Wry & Dry

Turkey's land grab. The toys flew out of the cot. Borisconi moves again.

Brexit: Borisconi moves again

Readers' hearts would have gone out to the British MPs who gave up their Saturday last weekend for a nil-all draw in the House of Commons.  Sigh, the lonely Saturday night in the club in Mayfair, rather than with Lady Bracknell's great-granddaughter in an expensive, secluded Airbnb in the Cotswolds.    

But undaunted, Borisconi soldiers on like the Duracell bunny.  Knowing that his 'Brexit by 31st October' has as much chance of success as China giving Hong Kong back to the Brits, he is now punting on a general election in December.  MPs will be grateful that the vote will be held on a Monday, thereby allowing plenty of time to return from the weekend embrace of the local Lady Bracknell's great-granddaughter.

The latest YouGov polls shows that most Brits support the calling of an election (50% yes v 23% no).  But, this being the UK with its weird voting system, polling of an election outcome is meaningless.  Mrs May's government held a 10 percent point lead at the start of the 2017 campaign, but scraped in by a bee's knee.

Mind you, Mrs May electioneered with the same charisma as did Bill Shorten.  But had less baggage.  Borisconi would do better than either.

Cartoon borisconi charming

Wry & Dry dips his lid to Borisconi.  He has now taken the searchlight off the floundering Brexit process and focused it on an election. The Brits could never understand Brexit, but they know how to place a X in a box [1].

[1]  The UK does not have a preferential voting system, hence voters need to check one box.  And voting is not mandatory.  

Headline of the week

"Turkey and Russia strike deal over Syria's border."

Perhaps someone might tell the Syrian's about their border.  But, actually, it doesn't matter.  Yes, Sultan Erdoğan has won a land grab of only slightly lesser value to him than that of China's of the atolls in the South China Sea.  And Tsar Vlad is seen to be the benevolent, but distant peacemaker.

It's sort of weird that Turkey and Russia are holding hands, in view of them spending many of the years between the 17th and 20th centuries at war [2].

But surely Readers will see that the winner is Syria's barbaric President Basher al-Assad.  The withdrawal of the Yoo-Ess-Ay was a pre-Christmas gift to al-Assad that no-one saw coming. 

Cartoon trump syria

Not even the person who made the decision, who seemed to wake up one morning saying, "I have a dream.  And it's about Syria."  There was no event that drove the decision.  And as subsequent events proved, was an impulsive act, taken against fierce opposition and without due regard to the consequences.  

Often-times, a political leader will make an impulsive decision that leads people to ask "what was he thinking?"

Wry & Dry's memory, looking at history backwards, adds Trump (Syria) to such as Smith (cricket ball meets sandpaper), Cameron (Brexit referendum); Cameron (Scottish referendum), Merkel (refugee invasion), Tsipras (not defaulting on Greece's debt), Bush G.W. (Iraq), Lord North (American colonies) etc.

What was he thinking? 

[2]  It was one of the longest series of military conflicts in European history. Except for the war of 1710–11 and the Crimean War, which is often treated as a separate event, the conflicts ended disastrously for the stagnating Ottoman Empire (Turkey); conversely they showcased the ascendancy of Russia as a European power after the modernisation efforts of Peter the Great in the early 18th century.

The toys flew out of the cot

I-Wanna-Make-A-Bucket-Load-of-Dosh-Trump was very, very unhappy.  Readers will recall that he had planned to hold the 2020 G-7 Summit at his golf resort in Florida.  No personal gain, of course.  All profits to the G-7 Secretariat.  Of course.

But unlike his decision to abandon the allies of the Yoo-Ess-Ay in Syria, where the average man person in the Yoo-Ess-Ay doesn't know where Syria is, much less who the Kurds are, that man person knows where Florida is.

Howls of outrage from all sides caused I-Wanna-Make-A-Bucket-Load-of-Dosh-Trump to back down on filling his back pocket.  Another venue will be found.

Of course, being the gentleman person that he is, he backed down with grace.  Err, maybe not. The usual suspects were screamed at: Democrats and the media.  Readers will know that he will ignore these two stones in his shoe.  The real reason for the change of mind was amazing pressure from senior Republican supporters, who accused him of corruption.  How dare they!

But the fact of the G-7 not being at his resort caused a profit guidance downgrade for Trump National Doral Miami report.

And the toys flew out of the cot.   

Cartton trump toys out of the cot

Pension podium

As much as people complain about banks, financial planners and other rogues of the Australian retirement system, Australia is on the podium compared to other countries.

