At this time of year Tidemarks should be coming to you from the Jacuzzi deck of a large yacht moored alongside the swimming pool straight in Monaco. Underdressed young women should be plying me with intoxicating drink. Fellow guests would include hedge fund managers begging to be put on the Tidemarks mailing list and asking to hear my investment wisdom. However, for some reason, my tickets to this migration magnet for the rich and sleazy failed to arrive and so the pond outside the office will have to serve as a replacement for the sparkling Mediterranean. I have fetched my own mug of instant coffee and have to say that the traffic in Fricker Road sounds nothing like a Formula 1 practice session.
Some things are going up and others are coming down. The most noticeable down item has been the temperature. Dozens of long-standing lowest ever temperature records have been broken this week, and the global warming story is meeting with a bit of scepticism down here on the southern tip. And are share prices about to go down? After poking its nose above the 29 000 level a day or so ago, the All Share index has retreated with huge intra-day swings testing the skills and wallets of the day-traders.
Things that are going up in most parts of the world (except Iran where the president has decreed that they go down) include interest rates. Readers will be familiar with my view that the US long bond rate is a sensitive indicator of economic conditions and sentiment. That rate is rising quite sharply and amongst other things is putting even more pressure on the already battered housing loan market in the US. Investors seem to sense that it is going to get more expensive to live and are demanding more yield from their money. Here in SA as well, food prices are experiencing a wicked rate of increase. This fact, together with the bitter weather tends to activate the “gloom gene” in some folk. To cheer myself up I probably need to go shopping for fishing kit and beer again this weekend.
In less than two weeks time, we will be treated to Governor Mboweni’s bimonthly TV appearance. Towards the end of his performance he will make the interest rate announcement. Given the unmistakable inflationary signals that are flashing, I think he will push them up. I also think that the market is wondering what really bad story might come along and blast a hole below the waterline of this bull run. Now if the Governor were to announce a one percent hike instead of the more customary half percent, that might be the torpedo. But then again it might not.
A learned academic has discovered that two thirds of the small businesses that are eligible for a tax amnesty, if they give themselves up to the taxman before the end of the month, will not do so. This is because “most small business owners perceived tax payment and the costs of administration for compliance as an unnecessary expense.” I humbly submit that every current taxpayer feels exactly the same way. Who wouldn’t love to get off SARS’ mailing list?
And that investment wisdom? Just the usual. Buy low and sell high – infrequently. Which is about as useful as Eskom’s current advice not to use power otherwise there won’t be any!
I wonder what impressions of sunny South Africa the English rugby tourists will take away from their close encounters with the frozen ground in Bloemfontein tomorrow. What a tough place to make one’s test rugby debut!
James Greener
25th May 2007
