WWN#42 – Trump & Australia: Trade Agreements & Tariffs

POTUS - Steel and Aluminium Tariffs.jpg

Source: Reuters

What’s Been Happening?

In January 2017, US President Trump signed a presidential memorandum to withdraw the United States from the Trans-Pacific Partnership (TPP). Trump had previously argued that the agreement harms the U.S economy and the TPP was a “disaster done and pushed by special interests who want to rape our country”.

Despite their most influential country dropping out of the agreement, trade ministers from 11 remaining countries decided to press ahead in March this year, saying that they were showing resolve against protectionism through global trade. The new TPP deal covers Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Altogether, the pact covers 500 million people who account for 13 percent of the global economy.

What Now?

Trump has alienated the United States from its allies and other countries further by declaring that he will impose levy penalties of 25 percent on steel and 10 percent on aluminium imports as part of his “America first” pitch for local jobs. Exemptions based on national security grounds and the economic relationships between various countries and the U.S will ideally be granted within the two week waiting period before the tariffs take effect. Neighbours Canada and Mexico have already been excluded by Trump as long as they negotiate a new North America Free Trade agreement.

On the other hand, China immediately threatened to curb imports of U.S soybeans in retaliation while the E.U has simply stated that they will react firmly with countermeasures to be proposed within days.

Following the announcement, Australia’s PM Malcolm Turnbull phoned President Trump and said “a good and very productive discussion” took place. It was verbally confirmed between the two that tariffs would not be imposed on Australian companies exporting steel and aluminium. Turnbull has said that he reminded the U.S President of the good trade and military relationship between and the US. 60 percent of Australia’s “warfighting assets” are derived from the US and thousands of U.S marines rotate through Darwin every year.

What’s Next?

There are concerns that the implementation of tariffs can launch a trade war that will hurt other industries under a tit-for-tat approach. House Speaker Paul Ryan hopes that Mr Trump would “consider the unintended consequences of this idea and look at other approaches before moving forward”.

Some business leaders suspect that the steel and aluminium moves are a prelude to an increasingly protectionist administration, with upcoming moves likely to target China who, according to the Commerce Department, sold $375 billion more goods and services in the United States than what it had ordered.

There is also no time limit on how long the tariffs can last. If Trump wants to change the tariffs or introduce exemptions, he can file follow-on orders. Although countries can file a complaint at the World Trade Organisation, it would take years to make and enforce a ruling against the U.S who will likely argue that tariffs should be allowed to protect national security.


WWN#41 – Aussie Stock Market Plunges: Should You Buy, Hold or Sell?

ASX200 February Fall.png

Source:  Yahoo Finance

What’s Been Happening?

At the beginning of February, the benchmark 10-year bond yield rose to a four-year high on the back of positive payroll data being released in America. With wages rising and unemployment falling, the data acted as a signal to many that the U.S. was inevitably about to start increasing interest rates.

A week prior to the news, the Dow Jones Industrial Average had its highest closing record of 26,616.71 set on January 26. This meant investors were already quite cautious of a pull-back and inevitably the release of positive economic data triggered an immediate sell-off in the stock markets there and around the world.

After falling slightly on Monday, the Australian stock market had one of their worst trading sessions with $56 billion in value wiped off the stock market on Tuesday. The S&P/ASX 200 dropped 3.2% which makes it the worst one day fall since September 2015. There was some reprieve on the following day as bargain hunters came in and stabilised the market which recovered about 1.2%.

What Now?

On Thursday night, the sell-off on Wall Street deepened and the Dow Jones Industrial Average lost 4.2%, taking the losses since last Friday past 10 percent, the definition of a correction. That led to renewed selling on Friday for Australian shares, albeit it was only a 0.9 percent drop to finish the session at 5838 points. Over the week, the cumulative losses add up to 4.6% and the total value of the Australia sharemarket has dropped by more than 70 billion.

What’s Next?

Is it time to buy? Focus on the Fundamentals

Head of equities research at Morningstar, Peter Warnes, has commented that: “It’s way too early to go bargain hunting” as there will be reliefs but more downside is likely to develop over the next few weeks. Investors are likely to wary as volatility remains high.

Having said that, stock market pull-backs can be an advantageous time for investors to pick up stock more cheaply. During periods of volatility, individual stocks are more likely to outperform the market especially as the reporting season has begun in Australia and companies have started to report their half yearly earnings.

