Jozi, Jozi. 26o 12' 16" S, 28o 2' 44" E. We did alright all things considered, Spanish and Italian yields continued to rise, and that problem has come to a head today where the Spanish 10 year yield has crossed through the 7 percent mark. It is a little lower than that now, and I guess now everyone is becoming experts on where to next, and with solutions for the Europeans. They are working on one, in the meantime we are seeing the Europeans buy time in the words of Dave Rosenberg, the realist from Toronto, who works at Gluskin-Sheff a niche firm, for high net worth individuals. Rosenburg writes a wonderful daily titled "Breakfast with Dave", which you only get as a client. Well, nearly every day is what the Gluskin-Sheff website says. And by telling me that he is back on the screen, I get the distinct sense that we are in that bearish news cycle for a while. Greek elections this weekend for whatever reason are key again, the Germans are starting to come round to the idea of the bazooka option.
Locally yesterday we had a decent day, the Jozi all share ended the session up 182 points and above 34 thousand, by a mere 38 points. The main drivers were the resource stocks, driven by a large jump from the platinum miners. The decliners were few, a slight sell off by the retail companies, and the gold miners lost a little bit of loving, down 0.61 percent on the session. Retail sales locally were pretty poor, or were they? Russell Lamberti, from ETM said this on the Twitter thingie: "Big overreaction to SA Apr retail sales data. Sales not as weak as data suggests. Adjust for statistical shenanigans & sales up 5%y/y not 1%" Now, strangely I have numbers from May, which I can share tomorrow, the Mooi River Index and the Transnet Ports volumes data, which are pointing in the RIGHT direction and not weakening. So, perhaps the monthly data shortly will be better than we expect going forward. I also caught reference to a Chinese current quarter GDP number looking weaker than anticipated and could even fall below 7 percent. OK, everyone is preparing themselves for this, seemingly.
New York, New York. 40o 43' 0" N, 74o 0' 0" W. Because there was a lack of corporate news, or anything new from the Europeans, the main focus was on JP Morgan CEO Jamie Dimon being grilled by the Senate Banking committee. Now, as I understand it, this is the first time that JP Morgan has to appear in Washington in front of such a committee since the early 1930's and the CEO back then was Jack Morgan, the son of the founder, J. P. Morgan. Jack himself was JP jnr, but went by Jack to avoid being compared to his father. Gosh, it is going to be tough for the Graf/Agassi kids. Amazingly, both Graf and Agassi (who happened to be married) are two of three singles players EVER to have won all the grand slams (not necessarily in the same year) and an Olympic gold too. Poor kids. The other player is none other than Rafa.
But we are getting distracted, back to the Jamie Dimon thing. He was grilled, said I am sorry, apportioned blame to himself and his team. Included departed execs. Hey, there is nothing wrong with saying that you are sorry for something. I do it, we should all do it a little more often. Jim Cramer thought that he was wrong, and called Jamie Dimon a loser, which a lot of people think was very harsh, but to be in that box at that time, there was no way of winning in front of politicians that were baying for your blood and your whole industries blood. Rather than be completely combative, he went the other way. Which I think worked. And that leads me into the next piece.
Joe Kernan, who I beat up on way too often, actually asked one of the best questions that I have ever heard on business TV directed towards a politician. Joe of course is the anchor for the wildly popular CNBC Squawk Box show, the one that we see from about one in the afternoon onwards. He is a Republican through and through and is anti big government, so you can imagine that he is a "hater" of the current administration. He had Senator Shelby on the show, who was the chairman of the committee that was going to be grilling Jamie Dimon about JP Morgan, and asked a far more important question, which goes to the core of these Q&A sessions. And for the purposes of this conversation, we don't need to see the answer, because I am trying to make the same point:
Question: "Senator, a lot of viewers are pointing out and I'm not focusing this on you or your party or anyone in particular but they're pointing out that the federal deficit is running 3 billion per day, for the fourth consecutive year and congress is not entitled to hold hearings on other shortfalls. Maybe this will humble congress to act. It nice that you're so concerned with JP Morgan. Should there be hearings on what is happening in congress and the deficit for the country, too? Who would preside over them?"
Exactly, nailed it Joe. The only thing that politicians are accountable for their actions is at the polls, and perhaps that even moves way too slowly for most folks. Dick Shelby has been a lifer politician for an age, he has been on both sides of the aisle, perhaps age does make you a whole lot more conservative. I agree, politicians always like to grill people like it is their given right, I would love to see a platform that made them a lot more accountable in public and have to deal with the same hard questions. Self importance.
Currencies and commodities corner. Dr. Copper is last at 334 US cents per pound, the gold price is last at 1619 Dollars per fine ounce. The platinum price is 1478 Dollars per fine ounce, it has been getting a lot of support with the gold price. The oil price is slightly better, 82.88 Dollars per barrel. The Rand is weaker as risk off visits again today. 8.42 to the US Dollar, 13.08 to the Pound Sterling and 10.59 to the Euro. Mr Risk Off visiting today and we are giving back yesterdays gains.
Parting shot. What will the Greek people do? I agree that Spain is not Greece. They (Spain) may need emergency funding, but they are not Greece. You saw the number over the last weekend that said the combined three other little pigs, Portugal, Ireland and Greece are still half the size of the Spanish economy. Spain fits into a whole other category that Ross-Sorkin called in his too big to read book "Too Big To Fail". The Spanish were downgraded again last evening by Moody's, but at the same time have this problem -> According to the latest data house price falls in Spain are accelerating which worsens everything. I am guessing that the bazooka is being loaded by Angela Merkel. Or at least that is what we are hearing, Germany is looking for the awe product. But did you see Angela Merkel wearing Orange? Angela Merkel wears orange before Germany Euro 2012 match for some reason. Perhaps the G20 meeting this weekend will actually yield something.
Sasha Naryshkine and Byron Lotter
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