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A tale of complacency

Good morning! There were 6 new cases of rare blood clots linked to the AstraZeneca vaccine last week, taking the Australian total to 24 out of the 2.1 million doses of AstraZeneca administered (0.001%). But for some reason, instead of talking up the incredibly low risk and significant benefits of AstraZeneca, Health Minister Greg Hunt elected to tell those who have doubts that "as supply increases later on in the year, there will be enough mRNA vaccines for every Australian".

In other words, feel free to wait for Pfizer or Moderna; the Hermit Kingdom is in no hurry! 🙄

Market Wrap

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

The US S&P500 (+1.06%) snapped a 3-day losing streak after initial jobless claims fell to a better than expected 444,000 in the week ended 15 May, down from 478,000 the week prior. The tech-heavy Nasdaq added 1.77%, boosted by a slight dip in US 10-year bond yields.

Fewer employed: Australia's unemployment rate fell to 5.5% in April, with the ABS noting that the end of JobKeeper had no "discernible impact on employment between March and April". However, the economy actually shed jobs in the month (-31,000 or -0.2%), with the falling unemployment rate due to fewer people looking for work (the participation rate decreased by 0.3 percentage points). Not a great start for Frydenberg's 250k additional jobs Budget recovery plan.

Qantas job cuts: In a market update yesterday, Qantas said it was on track for a loss of more than $2 billion this financial year, would offer further redundancies for international cabin crew and apply a two-year wage freeze. Clearly frustrated by Australia's poor vaccine rollout, CEO Alan Joyce said: "No one wants to lose the tremendous success we've had at managing COVID but rolling out the vaccine totally changes the equation. The risk then flips to Australia being left behind when countries like the US and UK are getting back to normal."

Corona Wrap

A tale of complacency

Case numbers in Taiwan in particular have shot up recently.
Case numbers in Taiwan in particular have shot up recently. OurWorldInData

Yesterday the BBC published a summary of what went wrong in Taiwan and Singapore, two countries that went from being "hailed as virus success stories" to stuck in lockdown. Taiwan is currently recording around 300 new cases per day, with around 40 per day in Singapore.

Border controls: Like Australia, Taiwan closed its borders early in 2020 and eventually eradicated domestic transmission of COVID-19. However, "the population started to become complacent - as did its government". Testing rates fell to just 0.57 per 1,000 people by mid-Feb 2021 (for comparison, the UK was at 8.68 during the same period), stemming "from a belief that the virus could not break through Taiwan's strong borders".

However, the government then started relaxing border restrictions – before the population had been vaccinated (even today, Taiwan has administered vaccine doses equivalent to just 1% of the population) – allowing the virus to sneak in through unvaccinated airline pilots, who only had to quarantine for three days. It promptly made its way to Taiwan's "tea houses" – adult entertainment venues – with people unwilling to declare they had visited such venues, hampering contact tracing.

Cross contamination: In Singapore, it was the border that failed – "a number of infected airport staff had been working in a zone that received travellers from high risk countries... then went on to have their meals in the airport's food courts - which are open to members of the public". Those airport staff then contracted the B1617 variant, the more infectious 'double mutant' that originated in India, and spread it to the public.

As with Taiwan, complacency took hold: the loophole allowing staff to mingle with the public had been disclosed up to a month prior to the eventual outbreak but nothing was ever done about it.

Why this matters: Australia is only one quarantine bungle away from having its own domestic outbreak, which is why it's so important for the vaccination rate to improve. Singapore expects to have its population fully vaccinated by the end of 2021, which at one stage was also Australia's target. However, Singapore has already administered around 58 vaccine doses per 100 people, which compares favourably to Australia's 12.5 doses per 100 people.

Given the local distrust of AstraZeneca and the government's assurances that there will be "enough mRNA vaccines for every Australian", Australia will probably be at least 2-3 months behind Singapore in terms of vaccinating its population and reopening its borders. That means our borders need to hold for at least another 9 months... 🙏

The Wrap Up

  • Queensland is no longer administering AstraZeneca, with the vaccine now only available in the state's GP clinics.
  • Both Victoria and New Zealand released their respective budgets yesterday. The story for both is essentially is the same as it was for the federal Budget last week: deeper in debt. Interestingly, New Zealand's government may have wanted to spend even more but was constrained "because the 'big' departments are already flat out on a number of major reforms".
  • Australia submitted a bid to host the Rugby World Cup 2027. World Rugby will announce the host in May 2022. The only other bidder so far is Russia, which is unlikely to win without some epic bribes given that the 2023 World Cup is already being held in Europe (France).
  • The Australian government has commenced talks with the International Air Transport Association (IATA) about a possible digital COVID-19 travel passport. The IATA – whose members include 290 of the world's airlines – already has an app, with Singapore recently signing up to be the first country to accept the pass.
  • Texas' government paid natural gas suppliers to go offline during the winter storm blackout in February, by activating "a program that pays large industrial power users to reduce their consumption during emergencies", without knowing "who was being paid to participate in this program and what type of facilities were getting shut off". 😣