Problem solved! πŸ™ˆ

Delivered on By Justin Pyvis

Good morning! The rapidly improving COVID-19 situation in Australia led ScoMo to reveal that international tourists may soon be allowed back into the country:

“I don’t think it’s too far away, to be honest, but we’ve got to get some medical advice further on that, a bit more work to do with the states to make sure we’re comfortable about it.

“And then I’d like to see us get there soon, certainly before Easter, well before Easter.”

Great news – another sign that life is slowly getting back to normal.

Now we just have to hope that BA.2, also known as “Son of Omicron”, is no more severe than its predecessor, given it’s estimated to be 1.5-times more transmissible. 🀞


Reading the tea leaves

Daily % change

AUD/USD

70.4

-1.1%

AUD/CNY

4.48

-0.4%

AU Bond

1.92

-1.8%

US Bond

1.78

-1.4%

ASX200

6,988

+2.2%

S&P500

4,432

+2.4%

Brent (bbl)

90.7

+0.8%

Gold (oz)

1,790

+0.3%

Iron ore (t)

146.0

+6.1%

Bitcoin

37,721

-1.1%

Ethereum

2,574

-0.9%

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.

TheΒ US S&P500Β shot up 2.43% on Friday while the tech-heavy Nasdaq composite surged 3.13%, thanks to an upbeat earnings report from Apple (the world’s largest company by market cap).

The end-of-week rally came despite the core PCE price index – watched closely by the US Federal Reserve (Fed) – rising 4.9% in December, the most since September 1983, and the employment costs rising 4% from a year ago, the fastest in the 20-year history of the data.

A separate report showed personal income in the US increased a less than expected 0.3% in December, which after inflation made it a third straight month of -0.2% declines.

US consumer sentiment was also poor throughout January, with the University of Michigan Surveys of Consumers “sinking to its lowest level since November 2011”. The authors also claimed that the “wage-price spiral that has subsequently developed” is no longer linked to supply chain problems, and that household spending will likely turn negative when it’s no longer being “supported by an extraordinary pace of rising home and stock prices”.

Locally, theΒ ASX200 finished the week up +2.19% in a broad-based rise with all 11 sectors – even tech! – finishing in the black in what was a rough week for the index which kicked off with four consecutive days of losses.


Food for thought

Erdogan churns through bureaucrats at a remarkable pace.
Erdogan churns through bureaucrats at a remarkable pace. Source

It was certainly a wild end to the week in terms of economic news, which kicked off with December quarter GDP figures in Europe’s two largest economies, Germany and France.

And talk about chalk and cheese!

Germany’s GDP dropped by -0.7% from the prior quarter in the December quarter, “mainly on the back of weak private consumption”. The weakness followed increased coronavirus restrictions during the quarter coinciding with a spike in energy costs, the latter of which “will continue weighing on private consumption, even if social restrictions are lifted in the coming weeks”.

Decommissioning all those nuclear power plants before having a reliable alternative in place that wasn’t dependent on Russian gas probably wasn’t the best idea… just a thought. πŸ™„

At the other end of the economic growth spectrum was France, which “pulled away from its European neighbours with growth of 7% in 2021, the country’s fastest expansion for 52 years”.

In the December quarter alone the French economy grew 0.7% from the prior quarter, “boosted by a sharp rebound in consumer spending after coronavirus restrictions were eased last year, while also benefiting from its lower exposure to the global supply bottlenecks that have hit German manufacturers”.

That will be music to President Emmanuel Macron’s ears given he faces re-election in April.

Moving to Asia, South Korea’s industrial production grew at 4.8% in 2021, the fastest pace in 11 years, in what was a “rapid bounce-back from sagging performance in the pandemic-hit 2020”.

Retail sales also hit an 11-year high, growing 5.5% last year, although “indexes unveiled by the state-run agency suggest possible slowdown in the growth of production, retail sales and facilities investment for the coming months in 2022”.

Speaking of slowdowns, China’s manufacturing sector started 2022 with a “whimper” according to the January Caixin PMI, which fell to 49.1 in January – the lowest since February 2020 – from 50.9 in December (a reading above 50 indicates expansion).

No doubt Xi Jinping ordered factories in the region to reduce output in an attempt to keep the skies a shade of blue instead of the usual brown ahead of the Beijing Olympics, which kicks off on 4 February.

Down in South America, Argentina’s government struck a last-minute deal with the International Monetary Fund (IMF) to restructure $US44.5 billion of debt from its 2018 bailout, which it was finding difficult to service with inflation running at over 50% annually.

