Finance & Fury Podcast

Welcome to Finance and Fury, The Furious Friday edition Continuing SDGs – today we are covering Economics or SDG 8 First, look at the economics of the UN itself – something never talked about Who pays for the UN – Member states - A complex formula - US pays most at 22%-28% of the UN's different budgets Aus - Regular budget for AUD - $86m (rough estimate) in 2016 - $58m USD – not too much But the official budget doesn’t include other donations – Gov agency voluntary contributions (specified or unspecified) – all revenues from government donors – Total was $747m p.a. USD ($1.1bn) – across 21 UN organisations A lot of money being shipped to UN when we have a desperate need to more infrastructure and helping create more liveable areas outside of Cities – Up from $601m in 2014 – massively increased - UN revenues massively increased – What does the UN spend money on? 2016, the organisation's total expenditures was nearly $50 billion, with the US financing about $10 billion, or one fifth, of that. Even with cos

Welcome to Finance and Fury, the Say What Wednesday edition Today's Question is from Gabriel With the latest news around trade wars, inverted yield curve and EU collapse, I would love to hear your thoughts on how to protect a portfolio, is it worth using hedging instruments or changing the assets mix? Do you use options? What do you think about using them as a hedge?   Wealth Preservation – Concerns to account for – Most asset classes aren’t looking good Share market collapse – many things that can trigger it - Hyper Synchronicity – Event occurs all at the same time without any apparent event - herd behaviour – governing dynamic which underlies the whole of human experience and history — social, emotional, psychological, and spiritual - probability transitions between emergent states of order and nonlocality –thought of long bull run makes people for different reasons sell off assets to profit and reinvest - If the EU breaks apart – I think is inevitable – when? No idea - Covered EU in 3 ep series Nov last

Welcome to Finance and Fury Last Monday ep – Cash Restrictions Bill – Went through black economy and outline of regulations Today – Go further into implications of this – along with other considerations such as bail-ins and negative rates why bill needed – not for the black market Case for black market is a guesstimate – 3% of GDP — roughly $50 billion - recommendations given by KPMG, along with the guesstimate showing the 65% increase in black market economy over past 3 years This figure, it said, was a qualitative estimate (guess), based on a wide definition of what activities make up the black economy - activities including underpaying wages or paying for work cash-in-hand, under-reporting income, sham contracting, ABN and GST fraud, illicit tobacco, money laundering, unregulated gambling, criminal acts, counterfeit goods and illegal drugs - Proper modeling on the economic and social costs is work has not yet been done - Yet the Government is moving ahead with proposed laws that could make people crimina

Welcome to Finance and Fury, The Furious Friday edition   Today we start discussing the SDGs in relation to The economy – few SDGs this relates to Go through each in detail in separate episodes – but this ep is an overview into how deep this goes. UN goals as part of Agenda 2030 – Quick list of these - SDG 8 – Decent Work and Economic Growth SDG 9 – Industry, Innovation and Infrastructure SDG 10 – Reducing Inequality SDG 12 – Responsible consumption and production SDG 17 – Partnerships for the Goals – Companies come into it Before we start breaking down each of these next episodes - Question: what do Smart Criminals do? Answer: never commit more than one major crime at a time Why? Chance of getting caught for both goes up exponentially – Similar for Gov Policy if change is made at once – if you saw the true end game of these policies – hint – another forced reindustrialisation like each of the programs done by Stalin and Mao – nobody would want this – But do it bit by bit, by bit, all through legisla

Welcome to Finance and Fury, The Say What Wednesday Edition This week's question comes from Cameron "One small question we have been pondering. Our parents are gifting a small amount of money monthly to our 1yr old son (their grandchild). Rather than let in mature in a bank account we are interested in some sort of passive asx investment considering this could grow until he was at least 18. Any thoughts or commentary around this would be great to hear!"   Today – Talk about family investing options – either for your kids or if grandparents are wanting to gift money to kids   There are a number of different considerations needing to be taken (mainly whose name the investments should be made in, along with the end purpose of the investments)   First - Funds for your Kids – What is the purpose? Something they can access at 21 to put towards buying house, holding still, etc.   Considerations – Are the funds being invested or not? No – Less to worry about Banks are happy to open accounts in kids names – take m

