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
- Aurelia Metals – deep dive
To read Investment Matters, you can still just click on the link at the bottom of this week’s Wry & Dry. Or here.
Wry & Dry’s musings
The election of the new wearer of the fisherman’s shoes, Leo XIV, an American, an Augustinian1, a polyglot2, has many consequences:
- Trumpster has cancelled all tariffs on the Vatican City.
- Trumpster will order that Chicago’s name be changed Leoziv.
- The study of Roman numerals will now be mandatory in all schools in the US, so as to educate they the American people that XIV is, in fact, a number. And not a surname or brand name. And not to confuse XIV with LIV,3 or a black rapper’s name.
- Trumpster will undertake special training on Roman numerology.
1 A mendicant order of the Catholic Church, named for St Augustine, an esteemed theologian and philosopher of Berber origin. Many Protestants, especially Calvinists and Lutherans, consider him one of the theological fathers of the Protestant Reformation due to his teachings on salvation and divine grace. He is the patron saint of brewers and printers. He once wrote “Oh, Lord, make me chaste and celibate—but not yet!” As a youth, before his conversion to Christianity, Augustine was fond of drink and women. He had an illegitimate son in 372.
2 He speaks English, Spanish, Italian, French, and Portuguese, and can read Latin and German.
3 A golfing organisation, where events are played over 54 holes.
1. India v Pakistan is just not cricket
The outbreak of skirmishes/incidents between India and Pakistan is an irregular part of life for the sub-continent. But media headlines of “between two nuclear powers” really overstates the case. There are sensible people in each country in control of the higher order of things.
That is not to say that either country is ready to take the off-ramp. As with previous skirmishes, it’s all about national pride. And it’s mostly about competing claims over the Himalayan region of Kashmir.
A serious side issue is that China supplies Pakistan with J-10C fighter jets. And China was thrilled with the success of its aircraft, which apparently shot down (with air-to-air missiles) as many as five Indian aircraft.
The J-10C is manufactured by the listed (on Shenzen Stock Exchange) Chendu Aircraft Corporation. The stock price of which surged by 12% yesterday. The Indian aircraft were the French Dassault Rafale F3Rs.
The major issue is not the comparative merits of Chinese jet fighter versus a French one. But that the Chinese one carried PL-15 missiles, that can speed at above Mach 5 for a short time. That’s hypersonic.
The Taiwanese are now more worried. And Trumpster thinks that Kashmir is a type of wool made from goats.4
The seriousness of the situation is shown by the fact that last night’s IPL cricket match between Punjab Kings and Delhi Capitals in Dharamsala was cancelled after 10.1 overs of play. There were air raid alerts in neighbouring cities of Jammu and Pathankot.
4 He’s thinking of Cashmere.
2. Albo gets his place in history. So does Top Gun Pete
Good grief. It was a 55/45 win for Albo (the polls had 52/48), to whom Wry & Dry dips his lid. This is a vindication of Albo’s campaign, he stuck to the script and successfully played the avuncular (i.e. wise uncle) leader. But less so of his policies. The age of dependence has begun.
And it’s a damning indictment of a tired, out-of-touch political party led by an unimaginative, mono-culture focussed leader. Whose leader was given the DCM by his local voters. As was the leader of the Greens, who in a fit of leadership idiocy forgot that his party was one of environmental leadership. And not antisemitism.
Top Gun Pete’s troubles started with the resounding Voice no-vote victory. Those around him, and he himself, thought here’s PM material, forgetting that a single issue, yes/no choice is not a template for an election. Driven by first class honours in Borisconi Management 101 and Trumpian impulsiveness even before Trumpster won his election, TGP’s campaign spluttered like a deflating party balloon.
The Liberal carcass is still warm in the grave. And yet those few Liberals not in the queue at Centrelink are now seeking media attention for their leadership preference, disguised as policy ideas.
And yesterday the right-wing Senator Jacinta Nampijinpa Price jumped from the Nats to the Liberals, causing discombobulation within the ‘moderate’ Liberals. Ms Price is an ambitious, articulate loose cannon. Interesting, a rat swimming towards a sinking ship.
Never one to miss an opportunity, National’s Senator Matt Canavan announced today he would challenge David Littleproud for the top gig in the National Party. Canavan is mentored by Barnaby Joyce. Say no more.
