Friday 27 February 2015

DATA WATCHING



For the data geeks who think they can discern the future in the numbers from the past this was a bonanza week. Firstly there was the GDP growth rate for the last three months of 2014  and then there was the National Budget for the coming fiscal year. And then it’s company reporting season and a deluge of financials is flooding the newspapers, despite the JSE saying it no longer requires them to do so. Odd that.
As usual the more one looks into any published data the more one wonders what it is that the compiler of those numbers doesn’t want to reveal.  Minister Nene’s budget speech managed to get by without once using the “austerity” word but in fact this is what is going to happen. So far it has yet to trigger any reaction from the usual suspects but soon they will spot that the government will be taking more but giving less. The fastest growing expenditure item is the cost of paying the interest on the government’s debt. This year it will comprise more than 10% of the state’s total expenditure and of course there is nothing to show for it. Worryingly, even with his finest spin, Nene is forced to admit that this ratio could be over 11% in just 2 years time. No wonder he wants to cut civil servants’ spending on catering, entertainment (what!?) and venues by 8%.  Home Affairs department is to get 18% less than last year. This won’t help us to get all those unabridged certificates that are required.
In defiance of these calls for parsimony, however, the Office of the Premier here in KZN has appointed a consultant to run the “I Do Right – Even When Nobody is Watching” Campaign. Aside from the disturbing grammar, the idea that such a campaign has become necessary and furthermore is underway is dreadful. Why not simply fire anyone not doing right?
Nene’s audience seemed pleased with the announcement that for the first time in many years the income tax rates would need to go up by one percentage point. But how many of those MPs have now gathered that in their salary bracket that translates into about an extra R1000 a month in tax deductions?
Also growing by 10% pa is the sum allocated (R47.8bn) for paying the R330 per month child support grant. That means that we are a nation where more than 12million children (out of an official population of around 56 million) depend on a very meagre state handout to survive. What a scandal and disgrace for this country. The sole hope for these kids is that their parents get employment but the dead hand of the socialism is throttling us all to death.
Another eye-catching figure in the budget was the almost R56n that government hopes to collect this year from the fuel levy. This amount is about R11bn more than the National Roads Authority’s debt and once again it is very hard to understand why the levy proceeds, which have been paid by motorists anyway, can not be used to extinguish that debt and SANRAL can sell those ugly and contentious e-toll gantries around Joburg to a scrap metal merchant.
The 4th quarter 2014 GDP growth was a very surprising 4.1%pa. The largest contributors to this still unsatisfactorily low figure turned out to be the manufacturing and mining sectors. Representatives from these areas seem bemused by the news. Investors however are thrilled and the JSE All Share soared to new highs so that February’s performance will be around 3.5%. The combined financial and industrial index (i.e. omitting the pesky resources shares) is up 27% year on year. The problem is that average earnings for the companies in that index are up only 15%pa. The valuation string is stretched really taut. Will there be a sharp snap someday? Probably.
The Proteas’ win over the West Indies this morning was very satisfactory. Our progress through the World Cup is reasonably comfortable. The Lions on the other hand are making a very bad start in the Super 15, although it was really unsporting of the Sharks last week to host them in several inches of water. Talk about a home advantage.
James Greener
27th February 2015

Friday 20 February 2015

WHERE ARE THE (TAX) BODIES BURIED?



