#commonsense

One size fits few

The government, in its infinite wisdom to drip feed we recalcitrant children with policy that is for our own good, seeks to reopen cafes and restaurants with a maximum of 10 people. One size fits all. Forget that 170 out of 500 local government areas (LGAs) have no cases of coronavirus.

This is a picture of ‘Essence‘cafe in Neutral Bay. It seats around 10 people in cramped quarters on stools.

400 metres up Military Road is The Oaks Hotel in which can accommodate 400 people.

Yet 10 people in Essence would attract a far higher risk of infection than 10 at The Oaks because of the difficulty of maintaining 1.5 metres.

Never mind. Not withstanding all food and beverage outlets are required to meet hygiene and capacity requirements.

Wouldn’t it be smarter to open up based on a percentage of mandated capacity? No, one size is easier according to our authoritarians.

Shut up and do as you’re told. You’re not qualified to exercise your own freedoms and respect for your fellow citizens.

Never let a good crisis go to waste – Part 2

Michigan Conservatives Plan To Protest April 15th ...

Small businesses employ 50% of all Americans. The Small Business Administration (SBA) distributed 1.4 million loans worth $350 billion under the Paycheck Protection Program (PPP). It has now run dry. Small businesses are seeking these loans which stipulate the funds must be directed to pay employees coping with coronavirus. Typically, House Speaker Pelosi and Senate Minority Leader Chuck Schumer are trying to stuff unrelated partisan pork into the bill in order to back it.

To sustain small businesses, which employ half the country, the SBA is requesting another $250 billion. Yet Pelosi and Schumer want to use the crisis to ram in more unrelated regulations to the PPP with:

  1. significantly increased funding for disaster grants and loans,
  2. additional support for the food-stamp program,
  3. adequate funding for nationwide virus testing and personal protective equipment,
  4. the collection and publication of demographic data so that government can accurately determine the level of impact on under-served communities and communities of colour.

While all of these items may have a place in a separate debate, surely helping half of the country’s employment providers stay alive is the bigger issue. Never mind Pelosi was happy to parade herself on late-night TV in front of her $24,000 refrigerators while the bill is delayed. We don’t begrudge anyone owning nice things, but the optics of a freezer full of $13 ice cream punnets is hardly reflective of the crisis.

It wasn’t long ago that her party wanted to stuff a laundry list of ridiculous unrelated items to the $2.2 trillion emergency stimulus last month including airline emissions standards, corporate board diversity and wind/solar subsidies.

Now that 22 million Americans are out of work, should we be surprised that 3,000 people were protesting in Lansing, Michigan demanding the economy be reopened? Or the 100s of people in Raleigh, North Carolina.

Do they have a point?

Here is the latest data outlining infections as a percentage of the state populations. The average infection rate across the US is 0.2044% of the population. That means that 99.8% of people haven’t caught it. While social distancing is proving effective, one has to wonder whether the economy can be reopened quicker than the lid on Nancy Pelosi’s ice cream.

Infections

Switching to COVID 19 deaths, the national average is 0.0101% of the population. New York, which we lambasted for the insane advice handed out by its Health Commissioner Oxiris Barbot has 7.6x the national average. Wyoming, while less densely populated than NYC, has 0.03x the national average.

Deaths

Michigan has a death rate of 0.02%, twice the national average. Its infection count is 0.293% or 50% higher than the national average. North Carolina might have a bigger argument to make. It has a 0.0015% death rate (0.1x the national average) and infections at 0.0542% (0.25x the national average) of the state’s citizens. Why aren’t governors looking to reopen their economies sooner, which is their decision, not Trump’s, to make?

These people rightly want the governors to start opening the economy so they can work. Jobs, jobs, jobs. Never cross an American and their belief in “rights”. We think this once again plays straight to Trump’s reelection. People are seriously frustrated and when they join the unemployment queue they are through with partisan politics.

FNF Media has always thought protests would eventually happen. The risks of contracting coronavirus versus the reward of having a job and feeding a family are now front and centre. They would undoubtedly settle for social distancing guidelines while working instead of remaining in lockdown.

