Geopolitics

Debunking more shameless taxpayer-funded climate alarmist crap from SBS

Yet more ridiculous climate alarmist rubbish was published from the taxpayer-funded SBS claiming we rank dead bottom (true) in one of the lower weighted (it didn’t mention that) categories of the Climate Change Performance Index (CCPI). The CCPI measures the emissions, renewable energy share and climate policies of 57 countries and the European Union. It released the document at the COP25 summit to bathe in the spotlight with alarmists pals. Where was the journalistic rigour?

Who were the Aussie based “experts” (activists) the CCPI relied on to provide really in-depth qualitative opinions on our climate policy evaluation?

Doctors for the Environment Australia
Australian Conservation Foundation 
Oxfam
The Australian Institute

All climate activists. Precious little objectivity there. It is isn’t hard to work out why Australia scored a 0.0 on climate policy. Seriously? Any think tank with the remotest thirst for integrity in reporting and data collection should have questioned a zero score.

According to Bloomberg NEF, Australia has the 3rd highest clean energy spend per capita! We spent twice as much as France yet these climate alarmists marked us down because our democracy supported Adani. No doubt the experts just hurled toys out of the pram.

Why can’t the SBS do the slightest bit of fact-checking? What prevents it from reading the document and finding out that the credentials of the experts handing out the lowest score (relative to what?) with a lower weighting in the overall score is pretty low. Note the other three categories are based on actual data, not the whims of activists with an axe to grind against the current Morrison government.

And the summary for Australia was as follows,

National experts observe a lack of progress in these areas with the government failing to clarify how it will meet the country’s insufficient 2030 emission reduction target and inaction in developing a long-term mitigation strategy. While the government is not proposing any further targets for renewable energy beyond 2020, it continues to promote the expansion of fossil fuels and in April 2019 approved the opening of the highly controversial Adani coalmine. Experts note that the new government is an increasingly regressive force in negotiations and has been criticised for its lack of ambition by several Pacific Island nations in the context of this year’s Pacific Island Forum. The dismissal of recent IPCC reports, the government not attending the UN Climate Action Summit in September, and the withdrawal from funding the Green Climate Fund (GCF) underpin the overall very low performance in the Climate Policy category.”

This CCPI document is frankly laughable. Such is its desire to heap scorn and shame on nations, the Top 3 overall rankings were withheld from all nations. CPPI noted,

Still no country performs well enough in all index categories to achieve an overall very high rating in the index. Therefore, once again the first three ranks remain empty.

And would you look at the softball it tossed China,

National experts emphasize that China exerted huge efforts to cut fossil fuels and emissions in a coordinated way, however due to the turbulence of economy and trade still performed under expectation from the international community. Further, the national experts acknowledge that China put a lot of effort to overachieve its 2020 goals in the run-up to national GHG emissions 2030 targets. However, more efforts are needed to be in line with a well below 2°C compatible pathway. As the country is on track to fulfil its targets and promises made in Paris, experts hope that China will increase its targets next year. While the country could further increase its share of renewable energy in the energy mix over recent years, the rating in the Renewable Energy category remains medium. Despite a positive trend, current shares of renewable energy are rated low and national experts critically note the country’s high dependency on coal. By implementing a pilot emission trading scheme, China is showing positive efforts in national climate policy, which leads to a high rating in the Climate Policy category.

So could the CCPI tell us why renewables investment in China has slumped 40% as the government has said it won’t approve any such projects unless it can compete with coal?

USA’s overall emissions & emission per capita have declined since Trump took office but the CCPI could restrain its TDS.

National experts emphasise that the national climate policy has worsened under President Donald Trump’s administration and they highlight the importance of state-level measures. While renewable energy and energy use reduction targets are in place in some states, these vary greatly in terms of strength and implementation. At the international level, the performance completes the picture on a national level, with the US acting as a destructive player in international negotiations on all levels. The very low performance is further underpinned by the Trump administration officially having started the process of withdrawing from the Paris Agreement, due to be finalised on 4 November 2020.

Yep, capitalism has allowed the US to experience declining emissions. No need for a socialist construct to hand over billions of dollars to rent-seekers. CCPI asked more activists including the Union of Concerned Scientists for the US bashing.

