Confidence

When climate alarmists start trusting bankers

If global warming alarmists ever wanted to pick an industry as steeped in unreliable forecasts as climate scientists, one would find it hard to beat investment banking. Having been in that industry for two decades, the list of woefully misguided and poorly researched puff pieces is endless. There is a reason global banks are trading at fractions of their former peaks. They don’t add much value and most never picked the GFC of 2008. If they were smarter, greed wouldn’t require recessions.

Never mind. When JP Morgan economists are portending climate doom, why not hitch them to your global warming wagon? There is a kind of conflict of interest. Evil, greedy fat bonus paying tax avoiding corporates preaching virtue on climate.

By the way, you won’t find a research analyst who believes they don’t deserve air travel at the pointy end and luxury limousine transfers to and from the airport.

Yet they are aligned with the hypocrites at the Bank for International Settlements (BIS) which told us at the 1500 private jet junket at Davos that it’s central bank members are “climate rescuers of last resort.” This despite their monetary policies having played a major part in fueling overconsumption via the debt bubble. Ultra low interest rates will ultimately have a profound effect on carbon emissions – a global economic crisis of epic proportions which won’t require one wind turbine or solar farm to achieve. They’ll save the climate by destroying the wellbeing of so many in the process.

On the one hand, JP Morgan can now claim some kudos for allowing such free thinking which isn’t at the behest of the investment banking team.

Maybe it’s worth pointing out that most banks keep meticulous (but useless) data on the readership of such reports. Much like the media chasing advertising dollars through clickbait, research analysts strive for internal point scoring to boost their year end review chances to push for bigger bonuses to their excel spreadsheet obsessed line managers who look at quantity, not quality. So if a warmest piece can create noise, irrespective of the quality of the content, then that serves a purpose for internal bosses.

Such has been the hollowing out of investment banking research teams, the last remaining life jackets are in short supply. It was only last year that Deutsche Bank closed its entire global equity platform. While regulation is part of the problem, there is simply very little value add to convince clients to pay for.

While the report supposedly chastised the bank’s lending of $75bn to the fossil fuel industry, in a world of ESG, which puts ideology ahead of risk assessment, JP Morgan can now claim it has seen the light so it can hopefully fool green tech companies in need of cash that they are worthy environmentally friendly financiers. This will also give the public relations team a welcome talking piece to the media and ESG retirement fund managers that they practice social responsibility.

Back to the report. On what pretense do the JP Morgan analysts have for the climate crisis threatening the human race? Citing the IPCC (where scientists have slammed the processes which prioritize gender and ethnicity over ability and qualification) and the IMF (which couldn’t pick economic growth it it tried) are hardly the sort of data one would gladly source as gospel to compile a report.

It seems everyone is an expert on climate change nowadays. Central banks, ASIC, APRA, RBA, the Australian Medical Association and now investment banks. As we pointed out earlier in the week, where were the scientists who made a b-line to speak at the National Climate Emergency summit in Melbourne? That’s right 2/3rds were activists, lobbyists, left-wing media and academics with no scientific background.

You know when alarmists are channeling bankers, that they are running out of credible evidence. Even worse, most banks have an uncanny ability to act as contrarian indicators.

We can be sure that a whole lot of malinvestment will continue thanks to governments trying to declare emergencies to justify infrastructure spending to replace sensible business friendly structural reforms that would have a far better chance of keeping them in power for longer.

In closing, it seems even the media has lost faith in investment bank research, choosing to channel NY Mets baseball pitchers for commentary on stocks instead.

HK Int’l Airport traffic for Jan 2020 – Inbound Asia -43%

HKIA just published figures for January air traffic. It notes,

Traffic figures at Hong Kong International Airport (HKIA) saw decreases in January 2020. During the month, HKIA handled 5.7 million passengers and 33,210 flight movements, representing year-on-year decreases of 11.7% and 9.1%, respectively. Cargo throughput dropped 10.4% compared to the same month last year, to 359,000 tonnes.

Overall passenger traffic to/from Mainland China, South Korea and Southeast Asia recorded the most significant decreases in January. Visitor traffic remained weak, showing a year-on-year decrease of 43%. However, travel by Hong Kong residents saw a surge during the Chinese New Year holidays, amounting to a monthly growth of 25% year-on-year.

Cargo throughput declined due to closure of factories and businesses in Mainland China during the Chinese New Year holidays. The decrease in cargo was mainly attributed to the 15% and 10% drops in imports and transshipments, respectively. Exports decreased by 9% compared to the same month last year. Amongst key trading regions, traffic to/from Southeast Asia and North America decreased most significantly in the month.”

