Across financial markets, uncertainty surrounding the COVD-19 pandemic has led to a spike in volatility, dragging equities into bear market territory.
Welcome to Talking Business, a podcast produced in Melbourne Australia. The podcast is available on the Acast app, the Apple Podcast store or wherever you go to get your podcasts. Or you can get it at the Business Acumen website at www.businessacumen.biz.
I am Leon Gettler. My job is to review and monitor the week’s news in business, finance and economics. I bring it all to you, every week.
This is episode number 43 in our series for 2021 and today’s date is Friday November 26.
First, I’ll be talking to Jason Eisner, a co-founder of BrandQuest, a strategy, culture and brand management company and he’ll talk about whether businesses can run discounts in a difficult economy. And I’ll be talking to Indeed economist Callam Pickering about the latest wages and jobs figures.
But now, let’s talk to Jason Eisner.
President Joe Biden nominated Jerome Powell for a second four-year term as US Federal Reserve chairman and elevated governor Lail Brainard to vice chair, in a politically expedient move that also maintains continuity at the central bank as it deals with a 31-year high in inflation. In announcing the nominations on Monday (Tuesday AEDT) President Biden said both Mr Powell and Dr Brainard had helped achieve a successful economic recovery from the pandemic and that he was confident they would control inflation. Powell will confront significant challenges as he embarks on four more years as America’s top monetary policymaker — chiefly, how to manage an economy that is not back to full employment at a time of uncomfortably high inflation. Powell will also be under pressure from progressives to understand and address the economic and financial market implications of uncontrolled wildfires, super-powerful hurricanes, and other devastating impacts of climate change. Fed officials have also become more outspoken on the potential for racial and gender inequities to drag on economic growth.
A COVID-19 spike across Europe and the US has hit the equity market and threatens to stunt the global economic recovery despite vaccines, treatments and a willingness among consumers and businesses to adapt to pandemic restrictions. The lockdown imposed in Austria beginning this week has pressured neighbouring Germany to consider similar measures while case numbers have begun to climb across the continent, sapping European shares and pushing back rate hike expectations for the European Central Bank. In the US, a surge in new infections has again caused angst over the potential hit to economic growth and has depressed share prices in a plunge that extended to Australia on Monday. The S&P/ASX 200 fell 0.6% as travel stocks and businesses with broad exposure to European and American markets fell, including travel agents and airlines. Declines for Flight Centre, Corporate Travel Managem ent and Qantas have been among the top losses reflecting a rethink of previously bullish sentiment after the delta COVID-19 wave earlier in the year.
Business owners are being told they should set their own rules on whether customers and staff have to be vaccinated, in a message from Prime Minister Scott Morrison that takes on state premiers amid uproar in federal Parliament over vaccine mandates. With some of his own Liberal colleagues moving against the government on vaccine rules, Mr Morrison tried to quell a damaging dispute in Parliament by insisting he would not force employers to demand vaccinations for their workers and customers. The claim puts the Prime Minister at odds once more with state health orders that ask retailers, event organisers and others to ask for proof of vaccination, as the issue sparks public protests and fury from conservatives including Pauline Hanson’s One Nation. The government was thrown on the defensive on Monday when Senator Hanson sought to pass a private bill in the upper house to overturn the health orders, gaining support from five Liberals and Nationals who crossed the floor to defy Mr Morrison. The One Nation bill was backed by Liberal Senators Concetta Fierravanti-Wells, Gerard Rennick and Alex Antic as well as Nationals Senators Matt Canavan and Sam McMahon in a sign of the deep grievances over state rules that impose greater restrictions on those who are not vaccinated. Senator Hanson and her colleague Malcolm Roberts were participating online and could not vote, while Liberal Senator Eric Abetz abstained rather than siding with the government in the majority vote to block the bill. Tasmanian independent Jacqui Lambie angrily denounced the One Nation move and argued for controls that allowed more liberty for those who signed up for the vaccines, saying people had to think of others.
Deputy Prime Minister Barnaby Joyce is poised to appoint a former regional mayor from his NSW electorate of New England as chairman of the federal government’s independent infrastructure advisory panel on a six-figure salary. The opposition used Federal Parliament on Tuesday to attack Mr Joyce’s links to Col Murray,who retired after 11 years as mayor and four terms on the Tamworth Regional Council earlier this month, accusing Mr Joyce of showing “contempt for impartial infrastructure advice”. He is expected to be announced as the chairman of Infrastructure Australia, an independent statutory body that provides research and advice to all levels of government and industry on projects and reforms relating to investment in infrastructure, on Thursday. The body’s latest list of priority projects, announced earlier this year, had a combined value of at least $59 billion. Mr Murray, who told magazine The Monthly last year that he was “a fairly solid Barnaby supporter”, has a history in the construction industry and has chaired several regional local government lobby groups during his career in local government. He is also on the board of the University of New England. Labor’s infrastructure spokeswoman Catherine King criticised Mr Murray’s appointment during Question Time, contrasting him with the first chair of the body, former British Airways CEO and News Corp director Sir Rod Eddington. She said her side of politics had established Infrastructure Australia to provide impartial advice to governments and industry across the country.
