Foam-flecked at the mouth

Delivered on By Justin Pyvis

Good morning! What a few weeks it has been – we trust everyone managed to sneak in a nice break over summer, or winter for anyone unfortunate enough to be north of the equator at this time of year.

Those on the east coast of Australia certainly seem to have have taken “reopening” to heart, given that Australia’s daily COVID-19 case numbers have now outstripped the UK, US, Canada, Germany,.. in fact, there aren’t too many places in the world with more active coronavirus cases at the moment (adjusted for population, noting that ~10% of Australia – WA – is still closed off).

The good news is that while COVID-19 hospitalisations are also soaring (nearly 2,000 in NSW, or 50% above the prior peak), a good portion of them – somewhere between 20% to 50% or perhaps even as many as 65% – are asymptomatic and checked in for an unrelated ailment, such as a broken bone.

The reason for the massive range in the above estimates is because public health data in Australia are rubbish. Authorities clearly have the data but refuse to make them public, meaning all we get are sporadic releases from individual hospitals or snapshots when state health ministers decide to enlighten us.

Such misleading data might explain why the number of people in ICU in NSW is still well below the previous peak (~40%) despite soaring hospitalisations, many of which are simply ‘incidental’.

Oh well, it is what it is (for now). The fact is hospital capacity is worsening regardless of severe disease due to soaring cases and the related staff absences, leading the NSW government to reimpose restrictions over the weekend, limiting capacity at some venues and banning singing and dancing in hospitality venues.

NSW is not alone in worrying about hospital capacity constraints, either – on Friday the VIC government reintroduced density limits and the QLD government suspended elective surgeries and delayed the return of the school year to 7 February.

So much for “we aren’t going backwards”. 🤷‍♂️

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 S&P500 is a snapshot 30 minutes before close.

The US S&P500 lost 0.41% on Friday, finishing down around 1.9% for the week after a huge selloff prompted by the release of Federal Reserve minutes flagged a faster interest rate hiking cycle than market participants were expecting. The interest rate-sensitive, tech-heavy Nasdaq composite was hit particularly hard, ending the week down about 4.5% in what was its worst week since at least February 2021.

A jobs report released during trading on Friday only worsened sentiment, as it showed just 199,000 jobs were added in December, well below the 422,000 estimated. It also showed that US unemployment fell to just 3.9% with labour force participation at its lowest since 1977, as the so-called Great Resignation continues on its merry way, with supply issues likely to persist if large numbers of people remain out of the workforce.

Locally, the ASX200 added 1.29% on Friday to finish the week up just 0.1% thanks to the large iron ore miners such as BHP (+5.4%), RIO (+3.5%) and FMG (+6.0%). But the big winners on Friday were private health insurers (e.g. Medibank +7.5%), after Queensland’s government suspended elective surgeries until at least February, saving them a bundle of cash.

Food for thought

How central bankers react when reality contradicts their models.
How central bankers react when reality contradicts their models. Source

We kicked off the new year off by sending out an advance copy of the first ever Unwrapped, our new monthly newsletter, to all readers with 3+ referrals. Now that a week has passed we’re making it available to everyone!

​Click here to download Unwrapped: Foam-flecked at the mouth

If you’re too busy to read the whole thing, here’s the TL;DR:

  • Inflation may overtake the pandemic as the media’s headline-grabber of 2022.
  • There are differing views about how to cure it and at least for now Australia remains one of the last countries firmly in the no worries, “transitory” camp.
  • If monetary discipline fails in the war of ideas, policymakers may open Pandora’s box of unintended consequences by resorting to long-since discredited techniques such as financial repression, price controls or even antitrust.

While we’re on the subject of inflation, data on Friday showed that European consumer prices jumped 5% from a year earlier in December, a fresh record high since the single currency was created more than two decades ago.

Poland’s government then decided that enough was enough, cutting taxes on petrol, gas and electricity and providing cash payments to households. While that will reduce prices in the short-term, it comes at the cost of more debt and higher inflation in a year’s time as the base effects drop out. If inflation persists, Poland’s government will find itself in an even bigger crisis in the second half of 2022.

As we wrote in Unwapped, “inflation and more importantly how central bankers react to it could well be the new headline-grabber of the year”, so you had better get used to it!

Bits and bytes

👩‍⚖️ “Novax” Djokovic’s appeal to remain in Australia will be heard later today, with the world #1 currently detained in the budget Park Hotel in Carlton. His requests over the weekend for a personal chef and access to a tennis court were denied.

🛒 Woolworths CEO Brad Banducci warned that it’s “experiencing COVID-driven absences of 20%+ in our distribution centres and 10%+ in our stores”, with gaps on shelves starting to become more frequent. ALDI and Coles also reported issues.

🔬 A new Centers for Disease Control and Prevention report found that the Pfizer vaccine is 91% effective at preventing multisystem inflammatory syndrome in adolescents aged 12 to 18.

💉 The number of vaccine appointments in Quebec, Canada increased by more than 300% after the government made vaccination mandatory to enter liquor and cannabis stores.

🦠 The government of Tianjin – a port city located just 90 minutes from Beijing – ordered its 14 million residents to stay home until they test negative after 20 people (15 children) contracted COVID-19 in the city, including at least two with the Omicron variant.

⚰️ A report published in Science found that all-cause mortality in India was 27% higher in 2020-2021 compared to pre-pandemic years, suggesting that “India’s cumulative COVID deaths by September 2021 were 6-7 times higher than reported officially”.

🦗 Australia’s Usman Khawaja scored back-to-back centuries in the drawn fourth Ashes test, becoming just the second Australian man to do so at the SCG and first in an Ashes series at the ground.

🤝 Following the signing of a security pact between Australia and Japan, China’s government responded by saying it was “in total disregard of the facts, makes groundless accusations against China on a series of issues related to China’s sovereignty and territorial integrity and unscrupulously interferes in China’s internal affairs”.

🍎 Since Tim Cook became CEO of Apple in August 2011, the company’s “market value has grown $700m a day”. It’s not all Tim though - since March 2020 when COVID-stimmy started to kicked in, Apple’s market cap has risen $2.6 billion a day.

💰 Global venture capital investment hit $US643 billion last year, up 92% from 2020’s $US335 billion. The United States alone saw $US330 billion invested, nearly double 2020.

🧐 Multiple US Federal Reserve officials sold stocks only to buy them back days later, conveniently moving ahead of decisions by the Fed to actively rescue “a broad swath of markets”.

🐷 Evidence from offshore bank accounts suggests that around 7.5% of all foreign aid is siphoned off to elites, increasing with the ratio of aid to GDP.