Trudeau's greedy gamble 🍁
By Justin Pyvis – Delivered on 06 Sep 2021

Good morning! Friday's national cabinet provided some clarity on borders as ScoMo revealed that Australians will be able to travel internationally once their respective states reach the 80% fully vaccinated threshold.

Except for those in Western Australia, that is – WA Premier Mark McGowan said his state would reopen on "a date a couple months after that [80%] to give everyone the opportunity to get vaccinated". Given WA's nation-low vaccination rate, that probably won't be until 2022.

Meanwhile, Australia executed another vaccine swap deal on Friday, receiving 4 million Pfizer doses from the UK this month in exchange for the same amount at some point in the future. The swap effectively doubles the amount of Pfizer available to Australia during September and with shipments expected to rise from here, supply is no longer the vaccine rollout's constraint.

Markets

Weekly % change

 

AUD/USD

74.0

+2.2%

 

 

10Y Bond

1.23

+1.7%

 

 

ASX200

7,523

+0.5%

 

 

Brent (bbl)

72.4

-0.4%

 

 

Gold (oz)

1,830

+0.7%

 

 

Iron ore (t)

144.0

-7.8%

 

 

Bitcoin

50,700

+3.3%

 

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

The US S&P500 was flat on Friday, falling 0.03% as the Labor Department's nonfarm payrolls report showed just 235,000 jobs were created in August, the fewest since January and well below expectations for 733,000.

Locally, the ASX200 finished the week up a clean 0.5% as commodities and energy shares rebounded, more than offsetting declines in tech (e.g. Afterpay -2.8%, Xero -1.2%).

Economy

Lockdown blues: The Caixin Services PMI fell to 46.7 in August from 54.9 the previous month, the first time it has dropped below 50 (i.e. contractionary territory) since April 2020. The fall was likely due to COVID-19 flare-ups, with China's zero-tolerance strategy meaning much of the country experienced some kind of lockdown in August.

Reopening exhaustion: Retail sales in the Eurozone fell 2.3% in July from the prior month, well below expectations of a 0.1% rise. Online sales fell the most, declining 7.3%, with the the biggest geographic falls in Ireland (-5.9%), Germany (-5.1%) and Austria (-3.9%).

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Feature
Trudeau's greedy gamble 🍁

Canada's Prime Minister Justin Trudeau called a snap election back on 15 August more than two years ahead of schedule, gambling that pandemic reopening euphoria would secure him the majority that eluded him in 2019. In Canada a party needs 170 seats for a majority, represented by the dashed black line in the chart above.

So far it's not going according to plan.

Breaking it down: When Trudeau called the election, his Liberal Party was ahead in the polls – so far ahead that were the polls to be reflected in an election, his party would have regained the majority it lost in 2019.

However, it has been all downhill since then as the Delta variant takes hold, inflation hit 3.7% for the first time since 2003, GDP contracted in the June quarter and three quarters of Canadians think a federal election was unnecessary.

Consequently, Trudeau now trails the opposition Conservative Party – if an election were held today, polling indicates that Conservative leader O'Toole would win a minority administration.

Looking forward: A lot can change between now and 20 September. But Trudeau has yet to do anything to put voters' concerns at ease, or convince them that this election was even necessary in the first place. If anything he has done the opposite – at the first leaders' debate Trudeau warned voters that if they didn't give him a majority, there would likely be another election in 18 months.

Unless there's a change in tact over the next two weeks, Trudeau's greedy gamble could end up as one of the greatest political miscalculations of all time.

The Wrap Up
  • 🗾 Japan's Prime Minister Yoshihide Suga – who has only had the job for a year – will not contest the next election.
  • ⚽ The Socceroos defeated China 3-0 in the opening game of the third stage of World Cup qualification and have now won nine straight matches for the first time since 1997.
  • 🧳 Who knew ScoMo had ancestors in the US as well as the UK? The PM plans to travel to Washington DC for the Quad (Quadrilateral Security Dialogue) meeting with the US, Japan and India, slated for October or November.
  • 🔨 Doing business in China is getting more expensive. Xi Jinping's push for "common prosperity" is a "financial black box", with shareholder earnings siphoned off to finance projects that "please Beijing".
  • 🍿 Donald Trump will hold a rally in Iowa ahead of a rumoured 2024 run at the US Presidency.
  • 🦠 Vietnam is set to end its COVID-zero policy, removing lockdowns from 15 September and living with the virus.
  • 🍎 Apple delayed the rollout of its controversial plan to backdoor its devices in the name of child safety.
  • 💉 Kim Jong Un declined a vaccine offer from COVAX, electing instead to manage the virus "our style", i.e. quarantines and border closures.
  • 🎾 Naomi Osaka plans to take an indefinite break from tennis after she was knocked out of the US Open third round. Australia's Ash Barty was also eliminated.
  • 🥝 The Sri Lankan refugee who stabbed seven people in a New Zealand supermarket on Friday before being killed by police was "New Zealand's worst-kept secret", with even Prime Minister Jacinda Ardern briefed multiple times about the man's threat.
  • 👿 The Satanist Temple – a registered a religious organisation in the US – is attempting to get around Texas' new anti-abortion laws by arguing their members need access to abortion as a faith-based right.
  • 🏟️ There were packed crowds at a college football match in Wisconsin and at the Dutch Grand Prix, meanwhile some Australians celebrated father's day by... having lunch on the barricade between NSW and QLD.
  • 🦘 The Wallabies were comprehensively dismantled by the All Blacks in Perth, going down 38-21 in a Bledisloe Cup whitewash.
  • 🏉 Brisbane Lions' star Lachie Neale has reportedly requested a trade back to the Fremantle Dockers, and "has already spoken with [coach] Justin Longmiur".
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