The future is electric

Delivered on By Justin Pyvis

Good morning! It’s still early days in the Omicron wave but there are positive signs that the pattern first observed in South Africa might be playing out elsewhere as well.

That pattern is one of a steep vertical spike in cases followed by an equally steep decline, without the corresponding rise in hospitalisations and deaths associated with prior outbreaks.

In England, case numbers are falling steeply along with hospital admissions. In NSW – where the current wave started a bit later than in the UK – cases are still vertical but “acute outcomes [have] completely diverged from cases”.

Similar patterns have emerged in parts of the US where wastewater is tracked, such as in Boston, where the viral RNA signal has started to fall after around 3 weeks from when Omicron took over.

If the virus follows a similar pattern in Australia it means NSW and VIC could already be close to hitting peak Omicron. 🀞


Markets

Daily % change

AUD/USD

72.9

+1.1%

AUD/CNY

4.63

+0.9%

AU Bond

1.84

-1.2%

US Bond

1.73

-1.2%

ASX200

7,439

+0.7%

S&P500

4,720

+0.2%

Brent (bbl)

84.6

+1.0%

Gold (oz)

1,826

+0.3%

Iron ore (t)

132.3

+2.6%

Bitcoin

43,725

+2.1%

Ethereum

3,377

+4.2%

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 theΒ US S&P500Β was up around 0.2% despite US inflation officially hitting 7.0% in December, the highest level since June 1982. The reading matched expectations hence the market’s reaction (bond yields actually fell), with the first US interest rate hike now forecast for 16 March (74.4% probability).

Locally, theΒ ASX200 followed solid gains in the US the night before to add 0.66% thanks to large moves in energy (+3.0%) and tech (+2.1%). The latter was buoyed by the Bank of Spain’s approval of Block’s takeover of Australian buy now, pay later giant Afterpay (+4.8%), which was the last remaining regulatory hurdle.

Food for thought

Maybe this is what shifted China's EV acceptance from "policy-motivated to demand-driven"?
Maybe this is what shifted China's EV acceptance from "policy-motivated to demand-driven"? Source

What will the car market in Australia look like in 10 or 20 years? It’s probably safe to say that while we may be a bit behind the times – according to Wikipedia (yeah, we know), the electric vehicle (EV) market share Down Under was just 0.78% in 2020, putting us close to last amongst the 24 countries tracked – the future will be electric.

That’s because we’re tiny in global terms and don’t manufacture vehicles domestically anymore. Essentially where the rest of the world goes, Australia will eventually have to follow.

That transition might come sooner than many expect. While the Australian government only released its Future Fuels and Vehicles Strategy in November 2021, the world’s largest car manufacturer, China, was busy ramping up production of EVs to the extent that last year they accounted for 15% of overall passenger-car sales in the country, more than doubling from 2020.

In fact, China’s overall vehicle sales expanded 4.4% last year on the back of rising EV sales – the first year of growth since 2017 – as “Consumer acceptance of new energy vehicles continues to rise… [shifting] from policy-motivated to demand-driven”.

However, in the short-term downside risks remain dominant. Overall vehicle sales in China fell 7.7% in December “as carmakers grapple with ongoing Covid-induced parts shortages”, not to mention the broader economic slowdown as the country struggles with its heavily indebted property sector and rolling city-wide lockdowns.

But none of that will stop the trend to EVs, which at least according to the China Passenger Car Association are expected to account for a quarter of total sales in China this year, while sales of internal combustion engine vehicles remain flat or even decline slightly.


Still hungry?

🎾 ‘Novax’ Djokovic admitted that he travelled internationally in the two weeks before flying to Australia, saying his false declaration form “was a human error and certainly not deliberate”. He also confessed to breaking isolation while COVID-positive in Serbia. No decision on whether to cancel his visa was made after the Immigration Minister received “further submissions and supporting documentation”.

πŸ€” The NSW and SA governments made reporting of rapid antigen tests (RATs) mandatory, although NSW Premier Dominic Perrottet admitted “this is clearly one that will be harder to enforce, there’s no doubt about it”.

πŸ‘·β€β™‚οΈ The Great Resignation? Job vacancies in Australia “continue to reach new record highs”, with 396,000 jobs open in November 2021 as labour shortages persist, “particularly in lower paying industries”.

πŸ“‰ Consumer prices in China rose by just 1.5% in December from a year earlier “as supply of pork and vegetable recovered from disruptions caused by bad weather in October and November”, while producer prices eased off record highs to increase 10.3% after “the prices of crude oil and other commodities went down”.

πŸ”Œ This… sounds like a bad idea. “In ‘Assertive’ mode, the Tesla vehicle has ‘a smaller follow distance’, will ‘perform more frequent speed lane changes’ and ‘may perform rolling stops’.

πŸ•΅οΈβ€β™€οΈ The Dutch Olympic Committee advised its athletes and supporting staff to not bring any personal devices to China. They will instead be issued with unused devices “to protect their personal data from Chinese surveillance”.

⚑ The CEO of British Gas warned that “high gas prices will be here for the next 18 months to two years… As we move towards net zero, gas is a big transition fuel and so as you turn off coal-fired power stations in other countries, there isn’t an abundance of gas that you can just turn on quickly”.

🦠 Anthony Fauci said “Omicron, with its extraordinary, unprecedented degree of efficiency of transmissibility, will ultimately find just about everybody.”

πŸ•š The World Health Organisation “warned that half of Europe will have caught the Omicron Covid variant within the next six to eight weeks”.

πŸ’‰ The government of Quebec, Canada said it will soon issue “significant” fines to its unvaccinated residents because “they put a very important burden on our health care network”.

πŸ‘©β€βš–οΈ A federal judge in the US agreed to allow the FTC to “proceed with an antitrust lawsuit against Meta, formerly known as Facebook, after dismissing the suit last year”.

πŸ‘¨β€βš–οΈ A separate federal judge in the US ruled that Virginia Roberts Giuffre’s sex abuse claims against Prince Andrew can proceed.

🍻 Rules for thee, not for me! UK Prime Minister Boris Johnson is facing calls to resign from within his own party “after he admitted attending a drinks party during lockdown”.