Lenin’s warm feeling…

  • Cash grab
  • About to happen again?
  • Big short
  • In the mailbag

The climate change fanatics really don’t like it when anyone has the temerity to question their supposed science and motives.

Today’s mailbag illustrates that.

Until then, the loons are coming for your money — even after you die. We’ll explain this in a moment. First…

Markets

Overnight, the Dow Jones Industrial Average fell 35.95 points, or 0.18%.

The S&P 500 added 1.59 points, or 0.07%.

In Europe, the Euro Stoxx 50 index closed up 2.33 points, for a 0.07% gain. Meanwhile, the FTSE 100 gained 0.04%, and Germany’s DAX index lost 0.05%.

In Asian markets, Japan’s Nikkei 225 index is down 80.31 points, or 0.42%. China’s CSI 300 is up 0.37%.

In Australia, the S&P/ASX 200 is trading up 8.23 points, or 0.15%.

On the commodities markets, West Texas Intermediate crude oil is US$52.58 per barrel. Brent crude is US$55.39 per barrel.

Gold is trading for US$1,241.30 (AU$1,627.92) per troy ounce. Silver is US$17.78 (AU$23.32) per troy ounce.

The Aussie dollar is 76.24 US cents.

Cash grab

The Sydney Morning Herald reported yesterday:

Young Australians should be given a grant funded by an inheritance tax on wealthy estates to help them enter the housing market, pay university fees or start a business, a senior union figure says.

Tim Ayres, NSW secretary of the left wing Australian Manufacturing Workers’ Union, raises the idea in a speech to the Fabian Society about inequality and connecting with voters amid the rise of populist politicians like Pauline Hanson and Donald Trump.

In the speech due to be given on Wednesday night, Mr Ayres — a member of the ALP national executive — offers support for French economist Thomas Piketty’s proposal for an inheritance tax “to fund a one-off capital grant for every citizen at the age of 25”.

The report does the numbers:

He quotes Community Council for Australia figures that say if four per cent of the 25,000 families with assets of $10 million paid a 35 per cent duty it would raise $3.5 billion “while affecting only a fraction of the top 1 per cent of Australians”.

We can sense that Vladimir Ilyich Ulyanov (Lenin) and Karl Marx must be feeling warm all over at the very suggestion of an inheritance tax.

Why not? The rich can afford it.

And then the government can divvy it out to 25-year-olds as it pleases. Great idea? Of course not. And even less so when you do the numbers.

We presume the ‘four per cent’ figure assumes that, each year, 4% of those rich people — with $10 million or more of assets — will die. That would result in a redistribution of wealth amounting to $3.5 billion per year.

If we just take that at face value, what would it mean? Well, according to the Australian Bureau of Statistics (ABS), in 2016, around 7% of the Australian population was aged 25–29.

If we distribute that number equally across the five age levels, around 1.4% of the population was aged 25 that year.

With Australia’s population around 24 million, that works out to 336,000 people.

Those are the raw numbers. Now let’s take it a step further. Assuming we’ve just taxed 4% of those rich people who have just died (a nice thing for a grieving family to deal with), that’s $3.5 billion to spread between 336,000 people.

To save you the trouble of figuring it out for yourself, that’s $10,416.66 for each 25-year-old.

A lot of money? Sure it is. But is it the solution for helping people buy a home, pay university fees, or start a business?

Maybe. But that’s not the point.

First, taxation is theft. There’s no possible way to argue otherwise. Theft is the coercive seizure of private property. That perfectly describes all elements of the taxation system.

So regardless of whether a tax would benefit someone else is irrelevant. If a burglar nicks off with your best silverware, and gives it to his dear old mum so she can sell it to buy her weekly shopping, does that justify the theft?

No.

But that’s not all. The $10,416.66 assumes that the so-called rich would — with the presence of an inheritance tax — behave and save in the same way as they do now without an inheritance tax.

The reality is likely to be different.

Those with the means to shield wealth from the clutches of the government and the taxman will do so. A simple voluntary transfer of wealth to a trust or company structure would suffice.

Suddenly, the $3.5 billion the government expects from an inheritance tax would melt to $1 billion or less.

That always happens when a government introduces a tax on the rich. The rich sidestep it, meaning that the government has to broaden the tax’s reach to include…you guessed it…the middle classes.

Make no mistake. An inheritance tax isn’t about taxing the rich in order to give it to the poor, or 25-year-old voters. It’s about introducing a new tax, which will allow a government to broaden its reach and suck ever more life out of the private sector in order to fatten the parasitic public sector.

About to happen again?

We look at the market. The oil price is up 0.5%, but the natural gas price is up even more, 1.3%. What’s going on? And why does it matter for Aussies and Aussie investors?

We dropped a line to our old buddy Greg Canavan, Head of Research here at Port Phillip Publishing, to ask him about the ‘gas supply squeeze’ he’s been banging on about lately.