Image result for cop25 australia"

So take the CCPI report with all of the irrelevance of its compilation. Based on subjectivity. Just like the 11,000 signatories to a climate emergency, where the site that pushed the narrative overlooked the fact that Mickey Mouse, Aldus Dumbledore and Araminta Aardvark were included.

It is worth quoting Thomas Sowell again,

Those who cry out that the government should ‘do something’ never even ask for data on what has actually happened when the government did something, compared to what actually happened when the government did nothing.”

Well done on the SBS for yet more splendid journalistic integrity.

COP 25 & Gender – apparently it’s a thing

Let’s get real. If the alarmists really believe we have no time to waste in order to save the rest of us from absolute doom and gloom, why is “gender equality” being pushed so hard at the COP25 summit?? If women make the best scientists, why not make them 100% of the process? That’s sensible. Alas, it simply exposes why the UN deserves to be defunded in order that it rationalise around proper governance practices. After all, this is the mob that thought Zimbabwean dictator Robert Mugabe would make a good WHO ambassador and went out of its way to protect one of their own through a sexual harassment scandal at UNAIDS.

The document published at the COP25 summit today noted,

The full, meaningful and equal participation and leadership of women in all
aspects of the UNFCCC process and in national – and local-level climate policy and action,
including in consultations on the planning and review thereof is vital for achieving long-term climate goals…Collecting data, including sex-disaggregated data, and evaluating and
reporting on the effectiveness of processes to integrate gender considerations into climate
policy and action are vital for replicating action and strengthening efforts…”

The ultimate irony for the brains trust at the United Nations is explained by an extensive survey taken by itself on the processes in the compilation of the IPCC climate bible. Countless scientists slammed the lack of competence of the lead authors where the UN pushed diversity (i.e. identity politics) instead of scientific qualifications.

Donna Laframboise noted in her book, “The Delinquent Teenager” the following,

“In early 2010 the InterAcademy Council, an organization comprised of science bodies from around the world, took an historic step. It established a committee whose purpose was to investigate IPCC policies and procedures.

The committee posted a questionnaire on its website and invited interested parties to respond. Answers to those questionnaires were eventually made public after the names of the respondents had been removed. Those provided by IPCC insiders can be separated from the ones submitted by concerned citizens because the questionnaire begins by asking what role the respondent has played in the IPCC.

People with direct experience of this organization were remarkably frank in their feedback. According to them, scientific excellence isn’t the only reason individuals are invited to participate in the IPCC.

Remember, this is a UN body. It therefore cares about the same things other UN bodies care about. Things like diversity. Gender balance. Regional representation. The degree to which developing countries are represented compared to developed countries.
The collected answers to the questionnaire total 678 pages. As early as page 16, someone complains that:

“some of the lead authors…are clearly not qualified to be lead authors.”

Here are other direct quotes:

There are far too many politically correct appointments, so that developing country scientists are appointed who have insufficient scientific competence to do anything useful. This is reasonable if it is regarded as a learning experience, but in my chapter…we had half of the [lead authors] who were not competent.” (p. 138)

“The whole process…[is] flawed by an excessive concern for geographical balance. All decisions are political before being scientific.” (p. 554)

“half of the authors are there for simply representing different parts of the world.” (p. 296)

Lest anyone think that people from less affluent countries were being unjustly stereotyped, the person whose comments appear on page 330 agrees:

“The team members from the developing countries (including myself) were made to feel welcome and accepted as part of the team. In reality we were out of our intellectual depth as meaningful contributors to the process.”

The questionnaire did not contain the word gender. Nevertheless, it is uttered dozens of times in the answers people provided. While some feel the IPCC should not aim for gender balance, others applaud the use of this selection criteria. Among those with firsthand IPCC experience, therefore, it is an open secret that some people are
appointed for reasons that have little to do with world-class scientific expertise.

Depending on whose opinion you believe, this is true in either a small minority of cases or with regard to as many as half of the authors. In the view of at least one person, every IPCC personnel decision is influenced by concerns unrelated to science.

Clearly, it didn’t pay any attention to the results. Because if it did it wouldn’t be able to invent the kind of hysteria (that it has climbed down from constantly over time) to bully virtue signalling governments to force we mere peons to hand over $100s of billion every year to a bunch of incompetent globalists who want to keep this bandwagon going.

