Monthly Archives: March 2018

Wall Street and the JSE


The shock 2,5% drop in the S&P500 last night is a clear indication that the correction, which has been in progress since 26th January 2018, is not yet over. President Trump imposed about $50bn worth of tariffs against China, reigniting the prospect of a trade war between the two largest economies in the world. The point to notice is that this is a new issue in the correction which was not there on 26th January. At that time the correction began because of better than expected employment figures and the fear of a more rapid rise in interest rates. Read More

US Economic Boom


The current correction on Wall Street has two primary causes:

  1. The rise in the level of wages last month which made investors scared of a much more hawkish stance by the US Federal Reserve Bank’s Monetary Policy Committee (MPC), and
  2. The fact that the market had just run too hard for too long and some sort of a breathing space was both necessary and healthy.

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The Confidential Report – March 2018


Political

The eventual resignation of Zuma and the installation of President Cyril Ramaphosa has created a powerful new optimism in the South African economy. As an economic stimulant, nothing is really as effective as optimism. When consumers and businesses are optimistic about the future, they spend more and invest more which creates new business activity and creates new jobs. This in turn creates more spending in an upward spiral. So South Africa has entered a new “honeymoon period” – quite similar to that which gripped the country after Nelson Mandela took control. One of the key elements of this will be its impact on overseas investment. We can already see that through the steady improvement in the rand/dollar exchange rate as overseas investors seek rands to finance their projects. Of course, the length and extent of the honeymoon period will depend on how effectively Ramaphosa implements reform. Any significant misstep on his part could cause a reversal back towards pessimism. We believe, however, that the future must be a vast improvement on the past no matter what transpires. Of course, Ramaphosa will also be able to ride the wave of the international recovery – so there are two forces working towards far stronger economic growth in this country. Read More