The hardest place to do business

Delivered on By Justin Pyvis

Good morning! US President Joe Biden’s chief medical adviser, Anthony Fauci, declared:

“As we get out of the full-blown pandemic phase of Covid-19, which we are certainly heading out of, these decisions [on restrictions] will increasingly be made on a local level rather than centrally decided or mandated. There will also be more people making their own decisions on how they want to deal with the virus.”

Fauci didn’t provide a timeline, only that he hoped it would be “soon… at a time when we have enough people vaccinated and enough people with protection from previous infection”.

For context, the US has a double dose vaccination rate of around 64% while Australia is sitting at about 80%. The US likely has a higher rate of prior infection than Australia but it probably won’t be long before Omicron equalises that metric.

Reading the tea leaves

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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 was +1.39% higher as Meta (+5.7%) finally ended its slide after losing over 32% in total over the past four sessions, helping support a broader rally in tech stocks (the Nasdaq composite was up +1.90%).

Traders may have also liked the positive talks between French President Emmanuel Macron and Russian President Vladimir Putin yesterday, with British Foreign Secretary Liz Truss agreeing to fly to Moscow to discuss the situation in Ukraine with her Russian counterpart Sergei Lavrov later today.

Locally, the ASX200 added +1.13% with every major sector making gains other than energy (-0.4%) and materials (-0.6%), which declined due to softer Brent crude and iron ore prices, respectively.

A notable winnter was the ASX200’s second largest company by market capitalisation, CBA, which shot up +5.6% after reporting a better-than-expected half-yearly profit of $A4.7 billion, up 23% over the same period a year earlier.

At the other end of the spectrum was Mineral Resources (-8.9%), which reported a 96% decline in net profit due to falling iron ore prices late last year, which is “where most of – in fact, all of – our pain has come from”. The mining company also revealed a 60% hike in production costs at its Mt Marion lithium mine “due to increasing transport costs and labour constraints” in Western Australia.

Food for thought

A new report claims Victoria is the hardest place in Australia to do business.
A new report claims Victoria is the hardest place in Australia to do business. Source

Where’s the hardest place to do business in Australia? Victoria, at least according to a report commissioned by the Victorian Chamber of Commerce and Industry “inspired by international reports on the cost of doing business by the World Bank and the World Economic Forum”.

The report, written by the Nous Group, surveyed national businesses and found that Victoria is:

  • the hardest state in which to conduct business (>50% agree);
  • a difficult place to access labour and skills (80% agree); and
  • a state where the government is doing a poor job at reducing costs (93% agree); and
  • the culture of government regulators is a barrier to doing business (>80% agree).

It also found that while Victoria ranks first in skills and labour due to its highly educated workforce, it:

  • ranks second last in terms of people with trade skills;
  • has the highest local and state taxes; and
  • has the largest public service (a five-year average of the population employed in the public sector as a proportion of the total employed population).

Premier Daniel Andrews – nicknamed “Teflon Dan” for his uncanny ability to survive scandals – has been in charge since 2014, so has to bear at least some responsibility for the state’s failings.

Victoria’s next election is in November this year but Andrews will only be there if he can dodge yet another scandal, after one of his MPs crossed the floor yesterday to support a motion for the Ombudsman and anti-corruption commission to investigate Andrews' possible involvement in branch stacking and the so-called “red shirts scandal”.

Assuming Andrews survives, tough business conditions alone probably aren’t material enough to the median voter to have an impact at the ballot box. But what might is the 260-plus days of lockdown Victorians had to suffer through over the past two years, which may well be a memory too painful for many to shake by November.

Bits and bytes

😓 The Westpac-MI Consumer Sentiment survey dropped 1.3% in February after people’s assessment of their finances “deteriorated”. The authors speculate that the causes are likely “Omicron-related disruptions to activity and earnings at the start of the year; the rising cost of living; and the prospect of rising interest rates”.

➗ Qantas CEO Alan Joyce reiterated his claim that Western Australia resembled North Korea, saying the state’s hard border had split the country, “a bit like [how] Korea is divided”.

🌍 Global food prices reached their highest level since April 2011 in January, although there was a reprieve in inflation-adjusted terms with prices falling slightly for a second straight month (now -1.4% since November 2021’s all-time record high).

🌽 The chairman of Britain’s largest supermarket chain, Tesco, warned consumers that in terms of food price inflation “in some ways, the worst is still to come”.

🥝 New Zealand’s version of Canada’s “Freedom Convey 2022” has emerged, called “Convoy 2022 NZ”, which earlier this week “clogged the central streets of Wellington for hours”.

🍁 Alberta, Saskatchewan, Quebec and Prince Edward Island all revealed plans to remove pandemic restrictions, while Canada’s largest province, Ontario, will take a “very cautious” phased approach.

🏉 AFLW teams were granted permission to travel to Perth despite WA’s hard border, provided they fly in and out on the same day.

🦠 According to data released by Austin-Travis County (Texas), of the more than 1,200 people who have died of COVID-19 since the beginning of the pandemic, 95% had at least one underlying medical condition, the most common of which (49%) was hypertension (high blood pressure).

🌞 A new study from Israel found that “about half of people who were vitamin D deficient before getting COVID-19 developed severe illness, compared to less than 10% of people who had sufficient levels of the vitamin in their blood”.

🕵️‍♀️ An indelible public ledger is not a great place to launder your ill-gotten gains. The US government “seized more than $3.6 billion in bitcoin allegedly stolen as part of a 2016 hack of Bitfinex, saying authorities have also arrested a husband and wife in New York for allegedly trying to launder the cryptocurrency fortune”.

🥴 Meet Heather Morgan, the 31-year-old woman arrested in the case above, a self-proclaimed “Serial Entrepreneur, SaaS Investors and Surrealist”, who also goes by her rapper alter-ego “Razzlekhan”.

🛰️ SpaceX’s Starlink broadband internet offshoot lost 40 brand new satellites last week due to “a geomagnetic storm”.

👋 After Meta threatened to pull out of Europe, Germany’s Economy Minister said “I have lived without Facebook and Twitter for four years and life has been fantastic”, while France’s Finance Minister added “I can confirm that life would be very good without Facebook and that we would live very well without Facebook”.

📡 The big banks will hate this: Apple announced a new feature that will soon allow merchants to accept payments using only their phone, rather than relying on additional hardware.