Although it is just mid November there are already a few Yuletide markers showing up in the shops and the market. Durban temperatures are at last edging up towards the 30s, and so tinsel and canned snow are putting in an appearance. On the JSE, the average daily trading range of most of the indices is contracting, which suggests that traders are starting to worry more about holiday plans than trying to chase prices up and down. However, the All Share index level itself in the last few weeks has been setting the year’s high and is 50% above the March low point when the 2008 crisis was declared to be “over”. At that time the gold price was at a record R10 000 an ounce, presumably an indication that the metal was being used as a safe haven. As the year wore on, however, the price declined substantially to just R7 000. Bears are eager to point out that the price has recently edged back to above R8 000 an ounce and the local sponsors of the NewGold ETF had to buy 120kg of the yellow stuff and issue another 400 000 units to satisfy demand this morning. Is fear making a comeback?
The president’s welcome move to rein in government salary increases by a whole 1% is more form than substance but assuredly there will be bleating noises about the counter attractions of the private sector and how the talent will leave the rigours of public service unless properly rewarded. Mind you, the average civil servant’s idea of how things operate out here is a bit fuzzy. This week the State Diamond Trader -- a government organisation with a socially laudable but commercially naïve structure and purpose – requested a return to the cosy fold of tax-payer funding. The model that the Trader would become a self-supporting interloper in an industry that is notoriously opaque and exceptionally price sensitive, proved unworkable. Costs exceeded income and the Trader’s customers were altogether too worried about prices! Well, yes. Life is like that.
On Tuesday we get to watch our first central bank governor, who does not wear a tie, tell us about her plans for interest rates. For many years my research has shown that the colour of the governor’s tie was an accurate indicator of whether the change he was about to announce was up, down or unchanged. It will take a few appearances of Governor Marcus in front of the cameras before we can identify where she will wear the coded message. The widespread view is that rates will be left unchanged. I wonder if she might not like to start her job at The Bank with a worker friendly gesture and cut rates. After all, lopping 100bp off the repo rate might just give the rand the weakening nudge that many are seeking. And please the over indebted.
An international rating agency sliced a few gold stars off the report cards of most of the local banks this week. Myself and others are not overawed by the alleged prescience and skill of these self appointed super analysts. The fact that the one being rated is often the one paying for the rating does raise a few questions. Nevertheless the appalling games of musical chairs being played out in the executive suites of so many parastatal organisations at the moment will make even the most hardened Africa watcher amazed and fearful for his money. Locksmiths and IT teams have been kept busy changing locks and passwords to ensure that the latest departee can’t change his mind and wander back in to the office. In the meantime no one seems to be running the show.
Recycled Bafana Bafana coach Carlos all but agreed that the only way the national side will beat Japan in PE this weekend will be if the visitors obey the security advice to remain in their hotel and not venture out at all. Leicester it turned out was a very dangerous place for the ‘bokke. And isn’t Toulouse where they would have made the planes we cancelled a few days ago? No friends there tonight either.
James Greener
Friday 13th November 2009.
