MIKADO MOMENT

Fans of the Savoy operas will immediately have noted the similarity between Ko-Ko, the Lord High Executioner and Donald, President of the USA. Both have “little lists of those who won’t be missed”. The more recent of these two list-makers has identified the nations which most often vote in opposition to the USA at the United Nations and which in consequence face the probability of America chopping off aid and benefits. Alarmingly South Africa is on this list and the punishment could be far worse and longer lasting than anything Ko-Ko had in mind. It’s provng foolish to poke the bear and not believe that he will carry out his threats.

Whether it’s this policy that is finding support is of course impossible to tell, but solid demand for US dollars is the big market story at present with our own runt about 8% weaker against the greenback in just two months. However, those inflows to the dollar don’t seem to be directed towards buying US shares or bonds since neither of those prices are moving much. Conversely though, with many JSE listed companies sensitive to a weaker currency, the local indices are quite perky with resources leading the pack.

However, those who like to do old fashioned value analysis still feel that there are very thin pickings on the JSE. Earnings remain very low compared to prices and therefore this is probably not a good time to buy. But the difficulty in using this metric and indeed most other techniques, is that increasingly it appears naïve to rely too much on published and even audited financial statements to obtain such presumably useful parameters. This epidemic of unreliability is almost certainly related to the rise in regulatory and compliance activity. This will seem counter intuitive to outsiders but now that every call is recorded, every meeting reported, and busybodies are frantically trying to ensure that the playing field is level -- made harder because they have no idea what game is being played on that field -- the market’s early warning systems have been stifled. The incentives and opportunities to dig and ferret and chat and probe and pass on a rumour have been removed and largely prohibited and so it is only when a mess gets very large and smelly do the authorised mechanisms get activated. It’s ironic that despite the massive growth in compliance activities, clients and customers still get hurt. And what’s worse is that they are of course indirectly paying for this unwanted monitoring of their “safety”. A couple of scrupulous and honest front office personnel with long-standing client relationships are worth a thousand over-qualified yet inexperienced and clueless gumshoes listening to recordings, sifting through records and composing ever longer disclaimers.

If there are still any believers in hard tangible assets out there they probably already know that at around sixteen and a half thousand rand each, Krugerrands are at their cheapest in several years. The gap between this price and the JSE price of New Gold, the exchange-traded fund that tracks the rand price of gold is also at a low point. Time to switch from the ETF to the coin?

While there is the usual feast of Super Rugby matches to help us each reach the national average daily TV watching time of 7 hours and 2 minutes (yes really!)  the one that probably deserves our attention is the Cheetah’s play-off against the Llanelli Scarlets at 7:35 pm on Saturday (right after the Sharks match) in their Pro 14 campaign. The press commentary is mostly rather gloomy about their chances, but this is a side which often does surprise. And there’s an excuse to pop down to the bottle store and get in a few Guinness since they are the tournament sponsor and also deserve support.

James Greener

International Star Wars Day -- May the Fourth be with You

PUBLIC HOLIDAY PATTER

The idea that the state can allocate resources better than the market has been a very important contributor towards preventing this country from growing as fast as it needs to. Not only is it a very bad idea but also its implementation has some diabolical twists which have prolonged the agony. The state sets benchmarks which are racist, unfair to most parties and open ended. Recently the courts ruled that mining enterprises which had attained the required race composition amongst its owners could keep that box ticked even if at a later stage the ratio changed in the “wrong” direction. This “Once Empowered Always Empowered” judgement appeared to be accepted by government but now minister of mines Gwede Mantashe has decided to challenge the court decision. The industry is plunged back into a state of uncertainty and taxpayers will be handed yet another lawyer’s bill for legal action against themselves! It’s a dreadful situation that will once again delay our return to becoming a competitive and significant player in the minerals markets.

The new president and his rejigged cabinet are not as tough as we hoped. They are about to send SAA another bail-out cheque for R5bn when what they really need to do is put the airline on an internet auction site and insist on a cash payment from the successful bidder. The problem is that the finances are in such a mess that no one has much of a clue what the thing is worth and a bid of even R1 might be overpaying. SAA’s recent history of having the president’s girlfriend in charge and a cabinet minister who described airline pilots as glorified taxi drivers were just the latest in a series of very poor choices of people to run the thing. The live maps on the internet that display the location and route of virtually every civilian plane currently in the air clearly illustrate what a competitive industry this is. Governments have no aptitude for being in this kind of business.

