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What are banned but addicted vapers going to smoke now?

Image result for smoking many cigarettes

Tobacco companies fall foul of most ESG (environment/social/governance)/CSR (corporate social responsibility) measures. Good. Give that so much money is already loaded into corporations that focus on financial virtue signalling, tobacco companies remain forgotten. They look a great mean reversion trade.

British American Tobacco (BTI) is trading at $36 almost half the level of two years ago. Now at 1.02x book value and a 7.3% yield.

Philip Morris Int’l (PM) is at $72.60, down from $122.90 in 2017. A 6.4% dividend yield.

Imperial Brands (IMBBY) at $26.73 down from $55.55 in 2016. A 9.2% yield.

JT is less than half its 2016 number trading at $21.44. A 6.45% yield.

Philip Morris doesn’t have a vaping business but it appears with all these bans in NY etc that nicotine-addicted vapers will switch back to the old school.

Old habits die hard and cigarette smoking is pretty inelastic. Even in bonkers $40 a packet Australia, the ABS records men continued to be more likely than women to smoke daily (16.5% compared to 11.1%). Rates for both men and women have declined since 1995 when 27.3% of men and 20.3% of women smoked daily. However, these rates have remained similar since 2014-15 (16.9% for men and 12.1% for women). Therefore taxes haven’t killed off the habit.

So start underweighting the rubbish in your portfolio that has a penchant for banning plastic straws in the staff canteen to those corporates that allow yourself the opportunity to kill you!

Let’s not forget that governments aren’t going to terminate the monster taxes from this either, especially that so many national and state budgets around the world are looking seriously sick.

WeWorked

WeWork Financials.jpg(770×481)

WeWork has delayed the IPO. According to Zerohedge, the initial appraisal value of $47 billion appears to be entering the realm of $10 billion. This has ‘canary in the coalmine‘ written all over it. The kaleidoscope of razzle-dazzle in the free money world looks to have stopped spinning.

The company looks toxic. Most people point fingers at the co-founder Adam Neumann,  who, according to WSJ,  reportedly sold $700 million in a mixed debt and equity transaction. CM may be a contrarian, but even he sees the pre-IPO sale as somewhat suspicious. Selling part of your stock as part of an IPO is one thing. Doing it prior doesn’t pass the pub test.

How can IWG plc (better known as Regus) make profits (albeit sideways) with the same concept? 2018 IWG revenue and profit after tax increased 51% over 2014 levels. Revenue increased 13.5% since 2016, but post-tax profit slumped 24%.

WeWork seems like the Tesla of the office space world. Huge promises but the numbers are struggling to stack up. Maybe WeWPresumably, due to a combination of intensifying shared office competition, start-ups spoilt for choice or simply failing to grow.ork should leap into insurance as a way to generate cash flow like Tesla has started to do?

Climate change warriors seeking melting ice trapped by it

Swedish flagged MS Malmo was carrying a complement of climate change warriors wanting to explore the extent of melting sea ice in the Arctic for a documentary. Unfortunately, the ship was stuck in sea ice halfway between Norway and the North Pole and needed to SOS for rescue.

Thank God for fossil fuels as the stranded documentary crew were airlifted to safety by helicopter. The 7 crew remain on board awaiting more fossil-fuel-powered Coast Guard ice breakers to set MS Malmo free.

If Greta Thunberg has been aboard she could have used her superpowers to make sure the boat avoided a route that multi-million krone navigation systems clearly could not predict. Unfortunately, her desire to avoid fossil-fuel powered anything means those superpowers are only selectively helpful.

Borixit

Image result for boris gif

If the EU had a mandate to force the British people toward a No Deal Brexit it couldn’t have done a better job if it had tried. The sheer arrogance and meddling from Brussels have only steeled the resolve of many UK citizens. Did it think for a moment these jabs, threats and ultimatums would enamour those residing in the world’s 5th largest economy? All they have done is given the lion cause to roar.

Britons have not been asleep at the wheel but the political classes on both sides of the English Channel have acted as though they have. A further delay to a resolution and a block of No Deal only compound the anger.

This is way more than a Brexit vote – any general election will be about the party who is prepared to execute on democracy.

Those that have done their utmost to thwart the referendum will have a target painted on their back when an election eventually arrives. The Brits don’t want to comprise and they have not forgotten the betrayal. They want out of the common market as David Cameron assured them ahead of the referendum! Brexit is Brexit.

While some might dismiss BoJo as some eccentric Etonian clown, the UK PM has torn the scab off British politics with the proroguing of parliament. For 3 years, the UK Parliament under the weak leadership of Theresa May dithered and floundered in carrying out its duty.

