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Four phases to freedom

Good morning! The number of overseas arrivals on commercial flights was cut in half on Friday, as ScoMo and national cabinet finally agreed on an... acknowledgement that some kind of reopening framework was needed.

Drawing from a scene in comedic political satire Yes, Minister, ScoMo announced four phases towards freeing the Hermit Kingdom that conveniently avoided offering any thresholds or dates. We cover the four phases below but to save you a click here's how the Yes, Minister scene played out:

Sir Richard Wharton: "In stage one, we say nothing is going to happen."

Sir Humphrey Appleby: "Stage two, we say something may be about to happen, but we should do nothing about it."

Sir Richard Wharton: "In stage three, we say that maybe we should do something about it, but there's nothing we can do."

Sir Humphrey Appleby: "Stage four, we say maybe there was something we could have done, but it's too late now."

Markets

Weekly % change

AUD/USD

74.7

-1.5%

10Y Bond

1.43

-6.5%

ASX200

7,309

+0.0%

Brent (bbl)

76.1

-0.1%

Gold (oz)

1,788

+0.6%

Iron ore (t)

203.5

-4.2%

Bitcoin

35,532

+12.3%

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

The US S&P500 (+0.75%) hit its seventh consecutive record high on Friday โ€“ the first time since June 1997 โ€“ after the official non-farm payroll number in June was above forecasts (+850,000 vs 720,000 expected) but wage increases did not surprise (average hourly earnings +0.3% compared to May), suggesting inflationary pressures may remain subdued for a bit longer.

Housing to the moon: The supply of housing is relatively inelastic (slow to respond to price changes), so if demand rises then prices can move quite quickly. If you were after an indicator of demand, look no further than housing finance, with the latest data for May released on Friday:

New lending to housing is up 95.4% since May last year.
New lending to housing is up 95.4% since May last year. ABS

This is what happens when governments attempt to cure a supply shock by stimulating demand.


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Feature

Four phases to freedom

ScoMo announced the four phases that Australia will go through before life will be allowed to return to normal. As we've come to expect, there were no hard numbers or dates and if anything it was more of a signal that the government has at least put some thought to a reopening, rather than producing an actual plan.

Phase 1: What we are in right now โ€“ nothing new will happen but South Australia may trial a programme for returned vaccinated travellers to quarantine at home for seven days, rather than 14 days in a hotel.

Phase 2: This is the post-vaccination phase, although the definition of fully vaccinated has not been defined. If we had to guess, it would be somewhere in the range of 65-80% of adults fully vaccinated.

Once we enter this phase, COVID-19 case numbers will no longer influence policy and lockdowns will be a thing of the past unless hospitals become overwhelmed. International travel will still be restricted, although there will be larger arrival caps for vaccinated travellers and the possibility of a shorter 7-day and/or home quarantine option, pending the outcome of the trial.

Phase 3: This will be the "consolidation" phase. COVID-19 will be treated like the seasonal flu meaning no lockdowns, free domestic movement and no caps on international travel for vaccinated citizens. However, quarantine will still play a role, with ScoMo suggesting this phase may see quarantine-free travel bubbles with countries such as Singapore. Caps on travel for non-citizens will be increased, including for international students.

Phase 4: Once we reach Phase 4 we will be "back to normal" โ€“ sort of. There will still be pre- and post-flight testing and quarantine will remain mandatory for unvaccinated individuals.

In terms of the time frame, ScoMo said:

"We believe we'll be in a position by the end of the year to have offered everyone a vaccine who seeks to have one. If Australians respond to that, then I believe that we would be in a position to meet a particular target.

"I hope we're getting in that second phase next year."

The Wrap Up

  • ๐Ÿงพ Ireland and 9 other countries have rejected the 15% global minimum tax rate deal agreed by the OECD.
  • ๐Ÿ’ฉ Whoops โ€“ NBC's upcoming series Ultimate Slip 'N Slide was delayed after 40 crew members became "violently ill" with "awful explosive diarrhoea".
  • ๐Ÿฑโ€๐Ÿ’ป Florida-based IT company Kaseya was hacked, leading to over 200 US businesses facing ransomware demands in an attack that has now spread worldwide. Hopefully the root password wasn't kaseya123.
Video showing the fire in the the Gulf of Mexico.
The Gulf of Mexico was literally on fire after Mexico's state-owned oil company said it suffered a rupture in an undersea gas pipeline. BNONews/Twitter

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