We added Australia’s own state/territory data in those previous charts (yellow) which shows just how minuscule our infections and death rates are. We really need to be looking at easing restrictions sooner, rather than later. These statistics should make us all think.

WHO’s official 2017 pandemic playbook says it all

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The World Health Organisation (WHO) has bungled its response during the coronavirus crisis. Politics always seems to trump principle. This cartoon is particularly blunt.

In mid-January, WHO happily parroted Chinese propaganda which said, “preliminary investigations conducted by the Chinese authorities have found no clear evidence of human-to-human transmission of the novel coronavirus (2019-nCoV) identified in Wuhan, China.” This, instead of independent verification by WHO.

WHO Director-General Tedros Adhanom Ghebreyesus praised China’s “transparency” despite whistleblower doctors being silenced by the propaganda machine. Several have sadly ended up dying.

Ghebreyesus even took potshots at governments looking to close borders to quarantine themselves on the basis of “unnecessarily interfering with international travel and trade” and “increasing fear and stigma.”

The interesting thing is that Director-General was reading straight from WHO’s very own 2017 playbook, ‘Pandemic Influenza Risk Management [PIRM]- A WHO guide to inform and harmonize national and international pandemic preparedness and response‘.

On travel, the report noted,

The International Health Regulations (IHR) (2005) seeks to limit the public health measures taken in response to disease spread to those “that are commensurate with and restricted to public health risks, and which avoid unnecessary interference with international traffic and trade.” This aligned with China’s rhetoric.

On member state cooperation,

Under the Framework, Member States are responsible for (1) ensuring the timely sharing of influenza viruses with human pandemic potential with Global Influenza Surveillance and Response System (GISRS); (2) contributing to the pandemic influenza benefit-sharing system, including by working with relevant public and private institutions, organizations and entities so they make appropriate contributions to this system; and (3) continuing to support GISRS.” p.16

China covered up the extent of the problem by destroying lab samples taken in December causing the unexplained viral infections in Hubei province. Imagine what might have happened if China had been open and honest at the offset? How lucky to have a WHO that pushed China’s narrative that the spread of COVID-19 was slow?

Indeed it is the chief of WHO that calls the Public Health Emergency of International Concern (PHEIC) and for declaring a pandemic. The PIRM report stated,

The responsibility of determining a PHEIC lies with the WHO Director-General under Article 12 of the IHR (2005). The determination of a PHEIC leads to the communication of temporary recommendations…During the period of spread of human influenza caused by a new subtype, based on risk assessment and appropriate to the situation, the WHO Director-General may make a declaration of a pandemic.”  p.14

Why did it take till March 10 for the Director-General to declare a pandemic? 64 days after the start. 118,000 people had caught COVID-19 by then. Now the number stands at 351,000.

At least there is a get out of jail free clause in WHO’s 2017 PIRM report,

Ethics do not provide a prescribed set of policies; rather, ethical considerations will be shaped by the local context and cultural values.” p.18

We guess it must be ok in WHO’s mind that China’s ethics are shaped by the culture of the Communist Party.

As to the question of the effectiveness of social distancing? WHO concluded with this vague paragraph,

Nevertheless, measures that have been associated with containment such as social distancing, hand/respiratory hygiene and judicious use of antiviral drugs may be effective in mitigating the impact of outbreaks of a new influenza subtype in individual countries. These measures are most likely to be successful and are better supported by data demonstrating effectiveness when implemented in specific local (smaller scale) circumstances, e.g. households and closed or semi-closed institutions. Although there is no evidence of any wider population-level containment effect, these measures may reduce the spread and overall impact of the pandemic and could be considered as part of a country’s national preparedness plan, depending on available resources.” p.62

Has there been an overreaction on social distancing which is likely to produce catastrophic economic side effects? If hygiene and antiviral drugs are effective, does social distancing have any impact at all? If not, aren’t governments submitting companies and employees to unnecessary hardship?

Assuming one self-isolates for 14 days, if one catches COVID-19 the first day out of quarantine was there any point to the first 14?

