To all you wonderful folks out there in la-la land, Happy May 1st….if you’re in (most of) Europe, you get a day off; in China, you are getting 3 days (and, no, you unacclimated Westerners, this does not necessarily amount to 5 days off as this Sunday is for most going to be a work day, and last Sunday for a lot of people (including students) was also a work day, to help ‘offset/adjust’ the 3-day break). Don’t you just love the adjectives used?
Really, I have a real peeve about what’s being done to the English language – the latest is that a ‘coup’ is taking place in Venezuela; now how in ____ (fill in your own adjective – none of mine are polite) can a coup (sic) take place when the lawfully elected person is just trying to move into the office that he is being illegally denied? And the short answer is that this is not a coup, although what Maduro is trying to perpetrate/perpetuate could be considered to be – just saying! As of this writing, Maduro is declaring that he is still in power – but is apparently doing so “from an undisclosed location”.
Speaking of that, I heard a joke the other day – it seems that Theresa May (of the UK), Recep Erdogan (of Turkey) and Nicolàs Maduro (of Venezuela) were taken to Hell at the same time. At the entrance, the Devil said that he would allow them each one last call out of courtesy. Theresa May, being female, was asked to go first and spoke for half an hour and was handed a bill for 2 million Euros. Erdogan (being first in the alphabet) went second and spoke for an hour, and was presented with a bill for 4 million Euros. Maduro spoke for four hours – four hours – and got a bill for 1 Euro. May and Erdogan protested and asked why the huge discrepancy – the Devil answered as follows, “Since he’s been in power, he has taken his whole country straight to Hell so, for him, it’s just a local call!” Made you laugh – just saying!
Here’s something even as not funny as the sitrep in Venezuela – The Washington Post (Kevin Blackistone – I wish that he would get rid of the “i” as I always have to go back and put it in LOL) reported today that Clemson University’s dear ole football coach, Dabo Swinney, just got awarded a US$93 million contract over the next 10 years. This to a man who strenuously and constantly reiterates that he does not believe that college football players should be paid as, “there is enough entitlement in the world as it is”. Blackistone (I got the “I” first time, this time!) proceeds to shred the financial argument proffered by Swinney & Co that college football “can’t afford” to pay them (the players) anything” by doing simple, and I do mean simple, math – he took the revenue of US$52 million and divided it by the 85 college scholarships allowed under the rules of the Football Bowl Subdivision and worked it out to what he calls, “the fair market value in revenue” of $611,764 each. In the same article, he mentioned that, even though $6.2 million went to Swinney (according to USA today) and $6.2 million more to his staff, their expenses were only (sic) $46.3 million. So now let me do some even more simple arithmetic – so simple that you can’t even call it math. Net profit for the Clemson Football Program is accordingly $5.7 million – see, I told you that it was simple arithmetic, and we’re not even beginning to count all the soft profits associated with having a winning football team. Now, taking those same 85 scholarships and using the latest CollegeCalc figures showing that a 4-year degree at Clemson for an out-of-state student, counting costs for books and housing, is $50,516 (in-state is $29,574, if you’re interested), and you’re left with a net football profit of $67,059 (to the nearest dollar) for each of the scholarship recipients. Assuming that none of them are in-state residents (actually, according to ESPN, 44 players are listed as being South Carolina domiciled) that works out to a total complete net profit of $16,543 for the university after all costs are deducted without discount. And they say that slavery and indentiture are outlawed – evidently just the nomenclature was outlawed. I guess Mr. Swine (oops, Swinney) does it for ‘love of the school’ (oh, yeah, he went to Birmingham). Just saying!
I read today that the head of the Pender Investment Group has a peeve about people pointing to their YTD gains as being indicative of something significant vis-à-vis their financial prowess and states that their timeframe is way too short (something that I have been maintaining for years and years) – he made a pretty good case for keeping a longer timeline. Just saying!
Bloomberg was all over the news yesterday that Vodafone found backdoors in Huawei equipment (something that I also said would be a good bet). That Vodafone used to be owned by Hutchison Whampoa and that it is partners with them in Hong Kong even today, and that Hutchison Whampoa’s main shareholder’s ‘good relations’ with Beijing are well known and that there is much speculation about the connection of Huawei to the Mainland Government (or its ‘associates’ thereof) and that, as they say, is all I’m going to say about that (thank you Forrest Gump).
