Wry & Dry

Messy week. Death of a President. APRA roars at IOOF.

Messy week

W&D was looking forward to a gentle period leading up to Christmas.  The markets would be quiet, politicians silent and the sound of leather against willow would lull W&D, cradling a Waterford of 2007 Perrier-Jouët Belle Époque, into a baby-like sleep.

The celebration of Christ's birth should bring goodwill and joy to all men and women, no matter their gender.

No such luck.

The Australian parliament has descended into a scene from The Party, Blake Edwards' classic 1968 comedy starring Peter Sellers.  Or perhaps the opening scene from Saving Private Ryan.

The UK parliamentary parties are divided amongst themselves, which leads W&D to wonder if the Mother of Parliaments has become the mother of all ... oh, never mind.

China has got a very bad case of aggrievement over the arrest in Canada of a senior official from Huawei, a Chinese telecoms giant.  W&D is struggling through the champagne fog for the word... perhaps hypocrisy will do.

And the global share markets have got a bad case of the jitters.  Allow W&D to share a couple of charts.

Firstly, the year's gains on the ASX have gone:

Chart ASX 12 months

All Ordinaries Accumulation Index.  Source: IRESS

Secondly, but surely no-one invests in the share-market for just one year.  Maybe 10 years:

Chart ASX 10 years

    All Ordinaries Accumulation Index.  Source: IRESS

There will be much gloomy comment in the media over the weekend about the share-markets, the price of oil, politicians, etc.  Much will be made of the Sino-American trade war and other matters that lend themselves to excitable chatter and colourful charts beyond W&D's skill.  But these are all things (except W&D's charting skills) of a point in time. 

Australia is not sinking.  And the companies on the ASX are not dying.  BHP is still digging iron ore out of the ground, Woolworths is still selling groceries and the banks are still in business.  Sure their share prices have been belted: the market P/E is now about 14, below its long-term average of 14.7 (this means that the market is not expensive).

(First Samuel clients have also taken much pain, but should take comfort from its target share-portfolio having a P/E of about 8, even lower than at the nadir of the GFC.  A low P/E is a good thing.  And the post-GFC recovery reflected the attraction of the low P/E portfolio). 

The only good thing to come out of the short term pain will be another W&D forecast: the next interest rate move will be down.

APRA flexes its muscles

Australia's prudential Labrador, APRA, has ruined the Christmas for the senior folk at IOOF, a large manager of superannuation investments.  Readers will recall the disastrous evidence given by IOOF CEO, Chris Kelaher at the Banking Royal Commission.

APRA has taken legal action to disqualify Kelaher, chairman George Venardos and other company executives from running a superannuation fund because they are 'not fit and proper persons'. 


At the same time, APRA has given the company 14 days to explain why it should not be subject to sweeping new licence conditions, saying the company has not done enough to clean up its inadequate risk and governance structures.


This morning IOOF's share price fell 31%.


Brexit descends into a right royal shambles

UK PM May is facing the most withering period a UK PM has endured since Churchill kissed the King's hand in May 1940.  She was dealt a poor hand, is fighting continental Europe, two-thirds of parliament, a third of cabinet and 100% of the popular media.

Cartoon May nothing but blood

The government lost a couple of crucial parliamentary votes this week, locking out the no-deal Brexit option.  But if the EU won't further negotiate, it's either her deal or another referendum. 

But, oddly, the government is still ahead in the polls, leading Labour 40% to 38%.

Australian PM Morrison must be wondering what he needs to do to lead in the polls like May.  But May is up against the weird Jezza Corbyn, the unreconstructed socialist nutter from the 1960s.  By way of contrast Shorten is ... oh, never mind 

Death of a President

W&D wonders how Tarzan Trump wishes to be remembered, when he eventually shuffles off this mortal coil [1].  If he has a reflective bone in his body he might have pondered this at Wednesday's funeral service for former President George HW Bush.

George Bush Senior was remembered as a man who wore the mantle of presidential success (of which there was much) with decency, self-effacement and humility.  His depth of domestic and international political experience blended well with a deep sense of duty.  Readers might read the broadsheet media for deeper insights, especially of deep-feeling comments from friends and former foes alike. 

Cartoon bush not a democrat or a trump

And as Angela Merkel drily observed (all her observations are dry), without George Bush Senior she would not be Chancellor of Germany as there would be no Germany, as known today [2].  Younger Readers may not know that East Germany was a very separate country to West Germany from 1945 until 1990.  And Ms Merkel is from what was East Germany. 

It was GHWB who championed the unification cause after the fall of the Berlin Wall.

Back to Tarzan Trump.  W&D has searched for a reflective bone in his body.  And has found none. 

Now that's an idea

Readers will be aware that there is a certain, well, disgruntlement within the Liberal Party.  W&D wonders if an aggrieved former PM would consider drafting disaffected MPs from his side of the political spectrum and forming a new party.

The new, rump party would clearly represent all of the rites, rituals and ceremonies of that part of the spectrum.  As well as the broad philosophies.

