Benchmarks

KTM 1290 Super Adventure S review

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CM testrode the latest KTM 1290 Super Adventure S (SAS) model and redicovered what a lunatic’s grin was. Having owned the KTM 1290 Superduke R (SDR) CM was aware of how addictive the shared 1301cc v-twin engine is. While the SAS does with only 160hp vs the SDR’s 180hp, the engine is still a thermonuclear device. It dominates. It’s probably a bad choice in nanny state NSW. It is truly addictive.

While a more extensive test ride is required (like the 3 day test ride of the BMW R1200GS Rallye X) to find how it is to live with from day to day some short observations here.

Engine – KTM 4.5/5

The KTM has so much grunt but gets cranky at low rpm. It will protest below 3,000rpm in higher gears. Yet the BMW is far happier to pootle around in any gear and pull away regardless of what speed. Yet when winding the throttle open, the KTM’s extra 35hp quickly shows itself.

Suspension – KTM 4.5/5

The SAS has semi-active WP suspension which has a wide range of adjustment. The BMW’s self leveling suspension set up seems simpler (dialing in height and firmness) than the SAS which requires individual selection of each load. The BMW telelever front end behaves differently to the traditional telescopic forks but the feedback on the KTM is superior. Part of that is down to the lighter weight of the Austrian.

Brakes – 5/5

The brakes have plenty of bite, feel and the rear has good modulation. Fork dive is noticeable under heavy application but half of that is due to the fact the BMW won’t dive due to the telelever set up

Gearbox – 5/5

The quick shifter is far slicker than the BMW especially upshifts. BMW gearboxes are usually rubbish. CM blew two of them in his old K1600GT (see below) inside 4,000km.

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Ergonomics – 4/5

The KTM feels slightly firmer in the seat than the BMW but there is a power parts option including one with heating.  TFT screen is excellent. Clear and allows one’s mobile maps to synchronize to the screen and headset. The menu operation is not as good as the BMW’s mouse wheel.

The KTM offers a mobile phone compartment with a USB socket but it won’t swallow a iPhone Plus with cover on. Petty but something that will be righted soon enough. Backlit switchgear good.

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Tyres- 4/5

The Pirelli Scorpion Trail II tyres on the KTM are so much better than the BMW’s Michelin Anakee III although later models are shod with Bridgestone A41s.

Quality – 4/5

The tactile feel of the switchgear is better on the BMW. No question. Fit, finish and attention to detail are all better on the BMW. KTM has improved miles in this regard but the industrial design of the Beemer is better.

Overall – 4.5/5

A bit early to judge but no question that the SAS puts a smile on the rider’s face immediately. Something the BMW can’t manage. The BMW is very competent everywhere but rarely does it excite the rider. The KTM is good in some areas (quality) and amazing (engine) in others. That 1301cc engine dominates the experience in noise and performance. You buy the BMW with the head and the KTM with the heart.

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Note BMW is introducing a new R1250GS (1254cc) which will have 136hp (up 11hp) in 2019. It supposedly has variable valve timing but it is unlikely to be much more than a nice improvement on the 1170cc engine’s civility. The faithful will be pleased.

Who does this help?

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The City of Victoria has removed a statue of Canada’s first Prime Minister John A. Macdonald from the steps of City Hall. As ever the left’s obsession with erasing history it doesn’t like continues around the globe. The main question is, who does this help? Macdonald did call Canada’s indigenous people “savages” but are these words remotely surprising for the times?  It isn’t to condone those sentiments but why not learn from them instead of bleaching things said 150 odd years ago? Embrace how we have changed and “progressed.” At the very least use the first PM as a yardstick for how far civilization has come.

Will the left go a step further and try to deny Macdonald was the 1st PM? Rewrite Canada’s confederation history  from 1867 to 1873 and make the country’s 2nd PM Alexander Mackenzie the first, because he turned down the offer of a knighthood. Sadly the left would have to discard the multiple times Macdonald served thereafter as PM?

