April felt like a long and messy month for the markets. The four largest shares on the JSE displayed the confusion that was evident throughout the exchange by delivering returns that varied between 9% up from the brewer (SAB) to 8% down by the cigarette purveyor (BAT). Is there a signal about personal habits here? The two roughly comparable mining houses also went their different ways with Anglo gaining while BHP Billiton slumped. The index will be fractionally up on the month while the rand, despite a good last few days, actually softened a bit during April. It would be going against my bearish nature if I did not again suggest that the bull is finding it very tough to make any significant advances. This is not a time for “fill-your-boots” buying programs.
The Reserve Bank has proudly announced that they are developing a “macroprudential policy framework” to help them decide if there is too much credit in the system. The Department of Water Affairs is “engaged in initiatives” that support a “turnaround strategy” for coping with the R23bn sewerage backlog non-crisis. The members of a huge National Planning Commission will be announced today and will then set to work providing “visionary thinking in finding solutions to SA’s problems”. As well as despairing at the mangling of the language, note carefully that no one is actually going to do anything except decide what ought to be done. The outcome is always the same. The spokesman is despatched to sift through and rearrange the catalogue of clichés and platitudes and everyone else heads for lunch. It is reported that one brainwave for fixing the sewers is to see if any of the summarily dismissed engineers might like to come back and bail things out. My guess is that most of them are now overseas being valued for their skills.
Meanwhile the good news is that SARS have seized 17 970 counterfeit Bafana Bafana jerseys that were bound for Swaziland (?) and have confirmed that any employee getting a World Cup ticket, a souvenir football, a vuvuzela or a jersey (whether fake or not) from their employer, must pay tax on the value of that freebie. Given the large number of complimentary tickets that seem to be issued, that should be a nice little earner for the revenue account.
Accusations and recriminations are flying around Europe about who is not doing enough to help support the alarming number of countries where the truth about their actual government deficits is surfacing. The worst case development is that the euro currency collapses. This would cause an unimaginable dislocation of markets. I really can’t believe that would happen although undoubtedly there already are smart guys in dealing rooms taking positions that would benefit from such an outcome. Most probable, however, is that secret deals are being stitched together which will sort of rescue things but which will flout all the previous agreements and rules. No one will dare to complain. This is the reason that markets are nearly impossible to forecast. Human ingenuity never ceases to provide ingenious and creative solutions to unforeseen and unexpected problems.
Today is the last time that incoming flights to Durban will pass directly overhead my ocean- facing desk. From tonight the flight paths will change to the new King Shaka airport and the public relations people are hoping to make enough fizz about the move that we will all forget what it is costing us. Even the promise that the president will stop by to unveil a statue and declare the thing open has made little impact. Far more important is the forthcoming Sharks versus Bulls fixture. If the local lads fail to de-horn the blue one at Loftus tomorrow they will not be welcomed home at any airport.
James Greener
30th April 2010.
