Slasher's coffee beans

Jozi, Jozi. We closed at the worst point of the day. For equity markets that was. You get the sense that the long weekend might be pulling and tugging at the bulls efforts. If it were not for the pending “jobs number” on Friday, it might be a different matter. With the precursor always the ADP data, which is out today. Just a reminder of course the fellows at ADP are a listed payroll administrator. So they aggregate all of their data, a lot it must be said, and give an indication of what the jobs number should look like Friday. The ADP has folks with estimates, could you believe. If the big number Friday was not enough. Expect somewhere around 40 thousand jobs for the month of March. On the last day of March? Excellent, that smells like fresh data to me.

Maude Street meanders. BHP Billiton was out the blocks quickly on the new iron ore pricing structure which seems to favour them and the other big producers, Rio Tinto and daddy long legs Vale. Pronounced Vah-lay and not Vail. Session end retail stocks were the biggest laggards, unimpressive credit extension data again. Platinum stocks were the biggest winners amongst the majors, you can’t really count Oil and Gas as a whole sector can you? Sasol and an Oando secondary listing. Oando, a stock that trades less than 100 thousand Rands a day. Session end the Jozi all share closed at 28706, up 29 points. At one point within 100 points of 29 thousand.

Wow, the iron ore and steel saga that makes “the bold” look tame. ArcelorMittal have turned around, like I thought they would, and said to their clients, sorry, because we no longer get some of our iron ore at cost plus three percent we have to charge you a whole lot more. Sorry. Wow. As you can imagine government is outraged here and when I heard the news I turned to Paul and said this seems like a Pioneer type situation here. What would you do if you were in their shoes? You basically got your health insurance for free, but now have to pay through the nose, pass that cost on? Yech. I suspect government won’t let the new pricing fly. Ointment? Fly?

Greeksh debtsh. My mother read my piece yesterday and answered my questions would you believe: Omologo 10 Eton. Would mean I guess, equivalent to 10 Eton. I guess Eton is the greek cent? Thanks mom. Bloomberg on the auction yesterday: Greek Seven-Year Notes Drop; Demand Wanes at ‘Surprise’ Auction. This is the first sign that there are more than doubters out there. Nothing to do with speculators George, if you are curious. Nobody wants your debt, they don’t trust you. As a consequence the ten year was sold off, now yielding 6.47 percent. Creak.

How about a Guinness and …… a home loan? Wow. It is a mess, Irish banks underwent their own stress tests and are now firmly in the eye of the PIIGS. And who is going to pay for it? The tax payers of course. Before you get outraged remember that some tax payers went hog wild in the property go-go days of the middle part of this decade. Irish politicians are outraged. Hey chaps, were you not in charge and trumpeting the brave new Irish economy? It even had a name, the Celtic or Gaelic Tiger. Check how shocked and horrified everyone is, Bloomberg: Irish Banks Need $43 Billion on ‘Appalling’ Lending.

Having said all that, the Bank of Ireland ADR’s in New York were up nearly twenty percent yesterday. Sadly on the other side of the equation, a slightly smaller operator, Allied Irish Banks were down over eight percent. Sees. Mixed bag of course, not all banks are in a bad space, some can raise the funds required without breaking a sweat, others, deep discount share issuances.

Staying with this “trading theme” that I have been going on about over the last few days. I think largely raised by the New York Times article last week Friday. Here it is, if you did not get a chance. Again, some very long reading, but worth it, because it speaks to our style which is your style: Day Traders 2.0: Wired, Angry and Loving It. Check it out, as Randy Jackson would say, he might throw in dog there, but that is more a term of endearment rather than the literal dog. I love my dog, even though she wants to escape every time I open the front door.

As you can imagine people in the trader world have been picking this apart. As with the Business Insider, I am just more interested that the day trader is back, because this tells me all I need to know. This time however it IS different. Information is readily available, there are alternative trading instruments like StockTwits that exist. I think that the biggest mistake that folks make is pattern recognition which we are all hard wired to pick up. As a kid learning to talk, math at school, driving, all about patterns. For instance, this is not a tree, but rather a map of the transport systems in Seoul.

Remember that the overall market moves sharply, one way or another and if as a day trader you get it right for a while then I suspect that you think you might have some sort of feel for it. Here is what I think a good response to the story, from a place that I guess covers both trading and investing: Distinguishing Between Professional and Amateur Day Trading. Emotion out of it? Never I think, the trading robots that supposedly can pick up trends that have been programmed by people to understand trends. People trends.

OK, What does Buffett, the dude who has made more money participating in markets, have to say about this? This makes a lot of sense to me, what does it mean for you? Quote:

• The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities — that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future — will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.

New York, New York. A choppy session again, typical when we are in this pre jobs data zone really. First up half a percent, then down one quarter of a percent and ending about flat really, the broader market slightly lower. No real leaders, no real loser, a day that trader types hate I guess. Housing data earlier in the session in the form of Case Shiller home pricing kind of confirmed that house prices have bottomed. Minus 0.7 percent on the whole index, versus a consensus of minus one percent. The only thing with a minus in front of it that I like is cost cutting. That is the only minus that I like. Consumer confidence also rebounded for the month of March, and beating expectations that was “good” news. Good as in nice.

Wall Street wanders. Session end the Dow Jones industrial average had pancaked, up 11 to 10907. At the best level of the day the index was at 10940. The broader market S&P 500 with an even thinner mix, down a fraction, 0.05 points to 1173. The nerds of NASDAQ managed a quarter of a percent gain, 6.33 better to 2410. Yields on the ten year, 3.87 percent.

Commodities, currencies, Drs. Copper and bushveld, pass me the telescope. The oil price, 82.52 Dollars per barrel. The gold price 1108 Dollars per fine ounce. The bush doctor platinum price last at 1642 Dollars per fine ounce, that seems to be on a tear. Dr. Copper, the other more trustworthy doctor at 352 US cents per pound. The Rand last at 7.30 to the US Dollar, 9.84 to the Euro and 11.06 to the Pound Sterling. Pass me the telescope. OK, looking, a bit misty, should be, wait, flat. ADP, can see that on the horizon, that should provide some action later.

