Wry & Dry: a cynical and irreverent review of the week in politics, economics and life. For intelligent Readers who disdain the trivial.
But first, a snapshot of this week’s Investment Matters:
- The ‘rotation’ away from overvalued large stocks (e.g. CBA) to undervalued smaller stocks has begun
- Paragon Care seems to be the beneficiary of Sigma Chemist Warehouse merger
To read Investment Matters, just click on the link at the bottom of this week’s Wry & Dry. Or here.
1. Least-worst options
In foreign affairs there are no good options. Only least-worst options. So said Henry Kissinger, the greatest diplomat since Machiavelli.1 Also said by Henry Kissinger.
But in viewing the many responses to the escalating mess in the Middle East, Wry & Dry can only see the empty mouthing of most-worst options.
Simply, when was the last time a ceasefire agreement with a maniacal despot prevented the maniacal despot from continuing his reign of terror? Even worthy cries for a ceasefire from such involved, influential and significant leaders as Albo?
Nuh, there hasn’t been a time when a ceasefire prevented ongoing terror.
A reminder: “an appeaser is one who feeds the crocodile, hoping it will eat him last.”2 For too long the weak west, led by hand-wringing wet-blankets such as O’Bama, any French president, any German chancellor and most UK PMs, has allowed the rulers of Iran to play with millions of lives. At a distance.
In 2002, the former leader of Hezbollah gave his theological reason for the existence of Israel: “The Jews will gather from all parts of the world into occupied Palestine…[so] that Allah… wants to save you from going to the ends of the world, for they are gathered in one place – and there the final and decisive battle will take place.”3
Delightfully, this former leader got the ultimate DCM last week. But disgracefully, he was eulogised in some places of worship in Sydney; by demonstrators in Melbourne and by Iran’s ambassador to Australia.
Iran is happy to fight to the last… Lebanese, or Houthi, or Gazan. In pursuit of its theologically justified aim to cleanse the world of both Israel and Jews, it allows its puppets to do its bidding. Iran via Hezbollah has crippled Lebanon for its own genocidal and theocidal ideology.
Surely, it’s time to be serious. And take the least-worst option. Otherwise, Readers will be reading of the same humanitarian disasters in a decade. And spineless, appeasing leaders will still be calling for a ceasefire.
1 Well, ignoring Kissinger’s advice to Richard Nixon to abandon Taiwan so as to curry favour with China’s Chou Enlai so as to enlist China’s help in untangling America’s involvement in the Vietnam war.
2 Winston Churchill, quoted in the New York Times, 21 January 1940.
3 Cited in the New York Times, 1 October 2024.
2. In what industry is America’s best performing stock?
So, to the end of September, the S&P 500 Index had returned about 22%, calendar year to date. Nvidia, the IT chip designer, is up a healthy 138%.
Is that as good as it gets?
Nuh. The share prices of two US power companies have better returns, and a third not far behind: Vistra (208%), Talen Energy (185%) and Constellation Energy (up 121%). What’s going on?
AI is what’s going on. Well, actually, it’s AI data centres. Y’see these drain massive amounts of electricity. More than that which can be powered by oil, gas, solar, wind, or rats on treadmills.
Which leaves nuclear power.
Last week, Constellation signed a deal to supply Microsoft’s burgeoning data centres with energy from its nuclear power plant at Three Mile Island, Pennsylvania.4
In March, Talen agreed to sell Amazon vast amounts of electricity from its Susquehanna nuclear plant, also in in Pennsylvania.
Vistra is now the best performing stock in the S&P 500. In March it purchased Energy Harbor Corp, which gave it control over four nuclear plants. It will become the supplier of choice for AI data centre owners and operators.
Projected demand for US electricity is far exceeding projected supply. Hence planned coal-fired plant shutdowns by 2030 have been cut by 40%.
And if the US petrol-head driver becomes an electric-head, ironically, they will be reopening coal mines across the country to provide electricity to power carbon-free vehicles.
4 Correct. Three Mile Island was the site of the worst nuclear disaster in US history. The undamaged part was mothballed five years ago and will now be re-opened.
3. France’s finances laid bare
The Paris Olympics will be remembered more for being an exposition of French art than of athletic excellence.
Art or athletics, it matters no longer. The point is that Paris 2024 is now just a memory. The reality of France’s fiscal imprudence arrived with a thud on Tuesday. Its new Prime Minister, Michel Barnier,4 told the Assemblée nationale (France’s parliamentary lower house) that France had to bring down its debt levels by cutting spending and raising taxes.
Mon Dieu! How dare he!
