Earnings season tracking better than expected

This week on Talking Finance:

• Professor Peter Collignon, Professor of Infectious Diseases at ANU’s Medical School, takes us around the globe to look at how different countries are approaching their respective COVID situation;
• Jun Bei Liu, Portfolio Manager at Tribeca Investment Partners, has a look at earnings season so far and the new all-time highs reached on the Nasdaq and S&P 500;
• Jo Masters, EY Oceania Chief Economist, shares her thoughts on Australia’s economic recovery, and why we're a lot better placed than most nations; and
• Josh Butler, Political Editor at The New Daily, looks into Victoria’s hotel quarantine inquiry and China’s latest curveball to Australia’s wine industry.

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AG: Hello and welcome to Talking Finance, I’m Alex Gluyas and on this week’s show I’m talking to Professor of Infectious Diseases at ANU’s Medical School, Professor Peter Collignon, who takes us around the globe for an interesting insight into how different countries are dealing with COVID, including the rushed Russian vaccine, Sweden’s herd immunity strategy, New Zealand’s second wave and then, of course, the situation in Australia.

For markets I’m joined by Jun Bei Liu, Portfolio Manager at Tribeca Investment Partners, for an update on earnings season so far and what’s behind the Nasdaq and S&P500 reaching record highs overnight.

Jo Masters who is the Chief Economist of Oceania at EY provides an interesting insight into why Australia’s economic fundamentals put us in better shape for a recovery than other nations around the world.

And for politics, I’m joined by Political Editor at The New Daily Josh Butler to look at China’s latest claims that Australia is dumping wine and what it means for escalating China-Australia relations and also Scott Morrison’s announcement that Australia has secured a supply of Oxford University’s COVID vaccine.

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AG: Here is Professor Peter Collignon, Professor of Infectious Diseases at ANU’s medical school. Peter, the big news globally is that Russia has rushed through and approved a COVID vaccine. How likely is it that this vaccine not only works but is actually safe given how quickly it has been rushed through the approval process?

PC: The short answer is we don’t know and that’s why what Russia has done is a really bad idea. These vaccines we’re going to roll out to billions of people and you’ve really got to know what their side effects are. That means you need to do the preliminary phase one and phase two studies that tell you it’s safe in this relatively smaller group of people, which is often just maybe 100 people, and in Russia, I understand they’ve only immunised 76 people so that’s a really small number. Yes, you need to know effectively in the test tube that this looks like it’s worked but you really don’t know what it’s going to do until we do phase three studies and that actually means having tens of thousands of people in what we call the treatment arm, or the treatment group, versus the placebo or the comparative group.

You’ve then got to see first of all are we going to see rare side effects, 1 in 5,000 people may get some major complication, hopefully not but you won’t know that until you roll it out, is it different in different age groups? Do 20-year-olds behave differently, do 80-year-olds? Etcetera. Most importantly we’ve got to know does it work and the only way you know that is when you have it in places that have got a fair bit of infection and basically does this vaccine give you 10 per cent protection or 90 per cent protection because if we want a good vaccine that works and helps us to get to elimination we need a vaccine that’s 90 per cent effective.

In comparison, the influenza vaccine is probably only 30 per cent to 50 per cent effective. That’s still useful but it doesn’t achieve what a lot of people want which is to have so many people immunised or immune so that there’s no longer any transmissions of the virus and it can go back to life as normal.

AG: We’re also seeing a second wave occurring in New Zealand which has arguably had the most effective strategy in stopping the spread of the virus. Jacinda Ardern has continued with her hard lockdown approach and Victoria is currently in its own hard lockdown. Do you think this is clear evidence of an elimination strategy and is this a sustainable model in your view or is your view that suppression of learning to live with the virus is inevitable?