Sasha Naryshkine
sasha@vestact.com
www.twitter.com/sashanaryshkine
011 022 5440

It is all Cyrillic to me
30/03/2010

Jozi, Jozi. Yesterday local equity markets opened and coincided with the European and UK opening, again a reminder that cold weather is on the way. Basically shrugging off the Moscow terror attacks as a way of life, this is all too frequent an occurrence. See below, the list of all the incidents in 2009, I can promise you that you will be blown away by how frequent this type of activity occurs. Sad, but true.

Maude Street meanders. Commodity prices were boosted yesterday, leading to the market leaders coming from the resources sector. What a twist. Session end the Jozi all share index added 122 points to 28706, nearly closing at the highs. All the single commodity complex areas strong, oil and gas, gold and platinum. Construction stocks also enjoyed good gains.

We watched Russian TV on one of the tellys for much of the morning. Not because I wanted to do one of my crazy Russian accents, but rather to watch the Moscow subway bombings and how it all unwound. RT was average, but you know, gave us some perspective of what was happening with their reporters on the ground. The bigger question is, after it had been established that 38 souls had lost their lives (never quite sure whether that included the two suicide bombers) in the attack, who did it?

Not the first time that this type of attack on the Muscovites had occurred, one last in 2004. Wow. What a crazy time we live in. But I guess that this has happened through the ages, folks using their own agendas to attack those that are vulnerable, the ordinary folks. Do you think that it will make the ordinary person on the ground more sympathetic to the folks responsible for the attacks? As of yet nobody has claimed responsibility. A new way of terrorists “doing business”?

Well, perhaps not, I dug up all the terrorist incidents last year, depends which side you are on, I guess terrorists will call themselves freedom fighters, but here goes: List of terrorist incidents, 2009. Check down at November 27, 2009, there was an attack on a Russian train travelling between Moscow and St. Petersburg.

The 2009 Nevsky Express bombing. I can’t say that I remember this too well. But there you go, nobody claimed responsibility either. Might be a new way, then you are really unknown, even if folks think they know where you might be from. Perhaps it is better to be invisible.

BHP Billiton finally moving on iron ore pricing. Finally, in my opinion, for what it is worth. The biggest mining company in the world will move a large portion of their customers to shorter term contracts. The WSJ piece: BHP Moves to Short-Term Ore Contracts spells it out pretty well. Again, this is probably a consequence of the Chinese authorities whole involvement in the bribery scandal that rocked Rio Tinto. Leading of course to the sentencing of four Rio employees yesterday.

I noted a very long press conference from the Australian foreign minister yesterday which we watched on the other TV in the morning. Minister Stephen Smith making a few interesting points, which the WSJ has interpreted as The Rules in China. Well written and worth a read here folks, gives a great background on how we got to this point.

The rules have definitely changed, with regards to iron ore pricing. Perhaps this is another sign of the Japanese steel dominance having waned over the last decade, and new entrants such as the South Koreans and Chinese in a serious way. You think? Still, there is a level of secrecy with their respective customers. Plus with the conclusion of these talks it is a reminder if you needed one that the quarter is two days away from ending. Tomorrow being the last day. Read the Bloomberg take: Vale, BHP End Annual Ore Talks; Vale Wins 90 percent Jump

What is the biggest obstruction with one universal iron ore price? Well, my free subscription ran out at the Steel Index and I could not stomach paying around 380 Euros for an annual subscription of a daily price for iron ore, but there guys supply a list for iron ore fines. Iron Ore Reference Prices from the Steel Index.

So many different grades from different parts of the world. But surely the majors should have their contract prices visible and tradable? Because as you can imagine not all oil extracted by the majors is of exactly the same quality? A whole bunch of T-Rex’s versus a whole bunch of Brontosauruses that died in different places in the forest are I guess not exactly the same. Back in the Mesozoic Era. What is more important, are the plants the dinosaurs died amongst. Oil of the past.

What is in a price? The price of your debt that is. Remember now that Greece have to refinance. In a serious way. The Greeks start with seven year bonds being issued today, five billion Euros worth. Just a reminder that the Greek ten year bond yields 6.32 percent. Yowsers, that is expensive payback for the government. As this article Greek Seven-Year Bond Trading May Measure Need for EU Support points out, 35 billion Euros left to raise this year. 18 billion raised so far. The great big fat Greek bond auction begins after the EU backstop.

Unless you speak or can read Greek this is meaningless to me: , but it is the Greek ten year note. This is much more useful, GGGB10YR:IND Greece 10 Year. Best I get all my Greek friends onto this. People with names like Dimitri, or Stavros. It does mean Greek ten year, but the other stuff is meaningless to me sadly. My mother studied ancient Greek but I doubt she can help. Mom?

I thought great, but what do others pay for their debt? For instance California? Or us? Well, I did not have to dig too much, Check out what California does pay: in their bond issuance just last week. Remember what we paid when we issued a Dollar bond not so long ago? Beginning of March, what forgotten already? No worries, this will refresh your memory: South Africa’s $2 Billion 2020 Bond Gains on 1st Day of Trading. So, California various purpose bonds (I don’t know exactly what to think of that) around ten years out yields over 6 and a half percent. South African ten year government debt in Dollars yields around 5.4 percent. I feel a little cheated not to be much better than California, but hey, they are 13 percent of the US economy. Even if their state finances are broken.

Natural gas. Not the kind that your dog produces. Sorry. The real fly on twitter suggests that there are so many regulators that he calls it nat-ve-gas, because of all the speculators. Remember Amaranth? Genius. But wait, the price has been falling as fast as the old Zimbabwe dollar …well, fast. But check this out, from the dudes over at the Business Insider: The U.K. Is About To Run Out Of Natural Gas Storage. Should we care, or is this just another sign?

Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors This is an old paper (April 2000) from the fellows out of Berkeley, but is relevant today as it was back then. Read it, 34 pages, Reminds oneself that the best way to make money is to stay invested. Laszlo Birinyi, not a curry, seems to think that the S&P 500 could top 1325 this year.

New York, New York. Another choppy session on Wall Street, but a winning session for the bulls. A week shortened by holidays, both Christian and Jewish, plus an important read Friday on the jobs front sees relatively little commitment. But having said that, the major indices are closing in on some levels that some monkey technical people market participants think are important. Hey,

Wall Street wanders. Session end the Dow had managed a gain of 45 points to 10895, the nerds of NASDAQ added 9 and a quarter to 2404, whilst the broader market S&P 500 closed up 6 and three quarters to 1173.

Commodities, currencies, Dr. Copper and the bushveld Doctor. The broader commodities complex enjoying a good time as the Dollar weakens from these levels. “Tinks dem Greeksh.” The platinum price, the bush doctor is last at 1626 Dollars per fine ounce. Dr. Copper, the real doctor, 351 US cents per pound last traded. The gold price is/was last at 1111 Dollars per fine ounce. Decomposed organic matter The oil price is last at 82.45 Dollars per barrel. Nat ve-gas last traded at 388 US cents per mmBtu. What? 10,000 million British thermal units (mmBtu). Expect a much better start.

Sasha Naryshkine
sasha@vestact.com
www.twitter.com/sashanaryshkine
011 022 5440

Jozi, Jozi. A nothing sort of day for equity markets in the city founded on dwindling gold reserves, as markets look to a couple of short weeks worth of trade. Easter and Passover this week, at the end of the week however big jobs numbers. Huge. Why, because after the extreme weather of February that put a cap on hiring, this is supposed to be the bounce back and 150 thousand plus jobs positive is what we are supposed to see. Equity markets will be closed when we see that report on Friday, hiding eggs, overindulging. Again.

Maude street moves. Back to Friday, not too much to talk about. Banks under some pressure, down over a percent and a third. Sasol had a good day amongst the majors. The broader resources sector up half a percent. At the end of the session the Jozi all share index had added a mere 0.1 percent, up 28 points to 28583 points. 33192 is where the overall market was on May 20 2008. Over four and a half thousand points to get to the all time high of above thirty three thousand before we reset the clocks.

Talking of resetting clocks, another huge cheer for daylight saving for the Brits and Europeans, we all see the markets open at the same time. The British must have the longest day as far as continuous trade goes, 8 in the morning all the way through to 16:35 and the closing auction. About half an hour longer than us. All trade reporting can take place from 7:15 on the LSE to 17:15. 8:30 to 18:00 here, although normal continuous trade is from 09:00 to 16:50. And there we go, you now have some useless information.

Geely reckons they can make a go of Volvo cars. Otherwise they would not have bought it right? Right, stupid, but right. Normally the buyer shelling out the cash unless the deal is really sweet sees their share price under pressure, but in this case Geely is trading much higher, up as much as five percent, last check they were up over two and a quarter percent in Hong Kong. A big company, not all of it in Hong Kong, but the market cap in Hong Kong is 30.5 billion Hong Kong Dollars. 7.76 is the cross of the Hong Kong Dollar to the US Dollar. 3.93 billion US Dollars.

China’s biggest auto maker will acquire the Swedish brand Volvo cars for 1.8 billion US Dollars. The seller is Ford, the company has a market capitalisation of 46.7 billion US Dollars. Trades on a slightly more demanding multiple. This report from Scotia Capital is useful, Demographic Boom Turning To Bust For North American Auto Sales to see a longer term trend evolving.

See how the Chinese, Indians and Brazilians have all seen their auto sector grow really fast over the last decade, if that same trend were to be kept intact over the next decade then these three countries will be just as important as North America and Western Europe put together. The coming together of the BRIC’s. Plus as the report points out, the developed world are getting old. India could be much bigger than their current share of global vehicle sales. Africa does not even feature. Yet.

For Ford it means that they can delever a little, I am more interested in what it means for Geely. I saw a tweet which summed it up, Geely plan to build two Volvo plants in China and manufacture around 400 thousand vehicles at these two plants in the coming years. Read the full Bloomberg story to get a better understanding of where Geely sees Volvo going: China’s Geely to Buy Ford’s Volvo in Record Deal.

Much bigger though. Much, much bigger and getting a lot less airtime in fact. A Bloomberg piece: PetroChina Plans $60 Billion of Overseas Expansion. As some of the quoted types in the story point out, this is big, this is about PetroChina joining the top tier of oil producers.

Staying in China, the Rio Tinto execs have been found guilty of bribery and sentenced. Stern Hu, who is the only Australian amongst the four, the other three are Chinese nationals, has been sentenced to ten years in prison. This was the company employees who were accepting bribes from Chinese steel mill companies. Although they are disputing the amounts. They being the Rio execs. But it does not matter, 7 to 14 years for the other folks. Again, the point being here that accountability exists in China, where you do wrong, you pay.

But, are the Chinese courts attacking Rio Tinto and singling them out, in the iron ore pricing wars. There is only one way to settle it in my view and that is to have standard iron ore contracts float freely. That way we won’t have archaic price negotiations and the price is what you see in front of you. This however is more than the bribe part, it is about China-Australian relations. And seeing as Australia has a whole lot of what China wants, this seems like a tit-for-tat on the Rio/Chinalco 19.5 billion Dollars failed deal. My cents worth.

I absolutely loved this post. Because it goes directly to the heart of everything that we try and advocate here, work hard, keep your head down, don’t try and be fancy, just keep plugging away and saving money by buying good quality companies. The Business Insider has a piece titled: Here’s What Day Traders Don’t Understand. For me the role of the trader types provides liquidity. Thanks guys.

New York, New York. Sometimes something completely unrelated happens in market times that impact equities, because of where it happened. Between North and South Korea, with a southern navy boat apparently sunk by a northern navy vessel. Fourth quarter GDP was revised lower, but markets took that in their stride. Question, why would the labour department put the release out on a day that equity markets did not trade? Friday? Silly? Who knows, but the department clearly are working on Easter Friday.