That’s got to hurt. It is strange how markets are behaving so positively to the impacts here. Depending on the length of such a slowdown, how long can company cash flow last and when do we see the first bankruptcy of a travel/cargo company- land, air or sea as a result of coronavirus.

Expect that cruise companies report mass cancellations after the horrendous optics of passengers being confined to their quarters for weeks on end.

Hollywoke. Oscars audience plunges to lowest ever

When Joaquin Phoenix lamented, “We feel entitled to artificially inseminate a cow and steal her baby, even though her cries of anguish are unmistakable. Then we take her milk that’s intended for her calf and we put it in our coffee and our cereal,” Hollywood hit peak woke. At the Golden Globes, he thought telling us he would be wearing only one tuxedo for the entire awards season while eating vegan would be a hit with mainstream Americans to highlight doing his bit for the planet. At the BAFTAs, Phoenix ran the “systemic racism” line. Yet he didn’t hand his gong to a person of colour that he believed was deserving of the award.

Hypocrisy sadly doesn’t resonate very well with mainstream Americans.

Essentially the Oscars has become a light-hearted entertainment version of the Democratic primary debates. The policy platform was all in there – speeches about feminism, gender equality, LGBTQI, climate change, healthcare and living with less. Basically, every “woke” politically correct subject got a mention, delivered by the very people who have zero place lecturing the rest of the world, as Ricky Gervais told them.

Celebrities, coming off the highs of the second-lowest audience total ever recorded in 2019 (after a 12% bump on 2018 which was 40% down on the prior 5 years), must have hoped that the 2020 Oscars ceremony would recover with more of the same social justice. Sadly 2020 was watched by the smallest audience ever.

23.6 million viewers watched (-20% or 6 million down). Among the 18-49 demographic, the audience plunged 31% vs 2019.

Joaquin Phoenix closed his speech by saying,

I have been a scoundrel all my life, I’ve been selfish. I’ve been cruel at times, hard to work with, and I’m grateful that so many of you in this room have given me a second chance.

FNF Media would prefer Hollywood gave Phoenix a third chance to revert to type. Because this act isn’t fooling anyone.

Whose state of mind should be shredded? Fact checking Trump’s SOTU claims

Really? Nancy Pelosi defended her actions at the SOTU by saying she “shredded his state of mind!

We fact check Trump’s claims below beyond the unemployment figures we put forward yesterday.

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CLAIM: “In 8 years under the last administration, over 300,000 working-age people DROPPED OUT of the workforce. In just three years of my administration, 3.5 MILLION working-age people have JOINED the workforce.”

TRUE

During Obama’s two terms in office, the participation rate dropped from a high of 65.7% to 62.7% by the end. Since President Trump took office, the rate has grown from 62.8% to 63.2% which sums to c.3.7 million more people joining the workforce.

Source: BLS

——

CLAIM: “The median household income is now at the highest rate ever.”

TRUE

The U.S. Census has been tracking median household income since 1984. In 2018, the last year recorded by the U.S. Census Bureau, household median income was at $63,179, the highest number recorded.

Source: Census Bureau

——

CLAIM: In the Democratic response, Michigan Governor Gretchen Whitmer said that more than 275 bipartisan bills sit on Senate Majority Leader Mitch McConnell’s desk.

TRUE

Source: Congress roll calls

——

CLAIM: “Under my administration, seven million Americans have come off food stamps and 10 million people have been lifted off of welfare.”

TRUE

“Food stamps” aka U.S Supplemental Nutrition Assistance Program (SNAP) data shows seven million less people than there were before President Trump took office. Medicaid and Children’s Health Insurance saw a roughly 4.7 million person decrease.

Source: SNAP

——

CLAIM: President Trump claimed that America has gained 12,000 new factories under his administration after losing 60,000 factories under the previous two administrations.

TRUE

The Bureau of Labor tracks manufacturing establishments every quarter. US had 398,837 factories at the start of Bush’s presidency in 2001 and 343,972 manufacturing establishments at the end of Obama’s presidency in 2017. That’s a drop of 54,865. The preliminary data for 2Q 2019, reveals 356,046 factories. +12,074 since 2017.

Source: BLS

——

CLAIM: “Thanks to our bold regulatory reduction campaign, the United States has become the number one producer of oil and natural gas in the world, by far.”

SLIGHTLY MISLEADING

According to the U.S. Energy Information Administration, the U.S. has been the #1 producer of oil and natural gas in the world since 2013 before Trump took office.

Source: USEIA

——

CLAIM: “Since my election, the net worth of the bottom half of wage earners has increased by 47 percent, three times faster than the increase for the top one percent.” 