EU climate emergency vote is way worse than you think

What took the group thinking EU so long? What better way to justify more taxation and wealth redistribution than to declare a “climate emergency”? What you are about to read is a perfect explanation of how little credibility exists in the European Parliament (EuroParl).

In black and white, EuroParl noted,

EU countries should at least double their contributions to the international Green Climate Fund, Parliament says. EU member states are the largest providers of public climate finance and the EU’s budget should fully comply with its international commitments. They also note that pledges by developed countries do not meet the collective goal of 100 billion USD per year as of 2020…Finally, they urgently call on all EU countries to phase out all direct and indirect fossil fuel subsidies by 2020.

Now, this is where it gets curious. Take a look at this file (from page 8) and ask yourself, how many amendments to resolutions within the “climate emergency” conversation were rejected supporting the overall declaration passing 429 in favour, 215 against, 19 abstaining?

Here is one amendment that was rejected 95, 563, 9 by MEPs (you can’t make this stuff up),

Recalls that climate change is one of the many challenges facing humanity and that
all states and stakeholders worldwide must do their utmost to measure it
scientifically so that policy, and especially spending, is based on observable facts and not on apocalyptic fearmongering or unreliable models; emphasises that there is
no scientific consensus on what percentage of climate change is anthropogenic and
what percentage is natural

Seems fair enough! Basing decisions affecting 550 million constituents on real hard data is the right thing to do, no? Clearly not. Shut up and follow the religious cult and demand followers cough up twice as much into the collections pot. The lobbyists must be well pleased.

Or,

“Text as a whole without the words: ‘urgently’, ‘and implement’ and ‘to net-zero
emissions by 2050″ defeated 101, 555, 15.

Isn’t it striking that the majority of MEPs won’t even consciously vote in favour of making sure funds are spent appropriately? Nope, bow down and shut up. Otherwise face being cut off as we get to observe from the EuroParl documents below.

This is what an MEP from Northern Ireland, Claire Fox, had to say,

Madam President, I voted against the climate and environmental emergency motion because I’m really concerned at the hyped-up anti-science scaremongering that’s terrifying young people, telling them that billions will die, that there’ll be a collapse of civilisation, a lot of the rhetoric coming out of Extinction Rebellion and echoed in the debate over the last few days. I think that the fact that we voted against an amendment today that said that we should be committed to bringing the environmental subject back to rational discussion, and we rejected it, admits that actually, we’re having an irrational discussion. This becomes advocacy and propaganda, rather than science. There’s no scientific evidence from the IPCC or anyone else about the extinction of humanity, and we should be very careful about claiming that anthropological climate changes cause floods and droughts, which we have been doing quite casually during the last few days. In fact, the IPCC says that such issues are probably caused by socio-economic conditions, and we forget socio-economic conditions too much and demand, in fact, as this Parliament has done, decarbonisation, which will lead to eco-austerity, massive price hikes in energy, and ordinary working people paying the cost for scaremongering and...

(The President cut off the speaker)

or another Northern Irish MEP Robert Rowland,

Madam President, I’d just like to reiterate what my colleague said. I also rejected the COP24 resolution. I may not be an Economics Professor, but I do profess to understand economics. They also call it the dismal science, but when it comes to the climate emergency, I would describe the apocalyptic forecasts as nothing but science fiction. The adoption of these policies today, and the aim of carbon neutrality by 2050 is nothing short of reckless and the most extreme example of economic illiteracy I’ve ever seen. The fact that amendments were rejected demanding a full impact assessment shows rank indifference to the cost and practicality of aggressive climate policies.

One thing I can say for certain is that the impact of net-zero makes the consequence of any form of Brexit look puny by comparison. Dieter Helm, Professor of Energy and Economics at Oxford University, was right when he said: ‘We should be honest that it is a huge industrial undertaking, and it will have significant cost. These are enormous industrial activities, there is nothing in history that looks like this outside of wartime.

In my own country, our own Chancellor has put that cost at over one trillion pounds, or almost 2% of GDP per annum. It is an insane policy.

If the EU truly wishes to make itself even less competitive, in the face of some of the world’s highest electricity prices, they are only self-flagellating in an already flailing economy which continues to slow to 5-year lows. If the EU truly looked at its record since 2007, it would see its policies have delivered 40 million more people into poverty, a number which totals 118 million people, or 23% of the EU population!