Meanwhile, in Albo-heaven, the policy of Diversity, Equality and Inclusion got the heave-ho. Albo meekly bowed to the pressure of Labor’s factions. And gave the DCM to Cabinet’s only Muslim (Ed Husic) and its only Jew (Mark Dreyfus).
Mea culpa – Wry & Dry’s hours of psephological research came to nowt. Blending (a) published polling numbers (52/48); (b) Sportsbet’s odds (seat-by-seat); and (c) a fiscal assessment of Albo, he came up woefully short. How embarrassing.
3. UK & US: tariff peace in our time
The announcement reflected political spin over substance.
There was much ballyhoo about the US-UK new trade agreement – the first that the US has agreed with another country since Trumpster’s ‘Liberation Day’. UK PM Starmer said that the deal was ‘historic’. Really?
It’s a bad deal for the UK. In simple data, the UK’s average tariff for US exports has fallen from 5.1% to 1.8%, whilst US’ average tariff on UK exports has risen from 3.4% to above 10%. And US tariffs on UK built motor vehicles above 100,000 units will face a 25% tariff.
The only possible happiness for the UK might be that other countries will be worse off.
How did it come to this? If anyone deserved a good trade deal with the U.S., it’s the UK. It:
- is one of the few countries that has a trade deficit with the U.S.
- buys a lot of US manufactured products
- has defence spending above what Trumpster requires of Nato
- has a leader that Trumpster doesn’t dislike
It’s a win-win deal. Trumpster wins twice.
4. Meanwhile, in Rome…
The outstanding movie ‘Conclave’ arose from a work of fiction. But it reflected on the history of the most entertaining elective body since it was established in 1276.5 Littered by riots, intrigue, murder and simony, the process has evolved but the intrigue (meaning plotting not mystery) has continued.
Highlights of past outcomes of the process include:
- Pope Formosus’ body was exhumed in 896 and then subject to a trial (at the ‘Cadaver Synod’) for being ‘unworthy’. Guilty.
- Sergius III murdered his two predecessors (Leo V and Christopher)
- Benedict IX sold the papacy in 1045 to his godfather (who became Gregory VI)
- There were two concurrent popes in the 14th century (Urban VI, Clement VII)
- There were eventually three concurrent popes (Benedict XIII, Gregory XII, Alexander V and then John XXIII)
- Alexander VI (1492), part of the infamous Borgia family and father of at least eight children, presided over nepotism, corruption, simony, decadence, etc.
- Leo X (1513) sanctioned the sale of indulgences to pay for St Peter’s Basilica. This practice upset a German monk named Martin Luther. One thing led to another, and the Protestant Reformation began. An aside of which was England’s Henry VIII was able to marry Anne Boleyn.
- Leo XII (1823) was the last known pope to have fathered a child.
And the aged voting outcome signal of black smoke (no decision)/white smoke (it’s a Pope!) is delightfully theatrical.
5 But it is not the oldest. The honour of being the world’s longest continually democratically elected body goes to the Isle of Man’s Tynwald. The first woman to be elected was in 1933. The Conclave of Cardinals has, hitherto, chosen only men for the top gig.
5. Superannuation gloom
The Australian federal election result bodes ill for those with more than sixpence in their superannuation account.
The government has an increased majority in the House and, with the Greens, should control the Senate. Generally speaking, this means that the proposed superannuation tax surcharge of 15% in certain circumstances will probably proceed.
It is possible that many Readers will be affected, if not in the next couple of years then in the more distant future. Do not expect immediate government action – there is much to do. There will also be much to do to prepare for any changes.
The Trojan Horse in the legislation is the taxation of unrealised capital gains. Taxation of income or profits is one thing, but this is a monstrous initiative. And Wry & Dry believes that it will eventually creep into not only all superannuation investments, but also for family trusts.
Be afraid. Be very afraid. And be much poorer.
6. Warren Buffett – it’s time
Arguably the world’s best investor, Warren Buffett has hung up his HP12C calculator. At the tender age of 94.
He made the announcement at what he calls ‘Woodstock for capitalists’, the 60th AGM of Berkshire Hathaway, his investment vehicle. It was the use of that vehicle that gave him a competitive advantage. With managed funds, investors can pour cash into what might be an overvalued portfolio, or withdraw cash from an undervalued portfolio. Thereby exacerbating the market’s ups and downs.
