Great power mixed with great resentment

Delivered on By Justin Pyvis

Good morning! Australia will soon move to living with COVID-19 like it does the flu, after National Cabinet agreed to change the existing rules so that close contacts “exhibiting no or mild symptoms will no longer have to go into isolation”.

The change will be implemented on a state-by-state basis, with the Western Australian government already rejecting the idea because: “We are in a very different place, and National Cabinet recognises and acknowledges that.”

A decision on a fourth COVID-19 vaccination dose will also be made within the next three weeks, which would “potentially [be] the start of an annual program for people 65 and above”.

The move to get “those most at risk of severe illness” boosted again comes after Health Minister Greg Hunt announced $A2.1 billion of spending for “winter preparedness health measures”, as the government gears up for a winter that will see “co-circulation of COVID-19 and influenza viruses”.


Reading the tea leaves

Daily % change

AUD/USD

73.0

-0.8%

AUD/CNY

4.62

-0.6%

AU Bond

2.36

-1.3%

US Bond

2.00

-0.3%

ASX200

7,064

-0.9%

S&P500

4,204

-1.3%

Brent (bbl)

112.3

+2.7%

Gold (oz)

1,992

-0.3%

Iron ore (t)

157.6

-3.1%

Bitcoin

38,753

-0.4%

Ethereum

2,559

-0.6%

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

The US S&P500 closed Friday down -1.30%, registering its worst week in nearly two months after peace talks between Ukraine and Russia failed to amount to anything, and Goldman Sachs lowered its US growth forecast for 2022 to 1.75%, down from 2% previously, while also warning that “there is a 20% to 35% recession implied for next year”.

Market participants were also worried by the latest University of Michigan consumer sentiment index, which dropped to 59.7 in March, marking a third straight month of decline.

The index is now at its lowest level in 10 years as year-ahead expected inflation rate rose to its highest level since 1981 and “Personal finances were expected to worsen in the year ahead by the largest proportion of respondents since the survey started in the mid-1940s.”

Locally, the ASX200 lost -0.94% with only the energy and materials sectors posting gains as the market veered back into risk-off mode.


Food for thought

Since the pandemic struck Vladimir Putin has kept even his inner circle at a distance.
Since the pandemic struck Vladimir Putin has kept even his inner circle at a distance. Source

“Although they have amassed immense power and wealth, Putin and his immediate circle remain intensely resentful of the way in which the Soviet Union, Russia and their own service collapsed in the 1990s — and great power mixed with great resentment is one of the most dangerous mixtures in both domestic and international politics.”

That’s from the FT’s Inside Putin’s circle — the real Russian elite by Anatol Lieven, which unlike most of FT articles is free to read.

It’s well worth your time, looking as it does at how Putin went from being the “first among equals”, to publicly reducing even his “handful of close associates” – the so-called siloviki, or “men of force” – to “servants”.

Those siloviki are not to be confused with the oligarchs that are having their yachts and football clubs confiscated:

“A clear line should be drawn between the siloviki and the wider Russian elites — large and very disparate and disunited congeries of top businessmen, senior officials outside the inner circle, leading media figures, top generals, patriotic intellectuals and the motley crew of local notables, placemen and fixers who make up the leadership of Putin’s United Russia party.”

It’s the group of elites, not the siloviki insiders, that are increasingly discontented with Putin’s invasion of Ukraine, but are powerless to do anything about it.

As for the war in Ukraine itself, Putin and the siloviki believe it:

“…will consolidate patriotic feeling in Russia behind their rule, as well as permitting them to engage in intensified repression in the name of support for the war effort. This repression has already begun, with the closing of Russia’s last remaining independent media and laws punishing as treason any criticism of the war.”

Putin and the siloviki “are utterly, irrevocably committed to the idea of Russia as a great power and one pole of a multipolar world… Without Ukraine, Russia ceases to be a Eurasian empire”.

That means they are “prepared, if necessary, to fight on ruthlessly for a long time, and at immense cost and risk to their regime”, to prevent Ukrainian nationalism and independence, which they perceive as “a key element in Washington’s anti-Russian strategy”.

Do read the whole thing.


Chewing the fat


Bits and bytes

🦠 “Deltacron” has been discovered in the US and Europe, a hybrid variant that emerged “when two variants of a virus infect a patient simultaneously, exchanging genetic material to create a new offspring”. There’s no evidence of a change in severity.

🗳️ The latest Newspoll showed Anthony Albanese level with Scott Morrison as ­preferred PM for the first time in more than two years. Labor leads the Coalition 55 to 45 on a two-party-preferred split basis.

☣️ This is probably not good: “A senior administration official told ABC News Friday that the US is getting reports the Russians are starting to bring in biochemical weapon suits into Ukraine.”

🕵️‍♀️ “Putin ‘has placed the head of the FSB’s foreign intelligence branch under house arrest because he is furious at security services for failing to warn him’ that Ukraine could fiercely resist invasion.”

🤥 “The chief spokesman for Russia’s Defense Ministry, Major General Igor Konashenkov, said the US had a plan to use migratory birds to spread biological pathogens from Ukraine to Russia.”

✈️ “China has refused to supply Russian airlines with aircraft parts… after Boeing and Airbus halted supply of components.”

🛢️ Australia’s government banned imports of Russian oil, gas, petroleum products and coal.

❌ US President Joe Biden issued an executive order blocking imports of Russian products including seafood and vodka (~$US1 billion in revenue) and banning US exports of luxury goods.

💸 The G7 group of countries will revoke Russia’s “most-favoured nation” status on key products, resulting in higher tariffs.

🔐 China’s government locked down another 10 million people in the northeastern city of Changchun over the weekend after an Omicron outbreak was discovered in the region.

🚶‍♂️ Li Keqiang will step down as China’s Premier when his second term expires in March 2023.

💉 Moderna is looking to develop mRNA vaccines for 15 different pathogens including chikungunya, dengue, Ebola and malaria, with the aim of commencing clinical trials for all 15 by 2025.

☢️ Delayed for decades, “Finland’s first new nuclear plant in over four decades and Europe’s first in almost 15 years” started test production on Saturday.

🦥 Westpac CEO Peter King warned that because the RBA has waited so long to tighten policy – and only expects to reach a 2% cash rate – “There’s not a lot of flexibility… if something goes wrong”.

💰 The Ukrainian Ministry of Defense is offering Russian pilots $US1 million per plane and $US500,000 per helicopter if they defect with their aircraft.

🛂 The EU extended the use of its Digital COVID Certificate (vaccine passport) for travel between member states until 30 June 2023.

⚔️ Facebook and Instagram will temporarily allow people to post violent content “including calls for harm or even the death of Russian soldiers or politicians”. Russia’s government subsequently labelled the company an “extremist organisation” and banned Instagram.

🚖 Uber will add a fuel surcharge to trips and deliveries in the US and Canada for at least two months due to higher petrol prices.

🚢 Italy’s government seized ‘SY A’, a luxury yacht worth ~€530 million because it was indirectly linked to Andrey Igorevich Melnichenko, a Russian billionaire on an EU sanctions list.