If there was ever a bigger load of intellectual dishonesty posted by the EU it would be this. It states that,

Climate emergency declarations in 1,195 jurisdictions and local governments cover 545 million citizens with 53 million of those living in the United Kingdom. This means in Britain now roughly 80 per cent of the population lives in areas that have declared a climate emergency.

The irony if such a statement is that there is no way in the world that 545 million citizens are in agreement within those 1,195 jurisdictions. 53mn Brits? Seriously? In Australia’s case, many declaring climate emergencies have been local green-left councils who have made idle gestures without backing it up with realities. Constituents have not been asked. Windfarm plans for Warringah are not on the agenda.

The greatest irony with the EU is that they classify biomass (which is more polluting than coal) as a renewable and gives it a zero-carbon emission weighting provided a tree is planted per tree burnt. Sadly trees take 40 years to fully grow to be able to offset that produced. However, we will discover that the fine print taketh away the wonderful headlines.

Will the Poles ditch their coal industry to comply or face savage reprisals from Brussels? Will the EU guarantee Poland gets huge subsidies to pay for its termination? Which country would be so blind as to put their livelihoods into the hands of the EU!? The Greeks might have a view as do the Brits.

This action will spectacularly blow up.

By all means ride the short term wave of renewables stocks but be sure to line up all of those nasty fossil fuel companies into the portfolio that get pummeled by financial markets because the type of economic disaster that will beset the EU will only create the conditions where the peons will revolt and force a return to the way things were. Efficient, cheap and reliable forms of energy that will make a proper dent in the poverty line rather than promises and handouts.

The EU needs to learn the lesson that “Charity is injurious unless it helps the recipient to become independent of it.” It won’t be long before the youth of today get to embrace their love for socialism. Experience is a hard teacher. They’ll get the test first and the lesson afterwards.

This can only end in tears

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As Sweden’s economy slows to the worst economic growth rate in 5 years under a negative interest rate policy, one would think the Swedish Central Bank (Riksbank) would be seeking to prudently manage its asset book on the basis of appropriate risk/reward as opposed to lecturing Australia and Canada on their respective carbon footprints. What we are witnessing is yet another discrete move by authorities to manipulate markets based on fantasy rather than fact.  The hypocrisy is extreme as we shall discover.

While the Riksbank should have complete freedom in how it wishes to deploy capital, we should view this is a pathetic sop to the cabal at the European Central Bank (ECB). Since when did central bankers become experts on climate change? The RBA is no better. Deputy Governor, Guy Debelle, gave a speech in March 2019 on the risks posed by climate change which based prophecies on the data accident-prone IPCC and Bureau of Meteorology. Why not seek balance? Easier to fold to group think so as not to be outed as a pariah. Utterly gutless. Our own APRA is also pushing this ridiculous agenda on climate change reporting. It is willful negligence.

While it is true that on a per capita basis, Australia and Canada’s emissions are higher than the global average, why doesn’t the Riksbank give us credit for lowering that amount 11.4% since 2000? Even Canada has reduced its carbon emissions by 7.3% over the last 18 years. Admittedly Sweden’s emissions per capita have fallen 21.9% according to the IEA. Greta will be happy.

Why hasn’t the Riksbank taken China or India to task for their 169.9% or 94.7% growth in CO2 emissions respectively? There are plenty of oil-producing nations – Qatar, UAE, Bahrain, Saudi Arabia and Oman that have worse per capita outcomes than Australia or Canada. Do these countries get special dispensation from the wrath of the Riksbank? Clearly.

The US has pulled out of the Paris Climate Accord. If the US has marginally lower emissions per capita (15.74t/CO2-e) than Australia (16.45t/CO2-e), isn’t a double standard to write,

The conditions for active climate consideration are slightly better in our work with the foreign exchange reserves. To ensure that the foreign exchange reserves fulfil their purpose, they need to consist of assets that can be rapidly converted to money even when the markets are not functioning properly. Our assessment is that the foreign exchange reserves best correspond to this need if they consist of 75 per cent US government bonds, 20 per cent German and 5 per cent British, Danish and Norwegian government bonds.

