![Collingwood president Eddie McGuire is living proof you can make racist comments and keep your job.](/content/dam/images/g/p/m/o/0/l/image.related.afrArticleLead.620x350.gtfnap.png/1482396456954.jpg)
2015 was, ever so briefly, the most absurd year in human history. Then 2016 happened.
The 2015 fall of Tony Abbott had nothing on the 2016 fall of Hillary Rodham Clinton. The rise of Sir Philip Mountbatten the Duke of Edinburgh had nothing on the rise of Donald Trump the Poor People's Idea of a Rich Man. The ruination of Clive Palmer and his debt-osaurus empire had nothing on the corporal humiliation of Sussex Street Godfather Eddie Obeid nor of insider trader Oliver Curtis. The 2015 bromance with Shinzo Abe's submarines paled beside the 2016 decision to tap the cheese-eating surrender monkeys at DCNS. The spectacular redemption of Malcolm Turnbull in 2015 had nothing on the comedown of Malcolm Turnbull in 2016.
Paul Kelly (the auteur of Australiana, not the singer-songwriter), might've heralded The End of Certainty back when To Her Door was atop the charts, but we're calling the End of Implausibility – so long as we don't have to write a book padding out the thesis.
Comings and goings
![Jacques "Jac" Nasser, chairman of BHP Billiton.](/content/dam/images/g/s/r/q/a/s/image.imgtype.afrArticleInline.620x0.png/1479628235921.jpg)
On this page 12 months ago, we predicted BHP Billiton chairman Jac Nasser would sacrifice Jimmy Wilson and/or Dean Dalla Valle (both are gone) and that Origin's Grant King (AKA Admiral Ackbar) was sunset bound (check). Equally, we reckoned Jetstar CEO Jayne Hrdlicka was an early favourite to replace Grant O'Brien at the helm of Woolworths (ultimately wrong) and that Myer chair Paul McClintock couldn't hang on much longer (he could). So we've had finer stints with the crystal ball.
The most notable passengers through corporate Australia's departure lounge were Rio's Sam Walsh (an African bribery scandal in his wake) and Brambles' Tom Gorman (taking off in February). Incoming were Frank Calabria at Origin, the ASX's Dominic Stevens (we picked that one early), Medibank's Craig Drummond and Telstra's new chair John Mullen.
As for the capital markets, Asciano ceased to exist (thus Mullen's availability) and a three-way tussle is underway for Queensland wagering and lotteries operator Tatts Group.
Macquarie's top investment banker Robin Bishop "retired" as did TPG's Ben Gray. But you knew that already.
Next out will be Nasser himself. Westpac chair Lindsay Maxsted wants the prestigious job, but – contrary to our previous musings – it'll be another Melbourne-based (non-executive) member of the board who'll ascend in the first quarter of calendar 2017. By deduction, that leaves only two, one of whom already chairs an ASX50 company… Thankfully that excludes Dow Chemical's outgoing Andrew Liveris, whose switch from camp Obama/Clinton to camp Trump was stunningly, repulsively mercenary.
![Bell Potter broker Angus Aitken was sacked for writing to clients about the appointment of Michelle Jablko as ANZ ...](/content/dam/images/g/p/t/q/9/6/image.imgtype.afrArticleInline.620x0.png/1482353163232.jpg)
Of the miners, none more than Andrew Forrest proved the adage that necessity is the mother of invention, slashing Fortescue's production costs from $US34 ($46.89) to $US14.31 per tonne in 18 months flat, lower even than Rio Tinto's, while the spot price has ratcheted to $US73 from $US38 a year ago, when FMG was in serious strife and Twiggy was carrying on like a pork chop. Remarkably, the company has got its debt from a crippling US$13 billion to below a negligible $US2 billion, its share price is nearly $6 (last July, Goldman Sachs gave it a price target of 50¢) and the Twiggster is back in the top three most-minted Aussies. All the better to cure slavery and feed China with, my dear. Or pay more tax.
Antics and a bit of madness
Indeed the antics of the BRW Rich List's high-altitude flyers – from Anthony Pratt's Instagramming to Lindsay Fox's Mediterranean 80th "conception" party to a newly-petite Gina Rinehart in an Akubra buying half of South Australia – evoked the immortal words of Charles Bukowski, who wrote in 1982 "I had noticed that both in the very poor and very rich extremes of society the mad were often allowed to mingle freely." Amen, brother.
There was plenty more madness thrown around in the name, taken in vain, of gender equality. Bell Potter broker Angus Aitken was sacked after writing to clients blasting the appointment of Michelle Jablko as ANZ Banking Group's CFO. The bank's PR Paul Edwards took to Twitter accusing him of sexism, though Aitken hadn't mentioned her by name, let alone gender.