And most of all, we wanted to know why he’s so excited about it. Here’s his reply:

Hey Kris,

This east coast gas supply crunch story is really two fold.

On the surface, it’s a simple demand/supply story. That is, the big LNG terminals are sucking much of the available supply out of the market. The gas that’s left is going to the domestic market at much higher prices than it was this time last year.

And as I’ve pointed out, there are a number of smaller players taking advantage of this supply crunch.

What’s less well known in this story though is that the big LNG players — Santos and Origin — are in a spot of financial bother. They borrowed heavily to fund the construction of the LNG plants and now have massive debt loads. The market has signalled that it wants them to do something about it.

Santos has already moved, raising capital and selling off non-core assets. Origin is in the same boat. It’s rumoured to be selling off some of its assets in order to reduce its debt load.

The financial difficulties of the big energy players are an opportunity for the smaller guys. One of my stock picks has already benefited from Santos’ fire sale. And another one has recently attracted capital from a US based energy investor.

In other words, it’s all happening under the surface. That’s why I’m so excited about this opportunity. I just can’t believe the market hasn’t latched onto it yet. Sure, it’s waking up to it, but there still seems like lots of scepticism. That’s fine by me, more time to buy when these things are still cheap!

Cheers mate…

As I noted yesterday, I love the natural gas market. Backing stocks in that sector resulted in some of the biggest gains I’ve ever been able to make for subscribers.

The great thing about natural gas is that it’s much more of a cyclical story than oil.

Think about it this way: regardless of which direction the market is going, speculators are always looking for a chance to make a killing from oil stocks.

Oil stocks, along with gold stocks, are the two most emotive commodities on the market. Think of the sayings, ‘I’ve struck oil with this opportunity’ or ‘I’ve struck gold with this opportunity.’

Those are commonly used phrases when talking about any kind of good luck. On the other hand, nobody uses wheat, corn, soybeans or natural gas to express their good fortune.

So, what you find is that a commodity like natural gas tends to go out of favour, sometimes for exceedingly long periods. But when it comes back into favour, you’ve got to move.

When I spotted that something was about to happen with natural gas stocks late in 2008, I didn’t even let the collapsing global economy steer me off course. I knew this was something I had to tell Aussie investors all about.

Good thing I did. The natural gas price and natural gas stocks soared. Barely a year later, the good times were over, and it was time to cash in.

The story could be about to repeat now. In truth, I’m out of touch with what’s going on in the natural gas sector today, but Greg Canavan has been researching, analysing and covering it for months.

If I had to trust one person with the level of research he or she does, it would be Greg. He says a select group of natural gas stocks are about to move. If Greg says it, you should listen. Check out what he has to say here.

Big short

Speaking of trades, our Currency Wars Trader analysts have been up to their knees picking out new trades.

The big idea now is the potential for an Australian recession. They’re calling the opportunity to profit from this the ‘Big Australian Short’.

Those trades are active and well underway. They’re still within their entry limits, so it’s not too late to get in. Details here.

In the mailbag

If you poke a climate change fanatic, you’re sure to get a terrifying response. Here are some of the emails in reply to Tuesday’s Port Phillip Insider.

First, from (former) subscriber Jane:

The article on climate you sent me has been completely debunked and is a classic example of fake news.

See for example: https://www.carbonbrief.org/factcheck-mail-sundays-astonishing-evidence-global-temperature-rise

Please unsubscribe me from all your services and lists.

Oops! The owners of Port Phillip Publishing won’t be happy that we’ve caused a few dollars to flow out the door.

Alternatively, they probably won’t mind. After all, to misquote a popular phrase, it’s better to write and cause a reaction than to write and cause no reaction at all.

[Aside: We like that. We’ll use it again sometime.]

Next, this from (a current) subscriber David:

Ok, I’ll bite. The point at which your climate-scepticism leads you to take The Daily Mail as a quotable source of science means that your mention of ‘fake news’ is almost laughable. Perhaps you will be quoting Breitbart next?

You might find some of the articles below which debunk the MOS story interesting but, I rather suspect, that you will prefer to assume these rebuttals to be part of some liberal elite cover-up.

You’re right. Next…

Subscriber Bryan writes:

It is poor reporting to be beating a drum as loudly as a watermelon in the Senate but with poor research.

In your article in “Port Philip Insider” you chose to concentrate on one piece of contrary news to support your apparently blinkered views on climate change.

Ironically, by use the classic “Poisoning the well” strategy of sophistry, which is over 2500 years old… you exposed yourself to claims of hypocrisy in the intellectual arena.

It appears as if one report may have been released prematurely. However, you failed to mention that the questioned data of note reports data over a 20 year time span addressing an apparent pause in land temperature warming over 5 years. Climate change does not address trends over a mere 5 year time span, climate change has been observed over a 100 year time span. Even with a 11 year average (the length of the sun spot cycle), there was no pause in 1998. There was simply noise.

