Month: November 2019

Do as we say, not as we do

Take that. Despite living with the irony that half of the members of the Australian Council of Superannuation Investors (ACSI) fail to meet the very diversity quotas they expect ASX200 companies to hit, what a complete laughing stock to publicly tell conference organisers it won’t join unless there is a guarantee of gender balanced speaker participation. How about try to get the best diversity of thought for a speaking panel regardless of their identity? There won’t be a man in the audience who complains at a panel of superstar women speakers.

The ACSI demands are listed here. A default letter the ACSI uses is as follows.

“SAMPLE RESPONSE TO EVENT INVITATIONS

Thank you for your invitation to speak at [name of event]. ACSI has taken the Panel Pledge and will only participate in events which are gender diverse and inclusive. Before accepting your invitation, I’ll need some additional information to determine whether this event is consistent with our commitment.

Can you please confirm the following:

– Will there be a gender balance among speakers at this event?
– Will speaking roles be allocated equitably among genders?

If I agree to participate in this event, I reserve the right to withdraw later should I become aware there will not be a gender balance among speakers.

Thanks in advance for your support of our efforts to promote gender diversity.”

What if the ACSI was offered a chance to speak next to Mark Zuckerberg and Elon Musk for the third and final slot at an investor conference? Would ACSI turn it down to stick to its principlesb or be the first in line to take selfies to upload to Instagram?

Get woke, go broke.

This can only end in tears

ECB.png

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.

ESG Blacklisted portfolio

ESG (Environment, Social Responsibility & Governance) blacklisted stocks. We all know deep in our hearts that vices are far more fun than virtues. Real Coke tastes better than Diet Coke. Full cream is better than skim. McDonald’s fries are tastier than mashed potato. CM made this point in yesterday’s piece on the irresponsibility of socially responsible investing for building a retirement nest-egg given the long term underperformance.

When all of this politically correct ESG investing meets a recession, these oversold anti-ESG darlings, many with gobs of free cash will look like total bargains. Suffice to say in a downturn, vices tend to be what people resort to.

All CM cares about is the G in ESG. Governance is a must for investing. E & S are merely subjective views which don’t automatically convert to shareholder value. Good governance goes without saying.

So perish the thought that CEOs, like Harvey Norman’s Katie Page are being attacked by the likes of Ownership Matters which thinks putting in a shareholder activist who has failed 49 times out of 49 to be appointed to ASX listed boards is a better bet? As Janet Albrechtsen of The Australian wrote,

A copy of the report obtained by The Australian reveals Ownership Matters has recommended that Stephen Mayne be elected to the board of the retailer, even though the 50-year-old has no corporate experience in retail or property, no corporate board experience and no corporate management experience…Harvey Norman has a market capitalisation of $5.2bn, and shares in the retailer have gained more than 32 per cent over the past year, outperforming the 16.4 per cent gain in the benchmark S&P/ASX 200 over the same period…The advice sent out on Monday has baffled Ms Page’s husband, the business’s billionaire co-founder Gerry Harvey, who remains its largest shareholder, retaining ­direct ownership of almost a third of the company. “I have been on a public company board as chairman since 1972, and I have never seen anything as bizarre as the fact that the best ­retail executive in Australia is to be replaced by a ratbag called ­Stephen Mayne who has been a proven failure … every time he’s run for a board seat,” Harvey said.

 

South Park shuns PC in women’s sports

South Park has never won any prizes for political correctness which is why the formula continues to be so successful. This episode mocks the current obsession of accepting trans females in women’s professional sports.

N.B.it contains profanity.

To think poor old Martina Navratilova was eviscerated by activists for pointing out the obvious with respect to biological males playing female sports. Despite being such a positive role model for her community in the tennis world, the loony left can’t face biological facts.

Can we defund SBS too?

This isn’t journalism. This is alarmist quackery for the sake of it. Venice has been subject to flooding for centuries. While the floods in Venice now are the highest for over 50 years, it still means that floods were higher in 1966. Let that sink in. Presumably it wasn’t climate change driven back then.

