#NRA

Nike & Colin Kaepernick

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Ultimately consumers will vote with their feet (no pun intended) after Nike’s use of original kneeler Colin Kaepernick as its latest “Just do it.” campaign face. Arguing over who is right or wrong over this has become somewhat irrelevant. The kneeling debate is over 12 months old.

Nike is free to market how it chooses but must bear full responsibility for the firestorm it creates for itself. There is no doubt the social media impact will be huge and the marketing department might wax lyrical at the attention gained all it wants but the question is will the majority of it be positive? Virtue signaling for corporates is a dangerous game. More often than not it backfires.

CM has always held that corporations should stay out of politics because as much as they might profess a united face on certain issues, there is no way they speak on behalf of all those that work for them. The risk is creating an unfair working environment to those who do not wish to participate in the manner the corporate desires, even if they might privately agree. Coercing staff to openly tow the party line is tantamount to making them slaves if forced against their will for fear of repercussions in the workplace.

Don’t think for a second it doesn’t happen. Think of the same sex marriage (SSM) debate. If you had a rainbow flag screen saver you would have been cheered by the internal apparatchiks. Had you a “Vote NO for SSM” screen saver it is likely you would have been hauled in front of your manager and HR to explain your inappropriate workplace behaviour. The matter was a vote of democracy. What place is it for corporates to enforce one type of opinion on changes to the Marriage Act? Let’s not forget the results of the 2011 Census where 0.03% of the population identified with being husband and wife in a same sex relationship. Yes. 1,338 people only. All that fanfare for less than 1,400 people.

We are already seeing people in the US burn Nike products to protest the company’s move.

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In much the same vein as Democrat Party activists boycotting In-N-Out burgers for donating to the GOP, there is no real sense in die-hard NFL fans pushing to #boycottNike. What is the obsession with boycotts? Surely disgruntled fans can make up their own minds whether they’ll choose to buy Nike products or not. It is just more of the oppression obsession.

Nike will ultimately survive. The NFL has already seen ratings take a proper beating. The question is does this help? Probably not but Nike want to make a statement.

Knee jerk reactions where people burn football jerseys, season tickets, Superbowl pennants or Nike sneakers have become less and less about the subject protested about (Black Lives Matter) but more about people getting sick and tired of political correctness and social justice rammed down their throats on an almost daily basis. Even Buzz Aldrin is sick of the politically correct overtones in ‘First Man’ that went out of its way to delete scenes of an epic moment in America’s history – planting an American flag on the moon. Don’t forget Buzz punched a reporter who disparaged him in public. He said he is a “proud American

Sadly, many Americans feel their patriotism is under fire. That they should feel guilty for displaying Old Glory outside their homes. Maybe those loyal fans want to go and watch a NFL match to leave the financial, relationship, work, marital stresses behind. They pay money to unwind, not have political messaging paraded in front of them. Even if they think Black Lives Matter is a worthy cause, kneeling every match won’t make it sink in any deeper but dilute the message, as has been displayed by making Kaepernick the poster child.

Not all NRA members are cold blooded murderers. Those people that voted Republican in the last election aren’t all white supremacist, bigoted, racist Nazis any more than all those people that voted Democrat aren’t all whining, virtue signaling liberals.

Open debate is what is needed. Kicking people out of restaurants through open harassment, burning runners or boycotting businesses won’t fix a thing. Listening and debating the issues based on logical reason is the only way forward.  The only thing worth boycotting is the boycotters themselves. Sadly the lesson is unlikely to be learnt.

YETI puts the NRA on ice while BISON puts the lid on political correctness

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YETI coolers has announced it has decided not to be associated with the NRA anymore. News to the ears of Bison Coolers which announced they’re only too happy to fill the void. Interested in seeing the relative revenue performance of both brands. One might bet that the Bison may stampede the Yeti.

6.3 trillion reasons Blackrock isn’t worried

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Student activist, David Hogg, has added to his seemingly never ending list of firms to boycott. Yet again, the impetuousness of youth made him misunderstand the very nature of the business he is attacking. Yes, some Blackrock funds hold gun makers for the sake of index tracking. Some ESG related funds don’t. Clients of Blackrock and other funds get to choose what products they wish to invest in.

