To market, to market to buy a fat pig. Friday was an age ago. Although as I am often reminded, it doesn't matter who you are, the poor homeless person or the president of the United States of America, you all have the same number of minutes and hours in a day. Although the more resources you have, the more you can allocate to others in order to make your day easier. If we all spent the day doing the same things then the true leveller would be the scoresheet by the time the sun goes down. But, we are not all the same, we are different, even the president of the USA has to take a summer vacation. But the cost for the American tax payer to look after him in his 9 day visit to South Africa, Tanzania and Senegal: The Obama Family Trip to Africa to Cost $60 to $100 Million. Wow. That is seemingly a lot of money, but as Paul said, US presidents have been assassinated whilst in office. And the last one being a ricin laced letter this month! So, the expense is, I guess, a necessity.
Anyhows, the market being closed here yesterday means that we have to be in catch up mode to improved international markets. But some of that will of course depend on less volatile currencies. Our market after a swoon last week recovered and is back up again for the year in Rand terms. Retailers and resources have been hit hard this year, even more so in Dollar terms, Industrials have seen us through some tough times, but some argue that if the Rand strengthens from here that industrials and hence the broader market could come under pressure again. It has been a tricky time in mining in South Africa, the best part however is that all sides are talking. Still, the event at Amplats late last week reminds us all that we are still in a very tricky patch: Amplats protest muddies Govt summit progress. Pfff....
OK. You have been sucked into the Fed tapering angst. Everyone has. Personally we seem to think that the US Fed stepping away from the market means that the economy can stand on their own two feet without the support of central banks. That seems like a GOOD thing to me, no "artificial" if you will, stimulus. Letting the collective take control of the market. I guess in some senses with the end of stimulus you could declare that this is a success by Ben Bernanke and the rest of the FOMC and Fed. I read this morning from Bloomberg that Bernanke stayed on longer than he wanted to, telling Charlie Rose (Meryl Streep can't live without Charlie Rose) that the Fed chairman had stayed longer than he wanted to. Check it out: Obama Says Bernanke Has Stayed at Fed 'Longer Than He Wanted'.
I guess this is as clear a signal that Ben Bernanke is going to step aside when his term expires 31 January 2014, Janet Yellen is expected to be the replacement. But it says on the Fed website that his term as a board member ends on the 31st of January 2020. Yellen is 7 years older than Bernanke, so perhaps at the end of a couple of terms (four years as Fed chairman), she will be in her mid seventies and really throw in the towel with public service.
But this week all eyes will not be on will.i.am and Britney, but rather on the FOMC for "signals" or "signs" of when tapering is actually going to take place. Jeff Miller, a blogger that I follow published an interesting piece with some insight: WEIGHING THE WEEK AHEAD: WILL THE FED CHANGE COURSE? The FT article published late yesterday afternoon, written by Robin Harding, Fed likely to signal tapering move is close had a marked impact on the market, with the Dow losing 115 points from around 14:00 in the afternoon to just before 15:00. Fancy that! The skittishness of the short termers and the new worry means that there is likely to be a lid kept on markets until the Fed is clear on their moves. I don't think we lose any sleep around here on such weighty matters, the Fed will do what they have to!
Initially two good economic data points gave the markets impetuous yesterday, they were Builder Confidence Hits Major Milestone in June, which was the best such read in 7 odd years and then quite a solid beat from the Empire State Manufacturing Survey. Good news all around after some mixed news.
Unfortunately this morning we are confronted with the news from Europe that passenger automobile sales hit a twenty year low, after some encouraging signs last month. Last month of course was the first rise in 19 months. The lowest level since May 1993. Gee, that was a long, long time ago! The FT carries the story well this morning: European car sales fall to lowest level since 1993. Sis. As platinum producers and by definition the main supplier to the autocatalytic convertor market, the anticipation of a bottom unfortunately has not yet been put in place. I suspect that we are nearly, nearly there, here is hoping that this is the last month of awful news.
The Naspers rumour mill is churning, this time about a potential acquisition in India, The Times of India reported over the weekend: South Africa's Naspers may acquire RedBus. RedBus? What is that? Well, it turns out that it is less exciting than you may think, a simple online ticketing website for bus travel across India. In classic Naspers style, they will look to acquire a stake in the business and then perhaps more as time goes on. The business RedBus just turned a maiden profit after seven years of operating, but as you can see fits the entrepreneurial spirit that Koos Bekker seems to identify so well. A stake, perhaps 30 to 51 percent, valuing the business as more than 100 million Dollars is no small cheque for Naspers, between 30 to 50 million Dollars. Naspers results this time next week, it should be exciting!
SABMiller announcing this morning that they have entered into a cooperation agreement with a Swedish crowd called Kopparberg, a listed brewer of mostly cider products, but beer and water too. SABMiller will now be able to distribute these products across all of their regions where they operate, the first exclusive agreement is to distribute across Australia, more to follow in the coming months. Cider, I suspect (and I did a quick spot check) that if you are watching your weight that pear and apple ciders are of a higher sugar and calorific content than ordinary light beers. But comparable to stout beers, so perhaps they are just attacking a different market and continue to grow their offering. Never sitting still over there, or here, I guess it is fair to say that the brewer is no longer really South African!
Home again, home again, jiggety-jog. So we will find a little later tomorrow what the Fed thinks they are going to be doing. Of course the ending of their program all depends on unemployment and growth. Luckily we have those numbers coming around all the time. And better economic news is better in the long run. Our markets are up more than a percent today, which is all good!
Sasha Naryshkine and Byron Lotter
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