Macdonald offered to resign in 1873 when the party was caught up in a bribery scandal over a rail contract. His party lost the general election but he still led in opposition until winning government again in 1878. Macdonald served for 19 years in the top job despite all of these issues. He can’t have been that bad or did Vladimir Putin’s predecessors interfere?

The biggest irony is that Macdonald is largely regarded as one of Canada’s best PMs, ranked 3rd by MacLean’s in 2016 out of 23. He was 2nd in 1997 and 2011. Those rankings take into account a variety of measures ranging from effectiveness, economic growth and legacy.

Which brings us back to what does removing statues achieve? How do we move forward as a society if some who weren’t alive at the time feel obliged to apologize to people that weren’t born nor directly affected by whatever words were used?

As an Australian, should CM flagellate for things that our First Fleet might have perpetrated 230 years ago? CM’s father emigrated to Australia in 1949, not 1788. CM’s great grandparents were of Norwegian, Polish and Austro-Hungarian stock. Perhaps CM should embark on a global apology tour for things that happened at the hands of those evil empires over the centuries?

Or do we just conclude that the radical left might be best to look in the mirror and reflect why conservatives don’t wish for history to be erased as the 100 million that have died at the hands of socialism’s own work serve as a stark reminder why we need to remind us of our past? Exactly. Wipe away all signs of supposed oppression and bring on the cultural Marxists to enlighten us on how we need to conform through compelled speech and laws to punish us if we choose to step out of line to their warped version of the world. So much easier to do with social media and facial recognition.

Musk to be investigated by SEC over tweets

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CM has always thought that Elon Musk is the ultimate salesman. CM has also wrote that the biggest risk to being a short seller was then”cult” status of the company. On any rational investment grounds the stock is ridiculously priced but as the old adage goes, “the market can stay irrational longer than you can remain solvent!

Tesla is a car company that is worth more than GM, Ford & FiatChrysler combined. One that trades at 5x Daimler in valuation terms, a luxury competitor that is in the sweet spot of its product line up and rudely profitable.

Back in June, Musk bought $35mn worth of shares in Tesla. The whole idea that someone is willing to fork out $75bn on a whim seems somewhat implausible. Is it safe to assume that all of 100s of lawyers, bankers and brokers would need a little bit of time to prepare the necessary documentation to cement such a ridiculous sum? Or is money now just so free and easy that a billionaire deploys a vault full of cash loaded full of Zero Halliburtons into a private jet after a few phone calls?

SEC enforcement attorneys had already been gathering general information about Tesla’s public statements on manufacturing goals and sales targets. Now SEC attorneys are investigating whether his tweets about securing funding were factual.

CM is not accusing Musk of insider trading albeit as a matter of course the SEC should investigate when he knew about his mega financier. One wonders how it is that we know so little about the buyer, the term sheet, the question of shareholder approval and how “secure” it is? Taking it private will remove the lens of quarterly reporting but it doesn’t remove the fact of how dreadfully the company is run or how amateur production is. Even if public scrutiny is removed, the problems of profitability don’t disappear and the need for funds, credit ratings etc if he taps public markets for debt capital remain.

If Musk pulls it all off and the company becomes a roaring success then CM will gladly eat a whole humble pie and openly admit it was wrong.

As to the SEC investigation let’s hope it has learnt the lessons of its bumbling incompetency over Bernie Madoff and doesn’t miss anything that might be bleeding obvious.

Twitter, Twitter on the wall who should we shutdown after all?

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Black conservative Candace Owens gets a 12-hr Twitter ban for replacing the words of Sarah Jeong from “white” to ”black” or “Jewish”. Good to see the consistency in double standards from The Left. Of course Jeong suffered no such fate.

Candace Owens is an extremely articulate and intelligent person in her own right. Good to see more hypocrisy called out by her. If only Jeong could get as many likes or retweets. Perhaps Ann Coulter said it best, “Luckily for Jeong, the way “white men” saw the world in the 50s was that South Korea should be free.

