A Sniippet of weekly news #19 – Aug 2020

Last week, local politics was dominated by border-closure-wars and covid. Victoria continues to struggle. It was the only state not to see retail sales increase in July. Now QLD may host the AFL grand final. 

China has once again flexed its muscle on Australian exports with the wine industry now in its sights. Nothing like a Barossa red?

In the US ghost kitchens are replacing local restaurants as covid accelerates the delivery only category. Will we see this trend here?

In finance advice we look at the benefits of using an asset allocation for your portfolio. And in trivia we look at the dangers of riding Sydney ferries!

The one-minute weekly recap

A Sniippet for You

Is Australia’s ‘peak China’ moment here? (AFR, 19 Aug)

  • China’s move to put heavy import duties on Australian wines because of allegations of dumping could mark a big change in Australia’s economic relations with China
  • Has Australian exporters to China naively ignored the political risks?
  • What will Australia do when the Chinese iron-ore boom tapers?
  • Is the safer bet for investors to buy shares in Chinese companies?

Victoria’s stage four lockdown could last until end of September (AFR, 20 Aug)

  • Melbourne University epidemiologist Professor James McCaw, who is leading virus modelling for the Commonwealth, predicts that Victoria’s stage 4 restrictions will last until the end of September
  • Deputy Chief Health Officer Allen Cheng indicated “single digits, low double digits” are needed to lift restrictions
  • Business groups and medical experts have called for greater disclosure on Victoria’s contact tracing efforts amid concerns

How to covid-proof your holiday bookings (ABC, 24 Aug)

  • Pay with credit cards — they’re often protected by chargeback in case of cancellations 
  • Book last minute 
  • Drive rather than fly
  • Read cancellation policies carefully
  • Travel insurance will not generally cover trips booked after March 2020

Workers to lose $33k a year without reforms (AFR, 19 Aug)

  • NSW Productivity Commissioner has warned that people will be $33,000 a year worse off and living standards will slip, unless governments stop relying on the mining boom
  • The federal government had done “most of the heavy lifting” on productivity reforms in the 1980s and 1990s but now it is the states’ turn
  • He has made 55 recommendations in a green paper including best-practice teaching, smarter infrastructure, and a better mix of state and local taxes

CEOs back apprenticeship scheme to train IT workers (AFR, 19 Aug)

  •  6 CEOs have called for a formal IT apprenticeship scheme to address a labour shortage in the industry
  • The federal Employment Minister has given tentative support

Despite everything, being a landlord is still the best job (AFR, 21 Aug)

  • Landlords make more money than an average income earner – especially if they bought more than 10 years ago
  • In 16 of the 29 quarters leading up to June 2019, the median Sydney home earned more than the median full-time worker earned from wages
  • But according to the chief economist at AMP the good times could be ending, “There’s a high probability, particularly if immigration doesn’t return in strong numbers and we continue to see excess stock in the rental market, that prices and rent will fall and stay weak for a very long time”.

CBA is looking to help SMEs (AFR, 25 August )

  • CBA is looking at ways to increase their SME share this includes: 
    • allowing receivable and inventory as collateral
    • growing their SME digital loan channel BizExpress: under a pilot program, SMEs can get access to unsecured loans of up to $50,000 within 15 minutes
    • putting about 120 business bankers back into branches by December

Are ghost kitchens the future of restaurants? (Wired, 8 Aug)

  • Ghost or virtual kitchens are co-working spaces for restaurants who specialise in delivery only
  • There are 119 in the US but that is expected to double over the next 12 months
  • The coronavirus is playing a part with many traditional restaurants going delivery only
  • Ghost kitchens save restaurants money on rent, servers, and other dine-in costs
  • But is something lost when customers can’t dine in?

What happens to the markets if there’s a vaccine? (AFR, 20 Aug)

  • Scenario 1: Taper tantrum: as governments pull back from their enormous fiscal stimulus, investors get nervous, and markets become volatile
  • Scenario 2: The market jumps and expensive stocks get more expensive
  • Scenario 3: Big recoveries in airline, travel, and other covid affected stocks
  • Of course, a successful vaccine is not guaranteed

A Sniippet of Finance advice

Asset allocation as a guiding light (AFR, 24 August)

  • Choosing investments based on current market conditions is unlikely to be a winning strategy in the long run
  • Having an asset allocation rule based on diverse assets reduces return volatility
  • Choose asset classes that have little correlation between them
  • Within asset classes diversify between domestic and international
  • Having an asset allocation rule also takes emotions out of trading

A Sniippet of Brain food

3 Brain Hacks To Be More Decisive (Forbes, 6 Aug)

  • According to a recent McKinsey Global Survey, only 20 percent of respondents said their organizations excelled at decision-making
  • Acknowledge that making NO decision IS a decision
  • Accept that the future is unknown. Our brains like certainty but we need to get over it.
  • Pursue growth not perfection. A great decision-maker isn’t hard on themselves when things don’t work out perfectly.

A Sniippet of Trivia

Low blow: Sydney’s new ferries won’t fit under bridges with passengers on top deck (The Guardian, 24 Aug)

  • 10 newly purchased ferries will not be able to safely pass under bridges along the Parramatta River if commuters are sitting on the top decks
  • Commuters may risk decapitation if they do not move below decks
  •  In 2018, the NSW government bought 55 new trains worth $2bn that were too wide to safely fit through some tunnels

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