Wry & Dry

Borisconi beds down. Not in the navy. Euro trouble.

Easter I

No matter what child of Abraham you are, may you take some time to reflect on your blessings and the sacrifices others have made for you.  Please be thankful.

Easter II

Wry & Dry finds himself still WFH, with a quill in one hand a day earlier than usual and a Waterford of 1968 Perrier-Jouët Belle Époque in the other.  As usual.  And it's a short week.  So his musings are briefer.

Euro trouble

Readers would be aware that the CV-19 thing is messing up Europe almost as badly as did the Seven Years' War [1].  

Europe's (i.e ex-UK) two largest economies, Germany and France, who behave alternatively like love-struck teenagers and an about-to-divorce 50 year-old couple, are in recession and it's getting worse.

Germany: GDP is now expected to decline by 2% in the March quarter and by 10% in the June quarter, the sharpest decline since quarterly records began in 1970.  The good news is that growth in 2021 is expected to rebound by 5.8%.

France: GDP is expected to have fallen by 6% in the March quarter, the worst since the Second World War, but no forecast is yet made for the June quarter.  However, the Banque de France estimates that for every two weeks of shutdown the economy shrinks by 1.5% points.

Wry & Dry hears Readers asking about Italy.  Well, as Zhou Enlai would have said, "it's too early to say."  But it doesn't look rosy at the minute:

 Chart Euro debt

[1]  The Seven Years' War was a global war fought between 1756 and 1763. It involved all five European great powers of the time (Great Britain & Prussia v. France, Russia & Austria) plus many of the middle powers and spanned five continents, affecting Europe, the Americas, West Africa, India, and the Philippines.  It started with Austria wanting a part of Prussia and ended with France's European supremacy destroyed.

Bye bye Bernie

In a move that wouldn't surprise anybody, the 1960's ageing hippie presidential candidate, Bernie Sanders has 'suspended' his presidential campaign.  In layperson's terms, he has given himself the DCM.

Cartoon bernie free money

Bernie, aged 78, has made way for Sleepy Joe Biden, aged 77, to be the Democrat on the ticket.  As Readers can see from the below chart from the Financial Times, Bernie has pulled out earlier in the primaries' contests than any candidate since 2000, when Al Gore lapped Bill Bradley after the second time around the track.

Line charts of Democratic delegates in competitive presidential primaries since 2000 showing increasing competitiveness of Democratic nominating races

Readers will recall that Gore lost to George W Bush, by losing the state of Florida by just 537 votes, or 0.009%. That was the 'hanging chad' recount.  Wry & Dry has neither the time nor energy to explain a hanging chad to younger Readers.

Returning to bigger issues, the question now is, who will Sleepy Joe name as his running mate?  Wry & Dry is still rooting for Amy. 

Borisconi

Wry & Dry is amused that Americans are baffled by Borisconi being treated in a public hospital: St Thomas' in London [2], like any other Brit. 

Cartoon boris churchill

They might not understand that in the UK, like Australia, a public hospital can be first-class. Well, not quite like at the sharp end, but certainly not budget.

Readers will know that if Virus-What-Virus-Trump caught CV-19, he would be transferred from the White House to Walter Reed hospital, a secure military institution in Bethesda, Maryland.  More urgent attention would come from nearby George Washington University Hospital.

There is no free treatment in either.  Wry & Dry was curious as to cost of a simple operation in GWUH.  A knee replacement in Melbourne cost him less than $1,500 for everything.  GWUH's price list (which has 58,095 items) shows a cost of US$52,122.  And that is just for the operation.  The room, medication and the actual artificial knee is extra.

Wry & Dry is comforted by the fact that Virus-What-Virus-Trump would actually charge GWUH for tending to him.  And later make a Notflox series.

[2] Dare Wry & Dry observe that as recently as last year he was in the ED of St Thomas' with one of those travel bugs.  The food and service were excellent.

Not in the navy 

Q.  You are Yoo-Ess-Ay Acting Navy Secretary.  The Captain of a 100,000 tonne nuclear powered aircraft carrier [3] requests help for his crew, where over 100 have contracted CV-19, but your Navy has ignored requests for help.

The Captain widely distributes a memo pleading for accelerated evacuations.  What do you do?

a.  urgently arrange the requested evacuations;

b.  ask the President what to do;

c.  tell the Captain to nuke China; or

d.  give the Captain the DCM.