Cartoon retirement planning

Measuring the level of financial security provided in retirement, consultant Melbourne Mercer ranked Australia third in the world, with a 75.3 score.  The Netherlands (81) and Denmark (80.3) were also on the podium.  The top ten was rounded out by Finland, Sweden, Norway, Singapore, New Zealand, Canada and Chile with scores from 73.6 to 68.7. [3]

The Yoo-Ess-Ay came in 16th with a score of 60.6.

[3]  Hats off to Deep Kapur, Nga Pham and (Prof) David Knox for their insights. Readers should visit here to see.    
Just a little more on banks ...

But, wait!  There's more! Just to add some international data to Wry & Dry's observation last week about the expensiveness of the share prices of Australian banks, Readers may wish to spend a little time digesting the below.

The data is of the price-to-book ratio (P/B) of the world's largest 1,000 banks.  P/B is a valuation measure, like P/E.  But rather than share price divided by earnings per share, P/B is share-price divided by 'book value per share' i.e. total assets minus liabilities.  Like P/E, P/B can be used to compare the expensiveness of companies in the same industry.  And like P/E, a higher P/B means the company concerned is more expensive.  

The chart compares 2019 to 2011.  And Readers can see that Australian banks have a P/B that is podium finish stuff.

A graphic with no description

Theoretically speaking, all other things being equal (but they never are) the net assets (i.e. equity) of a company should equal its share price.  Which means a P/B of 1.0. 

Investors will pay more than a P/B of 1.0 if there is expected and reasonably certain profit growth.  Which is why on average banks trade at a P/B of 1.24.  And, of course, there are good reasons why Australian banks should trade at a premium P/B compared with other banks, not least of which credit rating.

But to pay twice P/B seems a bit, well, generous.  

Not clear on the concept

Readers will know that the UK Labour Party has been beset by claims of Antisemitism.  And its leader Jezza Corbyn coming under considerable criticism for sitting on his hands.

Well, the Labour Party heard the court of public opinion, and recently decided to hold a meeting to bring all the concerned groups (Jewish and otherwise) together to discuss the issue. 

On a Saturday.

Oh, me miserum! [4]

The princess' princess, Duchess Meghan continues to entertain the Royal watching media with her I-don't-want-publicity-but-please-take-photos-of-me-on-a-tour-to-the-poorer-part-of-Africa-and-yes-I'll-do-an-interview-for-the-BBC-but-understand-that-I-want-privacy.

Sigh.  Memories of Barnaby Joyce asking on a paid television Sunday night interview for privacy for him and his wife.

Cartoon meghan and harry

Someone should tell her that with the paycheck comes the job. And that her claim that she is “existing not living” is also hard on Wry & Dry's ears.  Since their marriage, she and her doting husband have spent £2.4m redecorating their home in Windsor, enjoyed holidays with Elton John and the Clooneys and hung out with the Obamas.

Wry & Dry has sent this video clip to the Duchess: see here 

Meghan is not the first to move country, shift jobs, get married and have a baby.  Her husband is rightly scarred by past events.  But surely the way forward is not to make matters worse by seeking solace by whingeing on camera.

Wry & Dry's avuncular advice: toughen up, princess duchess.  

[4] Oh, poor me.  

Nice work.  If you can get it

Some readers might remember a typical Silicon Valley start-up from 2014: Washboard.  Washboard was designed to solve a real, if insubstantial, problem: it can be difficult for those who rely on coin-operated laundry machines to acquire enough of those American coins called quarters to run a load.

Banks have limited hours, small businesses are not always obliging, and most apartment buildings don’t have change machines.  Washboard offered a solution: $20 in quarters, sent to you by mail each month, for the totally normal and understandable price of $27.  What could be simpler?

Washboard lasted six-days before collapsing, but it did make a small profit.  Which is more than WeWork did.

WeWork's founder and CEO Adam Neumann walked away from the rubble of his startup with a A$2.5 billion severance arrangement.  Nice work, if you can get it.

Some two thousand of his former employees are left to file for unemployment. 

Six weeks ago, WeWork was valued by JP Morgan at US$47 billion.  Today it is worth US$11.7 billion. 

Dramatic footage?

"Dramatic footage emerged on Monday of angry Kurdish residents in northeastern Syria throwing tomatoes at the US troops withdrawing from the area seemingly bringing to an end a five year alliance that saw the territorial defeat of Islamic State (ISIS)." - Rudaw, a Kurdish media network.

Dramatic footage? Tomatoes?  Might well have been an Australian breakfast television show. 

