Why worry about that Back-to-The-70s Show?

LiveWire05-04

For those who escaped the 1970s, the first time they came around. The Charger R/T E49 engine produced remarkable torque on a seven bearing configuration which enabled considerable power development ...

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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWhy worry about that Back-to-The-70s Show?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-05-04 06:46 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.livewiremarkets.com/wires/why-worry-about-that-back-to-the-70s-show><strong>LiveWire</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>For those who escaped the 1970s, the first time they came around.\nThe Charger R/T E49 engine produced remarkable torque on a seven bearing configuration which enabled considerable power development ...</p>\n\n<a href=\"https://www.livewiremarkets.com/wires/why-worry-about-that-back-to-the-70s-show\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"XAO.AU","symbol_name":"标普/澳交所 普通股指数","start_time":0,"source_url":"https://www.livewiremarkets.com/wires/why-worry-about-that-back-to-the-70s-show","article_id":"2432564091","we_media_id":null,"thumbnails":[],"rights":{"source":"livewire_stock","url":"https://www.livewiremarkets.com/wires/why-worry-about-that-back-to-the-70s-show","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2432564091","pubTimestamp":1714776389,"sourceInfo":{"source_id":"livewire_stock","name":"Livewire Markets"},"weMediaInfo":null,"summary":"For those who escaped the 1970s, the first time they came around.The Charger R/T E49 engine produced remarkable torque on a seven bearing configuration which enabled considerable power development previously unobtained from 6-cylinder engines and not surpassed until the Porsche Turbo 911  release of 1975.Charger R/T E49: 265 cu in  HP base engine (302 bhp (225 kW), 4spd manual, $3975.00. Charger 770 SE E55: 340 cu in  4bbl V8 engine (275 bhp (205 kW), 3spd automatic, $4850.00. Ever the value-oriented investor, I would have gone for the Charger R/T E49 4spd manual.Too bad mowing Dad's lawn did not pay as well as Warren's Washington DC paper round.I could afford the cushion to see over the steering wheel, but not the car.Previously, reality only happened on television, and you did not need to be there.You could kick back, in the bunny slippers, with a nice cup of tea, and not a care in the world.However, lately, a little at a time, and then suddenly, all at once, the world started going ","collect":0,"end_time":0,"defaultTopTitle":"livewiremarkets.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"XAO.AU":"标普/澳交所 普通股指数","XKO.AU":"标普/澳交所 300指数","XJO.AU":"标普/澳交所 200指数"},"translate_title":"为什么要担心那个回到70年代的节目？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"XAO.AU":0.9,"XJO.AU":0.9,"XKO.AU":0.9},"content_text":"For those who escaped the 1970s, the first time they came around.\nThe Charger R/T E49 engine produced remarkable torque on a seven bearing configuration which enabled considerable power development previously unobtained from 6-cylinder engines and not surpassed until the Porsche Turbo 911 (300) release of 1975.\n\nCharger R/T E49: 265 cu in (4.3 L) HP base engine (302 bhp (225 kW), 4spd manual, $3975.00\n\nCharger 770 SE E55: 340 cu in (5.6 L) 4bbl V8 engine (275 bhp (205 kW), 3spd automatic, $4850.00\nEver the value-oriented investor, I would have gone for the Charger R/T E49 4spd manual.\nToo bad mowing Dad's lawn did not pay as well as Warren's Washington DC paper round.\nI could afford the cushion to see over the steering wheel, but not the car.\nHey Charger!\nWhat on Earth just happened to Reality?\nPreviously, reality only happened on television, and you did not need to be there.\nYou could kick back, in the bunny slippers, with a nice cup of tea, and not a care in the world.\nHowever, lately, a little at a time, and then suddenly, all at once, the world started going crazy.\nPrices went up, and then up some more. They are still going up.\nSome idiot started a war, and then everybody wanted a war of their own.\nThe government, bless them, decided to be helpful and take over your life and business.\nThankfully, we don't have high unemployment. \nYet.\nIn most other respects, this world today looks awfully like the one I grew up in.\nFor those who never visited the 1970s before, here is a brief low-down.\n\nEast Keilor was not a desirable Melbourne fringe suburb.\nVidal Sassoon was not a manufacturer of upscale wind instruments.\nSaint-Tropez was somewhere people would happily go spend a whole roll of Kodachrome.\nMacramé is not something friends let their friends do, especially not in a Velour pantsuit. \n\nIf you were cognizant of these facts, life was pretty good, apart from the bill.\nInflation was crazy, and unemployment was high and going higher.\nThere was a big Made in Australia campaign, but the best jobs were in government.\n\n\n\n\n\n\n\n\n\nThe original \"Operation Boomerang\" campaign to \"Buy Australian\", as introduced by the Associated Chambers of Manufacturers of Australia (ACMA), was launched by PM Robert Menzies in May 1961.\nGovernment was large, with plenty of jobs, and the pay was indexed to inflation.\nIn the 1970s, it was not a good idea to try and work for a living.\nThe idea of \"Working-for-a-Living\" was strictly for the mug punters.\n\n\n\n\n\n\n\n\n\nSome mug punters were clever enough to stop working for a living. They tap-danced and threw knives.\nWhat do we have to look forward to?\nI am very keen on Generative Artificial Intelligence.\nUsing that, you could make a jive-talking cabbie that was fun to ride with.\nOn the other hand, you probably want a job with your wages indexed to inflation.\nI can think of two such vocations:\n\nWork for the government on making the world a better place.