Only three things matter for stock prices

Monday, 23 September 2019
Adelaide, Australia
By Bernd Struben

  • A $350 billion carrot
  • Too cautious?
  • In the mailbag…negative rates
  • South Australia investment conference

Do you believe man has stepped on the moon?

It’s OK if you don’t. This is a safe place.

I’m always willing to entertain a good conspiracy theory. And it is odd that no one from any nation has returned to the moon in 47 years. Just because the Ruskies didn’t get there first, doesn’t mean they had no incentive to get there at all.

But the biggest problem with faking something like the moon landings is the sheer number of people involved.

All told there were ‘supposedly’ six successful lunar landings between 1969 and 1972.

On 20 July 1969 Neil Armstrong famously became the first of 12 American men who collectively walked, drove and played golf on the moon. Yes, we’re looking at you Alan Shepard. They also managed to collect some rock samples and do a bit of research.

On 14 December 1972, Eugene Cernan much less famously became the last man — to date — to leave his boot prints in the moon’s dust.

But it’s not just those 12 astronauts and their support teams in the orbiting capsules that would have had to lie about landing on the moon. The cover up would also involve hundreds of ground technicians and scientists. And they would all have to take this massive secret to their graves. Without ever spilling the beans to their families or mates.

With human nature being what it is, the odds of hundreds of individuals keeping that kind of bombshell under their hats for 50 years is essentially zero.

It’s the same reason the 9/11 conspiracy theories don’t stack up. Too many people would need to be involved to ever keep the touted secret plots a secret.

Yet conspiracy theories thrive on doubt. If you can’t categorically prove or disprove something, then how can you be certain it did…or did not…happen?

In the case of faked moon landings, we may have that proof soon. Within five years, to be precise…if Donald Trump gets his way.

More, after the markets…

Markets

Over the weekend, the Dow Jones Industrial Average closed down 159.72 points, or 0.59%.

The S&P 500 closed down 14.72 points, or 0.49%.

In Europe the Euro Stoxx 50 index closed up 18.74 points, or 0.53%. Meanwhile, the FTSE 100 fell 0.16% and Germany’s DAX closed up 10.31 points, or 0.08%.

In Asian markets Japan’s Nikkei 225 is up 34.64 points, or 0.16%. China’s CSI 300 is down 1.49%.

In Australia, the S&P/ASX 200 is up 22.75 points, or 0.34%.

West Texas Intermediate crude oil is US$58.74 per barrel. Brent crude is US$65.00 per barrel.

Turning to gold, the yellow metal is trading for US$1,513.16 (AU$2,235.43) per troy ounce. Silver is US$17.98 (AU$26.56) per troy ounce.

And bitcoin has slipped back below its US$10,000 milestone…barely. One bitcoin is worth US$9,998.11. What’s the outlook for bitcoin and the other major cryptocurrencies? Stay atop all the latest crypto investing advice right here.

The Aussie dollar is worth 67.69 US cents.

A $350 billion carrot

Trump, as you may have heard, is moving forward the United States’ planned return to the moon. The new plan sees astronauts returning in 2024…at a total mission cost of some $350 billion.

The end goal is to establish a permanent base on the moon to use as a launching pad to manned settlement on Mars.

It’s all pretty sci-fi stuff. But that’s the 21st Century for you.

The opportunity for Australian businesses hasn’t been lost on Scott Morrison. Morrison used his visit to Washington DC to announce a $150 million government fund to help Aussie companies compete in the renewed space race.

Here’s the PM, as quoted by The Australian:

The five-year investment will see the Australian Space Agency foster the new ideas and hi-tech skilled jobs that will make Australian businesses a partner of choice to fit out NASA missions…

“It will also support Australian businesses to become more competitive in international space supply chains and to increase Australia’s share in a growing US$350 billion global space market…

There is enormous opportunity for Australia’s space sector which is why we want to triple its size to $12 billion to create around 20,000 extra jobs by 2030.’

Can you hear that sound?

It’s the door opening to billions of dollars in government and private sector funding to a newly revamped industry. Fortunes will be made and lost depending on whose technology and innovative ideas succeed…and whose fail.

Rest assured some of our editors and analysts are already running their slide rules over the companies with the best prospects in this new space race. They may be established companies whose share prices could double on securing a NASA contract. Or they could be little known small-caps, whose share prices could rocket to the…erm…moon if their ideas succeed.

As this story continues to play out over the coming months, I’ll keep close tabs on our editors’ progress. When they believe they’ve come up with a big winner, you’ll be the first to know.

Too cautious?

Before moving on…a little related dose of irony for you.

First this, from the Australian Financial Review:

Australian astronaut Andy Thomas is worried America’s planned return to the moon by 2024 is too rushed and could compromise safety.

He said Australia, as a partner in the project, was morally obliged to point out any concerns as it sees fit.

And secondly this, from the Sydney Morning Herald:

Australians are among the most risk averse in the developed world. An Infosys survey of 9000 people aged between 16 and 25, in Australia, Brazil, China, France, Germany, India, South Africa, the United Kingdom, and the United States, puts us at the bottom of the pile when it came to taking risks.

Moving on…

In the mailbag…negative rates

We’ve spilled a fair bit of digital ink on the rapid growth of negative interest rates across the globe.

At last tally the world has US$17 trillion (AU$25.1 trillion) in negative yielding corporate and government debt, according to the Bank for International Settlements (BIS). Or about 20% of global GDP, to put the figure in some kind of perspective.

On the arguably plus side, ever lower interest rates tend to usher in ever higher stock and property prices. For as long as the game lasts.

They also tend to send the gold price higher. Which should be good news for Greg Canavan’s favourite gold stock plays.

But aberrations and the eventual implosive grand finale aside, negative interest rates certainly don’t spread the wealth evenly. As reader Colin points out:

For decades now anyone fortunate enough to have money in the bank has had to pay tax on interest earned, what happens when there is negative interest rates and you have to pay the bank to hold your money? Bet you will not be able to claim that as a tax deduction, same as when you lose money selling shares. Always the worker ant loses out what a bulls**t system, if you’re a worker ant that is.’

Never in the history of the world has any governing body favoured the worker ant. Those calling the shots will always game the system in their favour.

So I won’t take Colin up on his bet. Indeed, it will be a cold day in hell before worker ants see tax rebates on the negative rates they pay their banks for the privilege of holding their money.

Finally…

South Australia investment conference

Just a quick note to let you know I’ll be attending Exchange SA here in Adelaide on Thursday, 26 September.

It will be my first time at this particular conference, now in its fifth year. But I’m keen to see if it lives up to its promised ‘South Australia’s premier investment conference’ billing.

A range of executives will offer insights into how their companies are performing along with their outlook for the midterm future. Presenting companies are involved in agriculture, banking, oil and gas, mining, technology and travel. I’ll give you some of the highlights next week.

If you’re planning to attend, come by and say hello. I always enjoy meeting readers in person. If you don’t have tickets yet and are in the area, check their website for details.

Port Phillip Publishing is in not involved with this event in any way. I just wanted to pass this on to you.

That’s it for today.

Cheers,
Bernd