It is not yet worrisome, but it is noticeable that the All Share index is now below the level at which it started the year. In fact this is also the case for most of the developed markets except for Japan. What’s going on? Is this the end of the unprecedented bull market bounce within a much larger long term bear market downturn? No one knows but it is certain that already many shares are not as overvalued as they were just a few days ago. However, this is not yet the buying opportunity that I am waiting for.
The week’s financial pages have been full with ever more bullish forecasts about how this year’s growth in SA will be wonderful. Indeed it may be, but I did notice that only one of the recent company trading statements was really positive about prospects and that was actually from a special situation and the company is about to disappear from the JSE boards. Yet another slap in the face for small investors. Even the mighty SAB Miller reported that folk are not drinking as much beer as they are able to brew. Although I can report that current Durban weather has necessitated some heroic efforts with the bottle opener.
It must be very confusing to be a banker in the USA these days. Their woes began when they decided that it was feasible to lend money to folk who had no chance or intention of repaying it. When the unreasonableness of this strategy began to bite, the President rode into town under a large white hat and doled out huge sacks of almost free cash. Relief and happiness abounded. But it turned out that there were few clients willing to borrow all this money and, keen not to examine the gift horse’s dentures, the bankers awarded themselves large bonuses to celebrate their survival and their “too big to fail” status. This caught the eye of the taxpayers and lenders who had provided the money in the first place and they drew the President’s attention to this practice. Last night Sheriff Obama donned a black hat and handed the banks a rule book as thick as a plank. The bureaucrats have prepared a blueprint for a different and allegedly less risky money lending scene. The market’s knee jerk reaction is to not like it. The rest of us will have to wait and see, but it is rare for a political plan for the allocation of any resource to achieve its stated objective. There is no one more resourceful at loophole location than a banker separated from the spoils.
Our own cabinet will end a three day huddle today. Even allowing for refreshment breaks and the time set aside for President Zuma to call and whisper terms of endearment to his large and numerous family, there will unfortunately still have been an opportunity for the socialists to have come up with more ways to spend other people’s money with very little effect. Barring, of course, for their own bank accounts. The new-found concern of the ruling party that “too many (of its) members” have a “councillor for life” mentality will be unlikely to alter the rather comfy status quo any time soon.
The USA announced that in future just about anyone who wants to visit the Land of the Free must first obtain a visa. In an unrelated development came the news that the Abu Thembu nation had seceded from South Africa. The declaration neglected to provide the location of this new country. I rather hope that it is not anywhere near here, since presumably travel to and through King Dalindyebo’s new realm will require a passport and I am sure to forget to take mine when popping down to the bottle store..
I expect that a larger than usual crowd will gather to watch the end of the Dusi canoe race on Sunday. At least two crocodiles have been sighted in the waters around the final straight and expectations for a thrilling finish are high.
James Greener
22nd January 2010.
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