Wry & Dry

Something fell off a cliff. Australia tops the world. Mid-termism in Yoo Ess Aye

That ain't a cliff...

W&D, whilst snoozing Thursday afternoon on his Chesterfield, was awoken by the sound of something falling off a nearby cliff.

AMP's share price...

That aint a cliff...

Source: IRESS

That's a 25% fall in one day.  And a 54% fall in less than eight months. 

The unhappy intersection of a bit of a dip in the share-market (see the accompanying Investment Matters); the announcement of the sale of some of its businesses and of massive outflows of clients funds (driven by, W&D is guessing, just guessing, the Royal Commission) caused AMP's share-price fall to break the sound barrier on the way down.

Cartoon AMP lemmings

Tony Grieg might have said...

"... and there's some real carnage out there." [1]

Well, perception of carnage.  At the risk of repeating what W&D said 14 days ago - an overvalued market will always correct.

But yesterday's and this morning's headlines overstated the extent of the carnage.  

Certainly, the New York market was quite overvalued and hence the headlines there more lurid.  The Australian market had pockets of over-valuation, especially in the larger stocks the share prices of which had been boosted by the maniacal quest for higher dividends.  But the prices of many stocks have fallen greater than individual circumstances would suggest.

Readers should be patient. 

Sleeping well, Tony?

By-election losses by an incumbent party always brings out a chorus of blame.  And so it was with the Liberal Party losing the formerly safe Sydney seat of Wentworth, formerly held by the former Prime Minister.

Make no mistake, the blame game is on.  And W&D is happy to join in and to blame that arch-retributionist, Tony Abbott. 

Cartoon Abbott two fingers

But it doesn't amount to a hill of beans.  This government is not about to lose government - it has a workable minority, so to speak.  But it's London to a brick that it will lose office whenever the next election is held.

Readers should focus on the bigger issues of life.  Such as the upcoming 'mid-term' elections in the Yoo Ess Aye.  

Mid-termism

The Yoo Ess Aye has a weird system of government.  Perhaps no more weird than our own.   Americans will vote for members of both chambers of Congress, having so done just two years ago.  All 435 members of the House are up for re-election, as is one-third of the Senate.  There is more speculation about this mid-term than the name of the upcoming baby of a Duke and Duchess.  Will it come down to a protest vote against Tarzan Trump?  (Err, W&D means the election outcome, not the baby's name.  Somehow, W&D cannot imagine a Prince Donald).  Or will Trump's increasing popularity (believe it or not) be reflected in Congress?

A couple of things for Readers to note:

1.  This is not an election for the President (whew);

2.  It is most unlikely that the Democrats will win the two Republican seats required to control the Senate; but

3.  They might win the House; but

4.  If they also win the Senate, then Tarzan Trump would have difficulty getting legislation through Congress.  This is what the Republicans did to President O'Bama in his last two years.

But the Democrats wouldn't stymie Tarzan Trump, would they?

Err, maybe.  But wait, there's more.

A Democrat Congress would leave wide open the door for official investigation to some of (many of,  all of ...) Tarzan Trump's alleged misdeeds.

Not surprisingly, Tarzan Trump is on the hustings.

Hell hath no fury like...

Readers would be aware the former PM Kevin Rudd is also on the hustings, selling his latest book, The PM Years.

Rudd's feelings toward's Wayne Swan, his Treasurer, made Howard's toward Costello the stuff of the milk of human kindness 

How about:

"Not only had Swan been treacherous, he'd been a coward and lacked cerebral horsepower."

"It was an all-round appalling performance ... a weak treasurer could improve with careful tuition but that didn't apply to Mr Swan because that assumed there was a basic level of intellectual software capable of being trained, as well as a treasurer sufficiently interested in being trained...  In Swan's case neither existed."

W&D's comment, and he does have one, is that, as so elegantly described by Rudd, former treasurer Swan was a dunce of a higher order.  But why were the Australian financial media so fawning toward him (Swan)?    

Queensland DCM 

Readers will recall Fraser Anning, the hapless far-right Senator from Queensland (where else) who became a One Nation Senator (Pauline Hanson's party) on the disqualification of Malcolm Roberts, and who resigned from One Nation to join Katter's Australia Party (another maverick Queensland's party, but with just one member, Bob Katter).  Well, the good Senator has been given the DCM by KAP clan chief Katter. 

Katter really had no choice but to think of his own fiscal circumstances.  He needs to be an MP.  But to win his seat he relies on union support and the Labor Party to direct preferences to him.  Both have threatened to withdraw that support at the next election (probably then giving the seat to the Coalition) because of Anning.

