THE DAILY EDGE (1 August 2018):

Household Spending, Income Rose in June

Personal-consumption expenditures, a measure of household spending on everything from hospital stays to groceries, increased a seasonally adjusted 0.4% in June from May, the Commerce Department said Tuesday. Matching that gain, personal income—reflecting Americans’ pretax earnings from salaries and other sources, including investments—also rose 0.4%. (…)

In addition to June’s gain, household outlays were revised up in May, to a 0.5% gain from 0.2%, and April, to a 0.6% increase from 0.5%. (…)

The saving rate in June was unchanged from May at 6.8%. Saving-rate data was significantly revised last week. The new data shows Americans have been saving between 6% and 8% of their monthly income in recent years. The previous estimate was between 4% and 6%. (…)

Real disposable income growth has reaccelerated while core inflation has decelerated to +1.6% annualized in Q2.

U.S. Workers Get Biggest Pay Increase in Nearly a Decade American workers received their biggest pay raises in nearly a decade in the year to June, a sign the strong labor market and low unemployment are boosting wages as employers compete for scarcer workers.

The Labor Department’s employment-cost index rose 2.8% in the year to June compared, the government said Tuesday. Wages and salaries, which account for about 70% of all employment costs, also rose 2.8% from a year earlier, the strongest gain for both measures since September 2008. (…)

• Employment costs rise at the fastest pace since 2008

Truth is, employment cost growth has been very stable since the Financial Crisis. Biz sales growth has substantially outpaced this important cost element, continuing to this day.

Trump Advisers Urge Imposing Steeper Tariffs Against China Some administration advisers are urging President Trump to raise the stakes with a sharp increase in the level of tariffs proposed for $200 billion in Chinese imports targeted for punitive measures.

Trump administration advisers are debating measures that might bring Chinese negotiators to the table. Some are pushing the president to apply tariffs as high as 25% on $200 billion of Chinese imports, up from an original proposal for 10%.

The White House won’t make a final decision until at least late August on those tariffs, which are likely to target consumer goods and food as well as machinery components. Advisers are justifying the steeper tariffs, in part, to make up for the rapid depreciation of the yuan in recent months. Since May 30, the yuan has fallen 6% against the dollar. (…)

The U.S. has already imposed 25% tariffs on $34 billion worth of Chinese imports and is on schedule to levy similar tariffs on an additional $16 billion of goods, probably this week or next. (…)

Treasury Secretary Steven Mnuchin and Chinese envoy Liu He and their staffs continue to talk about a possible meeting, said officials in both capitals, but the talks remain at a very preliminary stage.

Both sides argue that it is up to the other to make the first move after several preliminary Chinese offers, mainly involving the purchase of more U.S. goods, were rejected by Mr. Trump as inadequate.

The two sides have agreed that their initial offers weren’t a solid base for further negotiations, according to a senior member of the U.S. business community tracking the discussions. Those included the Chinese offering mainly to buy U.S. goods, and the U.S. demanding that China essentially scrap the industrial policy that turned it into an economic powerhouse, the senior executive said.

“They are discarding useless ideas and rhetoric,” the executive said. “They are figuring out what could be on an agenda and what could be a solution.” (…)

The Trump administration remains deeply divided over how best to deal with the Chinese, and the two main factions are moving in different directions. China trade hawks, led by U.S. Trade Representative Robert Lighthizer, believe China will make concessions only if it feels the brunt of heavy tariffs, said U.S. officials.

Trade doves, led by Messrs. Mnuchin and Kudlow, have been looking for a solution short of massive tariffs, fearful that those levies, plus Chinese retaliatory tariffs on American goods, could slow U.S. growth and tank financial markets. Mr. Mnuchin and Mr. Liu have continued to discuss U.S. China relations, but some of those conversations have gone poorly. (…)

• China vows retaliation if Trump slaps 25 percent tariff on $200 billion of Chinese imports

• U.S. and Mexico Nearing Nafta Car Deal, Sources Say

The U.S. and Mexico are in the final stages of negotiating a deal on rules for cars sold under Nafta, one of the biggest sticking points in discussions to overhaul the North American Free Trade Agreement, according to five people familiar with the talks. (…)

The talks have taken on a largely two-nation format, with Canada rebuffed in recent attempts to engage with Lighthizer, according to three other people with knowledge of the talks, who also asked not to be named. The Canadian negotiating team led by Foreign Minister Chrystia Freeland has been told that the U.S. is focusing on negotiations with Mexico and isn’t interested in engaging with Canada at the moment, according to the people. (…)

• Canada still part of NAFTA talks even as U.S., Mexico meet on their own, insiders say

(…) Two senior Canadian government officials, speaking on condition of anonymity because they weren’t authorized to discuss the matter in public, insist they’re encouraged the U.S. and Mexico have returned to the table to negotiate difficult bilateral issues such as labour changes in the auto sector – even if Canada wasn’t invited to take part.