TRUE

Federal Reserve Bank of St. Louis (FRED), the reports the net worth of the bottom half of the population was $1,070,183mn at the start of 2017. As of the third quarter of 2019, it was 1,668,034mn. That’s an increase of 55.86%, more than Trump quoted. The Top 1%, had $29,955,829mn. In 3Q 2019, it was $34,533,370mn, or 15.3%

Source: FRED Top 1% and Bottom 50%

——

CLAIM: “I have raised contributions from the other NATO members by more than $400 billion, and the number of allies meeting their minimum obligations has more than doubled.” 

TRUE

NATO Europe and Canada are expected to raise defense spending by a cumulative $400 billion US dollars by 2024 to meet the 2 percent of GDP obligations – though those obligations were agreed to in 2014.

Source: NATO

——

CLAIM: “Last year, our brave ICE officers arrested more than 120,000 criminal aliens charged with nearly 10,000 burglaries, 5,000 sexual assaults, 45,000 violent assaults and 2,000 murders.” 

TRUE

Source: ICE

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CLAIM: “As a result of our unprecedented efforts, illegal crossings are down 75 percent since May — dropping eight straight months in a row.”

TRUE

May, 2019 saw 144,116 apprehensions. Arrests have dropped every single month since that rime, reaching 40,620 in December, 2019. January data not released but apprehensions down 72%.

Source: CBP

——

CLAIM: “In the last three years, ICE has arrested over 5,000 wicked human traffickers.” 

TRUE

ICE has made 5,387 human trafficking arrests.

Source: ICE

——

CLAIM: “We have now completed over 100 miles and will have over 500 miles fully completed by early next year.”

MOSTLY TRUE

Acting Homeland Security Secretary Chad Wolf announced the completion of the border wall’s 100th mile. 400-450 miles of wall would either be completed OR under construction by the end of 2020 — not 500.

Source: DHS

——

CLAIM: “Since 2016, the violent crime rate in America has fallen nearly 5 percent after rising each of the two years before President Trump took office.”

TRUE

Violent crime fell 4.5% between 2016 to 2018. Preliminary 2019 numbers show a further decrease.

Source: FBI

——

CLAIM: Trump claimed drug overdose deaths declined for the first time in nearly 30 years.

TRUE

2018 was the first time in nearly 20 years that the number of drug overdose deaths declined and only the second time in nearly the last 30 years.

Source: CDC

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CLAIM: “Three years ago, the barbarians of ISIS held over 20,000 square miles of territory in Iraq and Syria. Today, the ISIS territorial caliphate has been 100 percent destroyed.”

TRUE

In March 2019, U.S.-backed forces in Syria captured the Islamic State’s last physical territory. In 2016, the ISIS held about 37,530 sq miles in Iraq and Syria.

Source: The Wilson Center

—–

Judging by her actions, should we believe “there is no such thing as eternal animosity.”

She sure has a strange way of showing it.

The only truth Pelosi spoke was that she “didn’t need lessons in dignity from the president.” She has that base well and truly covered.

The only truth in Pelosi was her denial.

“Climate change” Casanova

We’ve said it before and we’ll say it again.

While the alarmist media continues its attack dog mission on PM Scott Morrison over the bushfires, they overlook the most glaring hole in the argument of the fire chiefs – consistency.

If former FR NSW chief Greg Mullins truly believes that “climate change” is such a critical issue, why was the subject absent for so many years in the annual reports which were submitted to parliament that he oversaw? Surely he had the perfect opportunity to raise awareness year after year on the topic. Yet he didn’t.

Annual reports are like an opus magnum. They document the key opportunities and challenges for an organization. In Mullins’ case, the mention of climate change is conspicuous by its very absence. In the 2018/19 FRNSW annual report there is a reference to climate change by way of voluntary participation in Earth Hour. Hardly a detail oriented study on the effects of bushfires and global warming!

Now that Mullins is in cahoots with the Climate Council, it is very convenient to drum up ‘awareness’ on climate change post the bushfires for a Royal Commission (RC). Forget that 95% of a RC would probably draw on the exact same advice garnered from 57 former enquire since 1939.

Our belief is that incompetence has reigned supreme. Fire department senior management seemed more engaged on ticking the diversity & inclusion box (please see data in the above link) in annual reports than providing rich data on the core business i.e. preventing and extinguishing fires.

That is to take nothing away from the brave fireys who risk their lives on the front line. As some volunteer firefighters have made clear, they think the senior management act like a mafia.

For Mullins to use the get out of jail free card of climate change in any RC by saying it will ‘fail at the first step’ without is ridiculous.

To include it now should highlight the media by years of exclusion when he had the authority and opportunity to do something but didn’t. Why? Will anyone ask this question? Not with our powderpuff mainstream media.

