To market, to market to buy a fat pig. Not too much action across the globe, stocks were mixed from here to there. Locally we had the Monetary Policy committee announce the conclusion of their meeting and their decision to keep rates on hold. Although in the Q&A segment, possibly the question that gets the most chuckles (not the chocolate kind) in this office is "was the decision unanimous" gave us some insight as to where rates go next. No, Gill Marcus the Reserve Bank Governor said, it was not, 4 members of the 7 member committee voted to keep rates at the current levels, the other three were wanting to hike rates. The problem is that this inflationary cycle is not a "normal" one, in that many of the pressures have been built as a result of imported inflation.
A perception that emerging markets were too fragile fiscally led to a severe sell off of many markets, remember the angst over Argentina that was one of the catalysts for a rout of the SA inc. stocks? Yes, Turkey was Argentina was South Africa. Except, unlike in Turkey, South Africans have both access to YouTube and Twitter -> Turkey Muzzles YouTube, Media Ahead of Elections.
This is just another reminder if you needed one that technology can do more for democracy and world peace than any politician. And you think that the Public Protector has been under pressure? That would never happen here again in a hurry. Just by the way, I heard on the wireless on the way in to work early this morning that someone had posted a YouTube clip titled Nkandla Style, a PSY rip off about the president. I warn you before, it is not for everyone!!
The STATEMENT OF THE MONETARY POLICY COMMITTEE. I guess the important parts are that growth expectations have been lowered for one, and two inflation is expected to be slightly outside of the current band for a while, but not by much. And then next point, the folks with debt, we are in the raising part of the cycle.
The key line to confuse everybody and in typical central bank fashion leaving it open ended, is the last line:
We wish to reiterate that even though we are in a tightening cycle, there will not necessarily be a change in the stance at every meeting, and that the increments may not always be of the same magnitude.
Where we end up, i.e. where rates level off and how long it may take, that is possibly a different question altogether. We shall see. The bias however, I am afraid if you have debt, is definitely going to be in favour of rates going up. But I guess in a world where all cash was earning next to nothing (in their respective territories) this is good (or better) news for people with cash.
Although cash is never really the best of the long term investment classes, quite possibly the worst. Inflation will always however have an impact on your investments, this is a good article from PIMCO: Inflation and Its Impact on Investments. Old, the article, but not as old as inflation which is always relevant.
Talking inflation and money, fiat money was supposedly used for the first time by the Chinese, the Song dynasty which ruled from 960 to the 19th of March 1279 issued paper money in around the 10th century AD. It was called Jiaozi. Ironically the Yuan had a Dollar peg until 2005. Go figure, the people that invented paper money pegged it to another. More amazing is that the Chinese have historical records going back over 4500 years. If you need to know the first part (the first 2500 years) then feel free to read the Record of the Grand Historian!
Lynx, I'm reading this, you should too
"In the 1700s four in every five workers were employed on a farm. Thanks to tractors and combine harvesters, only one in fifty still works in farming, yet more people are at work than ever before." This article is very English (time to bust out the cucumber sandwiches and Earl Grey tea) but is adaptable for all of us: Technology creates jobs as much as it destroys them.
As luck would have it, I was having this conversation with Howie yesterday. How many social media (hashtag that) "experts", software engineers, environmental scientists, high tech critical care, the list goes on. The moral of the story is embrace technology, by doing that you create new opportunities. Driverless car? Google says yes, recent Toyota and GM problems -> A robo-car speed bump? Toyota, GM defects cast new light on push for self-driving autos.
People need to think differently to "stay ahead". I remember being seen to by a doctor as a child in Paris (France, not the one on the Vaal river) at my grandmother's flat. Now because of costs rising, not getting to patients on time, the general stresses of being in one place and rushed to see someone. I for one go nuts when I have to wait, if I were ever late for something and lost the business, I would think it was because I was tardy. So it was slightly refreshing to see this: More doctors making house calls, Concierge Medical Care is up New opportunities from old ideas, same old healthcare. About that smartphone application for booking doctors appointments.......
From the BusinessInsider: CITI: 'The Age Of Renewables Is Beginning'. Agreed, 100 percent. But the problem, as Paul said to us earlier this morning, when he was doing his masters degree, alternative energy was the next big thing 25 years ago. So which vehicle to choose as an investment option, well, I am not 100 percent sure of that yet.
