Wry & Dry: a cynical and irreverent review of the week in politics, economics and life. For intelligent Readers who disdain the trivial.
But firstly, a snapshot of this week’s Investment Matters:
- Stability returns to the markets
- Detailed results for Woolworths and Nanosonics.
To read Investment Matters, just click on the link at the bottom of this week’s Wry & Dry. Or here.
Wry & Dry’s rant
This was another week when decades happened.1 Consider:
- Upcoming-budget giveaway excitement: Albo: 1, Fiscal responsibility: 0
- Ukraine partition: Tsar Vlad: 2, Trumpster: 0, Ukrainians: 0
- Gaza development opportunity: Hamas: 0, Gazans: 0, Netanyahu: 1, Trumpster: 1
- US Judiciary v Trumpster: Judges: 1, Trumpster: 0
- Global EV battle: BYD: 1, Muskovite: 0
- Europe re-armament suppliers: European: 1, American: 0
Time for a sports-filled weekend?
1 Said by Vladimir Lenin, a Russian revolutionary, politician and political theorist. He was the first head of government of the Soviet Union from 1922 until his death in 1924. He established the world’s first socialist and one-party state. Ideologically a Marxist, his developments to the ideology are called Leninism. A very nasty man.
1. Ukraine partition: why are we not surprised?
The ‘Art of The Deal’ dealer badly failed this week. Which is exactly what the world expected from this serial deal-loser.2
Tsar Vlad holds all of the cards, bar one.3 And he didn’t have to play any of his, he just said “nyet.” And reiterated his own absurd demands.
Trumpster’s legendary dealmaking, in his own world, fell at the first hurdle. Tsar Vlad knows that Trumpster is desperate for a deal, whereas he is not. He is happy to keep feeding his troops into the Ukrainian meatgrinder.
The only card that Trumpster can create (Trump card – groan) is, with Europe, to turn the screws on Tsar Vlad with tougher sanctions and arming Ukraine to the hilt. But not all European countries want to arm-up.
In fact, the further from the Russian border the capital city, the lower the defence spending. On the below chart, from right to left, are Portugal and Spain. From top to bottom are Poland, Estonia, Latvia, Greece (anomalously a long way from Russia with a high defence spend), Lithuania and Finland.
Trump’s new negotiating card (tougher sanctions and massive armaments), if he wants it, will take time and cost money. And his cabinet is parsimonious, and he is not known for patience.
2 Consider some failures: Trump Airlines (died 1992), Trump Vodka (2011), Trump Casinos (2014), Trump: The Game (1990), Trump Magazine (2009), Trump Steaks (2012), GoTrump.com (2007), Trump University (2011), Trump Mortgage (2007), six business bankruptcies, US-China Trade Deal (2022), Iran nuclear deal withdrawal (2018), Afghanistan withdrawal deal (2018), etc., etc.
3 Economic sanctions applied by Western governments.
2. One good omen for Albo
Every budget night has more bulldust than a Queensland cattle station during a drought. And Tuesday’s will be no exception. Actually, it will be exceptional: the bulldust will be thicker than a Saharan sandstorm.
The exploding government giveaways, ballooning debt and all-round incompetence would make a Latin American government proud. But there is one statistic that will be repeated, one that will save Albo: GDP growth.
Whilst the good folk at the OECD have downgraded the growth of almost every country (Trumpster’s tariffs effect on global trade), Australia’s outlook is comparatively okay.
Of course, that sort-of-rosy outlook is on the back of significant fiscal loosening. That is massive government spending.
But for Albo and Grim Jim, it will be the headline.
3. Gold! Gold! Gold!
The price of gold hit a record $3,000 per ounce last Friday. That’s up over 14% since 1 January. “Why?” Wry & Dry hears Readers asking.
In these volatile times, it’s easy to blame the Trumpster. So Wry & Dry will.
It’s all about the imposition and capricious management of tariffs. These have caused fears of inflation and an economic slowdown. The problem is adding these two evils together, one gets ‘stagflation’, at once both a portmanteau and an onomatopoeic word.
The problem with rising prices and slowing growth is that it forces the Fed to fight one or the other, but not both. Older Readers may remember the last time the US went through a period of stagflation, the late 1970s and early 1980s.
The causes then were different. But the misery will be the same.
Chart courtesy of Financial Times
Gold is now the best-performing asset-class in the 21st century.
Gold’s recent kilometrestones were $1,000 during the GFC and $2,000 during covid. Trumpster might reflect one day that his policies caused as much ruin as both those seminal events.