Essentially Riksbank commitment to climate change is conditional. The US which is responsible for 13.8% of global emissions can be 75% of holdings. Australia at 1.3% can’t. No doubt sacrificing Queensland Treasury Corp, WA Treasury Corp and Albertan bonds from a Riksbank balance sheet perspective will have little impact on the total. In short, it looks to be pure tokenism. The Riksbank has invested around 8% of its foreign exchange reserves in Australian and Canadian central and federal government bonds. So perhaps at the moment, it is nothing but substitution from state to federal. Why not punish NSW TCorp for being part of a state that has 85%+ coal-fired power generation?

At the very least the Riksbank admits its own hypocrisy.

The Riksbank needs to develop its work on how to take climate change into consideration in asset management. For instance, we need a broader and deeper analysis of the issuers’ climate footprint. At the same time, one must remember that the foreign exchange reserves are unavoidably dominated by US and German government bonds. The Riksbank’s contribution to a better development of the climate will, therefore, remain small. This is entirely natural. The important decisions on how climate change should be counteracted in Sweden are political and should be taken by the government and the Riksdag (parliament).

Still, what hope have we got when Benoît Cœuré, member of the Executive Board of the ECB, lecturing those on “Scaling up Green Finance: The Role of Central Banks.” He noted,

2018 has seen one of the hottest summers in Europe since weather records began. Increasing weather extremes, rising sea levels and the Arctic melting are now clearly visible consequences of human-induced warming. Climate change is not a theory. It is a fact.

Reading more of this report only confirms the commitment of the ECB to follow the UN’s lead and deliberately look to misallocate capital based on unfounded claims of falling crop yields and rising prices (the opposite is occurring) and rising hurricane and drought activity (claims that even the IPCC has admitted there is little or no evidence by climate change). Sweden is merely being a well-behaved schoolboy.

Cœuré made the explicit claim, “The ECB, together with other national central banks of the Eurosystem, is actively supporting the European Commission’s sustainable finance agenda.

CM thinks the biggest problem with this “agenda” is that it risks even further misallocation of capital within global markets already drowning in poorly directed investment. It isn’t hard to see what is going on here. It is nothing short of deliberate market manipulation by trying to increase the cost of funding to conventional energy using farcical concocted “climate risks” to regulate them out of existence.

Cœuré made this clear in his speech,

once markets and credit risk agencies price climate risks properly, the amount of collateralised borrowing counterparties can obtain from the ECB will be adjusted accordingly.

What do you know? On cue, Seeking Alpha notes,

Cutting €2bn of yearly investments, the European Union will stop funding oil, natural gas and coal projects at the end of 2021 as it aims to become the first climate-neutral continent.

All CM will say is best of luck with this decision. Just watch how this kneeling at the altar of the pagan god of climate change will completely ruin the EU economy. The long term ramifications are already being felt. The EU can’t escape the fact that 118mn of its citizens (up from 78m in 2007) are below the poverty line. That is 22% of the population. So why then does Cœuré mention, in spite of such alarming poverty, that taking actions (that will likely increase unemployment) will be helped by “migration [which] has contributed to dampening wage growth…in recent years, thereby further complicating our efforts to bring inflation back to levels closer to 2%.

Closer to home, the National Australia Bank (NAB) has joined in the groupthink by looking to phase out lending to thermal coal companies by 2035. The $760 million exposure will be cut in half by 2028. If climate change is such a huge issue why not look to end it ASAP? This is terrible governance.

Why not assess thermal coal companies on the merits of the industry’s future rather than have the acting-CEO Philip Chronican make a limp-wristed excuse that it is merely getting in line with the government commitment to Paris? If lending to thermal coal is good for shareholders in 2036, who cares what our emissions targets are (which continue to fall per capita)? Maybe this is industry and regulator working hand-in-hand?

The market has always been the best weighing mechanism for risk. Unfortunately, for the last two decades, global central bank policy has gone out of its way to prevent the market from clearing. Now it seems that the authorities are taking actions that look like collusion to bully the ratings agencies into marking down legitimate businesses that are being punished for heresy.

This will ironically only make them even better investments down the track when reality dawns, just as CM pointed out with anti-ESG stocks. Just expect the entry points to these stocks to be exceedingly cheap. Buy what the market hates. It looks as though the bureaucrats are set to make fossil fuel companies penny stocks.

Teflon Trudeau

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At this stage, it seems that Canadian PM Justin Trudeau will form a minority government. Look forward to 4 more years of gaffes ahead. Having said that, the Conservatives need to take a long hard look in the mirror and realise they lost to a completely empty suit. That speaks volumes of their (lack of) popularity where it mattered. CM has said for a long time that Rona Ambrose was always the better choice to be the leader of the Conservatives. This was an own goal.