Canada's fracturing politics

Readers would be aware that the soft-left, sanctimonious Canadian Prime Minister, Justin Trudeau, was re-elected on Monday, but into a minority government and losing the popular vote.  He will form government with the support of the left-wing New Democratic Party and the separatist Bloc Québécois.  Each will have out their begging bowl.

Cartoon trudeau

But Wry & Dry sees a bigger issue.  Trudeau has divided Canada in much the same way as I-Wanna-Be-King-of-the-World-Trump did the Yoo-Ess-Ay.  But in Canada its simplistically geographical.  The results show that neither of the major parties (Liberals - left wing, or Conservatives - right wing) can draw majority support across the country.  It's now all about regionalism.  The western prairies voted Conservative, but want Wexit. Quebec voted Bloc Québécois and want Quexit.  The east voted Liberal and want, well, more of Trudeau's feel-good government imaging.

The big loser was the to-the-right-of-the-soup-spoon People's Party, which gained zero seats.  

Readers can see the implications for Australian political parties.  That is to govern for all. Bill Shorten failed miserably to understand this.  And Jimmy Morrison might struggle if he thinks that political life is all about listening to Queenslanders and farmers.  

Snippets from all over 

1.  US profits down

US third-quarter earnings are tracking at a 4% decline from a year earlier, which was expected.  But forecasts for the December quarter have been cut to a gain of 1.9% from the 5.4% increase that was forecast at the end of July.

Wry & Dry comments:  Downward revisions to profit expectations make it hard to justify price-to-earnings ratios, which, at just shy of 20 times are the highest since last October.  That’s when stocks began a nasty swoon that saw the S&P 500 tumble 14% in the final three months of 2019. 

2.  Ease of doing business: Australia ranked ... nowhere

Australia ranks a poor 18th in the World Bank's annual ranking of countries by 'ease of doing business'.     

Wry & Dry comments:  [cough] New Zealand came first, ahead of Singapore and Denmark.  Hong Kong did come in next, but the ranking was clearly completed before recent, err, untidy events.  

3.  Out of the mire

Shares in electric car manufacturer Tesla soared nearly 20 per cent in Wall Street trading on Thursday after the electric car pioneer posted a net quarterly profit, issued a bullish outlook and said its Model Y sport utility vehicle was “ahead of schedule” and would launch next summer

Wry & Dry comments:  But Readers should focus on Tesla's new Model 3 factory in Shanghai, which was built in less than 10 months, and will produce cars for 35% of the cost in the Yoo Ess Ay.    

4.  Boeing, Boeing ...

Boeing situation just seems to keep getting worse, and that goes beyond the 737 MAX. It has now been announced that Boeing doesn’t expect the first 777X delivery to happen until 2021, at least 12 months behind schedule

Wry & Dry comments:  Boeing has some 325 777Xs on order.  This delay will further crimp cash flow problems caused by the B-737 MAX grounding.  The B-777-8 and -9 are the longer-range variants of one of Boeing's most successful planes.  Boeing is pitching its B-777-900 to Qantas for its publicity-led Sunrise project (Sydney/ Melbourne to London/ New York in a single bound).

5.  Goldman Sachs to halve payout

Malaysia has continuously demanded Goldman Sachs pay an eye-popping $7.5 billion for its role in the 1MDB scandal [5], but privately, negotiators are considering settling for less than half of that,

Wry & Dry comments:  The scandal centres not on only Goldman Sachs, but on Malaysia's former Prime Minister, Najib Razak.  His wife was found to have 1,400 necklaces, 567 handbags, 423 watches, 2,200 rings, 1,600 brooches and 14 tiaras worth $273 million.  This story will have legs.

[5] The 1Malaysia Development Berhad scandal or 1MDB scandal is an ongoing political scandal occurring in Malaysia. In 2015, Malaysia's then-Prime Minister Najib Razak was accused of channeling over RM 2.67 billion (nearly USD 700m ) from 1Malaysia Development Berhad (1MDB), a government-run strategic development company, to his personal bank accounts.

And, to soothe your troubled mind ...


Last words ...

“Wayne Swan should be sitting there saying, 'I am a miserable bastard.  What did I do for working people?' "

 -  Bill Kelty, former ACTU boss, speaking about Swan's time as federal Treasurer, when he raised the super guarantee by just 0.5% points.  

A lightly salted absurdity ...

Deepak, Wry & Dry's Uber driver ... 

... sent another text message, saying he is back in Melbourne.  He had a most successful day at Caulfield last Saturday and looks forward to a similar outcome at Moonee Valley tomorrow.  And he gave Wry & Dry the word from the horse's mouth: Magic Wand.   Either way, he will be too busy to drive Wry & Dry for 'a little while'.




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