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The not-so free zone

Good morning! New Zealand reported its first locally transmitted COVID-19 case since February yesterday, a 58 year old man who had been infectious in the community since Thursday. The country immediately entered a 3-day hard lockdown (7-days in Auckland and the Coromandel Peninsula), with the source of infection and variant yet to be established. Earlier this morning four more community cases were reported, including an Auckland hospital worker.

Moving back across the ditch, the Victorian chief health officer revealed that 50 of the state's 227 active COVID-19 cases are children aged under 10. That's... problematic, given that no one under the age of 16 in this country is currently allowed to be vaccinated, and Australia's reopening plan involves keeping case numbers below "30 to 40" per day, even after hitting an 80% adult vaccination rate (see the Feature below for more on that).

Does anyone else see the problem here? 🤔

Markets

Daily % change

 

AUD/USD

72.6

-1.1%

 

 

10Y Bond

1.14

-3.4%

 

 

ASX200

7,511

-0.9%

 

 

Brent (bbl)

69.1

-0.7%

 

 

Gold (oz)

1,787

-0.1%

 

 

Iron ore (t)

158.7

-1.2%

 

 

Bitcoin

45,043

-1.7%

 

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

The US S&P500 tumbled 0.71% overnight after US retail sales fell 1.1% last month, well below expectations (-0.3%), no doubt feeding some doubts about the durability of the pandemic recovery.

Locally, the ASX200 fell for the second consecutive session, losing another 0.94% on a huge day for earnings reports – 18 companies in total. The big banks were hit particularly hard, with CBA leading the losses at -3.45% after trading ex-dividend. After markets closed, mining giant BHP announced a record final dividend and confirmed that its oil and gas businesses would be merged into Woodside to form one of the world's biggest energy companies.

Inflation watch: Announcing record results for the 2021 financial year, appliance manufacturer Breville's chief financial officer Martin Nicholas said: "Cost pressures continue to surprise me, especially on container costs... So we will be definitely looking to recover that through [higher] prices".

Running hot: "About 56% of all recommendations on S&P500 firms are listed as buys, the most since 2002... In Europe, about 52% of recommendations on Stoxx600 firms are buy or equivalent, a 10-year high. In Asia, that number jumps to 75%, the highest proportion since at least 2010."

Consumers resilient: According to the latest weekly ANZ-Roy Morgan survey, consumer confidence was up 2.5% last week and moved into positive territory (101.1), with big gains in Queensland (+7.5%) due to the end of lockdown and also in Sydney (+7.1% – it's a volatile series 🤷‍♂️). Interestingly, 'weekly inflation expectations' rose 0.2 percentage points to 4.5% – the highest level since May 2019.

Plenty of work: The UK's Office for National Statistics reported that early figures for July "show there were more than 1 million vacancies that month for the first time ever", although the number of employees on payroll remains 201,000 fewer than before the pandemic.


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Feature

The not-so free zone

We have good news and bad news. The good news is that Australia's vaccination rollout has improved by leaps and bounds, in-line with growing supply expectations and little bonuses such as the 1 million Pfizer doses purchased from Poland over the weekend. Depending on the gap between doses (and assuming the take-up remains strong), we're now on track to reach the 80% of adults mark before Halloween.

Chart showing Australia's vaccination rollout.
Australia is finally starting to vaccinate people at a decent clip. Covid Live

The bad news is that Australia's reopening may not be as clear cut as we were initially told, with NSW Premier Gladys Berejiklian appearing to support what WA Premier Mark McGowan has been saying lately – namely, that the goal is still zero COVID or as close to that as possible:

  • Berejiklian: "[At 80% vaccinated] you can live life more freely than what you are today but the extent of your freedom depends on case numbers. If case numbers are where they are now and we get to 80% double doses, we won't be able to do everything that we want to do."
  • McGowan: "We don't want to have deaths and we don't want to have spread of the virus, but there can be some easing of some of the rules. When you get to 70, perhaps 80, if there is a lockdown it might be a lesser area rather than the entire metropolitan area."

Mixed messaging: As with everything so far this pandemic, it's all a bit murky and it can be difficult to determine what, exactly, the plan really is. Speaking after Berejiklian and McGowan's comments, ScoMo appeared to confirm what was announced at the start of August, before various Premiers started adding their 2c:

"...it was then agreed in principle with the targets that were set by the Doherty Institute, which made it very clear that once you get to 70% and 80% at that level, particularly at 80%, you're managing the virus just like you would the flu."

Why this matters: The thing is, Australia does not manage the flu by restricting activity when case numbers reach "30 to 40" per day, which were the case numbers cited by Berejiklian. Presumably McGowan's threshold is even lower. In 2019 – a relatively bad year for the flu but also a year with no lockdowns – there were 214,377 confirmed flu cases (i.e. 587 per day on average) and 486 deaths across the country.

All of this suggests that what was supposedly agreed at national cabinet on 1 August is open to significant interpretation. Perhaps what it really means is that we are destined to remain the Hermit Kingdom for evermore, with ScoMo optimistic only because he's the next politician up for election so has no choice. 🤷‍♂️


The Wrap Up

  • 📊 A new opinion poll found that approval of the Morrison government's response to the pandemic fell from 56% in February to 38% as at mid-July. A year ago it was 66%.
  • 🔥 Epic burn – Chinese social media users said the Taliban's takeover of Afghanistan was "more smooth than the presidential transition in the US".
  • ⚔️ The United States federal government spent $US6.4 trillion on the post-9/11 wars in the Middle East (nearly four times Australia's GDP).
  • 🔌 Tesla is being investigated because its cars using Autopilot have so far crashed into seven emergency vehicles resulting in 17 injuries and one death.
  • 🌅 Japan's state of emergency in Tokyo and other regions was extended to 12 September. It was also broadened to include seven additional prefectures, covering slightly less than 60% of the population.
  • 💉 Anonymous sources in the Biden administration revealed that US health officials are planning to recommend COVID-19 vaccine booster shots eight months after being fully vaccinated.
  • 🔨 China's anti-big business crackdown continued yesterday, with the government's regulator introducing various rules intended to stamp out "unfair competition". Big Tech share prices crashed, again.
  • 🛃 Hong Kong tightened its requirements for international travellers, mandating 21 days in quarantine for those from "high risk" countries and 14 days for those fully vaccinated from medium- and low-risk places.

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