Wall Street wanders. After the Korean ship news markets traded way off their highs, the Dow Jones Industrial average closed just 9 points higher to 10850. The nerds of NASDAQ not so lucky, down 2.3 to 2395 points. The broader market S&P 500 marginally higher, less than a point better at 1166 when the bell signed off.

Commodities, currencies, Dr. Copper and the bushveld Doctor. The oil price last traded at 80.65 Dollars per barrel, the price has been amazingly stable. After having experienced a massive move, 90 bucks a barrel in Feb 2008 to 147 bucks a barrel in July 2008 to 35 bucks a barrel in December 2008. What a crazy year for crude prices. Since about October last year the price has been relatively stable. The gold price last traded at 1112 Dollars per fine ounce. Dr. Copper, 347 US cents per pound is where the good doctor last traded. The bushveld doctor, the platinum price, last traded at 1608 Dollars per fine ounce. The Rand is trading much stronger, 7.38 to the US dollar, 11.06 to the Pound and 9.95 to the Euro. Expect a much better start.

Sasha Naryshkine
sasha@vestact.com
www.twitter.com/sashanaryshkine
011 022 5440

Jozi, Jozi. Thanks to Marcus, the only true ruler of the Reserve Bank, and the overseer of all the notes in your wallet we got a late afternoon pop. And on the day that we all spotted a Marcus signature on an Ndlovu, passing it around, admiring her neat signature. An Ndlovu being the twenty buck note, you know elephant, get with the program. And there was a good enough jobs read from the US, which bucked the recent snow filled and fuzzy weekly jobless filings to boost the US futures up and away. And that helped us towards the end of the day too.

Maude street moves. OK, we closed at 28555 on the Jozi all share index, up 153 points. Resources were strong. General Retailers were up within a whisker of two percent. Sasol had a good showing, the Rand weakened a little after the surprise rates moves from the MPC. MTN got crushed, see that further down.

Marcus, the only true ruler of the Reserve Bank, and the overseer of all the notes in your wallet. What a tweeeest. 2010-03-25: Statement of the Monetary Policy Committee. After the meeting I think that it was Miriam Isa from BusinessDay who asked whether the decision was unanimous, Marcus said yes it was, even though there was robust debate.

OK, so 21 out of 24 sheep economists got it wrong, which lead to much sniggering amongst brokers and the public alike, tough job that, like trying to hit a moving target. With a bow and arrow set. But you can see in the message from the official release the reasoning behind it. What is not said and would not be is that perhaps there was a little more political pressure in cutting rates to the lowest level since 1981. OK, so fixed income becomes less attractive, for foreigners too, who are currently getting a pittance on their local government debt. Searching for yield, it closes the gap a little, but helps the consumer. Who is seemingly starved for credit.

MTN mashed. Whoa. MTN took some serious tap yesterday. The official line will be that Bharti and Zain have all but concluded their deal. And of course now Bharti will be competing head on with MTN in Nigeria. 6 months is a lot in the world of telecommunications nowadays. I have a different take on it, you know that MTN have moved aggressively into Africa and paid outrageous prices ten years ago. These have turned out to be amazing and very smart licence purchases now. The African population is going to double in the next forty years. And if the continents economy grows comfortably ahead of the developed world from a low base, that still makes the place very attractive.

The headlines vary, but here are a grouping, Bloomberg runs with this one: Mittal’s Zain Deal Pits MTN Against Former Suitor and this one from closer to home for the fellows over at Bharti, the Telegraph in Calcutta Bharti-MTN tussle on cards.

Massmart downgraded by formerly the US government Bank of America Merrill Lynch. BoFA ML. Jumble that around a little, the FAL MoB. Whatever, the analyst 12 month price target moves up to nearly 99 bucks, the stock trades 9 bucks higher than that. Does it mean anything other than someones 12 month price target is above where they suspect the stock ought to trade. That tells me about all I need to know, the time frames for owning the stock are way too short. Five years time, well nobody is going to give you that sort of view, that is just way too hard.

If you think that black box retailers are going to eat away high street even more, then these companies are for you. Paul and I were interviewed yesterday by the fellows over at BusinessDay, I had some rude things to say about BoFA, sorry. Massmart on the cut. I was wrong, BoFA are going to pay back the TARP money, so not a US owned entity anymore.

Drive by economics. This was a great observation. Byron has a mate whose family owns a factory that produces nozzles for aerosol cans. You know, the little thing on the top of the mechanism that dispenses from the actual can. Byron tells me how this mate of his tells him that during the recession they did much better than in the boom times. Reason? Well, in the downscaling from consumers, folks would shift to smaller cans of deodorant, spray and cook and the like. But a nozzle is still a nozzle and does not change in size as the can gets smaller. Interesting aint it?

The big fat nothing other than a backstop for Greece. Lots of uncertainty, in fact the Chinese deputy reserve bank governor echoed my thoughts, there is no real plan for Greece to deal with their debt. Really. There are commitments and promises and pledges, but to get serious you are going to have to irritate your electorate to the point where governments are elected on agendas other than great austerity. Any chance of the communists making headway at the next elections. You bet.

China adding their view on Greece, kicking the Euro whilst it was down. This was a speech from the deputy governor of the Chinese Reserve Bank, Zhu Min. What a cool name. Zoomin’ Zhu Min. He kind of has been saying what everyone does not want to think about, that Greece is just one of the issues, there is still Spain, Portugal, Italy and Ireland. Check out Zhu Min’s comments from this WSJ article: Chinese Banker Faults Greece Efforts The Irish seem to have disappeared for the time being. Plus the UK have serious problems too. And the US? Check this out, alarmist and probably designed by some gold bull, the giveaway is the gold tab at the bottom. US debt clock, sent to me by a happy client, thanks so much.