Is it time to hold?

Currently, we are in correction territory and corrections are generally temporary in nature. Although the U.S. political situation is a mess, the U.S. economy is actually doing fine (higher wage growth and lower unemployment) and therefore there is no definitive cause to be alarmed. Unless you have reason to believe that a stock will never reach that price again, it would be silly to sell now and lock in losses.

Is it time to sell?

Now is not the time to panic sell. Compared to overseas markets, the losses sustained in the Australian stockmarket are mild. It’s still $44 billion ahead of where it was this time last year and $220 billion ahead of where it was three years ago. Furthermore, even if there are a couple of rate rises, the interest rate is still relatively low in historical terms. In Australia, reporting season has only just begun and there are expectations that corporate earnings should rise by about 7% or so which should support stock prices that have not risen as sharply as in the U.S.

In Warren Buffet’s memorable words: “Be fearful when others are greedy and greedy when others are fearful.”


WWN#40 – South Korea Qualifies Ban on BitCoin!

South Korea Ban Bitcoin.png

What’s Been Happening?

In late 2017, the Korean government had been making it very clear that they wanted to bring the speculative activity of cryptocurrency trading under control through its warnings that it would be conducting on-site investigations of exchanges and looking at a “cryptocurrency tax”.

On Thursday, South Korea’s justice minister Park Sang-Ki was reported to have said that the justice ministry is “basically preparing a bill to ban cryptocurrency trading through exchanges”. The announcement sent bitcoin plummeting by as much as 21 percent and nearly all other cryptocurrencies saw significant losses. South Korea is a major hub for virtual currency transactions, where they account for more than 20% of all bitcoin trading and more than one third of South Korean adults hold some form of cryptocurrency.

Just a few days earlier, a popular cryptocurrency price tracker CoinMarketCap removed prices from South Korean exchanges because the coins were trading at a premium of about 30 percent compared to other countries. This likely led to more confusion than necessary and triggered a broad selloff among investors.

What Now?

The statement made by Park Sang-Ki was later moderated by the presidential office on the following day which said a ban was under review but no policy changes had been made as it was only one proposal under consideration. A petition on the website of the presidential Blue House has drawn more than 120,000 signatures opposing the ban.

The Ministry of Justice apparently made the independent announcement without the consent of the Ministry of Finance and Strategy and other government agencies involved in the South Korean cryptocurrency regulation task force.

What’s Next?

In light of the government’s announcement that cryptocurrency will not be banned in the near future, it is likely that the South Korean government will move towards regulating and fostering the local cryptocurrency market.

A spokesperson last year said that regulatory roadmaps set by other countries such as Japan and U.S. are likely to be followed so it is unlikely that a cryptocurrency trading ban will be imposed in the long-term as well. With more and more investors seemingly jumping in to cryptocurrency craze in Korea from college students to housewives, there needs to be a push for stronger regulatory requirements especially from the exchanges that foster cryptocurrency trading (e.g. Coinone and Bithumb in Korea).


WWN#39 – Apple To Buy Mobile App Shazam

What’s Been Happening?

Founded in 1999, Shazam is the company that invented an app by the same name that can identify music, movies, advertising and television shows by using the microphone on a smartphone or computer based on a short sample played. It then sends information such as the artist, song title and album back to the user and directs them to services where the full song or sound clip can be found such as ITunes, Spotify or YouTube.

Since 2013, it has consistently maintained a top ten spot in ITunes’ most downloaded list and has exceed 1 billion downloads to date. It also has more than 175 million monthly active users globally across IOS and Android. The US is the largest single market with about 20 million active users in November this year while the UK had about 4 million in the same month.

What Now?

Apple has acquired Shazam to the tune of about $US400 million ($AU531 million) for the UK-based start-up.

The deal was announced on Monday and would come as a disappointment for some of Shazam’s investors as the company was previously valued at about $US 1 billion when it closed its last funding round in 2015.

“Apple Music and Shazam are a natural fit, sharing a passion for music discovery and delivering great music experiences to our users”, Apple said in an emailed statement.

What’s Next? It’s all about the data

The acquisition of Shazam will be a potential benefit to Apple’s upcoming HomePod speaker.

However, the real opportunity isn’t just about adding music recognition capabilities to Apple’s existing product pipeline, it’s the provision of a wealth of Shazam user data that Apple can analyse and utilise. It can act as an early warning system to identify music trends or discover which songs are starting to get popular. It can also now potentially use the data from Shazam to see which songs lead to an Apple Music subscription or other subscriptions.