One of the officials is rejecting the idea Canada has been frozen out of the talks because it’s not unusual for two of the NAFTA partners to hold discussions on bilateral issues without the third partner in the room.

The source expects top Canadian officials to rejoin the NAFTA negotiations by mid-August. (…)

THE PMIs

My quick summary:

• U.S. domestic demand remains very strong but overall manufacturing activity slowing.
• Trade issues starting to bite on sales and costs and forcing inventory accumulation, which carries risk if demand stalls.
• Exports are weak across the globe.
• Price pressures are continuing with margins risks building.

U.S. Manufacturing PMI dips to five-month low in July

U.S. manufacturing firms signalled a strong improvement in operating conditions in July, despite the headline PMI falling to a five-month low. Weaker rises in output and employment were seen in July, while export sales fell for the second month in a row. Meanwhile, companies reported the greatest deterioration in vendor performance since the series began and a faster rate of input cost inflation. That said, business remained strongly positive, and was supported by hopes of further increases in overall new orders.

The seasonally adjusted IHS Markit final U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) registered 55.3 in July, down slightly from 55.4 in June. Overall, the latest improvement in the health of the sector was the joint weakest in 2018 to date, but remained strong in the context of historical data.

Production continued to rise across the U.S. manufacturing sector in July, extending the current sequence of growth that began in June 2016. Where an increase in output was reported, panellists linked this to greater client demand and larger new order volumes. Although the rate of expansion was strong overall, it was the slowest since November 2017.

New order growth, however, continued to outstrip that of output. The latest upturn in new business matched that seen in June and was strong overall. Anecdotal evidence suggested the rise was due to the acquisition of new clients and favourable demand conditions. That said, growth was largely driven by the domestic market, with foreign demand falling fractionally for the second successive month.

In line with a sustained upturn in new orders, backlogs continued to rise solidly in July. On the employment front, panellists commonly reported difficulties filling current vacancies, with the rate of job creation softening despite increased pressure on production capacities.

Pressure on supplier chains also intensified, as highlighted by delivery times lengthening to the greatest extent since the series began. Increased demand for inputs was exacerbated by firms reportedly stockpiling raw materials. Moreover, the rate of input price inflation accelerated to the third fastest since March 2012 and was sharp overall. Firms also commented on efforts to pass costs onto clients through higher prices, with the rate of charge inflation accelerating to the fastest since June 2011. However, some stated that competition between firms weighed on overall pricing power.

Difficulties in sourcing raw materials also fed through to a weaker rise in purchasing activity. That said, signs of stockpiling were evident in a faster increase in pre-production inventories, which rose at the quickest pace since January.

Finally, expectations regarding the outlook for output over the next year improved in July. Confidence was largely attributed to new product developments and more favourable demand conditions.

Chris Williamson, Chief Business Economist at IHS Markit:

The US manufacturing sector continued to expand in July, but shows increasing signs of struggling against headwinds of supply shortages, rising prices and deteriorating exports.

The latest survey showed output rising at a rate roughly equivalent to an annualised 1% pace of expansion, which is the weakest since late last year. While a weakening of new export orders for a second successive month suggested foreign demand has waned compared to earlier in the year, the slowdown can be also in part attributed to increased difficulties in sourcing sufficient quantities of inputs. (…)

• The ISM:

The July PMI^® registered 58.1 percent, a decrease of 2.1 percentage points from the June reading of 60.2 percent. The New Orders Index registered 60.2 percent, a decrease of 3.3 percentage points from the June reading of 63.5 percent. The Production Index registered 58.5 percent, a 3.8 percentage point decrease compared to the June reading of 62.3 percent. The Employment Index registered 56.5 percent, an increase of 0.5 percentage point from the June reading of 56 percent. The Supplier Deliveries Index registered 62.1 percent, a 6.1 percentage point decrease from the June reading of 68.2 percent. The Inventories Index registered 53.3 percent, an increase of 2.5 percentage points from the June reading of 50.8 percent. The Prices Index registered 73.2 percent in July, a 3.6 percentage point decrease from the June reading of 76.8 percent, indicating higher raw materials prices for the 29th consecutive month.

