Although some of the short-term traders will disagree, there is some evidence that the market is steadily returning to an upward trend. As I warned you last week, this has occurred because of my suggestion that the bear would amble back into the frame. Naturally, he has not done so. His reluctance may also be due to the rand improving to better than seven per US dollar, which could be taken as evidence that some foreign buying of our markets is taking place. The frenetic turnover that we experienced and enjoyed in June has also tailed off and things do feel a lot calmer.
However, the recovery has not yet been sufficient to allow the overall index to boast a positive performance for July. The gold mining shares in particular have taken a hammering. Company results for the June quarter-end are starting to appear and it will be interesting to see if the record-setting gold price has brought some cheer to the sector.
Very few shareholders, however, will be delighted by the prospect of next month’s seemingly inevitable interest rate rise. The most recent inflation numbers have apparently surprised those pundits who clearly have never been to the shops and tried to buy any of life’s little luxuries lately. So alarmed are they, that predictions of at least a 100 basis point increase are being published. From my own standpoint of economic ignorance I don’t understand why pushing up the cost of money should reverse the impact of the ever-increasing price of energy for everyone on the planet. The strikes in support of higher wages taking place around the country suggest that most people are a bit short of income. It also feels as if there is acceleration in the number of people feeding both informally and officially from the public purse. Not only is crime speeding along unabated and undeterred but officials who could be doing something about it are off to parts north to supervise elections and the like. Don’t those countries already have enough corrupt officials of their own to ensure the appropriate outcome?
I was unsurprised when a global survey of the banking sector showed that their biggest risk is to become submerged in regulation and legislation. My own experience of being informed by my bank of the last three decades that they could not use my passport as proof of my identity is yet another small example of the lunacy swamping us. On Tuesday, another new government organisation will begin its task of checking on the estimated 6000 privately owned organisations that grant credit and lend money. The state believes that they can not be trusted to lend only to folk who can afford to repay the loans. Just who is being protected from whom is unclear. But it is clear that a new tax is being levied on the financial industry.
And it is hard to find any good news in the sports pages either. It seems that the Tour de France this year was won by an American with maybe too much testosterone. For the last seven years, it was won by an American with almost none. The All Blacks’ new haka format is scaring everyone and the Proteas in Sri Lanka are wilting. I wonder if there is any need to renew my season tickets at Wanderers?
It is probable that there will be no Tidemarks next week. I need to go to the coast to see if summer is arriving. Keep safe and happy.
James Greener
28th July 2006