One can only imagine what a Venice Council could possibly do to combat climate change? Perhaps ruin the skyline with wind turbines and solar panels atop the roofs of the Rialto Bridge or San Marco Square?? To alarmists, no amount of tokenism is too little. Claim a climate emergency and show how worthy you really are.

No matter what the Venice Council does to “combat” climate change it will have no effect. Maybe the gondola union can indulge in some crony capitalism and demand that the €7.50 Vaporetto passenger ferries are banned so they can charge €150 to go from Santa Croce to Piazza San Marco instead. At least gondolas are zero emission vessels.

The SBS needs to grow up and deliver proper well reasoned content for the $400m in taxpayer funds it receives.

Donald Trump Jr’s new book #1 on NYT Best Sellers list

Donald Trump Jr. was quick to share the good news of hitting NYT’s #1 best sellers ranking, on Twitter.

“I dedicated #Triggered to the Deplorables and you guys made it #1… let’s do it again at the voting booth in November. You are the best!!! #MAGA”

Liberal heads must be exploding.

Former Fire Chief inflames the climate debate

Greg Mullins, the former chief of NSW Fire and Rescue said today, “Just a 1 degree C temperature rise has meant the extremes are far more extreme, and it is placing lives at risk, including firefighters…Climate change has supercharged the bushfire problem.”

CM could not hope to hold a flame (no pun intended) to his knowledge of fire behavior but why does the WA Government’s own fire service website, Bushfire Front (BFF) contradict him,

Compared to slope, wind strength, fuel quantity and dryness, temperature is an insignificant driver of fire behaviour. Experienced firefighters do not fear a 40-degree day per se. This is because even on a hot day, a fire in one or two-year old fuel can be controlled; on the same day a fire in 20-year old fuels with high winds would usually be unstoppable.”

One of them must be right. Could it be that Mullin’s personal beliefs about climate change are a factor? After all he serves as an author for the Climate Council.

Mullins also said that ” We saw it coming. We tried to warn the government.”

Indeed BFF notes clearly,

““Large wildfires are inevitable”

This statement is, to put it politely, bosh. Large wildfires can only occur when there is a combination, at the same time, of three things:

• an ignition source,

• severe fire weather and,

• a large contiguous accumulation of fuel.

Remove any of these three and you cannot have a large wildfire (= megafire).

We obviously can’t control the weather, nor can we hope to eliminate all possible avenues of ignition. The only factor we can control is the large contiguous accumulations of fuel. Therefore, broadscale fuel reduction burning is the only defence we have against large wildfires. This will not prevent fires occurring, but it will ensure fires are less intense, are easier and safer to control and will do less damage.

Does it work? Yes it does, as has been shown many times, over many years, by the experience of Western Australian forest managers. The “proof of the pudding” is the incidence of large wildfires in Western Australian forests over the last 50 years. There were a number of very large fires in Western Australian forests from 1900 to 1960, but after the 1961 Dwellingup fire disaster, the wide-scale fuel reduction program carried out by the then Forests Department, ensured that the fuel accumulation was well controlled. The graph below demonstrates this very clearly. It was only after the burning program gradually fell away following a diversion of resources away from forest areas, that the area of wildfires began to climb again after about 1990.

How is it that so many of these fires have been started by arsonists? A 16-yo has been alleged to have started fires in central Queensland. Johannes Leak’s cartoon was absolutely on the money.

Even assuming Australia pandered to Mullins and went zero carbon emissions tomorrow, could he guarantee that the bushfires would slow or end? Even though Australia is such a tiny contributor to global CO2 emissions? Could he show the science behind his beliefs on fires and the link to climate change even though 85% are deliberately, suspiciously or accidentally lit?

Of course the climate alarmists immediately endorse his words because he is a firefighter. Although are his words on climate change anymore relevant than those of the AMA?

Maybe we should reflect on the politics within the upper echelons of the fire services? Not so much the rank and file front line fire fighters but the bureaucrats who make daft decisions such as buying a Boeing 737 fire-bomber which can only be used at 4 airports rendering it highly inflexible (as much as it’s a great political sales point) or a military helicopter which spends 5hrs in maintenance for every hour it is in the field working. Or replacing 1yo trucks with brand new ones because records are poorly kept?

Nope, just blame climate change for it. Get out of jail free card for everything.