\nStart a cash-crop business whose product the punters cannot do without.\n\nSeriously though, there is plenty of opportunity to come, as the future will not be a simple repeat of the past. We have similar policies, but a different world. The outcome will not be identical. Those who say otherwise are doomed to write investment research.\nOthers may figure out how to tap dance, throw knives, and do investment research.\nLook through the Overton Window to what comes next!\nI was first introduced to the concept of the Overton window by a good friend in Perth.\nHe is a thoughtful individual, very well read, and a successful entrepreneur.\nThe key to starting new businesses is to have a good hunch as to what comes next. This is not the same as \"seeing the future\", but \"recognizing the present\". Knowing what current trends are most likely to persist for long enough to organize a business to profit from them.\nSome may view this as a \"gift\", but I disagree. I think it is a \"skill\" which can be cultivated. More than anything, this skill involves cultivating your human powers of observation and inquiry.\nMy friend in Perth has done this very well, and I am always alert to his insights.\nThe Overton window is the range of policies politically acceptable to the mainstream population at a given time. \nThat is plain enough, but here is the kicker:\nIt is also known as the window of discourse.\nThe persona of a tap-dancing knife thrower is taken. That one is done.\nI need a different one if I am going to not-work-for-a-living.\nYears ago, I invented a nom de plume for a market sentiment indicator I had developed.\nYou can read about that here, here and again over here.\nThat name was savvy yabby, which I have always wanted to use in my investment career.\nI liked this idea so much that I started a new line of business via an investment newsletter.\n\n\n\n\n\n\n\n\n\nThe title of a newsletter should say something about what it does and the market personality it expresses.\nThe blue yabby is a common sighting in the more luscious of Australian native rainforests.\nThey keep to themselves, searching for tasty morsels in streams and forests. They bring a pair of very powerful claws that are capable of cracking any nut. Their scientific name is:\nCherax Destructor!\nWhen I first learned that name, I was struck dumb. It is just beyond cool, to me.\nIf am ever reincarnated, I want to come back as a yabby.\nFor now, I will moonlight as The Savvy Yabby, so far as the newsletter is concerned.\nCannot tap dance. Cannot throw knives. Can crack gnarly nuts by the dozen.\nHere comes the Inflation Nation\nThere are many who are baffled by the notion that we should look back fifty years for a better view of the future. There are two basic views of progress:\n\nprogress is a constant upward sloping line where the future is always better than the past\nprogress is a constant struggle against the cyclical forces of regression to the mean\n\nArmed with the printing press for free credit creation, many Western policymakers remain of the view that retrograde motion is not possible. Progress is ever onwards and upwards.\nThe truth surely lies with a nuanced view that pits similarity versus difference.\n“History Doesn't Repeat Itself, but It Often Rhymes” – Mark Twain\nI was reminded of this dictum at a recent investment committee meeting of Sydney advisory firm Evergreen Consultants. Economist Dr. Peter Mavromatis presented a splendid chart recalling the tension between today and the 1970s.\n\n\n\n\n\n\n\n\n\nThis chart shows an eerie similarity to the 1970s. Source: Dr Peter Mavromatis of Evergreen Consultants \nEarlier in this tale, when inflation was just getting started, we were assured that no real action was needed as it was supply-chain related, and therefore temporary.\nIndeed, Xi Jinping did his bit, and the tradeable component of inflation is now well down.\n\n\n\n\n\n\n\n\n\nInflation is moderating but the stickiness of services inflation is troubling. Source: ABS and RBA.\nThe tradeable piece of inflation largely represents the stuff coming in by ship or air. This is not just China sourced product, but a good chunk is. That is well down, condition normal.\nHowever, before allowing the RBA or the government any victory lap, we should recognize that the fall in the tradeable component of inflation had very little to do with them. \nThat was the China price at work making imported goods cheaper.\nThe non-tradeables piece is the one we should focus on to measure domestic policy progress.\nThis scorecard is not so great. It fell from 5.4% year-on-year in the December quarter to 5.0% in the March quarter. That is 2.5% above the centre of the RBA target range of 2-3%. This is the piece that remains stubbornly high. It relates to rental rises, service prices and wage costs.\nThe Back to the 70s script remains on track. \nThis is not nostalgia talking. Nobody who lived through it would want the 1970s back again.\nThe problem is that, when history does repeat, to the extent that it does, this is usually down to a similarity in financial conditions, social conditions, and policy settings.\nWhen you do the same things, you are likely to get similar results.\nYou could ask why any government would choose self-defeating policy.\nI often do but am left with this simple answer.\nNational complacency leads to the glib acceptance of self-destructive policies.\nTh best way to get bad times, is to start with good times, and then do what is popular.\nMoney printing is very popular.Grants and subsidies are very popular.Tax cuts and handouts are very popular.Jingoism and blaming others for your troubles is extremely popular.\nIn short, there are few policies that are popular that involve short-term pain for future gain.