Friday 21 December 2018

THANK YOU FOR READING TIDEMARKS


The share markets are getting treated as if they are a Christmas turkey. Slaughtered. Let’s hope it doesn’t extend to the Easter Bunny.

So, Eskom are going to get two overseas consulting companies to come to Megawatt Park and “stress test and validate our own hypotheses”. This will be part of a program to advise on the balance sheet and the organisational design. Just what this means (if anything) it will doubtless be another total waste of time and money. Eskom should have on its own staff (as it used to) people capable spelling out that the enterprise’s current balance sheet shows the outfit to be insolvent and that it owes far too much money. Its financial stress is already off the scale and the organisational design is at least twice as big as it should be. There, fixed it for them! Cancel the consultants and all I ask in return is an uninterrupted and cheaper power supply please.

President Cyril did a nasty and foolish thing this week. He singled out a group of citizens based on their skin colour and then heaped scorn on them by accusing them of being “lackadaisical”. While this may not have been the exact word he wanted (although he hasn’t yet withdrawn it) it was uncalled for, untrue in general and insulting to the very many white folks who want to see this nation succeed and work hard to help it achieve its goals. Mr Presiden,t being rude to a group of people who provide so much employment for your voters and pay so much of the public sector salaries is a very bad idea. Even if secretly you do despise us!

I wish my readers, and I gained many new ones this year, a very Merry Christmas and a happy, safe and healthy New Year.

James Greener
Friday 21st December 2018.  

Friday 14 December 2018

AND WHAT ABOUT TIPPING THE CAR GUARDS?


While it might feel as though the share prices have fallen sufficiently for some tempting value to emerge, the fact is that there is still a great deal of downside potential. The main JSE indices (excluding those with the train wreck sectors that are our mining industry) would need to fall almost 50% before offering PE ratios similar to those enjoyed in 2008 and 2003. Of course, those same values can also be achieved if company earnings doubled from current levels. But that looks highly unlikely. The communists who now control nearly ever lever of power in the nation this week held parties to celebrate the enactment of minimum wage legislation. What no one cared to discuss is the concept of the enterprise maximum affordable total labour costs. In many businesses, dividing the latter by the former will yield a number lower than the current staff complement, and in order not to break the law, that means job losses. This refusal to understand that making a profit from contented customers and clients is the only way to true economic freedom is heart-breaking.
When just one man, albeit an ex-president with a litigious streak and shocking advice, can ring up a legal bill of R16m and probably more, it explains those gilded lawyer infested towers that are forever springing up in the smarter parts of town. At a recent presentation of what the future might hold it was explained to the audience that the legal profession was very nervous about the arrival of artificial intelligence and what it would do to their income stream The argument  is that since the law deals with facts and is pretty much black and white (the old fashioned use of the term) it is ripe for replacement by a robot that has been loaded not only with the laws of the land but also has unparallel instant access to every judgement ever made. However, it is not obvious that this potential impact has yet worried our own brand of legal eagles. Even the slowest humanoid would have by now reached the conclusion that calling publicly for the murder of all white people and for good measure their pets was not only unsavoury but undoubtedly law breaking. But the actual watchdog bodies responsible for controlling and punishing this vile hatred however have gone off to “study” this disgraceful outburst. Let’s ask Alexa the robot what she thinks.
A similar forecast about the disappearance of cash in favour of purely electronic money and value transfer leaves local observers wondering if the futurists responsible for this have ever ventured out of the New York coffee bar where they thought this one up. Exciting as it may seem to do away with cash and have every transaction pass through a record keeping system, the champions of this idea are perhaps naive about the scale of the informal and illegal economies where records are neither required nor indeed wanted. Even if the formal banking institutions agree to penalise cash handling further than they currently do, the demand for undetectable money flows will persist for as long as governments collect tax.  And then what about the tooth fairy’s coin?
Even retired investment analysts can remain news-junkies for the rest of their lives. The problem currently however is that each of the three main theatres of news for a South African based reader have not really changed their underlying stories for months. Locally our new president continues to spin a “good” story while barely reacting to and even pointedly ignoring crises like the country running out of electricity or egregiously incompetent cabinet ministers. In the US, President Trump doesn’t bother with selling his story and continues to do what he promised he’d do, with the bonus of utterly infuriating almost everyone else who never thought it would be possible to be a US president with such a poor grasp of most facts. And the mess that is Brexit is the most boring story of all. The obvious losers are those who thought that their government would follow the instructions that they asked the electorate for. There are no winners here either -- except perhaps for the crowds of unelected Eurocrats who are still firmly aboard a gravy train with multiple well-stocked buffet coaches.
Nearly Dakar Rally time!
James Greener
Friday 14th December 2018

