Big Tech Down Under
By Justin Pyvis – Delivered on 03 Sep 2021

Good morning! Victoria is getting serious about reaching the 70% fully vaccinated threshold set out by the Doherty Institute, yesterday reducing the time between AstraZeneca doses from 12 weeks to 6 weeks, effective immediately.

But the problem is the change actually goes against the evidence. The Doherty Institute's modelling would have been based on a 12-week interval, which provides 81% protection. Dropping it to 6 weeks reduces that to 55-60% (a single dose offers 76% protection from day 22 to day 90, i.e. 12 weeks).

In other words, Victoria's government is asking people to sacrifice their long-term protection so that it can relax restrictions sooner than otherwise. This is what you get when you come up with a "plan" but leave the rules ill-defined. There may be an argument for reopening before 70%, but halving the time between doses to hit a supposedly "safe" target that was modelled using a higher vaccine efficacy is just being deceptive.

Meanwhile, Queensland plans to go rogue but in the other direction – Premier Annastacia Palaszczuk said she will keep her state's borders closed "until I can get every child vaccinated", including those aged under 12 who are currently not approved for vaccination in any country. 🤔

It's sure looking like an extra spicy national cabinet meeting today!

Markets

Daily % change

 

AUD/USD

74.0

+0.4%

 

 

10Y Bond

1.20

-0.8%

 

 

ASX200

7,486

-0.5%

 

 

Brent (bbl)

72.8

-0.3%

 

 

Gold (oz)

1,812

-0.3%

 

 

Iron ore (t)

138.7

-1.4%

 

 

Bitcoin

49,513

+2.5%

 

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

The US S&P500 gained 0.28% overnight ahead of a big nonfarm payrolls report later tonight. Leading indicators have been mixed, with an underwhelming ADP payrolls report earlier in the week somewhat countered by declining weekly jobless claims, which beat analysts' expectations to fall to their lowest level since March 2020 last week.

Locally, the ASX200 fell 0.55% with large losses for the materials sector (-2.5%). Mining giant BHP (-6.9%) weighed heavily on the index on softer iron ore prices and because it was trading ex-dividend, wiping out all of its 2021 gains.

Economy

Transitory: Australia's trade surplus hit a record high $A12.1 billion in July on the back of a 7% increase in exports of non-rural goods, i.e. iron ore and coal. It's a record that's unlikely to be broken anytime soon, as iron ore prices have fallen heavily in August and into September.

Fuelling the fire: No wonder house prices are 🔥. New lending finance data from the ABS showed that Australia's average loan size for owner-occupier dwellings has been increasing since February 2021, reaching a new high in July. Most of the activity was in locked-down NSW, which recorded a 6.6% increase in owner-occupier loan commitments – the strongest rise in the country.

Inflation watch: Korea's consumer prices increased at their fastest pace for 9 years in August, rising 2.6% from a year earlier. Analysts had expected a 2.3% rise, with the increase driven by soaring fresh food, oil and housing costs.

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Feature
Big Tech Down Under

The title of this Wrap is deliberately tongue-in-cheek. There is no Big Tech in Australia – even home-grown Atlassian trades on the Nasdaq, rather than the ASX. Writing in the AFR, Richard Henderson made the observation that Australia's biggest companies have been uncomfortably static over the past 20 years:

"In 2021 the largest US public companies are mainly technology businesses like Apple, Google's parent company Alphabet, and Amazon. Microsoft, the only US company present in both periods, ranks second. Two decades ago, it placed first.

In Australia, tech lies absent from either snapshot. Instead, the big four banks and the two global iron ore miners dominate the current list, just as they did 21 years ago."

Breaking it down: Australia, economically, is known for two things – expensive houses financed by big mortgages (banking) and digging holes (mining). There hasn't been a need to encourage and develop Big Tech locally when it has been far more profitable to instead focus scarce resources (Australia's population is less than 10% that of the US) on catering to China.

That's worked out reasonably well, too – in 2000, Australia's average annual wage was 81.6% of that in the United States. In 2019 (i.e. pre-pandemic) it was 81.4%, with the difference essentially a rounding error. Australia also enjoyed a surge in relative wages for the decade between 2004 and 2014, as China's economy really took off and the US lagged.

Why this matters: According to Henderson, Australia's success has been due to "the blind fortune of the country's resources bounty, coupled with successive property booms and the economic uplift from stable migration". But there won't be another China every decade, which means eventually Australia will have "to face its future".

Looking foward: Facing its future will require a political change, from one reliant on seemingly limitless revenue from mining royalties, company tax and duties on property transactions, to one that lays "adequate groundwork to help grow global leaders".

While there's still time, we've yet to see any evidence – Australia's Parliament seems more interested in rushing through surveillance bills forcing Australian companies to undermine their users' privacy and security than 'laying the groundwork' for those companies to exist in the first place.

Houses and holes it is!

The Wrap Up
  • 🦠 Podcaster Joe Rogan has COVID-19 and is treating it exactly as you'd expect, with "all kinds of meds: monoclonal antibodies, ivermectin ... everything. And I also got an NAD drip and a vitamin drip, and I did that three days in a row."
  • 📱 Telstra rolled out incentives for fully vaccinated customers, offering 2,500 bonus Telstra Plus points and a 100 million point major prize draw.
  • 💸 Twitter started rolling out "Super Follows" in the US, a "new feature that lets users charge for subscriber-only content".
  • ⚽ Cristiano Ronaldo broke the men's soccer international goal scoring record after notching up his 111th goal against Ireland.
  • 🔥 Former West Coast Eagle star Daniel Kerr pleaded guilty to setting fire to his parents' home. He is facing 10 other charges to which he will plead not guilty.
  • ✈️ The international travel ban that prevents Australians from leaving the country was extended until 17 December "in line with medical advice".
  • 😷 Seems legit. "A chiropractor in Venice, Florida, provided more than 500 medical exemption forms for children who did not want to wear a mask."
  • 🍁 Trouble for Trudeau – a survey this week indicated a drop in support "among voters of every age and gender", with his Liberal party's lead in the polls vanishing.
  • 💉 Western Australia will require all health care workers to be fully vaccinated against COVID-19 by the end of the year.
  • 💲 The Bank for International Settlements, Monetary Authority of Singapore, Reserve Bank of Australia, Bank Negara Malaysia and South African Reserve Bank announced that they are jointly working on building and testing central bank digital currencies for international transactions.
  • 💩 A worthless dogecoin meme NFT that sold for $US4 million three months ago was 'fractionalised' into nearly 17 billion tokens, with 20% of them sold for over 11,000 ether (~$US42 million).
  • 🎶 They must have run out of cash. ABBA are back together after nearly four decades, announcing "a musical comeback with a new album and a London show".
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