The Wall Street Journal, on April 29th/19, stated that, “the skies are clearing for investors in China, but it’s still best to keep your umbrella handy.” WSJ also pointed out that, “net export growth in early 2019 was almost guaranteed to be good.” Talk about a qualified endorsement, or is it called, “damning with faint praise”? And then there’s Reuters on the same day who announced that, “China’s factory activity likely increased at a steady but modest clip in April” – after reading and then scrutinizing their blurb, I cannot determine how they reached that conclusion as they provided nothing concrete in the way of figures or even references – so, Ouija board, wishful thinking, tea leaves? And, on the same date, Xinhua reported (hoped/decided/hypothesized/_____) that, “China’s industrial profit (of major industrial firms) surges 13.9% ……(to) 589.52 billion yuan (about US$88 billion) in March. Imagine, they can get and vet all that data in only a few weeks. No mention about whether this includes provision for the sour loans reported in Global Gab #9 and reiterated by Bloomberg on April 29th/19, and no mention for sure that, “China’s Dagong rating agency taken over by state-owned investor” (Financial Times, April 19/19), and no mention for sure for sure for sure about the effect of a missing US$4.4 billion in cash at Kangmei Pharma (HQ in Beijing) “due to an accounting error” (also reported by Financial Times on April 29th/19 and Bloomberg on April 30th/19). BBG (my abbreviation) states that, “a securities lawyer” (who evidently did not wish to be named, or maybe that’s his English name) stated that this is, “unprecedented for China”. No mention made as to whether the term “unprecedented” referred to the size of the amount, or the amount being made public, or just the occurrence happening in this month. Remember Sino-Forest? Maybe banks aren’t “industrial concerns” and pharmaceutical companies aren’t “industrial concerns” – and maybe ‘shit for brains’ isn’t shitty.
Noted Bloomberg’s caution on April 29th/19 stating that there are “warning signs for China stocks” and that, “investors are running out of reasons to chase the bull market in Chinese stocks”. Following that on April 30th/19 was another ditty from The Wall Street Journal, this time announcing that, “China’s manufacturing activity falters” – I guess that ‘their’ umbrella (undoubtedly made in China” better get opened, and just one day later! Just saying!
Yet, China Daily, on April 30th/19, reported (sic) that “60% of Chinese companies see net profit growth in 2018” – no, I am NOT making this up – and, “11.29 per cent of them achieved a more than 100 per cent increase”, this according to the Chinese Securities Journal on April 30th/19. “About 1988 companies net profit attributable to shareholders of the parent company increased on a yearly basis in 2018, according to annual reports from 3400 companies listed on the Shanghai and Shenzhen stock markets”. And therein we see a clear indication of the problem – this is accounting and accounting is supposed to be exact ie. it is or it isn’t. There is no, “about”, about it (sorry, couldn’t resist the pun)! And then there’s the 2nd problem so aptly illustrated ….the number 8 in China is good luck, but it must be coincidental that the huge preponderance of official figures end in 8 or 88 – just saying!
I note that Nikkei on April 30th/19 reported that Super Micro has asked its suppliers to move their production out of China because “US customers …. have asked (it) not to supply them with motherboard made in China because of security concerns”, this, though the company has repeatedly denied “that its Chinese-made motherboards had been implanted with malignant chips”. Sorry, Mr. Liang (founder of Super Micro), but just moving supply locations is cosmetics, or as we in the West would call it, “smoke and mirrors”. The problem itself does not seem to be addressed. Just saying!
And lastly for today, I just read an article from BBG dated April 30th/19, written by Alexander Sanonov, entitled, “Millionaires Flee Their Homelands….”. He did a really well-written and exhaustively researched article (in my not very humble opinion) and there was a terrific chart showing percentages in the categories of:
- considering emigrating permanently
- considering 2nd passport/dual nationality
- holding 2nd passport/dual nationality
The number of those in the #3 category in Russia/CIS is close to 60% and Latin America has in excess of 40%. Considering that the major destinations are North America and the UK (France was cited as one of the countries where many in this category are leaving), it is not surprising that North America and Australasia shows that millionaires in Category #3 exceed 20% of the total. The effects on the property markets (London, New York, Toronto, Vancouver, Sydney are just a few examples) are already highly evident, but consider the other changes – education requirements for children, different goods and services (Alibaba has already identified the cultural demands for things like rice cookers and is profiting hugely due to its pro-action in Australia) etc. Consider also the benefits to the receiving nations at the expense of the countries of origin. Huge – yuge. Mr. Trump, tear down your walls! Just saying (again and again)!
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