Wry & Dry

FY-18 quietly closes. Wile E. Trump mid-air on a Harley. Red Stock Sock.

The year

Wry & Dry surveys FY-18 with a sense of quiet satisfaction.  The Australian share-market had a good year, returning 13.7% (including dividends), which will help pay for Mrs W&D's aid to retail shops in Hong Kong; North Korea didn't park a missile on anyone's front lawn; Tarzan Trump ensured the ongoing remuneration of cartoonists around the globe; the banks and their dissolute bed-fellows felt the wrath of the Royal Commission; and Barnaby Joyce's failure to remember Birth-Control 101 (much less Ethics 101) added a sense of risible ridiculousness to an already ridiculous Planet Canberra. 

Sigh.

Readers are already asking for W&D's prognostications.  He gives none.    

The week

Four big events:

1.  Largely unnoticed, China's main stock index, Shanghai Composite, is now in 'correction' zone, having fallen some 21% since its FY-18 high on 24-Jan-18.  A sense of mild panic is gripping the innards of Beijing.

2.  Bill Shorten, Opposition Leader, consulted himself, made a Captain's Call and decided the Labor Party policy was now to increase company tax for some small companies.  W&D sees the only merit in this being further confusion to Pauline Hanson's capacious mind (see Last Words, below). 

Cartoon Shorten captains call

3.  A justice of America's Supreme Court announced his retirement, giving Tarzan Trump the chance to appoint a sympathetic successor before the November elections (at which the Democrats might gain control of the Senate - thereby being able to block a Trump nomination).  Readers will know that there are three branches of power in the US: the President, Congress and the Supreme Court.  Which is why it is difficult to change things quickly, much to, for example, Tarzan Trump's chagrin.  But because of the current liberal/conservative balance on the Court, Trump can appoint a sympathetic judge, and thus align judicial outcomes (more or less) with his views. 

4.  Women in Saudi Arabia took to the roads on Sunday, ending the world's last ban on female drivers.  According to Bloomberg Economics, the move is expected to add as much as $90 billion to economic output by 2030.  

Stocks:  W&D's FY-18 Red Stock Sock

For W&D, the fiscal year-end is a time for quiet reflection.  To sit on the Chesterfield and allow his people to quietly extract the cork from a bottle of Perrier-Jouët 2008 Belle Epoque and gently usher the nectar into the Waterford.  And to enrichingly sip. 

And to ponder the poor bastards who bought any shares near their FY-18 peak.  And because of subsequent events found those stocks in the famous W&D FY-18 Red Stock Sock.

Red stock sock

W&D realises that the Red Stock Sock is a view just of one year.  And that he justifiably hates the banks and so put them in for poor form as much as poor performance.  But, frankly, m' dear, he doesn't give a damn [1].  The long-term outlook for all bar the banks is as unpredictable as Barnaby Joyce's next comment.  And Readers wouldn't want to bet on that.

As for the banks, it gives W&D no great satisfaction to see the banks humiliated as now.  It gives him great delight. 

Politics: Really, Abbott should quit

Readers will know that it is a close call for whom W&D holds in higher disdain: ex-PM Tony Abbott or wannabee PM Shorten.

In thinking of individuals, rather than parties, it is clear that W&D's-fellow-Australians feel the same way.  For reasons unfathomable, W&D found himself reading the Melbourne Age this week.  And came across a Fairfax-Ipsos Poll, that compared voters' views of critical success factors for political leaders, then as well as now.

Some interesting observations (some of which can be seen in the chart)

  1. Turnbull is far ahead of Abbott and Shorten on all factors
  2. Shorten's rating for Trustworthy of 39% is second only to Julia Gillard's 36% (2013) as being the worst
  3. But Gillard (then) outpointed Shorten (now) on every other factor
  4. Kevin Rudd (2007) was seen to be the most Competent leader
  5. John Howard (2007) was seen to be the Strongest Leader and the most Trustworthy

Cartoon Rudd what planet

 

But individual ratings only matter a little.  For example, Howard was flogged in the 2007 election (and lost his seat).  And currently, notwithstanding personal success, Turnbull's mob is behind in the polls.  W&D puts that down to the vengeful machinations of former party leaders Abbott and Joyce.   

