Investors remain highly focused on global political issues. Emmanuel Macron’s victory in France has reduced some political risk in Europe, but investors are growing increasingly skeptical about President Trump’s ability to deliver on his pro-growth agenda. The growing scrutiny over White House ties to Russian operatives, escalating risks of global terrorism and rising uncertainty around North Korea are all negatives for investor confidence.
But these negatives have not offset positive global macroeconomic conditions. Global economic growth is hardly robust, but looks better than it has in several years, especially in Europe. Manufacturing activity is improving and global trade appears to be recovering. Corporate profits are also trending higher across most markets and industry sectors. Financials remain a weak spot in many areas of the world, but we expect global bond yields will rise as economic growth solidifies, which should help this sector. Finally, monetary policy remains growth- and equity-friendly. The Fed is in the midst of a rate-hiking campaign, but should continue raising rates slowly and predictably…..
Philip Parker – veteran fund manager decides to sell all shares in Altair’s Trusts to hand back cash and hands back mandates for SMA/IMA’s and also sells MDA family office mandates to cash from shares.
AUSTRALIAN EAST COAST PROPERTY MARKET BUBBLE AND THE IMPENDING CORRECTION
CHINA PROPERTY AND DEBT ISSUES LATER THIS YEAR
THE OVERVALUED AUSTRALIAN EQUITY MARKETS AND
OVERSIZED GEO-POLITICAL RISKS AND AN UNPREDICTABLE US POLITICAL ENVIRONMENT
The underlined above are some of the more obvious reasons to exit the riskier asset markets of shares and property – in my opinion.
As a result of the above and after 25 years as a fund manager and 30 years in this industry I am taking around 6 to 12 months off. The main reason is in my opinion that there are just too many risks at present, and I cannot justify charging our clients fees when there are so many early warning lead indicators of clear and present danger in property and equity markets now….
As a psychologist researching misinformation, I focus on reducing its influence. Essentially, my goal is to put myself out of a job.
Recent developments indicate that I haven’t been doing a very good job of it. Misinformation, fake news and “alternative facts” are more prominent than ever. The Oxford Dictionary named “post-truth” as the 2016 word of the year. Science and scientific evidence have been under assault.
Fortunately, science does have a means to protect itself, and it comes from a branch of psychological research known as inoculation theory. This borrows from the logic of vaccines: A little bit of something bad helps you resist a full-blown case. In my newly published research, I’ve tried exposing people to a weak form of misinformation in order to inoculate them against the real thing – with promising results.
Two ways misinformation damages
Misinformation is being generated and disseminated at prolific rates. A recent study comparing arguments against climate science versus policy arguments against action on climate found that science denial is on the relative increase. And recent research indicates these types of effort have an impact on people’s perceptions and science literacy.
A recent study led by psychology researcher Sander van der Linden found that misinformation about climate change has a significant impact on public perceptions about climate change.
The misinformation they used in their experiment was the most shared climate article in 2016. It’s a petition, known as the Global Warming Petition Project, featuring 31,000 people with a bachelor of science or higher, who signed a statement saying humans aren’t disrupting climate. This single article lowered readers’ perception of scientific consensus. The extent that people accept there’s a scientific consensus about climate change is what researchers refer to as a “gateway belief,” influencing attitudes about climate change such as support for climate action.
At the same time that van der Linden was conducting his experiment in the U.S., I was on the other side of the planet in Australia conducting my own research into the impact of misinformation. By coincidence, I used the same myth, taking verbatim text from the Global Warming Petition Project. After showing the misinformation, I asked people to estimate the scientific consensus on human-caused global warming, in order to measure any effect.
I found similar results, with misinformation reducing people’s perception of the scientific consensus. Moreover, the misinformation affected some more than others. The more politically conservative a person was, the greater the influence of the misinformation.
This gels with other research finding that people interpret messages, whether they be information or misinformation, according to their preexisting beliefs. When we see something we like, we’re more likely to think that it’s true and strengthen our beliefs accordingly. Conversely, when we encounter information that conflicts with our beliefs, we’re more likely to discredit the source.
However, there is more to this story. Beyond misinforming people, misinformation has a more insidious and dangerous influence. In the van der Linden study, when people were presented with both the facts and misinformation about climate change, there was no net change in belief. The two conflicting pieces of information canceled each other out.
Fact and “alternative fact” are like matter and antimatter. When they collide, there’s a burst of heat followed by nothing. This reveals the subtle way that misinformation does damage. It doesn’t just misinform. It stops people believing in facts. Or as Garry Kasporov eloquently puts it, misinformation “annihilates truth.”
Science’s answer to science denial
The assault on science is formidable and, as this research indicates, can be all too effective. Fittingly, science holds the answer to science denial.
