A near inevitability

Delivered on By Justin Pyvis

Good morning! The close contact rules in NSW will change from 6pm this Friday, after which anyone who has been in contact with a positive case will no longer be required to isolate if they have no symptoms. Instead, they’ll have to:

  • wear a mask in indoor public settings;
  • avoid contact with elderly and immunocompromised people;
  • work from home where possible; and
  • undergo daily rapid antigen tests.

Victoria’s government made a similar change effective from 11:59pm on Friday, with the close contact isolation requirement replaced by five rapid antigen tests over a seven day period. Victoria also abolished its vaccine passport, check-in requirements and removed its mask mandate in primary schools, hospitality and retail settings.

Fewer restrictions mean fewer reasons for state politicians to pop up in our newsfeed, which can only be a good thing!

Speaking of politicians, did anyone catch the first big leaders debate between ScoMo and Albo last night? Yeah, neither did we, but given both are down in the polls we imagine it probably looked something like this:

The choices in this election resemble the 2004 South Park episode showing a contest between Giant Douche and Turd Sandwich.
The choices in this election resemble the 2004 South Park episode showing a contest between Giant Douche and Turd Sandwich. 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 -0.06% after positive earnings reports from the likes of Procter & Gamble (+2.6%) and IBM (+7.5%) offset big falls in growth stocks, led by Netflix (-35.1%) which tumbled after failing to meet expectations for the 7th time in 8 quarters, losing 200,000 subscribers supposedly due to inflation, the Ukraine war and “the large number of households sharing accounts”.

Locally, the ASX200 edged 0.05% higher, shedding almost all of its early gains as losses in materials (-1.46%) and energy (-0.57%) almost entirely offset positive moves in the 9 remaining sectors.

Mining giant Rio Tinto fell -2.76% after reporting underwhelming results in a “challenging” March quarter, with iron ore shipments down 8% from a year ago and 15% from the prior quarter.

Elsewhere in the region, the Bank of Japan “decided to offer to buy an unlimited amount of 10-year Japanese government bonds (JGB) at 0.25%, in its third move to defend its yield target since February”.

Food for thought

Most of the European nations reliant on Russian gas (coloured green) would have a hard time sourcing it elsewhere. Click image to zoom.
Most of the European nations reliant on Russian gas (coloured green) would have a hard time sourcing it elsewhere. Click image to zoom. Source

The FT ran an interesting, graphical piece this week looking at whether or not the Europe can wean itself off Russian gas.

Its short answer is “not without lots of economic pain and a huge restructuring of the energy market”, given just how dependent on Russia many countries have become over the past few decades (see image above).

In terms of the data:

  • Around 20% of the EU’s power comes from gas, with about 155bn cubic metres (bcm) of it, or nearly 67% of the total, from Russia.
  • The EU imported close to 77bcm of non-Russian gas supply last year, around 15% of the global total. It would need to increase that share to 25% at a minimum, along with taking other measures, to replace Russian gas.
  • That’s a difficult task given existing infrastructure and the “misplaced geographic distribution of LNG terminals and pipelines”. The countries that rely most heavily on Russian gas are also the least able to import LNG from elsewhere.
  • To boost its global share the EU would also have to “compete with Asian buyers, who have long been willing to pay above market rates for LNG”.
  • Gas prices have been high for several months but plants weren’t being converted – “what is possible for politicians to achieve through edicts that market economics wouldn’t?”
  • Wind and solar could only replace up to 1bcm of gas before winter because “you also need an intermittent power supply”. Coal could replace the equivalent of 12bcm but finding the coal would be difficult and “policymakers insist that the EU’s climate targets are unchanged”.

Ultimately Europe’s politicians got themselves into this mess and there’s no quick fix – even ramping up nuclear-generated power is “unlikely to make a dent” this year, and the Germans are still planning to shut down their remaining reactors in December.

If the EU is serious about ditching Russian gas, rationing and blackouts this winter “are a near inevitability… the market and policymakers will decide who suffers from the shortage of energy”.

A more likely scenario is that the EU continues to sanction everything other than Russian gas, given the enormous challenges and political pain involved in doing so.

Chewing the fat

Bits and bytes

💸 The Commonwealth Treasury’s Pre-election Economic and Fiscal Outlook revealed that in just two weeks following the 29 March federal budget, subsequent policy decisions “have worsened the bottom line by $714 million over the four years to 2025-26”.

🏨 From 30 April unvaccinated international travellers returning to NSW will no longer have to undertake hotel quarantine.

📈 Inflation is here: Fred Harrison, who operates 70 IGAs on the east coast, said “I’ve never seen more price increases in this last six-week period than I have right now. It’s been intense, they’re anywhere from 4% through to 10 or 15% across the board.”

📱 ScoMo’s phone is clearly compromised: NSW Premier Dominic Perrottet’s private text messages to ScoMo about transgender women in sport were leaked to the media.

🏝️ The opposition Labor party branded China’s deal with the Solomon Islands “Australia’s worst foreign policy failure since World War II”.

🔥 Germany’s producer prices surged 30.9% in March, the fastest rate of annual growth since records began 73 years ago. March was the first month that included the effects of the Russia/Ukraine war.

📣 Elon Musk is reportedly trying to raise debt for his $US43 billion bid to buy Twitter, working with Morgan Stanley and other potential investors, with his existing Twitter and Tesla shares as collateral.

🚢 Supply chains are taking another battering as a result of China’s lockdowns, and while other ports can be used, finding a truck is “getting more and more difficult… Unless the Chinese government changes its policy this could roll on for many months.”

🛑 China’s Twitter-like Weibo platform appears to be blocking the first line of China’s national anthem, which reads, “Stand up! Those who refuse to be slaves!.., amid increasing outrage and frustration over the authorities' handling of Shanghai’s harsh COVID-19 lockdown”.

🏡 Now fix supply: Canada’s government will ban foreign homebuyers for two years and taxes will be raised for sales that occur within a year.

🍁 Inflation in Canada hit 6.7% in March, a 31-year high as “Everything has gone up, absolutely every single thing.”

👩‍⚖️ The US government will appeal a judge’s order to make its public transport mask mandate unlawful if its health bureaucracy, the CDC, concludes “that the order remains necessary for public health”.

🙄 UK PM Boris Johnson “said he didn’t know at the time that attending a lockdown-breaking party in 2020 ‘could amount to a breach of the rules’.”

🎈 A hot air balloon crash landed in Melbourne, clipping rooftops on its way down due to “a malfunction he [the pilot] could not explain”.

⚔️ The battle for Donbas: the UK Ministry of Defence claimed that “Russia’s military presence on Ukraine’s eastern border continues to build”, and that Russia is trying to “disrupt the movement of Ukrainian reinforcements and weaponry to the east of the country”.

🎾 Russian and Belarusian players “will not be allowed to compete at Wimbledon this year because of the invasion of Ukraine”.

🚀 The Russian Defence Ministry reported that it had successfully launched a test of its Sarmat missile, “capable of penetrating any prospective missile defence”.