Berkshire’s only cash flows, however, are internal. Money comes in from (or goes out to) the assets it owns. Cash can’t come pouring in from new investors, or get withdrawn by fleeing investors, at the worst possible times. This is because Readers can invest in Berkshire only by buying shares from someone else in the secondary market.
To Wry & Dry’s mind, Buffett’s shrewdness was best seen in his investments in:
BYD
In 2008, Buffett invested $232m in BYD, the Chinese EV maker that has now overtaken Tesla. In 2021, the investment’s value had risen to $7bn. He then held some 21% of the company. He has since taken profits, but still owns about 10% of BYD.
Goldman Sachs
At the height of the GFC, American financial institutions were on the brink of disaster and the venerable Lehman Brothers had collapsed. Buffett invested $5bn in Goldman Sachs preferred shares, earning 10% p.a. (the Fed Funds rate was 2% at the time). He also received warrants to buy $5bn of Goldman stock at $115 per share.
The folk at Goldman were not fools. and knew that once the word of Buffett’s investment was on the street, confidence would be regained (a little). And so what better time to raise new capital. The day after Buffett’s investment was announced, Goldman issued $5.75bn of shares at $123 per share. The issue was oversubscribed.
Goldman redeemed Buffett’s shares in 2011, making profit of $3.7bn. In 2013 he exercised the warrants, received $2bn in cash and 13.1m shares.
7. Germany’s new embarrassment
Having spent weeks and weeks planning his carefully arranged election as Chancellor of Germany, it was somewhat embarrassing that Friedrich Merz fell short of the required Bundestag vote-count.
Some 18 rats from the Christian Democrats (CDU) and/or the Social Democrats, its coalition partner, ratted on his parade. A hastily arranged second ballot, after some behind closed-doors arm-twisting, reversed the outcome.
The protest vote was somewhat childish, given the inevitability of the eventual outcome. And it was an embarrassment that many thought used only to happen in Italy. The reputation of a well-oiled German machine had sand thrown in its wheels. Only the far-right AfD cheered.
Who cares? Well, most of the rest of Europe does. Especially France and its hanging-by-a-thread President Macron. Y’see, Merz is a most earnest Europhile, like Macron.
In France, all European decisions run through the president’s office. In Germany, coalition consensus requirements meant that the junior coalition partner ran the equivalent of the Foreign Affairs office. And often in conflict with the Chancellery.
But Merz’s CDU is the first party in nearly 60 years to control all three ministries coordinating Germany’s European policy – the Chancellery, the Economy Ministry, and the Foreign Office.
Expect a more muscular EU and pro-Ukraine (to which the UK has re- joined in many sense) policies, and more independent of Trumpster’s playpen across the Atlantic. Not that it will be plain sailing, the PM of Hungary is a Tsar Vlad acolyte and sleeps with a portrait of Trumpster.
8. Marking Musk: D-
As one journalist prosaically put it, what began with a chainsaw is ending in a whimper. Elon Musk’s objective of saving $2tn of the cost of running America has failed. Miserably.
And his role, focus and method are primary causes in the collapse of the sales of Tesla EVs. But there is more to this than meets the eye.
If Trumpster proceeds with his Golden Dome, America’s answer to Israel’s Iron Dome air defence system, whose satellite system might be chosen for the missile shield?
Already Musk’s Space X has formed a Golden Dome mates consortium, including Palantir (founded by his former partner Peter Thiel) and Anduril (founded by Palmer Lucker, another mate).
Tesla will recede into history. DOGE will revert to a word used by Venetian historians5. And Musk will be richer than Croesus.
5 The Doge was the head of state and effectively head of government in the Republic of Venice (697-1797). The role was elected effectively by an oligarchy of great families and was for life.
9. $75,000 for a Met ticket. Really?
If Readers mentioned ‘the Met’ in most cities in the world, a listener would think of an underground railway system.
So a mention that A Ticket at the Met would cost $75,000 would bring surprise. But not in New York. The Met is a museum. And A Ticket is for its annual fund-raising event: Met Gala.
This is the ultimate celebrity event. Apparently. Just 450 I-wannabe-noticed celebrities have the opportunity to get glammed up and attend.