#CancelIdentityPolitics

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.

 

The gender unemployment gap

Changes in the Gender Unemployment Gap during Recessions

Another interesting piece was written by the St Louis Fed showing the gender unemployment gap of men relative to women. A negative spread shows that women have lower risk of unemployment relative to men in the 24 months after the start of a recession. Looking at the chart we see that in 1960 & 1969 female unemployment tended to rise relative to men after a recession began but in the following downturns of 1973, 1980, 1990, 2001 and 2007 the situation reversed. Participation rates for women in the workforce hovered at around 40% in 1970 vs 60% today. In 2007, the most aggressive spread emerged in favour of women by over 2%. The Fed report does not include what types of roles that women tend to do. Switching to the Bureau of Labor statistics (BLS) it makes sense that women over time have been retrenched at lower rates than males due to field of employment.

Women today tend to occupy more jobs in education, nursing, healthcare (defensive industries) whereas men tend to work in more construction, agriculture and manufacturing specialties (levered industries).

In 2017, employment breakdown between men and women was as follows.

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Another interesting table from the BLS was that of educational standards of 1970 compared to 2010. As we can see more women are pursuing higher levels of education. 67% in 2010 took some college or higher degree vs only 22% in 1970. One would imagine in 2018 those numbers are higher again.

Where men once went to college in proportions far higher than women—58% to 42% as recently as the 1970s—the ratio has now almost exactly reversed with women comprising more than 56% of students on campuses nationwide, according to the U.S. Department of Education (DoE). Some 2.2 million fewer men than women will be enrolled in college this year. By 2026, 57% of college students in the US will be women.

It will be interesting to see how the gender unemployment gap develops during future recessions with a far higher level of educated women in the workforce.

Why discontinue?

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This is a chart of the change in the US Fed balance sheet, a series that has just been discontinued. Is this because the Fed is about to step up its activity and offering wider disclosure on tapering activity might spook markets? Given that 72% of the growth in S&P earnings has been driven by buybacks since 2012, it stands to reason the market is not exactly providing the type of confidence inducing organic lift the index reflects. Bank of America revealed that “net buying of Tech sector in the 1H was entirely buyback-driven.” 

Kind of reminds CM of the day Bernanke’s Fed announced it would no longer report M3 money supply a year before the financial markets headed into the GFC. CM estimated on p.4 of a report several years ago that M3 money supply by 2018 on constant long-term growth rates would turn into around $35 trillion from the $10 trillion at the time it was discontinued.

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Nothing to see here? Throw a deteriorating fixed income market with fewer buyers and corporates that have binged on cheap credit to fuel buybacks, it doesn’t look like the stuff dreams are made of. The chart below shows that quarterly pre-tax US profitability is struggling since 2011. Earnings (E) are not doing so well. It is by the grace of falling number of traded shares (S) that makes the EPS look flattering.

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We took the liberty of comparing corporate profitability since 1980 and correlating it to what Moody’s Baa rated corporate bond effective 10yr yields. An R-squared of almost 90% was returned.

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Why not use the Aaa spread instead? Well we could do that but looking over the last decade the average corporate debt rating profile looks like this. We have seen a massive deterioration in credit ratings. If we look at the corporate profitability with Baa interest rates over the past decade, correlation climbs even higher.

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We shouldn’t forget that the US Government is also drunk on debt, much of it arriving at a store near you. $1.5 trillion in US Treasuries needs refinancing this year and $8.4tn over the next 3.5 years. Couple that with a Japan & China pulling back on UST purchases and the Fed itself promising to taper (but now hide the results of) its balance sheet. So as an investor, would you prefer the relative safety of government debt or take a punt on paper next to junk heading into a tightening cycle?

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Discontinuation of series always carries a sense of deep cynicism for its true intention. It is not an onerous data set to cull. Sure we can fossick around and try to find it hidden in the archives of the Fed website but the idea is that they probably don’t want to publicise how much more they intend to flog.