Almost all of this month’s rather modest 3% total return from the All Share index occurred in the first few weeks. Thereafter the market has put on a virtuoso performance of matching ups with downs, mixed with copious indecision. The banking sector has found the going particularly tough. But mining houses and rand sensitive resource exporters appear to be benefiting from all the waffle about currency wars. The steadily rising prices of commodities suggest that someone somewhere is always keen to buy something either to eat or to make into something else. One particularly interesting segment of this market are the so-called rare-earths of which China seems to have an inordinate share and which recently they have declined to sell to anyone. Many of today’s essential electronic gadgets need tiny but critical amounts of these elements. Watch this space.
Minister Gordhan stepped up to the podium in Parliament with the exciting news that he will be collecting R30bn more in tax from us this year than he originally anticipated. But all he can think to do with this windfall is to buy some foreign currency. Not a great idea in my opinion. First prize would definitely be to give it back to us tax payers, so we can individually decide what to do with it. I, for one, would not buy any greenbacks. There are just far too many of them. However, I am not convinced that there really is a problem of excessive revenue. There was way too much dependence on expressing everything in terms of GDP which in turn depends on assumptions of how much it might grow. If there are indeed any extra rands in the National Treasury they will be quickly mopped up by those enthusiastic and spendthrift ministers who just recently have signed declarations that they will do their jobs and deliver services from now on. The president’s office has already claimed a 10% increase on their original allocation in order to meet “unforeseeable and unavoidable expenditure”. Is that a warning that we have another wedding to pay for soon?
Consumer price inflation is exactly that. Each consumer has a different experience depending on his or her pattern of consumption. The just released and much celebrated multi-year low of 3.2% for September was definitely not my experience. My electricity bill claims a considerably greater proportion of my total monthly expenditure than the 1.9% that the Stats SA model uses. And this item is up 18.3% year on year. Add to this the 7% increase in beer prices which also impacted me more than the model’s 1.6% weighting of expenditure. Those readers paying school fees will be amazed to learn that Stats SA feels that they comprise just 1.3% of one’s outgoings. These fees are up 10.2% year-on-year, the second highest after electricity. These figures go a long way to explaining why spending on other consumer items is under pressure. Apparently bread and cereals are down 1% in price since last year and telecommunications equipment is 30% cheaper. For all its importance in economic debate the inflation rate is a dreadfully suspect number.
The world is very relieved that Warner Brothers and New Zealand have agreed that those cold and soggy islands will be used as the location for another Hobbit movie. Taxpayers there are even paying $10m towards the film company’s marketing costs. The director also has his eye on the All Black training camp when it comes to casting for those fearsome huge and ugly creatures who lurk in the background just offside.
Flag sellers, whose business took a dive in July, are back in droves at the kingdom’s traffic lights, offering any item you can imagine plastered with the Shark logo. The intrepid few who have travelled from Province for the final will struggle to find much in blue and white hoops. Despite my great grandfather having married a Cape Town girl in 1881 I shall be supporting the black and white tomorrow.
James Greener
29th October 2010
