Wry & Dry

Shanghaied. Murder most foul. Clive's back: Aaagghhh!

Not the only game in town

Readers might be forgiven for thinking that the only games in town were Trump, Brexit, the Wentworth by-election and what dress the Duchess of Sussex wore today.

Allow W&D to update Readers on other key issues.

Shanghaied 

The Shanghai Composite (the major stock-market index in China) is down 31% from its peak in January.  This is a four-year low.  Can Readers imagine if the ASX or S&P500 were down 31%?  No?  Well, let W&D give Readers the whisper: massive headlines, prophesies of the apocalyptic end to the world as we know it, statements in parliament, gnashing of teeth and the farmers would want a subsidy.

So, what's going on?  In short:

  • as the Shanghai market falls, margin calls are forcing even more sales of stocks
  • imposition of Trump tariffs
  • higher US interest rates
  • more slowly growing Chinese economy

The comment of one investment manager clearly explained the moral hazard.  “It’s high time the state stepped in,” said Dong Baozhen, a fund manager at Beijing Tonglingshengtai Asset Management. “The national funds cannot just sit on the sidelines and watch this atmosphere of extreme pessimism.” 

Cartoon Chinese market forces

That sounds just like Australian agrarian socialists: privatise the profits and socialise the losses.

There are one or two problems emerging in China.  And the EU is worried about Brexit.  

Just when you thought it was safe...

... Barnaby wants to come back.  Yes, the former Leader of the Gnats, who was dumped from the role for a variety of, err, personal-relationship-management sins, says that he was "open to being drafted back into the role".

Cartoon Barnaby open to offers

And why not?  A leap in compensation to $400,000 per annum from the current $200,000 p.a. would go along way to bridge the very wide gap between profits from the sale of his autobiography and the financial claims made upon his wallet by his former wife.

Tarzan Trump's anti-free trade: strange bedfellows

Strange bed-fellows indeed.  Labor's trade spokesman, Jason Clare, and Bill Shorten have hopped into the warm and comfortable anti-free-trade-bed of Tarzan Trump.  

Work with W&D on this.

Readers will know that Tarzan Trump has already renegotiated the US' trade agreements with Mexico and Canada.  He is seeking to now renegotiate that with the EU.  But the smart people, like W&D Readers, know that the warmth and comfort of Tarzan's anti-free-trade-bed is illusionary.  It's a bed of fleas.  Free trade, of all sorts, has helped create greater global prosperity.  Pulling up the bedclothes into a xenophobic pile will dampen the US' long-term prosperity - and that of other nations.

The trouble for Australia is that Australia has a much more open economy than America.  And relies on free trade to, among other things, offset significant other economic disadvantages. 

Now consider the courage of Mr Clare and Mr Shorten, who have succumbed to the shameful and xenophobic anti-free-trade campaigns run by the ACTU.  Messrs Clare and Shorten needed to meet their earlier and public undertaking to support the Trans-Pacific Partnership - the 11-member Free Trade Agreement across the Pacific (from which Tarzan Trump has withdrawn).   But to get the ACTU's agreement to the TPP, they (Clare and Shorten) had to give a full set of promises to the ACTU that would make future FTAs unworkable.  Furthermore Mr Clare now wishes to renegotiate the FTAs already in place with China and South Korea. Previous Labor pragmatism saw it agree to those FTAs.  

Cartoon free trade Shorten chained

But wait there's more.  The long-negotiated and much needed economic partnership with Indonesia would now fail to be ratified by Labor.  And the TPP just approved would have to be renegotiated.

Sigh.  W&D cannot understand why Shorten would cave into such populist pressure: he's got the election in the bag.  Surely some testicular fortitude would enhance his standing as a leader unbeholden to anyone. 

Wentworth

With ear to the ground and eye to the keyhole, W&D has the scoop for Readers about the by-election tomorrow for the federal electorate formerly held by the former Prime Minister, Croesus Turnbull.

