Two steps forward, one step back
By Justin Pyvis – Delivered on 15 Oct 2021

Good morning! Victoria set a new pandemic record yesterday after it notched up 2,297 new cases, with acting Chief Data Officer Ben Cowie admitting that there was "no single event" and there were "increases across the board".

Better get those vaccination rates up, pronto! Speaking of which, Premier Daniel Andrews fired a warning shot at those still on the fence about the vaccine, confirming that it could be some time before the holdouts taste freedom:

"...those who don't want to be vaccinated, and choose not to be, there will be limits on their freedoms for a considerable time.

The exact nature of that will have to be said later but I can't definitively tell you what January, March and April looks like next year. Anybody thinking that they'll wait this out if they wait a few weeks they could go to the pub because the double vaccinated green tick to get it won't be a thing, yes, it will."

Have a great weekend.

Fully vaccinated population (aged 12+)


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

The US S&P500 posted its largest gain in seven months last night, rising 1.71% on the back of solid earnings reports from financials including Bank of America, Morgan Stanley and Citigroup. Initial jobless claims also impressed, falling below 300,000 for the first time since the pandemic began. However, it's not all clear skies ahead – US producer prices set another new record, rising 8.6% over the past year (although the monthly change of 0.5%, while still elevated, was the lowest this year).

Locally, the ASX200 gained 0.54%, with tech (+4.1%) the standout following strong gains in the US the night before on the back of lower Treasury yields.


Double dip: Hours worked and total employment in Australia fell below pre-pandemic levels yet again in September, due to "extended lockdowns in New South Wales, Victoria and the Australian Capital Territory". While the unemployment rate only ticked up 0.1 percentage points to 4.6%, that reflects "reduced participation during the recent lockdowns, rather than strong labour market conditions". Effective unemployment is probably over 10%.

Energy relief: China's government relaxed its restrictions over coal-fired power pricing, allowing generators to raise prices to "better reflect the supply and demand relationship".

Persistent inflation: Social security payments for about 1 in 5 households in the US will increase by 5.9% in 2022, the biggest cost-of-living adjustment in 39 years.

Splashing the cash: The NSW government will once again stimulate demand into a supply shock, giving people another $50 voucher to spend on entertainment and dining.

Getting hot: Producer prices in China increased by 10.7% in September, the biggest rise since the NBS database was made available in October 1996, as rising commodity and energy prices drove up costs. However, there was no discernible passthrough to the aggregate prices of domestic consumer goods, which increased just 0.7% from a year ago thanks in no small part to a 46.9% plunge in the price of pork.

Two steps forward, one step back

Several countries recently reopened their economies, pledging to move away from a focus on case numbers towards the clinical condition of those cases.

Unfortunately it hasn't exactly gone to plan for Israel (65% fully vaccinated) and Singapore (78% fully vaccinated). Despite their pledge, soaring case numbers in both countries caused politicians to quickly reimpose restrictions. While the 65-75% fully vaccinated Nordic countries also removed restrictions, it's a case of so far, so good – they only did so more recently and have yet to see rising case numbers.

Breaking it down: While these charts might look alarming, particularly for Israel, it hasn't translated into a fatality rate anywhere near what was witnessed earlier in the pandemic – the peak of around 3 deaths per million Israel was recording daily in September was only around 15% of what the UK experienced in its big wave in January 2021. And the fact there was a spike at all is because of the ~10% unvaccinated Israeli adults, who make up 73% of serious cases and 65% of the deaths.

Why this matters: New South Wales is starting to reopen its economy with COVID-19 in the community, and will soon be followed by other states. As case numbers and hospitalisations rise in Australia – at 52%, the total population vaccination rate is still significantly lower than all of the countries discussed above – state politicians will be confronted with a similar dilemma to their counterparts in Israel and Singapore: how many deaths are too many?

The situation is further complicated by an appalling vaccination rate in the regions where hospital capacity is lacking, especially among Aboriginal and Torres Strait Islander people (in WA, the country's worst-performing state, just 22.5% are fully vaccinated).

Looking forward: It's great that Australia is starting to reopen (finally!) but if politicians don't properly communicate what to expect and certain regions remain relatively unvaccinated, it could quickly morph into a case of two steps forward, one step back.

The Wrap Up
    💉Commonwealth Bank and Westpac released statements yesterday announcing that COVID-19 vaccination will be mandatory for all staff, affecting around 75,000 people in Australia.
    🎸Beatles legend Paul McCartney fired off another barb, calling the Rolling Stones "a blues cover band, that's sort of what the Stones are. I think our net was cast a bit wider than theirs".
    🦈The Governor of land-locked Colorado tweeted that his state "is tied for state with the least shark attacks!". Asked to comment, his press secretary said "Coloradans are known for being healthy and lean and sharks know they won't get much of a meal here".
    🕵️‍♀️The World Health Organisation's new 26-person team to investigate the origins of COVID-19 includes 6 people from the first, widely criticised team.
    🧒Children aged 5-11 may be eligible for the Pfizer vaccine within weeks after the federal government asked Australia's drug regulator, the TGA, to "expedite" its decision.
    🌏Over 100 nations, including Australia, signed the Kunming Declaration, which aims to protect biodiversity e.g. by increasing funding for conservation in poorer countries.
    🏭The Chief Operating Officer of Goldman Sachs said decarbonising the world would require $US100 trillion in financing over the next 20-30 years.
    🛂WA Premier Mark McGowan said when the state opens "to the infected states next year", his government will "put in place some public health safety measures", such as capacity limits and mask wearing requirements.
    🎓Harvard University moved its Chinese language academy from Beijing to Taipei, due to a "perceived lack of friendliness from the host institute".
    🔨Microsoft will shut down LinkedIn China due to "a significantly more challenging operating environment and greater compliance requirements".
    🥝New Zealand recorded 71 new COVID-19 cases yesterday, the most since the start of September, and cases are expected to rise further.
    🍎Apple has been forced to slash production of its iPhone 13 by 10 million devices due "to the ongoing shortage of computer chips".
    🦑They have Netflix? North Korean state media said Netflix's Squid Game "makes people realize the sad reality of the beastly South Korean society in which human beings are driven into extreme competition and their humanity is being wiped out".
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