The Federal Government has ignored the pleas of technology industry bodies and passed a bill that will enable it to take control of private infrastructure as a last resort in the event of a cyber attack.The Security Legislation Amendment (Critical Infrastructure) Bill 2020 was passed by the Senate on Monday night, with both the major parties backing it.The Greens dissented, terming the bill a “greedy little power grab” which did not have the backing of key stakeholders.
Missing Sydney businesswoman Melissa Caddick’s assets could soon be sold to repay more than $23 million she stole from her friends and clients. Ms Caddick is suspected of stealing millions before she vanished from her Dover Heights home just over a year ago. In a major win for her victims, some of Ms Caddick’s assets will be sold, but not all of the money she took will be returned. The $6 million Dover Heights mansion is among Ms Caddick’s assets to be carved up after the Federal Court officially appointed receivers and liquidators. Anthony Koletti, Ms Caddick’s husband, now stands to lose his home. The property sale will only be a fraction of what Ms Caddick owed to 72 clients who she stole more than $23 million from over eight years. Ms Caddick spent the money on designer cars, clothing, jewellery, and overseas trips instead of investing it. She vanished a day after ASIC raids last November. Some of her remains later washed up on a South Coast beach.
Australia’s “red hot” property market has started to cool, with prices to peak next year and sink 10% in 2023 as higher borrowing costs and “natural fatigue” set in, the nation’s largest mortgage lender predicts. Home prices in Sydney, which will post among the fastest gains in 2021 with a forecast 27% jump, will moderate to a 6% advance in 2022, according to Gareth Aird, head of Australian economics for the Commonwealth Bank. By 2023, though, the harbour city’s prices will fall 12%, the equal most of any capital city, matching Hobart’s predicted retreat. Melbourne, which was harder hit by pandemic-related lockdowns, will post a 17% rise in property prices in 2021, among the smallest gains. Price pressures will persist a bit longer, with the CBA tipping an 8% advance in prices next year before a 10% decline in 2023. Aird forecast the Reserve Bank of Australia would begin a “gradual and shallow” cycle from next year, taking the official cash rate from its current record low of 0.1% to 1.25% by the third quarter of 2023.
Australia will face a rental affordability crisis as domestic and international borders reopen, with Brisbane hardest hit as insufficient new supply pushes rents up more than 5% a year over the next five years. The opening up of domestic borders to interstate travel, national borders to international travel and the likely return of immigrants and foreign students will put pressure on all of Australia’s cities, commercial real estate agency JLL’s Q3 2021 Apartment Market Overview shows. But the 7% decline in the national inner-city apartment pipeline in the September quarter from just three months earlier – the latest piece in a picture of decline that has been under way for four years – makes clear the significance of the worsening supply situation as borders reopen. The latest quarterly report shows that the apartment pipeline to 2025 – of apartments complete so far this year, under construction, in marketing, with plans approved or submitted for approval – fell to 62,655 across the mainland capital cities from 67,154 in the June quarter.
The Commonwealth Bank fired a newly recruited employee in part because he discussed his pay with colleagues in breach of the company’s controversial salary secrecy clauses, contradicting assurances from chief Matt Comyn that the prohibition is not enforced. The Finance Sector Union has launched legal action against the bank over the sacking of the home loan consultant in one of the first challenges relating to pay secrecy The union argues the sacking offended workers’ rights to make a workplace complaint or inquiry, in this case the lender’s concern that the bank was underpaying him or his colleagues. It comes as Labor has promised to outlaw the clauses for all companies if it wins the federal election next year. FSU national secretary Julia Angrisano said CBA included the prohibition in every contract and members reported that managers are “regularly hosing down conversations and ‘reminding’ people that pay is confidential”.