It’s therefore highly unlikely that Apple will discontinue the standalone Shazam app. The fact that there is a 3.5 billion internet-connected consumers who aren’t paying for music streaming means that there is a very large untapped market for Apple Music. Shazam could prove to be the mainstream audience accelerator that Apple Music obviously needs.


WWN#36 – What’s Different? IPhone X Released

What’s Been Happening?

The iPhone 8 and 8 Plus were released on the 22nd September this year. Compared to its predecessor, the screen, display and cameras were left largely unchanged. The biggest visible difference would be the glass back which replaces the aluminium used in previous versions. It was a necessity as the new wireless charging feature would not have been possible without it. Inside the IPhone 8, there is an A11 Bionic chip that has been touted by Apple to be 25% faster than the previous A10 chip.

In terms of battery life, the battery on the IPhone 8 is actually smaller than the 7 but optimisations on the new chip seems to make it last longer. Overall, the updates are all quite small.

What Now?

Price Guide IPhone 7 IPhone 7 Plus IPhone 8 IPhone 8 Plus IPhone X
Minimum Price (in AUD) $849 $1049 $1079 $1229 $1579

On the 3rd of November, the IPhone X was released to Australia. More than four hundred people lined the streets around Apple’s flagship Sydney store proving it to be significantly more popular than the IPhone 8 despite the $350 price hike. If I was to describe the IPhone X in a sentence: the IPhone X is the IPhone 8 Plus but with all of its features crammed into a body that’s closer to the size of an IPhone 8. However, there are also a few new distinctive features:

  • Face ID – Unlike Samsung’s attempts at facial recognition which have been insecure to date, Apple’s Face ID actually seems to work well. As one user reported, the phone can still recognise you even if you wear a fake beard or glasses. And instead of a one in fifty thousand chance that someone would be able to open your phone with their fingerprint, with Face ID that becomes a one in a million chance. Face ID replaces the fingerprint reader “Touch ID” with the home button being removed.
  • Super Retina Display – At 458 pixels per inch, the resolution is crisper than the IPhone 8 Plus and IPhone 8 (401 and 326 ppi respectively). Without getting too technical, this has been made possible by Apple’s switch from an LCD panel to an OLED display panel.

Notable Mentions:

  • Battery life on the X is purported to be two hours longer than the IPhone 8 (14 hours vs. 12 hours).
  • Dual Cameras – According to Business Insider, the cameras on the back have markedly improved with dual optical image stabilisation which make for less blur, particularly noticeable in videos. The front-facing “TrueDepth” camera with all of its different components makes selfies look more like professional photos.

TrueDepth Camera

Unfortunately the IPhone X stock will be extremely limited until well into 2018 as Apple has reportedly run into significant problems mass producing the “TrueDepth” camera sensor. So for the people who did not line up for an IPhone X on launch date, you may have to wait a few months longer for this one.

What’s Next?

  • Until now, Apple has followed a vaguely chronological naming convention. As we’ve reached 10, it is unlikely that the next IPhone will be called IPhone 9. The big question is whether the next one will be IPhone 11 or will Apple invent a new name?
  • Better displays, better cameras and better processors. It’s likely that the next-generation IPhone for 2018 will contain at least some improvement in one of these areas as Apple has achieved this with every new IPhone release. It’s hard to see though how this can be done next year without increasing the size or weight of the IPhone.
  • The introduction of animated emojis “Animoji” in the X signal that further development in augmented reality is likely. There are already applications available within the App Store that you can download and use that incorporate augmented reality functionality (e.g. IKEA Place lets you visualise its furniture in your home).
  • Although the chances are very slim, I can only hope that the next IPhone will be cheaper than the X…


WWN#35 – Changes Overdue for CBA’s Compliance, Customers and Culture

 Commbank’s latest initiative – Rewarding Service and not Sales

What’s Been Happening?


  • Commonwealth Bank accused of ‘serious and systemic’ breaches of anti-money laundering and terrorism financing laws by AUSTRAC. For each of the 53,700 contraventions, the maximum penalty is up to $18 million. $8.9 billion was deposited through CBA’s intelligent deposit machines before the bank conducted a money laundering risk assessment.
  • A week after the scandal was made public, the Commonwealth Bank’s board has announced a cut to executive pay and short-term bonuses for the financial year that ended.
  • In mid-August, the bank announced the retirement of CEO Ian Narev who will leave before July 2018.


