The “pain index” measure is loitering at the year’s second highest levels, which means that the JSE has been experiencing successive days of wild swings from high to low and back again. In these circumstances, it is impossible to pretend that one has any insight or authority about the market. At least when there’s a trend evident, one can appear to be knowledgeable by forecasting that it will continue. All I can tentatively offer at the moment is that there is quite a lot of unusual stuff going on. Not least of which is that there are nearly a dozen new companies that will list on the JSE before Christmas. If all goes according to plan, the founders of these businesses should be able to shower their nearest and dearest with some pricey presents. However, not all of the recent listings have been unqualified successes and I wonder if investors are not getting just a tad weary of “pump and dump”.
I have mentioned before my fondness for the Prudent Bear website that collects together dozens of links to market news that leans towards satisfying the inner bear that lurks within me. More than two years ago, I noted that I had read about traces of smoke rising over the US housing and mortgage markets. Those wisps have now become a world-wide pall that is pouring out of a fiery inferno that is fiercer than anyone could have imagined. The US yield curve is now very inverted – that is long dated interest rates are considerably lower than short dated ones – and this is almost always an excellent predictor of a slow-down in the economy. In simple terms, folk are going to stop buying and ordering stuff.
Coping with the consequences of this development is now near the top of everyone’s priority list, particularly those people who are running businesses that can and will be affected by the American consumer deserting his post and neglecting his duty. I am therefore surprised that the quaintly named Carbon Disclosure Project managed to get any JSE-listed firms to spend any time at all on their pointless and doubtless irritating survey. Whose money did they get to spend in order to discover (gasp) that Eskom’s coal-fired power stations produce noxious fumes? And just what are we to make of the news that SA’s population is one of the most environmentally ignorant in the world? I know. Get taxpayers to fund more research and projects and schemes and programs and harass and hector people with bad science, poor policy and unworkable legislation.
Consider the fact that the total annual dividend payments by companies on the JSE is about R350bn. Compare this with annual government expenditure of more than R500bn. Certainly, there are tax and other linkages that make this simple comparison rather shaky but it is terrifying to note that private enterprise has less money to distribute to its owners than it takes to run the government.
I am delighted that the price tag for the Cullinan diamond mine is a lovely round R1 billion. When you are talking those kinds of numbers no one wants to bothered with the annoying 99 cents that invariably appears on the till slip. And also it removes the hassle of wondering whether to round up or down to the nearest 5c. I do just wonder, however, if it is the right price.
More international hot air this weekend. This time in Durban, where the 2010 Soccer World Cup preliminary draw takes place. (I wonder how many trademark infringements there are in that sentence?). My English friends and readers will not want to be reminded of this sport right now. Just where/who is Croatia?
Mind where you place your carbon footprints please.
James Greener
23rd November 2007 (my final sub-sixty prime number birthday)