Reporters who write about these things got very excited with some data that came out which showed that SA consumers were more confident about the future than at any other time in the past. This is indeed a newsworthy though puzzling result which doesn’t really feel right. Are consumers really unconcerned by the hike in the VAT rate and other new and increased taxes.  Is no one unhappy that we now pay more for fuel than ever before? What about the declarations of no-go zones in parts of our country following dreadful outbreaks of violence and civil insurrection? Sadly, in common with other hitherto mostly reliable data like company financial results, many statistics appear to be “massaged” before publication and are probably misleading.

Now that auditors and accountants have joined lawyers at the foot of the “Most Trusted Profession” league table, Noel Coward’s advice to Mrs Worthington not to put her daughter on the stage may no longer be correct. Treading the boards as a thespian or chanteuse at least attracts honest if not always pleasant reviews. And no one moves away from you at parties when you tell them what you do.

So, after my comment last week, the rugby became entertaining again. However, the other big problem this year has to do with colour. Of the jerseys that is. And the referee’s kit. My aging eyes increasingly find it hard to distinguish the teams and there are clearly occasions when the pass goes to the opposition, so the players are also bamboozled. At the very least one side should be in different coloured shorts. And who at the Bulls game, when the two sides were in hues of blue, thought that putting the ref in mauve was sensible?  That Azerbaijan street circuit for this weekend’s Grand Prix is strangely sterile and lifeless. Why won’t the FIA schedule one for Kyalami again? We could have minibus taxi races for the curtain raiser. No need for the Safety Car. They’ll pass him on the inside.

James Greener

Freedom Day (but not the country’s birthday) 2018

A CUCKOO CLOCK MADE IN SWAZILAND?

One indicator that is frantically waving at us from the wings is a commodity index which shows that the dollar prices of stuff like minerals, food and energy products are mostly quite a lot higher than they were a year ago. This is not bad news for the producers and sellers of these items (like we ought to be) but perhaps is the reason for forecasts that the economic boom elsewhere is coming to an end. In fact on a coarse scale the price of gold has, over the past two years, outpaced the average price of shares both in Johannesburg and New York . It would not be hard to work up an argument for explaining why hard assets might be more attractive than ones whose possible values rely on reports prepared by the currently rather embarrassingly error-prone tribes of accountants, auditors, executives and board members.

President CR has come home from the Commonwealth meeting early, presumably to put out the actual and figurative fires that have broken out around the nation. Some of the most severe conflagrations are the result of dire local and provincial leadership. Instead of renaming airports, government needs seriously to curtail provincial and “traditional” power structures. These are costly anachronisms unsuited to a modern state, providing cover for incompetent paper shufflers and disguise for large scale larceny. Halving the public service wage bill will trigger social upheavals registering at least 10 on the Richter Scale. But it will allow for massive reductions in tax rates, which in turn will encourage entrepreneurship and self-help capacity.

And on the subject of renaming, the king of Swaziland is so sick of his country being mistaken for Switzerland, that henceforth our neighbour is to be known as eSwatini. It’s hard to see where the confusion arises though.

In yet another but just the latest revelation of corruption involving government officials taking sweeteners from suppliers, it has emerged that our police force has a Technology Management Service headed by a Lieutenant-General. That’s a pretty senior rank for a computer geek. People like that rarely reach such giddy heights and are normally kept out of sight ferreting around in the cables and boxes under the desk. Of course, the emerging story of who was giving and who was receiving gets long and complicated with an especial horror being that one of the freebies consisted of tickets to a Manchester United home game. Hopefully when the conviction and sentencing of both sides of this dirty dealing takes place, the judge will take into account the time served at Old Trafford and reduce jail time by a day or so.

About a week after the Easter long weekend finished, transport minister Blade Nzimande held a press conference to announce that his department’s preliminary statistics showed that 510 people (61 more than in 2017) had died on South African roads during that period. There are many responses to this bleak formal announcement not least of which is what is he going to do about it? Presumably the claim that 18 900 law-enforcement officers were deployed countrywide over that long weekend was expected to be seen as a start. But this number suggests that absent comfort breaks, at peak periods there should have been around 3 cops per km on the main roads connecting the country’s bigger cities. Really? Where were they? The 5-yearly driving licence renewal program with the risible and easily circumvented eye-test is clearly having no effect on reducing accidents. And plenty of drivers are unlicensed anyway. Unroadworthy and grievously overloaded public transport operators also seem to have found a way around the law. Keeping true to all the zero-tolerance waffle is long overdue. Reportedly, in some nations, non-compliant drivers stopped at a roadblock are invited to witness the crushing of their vehicle there and then. In the interests of humanity though they may get out of the car first.

One has great sympathy for the sports journalists who earn a living trying to write about the state of rugby in this nation. The thesaurus function on their laptops must be weary of looking up words like bad, shocking, terrible and disappointing. And since I don’t have to, I won’t.

James Greener

4/20 cannabis culture day