Wry & Dry

Protesting at Rye. Record forecasting error. Electrifying Tesla.

Protesters get their comeuppance

The police in the Peoples' Socialist Republic of Victoria are quick learners.  Readers will recall that some 10,000 protesters defied the government's social distancing edict last Saturday and gathered cheek by jowl in the heart of Melbourne.  The police (perhaps, err, guided by higher authority) did nothing to enforce the social distancing laws.

Stung by complaints for their inaction, the next day the police moved in force to enforce social distancing laws at an out-of-hand protest by unruly people on the Rye pier.  Some 30 or 40 fishermen people had gathered.  These people were clearly a threat not only because of the possibility of transmitting CV-19 but more alarmingly they were carrying weapons that were disguised as fishing rods and tackle.  Their action of apparently catching fish was, of course, a ruse. 

Cartoon Rye pier 

The police were not fooled.  And quickly moved into action.  See below.  And a good thing too.  The  seriousness of the incident caused alarm in Beijing Melbourne.  So a surveillance device was dispatched from the Spying 'R Us Technology Company (Room 51006, Block Q, Emperor Xi Street, Emperor Xi City, Emperor Xi's Peoples Republic of China) purchased from JB Hi Fi.  Readers can see the cunning device in the photo, below, disguised as a seagull. 

photo fishermen 2

Chairman Dan is to be commended for ensuring that the police learned from their inaction on Saturday.  And for ensuring the safety of all Victorians.  Wry & Dry hopes that those dangerous fisherpeople in Rye have learned their lesson.

World record forecasting error

Readers are probably getting fed up with Wry & Dry's comments about the fatuousness of economic forecasting in these opaque times.

Cartoon economic forecasting

But allow Wry & Dry to point to last weekend's new world record error.  Forecasters in the Yoo-Ess-Ay had predicted that employment would drop by 8 million in May.  The actual figure was an increase of 2.5 million jobs.

...but the forecasts keep coming:

The Australian federal treasury has revised down its forecast of June unemployment to 8% from the previous 10%.

...and coming:

Against advice from Wry & Dry, the OECD has stuck its neck out and forecast GDP growth rates for 2020, assuming a 'second wave' of CV-19.  The obvious problem is, of course, that there is no GDP growth within a bull's roar.  

Australia and South Korea, again, look attractive places in which to live.

Chart oecd growth

Beyond Virtue Signalling

Readers will know that there isn't a single figure from history who wasn't flawed: Lincoln, Gandhi, Churchill, Napoleon, Garibaldi, etc.  But defacing statues of flawed figures merely shows not virtue but defacers ignorant of history.  Weird, isn't it, how a sense of self-righteousness justifies the obvious vandalism.   Monkeys at work...

Cartoon statues     

But now it's getting sinister.  Movie streaming company HBO has pulled the undoubtedly racially biased US civil war movie Gone With the Wind from its online Max library.  The movie will return "with a discussion of its historical context and a denouncement of ethnic and racial prejudices."

Like much of the virtue signalling, this sounds reasonable and laudable.  But Readers can see the subtext.  A morphing into a blend of 1984, Brave New World and Joseph Goebbels - telling people what to think.  Watch out for Casablanca to be banned.  And half of Shakespeare.

Wry & Dry senses that these vandals have many traits of so-called millennials: no understanding of anything that happened before their own life experience and absolute self-assurance that their perspective is unquestionably correct. 

Readers may also wish to consider other flawed leaders and their monuments.  There is statue of Sir Thomas Bent near Bay Street in Brighton, Melbourne.  Tommy Bent was a premier of Victoria in the late 19th century.  And a corrupt and notorious swindler to boot, who stole thousands from others.  The suburb of Bentleigh is named for him. 

Wry & Dry is waiting for the virtue signallers to deface Tommy's statue and to have Bentleigh renamed.   

And the dummy landed on the moon

This week's "And the Dummy Landed on the Moon" award goes to... Virus-What-Virus-Trump's re-election campaign team.  It has asked CNN for an apology and demanded a retraction of a poll that showed that Sleepy Joe Biden had a sizeable lead 55-41 over V-W-V-Trump in the presidential stakes.

Wry & Dry ponders that the aggrievance is not the fact that Sleepy Joe is ahead, but it's the margin.  Other polls have consistently shown that Sleepy Joe is ahead of V-W-V-Trump by between 7 and 10 points.   And today's Economist has published a typical Economists angle, based on statistical probabilities.  If an election were held today, Sleepy Joe would win in a landslide.