Demand remains strong, with the New Orders Index at 60 percent or above for the 15th straight month, and the Customers’ Inventories Index remaining low. The Backlog of Orders Index continued to expand, but at lower levels. Production and employment continues to expand in spite of labor and material shortages. Inputs — expressed as supplier deliveries, inventories and imports — had expansion increases, due primarily to negative supply chain issues, but at easing levels compared to the prior month. Lead-time extensions, steel and aluminum disruptions, supplier labor issues, and transportation difficulties continue. Export orders expanded, but at lower levels. Price pressure remains strong, but the index softened for the second straight month. Demand remains robust, but the nation’s employment resources and supply chains continue to struggle. Respondents are again overwhelmingly concerned about how tariff-related activity, including reciprocal tariffs, will continue to affect their business.

WHAT RESPONDENTS ARE SAYING

• “Global demand is still strong. Working on contingency plans for the Chinese tariffs. We will probably onshore most of that material. Labor availability is becoming an issue.” (Computer & Electronic Products)
• “As a result of new tariffs on materials to/from China, we are taking measures to move impacted materials ahead of effective dates, which in some cases is resulting in holding higher inventories.” (Chemical Products)
• “Steel cost increases are causing a lot of negotiations. The increases are real and will affect costs beginning in the third quarter of 2018.” (Electrical Equipment, Appliances & Components)
• “Reviewing the business case for importing manufactured parts from China, as new tariffs will lead to increased costs that we will pass along to our domestic customers.” (Transportation Equipment)
• “The steel tariffs are a concern to us. We have already seen steel prices increase due to the threat of the tariffs and are seeing kickback from our customers due to the higher prices. We are concerned that the end customer will go to off shore to purchase the finished product.” (Fabricated Metal Products)
• “Business is moving along at a brisk pace, outperforming the annual plan year-to-date (calendar year financials). However, internationally, nationally and locally, we are finding many manufacturers behind schedule due to capacity constraints. They are stating their order intake is heavy and/or they cannot find qualified employees to get all the work done.” (Machinery)
• “Tariffs are [resulting in] customs inspection-time increases on imported raw materials from China. Logistics seems to be improving, but we are seeing a [continuing] tight chemical bulk tanker market.” (Plastics & Rubber Products)
• “Our customer demand is high, but supply of aluminum is tight. Also, tariffs are negatively affecting our bottom line, as we are unable to pass increases to all of our customers. Plus, we are seeing increases in our construction costs because of the steel price increases. Labor market is extremely tight for professional personnel, plant technicians and support associates.” (Primary Metals)
• “The so-called trade war is now taking its toll on business activity, resulting in substantial reductions to new export orders. China has all but stopped taking orders, causing inventories to build up in the U.S. Domestic business is steady. However, it is too small to carry the load that export markets have retreated from. As a result, we will be meeting as a corporation next week to recast our second-half sales and revenue projections.” (Wood Products)

Eurozone manufacturing growth remains subdued at start of quarter three

The performance of the euro area manufacturing sector remained subdued at the start of the third quarter. Although the final IHS Markit Eurozone Manufacturing PMI® posted 55.1 in July, unchanged from the earlier flash estimate, this was only a minor recovery from June’s 18-month low of 54.9 and over five points below the record high registered at the end of 2017.

Sector data signalled that business conditions improved across the consumer, intermediate and investment goods sectors, with mild growth upticks signalled in the latter two. Similar to the trend at the all-manufacturing level, rates of expansion were weaker than at the turn of the year in all three subindustries.

July saw the Netherlands, Germany and Austria remain the strongest-performing nations. Growth improved slightly in the latter two, but eased to a 14-month low in the Netherlands. Rates of expansion also slowed in Italy, Spain and Ireland, whereas an acceleration was registered in France.