The very entertaining but actually deadly serious standoff between those who think someone else should pay and those who have no interest in being the payers roils on in euroland. Forecasting the outcome of this tussle and then in turn the market response is keeping the talking heads burning the midnight oil. One can be fairly sure that almost no one will guess correctly how the whole shebang unwinds. On the basis of the “follow the money” rule – only in this case there isn’t any – the likely outcome is that the Greek in the street is going to be disappointed and markets will continue to behave erratically. Even the rand has strengthened against the euro.
The news that Arts and Culture Minister Nathi Mthethwa is leading a state delegation to Moscow to repatriate the mortal remains of two struggle stalwarts who died in Russia in the 1970s is rather dispiriting.  Firstly it shows that there really is no proper job for this ministry and its minister to do and like the department of sport needs to be closed down immediately. These are areas when the government needs neither to have any expertise nor to interfere, especially not with full-blown and costly ministries. Secondly it makes one wonder just how many renowned South Africans there are buried elsewhere who are going to be dug up and returned to the southern tip. Is this an appropriate moment to suggest that maybe we should enquire where Jan van Riebeeck is resting and see if he might like to be returned to the shadow of the mountain?
There is something very odd and rather mysterious about this alleged “rogue unit” operating inside the South African Revenue Services. What on earth can they be up to? Surely the only thing a tax collector does is ferret out both people and monies that are hiding from them. Does going “rogue” mean that the fellows in the unit had changed sides? Were they deliberately not looking, or perhaps they have unearthed some juicy prey? Will we ever find out or have they summoned that junior official to make another error and operate the jammer / shredder in order to secure the no-fly zone around the president?
 Now that parliament is underway,  the MPs will at some point be asked to debate and approve something known tortuously as the Protection, Promotion, Development and Management of Indigenous Knowledge Bill. Sadly, whatever it is, indigenous knowledge does not encompass how to run a power utility, create an effective education system, pilot a motor vehicle accurately or bowl a decent leg-break. On reflection the largest body of such knowledge probably occurs mostly in the realm of botany and has long been researched and recorded by the appropriate academic departments and drug research houses world wide. So now are they about to be accosted by platoons of bureaucrats with forms and orders? Cue a serious misallocation of resources when the politicians find out that Petri dishes are not indigenous.
Losing the first game at the start of the Super 15 season is invariably dismissed as “not a serious problem”. However, the lack of points early on has a sneaky way of applying extra pressure at the end when it’s all death or glory time. With both the Sharks and the Lions seeking their first win tomorrow at Kings Park, its going to be a horrid evening for me and I shall watch from the couch with a medical team on hand to open bottles and even switch off the TV if necessary. And then it will be a few snatched hours of kip before resuming the position for the Proteas vs. India match from Melbourne. This will not be a relaxing weekend. Thank goodness I’m not Duzi paddler.
James Greener
Friday 20th February 2015

RED TEAM RED CARDED



Most of the talking heads seem to agree that last night’s chaos in parliament will mark the start of an ominous and disappointing phase in the nation’s political development. Almost everyone present in Cape Town yesterday behaved badly, even if was just in their choice of clothing. Apparently nearly every rule in the parliamentary book was broken. The ease with which “Honourable Members” are able to quote the number and wording of each paragraph in that book in support of their “point of order” is amazing. Equally astonishing is the firm adherence to the supposedly despised British traditions of gun salutes, mounted police and kilted pipers. The man who lugged the ceremonial mace into the chamber looked suspiciously like that sign language non-interpreter who embarrassed us all at Madiba’s funeral.
The whole unedifying farrago was arranged to allow the president to deliver his annual wish-list. Filled as usual with tortuous grammar to avoid saying anything definitive, he nevertheless appeared to outline many horrifying and blatantly investment-unfriendly ideas. For example, the plea for foreign investors to send us their money didn’t exactly mesh with banning them from owning property. The assurance that the energy shortages were being tackled with a plan to draw up a plan was not reassuring. There was a lot of talk about unlocking and revitalising stuff which should in the first place never have been locked up or allowed to die.  It seemed a sure thing that the markets’ reaction would be a sharp collapse this morning.
But they certainly did not.
The JSE has set a record high and the rand has not noticeably weakened against the US dollar (although it is fading versus the pound). So what the SONA debacle has definitely achieved is a complete disconnect between the fantasy world of politics and the real world of people making their own decisions.
It was rather startling to hear the Eskom CEO, Tshediso Matona boast that after just a few months in the job he now had a full understanding of that utility’s difficulties. Now this is a business in such trouble that it really can’t afford any time at all without a boss who knows what is happening. Even more alarming is the fact that for the three years prior to his new appointment Mr Matona worked as Director-General of the department of energy. What on earth do these bureaucrats do if it’s not learning all about the things they are supposed to control?
Those readers who live in the King Sabata Dalindyebo municipality (no, sorry, don’t know either) will be disappointed to learn that the free catering they have been enjoying at the past 13 development plan meetings may be coming to an end. Some dour killjoy has suggested that the R13m bill was excessive and the policy of “buying groceries” should be reviewed.
Apparently the folk who provide therapeutic massage with fragrant oils to their customers have asked the Competition Commission to allow the costs of such treatments to be covered by medical aid schemes. I shall watch the outcome of this request with great interest because it has long been my contention that the cost of the first cold beer on a Friday evening should also be allowed as a medical claim. If that’s not therapeutic then little else is.
My Canadian guests were delighted to draw my attention to the news that Edmonton has withdrawn from the bid to host the Commonwealth Games in 2022. Durban is supposedly now a shoo-in for that very dubious privilege. Nevertheless almost R100m will be spent on preparing the bid. The games themselves will cost at least R10 billion. The Canadians politely declined to subscribe to my private fund for distressed Ethekwini ratepayers and went on to ask if the violence and scrumming they watched on the TV last night was rugby. They seemed unconvinced when it was explained that the Super 15 starts only tomorrow. It’s also not cricket to have to get up so early to watch the world cup from the Antipodes. Why can’t they use proper time zones like we do?
James Greener
Friday 13th February 2015

