The central tenet of technical analysis (charting) is that every piece of information, about a company is distilled into the share price at that moment and that the behaviour of the price reflects the shifting balance of power between those who believe their information is good news and those who think that their knowledge spells trouble. This so-called “language of the market” is presently sending a clear message that the worst is over and most companies on most markets around the world (China excepted) are going to make greater profits in the future. Fusspots like me who fret about incomprehensible debt levels, insolvent banks, and collapsing housing prices obviously misunderstand the language. Careful listeners believe that while those little difficulties do exist, there are sufficiently powerful forces available (generally fuelled by tax money) who will be able to fix all these problems. After all isn’t that what governments are for? To ensure that everyone lives happily ever after?
Governor Mboweni has clearly spent a bit of time re-running the tapes of all his previous announcements about the repo rate. He has wisely decided that his obvious discomfort and physical deterioration in front of the TV lights was detracting from the drama of delaying the decision until he had delivered numerous pages of boring econo-waffle. The poor man had probably been told (incorrectly) that this part of the speech enhanced his reputation as a skilled and erudite central banker. Now the important number is released in the first few seconds of the broadcast when he looks fresh and happy. The sycophantic analysts deserve to sit through the rest knowing that we sensible souls have switched the TV over to The Fashion Channel or Sport Fishing
There is furious speculation about next week’s decision, which has been stirred up by the sharp improvement in the rand exchange rate. Money is flowing back to the southern tip. The peaceful and unexpected flowering of democracy in Zimbabwe is fuelling all kinds of over-excited speculation about opportunities. The air is thick with early birds looking for worms. They might well find them. But I don’t think that will distract the Governor from the soaring inflation rate and his determination to attack it. Much like the powers(off)-that-be at Eskom, there is a determination to punish citizens for not heeding the warnings to use less money and electricity.
It is taking much longer than I had expected for the bear to take control of the markets and economies. I am therefore grateful that I have no need to worry about the arrival of the day when I would be sent away with an ugly clock and a ridiculously large greetings card filled with doggerel about enjoying my golden years. I am going to stay put in front of these screens for as long as it takes and see everyone get what they deserve. So those of you who thought that the second absence in three weeks of this letter was the sign of my imminent retirement are happily wrong. A week ago, I was very proudly watching the Chancellor of Rhodes University conferring a degree on my younger daughter. A wonderful but possibly the last such occasion for us.
Load shedding has returned and as ever the Gauteng Provincial Government is on top of their game. The paper today carries a request by them for someone to host the “Passing of the Torch Awards 2008”. I know that fumbling around in the dark after Eskom trips the switch, requires skill but who ever would have thought that my government would have seen fit to pass out prizes for the top performers in this area? Obviously, an electrified venue will not be necessary.
James Greener
4th April 2008
