Woodside, page-5151

Hi Salami,

You have been asked twice to account for the porkies you told in your original note. Yet you offer no explanation - the silence is deafening!

- Your lie about the big beautiful bill... silence.
- So ideologically blinkered you forgot that an increase in USA defence spending is a net positive for Australia, as we rely on the US military... silence

If you don't account for yourself, you run the risk that some people might think less of you...

You choose the most pessimistic of all the USA outlooks - the OECD.

And for inflation you chose the highest of all the outlooks the OECD, again. Let's add some context here:

Summary Comparison

• GDP Growth:
  • Most Pessimistic: OECD(1.6% 2025,1.5% 2026)
  • Most Optimistic: Morgan Stanley(2.9% 2025,2.8% 2026), followed by Deloitte(2.4% 2025,1.7% 2026), assuming milder tariffs and CCI-driven spending (98.0).
  • Middle Ground: IMF(2.2% 2025,1.9% 2026),World Bank (1.8% 2025,1.7% 2026), European Commission(1.7% 2025,1.6% 2026), and The Conference Board (~2.0% 2025,~1.8% 2026) balance tariff risks with consumer resilience.
• Inflation:
  • Highest:OECD (3.2%–3.9% 2025, >2% 2026), driven by tariff-induced price spikes.
  • Lowest:IMF(2.5% 2025,~2.2% 2026) and The Conference Board (2.7% 2025,~2.4% 2026), expecting faster disinflation.
  • Middle Ground: European Commission (3.0% 2025,~2.5% 2026),Deloitte (2.8% 2025,~2.3% 2026),and Morgan Stanley (3.0%–3.5% 2025, 2.1% 2026).

You offered partial info from the Uni Michigan consumer sentiment report and tried to compare to a period long before tariffs were announced. That is a red herring. You may as well have compared to two years ago or ten years before the announcement! What does it really say about the forward expectations?

Comparison of May 2025 CCI and MCSI

1. Values and Trends:
   • Conference Board CCI:
     • Value: 98.0 (1985=100), up 12.3 points from 85.7 in April 2025, the largest monthly gain in over four years.
     • Sub-Indices:
       • Expectations Index:Surged from 55.4 to 72.8 (+17.4 points), Optimism was fueled by the May 12, 2025, U.S.-China tariff pause, with 44% expecting stock price gains (up from 37.6%) and fewer (37.7% vs. 47.2%) expecting declines. Job optimism increased.
     • Source: The Conference Board, May 27, 2025, Sample size 5000 households.
   • University of Michigan MCSI:
     • Value: 52.2 (1966:Q1=100), unchanged from April 2025.

       Sub-Indices:

       • Consumer Expectations (CEI): Rose slightly to 47.9 from 47.3 (+0.6 points), reflecting modest optimism post-tariff pause.
     • Source: University of Michigan, May 30, 2025, Sample size 600 households.

You can speculate all you want on what might happen and try to sew fear about tariffs. I will pay more attention to what is actually happening and ignore your Tariff-driven chicken little doomsday predictions. Let's look at the actual 10 year constant maturity yield instead.




In the late 70's/early 80's the biggest issue was the quadrupling of the price of a barrel of oil from $3 to $12 and the knock on effects from that. Add in loose monetary policy with M2 growing 7% annually, too much gov spending, the FED was not balanced - they focused on employment and ignored inflation, and there were rapidly rising wages.

Today, instead of an oil shock there is a grossly overspending USA government shock. Their annual budget has climbed > 50% from 4.5T in 2019 to almost $7T today. I see more risk in the USA from them not tackling their debt than ever I do from their tariffs (a secondary issue at best).

So if we see higher inflation and interest rates and bonds break look to the corrupt democrats and republicans and the entrenched interests driving a government that consumes a grossly large % of the GDP every year.

2024 Government Spending as % of GDP: 25% of GDP ($6.8 trillion), with a deficit of 6.4% of GDP. Federal spending was ~23% (net outlays), per FRED, with total government (federal + state/local) at 36.2%, per BEA

Again, as an investment thesis I don't pay much attention to presidents, or prime ministers, or headline numbers, or tariffs or analysts or any other prognosticators. Just compare my assessment of a company's value to what the market offers it for on any given day. When it looks really cheap - buy. When it gets too high - sell. It seems to work.

Cuppa


Also to To@newelly - You suggest that China has "mass leverage" over the USA... but as the USA stops buying from China it is China who suffers. The USA was their biggest customer. When you lose your largest and highest margin customer... it hurts.

Now more and more when the USA imports it is from Vietnam, India, Mexico, etc. It is easy, over time, for them to buy from someone else...