Category Archives: Current Market

The Confidential Report – February 2019

The American Economy

The Federal Open Markets Committee (FOMC) in America raised rates on 19th December 2019 by 0,25% to take them to 2,5%. This is the ninth 0,25% increase in rates since rates began to rise in January 2016. This came after rates were stable at a record low of 0,25% for seven years from January 2009 – following the 2008 sub-prime crisis. The steady, gradual increase in US interest rates since the beginning of 2016 means that US Treasury Bills (T-bills) are becoming more and more attractive to investors relative to the government bonds of other countries, including South Africa. This tends to cause funds to flow out of emerging economies like ours and into first world countries. The steady rise in US rates also means that the FOMC has confidence in the strong recovery of the US economy. This has positive implications for the base and precious metals which South Africa exports. Of course, it also puts pressure on the rand – which directly impacts the fuel price and, in the medium term, the inflation rate. Read More

The Rand Barometer

The South African rand is one of the most heavily traded emerging market currencies in the world. On average more than R50bn worth of our currency changes hands every trading day. This makes our currency a favourite for international currency speculators because they know that they can take up or sell out of a large position in the rand very quickly. It also means that our currency responds very sensitively and immediately to any event among the emerging market economies – even if that event has little or nothing to do with South Africa. Read More


Lewis (LEW) is a retailer of furniture and electrical appliances operating through 779 stores under the Lewis (494 stores), Beares (119 stores), Best Home (133 stores), and most recently, United Furniture Outlets (33 stores) brands. Of these stores, 116 are in neighbouring countries.

The company does 65,7% of its business on credit and offers customers credit insurance and other financial products. In the middle of 2015, the company’s insurance business and credit business came under scrutiny and it was forced to repay customers for what were considered to be illegal insurance and other fees. This had a significant impact on the company’s share price which fell from around R100 to as low as R25. Read More

Wall Street in Context

On our website ( there is a section which deals with how we see the stock markets of the world in the context of their history. We call it “Our Background Approach”. It sets out the context of the current situation on Wall Street as we see it.

To this background approach we have added an excellent tube of a lecture given by Jeff Diest ( which you should take the time to watch.

The New York Stock Exchange (NYSE) is on track to reach its tenth year in a bull trend – which is an all-time record. Experts and analysts are at a loss to explain its continued upward trend. No bull market in history has ever gone on for this long. But what they are missing is that, as Diest says, we are in completely uncharted territory.

We simply have no way to assess the impact of the unprecedented monetary policy stimulation of the world economy over the past decade.

Two points we can be certain of are that the quantitative easing (creating and injecting over $12,5 trillion into the world economy):

  1. is achieving its objective of putting the world economy into a boom phase.
  2. is only just beginning to be discounted into world markets.

Read More


Telkom was originally a state-owned enterprise similar to SAA or Eskom. The company went  through some difficult times, retrenching 4500 employees in an effort to right-size and remain profitable. Today Telkom is owned about 40% by the government and 12,5% by the Public Investment Corporation – which means that it is still government controlled – but it has a very substantial private sector ownership and is essentially independent.

The company consists of five operating divisions –

  1. Openserve, which is an internet connectivity provider with the largest open access network in South Africa,
  2. Telkom Consumer is a fixed broadband and internet service provider,
  3. BCX is a technology company,
  4. Gyro looks after masts, towers and property development and
  5. Yellowpages, which is a marketing and advertising company.

In its results for the six months to 30th September 2018, the group reported adjusted headline earnings per share (HEPS) up 10,3% to 328,6c. The CEPO, Sipho Maseko described the results as “satisfactory” in a difficult economy. Read More