Wry & Dry

Dumb & dumber. More tariffs: W&D has the scoop. Spirit of Dunrorke's Drift.

Dumb ...

Economic Idiocy 101.

The Yoo-Ess-Ay has an unemployment rate at a 50-year low of 3.8%; GDP growth of a steady 2.5%; inflation of a meagre 1.6%; interest rates at record lows and stock market up 18% this year.

So, what to do with interest rates?  

I-Wanna-Four-More-Years-Of-Free-Accommodation-In-Washington-Trump knows the political trade-off between a sugar hit today and long-term problems.  And will always take the sugar-hit today.  Because by the time the chickens come home to roost, he will either be in the Yoo-Ess-Ay's equivalent of being 'kept at Her Majesty's pleasure' or living a life similar to that of Richard M Nixon after Watergate. [1]

His first sugar hit was massive tax cuts, some to the deserving, much to the not-so-deserving and nothing done about tax rorts.

His second is his unrelenting jawboning of the US central bank (the Fed) to lower interest rates.  2020 is an election year and he wants the sugar to still be hitting the economy and markets.  To maximise his chances of re-election.

Cartoon Trump money at no interest

On Wednesday night, Jerome Powell, the Chief Teller of the Fed, caved in.  In W&D's view (and in this matter, for once, he is not alone) this is a craven decision, cowering to I-Wanna-Four-More-Years-Of-Free-Accommodation-In-Washington-Trump.

But the bully wanted more: "As usual Powell let us down," he rudely observed.

The economy of the Yoo-Ess-Ay does not need stimulating.  Look at the data.  Lowering interest rates to these levels encourages laziness in both companies and individuals.  There is no pressure for either more efficiency or to fix balance sheets as there is no penalty for too-high debt.

Add to this the disaster of savers taking cash from their bank and investing in high yield stocks or high yield debt securities and Readers can see W&D's point.

The same is unfolding in Australia.

This will end in tears.  

[1]  Reclusive reflection. Err, maybe not.  I-Am-always-Right-Trump will never admit an error.  Nixon later admitted his culpability about Watergate.  Keen students of both history and cinema should watch, in order, The Post; All The President's Men and Frost/Nixon.  

... and Dumber

Readers would have noticed last week's, well, weird don't-worry-about-Chernobyl-we'll-give-you-free-electricity mutterings from former Deputy PM and RDS [2] sufferer Barnaby Joyce.

It's now clear that the lad is really suffering from a serious bout of RDS.  This week, he announced that he was struggling to get by on a parliamentary package of about $280,000, plus car and phone.

The costs of his marriage breakdown and his new marriage were expensive, to the point where he was forced to "turn off the heating at night and kill his own sheep." City-folk, W&D guesses, suffering from 'ardship don't have the looxery of killing sheep.

Cartoon Barnaby sheep

W&D was going to remind the suffering gent of the old saw, "you make your bed, you must lie on it."

But then again, he has had multiple beds on which to lie.  And arrangements to keep him warm.  

[2]  Relevance Deprivation Syndrome.

What if they build cars and ...

... no-one buys them.  What's going on?  They-the-people-of-the Empire-of-China are not buying cars, figures released this week suggest.

Foreign manufacturers (required to be in joint-ventures with local companies) are getting belted.  Ford's plants are operating at 11% capacity. Peugeot's plant produced just 102 cars in the six months to June.  Volkswagen reported a 6% and General Motors a 10% sales decline in the March quarter.

Overall, China's car sales fell by 4% in 2018 and by 14% in the first half of 2019.

Emperor Xi Jinping has a few economic issues.

What if they build submarines and ...

... there is no-one to man person them?

Readers will be aware that we-the-taxpayer are going to fork out some $50 billion of our hard-earned to build submarines that will be obsolete by the time they are delivered.

Well, it looks like it won't matter, anyway.  There won't be enough sailors to sail them.  Whew.

Cartoon sailors submarines

A review of naval planning found that doubling the submarine force from six to twelve boats posed significant challenges requiring far-reaching changes to the recruitment, training and posting of submariners.  And that 'targeted financial retention measures' were required.  Otherwise there would be a further shortage of sailors. 

Readers will know that one of the navy's recently upgraded frigates, HMAS Perth, has been in dry dock for almost two years because there are not enough sailors to put it to sea. 

Invade between the flags.

More tariffs: W&D has the scoop

Last night, in a surprise move I-Hate-China-Trump announced he would impose even more tariffs on Chinese exports to the Yoo-Ess-Ay.  The S&P 500 fell 1% * and the price of oil plunged 8%.

What's going on?

Well W&D's take on this is that this escalation is not about trade.  It's about Hong Kong and Taiwan.

Readers will know that some 190,000 mainland 'police officers' took part in a drill on Tuesday; in Shenzen, just over the border with Hong Kong.