![The appalling handling of the Dreamworld ride tragedy demonstrated just how out depth Deborah Thomas, Chief Executive ...](/content/dam/images/g/s/b/v/w/p/image.imgtype.afrArticleInline.620x0.png/1477529973265.jpg)
The Fat Angus scandal was the story of May and June, alongside Eddie McGuire advocating the watery death of The Age's gun AFL scribe Caroline Wilson. Eddie had already blazed a trail for West Virginia county official Pamela Ramsey Taylor; when she called Michelle Obama "an ape in heels" last month, McGuire was living proof you can compare a black leader to a primate (in his case Australian of the Year Adam Goodes) and keep your lucrative job/s (and sponsors) by issuing a series of excruciatingly iterative semi-apologies.
Calling it out
Around the same time, Deborah Thomas was complaining about the sexist treatment she was copping as chief executive of Ardent Leisure. Nobody had threatened to drown her mind you; we'd just pointed out the company's poor performance and prospects, and her dubious qualification to be running it. While analysts also expressed their concerns, outrage merchant Mamamia and Daily Telegraph Instagram aggregator Sydney Confidential jumped to her defence – which all but proved our point.
This was of course before the accident in October on a ride at Ardent's Dreamworld that claimed the lives of four people. The appalling handling of that tragedy also aptly demonstrated just how out of her depth Thomas is. Which, if she was a bloke, would be undisputed.
![No more bad news: Woolworths chair Gordon Cairns and CEO Brad Banducci.](/content/dam/images/g/s/w/w/g/j/image.imgtype.afrArticleInline.620x0.png/1479967878928.jpg)
Shenanigans
AMP's shenanigans were another 2016 highlight, with more versions of Simon McKeon's resignation as chairman committed to paper than the four Gospels. Catherine Brenner's ascension to the chronic underperformer of financial services is a harbinger: expect the Board to move on chief executive Craig Meller in the New Year.
Myer, much to the chagrin of short-sellers (16.6 per cent of the department store's register is on loan to them), also staged something of a comeback under CEO Richard Umbers – a man many, us included, might have underestimated. He's now outpacing arch rival David Jones in same-store sales growth.
Woolworths continued its horror run – Masters was cut adrift, Big W's star recruit Sally Macdonald walked after less than a year, Board turnover resembled the Australian batting line-up and, to boot, Bella Vista humiliated the ACCC (bravo, we say). CEO Brad Banducci is starting to eke superior numbers out of the core supermarkets business as chairman Gordon Cairns and advisers focus on transactions, particularly flogging petrol stations. Will spinning-off pubs and bottle shops be their deal of 2017?
![Gary Helou resigned as Murray Goulburn's managing director.](/content/dam/images/g/i/i/f/g/g/image.imgtype.afrArticleInline.620x0.png/1481872771346.jpg)
Coles, meanwhile, seems to have topped out under boss John "The Reptile" Durkan, whose rapacity with suppliers (especially Murray Goulburn farmers) earned him the moniker, leaving Wesfarmers chief Richard Goyder in a conglomerated pincer – sinking stupendous capital into Bunnings' UK foray (now minus his star hardware boss John Gillam), a basket case in Target and a structurally porcine coal business wearing lipstick in the form of a stupendous but unsustainable spike in the spot price.
Speaking of Murray Goulburn, its entirely predictable (and predicted repeatedly by us since April 2014) meltdown was such a tragic unnecessity. How members of the board (not to mention the jokers at Dairy Australia, the bankers on the hybrid IPO, the stock's analysts and Gary Helou's cheer squad in The Australian's Melbourne bureau) can look themselves in the mirror is utterly beyond us.
"We told you so" is a wanker's game, which is why we're so good at it. But it's inconceivable (like most things that happened this year) that management, or even a semi-attentive board, didn't know three-quarters through the year and four-fifths into the annual output, and with prices for the last stretch of FY16 already set, that forecast earnings (thus farmgate returns) were fantasy. When Waleed Aly decided to notice, it became a national crisis.
Like its now-forlorn peers Bellamy's and Blackmores, MG was over-reliant on the siren song of China's promise.
As was James Packer. "I believe the rise of the Chinese middle class is equal to the rise of the internet in them being the two macro things that will change the world the most over the next 50 years," he said in October last year. And right the billionaire will ultimately be proven. But the regulatory vagaries of that market have brought too many ambitious Australian companies unstuck in recent times. Crown Resorts has just beaten a very public retreat, after 18 of its employees were imprisoned on the mainland amid a gambling crackdown by President Xi Jinping that has garrotted VIP revenue at its Macau, Melbourne and Perth casinos. Given Packer's public advocacy for Canberra to show Beijing maximum respect, he's unlucky to have stumbled into Xi's crosshairs. And added to the acrimonious end of his engagement to pop diva Mariah Carey, it made Packer's 2016 eminently forgettable.
Murray Goulburn's calamity (and indeed Bellamy's and Blackmores') also show us that mid-cap stocks are now inadequately scrutinised. Just as the upending of journalism's business model has left fewer of us combing the utterances and official documents of public companies, so too is equities research more thinly-resourced. To wit: Aconex, Ardent, Arrium, Automotive Holdings, Cochlear, Graincorp, Harvey Norman, McGrath, Sirtex, SurfStitch, TPG Telecom, Vocus and Wellard.