Trudeau had blackface, brown face, dressing like an Indian, using words like peoplekind, using two planes on the election campaign and the Trans Mountain pipeline debacle despite his climate emergency antics, found guilty of breaching ethics in the Aga Khan and SNC Lavalin scandals and even suggesting the use of haiku and poetry to assimilate returning ISIS fighters etc. against him but despite all that and more, it didn’t upset enough Canadians to sway their vote. All of this was on the ticket, much like Trump’s “grab ’em by the p#ssy” remarks. Say all you want about the morals or ethics of those that still voted for him despite all this. It is irrelevant. They did. Deal with it. For once Obama got a call right.

The Conservatives should have done far better but obviously failed to connect with the people. Scheer should step down as leader. Canada is obviously not that conservative despite a strong gain. Sadly, Scheer’s performances were quite poor in the final weeks when deflecting questions, especially related to hiring people that Trump used on his campaign. Just sounded disingenuous. Best to admit it and carry on. If there was a worry this would be discovered Scheer’s team shouldn’t have hired him.

No point in Conservatives wheeling out the old “we won the popular vote” excuse as the Democrats did in the 2016 US election as Trudeau has held onto power by the rules. In the end that is all that counts.

Still, Canadians, nor the Liberals should be cheering the outcome. Minority governments are poisonous. Australia’s 2010 election proved how disastrous compromise can be. As politicians look to serve their own interests, poor compromise is often made. Note that Singh’s NDP has been slaughtered so even as a coalition partner, he can’t wield so much power with such a poor outcome, so net-net Trudeau won’t face much of a different landscape.

On a positive note, by losing their majority, the Liberals will also lose a majority on parliamentary committees. This will mean far less ability to shut down investigations of scandals. A strengthened opposition may look into a deeper investigation on SNC-Lavalin but is that what Canadians want?

So with bitter disappointment, congratulations still go to Teflon Trudeau. CM believes it will be a case of buyer’s remorse in Canada. Conservatives have 4 more years to get their house in order. Much like Albanese is struggling with Labor’s platform in Australia, Conservatives need to wake up and smell the coffee.

It is worth assessing what has happened in Canada translating south of the border in next year’s US presidential election. Can people see how despite being cloaked in scandals, gaffes, blunders and many other flaws, Trudeau didn’t lose enough voters to cost him his job? That is why, despite the hateful media, Trump is set to romp home in 2020. Ultimately people care (and vote) about issues affecting them, not the morals or actions of those that hold power. Do people really think the Democrats are in with a shot with the current crowd of candidates? Trump has a Teflon coating too.

“Houston, we have a problem” (with Hillary)

Poor Hillary! NASA (founded in 1958), back in the late 1950s & 1960s, probably weren’t rejecting applications based on gender as a form of sexism but because to be an astronaut in those days meant one had to be at the elite end of an exceptionally high pool of candidates that were invariably drafted from US Navy, Marine or Air Force jet-fighter corps where no women were serving in such roles at the time. John Glenn served as a fighter pilot in WWII, as well as Korea. Moonwalkers, Neil Armstrong and Buzz Aldrin were Korean War fighter pilots. Michael Collins, the spring chicken in that group was a USAF fighter pilot. Noticing a pattern Hillary?

Back then, spaceships weren’t as automated as today. The space programme 70 odd years ago required pilots with in-depth flight experience, as technology back then was very much in its infancy. Exploring the flight envelope was properly in the danger zone. Perhaps the mood at NASA back then was one of chivalry, not gender bias. Maybe they believed in keeping women out of harm’s way after the war, rather than acting like a cabal of white male supremacist misogynists?

Although if Hillary bothered to check her history it shows us that Sally Ride became the first American woman in space back in 1983. 36 years ago. Diversity and inclusion in the rocketship have been around for almost 4 decades!

Did Hillary forget the brave souls including Christa McAulliffe who lost their lives in 1986 on the space shuttle Challenger?

