Slasher's coffee beans

Jozi, Jozi. It ended up fine, the day started getting better and better as the day progressed. Session end industrials, retailers, platinum miners found themselves in the winners column. Session end the Jozi all share index closed at 25217, up 53 points.

There has been a lot of debate around the issues of oil and what is a fair price. What is a fair price? Is it as simple as saying that it is as simple as finding the supply demand mean and going from there. Demand is a lot weaker now than it was 18 months ago.

But with that comes risks, risks that the supply side does not continue to develop. And coupled with lower oil prices and much credit lines drying up, exploration has probably been a lot lower than when oil prices were higher.

So if the prices at the moment for a barrel of oil do not reflect where the supply demand fundamentals should actually be. There are no mainstream alternatives to oil right now, there will be a lot more users of refined product when the global economy bounces back stronger.

Paul Kedrosky made a good point, or pointed out something useful: Despite world-class discoveries coming one after another, the massive subsalt plays in the deepwater and ultra deepwater areas of the Gulf of Mexico, Brazil, and elsewhere remain somewhat enigmatic, with a host of technical challenges one British executive likened to “putting somebody on the moon.”

That is the point that I was trying to make, cheap oil is finished. Until we find real alternatives, and hybrid vehicles are touted around at car shows. For the time being they are pretty expensive, but will become the norm.

At the same time as the developed world changes their patterns the emerging world arrives with more motorcycles, motor vehicles, bigger industry, more power needs and greater consumption of fossil fuels. All this happening whilst the developed world finds themselves committed to alternative energy. Which, for the time being is expensive to produce and only recently economically viable.

Another thing making me mad is still a year on from the Lehman collapse some of the employees are mad at government for not bailing them out. Why was there no government back stop, some are saying. Well, I might be cruel here, but boo-hoo, extraordinary gains were privatised, why should the ills be socialised.

Which leads me to another point, an interview done yesterday by CNBC Africa’s Eleni Giokos interviewed the chief of FirstRand, Paul Harris. Listen to the podcast, the part that makes me mad is the trading element of the business, perhaps we allocated too much capital to it, and everyone was doing it, and everyone got cleaned up.

I am sorry, but when you are trading with shareholder funds in that manner we are going to steer clear of this one. Listen up and let me know if you have the same feeling as me.

Paul was on the ENews channel this morning with all of these interesting points about Lehman and he even threw is FirstRand, making the same points that I was above. You can’t expect to take great risks and not be responsible ultimately for your own downfall, and then when the excessive risk taking does not turn out the way you plan, then look for a parachute.

New York, New York. Up. Ben Bernanke said that the recession is probably over. Thanks Ben, this is the guy who got everyone excited with the green shoots talk in March, which essentially sparked the rally. The Obama and Haines bottom in March. Haines is news anchor for a business channel at the NYSE, Obama, well he is one of the most recognizable faces on the planet.

Some of the stuff that Bernanke said was kind of run of the mill stuff. It is still going to feel weak, job recovery is going to take longer and so on. Session end the Dow Jones Industrial Average added 56 points to 9683, the broader market added three point three to 1052, whilst the nerds of NASDAQ closed nearly 11 better to 2102.

The oil price is much better at 70.97 Dollars per barrel, the gold price at 1017 Dollars per barrel, rushing ahead, whilst the copper price has also had some renewed interest, last at 2.87 Dollars per pound. The platinum price is last at 1333 Dollars per fine ounce. The Rand is strong across a board, 10.81 to the Euro, 7.36 to the US Dollar and 12.14 to the Pound Sterling. Phew, good from an inflationary point of view, imported inflation lower.

We should start better. As ever it matters what the Americans wake up and think.

Best wishes

Sasha Naryshkine
sasha@vestact.com
011 022 5440