Not much slack

Delivered on By Justin Pyvis

Good morning! Have we hit peak Omicron already? It certainly seems that way if one eyeballs NSW hospitalisation admissions, which declined yesterday for the first time since 18 December after trending down for several days.

The other states are a bit behind – and VIC is still in the midst of an aptly named “Code Brown” – but should follow suit in the coming days and weeks (except WA, which may never reopen), as that’s the pattern Omicron has followed everywhere else in the world: a big spike followed by an equally big descent.

Take the UK, which was hit by Omicron earlier than Australia. In mid-January, cases dropped by a fifth across Kingdom, with Sarah Crofts, head of analytical outputs for the ONS Covid-19 Infection Survey, reporting that “Our latest figures show a welcome decrease in infections across most parts of the UK and among all age groups, apart from younger children.”

Fingers crossed those trends continue. 🤞 Have a great weekend.

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.

At the time of writing the US S&P500 had fallen -0.31%, shedding early gains of as much as 1.5% as initial jobless claims rose for a second straight week and influential investor Jeremy Grantham warned that “Today in the U.S. we are in the fourth superbubble of the last hundred years."

Locally, the ASX200 rallied late to close up 0.14% thanks to big gains to materials (+3.0%) and another good day for energy (+0.8%), which rallied on the back of rising gold/iron ore and oil prices, respectively.

Food for thought

Shifting attitudes about bums on seats means many people can now work anywhere.
Shifting attitudes about bums on seats means many people can now work anywhere. Source

Australia’s unemployment rate in December hit just 4.2%, its lowest level since August 2008 which also happened to be just prior to the collapse of Lehman Brothers and the start of the global financial crisis.

Sorry 😬

Bad omens aside, December was an extremely strong month for jobs in Australia, with the employment to population ratio hitting a record high 63.3%, suggesting there’s not much slack in the labour market.

No wonder ScoMo was so desperate to get kids into forklifts (he has since abandoned the idea)!

Omicron will no doubt have taken some oomph out of the January figures (the December survey date was from 28 November to 11 December, just before the Omicron wave really took off) but it’s not looking like it will cause any lasting damage to the economy.

That’s perhaps why Westpac became the first major bank to call out the Reserve Bank of Australia (RBA), with Chief Economist Bill Evans expecting the RBA to backtrack on its bold interest rate call, and soon:

“We have not changed our call for the first hike in the overnight cash rate by the RBA since June 2021 when we were early to challenge the ‘not till 2024’ consensus…

We now expect one hike of 15 basis points (0.15%) in August to be followed by a further hike of 25 basis points in October.”

A tight labour market and ultra-easy monetary and fiscal policy usually means rising wages and inflation (Australia’s government doesn’t report data on a timely basis so we’re still flying blind on those metrics), hence Westpac’s call for a rate hike in August.

The RBA could well be facing a credibility crisis in the very near future. For more on inflation and why many central bankers, including the RBA, were asleep at the wheel last year be sure to check out our January issue of Unwrapped: Foam-flecked at the mouth, where we went into far more detail.

Bits and bytes

❌ Demonstrating his inability to consider trade-offs, WA Premier Mark McGowan delayed the reopening of the Hermit Kingdom’s hard border indefinitely, saying “It would be reckless and irresponsible to open up now — I can’t do it.”

🥪 Food prices in New Zealand rose the most in more than 10 years in 2021, notching up growth of 4.5% in December from a year earlier, potentially forcing the central bank to raise interest rates at an even faster clip.

💹 Germany’s producer prices – what factories receive for their goods – soared 24.2% in December (5.0% from the prior month), the biggest increase in history.

🥝 95%+ fully vaccinated (12+) New Zealand will not use lockdowns again, but if Omicron is in the community then “the whole country will move into red within 24 to 48 hours”. Red means mask wearing and gathering restrictions on most venues and businesses.

📉 China’s central bank cut the loan prime rate on 1-year and 5-year loans, aimed at pushing down borrowing costs for household mortgages and certain corporate loans.

🎾 ‘Novax’ Djokovic is considering suing the Australian government for more than $A6 million for “ill treatment” while he was being detained, potentially unlawfully.

📈 US President Joe Biden threw his support around the Federal Reserve’s plans to tighten monetary policy, saying “Given the strength of our economy and the pace of recent price increases, it is appropriate… to recalibrate the support that is now necessary.”

🌋 Tonga’s Consulate released fresh pictures in the wake of the underwater volcanic eruption last week, showing the destruction caused by the volcanic ash and tsunami.

💊 Australia’s drug regulator, the TGA, gave provisional approval for two antiviral COVID-19 treatment pills as well as Novavax, the ‘old tech’ protein-based vaccine for which many had been waiting.

🔬 The Victorian government backtracked on its 90-day IVF ban amid public outcry, allowing procedures to resume immediately.

🕵️‍♀️ China’s government requires all athletes at the Beijing Olympics to install a “MY2022” app, which has security flaws where “data protections could be easily sidestepped”. The app also allows athletes to report “politically sensitive” content, containing a censorship keyword list including Xinjiang and Tibet.

💉 Harvard researchers concluded that “nocebo responses” – “expectations of side effects, anxiety-induced effects, and the mistaken attribution of common, nonspecific ailments, like headaches” – explain up to 76% of the side-effects people report after their COVID-19 vaccinations.

🍁 Awkward. A high school in Canada called “Prince Andrew High” will change its name next year to be “reflective of our school community and uphold our values as a safe and inclusive learning space for all”.

🥔 The White House was forced to clarify comments made by Joe Biden, who implied the US would do nothing if Russia invaded Ukraine provided it was only a “minor incursion”, saying “If any Russian military forces move across the Ukrainian border… it will be met with a swift, severe, and united response from the United States and our Allies.”

🗳️ US Democrats suffered another loss in the Senate after moderates Joe Manchin and Kyrsten Sinema crossed the floor to vote down the party’s efforts to pass voting rights legislation.

🥽 Ken Kutaragi, the “father of PlayStation”, said “Being in the real world is very important, but the metaverse is about making quasi-real in the virtual world, and I can’t see the point of doing it. You would rather be a polished avatar instead of your real self? That’s essentially no different from anonymous message board sites.”

☣️ Must want the competition gone before launching an e-Ruble? Russia’s central bank proposed a ban on all private cryptocurrencies in the country, including crypto exchanges.