Inoculation theory takes the concept of vaccination, where we are exposed to a weak form of a virus in order to build immunity to the real virus, and applies it to knowledge. Half a century of research has found that when we are exposed to a “weak form of misinformation,” this helps us build resistance so that we are not influenced by actual misinformation.
Inoculating text requires two elements. First, it includes an explicit warning about the danger of being misled by misinformation. Second, you need to provide counterarguments explaining the flaws in that misinformation.
In van der Linden’s inoculation, he pointed out that many of the signatories were fake (for instance, a Spice Girl was falsely listed as a signatory), that 31,000 represents a tiny fraction (less than 0.3 percent) of all U.S. science graduates since 1970 and that less than 1 percent of the signatories had expertise in climate science.
I found that explaining the misinformation technique completely neutralized the misinformation’s influence, without even mentioning the misinformation specifically. For instance, after I explained how fake experts have been utilized in past misinformation campaigns, participants weren’t swayed when confronted by the fake experts of the Petition Project. Moreover, the misinformation was neutralized across the political spectrum. Whether you’re conservative or liberal, no one wants to be deceived by misleading techniques.
Putting inoculation into practice
Inoculation is a powerful and versatile form of science communication that can be used in a number of ways. My approach has been to mesh together the findings of inoculation with the cognitive psychology of debunking, developing the Fact-Myth-Fallacy framework.
This strategy involves explaining the facts, followed by introducing a myth related to those facts. At this point, people are presented with two conflicting pieces of information. You reconcile the conflict by explaining the technique that the myth uses to distort the fact.
We used this approach on a large scale in a free online course about climate misinformation, Making Sense of Climate Science Denial. Each lecture adopted the Fact-Myth-Fallacy structure. We started by explaining a single climate fact, then introduced a related myth, followed by an explanation of the fallacy employed by the myth. This way, while explaining the key facts of climate change, we also inoculated students against 50 of the most common climate myths.
For example, we know we are causing global warming because we observe many patterns in climate change unique to greenhouse warming. In other words, human fingerprints are observed all over our climate. However, one myth argues that climate has changed naturally in the past before humans; therefore, what’s happening now must be natural also. This myth commits the fallacy of jumping to conclusions (or non sequitur), where the premise does not lead to the conclusion. It’s like finding a dead body with a knife poking out of its back and arguing that people have died of natural causes in the past, so this death must have been of natural causes also.
Everyone should read this as a reminder of the brutality that states may employ for political ends, whether Ethiopia (1935), Chechnya (1995), Iraq (1998) or Syria (2017). Chemical weapons such as sarin or mustard gas leave horrific injuries, but any deliberate targeting of civilians — such as bombing of hospitals and residential neighborhoods — should IMO be treated as a war crime.
Luke O’Brien is a U.S. Army officer assigned to Aberdeen Proving Ground and is currently a Countering Weapons of Mass Destruction Graduate Fellow at National Defense University:
…..Perhaps the most notorious example of this from recent memory, however, was the Iraqi chemical attack on the Kurdish town of Halabja in March 1988, as part of the Anfal Campaign at the end of the Iran-Iraq War. This attack struck the small Kurdish village with both conventional and chemical bombs, including sarin, just as Assad’s forces would nearly 30 years later. The first attacks used normal high-explosive bombs, which both drove civilians into basement shelters as well as broke open the villages windows and doors. These initials attacks were then followed up with chemical munitions, which quickly filled the basement shelters and killed their occupants.
Such brutality was intentional. The attacks were intended to break the back of the Kurdish peshmerga militia by depopulating its support. Commenting on the matter at the time, Iraqi Gen. Ali Hassan al-Majid bragged that he would “kill [all the Kurds] with chemical weapons.” The chemical bombardment of Halabja had its desired effect, with a stream of surviving civilians abandoning the town and fleeing to nearby Iran. This use of chemical weapons, moreover, had another added benefit: driving away civilians and insurgents who had become numb to the effects of conventional weapons…..
Michael Kofman is an Analyst at CNA Corporation and a Fellow at the Wilson Center’s Kennan Institute:
….Past American attempts at coercive diplomacy with Russia have typically lacked actual coercion, and a theory of how to gain leverage over Moscow. It will be rather startling if 59 cruise missiles turn out to be the answer to this problem. Thankfully, the previous administration tested a lot of theories that didn’t work, from empty threats at the United Nations, to disproven assumptions on what influences Russian behavior, to narratives about quagmires. It would be best for Trump’s White House not to set us on this journey, mounted on that very same broken wheel (or one just as broken in a different way).
