The two most recent meetings of the monetary policy committee have ended with Governor Mboweni gliding up to the microphone and chanting the sacred phrase: “Raise the repo rate by 50 basis points.” Now I thought that this is what was happening. I assumed that the committee, after two days of deep deliberation, wise discussion and frequent comfort and refreshment breaks, had set the precisely perfect price of money for the nation at that moment. However, Minister Manual told us this week that the Governor was merely “in the signalling phase” and that unless we note, understand and obey his signals, we consumers can expect soon to be “beaten into submission”. Given that most of the population fails to note, understand and obey even the more obvious signals, such as red traffic lights, we obviously did not appreciate that the large perspiring man in the TV lights and the striped tie was actually waving a grubby red flag. Just what is it that we have to stop doing in order to avoid this threatened beating? Perhaps they wish us to stop buying imported goods. Or, at the very least, to stop borrowing money to do so. But will that not threaten the growth rate and our transformation? Please tell us. The beating that we get from the taxman already has me submitting and I don’t want any more.
Actually, the rand is already putting the brakes on some spending anyway. A number of items have given the currency a beating of its own. These included the report that we are not as a country as competitive as we used to be or as we need to be. Far too many of our resources are engaged in telling others what to do and how to do it and not actually doing anything productive themselves.
Mind you, it is not always perfect in the free market either. I am assuming that decision by the beverage industry to move to the small 330 ml can, is their own and not some bureaucratically imposed standardisation. I am unimpressed by the claim that the reduced neck diameter will produce a “smoother, more polished finish”. The old 375ml “pint” bottle has also disappeared from the shelves. My glass really is half-empty. This is a very serious matter, and the only way I can think of to counter the problem is to open two cans at once and buy some more SAB Miller shares.
It was another week when the JSE pushed the All Share to a new high, but the effort to do so, has exhausted the bull and a modest correction is taking place as we approach the weekend and the Ellis Park test. The eternal question about whether or not this is the final top will of course remain unanswered for some time. What I do know is that, as always, this time it is different, so to seek guidance from previous times when the market allegedly behaved like this is probably unhelpful. I shall bore and exasperate loyal readers by repeating my view that I think that the most important catalyst for the JSE will be Wall Street. The return to average or lower than average valuations in the US markets could occur at any time, although these days I tend towards thinking that the correction might not be as steep or severe as some of us would like to see.
What with civil servants threatening to beat us, beer portions getting smaller and our currency weakening, the one point victory over the All Blacks was a highlight. Give us a larger margin of victory tomorrow over the Wallabies please lads. We need a ray of sunshine, especially as our guests will be trying to avoid them. Rays, that is.
James Greener
8th September 2006
