This will be the last (and sole) Tidemarks that I shall write which can be dated 29th February. The next time this date falls on a Friday, I will definitely be fishing somewhere. So perhaps I should try to be positive and upbeat in this unique edition.
Let’s start with things that have gone up. Inflation certainly has and with today’s fuel price increase announcement there is no way that it will cool off any time soon. Money supply growth is well north of 22% pa and bond market yields are rising quickly too. It is more than a month until Governor Mboweni’s next appointment in front of the hot TV lights but it is hard to identify any possible news between now and then that might be good enough to persuade him to cut the repo rate. So that’s something else that will go up. The trade deficit is also going up but only the biggest optimist would see light at the end of this particular tunnel and one of the biggest importer of things at the moment must be the Gautrain tunnelers. The cost per passenger mile of this project must be starting to make the man on Mars mission look cheap.
Commodity prices have been soaring so fast that even gold has been a laggard in this company. The number of US dollars required to buy a unit of almost every currency in the world, except the rand, has been going up. Share prices on the JSE have also been going up although individual experiences for February performance may vary considerably depending on the weighting of commodity stocks within the portfolio.
Good news in the down direction must include wonderful rains that have been falling and car and house prices (provided you are not a seller like me!). The price of electronic goodies like big screen TVs and computers also seem to be suffering from over supply and under demand.
Buyers of these items might find themselves unable to enjoy them from next week when savage and lengthy power cuts are scheduled to restart. Just how the country has managed to enjoy these past few weeks without needing to shed any loads has not been explained. But something is going to happen in the power generating industry this weekend and the dark ages beckon. I do hope they don’t start tomorrow when I go to Loftus to watch the Bulls/Sharks grudge match under lights. Even the briefest blackout could see some scores being settled while the ref is peering into the gloom.
Sufficient companies have now reported so that most of the indices are starting to reflect the new average earnings. Unsurprisingly, annual growth rates can be seen to be declining in almost every sector. I have not yet seen any sector earnings bases actually falling, but the slowing growth, in tandem with the price recovery of the past few weeks, means that PE ratios are pushing upwards again. This of course makes it again hard to find any value to buy. This is very unfortunate, as suddenly, it looks like a good idea to reduce cash levels. An important consequence of rising inflation is that interest rates after inflation and tax are zero or even negative. Cash is no longer king. This explains the swarms of buyers in the stock market looking for protection from this savings-destroying evil. Time this weekend to go through the share lists with a fine toothcomb again.
I am finding it quite hard to switch between watching the Super 14 matches under the new experimental laws and the Six Nations under the old laws. It must be especially tough on the referees too. I am sure I saw one signal a four last weekend.
James Greener
29th February 2008