Cartoon liberal party split rump parties

Of course, which of the two former PMs would form the breakaway party: Croesus Turnbull or Mad Monk Abbott?  

Just thinkin'.

We-the-people ...

W&D has his own view about the merits of Australia becoming a republic.  But if nothing else, there is one thing clear from UK's Brexit referendum: unless we-the-people know the structure of the outcome for which we are voting, there is little point in having a vote.

Readers will be aware that when former UK PM David Cameron decided to put the Brexit issue to a referendum, there was no understanding of what the UK would look like in the event of a >50% Brexit vote.  And so, having voted for Brexit without knowing what Brexit means, the UK public has witnessed its lords and masters spend two years negotiating what UK-post-Brexit would be.  And no-one was going to be happy.  And no-one is.

The critical importance of the Ireland/Northern Ireland borders was completely overlooked.  The negotiating strength of the UK was over-estimated.  The belligerence of the EU under-estimated.  The legal complexity of Brexit was underestimated.  And the electoral drubbing that came after the Brexit vote and before Brexit negotiations really began came within a bee's wing of a change of government.  Which meant that Mrs May's negotiating hand was reduced.

Hence the current dysfunctionality of the Brexit process. 

Having said that, Readers will recall that one of the problems with the last vote-for-a-republic in Australia was that the question was 'Should Australia become a republic?' without any understanding of what the structure of the republic should be.  The mooted structures at the time were a directly elected President or one elected by the Parliament.

Cartoon are you concerned about a republic

W&D suggests that before the yes-or-no to a republic vote, that we-the-people-be asked to vote on one of two republican models.  Once it is clear what the model will be, then a referendum is held on whether or not to have a republic.    

G-20 spot of bother

The sight of German Chancellor Merkel reading a primer on new Australian PM Morrison, in Morrison's presence, was one of few matters at the G-20 Summit that made W&D chuckle.  Morrison kept an impassive face.  Ms Merkel's face remained impassive.

But impassive faces have become globalised.  Visages as stony as Easter Island statues were the order of the day, with Chinese Emperor Xi Jinping getting the gold medal.  Again.  Hall of Fame Legendary status cannot be far away.

It took Tsar Putin high-fiving Saudia Arabia's Crown Prince Sultan Mohammed bin Salman bin Abdulaziz Al Saud to cause a few smiles to be cracked.  W&D ponders that Tsar Putin didn't want to shake hands for fear of losing his.  And an air-kiss wouldn't be manly.

Otherwise the G-20 Summit was noteworthy-less.  

W&D Readers heard it here first ...

... that a gent in the Netherlands, Emile Ratelband, aged 69, wanted to change his birth-date by 20 years, so he would be 49.  And that he had taken his case to court.

He said that he felt discriminated against, inter alia, on Tinder (Tinder apparently being what W&D understand to be as a popular 'dating' app.)

The court threw out his application.  But W&D consider's that Emile's case has done him more good than harm.  His, err, prowess, although self-assessed, would now be widely known.  And his opportunities on Tinder would be significantly enhanced.

Snippets from all over 

1.  A boom year for lawyers

The Royal Commission has done more than shine a light on dodgy bankers.  It has also lined the pockets of the lawyers.  For example, Westpac's law firm, Gilbert + Tobin reports that RC work makes up 33% of 2018's new revenue.

W&D comments:  Nice work if you can get it. 

2.  Australia grows, more slowly

Australia's GDP grew 2.8% in the 12 months to the end of September, down on that expected.   And the Chief Teller of the RBA left official interest rates unchanged at 1.5%.

W&D comments: It's okay, the GDP number is still a good result.  The end of massive resources' investments, e.g. LNG projects in Darwin and WA, dented the investment spending category.  And watch out for cries of the official interest rate to be lowered (which will give the banks a chance not to lower mortgage rates).   

3.  Meanwhile, back at the Forum

Italian Prime Minister Giuseppe Conte said he will present a new budget proposal to the EU this week.  Readers will be aware that the EU wants Italy to reduce its budget deficit to 1.9%.  

W&D comments:  The we-won't-blink-first farce continues.  

4.  Down at the car wash

US hotel operator, Marriott, has its share price tumble by 6% after it announced that its Starwood guest reservation database was breached, potentially exposing information on about 500 million guests. Among the Marriott data taken included names, mailing addresses, phone numbers, email addresses, passport numbers, date of birth and gender. 

W&D comments:  Travelling Readers may not know they are staying at a Marriott hotel, as it operates under many brand names, including The Ritz-Carlton, BVlgari, EDITION, JW Marriott, Renaissance Hotels, Courtyard, St. Regis, The Luxury Collection, W, Westin, Le Méridien, Sheraton, Four Points by Sheraton, and Element.  It is unlikely that Marriott will have initiative to advise any of the 500 million that their privacy may have been breached.  Readers are urged to be vigilant.

5.  They the people ...

... of Turkey are pleased that inflation is slowing.  In October it fell to an annual rate of 21.6%, down from 25.2%.

W&D comments:  Sultan Erdogan thinks that is still a good result. 

