May 29, 2009 in Uncategorized
Jozi, Jozi. It was good slash bad. Good that the governor made the cost of money cheaper by a 100 basis points, the repurchase rate is currently 7.5 percent. Prime was reduced to 11 percent on the rate cut, still, not the cheapest place in the world to borrow money that is for sure. Judging from the tone of the speech of the Governor of the Reserve Bank, don’t expect any further cuts in a hurry as inflation remains sticky. Session end the Jozi all share had lost 206 points to 22315.
The Rand moved firmer through much of the day, looking to crack the 8 to the US Dollar mark, and this interestingly as the Dollar started to reverse the weaker trend to currencies. That is a complex world, currencies. I heard some fellow on the box say with an enormous amount of conviction is that his next stop on the Euro Dollar cross (I did not catch the time frame) is 1.47. Good.
Back to the Reserve Bank decision here, you can read the full statement from the Governor after the two day meeting of the MPC. PPI data released during the day yesterday showed the hugely volatile data plunging. These are prices at the factory gates, falling sharply. This bodes well for consumer inflation a little further down the line, although the consensus is that inflation should stay outside (the wrong side) the band for the foreseeable future.
The last couple of lines gives you a look into some economic speak: “The evidence which was presented to the Monetary Policy Committee suggests that the output gap has widened further. This is expected to contribute to an improved inflation outlook, notwithstanding some current inflation inertia”. Translate the last line as the inflation outlook could get better or worse.
Indian GDP for the first quarter came in showing 5.8 percent growth, beating the 5.2 percent forecast. Good? For sure, a beat of that magnitude is very encouraging, even if the read is lower than most of the decades growth. A Bloomberg story from half a day ago suggests that Chinese GDP forecasts have risen when measured versus a February forecast. 7.1 percent was the measure then, the new measure is 7.5 percent. Heck, two more decent month and at the end of July we might be at that 8 percent mark. Who wants to be an economist?
I really liked this interview, it is so very short. David Einhorn is a guy who shorted Lehman four months before the stock price went kaput, by revealing the short to the world, of course there is a little juice in it, don’t you think? But in a very short time he makes some good points, he is short Moody’s, destroyed brand, no longer credible, and various other reasons, including some stretched valuations. Check it out here.
Pimco, these are the guys who are the worlds largest bond fund, have been talking about a new normal, my favourite guy there is Mohamed El-Erian, even if his moustache gets in the way. I do an El-Erian skit pretty well, or at least I think so. Read what he has to say about the changing world, or at least in Pimco’s view, they have been bashing on this one for ages.
New York, New York. Equities staring at the bond markets and a seven year note auction by the treasury that went off without a hitch encouraged the guys on the other side of the fence. So, treasury got the notes away no problem and in fact the subscription went around the same as the others before it. So, even if there was a little anxiety short term, particularly this week. Session end on the Dow we saw 103 points to the good to 8403, the nerds of NASDAQ better by 20 to 1751, with the broader market S&P 500 up 13.77 to 906.
General Motors saw their bond holders accept an equity swap, but their bankruptcy is inevitable. The White House is looking at around a ninety days maximum ordered bankruptcy, or so the folks in the know say. Good, bad, indifferent, don’t and never owned the stock. GM about to exit the Dow and the S&P 500, replacements for the Dow include Google would you believe, some even suggested Toyota. The S&P 500 is a little more cut and dried, it looks like First Solar will make their way in.
Getting the bulls running again were some better than expected durable goods orders for April, even if the previous months data was revised lower. That only really has an impact if it is a sizeable revision, but don’t miss on the original number. Crazy.
Twitter. A strange new method of communication. It is almost like an open sms line, someone sends to those folks who want to read it. Or so that is what it seems to me. I signed up and have started tweeting, I think that is the word. If you are on the web a lot and are have a Twitter login, lookup sashanaryshkine. Now, about not being a twit.
The oil price is much higher at 65.44 Dollars per barrel. The copper price is much better at 2.16 Dollars per pound. The gold price also gaining momentum at 968 Dollars per fine ounce, the platinum price also much higher at 1162 Dollars per fine ounce. The Rand is strong, 7.97 to the US Dollar, 12.81 to the Pound Sterling and lastly 11.17 to the Euro.
We are poised for a stronger start here, following through from Wall Street last night and having trickled through to Asia and Europe. Excellent, that will be a good end to the week.
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