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Crisis averted

Good morning! We trust you all had a great Easter break. Some good news from Queensland over the weekend, which hasn't recorded a new local COVID-19 case since Saturday and appears to have traced the entire chain of its recent outbreak. The "missing link" was a "previously unidentified nurse, who also works at Brisbane's Princess Alexandra Hospital".

In other news, New Zealand will today announce if and when a trans-Tasman bubble with Australia will take place, potentially allowing unrestricted travel between the two countries.

Market Wrap

Yet another new record high

Daily % change

AUD/USD

76.5

0.0%

10Y Bond

1.77

-1.0%

ASX200

6,829

0.6%

Brent (bbl)

62.3

-4.0%

Gold (oz)

1,729

0.0%

Iron ore (t)

160.0

1.2%

Bitcoin

58,809

0.1%

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

The US S&P500 closed above 4,000 points for the first time on Thursday – ever. It extended that record on Monday (which wasn't a holiday in the US), closing up 1.4%, to reach 4,077. It's amazing what a little money printing and fiscal stimulus can do for nominal indices.

American jobs: The US Labor Department reported the economy added 916,000 jobs in March (above market expectations), with unemployment falling to 6.0%. That's the most jobs added since August 2020, with companies in leisure and hospitality – particularly restaurants – leading the charge. The numbers may even get better from here due to an easing of COVID-restrictions, the arrival of spring and rising confidence as much of the country gets vaccinated.

Mining boom: The Supreme Court will allow Chinese conglomerate CITIC to mine up to an additional 1 billion tonnes of iron ore in Western Australia through a deal with Clive Palmer, which is expected to net the 'mining magnate' – inverted commas because Palmer doesn't so much mine as he does lease tenements to mine operators – $US142 million up front and as much as $A250 million a year in royalties. Iron ore prices remain close to record highs following large-scale construction and infrastructure stimulus in China.


Econ Wrap

Australian property is hot, hot, hot

Property prices are hitting records in all cities.
Property prices are hitting records in all cities. Stephanie Chalmers/ABC

The national CoreLogic house price index for March 2021 rose by 2.8% in the month, the fastest rate of growth since October 1988 – more than 32 years ago.

Unusual but not unique: In the 37 'wealthy' countries in the OECD, home prices hit a record in the third quarter of 2020. Across all of those countries, prices rose almost 5% for the year, the fastest in nearly 20 years.

Governments around the world responded to the coronavirus pandemic by cutting interest rates and stimulating demand, including for housing. However, the people most affected by the pandemic were concentrated in lower-paying industries, i.e. not the demographic looking to buy an expensive, long-term asset.

Given that housing supply is heavily constrained – especially in the short-term – it makes sense that prices have been soaring, as higher income households with the resources to buy a new home actually improved their lot during the crisis.

Did you know: The price of a brickie in Perth is up from 80c a brick a year ago to $2.50 today.


Culture Wrap

Art prices and the nouveau riche

The record-breaking painting entitled The Journey of Humanity.
The record-breaking painting entitled The Journey of Humanity. Sacha Jafri/artnet

Art is booming:

Not unusual: A 2015 paper in the journal Explorations in Economic History found that for art prices, "new money itself [and]... social competition—often among 'nouveaux riches'—[is important] in the determination of art prices at auction". In the eighteenth and nineteenth centuries "buyers were mainly European monarchs and rulers". In the early twentieth century, it was "wealthy American businessmen". In the late 1980s, it was mostly Japanese buyers setting records at art auctions.

Shared fates: This time around most art auction records are being set by crypto investors/business-people/entrepreneurs (define them how you will), who are this year's nouveaux riche. And by 'this year', we mean this year – the price of Bitcoin has increased 1,000% since March 2020, and many other cryptocurrencies have risen by far more.

The current boom in art prices will live and die with crypto.


Random Wrap

  • The personal data of 533 million Facebook users from 106 countries – including the Zuck himself – was published, for free, "in a low level hacking forum on Saturday".
  • The Morrison government is considering requiring 100 points of ID to get a social media account. Sounds like a great idea. Facebook is super responsible with our data. 🤔
  • China's tech crackdown has intensified, with a record 76 companies suspending their IPO applications in March.
  • A new approach to creating an HIV vaccine had a promising 97% antibody response rate in Phase I human trials.
  • Lithium battery costs have fallen by 98% in three decades.
  • GameStop is cashing in on the WSB reddit mania, issuing up to 3.5 million new shares through an "at-the-market" offering over a period of time.

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