In a contest of wills, Trump needs a plan to establish coercive credibility rather than hoping to scare the Russians with expensive fireworks. The number one mistake previous administrations made with Moscow is that, rather than deal with the Russia that is, they all imagined a Russia that suited them more, and then tried to have relations with that imaginary country.
The reality is, this administration’s only current leverage with Russia is the notion inside the Kremlin that a cooperative agenda with the United States is still possible. That’s a dubious proposition which offers the U.S. some advantages. Russia still hopes that there are carrots the United States might offer, or at the least it could get respite in the current confrontation and consolidate gains. If the administration is able to drag out this perception, rather than demonstrating that the White House is rapidly reverting to classical archetypes that Moscow anticipates, then there is an opportunity to obtain concessions.
Given that a cooperative agenda between the United States and Russia is well-nigh impossible, where does that leave us?
Michael J. Mazarr is senior political scientist at the nonprofit, nonpartisan RAND Corporation and associate director of the Strategy, Doctrine and Resources Program of the RAND Arroyo Center:
The configuration of power in the international system is changing, which is precisely why revisionist powers such as Russia and China feel empowered to challenge American primacy. The United States and its great power rivals do not accept a common set of global rules. Moscow and Beijing are challenging the norms that Washington prefers, from non-aggression in Eastern Europe to freedom of navigation in the South China Sea. The ideological differences between the great powers are far less severe than they were during the Cold War, but the cleavage between the world’s leading democracy and its two foremost authoritarian powers is significant enough to be a source of conflict. And finally, more than 70 years after the last great power war, there does not appear to be any commonly perceived threat powerful enough to overcome these other factors and compel sustained cooperation. The focus of many great powers today seems to be on a opportunistic grab for influence rather than an urgent fear that disaster will befall them if they cannot find ways to coordinate their actions with others.
Efforts to form a great power concert are thus likely to prove unavailing; making concessions to Russia or China in hopes of drawing them into such a concert could well be more destabilizing than stabilizing. But managing these relationships — and doing so while preserving the greatest degree of stability possible — remains an urgent task for the United States…..
First large scale shoe robot factory unveiled: Adidas will use machines in Germany instead of humans in Asia to make shoes
Adidas, the German maker of sportswear, has announced it will start marketing its first series of shoes manufactured by robots in Germany from 2017. More than 20 years after Adidas ceased production activities in Germany and moved them to Asia, Adidas unveiled the group’s new prototype “Speedfactory” in Germany. As of this year, the factory will begin large-scale production. What’s more, Adidas will also open a second Speedfactory in the U.S. in 2017, followed by more in Western Europe. According to the company, the German and American plants will in the “mid-term” each scale up to producing half a million pair of shoes per year.
Does this pose a threat to Adidas’s traditional manufacturing base in China, Indonesia and Vietnam? After all, labor in the region is becoming less cheap these days, and manufacturers are increasingly turning to robots. The current model in the apparel industry is very much based on sourcing products from countries where consumers are typically not based. In the longer term Adidas could even produce the shirts of Germany’s national football team in its home country. The shoes made in Germany would sell at a similar price to those produced in Asia, where Adidas employs around one million workers. Arch-rival Nike is also developing its robot-operated factory.
This development in the shoe area is just the beginning and will be leveraged to the apparel industry as well….
Robot factories will not restore former employment levels, with operations run by a skeleton staff. And low employment leads to low consumption. But new factories will require intensive capital investment. This may portend increased demand for capital in the future. With current high debt levels threatening the stability of the financial system, equity investors may be in short supply.
Don’t know if he is long, but Donald Trump is doing his best to drive up demand for gold.
From the FT overnight:
Donald Trump has warned that the US will take unilateral action to eliminate the nuclear threat from North Korea unless China increases pressure on the regime in Pyongyang.
In an interview with the Financial Times, the US president said he would discuss the growing threat from Kim Jong Un’s nuclear programme with Xi Jinping when he hosts the Chinese president at his Florida resort this week, in their first meeting. “China has great influence over North Korea. And China will either decide to help us with North Korea, or they won’t,” Mr Trump said in the Oval Office.
“If they do, that will be very good for China, and if they don’t, it won’t be good for anyone.”
But he made clear that he would deal with North Korea with or without China’s help. Asked if he would consider a “grand bargain” — where China pressures Pyongyang in exchange for a guarantee that the US would later remove troops from the Korean peninsula — Mr Trump said:
“Well if China is not going to solve North Korea, we will. That is all I am telling you.”
Nothing like the threat of nuclear war to drive up the price of portable assets. Not that it would do much good if you are on the receiving end.
Spot Gold broke resistance at $1250 an ounce. Follow-through above $1260 is likely and would signal an advance to $1300.
Theresa May had a calmer, less belligerent approach: “….encourage China to look at this issue of North Korea and play a more significant role in terms of North Korea … I think that’s where our attention should focus.”