In Japan, peak hour trains to work remain as crowded as normal yet the country isn’t registering a severe outbreak of the disease. Close quarter drinking parties below the cherry blossoms are in full swing, yet no real signs of mass contagion. Japanese are meticulous with hygiene. Is it a factor? Japan has 1,046 cases and 44 deaths so far.

South Korea’s success would seemingly be driven by the sheer number of tests conducted on its population (270,000) which has made controlling out who needs to be isolated easier, as opposed to social distancing and hoping for the best. South Korea has tested 5,200 people per million population vs America at 74, according to the Centre for Disease Control. We don’t profess to hold any expertise in virus containment, but the data seems to bear out highly inconsistent results.

Yet it doesn’t escape the immutable fact that UN bodies, in general, have terrible track records. Why do so many countries want to entrust sovereign laws to UN groups that can’t keep their own houses in order?

In the last audited set of accounts (Dec 2018), WHO operates on a $2.9bn budget of which $931.22 million is paid in salaries across 8,153 staff or an average of $118,000 each. Although in the FY2018 financial year, expenditures totalled $2.5 billion, leaving a $442 million surplus after financial revenue. 

WHO spent $191.7 million on travel, $178 million on operating expenses and $177 million on medical supplies and materials. Medical supplies and materials are mainly purchased and distributed by WHO including vaccines, medicines, medical supplies, hospital running costs, fuel, as well as related shipping costs.

Contracted services look an interesting line item at $781 million. Medical research activities and security expenses are also included in contractual services. 

Despite Ebola in 2014, MERS in 2012, H1N1 Swine Flu in 2009 and SARS in 2002 it is hard to ignore the fact that with over 8,150 well-paid staff members WHO can’t construct a better policy prescription in limiting the spread other than provide sketchy anecdotal data on what methods seemed effective in containing the spread? Perhaps China can loan some propaganda ministry staff to better shape the responses. That’s right, they already have.

Let’s not forget that Tedros Adhanom Ghebreyesus proposed former Zimbabwe dictator Robert Mugabe as a WHO ambassador in 2017. It is not hard to see where the lack of judgment comes from.

Get ready to buy Boral & ABC rather than watch a market swim in concrete shoes

Governments rarely have imagination during crises. Usually, it involves chucking uncosted cash around. How many projects have we seen run way over the promised budget? Submarines anyone? NBN?

Handing out $750 cheques to 6 million struggling Aussies in the hopes they’ll spend it is a bit of a wing and a prayer strategy. Maybe those struggling will just use it to pay down debts of previous consumption rather than ignite a new spending splurge.

At some stage, large-scale infrastructure spending will return to the headlines to stem the economic slowdown. Look at the state of national infra spending forecasts in the chart above.

Bridges to nowhere. Tunnels, highways, schools and hospitals. New projects to get people back to work. It happens pretty much every downturn. So why should we expect anything different?

A read of the latest infrastructure report states quite clearly there are 4 areas to address:

  1. Population growth has become a major point of contention in infrastructure debates. In our largest cities, ageing assets have been put under growing strain, with rising road congestion, crowding on public transport and growing demands on social infrastructure, such as health, education and green space.
  2. Energy affordability has also deteriorated over recent years. A steep rise in network costs has driven energy bills 35% higher over the past decade, and up by 56% per unit of electricity consumed in real terms.
  3. In telecommunications, the nbn rollout continues to face challenges. In the 4.8 million households in which it has activated, services have not met the expectations of many users.
  4. In the water sector, the past four years have seen mixed results. Many metropolitan utilities are increasing the sustainability and quality of their services through innovation, supporting the liveability of our cities. But many regional areas are suffering from growing water security fears as large parts of the country are in drought.  

Cement companies play straight at the heart of three of these four distinct areas. Roads, rail, hospitals, schools, dams and so on. In the energy space, whatever direction we take (solar, wind, coal, gas or nuke), cement, asphalt and aggregates will be required to achieve it.

Bellwether Boral (BLD) is perhaps best positioned to benefit as it makes railway ballast, asphalt, cement, concrete. Boral shares have yet to be kicked as hard as others. Boral hit a GFC low around the $1.64 mark. It stands at $3.00, 33% above that level.

