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Ignoring the advice

Good morning! Unfortunately it was mostly bad news on the pandemic front yesterday, with almost the entire east coast of Australia now in lockdown. After recording 8 new local cases – of which 2 have no know origin – Victoria's Premier Daniel Andrews plunged the entire state into its sixth lockdown, this time for at least 7 days.

Sadly there was no improvement in NSW, where another 262 new cases and 5 deaths were recorded, the latter all aged over 60 with only 1 of the 5 even partially vaccinated (a single dose back in late May). The outbreak has also now spread to the regions, leading to eight local government areas in the Hunter and Upper Hunter region being placed into a snap 1-week lockdown, with restrictions "exactly the same as exists in Greater Sydney".

There was, however, some positive pandemic news yesterday: Queensland reported 16 new locally acquired cases but only three of them were active in the community, and only for 1-2 days. Authorities also confirmed that a batch of Pfizer doses had been delivered earlier than expected, with 112,320 additional doses to be sent to Queensland and another 180,000 to NSW starting next week. 🙌

Markets

Daily % change

 

AUD/USD

74.0

+0.3%

 

 

10Y Bond

1.18

+2.6%

 

 

ASX200

7,511

+0.1%

 

 

Brent (bbl)

71.3

+1.6%

 

 

Gold (oz)

1,806

-0.4%

 

 

Iron ore (t)

166.2

-7.4%

 

 

Bitcoin

40,945

+3.2%

 

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

The US S&P500 climbed 0.60% to reach a record high, as declining jobless numbers – 385,000 for the week ended 31 July, a decline of 14,000 from the week prior – eased concerns that the current wave of coronavirus cases might be sapping growth. Most importantly, continued claims – that is, the total number of people receiving benefits – fell sharply by 366,000 to 2.93 million.

Locally, the ASX200 (+0.11%) started off slow before hitting a fresh record high, despite a poor performance from the big mining companies on the back of falling iron ore prices.

Hitting paydirt: Australia's merchandise exports increased 8% to $A41.3 billion in June, resulting in a record $A13.3 billion trade surplus. Once again the hero was iron ore (84.7% to China), exports of which were worth a mammoth $A17.6 billion – or 42.6% of Australia's total. But it may not last – the iron ore price was smashed yesterday (-7.4%) following a government campaign to cut steel output and the recent Delta strain outbreak, which is raising doubts about the country's near-term growth prospects.

Inflation to rise: The Bank of England expects consumer prices to reach 4% this year, well above its 2% target and an upgrade on its May estimate of inflation peaking at 2.5%. However, it's persevering with a record-low cash rate because "The Committee’s central expectation is that current elevated global and domestic cost pressures will prove transitory".


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Feature

Ignoring the advice

Johannes Leak cartoon from The Australian.
Politicians will follow the advice until it doesn't suit them. Johannes Leak/The Australian

Australia's state and federal governments love to fall back on the "best health advice" when announcing decisions. It makes perfect sense, too – politicians can do what they want while deflecting responsibility to faceless bureaucrats, and there's not a lot Joe Public can do about it until the next election. But that changed on Wednesday when the federal government released the Doherty Institute modelling underpinning its new 70-80% vaccination target, which included the following:

"From the starting point of age-based coverage in Australia as of 12 July 2021, an 'All adults' allocation strategy that achieved high coverage in key transmitting populations (20-39 years) resulted in greatest reductions in harms across all age groups, regardless of vaccination status."

Translation: The modelling shows that the optimal vaccination strategy is to open it up to all adults but with a focus on the young (after healthcare and some other essential workers, of course). This is well supported by the scientific literature – see for example here, here, here and here. However, the government ignored that advice and selected the second-best option, called 'Transmission reducing', which is one of only two strategies "consistent with the [current] national COVID-19 immunisation programme".

Why this matters: For whatever reason – status quo bias? – the decision to ignore the scientific literature and the Doherty Institute's modelling will all else equal mean longer lockdowns and more lives lost than if it changed tack, opened up Pfizer to all and made a concerted effort to vaccinate the super-spreading age groups – many currently ineligible for Pfizer – that make up two thirds of the active cases in the country.


Tokyo 2020 🗼

Australia added two gold medals to the total yesterday, equalling the nation's record for best ever Olympic haul with 17 (Athens). The medals came courtesy of Jean van der Westhuyzen and Thomas Green in the men's kayak double 1000m and 18-year old Keegan Palmer, who dominated the men's park skateboarding final with the two top scores.

Unfortunately the Kookaburras couldn't snag a gold medal, going down in a shootout to Belgium after being locked up 1-1. There was also a bronze medal for Melissa Wu in the women's 10m platform diving competition, her first ever individual medal in four Olympic games, and for Ash Moloney in the men's decathlon

Australia's women's beach volleyball duo will play USA for a gold medal later today, while the much-hyped Boomers will play for bronze tomorrow after being torn apart 97-78 by a superior Team USA in the men's basketball semi finals.

Medal tally

🥇

🥈

🥉

1 🇨🇳 China

34

24

16

2 🇺🇸 United States

29

35

27

3 🇯🇵 Japan

22

10

14

4 🇦🇺 Australia

17

5

19

5 🇷🇺 ROC

16

22

20


The Wrap Up

  • 🏭 Melbourne-based fruit and vegetable manufacturer SPC will become the first Australian company to require coronavirus vaccines for employees.
  • 👮‍♀️ NSW Premier Gladys Berejiklian is "trying to consider options" around a possible 'no jab, no work' policy.
  • 💲 The federal government announced a Stolen Generations Redress Scheme, with $378.6 million to be spent on living Stolen Generations members who were removed as children from their families.
  • 🕵️‍♀️ Video conferencing company Zoom agreed to pay $US85 million after it lied about offering end-to-end encryption and instead sold user data to Facebook and Google.
  • 🛂 The US will soon require "nearly all foreign visitors to the US to be vaccinated for the coronavirus". No timeline has yet been determined.
  • 👩‍🎓 A study in the UK found that fully vaccinated people were 50-60% less likely to become infected with the delta variant than unvaccinated people.
  • 🏡 A coalition of 11 housing industry groups sued the US government in an attempt to block the new federal eviction moratorium, which President Biden has conceded is constitutionally questionable.
  • ⚖️ A majority of Democrats in the New York State legislature support impeaching Democratic governor Andrew Cuomo following serious sexual harassment accusations.

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