A just, democratic world order

Delivered on By Justin Pyvis

Good morning! If you thought the fun was over after Tuesday night’s big-spending budget then you are sorely mistaken!

The federal government reportedly has a “war chest” of $13.8 billion it can now use to “fund a seat-by-seat battle for power at the election”.

That’s because several of the spending commitments in the budget, namely those with broad titles such as “Energy Security and Regional Development”, and “Local Roads and Community Infrastructure”, came “without details on the final destination of the funding”.

Presumably this time ScoMo will leave the tools at home.

ScoMo honing his welding skills back in February.
ScoMo honing his welding skills back in February. Source

Reading the tea leaves

Daily % change







AU Bond



US Bond









Brent (bbl)



Gold (oz)



Iron ore (t)









Note: Brent oil, gold bullion and iron ore prices are the second futures contract. Bond yields are 10-year Treasuries.

The US S&P500 fell late in the day to close down -1.57%, finishing the quarter -4.9% lower – its worst performance since March 2020 – after Putin signed a law threatening to cut off Europe’s gas supply if they refused to pay for it in roubles:

“Nobody sells us anything for free, and we are not going to do charity either - that is, existing contracts will be stopped.”

Brent crude dropped after the White House agreed to release the largest ever batch of oil from its Strategic Petroleum Reserve (1 million barrels per day for 6 months) in an effort to, at least temporarily, combat surging inflation.

Oil cartel OPEC+ also met overnight but agreed to stick to its pre-invasion strategy of gradually increasingly supply, “despite sustained pressure from top consumers calling for the group to pump more to cool soaring oil prices”.

Locally, the ASX200 fell -0.20% despite the best efforts of the materials sector (~20% of the index) which gained +1.46% following a strong run-up in iron ore prices after the local market closed the day before.

In terms of the losers, tech (-2.18%) led the way after a soft US lead when it turned out that – shocker – Russia had not in fact deescalated its assault on Kiev, despite its assurances to the contrary.

Food for thought

If even Europe hasn't cut off Russian imports, why would China?
If even Europe hasn't cut off Russian imports, why would China? Source

Russia’s Foreign Minister Sergey Lavrov met with his Chinese counterpart, Wang Yi, for the first time since the invasion of Ukraine, releasing the following statement:

“We, together with you, and with our sympathisers will move towards a multipolar, just, democratic world order.”

China’s version of events was less clear-cut, but did stress that China has no plans to follow the west in cutting Russia off:

“China-Russia relations have withstood the new test of the changing international situation, maintained the correct direction of progress and shown tenacious development momentum.”

Ignoring the fact that neither Russia or China have anything remotely resembling “just” or “democratic” governments, it’s clear that China’s government has made up its mind: it’s going to sit this one out, remain ‘neutral’ and continue to trade with Russia, reaping the benefits of the west’s sanctions.

That news shouldn’t come as a surprise, as it’s also what India – which has a “Comprehensive Strategic Partnership” with Australia and is a member of the so-called “Quad” alliance with Australia, Japan and the US – is doing. A large portion of Russia’s exports, such as oil, also continue to flow into the EU, which is by far Russia’s largest export destination (see image above).

If India can get away with doing nothing on the world stage, why can’t China? The benefits of not condemning Russia are huge – China is the largest importer of oil in the world, its economy is slowing and it already has the necessary infrastructure to import more Russian oil (around ~50% of its Russian imports are crude petroleum).

China is also a critically important player in supplying Russia with products it struggles to produce in its relatively simple, resource-rich economy, such as broadcasting equipment and computers. Bilateral trade between the nations is roughly balanced, so their central banks shouldn’t have any problems swapping yuan and roubles back and forth.

As an added bonus for China (if it needed one), western sanctions mean it gets to pay less for its oil, with Russian crude selling at around a 20% discount to the global benchmark price.

No wonder Chinese companies are “forging ahead” with at least four new Russian gas pipeline projects as the country seeks to ween itself from what it deems a greater risk: reliance on members of the Quad.

Chewing the fat

Bits and bytes

👷‍♀️ Australian job vacancies grew 7% in February 2022 from November 2021, “when many businesses were emerging from the Delta lockdowns”. Vacancies were up 86% from a year ago and remain well above pre-pandemic levels.

👷‍♂️ “According to the NAB business survey, a record 85% of Australian businesses report staff shortages were holding back their ability to operate at full capacity and capitalise on demand in the final three months of 2021.”

🏡 Almost 240,000 Australian “young growing families… were under mortgage stress as at the end of February, even before petrol prices started to rise.”

🌊 Deputy PM Barnaby Joyce “dissolved the national advisory body established less than two years ago to scrutinise major water projects”. Such as the dam he wants in his electorate?

📣 Ukraine’s President Volodymyr Zelenskyy addressed the Australian parliament last night, commenting that “the nature of evil… can instantly cross any distance, any barriers and destroy lives”.

📉 China’s official manufacturing and non-manufacturing PMIs fell below 50 in March, indicating contraction, the first time that has happened since since the height of the initial lockdowns in 2020.

⚡ Germany’s government activated its “gas emergency plan”, under which it can “ration gas, with industry first in line for cuts”.

📈 UK house prices increased at their fastest rate for 17 years in March, rising 14.3% from a year earlier. They are now 21% higher than they were before the pandemic.

✈️ An Airbus A380 completed a trial flight powered entirely by cooking oil and waste fats.

🕵️‍♂️ Jeremy Fleming, the head of the UK’s cyber spy agency, said “Putin has massively misjudged the situation”, and that his troops had low morale, were poorly equipped and have refused to obey orders.

🦠 The World Health Organisation released a report claiming that the most likely way forward was that COVID-19 would evolve to become less deadly over time “due to sustained and sufficient immunity”.

🏎️ Las Vegas will become the third venue for Formula 1 in the US, hosting a night race in November starting in 2023.

🍁 Canada’s government will ban the sale of combustion engine passenger cars by 2035 and require zero-emission vehicles to comprise at least 20% of total sales by 2026, and 60% by 2030.

⚔️ Ukrainian officials alleged that Russian shelling “deliberately destroyed food stocks [50,000 tonnes] destined for the whole of Ukraine”.

🦗 Pakistan pulled off its highest ever ODI run-chase (349) to defeat Australia by six wickets in Lahore last night.