That should delay yet another full-blown currency crisis for at least a few more months!

Finally, another country that frequently struggles with inflation is Turkey, where inflation hit a 19-year high of 36% in December. But that’s probably where it will stop, at least officially – instead of trying to deal with the problem by invoking some sort of fiscal and monetary discipline, President Erdogan did what all good leaders would do and… sacked the head of the national statistical institute after just 10 months in the role.

Problem solved! πŸ™ˆ


Bits and bytes

🚚 Australian conglomerate Wesfarmers is relocating key staff from Perth to the eastern states due to “the uncertainty around when the border might reopen and the continuing inflexibility towards business-critical travel”.

πŸ’‰ Victoria’s Premier Daniel Andrews said “I think it’s only a matter of time before the relevant federal agencies confirm that this is three doses, it is not two plus a bonus”, and he expects a change to the definition of fully vaccinated to be announced in the next week or two.

🍻 South Australia’s government relaxed a range of restrictions on Saturday morning, including increasing density limits at hospitality venues, after finding “ourselves in a much, much improved situation, certainly within our hospitals capacity to respond to the numbers that we have at the moment”.

πŸ“ˆ But it’s transitory, right? Producer prices in Australia rose 3.7% in the December quarter, the fastest annual pace in almost 13 years.

πŸ“‰ The first Newspoll of 2022 showed the Β­Coalition falling behind Labor for the first time. It was “the worst result for the governing parties since September 2018, in the wake of the AugΒ­ust leadership spill that elevated the Prime Minister to the top job over Malcolm Turnbull”.

πŸ’Έ The NSW government will give businesses $A1 billion including a “JobSaver 2.0”, with those that can prove they lost significant revenue in January eligible to claim back up to 20% of their payroll in February.

🍁 A truck driver “Freedom Convoy” drove through Ottawa on Saturday night, protesting against cross border vaccine mandates. Prime Minster Trudeau was moved to a secret location.

πŸ•ŠοΈ China’s new ambassador to the US said: “If the Taiwanese authorities, emboldened by the United States, keep going down the road for independence, it most likely [will] involve China and the United States, the two big countries, in a military conflict.”

πŸš† A 55-year old man in China attempted suicide at a train station, leaving guards a note blaming his unmarried son: “People of my age in the village all have children and grandchildren already. But you are 29 and have achieved nothing.”

πŸŒ‰ A bridge in Pittsburgh collapsed due to “years of deferred maintenance”, just hours before US President Joe Biden arrived to spruik his new infrastructure bill.

🎢 Joni Mitchell joined Neil Young in boycotting Spotify over the Joe Rogan podcast and its “COVID-19 lies”, with the platform’s cancellation page receiving too many deletion requests to handle.

✈️ Elon Musk reportedly offered $US5,000 to a 19-year-old to shut down a Twitter account that tracks his private flights, pleading “I don’t love the idea of being shot by a nutcase.”

🌾 Sri Lanka’s government is paying compensation to over a million rice farmers “whose crops failed under a botched scheme to establish the world’s first 100-percent organic farming nation”.

🏑 Working from home saves the average employee about 70 minutes per day, with half the time going to working more and the rest to increased leisure/errands.

⚰️ Russia’s population officially declined by more than one million people during 2021, with some 662,000 people succumbing to COVID-19 – more than double the government’s official number “which uses a different methodology”.

πŸŽ–οΈ Mitchell Starc won his first Allan Border Medal, beating Mitchell Marsh by just one vote. Ashleigh Gardner won the Belinda Clark Award convincingly.

πŸ‘©β€βš–οΈ The “EU’s General Court in Luxembourg struck down much of a 2009 finding that Intel had abused its dominant position”, ruling that “the analysis carried out by the European Commission, the bloc’s main antitrust regulator, was incomplete”.

πŸ”₯ The Perth Scorchers became Big Bash League champs despite playing away from home all season, “becoming the first BBL club to claim four titles after crushing the Sydney Sixers by 79 runs”.

🎾 It was a good Australian Open for the locals with Ash Barty claiming the women’s singles title while the pair of Kyrgios and Kokkinakis, aka “Special K”, won the men’s doubles.

🏈 Tom Brady, the Greatest Of All Time (GOAT), announced his retirement six months before his 45th birthday. He leaves with seven Super Bowl rings – the most in NFL history – along with all-time records in touchdown passes (624) and passing yards (84,250).

🐐 Speaking of GOATs, Rafael Nadal became the all-time grand slam title leader with 21 titles after coming back from two sets down to win the Australian Open final.