Friday 6 February 2015

SITTING IN THE DARK



Just about every market index is bouncing around like a yo-yo. On the bull side are floods of cash washing over many economies from frantic central banks desperate to make people feel rich again. On the bear side is the plain fact that the supply of almost all commodities, especially energy and even the food ones, seem to be swamping demand and prices have fallen sharply. Producers of these things are feeling the pinch and it shows in the share prices. As always the sensible thing to do is mostly nothing other than keep an eye out for buying opportunities when a particularly bad dose of pessimism washes across the companies that are well managed and have great brands.
Broadly speaking the “austerity” that everyone keeps moaning about, especially along the bottom edge of Europe, is just a government decision to reduce the amount of money that they can give away to those citizens who claim the loudest that they deserve it. This decision is not the result of careful debate and consultation, but instead is the consequence of that government running out of money!
A very recent development in Greece where “austerity” had become especially unpopular is that a political party, with an identical lack of arithmetic and economic skills as our own EFF fellows, has been elected to power. Unconcerned by the paucity of tax receipts compared to desired spending programs, the new government has enthusiastically resumed the business of giving money away and thus has banished “austerity”. The reaction is that anyone who has recently lent money to Greece (most notably the diligent and prudent Germans) has quickly decided a) that they won’t do so any more and b) to sell at any price the IOUs (aka Bonds) they bought from the previous Greek government. This sell-off has caused Greek debt prices to collapse which is the same as saying that yields are soaring. Contagion is being felt in may other wobbly economies and even our own debt yields are pushing higher – though that may also be a result of the difficulties in our electricity supply and an absence of sensible political leadership.
This Euro zone debacle might be fun to watch from the distance of the southern tip was it not for the fact that our TVs don’t work. The power failures, caused by the ineptitude of the national electricity utility Eskom, have moved up several notches in their frequency and duration. Large swathes of the nation are without electricity for hours on end. There is something quite soothing about preparing to cook supper on the braai and to sip wine by candle light without the background hum of appliances but it will soon get annoying when the drinks get hot. Businesses and others who need power all the time are not so chilled and it is especially irritating to learn that nothing is being done about the widespread and blatant theft of electricity. More than one person has suggested that authorities should simply shut down supplies to any substation that has even one illegal connection trailing away across the veld. That should also occur in areas where electricity accounts are being simply ignored. Let's see if peer pressure by the law-abiding has any effect. Or are we all simply content to grub around in the dark at the level of the thieves and malcontents?
Apparently last year about R320m was spent in SA on "super-luxury" watches. For a nation where time and punctuality are not thought particularly important that seems rather odd.
Matters got rather rowdy at the AFCON tournament in Equatorial Guinea when the home side lost the semi-final (which by some accounts they were lucky to reach). It may however be mild compared to the sports we could witness next week in parliament when JZ is scheduled to deliver a State of the Nation Address. In a rather boring repeat of the demonstrable falsehood that they have come to the chamber to work, Julius Malema and his rabble will likely disrupt proceedings again. In itself this may be no bad thing because SOMA too is likely to be full of lies about achievements and progress the government have chalked up.  It would be fitting if the lights went out somewhere during the expected melee.
James Greener
Friday 6th February 2015