Purely in the public interest, Wry & Dry thumbed through the red-carpet photos. And did not recognise a single guest. But this man (below) seemed vaguely familiar – a shrewd businessman trying to look inconspicuous, perhaps?
Source: The Age
10. The Rock II?
Trumpster announced that Alcatraz, that notorious prison two kilometres off the coast of San Francisco, will re-open after being closed in 1963. His aim is to house “the most dangerous prisoners.”
Nuh. This is all about entertainment. Readers will have noticed the coincident Trumpster announcement imposing a 100% tariff on all imported movies. That plan is clearly to encourage more American movies. And Trumpster wanting to be a star in one.
In the same spirit as Trumpster suggesting that he himself would make a good pope, he wishes to star in The Rock II. The original The Rock was a very successful 1996 movie with Sean Connery. Connery was aged 66 when he made the movie. Trumpster is just 12 years older.
Wry & Dry is sure that with even more orange make-up, CSI and an accelerated course of Ozempic, he could play a much younger man. Who saves the world from inside a cell in Alcatraz.
11. Election epilogue
The most articulate review of the Greens’ disastrous election campaign has come from Philip Dalidakis, a former state MP. Writing in Wednesday’s Financial Review, he brilliantly joined all of the dots. Consider his opening paragraph:
“By now, most Australians have come to understand what the Greens are selling, and they don’t like it. It’s neither environmental justice nor social progress, but a toxic brew of sectarian politics designed to divide our communities in a cynical attempt to harvest votes from outrage.”
He later goes on…
“They encourage the false and antisemitic idea that Jewish Australians are collectively responsible for the actions of the Israeli government. They fan the flames that have already led to record breaking levels of antisemitic abuse, threats and violence in our country since October 7, 2023.”
And…
“Only the Greens have turned a humanitarian crisis into a wedge issue for Australian multiculturalism.”
Hear, hear.
Snippets from all over
1. Tesla’s Waterloo
Tesla’s sales in Germany and Britain fell to their lowest level in over two years in April, dropping 46% and 62% year on year respectively. (The Economist)
Wry & Dry comments: Perhaps a backlash against the politics of Elon Musk. Perhaps.
2. More insider trading
A small group of traders earned a $99.6mn windfall by buying Melania Trump’s cryptocurrency token in the minutes before it was made public, an analysis by the Financial Times has found. (Financial Times)
Wry & Dry comments: Why are we not surprised?
3. A tighter energy noose for Tsar Vlad
The European Commission will set a 2027 deadline for EU companies to sever any remaining energy contracts with Russia and shift to other sources including the US, according to officials. (The Times)
Wry & Dry comments: There is more to this than meets the eye. The EU has struggled to ban gas imports because of pro-Tsar Vlad governments in Hungary and Slovakia that argue doing so would increase energy prices. The plan is that this move is not an imposition of sanctions, which needs unanimity.
4. Trumpster wants to raise taxes
Donald Trump has proposed raising taxes on the wealthiest Americans, in a breach of Republican orthodoxy that he hopes could pay for broader tax breaks being debated in Congress. (Financial Times)
Wry & Dry comments: He’s running up the flagpole for those who earn greater than $2.5m a 40% a tax rate (up from 37%).
5. So much for global MAGA
So much for the global MAGA movement. For the second time in two weeks, a Western democracy has taken a political turn to the left. On Saturday Australia followed Canada in handing a new mandate to the center-left party in power. (Wall Street Journal)
Wry & Dry comments: Australia hits the headlines, but not for a sporting event.
It figures
Nothing to see here.
And to soothe your troubled mind…
“They’ve been fighting for many, many decades. And centuries, actually, if you think about it.”
Trumpster, giving a history lesson on India and Pakistan in conflict.
Wry & Dry comments: Err, nuh. Pakistan (East Pakistan and West Pakistan) was created in 1947, as a result of the partition of India into a mostly Hindu state (India) and a mostly Muslim state (Pakistan). Part of the creation was the mass migration of some 15 million Hindus, Muslims and Sikhs, who crossed newly drawn borders to reach their faith-based homeland. Some one millions were massacred.
Disclaimer
The comments in Wry & Dry do not necessarily reflect those of First Samuel, its Directors or Associates.
Cheers!