Wry & Dry

Don't be fooled: no-one knows. American Samoa speaks. Baby Borisconi.

Carnage.

Readers will well remember cricket commentator Tony Greig's oft-repeated line, "There's a bit of carnage out there."  And so it is with the world's markets.

Consider the S&P 500 (the most indicative US stock market indicator).  Gains on Monday turned to losses Tuesday turned to gains Wednesday turned to losses Thursday (i.e. last night). In nine trading sessions, three have seen the S&P 500 close up or down 4%, and four others brought 3% dives. An eight-day average of the S&P’s daily high-low range is the widest since 2011 (Bloomberg data).

The ASX is not immunised against the carnage.

ASX NYE 

As Wry & Dry has repeated, an overvalued market will always correct.  Readers will know that the market was over-valued.  And the coronavirus epidemic, at last, brought some perspective to the overvaluation.

It is not Wry & Dry's place to overload with investment analysis.  He will leave that to his colleagues:

a. Readers should peruse today's Investment Matters, which follows Wry & Dry

b. First Samuel clients will receive a special and short investment email later today.  This will detail:

  • ongoing re-balancing to manage portfolios in a low-interest rate future
  • out-performance of the market since its peak
  • investment of about one-quarter of available cash into attractive stocks, the prices of which had fallen sharply
  • switching of about one-third of un-hedged international shares' investments to hedged   

c.  First Samuel clients will on Tuesday be emailed a video of the presentation from one of its recent CIO Dinners

Don't be fooled.  No-one knows.

For once the civilised world and the Yoo Ess Ay are united.  In panic.

This pesky corona-virus thingy has taken on a life of its own.  And public statements that would make Barnaby Joyce ramblings look sensible are swirling across the globe in a self-sustaining vortex of speculation.

Readers might allow Wry & Dry to provide a sense of certainty in all of this.  These are the facts:

Q1.  Have we reached 'peak coronavirus'?

A.  It's too early to tell.

Q2.  How much will global GDP be affected?

A.  It's too early to tell.

Q3.  How will Australia be affected?

A.  It's too early to tell.

Q4.  How will my investments be affected?

A.  It's too early to tell.

...

Q99.  Who is to blame for all of this?

A.  Chinese Emperor Xi Jinping.  If he hadn't built a culture of media oppression, fear and bureaucratic centralisation, this epidemic would probably have been quickly contained.  Slater & Gordon (litigation lawyers) should be drawing up its class action claims.

WryDry 734

Q100.  Where do Readers get their toilet paper?

A.  It's too late to tell.

WryDry 733

American Samoa speaks 

Readers will know that American Samoa is an unincorporated territory of the United States located in the South Pacific Ocean, southeast of (the independent nation of) Samoa.  It has a population of 55,689 and is some 7,700 kilometres from mainland Yoo Ess Ay.

Work with Wry & Dry on this.

Readers also know that on Tuesday, Democrat supporters in 14 states of the Yoo Ess Ay and one territory voted in 'presidential primaries'.  Sleepy Joe Biden won most delegates in 10 states, Socialist Sanders won the other four states.  And the winner of most delegates in American Samoa was... billionaire Michael Bloomberg.

Bloomberg has spent in excess of $500,000,000 on his presidential campaign.  Wry and Dry can now see where the money went.  He bought American Samoa.

WryDry 735

But winning five of the six delegates to the 3,969-delegate Democrat Convention (0.15%) was too much for Bloomberg.  He gave himself the DCM soon afterwards. 

Meet the Frackers.  Before they die.

Few Readers might be watching the price of oil as an indicator of, well, something.  The price of oil has dropped from $60 at the end of December to $47 last night. 

But as a sort of proof statement of supply and demand, Readers will recall the price of oil stayed above $80, and even spending a lot of time above $100, from 2010 to 2015.  That high price drove the US and Canadian shale oil (and gas) industry (i.e. the fracking industry).  The innovation and technical success of extracting oil by fracking sharply pushed down the price of oil.