So here is the deal that the EU has agreed to on Greece. Thursday night late an agreement reached. The FT reports: Eurozone agrees to Greek rescue deal. Much excitement over very little to be perfectly honest, that is what I think. Some good points made by Angela Merkel, the German Chancellor, who said that Greece could do more. Excuse the source, but here are a list of Greek islands, according to the Pub Quiz. Sell a few of these to Roman Abramovich and the like. Solve sovereign debt with sovereign assets?

New York, New York. Boom. The bears woke up in the last thirty minutes. The official reason will undoubtedly be attributed to, at the time when New York signed off, no resolution of the Greece debt situation. Which in reality has still not been resolved. Because now the public really have to suck it up. Oh, and the small matter that Dubai World managed to refinance their debt. Best Buy crushed earnings consensus. So markets were flying and at multi month highs before the sellers stepped in en masse to crush them in the closing phase of the markets. A surging Dollar put the cap on.

Wall Street moves. Session end the Dow closed at 10841, up five points, having reached 10955, a 52 week high, earlier. At 13:28 NY time. The S&P 500 lost nearly two points to close up shop at 1165, whilst the nerds of NASDAQ was nearly unchanged, down just a touch, 1.35 points in the red to 2397. Only 2735 off the all time high.

Commodities, currencies, Dr. Copper and the bushveld Doctor. Dr. Copper last at 339 US cents a pound, higher in the session. The gold price last at 1096 USD per fine ounce. The bush doctor, platinum, the price last crossed at 1605 Dollars per fine ounce. The oil price is trading slightly higher at 81.1 Dollars per barrel. The Rand was little moved at last look, 11.04 to the Pound Sterling. 9.94 to the Euro. A mixed start.

Sasha Naryshkine
sasha@vestact.com
www.twitter.com/sashanaryshkine
011 022 5440

Jozi, Jozi. We were doing well, having made back some of the losses in the previous session, and then Fitch weighed in with a downgrade of Portuguese debt. This is not just pickled fish or oily sausage we are talking about here, (sarcasm begins)this is Fitch we are talking about. Remember Fitch, the credit rating agency that triple A’ed collectives of wooden houses on the banks of the Mississippi river, owned by people in string vests? (/sarcasm ends) That Fitch. We have to take the ratings agencies seriously, but I am still struggling with that.

Maude street moves. for those of you who have never seen the JSE building, it is sort of on the corner of Maude and Gwen lanes. Hence Maude street moves. Exchange square, entrance on Gwen lane. So perhaps Gwen lane gyrations is more apt. Back to the markets, no big movers either way or the other, the overall Jozi index down 49 points to 28401. Mixed, banks, resources, industrials all down a little. Construction stocks up, starting to find value? Who knows? Lots of uncertainties around the sector.

Marcus, the only true ruler of the Reserve Bank, and the overseer of all the notes in your wallet. Although I am still to see a note signed off by the “new” governor of the South African Reserve Bank. Newish. OK, so Governor Marcus and the Monetary Policy committee wrap up their two day meeting today and expectations from economised again economists is for no change.

Although the MPC does have some fodder, in the form of CPI back in the band. Yesterday the official CPI release from Stats SA for February 2010 showed that inflation had come back into the zone again. I heard a wireless interview on the Chris Gibbons show on 702 with Dennis Dykes, Nedbank chief economist who said that rates would probably remain unchanged all the way through this year.

As per the 702 website: …The figures are almost exactly as forecast by a Reuters poll of economists last week. Nebank’s chief economist told the MR that the numbers are pretty much in line with consensus and with what he thinks the Reserve Bank expected, so no real surprises. He thinks the dip below 6% will probably remain for the rest of the year. He thinks the Reserve Bank could cut interest rates, but it will be a close call and will probably remain stable.

So you mean that there is a chance? To quote the classic movie Dumb and Dumber. What you mean? It IS a classic. Jeff Daniels best work. OK, back to that official Stats SA release, food prices going backwards: largely driven by monthly decreases in fruit (-3,2%), vegetables (-1,6%), meat (-0,7%), bread and cereals (-0,3%), milk, eggs and cheese (-0,3%), oils and fats (-0,3%), other food (-0,3%) and fish (-0,2%). These decreases were counteracted by monthly increases in cold beverages (2,9%) and hot beverages (0,1%).

Take a look at Table E in the Stats SA release there is a table of items line by line. As per their weighting in the overall picture. Electricity and other fuels contributes only 1.87 percent. But was up 24.1 percent over the year. Tobacco up 14.9 percent over the last year, thanks to increased taxes, contributes more to the overall basket weighting with 2.29 percent. The one I found most interesting, perhaps linked to the price of the soft commodities, tea and coffee, Hot beverages up 11.6 percent, don’t worry that only contributes 0.34 percent overall.

Sweet. If you were long that is. Sugar of course. Remember that the Sugar price was down seven percent in the previous trading session, last night the Sugar number 11′s were up 6.64 percent to 17.67 US cents per pound. Is that a lot? Not too sure. What I did notice is that our sugar stocks at the open hardly moved, even though the sugar price had plunged the session prior to that. I am sure that you could have offset that with a Coffee C’s purchase. The C’s being the quoted contract.

Staying with sugar and diabetes. A Bloomberg slash BusinessWeek story has the following headline that tells you all you need to know, the bad things about an emerging middle class: China Tops India on World Diabetes Ladder as Boom Spurs Obesity. The challenges? Many. Solving it? Not so easy. Higher lifestyle taxes in the future? Probably.

UK budget day. I have this tendency to interact with one way media, TV and radio program get my feedback. Which of course never reaches them, as you can imagine. But I do it anyhow, it probably irritates my wife, colleagues and mates, but I do it anyhow. The UK budget was no exception yesterday, most of my fury was directed at the business cable networks for eating into my US market preview, instead I had to watch hairy eyebrows Alistair Darling deliver the UK budget.

The Brits have this amazing parliamentary system with lots of jeering and paper waving, I am sure it is an art that you don’t just learn, you feel it as a member. So labour delivered their last budget before the elections, which are set to take place early May, according to those predictors of election timing.

