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A lasting shift

Good morning! Lots happening on the pandemic front today, starting with the news that the lockdowns in South Australia and Victoria are both officially over! 🙌🎉 However, heightened restrictions will remain in both states for at least a couple of weeks.

Unfortunately that's where the good news ends, with New South Wales recording its highest-ever daily number of cases (172), with at least 79 of those active in the community for all or part of their infectious period. Then it got even worse – yesterday evening government insiders confirmed that the state's lockdown will be extended for another 4 weeks, with Premier Gladys Berejiklian to announce the details at 11am (we're not sure why her ~10 full-time media staffers couldn't accomplish it last night... it's not like they could go anywhere).

There was also another blow to the vaccine rollout, with Novavax revealing its candidate will not be ready until at least 2022. That means all three of the vaccines initially backed by the government before it rushed to secure a larger order from Pfizer have either failed to arrive (University of Queensland, Novavax) or have seen reduced effectiveness due to the government's own inconsistent health advice (AstraZeneca).

Chart showing Australia's vaccine agreements as at 1 December 2020.
Hindsight is 20/20 but as at 1 December 2020, Australia effectively only had orders for AstraZeneca and a small amount of Pfizer. FT

Finally, a fully vaccinated returned traveller tested positive for COVID-19 on the Gold Coast after contracting the virus while in hotel quarantine, and he may have been infectious in the community for up to 12 days. He's a low risk but the news will likely quash any lingering hopes that vaccinated Australians will be permitted domestic quarantine-free travel before all of Australia has had a chance to get a jab...

Markets

Daily % change

 

AUD/USD

73.6

-0.3%

 

 

10Y Bond

1.18

-3.3%

 

 

ASX200

7,431

+0.5%

 

 

Brent (bbl)

74.7

-0.1%

 

 

Gold (oz)

1,799

+0.1%

 

 

Iron ore (t)

196.4

-1.3%

 

 

Bitcoin

38,008

+0.2%

 

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

US markets were weaker overnight, with the S&P500 falling 0.47% despite positive earnings from Tesla after the close on Monday, reporting over $US1 billion in net income for the first time. However, $US354 million of that was from selling government environmental credits and its valuation remains lofty at 115 times the next 12 months' earnings. Locally, the ASX200 finished up a cool 0.5% to set another all-time record high, crossing the 7,400 mark for the first time.

Korean recovery: Korea's June quarter GDP grew 5.9% from a year ago, the fastest annual pace in a decade due to a pick up in consumption. Note that the recent wave of COVID-19 cases – and subsequent restrictions – did not occur until July, so any weakness resulting from that won't appear until data for the September quarter are released.

China slowing: Profits at large industrial firms grew 20% in June relative to the same month last year, the fourth straight monthly decline in growth as the low-base effect seen earlier in the year gradually fades. There were rumours yesterday that China's government is considering levies to slow exports of steel and reduce domestic prices, suggesting it may be worried about rising inflation and tight margins in certain sectors.

No inflation here: National home prices in the US rose 16.6% in May from the same month in 2020, sending the the Case-Shiller index to an all-time high with analysts "running out of superlatives" to describe what they're seeing. Totally healthy and we're sure it will end well... 😬


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Feature

A lasting shift

The pandemic caused plenty of shifts, such as an increased reliance on work from home (for those that could), zoom meetings and home delivery. But will any of it last once economies reopen? Goldman Sachs had a look at the data in the US, finding that over 7% of new jobs listed in June were offering remote working options, the highest to date and well above the pre-pandemic norm of roughly 1%.

Why this matters: If on average ~7% of people never return to the office, that's 7% fewer coffees purchased in the city, 7% less office space required, 7% more seats available on public transport, 7% fewer suits dry-cleaned... you get the idea. Global governments have provided unprecedented support to workers and businesses that have had their incomes affected by COVID-19 restrictions, but if some of that looks to be permanent then governments will need to stop preventing capital and labour from being reallocated to where it's most needed.

Tokyo 2020 🗼

Australia secured its third gold medal in the pool, with Kaylee McKeown taking home the women's 100-meter backstroke and celebrating by dropping the F-bomb 😁. Unfortunately Jessica Fox failed to claim gold in the women's K-1 kayaking, forced to settle for bronze after making a couple of costly errors in the final.

Elsewhere, multiple gold medal winning US gymnast Simone Biles pulled out of the tournament mid-competition to "to focus on mental health", and there was another huge upset in the women's singles tennis, with home-town hopeful Naomi Osaka knocked out in the third round by world #42 Markéta Vondroušová.

Medal tally

🥇

🥈

🥉

1 🇯🇵 Japan

10

3

5

2 🇺🇸 United States

9

8

8

3 🇨🇳 China

9

5

7

4 🇷🇺 ROC

7

7

4

 

 

 

7 🇦🇺 Australia

3

1

5

The Wrap Up

  • ❗️ In response to a media question asking whether an 80% adult vaccination rate will be the threshold required to reopen, Victoria's chief health officer Brett Sutton said "It certainly looks that way."
  • 🥝 The Wallabies were granted an exemption to travel to New Zealand for the first Bledisloe Cup match on 7 August. They will not have to quarantine.
  • ❤️ A new study found that light-to-moderate alcohol consumption can reduce the risk of heart attack, stroke and death among those with heart disease by up to 50%.
  • 💉 Over 50 US health care organisations "advocate that all health care and long-term care employers require their workers to receive the COVID-19 vaccine".
  • 🥴 California and New York City now require all state and health care workers to get vaccinated or submit to weekly COVID-19 tests. California's Governor Gavin Newsom said being unvaccinated was now equivalent to "a choice to go out and drink and drive and put everybody else's lives at risk".
  • 🦗 Australia claimed victory in the third and final ODI against the West Indies, chasing down a low score of 152 with six wickets to spare.
  • 🐷 An oligopolist cries monopoly – CBA chief executive Matt Comyn told a parliamentary inquiry: "They [Apple] make great products, they're an enormous company, they have tremendous market power, and they use it."
  • 🐕 A traffic light in Japan collapsed 27 years before expected, with police concluding that "dog urine was the likely culprit... [with] 40 times the concentration of urea at the bottom of the post compared with other traffic light poles".

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