What keeps us happy and healthy as we go through life? If you think it’s fame and money, you’re not alone – but, according to psychiatrist Robert Waldinger, you’re mistaken. As the director of a 75-year-old study on adult development, Waldinger has unprecedented access to data on true happiness and satisfaction. In this talk, he shares three important lessons learned from the study as well as some practical, old-as-the-hills wisdom on how to build a fulfilling, long life.
We all know that the Coalition hearts the housing bubble. Everything it does spells undying infatuation:
protecting property tax rorts;
focusing only on supply-side reform and even then doing pretty much nothing;
shelving any and all policy reform that might disrupt its smooth and burgeoning progeny, plus
running a staggeringly huge immigration program despite widespread economic damage.
It’s the last point that I want to focus on today because that’s the one where Coalition bubble-love rubber hits the road for its electoral prospects.
Since the WA election, Coalition polling has been devastated. A little bounce in Newspoll has been wiped out by landslides against the government in Ipsos and Essential polls. Moreover, the carnage has been just as apparent in the Coalition’s primary vote which has hemorrhaged voters to One Nation. The latter has been unaffected by the WA election despite doing less well than expected.
The major change in politics since the state result has been a commitment by One Nation to never ally with the Coalition again. The fringe party has realised that such pragmatism is lethal to its prospects.
This simple truth seems yet to have filtered through to the federal Coalition. As One Nation takes a material portion of its vote, and that vote refuses point blank to ally with it, there is ZERO chance of the Coalition winning a federal election ever again, and probably not at the state level either. While One Nation exists in this form, the Coalition has effectively ceased to exist as a political force.
One might have thought that the prospect of NEVER WINNING ANOTHER ELECTION might be enough to trigger some soul-searching in the party. And it has done a little. Do-nothing Malcolm has switched from toying with random ideas to deploying random ideas but it’s still all at the margins and is meaningless:
18c reform won’t move the needle;
contradictory coal and hydro investment won’t move the needle;
a retrograde company tax cut won’t move the needle;
a supply-side housing affordability Budget won’t move the needle.
All together they might nudge it a little but it won’t be enough. Nothing like it.
Indeed, I’ll go so far as to say that the Coalition could do the following immensely popular policies and it would still get clubbed from office:
abolish negative gearing;
install gas reservation;
offer tax cuts.
The problem is that these are all cyclical fixes for what is a structural shift to One Nation driven by one very simple truth: Australians are done with high immigration.
That’s Pauline Hanson’s primary appeal. She makes little sense on other issues and is bat shit crazy on many. But her one great power, the one that vibrates deep in the bowels of every Australian that is marginalised by house prices, falling wages, can’t get a job, is fearful of Islam or just a bigot, or is just plain pissed off at the direction of the country, is the deep and legitimate truth that running a mass immigration program during a period of high unemployment is treasonous economics.
Thus there is only one policy shift that can change the Coalition’s fate and it is as plain as the nose on Pauline Hanson’s face: cut immigration and cut it hard.
Cutting immigration back to 70k per year or less would completely shift every electoral parameter as the Coalition:
finally had a housing affordability policy to put up against Labor’s negative gearing reforms;
finally had an environmental policy to put up against the immigration-hypocritical Greens;
could gut One Nation overnight and go to work on wiping it out by exposing the loons as weakening polls divide them.
This one policy shift would put the Coalition instantly in the running for the next election even if it were Do-nothing Malcolm that did it.
So, why does the Coalition suffer from such suicidal bubble-love that it can’t or won’t grab this lifeline?
many Coalition MPs are personally leveraged to the bubble so they’ve their own financial interests in mind;
as yesterday’s revelations about the MPs that prevented negative gearing reform showed, they are political hacks with terrible policy judgement;
they are bereft of the intellectual depth and corporate memory to contemplate alternative economic models. Cutting immigration to 70k would take pressure off eastern capital house prices enabling further rate cuts and a lower currency;
the Howard and Costello myths make this even worse,
and, the Coalition is closely wedded to the business interests in banking, retail and construction that benefit from high immigration even as the net result is negative for the wider economy.
I’ll add one more factor which appears increasingly important. Career politicians don’t care for their own political party or its nominal values as they used to. The dominant ideology of unglued self-interest comes with the wonderful fringe benefit of not having to take responsibility for anything. Contemporary Coalition MPs see party membership as a gravy train to private sector riches in board positions, lobbying roles and other forms of ‘control fraud’ in the very sectors that thrive on the bubble. So, for them, arbitraging the fate of the party for personal gain is all just a part of being a good liberal.
Backing self-interest used to work in political forecasting but does this rabble even have that in them?