6.  Is Paris burning?

Not any more.  The violent and fiery protests against M. Macron's fuel tax increase have been successful. 

Cartoon is Paris buring

The increases were delayed for 6 months and have now been cancelled.     

W&D comments: Never in doubt.  M Macron has had an embarrassing backdown.  Perhaps people other than Paris elites need their cars more than M Macron. And maybe M Macron should have a chat to his bosom-buddy, Ms Merkel - Germany's emissions are over twice that of France. 

Chart global CO2 emissions 

Tool of the Week 

Podium finish goes to ... Malcolm Turnbull.  For having early signs of the self-inflicted degenerative disease: Relevance Deprivation Syndrome. 

Cartoon payback park

RDS has already badly affected ex-politicians such as Jeff Kennett, Kevin Rudd, Tony Abbott and John Hewson. 

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

... was talking about Tesla, an electric car company, commencing production in China.  "What's going on?" he asked as W&D got into his car.

"It's all rather straightforward, as much as anything can be in China," W&D replied.  "Tesla is building a plant just outside of Shanghai.  It expects to commence producing cars in late 2019."

"But doesn't China not like American cars?" asked Deepak, confusingly.

"Ah, they don't like American cars made in America.  And China has just slapped a 40% tariff on American made cars.  But American cars made in China is a different kettle of fish."

"What fish?" Deepak looked confused.  "Anyway, where is Tesla going to get the money to pay for the plant?"

"Ah, that is the easy part.  There will be no problem in getting loans from Chinese banks.  Even if the banks are reluctant, the government is not.  They are really keen to have Tesla in China.  It's as much political as it is economic." 

"Well, all I can see it trouble," said Deepak gloomily.  "The Chinese really don't like the Americans.  This will be a disaster."  

"A fateful conclusion," said W&D cheerily as he unbuckled his seat belt.  "The people like each other, the Chinese like the Americans for their creativity and Americans like the Chinese work ethic.  It's just the governments don't like each other.  Speaking of dislikes, how is your mother-in-law?" 

Deepak's face fell.  "Things went well, for a while.  But now it's got worse.  She is talking of inviting her cousins over to visit.  There are six of them.  How will I get to spend quiet time with Anjali.  Especially with her now finding it more difficult to manage."

"Read my lips on this, Deepak.   Don't worry about Anjali's relatives.  Your bigger worry is the price of Bitcoin.  It's now down to US$3,563, a fall of 81% in the last 12 months," observed W&D as he strode off.  "Hell will hath no fury like Anjali finding out."  

And, to soothe your troubled mind...  


Last words ...

"M. Macron s'inquiète de la fin du monde. Nous sommes inquiets pour la fin du mois."

("Mr Macron is worried about the end of the world.  We are worried about the end of the month.")

 -  A 'yellow-vest protester in Paris, protesting about M Macron's increased fuel tax to pay for renewable energy initiatives.

M Macron has cancelled the fuel tax increase.

First Samuel client events calendar

All quiet until 2019

Some lightly salted absurdities from all over ...

At the extreme left-hand end of the Bell Curve

1.  If you are carrying 50 kilos of pot in your boot, don't change lanes without indicating correctly.  But Jonathon Miller, 29, of Tabernash, Colorado did just that.  The police searched his car and found the stash in the boot.  It's a 15-year jail-time case (pending).


2.  If you are walking down a street in Central, Brazil and you see an alligator, perhaps it's best not to play with it.  Ernandes Machado attempted to catch the reptile but the alligator decided to enclose Ernandes' hand with its teeth.  Fortunately passers-by prised open the 'gator's jaw with plank of wood.   The 'gator escaped.  


Guess what happened next?

Youngstown (Ohio) State University was in lock-down because of a report of a man with a gun on campus.  Meanwhile, the local parking inspectors came across a series of students' cars illegally parked.  What did the parking inspectors do?

a.  Realise that around the corner the university was in lock-down, and hurriedly returned to base;

b.  Realise that around the corner the university was in lock-down, and walked on by;

c.  Realise that around the corner the university was in lock-down, but left cautions on the cars' windscreens; or

d.  Realise that around the corner the university was in lock-down, but booked the cars anyway.       

Close.  But no cigar.  d. is correct.  The city council has a contract with a private company to book offenders.  They get paid by the ticket.


The man with the gun was arrested.  

"You're only supposed to blow the bloody doors off" 

Michael Caine would weep.

Have a Wry & Dry weekend. 



[1]  See Shakespeare's Hamlet

[2]  Each of the UK (Thatcher) and France (Mitterrand) opposed reunification. The US made membership of NATO a precondition for its support of reunification, but otherwise gave its enthusiastic support.  Italy (Andreotti) opposed reunification.  West German Chancellor Kohl skillfully negotiated the successful outcome, including paying 55 billion Deutschmarks to the Soviet Union (as it was then) for its concurrence.  Over the first 20 years of the united Germany, the cost to Germany of the subsequent economic restructuring and reconstruction of what was Eastern Germany was some 100 billion euros per annum.