\nSome weeks ago, I wrote this commentary:\nThe investment opportunity is a reversal of the previous global disinflation shock. The geopolitical pressures of the time have famously elevated national security concerns over the economy. Policies to reshore manufacturing, or friend-shore into more expensive locations, will raise goods prices.\nOn cue, and true to the prevailing 1970s vibe Treasurer Jim Chalmers wrote an opinion piece on the Future Made in Australia policy initiative. This policy will be about encouraging investment in manufacturing and discouraging the wrong kind of foreign capital. \nThe Critical Minerals industry policy was about discouraging Chinese investment.\nThat has succeeded in achieving the policy objective.\nThere are now legions of projects stalled at the final step of securing equity finance to complete the mines due to a lack of committed offtake from non-Chinese buyers.\nI warned about this, as any sensible investor would.\nThe progress of populism for social regression is about not listening.\nWhen you resolutely ignore the lessons of history you can most definitely repeat it.\n\n\n\n\n\n\n\n\n\nFrom war to industry policy the lessons of history are resolutely ignored in our time.\nThe crowd is always right, and we have been told that crowds are wise.\nI won't dwell on this topic any further. That notion is populist bunk.\nThere is one commodity that has a habit of reasserting its presence in times of stress.\nGold is clearly in a bull market.\n\n\n\n\n\n\n\n\n\nGold has broken out to the upside in what looks to be an echo of the 1970s move during stagflation.\nOf course, many commentators are \"puzzled\" or \"mystified\" by this turn of events. They have checked their models, and they believe that you must have negative real interest rates.\nIndeed, that does help, but you may need to check if you have measured inflation correctly.\nIf you just subtracted the government sourced inflation rate, you may have a poor read on the true state and character of the inflation under way in many Western nations.\nThe above chart for gold was denominated in US Dollars.\nHere it is in Australian dollars.\n\n\n\n\n\n\n\n\n\nThe Australian dollar gold price is rarely discussed in Australian financial markets. Source: LSEG\nAustralian monetary policy is often celebrated as being world-leading, due to the absence of recessions from our recent past. However, we are now a nation with land prices that are too high to support ready expansion of our built environment. Housing is very expensive.\nWhen housing is expensive, labour will soon become expensive.\nWhen your national government pursues restrictive energy policies, and discourages new wells for natural gas, you will soon have high energy prices.\nWhen you have high land, labour and energy prices you will struggle to do manufacturing on a competitive basis. No matter your policy on manufacturing, if you preference expensive local solar cells over cheap, high quality, Chinese solar cells, your energy will be expensive.\nThe best way to make an already bad situation worse is to pretend that you would be better off not selling your plentiful minerals to China, to buy cheap, high quality, electric vehicles.\nIf you do all of that, precisely as we are, your economy is not going to remain strong.\nThe last resort will be currency devaluation to do what the RBA cannot do.\nThis will impose the necessary pain, over perhaps a decade, to impart the necessary lessons on how this world actually works to an electorate that prefers bedtime stories of greatness.\nYou don't need to be a genius to forecast any of that.\nYou just need to be sentient, and to look out the window.\nInvestment Strategy\nMonetary inflation, tariff barriers and preferred treatment with tax breaks and subsidies, are actually good for selected stocks, in the short run. However, this sugar hit does not last.\nThere is an old Scandanavian proverb to this effect:\nDon't wet your own pants in a blizzard just to stay warm.\nThat is what we in Australia are doing right now.\nOver in the USA, I think that the Biden Inflation Reduction Act (IRA) will have a similar result.\nThere has been huge capital expenditure in new semiconductor fabs and electronics plants that were uneconomic the moment the first plod of earth met the presidential shovel.\nI say this because we know this.\nThe laws of economics will not be repealed simply because it is popular to blame our own troubles on the existence of China. They have their own problems. \nChina is not likely to stop pushing forward on expanding the production frontier for goods at ever higher levels of quality, and a lower price point.\nWe can complain. They don't care.\nWhat they do care about is sourcing minerals and selling goods.\nFormerly, we did very well, as a nation, selling them minerals to buy goods.\nNow, it would seem, we don't want to do that anymore. \nThat is not my decision, so I am prepared to accept that I have no control over it.\nThe only control I do have is on where I put my money.\nPart of that is going to go into gold and Australian gold miners. This is because that is one area where the Australian made logic works. We already do the entire supply chain here.\nChina is the largest gold market globally, and they consume about three times as much gold as they mine, even though they are the largest gold producer.\nGiven the track record of the RBA keeping interest rates too low and pointing to the CPI as the proof that they are managing the economy well, I expect higher inflation for longer.\nAustralian assets will be challenged by a weaker domestic currency.\nFor selected exporters, this is good. For gold miners it is fantastic.\nLet us see how things turn out, but I am becoming more bullish on gold by the day.\nThe disconnect between government policy and reality has rarely been wider.\nThat 70s show is getting a re-run.\n\n\n\nNever miss an update\n\n    Enjoy this wire? 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