PC: I think suppression and learning to live with the virus is what we’re going to have to learn to do for the next year or two until we get a very effective vaccine that basically allows us to maybe eliminate the virus. Essentially, I’m not sure that New Zealand and Victoria, which were the two places that went for an elimination strategy with very hard lockdowns, have been successful in achieving, if you like, control or even elimination by the current definition than Queensland, Canberra, Tasmania, Northern Territory, South Australia and Western Australia. They have all, by the definition of elimination, achieved that but without the same strict lockdowns and with, I would think, less economic and social costs.

I actually think the hard lockdown doesn’t necessarily give you a better result than just trying to suppress the virus to very low levels which will give you elimination in a lot of areas but the trouble with elimination is you may achieve it for a period of time but it’s so easy for the virus to be reintroduced, it’s everywhere around the world, it’s so easy that it can escape when somebody might do the wrong things at some time. Look at New Zealand, look at Melbourne in particular and even in New South Wales we’ve had a security guard recently when they have got very good procedures in place where they’ve got infected and it has the potential maybe to go out in the community. We’ve got to live with that all the time.

My trouble is if people think that the virus is eliminated in their area, and it may well be, they actually feel that they can go back to normal because hey, we’ve eliminated the virus. The trouble with that is if you start having huge crowds, you don’t keep your physical distancing both in your own homes with keeping numbers down with your friends and family in your workplace for instance, too crowded in the staffroom, including with essential workers. When it does come back, and it’s almost inevitable that will get reintroduced periodically because there’s so much around the world then it spreads much more rapidly because you’ve got a false sense of security.

I also worry that if you actually go too hard with lockdowns that there’s almost a human reaction to say well we’ve done the hard yards, we can go back to normal and again you are more likely to have bigger crowds, etcetera. That’s why I think while elimination is nice and yes it’d be great if we can have it and sustain it, we’re better off going for a suppression therapy to really low levels of suppression policy because that actually means that we’ve got to keep on thinking well we think it’s gone, it’s probably gone but I can’t be sure and therefore let’s keep up these proportions at least what’s practicable because that will decrease the spread if it ever does get reintroduced and will have less harm, and it will be easier to control.

AG: Can we then look to what’s been happening in the opposite of that hard lockdown in terms of what’s happening in Sweden which largely kept society open. I just wanted to get your view on their strategy because some people point to the fact that their cases are now declining quite quickly but if you actually compare them to the other Scandinavian countries like Denmark and Norway, who actually did lock down, Sweden’s death count is far higher.

PC: Sweden’s death count is markedly higher than Australia as well so yes, I’m not sure that the Swedish approach is the way to go. I guess we might be wiser in two years when we see what the cumulative effect of all of this is but I would think we’re better off taking the Australian approach or which was the Australian approach which is let’s go for suppression, let’s keep things working as much as possible but keep crowds down, close venues that might be more responsible for transmitting this disease particularly when there’s a lot around because I think that’s more sustainable with less deaths overall.

We need to do things better, our nursing homes particularly we need to do more to keep it out of there but I, at the moment, think the Swedish model has a much higher death rate than other places that have done it differently and not necessarily with a better economic, social or other outcome. I guess we’ll have to wait and see but I also think an elimination strategy where you lock down really hard like Victoria and New Zealand isn’t the way to go either because I’m not sure that has produced better results than say Queensland, South Australia, Western Australia or even Canberra and we have achieved the same end but with less economic and social costs.

AG: Just on that, are you pretty much saying that in terms of looking around the globe that in your opinion, the rest of Australia barring Victoria, has dealt with it really well?

PC: Yeah, I think we have actually, we have had good control of our borders, yeah we have had an escape and Victoria is a good example but I think Victoria has had a lot of things they haven’t done as well as for instance New South Wales, everything from contract tracing to not keeping people who are infected at home, they’re out on the streets, to not having as many contact traces to being poor with results getting back and people implementing that. There’s a lot of things at quarantine hotels obviously that we need to learn and fix up so we don’t do it again because we’re going to have this problem for another year or two.