Welcome to Finance and Fury In today's episode, I thought it was important to cover Currency Bill - Might have seen in the news – headlines about the $10k transaction – Currency (Restrictions on the Use of Cash) Bill 2019 – what we are talking about – had first round through Parliament Goes deeper - Talked about this topic last year in October – Cashless Society episode – link to episode Policy is trying to control behaviour – by making the undesirable activity illegal – regardless of validity or effect Gov wants all money accounted for – which is far easier when it is electronic rather than cash based – A lot to unpack in this – you might have seen this reported on in the news – give a quick recap on the bill – Then go through why these extreme measures are needed to help get out ‘black market’ economy under control – outrageously high when compared to 0% of GDP, at around 2%-3% of GDP - being satirical (later) Quick overview of the bill – Now - people could be jailed for two years and fined $25,20

Welcome to Finance and Fury, The Furious Friday edition.  This is part 4 of the series around the UN's Sustainable Development Goals.  Going through the first SDG today – SDG4 – Education If you haven’t listened to the first 3 – Maybe go back and check it out as today – finish the first part on people – So far gone through the UN, media, and trauma-based society Previous episodes: Part 1 UN Part 2 Media Part 3 Trauma-based society Today – Do a quick overview on SDG 4 - Education - Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all Run through the history of education – look at education model today – Look at current formal education as part of the SDG4 – how it is being implemented and by who within Australia Education for sustainable development (ESD) is explicitly recognized in the SDGs as part of Target 4.7 of the SDG on education UN hopes to educate children on the importance of the SDGs - “By 2030, ensure that all learners acquire the knowledge and

Welcome to Finance and Fury, the Say What Wednesday edition  Today's question comes from Jessica. Jessica – Hey Louis, You mentioned something about a Yuan devaluation in the Tech Share episode. I’m just wondering what this is and why a country would do this? Thanks Jessica – Does sound weird – a country choosing Devaluation - an official lowering of the value of a country's currency within a fixed exchange-rate system China's monetary authority formally sets a lower exchange rate of the national currency in relation to a foreign reference currency or currency basket (USD) – Beggar thy neighbour policy Exchange Rates – Fixed v Floating Floating exchange rates system — when exchange rates are determined by market forces and not by government or central bank policy actions – what we are used to in Aud, Usd, Eur – while note controlled influenced by MP The decrease in a currency's value relative to other major currency benchmarks is called depreciation increase in the currency’s value it is called appreciati

Welcome to Finance and Fury,  Inflation and interest rate – real rates RBA update – Inflation and interest rates RBA - cash rate unchanged at 1% - following two consecutive rate cuts – past ep, talked about loans and property pieces Today – Look at the hidden wealth killer – inflation – loss of real values in relation to loans – Low rates with low inflation can be worse than higher rates with higher inflation saying it will take longer than earlier expected for inflation to return to the 2% target while economic growth has been lower than previously forecast The RBA is seen cutting interest rates later in the year as escalating US-China trade war tensions would pose a mounting risk to the economy – Make currency cheaper for exports Quick update - Excerpt from the statement by the governor Philip Lowe:  Economic growth over the first half of this year has been lower than earlier expected household consumption weighed down by a protracted period of low-income growth and declining housing prices, higher

Welcome to Finance and Fury, the Furious Friday Edition Today's episode is number 3 in this series – check out last 2 FF eps  episode 1 episode 2 Last ep – talked about media and the realities that they create – but they are not consistent – and massive hypocrites Talked about conspiracies a bit in the past 2 eps – the media labels anyone who questions the official narrative as a conspiracy theorist But wait – didn’t they have their own conspiracy theory on how Trump was a Russian agent? Putin and he had secret deals to overthrow the US? 3 years every day there were constant stories of reports of sources from an overheard conversation – blah blah – nothing – They not only were conspiracy theorists – but promoted that - and in a treasonous way – turning the people of the world against one person – US media lying about their leader to have him removed But when someone else questions what they say – conspiracy theorist!!!!! – If you question their conspiracy you are the crazy one It might take a little whi