Eurozone manufacturing output increased again in July. Despite a mild improvement, the rate of expansion was the second-weakest since November 2016. The more subdued trend in output growth in recent months reflects a concurrent slowdown in the pace of increase in new orders. The latest rise in new business was identical to the 22-month growth low registered in June.

Inflows of new work have been stymied recently by a weakening trend in the pace of increase in new export orders, amid uncertainty about the economic outlook and worries about tariffs and trade wars. July saw new export business increase at the slowest pace since August 2016. Weaker growth was seen in Italy, the Netherlands, Greece and Ireland, while France and Austria saw exports decline. Although Germany and Spain saw improved expansions, these were much weaker than those registered at the start of the year.

Work-in-hand (but not yet completed) continued to increase in July, although the pace of expansion eased to its weakest for two years. Companies responded to the ongoing pressure on capacity by increasing employment, with staffing levels rising for the forty-seventh successive month.

All of the nations covered by the survey registered an increase in employment during July. Similar to the trend in output growth, the fastest job creation was recorded in Austria, the Netherlands and Germany. Only France, Austria and Greece saw staffing levels rise at quicker rates than in June.

Price pressures remained elevated in July, with input costs and output charges both rising at above survey-average rates. That said, purchase price inflation was slightly weaker than in June, while the increase in output charges was the least marked since September 2017. Increases in input costs were linked to tariffs, trade wars, supply-chain delays and raw material shortages.

Business optimism about future business conditions improved slightly, as companies retained confidence that output levels would be higher in one year’s time. However, the overall degree of positive sentiment remained among the lowest seen over the past two years. Business confidence improved in Germany, France, Italy and the Netherlands.

Chris Williamson, Chief Business Economist at IHS Markit:

The clear implication is that manufacturers may have to adjust production down in coming months unless demand revives. Clues to the current soft patch lie in the export growth trend, which has deteriorated dramatically since the start of the year across all member states to reach a near-two year low, with France and Austria seeing exports fall into decline in July.

China Manufacturing PMI slips to eight-month low in July

The headline seasonally adjusted Purchasing Managers’ Index™ (PMI™) fell from 51.0 in June to 50.8 in July. Although still above the neutral 50.0 mark, the latest figure highlighted the slowest improvement in the health of the sector since November 2017.

Chinese manufacturers continued to increase production during July. However, the rate of expansion softened since June and was moderate overall.

At the same time, new order growth weakened for the second month running and was slower than the historical series trend. Data suggested that reduced external demand contributed to the slowdown, as exports fell for the fourth month in a row. Notably, the rate at which new export business declined was the quickest recorded for just over two years amid reports of subdued market conditions.

Employment across China’s manufacturing sector continued on a downward trend in July, with some companies lowering staff due to company downsizing. That said, the rate of job shedding eased since June. Lower staff numbers and a further rise in new orders led to increased amounts of outstanding business, though the rate of accumulation slipped to the weakest for five months.

Buying activity among Chinese goods producers increased again at the start of the third quarter. However, the pace of expansion was the weakest recorded in just over a year. Stocks of inputs were meanwhile little-changed from the previous month, while inventories of finished items declined for the third month in a row.

The time taken for inputs to be delivered to manufacturing companies in China continued to lengthen in July. However, the degree to which vendor performance deteriorated was the least marked since February.

Average input costs rose solidly in July, despite the rate of inflation softening since June. Companies widely linked higher cost burdens to greater raw material prices. Meanwhile, factory gate prices increased at only a modest pace that was the slowest recorded for three months.

Companies generally anticipate output to increase over the next year. However, the level of positive sentiment held close to June’s six-month low and remained weak in the context of historical data.

• Opinion: China’s Economic Growth Falls Short of Potential

Japan Manufacturing sector growth slows to 11-month low

The headline Nikkei Japan Manufacturing Purchasing Managers’ Index TM (PMI)® declined to 52.3 in July, from 53.0 in June, thereby pointing to a softer rate of improvement in manufacturing sector business conditions.

New business growth eased noticeably during the latest survey period. In fact, the rate of increase slowed to a 21-month low and was only mild overall. Panellists mentioned that demand had been weaker among both domestic and international clients. Survey data pointed to unchanged export sales during July. Orders from overseas customers have failed to rise in each of the past two survey periods.

