EVERYONE’S A WINNER

The US long bond yield continues to fall and is cause for much pontification by the talking heads. Also catching attention are the rising prices of gold and Bitcoin – that supremely odd and impossible to value so-called crypto currency. Are these three trajectories unconnected? Probably.

Well if no one else did, the official supplier of Pens to the Presidency had a good day this week when 93 trade agreements between South African and Chinese company representatives were signed. Reportedly worth R27 billion, details of exactly where and in which direction this sort of money will flow were not offered. In all probability these agreements will be safely shelved near to the stock of leather-bound copies of the Constitution which were feared stolen recently. It seems that Parliament gives every new MP a de lux copy of the constitution as a token of gratitude for devoting their time and skills to the nation but which, like the above-mentioned agreements, are probably never again looked at. Neither document contains the timetable for the gravy train so is of scant interest to locals. South Africans involved in these deals should take note that the Chinese have a reputation for taking a dim view of overt and extravagant corruption. Just saying.

Those of us who are concerned about the working conditions for our leaders are very relieved to hear that a new guide to replace the infamous Ministerial Handbook has finally been published. Among the improved conditions for our severely overworked ministers, deputy ministers, provincial premiers and other feeders on the public purse is that the state can spend quarter of a million (inflation linked) rands on security measures for their official residences. Meanwhile the nation’s 257 mayors (why so few?) are being urged to give up luxury vehicles and use public transport in order to cut costs. The even more lowly ranked Amakhosi (tribal leaders) and izinduna (chiefs) are also very likely to ignore this advice as they are currently lobbying for free wi-fi and briefcases with a set of car keys -- presumably with a matching car -- upon appointment.

Amongst news of the endless corruption and malfeasance that is now embedded in the South African economy was a reference to a “suspended acting chief executive”.  This title pretty much encapsulates a great deal of our woes. It hints at the possibility of misdemeanour, the damaging rate of turnover among senior staff and the shortage of obvious successors all of which hamper the operation of the organisation concerned. Which in this case is the state-owned outfit that manages most of the civil servant pension funds. This is not a trivial position. It requires overseeing the custody of billions of other people’s money, a temptation that quite a few people are seemingly unable to resist. Across the fence in the private sector a similar issue is starting to escalate as Old Mutual and its newly departed CEO are “lawyering up”. A delightfully evocative phrase.

As is “left-wing soap-dodgers” which might describe most of the students who are likely to be attracted to apply for a place at the School for Global Inclusion and Social Development at the University of Massachusetts. “Right-wing silver-backs” of conservative mien are doubtful if this even means anything. For example, an article penned by Assistant Professor Sindiso Weeks of that School frets about the clashing definitions of “community” in different Acts of the South African parliament. Apparently, this might impact who gets what for free.

Forget about the fourth industrial revolution and artificial intelligence. Just getting a computer to match names and addresses is a real challenge as anyone who has tried to run the Christmas Club on their laptop will agree. This week, Naspers, which owns a big chunk of a very significant computer business failed to get its mailing list right and sent an important circular about a new listing to the right people at the wrong address. Serve them right for trying to use the Post Office.

Scuderia Ferrari in Maranello can’t be a happy place these days. No amount of excitable arm-waving nor expressive shrugging has helped to prepare a car capable of consistently passing a Mercedes in Formula 1. It’s making for a boring season of Grand Prix and viewers will soon defect to the cliff diving for more interesting entertainment. Far cheaper equipment too.

James Greener

Friday 28^th June 2019

DREAM ON MR. PRESIDENT

The little mentioned truth about investing is that there are no truths. All the wonderful sayings, rules of thumb, conventional wisdom and the rest have as many examples of failing as of succeeding. For example, the yield of the government’s long dated bond ought to signal something about confidence in that nation. Allegedly lenders demand higher yields from borrowers that might in the worst case not be around some time in the future. From all the whining and rhetoric about President Trump one could be led to believe that he was running that nation into the ground (and there are some numbers which support this view) but today the  US 10 year bond yield is a mere 2% -- the lowest in 3 years and a sign of confidence? Meanwhile our equivalent bond is yielding around 8% -- hardly a warning signal that this a nation which may be soon be rated “junk”.

State of the Nation is really a highly misleading title for the sort of speeches that our Presidents make from time to time. Aside from giving people an excuse to get togged up in the most amazing garb, by its very name its content should be delivered entirely without using the future tense. We want to hear what our government has managed to do for us and as a result exactly where we are now. Instead we are treated to a celebration of what it is going to do – which experience suggests is never going to happen anyway. Last night we were offered a selection of President Cyril’s dreams. These included “…a South Africa where the first entirely new city built in the democratic era rises, with skyscrapers, schools, universities, hospitals and factories,”. Hmm well yes that sounds like fun, but first can we please hear from the erstwhile chairman of the Eskom War Room what has been done to provide enough electricity for the existing cities. The sole interesting but unsurprising item he told us of the future was that Eskom was going to gets its wodge of taxpayer’s money earlier than budgeted. And by the way, isn’t the reference to skyscrapers endearingly quaint.?

