Wry & Dry

Sort the sock drawer. Yoo-Ess-Ay booms. RBA would be stupid...

In the dentist's chair 

W&D had two choices: (a) watch the election debate; or (b) sort out the sock drawer.

The debate was wedged, according to the local rag, between The Vicar of Dibley and a sales' show of some sort.  Well, that theme made sense to W&D: Mr Morrison as the vicar and Mr Shorten as the salesman.

But the problem was that the debate was on a television channel unknown to W&D.  7TWO wasn't on W&D's remote control device.  It wasn't 2, 7, 9 or 0. Or any other digit. 

So, W&D opted for the sock-drawer-sorting. And it would seem that Readers made the same decision.  The debate was the 19th most-watched programme on Monday night.

WD leaderds debate

Meanwhile, it's only 19 months to the next US election

Readers would know that the barriers for the US Democrat presidential nomination are quickly filling.  It's now up to 20 candidates.  And the latest is no surprise, Joe Biden, the folksy former Vice President to President O'Bama.

But W&D doesn't think for one minute that Mr Biden wants the top job, though.  Work with W&D on this. 

W&D's view is that Joe, and the senior folk in the Democrat leadership, want him as the steady hand of a Vice-President.  The reality is that Joe will be 77 when the election is held, and he's yesterday's hero.  Well, not even a hero.  But he's very experienced, polished, likeable and worldly (well, as much as an American politician can be).

The prominent Democrats who have thrown their hats/ fascinators into the ring are well to the left of the fish fork, such as that ageing rock star, Bernie Sanders.  A far left-wing candidate hasn't a chance against I-Wanna Trump.  And neither has anyone who remembers the '60s [1].

The aim is to get a sort-of-centrist younger person to challenge I-Wanna Trump.  And that person would do better if the platform were shared with Joe.

Readers will have seen that on entering the race, Joe has an instant 24 point popularity lead over Bernie Sanders. But don't be mistaken, don't be misled, that result is all about a current perception of 'electibility', not who will make the better president.  Joe will end up #2 on the ticket.

W&D is still rooting for Amy Klobuchar to be #1, but it would seem that not many Readers are.  

[1] But, of course, if you can remember the '60s you weren't there.

WD biden

The RBA would be stupid ...

... to lower interest rates next week.

Readers will know that the first Tuesday in every month (except January, but including November, Melbourne Cup notwithstanding) is when the Chief Teller of the Reserve Bank and his colleagues have a hearty breakfast together.  W&D is sure it would be an austere, but healthy fare.  Bircher muesli, no doubt.  Perhaps multi-grain bread (toast-yourself); freshly squeezed orange juice and filter coffee.  No Eggs Benedict, smashed avocado or even a piccolo latte.  


Coincidentally, they also decide on the 'target cash rate', i.e. effectively the benchmark short-term interest rate for the Australian economy.

Readers will be aware that a massive Group Think has developed over the past few weeks that the Chief Teller should lower interest rates.  The Group Think revolves around (a) the hysteria about falling house prices; and (b) the March quarter headline CPI being 0%.  Weirdly, the RBA wants inflation to rise to be within its 'band' of 2-3%.

Whilst W&D would personally welcome such a move (as it would lower his cost of living), really it would be a daft decision.

Firstly, lowering interest rates might re-ignite the speculative end of the property market.  Not a good thing.

Secondly, why lower interest rates to 'prop-up' the property market?  Since when is the RBA's charter to prop-up the property market?  W&D thought it was to fight inflation...

WD RBA inflation 

Thirdly, lowering interest rates is not going to increase inflation.  Lower inflation is now a product of a massively more efficient world, that can produce goods and services more cheaply than previously.  This is an outcome of both rapidly changing technology and cheaper international labour costs.

Finally, lowering interest rates means lower deposit rates.  Not good for those relying on deposit interest for living.

It's time that the RBA got with the programme.  Its interest rate model is not working.   

Brexit entertainment is never far away

Readers might sense that calm has descended over Brexit-wrought UK.  The EU gave the Brits an extension until 31st October before they ask for another extension.  Mrs May (PM) had gone hiking somewhere in the north of England [2], hitherto demonstrating university students hunkered down for their final exams later in May (month) and the media turned their obsessiveness to the sex of the upcoming first child of Prince Henry and his American wife.