It’s not so much blaming people but where have things gone wrong? The Ruby Princess in New South Wales was another great example. Learn from what we have done wrong. In northern Tasmania, they had an outbreak because they had staff too close together in tea rooms in their hospitals, etcetera. We need to learn from those and we need to change our practices and including nursing homes are not letting a lot of staff go from nursing home to nursing home because they’re a low paid casual worker. All of those things, we’ve got to learn how do we do it better so that we don’t repeat these mistakes and we don’t get a problem inevitably when this virus comes back and is reintroduce which I think is inevitable that we limit the spread and we’re able to control it better which thankfully so far New South Wales seems to have been able to do with a much bigger state and much bigger population but it’s a wait and see game.

I wouldn’t adopt the Swedish approach at this stage, I think what we’re doing in Australia is pretty good by world standards other than what’s happened in Victoria.

AG: We’ve seen reports just this morning that Scott Morrison has signed a letter of intent to secure the Oxford University COVID vaccine should it be safe and effective. Given this vaccine is one of the most advanced in the world how important is it that we have locked in a deal to be supplied with it given the presumed popularity of that vaccine?

PC: I think it’s a good idea that we lock in with the vaccines that look like they’re most advanced and that is one of the ones that is most advanced and looks like it’s got potential. My understanding at least from the media in the contract we only have to go through with that deal if it shows that it’s safe and effective so that’s why the current phase three studies are so important that are happening in Brazil, South Africa and the UK. What we’ve got to see is when they roll it out to tens of thousands of people that it’s safe and effective and that will take quite a while to get that data. I am not sure we’ll have data until the end of this year because it will take that long to enrol and follow up with people.

That’s good but then it also means that there’s going to be many months before you get production of millions or tens of millions of doses you need just for Australia and then distribute it. It still means we’re not likely to see a vaccine until the middle of next year at the earliest and more likely the end of next year.

AG: Just finally in Victoria we’re continuing to see a large number, in comparison to history, of deaths, but new daily cases now seem to be stabilising. Is this an expected trend we’re seeing as these deaths reflect a large quantity of cases from prior weeks?

PC: Yeah they do, deaths tend to lag cases by a couple of weeks and it’s very dependent on the age group that gets infected. I mean if you’re in your twenties you have less than a 0.1 per cent mortality but if you’re in your eighties it’s over 10 per cent and then in a nursing home is probably closer to 30 per cent. Yes, we will, unfortunately, continue to see, I think, reasonable amounts of deaths and not until Victoria gets down to only 10 or 20 new cases per day are we going to really see a fall in deaths of any numbers and that will even be a couple of weeks after that before we start seeing the decrease in death numbers.

AG: Good to chat, Peter, thanks very much for your time.

PC: Okay, see you, bye.

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AG: And now for a look at markets, here’s Jun Bei Liu, Portfolio Manager at Tribeca Investment Partners. Jun Bei, we’re a bit passed halfway through earnings season and this week has been a big one in terms of the companies that are reporting. The big standout has been those online retailers such as JB Hi-Fi and Kogan. How is this boom in online spending during lockdown impacting markets and do you think it’s sustainable?

JBL: The sustainability of it is a little bit questionable, however, because of the lockdown it probably has changed some people’s consumption habits. But of course, there’s pull-forward where, as people are locked in their home and there’s really not many other options to shop and spend all that stimulus that’s been given to them. So, a lot of those online retailers will be seeing a significant amount of sales. But look, as the reporting season progressed, we’re actually seeing the sales coming through the offline retailers for those that are exposed to the car-related industry or even some of the other retailers that have physical shops. As things open up, people are more willing to visit those shopping centres and visit the actual physical store.

On that basis, we do believe that online retail spend is going to moderate somewhat as everyone else moves past the lockdown period over the next six months.

AG: How have you viewed the big banks' results so far? ANZ has just announced it is paying a dividend, but we had Westpac tell the market that they’re the only big bank to cut theirs entirely. Was this expected?