Nonetheless, output growth remained relatively robust, despite softening to a four-month low. Production has now increased in each survey period for the last two years. Japanese manufacturers also continued to enhance their operating capacities by recruiting extra staff. The rate of job creation, despite weakening, was relatively robust in the context of historical data. In line with higher output and employment, backlogs of work accumulated to a softer degree in July. The rate of increase in outstanding business was only marginal amid a slowdown in new business growth.

Elsewhere, difficulties in acquiring raw materials from suppliers were reported by panellists. Average lead times for the delivery of inputs lengthened to the greatest extent since May 2011. The deterioration in vendor performance was attributed to stock shortages and stronger input demand.

Prices data indicated another sharp monthly rise in costs during July. Oil, metals, food and labour were all cited by panellists as being more costly. Furthermore, the rate of inflation accelerated to an 88-month high. To protect profits, firms passed on part of the rise in cost burdens to their clients through greater selling charges, with the rate of
increase quickening to a near-decade high.

Despite higher prices and prolonged delivery times, Japanese goods producers continued to purchase additional inputs, albeit to a slower extent than in June. That said, delayed shipments contributed to a depletion in pre-production inventories.

Lastly, Japanese goods producers were optimistic towards future output. Planned expansions into new markets and new product launches were noted as reasons to be confident. However, the level of positive sentiment fell to a four-month low.

EARNINGS WATCH

Prior to yesterday, we had 301 reports in, an 81% beat rate and a 5% surprise factor. Only Energy companies fail to surprise: 44% beat rate and –11.0% surprise factor with 16 of 31 companies in.

Trailing EPS are now $147.86, $152.20 pro forma the tax reform.

• Rio Tinto’s Cost Warning for Global Miners

Australian giant Rio Tinto RIO 1.20% on Wednesday reported a 33% jump in first-half earnings compared with the same period of 2017, a chunky dividend increase, and a new $1 billion share buyback. Under the strong headline numbers, however, some warning signs are flashing. The shares were down 4% in morning trading in London.

(…) Rising operating costs, particularly for energy and raw materials, were only barely offset by stronger shipment volumes and higher sales prices for copper and aluminum. (…)

• Companies Warn Currency Swings Will Weigh on Earnings Diageo, Unilever say volatile exchange rates have led to poorer financial performance

(…) Nearly two thirds of the 200 finance chiefs in a July survey said their earnings got hit by unprotected exposure to foreign currencies, according to HSBC Holdings PLC. And, 47% of CFOs at companies with revenue exceeding $5 billion said they want to increase their protection against currency gyrations, while 77% plan to allocate more funds for this, HSBC said. (…)

One reason companies don’t hedge currency risks more widely is the cost, which can account for as much as 20% or more of the transaction, according Rudi Alexis, head of foreign exchange distribution at Barclays PLC. “In emerging markets in particular, hedging an asset can be extremely expensive,” he said. (…)

• Apple’s App Sales, iPhones Power Earnings Apple delivered its best-ever revenue for the June quarter, typically its weakest period, as demand for high-price iPhones remained resilient and services such as app-store sales swelled to a record.

• P&G Shifts Strategy, Raises Prices Company would seek to push through large price increases on Pampers diapers and Bounty paper towels

After more than a year of trying to combat weak demand with lower prices on staples like Tide detergent and Gillette razors, executives said Tuesday the company was changing course. P&G said it would increase prices on its Pampers brand in North America by 4% on average and by 5% on its Bounty, Charmin and Puffs brands.

The increases go into effect later this year or in early 2019. As the biggest player, P&G tends to drive industrywide pricing moves. (…) He said other goods beyond those named could see increases. (…)

Executives at rival Colgate-Palmolive Co. CL 0.83% have also promised higher prices. On an earnings call Friday, Colgate executives said they were increasing prices in emerging and developed markets in the second half of the year in response to the rising cost of raw materials. (…)

• Lumber Liquidators Shares Plunge as Higher Costs Weigh on Margins

• Boat-engine maker Brunswick Corp. has raised average selling prices by 6% so far this year, partly in response to raw materials inflation, and the company intends to keep raising prices over the second half of the year.

DE-FAANGING

Yesterday, David Rosenberg posted this chart to illustrate the S&P 500 trailing P/E ratio is 19.7 ex FAANG (+MSFT), 1.5 points (7%) less than its current 21.2 P/E.