And Readers will also know that The Chinese People's Liberation Army (PLA) garrison in Hong Kong on Wednesday (Jul 31) posted a video on social media (click here to watch) showcasing its military hardware in action, as well as an "anti-riot" drill in which armed soldiers disperse a crowd of protesters.  

This video is really scary stuff.  Joseph Goebbels [3], come on down!

W&D thinks that, in escalating the tariffs, I-Hate-China-Trump is sending a message back to Emperor Xi Jinping to leave Hong Kong (and Taiwan) alone. 

We live in interesting times.

* W&D reminds Readers with his oft repeated saw, that "an over-valued market will correct, sometimes for reasons not directly related to the share market."   

[3]  Joseph Goebbels was one of Hitler's closest and most devoted followers.  He was Minister of Propaganda.  He was particularly adept at using the relatively new media of radio and film for propaganda purposes, especially for antisemitism and the shaping of morale.

Spirit of Dunrorke's Drift

Readers will know of the legend of British character building that springs from seeming, well disasters.  And might consider Dunkirk and Rorke's Drift [4] as exemplars of British 'pluck'.

Cartoon Borisconi how we won the war

Not that new UK PM Borisconi has said so in many words, but it seems to W&D that he is trying to rally the nation to his view of the decidedly non-military Brexit matter by invoking sentiments of those two military events.

It remains to be seen how far he will get.  But, as long as he keeps his references to Dunkirk at a Basil Fawlty level (i.e. "don't mention the war") there is little downside on the EU side.  But no upside either.  

And Borisconi, as an author of a half-decent biography of Churchill, will know that Churchill said, when speaking of Dunkirk, "Wars are not won by evacuations."

[4] Made into one of the greatest movies of all time: Zulu.   


W&D has egg on his face.  Just as he and all of Ireland were about to celebrate a famous victory of the Irish cricket team over the Poms, the Paddy's blew it.  All out for 38 in their second dig.  All done with 15 overs.  The Poms won easily.

But Ireland's day in the cricketing sun will come.

Borisconi: faster than a speeding bullet

New UK PM Borisconi has enjoyed an early bounce in the opinion polls, opening up a 10 point lead over Jezza's Labour Party.

W&D senses that there will be a general election later this year.  If Borisconi does negotiate a better Brexit deal with the EU it will be a landslide, as the Brexit Party's raison d'être vanishes and its supporters swing behind Borisconi.  If it's a no-deal Brexit, there will be leverage of the fit of anti-EU passion.

Still, there's a long way 'twixt cup and lip.  

"He would say that, wouldn't he?"

Chief Teller of Westpac Brian Hartzer said on Wednesday that the states should cut stamp duty to lift growth.

Err, undisclosed conflict here.  Or perhaps an obvious one.  The beneficiary of a cut in stamp duty would be the banks.  Purchasers wouldn't pocket the stamp duty saving, but, as the various First Home Owners Grants have shown, borrow more to spend more on their home. 

And W&D isn't sure how an increase in household debt by the leveraged difference in stamp duty is going to increase growth.  


Focusing on the big issues I

W&D guesses that all big events must be covered from all angles by the media.  To broaden the possibility of reader interest. 

Hence the anointment of Borisconi as PM of the Old Dart brought forth history (his school, university, time spent in Australia, etc); finance (how much is he worth? how much will he earn?); family (former wives, children); etc.  And the inevitable fashion.  Not Borisconi's.  But that of his girlfriend, Carrie Symonds.

The UK Telegraph breathlessly reported that at her boyfriends' first speech and SW1A [5] steps picture, Ms Symonds wore "a pink £120 midi dress from Ghost, which sold out shortly afterwards."  The choice of dress was 'so divisive'.  In the interest of W&D Reader interest, W&D publishes the critical photograph:

Carrie Symonds

[5]  That is, 10 Downing Street, London.  Official residence of the Prime Minister of the UK.

Focusing on the big issues II

Readers will recall that in February W&D alerted that 2019 was the 50th anniversary of Woodstock [6], the most famous (but not first) rock festival.  And that Woodstock 50 was going to occur in August to celebrate that amazing event.

Bernie Sanders was excited.

A few bodies from the original were to be re-incarnated: Santana, Melanie, David Crosby, John Fogarty and Canned Heat seemingly having survived 50 years of whatever blend of sex, drug and rock 'n roll floated their boat.

But it was announced yesterday that Woodstock 50 has been cancelled.  Apparently, too much time was spent smoking the weeds rather than avoiding them.    

Cartoon Woodstock 50

[6]  Arguably, the most famous of all rock festivals, with a playlist never repeated, including Melanie; Arlo Guthrie; Joan Baez; Santana; Canned Heat; Grateful Dead; Creedence Clearwater Revival; Janis Joplin; The Who; Jefferson Airplane; Joe Cocker; Blood, Sweat & Tears; Crosby, Stills, Nash & Young and Jimi Hendrix. 

Unclear on the concept

Recruits to the UK police force seem a bit precious.

