It's like that movie The Croods
By Justin Pyvis – Delivered on 25 Aug 2021
The Croods in a cave Hey look, it's "some" of Australia. The Croods/DreamWorks
Good morning! For whatever reason ScoMo decided to liken Australia's reopening plans to that of a cartoon movie:
"Now, it's like that movie The Croods... some wanted to stay in the cave and that young girl, she wanted to go out and live again and deal with the challenges of living in a different world. Well, Covid is a new, different world, and we need to get out there and live in it."
Right o'. Moving along, NSW administered its six millionth vaccination yesterday, which is the figure Premier Gladys Berejiklian has previously said would "give options" for relaxing restrictions. But despite knowing this day was coming for months, Berejiklian and her team of 28 full-time advisors decided to wait until later in the week to announce what exactly the "at least one" new freedom for fully vaccinated residents will be. 🤔

Unfortunately there was no good news in the other two locked down states and territories, with the ACT notching up 30 new cases, a new daily record, and just 13 of them were in quarantine for the whole infectious period. The situation was similar in Victoria, which recorded 50 new cases with just 11 in quarantine during their infectious period.

Across the Tasman the Kiwi cluster grew by another 41 cases, 38 of which were in Auckland and 3 down in Wellington. They still don't know how the quarantined traveller from NSW managed to spread the virus to the community.
Markets

Daily % change

 

AUD/USD

72.6

+0.6%

 

 

10Y Bond

1.17

+6.4%

 

 

ASX200

7,503

+0.2%

 

 

Brent (bbl)

71.1

+3.6%

 

 

Gold (oz)

1,806

-0.1%

 

 

Iron ore (t)

150.5

+10.2%

 

 

Bitcoin

48,337

-1.9%

 

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

The US S&P500 gained 0.15% overnight, despite a decline in the Richmond Fed manufacturing index from 27 in July to 9 in August (a reading above 0 indicates growth). Labour and supply chain pressures remain, as "as the wage index hit a record high... [and] lead times continued to increase and inventories remained low".

Locally the ASX200 added 0.17%, helped by gains to the big miners as iron ore futures rebounded a solid 10% during the day. Not so fortunate was online retailer Kogan, whose share price tanked 15.8% as its net profit plunged 87%, "after the online retailer slashed prices to clear excess inventory and incurred higher freight costs".
Economy
Lockdowns? Pfft: You can't keep the consumer down. The ANZ-Roy Morgan Consumer Confidence index rose 0.5% to 101.6 last week and despite small falls in NSW (-1.9%) and VIC (-2.9%), "sentiment in these two states remains well above the lows of last year".

Only the essentials: Official retail sales in New Zealand grew 3.3% in the June quarter, i.e. prior to the lockdown. However, high-frequency data gathered from Eftpos spending show that retail sales have roughly halved since lockdown started, despite strong gains in liquor and supermarket spending.

Supply chain woes: US new home sales increased 1.0% in July after three straight monthly declines, although were still down 27.2% from a year ago. New homes are hard to come by – the median new house price is up 18.4% from a year ago and supply may remain scarce, as "backlogs in construction will temper sales... Homebuilders are reportedly turning away buyers as they attempt to reduce the backlog of sales".
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Feature
There will be no freedom day
Feature image Judgement day will soon arrive – how will the states respond? ABS/Covidlive
The Doherty Institute – tasked with modelling Australia's reopening plan – unleashed a tweet storm the other day that clarified a few issues. These were the key points:

● "COVID-19 won't go away but it will be easier to control in the future."
● "There is no 'freedom day'."
● Public health measures – "test, trace, isolate and quarantine" – will remain.

After reopening, the stated goal is to only use measures necessary "to keep the reproduction number below 1", and having "tens or hundreds of cases nationally per day is possible".

Breaking it down: Those statements are at odds with what ScoMo has been stating publicly, as clearly case numbers will still matter (if not, why mention the reproduction rate?). The freedom people will gain from the plan will vary by state, too – in COVID-zero states, it may actually be reduced for those with no desire to travel or be visited by friends and family overseas. That does, of course, assume those states remain COVID-zero – a big assumption.

Incidentally Australia's reproduction rate is currently 1.3 (i.e. doubling every 8.4 days), which is above the US and UK (both ~1) despite Victoria and New South Wales being in lockdown. That's because we have a lot of dry tinder – a relatively low vaccination rate and little immunity from past infections – hence the focus on getting the vaccination rate up.

Why this matters: There will be no grand reopening in Australia; no freedom day. There will be degrees of freedom and while "it is unlikely that we will need generalised lockdowns", they will remain a possibility. Get used to carrying a mask. 😷

Essentially, all the Doherty plan does is acknowledge a trade-off – in exchange for certain freedoms, hundreds or thousands of Australians will die of COVID-19 every year, just as many thousands die from influenza and pneumonia, all without much commotion.

Looking forward: ACT Chief Minister Andrew Barr said that the "70-80% targets... reflect the opportunity to take gentle and measured steps forward in the national plan". A subdued "gentle and measured" reopening means any companies trading at valuations contingent on a 'Freedom Day' equivalent in Australia will likely disappoint, although it also means the RBA will probably drag its feet on monetary tightening.
The Wrap Up
  • ⛈️ A month's worth of rain fell in Sydney yesterday. Good thing they're all indoors... 😬
  • 💉 All 16-39 year-olds will be eligible for the Pfizer vaccine from 7am today in Victoria.
  • ✈️ Qantas' new vaccination advert is sensational – sooo much better than the federal government's dull, militaristic "arm yourself" campaign (and the less said about the other one, the better).
  • 🥨 Germany has stopped using the coronavirus infection rate for deciding if restrictions should be imposed and "will instead monitor hospitalisations as a key indicator".
  • 🐄 A beach in Corsica, France had to temporarily close "due to some aggressive behaviour" from the local cows.
  • 🕊️ More than 1,600 people have been evacuated from Afghanistan by Australia and New Zealand in the past week.
  • 🏉 The entire Rugby Championship will be played in Queensland after the state government gave South Africa and Argentina permission to quarantine in 'managed isolation'.
  • 🕷️ The official Spider-Man: No Way Home trailer was released one day after it was inadvertently leaked online.
  • 🥁 Rolling Stones drummer Charlie Watts, who was battling "an undefined health issue", died age 80.
  • 🍁 British Columbia became the second Canadian province to require proof of vaccination for people attending certain social and recreational events.
  • 🔌 Electric vehicle charging company JOLT plans to install 5,000 fast-charging stations across Australia, offering drivers around 45km worth of free electricity per day.
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