A.  Close, but no cigar.  The correct answer is d.  Acting Navy Secretary Thomas Modly gave Capt. Brett E. Crozier the DCM, saying he was “too naive or too stupid” to be in charge of an aircraft carrier.   

WryDry 772    

When Crozier walked the plank in Guam, the 4,865 crew members cheered him.  Modly then said that by cheering Crozier, they were overlooking their most basic duty to defend U.S. interests.    

Wry & Dry is still trying to join the dots on this.

But, as it turned out he need not have.  Yesterday, Modly gave himself the DCM and fell on his sword. 

[3]  The ship is the USS Theodore Roosevelt, a Nimitz-class aircraft carrier, named for Theodore Roosevelt, the 26th President of the Yoo-Ess-Ay.  Roosevelt, the famous trust-buster of the early 20th century ranks with his cousin Franklin and Abe Lincoln as giants amongst US presidents.   

To repeat a point...

... a point that Wry & Dry recently made, American companies have taken on significant debt not for mergers, acquisitions or capital spending, but for funding share buy-backs.

The point is repeated because Wry & Dry procured an updated chart (below) of who has actually purchased US stocks over the last decade.  And it wasn't investors.

Readers will know that share buy-backs increase EPS by reducing the denominator.   Now the chickens are coming home to do whatever chickens do.  As the New York Times recently observed:

“Perhaps no other industry illustrates the awkward position that corporate America finds itself in more than airlines. Major airlines spent $19 billion repurchasing their own shares over the last three years. Now, with the coronavirus virtually paralyzing the global travel industry, these companies are in deep financial trouble and looking to the federal government to bail them out.” 

As Readers can see from the below chart, 2019 saw a massive increase in debt.

 

Wry & Dry draws this to Readers attention merely to suggest that the worst may not be over for the S&P 500.

The Chinese Hustle.  Again.

Readers will have been aware of Luckin Coffee, a Chinese coffee chain the shares of which are listed on Nasdaq.  It's a sort-of Starbucks copycat.

Well, the company has now said that much of its 2019 sales were fabricated.  The stock fell 80%.  And trading has been suspended.  

Readers should watch The Chinese Hustle.  Here's the trailer - It's on Notflox.

But, wait. there's more!  A massive margin call earlier against Chairman Charles Zhengyao Lu and Chief Executive Jenny Zhiya Qian will lead to American banks losing more than $100 million on the margin loans.

As one commentator noted: "In hindsight, Wall Street probably shouldn't have let Luckin Coffee's chairman have more or less unfettered access to half a billion dollars with now-plunging Luckin shares as collateral."

WryDry 773

No tears from Wry & Dry. 

Who's Zooming Who(m)

Readers will be aware of the massive boom in video conferencing since CV-19 forced workers to WFH.  And with it the positioning of items behind the worker to ensure that the video-from-home camera caught charming family + dog/cat photos, bookshelves filled with never-read tomes, or a blank wall previously occupied by a faded poster of Raquel Welch in One Million Years BC.

The boom has also meant a boom in teleconferencing platforms.  And the winner is Zoom, which has become the most downloaded app in the world.

 Cartoon zoom

Well, maybe not for long.  Concerns about its security have been bubbling for weeks.  And now have exploded.  Up until now, Zoom has responded to privacy questions with a typical media release, the text of which was copied from Media Communications 101: “Zoom takes its users’ privacy, security, and trust extremely seriously.”

But not seriously enough.  A plague of "Zoombombing" - where people gain unauthorised access to a meeting, a 'please explain' from New Yoik's Attorney General about exploitation of user data and an FBI investigation has caused a rush to alternative platforms. 

Readers will be aware that Zoom meetings can be accessed by a short number-based URL, which can easily be generated and guessed by hackers.  And that Zoom has falsely advertised itself as using end-to-end encryption, a system that secures communication so that it can only be read by the users involved.  Zoom confirmed on Wednesday that end-to-end encryption was not currently possible on the platform.

Predictably, the litigation lawyers have loaded for bear and filed lawsuits.  It might be some time before international travel resumes.  But Wry & Dry predicts that the sharp end of the planes will be fully occupied.

Equally predictably, panic has gripped Zoom HQ.  "If we mess up again, it's done," Zoom CEO Eric Yuan said in an interview with the Wall Street Journal. "I really messed up as CEO, and we need to win their trust back. This kind of thing shouldn't have happened."