Critical success factors2

W&D forecasts that Abbott will soon come out of his winter cave, wearing budgie smugglers to protect against the cold, and do his best to run interference just before the upcoming Super Saturday by-elections.  

Cartoon Abbott handing out how to vote cards

Snippets from all over 

1.  Turkey confirms Erdogan as Sultan-for-Life

The good folk of Turkey have opted for despotism over democracy, and voted Recep Tayyip Erdogan into place among the world’s emerging class of authoritarian and nationalistic rulers.  

Cartoon Sultan counting votes

W&D's comment: Is this akin to the Germans electing Hitler in 1933?

2.  Royal Commission confirms banks as [insert your pejorative here]-for-life 

The Banking Royal Commission took its array of pillories to Brisbane, to hear further stories of amazing unethical and illegal behaviour. 

Cartoon Banks on the farm

Farmers' revenge

W&D's comment: W&D understands the need for responsible borrowing as much as for responsible lending.  But the ongoing revelations suggest that some power-crazed bonus-driven bankers would have sent some customers to a gulag as much as sell their property with one day's notice.  

3.  Breaking up is easy to do

As W&D noted last week, the shares of GE, the formerly #1 US company, have been booted out of being used to calculate the Dow Jones Index.  GE is now selling parts of its business that it bought in earlier years.  And Australian banks are doing the same: CBA being the latest, with plans to dispose of its wealth management and mortgage businesses.  

W&D's comment: Readers might remember the Commonwealth Savings Bank...

4.  New York primary (i.e. pre-selection) shakes Democrat establishment

Democrat pre-selectors in New York state have chosen Alexandria Ocasio-Cortez, a 28-year-old relative political novice, over 10-term New York Congressmanperson Joe Crowley.    

W&D's comment: This is big.  It's not that a Latino ousted an Irishmanperson, or the young ousted the old or a woman ousted a man.   It's that Ocasio-Cortez is a big supporter of Bernie Sanders, the extreme left-wing opponent of Hilary Clinton in the 2016 Presidential primaries. 

Wile E. Trump?

Readers will fondly remember scenes where cartoon character Wile E. Coyote finds himself suspended in mid-air, waiting for gravity to exert itself as another absurdly complex plan to capture the Roadrunner backfires.

And so W&D has an image of Tarzan Trump, careering over cliff, coming to a halt and suspended in mid-air, atop a Harley Davidson motorcycle, waiting for gravity to exert itself.

Cartoon Trump Harley D

Of course, readers will know that of all the icons of America, none is as burnished into the soul of America as the Harley Davidson motorcycle [2].  Last year Tarzan Trump made much of a photo-opportunity with Harley's CEO and some delightful Harley product. 

And so news over last weekend that Harley Davidson was moving some of its manufacturing business to Europe from the Yoo Ess Aye as an outcome of Tarzan Trump's imposition of tariffs on Europe [3] seemed to turn Tarzan Trump into Wile E. Trump. 

But wait, there's more! Mid-Continent Nails (of Poplar Bluff, Missouri, Readers will know) makes about 50% of all the nails made in the Yoo Ess Aye.  Its main input is steel wire from Mexico.  That wire is now subject to a 25% Trump tariff.  MCN had to pass the cost on to customers.  But the increased cost caused sales to plummet as buyers opted for cheaper nails from China!   MCN has already laid off 60 of its 500 workers and will soon lay-off another 200.

W&D is waiting for gravity to exert itself on the suspended Wile E. Trump.

Imelda Marcos put to shame

W&D dipped his lid to Imelda Marcos, the then wife of former Philippines president Ferdinand Marcos.  Imelda's love of extravagant fashion, especially of shoes, at the expense of they-the-Philippines'-taxpayers, was legendary.  And thought to be unsurpassable.  