There is a slice of irony to see Remainers march in the streets to protest the proroguing of parliament.  They claim it is undemocratic when it was indeed they who did their utmost to block the will of the people. If we were to truly get to the bottom of the pet gripes of most Remainers, it would likely amount to having to form a line in the non-EU queue at customs of remaining members over any fear of major economic impacts.

Boris Johnson has played chicken with his own party members – who are Remainers – that they’ll be turfed from the party if they don’t back his plans. The flip side is that they will be crucified at the next election anyway. To side with Corbyn is suicide. To side with a Theresa May rehashed deal is a recipe for Torycide. An alliance with Farage is his only hope to end this mess, eventually.

Brexit Party leader Nigel Farage knows that the Tory & Brexit parties cannot split their votes as evidenced in the Peterborough by-election. With no proportional representation voting, we shouldn’t be surprised if Brexit party candidates are put up in every weak Tory constituency and where Tory Remainer incumbents currently sit. For that, Farage can negotiate a No Deal, let BoJo keep the top job and eventually convert his Brexit Party members to become a new look Tory party. Let’s face facts. The Brexit Party is predominantly about leaving the EU. If the job is done, what better way to inject much needed new blood into the Tories than get real Britons from all walks of life in parliament.

All the predictions made by Project Fear have failed to eventuate. No crashing economy or financial markets, no surge in unemployment and no British businesses gnashing teeth at what might come with life outside the EU. If anything the recent G7 looked very promising when reflecting on all of the FTAs which will probably be agreed on.

The latest trade stats between the EU and Britain make this argument pretty simple. EU members make up 7 of the Top 10 British export markets accounting for 37.4% of all trade. Top 10 account for 65.9% of trade. America accounts for £54.9bn while Germany is £36.5bn. Will British businesses fret at exporting more to America?

On the Import side, the UK matters much more to the likes of Germany at £68bn. The Dutch at £42bn and France at £28bn.

In short of the UK ‘s Top 10 importing nations, 8 are EU members. The Top 10 account for 65.7% of the total. Those 8 EU nations make up 48.1% of the total imports into the UK. On what earth would these Europeans seek to cut off their noses to spite their face? 7.13% of Germany‘s exports end up in Blighty.

One might argue that 10% of all UK exports end up in Germany Germany is the UK’s #1 importer and Germany is the #2 destination for British exports. For Germany, the UK ranks #11 importer and #3 export nation. Angela Merkel is not going to throw away a 1% GDP equivalent trade surplus in an economy in retreat. Not going to happen.

The behaviour of the EU has been so predictable. Recall Theresa May’s initial plan took the EU cabal 45 minutes to approve. That ought to have told everyone what a total dud for the UK it would be. How could we forget Emmanuel Macron imposing an October 31 deadline to have BoJo prorogue parliament and have the little Frenchman pull back his Napoleonic bravado seeing that the threat meant the EU had to throw more spanners in the works.

The British aren’t stupid. They didn’t get duped in 2016 by Brexit buses carrying slogans. 17.4mn wanted out. The taunts that people like Trump and Putin were Leavers and Obama and Trudeau were Remainers had the opposite of intended effect. The left tried to use the same tactics in the recent state elections in Germany. They used the idea of Nazism to shame people not to vote for the AfD in the Saxony election. Unfortunately, even malleable 18-29yo voters put the nationalist party top. If a second referendum were held, Leave would win by an even bigger margin.

If Jeremy Corbyn ever wanted to prosecute a case for No Deal he only had to do the obvious – make reference to Trump. True to form, he did. Does he honestly believe that signing a free trade agreement with the US would be a bad thing? Would British consumers and industry truly shun 25% of the global economy which would lower the cost of goods and services?

Corbyn promised to leave the EU at the last election but has since openly become a turncoat and proclaimed he will do his utmost to prosecute remain. At least he has finally become honest.

Let us not forget the facts of the referendum:

Leave vs Remain

Votes – 17.4m vs 16.1m

Constituencies – 406 vs 242

Labour Constituencies – 148 vs 84 (Does Corbyn honestly believe they’ve flipped back?)

Tory Constituencies – 247 vs 80 (Does BoJo really fear the remainers in the ranks?)

Regions – 9 vs 3

MPs – 160 vs 486

When The Guardian and the BBC are in full flight with attacks on BoJo we should take much comfort that their greatest fears will eventually be realised. The media hysteria on the risks of a general election. Australia’s own ABC has written that could Boris Johnson be the UK’s shortest-serving PM?

