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A 787-sized loophole

Good morning! Did you know that if you're in Australia and want to host a wedding but family and friends overseas can't attend due to Australia's closed borders, there's a 787-sized loophole you can easily jump through? Well there is – hear us out.

Following the revelation that the man who (through no fault of his own) triggered the recent WA hotel quarantine breach had returned from a short trip to India for a wedding, federal Immigration Minister Alex Hawke confirmed on Wednesday that weddings are still considered a valid "urgent reason" to leave the country (just no longer to India). So there you go.

Did you also know that India's government has blamed so-called super-spreader events such as weddings for its recent resurgence in COVID-19 cases? Or that there are still at least 40,000 Australians and countless non-citizen family members stranded overseas vying for scarce hotel quarantine spots in Australia?

But don't stress about that – the government certainly doesn't.

Market Wrap

Lower for longer

Daily % change

AUD/USD

77.9

0.3%

10Y Bond

1.66

-3.8%

ASX200

7,065

0.4%

Brent (bbl)

67.0

0.7%

Gold (oz)

1,782

0.3%

Iron ore (t)

187.3

-1.6%

Bitcoin

54,418

-1.2%

Note: Brent oil, gold bullion and iron ore prices are the second futures contract.

The S&P500 (-0.085%) was slightly weaker overnight after the US Federal Reserve left everything unchanged, stating that it was still waiting for "substantial further progress" on jobs and inflation. However, Fed Chair Powell spooked markets when he said: "Some of the asset prices are high. You are seeing things in the capital markets that are a bit frothy. That's a fact." 😨

Lower for longer: Australia's consumer price index (inflation) numbers for the March quarter came in at 0.6%, well below expectations, with prices rising an average of 1.1% over the past year. The Reserve Bank of Australia recently said it's waiting "until actual inflation is sustainably within the 2 to 3 per cent target range" before it considers touching the cash rate. The ASX200 jumped nearly half a percent as soon as the news broke, with the Aussie dollar falling by about the same amount.

The lucky country: Iron ore accounted for 39% of Australia's total March exports, with a record $A14 billion exported.

More big tech earnings: Apple and Facebook reported their March quarter earnings last night, with both showing significantly better numbers than Wall Street expected. Apple was up over 4% in after hours trading with Facebook up more than 6%.


Econ Wrap

A demographic time bomb?

Australia's closed borders have created a few problems.
Australia's closed borders have created a few problems. Matt Golding/SMH

Writing in Reuters yesterday, Jeffrey Goldfarb warned about the possibility of "economic sluggishness" caused by the first population decline in more than a century (since the depths of World War One).

More people, more growth: As Goldfarb notes, Australia has grown dependent on immigration. Indeed, it owes its world record unbeaten growth streak to just that – "Since 1980, GDP has grown by about 3.1% a year on average while the expansion averaged less than 2% on a per-capita basis."

Education (international students), farming (backpackers seeking a visa extension), property (more people means more houses) and retail sales – more than a third of Australia's ever-reliable 3% annual retail sales growth has come directly from immigration – have all built entire industries around a steady increase in the population.

A new world: The global pandemic means Australia, at least while its borders remain shut, is no longer able to grow through immigration. That creates a problem, one which if not adequately addressed "risks inviting stagnation". Goldfarb is right – a growing population and the 'demographic dividend' it delivers buys a country a lot of policy wriggle room. Without it, tough decisions actually have to be made or standards of living will start to decline.


The Wrap Up

  • Western Australia will stop using three of its nine quarantine hotels – the Four Points, Mercure and Novotel Langley – after the Department of Health was advised they were a high risk for spread of the virus because of poor ventilation.
  • Bloomberg ran a good article on soaring steel prices on the back of the world's economic rebound and, of course, massive stimulus.
  • The federal government committed $A747 million dollars to upgrade military training bases in the NT to prepare Australia for an "uncertain" world.
  • Sydney's median house price has reportedly jumped to a new record of more than $A1.3 million, after "the fastest acceleration of house prices over a single quarter", since Domain's records began in 1993.
  • The US Federal Communications Commission (FCC) granted Elon Musk's Starlink the right to orbit 2,814 satellites at 550km rather than 1150km, which is expected to reduce latency from around 20-40ms into the teens or even single digits.
  • The demand for cruises has never been higher, according to the UK's Fred Olsen cruise lines... 😲
  • The UK became the first country to approve 'self-driving' cars on its motorways (under 60km/h).

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