Paraphrasing what Blackrock’s Larry Fink said to CNBC on the matter, “we are just custodians of our client’s money. They decide what they wish to invest into and they can select from products that don’t hold gun manufacturers.

Fink said the feedback from clients was a 95/5 ratio in favour of what Blackrock is doing with respect to investment offerings. As a $6.3 trillion AUM asset manager one wonders how much impact this boycott will have. If history is a guide then Blackrock and other funds will no doubt see a boost to assets under management thanks to Hogg’s boycott.

Or perhaps Fink should offer him an internship to learn about ESG.

Turning the weapon of free speech on themselves (again)

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Activism clearly annoys Americans. David Hogg, of Parkland, Florida fame proved for a second time that Americans are sick and tired of being lectured to. What we can deduce is that many citizens with a pulse are revulsed by senseless crime but do not take nicely to being berated over expressing individual consumption choices based on the subjective views of others much less roll over and cede constitutional rights .

First, labeling innocent, law abiding  NRA members as “hav[ing] blood from children splattered all over their face”  led to a huge surge in memberships for the group since Hogg’s remarks.

Second, Fox host Laura Ingraham lost nearly 30 advertisers since Hogg’s boycott against her show launched on March 29, after her unnecessary remarks pointed at him for failing to get into several colleges. It turns out that data compiled by a media watchdog shows a jump from 2.23 million viewers prior to Mr. Hogg’s campaign to 2.7 million since her return from a vacation. Even liberal host Bill Maher defended Ingraham while censuring Hogg for dishing it but not taking it.

If Americans believe in their deep conscience that guns have no place in their society or Laura Ingraham is an insensitive brute, NRA membership and Fox viewership during her time slot would drift of their own accord and corporations could make business decisions ruled by fact rather than inaccurate I’ll-informed guesstimates of kneejerk reaction.

What has been exposed is yet more of the corporate hypocrisy seen since Nov 2016.

Moves by sporting goods store Dick’s to ban AR sales and raise the age limit to 21yo looked sensible from the outside. However it had multiple massacres over decades to make that call. The current CEO has been in charge since 1984. Why the u-turn in his conscience? Indeed the company did temporarily suspend sales of ARs after Sandy Hook in 2012 but kept retailing them at the company’s Field & Stream outlets before selling them again at Dick’s. If one looks at its website one can still buy a pump-action shotgun. Not very consistent.

Surely  if Dick’s feels so strongly about gun control perhaps it should stop selling them period. 95% of firearm related murders are committed with handguns. Statistically they’d be better off banning sales of pistols.  There are 50,000 (mostly individual) gun stores in the US who will gladly sell ARs to customers. One seriously doubts that Bob’s Guns in West Virginia will cut off his nose to spite his face until the law forces him too!

According to the Crime Prevention Research Center, murders in US appear to be very concentrated: 54% of US counties (representing 11% of the population) in 2014 had zero murders, 2% of counties made up 51% of the murders, ironically in states with the strictest gun controls – Illinois, NY and California.

The lesson for activists is simple – until they begin to engage in debate using fact rather than look to boycotts to shut it down they should look forward to yet further failures in pushing their agenda. By thinking they can score a bullseye for controlling societal moods, they’re  inadvertently turned the weapon of free speech on themselves .

Waking up to a horror of our own creation

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Some will say I am a pessimist. I’d prefer to be called an optimist with experience. At only age 16 (in 1987) I realized the destructive power financial markets had on the family home. Those memories were etched permanently. We weren’t homeless or singing for our supper but things sure weren’t like they use to be. It taught me much about risk and thinking all points of view rather than blindly following the crowd. That just because you were told something by authority it didn’t mean it was necessarily true. It was to critically assess everthing without question.

In 1999, as an industrials analyst in Europe during the raging tech bubble, we were as popular as a kick in the teeth. We were ignored for being old economy. That our stocks deserved to trade at deep discounts to the ‘new economy’ tech companies, no thanks to our relatively poor asset turnover and tepid growth rates. The truest sign of the impending collapse of the tech bubble actually came from sell-side tech analysts quitting their grossly overpaid investment bank salaries for optically eye-watering stock options at the very tech corporations they rated. So engrossed in the untold riches that awaited them they abandoned their judgement and ended up holding worthless scrip. Just like the people who bought a house at the peak of the bubble telling others at a dinner party how they got in ‘early’ and the boom was ahead of them, not behind.