4. Victoria – last days of Rome?
Rome wasn’t built in a day. Nor did it fall in a day. Its decline was relatively slow, as corruption, dissolution, fiscal and cultural disintegration and erection of vanity monuments crept into its fibres. And that decline led to the phrase “last days of Rome.”4
Which brings Wry & Dry to the Victorian government.
Readers outside of the Bankrupt State of Victoria may not be aware of the ‘Big Build’. This is a sort of collective noun to describe the size of the pile of debt that the government has spent on infrastructure projects.
As Wry & Dry quills this piece and Readers are eagerly devouring it, thousands of toiling workers are laying tracks, digging tunnels and paving roads on some $208bn of projects. So far, $40bn of that sum is ascribed to a catch-all line: ‘cost blowout’.
Over recent weeks, it has become increasingly clear that there has not been as much laying, digging and paving as is supposed to occur. On Monday, a media organisation revealed that unsavoury people in the CFMEU (a building union) were each collecting about $11,000 per week for not turning up to work.
Further, the media company states that the Victorian government covered up the payments. And other misdeeds.
Meanwhile, Jacinta Allen, the Victoria Premier, has presented the Sargeant Schultz response: “I know nothing.” Actually, it was: “The advice [concerning police investigations into the corruption] I was given and announced yesterday was given from the acting Chief Commissioner of Police.”
Politics 11: Don’t throw advisors under the bus. And if you are going to so do, don’t identify them. And if you are going to identify them, make sure that the advice about which you complained was actually that which was given.
In a nanosecond, Victoria Police released a statement effectively saying that the premier was (a) a liar and (b) disloyal.
Readers might consider that she was the Minister for Commonwealth Games Delivery and that went pear-shaped at a massive cost. Or that she was the Minister for Transport and Infrastructure. The Big Build has become a fiscal albatross.
She is now Premier and presiding over a government cover-up of union corruption, secret deals, bullying and gangland infiltration.
Calls for her resignation are misplaced. Victoria, like the dying stages of the Roman Empire, is mired in corruption, incompetence and greed. She should hang around and face the voters’ wrath. Unlike her craven predecessor.
4 The phrase first appeared in a literary journal in 1853, which described Couture’s painting “The Romans in their Decadence.” The painting represents, the journalist writes, “an orgie in the court of a temple, during the last days of Rome. A swarm of revellers occupy the middle of the picture, wreathed in elaborate intricacy of luxurious posture, men and women intermingled; their faces, in in which the old Roman fire scarcely flickers, brutalized with excess of every kind…” The painting now hangs in Paris’ best gallery, Musée d’Orsay.
5. Top Gun Pete flies into his own storm
Top Gun Pete is touting his possible relationship with Trumpster as an election tipping point.
When will TGP get the message? The reason he hasn’t pushed the polling needle to the blue-zone of Coalition victory is his absence of serious economic reform policies. Or any policies. Except a nuclear power station near you and 28 more F-35 fighter aircraft.
The first, whilst electorally appealing is politically impossible (the states need to consent – no chance, and the Senate to agree – no chance). And fiscally daunting, unless he can buy a secondhand plant from Ukraine.
The second is also electorally appealing, and it might now be cheaper. TGP could do a deal with Trumpster to replace either or both of Canada and Spain in the production queue, both of which are rethinking their orders and reliance on the US.
Getting back to TGP’s First Overseas Trip If Elected, he has made it clear that it will be to Trumpster Town. Readers will recall that Albo’s was to Indonesia.
Wry & Dry has scoured the literature for evidence that TGP has a special relationship with Trumpster to leverage on his maiden voyage. And found none.
The only possible Coalition relationship-advantage would be that whomever TGP appoints to Washington will not be the Ruddster.
6. Trumpster gets knuckles rapped
It was difficult to do. Rapping Trumpster’s knuckles. As they drag along the ground.
But that is what US Chief Justice, John Roberts, did on Wednesday. He issued a rare public rebuke to Trumpster over the president’s threat to impeach federal judges. The Trumpster called one judge, James Boasberg, a ‘Radical Left Lunatic” and said he should be impeached.
The Honourable Chief Justice said that such remarks were “not an appropriate response” to disagreements over their rulings. “The normal appellate review process exists for that purpose.”
The Trumpster, as usual, was capricious. Last week, he complained about people who have criticised judges, declaring that “it has to stop, it has to be illegal, influencing judges.”
Oh, to have such a versatile mind.
7. UK Labour to cut welfare benefits
The sky is indeed falling. A left-wing government is going to cut welfare benefits. Good grief!
