There has been quite a lot of suffering “...the slings and arrows of outrageous fortune,” in the market these last few days, but I doubt if anyone feels “nobler in the mind” for the experience. The simple statement that the all share index has today set the week’s high almost 1000 points above the week’s low, which was achieved on Monday completely disguises the extreme anguish in between. Most days posted daily ranges well in excess of 300 points. Sometimes the action was in one direction, on others it was both up and down, a long way, several times! This has taken the twinkle from the eye of even the keenest trader. Everyone is hoping that things will be much smoother on Monday when both the US and the UK markets will be closed to celebrate the arrival of the sun or some other quaint ritual.
Of course, we still don’t know if this is the end of the bull market or the start of the bear market (although readers will not be surprised that my own feeling is biased towards the latter). Or perhaps it is something else altogether. Like the end of the world as we know it.
Just as long as it doesn’t happen immediately or else we shall miss the sumptuous 2010: Corporate Banquet to be held by the drearily-named Institute for Local Government, at some glamorous gambling facility near the airport. From the advertisement, it seems that the mass munchies are planned as the highlight and main attraction of the 2010: The Role of Local Government Conference that starts this weekend at the same venue. “Limited seats are still available!!” but I shall not go.
Bureaucrats obviously sheltered in their offices during the cold spell and used the time to come up with a bonanza of strange ideas. Like the requirement that cell phone companies compile FICA-like records of ID and addresses of all their customers. At least one company has quoted some interesting statistics about the number of people within our borders who have neither, but do enjoy their cell phones. And then the state-owned and taxpayer-supported airline was “slapped with a fine” of R55m by the (state-run) Competition Commission for stifling competition through some dodgy deals about two years ago. Just whose wallet will get raided for this one? And a neighbouring country proudly announced the issue of inflation-linked bonds that will offer a yield of 2% above inflation. But with inflation through 1000%pa and rising, I am not sure these will be popular.
Meanwhile in the real world, companies have been continuing to report very pleasing results and it seems that the consumer and his (or her) credit card are going great guns. One bank grumbled about this profligacy a bit, but since it is they who issue the cards and set the limits it seemed a trifle pious. But we should all take their point. The bull has been fuelled by massive money supply growth everywhere – particularly in the US and, not insignificantly, right here as well. The US housing bubble has definitely burst and mortgage defaults are rising swiftly. Roosting chickens have been sighted.
But neither trade and budget deficits nor rising debt will be given a single thought in Monaco this weekend when the (very) rich and (improbably) famous gather on the poop decks of their yachts to throw champagne corks at the GP cars. As my boat has not yet come in, I’ll just sit in front of the TV with a Castle.
James Greener
26th May 2006