It was so blindingly obvious that the tech bubble would collapse. Every five seconds a 21 year old with a computer had somehow found some internet miracle for a service we never knew we needed. The IPO gravy train was insane. One of my biggest clients said that he was seeing 5 new IPO opportunities every single day for months on end. Mobile phone retailers like Hikari Tsushin in Japan were trading at such ridiculous valuations that the CEO at the time lost himself in the euphoria and printed gold coin chocolates with ‘Target market cap: Y100 trillion.’ The train wreck was inevitable. Greed was a forgone conclusion.

So the tech bubble collapsed under the weight of reality which started the most reckless central bank policy prescriptions ever. Supposedly learning from the mistakes of the post bubble collapse in Japan, then Fed Chairman Alan Greenspan turned on the free money spigots. Instead of allowing the free market to adjust and cauterize the systemic imbalances, he threw caution to the wind and poured gasoline on a raging fire. Programs like ‘Keep America Rolling’ which tried to reboot the auto industry meant cheaper and longer lease loans kept sucking consumption forward. That has been the problem. We’ve been living at the expense of the future for nigh on two decades.

Back in 2001, many laughed me out of court for arguing Greenspan would go down in history as one of the most hated central bankers. At the time prevailing sentiment indeed made me look completely stupid. How could I, a stockbroker, know more than Alan Greenspan? It was not a matter of relative educations between me and the Fed Chairman, rather seeing clearly he was playing god with financial markets.  The Congressional Banking Committee hung off his every word like giddy teenagers with a crush on a pop idol. Ron Paul once set on Greenspan during one of the testimonies only to have the rest of the committee turn on him for embarrassing the newly knighted ‘Maestro.’ It was nauseating to watch. Times seemed too good so how dare Paul question a central bank chief who openly said, “I know you think you understand what you thought I said but I’m not sure you realize that what you heard is not what I meant.”

We all remember the horrors of the collapse of Lehman Brothers and the ensuing Global Financial Crisis (GFC) in September 2008. The nuclear implosions in credit markets had already begun well before this as mortgage defaults screamed. The 7 years of binge investment since the tech bubble collapse meant we never cleansed the wounds. We would undoubtedly be in far better shape had we taken the pain. Yet confusing products like CDOs and CDSs wound their way into the investment portfolios of local country towns in Australia. The punch bowl had duped even local hicks to think they were with the times as any other savvy investor. To turn that on its head, such was the snow job that people who had no business being involved in such investment products were dealing in it.

So Wall St was bailed out by Main St. Yet instead of learning the lessons of the tech bubble collapse and GFC our authorities doubled down on the madness that led to these problems in the first place. Central banks launched QE programs to buy toxic garbage and lower interest rates to get us dragging forward even more consumption. The printing presses were on full speed. Yet what have we bought?

Now we have exchange traded funds (ETFs). Super simple to understand products. While one needed a Field’s Medal in Mathematics to understand the calculations of a CDO or CDS, the ETF is child’s play. Sadly that will only create complacency. We have not really had a chance to see how robots trade in a proper downturn. ETFs follow markets, not lead them. So if the market sells off, the ETF is rapidly trying to keep up. Studies done on ETFs (especially leveraged products) in bear markets shows how they amplify market reactions not mitigate them. So expect to see robots add to the calamity.

Since GFC we’ve had the worst post recession recovery in history. We have asset bubbles in bonds, stocks and property. The Obama Administration doubled the debt pile of the previous 43 presidents in 8 years. Much of it was raised on a short term basis. This year alone, $1.5 trillion must be refinanced.  A total of $8.4 trillion must be refinanced inside the next 4 years. That excludes the funding required for current budget deficits which are growing despite a ‘growing economy’. That excludes the corporate refinancing schedule. Many companies went out of their way to laden the balance sheet in cheap debt. In the process the average corporate credit rating is at its worst levels in a decade. Which means in a market where credit markets are starting to price risk accordingly we also face a Fed openly saying it is tapering its balance sheet and the Chinese and Japanese looking to cut back on US Treasury purchases. Bond spreads like Libor-OIS are already reflecting that pain.