Oil price

West Texas Intermediate crude oil price.  log scale.  Source: Macrotrends.

But as the fracking industry became more successful (and turned the Yoo Ess Ay into the world's largest oil producer: the once-massive Yoo Ess Ay petroleum deficit — $436 billion in 2008 — turned into a surplus last September), that very success drove down the oil price to the extent that fracking became uneconomic. 

The slowdown in shale oil growth started well before the coronavirus.  The industry is not profitable, the technology has matured and the most prospective drilling areas are fully tapped.

And now the coronavirus driven collapse in oil prices has compounded the problem.  wry & Dry ponders that this may be the beginning of the end of growth in that industry. 

A Useless but Interesting statistic

The Economist magazine, arguably the premier periodical for Readers, had an article this week on the divide in English sport.  And focussed on football.  Readers will know that English football has four divisions, with Premier League being the top.  And the second league is weirdly called Championship League.  The third league is League One and the lowest is League Two. 

Clearly, the supporters of the lowest-ranked clubs (i.e. in the fourth-ranked league) would have hurt feelings if they were members of League Four.  Poor petals.  But less so if in League Two.

Anyway, it seems that most EPL clubs (e.g. Arsenal, Chelsea, Tottenham, Man City, Man United, etc) are in electorates that voted Remain in the Brexit referendum. 

WryDry 736

 

And those where the lower-ranked clubs are based (e.g. Stevenage, Grimsby) voted to Leave.

Chart EPL Brexit votes      

Just keeping Readers in touch with the real issues.  

Amy.  Amy.  Amy.

Wry & Dry is a strong man.  But the decision of his favourite candidate Amy Klobucher to give herself the DCM from the Democrat candidate campaign brought a tear to his rheumy eye.

Amy's is a pragmatic decision, clearly reflects Amy's understanding of the American psyche. That psyche is that they will not elect a president with a surname of three or more syllables.  The only recent example is O'Bama, prior to which it was Kennedy, 50 years ago.  Strangely, both Irish.

Chinese dope

Astute Readers will remember the famous Chinese swimmer, Wee Do Ping [1].  Well, the drug spectre has again arisen. Sun Yang China's triple swimming Olympic gold medalist has just been banned for eight years for a second brazen doping offence.

Readers will have seen Australian Mack Horten refusing to share the podium with Sun.  Sun, whose grievance ability is firmly rooted in the Chinese tradition, has a history of temper tantrums longer than his swimming records.

Wry & Dry has done some research to assist Readers in understanding the psyche of the man.  It seems that Sun's mother, Ming Yang, is China's most fearsome of tiger mothers.  It is she that has driven Sun's career, it is said she would stop at nothing to ensure his success.  The phrase "whatever it takes" comes to mind.  

WryDry 738

[1]  Remembering the 12th Man, of course.

Baby Borisconi

Wry & Dry dips his lid to the UK Prime Minister. 

WryDry 739

Borisconi and his partner Carrie have announced not only a secret engagement last year but also upcoming reproductive success.  Borisconi has now comfortably passed Wry & Dry in the score of passing-on of DNA.  However, the size of the margin is not clear.      

Snippets from all over 

1.  Men more likely to die from coronavirus

Coronavirus is far more deadly for men than women, with males 65 per cent more likely to die from an infection than females, new analysis shows.  The latest breakdown of figures from the World Health Organisation (WHO) and Chinese scientists, shows that of all suspected cases 1.7% of women who contract the virus will die, compared with 2.8% of men.

Wry & Dry comments:  It's tough being a man.  

2.  Zero oil demand growth 

The coronavirus outbreak has led the world’s biggest oil traders to slash their projections for global oil demand growth to the weakest levels since the financial crisis, with many expecting consumption to stay steady or even shrink in 2020. 

Wry & Dry comments:  Which is why OPEC is meeting to cut production to force up prices.

3.  Flybe DCM

British regional airline Flybe has collapsed following a plunge in travel demand, putting around 2,400 jobs at risk amid a darkening forecast that could see some airports struggle and business travel restricted.

