Comment 27 February 2016
Order in the House
What is the world coming to? Parliament behaving like an out-of-control kindergarten where the headmistress likes hats but is clearly somewhat out of her depth. Some of our universities creating the impression of battlefields. Our national politics reaching fever-pitch as Pravin throws down gauntlets, Zuma obligingly picks them up, but in the process invites the likes of Gwede to admit colour, bringing us ever closer to yet another Shakespearean scene.
Change is in the air. Yet some things will never change, as the Budget again displayed with some insistence? We are in the process of re-establishing order, if you wish recapturing the State from those who captured her not all that long ago and have been pillaging her ever since to their hearts content. According to Zille in a week in which more progress was made than in the foregoing 300 years. And by all means, it is very heartening to see lawlessness called to order. But is it enough? No, it isn't.
Comment 26 February 2016
Obfuscated Clarity 26/2
It couldn't be clearer. In the private sector where money rules they expect you to show clarity, even if circumstances may arise where a bit of light obfuscation is in order. Know what I mean? In the public sector, where politics rules and far too many people must be shielded from unpalatable realities if one wants to survive longer than five minutes, obfuscation has been refined to a fine art, although sometimes when things have really been going completely off the rails, a little bit of truth may take you a long way. Know what I mean?
Now, this week’s budget: what did it suffer from most? Obfuscation or clarity?
Comment 24 February 2016
by Cees Bruggemans words 700
At a time when our universities are raked by transforming activism, war rages in the MidEast, millions have been made refugee and migrant flotsam on many continents (raged against by Trump in the US when Mexican, raged against in Europe when MidEastern or African, raged against in Aussie when Asian, raged against in SA when from elsewhere, especially in time of drought and deep gloom to the north), it is apparent how universal the lack of business confidence is.
When the existing order is under threat, business turns defensive, inclined to take fewer risks, in the process slowing the process of growth & transformation.
Comment 18 February 2016
Crisis? What Crisis?
The year started badly in global financial markets, but by mid-quarter 1Q16 (a mere six weeks into the selling frenzy) one wonders what the fuss was about. American recession? Chinese collapse? Oil at zero? Banks bankrupted? Bank bond holders getting US marine crew cuts? Central banks losing their grip? Safe havens like gold & Treasury bonds overcrowded?
Was that for real or a bit of an overreaction? A must-sell or buying opportunity?
Comment 17 February 2016
Europe faces a belligerent Russia, an intractable migrant influx from near Asia and North Africa, internal political revolt (a rising radicalised tide of various hues as well as peripheral threats of splintering), growth of social intolerance, a lack of economic growth dynamic, a late Fed-imitating central bank convinced it will keep succeeding (but will it?).
The list could be longer, but this is intimidating enough to give pause. What is an EM exporter with still sizeable exposure to this old continent (like SA) to do? Diversify away as fast as possible (but in whose favour?) in case worse happens? Or is it all overstated, Europe will resurrect and should remain a key export destination?
Comment 14 February 2016
Ending the Stampede
by Cees Bruggemans words 1300
What will it take to end the stampede of the past six weeks in global markets? Is there good reason underwriting these market selloffs, or is it mostly emotion reacting to deepening uncertainty, many feeding off the anxiety of neighbours?
Two positive observations. Prices have fallen to the point of value (but they could fall yet further, deep into oversold?). Central banks are ready and willing to do more (but few in their global audience still believe they have real ammo?).
Comment 10 February 2016
The Recession Bogey
By Cees Bruggemans words 1600
It took six years of deteriorating terms-of-trade, five years of less than half-mast business confidence, four years of stagnating and then declining SARB leading indicator, 30 months of falling car sales, two years of rising interest rates (so far by 1.75%), over a year of subpar consumer confidence (a majority recording a LACK of confidence), falling non-residential building plans passed and declining agriculture output as vicious drought bit, a few false starts along the way during 2014-2015 as various sectors tasted the whip of withering labour strikes (such as mining, industry) and abrupt output disruption. But growth lingered. Now, the recession bogey is finally within sight, according to some, in 2016. Two or more quarters of GDP decline to come.
Except it isn't going to happen, demanded by the rating agencies (if we want to avoid being declared junk) and avowed by finance minister Gordhan (tasked with preventing us being junked). A hopeless task or doable?
Comment 9 February 2016
Questions about 2016
by Cees Bruggemans words 1070
It is not smooth sailing, 2016, after a wild January beginning. It may have come as a bit of a surprise that February has started so meek, encouraging even?
We are still suffering from the ding-dong Nene firing. With junk hanging over our collective heads. And those various Chinese tribulations that aren't finished with us (still a lot of Yuan depreciation ahead?). But what else is there that will shape us, possibly in unexpected ways?
Comment 5 February 2016
Interest rate resistance
Emerging Markets like SA face two kinds of major external risks. Shock events roiling them (like the Chinese market liberalization disturbances). Or too much liveliness in major economies putting upward pressure on interest rates, affecting capital flows and hitting EM currencies & asset markets.
Though we have seen episodic stresses internationally in recent months, China having a torrid time with its stock markets and trying to gently decouple the Yuan from the Dollar, giving massive global disturbances during June-August last year, and again last month, these do remain exceptions. As to global interest rate disturbances, it remains for now a matter of too little rather than too much, in complex ways supporting EMs.
Comment 3 February 2016
After being bruised and battered in the closing moments of 2015 and by the opening moves of 2016, psychology appears to be making a modest comeback. But is it durable or of short duration?
This as much by way of global markets being encouraged to come away from their oversold condition by soothing central bank noises as our finance minister Gordhan sounding feisty about restoring confidence in the SA economy and preventing us from being reduced to junk. Will it last?