To market, to market to buy a fat pig. We were at the opposite end of the hill to the Grand Old Duke of York who was up. And when he was up, we were down. A couple of reasons, having to catch up with Wall Street which had a sloppy close on Friday and dealing with a firmer Rand through the day. The news filtering through that the Russians were perhaps withdrawing after their "exercises" had finished on the Ukrainian border. That is good for the regional power (Russia) and the rest of us. I can imagine that the folks in Eastern Europe are petrified of the Russians, they remember and know too well. But the major boost came from the small in stature but colossal on the financial scene, Janet Yellen, the new Fed chair who gave a speech 25 minutes into the market being open yesterday.
If you are looking for the full transcript of the speech, then search no more, here it is: What the Federal Reserve Is Doing to Promote a Stronger Job Market. Much of the speech was translated by the Fedspeak experts that there will be no rate tightening any time soon. I am not too sure why the market always second guesses the Fed and what it is that they are going to do next, rather focus on the now and stock prices if that is your job. Paul nailed it in a tweet the other day:
If your equities investment strategy changes when the Fed chief makes public statements, then you are doing it wrong.
— Paul Theron (@paul_vestact) March 20, 2014
Exactly. By chopping and changing your "strategy" all you are doing is incurring costs and incurring capital gains along the way. complicating your life. Just keep carrying on, adding to the existing quality, avoiding getting spooked or tempted when times are great or simply unbelievable (you see years of 40 percent up and 25 percent down) and just buy the best companies.
Markets locally lost a third of a percent, resources down around four-fifths of a percent. Just today there is news from China (where) factories struggle, adds to expectations for stimulus. That has been lending support for markets over the last few trading sessions, the Chinese are possibly going to be embarking on stimulus methods.
There were better trade numbers, depending on which way you look at it. These are Trade Statistics for February 2014, where depending on whether you include or exclude Botswana, Lesotho, Swaziland and Namibia, we recorded a trade surplus for the month of February or we recorded a trade deficit.
If Vladimir Putin was faced with this conundrum, perhaps he would just annex these four countries and suggest that they are ours, because the people there want to live here. What is most encouraging from this report is how we continue to export more to the rest of the continent, ironically the "African growth story" could be great for the country that is at the Southern tip of the continent. I always sigh when South African CEO's are asked what their African expansion story is. If you needed reminding, South Africa is part of Africa.
Just to finish off, the Yellen comments sent US markets higher, the S&P 500 added nearly four-fifths of a percent, the Dow Jones about the same amount, whilst the NASDAQ added just over a percent to end the quarter. The S&P closed the quarter out 1.3 percent, the Dow Jones down 0.72 percent whilst the Nasdaq is up just 0.54 percent YTD. Ourselves? Locally the all share index closed at 47,771, starting the year out at 46,256 points. So, up 3.2 percent over the last 3 months. 13 odd percent if you annualise that. Would you take that now? The market would end the year at around 52300 points.
Lynx, I'm reading this, you should too
OK, this is a little old, five days old to be exact, which in the technology world is longer than in the investment world. It makes sense and I am surprised that nobody has thought of it before, like most inventions actually. There is always an element of hey, why didn't I think of that? Apple Files Transparent Texting Patent To Help People Who Walk And Text. Added to that Apple news is that "sources" say that the New iPhone 6 screens to enter production as early as May. Nice.
I am a big fan of Michael Lewis and his books, they are always insightful and really well written. Is the market rigged though? Is Lewis just promoting his new book? Maybe he is just out there to make a splash for his newest book, Flash Boys: A Wall Street Revolt, which I intend to read. High frequency trading? Good luck with that. We are as ever at the opposite end of the market to the machines. See Andrew Ross Sorkin's take: Fault Runs Deep in Ultrafast Trading. Spot on Andrew!
Here we have Nkandla as the latest scandal, 250 odd million Rand equates to around 23 odd million Dollars. Zhou Yongkang and his family laugh (not anymore though) at that amount, this from Reuters: Exclusive: China seizes $14.5 billion assets from family, associates of ex-security chief: sources. Wow. the sheer size and scale. Just remind me, the Peoples republic, right? Socialism at its best here sports lovers. Not everyone however is in agreement, the FT (subscription only): Ex-president Jiang urges Beijing to curb anti-corruption drive.
It is April the first. Which means that if you thought that the Boks were going to turn out in red, then I suppose you were duped. How possibly could they wear Red and Gold against Wales, who have a scarlet jersey? But BHP Billiton are not in the interest of doing that and have released a SENS titled Market Speculation, which suggests that whilst they like there other businesses, they will focus on five segments, Copper, Iron Ore, Coal and Petroleum as well as Potash. Which means that those other businesses could be spun off.
Yesterday the Gauteng High Court ruled on the much publicised interconnection battle between MTN, Vodacom (working as a team ironically) versus Icasa who are trying to drop these rates to 20c per minute (what MTN and Vodacom would charge Cell C and Telkom mobile). The ruling was bitter sweet for all parties involved and in my mind makes no sense. The court said that yes the new Icasa installed interconnect rates were unlawful and invalid but the order to stop them will be suspended for 6 months.
So basically MTN and Vodacom will be forced to lower the rates while Icasa is given the time to reevaluate what is fair. What is even more unfair is that MTN and Vodacom have to pay their two smaller competitors more than double, 44c for the same service. That is anti competitive and not business friendly. Sasha makes a good point, Cell C have been around for more than 14 years. They are not exactly new, why the big regulatory helping hand now? Telkom Mobile also have the benefit of a big corporate backer, they aren't exactly starting off from scratch.
As investors in both MTN and Vodacom we find the ruling encouraging but I will be interested to see what Icasa come up with. I am guessing they will have to up the rate a bit and close the gap between what the competitors have to pay. Surely it should be all equal. Eskom don't charge smaller businesses lower electricity rates because they are small compared to their competitors. Competitors need to find an edge and be worthy of their growing market share, that is what keeps the economy ticking. For example Cell C should draw in new clients because they offer a better data service, now that would benefit consumers.
Home again, home again, jiggety-jog. Locally we have crested 48 thousand points again on the All Share index, as stocks are up half a percent. Retail stocks have crept into the green again for the year. Amazing. Sector rotation? Errr... good luck with that.
Sasha Naryshkine, Byron Lotter and Michael Treherne Follow Sasha, Byron and Michael on Twitter
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