W&D was not fooled.  Whilst the wheels of government have had enough sand thrown in them to grind decision making to a halt, that self-viewed successor to Winston Churchill, Boris Johnson, has been active.

Boris, who every morning when he shaves sees a future Prime Minister, is plotting to overthrow the unfortunate Mrs May.  The tipping point will be the upcoming EU Parliament elections (23rd May).  The polls suggest that the Conservatives will get their worst result ever.  This will be seen as a poll on Mrs May - and she might have no choice but to give herself the DCM.

In an emotional tsunami (to the tune of Rule Britannia), Boris will win the party vote, with a mandate to renegotiate Mrs May's Brexit deal.

WD 37 FY 19 Boris

As it is just not possible for Mrs May's deal to be re-negotiated by Mrs May, it will be up to Boris to so do. 

Or it's a No-Deal Brexit.  Which Boris will view as his Dunkirk. 

[2]  Although she's back in the Downing Street Salt Mine this week.  On Wednesday she gave her swaggering and boastful Defence Minister the DCM.  Apparently, he had leaked government information about Huawei's role in telecoms infrastructure (see below for more).

There is always Julian

If Readers are not entertained by Boris, there is always Julian Assange.  The publicity-shy rent-evader (seven years and not a pound paid to his landlord, the government of Ecuador) was sentenced on Wednesday in Westminster Magistrates' Court to 50 weeks in the slammer for jumping bail those seven years ago.

Mr Assange appeared in court overnight, regarding his extradition to the US. 

The weirdness of Mr Assange's life has morphed across to his lawyer, who said Mr Assange "could be forcibly kidnapped [3] without the consent of the UK and taken to the US."

Sigh.  What do these people eat?

[3] W&D guesses that he might be agreeably kidnapped, but then that wouldn't be kidnapping.

W&D has a theory ...

... and that is that there is something going on with the big banks that we-the-customers are not being told about.  Consider these:

  • real incomes are continuing to rise
  • unemployment is at 5%, technically 'full employment'
  • interest rates are at record lows
  • the economy is growing steadily
  • mortgage delinquencies (not defaults) are stable at between 1.6 and 2.2%

So why are the banks tightening lending restrictions?  LVRs are being lowered, personal expenses more tightly assessed and income-evidence requirements lifted.  The banks' balance sheets are in good shape (aside from allowances for bad behaviour as uncovered by the Royal Commission).

W&D thought the banks were there to lend money...

WD Banks

What's going on?  Has the RBA uncovered something that the banks are now required to unwind over a number of years.  Are there nasties embedded somewhere in the banks' balance sheets about which we know nothing?  

Just sayin'.

Smoking gun?

Readers will know that some Western governments have been concerned that Huawei, a massive Chinese telecoms company, is using its access to other countries' telecoms' networks to harvest data for the Chinese government.  Huawei has always denied these allegations.  And the Chinese government, in its usual aggrieved manner, has said how dare these nasty people make such outrageous statements.

WD Huawei

Readers will also be aware that the Australian government has banned Huawei from supplying any part of the local 5G network because of cyber-security fears.  The US has done the same.  The Chinese are taking each to the WTO.  Good luck with that.

But now the plot has thickened.  Vodafone UK has found that Huawei had built hidden 'backdoors' in Vodafone's Italian fixed line business and its optical service nodes.  This would have given Huawei access to millions of homes and businesses. 

Is this the smoking gun? W&D expects massive aggrievious noises from Beijing.

Unintended consequences

Reader might have thought that the effect of the Royal Commission would be only about repentance, remediation and in some cases charging of recalcitrant participants in, mainly, the banks and AMP.  Err, no.  That would be to severely underestimate the broader consequences.

W&D is not just talking about the funding of overseas vacations and that long awaited beach-house renovation for the lawyers involved.

As the data now shows, there has been a massive transfer of funds from bank superannuation funds and AMP to, mostly, industry superannuation funds.

It would not have escaped Readers' attention that AMP announced yesterday it has suffered funds' outflows of $5.5 billion in the past 12 months.  And this is on top of the banks' outflows.  That's a lot of securities' selling.

Meanwhile, the lawyers are waiting for the next big Royal Commission.  Or should that be in the plural?