The 'Front Line Review' has been told that recruits have been “wrapped in cotton wool”, are routinely shocked that police are expected to work nights and weekends and “do not like confrontation”.

So, you want to join the police force, but don't like confrontation?

Good grief.

Snippets from all over 

1.  Awakening Greek tragedy?

Greece’s new government (a month old) has promised tax cuts and spending increases.  And that no public-sector workers to be fired.  

W&D comments:  Tax cuts?  The Greeks don't pay any tax, anyway.   

2.  Down at the car wash

The US economy grew less than previously thought last year, missing President Donald Trump's target of 3%.  Revised official figures shows that GDP expanded by 2.5% during 2018.

W&D comments:  Never send to know for whom the bell tolls ...

3.  Credit goes backwards

Lending to Australian businesses contracted (by 0.1%) for the first time in more than two years in June, Reserve Bank data showed. 

W&D comments:  'Ardship for banks.

4.  Property developer collapses

Australia's largest private property developer, Ralan Group, has collapsed.  The company has over 3,000 residential units in its pipeline, including the $1.4 billion Ruby Collection at Surfers Paradise.  It owes some $500m to its lenders. 

W&D comments:  It is just this sort of property debt that will ensure that the RBA doesn't raise interest rates. 

5.  EU growth halves

Growth in the ailing eurozone halved to 0.2% in the second quarter as the global industrial downturn brought Germany and Italy’s economies to a standstill.

W&D comments:  And the EU is worried by Brexit.

And, to soothe your troubled mind ...


Last words ...

"I would say for the 737 MAX to get back into the air, every Boeing official should be flying that plane for one month to make sure that we have the confidence to get back on that plane."

 -  US Senator Joe Manchin, at a Congressional subcommittee on Wednesday.

That wouldn't convince W&D to fly the plane.  Or Mrs W&D.

A lightly salted absurdity ...

Deepak, W&D's Uber driver ... 

... was unusually sullen as W&D clambered into his jalopy.

“Well, how was it? asked W&D.

“How was what?” Deepak snapped back.

“Anjali’s maiden speech at university that you attended last week?” prompted W&D.

“I had no idea what she was talking about,” Deepak announced with a haughty shrug of his shoulders.

“But the rest of the room did?” W&D chortled.

“Perhaps. But I did recall something a bit strange though, Mr. W&D.”

“What was that?” W&D asked, raising his recently clipped eyebrows.

“Anjali suddenly stared right at me as she was talking about acquisitions and takeovers of low performing portfolios. I got this very uneasy feeling that she was sending one of those hidden messages …”

“Dangerous,” said Mr. W&D.

“It’s worse, when Anjali got home she demanded that she should take over all my Bitcoin investments. Never! I said. I don’t need her advice.”

“Why? Things not so stellar in crypto world?” W&D retorted.

“It’s up and down, but it takes time and skill, Mr. W&D.  And I know what I am doing, I don’t need to go to university for that!” Deepak said with a flourish.

“Or Anjali’s guidance," W&D carefully warned.  "I’m sure it will all be well as long as you have moved on from storing your Bitcoin login and password details on the fridge magnet, you once told me about. That would be a swift acquisition, indeed, and I can tell you know once Anjali has logged you out, she’ll never let you log back in!” W&D warned.

Deepak laughed nervously, then after a long pause, he turned pale.

“What’s wrong?” W&D asked, sensing impending doom.

“Anjali told me she was cooking up a very special dish today in the kitchen. She said it all the while staring at the fridge door. It was most strange. Surely, Mr W&D, she wouldn’t, she couldn’t! Do you think she was speaking metaphorically?” said Deepak, his voice diminishing to a mere whisper.

“I’ll bet she is cooking up the best vindaloo you’ve had in years, my dear Watson! And flowers won’t work this time!” observed W&D unhelpfully, as he alighted.

Deepak hurriedly removed his Uber sign and sped off in the direction of home, or more importantly, in the direction of his fridge door.

First Samuel client events calendar


First Samuel Annual Forum

Tuesday 24th September

with Special guest
Hon Josh Frydenberg, MP, Federal Treasurer

Official invitation will be sent next week

Chief Investment Officer Dinners

Interstate Invitations - Sent

Melbourne - Sent

Contact Jess at responses@firstsamuel.com.au to RSVP your preference of venue


Venue Seating Date & Time
Cumulus Inc. - Melbourne CBD Lunch 27th August 12pm
Hellenic Republic - Kew Dinner 27th August 6pm
Stokehouse - St Kilda Lunch 28th August 12 pm
Chin Chin - Melbourne CBD Dinner 10th September 6 pm (Dinner is full)
The Botanical Hotel - South Yarra Lunch & Dinner 11th September 12pm & 6pm (Dinner is full)
Many Little by Polperro - Red Hill Dinner 17th September 6pm
Elyros - Camberwell Lunch & Dinner 18th September 12pm & 6pm