A sweet mea culpa.  Still, you gotta make money whilst the sun shines. Some did.  Zoom's share-price (it's listed on Nasdaq, the technology stock exchange in New York) had been moving sideways until the middle of March.  And then up she went.  And down she came.

Chart Zoom 

Snippets from all over 

1.  US earnings 'season'

First-quarter earnings season kicks off in under a week, starting with the financial sector, with reports expected from JPMorgan and Wells Fargo on April 14.  

Wry & Dry comments:  This time around, "beats" or "misses" will largely be irrelevant, because the results will be lowered by a tremendous increase in provisions for loan loss reserves, as well as considerations for a difficult economic cycle through 2021.  

2.  Hong Kong closes 

The Hong Kong government has banned public gatherings of more than four people and closed venues such as gyms, bars and karaoke parlours

Wry & Dry comments: In another sign that this is serious, it also announced that 'massage places' also close.

3.  Fiscal cherry blossom

Japan is finalising plans for a massive stimulus package worth ¥108T ($990B) - equal to 20% of GDP... That exceeds 11% of GDP for the U.S. stimulus package laid out by President Trump and 5% for that of Germany. 

Wry & Dry comments:  Australia's anti-CV-19 stimulus is about 17.5% of GDP, now the second largest globally.

4.  Big Tobacco opportunism 

British American Tobacco is developing a potential vaccine grown in tobacco plants, while Medicago, a biotech firm partly owned by Philip Morris, is pursuing a similar effort. 

Wry & Dry comments: Whilst they're at it, perhaps they can make tobacco-friendly face-masks that permit wearers to smoke at the same time.  Thereby reducing the risk of death by CV-19: success.  The fact that the wearer might otherwise die of lung cancer is not relevant, of course.

And, to soothe your troubled mind ...

Miscellany 

Last words ...from memory lane

NASA should be focused on the much bigger things we are doing, including Mars (of which the Moon is a part).."

 -  Donald Trump, 8 June 2019.

The moon orbits the Earth at a distance of about 383,000 kilometres.  Mars orbits the sun and is on average 225,000,000 kilometres from Earth. 

A lightly salted absurdity ...

Deepak, Wry & Dry's Uber driver ... 

...was frowning as Wry & Dry hopped into the back seat of the jalopy.

“You remember my mother-in-law,” he said nonchalantly, gesturing to the elegant occupant in the backseat.

“Damshi!” Wry & Dry exclaimed happily.

“It has been some time,” she said grinning.

“My mother-in-law is doing deliveries today, apparently it isn’t wise me getting out of the car because of Anjali and the chance of contamination,” Deepak said flatly.

“I see, he’s got you pounding the pavement” said Wry & Dry, raising an eyebrow at Damshi.

“Well yes, one cannot be too cautious, isn’t that right Deepak?” Damshi said with a dash of facetiousness.

Deepak grunted.

“It’s my last delivery that brings me the most pleasure,” Damshi purred.

“Oh, yes,” Wry & Dry asked leaning in with curiosity.

“A lovely gent, he likes to make me a cup of tea. All on his own you see, and I feel it is my duty on compassionate grounds to partake.”

“The milk of human kindness huh?” ruminated Wry & Dry.

“One could call it that,” she grinned, a flush emerging at the base of her neck that settled delightfully on her cheeks. 

Wry & Dry sighed deeply.

“I had to wait for over an hour last week while she had her damned cup of tea!” Deepak remarked crossly, breaking the silence.

“Well these things are best when taken slowly, Deepak. Bit of talk first, care must be taken when steeping and then one must sip slowly until the cup is empty. And then I take my leave.”

“Until next week?” asked Wry & Dry stirring at the thought.

“Oh no my dear, one must make the most of every opportunity. He is indeed a thirsty man,” Damshi quipped.

“Twice a week?” Wry & Dry choked.

“Every afternoon” Damshi said as she gracefully alighted the vehicle.

“Take your time Deepak,” she called.

“He will, I’ll make sure of it,” said Wry & Dry as he winked at Damshi and grinned. It was good, he thought happily, that despite everything a cup of tea was indeed a cure all.

Certainly that’s what Mrs. Wry & Dry always maintained.

   -  from the quill of Mrs Wry & Dry. 

 

Cheers

Anthony 

 

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