Care or cases
By Justin Pyvis – Delivered on 04 Nov 2021

Good morning! It was all about borders once again yesterday, as Queensland's government revealed that when it opens up only people from "deemed green countries and safe travel zones by the Commonwealth" will be allowed to skip hotel quarantine (currently only New Zealand).

Out west it was yet another day without a reopening plan for the holdout state, although WA Premier Mark McGowan did finally say when the long awaited roadmap would be released: this Friday!. He also confirmed that due to several days of cases below 500, NSW "will transition from 'extreme risk' to 'high risk' under WA's controlled border arrangements from 12.01am Saturday, 6 November".

That means travel is now an option for a small group of exempt individuals including senior government officials, military, politicians and "those Western Australians that may have travelled to NSW recently, have roots in WA and have a legitimate right to return". Of course, 14 days of self-quarantine is still mandatory on arrival along with the usual testing requirements.

Finally, Queensland Premier Annastacia Palaszczuk appears to be embracing the idea of incentives, announcing 7,250 vouchers worth $A10 a pop to be used at one of 29 clubs across Queensland, provided the recipient also rolls up their sleeve for a first dose of a COVID-19 vaccine. 🍻👏

Fully vaccinated population (aged 12+)


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Note: Brent oil, gold bullion and iron ore prices are the second futures contract. Bond yields are 10-year Treasuries.

Overnight, the US S&P500 added 0.65% after trading lower for most of the session, picking up following dovish comments from the Fed indicating that it still believes 30-year high inflation is "transitory" and that while it will start reducing the pace of its asset purchases in mid-November, it'll do so at a snail's pace.

Locally, the ASX200 finished 0.93% stronger with every sector recording gains except for tech, which dropped -0.2%. The volatile materials sector led the way as iron ore futures traded in Singapore rebounded a few percent during the day, helping the likes of FMG (+3.1%).


Lowest on record: Unemployment in New Zealand fell to just 3.4% in the September quarter, matching the previous record set in the fourth quarter of 2007. The country's labour cost index jumped 2.4%, which given the upwardly 'sticky' nature of wages means inflation – currently running at record levels of more than double wages growth, meaning salaried Kiwis are actually getting poorer – is unlikely to be transitory, adding further pressure on the Reserve Bank of New Zealand to further tighten interest rates when it meets later this month.

Stimmy fade: Building approvals in Australia fell 4.3% in September, a decline that according to the ABS "can be largely attributed to the end of federal and state stimulus measures".

Caixin services: China's services sector improved in October relative to the prior month, according to the Caixin Services PMI survey. However, "providers bore higher inflationary pressure in October as input costs rose at a faster pace than the previous month", due to "greater staff and raw materials costs".

Mainstreaming crypto: In the coming weeks the Commonwealth Bank of Australia will allow "customers the ability to buy, sell and hold crypto assets, directly through the CommBank app". The coins initially available include Bitcoin, Ethereum, Bitcoin Cash and Litecoin and six others.

China's slowing: Premier Li Keqiang said the Chinese economy is facing "downward pressure", and that it needs "cross-cyclical adjustments" to get back on surer footing.

Asset price inflation 101: The average price of a house in the UK is now above £250,000 for the first time ever, according to Nationwide's house price index. Prices increased 0.7% in October, or 9.9% compared to the same month in 2020 as relatively fixed supply continues to come up against a wave of demand triggered by government support measures and suppressed borrowing rates.

Inflation bites: Transitory tho, right? According to the latest Angus Reid survey, two in three Canadians reported feeling stressed about the increased cost of living resulting from an inflationary rise of food, fuel, and housing costs. That's more than double the next highest cause of financial stress, saving for retirement (30%).

Care or cases

Parts of Australia are transitioning to treating COVID-19 as endemic, i.e. 'living with it', and with any luck the entire country will be on that model by early 2022. However, despite attempting to do the same some countries have recently balked at rising case numbers, reimposing pandemic restrictions.

Stepping back: Yesterday the Netherlands' government brought in a mask wearing mandate and broadened use of the country's vaccine passport to include museums, gyms and outdoor terraces. The decision to tighten restrictions came despite the fact that hospitalisations remain well below where they were during the waves that occurred pre-mass vaccination (see chart above).

For context, the Dutch have a fully vaccinated rate of 82.1% (people aged 12+), putting it ahead of every Australian region excluding the ACT (92.7%) and NSW (86.9%).

Why this matters: At an 80% vaccination rate, Australia's 'National Plan' involves seeking "to minimise serious illness, hospitalisations and fatalities as a result of COVID-19 with baseline restrictions". What exactly "baseline restrictions" are remains undefined (we scoured the web for a definition with no luck), but lockdowns are only meant to be "highly targeted" and the fully vaccinated are to be exempt "from all domestic restrictions".

How Australia's politicians react to an inevitable increase in case numbers when they eventually reopen (even the vaccinated can spread COVID-19) will matter enormously in terms of providing the kind of certainty that businesses, especially those involved in the services sector, need to invest and operate.

Looking forward: Public health in Australia is a matter for the states/territories, so the health response will almost certainty differ by region. Yesterday NSW Premier Dominic Perrottet said as his state relaxes restrictions, "case numbers will increase, hospitalisations will increase – we need to learn to live alongside this pandemic".

So we know NSW's position, but there's a lot of uncertainty about how some of the other state Premiers would respond to even a handful of COVID-19 cases once transitioning into the reopening phase, even though their focus is supposed to switch from cases to care (hospitalisations).

The Wrap Up
    💉The CDC's advisory panel voted unanimously to authorise the Pfizer vaccine for children aged 5-11.
    🔨Yahoo became the latest US tech company to pull out of China entirely, citing an "increasingly challenging" operating environment.
    🧒Missing four year old Cleo Smith was found alive in a locked house in Carnarvon, with a 36-year old man being held in custody pending charges.
    🏡The lemon problem? Digital real estate company Zillow will abandon its business that instantly buys and then flips homes after losing $US422 million in just one quarter because "the unpredictability in forecasting home prices far exceeds what we anticipated".
    🐸France's ambassador to Australia said that ScoMo behaved "out of this world", questioning whether any other country could trust "the value of Australia's signature and commitment".
    👩‍⚕️A group of nurses in Victoria lost a court case attempting to prevent disciplinary action being taken against them for refusing COVID-19 vaccination, ahead of a full trial at a later date.
    ⚠️Ethiopia's government declared a 6-month state of emergency "after forces from the northern region of Tigray said they were gaining territory and considering marching on the capital Addis Ababa".
    🕵️‍♀️Facebook will shut down its facial recognition programme due to "growing societal concerns", and "will delete more than a billion people's individual facial recognition templates".
    🦗23-year old opener Will Pucovski has been ruled out of the Ashes opener following the 10th concussion of his short career.
    The Atlanta Braves won the 2021 World Series, breaking a record streak of 16 postseason appearances without a title.
    🐟Ouch. A Brazilian man died after jumping into a lake to escape a swarm of bees, "only to drown and be eaten by piranhas".
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