Then there is the tapped out consumer. Unemployment maybe at record lows, yet real wage growth does not appear to be keeping up. The number of people holding down more than one job continues to rebound. The quality of employment is terrible. Poverty continues to remain stubbornly high. There are still three times as many people on food stamps in the US than a decade ago – 41 million people. Public pension unfunded liabilities total $9 trillion. Credit card delinquencies at the sub prime end of town are  back at pre-crisis levels. We could go on and on. Things are terrible out there. Should we be in the least bit surprised that Trump won? Such is the plight of the silent majority, still delinquent after a decade. No wonder Roseanne appeals to so many.

A funny comment was sent by a dyed-in-the-wool Democrat, lambasting Trump on his trade policies. He criticized the fact that America had sold its soul for offshoring for decades. Indeed it had but queried that maybe he should be praising Trump for trying to reverse that tide, despite being so late to the party. Where were the other administrations trying to defend America all this time? Stunned silence.

Yet the trends are ominous. If we go back to the tech bubble IPO-a-thon example. We now have crowd funding and crypto currencies. To date we had 190 odd currencies to trade. Of that maybe a handful were liquid – $US, GBP, JPY, $A, Euro etc – yet we are presented with 1,000s of crypto currency choices. Apart from the numerous breaches, blow ups and cyber thefts to date, more and more of these ‘coins’ are awaiting the next fool to gamble away more in the hope of making a quick buck. Cryptos are backed by nothing other than greed. Yet it sort of proves that more believe that they are falling behind enough such they’re prepared to gamble on the biggest lottery in town. One crypto used Wikipedia as a source for its prospectus.

Yet the media remains engrossed on trying to prove whether the president had sex with a porn star a decade ago, genderless bathrooms, bashing the NRA, pushing for laws to curtail free speech, promoting climate change and covering up crime rather than look at reporting on what truly matters – the biggest financial collapse facing us in 90 years.

There is no ‘told you so’ in any of this. The same feelings in the bones of some 30 years ago are back as they were at the time of Greenspan and Lehman. This time can’t be avoided. We have borrowed too much, saved too little and all the while blissfully ignored the warning signs. The faith and confidence in authorities is evaporating. The failed experiment started by Greenspan is coming home to roost. This will be far worse than 1929. Take that to the bank, if it is still in operation because you won’t be concerned about the return on your money but the return of it!

Who is bullying who?

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For all of the sanctimonious actions of the left can we be surprised by the surge of American citizens rushing to protect their constitutional rights? NRA members being labeled criminals and having blood on their hands by a bunch of kids shows how the loss of the lives of 17 youths has turned into a sick political circus. NRA members have not been responsible for any mass shoootings. Anyone with a pulse knows how sick mass shootings are. No one doubts the trauma caused. No one wants gun violence, least of all the NRA. It is never in their interests to have a shooting. Period.  Most people outside America can’t fathom why anyone needs a gun. Yet the adults corralling these kids are only too happy to back their martyrdom. They should know better than to use children this way.

Since the march on Washington we’ve seen defacto spokesman David Hogg be outed for lying where he was at the time of the shooting. He led the speeches, threw his defiant salute at the end and got the media’s praise. What wasn’t covered by the mainstream media was the fact that he hung up on the office of the White House in the middle of a call ahead of the event which showed his immaturity then allowed his fame to get the better of him by rattling off an expletive laden rant – “Sadly, that’s what we have to do with our government because our parents don’t know how to use a f***ing democracy so we have to do it.”