Anning lasted 143 days as a member of KAP.  Which is just a little longer than he was a One Nation Senator: the one hour between being sworn in and the media conference.

Slow news week? 

W&D didn't think it was a slow news week.  But it must have been at The Australian newspaper yesterday.  Page one headlines of "Rush admits calling actress 'yummy'" greeted W&D as he unwrapped his daily read from voluminous amounts of Glad Wrap.

Cartoon barrister Rush

Did this stunning revelation deserve such monumental status as headlines on Page One?  W&D wondered what happened to, to briefly summarise: Saudi murder, Shorten, Trump, Italy, Labor Victoria and the police, Brexit or, at a pinch, what a newlywed Duchess was wearing on tour.

To what is the world coming?  

Australians are the world's wealthiest 

W&D is always suspicious when a politician says, "you've never had it so good." [2]

But independent research by Swiss bank Credit Suisse confirms the story.  The median wealth of an Australian adult is the highest in the world.

World wealth

There are many good things about the data. And one bad.

The good: the measure is 'median', i.e. the midpoint of observations.  This measure doesn't suffer from the problem of using an average, where a small number of very wealthy people drag up the average.  This is the case in the US, for example.

The good: Australia has relatively low wealth inequality.  The Gini coefficient for wealth [3] is just 66% (the 12th most equal in the world - the worst for wealth equality are: Namibia, Zimbabwe, Denmark, Switzerland and USA) and only 6% of Australians have net worth below US$10,000. The latter figure compares with 18% in the United Kingdom and 28% in the United States.

The bad: the wealth is heavily skewed towards non-financial assets (i.e. real estate), which makes up 60% of gross assets.  This is the highest of the top 10 countries. 

Cartoon my house earns more two girls

For the full report, Readers may wish to follow this link.  

W&D might be tempted to say that, also with low inflation, good GDP growth, etc, Australia: "you never had it so good".  Except for our politicians.

Snippets from all over 

1.  Tesla makes a profit

Tesla, a maker of electric-powered automobiles, has squeezed out its first quarterly profit in two years, adding weight to CEO Elon Musk’s claims that it has put the troubled first year of the Model 3 behind it and fuelling a bounce of more than 10% in the price of its shares.     

W&D comments:  Hats off to Elon.  W&D didn't see this coming. But before W&D gets proved too wrong, wait for a couple more quarters. 

2.  Singapore wins Dyson electric cars

Speaking of electric cars, the Dyson group, which makes vacuum cleaners, hand dryers and hairdryers, has decided to make its new electric cars in Singapore.  It also confirmed plans to get the zero-emission vehicles on the road by 2021.

W&D comments: Mrs W&D owns a couple of Dyson devices.  And hopes that the Dyson car is as funky.  Err, as the Dyson rotating air purifier/ heater, not Mrs W&D.  Although, given encouragement...  Oh, never mind.  

3.  Roman theatre v. EU rule book

The European Commission has ordered Italy to rip up and redo its free-spending budget in an unprecedented financial rebuke of a member state. Italy was given three weeks to rewrite its budget and it populist government was warned against thinking it could “break free” of eurozone austerity rules.  But, "This is the first Italian budget that the EU doesn't like," wrote Deputy Prime Minister Luigi Di Maio on Facebook. "No surprise: This is the first Italian budget written in Rome and not in Brussels!"

W&D comments:  W&D has been warning Readers about this crisis for some time.  The Italian government, a thinly-tied coalition of anti-establishment mavericks, anti-immigration rightists and puppet technocrats believe that every artificially manufactured clash with the EU is a political gain for itself.  Soooo Italy.

Italy spends more paying interest on its debt than on education.

And the EU is worried about Brexit.

4.  Down at the car wash

Tarzan Trump's tariffs have made steel more expensive in the US than any other market.  The flow-on is considerable: for example, car-maker Ford's profit took a US$1 billion hit because of the tariffs pushed up the price of 'hot-rolled coil' by 28% in nine months. 

W&D comments: But wait, there's more.  Ford's new SUV, Focus Active, due to be made in China, was scrapped because of the US putting a 25% tariff on vehicles imported from China.  And China's 40% tariff on imported vehicles has led to Ford to cut its exports to China.

5.  China's economic growth...

... slowed to 6.5% year-on-year in the September quarter, marking the weakest growth since 2009.  

W&D comments:  Don't yet panic.  Growth of 6.5% is still, well, outstanding.  And China's economic data are rubbery figures.  But another quarter at or below this level might raise some eyebrows.

Tool of the Week 

Podium finish goes to ... the government of Saudi Arabia, for arguably the great yet example of implausible deniability [4] about the death of a Saudi journalist who was causing some grief for the Saudi government.