Welcome to Finance and Fury, the Say What Wednesday edition.  Today's question comes from Mike - "Hey Louis, Wondering if you think buying Tech shares are worthwhile"  We have the FANG and the WAAAX – US – FANG - Facebook, Amazon, Netflix and Google Aus – WAAAX - Wisetech, Afterpay, Altium, Appen, and Xero (known collectively as the WAAAX stocks)  Intro Find that the nature of investments is very binary – some are very for it, some against it – like BTC True with tech companies - some with no earnings profile - so polarised the local investment community Those buying into the company brand, then those buying based around values and trends   Factors – Valuations and Fundamentals – Are they a bubble or good long term holds? forward price-to-earnings ratios – Growth shares normally about 25 to 30 in AUS, USA lower at about 15-25 – for tech different FANG share - average is a 50 PE WAAAX - over 100 times forecast earnings to almost 170 times earnings for the 2019 FY The valuation premium for growth is

Welcome to Finance and Fury,  Past few Monday eps on Share concentration – and the holdings and influence that super funds have Today – talk about the legislation put into place and the plans going on now where you might end up renting an apartment from your super fund or bank The plan to help increase apartment supply – decline in prices = lower incentive for developers as a build to sell model – from slumping demand for apartment building New residential product: “build-to-rent” Won’t help Australia’s housing affordability stress, may make it worse, but it helps to achieve public policy objectives - widened housing diversity – for affordable housing close to city centres enhanced build standards – Avoid develop to sell disasters like Opal towers better-managed and secure form of rental housing – economies of scale from LCLs – which we will run through Look into other areas this has been implemented to see how well objectives met   What is it? This refers to apartment blocks built specifically to be rente

Welcome to Finance and Fury, The Furious Friday edition.  Episode 2 in this larger series - The last episode – Talked about historical events – resulted from people acting out their conspiracy – act of making plans with a counterparty to commit an unlawful or harmful act – if it would be a crime to do, known as a criminal conspiracy – Conspiracy = Planning to commit a crime in most cases – but people who today are pointing out historical evidence surrounding events are now labelled a ‘conspiracy theorist’ based around what is outside of the consensus – Some might call that curious – doesn’t mean that they are correct – but interested enough to gather their own information and see what is there – and does it stack up to what other sources have said? This is where the media is damaging – not only polarising but it creates two different realities for people People act based around what they believe to be true – from heuristics, learning, history, etc. Use CNN and Fox as examples, or Sky vs ABC in Aus – both

Welcome to Finance and Fury, The say What Wednesday edition where we answer your questions, and sometimes questions from people from the gym – such as today Is this a scam – moneysmart have a page on this – which is good resource – give a quick summary of this – but trouble is that while you can read it and research the sort of things to look out for - so can the scammers. Scammers adapt to get around the warnings or rebrand to avoid public scrutiny. Imagine if you got a call from a Nigerian Price who just needs you CC number to buy a taxi ride home, but he will give you $100k in return. Works? Not today – we are all aware of this trick – but back in the 80s to 90s it was slightly more plausible – no smartphones to order uber, or mobile phones to call the people he needs, so you would be talking to him on your landline – assuming that he is at a payphone calling random numbers as he doesn’t know right number to call and just spent his last 50c on this call – hence why this did actually work at one point of

Welcome to Finance and Fury Today we are discussing the concentration risk Last week – how the modern banking system acts like dominos failing– Due to their liabilities and obligations to one another this week – look at the other side of the balance sheet – Which is the Equity Holders – Shareholders – who owns the shares of banks Also – the concentration risk that just a handful of companies have in the overall size/weight of the Aus Share Market. Plus – Look at two events that every bank just did as this is a real-world example   Concentration in the index – Complex with lots of elements – break down major ones Remember – Big 4 banks – including Macquarie = 5 of the top 8 companies on ASX by market cap Australian bank shares – ownership and connectivity – beyond the derivative concentration representing 23% of ASX300 - IMF report in 2012: big four controlled 88% of residential mortgages and 80% of deposits. biggest six American banks held 30% of total deposits not just banking: the big four own 53% of

