Karl Mars Bar is a Martian based and universally acclaimed Fund Manager. He is visiting Earth for his 2015 Investment Review. We caught up with Karl during his attendance at the Paris Climate Conference. Here is an edited text of the interview. Clime: Welcome back to Earth. Karl: Thank you for having me. It's great to be back for my 99th visit on Earth - I am beginning to feel like Bob Hope. Clime: So how does the Earth look on this trip? In your view have things improved and are there investment opportunities for the Martian Future Fund? Karl: I would say that the Earth presents pretty much the same as it did a year ago. In the main it is the same people running the planet and doing the same things as they were on my last visit a year ago. "Groundhog Day" flashes across my mind. Same mediocre people doing the same things with the same results. It wouldn't happen on Mars given our policy of enforceable eviction for incompetence. Clime: Where do incompetent Martians go if they are evicted? Karl: Earth. Clime: Are evicted Martians gainfully employed on Earth? Karl: Yes, and most have become career diplomats and bureaucrats. Some are politicians and one actually headed the International Soccer Federation. Hopefully the new guy will not be seeking bribes from Mars to host the 2030 World Cup. Clime: Is there an easy way to identify the ex-Martians who hold senior positions? Karl: Apart from their ability to keep their jobs without actually doing anything they are generally identified by their constant sun tans. They holiday on Mars and we have great tanning weather. The tan of course covers over their green blemishes. Figure 1. Sun Tan Source. The Australian Clime: We noticed that you were in Australia recently. What was the purpose of your trip? Karl: It is important for the Martian Future Fund to see the new Government in action. The Martian government has been reviewing Australia's desire for a Free Trade agreement with Mars. So I was just checking that your new Government hadn't come to their senses and dropped this policy. Clime: What's wrong with a FTA with Mars? Sounds like a big bold new initiative. Karl: Do you really think so? An essential part of the deal is the scrapping of all import tariffs on Martian goods landing in Australia. That will cost your country billions in revenue and expand our trade further. As you produce nothing that we want then I cannot see the benefit and I told this to your trade officials. Figure 2. Alien Investment Source. CartoonStock.com Clime: What was their response? Karl: Look they are all old mates from Mars. They were evicted years ago and are keen to do anything that entails a regular free trip back home. A FTA with Mars is a godsend to them and it means they don't have to go to India for a FTA negotiation even though that would be a much better opportunity for you Aussies. But watch out that India doesn't by pass Australia and go straight to Mars with an FTA. They are building a space rocket at this very moment. Figure 3. Space Club Source. Heng Clime: Did you get to meet the new Treasurer and review his budget update and forecasts? Karl: Yes, I certainly did and we went through his MYEFO update. That is the Martian Year End Financial Options. We do this each year to determine if we want to exercise our option to buy any more Australian Government Debt. I can certainly say we are interested and more so if he can manage to get rid of the AAA credit rating. He assured me that the Government advised by Treasury (yes, more Martians) are working aggressively towards a credit rating downgrade. Clime: So why is that good news? Karl: Are you serious? Australian bonds will rally on a downgrade just like the space junk bonds issued by Europe and Japan. Downgrades are good for bonds and their owners. More so when you realise that most bond managers are ex-Martians. Clime: Your view of the new Treasurer? Karl: Look I hate to admit this but you Aussies did the right thing by replacing the former guy who was a Martian. It's interesting how many ex-Martians that Australia has appointed as the US Ambassador. Ex-Martians excel when dealing with the US bureaucracy and their bosses the Investment bankers. I also think it is good that your new Treasurer has never ever visited Mars. He has his two feet solidly planted on Earth and in Australia. Clime: We are at the Climate Summit - What did you say and have you a view on the Summits outputs and the outlook for world economy? Karl: I do have some observations that I would like to share with