The roadmap to freedom
By Justin Pyvis – Delivered on 10 Sep 2021

Good morning! The local pandemic news was once again centred in NSW yesterday, with Premier Gladys Berejiklian unveiling the state's long awaited "roadmap to freedom". Given its length, we've covered it in the Feature. 👇

Thankfully the (positive!) announcements didn't stop with the roadmap. NSW's government also revealed that parts of regional NSW will come out of lockdown at midnight on Friday, although they will be subject to "capacity limits for our hotels, cafes and restaurants... mask-wearing, social distancing".

Students in NSW will also be permitted to return to school on 25 October.

Not wanting to be left out, the ACT's government said it would reveal its own path out of lockdown on Tuesday. Chief Minister Andrew Barr offered a hint about the possible reopening timeline by stating that "the next eight weeks are a race to get as many people fully vaccinated as quickly as possible".

Barr also said that the ACT would not be introducing a 'vaccine passport', due to "human rights issues", and because incentivising people to get vaccinated is "not an issue in the ACT".

Finally, some bad news – Victoria hit another unwanted milestone yesterday, notching up 324 new local cases, just 107 of which were linked to known outbreaks. That's the most new daily cases since 13 August last year.

Commenting on the figures, the state's COVID-19 Commander Jeroen Weimar said "We're now in an environment where there is widespread community transmission, the person next to you at the grocery aisle may be positive and they may not know it, they may not be showing any symptoms, but we're seeing transmission."

Eeesh 😔

Markets

Daily % change

 

AUD/USD

73.7

0.0%

 

 

10Y Bond

1.24

-3.1%

 

 

ASX200

7,370

-1.9%

 

 

Brent (bbl)

71.3

-1.9%

 

 

Gold (oz)

1,796

+0.3%

 

 

Iron ore (t)

129.7

-1.7%

 

 

Bitcoin

46,297

+0.7%

 

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

The US S&P500 fell for the fourth straight session, losing 0.46% as every sector other than financials fell. The decline came despite positive US jobless claims, which totalled 310,000 for the week ended 4 September, a new pandemic-low that was below the Dow Jones estimate of 335,000.

Locally, the ASX200 was slammed 1.90% in a broad-based selloff as all 11 sectors finished in the red. Tech (-3.2%) was the worst offender, with consumer staples the least bad at -0.74%.

Economy

Pressure points: Producer prices in China (the prices that factories charge wholesalers) increased 9.5% in August from a year earlier, the fastest pace in 13 years. However, that hasn't translated into rising prices for consumers – the consumer price index rose just 0.8% due to sharp declines in pork prices and travel-related services such as air tickets, tourism and hotel accommodation (large parts of China were locked down in August).

Not tapering: The European Central Bank announced it will cut back its government bond purchases ('quantitative easing') over the coming quarter but insisted it "isn't tapering". Right o...

Budget time: WA's government revealed a $A5.6 billion operating budget surplus in 2020-21, dropping down to $A2.8 billion this financial year, after which net debt is expected to start climbing again 😬. The Commonwealth's September 2022 assumption was used for an international border reopening date and while no forecast was provided for the domestic border, Premier Mark McGowan said "we've got to get above 80%... I don't know whether it'll be February, March or April, I suspect it will be one of those months".

In the clouds: Bank of America is forecasting the S&P500 to retreat 6% by year's end as "Sentiment is all but euphoric with our Sell Side Indicator closer to a sell signal than at any point since 2007. Wage/input cost inflation and supply chain shifts are starting to weigh on margins."

Blast from the past: The director of US President Biden's National Economic Council Brian Deese said, with a straight face, that if you simply exclude beef, pork and poultry from the calculation, grocery price increases "are more in line with historical norms". Reminder: Excluding items is what former Fed Chair Arthur Burns famously did to hide inflation in the early 1970s, blaming everything from the OPEC oil embargo to El Niño's effect on Peruvian anchovies as the 'real' causes of inflation. How was, of course, wrong.

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Feature
The roadmap to freedom

The government of NSW released its "roadmap to freedom" yesterday, providing exemptions to COVID-19 restrictions to fully vaccinated individuals or those with medical exemptions.

Breaking it down: No date was offered up, only that from the Monday after NSW reaches a 70% fully vaccinated rate (people aged over 16), fully vaccinated people will be allowed to:

  • • Have 5 visitors at home.
  • • Gather in groups of 20 people outdoors.

That may not sound like much but the fully vaccinated will also be able to patronise a range of establishments, including hospitality, retail, sport and entertainment, although they will still have to abide by strict density restrictions.

Masks will remain a part of life indefinitely and are mandatory for all indoor public venues and public transport. City businesses will also continue to suffer – employers must allow employees to work from home if they can.

The state government plans to police all of this with, you guessed it, a vaccine passport:

"If you want to go and buy something which is regarded as a non-essential shop [e.g. a pub], you will put up the QR code and if it is not a green light saying you have been vaccinated, you won't be welcome inside... This is really for double dose vaccinated people who can enjoy the, what we call regulated, facilities."

Looking forward: Once the state reaches an 80% fully vaccinated rate even more freedoms will return, such as "international travel, community sport, major events and other areas". However, travel is something that might be restricted as "we cannot afford to have that [free movement] continue if there's a major outbreak in a particular area", at which point people "might be limited only to a radius outside their home, or within that area".

But the big uncertainty in this plan is the NSW health system. The Burnet Institute modelling on which it was based was "entirely on all current restrictions being maintained", and included a peak of nearly 1,000 cases in ICUs – about 250 more ICU cases than NSW has beds.

Given that "changes in restrictions will lead to changes in outcome", Premier Gladys Berejiklian will be hoping that the inevitable surge in cases post-reopening remains confined mostly to "the vaccinated population, [as] our health system won't be troubled by that". But if it doesn't, expect some of these freedoms – especially the ability to move around the state – to end up severely curtailed.

The Wrap Up
  • 🔨 Shares in Tencent, NetEase and other game companies plunged after China's regulators "reminded" them of restrictions on game time for children.
  • 🎭 Talk about drama! Brisbane Lions star Lachie Neale is staying put, deciding against making a trade request to Fremantle.
  • 🚛 From 23 September truck drivers and health care workers entering Victoria will have to have had at least one dose of a COVID-19 vaccine.
  • 🦗 Australia's one-off Test match against Afghanistan will be cancelled if the Taliban, which bans women from playing sport, does not support women's cricket.
  • 🆓 Sweden (~72% of adults fully vaccinated) will remove most restrictions on public venues such as restaurants, theatres and stadiums at the end of this month.
  • 🐱‍💻 According to Google, "One in three Australians has had passwords hacked or compromised and one in four has fallen for a phishing attack designed to steal banking or credit card details".
  • 🤪 The chair of the UK's financial watchdog "warned investors not to take cryptocurrency advice from Kim Kardashian and other social media influencers".
  • 🛂 US President Joe Biden announced sweeping new federal vaccination requirements, requiring all federal workers and contractors to be vaccinated, as well as any private employer with more than 100 employees.
  • 👩‍💻 The new Matrix movie, Resurrections, dropped its first official trailer last night. Watch it here
  • 🚢 Another container ship, the Coral Crystal, got itself wedged in the Suez Canal last night. Thankfully the canal's tugboats managed to float the south-bound vessel and traffic was not negatively impacted.
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