Comment 25 May 2017
Mix of fortune holds us back
by Cees Bruggemans words 480
We can't claim a lack of luck favouring us of late. A near doubling of the maize harvest as a more normal summer rain season favoured us. A stronger 1Q17 mining output has export prices favoured us. A major decline in CPI inflation to 5.3% in April, possibly reaching 5% by mid-year. Well supported Rand as global forces support emerging market currencies.
And yet this isn't the whole story. SARB reportedly remains cautious, and is not expected to lower interest rates soon, not even for the remainder of the year. And this with massive GDP underperformance, steadily falling inflation, retreating food inflation as agriculture performs strongly, and steady petrol and diesel prices as global oil prices remain similarly steady and the Rand firm.
Comment 17 May 2017
What is wanted?
The British were ultimately the most straightforward about it. Some 51% voted yes for Brexit last year. By 8 June coming, one line of thinking is that Theresa May will find her Conservative majority in parliament substantially increased. By one reckoning, that will strengthen the Brexit hand, possibly nearer 60%. Populism achieved by a wide margin.
Trump with all guns blazing garnered some 49% of the US electorate and with it the presidency. Though his speeches have been intensely populist on message, actual followthrough has been fading steadily under the grinding attention of the fractious Republican Congress and the independent judiciary. Impressive, but losing speed. Next elections for Congress will be in November next year. That is, if we get there, with the Russian scandal growing daily.
Comment 6 April 2017
The crest of a wave
by Cees Bruggemans words 950
Serendipitously, SA finds itself on the crest of a wave, accompanied by many other vessels of similar vintage. Not quite Jan van Riebeek and his fleet sighting table mountain 365 years ago today, but the surfing analogy applies.
The entire emerging world is currently on the top of a wave, wallowing in their typical fashion, but way beyond their station when considering what happens once the wave breaks. And off Hawaii not knowing your wave crest from your trough is like not knowing one body part from another.
Comment 2 April 2017
Playing fast & loose
by Cees Bruggemans words 400
Watching Charlie Rose one evening last week, there was Larry Summers saying something profoundly relevant: “improved business confidence is the cheapest form of economic stimulus”.
You don't have to create exceptional incentives that cost more than you think to get the economy going. Or as Chris Stals once put it: “less is more”.
Comment 22 March 2017
What next, SARB?
by Cees Bruggemans words 950
Despite years of economic weakness, and below potential growth, SARB has remained risk vigilant with an upside bias to interest rates. Is that stance finally to be challenged by unfolding events, or reinforced anew? Rate cuts or further hikes next?
SARB sense of risk has focused on the Fed having to raise interest rates in a normalising cycle, now reinforced by Trumpian fiscal plans, reflecting faster US growth and inflation, leading to a stronger Dollar and (possibly aggressively) higher US bond yields, and this in turn having many negative consequences for the outside world, especially downward pressure on global commodity prices and Emerging Markets currencies.
Comment 26 February 2017
The Year of Europe
by Cees Bruggemans words 850
Whereas 2016 was the Year of Brexit, only within four months to be superseded as the Year of Trump, 2017 looks likely to be the Year of Europe. Not that Brexit or Trump are fading, if anything Trump’s intensity hasn't yet peaked. Europe, however, is sending signals of being in a thoroughly confused state, still being pre-something but sensing of becoming post-something.
Where bigness is concerned, the focus is on France by May/June and Germany in September. But there are the smaller ones, too, to take into account, Holland in March and Italy possibly in May. Nothing radical may happen in any of them after all, yet the forces of populism are rapidly advancing. Nothing can be left to chance any longer.
Comment 22 February 2017
The past 100 years have witnessed two great societal experiments globally: (1) the systematic attempt to forcibly replace decentralised market capitalism and its increasingly democratic polity with a centrally/command socialist economy and its totalitarian/authoritarian polity (I think they were named communism and fascism in Europe, Asia, parts of Latin America); and (2) the almost universal effort of the countries so affected to eventually undo the first experiment, transforming its outcome back to some form of market economic system and generally a more democratic polity.
Africa, too, jettisoned Western colonialism and imperialism and its associated capitalism (experiment 1), except that where they didn't end up communist they ended up with Big Men patronage networks. Some then later on also entered into experiment 2, while some have as yet stayed stuck. Only a few exceptions started experiment (2) early without detours (Botswana?).
Comment 14 February 2017
Unpacking some Packaging
by Cees Bruggemans words 750
“Making America Great Again” and “America First” could easily be applied to South Africa, too, even if we would probably have to walk somewhat different paths. As the Trump presidency accelerates towards its stated goals, and given the potential fallout and implications also for SA, it might pay to unpack some of the packaging on display.
This is a populist President, living by simple hard-hitting slogans that resonate with his electorate. Its literal application may have some light as well as dark sides, as they would have in SA when applied here.
Comment 8 February 2017
by Cees Bruggemans words 530
Many cliches coming to mind. Locking horns, taking the eye off the ball. The American electorate has thrown a monkey wrench into the works, and its champion Trump is prepared to follow through. But at what cost, benefit?
In the process are we losing the plot, in America, but worldwide too? Or does it remain mainly noise, fog of a non-existing war? The ship will right itself as it comes out of its wrenching course correction?
Comment 5 February 2017
Damaging corporate fallout
by Cees Bruggemans words 1050
The bigger, older and richer the company, the more it has the resources to look after its interests. Such companies don't only play offense (maximizing market share and wealth for their stakeholders), they also play defense (defending themselves from legal attacks for alleged misdoings).
So today we are aware of discrimination laws, labour regulations, environment regulations, overseas child labour politics, financial regulations and much more. But something blindsided this collectivity for years, both due to its insidiousness and because how could it sanely be possible to incur latent liability when playing within the rules? Yet it has happened on such a scale that it has unleashed revolutionary reactions.