There is very little to write about in the market this week. Even the expected 25 basis point rise in the US rates has had no noticeable impact on our lives. Yet. As you all know by now, my tedious view – long overdue for fulfilment – is that the spectacularly large US debt position is a millstone that gets heavier with each increase in interest rates. Perhaps my expectation of an enormous splash when the victim (US consumer) topples beneath the surface of the liquidity lake is over-optimistic. Maybe all that we shall see will be expanding circles of ripples with just a faint gurgling noise from the centre. However, it’s those ripples that worry me, as I think they could look like tsunamis by the time they reach our markets.
So far this month the JSE is down a bit, but only because of the mining shares. Almost all the other sectors are still stumbling and lurching upwards. The rand has gained against all currencies except the Pound so far this month and the US dollar has been taking a caning from everyone – particularly these last few days. The price of gold is a very good indicator of how deep in the dollar is.
There is a distinct holiday feel to the market with wide price spreads and negligible volumes. The day before the public holiday we enjoyed quite a bit of turnover because of futures close out. This is an arcane ritual that takes place four times a year, usually on the afternoon of the third Thursday in the month. For 100 minutes the market is dominated by duelling computer trading programs – I’m sure I heard the sound of plucking banjos – and mere mortals watch in horror or glee, depending on their position. These programs should carry age restrictions.
To make up for lack of action, and probably readers, analysts and reporters are now churning out their predictions for 2005. It seems that most are sure that the market will go up, the rand will be strong but unpredictable and the Proteas will beat England. Another of my, hopefully well known, scepticisms is that on average exactly half of one’s forecasts are correct. I have already admitted to one of mine which this year was wrong. This is therefore not a good moment to put down on paper any ideas that I may have. Statistically you will now be expecting it to be accurate. Come to think of it, I have very few ideas at the moment anyway. I know what I’d like to happen but that should not be confused with what should happen or indeed with what will happen.
But enough of this lyrical word play; there’s some test cricket to watch and Christmas presents to wrap. I’ll be in the office next week should you feel the need to impress the folk next to you on the beach with a call to your stockbroker to discuss the portfolio. The week after that, it will be me on the beach next to you.
Remember the hat and the sunscreen.
James Greener
17th December 2004
