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Fires, floods and... spiders?

Good morning! The news just keeps getting better for New South Wales, with residents being warned of a potential funnel-web spider plague due to warm weather following five days of torrential rain and floods around the state. That and "a pretty pestilent season along the whole east coast... [with] lots of mosquitoes".

Although it's not all bad – later this week, dancing will be legal for the first time in over a year! 🕺💃

Market Wrap

Tech wrecked

Daily % change

AUD/USD

75.9

-0.4%

ASX200

6,779

0.5%

Brent (bbl)

64.0

5.3%

Gold (oz)

1,733

0.5%

Iron ore (t)

155.8

0.4%

Bitcoin

54,100

-0.6%

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

The tech-heavy Nasdaq was down 2% despite slightly lower yields on US 10-year bonds, with many US states starting to lift pandemic restrictions – even on the west coast. Fewer people locked up means fewer Zoom calls... or something (the Dow Jones, which is more exposed to businesses that stand to benefit from a reopening, was largely flat).

Oil bounces: Brent crude shot up over 5% yesterday after a huge ship veered off course in a sandstorm and got stuck in the Suez Canal, completely blocking ~10% of the world's maritime traffic. We're serious – check out the Random Wrap below for a couple of pictures. Crazy times...


Travel Wrap

Virgin ditches free food

Airline food was never that great anyway.
Chicken Wings Comics

From Thursday, people will have to fork out some of their own hard earned if they want to eat on board a Virgin Australia flight. Water, tea and coffee will remain complementary. The airline will also unveil a new menu for both business and economy class.

No big loss: Look, airline food is generally nothing to write home about. There's also not a strong incentive for an airline make it decent when it's included as part of the airfare, especially in economy where margins are super tight. According to Virgin (grain of salt warning), 65% of travellers don't even consider whether food is complementary when making a booking.

Finding a market: Bain Capital acquired Virgin during the coronavirus crisis. It has a plan to be "neither a full service or budget carrier but a 'mid-market' airline that retains its Economy, Economy X and Business classes". In other words, it doesn't want to compete with Qantas (and Jetstar). So in this case, mid-market means ... budget with a better menu?

Elsewhere:

  • Rex – an actual mid-market carrier – will launch flights between Sydney and Canberra next month, currently a Qantas-only route (although Virgin plans to service it from 26 July). So much for carving out a niche!
  • Indonesia plans to introduce a new type of long-term visa, which lasts for five years and will enable foreigners to live and work in the country without a work permit. 🏖️

Corona Wrap

It's a clusterf**k

Australia is waaaaaay behind.

GPs started to receive their (limited!) vaccine doses this week but many seem to be missing their consumables – important tools such as needles, syringes and sharps disposal containers. Whoops.

They're dreamin': The vaccination rate will no doubt accelerate once the government's "improved system" is implemented and the recently approved, locally-manufactured AstraZeneca doses start flowing. But an October completion target was clearly predicated on flawless execution, something at which most governments are not very good.

Elsewhere: Some of the changes forced onto companies by the onset of the pandemic are already starting to stick.

  1. Twitter and Google announced they plan to keep their offices largely closed for months despite the government now allowing them to be opened in a limited capacity.
  2. Ninety per cent of Australians surveyed said that their ideal work environment would be a mix of remote and in-person working, or a wholly virtual workplace.
  3. DBS, UBS, BNP Paribas, Standard Chartered and other global banks have already started to shed office space, with employees "given the flexibility to work remotely for as much as 40% of the time".

Random Wrap

A ship got stuck in the Suez Canal

The 224,000 ton Ever Green may be stuck for days.
The 224,000 ton Ever Green may be stuck for days. John Scott-Railton/Twitter

It was a slow news day and to be honest we'd rather show you a huge ship blocking a major freight canal than an angry 'glass houses' ScoMo taking the bait and then apologising for an "insensitive response". So here's another picture:

It really is quite the sight.
It really is quite the sight. Marcel Dirsus/Twitter

In all seriousness, the Suez Canal is a major shipping route (~10% of world maritime trade). Writing in Bloomberg, Cheong, Lee, Cho pointed out that "European and U.S. refiners that rely on the vital waterway for cargoes of Middle Eastern oil may be forced to look for replacement supplies should the blockage persist, potentially boosting prices of alternative grades. At the same time, flows of crude from North Sea fields destined for Asia will be held up".


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