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Rex Column

Rex Column                                                                                 10 October 2016

Uncertainty slowly transforming    

by Cees Bruggemans          words 900

It took a few years to sink in. Whereas markets have ever since the 2008-crisis and global 2009 recession taken it as an article of faith that global recovery would be slow and yields inclined to go very low for long, central banks were always more old-fashioned inclined about recovery. It would be stylised “normal”.

Yet with some parts like China subject to a long slowdown, parts like Japan mired in semi-permanent stagnation, parts like Europe struggling to get some growth momentum going, many EM and commodity producer parts turned into global dependencies (as much on rich country import demand as Chinese imports for its sweatshop industry) and many suffering horrifically as a consequence, with America the perennial slow recuperation story, the global recovery was never going to be simple.

Rex Column                                                                                   3 October 2016

Quiet unsettled times   

by Cees Bruggemans          words 950

There is this impression of quiet times steadily carrying on, with the Fed keeping rates steady, the US labour market steadily putting people to work, and the US stock exchanges steadily setting new records. What more could you want?

Yet there is this unease coursing through the system, focused on banks, but also on overpriced assets and an unspoken anxiety things could unravel quickly (the usual fear of the exposed). Perhaps not an irrational fear, but still over the top?

Rex Column                                                                       25 September 2016

SA Reprieve resumes    

by Cees Bruggemans                 words 600

Life is full of surprises. That is what makes it interesting, but also unpredictable. I had long walked around with the idea of a hurricane assaulting us, thinking of 2013-2015, with a final Zuma inspired Nene spout. But after that we seemed to enter the eye of the hurricane – more benign conditions, the Fed capitulating, and we cleaning up some unfinished business at home.

But the problem of a hurricane is that it is a rigid concept. The second half of the storm has to come around, led by the Fed(?) or Zuma(?) or both, pummeling us with 200km winds anew. Ready to bury yourself. A lot more Rand weakness, higher interest rates, more handwringing generally.

Rex Column                                                                           20 September 2016

When Trump collides globally    

by Cees Bruggemans          words 1270

Whatever your personal preference, this US election was for Clinton to lose and for Trump to overcome his outsider business status (a double handicap, tripled by his unconventionality). Yet as happened with outsider Obama eight years ago, insider Clinton is fading. And Trump, against many odds, too numerable even to start on (no doubt the stuff of many books, now and to come, the New York Times columnist Maureen O’Dowds latest book and Sunday’s Charlie Rose interview on Bloomberg being just one) is the aggressive underdog seeking and finding weakness and merciless going for jugulars. Day in, day out.

This isn't an expression of admiration or underwriting. It merely is observation, whether or not in fact he makes it in seven weeks time, demolishing her forever or letting her win by a sliver. But the implications of a Trump win could be earth moving, not just in the US, but like a sound burst wave traveling worldwide – economically, financially, geopolitically. The first bit could affect SA directly, and massively. Are we geared to meet incoming ordinance….?

Rex Column                                                                           12 September 2016

Economy going nowhere?    

by Cees Bruggemans          words 550

Company results of recent weeks across a wide spectrum, and Treasury tax revenue collection data year to date are sending a most uncomfortable message. The economy has apparently come to a stop. In real, volume terms there doesn't seem to be too much growth to be had, if any.

The Minister of Finance public remarks leaves little to the imagination: we have not succeeded so far in getting growth going. This from the most passionate champion to get things going to avoid rating downgrades down the line.

Rex Column                                                                              5 September 2016

On your own    

by Cees Bruggemans          words 400

It isn't the first time the SA economy (you, me and the dog) find ourselves in this situation. On our own, left to our own wits, with a mild headwind breeze (from slightly higher SARB interest rates), a stealthily rising tax burden (in the nature of fiscal affairs) and far more aggressive rise in administrative costs (electricity, municipal rates and taxes, rental levies, and anyone thinking they can get away with 10% or more - which is quickly done…).

So no real incentivizing for us (the petrol/diesel price and Rand firming windfall have long ago been squandered). Macro policy imposes her greater burdens in search of greater stability. Household credit became long ago tethered to +2% nominal growth to prevent consumer overreach, while similarly home mortgage lending has barely done nominally +4% for those who can afford it, both well below inflation, suggesting shrinking private indebtedness. We appear serious about wanting to prevent excessive household borrowing creating long-term social problems.

Rex Column                                                                                   29 August 2016

Fading our Reprieve    

by Cees Bruggemans          words 830

After the nightmarish market blowouts of late 2015 and opening weeks of 2016, our fortune turned, as both Fed and Zuma retreated in their strident positioning. It allowed impressive clawback in Rand and bond yields, further enhanced by the slingshot qualities of Brexit at mid-year (as yet more global central bank support crowded in, further lowering top-tier global bond yields, further intensifying the global search-for-yield favouring especially risky EM assets like SA).

But these “reprieve” windfalls ultimately seemed temporary, short-term in nature, begging the question when they would die out and be replaced by something more virulently disruptive.

Rex Column                                                                                   22 August 2016

SA ratings: Battle of wits   

by Cees Bruggemans          words 840

There is this palatable anxiety that just because we missed the ratings culling knife last May/June, doesn't mean we will miss our encounter in December, with all the cost-enhancing implications that a downgrade would bring in its wake.

But hang in there. It might be more nuanced than that. It certainly was so three months ago. And that window may not yet be fully closing. Despite impressions, perhaps, still too much in our favour?

Rex Column                                                                                15 August 2016

SA reprieves & remoulding     

by Cees Bruggemans                    words 800

Given a threatening global context, and following the fearful events of December and early January, when a respected SA finance minister was unceremoniously fired, as our traditionalist leadership bared its fangs, the Rand reached 18:$ and bond yields 10.4%. It could supposedly only get worse with such global realities and such a political superstructure?

In the event, the past seven months have been one long clawback from the brink. This has been very real, across many dimensions, though we have every right to question whether this process can continue, or whether it will see setbacks?


Rex Column                                                                                   8 August 2016

What do you mean…?   

by Cees Bruggemans          words 1100

We now have two very critical areas in our national politics having a direct bearing on our national well-being, yet in both instances having to query what politicians mean when they say something. For things often look, sound & smell like mud, and not really true to intend. It too often isn't obvious yet that the national interest will be prevailing (as compared to far narrower personal ones). Yet the consequences are potentially enormous.

This concerns the Zuma/Gordhan axis, and the EFF/DA/ANC axis in key hung municipal councils where no single party obtained an outright majority. Both at national and local level, these dimensions can add to our national stability or subtract from it. Either we all gain from it, or all lose. So what's it to be?

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