But the election is not today, it is four months away. And a note for Younger Readers: voting in the Yoo-Ess-Ay is not mandatory.  So opinion polls can be very inaccurate.  It's all about which team gets its supporters out on the day.      

Tesla booms

This week Tesla became the most valuable company in the world, surpassing Toyota.   This is much to Wry & Dry's embarrassment, who as recently as two years ago dismissed the company as an overpriced ego trip for its founder, funded by other peoples' money.

Investors have voted with their wallets, many because they like the idea of electric vehicles.  Smarter investors understand two things about Tesla.

Firstly, legacy car companies (Ford, GM, VW, etc) cannot profitably manufacture EVs.  They rely on profits from internal combustion engined (ICE) vehicles to subsidise EVs. [1]  Tesla is now marginally profitable, and has started cutting the prices of its cars.  This is counter-intuitive.

The logic is simple: in the vehicle industry, cutting prices normally means the demand for your model has dropped and you're trying to boost sales by cutting prices to steal market share from other car companies. In the tech industry, cutting prices means you've figured out a way to cut the cost of manufacture and you're cutting prices to block other companies from entering your market space. Tesla is eating the lunch of legacy car companies.  

Secondly, in the same way that shaving companies give away razors to make money on the blades, so Tesla has the opportunity to virtually give cars away and make money on selling electricity at charging stations.  Watch that space.

Cartoon Elon musk

Of course, all of this works only as long as shareholders are willing to keep on funding Tesla's development.  But optimism abounds.

[1]  This is the reason that Dyson, the vacuum cleaner man, pulled out of further developing an EV.  He invested almost a billion dollars and then decided he couldn't compete either against ICE manufacturers or Tesla.  

Who wins from protest marches?

Wry & Dry came across some interesting data in The Economist this week.  In the Yoo-Ess-Ay, research shows that violent protests help the Republican Party and peaceful protests help the Democrats.  It's almost self-evident, but the data, limited as it is, is real.

Chart protests

The research is from Princeton University and found that non-violent protests held between 1960 and 1972 boosted local support for civil-rights issues, whereas violent ones had the opposite effect.  Readers will recall that this was the time of massive Vietnam and civil rights protests.

The research suggested that violent protests were enough to swing Delaware, Illinois, Missouri, New Jersey and Ohio to Nixon in 1968.  And to victory.  

The irony in all of this is that, then as now, the aim of protesters is to attract media attention.  In the 1960s, civil rights leaders chose to hold protests where they knew that the police would respond in a 'disproportionate manner' (i.e. violently).  This got media attention.  But it lost the votes of those who might otherwise support the cause.

Of course 2020 is a different time.  Nixon ran as an agent of change, he was the challenger.  Round-Up-A-Posse-Trump is neither.        

Cathay Pacific - slowly turning to Beijing

Readers will be aware of the plight of Cathay Pacific, the Hong Kong based airline majority owned by Swires, the largest of the Hong Kong trading houses.  It's business has collapsed in a similar fashion to other airlines.  And the Mandarins in Beijing told the airline to fire any employees who protested against Hong Kong's hapless puppet, Carrie Lam.  If the airline didn't kowtow, OTD [1] goes Cathay's 'fly-over' China rights.  Cathay prostrated, trembled and obeyed. 

Well, now the Hong Kong government has taken a 6.1% stake in Cathay, as part of a $5 billion recapitalisation.  A 6.1% shareholding wouldn't normally come with a seat at the table.  But, somehow, the Hong Kong government will be allowed two 'observers' at board meetings and full access to management information. 

Cartoon cathay

And Wry & Dry bets that the two observers will observe Cathay from the very sharp end of the plane, on a regular orientation programme.  

[1] Out the Door.

Snippets from all over 

1.  Pull back

After a lengthy rally, the S&P 500 fell 6.9% last night. 

Wry & Dry comments:  The sky is not falling, the recent market surge was not sustainable.

2.  Australia's consumers regain mojo

The Westpac consumer sentiment index rose 6 per cent to 94 points in June, recouping the remainder of the 20 per cent lost in the last three months.

Wry & Dry comments:  Just need the Banana Republic of Queensland to reopen to push confidence back above 100. 

3.  Australia's business confidence rises 

NAB reported that Australian business confidence and business conditions both jumped in May as CV-19 restrictions began to unwind.  The former jumped jumped 25 points and the latter by 10 points. 

Wry & Dry comments:  But both are still negative. 