you. But before doing so I want to emphasise that Earth is a much better place to live on than Mars. The following chart outlines how superior Earth is over most other inhabitable planets. However, that is not an excuse to be complacent and that was the basis of my speech to the Summit. Figure 4. Planet Habitability Index Source. Astrobiology First, clearly the Summit organisers forgot to invite OPEC. That was a silly mistake but I guess it is explainable because most of the Leaders at the summit actually don't like the OPEC guys. I am struggling to explain to my Board on Mars as to why Earth organises a Summit to slow the utilisation carbon energy at the same time as they pump out more carbon energy. Second, I have been to numerous climate summits in recent years. This was a really emotional one and it was good that the all the leaders turned up on the first day. However, we are all busy guys so I do not see the excuse for many of them going home early. I came from Mars and stayed the weekend. I do not get why some of them left before the fireworks display and the pyjama party on Saturday night. Third, I find it strange that so many world leaders have met so many times in just the last 3 weeks and for so little result. I am literally punch drunk from attending so many summits and I have actually dined with your Prime Minister four times in different cities. I suspect he is now so tired that he doesn't know what time it is in Point Piper. Figure 5. Ex-Martian Politicians Source. CartoonStock.com As for the world economy? I don't get a good feel for what is going on. I met up with the Chinese President and he gave me a good background briefing on the world and his economic policy response. Essentially the Chinese Policy is to attend Summits, smile constantly and not get involved. He sees this as the best way of avoiding the mess of Europe, US and the Middle East. He also has no time for ex Martians whom he suggests have infiltrated everywhere. He absolutely won't let them into China. Clime: The US economic situation and the Federal Reserve decision on interest rates. What's likely to happen now? Karl: I met with Janet Yellen over coffee to discuss the interest rate adjustment. Obviously a lot of what we discussed must remain confidential but I am pleased that she actually followed my advice of about a year ago. I suggested then that she should wait a year on adjusting interest rates and she did just that. Clime: So will interest rates be adjusted again? Karl: Absolutely they will continue to go up, but later rather than sooner. Clime: What does that mean for investors? Karl: Expect the expected and be prepared to deal with the unexpected consequences of the expected. Certainly this would not be a good time to panic but I would suggest that a healthy level of Martian bit coins would be a good hedge against the unexpected - whatever that is. Clime: Finally, our readers would be interested in some reflections on 2015 and the outlook for 2016. How does it look from Mars? Karl: Before I get into the nitty gritty can I suggest that you come to Mars for a visit and bring your kids. I suggested earlier that people on Earth and particularly in Australia, do not know how lucky you are. Yours is the best planet in the Universe and your kids should stop complaining about the price of Sydney property. However today the Earth is not a good place to invest at the moment - except maybe Aussie bonds if they move to junk status. 2015 was a rollercoaster and just like Disneyland, the ride brought you back to somewhere near where you started. It was fun for a while, then it had a big dip and the exit from the ride was one level below the start. The outlook for 2016 is for more of the same. However, I suspect that the markets which underperformed in 2015 will become the performers in 2016. We can see from Mars that the Earth is dealing with the continuing after-shocks of the GFC .There was no SSFC (Solar System financial crisis) and investors need to understand that many of the problems are Earth centric. Investors need to diversify their portfolios, be very patient and look outside your planet for opportunity. Buying residential property on Mars would be a good idea and especially before the Chinese find out that Mars is a cleaner place to live than Beijing. Happy investing in 2016! Clime: Thanks Karl. Figure 6. Life on Mars Source. CartoonStock.com Read past interviews with Karl Mars Bar 2015: The 150 year old man 2014: The view from Mars 2013: Cricket, Politics and the world in 2013

