The ‘privileged’ many…

  • Only the best
  • Not so worthless after all
  • Filling the swamp
  • Gold surge
  • Lower…and higher

From The Australian:

“Privileged” male students have been told to be more like women by curbing their confidence and refraining from dominating or showing off during classes, following workshops run by the University of Melbourne Student Union.

Men should also acknowledge that being born male and white affords them certain privileges and reconsider the use of “Australian banter” during tutorials because of the risks of excluding students from other cultural backgrounds.

From your editor’s position of privilege, we had better be careful about what we say.

We do wonder, however, if the student union may have been better off flipping the advice. Perhaps the focus could have been on encouraging female students to speak up more.

Or maybe not. Maybe they could have explained, using empirical evidence, that male students may be able to learn something from female students — such as why more females graduate than males.

As The Australian reported last year:

Australian female graduates are outnumbering males at record levels, with almost 45,000 more women completing tertiary qualifications last year than men, new data from the Education Department reveals.

Furthermore:

The number of women completing tertiary courses has jumped from 78,850 in 1999 to 129,045 in 2014, a 64 per cent increase, while the number of male graduates has climbed from 57,310 to 86,337, up 51 per cent.

The trend has accelerated over the past 15 years, and has now reached a 60–40 per cent split for domestic students.

In that context, we wonder if the concept of ‘male privilege’ exists at all in Australian universities. Rather, based on this evidence, we’d think the university and student union should concern itself with the big difference in graduation rates between the sexes.

Then there is the high school graduation rate. It’s old data but, according to statistics from 2011, 83% of female students went through to Year 12, compared to just 73% for male students:



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Source: Australian Bureau of Statistics
Click to enlarge


We cup our hand to our ear. We seek the sounds of the outcry about the ‘education gap’, and the inequality between the sexes.

We are either too hard of hearing to make out the wailing and gnashing of teeth…or there is none.

But heck, ignore our view. We say it from a position of privilege.

On with the show…

Markets

Overnight, the Dow Jones Industrial Average gained 56.09 points, or 0.27%.

The S&P 500 added 8.69 points, or 0.37%.

In Europe, the Euro Stoxx 50 index fell 22.61 points, or 0.63%. Meanwhile, the FTSE 100 fell 0.89%, and Germany’s DAX index lost 0.33%.

In Asian markets, Japan’s Nikkei 225 index is down 30.59 points, or 0.16%. China’s CSI 300 is up 0.21%.

In Australia, the S&P/ASX 200 is down 19.21 points, or 0.33%.

On the commodities markets, West Texas Intermediate crude oil is US$49.77 per barrel. Brent crude is US$52.91 per barrel.

Gold is trading for US$1,249.92 (AU$1,683.89) per troy ounce. Silver is US$16.65 (AU$22.43) per troy ounce.

The Aussie dollar is worth 74.22 US cents.

Only the best

Check out the performance of these ‘halo stocks’ over the past year:

  • Halo Stock #1 – Up 72% in 6 months
  • Halo Stock #2 – Up 57% in 8 months
  • Halo Stock #3 – Up 125% in 10 months
  • Halo Stock #4 – Up 121% in 7 months
  • Halo Stock #5 – Up 86% in 2 months

Not all halo stocks go up this amount. Not all halo stocks go up, full stop.

That’s why, the project we’ll introduce you to soon won’t aim to pick every halo stock. Instead, it will focus on what we believe is the best of the crop.

Those halo stocks with the best chance (not guaranteed, of course) of clocking up a 72% gain in six months, or a 121% gain in seven months, or even as one halo stock has done, a 562% gain in eight months!

Details soon. Stay tuned.

Not so worthless after all

Meanwhile, the embarrassment continues to pile up on your editor.

Since we wrote that Fairfax Media Ltd’s [ASX:FXJ] masthead newspaper titles were worthless, the bidding war for…erm…Fairfax’s masthead newspaper titles has heated up.

Not surprisingly, so has the share price.



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Source: Bloomberg
Click to enlarge


At the time of our ill-timed ‘it’s worthless’ commentary, the Fairfax share price was around $1.07.

Today, it trades at $1.23, after receiving not one, but two, competing bids for the entire business — including those ‘worthless’ newspaper mastheads.

And in breaking news from Bloomberg, it reports:

Offer for publisher of Sydney Morning Herald at A$1.30 per share could generate internal rate of return of 11.2 percent for private equity suitor, Deutsche Bank analyst Entcho Raykovski said in [a] report.

Now they’re just rubbing salt into our gaping wound.

