Locally our employment data was very strong with unemployment rates falling to 5.8%, which was much better than expectations. In addition, the percentage of the population working also rose to 62.3%, albeit slightly below the pre-Covid level of 62.7%. This is far better than expected and supports the view that the JobKeeper expiration may not be as painful as many suggest.

Not surprisingly population growth has slowed dramatically due to immigration largely ceasing. This will cause some headwinds for overall economic growth and housing demand, but it will assist the unemployment rate. We do however note housing demand is currently very strong. Going forward we suspect a hot topic politically will be immigration, particularly given Australia’s attractiveness has likely increased as a result of Covid.

There is a lot of information available for those who are interested, but we thought a very brief summary would be helpful.

Vaccines work with the immune system. The vaccine shows our immune system what the virus looks like and gives it the tools to pre-warn it so that it can fight the virus. The issue is that they have only shown the immune system a critical part of the virus called the “spike protein”, not the whole virus. This was done due to time constraints – whilst blueprinting the whole virus is a better option, it is far more time-consuming, and of course time was of the essence. The good news is that the whole of virus vaccine is still being developed.

So, what’s the issue? Well, the virus copies itself millions and millions of times and now and then the copies aren’t perfect replicas. If the blueprint for the spike protein changes, the ability to recognise the virus is impeded. If enough changes happen, the spike protein may become unrecognisable, and an escape mutant emerges. The escape mutant is likely to become the dominant strain.

Copying errors are already occurring and the mutations in Brazil and South Africa have significantly undermined the body’s immune system to recognise the spike protein, resulting in material reductions in the vaccines’ effectiveness. To date the UK and US mutations have not compromised the effectiveness of the vaccines. 

Can’t we just recode the vaccines for the mutations? Altering a change of shape in the spike protein should be easy to recode. However, a “stealth change” is another story. This type of change makes part of the spike protein invisible to antibodies and as a result is potentially much more complicated to recode.

These complications have led Hamish Douglas of Magellan to describe the current situation as “the most complex risk environment the world has seen for many years.”