JBL: Cutting the dividend was a little bit surprising just given – well, APRA has announced that they can actually pay out 50 per cent of their profit and then Westpac has decided not to given the uncertainty. The banks' results so far have been kind of lacklustre. We knew the result wasn’t going to be great, but it came a little bit below expectations. Top line’s weaker, margin’s weaker and capital position all a little bit weaker than expected. I guess one of the key themes to take away from those results at the moment in the big banks is that there’s so much uncertainty over the next six months as those JobKeeper and stimulus started to wean off.

As well as some of the mortgage payment holidays that the banks have given to people started to come off and we really have to see how the economy, how people, will respond post those periods. So the outlook, all very uncertain, pretty much reflecting how our economy might recover from this disruption.

AG: And just a comment on the results we’ve seen so far this earnings season as a whole, do you think they are roughly in line with what the market has been expecting or perhaps a bit better than expected?

JBL: Yeah, look, actually the results so far have been reasonably positive, a little bit better than expected, taking out the financial sectors, these are the banks and some of the fund managers and the like. Overall, the result has been reasonably better and the share price has been modestly on the upside. This is partly because earnings have been cut significantly, especially for businesses that are exposed to the lockdown and so when the company does report, because of the stimulus and because of the pent-up demand, we’re actually seeing better performance out of those sectors. But the banks, of course, things are still pretty tough and the overall financial sectors, they do have quite a significant headwind and structural pressure. That’s why we’re not actually seeing upside on that basis.

AG: And just looking over to the US and the Nasdaq reached another record high overnight and the S&P 500 broke its own record. How much of this do you think is due to better than expected earnings season results, or is this still being driven by that momentum of those major tech stocks?

JBL: Absolutely, momentum in the major tech stocks continues to power on. But what was surprising was those tech companies at the recent reporting season have all met the very hefty big expectations that investors have for them, so hence why the share price is continuing powering on, combined with a very low interest rate, it’s almost at this point where nothing is stopping them. But I think on the other hand with the overall index, you’re seeing a bit of better performance across other sectors as well which is very similar to our market as well, as the consensus earnings are being cut more severe than what it is in reality.

AG: We saw the RBA minutes released yesterday from their most recent August 4 meeting. Something that stood out was the point that fiscal stimulus will add 4 per cent to GDP this year and 5 per cent to GDP next year. Is this a clear indication by the RBA that this physical and monetary support will likely be required for a long time?

JBL: I think even though they may not highlight it and spell it out in clear sentences, it is not something that can be easily backed away from, unless the economy reached its full capacity and starts seeing inflation, which we don’t expect to see for a very, very long time. We’ve seen examples like the US and Europe where, when they start pumping the stimulus, it's very, very difficult to step away, when they do create a lot of disruption and deflation in asset prices. So, it is going to be a tricky position when once we recover, to walk away from some of those lower interest rates just because it’s provided so much support for all asset prices around the world.

AG: And the Aussie Dollar continues its rally. What are you viewing as the key driver behind that?

JBL: That’s mainly reflective of risk appetite. When things are good, people wanting to buy, invest for return, and to get high return is to move capital outside of the US, which is considered as a safety currency. So you’re seeing the Aussie Dollar rallying, you’re seeing the emerging market currency rallying, so it’s reflective of risk appetite. As global growth finally does pick up once we move past the current pandemic, you should see that strength across the Aussie Dollar and other currencies continuing.

AG: Great to chat, Jun Bei, thanks for your time.

JBL: That’s great, thank you so much for having me.

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AG: Now for a look at the economy here is Jo Masters, the Chief Economist at EY Oceania. Jo, you wrote an interesting article that was a reminder of Australia’s strong fundamentals leading into this COVID recession which I think is an important fact to remember as we approach a recovery. Why are you viewing Australia as being in better shape compared to the rest of the world to get through this economic downturn?