Interview Date: 28 January 2015 The following is a satirical view of the world from afar. Readers should be cautious and accept that some of the comments may be considered trivial. The heading to today's article may confuse you but all will become clearer as we delve into recent economic events in Europe and Australia. Last week, after much delay and intense political debate, the European Central Bank (ECB) announced its version of Quantitative Easing (QE). It declared that some one trillion euros of government bonds and private securities would be purchased with printed euros over an 18 month period commencing this March and ending in September 2016. The delay had been excruciating as ECB President Draghi had for many months - or was it years? - led world capital markets to believe that QE was absolutely coming. The delay had been caused by the intransigence of the German courts and bureaucracy which interpreted their constitution as implying that QE could not legally be supported by Germany. In a last-ditch attempt at sabotage, the Germans tried to make QE impossible by requiring that the buttons to the Euro printing presses be started by a non-human (i.e. an alien). Figure 1. Quantitative Easing: The Theory The Macro View can disclose this to you because the buttons were indeed pressed by an alien – our old friend Karl Mars Bar. Many of you may recall Karl is the Investment Manager of the Martian Future Fund (MFF), and over the years he has granted the ‘Macro View’ exclusive interviews and commentaries concerning Europe and world markets generally. (Previous interviews available on StocksInValue: December 2013 - The View from Mars ; December 2012 - Cricket, Politics & the world in 2013 and many more) Over the weekend, we found Karl at the Australian Tennis Open where he was a guest of one of Australia’s major banks. Karl loves sport but remains intrigued as to why he is invited to the corporate boxes of some of the world’s largest institutions. Anyway, we caught up with Karl outside the bank’s corporate box and coaxed him into a quick interview. Clime: Karl, welcome back to Australia. Karl: Thank you, it’s good to be back. Clime: Are you reviewing investment opportunities in Australia ? Karl: No, I cannot say that. I was in Europe last week on a secret mission and the opportunity came up to come down under for the tennis, and I grabbed the chance. I don’t get to see tennis live at home so it’s always great to be here and soak up the atmosphere with generous servings of champagne and lobster. Banks certainly are doing well down here - and I am not even a shareholder. Clime: We will get back to Europe shortly, but we could not help but notice that the Australian Treasurer Hockey is in the box with you. Has he sought from you any advice from the Martian investment perspective? Karl: Well, I wouldn’t like to divulge too much but he is clearly interested in our Martian Health Scheme (MHS). I noted his recent declaration that someone in Australia has just been born who will live to 150 years old. I congratulated him on that achievement but alerted him to the fact that an average Martian already lives to over 150 Martian years, which actually equals about 290 Earth years and so you still have some catching up to do. Clime: Does that mean that the funding of the MHS is out of control like Australia’s will be? Karl: No, that’s not the case. The reason we live to 150 Martian years is because we have very healthy 100 year old Martians who don’t need medical help. That’s why we live longer. I pointed this out to your Treasurer and he seemed genuinely perplexed by the fiscal benefits of good health outcomes. Longer life should mean lower health costs. I thought that was why your Government sold Medibank Private – but clearly I was wrong. StocksInValue: So the MFF did not invest in the Medibank float? Karl: Did anyone invest in it? That’s an interesting concept in Australia. I find many people use the expression “invest” when they really just trade or gamble with other people’s capital. I guess it legitimizes the share market down here. No, we didn’t invest but I think the Martian Future Hedge Fund flipped some over a few times but they actually lost on the $A exposure. Clime: So is currency a big problem for investing at present for the MFF? Karl: It’s a shocker from a Martian perspective. The printing of currencies on Earth has devalued everything and the Martian dogma and martinis (our currency) has revalued through the stratosphere. Using the Big Mac index, I found that I could not actually buy enough burgers and chips to make up one dogma on my recent trip to Brussels. I left the change and the girl behind the counter said she wouldn’t need to work again. Figure 2. Euro/USD 60 Day History Source. exchangerates.org.uk Clime: Should Australia undertake QE? Karl: If you haven’t joined the party then you are probably paying for it. Or as my mother told me once - if you are the last one to the party then you will be cleaning up the mess. I guess that you guys down here think that it is not right to print money but it is actually more sensible than giving the Duke of Edinburgh a knighthood. In Brussels last week, Draghi confided in me that he could not understand why the Chinese and the Aussies let the Europeans, the Japanese, the Yanks and the Poms get away with printing money. I have to admit that I find it