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As many stadiums as you like

Good morning! ScoMo blasted NSW Premier Gladys Berejiklian yesterday after she revealed the state's plan to open a Sydney centre which could vaccinate 30,000 people a week by mid-May:

"If the supplies are not in place, then you can have as many stadiums as you like... You can have the fastest trucks in the universe, but the supply will determine the pace of the vaccine rollout and there are a lot of variables when it comes to supply."

Good point – shame about the vaccine supply chain. Who was responsible for that again? We have plenty more on the latest vaccine debacle in the Corona Wrap. 👇

Market Wrap

A new record every day?

Daily % change

AUD/USD

76.5

0.5%

10Y Bond

1.65

-2.1%

ASX200

6,999

1.0%

Brent (bbl)

63.4

0.4%

Gold (oz)

1,758

1.0%

Iron ore (t)

165.6

0.6%

Bitcoin

57,614

2.5%

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

This is getting tiresome but... the US S&P500 closed at yet another record high Thursday (+0.4%)! Locally, the ASX200 has increased every day this week and is precariously close to crossing the 7,000 mark, which it hasn't done since late February 2020 – i.e. pre-coronavirus.

Talking up the boom: In his annual letter to shareholders, JPMorgan's Jamie Dimon wrote: "I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom."


Econ Wrap

The last kick of the can

House prices have outpaced incomes.
House prices have outpaced incomes. Alex Joiner/Twitter

Australian houses are expensive. For example, the national price-to-income ratio was below 3.0 until the late 1980s, after which housing affordability deteriorated significantly – by 2019, the national median multiple had increased to nearly 6.0.

What changed: Supply was increasingly constrained (zoning, NIMBYism and so on) as demand was constantly stimulated ahead of income growth through population growth and declining mortgage rates (enabling people to take on more debt). The Commonwealth Bank's head of Australian economics, Gareth Aird, said:

"Every time the central bank cuts interest rates, a person walks into a bank and asks for a bigger loan to pay for a house. It happens again and again. You get to that point where you can't keep doing that when you have interest rates at zero. We've now had the last of the kicks of the can down the road."

What's to come: Governments – state and federal – have relied on rising house prices every time the economy stutters (construction activity) or state finances deteriorate (stamp duty receipts). But with the RBA's cash rate at just 0.1%, we may have reached the point where that strategy will no longer work and tough decisions – for the first time in 30 years – will have to be made when the next crisis rolls around.

Declining mortgage rates were one factor driving up prices.
Declining mortgage rates were one factor driving up prices. Alex Joiner/Twitter

Elsewhere: Rupert Murdoch's News Corp announced it's raising $US750 million "for general corporate purposes, which may include acquisitions". New Corp has recently acquired the Investor's Business Daily and the books & media segment of Houghton Mifflin Harcourt. Rupert's clearly struggling – thank heavens for the government's recent Google/Facebook link tax, which funnelled tens of millions of dollars to New Corp!


Corona Wrap

An explosion of scepticism

Novavax would be good, if we could get it delivered.
Novavax would be good, if we could get it delivered. Statista

Australia needs a Plan B as despite being safer than flying, paracetamol or the oral contraceptive pill, world opinion has turned against the AstraZeneca vaccine. According to Art Caplan, a bioethicist at New York University, "all that people heard was: AstraZeneca's vaccine can kill you because of blood clots".

AstraZeneca restricted: Last night the Australian Technical Advisory Group on Immunisation recommended that the Pfizer vaccine should be preferred for people under the age of 50, due to the rare risk of clots in younger people. It's safe to say that the plan to have everyone vaccinated by the end of October is officially dead and buried.

Thankfully, the 52-year old ScoMo has had his double-dose of Pfizer already and will no doubt take a few international trips this year. Phew!🤭

There is no backup plan: There isn't enough Pfizer to vaccinate the under-50s in a timely manner. Half of Australia's 20 million doses of Pfizer (10 million people) was only confirmed in February, so we'll be at the back of the queue.

That leaves the 50 million doses of Novavax (25 million people) we have on order. But there's a catch: the company only yesterday warned that it would not be able to ship any doses to Australia until the end of 2021 – once the Therapeutic Goods Administration gets around to approving it, that is.

Up shit creek: If AstraZeneca proves to be a flop due to blood clots or an explosion of scepticism in Australia, the government's poor vaccine procurement decisions (or rather, non-decisions) in 2020 mean there's unlikely to a better alternative than... just waiting it out. Sigh.

Elsewhere:

  • An unvaccinated border worker in Auckland tested positive for COVID-19 yesterday. There is currently no evidence of community transmission and it is not expected to jeopardise the travel bubble with Australia. Why an unvaccinated person was working a quarantine facility at this stage in the pandemic is another question entirely... 🤯
  • Hong Kong experts are pushing for the government to ditch AstraZeneca in favour of the single-dose Johnson & Johnson vaccine.

Random Wrap

A triple threat

Three tropical systems will travel WA's waters for the next week.
Three tropical systems will travel WA's waters for the next week. BOM
  • Cyclone Seroja should impact the west coast of WA later this weekend, joined by Cyclone Odette and another tropical low west of WA. Expect lots of rain!
  • Beijing is now home to more billionaires than any other city. It certainly helps win these prizes when you're the 9th most populated city in the world, nestled next to the who's-who of the Chinese Communist Party and the many favours it can bestow.
  • SpaceX's Starlink launched another 60 satellites on its way to becoming a network of 1,500 satellites capable of providing broadband to everyone on the planet (especially those in rural areas).

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