Well, he dared. France’s budget deficit at the start of 2024 was forecast to be 4.4% of GDP. It will now be at least 6%. Compare: Australia’s budget deficit for FY-25 is forecast to be about 1% of GDP.
M. Barnier had further bad news. Two-thirds of the assault on France’s debt would come from spending cuts. “The first remedy for debt is public spending cuts,” he said. “Reducing spending means giving up magic money, the illusion of everything being free and the temptation to subsidise everything.”
France’s borrowing costs recently rose to same levels as Spain and Greece, for the first time in decades. In May, France’s credit rating was cut to AA- from AA.
Ouch.
4 Better known as the EU’s chief negotiator against the UK’s Brexit. Barnier ran rings around the incompetent UK team led by the hapless former PM, Teresa May.
4. China surpasses the Soviet Union
Emperor Eleven5 breathed a sigh of relief. Communist Soviet Union was in power for 74 years before it collapsed in 1991. On Tuesday, communist China celebrated its 75th birthday.
There’s nothing a despot likes more than to have etched into history a totem pole of longevity. In this case, it’s communist China’s, not Emperor Eleven’s longevity. Yet.
Ignoring heads of states, such as kings, queens, sultans, etc, Emperor Eleven has a long way to go. He got the top gig effectively in 2012. Twelve years is a mere minute in the world of despots.
The delightfully named Teodoro Obiang Nguema Mbasogo, dictator of Equatorial Guinea,6 has been in power since 1979. An eon of 45 years. Emperor Eleven will not last another 33 years in power.
5 In 2014, an Indian newsreader was fired for referring to President Xi Jinping as “Eleven” Jinping. This salute to Latin and in a country where XI means a cricket team, entranced Wry & Dry. Henceforth, China’s leader has been known as Emperor Eleven.
6 Equatorial Guinea, formerly Spanish Guinea, is a small country of some 1.8 million souls, located in the armpit of Africa (i.e. where the western side of Africa turns from northwards to westwards). Because of oil, it is the richest country per capita in Africa.
5. Underestimating solar
It is difficult to make predictions, especially about the future.7
Readers will be interested with the below chart. It shows how the five-year forecasts of installed solar power capacity compares with what actually happened.
Chart via The Economist
Yes, the point is that the forecasts have been underestimating outcomes by a factor of between 3 and 5. Good grief!
As the Economist magazine notes, solar is not like other energy sources. The cost, in real terms, of energy from coal, oil and natural gas has remained about the same. Solar energy is vastly different.
The cost of energy from solar has dropped by a factor of more than 1,000 since the late 1960s.
Wry & Dry leaves it to Readers to decide how they wish to use that information.
Meanwhile, the UK’s last remaining coal fired power station was switched off on Monday. No more coals to or from Newcastle.
7 Attributed to many people, from Mark Twain to Yogi Berra. But most likely to be a Danish proverb, quoted by Niels Bohr, renowned physicist.
6. Spot the outlier
7. Tsar Vlad’s defence IOU
Tsar Vlad thought that the ‘special operation’ into a neighbouring country would be a short-term thing. Nuh.
He has now proposed that Russia spend 32% of its 2025 budget on defence. That’s about 7.5% of GDP. Good grief.
That is behind only Ukraine at 34% of GDP (understandably), Lebanon 9% (ditto) and Algeria 8%. The US spends about 3.4%, UK 2.3%, France 2.1%, and Australia 1.9%.
Russia’s military spending boost is a turnaround for Tsar Vlad. In 2023, he had proposed to reduce it by about 20%. But parking one’s tanks on someone else’s front lawn is costly. Some US$145 billion, in fact.
All this spending, plus other handouts, comes at a cost: inflation. This has forced Russia’s central bank in September to increase interest rates to 19%.
8. Qantas’ sky is falling
Nothing stirs the passions at Qantas’ HQ like the threat of more competition. And the possibility of Virgin Australia being 25% owned by Qatar Airways has sent conniptions into all Qantas’ HQ’s offices: first, business and even in the cheap seats.
It’s not really an FIRB (foreign ownership) matter. Virgin is currently owned by a foreign private company. It used to be owned by a lad named Richard Branson and a collective of foreign airlines.
It shouldn’t be an ACCC (i.e. competition) matter. Two former ACCC chairs stated during the recent Senate hearings that additional flights from Qatar would enhance competition and reduce prices.
So, it seems it’s up to the federal transport minister, as Virgin will need her approval to add flights to Doha. Qatar’s deal is that Virgin ‘wet leases’ planes from it, essentially meaning that it’s a Qatar plane with a Qatar crew but coded as Virgin. Qantas currently wet leases aircraft from Finnish Airways.