BLDAX

50% of Boral’s Aussie revenue comes from NSW, the state with by far the healthiest balance sheet and the biggest infrastructure projects. 50% of revenue is Australian based with another 38% coming from the US which has huge infrastructure needs. 25% of group revenue comes from roads, highways, subdivisions and bridges. Good leverage.

Adelaide Brighton (ABC) has been bludgeoned in this market meltdown and $1.35 is the level it hit at the pits of the GFC in 2008. If it starts to sink below that level, it will start to look interesting again. If you look at the chart you can see it has slid from almost $7 in 2018 to its current price of $2.24.

Adelaide

A read through ABC’s last set of results points to the difficulties in the market for its cement and aggregates business. It has also embarked on a rationalisation program before all of this coronavirus hysteria.

We hold no positions in ABC or BLD as yet but will look to accumulate should the market continue its sell-off towards these 2008/9 lows.

The national government is out of options but to build out locally. They have already used the bushfires excuse to ditch the budget surplus plans so might as well push a bold infrastructure plan to save us all!  The best plan would be a high-speed rail project which addresses real long term needs of Australians.

Coles comes to its senses that the consumer is always right

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What rubbish! Literally! The plastic bag ban in supermarkets in Australia was only ever a sop to green madness based on spurious science. Coles and Woolworths didn’t consult customers as much as they claim they did. If they did, why has Coles started to provide them for free again? Could it be a consumer backlash? Let’s see how much more business Coles does as a result!

The idea of a spontaneous shop on the way home from work. Perhaps the sick wife has asked her husband to buy milk, bread, a sack of oranges and ice cream. People want convenience. That doesn’t absolve them of being responsible stewards in their disposal. CM reuses the bags for disposing rubbish. Why should CM be punished for the laziness of others?

In a nutshell it is further evidence of the true colors of the majority of consumers with respect to environmentalism. Just like people that buy SUVs and fly overseas on holidays. Most want others to do the “save the planet” thing on their behalf. Just ask Leo DiCaprio or Cate Blanchett. They’ll preach about our need to do our bit but are the first to board a private jet to go to the next film festival.

This Coles news made it to the Japanese press. Supermarket chain ‘OK Store’ charges ¥6 for a plastic bag or you can make a box from all of the packing the food arrives in which costs nothing. After packing your box you can recycle the cardboard in the paper bin. Simple.

Yet what is this constant penchant to boycott everything. A sort of collectivist pitchfork movement.  Why not just let consumers express their free choice? If Coles see consumers reject the restoration of plastic bags they’ll take them away just as quickly. Tired husbands forced to do an emergency shop for a sick wife don’t require social justice warriors to give evil glances on the bus.

For CM, the next shop WILL be at Coles.

 

Rehabilitation lessons in common sense a must

One has to wonder what rehabilitation services for returning ISIS fighters to Canada would look like? Opposition Conservative Leader Andrew Scheer asked that question of PM Trudeau on what his plan would look like to try to rehabilitate people who went to fight for a group that threw homosexuals off buildings for just being gay, burnt allied fighters alive, sold women and children into slavery and raped countless women among many other crimes committed. Trudeau read from a sheet of paper. On what planet does one have to live on to think that a group that fought against Canadian troops and its allies can seriously reintegrate into Canadian society and honestly reform to the values of Canadians?

Put aside arguments about these individuals being freedoms fighters. These people, some who may have individually committed the crimes aforementioned will come back free to live among Canadians. Does the government honestly think that these people can be, much less want to be “rehabilitated” to understand the wonders of democracy and progressivism? To fight for ISIS and the principles of that archaic ideology are probably as far removed from the liberal ideals that Trudeau espouses. What can be absolutely certain – this will be an absolute waste of taxpayer funds to try to convert those that thought the doctrines of ISIS were something to aspire to. Then again with M-103, every day Canadians are gagged from criticizing these same fighters.

When you boil it all down to gravy, it seems that government needs rehabilitation lessons in common sense.