One of Virgin Australia’s staff has resigned because of complaints about their behaviour. Virgin Australia’s chief of corporate affairs has quit less than a year into the role, amid an internal review of her workplace behaviour. CEO Jayne Hrdlicka announced the resignation of Moksha Watts to staff on Sunday in an internal memo, which was seen by The Australian. Ms Hrdlicka noted Ms Watts had taken the decision “in the midst of an ongoing internal review about her workplace behaviour”. Ms Watts was one of six appointments to Virgin’s “executive leadership team” soon after the sale of the airline to US private equity firm Bain Capital. She joined Virgin Australia after a seven-month stint with The Arnott’s Group, and previously spent four years with Qantas and Jetstar, where she got to know Ms Hrdlicka, a former Jetstar CEO. The University of Sydney arts and science graduate also worked as an adviser to former Labor prime minister Kevin Rudd in 2013, following stints with Anthony Albanese and Jenny Macklin. Ms Watts’ resignation from Virgin came after a significant turnover of staff in the corporate affairs department. Virgin Australia chief corporate affairs officer Moksha Watts has quit amid an “ongoing internal review about her workplace behaviour. The difficult working environment was flagged with human resources as far back as April, and employees have continuously requested mental health or stress leave to cope. Incidents described by these sources include meetings where it was alleged Ms Watts would openly and aggressively criticise and belittle staffers
In a year when the scandal-plagued casino industry damaged by three royal commissions into Crown Resorts has been forced to clean up its act, poker machine manufacturer Aristocrat Leisure took the task literally. As the pandemic shut casinos and dented Aristocrat’s turnover, the $30 billion ASX company filed a patent in the United States for self-disinfecting poker machines. Aristocrat Technologies said it could make poker machines or retro-fit them with ultra-violet (UV) light to rid “high-touch” surfaces and buttons of COVID-19 and other pathogens. The UV light, which the company insists can be deployed safely by “limiting exposure to UV radiation that might cause skin damage or retinal damage”, could be activated on demand, during idle times, or during off-hours for a more thorough disinfection with higher-intensity UV light.
.Woodside will press ahead with the biggest oil and gas development to be built in Australia in a decade, after sanctioning its $16.5 billion Scarborough project off Western Australia. In a move that has enraged green groups, Woodside announced it had approved the Scarborough development and the associated upgrade of its Pluto liquefied natural gas facility near Karratha, 1,600km north of Perth. A report by two groups – the Conservation Council of Western Australia and the Australia Institute – suggested the development could lead to lifetime emissions equivalent to that released by 15 coal-fired power plants. The investment decision is the first major fossil fuel project to be announced since the global climate talks in Glasgow, which urged nations to rapidly cut greenhouse gas emissions. A coalition of environmental organisations opposing Woodside Petroleum’s go-ahead for the $16.5 billion Scarborough LNG mega-deal in Western Australia have vowed to step up pressure on the oil and gas giant’s investors and financiers The decision comes despite a furious, last-ditch bid by environmentalists to stymie the project after the Conservation Council of WA last week launched legal action, claiming the project required assessment under federal law. That decision also coincided with news that the boards of Woodside and BHP had agreed to merge their petroleum businesses in a $40 billion deal, which will create one of the world’s biggest fossil fuel players. With a price tag of $16.5 billion, Scarborough is set to be the biggest oil and gas development undertaken in Australia since the end of a $275 billion investment splurge 10 years ago. The project will involve the construction of a 430-kilometre pipeline, linking the Scarborough gas field to the mainland, as well as a second production train at the Pluto LNG processing plant. At the peak of construction, as many as 3,200 jobs are expected to be created, with first production slated for 2026.
Biotech giant CSL is on the hunt for startups to move into its new Melbourne headquarters as it launches an incubator program designed to commercialise Australian ideas and keep research onshore. The $144.5 billion coronavirus vaccine maker has inked a deal with the University of Melbourne and Walter and Eliza Hall Institute to launch a $95 million incubator project, which will also be supported by the Victorian government’s Breakthrough Victoria Fund. The incubator, which is set to launch in 2023, will have space for up to 40 Australian companies that are looking to move their early stage research towards commercialisation. The companies will be based at CSL’s new global headquarters on Melbourne’s Elizabeth Street and have access to office space, equipment and lab facilities. The collaboration comes as the country focuses on manufacturing its own medical products including vaccines following the COVID-19 pandemic. CSL chief executive Paul Perreault said the program was also designed to help researchers learn how to bring new products to market
Corporate regulator Joe Longo has urged consumers to show a high degree of caution towards the cryptocurrency craze, urging people to be careful about putting their savings into an unregulated asset class that many do not fully understand and admitting the regulator is virtually powerless to intervene and consumers are “on their own”. Mr Longo, chair of the Australian Securities and Investments Commission (ASIC), on Monday said the “phenomenal” cryptocurrency boom had become too big to ignore, but consumers should be aware of the risks before plunging into cryptos. Following last week’s Reserve Bank warning about the risk of crypto asset prices plunging, Mr Longo on Monday said it was not ASIC’s job to stop people investing in cryptocurrencies, but they should be aware of the risk. He said there had been “extraordinary” demand for crypto assets from investors and consumers, fuelled by ultra-low interest rates and the pandemic, and warned that consumers were “on their own,” given the lack of any regulatory protections.
And that’s it for this week. And next week, I’ll be talking to Frontier Pet’s Founder, Diana Scott, to discuss how Frontier Pets is helping put an end to the 500 million Australian animals stuck in Factory Farming, and how they’ve created an additional source of income for Australian farmers. And I’ll be talking to economist Saul Eslake about how Australia will manage the recovery
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Wishing you all a safe and healthy week. And looking forward to bringing you Talking Business next week