The federal transport minister is Catherine King. Just over 12 months ago, Ms King rejected a bid by Qatar for an additional 28 weekly flights into major capital cities. She was excoriated for her decision, lampooned as being a puppet of Qantas.
Wry & Dry wonders how Ms King’s mood will be when she has to make a decision based on more or less the same facts. But Readers can bet London to a brick that Qantas’ lobbyists will be pushing the first-class goodwill trolley down the aisles in Parliament House.
9. Tsar Vlad wants more Russians
Russia recorded its lowest birth rate in 25 years in the first six months of 2024. Not good enough, said Tsar Vlad.
And so the Russian parliament is working on legislation to outlaw online or media propaganda that encourages “a conscious refusal to have children.”
Hold the phone! Read the words. It’s not a “conscious decision not to have children” but a “refusal to have children.” This is sort-of handmaid’s tale stuff: women have a responsibility to have children.
Wry & Dry is waiting for the first of Tsar Vlad’s new gulags; to where women are sent to conceive and bear children.
10. Childcare… for men
Another indication of the superiority of women over men has been graphed…
Chart: Wall Street Journal
Of course, that data is about American men. Australian men, surely, would be more independent…
11. It’s not about the debate
Readers who missed Wednesday’s (Melbourne time) Veep debate missed another one-sided debate. This time, it was the Democrat who was dripped upon from a great height.
The Trumpster’s acolyte, JD Vance, showed how to effectively present a flawed case. He was articulate, confident and well-practiced. Of course he lied, this is politics. This man is steely and dangerous.
Kamala Kamala’s acolyte, Vienna Walz, showed how not to debate. Fidgety, nervous and too earnest, he was out of his depth. Elmer Fudd, if Readers will. The guy’s a country hick.
But that’s not the point.
The point is that Kamala appointed Vienna Walz as her running mate because, “I sensed that we could get on well together.”
Not because of competence, or of a powerful presence.
It’s a worry that her personnel appointments might be made not on the basis of competence. In the same way that the Trumpster’s have been made solely on the basis of loyalty… to him.
Snippets from all over
1. UK gives away
The UK will cede sovereignty of the Chagos Islands, a strategically important archipelago in the Indian Ocean, to Mauritius. (Financial Times)
Wry & Dry comments: Mauritius, which is 2,200 kilometres from the Chagos Islands and never owned them, has brought repeated claims of sovereignty over recent decades. Emperor Eleven will be delighted. And what will UKPM Starmer next relinquish: Gibraltar? Falkland Islands? Jersey? Oh, and why the fuss? Chagos is home to Diego Garcia air base, a major military asset for the UK and the US.
2. European car-makers hammered
Stellantis and Aston Martin became the latest European carmakers to issue profit warnings with the industry hammered by competition from cheaper Chinese rivals and weaker demand in its home market. (The Times)
Wry & Dry comments: Shares in Stellantis fell 15% while Aston Martin was down 24% in morning trading on Monday.
3. Trump-themed assault rifle
A small Alabama gun maker is selling a Donald Trump-themed “MAGA Patriot” AR-15, the same model of assault rifle that was used to shoot the ex-president himself two months ago. (Financial Times)
Wry & Dry comments: This is one [insert your own adjective here] country.
4. France’s far-right on back-foot
An embezzlement trial against Marine Le Pen, the leader of France’s hard-right National Rally, began in Paris. Ms Le Pen and her party are accused of misusing €3m of the European Parliament’s funds, a charge she denies. (UK Telegraph)
Wry & Dry comments: Al Capone was jailed for tax evasion, and never charged with any of the murders he committed.
5. Austria goes right
The hard-right Austrian Freedom Party (FPÖ) came first in Austria’s parliamentary election, according to early projections, with around 29% of the vote. Such a result might allow the party to lead a government for the first time. (Economist)
Wry & Dry comments: Some years ago, Austria produced an even further to the right-of-the-soup-spoon person. In 1889 Adolf Hitler was born in Braunau am Inn, close to the German border.
It figures
- 49%: Turkey – inflation in the year to end September.
- -0.3%: UK – GDP per capita in the three months to end June. It’s because net migration is growing larger than GDP:
Source: UK Telegraph
3. 1.8%: Germany – annual inflation rate to end September
And to soothe your troubled mind…
“To paraphrase Oscar Wilde “To lose one Abrahamic faith, Mr Albanese, may be regarded as a misfortune; to lose three looks like carelessness.””
Letter writer to The Australian, Monday 30 September.
Wry & Dry comments: There’s a few more faiths to go.
Disclaimer
The comments in Wry & Dry do not necessarily reflect those of First Samuel, its Directors or Associates.
Cheers!