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Victoria eases restrictions

Good morning! For the first time since 10 December Victoria is COVID-free! πŸ™Œ The state government announced relaxed restrictions from Friday, with masks no longer required (except on public transport), gathering limits increased and most importantly for some, up to 75,000 people at the footy this weekend.

Market Wrap

More stimulus please!

Daily % change

AUD/USD

76.2

-1.5%

ASX200

6,745

-0.1%

Brent (bbl)

60.5

-6.3%

Gold (oz)

1,726

-0.7%

Iron ore (t)

154.7

2.0%

Bitcoin

54,940

0.7%

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

More stimulus! That was the message from US Fed Chair Jerome Powell and Treasury Secretary Janet Yellen (the former Fed Chair) during their joint House Financial Services Committee testimony last night. The TL;DR is it was filled with phrases along the lines of 'hopeful but daunting', and 'far from complete'. Powell again reassured markets that the Fed would "continue to provide the economy the support it needs for as long as it takes", and that he would wait for "data-driven" evidence before considering raising rates.

Oil slides: Oil dropped more than 6% as rising coronavirus cases in Europe have again caused people to question the scale of the demand recovery. Germany announced new lockdowns over the Easter period, with France and Italy also increasing restrictions on activity. In the UK, the government is seeking to impose a Β£5,000 fine on people travelling outside of England without a 'valid reason'.

Airtasker surges: Airtasker, part of the 'gig economy' which "provides an online and mobile marketplace enabling users to outsource everyday tasks", listed on the ASX at 65 cents a share and promptly jumped to over $1. The rise followed a positive trading update, with the company reporting strong operational and financial performance since 1 January.


Econ Wrap

Popping the Kiwi housing bubble

RBNZ

House prices have been on a rampage in New Zealand, rising by 21.5% over the past year and are now the most expensive in the OECD. The government yesterday announced new measures aimed at combatting the rise, including:

  • phasing out the ability of investors to claim mortgage interest as a tax-deductible expense (called negative gearing in Australia);
  • extending of the period in which capital gains apply to the sale of investment properties to 10 years (from 5); and
  • unlocking more land to increase housing supply.

A crystal ball: If property continues to heat up in Australia, the government and regulators may consider similar measures to cool the Aussie property market. Note that the Reserve Bank of New Zealand already implemented more stringent loan-to-value lending ratios earlier this month, something we have yet to see in Australia.

Elsewhere: Premier Li Keqiang said China's economic growth this year could exceed the government's target of 'above 6 per cent'. We're not sure how you exceed a target with an unlimited threshold but... I guess that's why we're writing this newsletter and not trying to set targets for an economy containing 1.4 billion people. πŸ€·β€β™‚οΈ

Corona Wrap

Global vaccine struggles

Please, do a cost benefit analysis!
Alex Tabarrok/Twitter

In Hong Kong, seven chronically ill aged care residents recently died after receiving the Chinese-made Sinovac vaccine. One person with underlying conditions also died following vaccination with the Pfizer shot. There are now "mounting public concerns" over the vaccines – particularly China's Sinovac – with respiratory medicine specialist Dr Leung Chi-chiu estimating it will now take another 300 days to achieve a 70% vaccination rate (i.e. Jan 2022).

Uniquely Hong Kong: The public's mistrust of Hong Kong authorities has grown over the past few years following moves by China to restrict free speech and imprison democracy advocates. Hong Kong's leader, Carrie Lam, is a pro-unification bureaucrat hand-picked by Beijing – meaning she has a snowball's chance in hell of convincing the people of Hong Kong that the vaccines are, in fact, safe. In an effort to speed up the vaccination rate, the minimum age for getting the jab will soon be decreased from 30 to 16.

Local implications: The vaccine rollout issue in Australia has so far been logistical, with more people wanting the jab than the government has made available. However, as we saw in Europe and now Hong Kong, the public's perception can turn quickly, jeopardising even the best-laid rollout plans.

Elsewhere (see image above): Nine countries, mostly in Europe, are still refusing to use the AstraZeneca vaccine, despite the European Medicines Agency and the World Health Organisation reporting the benefits outweighed the risks following investigations into reports of blood clots.


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