Hmm.... I agree one hundred percent, the quality and levels of journalism have never been better than now (so many more tools to use, Twitter, Facebook, YouTube, the internet as a whole) but do you agree with this conclusion: NEWSPAPERS ARE DEAD; LONG LIVE JOURNALISM. This is obviously not here, where a lot of people still need their paper fix. But ultimately the advertisers are going too reach their target audience on their terms, and that means Instagram and the like are going to the platforms of tomorrow, and not newspapers and even TV as we know it.
Apple and Microsoft. You would be cautioned against mentioning those two names in the same sentence, more especially around their various sets of fanboys and fangirls. But. Announcing the Office you love, now on the iPad is on the blogs section of the Office section of the Microsoft website. How much? Well, free for Office 365 users. I am not too sure if this is an admission that Apple dominate the tablet market, but it seems like that to me.
I enjoyed this post from Eddy Elfenbein: There's No Such Thing as Value. The key lines for me were: "The proper job of an analyst is to judge possible outcomes and their impact. Value is a tool, but it must always be seen within the context of if/then scenarios. Too often, modelers become enthralled by their model and don't look at what the underlying message is. I always cringe whenever I see some perma-bear claim the S&P 500 is over-priced by a massive amount. The statement, by itself, is meaningless."
People are struggling with this, The Next Problem: Too Much Profit. As a percentage of GDP, corporate profits are at an all time high. So why no hiring? Well, why not more hiring? Time will tell, but it ties into the mechanisation story.
Byron beats the streets
Everyone knows about Facebook, it is an extremely visible company for obvious reasons. When they do stuff like buy Whatsapp for $19bn it becomes the latest talking point around the dinner table. If GE were doing such a large acquisition it would draw half the interest. When these acquisitions are discussed the biggest talking point is why Facebook would buy such a company and how would they integrate it with their current business model. People um and ah, trying to justify the acquisition.
The very well known Reuters journalist Felix Salmon came up with a very smart expatiation in this piece titled Mark Zuckerberg, the Warren Buffett of Technology? And you know what, I think he's nailed it. Basically the article says that the Zuck is not necessarily planning on integrating these businesses into Facebook. He is using the Facebook lofty share price to buy amazingly innovative businesses and hold them as an investment holding company would. Facebook have a big cash pile which is going to grow and these small businesses can use that umbrella to grow with almost no limitations. Some may fail but some may change our lives forever.
I find this extremely exciting. Technology is a very tough business and if you slack for just a second you will be left behind. Facebook are hedging themselves against these changes. The Zuck has impressed me since the business has listed and he has had to take a more corporate roll. In fact I think he has thrived. For me he is up there with Elon Musk. This strategy and the realisation from Felix Salmon of what is actually going on here has made me re-evaluate Facebook as an investment. At first I was happy to add the stock for clients looking for a bit more risk. But now I am inclined to consider it as a staple addition for every portfolio. I will keep a close eye on the progress.
Having said that, Google are also positioning themselves well as a diversified technological conglomerate. The business is so big it is not required to announce most of its acquisitions. But trust me they are hard at work both acquiring and innovating organically. It is a very exciting space.
Michael's musings: Philanthropy
Yesterday I read a very interesting blog piece titled, Why it makes sense for Larry Page to donate his billions to Elon Musk.
The basis of the piece was saying that when Larry Page (co-founder of Google) dies, he will do more good for humanity by giving all his money to someone like Elon Musk than by giving it to charity. The principle used here is, "give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime".
Business through competition creates the innovations that push us as a species forward. New technologies may be reserved for the rich in the beginning due to costs but they do filter down to lower income groups; something like Panado is a good example. Elon Musk is busy revolutionising the energy industry, and if his batteries and solar panels crack the "energy code" it could lead to cheap and sustainably energy for the globe. Having access to electricity is arguably one of the biggest things that can help the poorest of the poor improve their lives.
It is a very interesting read, and right up my street as I am a fan of business and Capitalism.
Home again, home again, jiggety-jog. Markets are flying. The Rand is firmer. Happy days.
Sasha Naryshkine, Byron Lotter and Michael Treherne
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