JM: I guess it’s really important to acknowledge just how difficult the current conditions are, we know that now is an economy that’s contracting very sharply with very serious impact across the labour market that’s been cushioned by policy but still very confronting times for many people. If we look beyond the next six to twelve months or so into that recovery phase this recession is different in many ways but one of the ways to do it is it’s been ubiquitous. Every economy around the world has faced a health crisis and the consequence of economic contraction with that and in that environment, your deep underlying fundamentals will be really important and when we look at those for Australia they remain relatively strong.

We highlighted four ones in particular, the balance sheets in Australia are fairly robust. Our public sector debt is low so the government’s balance sheet is solid, central bank has one of the most robust balance sheets amongst advanced economies mainly because we didn’t do a whole heap of QE post the global financial crisis, our commercial banks are some of the most solidly capitalised in the world, our businesses are not overly leveraged as we see a place inside the US. The household balance sheet is probably the most fragile one, we know that household debt is very high but we also know actually that household assets at the moment are quite high so providing we don’t have a big collapse in assets the household balance sheet in net terms looks very solid so that financial stability is going to be incredibly important for Australia as we start to recover.

We also looked a little bit beyond that and argued that Australia remains a very desirable location for skilled migrants that the rise of the middle class in Asia and their needs and wants will continue to progress post-COVID and also that Australia still has a strong comparative advantage in areas not just resources but renewables, med-tech, waste, agriculture and the like.

AG: You also pointed out how COVID has shown us in an economic sense what is possible when the government and central bank, I guess, go outside the norm, and as you put it 'throw away the rule book', how will it shape Australia’s economic policy going forward?

JM: Yeah, so I think we should be very proud of the many examples of how we see different parts of our economy pull together, there’s examples across government between state and federal for example, we have also seen collaboration between tenants and landlords and banks for example. We have seen people, the stakeholders involved in industrial relations get around the table so we should be really proud of that and I think we should try and hold onto that because COVID is an incredibly challenging economic environment but one that does give us the opportunity, that burning platform to try and make Australia more robust, more resilient, more efficient in the future and that’s going to be really important because that’s how you drive economic growth and that’s how we create jobs and address the debt burden down the track.

AG: As COVID cases are looking to stabilise in Victoria, how big of a hit, do you think, this second lockdown has had on the Australian economy and supply chains and is it a sustainable model to go forward from an economic sense to keep locking down and reopening if there’s potentially more waves coming?

JM: One of the difficult things at the moment is there is no roadmap, I think it will take many years before we can look back and assess what was best practice, what was the most efficient policy response in an economic sense and a health sense. We know that restrictions hurt the economy almost immediately and very negatively. We also learned that when we eased restrictions you do get an improvement in activity, it’s not symmetrical but that does happen.

Balancing that against the health side of the equation is going to continue to be a challenge. I think actually whilst there’s a lot of focus on what’s happening in Victoria and the economic hit is likely large enough to mean that Q3 GDP will also show a contraction so that will be three consecutive contractions the more sort of [indistinct] contraction you get the bigger the hill to climb on the other side so it definitely has an impact and it’s had an impact through confidence. We saw consumer confidence in New South Wales fall more than in Victoria so we’re watching that confidence link quite closely but actually watching what happens in New South Wales is going to quite important as Governor Lowe said last Friday where we haven’t had that lockdown managing sort of hot spots, not really tightening restrictions up too much so we are watching and learning all the time.

AG: The RBA revealed yesterday in their meeting minutes that around 30 per cent of Australia’s working age population was on government COVID related welfare, are you anticipating that fiscal monetary support will need to be maintained perhaps a little longer than first anticipated in order to lower the unemployment rate?

JM: Absolutely. We have already seen an extension of Job Keeper and Job Seeker albeit more tapered, they are incredibly expensive policies particularly Job Keeper so continuing to target it and taper it is probably what we’re going to see but the reality is we know that there are households that are relying on that money so the ABS survey showed that 42 per cent of people that have received income support used some of that to meet living expenses, day to day expenses, and we know that lots of businesses are relying on it as well. We are absolutely going to need ongoing support particularly if we continue to get localised outbreaks and renewed restrictions so that’s the first thing.