Clearly hedge funds – many of them picking short opportunities – are taking up the forensic slack, to their considerable advantage, and to the self-righteous anger of company directors (mainly in situ at the Melbourne Club or hiding from Miranda Devine in the Chairmans Lounge).
In hindsight, for instance, Slater & Gordon's indignance last year at "rumourtrage" was decidedly objectionable (as was MG's). Short-sellers, reckoned Slaters chairman John Skippen in August 2015 when the law firm was trading at $3.27, "make investors nervous and think something is wrong with the company and its financials when there is not". But inevitably, there is. If there isn't, short-sellers lose their money – as they should – and the media would pay them no heed. But Skippen's share price is now 26¢, $2.6 billion in shareholder value flushed down the toilet on his supercilious watch.
![James Packer with Leonardo DiCaprio in Macau.](/content/dam/images/g/t/c/z/s/s/image.imgtype.afrArticleInline.620x0.png/1482029257116.jpg)
Just like Slaters and MG and the now-defunct Vocation (whose former chair John Dawkins, CEO Mark Hutchinson and CFO Manvinder Grewal will face the Federal Court next year on charges brought by ASIC of misleading and deceptive conduct, and of breaching their continuous disclosure obligations) before it, Estia Health is now squealing in the same key, blaming shorts and the press for its $700 million spiral, not the fact it has never, ever met its profit guidance nor the loss of its founder and largest shareholder Peter Arvanitis after a margin call, nor a laughable series of public clarifications that on inspection were nominally true but misleading in real terms. We've seen this play so many times now.
Next year, Inghams will be one to watch as input costs (chook feed) turn north cyclically and blood-sucking supermarkets (see above) squeeze its pricing power. We reckon IDP Education, Mayne Pharma and Spotless are worth a good look, too.
In our backyard
The apocalypse continued in the media sector. Fairfax newsrooms endured yet another round of redundancies, MEAA members walking out on a wildcat strike (labelling those of us who didn't "scabs"), the dinosaurs cheering on the asteroid. All the while, Murdoch columnists sneered unbearably, especially the innumerate Chris Mitchell, who then released a fictional autobiography nobody bought.
Yet six months later, News Corp has been impelled, finally, to inhabit semi-reality – with every newspaper in its international stable bar The Wall Street Journal and London's The Times and The Sunday Times now losing money – and Holt Street is scissoring $40 million (so far) from its FY17 editorial budget and the walking redundant are already being shown the door (though, miraculously, not Phil "Buzz" Rothfield).
Telstra wants out of a spiralling Foxtel but is too timorous to take the requisite bath offloading its stake. Sensis Mark II?
Free and pay TV are equally crunched by falling audiences and ad revenue while the cost of sports rights soar and streaming players encroach. New and astronomical rugby league and AFL deals kick in next year while talks have begun over the next cricket agreement.
Nine Entertainment is badly hurting, its stock down 40 per cent in CY16, with Fairfax owning half of its only serious growth asset, Stan, and the two parties now exploring a merger of metro newsrooms (with Macquarie Radio's inclusion subject to media reforms passing the Senate). Arch rival Seven couldn't help gloating at Willoughby's misfortune during 60 Minutes' child snatch debacle in Beirut. They're decidedly quieter now that their own CEO Tim Worner is embroiled in a sex scandal. Earth to Jeff Kennett? Cricket Australia's sick organisational culture is also an unresolved mess for its board – which boasts Rio Tinto veteran David Peever as chair, plus ex-Wesfarmers chair Bob Every, Bank of Queensland director Michelle Tredenick and Qantas director Jacquie Hey.
![Estia Health lost its founder and largest shareholder Peter Arvanitis after a margin call.](/content/dam/images/g/h/h/t/r/x/image.imgtype.afrArticleInline.620x0.png/1465203026675.jpg)
And finally ...
The Prime Minister had a far closer brush with political mortality than anyone expected on July 2 while Bill Shorten was spared the kind of negative scare campaign he ran himself. He won't be so fortunate next time. The post-mortem finger-pointing was epic, with the Liberals launching into the Business Council of Australia, the BCA defending itself (in an epic own goal by outgoing president Catherine Livingstone – since replaced by Admiral Ackbar). It was almost as much fun as the cringeworthy performance of the House Economics Committee as it grilled the CEOs of the Big Four banks.
Turnbull will have to double down on his innovation agenda next year – being the only real prospect of future employment and economic growth in the regions – even if it's described and explained in more relatable terms.
A significant ministerial reshuffle is coming, too, whether in January or right after the May budget. Like that of perceived nanny state Premier Mike Baird, the PM's popularity collapsed this year, but both leaders have time to turn it around. If they do, they'll break the recent curse of incumbency. If they do, here's hoping they don't share the recipe with the Donald...
![Seven boss Tim Worner is embroiled in a sex scandal.](/content/dam/images/g/t/e/h/g/7/image.imgtype.afrArticleInline.620x0.png/1482469371878.jpg)
![Prime Minister Malcolm Turnbull faces a make or break year in 2017.](/content/dam/images/g/t/6/8/2/k/image.imgtype.afrArticleInline.620x0.png/1481229296725.jpg)