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The national blame game

Good morning! The situation in Queensland got interesting yesterday after it was revealed that the COVID-19 hospital ward receptionist caught the Delta variant from a returned traveller who was being treated in the hospital. It turns out the traveller was unvaccinated and had been "allowed to come and go between Australia and Indonesia repeatedly throughout this pandemic", having "been through our hotel quarantine several times".

Plenty more on the ongoing vaccine rollout and Delta variant crisis in the feature section below. 👇

Markets

Daily % change

AUD/USD

75.0

-0.1%

10Y Bond

1.50

+1.4%

ASX200

7,313

+0.2%

Brent (bbl)

75.1

0.0%

Gold (oz)

1,770

+0.5%

Iron ore (t)

210.5

+1.9%

Bitcoin

34,913

-3.8%

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

Another day, another record high for the US S&P500, which edged up 0.13% last night for its second-highest first-half gain since 1998 (+14.4%) following positive private sector employment data. Locally the ASX200 was up 0.2%, meaning it officially recorded its strongest financial year gain since 1987 (+24%).

Stimmy credit flows: Growth in housing credit for owner-occupiers in Australia hit a 33-month high of 0.9% in May compared to the previous month, according to the RBA's latest lending and credit aggregates. Compared to May last year, credit to owner-occupiers increased a seasonally adjusted 7.0%.

Digital divide: Bank of France Governor Francois Villeroy de Galhau became the latest central banker to warn that in terms of digital currencies, "we in Europe must be ready to move as quickly as needed or risk an erosion of our monetary sovereignty". Taking the opposite stance, US Fed Vice Chair for Supervision Randal Quarles said in a speech that "we do not need to fear stablecoins... [and] the potential benefits of a Federal Reserve CBDC [central bank digital currency] are unclear. Conversely, a Federal Reserve CBDC could pose significant and concrete risks".

China slowing: Consistent with the official narrative, China's official manufacturing Purchasing Managers' Index (PMI) fell ever so slightly to 50.9 in June from 51.0 in May (anything over 50 indicates growth). Incidentally, today marks the 100th anniversary of the Chinese Communist Party. Over 100 coal mines were ordered to halt production, some until at least 5 July, so that Xi Jinping will actually be visible when he gives his speech.

Asia weakness: Industrial production in both Japan (-5.9%) and Korea (-0.7%) declined in May from the month prior, with car manufacturing and mechanical equipment the main culprits. Motor vehicle production in both countries was down around 20% from April, with ongoing supply issues in the semiconductor chip market plaguing both nations.


Feature

The national blame game

It has all gone pear shaped in the last week and the world is now mocking us
It has all gone pear shaped in the last week and the world is now mocking us. @Dr_Tad/Twitter

In light of the fact that the Queensland outbreak originated in a returned traveller who may not even be an Australian citizen, Queensland's Deputy Premier Steven Miles said that:

"Every month, about 40,000 Australian citizens and about 6,000 permanent visa holders are allowed to leave the country.

Many of them seek to return … rejoining the queue, going back through hotel quarantine, putting our community at risk.

It turns out the only thing that's required to get a permit from the federal government to leave the country is proof you have a meeting in another country.
...
Thousands of people are being allowed to travel here who are not stranded Aussies... in fact, 20,000 non-Australians arrived in Australia [last month] — half on short-term temporary visas."

Let's be clear: The Queensland government still needs to shoulder the lion's share of the responsibility for this outbreak, as the receptionist at the COVID-19 ward should have been fully vaccinated and wearing the appropriate protective equipment. But Miles has a point – why are so many people leaving the country every month, many presumably on short-term trips, when there are still more than 35,000 Australian citizens registered as wanting to return, not to mention the millions of fully-vaccinated parents and others that don't qualify as "immediate family"?

It's just inconsistent, and that's what frustrates people. The optics of the situation are that the borders are closed for everyone except well-to-do businesses and politicians. So much for "we will get through this together".

Mixed messaging: One day after ScoMo said he "would encourage" young people to talk to their GP about getting vaccinated with AstraZeneca, Queensland's Chief Health Officer Jeannette Young said the opposite – "I do not want under-40s to get AstraZeneca. I don't want an 18-year-old in Queensland dying from a clotting illness who, if they got COVID probably wouldn't die."

The Royal Australian College of General Practitioners was also blind-sided by ScoMo's announcement, reporting in a statement yesterday that it was provided with no notice "and [we] are now scrambling to figure out what this means for our patients". The Australian Medical Association also advised against following ScoMo's advice: "Our recommendation is still really for patients to follow the ATAGI advice. Be patient and have the ATAGI-recommended vaccine when it's available".

Other state leaders were quick to join Queensland in talking down AstraZeneca, with WA Premier Mark McGowan repeating "the health advice we have is they [people under 40] shouldn't", and NSW Premier Gladys Berejiklian saying NSW clinics will not accept people aged under 40 for AstraZeneca bookings unless they are seeking a second shot.

Confused: Premier Berejiklian added that national cabinet had only agreed that GPs would not face any legal consequences if they administered the vaccine to anyone, not that it should be encouraged. Victoria's Health Minister Martin Foley said he left with the same takeaway, namely that "opening the eligibility to people under 40, [for] AstraZeneca, was not a decision of national cabinet". Queensland's Premier Palaszczuk was similarly bemused, adding that "there was no such decision taken at national cabinet. We merely noted that the Commonwealth will be giving an indemnity to GPs".

If you were trying to write a script for some kind of dystopian Hollywood disaster flick, littered with political infighting and the ensuing litany of mistakes, poor decisions and underperformance, you'd struggle to do much better than Australia's 'leaders' are doing right now. In fact, if your goal was to discourage as many people as possible from getting vaccinated then this past week has probably been near-optimal.

So much for the 'national' cabinet. More like the national blame game. 🙄


The Wrap Up

  • Elon Musk said that SpaceX's Starlink satellite internet venture was growing quickly, with total investment costs forecast between $US20-30 billion. So, about 30-50% cheaper than Australia's National Broadband Network.
  • Full circle: Australia's Future Fund will pay $A2.8 billion to buy a 49% stake in Telstra's TowerCo (its mobile telecommunications towers portfolio).
  • Moderna said its standard COVID-19 vaccine is protective against variants, including Delta.
  • In response to an employee letter asking for fully remote work options, Apple reiterated its policy that staff will have to return to in-office work on Mondays, Tuesdays, and Thursdays.
  • Consultancy Deloitte Australia has eliminated the concept of core hours at the desk, allowing employees to work the hours they want. CEO Adam Powick said: "There is no one size fits all working week anymore and no requirement to be 'in the office' for any set amount of time... It's a move away from inputs and hours and a focus on output and outcomes."
  • The Pennsylvania Supreme Court overturned Bill Crosby's sexual assault conviction, allowing him to walk free from prison "after finding that he was denied protection against self-incrimination".
  • The Tour de France fan who caused a pile-up on day 1 with a cardboard sign has been located and arrested.

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