Even beyond that though the economy is going to need for aggregate demand so that is investment and consumption in the economy while households and businesses get back on their feet while confidence recovers to get private sector led activity and even beyond that as we restructure there will be some restructuring needed in the economy and we’ll need to support people and businesses through that.

AG: Great to chat, Jo, thanks for your time.

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[Parliament audio clip]

AG: And now for politics, here’s Josh Butler, Political Editor at The New Daily. Josh, the COVID hotel quarantine inquiry continues and yesterday an epidemiologist with the DHHS linked almost all current COVID cases in Victoria back to the Ridges or Stamford Plaza hotels. How have you viewed the inquiry so far and what do you think the political ramifications might be?

JB: The hotel inquiry’s been really interesting, it’s sort of kicking off again this week. But as you mentioned, the entire Victorian outbreak more or less at this point is now being linked back to the failures in the hotel quarantine actual process. Victoria’s still copping heat over not using ADF, the defence force members, to actually enforce and logistically run that hotel quarantine as other states have. Even yesterday, in a Senate committee hearing, defence force members again reiterated that there were defence force personnel on standby that have stood up in every state and territory including Victoria, so there’s still a lot of questions to answer here. We still haven’t exactly found out why it was that Victoria didn’t use the defence force in the same way that other states did.

Victorian officials are still saying that there wasn’t an offer on the table. The federal officials are still saying there was. There’s still this sort of back and forth tit for tat sort of battle. But is sort of strange, we still haven’t quite got to the bottom of how this happened and why it sort of spiralled out of control in a way that it hasn’t in the other states. We’re still sort of waiting to figure out exactly what’s happened and to hear all the ins and outs. But yeah, those sort of figures from yesterday where it was revealed that essentially the entire Victorian outbreak will be chased back to these two hotels and specifically to one family that had come back from overseas in one of these hotels. It’s quite alarming.

AG: There’s also now been reports that a hotel quarantine guard with COVID worked at several locations across New South Wales, a pretty similar incident to what occurred in Victoria. How do you think Gladys Berejiklian will respond to this given there’s still a lot of anger being directed at the Ruby Princess debacle?

JB: Yeah, it’ll be interesting. I mean, she’s due to give a press conference in the next hour or so and I’m sure that there’ll be a lot of questions to her about how this could have happened. I mean, with the Victorian outbreak in federal run aged care homes, a lot of the criticism and a lot of the conversation was around workers who worked at multiple sites, multiple different facilities, sort of spreading the virus from one infected home to the next where it wasn’t infected so far. There has been so much talk about having to address that.

Obviously, a lot of these workers who might work in healthcare or other sectors like hospitality or security as well, just by the nature of that work, obviously a lot of the time it’s casual work or contract or gig kind of work. People might work across multiple different sites and that might work for a lot of people in normal times, but in a time now when we’re trying to limit people’s movements, especially limit people’s movements if they’re working or spending time in high-risk areas. It’s not ideal that people are maybe spreading the virus around just by travelling between the different workplaces.

A lot of this criticism so far, and myself and my colleague at The New Daily wrote a story about this, it was published this morning – unions and politicians are saying, “Well why is it that we still have a situation where people in these sort of high-risk environments, especially a hotel quarantine guard, why is it that there were no stronger rules or recommendations in place that people like that don’t work in multiple facilities?” Why is it that, number one, there were no rules and no recommendations to say that, okay, if you work in hotel quarantine you shouldn’t go and work in a shopping centre, you shouldn’t go and work in a fruit market? But number two, I guess more importantly, why are we not paying people who are working in hotel quarantine in these sort of very high risk dangerous environments, why are we not paying them enough that they can feel comfortable to not have to work across multiple sites? Why is it that we’re not paying these people quite a lot of money in essentially danger pay?