Snippets from all over 

1.  Down at the car wash 1

US economic growth is booming, up 3.2% annualised in the March quarter, the strongest in 4 years.

W&D comments:  I-Wanna Trump needs the growth to justify the cost of last year's tax cuts.  But he will be long gone when the debt chicken comes home to roost. 

2.  Down at the car wash 2

I-Wanna Trump announced that no further sanction waivers would be granted to countries importing oil from Iran.  The oil price leapt to $74. 

W&D comments:  Guess, what, Saudi Arabia gets to fill the gap.  It needs an oil price of $85 to balance its budget.

3.  Ukraine has a sense of humour

The new president of Ukraine is Volodymyr Zelensky, a native Russian-speaker of Jewish heritage.  He comfortably won a run off against the incumbent, Petro Poroshenko.  

W&D comments:  Mr Zelensky is a television comedian with zero prior political experience. Wait for him to be sorely tested by Tsar Vlad doing something provocative. 

4.  Eurozone rebounds.   

Preliminary growth data from the eurozone showed the economy grew 0.4% in the first quarter, up from 0.2% in Q4 of 2018.  

W&D comments:  Well, not quite a rebound.  Perhaps an uptick.

5.  Indonesia: a capital move?

Indonesian President Joko Widodo said on Tuesday that the country is considering spending $33 billion to move its seat of government out of Jakarta.  

W&D comments: Jakarta is 8 metres above sea level.  Perhaps to, err, higher ground?

Tool of the Week 

Podium finish goes to ... Jack Ma, billionaire boss of Alibaba, a massive Chinese e-commerce and IT company, who said, "If you are joining Alibaba, you should be prepared to work 12 hours a day.  There is a price for being number one."

Mr Ma is China's wealthiest person, with some A$55 billion to his name.

Deepak, W&D's Uber driver ... 

... phoned W&D from India.  The line was patchy, to say the least.  But W&D could make out that he was still campaigning in the Indian elections.  But it wasn't clear for whom.  W&D asked about his problems (mother-in-law, sleepless new baby, wife's six cousins, Bitcoin price) and all he said was that he wanted to get away from them all.   

Publication dates

Readers, please note that arrangement for the upcoming public holidays and W&D holiday arrangements are:

Fri-3-May - published

Fri-10-May - published

Fri-17-May - published

Fri-24-May - W&D on vacation

Fri-31-May - W&D on vacation

Fri-7-Jun  - W&D on vacation

Fri-14-Jun - published

And, to soothe your troubled mind ...


Last words ...

Until the election, W&D will present apposite quotes on politicians and elections.

Compassion is the use of public funds to buy votes." 

 -  Thomas Sowell, an American economist and social theorist who is currently a Senior Fellow at the Hoover Institution, Stanford University.     

First Samuel client events calendar

Events for 2019

Eat Street

Invitations sent on Tuesday 2nd April   

21st May 2019 - The Sofitel   

NGV Viewing and Cocktail Night

Invitations not yet sent

25th June 2019 - NGV 

Contact Jess at responses@firstsamuel.com.au to RSVP

Some lightly salted absurdities from all over ...

At the extreme left-hand end of the bell-curve ...

Police in Hugo, Oklahoma were looking for a robbery suspect.  And pulled over a truck.  The driver was slow in getting out.  The police opened fire.

Three of the four children in the truck were hit by bullets.  


The children's injuries were not life threatening.

Guess the outcome

Christine, a renter was seeking a room in New York.  She was rejected. 

Q.  What reason was given by her possible flatmates: 

a.  She was black;

b.  She was Jewish;

c.  She was English; or

d.  She was a Capricorn.  

A.  Close.  But no cigar.  The answer is d.  The text message back said, "Sorry I haven't responded earlier.  My concern is that you're a Capricorn.  Our main goal is to keep things egalitarian, without anyone being 'in charge' ... This Virgo/ Gemini house is a special place where soft mutable signs get to run free untethered by cardinal authorities."


'Cardinal authorities'?

Just when you thought it was safe ...

... the Canadians have opened the world's longest, tallest and fastest roller coaster.  It's 1.1 kilometres long, has a 100 metre vertical drop, a 360-degree loop and a top speed of 130 kph.  It's at Canada's Wonderland, just north of Toronto.

Click here to get your stomach stirring 


W&D has the election to provide the nausea.