Welcome to Finance and Fury, The furious Friday edition Intro ep to a new FF series – probably going to be the biggest Today – episode to give the bird's eye view of the overall topic - massive topic - ranges from education, energy, transportation, medicine prices, along with 1,000 other things  Spend a number of episodes on each of these elements - look at finer details – may seem unrelated – Everything in this series - form part of the 17 SDGs set out by the UN in Agenda 2030 This may be a bit long – lots to initially unpack - but very important ep – side to history most people don’t know about – that still affects us to this day What is Agenda 2030? Most people haven’t probably heard about this – that is okay – not discussed/addressed often – but it exists 193 countries signed on to this almost 4 years ago – we were one of them (Australia) If you are one of the few who have heard of this – probably had one of two reactions, First thought of the conspiracy theories that are brought up in relation

Welcome to Finance and Fury, the Say What Wednesday edition   Hi Louis, My wife and I a looking for ways to buy a home, given some credit history and income stability challenges. I was hoping to get your thoughts on Rent-to-own arrangements. I really enjoy your podcasts, thanks for doing it.   Thanks Cameron!   What you need to know about rent-to-own home schemes Rose out of current market conditions - A perfect storm of rising living costs, “low and slow” wage growth and increasing house prices – task of saving for a deposit for a $800k place takes longer than $200k place alternatives - rent-to-own schemes is becoming a choice for people looking to buy a place   What is rent-to-own? Rent-to-own schemes - leasing agreements that afford renters the right to buy a home at the end of a pre-determined rental period, at a price agreed prior to signing the agreement Sets in stone the future sale price - means you may potentially buy a home for a cheaper price can also work against the buyer, if the market e

Welcome to Finance and Fury snuck this episode in ahead of time – only reading about news yesterday – need to do some further digging – but is it Time to sell shares in anticipation of a crash? Today – run through some news that you might not have seen – financial troubles of DB, but also China’s bank runs   First - A lot of elements to it – financial crashes are never due to just one event – chain of events – think of it as an avalanche – snow builds up – eventually, there is too much – large vibration (sound, contact) = slow rumble at first, but as it takes off and wipes out most of what is in its path – Share market crash is similar is there is often a run-up in value – if it has come from debt, derivatives, expansion of money supply, further driving irrational exuberance – Then there is an event that requires a contraction in the money supply – i.e. how much is invested versus how much debt is owed on it How connected they are is also a factor - Banks Largest shareholders are other banks or financial in

Welcome to Finance and Fury, The Furious Friday edition.  In money system – need a reserve – gold, currency – gives a floor value which gives confidence Doesn’t provide much stability – Most central bankers use the same terms when talking about current international financial system – Incoherent – You have the AUD to USD drop, gold moves one direction, - completely disjointed – based around the models of international finance – not what they predict will happen – but still trying to manage Floating currencies are not stable - financial war easier – There has been a currency war going on since 2010 Remember QE – US dollars and treasury issues – what happens if your currency is pegged to USD? China – had to massively increase their money supply as well to keep currency exchange low – US growth from consumption, while China growth from exports – Yuan goes up, exports down But printing a lot of Yuan created inflation in china, along with the rest of the world – food, oil, commodities, USD is a form of global

Welcome to Finance and Fury, the ‘Say What Wednesday’ Edition. We recently had an awesome email from Zoe about a potential market solution following the ‘Solution for pollution’ episode last week; “We sort our cans from our mixed recycling in our Sydney CBD office building to donate the 10c return to charity. We collect 50 cans per week on our floor which is on level 22 of a 23-level building. Staff are incentivised to sort their waste through the small charitable 10c donation. However, it is difficult to return cans in the city as there is no spare space to hold sorted recycling. This could be fixed if we could hold sorted recycling in our office buildings. Rather than sending mixed and often contaminated waste to large holding areas outside of the CBD, we could send clean product directly to appropriate recycling facilities.  There are hundreds of office building across the country holding contaminated recycling then paying waste companies to remove their rubbish. With a small 10c donation to charity for e