Firstly: he left the Saudi embassy in Ankara alive. 

Secondly: he had been killed in a fist-fight in the embassy.

Thirdly: he had been murdered in a 'rogue operation'.

Fourthly (this morning): his murder was pre-meditated.

W&D next expects: Fifthly: he himself was a murderer and deserved to die for sins too horrific to reveal.

Cartoon two arabs suicide to go in

One thing is for certain: the Saudi's, isolated in the oil-drenched cocoon of a kingdom, have no idea how to manage international relations and media.  Turkey's wily Sultan Recep Tayyip Erdogan has shown the Saudi's a masterclass.

Deepak, W&D's Uber driver...

... phoned in sick.  Well, he wasn't sick.  But Anjali was.  He said he thought she was okay, but he'd call later with more news.

W&D will keep Readers apprised.

And, to soothe your troubled mind...  

Miscellany 

Last words...

"Not the work of a great mind.

 -  Michael Gorbachev, former General Secretary of the Communist Party of the Soviet Union and President of the Soviet Union, on Tarzan Trump's plan to scrap a US-Russia nuclear weapons treaty.   

The 1987 Intermediate-Range Nuclear Forces Treaty was signed by US President Ronald Reagan and Soviet General Secretary Mikhail Gorbachev in Washington. It banned nuclear and conventional missiles with ranges of 500 to 1000 kilometres, as well as their launchers.   

First Samuel client events calendar

CHIEF INVESTMENT Officer Dinners 2018

FY-18 was a Year of Harvest and Sowing Seeds for the Next Five Years

Places are now only available at;

Wed-14-Nov   Lunch  Donovans

Please contact Jess if you haven't already.

Some lightly salted absurdities from all over ...

At the extreme left-hand end of the Bell Curve

Three middle-school kids from Norfolk, Virginia, decided to steal a car.  So they did.  And drove off.  They sideswiped a few cars. And the vehicle ended up in bushes, against a tree.

The three got out and then calmly boarded a school bus, for the nearby Azalea Garden Middle School, which they all attend.  When the bus pulled up at the school, the police were waiting. 

(Pilotonline.com)

Perhaps something faster than a school bus going on the school run might have worked. 

Guess what happened next?

Thai Airways flight from Zurich to Bangkok was scheduled to depart at 1.30pm.  However, it didn't depart until 3.30pm.  The reason for the delay was:

a.  Violent thunderstorm;

b.  Bomb threat;

c.  Flat tyre; or

d.  Two off-duty pilots wanted first class seats and wanted them now.       

Close.  But no cigar.  d. is correct.  The first class cabin was completely sold out.  The flight was only able to take off after two passengers agreed to bump themselves down to business class.  Thai Airways apologised. 

(Travel & Leisure)

No news on the pilots.

Q.  What do I do if I find a 150-year-old skull in your back yard?

A.  Don't tell the government.

But then there was Ontario’s seldom-mentioned but extremely fussy Funeral, Burial and Cremation Services Act (2002), which insists that human remains found on private property be examined for anthropological potential.

It took 19 months and $70,000 in fees, expenses and government charges to bury the damn skull and to finish the patio.

(theglobeandmail.com)

Readers, if you want 15 minutes of bureaucratic entertainment, you gotta go to this article.

 

Have a Wry & Dry weekend. 

Cheers!

Anthony

[1]  Well, the 12th man did.  

[2]  "Most of our people have never had it so good."  Former UK Prime Minister Harold McMillan, speaking at a Tory rally, 20th July, 1957.  He was right, but it was still pretty bad.

[3]  The Gini index or Gini coefficient is a statistical measure of distribution developed by the Italian statistician Corrado Gini in 1912. It is often used as a gauge of economic inequality, measuring income distribution or, less commonly, wealth distribution among a population.  A Gini coefficient of zero expresses perfect equality, where all values are the same (for example, where everyone has the same income). A Gini coefficient of 1 (or 100%) expresses maximal inequality among values (e.g., for a large number of people, where only one person has all the income or consumption, and all others have none).  Be aware that the gini coefficient for wealth will be much less that income for most countries.

[4]  'Plausible deniability', on the other hand, although existing throughout history, was coined by the CIA in the early 1960s to describe the withholding of information from senior officials in order to protect them from repercussions in the event that illegal or unpopular activities by the CIA became public knowledge. Readers will be aware of President Harry Truman's national security council paper 10/2 of June 18, 1948, which defined "covert operations" as "...all activities (except as noted herein) which are conducted or sponsored by this Government against hostile foreign states ... and that if uncovered the US Government can plausibly disclaim any responsibility for them."