CM once wrote to BMW Motorsport racing as a clueless 16yo car fanatic with dreams to become a racing driver. Sadly, CM’s dimensions (6’2″ and 100kg at the time… err hem even worse now) were not the stuff that would have been suitable for anything other than semi-trailer rigs which BMW didn’t make. Sometimes, at the pinnacle of certain professions, physical attributes, unfortunately, rule certain folk out.

It is none-the-less amazing to witness the oppression Hillary Clinton has faced during her life. Doesn’t your heart bleed? CM thinks many Americans would gladly see Hillary as an astronaut with a one-way ticket. Jettisoned as space junk. Can you imagine if Apollo 13 had Clinton on board during that rescue mission? She would undoubtedly be arguing with Mission Control on how things should be done, not the other way around. At least now, she would have made up for the weight deficit that ill-fated mission required to get the module safely back to earth!

Forget the return “ON” your money. Just look to the return “OF” it

CM knew a lot of passive indices existed but not to this crazy extent. Probably explains why there is so much stupid money tied up in me too commoditised investment products. 4 years ago CM wrote a piece on the dangers of ETFs (especially leveraged)  and passive products in a downturn. These products predominantly follow the market, not lead it. So if these products end up stampeding toward the exits in a market meltdown, the extent will be amplified, especially those levered funds potentially making market panic look worse than it really might otherwise be. Don’t be surprised to see the mainstream media sensationalise the size of any falls in the market.

According to Bloomberg, 770,000 benchmark indexes were scrapped globally in 2019…however  2.96 million indexes remain around the world, according to a new report from the Index Industry Association…There are an estimated 630,000 stocks that trade globally, including c.2,800 stocks on the NYSE and c. 3,330 on NASDAQ or 5x as many indices as there are securities globally.

CM wrote back in October 2015,

ETFs are hitting the market faster than the dim-sum trolley can circle the banquet hall. Charles Schwab, in the 12 months to July 2015, saw a 130-fold preference of ETF over mutual funds given their relative simplicity, cost and transparency….

…ETFs, despite increasing levels of sophistication, have brought about higher levels of market volatility. Studies have shown that a one standard deviation move of S&P500 ETF ownership as a percentage of total outstanding shares carries 21% excess intraday volatility. Regulators are also realising that limit up/down rules are exacerbating risk pricing and are seeking to revise as early as October 2015. In less liquid markets excess volatility has proved to be 54% higher with ETFs than the actual underlying indices. As more bearish market activity has arrived since August 2015 we investigate how ETFs may impact given a large part of recent existence has been under more favourable conditions…

CEO Larry Fink of Blackrock, the world’s largest ETF creator, has made it clear that
leveraged ETFs (at present 1.2% of total ETF AUM) have the potential to “blow up the whole industry one day.” The argument is that the underlying assets that provide the leverage (which tend to have less liquidity) could cause losses very quickly in volatile markets. To put this in perspective we looked at the Direxion Daily Fin Bull 3x (FAS) 3x leverage of the Russell 1000 Financial Services Index. As illustrated in the following chart FAS in volatile markets tends to overshoot aggressively

…The point Mr Fink is driving at is more obvious with the following chart which shows in volatile markets, the average daily return is closer to 10x (in both directions) than the 3x it is seeking to offer. This is post any market meltdown. On a daily basis, the minimum and maximum has ended up being -1756x to 1483x of the index return, albeit those extremes driven by the law of small numbers of the return of the underlying index. Which suggests that in a nasty downturn the ETF performance of the leveraged plays could be well outside the expectations of the holders.”

CM has said for many years, where CDOs and CDSs required the intelligence of a mystical hermit atop a mountain in the Himalayas to understand the complexities, ETFs are the complete opposite. Super easy to understand which inadvertently causes complacency. Unfortunately, as much as they might try to do as written on the tin, the reality could well turn out to be the exact opposite.

Hence CM continues to believe that stocks with low levels of corporate social responsibility (CSR) scores like tobacco companies such s Philip Morris, JT and Imperial Tobacco, as well as gold/silver bullion,  look the places to be invested. Cash won’t necessarily be king because the banks are already in a world of pain that hasn’t even truly started yet. Aussie banks look like screaming shorts at these levels. The easiest way for the plebs – without access to a prime broker – to do this is to buy put options on individual bank names. Out of the money options are dirt cheap.

Banks

Forget the return ONyour money. Just look to the returnOFit.

NB, none of this constitutes investment advice. It is a reflection of where CM is invested only.