strange too. Clime: So what should Australia do? Karl: As I told Joe at the champagne bar a few minutes back, you have a choice. You can either borrow billions and pay interest for the next 30 years, or you print billions and pay no interest ever. Clime: What was the Treasurer’s response? Karl: He seemed genuinely perplexed by the alternative. He did not seem to realize that Australia had a choice. Clime: Europe – is there now some hope of recovery from the QE policy? Karl: Well, they think so and that’s a great start. But the real problem for Europe is that anyone who does not work for a bank or the bureaucracy doesn’t have a job and wants to leave. I think the biggest risk for a European economic recovery is actually having an economic recovery! Draghi knows this and the ECB is actually planning to have thirty years of recession and it aims to have German 30 year bonds yielding nothing by September next year. That is its real (but covert) plan and so far it is on track. Figure 3. Tumbling Down Source. The Wall Street Journal Clime: Sorry, but our readers may be confused by that comment – can you explain it more simply? Karl: Well, as you know the hedge f 10f9 unds, which are funded by banks (that in turn are funded by the ECB for no cost) have virtually bought every European bond on issue – except the really smelly Greek ones. Virtually all bonds are now yielding less than 1%. Every hedge fund worth their management fee has been front running the ECB waiting for the Germans to agree to QE. Today the so-called best euro bonds (German and Swiss) are showing a negative yield for up to 5 years. That doesn’t make sense to us Martians and especially with euros falling out of the sky like confetti. Figure 4. Germany Bund ‘Curve’ Source. Alhambra Investment Partners Clime: Sorry, but why does recovery risk recovery? Karl: Guys, think about it. The ECB claims to be targeting inflation at 2%, but is going to buy negative yielding bonds. Has anyone studied economics in this world? If inflation goes to 2% then bond yields must rise to well above 2% at some point. I would think that would snuff out most European governments and the bond holders will be toasted. So today, all my clients who are not European are trying to get out of Euro bonds before the currency devalues into a black hole. The QE program is a gift from god to hedge funds across the solar system! Clime: So that is why the ECB says it will be sharing the default risk with member Central Banks? Karl: No, I think you are reading and believing too much. Frankly, I read that part of the policy and I could not make sense of it, so I immediately assumed it was nonsense. Remember that no one other than the Greeks, the Cypriots and the Irish have shared in the pain of Europe! Clime: Were you in Europe for the Davos Economic Forum? Karl: Look, that was my cover and I actually think every European fund manager uses it as a cover to get a paid skiing holiday. I will give you a scoop today. I was seconded by the ECB to press the button on QE in Europe. Angela Merkel thought she would be clever and insist that a non-human be involved in the start of QE. My old friend Prince Andrew was secretly holidaying on Mars and he passed on the message to me from Draghi. So I literally packed my bags with the Prince and caught the first space probe back to Europe. Andrew went off skiing in Davos and I went straight to Brussels for high level talks. Clime: The Greek election – any issues there? Karl: Frankly, I like the no tie policy implemented by new Prime Minister Alexis Tsipras. That is the first real Greek attempt at austerity. Soon it will be no shirt. I think they will end up wearing no undies at some point, and that will literally be the bottom of their cycle. Clime: How do you see the big economies of the US, China and Japan? Karl: I don’t bother with Japan. However I do give them credit though for proving that you cannot create inflation by QE. They were the first ones to show that, but no one believed them. I think the US is going to patent QE at some point and claim it was their invention. The Chinese will copy it and sell it to Australia, and the whole world will be awash with worthless paper at some point. On this basis I know that the Martian Future Hedge Fund is running long world equities and short world currencies and guess what – we are losing more on the currency – Wonderful stuff! Clime: Any last advice for Australian investors? Karl: Stay happy and please do not expect or plan to live to 150 years old. That will simply stress you to death. There is no way that you will have enough savings to last that long. Clime: Thank you Karl. Karl: My pleasure. Now back to the tennis. Go Nick!

Karl Mars Bar Archives - Clime Investment Management

The View from Mars

Karl Mars Bar is a Martian based and universally acclaimed Fund Manager. He is visiting Earth for his 2015 Investment Review. We caught up with Karl during his attendance at ...

clime2016-01-14T10:30:54+11:00January 14th, 2016|Latest News, Weekly Investing Report|

The 150 year old man

Interview Date: 28 January 2015 The following is a satirical view of the world from afar. Readers should be cautious and accept that some of the comments may be considered ...

clime2015-02-05T10:58:01+11:00February 5th, 2015|Weekly Investing Report|

Insight Category: Karl Mars Bar

The View from Mars

The 150 year old man