Newsletter

March Market Wrap, JobKeeper Cliff, Cyber-Attacks & April Fools!

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Happy April Fools’ Day

Hard to believe that in a blink of an eye Christmas quickly becomes Easter. But, before we settle into a welcome sunny long weekend, we first navigate April Fools’ Day.

The origin of April Fools’ Day is debated, but its history covers many decades of hoaxes. Celebrating just one outstanding contribution. Famously on the evening of April 1, 1957, thousands of British families tuned in to watch Panorama, still one of the U.K.’s top current events broadcasts, to witness footage of a happy Swiss family harvesting their prized spaghetti trees. Unbeknownst to many viewers, the four-minute “news” segment, which showed strands of cooked pasta dangling from the trees in a family vineyard, was an elaborate hoax. Hundreds of angry letters and bitter newspaper headlines followed, regardless the show’s staff were very pleased with successfully April Fools’ Day pranking the nation. Any of you with young children or grandchildren will be sure to enjoy the continuation of this happy tradition. Enjoy!

 

End March Market Update

Australian and US markets finished the month up by 1.8% and 4.4% respectively.  March also tied off an eventful yet positive quarter for both markets which saw the All Ordinaries rise 3.6% and the S&P 500 rise 6.2%. March saw bond yields continue their steady rise which caused a mild sell-off in some of the most popular tech names during the quarter and a rotation into value stocks. The financials, energy and consumer discretionary sectors have been the standouts so far this year.

The S&P 500 hit a record high during intraday trading on the 31st of March, 6 points shy of the 4000-point milestone. Markets were waiting in anticipation for details of President Biden’s US$2 trillion infrastructure plan which will set the tone for markets this coming month. The massive spending plan intends to create millions of jobs, combat climate change and also reverse the Trump administrations corporate tax cuts.

 

The Coming JobKeeper Cliff?

Optimism has been high that the aggressive stimulus packages, and corresponding ‘lower-for-longer’ monetary policies, rolled out in the past 12 months have staved off the prospect of an especially deep and prolonged pandemic induced recession.

That optimism has been tempered by the knowledge that the most substantial stimulus package, JobKeeper, needed to eventually come to an end. JobKeeper was a very necessary and pointed response to the challenges posed by the pandemic to specific sectors, particularly hospitality and tourism.

Nationally, 1.54 million individuals were being supported by the program by December 2020. This compared with 3.6 million in its first phase, which ran from April to September.

In Victoria, where the lockdowns and subsequent economic fallout were most severe, about 1.1 million workers received JobKeeper in its first phase, falling to 626,000 in the second phase, which ran from October to December.

The challenge for such a wide-reaching and generous policy was always going to be weaning the businesses and economy off the medication. Only then would we have a true steer on just how terminal the damage has been to certain sectors. Fears also persisted as to what this means in terms of insolvencies and job losses. Some commentators are predicting a smooth transition off the medication, but only time will tell the full picture.

 

Escalating Cyber-Attacks

On Monday, Mike Sneesby’s first day as Nine Entertainment’s CEO was spent managing the biggest cyber-attack to hit an Australian media company, affecting TV programming and newspaper print production countrywide.

The CEO told staff Monday that the cyber-attack was “significant in scale with high potential to disrupt our business” and “a number of our core systems remain offline”. The source of the suspected ransomware attack has not been identified and reports suggest the disruption could extend into the Easter long weekend.

Nine Entertainment also requested the assistance of the Australian Signals Directorate (ASD). ASD is part of the Australian Intelligence Community and is the Australian government agency responsible for foreign signals intelligence, cyber warfare, and information security.

As Nine worked to resolve the issue, Australian Parliament was also investigating a potential cyber-attack in Canberra on Sunday evening, which affected government-issued smartphones and tablets.

Assistant Minister for Defence Andrew Hastie said on Sunday night he was “not surprised” about the attack. He said “This is a timely reminder that Australians cannot be complacent about their cyber security. Cyber security is a team effort and a shared responsibility,”. “It is vital that Australian businesses and organisations are alert to threats and take the necessary steps to ensure our digital sovereignty.”

At Stanford Brown we take the threat of Cyber security very seriously, with significant time and resources dedicated to protecting our infrastructure and data.   The threat will only increase going forward and maintaining vigilance is key.

 

The Stanford Brown Portal

We are very excited to promote our tailored Stanford Brown Personal Wealth App.

The portal allows you to link up your finances from bank accounts and property to superannuation and more. It will keep you up to date with live data and help you manage, track, and store your entire financial world.

It also has a built-in digital signing tool for fast and easy sign offs, allowing you to use the time you would have spent printing and signing off a form to sit back and feel good that you’re taking small steps to help limit unnecessary paper waste.

We are rolling the portal out to clients in stages over the coming months. Should you want to understand more please speak with your adviser today.

 

The Bottleneck to World Trade

The massive cargo ship blocking the Suez Canal was refloated on Monday after six days of rigorous efforts by salvage authorities. However, the blocked Suez Canal has severely hurt global trade and powerful economies around the world.

While normal traffic has now resumed, the blockage resulted in enormous economic loss — hundreds of ships ferrying cargo worth billions were either stuck in traffic or forced to reroute.

Roughly 12% of global trade passes through The Suez Canal and this disruption was holding up trade valued at over $9 billion per day, according to data from Lloyd’s list.

Since the blockage lasted for six days, the total trade loss has been estimated at roughly $54 billion. However, this figure is based on just the cargo shipments that were halted or delayed due to the blockage.

The actual economic damage suffered by countries around the world could be much higher as prices of important commodities like crude oil and gas rose amid fear that the blockage may continue for weeks.

In an era of rapidly advancing technology, it is remarkable just how much world trade still relies on this narrow stretch of water and the collateral damage caused by any disruption to this essential gateway is unlikely to be mitigated anytime soon.

 

The Global Vaccine Rollout

We wrote last month of the unprecedented public health operation to vaccinate the globes 7.8 billion people.

Since then, there have been many twists in this tale. Prime Minister Scott Morrison had set a target for Australia of administering 4,000,000 does by April 1. A target they subsequently and somewhat quietly abandoned several weeks ago, as problems set in related to receiving the contracted doses from the EU.

In a move seemingly targeted more at the UK than Australia, the EU sought to ensure there are more COVID-19 shots to boost their own flagging vaccine campaign as new infections surge. Australia has responded by ramping up production of the AstraZeneca vaccine onshore by CSL.

As of March 31, Australia has vaccinated 670,000 people and the sluggish COVID-19 vaccine rollout could miss another key federal government milestone, with the promise of 6 million doses distributed to the states by mid-May now highly questionable.

For those of you interested in keeping track of the vaccine roll-out, the Financial Times have a rolling tracker. As of 1 April, they have recorded over 578 million vaccines given globally with Israel remaining the standout performer for large scale rollout and the UK also making sterling progress. Needless to say, you unfortunately still need to scroll quite far to find Australia.