Wry & Dry comments:  Flybe was already in fiscal trouble and had to be rescued in mid-January.  This will be the first of many.  IATA predicts that airlines will lose $63 billion to $113 billion in revenue in 2020.

4.  Australia's GDP surprises

Australia's annual economic growth climbed to 2.2% in the December quarter, up from 1.8%    

Wry & Dry comments: The 'gentle turning point' in Australia's economy has started.  Oops, sorry had started.  That data was before bush fires, corona-virus. And toilet paper rage. 

5.  Chinese manufacturing collapses

China's official manufacturing purchasing manager's index (PMI) fell to a record low to 35.7 in February, from 50 in January. 

Wry & Dry comments:  And not even the end of the beginning.

And, to soothe your troubled mind ...

Miscellany 

Last words ...

When you have a 4.5% up day in the market and a 2% down day -- what does that mean?  It just means we don’t know what’s going on.

 -  Kathryn Kaminski, a US fund manager.

She hit the nail between the eyes.     

A lightly salted absurdity ...

Deepak, Wry & Dry's Uber driver ... 

... looked harried as Wry & Dry opened the back door of the jalopy.  Without salutation, Deepak barked, “Shove it all along, you’ll find room.”

Wry & Dry raised an eyebrow.  “Well hello Deepak, I see that your nether-regions will be well tended in the event we are all quarantined,” Wry & Dry quipped as he pressed himself against a teetering tower of Sorbent.

“I’ve been to Costco,” Deepak announced proudly.

“Mrs. Wry & Dry would not approve, even if it were the bubonic plague, she’d rather die in the comforting surrounds of the Hawthorn IGA, than venture to that place which she calls the Aisles of Doom – Costco!”

“Well Mrs. Wry & Dry now has a happy alternative,” he said thrusting Wry & Dry a freshly printed business card.

Wry & Dry read from the card: “Pandemic Supplies  Your one-stop-shop for out-of-stock must’ves.”  And felt a shiver run down his spine, the shiver that always seemed to materialise on sight of appalling grammar.

“What else is available, just in case?” asked Wry & Dry.

“Rice, pasta, the usual and of course my mothers-in-law’s tea. She has a huge stash and little does she know I’ve been putting it in little sandwich bags to sell online. I’ll be selling it by the gram,” Deepak said.

Wry & Dry wondered for a moment whether he should mention his suspicions about the contents of the Damshi’s tea. Then thought the better of it.

Deepak pulled quickly towards the pavement and Wry & Dry found himself suddenly up to his top waistcoat button with toilet paper.  He did what any thinking man would do.  And looped a 12-pack onto each wrist and opened the door.

“Be my guest, as long as you tell everyone about “Pandemic Supplies”.  It’s the new best thing, I’m telling you!” cried Deepak.

“You may be right Deepak, in fact there is a concept called Disaster Capitalism Complex. We’ll discuss next week, but in the meantime Mrs Wry & Dry is after emergency supplies of top-shelf gin. Not the stuff from Costco, she likes it with botanicals.” 

“I have gin and it’s from Costco” Deepak said with a boyish giggle. “Mrs. Wry & Dry will never know the difference. I’ll pop in some of my mother-in-law’s tea and swill it about, they’re botanicals. And it will give it a real kick. She’ll never know, women just don’t get these things.”

Wry & Dry considered the offer for a second and then laughed; “Deepak, will you ever learn? Women are terrifying when it comes to having a nose for things." 

Laden with toilet paper Wry & Dry clambered out just as his phone burst into life – it was Mrs. Wry & Dry wanting to know if it were possible to stop by Red, White & Amber on the way home, from where she had ordered six bottles of her favourite gin – just in case of lockdown. 

   -   from the quill of Mrs. Wry & Dry, who enjoys modest amounts of gin and always with botanicals. Pick of the month- Lone Wolf.

 

Cheers

Anthony 

 

First Samuel client events calendar

EVENTS FOR 2020

Eat Street

is coming!