PDSnet Articles

The Giant Awakens

As expected, Wall Street is making new highs on the back of a buoyant economy and record low unemployment. It is ignoring the bad news like weaker-than-expected housing and focusing on the bullish data like the 211 000 jobs created in April month. This is typical bull market behavior. In a bull market, investors focus on the positive and tend to ignore the negative.

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Wall Street Steams Ahead

America is in the throes of a massive economic recovery. This recovery has been anticipated and discounted by the share market since the middle of 2009. The recovery is firmly based on the massive quantitative easing and record low interest rates which have existed since the sub-prime crisis of 2008. Last month the US economy created 211 000 new jobs and unemployment fell to a very low 4,4%. If anyone still thinks that the US economy is not in a recovery phase, they are not looking at the facts. That recovery will inevitably spread to the rest of the world.

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The Confidential Report – May 2017


The president has delivered a shattering blow to the South African economy, just as the economy was beginning to show definite signs of renewed optimism at the start of 2017. South African consumers may have been frightened into “pulling their heads back into their shells”. When consumers and businesses are scared, they typically stop spending and conserve cash to cope with whatever the new uncertainties may occur. This tends to reduce the sales of white goods and big ticket items like motor vehicles. It results in major investment projects being curtailed or abandoned and it results in consumers “trading down” to cheaper products. Economists and analysts have had to modify their forecasts downwards to reflect the new somber mood.

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Combined Motor Holdings

Combined Motor Holdings (CMH) is one of those companies that is just out of favour with the big institutional fund managers. It is clearly a blue chip share with a long track record of rising earnings, and yet because it is in the motor trade, which has been doing badly in the past year, the share has been bid down to a P:E of 7,5.

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The oil revolution began with the mass-production of motor cars towards the end of the nineteenth century. Since then the world has been burning oil to meet an almost insatiable demand. Oil has become the most important commodity in the world economy. Almost every product and service incorporates an oil component in its cost structure somewhere – every product has to be delivered – usually by means of an internal combustion engine of some type.

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