No matter the result, Readers will once again see alive former Labor Wannabee Prime Minister, Gough Whitlam's comment, "In the race of politics the punters know that the horse named Morality rarely gets past the post, whereas the nag named Self-interest always runs a good race." [1]

Hewie's views on climate change may mirror many others'.  But Hewie fails to disclose that he is Chairman of Port Augusts Graphite Energy, which is hoping to build the world's largest solar thermal project in South Australia.  The project needs more federal government funds than the $110m concessional loan already on the table. 

Cartoon Hewson solar joggers

W&D wonders which political party is going to be more inclined to put dollars on the table for Hewies' company?

Costs of bad behaviour

The analysts and brokers are now coming out with their estimates of the cost to bank shareholders of the recently disclosed shenanigans.  The below are estimates, but by any measure are very large.

Banking costs

But the costs to shareholders will be felt in other ways, as the banks are lumbered with the internal employee dislocations.  Some areas will now be sclerotic.  Or, should W&D suggest, more sclerotic.

Cartoon banks in the rain shareholders wicked

And Readers will know of Lafferty Global's study of 500 banks: Australian banks were among the worst performers.  With a maximum rating of five stars, ANZ, NAB and Westpac each won two stars (in the bottom 13%) and CBA three.  The report rated each of the four with a zero for culture (no surprises there) and zero for digital dependability (ditto).  The report summed: "the strategy statement of all four are fluff and fail to set out credible actions."  Ouch.

Murder most foul

Thousands of people are daily murdered.  But rarely has a murder drawn such international headlines as that of Jamal Khashoggi, a Saudi journalist, in the Saudi Arabian embassy in Ankara.  Readers will be aware of the story.  A severe critic of the Saudi regime goes to the Saudi embassy in Turkey for some minor documents.  And doesn't come out.  The media back-grounding by Saudi officials suggests that 'rogue' operators within the Saudi intelligence service badly stuffed up.  The truth will probably never be known.

Emperor of Turkey, Sultan Erdogan is furious.  Tarzan Trump is dismayed.  The world is shocked.

But allow W&D to remind Readers of the harsh world of realpolitik [2]:

Firstly, Emperor Erdogan and Tarzan Trump will not let one dead journalist upset each country's profitable relationship with Arabia.  For the emperor it's about the financing of large 'nation building' projects.  For Tarzan Trump it's not so much about oil, as (a) the triangle of Iran, Israel and Syria and (b) arms' sales.

Secondly, don't confuse a country having a young ruler with the ruler being progressive: Crown Prince Mohammed bin Salman played his public relations cards beautifully by allowing women in Arabia to drive.  But then sanctions the beheading of a critic.  The regime is still as wicked as Isis.

Cartoon CSI Riyadh

Snippets from all over 

1.  Nice work.  If you can get it.

The six children of Rupert Murdoch are each set to receive $2 billion from the break-up of his media empire and the sale of his entertainment business to Walt Disney.

It's all about the six (Prudence, James, Lachlan, Elisabeth, Grace and Chloe) being beneficiaries of the Murdoch Family Trust.     

W&D comments:  A nice little earner, just for being a child of the wealthy.  The begging bowls will already be out.

2.  It's getting silly

Uber, a car-share hire firm, currently privately owned, is gearing up for an IPO (Initial Public Offering i.e. a float or stock exchange listing).  The company was valued this week at over $120 billion.  This is more than three times the value of Ford and twice that of Tesla, both motor vehicle manufacturers.  

W&D comments: This is ridiculous.  Uber loses money.  In the June Quarter alone its losses were over $1 billion.  In 2017 it lost $4.5 billion.  Perhaps those undertaking the valuation (Morgan Stanley and Goldman Sachs) were somewhat conflicted.  Just sayin'.  

3.  UK's path to less coal

The UK’s carbon emissions are the lowest they have been since 1890.  And it is on track to rely on coal for less than 5% of its electricity.

