The sky is falling. Again.
Hell hath no fury like a stock market surprised.
And so it was on Tuesday, when the S&P500 fell about 4.3% with the news that US inflation was higher than expected. Whilst the price of petrol dropped, almost everything else went up, boosted by reduced supply (‘supply-chain’ issues) and increased demand (massive government stimulus).
Hence a fear that the Fed would need to raise interest rates even higher to control the beast.
Who cares?
Err, well Australian investors. Funny, isn’t it, that people who say they are long-term investors suddenly get spooked by a downward spike in the share market. Wednesday’s ASX downward spike was -2.6%.
The 3.5% fall on the 14th of June didn’t bring as many conniptions. What’s going on?
Well, the phoenix of prolonged inflation has risen from the ashes. The implications for investors are many (which doesn’t mean selling every share owned). Readers are urged to read this week’s Investment Matters (the link is at the foot of this page).1
1 Sydney and Melbourne First Samuel clients are also urged to look out for the upcoming invitations to Chief Investment Officer dinners.
Meanwhile in Uzbekistan…
… two modern day autocrats will be attending a CPD course on “How to invade a neighbouring country.”
Just kiddin’.
Emperor Xi and Tsar Vlad will actually be meeting on the side-lines of the Shanghai Cooperation Organisation’s summit2, being held in Samarkand. Each has an agenda, dressed up as a close friendship.
Following his invasion of Ukraine, Tsar Vlad is as lonely as a cloud. And Emperor Xi is his only friend of substance. Well, sort of. The friendship is one of mutual enmity towards to US. And commercial self-interest. Tsar Vlad has the oil, gas, etc and is a willing, if not desperate, seller. Emperor Xi is a willing buyer, but at a price.
Effectively, Tsar Vlad is now beholden to Emperor Xi. And Emperor Xi likes the concept of yet another vassal at his feet. And is happy to keep his distance.
And Emperor Xi is smart enough to turn down Tsar Vlad’s requests for military hardware. His position is one of benevolent neutrality. So, Tsar Vlad has his begging bowl out to North Korea and Iran to resupply his depleted and broken war machine (see more, below).
Readers will have heard that Emperor Xi has been kicking up a fuss for many years about the “Unequal Treaties” of 1858 and 1860. At the end of a gun barrel, China signed away Hong Kong to the British. Less widely known, it also signed away Outer Manchuria (coloured light pink in the below map) to Russia.
Will Emperor Xi now want Outer Manchuria back?
2 Shanghai Co-operation Organisation is a loose knit gathering of central Asian countries: China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Uzbekistan, India and Pakistan. Afghanistan and Mongolia have “observer” status (observing on Zoom or Teams?), as does, weirdly, Belarus. Greece is closer to Samarkand than Belarus, maybe it should apply to observe.
Retreat to Moscow
Napoleon’s retreat from Moscow was one of the great military disasters. He invaded Russia with 615,000 men and only 112,000 returned to France. Not a happy result. And yet he is lauded in France. Weird.
Tsar Vlad’s army’s retreat to, well, not quite Moscow is not yet one of the great military disasters. For now, it’s massive amounts of free-range-egg-on-face for Tsar Vlad. And for his acolytes.
Consider in early July: Andrey Turchak, a senior Russian politician and noisy nationalist, visited the eastern Ukrainian city of Kupyansk, which had then recently been captured by Russian troops. He opined on Russian television that, “Clearly, Russia is here forever.”3
Last week, Ukrainian forces recaptured Kupyansk. And kept on going.
But talk is somewhat premature that Ukraine’s stunning successes in the past fortnight will lead to Tsar Vlad pulling up stumps. He’s not going to back down. Nor is he going anywhere. Remember, with just three recent exceptions, Russian/ Soviet leaders either die in office of natural causes or die in office of unnatural causes. 4
But Readers should make the most of this delightful setback for Tsar Vlad. And further rejoice in another of Patrick’s Cook’s work:
3 Turchak is strangely wealthy, for a man who is a career politician. Inter alia, he owns a $1.7m villa in France. Err, hang on, this is Russia. Maybe not so strangely.
4 Yeltsin (1999) and Gorbachev (1991) both gave themselves the DCM. Khrushchev (1964) was given the DCM by the Politburo and pensioned off. Readers have to go back to Ivan VI who, in 1741, had his sovereignty overthrown by his cousin. He was two months old at the time and was imprisoned for 20 years before being killed in a failed attempt to release him.
Bitcoin blues
That mirage of possible wealth, bitcoin, fell 10% on news of the latest US inflation data (see comment above).
So much for bitcoin being an inflation hedge.
What a deal!
On Wednesday, the shareholders of social media company Twitter formally accepted Elon Musk’s bid to buy the company for $44 billion.
Twitter is currently valued at $32 billion. Which is perhaps why they accepted the bid.
As the company is now valued at much less than what he bid, Mr. Musk is doing what any American entrepreneur would do under the circumstances: lawyer-up.
Trivia
The first legal judgment in the name of the King in the global legal world was in Chairman Dan’s People’s Republic, could Readers believe it?
