The GDP figures that were released this week were alarming and my conviction that the world wide equity bull markets are unsustainable has been strengthened. It is going to get ever harder for most companies to grow their earnings or even make a profit in the next year or so. The average historic price earnings ratio of 13 on the JSE does not excite me at all. The trend of P rising while E falls is really not a great buy signal. Obviously there will always be companies that will buck the trend and find customers even in a recession, but the real hunt must be on for those organisations that manage the downturn, survive the drought and get positioned to benefit quickly from the recovery whenever it is. Many of the big names – especially in the financial sectors – seem to me to be unlikely to make that cut. Among the headwinds they face is the gale of legislation and costly administration that is now required to ensure that they are operating in accordance with codes that have nothing to do with profitability and customer service.
Education is an area in which we are all total experts having each spent at least a dozen of our formative years in close contact with the industry. Several saddening and infuriating stories broke this week about the ever deepening mess that government is making of providing the nation with motivated and enthusiastic youngsters eager to earn a living and able to read, write and work out the VAT on a dozen cans of condensed milk. It appears that almost a year after last year’s school leavers began to sit their final exams, those that passed are still waiting for some bureaucrat to approve the design of the near worthless certificate that will celebrate the event. The fact that the forgers have already been eagerly supplying certificates for those who failed merely exacerbates matters. And now we have the unedifying sight of universities and education departments circling each other growling about whether or not the ability to add AND subtract is a necessary condition for entry to the nation’s halls of academe.
I am intrigued by the observation that the Chinese appear to have been unimpressed by the assurances of the fellows from Washington that a strong dollar is national policy. The boys from Beijing are very worried about the threat to their reserves that is posed by a falling US dollar and are exchanging them for tangibles in the form of minerals, mines and meadows. This has been causing spikes and peaks in some commodity prices and despite the excited yells from the lookouts that have been posted to check for green shoots these are probably not harbingers of consumer recovery.
Tidemarks is coming to you a day early this week because I am going on holiday. Admittedly it is very hard to distinguish between days when I am working from days when I am not working. Venue and attire are not good clues and it is hard to go somewhere where the cell phone and internet coverage are no different from what I enjoy here at my desk. So it will just have to come down to discipline. A longer beach walk before breakfast, double the post-lunchtime nap and open the first Castle earlier than normal. Perhaps even more fishing time. I am suddenly looking forward to this break.
And sadly, once again the whole issue of race has raised its head in South African sport. This time it has to do with whether one of our athletes at the world championships should be running in the girl’s race or in the boy’s race.
James Greener
20th August 2009