UK’s Labour government said it would introduce large reforms to the UK’s benefits system. The aim is to cut at least £5bn a year from the welfare budget by 2030. The plans include narrowing the eligibility criteria for the main disability benefit. The Chancellor of the Exchequer (i.e. Treasurer) has argued the changes will help people ‘return to the workforce’.
Of course, it’s all about trying to balance the books from its own spending splurge last year. And it adds to the decision to abolish the NHS quango last week.
UK departments other than the Department of Health and the Ministry of Defence have been told to expect cuts of as much as 11% of their budgets.
This is almost Thatcherite stuff.
8. Happiness
The much-anticipated World Happiness Report has reported. And the results are not surprising: live in a cool climate with forests that is a Western democracy. In fact, the top 20 places are all filled by Western democracies.
Captain Obvious results abound: Australia slipped to 11th and the US to 24th. UK had its worst evaluation since 2017. And the usual suspects were clustered around the foot of the table: Afghanistan, Lebanon, Zimbabwe, Yemen and Egypt.
Surprises included Costa Rica at 6th, Israel leaping to 8th, France falling to 33rd and Singapore to 34th.
The survey, conducted by Gallup (an analytics firm) and the UN Sustainable Development Solutions Network, is a self-assessment project.
9. Compare and contrast
BYD, the leading car manufacturer in China, announced on Tuesday that its new EV could have its battery charged in five minutes.
Yallourn power station, one of Australia’s largest coal-fired energy producers and one that provides 22% of Victoria’s electricity, will now remain open for four more years. This is because of fears of electricity shortages.
10. Spot the outlier
11. Give back the Statue of Liberty
Readers have got to love the Gaullishness of the French. It pops up every now and then. And also this week.
“France should take back the Statue of Liberty,” demands a French Member of the European Parliament. And the reason? Because the US no longer represents the values that led France to give the statue in the first place.
The Statue of Liberty was a gift from the French people to America. It was unveiled in New York City’s harbour in October 1886, for the centennial of the American Declaration of Independence.
Sigh. The point should be that US presidents come and go. But the Statue of Liberty is a permanent symbol of the sentiment behind the gift. And to remind the good folk of the USA of that sentiment.
Snippets from all over
1. Europe planning for a US-free Nato
Europe’s biggest military powers are drawing up plans to take on greater responsibilities for the continent’s defence from the US, including a pitch to the Trump administration for a managed transfer over the next five to 10 years. (Financial Times)
Wry & Dry comments: Too little, too late.
2. Greenpeace loses court case; to pay pipeline company more than $660m
A North Dakota jury on Wednesday awarded damages totalling more than $660 million to the Texas-based pipeline company Energy Transfer, which had sued Greenpeace over its role in protests nearly a decade ago against the Dakota Access Pipeline. (New York Times)
Wry & Dry comments: Greenpeace said that the claimed damages would be enough to put it out business.
3. Conflict of interest?
Donald Trump’s commerce secretary touted Elon Musk’s Starlink to federal officials in charge of a $42bn rural broadband programme, raising new questions about the billionaire White House adviser’s conflicts of interest. (Times)
Wry & Dry comments: Conflict of interest? What conflict of interest? Err… Muskovite gave $250m to Trumpster’s election campaign.
4. Mr Carney doesn’t go to Washington
Mark Carney, Canada’s new prime minister, made a statement by making his first trip abroad to Paris instead of to Washington, DC. He will then visit London. (Economist)
Wry & Dry comments: It is tradition that new Canadian PMs firstly go to Washington.
5. Muskovite’s truck falling to pieces
Tesla is recalling more than 46,000 Cybertrucks in the US to replace an exterior panel that could fall off while driving, marking the latest safety setback for a product that Elon Musk has described as the “toughest” pick-up truck. (Financial Times)
Wry & Dry comments: Cynics might start saying this is karma.
It figures
- 4.1%: Australia. Unemployment rate, unchanged. Interest rate outlook unchanged.
- Zero: US. Change in interest rates.
- 4.9%: US. Long-term inflation expectations. The highest level in 32 years.
- 57.9: US. Consumer sentiment in March. The lowest level since November 2022.
And to soothe your troubled mind…
“I am completely in the clear.”
Nicola Sturgeon, former leader of the Scottish Nationalist Party and wannabe Scotland’s First Prime Minister, on not being charged with any crime in relation to embezzlement of party funds. Her estranged husband wasn’t so lucky.
Wry & Dry comments: Sturgeon’s eight years in office were punctuated by her failed Quixotic quest for Scottish independence and failure to achieve anything else.
Disclaimer
The comments in Wry & Dry do not necessarily reflect those of First Samuel, its Directors or Associates.
Cheers!
Read this week’s edition of Investment Matters.