Saverio Zirilli v The King, a drug importation case, was promulgated in Melbourne’s Court of Appeal last Friday.
Melbourne’s first World’s First since Chairman Dan lost Melbourne’s title as the World’s Most Liveable City.
Unclear on history
Where did the money go?
The money that was supposed to be spent on learning history at school.
Readers are welcome to their views on the monarchy as much as their views on a football team (ABC5). But really, it is faintly absurd for some journalists (actual or whom self-identify as such), Greens’ MPs and Indigenous leaders (actual or whom self-identify as such) to suggest that the monarchy is responsible for the colonisation of Australia. One even stated that Queen Elizabeth was the architect of colonialism. Really.
The decision to establish a colony in Australia was made by Thomas Townsend, Lord Sydney, Secretary of State for the Home Office, in 1786. He was responsible for giving the new colony a constitution and judicial system suitable for a colony of free citizens rather than a prison. The colony was established with about 850 convicts and about 350 marines, sailors, civil officers and free settlers.
Not quite an invasion. And nothing to do with the then monarch George III (who at the time was going, or had gone, bonkers).6
There’s nothing wrong with freedom of speech. But please go back to school if you are (and not feel that you are) currently oppressed by the monarch or colonialism.
See further, below: By the way…
5 Anyone But Collingwood.
6 It is a technicality that the colony was established in the name of the Crown, or on land claimed for the Crown. It has to be in the name of a body of some sort.
Unclear on the concept
“Queensland will continue to only impose tax on land owned in Queensland,” said Deputy Under Treasurer Dennis Molloy on Wednesday.
Technically correct. But the amount of tax will be determined by the landowner’s assets in other states as well as Queensland.
Yes, Minister Deputy Under Treasurer. That’s double taxation.
Advertising
Wry & Dry guesses that in the months leading up to the 2022 federal election that the federal government would be a large advertiser, impartially splashing spending we-the-taxpayers funds on all the good things that had been done for we-the-voter.
But not that in the first six months of 2022 it would be Australia’s largest spender. Still, propaganda is expensive.
Nor that Chairman Dan would come in second spot. No election about which to advertise, but, hang the expense. But no surprise that the well-upholstered Clive Palmer would finish near the top.
The top 20 advertisers7 were:
- Commonwealth government
- Victorian government
- Harvey Norman
- NSW government
- News Corporation
- Clive Palmer
- Wesfarmers (Bunnings)
- Nine Entertainment
- Woolworths
- Amazon
- Suncorp
- McDonald’s
- Coles
- Telstra
- Singapore Telecom (Optus)
- CBA
- Queensland government
- Industry Superfunds
- Reckitt
- Toyota
7 Source: A fly on a wall.
Memories 1: Victoria
HM Queen Elizabeth II, who lived on an island just to the west of France, visited Victoria on 16 occasions in her 70 years as sovereign.
Former Prime Minister Scott Morrison, who lives in a bubble just to the south of Sydney, visited Victoria on only 11 occasions8 in his 4 years as Prime Minister.
Just sayin’.
8 Estimated, from media articles. Excludes electioneering.
Memories 2: Victoria
Writing of Victoria, in a moment of boredom, Wry & Dry was looking back through articles he didn’t publish. The below might have been published in the middle of the Victorian lockdown in mid-September 2020. The story is true. It is shared to remind Readers of what life in Melbourne had become.
It’s come to this in Chairman Dan’s Gulag State.
Around lunchtime today, three armed policemen came to question Mrs. Wry & Dry. Some Readers may know that she has been writing and distributing a weekly community newsletter since the start of Chairman Dan’s lock-down. The aim has been to share news, happiness, children’s activities and for neighbours to tell each other what’s going on.
In it, Mrs. Wry & Dry made mention of a local opera singer singing from atop her brick fence every Friday afternoon at 5pm. Some locals have turned up to listen, whilst walking their dogs, cats and other animals.
Someone has now dobbed in Mrs. Wry & Dry. And so three armed police came to intimidate her.
It seems as though there were two issues: (a) why she was “advertising an event”?; and (b) putting a newsletter in a letterbox might spread coronavirus (!). She was not intimidated by the three policemen. And told them that she would continue to letter-drop the community newsletter each week. And if people wanted to let others know of what they were doing, so be it. And if they were going to arrest her, then go ahead.
They declined. A wise choice. Hell hath no fury, etc, etc.
She also asked them what was she allowed to do in the lockdown? They couldn’t tell her and referred her to the health department website.
This is faintly ridiculous, but there are three issues:
(1) Why weren’t these fine young men arresting drug dealers, burglars and wife beaters instead of trying to intimidate a young woman?
(2) Why is it that this lock-down has now turned neighbour to become dob-in neighbour?
(3) Why does it take three armed policemen to do this? Is the police-force over-personned?
So, Chairman Dan, it’s come to this? This incident is placed at your feet.
Ah, those were the days. Or, maybe those are the days.
Memories 3
The Governor of the Reserve Bank, Philip Lowe, was this morning asked by the House of Representatives economics standing committee whether he was aware Scott Morrison had been secretly sworn in as treasurer.