But matter not, our hopes remain intact that one day (one day) our predictions on arch-nemesis Tesla Inc. [NASDAQ:TSLA] will come true.

We certainly have one equally-famous Tesla bear in our corner — Jim Chanos, president and founder of Kynikos Associates. He told Bloomberg, when asked about Tesla’s stock valuation: ‘I don’t think the equity’s worth a whole lot.

Aside from that, Chanos made a further point:

BMW this year will do 100,000 hybrid and EV vehicles. The same as Tesla… And they have the rest of the business too.

Good point. We remain (theoretically) short.

Filling the swamp

Not only does the ‘Deep State’ not like Donald Trump as president of the United States, but it’s clear the establishment politicians don’t like him either.

It becomes more apparent by the day.

Americans elected Trump because they liked his ‘drain the swamp’ message.

The people at large may like that message. But those inside the swamp don’t.

Furthermore, what Trump forgot to take into account is the fact that there are those on the fringes of the swamp who yearn to be in the swamp.

In other words, the enemy is greater than it appears.

It means that, regardless of political allegiance, there isn’t a drive to purge Washington DC of bureaucrats and bureaucracy. Instead, those within and on the fringes of the swamp would rather it grew bigger.

If that means growing it at the expense of an elected politician, so be it.

Don’t get us wrong, we have no time for politicians, whether elected, unelected, appointed, or who are there by virtue of birth.

We just find the relentless pursuit of Mr Trump rather amusing. Whether it does all lead to impeachment or not is another thing.

But, either way, we expect the fun to continue for at least another three years and nine months.

Gold surge

As you may have noticed, the markets have been somewhat wobbly in recent days.

Yesterday, the Dow Jones Industrial Average recorded a 1.7% drop. Overnight, it recovered some of that loss. But not all of it.

What’s pleasing is that after stocks and gold both seemed to move in lock-step since the beginning of the year, they appear to have reverted to some form of inverse correlation.

Stocks down. Gold up.

But whereas the gold price has only gained around 2.6% over the past 10 days, another type of ‘gold’ has more than tripled that return.

The ‘gold’ in question is, of course, gold stocks.

And to be precise, we’re talking about the tiny gold stocks as measured by the VanEck Vectors Junior Gold Miners ETF [NYSEARCA:GDXJ].

The exchange traded fund (ETF) contains a selection of mostly Canadian and Australian small-cap gold stocks.

We love gold…physical gold. We love it for its tangibility and value — we also love it because no one has yet found a way to ‘hack’ into gold.

Digital currencies, including central bank-issued money, that’s something else.

But, we also understand that even though gold is a great asset, if you’re looking for a leveraged way to play a surge in the gold price, then punting on speculative gold stocks is about as good a way as any to do it.

That’s certainly star gold-stock tipper Jason Stevenson’s view. Jason isn’t a rabid gold bug, despite his West Australian upbringing. But he knows that if the gold price moves in a big way, one part of the market (tiny gold stocks) invariably moves the same way, but by a much larger degree.

You can check out Jason’s work in Gold Stock Trader here.

Lower

Elsewhere, just when you thought the era of low interest rates were over…from The Australian:

The Reserve Bank may need to cut rates “multiple” times this year according to Credit Suisse, citing reduced fulltime employment and “upward bias” in the latest ABS employment data as cause to revisit its current 2017 cash rate forecast of one cut.

How much lower can rates ago? A ‘bunch’ is the answer.

The Reserve Bank of Australia Cash Rate is 1.5%. The consensus view is that rates won’t shift from that level at all this year.

But consensus views sometimes get it wrong. And, what’s more, with Australian federal government debt above half a trillion dollars, it seems unlikely that rates will rise.

That doesn’t mean they’ll fall either. But if we were to bet, we would bet lower rather than higher…

Higher

The opposite of ‘lower’ is ‘higher’.

We see interest rates going ‘lower’. We see volatility going ‘higher’.

This week, after the latest Trump drama, the US VIX (Volatility Index) spiked to its highest level since…April.



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Source: Bloomberg
Click to enlarge


OK, it’s not much of an event. However, we’ll note that until that spike, as we mentioned last week, volatility had been at its lowest since the early 1990s.

Volatility is a funny old thing. The lower it falls, the more comfortable investors become — or maybe it’s the other way around.

Regardless, it’s just worth noting that low volatility doesn’t necessarily mean that all is fine with the world and the markets. It can also mean that no one has yet revealed the underlying problems that will send the markets crashing.

Remember, in 2007, volatility had dropped to its lowest level since the early 1990s too. That was just before the market peaked.

You know the rest of the story.

Back Monday.

Cheers,
Kris