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Here’s a twist: Please sir, we don’t want any more

Peter Switzer
17 December 2021

Is fear in here different to that in the US, home of the brave? Yesterday, US stocks were threatened by two headwinds: the Fed decision on interest rates and the Omicron threat.

But once the Fed had satisfied market influencers that it wasn’t getting more hawkish or tough, which would mean more rate rises and quicker than expected, Wall Street went up. And even tech stocks that are threatened by rising interest rates went for a big rise with the Nasdaq up 2.2%.

That market reaction says Omicron isn’t putting the fear of loss into US share players, but locally our market was down 0.43%, which probably says we’re afraid that this new virus variant could lead to restrictions, reclosed borders and all the ‘stuff’ we’ve endured since March 2020!

The Australian today looks at Omicron’s spread and tells us that it has business leaders pleading with the country’s governments not to impose restrictions, which would once again slowdown the inevitable economic boom that getting ‘back to normal’ will mean.

“Locking in a strong recovery will mean sticking to the plan to reopen, managing the supply constraints that are putting a handbrake on the recovery and tearing down Fortress Australia,” said Business Council of Australia chief executive Jennifer Westacott. “We have to continue reducing the economic friction that makes it hard to do new things.”

Ms Westacott says keeping the economy open will help wage rises and productivity and her views were reinforced by Andrew McKellar, boss of the Australian Chamber of Commerce and Industry, who’s happy with the momentum building for the economy with the current reopening phase. But McKellar argued that “businesses and the community cannot afford a return to the disparate stop-start measures of lockdowns and restrictions”.

Right now, the US is not locked into fears about the threat of Omicron, with even the bosses of Southwest Airlines and American Airlines questioning the need for masks at a US Senate hearing. This did lead to an outcry from flight attendants, and these guys have backed away from their controversial views.

At home, the big challenge for PM Scott Morrison is this: can he afford a big spike in hospitalisations and deaths from this variant of the Coronavirus? On the other hand, can he afford to support restrictions and lockdowns, which state premiers are quite happy to introduce for health and re-election reasons?

Right now the gamble is that Omicron is not a hospital threat and a killer, and should be treated like a very bad dose of the flu. Or is it too risky to treat lightly?

At the moment, Omicron is hitting the economy gradually with self-isolation rules leading to the cancellation of Christmas parties and other events, which will have an economic dampening effect and could become more impactful, given the spread of this variant.

We’re in the hands of the PM and the premiers. For those wanting us to take the gutsy path to keep trying to live normally in the face of Omicron, it’s not anything I’d be prepared to put my money on. Aussie politicians are very different to US ones and our business leaders don’t have the same clout in Canberra and the state capitals, like they do in Washington and in the states of the good old U-S-A!

Have a great Christmas break wherever you might be. And all the best for 2022. I still think it’s going to be a cracker!


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