Would you look at a daily chart and sell a stock which had dropped over a day? Surely you would look at a longer trend which indicated at least 20 days, and then probably confirmed with another trend.

And to skewer Bryan with his own épée, we’ll argue that even a 100-year trend in climate is a mere fraction of a second compared with the 6,000-year age of the Earth (we just throw that one in there deliberately to annoy).

This from subscriber Paul M.:

I wouldn’t want to rely on what the Daily Mail says about climate change or anything else. This article might be worth checking out, from Carbon Brief:

Factcheck: Mail on Sunday’s ‘astonishing evidence’ about global temperature rise

Here’s another, from The Guardian:

Mail on Sunday launches the first salvo in the latest war against climate scientists.

Ah, but who checks the fact checkers?

Finally, from subscriber Nick G.:

I suggest that you read this article, and reconsider your commentary. http://www.lse.ac.uk/GranthamInstitute/news/more-fake-news-in-the-mail-on-sunday/

If you wish to propagate views on how and why the global warming campaign is a ‘rort to screw taxpayers…….’ I suggest that you present a detailed analysis of who is designing the rort, how the rort plays into the hands of those designing it (or it wouldn’t be a rort) and how and why the majority of climate scientists who are perpetuating the rort continue to do so. Also consider the question of today’s taxpayers and the later taxpayers when sea levels have risen, more millions of threatened and displaced persons are seeking assistance, position of arable land has changed considerably due to changed rain patterns. It probably is the case that not all climate change is due to human activity, as climate has been changing over millions of years, but if current human initiative can diminish the expensive effects on our children and future generations, this is an issue you should not leave out of your analysis.

I do not find that your ‘mouthing off’ in this manner does you any credit. Before weighing into ‘fake news’ situations, I suggest that you check your sources more carefully.

We admit to having a beef with the term ‘fake news’. It appears that the mainstream appears to consider that anything outside of the mainstream…anything with which they don’t agree…is ‘fake news’.

In contrast, everything related to them by The Sydney Morning Herald, The Age, The Washington Post and The New York Times is bona fide and always truthful reporting.

We beg to differ. The mainstream press claims to be honest, truthful and impartial. Yet it is the embodiment of the establishment. The mainstream press fights for the status quo.

It likes the rotation of the same political parties going in and out of office. It makes their job easier. It allows them to build long-standing ‘insider’ relationships that transfer from one generation of the ruling class to the next.

What they don’t like is the insertion of an ‘outsider’ and the rise of ‘outsider’ influences. The dying and decaying mainstream press especially doesn’t like the rise of the alternative media, such as Breitbart, Infowars or others.

And it doesn’t like the rise of alternative research groups such as us at Port Phillip Publishing.

All we can say is: they better get used to it.

Another email from David B.:

You are citing that “Fake News” specialist the Daily Mail.

How about you read the link below to find out what’s really going on.

http://www.popsci.com.au/science/the-house-science-committee-claims-scientists-faked-climate-change-data8212heres-what-you-should-know,450206

You should write on topics you understand instead of spreading misinformation.

I suppose it would be beyond you to issue an apologetic retraction.

Interestingly, I have never received a courtesy reply to any emails.

Sorry, David. We receive many, many emails every day. We don’t have the time or resources to reply to them all, but we do read them all.

Subscriber Nigel offers this:

You believed something written in the Daily Mail/Mail on Sunday???!!! And I thought you were some kind of sceptic!

Good point.

And subscriber Ernie writes:

Boy you were sure sucked in by the “Daily Mail” story. This particular rag is renowned for so-called “fake news”, or more accurately, news with a “peculiar slant”. I know, I’ve witnessed this over my 70 plus years on this planet.

Go to this link for the “real news” on this piece of fakery and in future stick to what you know best. https://www.carbonbrief.org/factcheck-mail-sundays-astonishing-evidence-global-temperature-rise

‘What you know best’? We’re still trying to figure that out. Hopefully, we’ll know by the time we hit Ernie’s age.

One final point. The climate change fanatics like to offer the following chart as proof of climate change:



chart image

Source: National Oceanic and Atmospheric Administration
Click to enlarge


Scary! Look at all that red. The Earth sure is heating up. You could fry an egg on it.

But while it may be scary to the little climate change darlings, we would simply suggest that temperatures are oscillating from one extreme to another. The period from 1940 to the mid-1970s is evidence enough of that.

You see the same kind of volatility in everything, including stock markets. First, you get a move to one extreme, then a reversal to the mean, followed by a move to the other extreme.

Years from now, the trend will have reversed, and the old fears of ‘global cooling’ will be back on the agenda…followed by taxes and policies designed to encourage people and businesses to use more carbon!

Cheers,
Kris