Not so.  She now has to step aside as the First Lady of Theft.  Rosmah Mansor, the wife of recent Malaysian Prime Minister Najib Razak, now has podium position.  Some $370m worth of jewellery, cash, handbags, watches and other luxury items were seized by local police in a raid of (only) six of their homes.  The coppers are chasing Najib and his cronies for plundering billions of dollars from Malaysia's sovereign wealth fund.  That story has a long way to go.

This story, though, is mind-boggling enough.  The haul included: $29m in cash, 423 watches, 567 luxury handbags, 1,400 necklaces, 2,200 rings and 14 tiaras.  Who keeps $29m in cash at home?

But, wait.  There's more!  Najib is the son of Malaysia's second Prime Minister, Abdul Razak and nephew of its third, Hussein Onn.  

All in the family.

Be careful for what you wish

W&D couldn't help but bring to mind the Chinese proverb "be careful for what you wish" (as it should be correctly phrased). 

Readers will know that the new Chairmanperson of AMP is David Murray (former CEO of CBA - say no more).  And only last week Murray, in addressing one of those businessmenperson's lunch was scolding ASIC for its past inaction.  Well, it didn't take long for the corporate Labrador, but now with attitude, to start growling. 

The growling is that ASIC is now taking AMP to the Federal Court for failing to prevent its financial planners from churning customers into new life insurance policies.  Nothing extraordinary about either event.  The churning of insurance customers is a past dark art of the industry.  And AMP has probably placed on retainer half the Sydney bar in preparation for an expected landslide of lawsuits arising from the, err, behavior of people from former chairmanperson Catherine Brenner down to the cleaner in head office. 

Of course, W&D is not suggesting any hint of revenge in ASIC's actions... 

Crypto-currency shambles: The Sequel

It must have been a coincidence.  But no sooner had W&D last week written about the precariousness of crypto currencies than they crash an average of 19% in the week since.

Market darling Bitcoin has fallen only 9% to US$6,122 since last Friday.  Only... 

And that's only 68.5% down from its 17-Dec-17 peak.  Only...

Deepak, W&D's Uber driver, wanted to hear all about ...

... tariffs.  "I don't understand all of this tariff stuff.  What is going on?"

"The skill with Trump is to read between the tweets, so to speak," W&D responded.

"Read between the tweets?  What does that mean?" Deepak looked puzzled.

"It's a figure of speech," replied W&D patiently.  "Anyway, my point is that Trump is trying to express a point of view, but doing it badly.  Essentially he wants workers to be better treated and wants rules to give them better jobs."

"That sounds perfectly sensible," said Deepak.

"Oh, it is, as far as it goes," said W&D, warming to his theme.  "The other view is that people will be better off if they have more stuff.  Simply put, Trump wants a focus on production, to boost exports and limit imports to attract jobs from other countries.  But workers will be less able to buy stuff."

"Now I am confused.  Why?"

"Well," resumed W&D, "the other view is that freer trade leads to a bigger economy and hence more cake to share. But this gets to the heart of the problem."

W&D paused to collect his thoughts.

"The gains from freer trade are spread widely across consumers, whilst the losses are concentrated in small groups who longer have jobs or have their jobs threatened.  Not surprisingly, they shout louder than the winners.  And because they are concentrated rather than widespread, they have more political clout.  The fact is that trade barriers damage the entire economy, hurting consumers by more in total than the gains from the small group of jobs created or protected by the tariffs.  The overall outcome will be that more jobs are likely to be lost than created."

"So," mused Deepak, "the issue then is to have the freer trade with an arrangement that compensates the losers."

"Exactly," replied W&D.  "And that is not easy.  Trump has taken the politically easy option.  By the way, speaking of bugs, how is Anjali's stomach bug?"

"Ah," beamed Deepak at last.  "It's not a tummy bug.  I'm going to be a father!  Anjali is pregnant!"

"Delightful news indeed.  Congratulations. How is she?"

"Well, there are two problems.  The morning sickness.  And her mother has arrived, early. This will be a disaster." 