What do you think Alistair Darling’s wife calls him? Darling, wont you come here. OK, I know what the opposition wanted to call him yesterday, words that can’t be repeated. Darling was a young communist of sorts, did you know that? But when are we getting to the juicy parts? The global bank tax I thought was more than a little short sighted and nothing more than a political move. At the same time, the labour government wants to force the banks under their control to lend more.

Taxes on the rich and the breaking point. I am getting the sense that top earners around the world are getting more than a little edgy. This was a Liz Claman tweet, she is a Fox business anchor, US context, but you get the point: Met 2 guys here who recently established residency in Utah. Left CA due 2 such high taxes. Same thing happening in NY. Politicians take note. Food for thought? Sure.

So what did the UK budget actually deliver? Well, the right mix according to the WSJ: U.K. Budget Holds Few Trims. The only big surprise was in the form of lower than expected deficit, however as this Economist (yes we still read that) article points out, there is little to cheer: Sparing the knife – An intensely political budget merely tinkered around the edges of Britain’s fiscal problems

US and Chinese currency sabre rattling. Hot words backwards and forwards between the Chinese and US over what the real level of where the currency should trade. Not pronounced the “won”, but rather the “You-on”. Read what the FT have to say on it, if you don’t have a subscription, don’t worry, sign up for the free version. China rejects US complaints on currency.

Methinks this all boils down to manufacturing. The Chinese labour pool is seemingly infinite and more productive than anyone else, perhaps the Indians could compete. How do we even compete as far away as we are from China? There again is outrage that cheap imports for the World Cup are hampering local manufacturing. Whose fault is that? I don’t know and I DO care. Realistically can we compete?

This is very old, but an IMF paper I found on the internet spells it out pretty well for me: In 1978, after years of state control of all productive assets, the government of China embarked on a major program of economic reform. In an effort to awaken a dormant economic giant, it encouraged the formation of rural enterprises and private businesses, liberalized foreign trade and investment, relaxed state control over some prices, and invested in industrial production and the education of its workforce. By nearly all accounts, the strategy has worked spectacularly.

See that, state relinquishing control and turning it over to private business. The opposite of what we are doing here. Truthfully. If you work for a state enterprise what is the downside? And that goes back to accountability, a very good article written by Pierre de Vos yesterday: What we talk about when we talk about accountability. I am not saying it is right, in fact I think that it is barbaric, but remember accountability in China is something completely different than it is here.

Baby milk powder that killed infants? Death penalty. Graft? Check this out: China referees arrested over graft. I am not saying it is right, but these fellows could face a different kind of penalty, death. Not right in my opinion, but at a whole new level. And you can bet tender riggers and backhanding is done with sweatier palms. Just saying.

New York, New York. It was those debt issues and the PIIGS that weighed on markets. Greece still greasy. Portugal debt still portly. Where does the UK fit into the PIIGS, bearing in mind that their deficit is worse than all of those? PIIGS yUcK? The Dollar powered ahead as the Euro floundered, not lending much help to commodities and in particular the gold price. Errr… I thought crises such as sovereign debt were supposed to see a flight to quality?

Housing data, the headlines will all read as follows: New home sales at an all time low. 308 thousand in Feb. That sounds like quite a lot of new houses to me, but since data has been kept, that is the lowest level. 308 thousand as is to 308 million people in the US, around 0.1 percent of the population bought new houses in February.

How does this compare to the local data? As luck would have it, there was January 2010 release from Stats SA last week: Selected building statistics of the private sector as reported by local government institutions. Table 9 is revealing. It suggests a whole lot of things, but I added up the number of residential dwellings, which are categorized as follows: Dwelling-houses smaller than 80 square Metres (898 approved in Jan 2010), Dwelling-houses equal to or greater than 80 square metres (930 approved in Jan 2010), Flats and townhouses (655 approved in Jan 2010) . That adds up to way too few houses approved. Or am I wrong?

Wall Street moves. Choppy. Session end the Dow had given up 52 points to 10836, the nerds of NASDAQ down 16 to 2398 whilst the broader market S&P 500 closed down six and a half to 1167.

Commodities, currencies, Dr. Copper and the bushveld Doctor. Dr. Copper last at 334 US cents per pound. Gold price last at 1091 USD per fine ounce. Platinum price 1579 USD per fine ounce. Bush doctor. The Rand, slightly weaker, 11 exactly to the Pound, 7.37 to the USD and 9.84 to the Euro. Expect a mixed to nothing start here.

Sasha Naryshkine
sasha@vestact.com
www.twitter.com/sashanaryshkine
011 022 5440

Jozi, Jozi. I cannot tell a lie, yesterday morning and yesterday afternoon I had little time to check out markets. There was a hectic morning of sightseeing in Cape Town before catching our delayed flight back to Jozi. So everything I saw about the markets was either on twitter or on my Bloomberg application on my smart phone. Neat hey? I saw a most stunning Cape Town from the top of Table Mountain with the first cable car up. We had a first take breakfast which was average, but with the best view ever.

Down the mountain, a little visit around the waterfront, Percy Montgomery was a real gentleman, held doors and lifts open for my family. My wife said she recognized him, who was he? Then the real highlight, saw Larry Ellison’s yacht, oh he of Oracle fame. This is a boat and a half. Some dude at the top of Table Mountain told me that the chef on board was a good friend and even pointed the small liner out sailing into the waterfront.

I said isn’t Roman Abromavich’s boat bigger, he said no. Turns out that I am right, if you believe everything you read on Wiki – List of motor yachts by length. I took a couple of pics and posted them on twitter, nothing great. Here is a website devoted to the Ellison boat, sailing nerds you know: The Motor Yacht Rising Sun Fan Site.