  • Perhaps in an effort to improve its image, CBA announced in late September that it will remove ATM fees charged to non-customers for using its ATMs which was followed in quick succession by Westpac, ANZ and NAB. As a result, fees will be abolished at 3400 CommBank machines, 2300 ANZ machines, 2925 Westpac machines and 1300 NAB machines.


  • In early October, rumours of a class action led by Maurice Blackburn against Commonwealth Bank for the AUSTRAC debacle became reality following the announcement that the funding for the litigation by IMF Bentham was now unconditional.
  • Scathing criticism came from the country’s largest consumer group, CHOICE, about the Commonwealth Bank’s Dollarmites scheme which allowed “kickbacks” to schools to “flog their products”. CBA also pays schools $5 for every account opened via the program, and 5 per cent of every deposit made at school, up to a maximum of $10 per deposit.

What Now?

Last Friday (13th of October), CBA announced that it would immediately remove “financial outcomes” from a bank teller’s performance assessment criteria, with customer service being the sole measure of a teller’s performance.

This is seen as the latest move by the bank to endear itself to customers and shareholders following the AUSTRAC money-laundering scandal and the call to ban the bank’s Dollarmites program by CHOICE.

Executive General Manager, Angus Sullivan, said “the new remuneration plan will support and encourage [our staff] to have better quality conversations with customers, understand their needs and provide the best possible service”.

What’s Next?

Moving away from sales-based incentives and recognition programs and towards value-based rewards is certainly a step in the right direction. As Australia’s largest bank, it will still take a number of changes before the bank can be back in the spotlight for all of the right reasons instead of wrong ones.

In her opening statement before the House of Representatives in Canberra, CBA Chairwoman Catherine Livingstone outlined the renewed focus for the bank in:

  • Encouraging a customer-centric mindset that is shared by both management and employees across the company so that customers’ needs are met and outcomes are improved.
  • Reviewing and implementing better monitoring procedures for cash transactions, especially ones that flow through the IDMs.
  • Meeting and exceeding overall compliance obligations to AUSTRAC
  • Fostering an organisational culture that strengthens accountability and compliance



WWN#33 – Ban Overturned: Women Can Finally Drive in Saudi Arabia!


What’s Been Happening?

Although Saudi women have consistently raised the issue by legal and social means, little progress has been made to allow them to drive due to the vague nature of Saudi law, which complicates the matter. Whilst Islamic law or Saudi traffic law does not prohibit women from driving, they are not issued licences and are detained if they attempt to drive.


  • In 1990, 47 women were arrested for driving in protest against the driving ban and some consequently lost their passports and jobs.
  • In 2011-2012, there was a social media campaign with Facebook and YouTube being used to encourage women to drive and inspire others to do the same, promoting change. Whilst the response was largely positive, women who were caught driving were still detained or arrested.
  • In late 2014, two Saudi women were detained for more than two months when they tried to cross the Saudi border with a licence obtained from the United Arab Emirates in an act of defiance.

What Now?

Saudi Arabia’s King Salman has issued a royal decree allowing women to drive, in a historic decision that will make it the last country in the world to permit women behind the wheel. The decree stated that the majority of Muslim scholars on the country’s highest clerical council agreed that Islam allows women the right to drive. From June 2018, women will be able to obtain driver licences. Prince Khalid bin Salman has further stated that women will be allowed to obtain driver’s licences without having to ask for permission from their male guardian. This move is seen as part of the government’s “Vision 2030” plan for social and economic reform as the kingdom prepares for a post-oil era.

A newly-formed committee will first develop a plan on how to implement the order in accordance with religious and regulatory standards, presenting its recommendations in 30 days.

What’s Next?

The announcement is a move in the right direction but activists say that there is more to be done. Other violations of women’s rights persist due to the country’s strict laws and guardianship policies. A male guardian’s consent is required for any female to perform even the most mundane activities. Some examples are: getting a passport, travelling abroad, opening a bank account, getting a job and dressing how they want – all of which require guardian consent.

For Saudi women, gaining the right to drive is not the end of the struggle. As Muna AbuSulayman, a Saudi television presenter, has said: “It didn’t solve all the issues, but it made them one less.”