Well that’s July done and dusted. The JSE’s month-end runs will take place tonight and portfolios are going to have a rather tattered look to them. The All Share index has retreated more than 2 000 points in the last few days as substantial selling has taken place. At last, people have noticed that huge amounts of the US debt mountain are either already in default or likely to go that way soon. Several major borrowers this week have had to rethink their plans when they failed to find lenders. Suddenly cash has become scarce and those who have it have become rather careful about where to place it. Even here in SA, we have had the rather unexpected sight of a new listing failing to raise all the cash it required. On the other hand, there has also been one that was many times oversubscribed, so it is not yet an undoubted bear market as defined in the Bear Market Control Act of 1969 (amended 1987).
Talking of legislation, did you notice the near hysterical reaction of the tax man to the rather appealing suggestion that house owners should deduct the cost of their security installations from their tax payments? As one who has recently shelled out large sums for just these things, the idea looks good. However, SARS had no hesitation in warning that this sort of criminal act was far more severe than the assaults and robberies that I am trying to prevent happening in my own home.
I have always enjoyed watching the Tour de France on TV, mainly for the simply wonderful views and panoramas that one can glimpse in the background. The caravan of cyclists, motorbikes and cars weaving through the landscape can also be very exciting. For several years, I felt a special affinity with the race leader as he too had managed to defeat a dread disease after a year of rather toxic drugs. My particular chemical regime, however, did nothing to improve my cycling skills. But nowadays, it seems that virtually all the participants are in need of continuous medication. But because this is against the rules, the judges have been waving decks of red cards and the field of competitors has been thinned almost every day. Pretty much anyone who turns up on the Champs-Elysees on two wheels on Sunday will have a good chance of hoisting a trophy and getting a bouquet to toss at the photographers.
The other good news is any prize money that the lone South African rider, Mr Hunter, may pocket, will be now be worth a lot more back home than it was when the race started. The rand has suffered very badly this month especially against sterling and the euro, a factor which has also helped foreign investors take a dim view of the JSE and the bond market. Gold too has stopped taking the steroids it was on earlier.
The next scheduled interest rate decision by the Reserve Bank is less than three weeks away. All the tired old reasons for and against a hike are being taken out for an airing. I am interested by the quiet reappearance of the practice of disintermediation. This is when borrowers and lenders negotiate directly and leave the banks out of the deal. It sometimes is an indicator of high rates. We shall have to wait and see what it means this time.
Have a safe weekend and remember not to use any of the copyrighted phrases, words and numbers when referring to the sporting event that will take place at the southern tip of Africa in the year after 2009 between 32 international teams of 11 men, each selected for their desire and/or ability to propel with their feet a spherical bladder into a net.
James Greener
27th July 2007