OK, but back at the coal face, there were, ummmmm, there was a whole lot or errr… oh well, when publications (other than Bloomberg where the word is prohibited) don’t know what to say, the report will read, “there was profit taking today as markets ended lower…” Yech, I can’t stomach that phrase either, because when markets go up, are those reverse profit takers? Markets ended lower after having been comfortably in the green in the first half of the session. After all was said and done and I was landing, the Jozi all share index had given up one third of a percent or 93 points to 28451.

Eksdom I mean Eskom. One of the main stories in (or is it on?) the BusinessDay website this morning is that Pravin Gordhan is pleading with the World Bank to give the 3.75 billion ZAR loan to the state entity. He makes some good points. But. Byron has a mate who works for the power utility. They still subsidise lunches. He can get a full lunch for the princely sum of five bucks? How can that be right, the consumer must cough up, but internal costs are not cut aggressively. I just use this one example, I am sure like in many state enterprises that there are too many.

Kumba Iron Ore, Arcelor Mittal, this looks messy. Very messy. Arcelor Mittal down four percent yesterday as the contract situation is as of yet unresolved. Not resolved. Nothing. No clarity. So what do “investors” do when there is no clarity? They sell. And now it emerges that the mining rights, the ones that Arcelor Mittal failed to renew, have been granted to a company with connections to the ruling party. Stop for a minute here, if nearly two thirds of people vote for the ruling party, then surely lots of business and political interests cross swords? Clearly this is not something that just happens here. It seems that out of court talks are underway right now. Watch.

A whole host of releases from the South African Reserve Bank yesterday. Wow. A whole 60 odd years worth of national accounts. Isnt that amazing. South Africa’s national accounts 1946 – 2009: An overview of sources and methods. Check out some of the interesting tables in this whopper and let me know what you think. The one that struck me is that although we agonise about household debt to disposable income ratio, that has always been high. And when credit started to become a reality for many middle income earners, it ballooned.

Another hedge fund being fingered for insider trading. Although that is not fair, but that is how the headline will read. It is not so much the hedge fund clients that benefitted from being inside the fund, rather someone who works for them. An waiter execution dealer has been served. And not with a plate of pasta, rather a search warrant. Read the story at the Business Insider: Arrests Made After Major Insider Trading Raid At Mega Hedge Fund Moore Capital. Seems early stages of what will be very messy.

Not so sweet. Sugar prices have been absolutely decimated. Depends of course where you draw your line in the sand. Would you believe that production is going to be much better than folks anticipated. As Brazil harvests a larger than expected crop. The price was down seven percent in heavy trade last evening. Probably as farmers planted a lot, in anticipation of higher prices. Since the top was hit in early Feb (can that be possible) the price is off over 40 percent. Still, the price is comfortably above the 13 US cents a pound price around September 2008. 16.6 US cents a pound now. Don’t know, do care. South African listed sugar stocks: Illovo, Tongaat Hulett, Crookes Brothers.

Those red aeroplanes, 1time. Cool brand, they have done well, it must be tough though. You can Google a whole host of airlines that are no longer. It always seems to me anyhow that people scour internet websites for the best deals, just to save a few bucks. Fuel prices fluctuate. Staff, because of the high quality needed, is expensive. You have to have the highest standards at the least possible price to the end user.

For 1time the business luckily has a *nice* maintenance business, which has expanded significantly during the last financial year. In a South African context Comair have operated wonderfully over the years. Methinks that the key is Sub Saharan Africa. Recent routes to Livingstone and soon Maputo will be key. Because the base is still so very low.

New York, New York. The shorts losing their pants and everything else in-between. A late move after everyone was unable in their own markets to react, much of the move north came in the second part of the session. I still can’t get my head around that the spot market in New York is ONLY open from 9:30 am to 4:00 pm local time. In pure minutes traded we do another 150 minutes a day.

It was for some part of the session about Greece and their bailout again. Who will help. (Sarcastic starts) If only those speculators were not driving up the cost of money for Greece, everything would be so much better. (/sarcastic ends) If only Greece had their finances in order over the last decade and had disclosed their financial positions properly, then everything would be OK. That part not sarcastic.

There was some data that was better, in the form of housing data, there was testimony by Tim Geithner on housing itself. The blogosphere did not like the fact that government were all hands on in the housing arena, the bloggers (lets make them all treasury secretary) were expecting government to be letting go. It seems a right royal mess, the government’s involvement with housing, thanks FDR. I don’t read any much good news about Fannie and Freddie.

Wall Street moves. Session end the Dow Jones industrials had added nearly 103 points to 10888, the nerds of NASDAQ nearly 20 points better to 2415, whilst the broader market S&P 500 added 8.36 to 1174.

Commodities and currencies. The oil price last ticked through at 81.12 Dollars per barrel. The gold price last crossed the screens at 1099 Dollars per fine ounce. Platinum, the price thereof, at 1601 Dollars per fine ounce, that is the Bush Doctor. The real Dr. being Dr. Copper was last at 340 US cents a pound. The Rand is still strong, 10.99 to the Pound Sterling, 7.34 to the US dollar and 9.85 to the Euro. Expect a better start here, on account of a late move on Wall Street.

Sasha Naryshkine
sasha@vestact.com
www.twitter.com/sashanaryshkine
011 022 5440

Jozi, Jozi. We closed near the lows of the day yesterday, the Jozi all share index gave up 230 points to close at 28033. Losers across the board, the gold miners having a tough time, down one and a half percent. The very most exciting thing that happened yesterday was the switch over of US time, an hour forward which meant that we got an extra hour of trading. Which is nothing short of very awesome. The UK clicks over this weekend I think, which is great, because that means that the first hour is not “dead space”. The best thing about knowing that winter is coming.

Not new news, regarding the wheat milling price fixing issue, but relevant nonetheless. The competitions authorities as per their website: … subsequent to its investigation into collusion in the wheat milling market, has referred its findings to the Competition Tribunal against Pioneer Foods (Pty) Limited (“Pioneer”), Foodcorp (Pty) Limited trading as Ruto Mills (“Foodcorp”), Godrich Milling (Pty) Limited (“Godrich”), Premier Foods (Pty) Ltd (“Premier Foods”) and Tiger Brands Ltd (“Tiger Brands”). Not cool.