W&D comments:  Current energy sources are: gas 44%; wind & solar 29%, nuclear 21%; coal 6%.  And most of the gas comes from Boris Johnson and Jezza Corbyn [3].

4.  Down at the car wash...

It was announced that the U.S. budget deficit grew to $779 billion in Tarzan Trump’s first full fiscal year as president, the highest since 2012, amid tax cuts and spending increases.

W&D comments: The deficit is about 3.9% of GDP, up from 3.5%.  At a deficit of 3.9%, and thinking about Making America Great Again: in global rankings, the US is surrounded by Georgia, Aruba and Malawi on one side.  And Falkland Islands, India and Burindi on the other.  And the only sound that greeted Treasury's report was the sound of crickets.

5.  Italians bank on the Swiss

The always accurate UK Telegraph newspaper reports that nervous Italians are starting to funnel money across the border into Switzerland, worried that an epic clash with the EU could set off a Greek-style banking crisis and a slide towards default.

W&D comments:  Readers will know that there is a part of Switzerland (the canton of Ticino) where the language is Italian, the food is Italian but the banks are Swiss.  Perfezionare!  Chiasso (just south of Lugano) is just 1.5 kilometres over the border from Como.  

A run on Italian banks is not going to help.  Just sayin'.

6.  Australia: full employment?

Australia's unemployment rate fell to 5% in September, its lowest in seven years.

W&D comments:  Former PM Croesus Turnbull's election slogan of 'Jobs and Growth' has been comfortably fulfilled.  Pity about the Abbott wrecking ball, which preferred Shorten as PM to Turnbull.  Still, you can't put the toothpaste back in the tube. 

Cartoon Turnbull in NY

Strange how former PMs lose the plot after they lose the keys to The Lodge.  Since Howard only Julia Gillard has retained a modicum of dignity. 

Tool of the Week 

Podium finish goes to ... Clive Palmer, the still well-upholstered businessman-cum-wannabee Prime Minister. 

Readers will recall that Palmer formed the Palmer United Party and won a seat (by 53 votes) in federal parliament.  Readers may have suppressed the memory of his party also winning three seats in the Senate: Glenn Lazarus, Jacqui Lambie and Dio Wang.  Lazarus and Lambie quit the party, sat as independents and ended up at Centrelink.  Palmer resigned his seat in disgrace and his political party collapsed, being wound up in April 2017.

But never say never.  Palmer is back, as leader of the 'United Australia Party' and standing for an unnamed federal seat.  Nothing wrong with that - he will provide much material for starving journalists and struggling cartoonists. Except that Palmer is now claiming that his UAP is a natural descendant of the UAP of the 1930s and 1940s.  

What is even more galling, Palmer has the temerity to put on adverting billboards "Our history - United Australia Party Prime Ministers:" under which words were photos and names of Joseph Lyons, Billy Hughes and Sir Robert Menzies.  The corpses of each of those gentlemen have already rotated in their graves at the implications of Palmer.

But it is we, the living, who should be worried. 

Meanwhile search parties are still out, looking for Palmer's nephew, the peripatetic Clive Mensick.  Mensick was the sole director of Palmer's Queensland Nickel when it collapsed in 2016.  Just before the company died, tens of millions of dollars were transferred from the company's bank accounts to a variety of offshore accounts.

Deepak, W&D's Uber driver, was wanting to...

... talk about postal rates.  "I read that Mr Trump wants the US to leave the Universal Postal Union.  What's going on."

"That's correct.  It's another China issue.  But quite separate from all the other stuff going on," W&D replied.

"I though the Universal Postal Union was a trade union for postal workers," said Deepak innocently.

"Not even close," W&D replied.  "Its an agreement dating to 1874, with 192 member countries.  Under current rules, the UPU sets lower rates for developing countries.  China is considered a developing country.  So it gets cheap mail rates."

"Well, it is a developing country, sort of," Deepak hit back.