Theresa May called a snap election when she didn’t need to. She lost her outright majority because she overlooked the fact that the electorate was sick and tired of voting. It was stupid to do so. She was punished for it.

This time, Boris Johnson knows that the electorate is screaming to boot out those that have betrayed the people. Farage smashed the EU elections after only 6 weeks after forming the Brexit Party. His popularity is better than the Tories. Boris can’t be blind to this. Neither are the remainers in his party who are fighting tooth and nail to prevent it.

Yet can he the media stir up enough fake polls to get the 2/3rds majority to call an early election?

Prolonging this outcome only means the peons are busy sharpening their pitchforks so best work to side with the angry mob.

People say CM is not woke enough…not anymore

People say CM is not “woke” enough. Maybe they’re right?!

Lucky for CM today, Meghan Markle’s biography was not merely discounted to the sticker price of $6.99 but $1.99 at the register! Who better to learn from about all the pet causes of the left? Let the healing begin!

#DontHaveToGoBrokeToBeWoke ?

If it doesn’t sink in, CM can always keep ’em guessing if this is on the desk.

Bega’s environmental promises & embarrassing boasts

Before it declared a climate emergency, here is how the Bega Valley Shire Council (BVSC) viewed its role in saving the planet.

On page 24 of the 2017/18 BVSC Annual Report (AR) noted,

61.106 passengers flew in or out of Merimbula airport, a 1,396 (+2.3%) person increase! If there is a climate emergency why would it celebrate this? How could it possibly encourage 70km of paved road repairs or fixing up 7km of bridges? Aren’t these gestures only going to contribute to a climate catastrophe by inviting more fossil fuel powered traffic?

Ah yes, but on the environment…the AR noted,

We care for the environment by:

• Managing and enhancing bushland areas

• Providing environmental and waste education and recycling services

• Responding to pollution incidents and prosecuting polluters.

• Monitoring the water quality of the Shire’s estuaries

• Planting trees and controlling noxious weeds

• Beneficially recycling and reusing treated effluent.

The amount spent on taking care of noxious plants and insect/vermin control; other environmental protection; solid waste management, including domestic waste; other waste management; other sanitation; and garbage, street cleaning, drainage and stormwater management amounted to around $11.5m out of the $92.7m expenditure in Bega Valley.

Under “environmental protection” BVSC spending fell $20,000 on the previous year to $68,000. Its a pathetic figure against all the hysteria.

The Film Industry Strikes Back?

The film industry is apparently striking back because there is no audience on a dead planet. Extinction Rebellion (XR) is hosting a Star Wars costume themed rally on Sep 20. But CM thought XR declared that fashion is unsustainable? Surely this flagrant use of Star Wars themed clothing and torn asunder plastic storm trooper outfits made from plastic contravenes the very essence of XR’s cause!?

Well we should never worry about an industry where the entire edifice is built on hypocrisy and double standards. How quickly they rallied to the #METOO cause when they were exposed despite decades of being aware of the supposed antics of Harvey Weinstein et al. Or Leo DiCaprio flying his eyebrow stylist by private jet or even Bette Midler expressing her pooches by airline to Europe. Or Dame Emma Thompson jetting in from the US to attend the XR protest in Trafalgar Square.

Maybe we only need evaluate Hollywood on its nearly two decades of failure as it has made its films more political. We need only look at the ratings of the Emmys, Grammys, Oscars and Golden Globes which are all well off the peak.

Cinema attendance in the domestic US market is back at 1993 levels. In the 1990s Hollywood made 400-500 films annually. It now pumps out more than 700. The average revenue per film continues to head south. The strategy seems to throw more at audiences and hope it sticks. Are the movies the industry rates itself on actually reflected in the box office? Out of touch with the audience? It would seem so.

It should appear to Hollywood that movies about real life stories are the ones that seem to resonate most with audiences – Titanic, The King’s Speech, Argo and A Beautiful Mind. These 4 films grossed $1.04 billion at the box office. It has been 12 years since Hollywood has had a fictional film it chose for itself beat the worst of the 4 movies based off real stories in ticket sales. It has been 15 years since having a proper blockbuster like Lord of the Rings which is arguably pure fantasy and extends to child audiences.

Films are of course subjective. One film one person may enjoy, others may not share the same view. It is interesting though that $100m box offices were a cert for an Oscar Best Picture award til 2004 after which it has been hit and miss since. 9 films in the last 13 have failed to breach $75mn. So instead of Hollywood being so preoccupied with espousing politics, perhaps it should look to the audience it ‘preaches’ to and starts ‘reaching’ them instead. Then the film industry can say it is striking back.