Rex Column 16 May 2017
Favourable winds, steady drift
There is so much we have had to get used to this past decade. One of them the separation between financial conditions and the performance of the economy.
For decades we were known as a windfall economy, strongly correlating commodity price booms and domestic economic acceleration. This link ended some years ago. In contrasts, global busts have retained their strong constricted influence.
Rex Column 9 May 2017
The Gigaba factor
by Cees Bruggemans words 500
Iast week I came across something striking, at least to me. Finance minister Gigaba was being interviewed at the world economic forum in Durban, and he was asked a serious question.
Either the question was poorly formulated (it wasn't) or Gigaba didn't quite get the crux of it (possibly). More likely, he choose to answer in a way that suited him and his government. It highlighted for me the lack of insight why we are not the dynamically performing economy Gigaba claims we are.
Rex Column 2 May 2017
by Cees Bruggemans words 500
We (at least some off us) tend to have fixed inclinations as to the structure of things, both globally and locally. In other words, capitalist/market economy with public oversight, through free trade working towards resource maximization and growth, adding to national income and wealth.
And large parts of this engine remains in place and functional. But its relevance appears to be fading as something else is coming more strongly into view. Within countries, the weak are making their voices heard, not mainly via labour unions or traditional political parties as used to be the case, but through populist voices and resistance. Externally, a new nationalism is growing, too, not so much observable in the little countries like Monaco, but much more assertively by the bigger ones.
Rex Column 19 April 2017
Emerging risk bonanza
by Cees Bruggemans words 750
It was not quite the expected scenario that has been unfolding with great steadiness, in recent months/years. Instead of being tripped up by an impending Fed policy normalisation (stretching over some years, likely accompanied by market disturbances) and reinforced by a Trump boom driving rates, yields and Dollar higher, or by rising geopolitical tensions threatening to sink anything weak, emerging risk has flourished ever since the great Fed bond tapering of 2013 proved just a scare.
It isn't that the world has become more unpredictable & difficult to understand. If one understands the situation and makes the right assumptions, all of this is very much understandable & predictable.
Rex Column 11 April 2017
Coming up for air
by Cees Bruggemans words 700
Looking back over the past quarter, the real SA data flow has a somewhat unreal character. Particularly considering the dire warnings about our future, given the idiosyncratic political behaviour of late.
Some sectors are still down, but others show gains. Not big stuff, but still enough to keep the ship afloat. And some forward looking surveys are anything but shy.
Rex Column 5 April 2017
A slow fuse event
by Cees Bruggemans words 770
The shock, when it came last Thursday night, was not entirely unanticipated. For over a year rumour had been rife that Zuma would fire Gordhan. But timing was totally uncertain. In the event, on the flimsiest of grounds, and apparently for maximum embarrassing, shaming effect (a recall from an overseas investor roadshow), Zuma finally moved. But as if hiding the primary target among a bunch of sheep, some 20 ministers and deputy ministers were fired, too, the common link being public criticism/opposition to Zuma.
It was the kind of spectacle that reached the global news. It isn't every day that a President fires 20 ministers because they don't like them. What gave Zuma the right to do so? Just pausing the question showed the overseas ignorance about the SA make-up. And yet the Rand barely moved 100 cents in stages in response.
Rex Column 27 March 2017
A nutcracker world
The temptation in today's uncertain world is to draw up a long list of risks to assess the state of the future. All risks being obvious, though not necessarily equal in stature. That way, though, one might miss the forest for the trees.
It may pay to take a hard look at what has floored us in recent years, and to project these forces forward. And then still ask a few things about looming risks as yet not felt.
Rex Column 20 March 2017
The SA economy 2017
by Cees Bruggemans words 680
To talk of THE economy today is a complete misnomer. There are in fact three. The daily nuts-and-bolts one, the political one and select exporters. And don't confuse the one with the others.
The SA political economy is a raving disaster. The nuts-and-bolts is struggling, indeed going down on the goods side but carried by services. When it comes to corporate results select counters do well, others are losing growth momentum and yet others are severely struggling.
Rex Column 13 March 2017
by Cees Bruggemans words 950
The temptation with Rand prospects is to see it through its home lenses only. We certainly have enough noise in our DNA to create volatility and cyclicality. And at times of exceptional events, such as internal political shocks of old, the world became a bystander to our own doings in shaping the Rand.
These times are mostly played out, even if a residual remains, as we could see with Nene-gate.
Rex Column 6 March 2017
Hope not a strategy 6/3
by Cees Bruggemans words 350
Hope is not a strategy, right? At least, that is the view of realists. But if so, what is powering US equities while bonds apparently remain stagnant, and the equity excitement spilling over worldwide (at least in places)?
It probably isn't all hope at all. Instead, three engines are being suggested, one of which is the upbeat underlying data, one is the many Trump promises, and one is (perhaps controversially) the Fed new found determination to raise rates.