"That maybe so.  But China exports massive amounts to the US, not just obviously in massive containers, but also by mail.  The US postal service effectively subsidises Chinese exporters by about US$300m per annum."

"So, what now?" Deepak looked mildly interested.

"China is predictably aggrieved.  But China does grievance very well and knows that the practice had to stop sooner or later.  The US will come to an agreement with China and the US then will not have to leave the UPU.  Speaking of agreements, have you agreed with Anjali about the possible size of your family?" 

"No, not yet," he said cautiously.  "I've thought about it, and it's probably going to be better to wait until some time after our son is born."

"Congratulations," enthused W&D.  "A very wise decision.  And is all still okay?"

"Anjali is very well.  This is going to be easy."

"A fatal conclusion," observed W&D, as he stepped from Deepak's car.  "Things might be easy for you.  But as the pregnancy progresses the strain on Anjali will increase. You need to be alert to her needs, otherwise yours will be neglected."

"Oh, dear, I had forgotten," admitted Deepak to a receding W&D.

"So easy to do, being a man," paused W&D.  "But remember how uncomfortable it was sleeping in the spare bedroom." 

Deepak looked horrified. 

And, to soothe your troubled mind...  

Miscellany 

Last words...

"I like to think that between Isaac Newton and Charles Darwin he will never be alone again.

 -  Lucy Hawking, speaking of her late father, the physicist Stephen Hawking, and the decision to inter his ashes in Westminster Cathedral between Newton and Darwin.   

She must have forgotten that her father resolved that not only was there not a God but also no life after death.  "From dust you came.  And to dust you shall return."   

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

A technician was working on a Belgian Air Force F-16 when he accidentally activated the six-barrels 20mm Vulcan M61A-1 cannon of that F-16. The cannon was loaded. And fired. 

Trouble was that a second F-16 was parked right into front of the F-16 being worked upon.  Direct hit.  Greater trouble was the second F-16 had just been refuelled.  Ka-boom.  Up it went.

Trouble was that a third F-16 was parked behind the second F-16.  It suffered considerable damage.  Two technicians were injured.   

(Aviation24.be)

No news on the fate of the technician who accidentally pushed the button. 

Guess what happened next?

A white woman in South Carolina (dubbed Gas Station Gail) was filling up her car at the filling station.  A group of school age black protesters carrying 'stop the violence' signs stopped to get drinks from petrol station shop.  What did Gail do next?

a.  Ignore them and filled up her tank;

b.  Ask for a 'stop the violence' sign so she could join them;

c.  Ask the leader, "what violence?"

d.  Dialled 911 (the US emergency number) and called for police.       

Close.  But no cigar.  d. is correct.  She called the police, claiming "it's like a riot here" and that the kids were "absolutely destroying the outside" of the store.  By the time the police arrived, the kids had bought their drinks and moved on. 

(Raw Story)

W&D wonders why she didn't shoot them.

Redheads of the world...

... you are lucky.  You look two years younger than you actually are.

That's according to a study conducted by Erasmus University in Rotterdam, which discovered the gene that keeps people looking young is the same as the one responsible for red hair and skin.

According to their findings, those who carry a variation of the MC1R gene responsible for red hair, look around two years younger than they actually are.

The research was first published in the journal Current Biology and serves to highlight one of the hidden benefits of being ginger.

(Irish Post)  Where else?

 

Have a Wry & Dry weekend. 

Cheers!

Anthony

[1]  Gough Whitlam, writing in the London Daily Telegraph on October 19, 1989.

[2]  Realpolitik: politics or diplomacy based primarily on considerations of given circumstances and factors, rather than explicit ideological notions or moral and ethical premises.  The term Realpolitik is sometimes used pejoratively to imply politics that are perceived as coerciveamoral, or Machiavellian. 

[3]  Each a Wanna Prime Minister: Boris because he sees himself as a latter day Winston Churchill; Jezza because he still believes that there are fairies at the bottom of the garden and that malevolent dictators can be negotiated with.