The beauty of honesty

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The above quote is from quirky fund manager Dr Michael Burry MD towards the end of the movie, The Big Short. It says so much of today. One mate who is a very decent asset manager in Australia wrote to his clients, “I realise such may fly in the face of typical adviser recommendations (show me how someone is paid and I’ll show you how they will behave) however, I would rather lose a client than lose a client’s capital.

We share similar views on the state of the global capital markets. We joked about his long message to his investors sounding like Jerry Maguire burning the midnight oil writing the “fewer clients, less money” manifesto which got him sacked.

Now that our world is moving further and further toward automated everything including pre-emptive responses (which I scoffed out the other day about LinkedIn) it is truly refreshing to see this authentic honesty. The irony is that as much as machines are pushing us into ever tighter time windows, humans instinctively carry long term memory whether trauma or positive life events.

May your honesty be paid back in spades when those you saved a bundle recall your genuine gesture.

Exactly

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From Car Buzz – Mazda’s SVP in North America talks total sense with respect to allowing automakers to come up with the best solution rather than be dictated to on how they should run their businesses. Let them live and die by the sword of their own decisions in challenging technology even if it means zero emissions targeting and let necessity become the mother of invention rather than forcing inefficiency through regulation which governments excel at.

In case you haven’t noticed, Mazda does not offer a single EV in its entire global lineup, and it has no immediate plans to do so. How come? Because it believes the internal combustion still has a future. Automotive News has reported about the speech Robert Davis, Mazda senior vice president in charge of special assignments for North America, gave at a recent seminar. But let’s make one thing clear: Mazda is still very much committed to fuel efficiency, hence its ongoing development of its SkyActiv line up gasoline and diesel engines.

But it’s in no rush to develop EV tech for several reasons. For example, Davis made this point: “Take the $7,500 EV credit off the table? At the same time, you take the EV mandate off the table. Let the government keep the $7,500 and let the industry find the best way to meet the clean air standard. Make it C02, make it grams per mile, fuel economy, whatever feels best. But don’t mandate the particular powertrain.” One of the reasons why Mazda has taken this approach is due to its small size; it simply cannot keep up with larger global automakers, so it’s forced to take its own path. Another EV related issue Davis mentioned was concerns regarding lithium-ion batteries; what will happen to them once they’re worn out?

Unlike, say, cellphone batteries, EV batteries are much more difficult to recycle. “This is where the great thinkers of our industry need to speak up and be heard and make sure the manufacturers can do what they do best: compete against each other for the customers’ hearts and minds,” Davis added. “We’re all better than this. We can do better than this. We need to consider that this not zero emissions. This is remote emissions, or displaced emissions.” But his bottom line point regarding internal combustion engine technology is that there’s more innovation to be done, and Mazda will continue doing just that.

However, the Japanese automaker is not afraid to adopt new technologies, such as batteries and plug-in hybrids, “but they all share the internal combustion engine. So before we go into the time and effort and expense of adding electrification, we were convinced that a solid, efficient internal combustion engine was critical.”

Finally something to really cheer about

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Ever noticed how most news is negative these days. It was last week when I took a break from writing any blogs because frankly I felt I was adding to the endless negativity.  So today, I was warmed by a story of a high school in NSW Australia that brought forward a student formal by 6 months to enable a terminally ill school girl, Hannah Rye, to attend it with a National Rugby League (NRL) hero, Trent Hodkinson.

The NRL is often plagued by sex, drug, alcohol and violence related scandals so it is truly nice to see there is a positive face.  Too often we are exposed to overpaid juvenile brats who can’t see anything other than their own media bubble.

It is nice to think that someone in “real” trouble with few months to live is given such a wonderful opportunity to see out her last days with pride, dignity and joy. I sincerely hope Hannah gets all the media attention she deserves and the wish it relieves the anguish of all the physical pain caused by Ewing sarcoma — a cancer found in the bones or soft tissue.

Even the self-entitled should grasp the essence of going out of one’s way to help another selflessly is worthy in every way. Inspiring stuff that decency in humanity still exists.