4.  China's record trade surplus

China's Exports fell 3.3% to $207 billion compared to a year earlier and imports tumbled 16.7% to $144 billion, resulting in a trade surplus of $63 billion.

Wry & Dry comments:  This is the highest since Reuters started tracking the series in 1981.

5.  Worst month ever for German economy

German industrial output posted its steepest decline on record in April, plunging 17.9% during the month that saw unprecedented closures of factories and shops due to Covid-19. 

Wry & Dry comments:  ...but the Bundesbank feels the peak of the economic crisis is likely over.

And, to soothe your troubled mind ...

Miscellany 

Last words ...

As for the qualities of Mr Trump, let me say that, among many other things, he is the President of the United States.” 

 -  Boris Johnson, UK PM, brilliantly put on the spot by an SNP backbencher: "Would the PM care to list the good qualities of Mr Trump?"

Borisconi went on to say what a great nation the Yoo-Ess-Ay was.  But somehow didn't manage to mention any of Virus-What-Virus-Trump's good qualities.

A lightly salted absurdity ...

Deepak, Wry & Dry's Uber driver ... 

...grinned happily as Wry & Dry hopped into the jalopy.

“Well, have you sold it?” Wry & Dry asked.

“The jalopy? No, we have decided to keep it after all,” said Deepak.

“Better the devil you know than the devil you don’t know,” Wry & Dry quipped.

“The truth is no one wants it, can’t give it away! Anjali said I should try a bit harder. She had her heart set on a 7-seater. She even got quotes and went on a test drive without me,” Deepak grumbled.

“Let me guess, it was reassuring expensive and resembled a Panzer?”

“That’s the one and she’s even picked out the colour. It’s cruel you know, it’s like keeping a greyhound in an apartment. Those sort of vehicles are made for off-road,” Deepak announced.

“And the only off-road it would see is when you mount the curb again?”

“Exactly,” Deepak said excitedly, before frowning slightly as he realised the implication of Wry & Dry's comment.

“Did you explain your sense of injustice on behalf of said vehicle and explained that it was born to roam free?” asked Wry & Dry, thinly disguising his amusement.

“Yes, and I also explained that I think now that Anjali is about to be legitimised with her mother being married to that rather abundant lover, it seems the old faithful jalopy is now below Anjali’s station. Anjali listened very carefully to me as she knows I am always wise and detest snobbery of all kinds.” 

“Indeed,” affirmed Wry & Dry.

“And you know what my wife said?” Deepak announced proudly.

“Couldn’t guess,” said Wry & Dry.

“She told me I was absolutely right. I knew Anjali would come round to my way of thinking, to be contented with the jalopy that we both know and love.”

“Are you sure that’s what Anjali meant?”

“Of course,” said Deepak indignantly, rolling his eyes.

Deepak’s phone rang, and he thrust in the earpiece against his tympanic membrane and spoke in a muffled but rather deep and authoritative voice.

“Absolutely, my estimated income has certainly gone up now I’m Senior Traffic Controller. Yes, yes, and of course I am still a private chauffeur as well... Well, technically, you could say that I’m using the Uber platform,” Deepak tailed off before hanging up.

“That sounded interesting," Wry & Dry observed. "What's with the Senior Traffic Controller stuff?  That's not the community service order you got to be a part-time lollypop man at a school crossing?"     

"Well, yes.  Everybody pumps up the work they do.  That was the bank.  They like to check I’m still employed and as you say kicking financial goals in these difficult times.  It’s great customer service for banks to know how much they care about their high-end clients,” Deepak said, puffing out his chest with self-importance.

“Are you sure it's just a relationship call?  Thinking of Anjali's desire for, err, higher things, perhaps it’s a credit check for a…” Wry & Dry deliberately let his voice trail off.

“...a credit check.  No."  Deepak paused, as the penny slowly dropped.  "No!  Not for a new car loan?  We can't afford one!“ he caterwauled as the tips of his ears spontaneously reddened.

“It’s always a worry when wives tell you that you are absolutely right,” unhelpfully remarked Wry & Dry, causing Deepak distress enough for his jalopy to mount the curb as it approached Wry & Dry's office.  

“Good luck,” Wry & Dry cried, as he unbuckled his now tightened seat belt and hopped out.  But his voice was lost as Deepak hurried off with a screech of tyres and a cloud of smoke.  In the direction of his bank, Wry & Dry guessed.

  - from the quill of Mrs Wry & Dry. 

 

Cheers

Anthony