Solving world hunger
By Justin Pyvis – Delivered on 02 Nov 2021

Good morning and happy Melbourne Cup day! There was plenty of border news yesterday, starting with Queensland where the government said it won't scrap mandatory home quarantine for fully vaccinated international travellers until the state reaches a 90% vaccination rate, as "There could be other variants that are brought in, you have to look at the different vaccines and the efficacy of those, there's a whole lot of reasons. We go off the health advice."

Given the state's first dose vaccination rate is only 77.8% (people aged 16+), it's looking like international quarantine will remain a requirement in Queensland into 2022 sometime, barring a change to the "health advice".

But that's better than WA, where Premier Mark McGowan said the state's domestic border will remain hard indefinitely because he doesn't want people to "go out of NSW overseas, come back into NSW without quarantining and then demand to come back to WA", arguing that WA would need a "very high" vaccination rate before he drops the barriers. But as we've come to expect, no firm plan was forthcoming from the only state yet to provide one, only that a reopening will be "sometime in the first half of next year".

Meanwhile, NSW might be back to 'normal' sooner than expected, after Premier Dominic Perrottet set a target of 95% fully vaccinated to "bring forward some of that relaxing of restrictions". All restrictions are currently set to be removed on 1 December, which would be around 3 weeks after it's scheduled to hit the 90% fully vaccinated mark (people aged 16+).

Fully vaccinated population (aged 12+)

ACT
NSW
VIC
TAS
SA
QLD
NT
WA
Markets

Daily % change

AUD/USD

75.2

-0.1%

AU Yield (%)

1.94

-0.2%

US Yield (%)

1.58

+1.2%

ASX200

7,371

+0.6%

S&P500

4,614

+0.2%

Brent (bbl)

84.4

0.0%

Gold (oz)

1,795

+0.6%

Iron ore (t)

99.4

-4.5%

Bitcoin

60,987

+0.0%

Note: Brent oil, gold bullion and iron ore prices are the second futures contract. Bond yields are 10-year Treasuries.

The US S&P500 added 0.18% overnight as earnings reports – more than 80% have beat estimates – keep sentiment mostly positive ahead of a big Federal Reserve meeting this week, where a long-awaited tapering could be announced.

Locally, the ASX200 gained 0.64% despite a massive 7.4% decline for Westpac, which reported declining margins and rising costs "due to an increase in our workforce". Another notable moved was Seven West Media, which added 14.3% after it revealed plans to buy regional TV broadcaster Prime.

Economy

Stimmy fade: The housing stimulus from government (state and federal) handouts and the RBA's interest rate reductions appears to have peaked, with price rises as measured by CoreLogic rising just 1.5% in October, losing "momentum since moving through a peak monthly rate of growth in March (2.8%)".

The fuel that feeds the fire of rising house prices – debt – has also slowed, with new borrower-accepted loan commitments declining 1.4% from the prior month in September.

2024 no more?: Analysts at Westpac, ANZ and NAB believe that the RBA will abandon its interest rate guidance at today's meeting and end its yield curve control (quantitative easing) programme.

Parts of China are slowing: Hot on the heels of the government's manufacturing PMI survey which showed a manufacturing slowdown, the Caixin PMI – which tracks smaller, more trade-exposed private firms – reached 50.6 in October, indicating an increasing activity. However, "manufacturing output shrank for the third consecutive month... [as] shortages of raw materials and soaring commodity prices, combined with electricity supply problems, created strong constraints for manufacturers and disrupted supply chains".

Japan has a pulse: Factory activity in Japan hit a 6-month high in October, with the latest Jibun Bank manufacturing PMI hitting 53.2, although "Material shortages and delivery delays induced sharp rises in input prices... This contributed to higher charges for clients in attempts to cover margins, with factory gate inflation quickening to a 13-year high."

A whiff of stagflation: Retail sales in Europe's largest economy, Germany, plunged 2.5% in September, well below the 0.6% increase expected. It comes at the same time as inflation is rising at 28-year high 4.5%, with the best-selling German tabloid dubbing European Central Bank chief Christine Lagarde "Madam Inflation".

Feature
Solving world hunger

In an article titled "2% of Elon Musk's wealth could solve world hunger", David Beasley, director of the United Nation's (UN) World Food Programme, said that billionaires such as Elon Musk and Jeff Bezos could "step up now, on a one-time basis... [and donate] $US6 billion to help 42 million people that are literally going to die if we don't reach them. It's not complicated".

$US6 billion is about 2% of Elon Musk's net worth, which got him interested – Musk tweeted a reply that "If WFP can describe on this Twitter thread exactly how $US6B will solve world hunger, I will sell Tesla stock right now and do it. But it must be open source accounting, so the public sees precisely how the money is spent."

Stepping back: The UN has a goal to "end hunger by 2030... [by] eliminating undernourishment for all". It's an ambitious target that in 2020 alone it raised $US8.4 billion to combat. However, the agency's spending hasn't done much to reduce global undernourishment, which declined just 0.3 percentage points in the five years between 2012 and 2017 (see chart above).

Why this matters: Solving world hunger for $US6 billion would be a bargain – that's just 0.09% of the US government's annual spending. Musk is effectively calling Beasley's bluff, hence his request that before he donates a cent the UN needs to "publish your current & proposed spending in detail so people can see exactly where money goes. Sunlight is a wonderful thing."

Looking forward: If the UN does open its books and produce a planned spending proposal, Musk is crazy enough to follow through on his promise despite the fact he would be taxed at 52% and tank Tesla's valuation in the process. But the likelihood of such information coming out of an organisation that spends more flying staff around the world, often in first class, than it does on AIDS, tuberculosis or malaria, is extremely slim.

Either way, it's good to see some light shone on a very real issue and perhaps have some solutions thrown around that don't involve sending additional billions to an organisation that doesn't spend its current billions all that well.

The Wrap Up
    🎰Crown will enforce a strict full vaccination entry rule for all of its casinos across Australia, "even if coronavirus rules are eventually changed to allow unvaccinated punters back through their doors".
    ✈️Fully vaccinated citizens of Singapore will be allowed to fly to Australia (NSW) quarantine-free from 21 November.
    🗾Japan's ruling LDP won re-election, securing yet another stable majority that will enable new Prime Minister Fumio Kishida to "ramp up stimulus".
    💉The US FDA delayed approving Moderna's vaccine for teenagers, saying it needs more time to study "the risk of myocarditis in kids". The decision will also delay Moderna's hopes of seeking approval for a lower-dose version for kids aged 6 to 11.
    👩‍⚕️Tassie's government stood down 170 health staff (around 1% of the total) that failed to prove they had been fully vaccinated against COVID-19 as part of a public health directive, including 38 permanent nurses (but no doctors).
    💰In Queensland, 4,000 health workers (around 3% of the total) have been suspended on full pay (where's the incentive!?!) for refusing to prove they've been vaccinated against COVID-19.
    📈South Australia's government released modelling showing that once its border reopens it could expect between 4-51 deaths in the first 300 days, depending on which public health measures are maintained.
    🦇The long-tailed bat won New Zealand's bird of the year award, despite being a mammal. Forest & Bird's Bird of the Year spokesperson Laura Keown said "I think I'm going to be fired".
    📱Private text messages between ScoMo and France's President Macron were leaked to the media, allegedly showing that Macro was indeed warned that Australia was considering tearing up the submarine deal.
    🏝️Tonga recorded its first ever COVID-19 case and immediately went into a 1-week hard lockdown.
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