“No, I was not,” he said.
Neither were the lads down the pub who normally partook in Morrison’s ‘pub test.’
But Wry & Dry bets that Jenny (Morrison) knew.
Hong Kong
Emperor Xi’s bedtime reading list now includes children’s picture books. It seems as though some dastardly speech therapists in Hong Kong have published three children’s books comparing him to an invading wolf and the people of Hong Kong as sheep.
So, he did what any sensitive new-age guy would do: take offence and have them clapped in irons.
The Famous Five have been sentenced to 19 months in the slammer for ‘sedition’.
Isn’t it a fine thing that Emperor Xi is focussing on the big issues.
By the way…
A few Readers asked about Wry & Dry’s view on Australia becoming a republic, considering his comments on the death of HM Queen Elizabeth.
Firstly, Wry & Dry is an Anglophile, comfortable in the armchair of the source of Western democracy that also conveniently speaks English, has history oozing from every pore, plays cricket, has a sense of irony and is home to delightful pubs.
Secondly, Wry & Dry is, for Australia, a Republican, subject to a non-elected head of state and he/ she not being named that awful term ‘president’ or ‘chancellor’.
The succession of King Charles is not relevant.
Snippets from all over
1. Sleepy Joe: here, there, and everywhere
President Biden, desperate to avert a damaging freight rail strike that could exacerbate rapid inflation, is pushing rail companies and unions to reach an agreement ahead of a Friday deadline. (New York Times).
Wry & Dry comments: His insertion into the dispute has, of course, nothing to do with the upcoming mid-term election. Of course.
2. Google
The EU’s second-highest court “largely confirmed” findings of competition regulators who ruled in 2018 that Google unlawfully imposed restrictions on the makers of Android smartphones to cement the dominance of its search engine. The original penalty was trimmed to €4.125 billion. (The Times)
Wry & Dry comments: A slap on the wrist: in 2021, Google’s revenue was US$256 billion.
3. Hong Kong office space aplenty
CBRE Group, a real estate investment firm, estimated commercial vacancies in Hong Kong sat at 11.9% at the end of the first half, the highest since the third quarter of 2003. (Financial Times)
Wry & Dry comments: …which has caused rents to drop by about 27% since 2019.
4. Emperor Xi under the microscope
China faces being censured by the United Nations Human Rights Council for the first time in its history, after a UN report detailed mass detention and persecution in Xinjiang. (Wall Street Journal)
Wry & Dry comments: It would seem, prima facie, that the majority of the 48 members of the UNHRC would vote for censure. But this is not a judicial process. Emperor XI has an old fashioned but successful version of “you scratch my back and I’ll scratch yours.” Which goes something like this: “So, you owe us two billion dollars and you are behind in your interest payments…”
5. Don’t mention the war
Germany’s economy will shrink next year as soaring energy costs caused by Russia’s throttling of gas supplies reduce disposable income and consumers rein in their spending, according to a leading think-tank. (Financial Times).
Wry & Dry comments: Think-tanks are made up of economists. Economists will change their minds when the facts change.
6. House prices fall
Australian home prices recorded their largest monthly decline in almost four decades in August, with rapidly rising interest rates expected to drive further falls in the period ahead. (Bloomberg).
Wry & Dry comments: No surprises there, as interest rates had been at four-decade lows.
Data
- Australia’s unemployment rate lifted slightly to 3.5%.
- The percentage of US children living in poverty reached its lowest level on record last year: 5.2%.
- The UK economy grew 0.2% points in July, less than expected.
- US 30-year mortgage rates hit 6% for the first time since 2008.
- The UK unemployment rate fell to 3.6%, the lowest since 1974.9
9 But Prince Andrew remains unemployed.
And, to soothe your troubled mind…a quote. Or two.
“…they fled like Olympic sprinters.”
- Petro Kuzyk, a commander in Ukraine’s national guard, speaking of the retreat of Russia’s army in the face of a Ukrainian offensive that recaptured 3,000 square kilometres in just six days.
Tsar Vlad will not be happy. Ultimate victory doesn’t come to the winner of a battle. But it helps.
“Boris Johnson was hidden behind Theresa May’s hat. Its brim was as wide as the rings of Saturn, and every time Theresa turned away from her predecessor, which seemed to be all the time, the poor man was eclipsed in darkness.”
- UK journalist, commenting on the audience in Westminster Hall9, to hear King Charles III address Parliament.
Poor Borisconi, in the shade at last.
9 Westminster Hall was built in 1097. The trials of both Guy Fawkes and Charles I were held there. It has walls two metres thick.
Melbourne holidays & Wry & Dry’s vacation
Wry & Dry will not be published next week, Friday 23 September. Thursday 22 September is a Day of Mourning for HM Queen Elizabeth II. Friday 23 September is a Victorian holiday because Saturday 24 September is the AFL Grand final.
Wry & Dry will not be published on Friday 30 September, as he will be on vacation, in climes warmer than Melbourne.
PS The comments in Wry & Dry do not necessarily reflect those of First Samuel, its Directors or Associates.
Cheers!
Anthony Starkins