I am not sure where David gets his 21.2 P/E with trailing EPS at $146.75 (19.1x) per Thomson Reuters and $140.82 (19.9x) per Capital IQ. Let’s simply use the differential between his P/E and his ex-FAANG+M P/E of 1.5x to check the impact on the Rule of 20 P/E (David says that the earnings of FAAN+M account for 10% of the earnings pie).

Subtracting 1.5 from the current Rule of 20 P/E of 20.9 = 19.4, slightly undervalued but still no bargain.

WHO’S LEADING NOW?

David Keller at Sierra Alpha Research points out the divergence between the S&P 500 and the FAANG+ stocks, relieved as he is to see that the market is not as narrow as feared.

Just as interesting is the breakdown in the relative strength of Consumer Discretionary stocks vs Staples. Risk off?

Switching out of CD into CS means leaving a sector showing 19.9% EPS and 7.8% revenue growth so far in Q2 with a 10.9% earnings surprise factor for one displaying 12.7% EPS and 5.5% revenue growth with a 5.2% surprise factor. Perhaps investors are getting dizzy with the CD companies’ faster speed, feeling more comfy with the slower, but nonetheless growing CS companies.

From a PEG viewpoint, this is no value switch: the P/E on CD companies is 21.1 (PEG: 1.06) while that on CS companies is 17.4 (PEG: 1.37). And earnings revisions are not positive for Staples. This chart from Ed Yardeni shows revisions for S&P 500 CD and CS companies. Trends are very similar on mid and small caps. Weak leaders!

DEEP DIVING

Russian warship ‘carrying £100 billion in gold’ discovered off South Korea

A South Korean salvage team has discovered the wreck of a Russian warship that was sunk in a naval battle 113 years ago and is believed to still contain a trove of gold bullion and coins worth 150 trillion won, or £100 billion. (…)

• Getting to the bottom of the Donskoii mystery: is the Russian shipwreck really worth £100 billion?

(…) The Shinil Group claimed on Wednesday to have found the lost Dmitri Donskoii, a Russian warship scuttled by her crew in 1905 during the Russo-Japanese War. The ship, it was said, was carrying the funds of Russia’s Second Pacific Squadron and  went down with 5,500 boxes of gold bars and 200 tons of coins still in its holds to stop the Japanese seizing it.

The Shinil Group estimates the gold would have a value today of £101.3 billion and has promised to use a percentage of the proceeds from the treasure to fund the construction of a railway line linking Russia and South Korea through North Korea. (…)

But questions have been raised about the treasure that is supposedly on board, with South Korea’s financial regulators warning investors to be wary of sinking their savings into companies behind the venture. (…)

South Korean media have also raised questions about the Shinil Group as several of its affiliated firms are not registered with the South Korean authorities and calls to the company in recent days have gone unanswered.

One suggestion reported by the Korea Times is that the eye-catching announcement of the discovery of a ship laden with gold is linked to The Shinil Group’s cryptocurrency operations.

A website set up under the Shinil Group’s name described a newly launched “Donskoi International” crypto currency exchange as linked to the find. The website said it would “share profits” from the Russian wreck with the public by handing out its virtual currency to anyone who signed up to use the exchange. It promised additional coins to those who helped sign up others. The Shinil Group has denied that the website is affiliated with the company. (…)

Russian historians have also poured cold water on reports that the vessel was carrying vast amounts of gold, with experts claiming that it would have been quicker and far safer to transport funds to cover the Russian fleet’s operations to the Far East by train.

There is even debate over who located the vessel first, with the government-run Korea Institute of Ocean Science and Technology claiming to have confirmed the site of the wreck in 2003. A South Korean construction company also claims to have been the first to find the ship. (…)

The Telegraph spoke to the British leader of the underwater search team that located the wreck who said he was “watching with as much interest as everyone else” to see if the claims are correct. (…)

“We tried, but we couldn’t see inside the wreck”, Mr Heaton said. “We could see through the open casements and gun ports, but we could only see down one deck and the submersible could not go inside because of the fishing gear entangled in the wreck.

“We have heard lots of reports of treasure on the ship, but we have not seen any,” he said. (…)

“We believe there are gold boxes, and it’s historically proven,” company spokesman Park Sung-jin told Reuters. “The boxes were very tightly lashed, indicating there are really precious stuff inside.”

Grant’s: “The old cliché that “a gold mine is a hole in the ground with a liar at the top” now has a worthy modern day companion.”