Statistically speaking, to introduce climate change in the 58th review in 81 years would smack of being an outlier. Outliers shouldn’t be ignored but they must be viewed in context of the relatives of intensity, area burned, fuel loads, hazard management, weather conditions, people and machines deployed. It is likely that these fires will be less than one standard deviation off the mean which effectively would conclude that climate change wouldn’t be a driver.

Climate change is now a phrase of convenience tossed around more frequently than Casanova telling girls they are “the only one” on Valentines Day.

Trump trounces the party of raw onion, lemon and chilli mouthwash in SOTU

Trump smashed the State Of The Union speech. Utterly exposed the Trump Derangement Syndrome within the Democrat’s ranks.

Trump has a glass jaw. This is well known. He made his feelings well known to Speaker Nancy Pelosi in his 2020 SOTU address. He snubbed her handshake and set the tone. It was juvenile and unpresidential to refuse Pelosi’s gesture but Trump wanted the optics. She was shocked. Then again their mutual hate is no surprise to anyone, especially given the impeachment farce.

Before he spoke, Trump was greeted by chants of “4 more years!

The sound of Pelosi’s applause was quieter than a one-handed clap.

Pelosi or the Democrats couldn’t raise one round of applause for record unemployment for blacks, Hispanics, veterans or disabled people. So much for identity politics, they bleat incessantly about.

Trump awarded stage 4 lung cancer sufferer Rush Limbaugh with the Presidential Medal of Freedom. Not even Pelosi could extend any warmth for his achievements, let alone his ailment.

You have to hand it to Trump for rallying American greatness. As a media man, he knew exactly how to win the crowd with his special guests.

He spoke of an 8th grader who wants to join the newly created Space Force. His great-grandfather is the 100yo Tuskegee Airman, Brigadier General Charles McGee. Americans love their war heroes. It was a powerful moment.

Even awarding a child of a single mother of colour, Stephanie and Janiyah Davis, with an education freedom scholarship couldn’t bring Democrats to applaud them.

He also spoke of his repudiation of illegal aliens and sanctuary cities. He spoke of Rocky Jones who was shot 8 times and killed at a gas station. He was murdered by an illegal immigrant who was released by a sanctuary city. Trump said he wants to pass legislation to allow victims to sue sanctuary cities for suffering such losses. He also stamped his disgust of giving free healthcare to illegal aliens.

He spoke of drug price transparency and introducing record numbers of generic drugs to lower the cost of medicines. Healthcare is far from perfect but steps are being made.

One of the most powerful moments was the surprise visit of Sgt Williams who was reunited with his family after a long deployment. Chants of “USA” as they embraced was one to pull at the heartstrings of a nation that is proud of its military. Probably the most exceptional moment of the SOTU speech.

Whatever bluster or fact-checking that will inevitably surface in the hateful mainstream media, much of his achievements will ultimately be weighed by the electorate come November.

During all of this, the fact was most Democrats swished a mix of raw onion, lemon and chilli mouthwash. Too bitter to accept the realities of a president that has kept a lot of promises. Staring down at their smartphones as he rattled off KPIs on the economy and the number of companies who are setting up in America. The mainstream media will talk of the handshake snub but the SOTU will be what is remembered by Americans for making them feel proud again.

On the back of the Iowa Caucus farce and his inevitable acquittal from impeachment this week, his coronation looks ever more certain after tonight.

Nancy Pelosi couldn’t wait for it to be over. She ripped his speech up in front of the audience, a terrible look especially given her bitterness. It is hilarious to think on so many issues the Democrats couldn’t celebrate successes of their own citizens.

Trump 1 Democrats 0.

NB – he didn’t mention Iowa or impeachment once.

The madness of crowds and NY Mets baseball pitchers

As a former stock analyst, the euphoria around Tesla seems insane. Still Mr Market is always right. I’ve been totally wrong on the direction although I still contend it’s way overvalued, especially as the Q4 was down on Q3. Who needs facts?

Now that a new target price of $7,000 has been put on Tesla by one analyst – which would make it worth around $1.3 trillion – we see that social media clickbait is driving the analysts to outdo each other rather than base it on rational fundamentals.

To make the point, even CNBC thinks getting a NY Mets baseball pitcher to give his 10c worth on Tesla makes more sense than inviting a sell-side analyst.

The twist in Tesla’s tale is that with a $130bn market cap, it could raise capital and buy a competitor auto maker to get access to production, multiple platforms and distribution expertise, three skills it sorely lacks.

What would I know? Elon Musk is a salesman extraordinaire. That has never been in doubt. The question is whether the hype built into it can match the euphoria.