Wry & Dry

Icon? Really? Pardon me. The new Bitcoin.

Icon?  Really?

Wry & Dry prides himself on having his finger on the pulse of the feelings of the common man. 

But he missed entirely the feelings about the closure of Holden, the Australian motor vehicle subsidiary of General Motors.  More than once the moniker 'icon' appeared in the media.  Icon?  Really?

Media tears confirm the impression that most people were brought up believing that Holden was indeed an Australian owned company.  And so the tears are for the loss of an Australian icon.  PM Jimmy Morrison fed into this, and shed what was arguably the most crocodile of crocodile tears, expressing anger at the very rational decision of GM to pull up stumps.  

Cartoon Holden

Cry me a river, Jimmy.  We-the-taxpayer spent over $2 billion dollars financing the government-acquiesced inability of Holden to control the costs of its workforce.  Readers will know that the management of Holden couldn't take a tea break without the consent of the union.  But the management didn't mind as all it had to do was ask we-the-taxpayer to subsidise the extra costs.  The cosy arrangement worked for management and unions - comfortable behind tariff and non-tariff barriers.

The other outcome was no innovation.  Why bother? they would ask.

Only too late did someone realise that the Australian market was too small, the costs too large and that an inflexible workforce would remain inflexible.  

Pardon me

Wry & Dry likes the idea.  Get oneself elected as President.  And then pardon mates of your mates.  Your mates' mates will then feel a debt.  And they will be called upon to repay the debt.

There is that scene from The Godfather [1] when the godfather calls upon the undertaker to repay a favour he did in having the undertaker's daughter's rapists kneecapped.

And so I-Want-Four-More-Years-Trump has decided to pardon some of the great fiscal criminals of recent years.  Seven criminals were given full pardons (including the notorious Michael Milken, the so-called junk-bond king of the 1980s, who served just 22 months of a 10-year sentence) and five had sentences commuted.  Wry & Dry wishes to think that I-Want-Four-More-Years-Trump is doing all of this out of Christian benevolence.  And that no favours would be owed.

Cartoon Trump criminals

Wry & Dry has little doubt that Mr Milken and others still have some loose change left over from their, err, dealings.  But certainly does not think for one moment that any President would use his position to ask a favour and demand that some of that loose change would find its way into his campaign coffers.

No more doubt than withholding aid to a developing country, let's say in far south-eastern Europe, was in exchange for possible dirt on the son of a possible presidential candidate. 

[1] One of the greatest movies of all time; lingering behind Casablanca, Zulu, Lawrence of Arabia and Best in Show.  Each has so many enduring themes that Readers encounter everyday.  Although, getting gunned down at a tollbooth is probably not an everyday encounter.   

Warren's new record

Readers will want to know what Warren Buffet has to do with Victoria's Secret.  Allow Wry & Dry to join the dots, that otherwise might seem unjoinable. 

Warren Buffet is now the longest-serving CEO of any S&P500 company (Berkshire Hathaway), overtaking a Mr Les Wexner.  Wexner has just resigned from a company called L Brands after 57 years in the top job.  L Brands has just sold 55% of its subsidiary, Victoria's Secret to a private equity company. 

Wry & Dry has little doubt that Mr Buffett is chuffed at now being the grand old man of Wall Street.  But wonders if he would understand the business of the man whose record he now holds. 

"Victoria who?"  "What secret?"  The founder of Victoria's Secret, Roy Raymond, chose the name 'Victoria' after Queen Victoria.  The 'secret' was what was hidden under her clothes. 

Prince Albert was a brave man.   

No surprises there

Readers will not be surprised that World Bank research has shown that billions of dollars in foreign aid to developing economies ends up in tax havens such as Switzerland.  The sum is about 16% of all aid to 22 countries.

Cartoon foreign aid

Wry & Dry is now pondering how the Peoples' Socialist Republic of Victoria can get itself re-classified as a developing nation.  Sure, 16% of the foreign aid will end up in Switzerland, but think of the other 84%.

How many level crossings could be eliminated? 

Crying for Argentina

Readers may have lost count.  Allow Wry & Dry to refresh those worn memories.  In 2001 Argentina defaulted on around $100 billion of debt.  That was its eighth default, some sort of record.   That default triggered the worst economic crisis in the country's history.  That consequence was blamed on the fiscal policies of the IMF at the time.

Now alphabetically powerful Argentina looks like breaking its own record.  And is on the verge of its ninth default.

Sigh.  Again the figure is about $100 billion.  And again the IMF is at the heart of negotiations - as it is owed $44 billion.

The bookies have placed a 77% chance of default. 

Cartoon Argentina

Wry & Dry recalls that a little over 2 years ago, Argentina issued $2.75 billion of bonds with a 100 year maturity!  With a yield of just under 8% p.a., investors would recoup their initial investment after about 12 years.  And if they hang on for a few more years the return will be greater than that on higher grade government bonds.  

So the aim is to get the IMF to get the Argentinians to just pay the interest.  Everybody knows that the principle will never be repaid.

The investors win.  The folk at the IMF get to keep their jobs - that is winning in supranational-land.  The only losers are the Argentinians.  Who will have to go through an absurd charade of austerity.  Again.

The new Bitcoin

Two masked men in Hong Kong were arrested on Monday for attempting to steal a delivery of toilet paper. Some 600 rolls were swiped from a supermarket. 

Cartoon Hongkong toilet paper

Panic buying in the colony has caused shortages of many household necessities and a black market has developed.  Wry & Dry considers that it is a pity that the men were arrested.  It would have made for interesting research. 

Will toilet paper become the new Bitcoin?

