The Nenana River in Alaska
freezes over every winter. As the spring thaw approaches the gamblers of the
area erect a large wooden tripod structure on the ice in the middle of the
river and then place bets on the date and time when the structure will collapse
and be swept away by the resumption of the river’s flow. This year the ice
broke up only on 20th May (thereby apparently breaking a 97 year old
record). Some thing similar is staring to happen in the markets. Stuff which
has been steady for sometime is beginning to crack apart and people are falling
into pretty cold water.
Our poor runt has lost more than 7% this week against the Yen and
the Swiss Franc. Against the other majors the damage is above 6%. Blame for
this has been placed on non-resident sellers of our bonds because that market has
also been taking a pasting with yields soaring and prices plunging. The
President called people over to listen to a speech which presumably was
supposed to allay the widespread fears that his government had no clue what was
happening or what they could do about it. Unfortunately his words were taken to confirm
exactly those concerns and the prices of bonds and the currency tanked even
further. Now concepts such as interest rates and foreign exchange rates baffle
even us pundits so it is little wonder, especially in view of who our pres.
chooses as his financial advisors, that he too is all at sea.
In the USA
the yield on the 10 year bond has popped sharply above 2%, and this has caused
an outbreak of jargon-speak. If indeed there is a bear market beginning there
too it is going to annoy and disappoint many officials who were sure than programs such as Quantitative
Easing, Sequesters, Fiscal Cliffs and dropping dollars from helicopters would
ensure that things kept going smoothly.
At home the JSE share market may or may not be witnessing the death
throes of a bull market. Prices have been swinging wildly up and down with the
All Share index daily range rarely recording less than 500 points while daily
highs and lows through the week have been fairly similar. Traders are engaged in
a large and gruesome tussle and the volatility will be providing some hair-raising
war stories about gains and losses. Investors should be content to sit
wide-eyed in the grandstands and wait for the blood and dust to settle.
Total return of the All Share index in May is going to come out above
7%. This is an exceptionally high performance especially as there has been little
in the overall economic landscape which normally might be expected to drive
such optimism and excitement. Indeed first quarter GDP growth was announced
this week at a measly 0.9%.
Despite yesterday being International No Smoking Day our largest listed
share, British American Tobacco tops the week’s list of value gained through
share price appreciation. Biggest loser on this list is First National Bank. I
trust has more to do with the boss retiring than my application to them for a
credit card.
The back cover of one of the those large glossy so-called life-style
magazines that fall out of the morning paper from time to time, carries an
advertisement from Eskom in which the power utility implicitly admits to
failing in their task to supply the nation with sufficient electricity. The ad
requests consumers to reduce energy demand by switching off hot-water geysers
every evening. The odd thing about this undoubtedly expensive message is that
it appears to be delivered by someone dressed to look like a geyser sitting on
a smart leather couch. The rest of the surroundings also hint of comfort, but
the effect is compromised by an untidy pile of exam scripts awaiting marking on
the table within reach of Mr. (or it may be Mrs.) Geyser. Very strange. (No,
its not a boiler suit.)
James Greener
South Africa’s 103rd Birthday