"A fatal conclusion," laughed W&D as he stepped from Deepak's car.  "Mothers-in-law have their uses.  They can be intrusive, but will do a lot of work that might otherwise have fallen to you."

"But she's moved into our bedroom," wailed Deepak, "And I'm in the guest room, on my own."

"Oh, dear.  Perhaps you can arrange for her to go back to her home for a couple of days each week.  By then, each of you and Anjali will be in abstinence-induced fettle, if you follow me," obliquely responded W&D as he strode into the distance.      

And, to soothe your troubled mind...  

Miscellany 

Last words...

"I haven't flip-flopped.  I said no originally, then I said yes, then I said no and stuck to it.” 

 -   Senator Pauline Hanson, Leader of the One Nation party, speaking about company tax cuts.

Stuck to what?

First Samuel client events calendar

Date 

Description

Details

2018 Events  

Wed-18-Jul-18

NGV Winter Masterpieces Exhibition

Masterworks from MoMa (New York)

Invitations sent

NGV

Tue-14-Aug-18

Annual Forum and Cocktail Party

"Who is giving whom ... the coal shoulder?"

Hear Tony Sennitt, CEO of Diamond Energy, argue the case for renewables

Guests are invited to argue for coal

Invitations sent

Leonda

Various

Chief Investment Officer Dinners

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

Invitations to be sent

Various

Some lightly salted absurdities from all over ...

At the extreme left-hand end of the Bell Curve

Michael Dwayne Wallace, 25 of St Louis County had lost his driver's licence.  But wanted to get to the other side of town in a hurry.  So he put flashing lights and a siren (purchased online) on his car, and away he went.

But the local police do not drive white Hyundai cars.

(St. Louis Post-Dispatch)

Falsely impersonating a law enforcement officer, careless and imprudent driving and driving while licence revoked or suspended.

Guess what happened next?

Troy Skinner, 25, flew from his home in New Zealand to Australia, Australia to Los Angeles, and Los Angeles to Washington D.C, then he took a Greyhound bus to Richmond Virginia, all to meet a 14- year-old girl he met on-line.  He banged on the front door of the girl's home with a brick.  He was carrying a knife, duct tape and pepper spray.   What did he the girl's mother do?

a.  Open the door and asked him to come in;

b.  Yelled through the door for him to go away;

c.  Call the police; or

d.  Get out the family rifle and shoot him.     

Close.  But no cigar.  d. is correct.  Skinner got hit only in the neck.  The police arrived soon afterwards.

(wtvr.com)

Entering a dwelling house with intent to commit murder, rape, robbery, etc. Reading of judges in the Yoo Ess Aye, Skinner can say goodbye to daylight.

His waitress told him he was too drunk for another drink...

...he then decides to prove her point.  Williams Banks was refused yet another drink at the Wild Wing bar in Spartanburg, South Carolina.  And so he proceeded to threaten to shoot multiple witnesses, assaulted the waitress, assaulted police, etc.   

(thestate.com)

Third-degree assault and battery, drunk and disorderly, etc.

Bonus: he had been released that morning from jail and was on parole.  

 

Have a Wry & Dry weekend. 

Cheers!

Anthony

PS  Special fiscal-year-end thanks to Patrick Cook, our sensational cartoonist, for his laugh-adding masterpieces.

[1]  Rhett Butler's final words from Gone With the Wind, as he finally turns away from arguably the most capricious heroine in all literature, Scarlett O'Hara.

[2] Or in W&D's mind.  The image of Peter Fonda and Dennis Hopper atop Harleys in the 1960's cult film Easy Rider ranks alongside iconic cinematic images of "Frankly my dear, I don't give a damn"; Bogart and Bergman at Casablanca airport; Marilyn Monroe's dress (Seven Year Itch); and Benjamin framed by Mrs Robinson's delightful leg (The Graduate).

[3]  In retaliation for Trump's steel and aluminium tariffs, the EU raised its tariffs on American exported Harley to 31% from 6%, effective last Friday.