Friday 7 December 2018

MIRACLE GROWTH


The share price bear appears to have been awakened by the sound of reindeer footfall and is loping about dealing out hefty slaps with razor sharp claws. The Overall Share Price Indices in most exchanges look set to close the year lower than they opened. The gold price is showing signs of demand. Despite what the futurists say about how the millennials are transitioning to a world where their smart phone is all they need to arrange their affairs, not everyone is convinced that the block chain and tap-and-go is about to displace all other forms of wealth storage and transfer. It’s impossible to pay with your phone if the power is out!
We have churlishly remarked before that the GDP numbers published every 3 months have a feeling of not being as meaningful as they ought to be. They are altogether way too volatile with suspiciously large swings from one period to another. Plus, there are puzzling internal inconsistencies. As always, the Stats SA publication is packed with all you might ever want to know about our nation’s economic activity, with handy downloads of even more numbers dating back to when life began. But our concern is that the systems and standards for the origination and collection of the raw data has changed in ways not always well explained. Understandably, agricultural output is traditionally all over the place as weather and commodity prices blow hither and yon. But why mining should be so variable is hard to understand. Nevertheless, the 3rd quarter results released this week were suitably reviving with the assertion that positive economic growth of a whopping 2.2%pa had been enjoyed. This was mostly due to a huge surge in manufacturing. Miraculously this improvement was achieved (before the current season of power cuts) with zero growth in the contribution to the economy from the electricity generating sector. Fishy.
Somehow the rather natty panama hat worn at a slightly rakish angle conveyed the impression that Eskom Chairman Jabu Mabuza at the media briefing wasn’t as concerned by the power cuts as the rest of us are. His assertion that the people and not the utility were responsible for the lack of electricity was a novel one and not widely shared by motorists stuck in gridlock for hours. Even if some consumers are paying for their electricity – and not, as now seems widespread, simply stealing it – Eskom still can’t get even that money to the coal producers who understandable are reluctant to deliver coal to a deadbeat organisation. Eskom have an alarming habit of spending any money the have on things that do absolutely nothing towards getting the generators running. The catering budget for welcoming and departing functions for executives and board members at State Owned Enterprises must rival the salary bill. We must be one of the few nations where the names and qualifications of the people appointed by the government to run boring but vital utilities are well known and widely discussed. It’s because they are mostly incapable of doing it.
When are we going to see some arrests and better still some convictions and best of all long jail time for the numerous felons alleged to have stolen public money? And come to think of it, some private money as well. The only one that most of us can think of was Jacob Zuma’s financial advisor (the first of several spectacular duds in that post) who was granted medical parole because of a terminal condition a dozen years ago. Fortunately for the poor man, his doctor turned out to be as bad at medicine as he was at finance. There is much anticipation that President Cyril has picked a good one in appointing Shamila Batohi to the top of National Prosecuting Authority. I do hope she has ordered that her office be thoroughly cleaned before moving in. It’s had some very unsavoury characters in it of late. And that’s on her side of the desk too. Get to work young lady!
The Blitzbokke had a very poor start in the Sevens Series in Dubai last week, but with a few of the well-known playmakers returning to the side for the Cape Town leg this weekend things could improve. This is one code where the world rugby bosses appear to have got nearly everything right. It is really a very entertaining weekend of sport.
James Greener
Friday 7th December 2018