I think that will be one of the big conversations that comes out of this and I wouldn’t be surprised if there was maybe some movement on that. We’re obviously speaking to a couple of the places where this guard had worked and I now know that they are bringing in more stringent controls around where their workers can work at other jobs, other facilities, other sites and that sort of thing. I wouldn’t be surprised if there was some more talk about this here in New South Wales around how those sort of workers are allowed to move around and work in different sites.

AG: We’ve also been seeing tensions rising in Australia’s relationship with China. First it was barley, then it was beef and now China’s claiming Australia’s been dumping wine. How much should we read into this as an escalation of what already seems to be quite a tense relationship?

JB: Yeah, it’s been strange. This one’s sort of come out of nowhere. Like you mentioned, the other ones, barley and beef as well. The Trade Minister and the Agriculture Minister have been saying that this is a pretty perplexing kind of situation because the wine that we do export to China is of pretty high quality, it’s not the type of low quality cheap stuff that would normally be pinged in a foreign dumping allegation. Australian officials are saying this is a pretty perplexing sort of situation, but on the other hand, Chinese officials are saying this is a pretty standard dumping investigation, don’t read too much into it on a political angle. But it’s one of these sort of things – I mean, there had been talk from China that Australian wine might be one of those goods that is targeted or looked at for further restrictions.

It’s something like a billion dollar export market for Australian wine and it’s very important and it’s a growing and lucrative market. It’s still to be seen exactly how this sort of shakes out, whether there will be further tariffs on Australian wine in China, whether there will be further sort of restrictions on Australia exporting products to China in that sector. But, yeah, I think this kind of caught a lot of people off-guard yesterday and no one could really make too much sense of why this has happened, why this is happening now.

AG: And there’s also been news out this morning that Scott Morrison has secured a deal regarding the supply of the Oxford COVID vaccine should it be approved and safe. The government is signing a letter of intent, which is still actually quite early stages. But if you look to other countries around the world that have signed multiple vaccine deals, is this announcement as big as Scott Morrison’s making it out to be, do you think?

JB: It’s a good step and it’s something a long the way. I mean, it’s good to know that there is something locked in if it does – obviously this is a big caveat, if it does end up being a successful candidate. This has been one of the candidates, there’s something like 167 vaccines in development across the world, so this is just one of many, many, many possibilities. But from the very start, Australia has sort of looked at this Oxford University vaccine as one of the most promising ones. It’s good that we’ve locked in a deal, I guess. But as you say, it’s a letter of intent. If this vaccine actually does prove to be a good candidate – I mean, there are still trials going on and the trials will go for many more months still – the talk is that it might not even be until very late this year or early next year when those trials do complete. It’s still some months away at the very least, but even if we do decide this is the one we want, passed all the tests, all the restrictions and X, Y, Z, we still have to sign another deal afterwards to talk about money and talk about logistics, talk about manufacture and that sort of thing. There’s also talk that it might not be as simple as just, we produce it here, there’s only a certain number of manufacturers who can do it and one of the manufacturers, CSL, is committed to a vaccine from The University of Queensland, which is Australia’s only leading candidate that we’re actually producing onshore here.

So it is still a while away. I mean, it’s a good first step, there’s something in the bag. Morrison and the Health Minister, Greg Hunt, have said that we are looking at other candidates and we’re going to try and lock in other similar deals if there are other good potential options out there. Look, I mean it’s good, this is the first one that we’ve got so far, it’s the first one that we’ve got locked in, but it’s still some while away. It’s a good announcement, it’s interesting and I think people will be assured that there is work being done, but there is still a long way to go. This is just the first step in a very multi-step process.

AG: Good to talk, Josh, thanks for your time.

JB: No problem, thanks.

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AG: Happy birthday to the fabulous Belinda Carlisle who celebrated her 62nd birthday on Monday! Here’s a little of ‘Heaven Is a Place on Earth’ to celebrate!

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AG: That’s all from me, take care and have a great week.

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