Short Note 3 May 2017
The Zuma effect runs deep
by Cees Bruggemans words 620
From early April I understand short-term commercial bank deposits to have shot up, indicative of a pullback by average SA businesses in their economic activity. Yesterday there were more impressions about activity levels in April in the SA economy. These are the first real readings after the Zuma reshuffle in late March shocked many senseless.
The ABSA purchasing manager index for SA manufacturing, after floating around nicely over 50 during the whole 1Q17, suddenly plunged to 44.7 in April (from 51.9 in March). The first inclination was to think it not for real. Until ZUMA swum into view. Right, this is what firing respected finance ministers and replacing them with much more malleable material, followed by an instant downgrading to junk by S&P and Fitch, can apparently do to the sensibilities making private economic decisions.
Short Note 26 April 2017
The confidence lever
by Cees Bruggemans words 570
We have had some recent examples of remarkable confidence boosting events, in each case concerning future promises by some newly elected politician.
There was the 18 month campaign slugfest by Donald Trump, that didn't really connect until dragged across the finish line. Thereafter, markets with a gusto came to discount the Trump factor, in his vision of tax cuts, higher infrastructure spending and deregulation making business “easier” in many sectors, all of it promising more growth.
Short Note 12 April 2017
Everyday carry on
There is the daily shock of yet another political Zuma event, some with major fallout, such as the cabinet reshuffle, the junk rating, the confidence loss and what possibly could follow. Or a depressing data release, like manufacturing output decline in Feb, making for two recessionary quarter declines in a row.
But there is also the other reality, even as you glance through the news media, hit the highway, get around the larger cities, in fact the country. Every day life carries on very much as is.
Short Note 23 March 2017
Balls to the Wall
by Cees Bruggemans words 720
It is a pilot term, “balls to the wall”, meaning full speed ahead. Its relevance in modern times? There is a global tendency today to fall back on old-fashioned construction work such as walls, to keep unwanted migrants out and the local population protected. And it giving rise to a rising urgency to wall off countries small and large that find themselves on new global migration routes. But this in the face of a rising global demographic wave.
Primitive forms of physical protection are making a massive comeback, a surrender to desperation, a last throw of the dice to address something equally primitive, increasingly large disturbed regions of the world, through war, social tensions and economic distress, setting in motion unprecedented migrants flows seeking access to richer parts of the world in search of a better life for oneself and future generations.
Short Note 16 March 2017
The Dutch make a stand
The global press has been looking for another scalp, making it a head-trick after Brexit on 23 June and Trump on 8 November 2016. The next domino to fall to populism was to be Europe, falling apart in the process.
And thus the global interest in white-maned Geert Wilders in Holland, followed by Marie Le Pen in France in April, and other such folk in Italy in May, though short of Germany.
Short Note 8 March 2017
A very chaotic world
by Cees Bruggemans words 520
GDP growth in SA last year was a fraction less than 0.3%. The worst performer was mining. Best performers were in the tertiary sector.
The CEO of Peugeot-Citroen-Opel defines the present as a very chaotic world, one in which industry consolidation will hopefully provide leverage to respond to events. The CEO of Fiat-Chrysler-Ferrari is also on the prowl. If it isn't marriage with General Motors, it may have to be Volkswagen.
Short Note 28 February 2017
Buffett:”And then what”?
The immediate future of the 10-yr US Treasury bond, currently yielding 2.3%, is very important for the next US and global act. Will it drop further, hang around present levels or rise decisively through next year? And what would do it?
Warren Buffett was being questioned about this on CNBC yesterday, and his reaction was interesting. The focus was on the Fed, and what it would do next. And here Buffett raised a few interesting issues.
Short Note 15 February 2017
Learning on the Job
by Cees Bruggemans words 580
In recent days I distinctly gained the impression that after a rocky start President Trump is learning on the job. Is that relevant for us? I would say so. We know everything about one-man wrecking balls, and on a world scale this could have become intimidating, with unpredictable fallout, a lot of it not necessarily good, not even for us.
To send China and Europe packing in tweets, and Aussie in a broken phone call, wasn't the best of all starts, unless meant as an abrupt change in trend. His travel ban was poorly conceived and executed. And it hasn't been half clever for Trump to keep his own private cell phone for tweeting, thereby exposing his location, unnecessarily endangering himself.
Short Note 24 January 2017
So you thought you understood the situation? Trump was going to be big, but not mental? Well, think again. The daily White House flow is pumping up, and it looks like big change.
As Trump has been saying for 18 months, he has the ordinary bloke in mind, the one that somewhere along the line fell off the wagon. And he apparently wants to change the system of production as we know it to do so, at home and globally.
Short Note 13 December 2016
The changing risk scenario
by Cees Bruggemans words 720
Things are rapidly changing, event driven. Our main SA risks are global capital flows and domestic politics affecting private confidence and responses. Both of these may have turned more positive, but the global more so than the domestic, much of it counterintuitive.
There was the pre-Trump, Clinton-inspired view of the world in which the Fed could remain slow acting, with our capital flow remaining supported by carry-trade yield search. The Trump election changed all that, but serially, and possibly in unexpected ways. The domestic outlook appears fluid, with the Zuma era losing dynamism, yet the outcome not as yet firmly nailed and as such uncertain.