Unimportant, but interesting

Jeff Bezos, the founder and largest shareholder in Amazon, announced on Monday that he was giving US$10 billion to the Bezos Earth Fund to help counter the effects of climate change.

Cartoon Bezos

Generous?  Sure.  But Readers might know that Mr Bezos' wealth has increased by US$15.6 billion in the first seven weeks of 2020.  So he's still $5.6 billion ahead.  And he gets a tax deduction for his philanthropy.

Sigh.

Snippets from all over 

1.  Banking woes

Facing substantial challenges in its key markets, HSBC (aka Hong Kong Shanghai Banking Corporation) is cutting 35,000 jobs and $100B in assets over the next three years, and will incur $7.2B of costs because of the restructuring. 

Wry & Dry comments:  35,000 bodies to get the DCM; that'll need a big exit door.  HSBC is a British multinational investment bank and financial services company, the seventh largest in the world.    

2.  The new black

The International Energy Agency slashed its forecast for global oil demand growth in 2020 by 365,000 barrels per day to 825,000 barrels per day, the lowest level since 2011.

Wry & Dry comments:  Coronavirus is the new black.    

3.  Japan's GDP collapse 

Japan's GDP fell at an annual rate of 6.3% in the December quarter, as the rise in consumption tax (GST) in October crushed the economy. 

Wry & Dry comments:  So, no, it's not the corona-virus.  But the March quarter GDP might also be negative, which means a 'recession' in economist-speak (i.e. two successive quarters of negative GDP growth).

4.  Tesla bear-case

One of Tesla’s longtime fans on Wall Street slashed his worst-case scenario for the stock price to a mere $10, in the latest sign that analysts have begun to lose faith in Elon Musk’s electric-car maker.

Wry & Dry comments: It's not coronavirus, but possible collapse in Tesla sales in China and Tesla’s mounting debt load.

5.  Apple bite

Apple, maker of iPhones and other fashion technology, doesn’t expect to meet its revenue guidance for the March quarter due to work slowdowns and lower demand due to the outbreak of novel coronavirus in China.

Wry & Dry comments:  The new black.

Cartoon corona virus new black

And, to soothe your troubled mind ...

Miscellany 

Last words ...

“The truth still matters.  Roger Stone’s insistence that it doesn’t, his belligerence, his pride in his own lies are a threat to our most fundamental institutions, to the foundations of our democracies

 -  Amy Berman Jackson, in handing down a 40 month sentence to Roger Stone, long-time adviser and confidant of Donald Trump.

Wait for the pardon.     

A lightly salted absurdity ...

Deepak, Wry & Dry's Uber driver ... 

...greeted Wry & Dry with a grin as he clambered into the back seat of the jalopy. 

“You are looking well, Deepak, not so discombobulated. Maybe you have changed your brand of tea?” Wry & Dry asked, curious to see if Deepak’s mother-in-law was still plying him with her specially medicated brew. 

“Back to the Masala chai, it’s always been my favourite really.”

“Good thing I imagine,” said Wry & Dry.

“In fact, while I was drinking my chai, I was reading all about Trump’s upcoming visit to India. Did you know that as we speak there are thousands of people tidying up the streets from the airport to Taj Mahal just to impress Mrs Trump?”

“Good to see an interest in politics emerging Deepak, and yes the streets will be bedecked for Melania’s photo-stop at the Taj Mahal. But the nuts and bolts of the trip, Deepak are just that, to discuss nuts and bolts,” Wry and Dry said, certain his wit would fly as high over Deepak’s head, as the 24 Seahawk helicopters Lockheed Martin had recently sold to India’s Defence Force.

“Nuts and bolts?” Deepak asked, on cue.

“Yes, nuts and bolts, meaning that both sides wish to discuss the tariffs the US administration has placed on Indian walnuts and Indian steel, among other things of course. It’s all about trade deficits and Trump getting upset that India is not buying enough American products. Hence the purchase of the 24 Seahawk choppers to balance things up a bit. So, it’s not just about visiting the sites.”

“I see,” said Deepak glazing over before steering the conversation back to more solid ground. 

“I’m sure the nuts and bolts will take care of themselves; they usually do. But don’t you think Melania having her photo taken in front of the Taj Mahal, just like Princess Diana, is a little bit exciting?” Deepak exclaimed.

Wry & Dry sighed deeply and forged on; “It’s not Princess Diana.  It's a technical matter.  She was Diana, Princess of Wales, not Princess Diana.  Only a daughter or grand-daughter of a sovereign can be a Princess.”

Deepak looked confused, “I’m sure that anyone can become a Princess. Sort of like, Melania, she is a sort of Princess, isn’t she?”

“You are absolutely right, Deepak” said Wry & Dry thinking of his latest irritant, Princess Markle Sparkle.

“There are self-proclaimed princesses in abundance these days, Deepak. One cannot be too careful,” Wry & Dry added with a wink, jumping out at his stop. 

“Got to run, I’ve had 32 missed calls from home! I’m a dead man driving!” wailed Deepak as he took off.

Those princesses can lurk anywhere, thought Wry & Dry. He looked down at his phone, phew he thought - no missed calls…

   -   from the quill of Mrs. Wry & Dry

Cheers

Anthony 

 

First Samuel client events calendar

EVENTS FOR 2020

First Samuel Chief Investment Officer Events

"Managing for a Low-Interest Rate Future"

Most events are at full capacity. 

Please call Jess on (03) 8610 9222 if you need to cancel or make other arrangements 

25th Feb – Chin Chin, Melbourne CBD

26th Feb - The Botanical, South Yarra

27th Feb – The Botanical, South Yarra
(Lunch & Dinner)

5th March – Stillwater, Dromana