Friday, 20 October 2017


Even with perfect hindsight there are many things which remain puzzling. Like why US share markets are up 25% since Donald Trump became president? According to the main stream media, Mr Trump is despised and mistrusted by everyone. Except apparently by those who believe that businesses will thrive and make money while he is in the Oval Office. Almost all valuation tools and historical comparisons indicate strongly that share prices in the US and in many other places are far too high but the buyers stubbornly don’t seem to care and are prepared to offer sellers ever higher prices.
Although on a shorter timescale even our markets too are resilient in the face of mounting evidence of Armageddon levels of corruption and larceny by nearly everyone on the state payroll.  Of course, the main indices are dominated by shares whose prices are set offshore and as we have remarked before, much of our performance is rand hedge behaviour.
Next week sees the government finance equivalent of the half-time interview when the head coach and Minister of Finance will doubtless say that the first half was tough but then it wasn’t his strategy anyway but the lads are hopeful of a big turnaround in the second half.  But Minister Gigaba’s impeccable ensemble highlights the suspicion that the government is increasingly spending far more than it is collecting. The latest information from National Treasury is that the 12-month rolling deficit has climbed to an all-time high of R210 billion. Severe squeezing of the numbers and taxpayers might just see this number fall below R200bn by the end of the government’s budget year in March. But this is still R30bn more than what previous Minister Gordhan hoped for when he delivered his last Budget eight months ago. And the most recent bail-out of SAA doesn’t yet figure in these numbers.
But why are we worried?  The boss is innumerate and far too interested in his own future to pay much attention to how the peasants are scraping along. And most of the rest of the cabinet are playing musical chairs, taking calls from Saxonwold, Dubai and Moscow and nervously checking that all the bodyguards are in place. The cabinet shuffle that scared the rand a bit confirmed that Number One has no intention of addressing either the financial or social woes of our nation. He is a very shrewd and experienced campaigner who ensures that it is he who never gets any unwelcome surprises. The news that the ANC has an Integrity Committee is astonishing, but they must be a sad and frustrated group of cadres with very low job satisfaction levels.
The South African reaction to the news that the folk at the big telescope in Sutherland had witnessed a huge accident was to watch for tow-away trucks and private ambulances speeding up the N1. Fortunately, not only was no one injured, the event took place 130 million years ago and the noise has only just reached Earth. Nevertheless, the simultaneous observation of both gravity and light signals from the collision of two neutron stars is a breath-taking scientific event and achievement.  Also in the realm of science is the news that our new Minister of Energy has an honours degree in biochemistry. He now will have to think in Megawatts rather than units a billion times smaller, but perhaps Russian roubles will be his currency of choice as he seems to have been selected by Number One to close the nuclear power station deal with Mr Putin.
It’s that time of year when the glossy ads for outrageously expensive booze drop out of the newspapers. So far, the leader is a 50-year-old Balvenie single malt whisky at R650 000 a bottle. The 40-year-old is a mere R110 000. Now it doesn’t exactly work like this but putting away a bottle of the younger one for 10 years seems to offer a handsome 17%pa return. That’s if you can keep your friends in the next decade from exploring the deep recesses of your bar cupboard once the Amarula runs out!
Currie Cup semi-finals allow for a possible Sharks vs Lions final which will once again call for the red cap and black shirt and a certain coolness in the bowling club bar. I’m also cooling off on Formula 1 which seems to have become less interesting now that Bernie has gone.
James Greener
Friday 20th October 2017