Whatever one thinks about the advisability of public figures using social media internet platforms to communicate with their audience and bypass the more conventional news channels, the phenomena is alive and growing apace. While it certainly is a great tool for the immediate dissemination of facts and real news, leaders and officials who take to Twitter to offer their opinions, prejudices and preconceptions constitute a proper hazard. This is because of the preponderance of what President Trump famously derides as “fake news” and also, just as importantly, it can showcase the author’s shortcomings and ignorance (another supposed Trump claim to fame). This week our ambassador to Denmark illustrated her utter lack of talent for a post in diplomacy by heaping scorn, invective, lies and insults on a minority group in her country. That President Cyril has not responded with an immediate recall of this disappointing civil servant also strengthens our impression that he fears something and is unsure of his legitimacy.

An interesting contribution to the debate about the state of SA sport is the assertion that sport is just as corrupt as any other enterprise Allegedly most of the money that is destined for the recognition and development of young talent is adroitly repurposed by the governing bodies of the various sports .. Many sports men and women are poor or reluctant administrators and the task of negotiating the lucrative TV rights falls upon administrators capable of doing so. Sadly, many are untrustworthy and with few actual athletes on governing bodies redirecting cash flow to flying one’s family first class to the tiddly winks World Cup in Las Vegas attracts scant attention.  Tidemarks has long campaigned for government to withdraw entirely from sport. After all it doesn’t have the money nor frankly the skills nor interest beyond demographics. This year, in a budget shared with arts, culture and recreation and in which a third went to civil servant salaries the allocation was R11bn.  Allowing taxpayers to claim rebates up to that total amount on a first come first served basis against suitable proof of donation would work far better.

James Greener

Winter Solstice 2019

SHOOTING FOR THE POT

Perhaps two of the more alarming developments of the week are the suspension of the Tongaat listing and the news that someone is trying to sink oil tankers in the Straits of Hormuz. Both raise the question of is there more to come? The utter failure of accounting standards and lackadaisical auditing practices have once again failed to give timeous warning of a corporate collapse and the possibility of massive oil price rises are both important factors to be considered by anyone looking for a place to invest. Krugerrands are once again above the R20 000 per coin level.

In the meantime, the largest pension fund in the country – the one belonging to most of the civil servants – has quite rightly complained to the Public Investment Commissioner, the organisation that manages most of that fund’s assets, about its investment policies. They (the fund’s trustees) seem to think that maybe far too much of their pensioner’s money is going into dodgy investments particularly those which do not have the relative comfort and transparency of being listed on a recognised exchange. There is of course no 100% safe investment. Time was when lending to Eskom was considered “blue chip” but no longer. But some of the “investments” that the PIC is currently choosing are very dubious. And no one needs to have this fund running into difficulties

However, the Gupta family seemingly has no money worries thanks to their highly successful hijacking of a whole national economy. Ours! The leaking of their plans for yet more lavish weddings (not in Sun City this time) is clearly a deliberate ploy to show off their success in circumventing just about every anti-fraud and foreign exchange regulation that exists in South Africa.

President Cyril’s suspected lack of business acumen and understanding continue to worry the markets. Instead of allowing SAA to bleat on about how much money they need to keep the doors open he should be instructing them to focus of getting the outfit ready for immediate sale. There is simply not enough money in the country for the nation to keep all these albatrosses alive. And so far neither he nor Eskom have explained how breaking it into 3 parts will save money without selling anything.

At least two unions have now called for teachers who own guns, to take them to work. This follows several violent and deadly incidents on school premises in recent weeks where the official reaction has been the usual limp-wristed conciliatory auto babble about parental control and guidance. In my day teachers were armed with a fine line in cutting sarcasm and a bamboo cane. Both punishments smarted badly and encouraged behaviour that would not draw undue attention to one’s attitude and scholastic efforts.  Thankfully playground violence rarely escalated into a Wild West style shootout although we were all avid devotees of the movie genre and so would have been delighted to learn that there exists a South African Sheriff Society (SASS) which is “the voluntary sheriff organization of choice and is representing the most sheriffs in South Africa” (sic). Presumably their service to members includes a list of wide brimmed hat suppliers and tips on keeping one’s badge and Colt 45 in good condition. Speedy draw classes on every second Saturday?  Grammar optional. We citizens need our sheriffs to be on top of their game as the government is reportedly planning to disarm all private security guards.

There’s also precious little being done to slow down the scourge of luggage theft at our airports, where we could also do with some mean-eyed sharpshooter with four-day growth of beard, itchy trigger finger and a disinclination to ask many questions of a luggage handler delving into a pile of neatly folded shirts though the smashed side of Louis Vuitton’s finest.

The proponents of the idea of using drones to deliver goods – particularly fast food— must be blissfully unaware of the sharp-shooting skill of those with Boer ancestry and the deadly accurate stone throwing ability of most of the others. Bring it on Mr Pizza! We can’t wait.

Isn’t Pebble Beach the most beautiful golf course? That landscape looks seismically active though.

James Greener

Friday 14^th June 2019