Hogg totally ignored the facts that could have prevented the tragedy. He glossed over the fact that automatic rifles account for less than 3% of firearm deaths. He overlooked the fact that 10% of schools in America have metal detectors and almost half have drug sniffer dogs. No words about the surge in single parent households and all of the psychological knock on effects of that. Of course it is the NRA’s fault as he aptly described them, “…The pathetic f***ers that want to keep killing our children, they could have blood from children splattered all over their faces and they wouldn’t take action because they all still see those dollar signs…”

Cuban flag bearing student Emma Gonzalez admitted she’d bullied the shooter Nikolas Cruz.  Yet adults around the world celebrate their bravery. The Democrats even had voter registration booths to take advantage of a day which was supposed to be about one thing – gun control. One Parkland survivor, Kyle Kashuv, showed how gun control is but a small part of the problem. In his view bullying of outcasts, single parent households and the 78 glaring oversights by the FBI and law enforcement over several years which might have prevented the tragedy are far bigger issues. Yet the media gives it next to no airtime.

Take cyber bullying stats from the Association of Psychological Science in the US. In 2015 more than 16,000 young people were absent from school daily because of bullying. 83% of young people say cyber bullying has a negative impact on their self-esteem. 30% of young people have gone on to self-harm as a result of cyberbullying. 10% of young people have attempted to commit suicide as a result of cyberbullying. People who have been bullied are at greatest risk for health problems in adulthood, over six times more likely to be diagnosed with a serious illness, smoke regularly, or develop a psychiatric disorder compared to those not involved in bullying. In the US alone, suicides per 100,000 head of population since 2000 are up 38% according to WHO.

There is no problem with protesting under the guise of free speech provided it is done respectfully and with fact. This whole episode completely dismisses the dead kids and pushes an activist agenda. The media is just as shameful. One can be pretty certain that if the NRA was able to have reasoned debates on solutions a far better outcome would occur than openly outing innocent civilians as silent killers.

The idea of possessing a gun is irrational to CM but the growing trend of trying to shut down open debate, free speech and demonization if innocent people is a growing trend around the world.

Truth in advertising?

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Imagine if Delta released an ad like this today? 45 years ago it offered military personnel cheap tickets. In an era where sex, drugs and rock’n’roll ruled, such a risqué advert (torn asunder all the promiscuous women are seemingly white) was one can only guess “in step with the times” back then.  Then again the same Delta Airlines has just cut off its association with law abiding NRA members for simply flying to see the inlaws. CM noticed that National Geographic has just issued a formal apology for its racist and bigoted articles from 100 years ago. The editor wrote, “For Decades, Our Coverage Was Racist. To Rise Above Our Past, We Must Acknowledge It.” One would imagine that all the editor did was raise an issue that a majority of its readers never thought about and hold present journalists and photographers to some sort of ‘Day One, Year Zero’ doctrine.

What is it with this “shaming” culture we live in today where corporates must make collective apologies for things that were done before people were born to people who are most likely dead on matters they had zero control over? Just spare the sanctimonious lectures and thought control. I can’t remember the last time I heard a wolf whistle but some want this made a ‘hate crime’. Not condoning it but a wolf whistle is generally viewed as a compliment not a slur. Just like those Hollywood actresses wearing three postage stamps held together by dental floss chanting #METOO all the while they kept quiet about mass sexual harassment because their careers were more important than principle. Spare us the hypocrisy.

Surely people’s sensitivities can’t be such that this should be a jailable offence? Even Qantas staff have been handed newspeak dictionaries on what they can and can’t say to customers to avoid the 0.00001% risk of offending someone. Where do we draw the line? Seems like the line is being drawn further to the point of endorsing a whole industry built on victim culture.

Instead of acknowledging humans have flaws, celebrating differences and accepting it we are being cornered into smaller and smaller ‘legal’ boxes of what is deemed ‘with the times’ and straying outside that risks an innocent person being labeled a bigot, racist, sexist or homophobe. Worse, more laws (like Canada’s M-103 or Australia’s 18-C) risk jail or massive fines for anyone that makes a factual statement. The worst part about it is that lives have been ruined based on trumped up charges willingly egged on by groups like the heavily biased Australian Human Rights Commission, a group that encourages people to lodge complaints but gladly tweets justices it self-serves on its own side  no impartiality

We can all look at the above advert from Delta 45 years later and see it doesn’t really fly (no pun intended) but most of us do not need some sort of state sanctioned manual to ensure we all are indoctrinated to know it is bad form with a law laced on top. Yet this is exactly the type of thing we are seeing day in and day out.