Not a very long document by any stretch and a little light on details, here is the full release from their website: Wheat milling cartel referred for prosecution.

What is section 25 of the constitution and dealing with land specifically? Well that is section 25 of the constitution of South Africa, finalised back in 1996. Read the section, wont take you longer than a minute. I am not too sure what needs to be amended, but apparently it has to do with declaring agricultural land a national asset. Sounds like an old European concept, renting land from the lord government.

The Times has a piece suggesting that opposition parties will oppose the land proposals: Parties vow to oppose land proposals. I am guessing that not many people have read the Green paper yet, and the Department of Rural Development and Land Reform has little info, as far as I can see. Wow, I thought it was just me, but I checked in three browsers and the website is rubbish ordinary. I hope the department did not pay 10 million bucks for this beauty.

Any land issue is a tough one, it is a very emotional one. We should focus more on the practicality of it all. Feeding the nation at the cheapest possible rate, is that what we are looking for? And are we not trying to invent something new, when we should be looking at *land for food* programs elsewhere in the world. Small scale? I really don’t know the answer. Anyone? What we often miss is that we have large tracts of farming area that does not compare with Mozambique, Malawi, even Zimbabwe. Our land is simply not as arable.

Read what others have to say and make up your own mind. From the Business Day: Farmers furious at ‘national asset’ threat to land rights. Fin24 have this take on the matter: New focus put on land reform. And then one of my favourites, a fellow called Pierre de Vos, called Don’t blame the Constitution. A Business Report article suggests that there might be an overreaction: No land grab intended says rural development official.

We often hear about oil running out, and it will happen. But (you can’t start a sentence with but, but…) one that we hear about and pay little attention too is water running out. After all, we have desalinisation plants, one of our favourites in New York, General Electric with their GE Power & Water is a big operator.

The Business Insider reviews an interesting piece as their lead. It changes all the time you see, like the interwebs. It is titled: Matthew Simmons’ Awesome Presentation On The Coming Oil & Water Shortage. That comment from Jeff Immelt still sticks in my mind, that alternative energy will become the single biggest theme of this century. Yip, and this slideshow is a reminder.

For every winning trade, there is someone on the opposite end, not so? If someone did not sell MTN at ten bucks seven or so years ago, then it would have been at and around 120 bucks today. Not so? That is what makes a market though, for every seller there is a buyer. Remember the rich list? I was wondering that there must have been lots of people inside of that list who actually went backwards, and my suspicions were confirmed by this: The 67 Bonehead Billionaires Who Managed To Lose Money In 2009. Only interesting because of the trends, where these guys were invested.

New York, New York. A bathtub is not bad if it is a graphical representation of Wall Street last night. Deep in the middle and shallow on the sides. Decent enough economic data for the Fed to digest before their statements later today. Industrial production and capacity utilization (what?) better than anticipated, the report for both released at the same time. A graphical representation of production and capacity, which can be found here: suggests a strong bounce back. The longer term trend however is what we do know, manufacturing in the US has also been declining. Got that Minister Davies and Patel? Not just us.

Capacity utilization explained by the dudes over at Briefing.com: In addition to production, this monthly report also provides a measure of capacity utilization. Though the rate of capacity utilization is seen as a critical gauge of the slack available in the economy, the market does not completely trust this measure. Capacity is very difficult to measure, and the Fed essentially assumes that growth in capacity in any given year follows a straight line. One can therefore predict the capacity utilization rate quite accurately based on the assumption for production growth. The 85% mark is seen as a key barrier over which inflationary pressures are generated, but given revisions to these data and the difficulties with capacity measurement, the 85% mark should be viewed cautiously. It would be appropriate to look for corroborating inflation indications from commodity prices and vendor deliveries.

From the same source, Briefing.com, Industrial Production is defined: The index of Industrial Production is a fixed-weight measure of the physical output of the nation’s factories, mines, and utilities. Manufacturing production, the largest component of the total, can be accurately predicted using total manufacturing hours worked from the employment report. One of the bigger wildcards in this report is utility production, which can be quite volatile due to swings in the weather. Severe hot or cold spells can boost production as increased heating/cooling needs drive utility production up.

Session end the Dow managed to climb back into the green, adding 17 points to 10642, the nerds of NASDAQ fell just short of the winning column, losing 5 points to 2362. The broader market S&P 500 added a marginal half a point to 1150. Energy stocks weighing heavy as the crude price slipped.

Commodities and currencies. The oil price has slipped below the 80 bucks mark, last at 79.51 Dollars per barrel. The metals part of the commodities complex looking a little better at 1111 Dollars per fine ounce. The copper price last at 334 US cents per pound. The platinum price is better at 1625 Dollars per fine ounce. The Rand is steady at 7.40 to the Us Dollar, 11.14 to the Pound Sterling, 10.13 to the Euro. Expect a better start.

Sasha Naryshkine
sasha@vestact.com
www.twitter.com/sashanaryshkine
011 022 5440

Jozi, Jozi. A late afternoon surprise in the form of US retail sales that looked much better than anticipated. We were pretty much up and away left to right on the graphic, resources leading the market higher. Underperforming but comfortably up for the day were industrials. General retailers were slightly lower on the day, wow that sector has run hard, up 15 percent for the year so far. Banks not too far behind, up just over 9 percent this year. I suppose the fairly benign inflation reads plus a firmer Rand has caused the outlook to be favourable for rates. Session end the Jozi all share index closed at 28262, up 350 points.

ATM withdrawals and what they tell you. I saw in the weekend paper references to something called the Spark Cash Index. It was one of the few curious pieces that caught my eye. I found it here: Release version: February 2010. From the Spark website, the company is relatively new and is at the forefront of providing convenience ATM’s, I am figuring the ones at filling stations, convenience stores, those types of locations.

OK, back to that cash index for Feb, the higher withdrawal by 8.26 percent in Feb when measured against Feb 2009 suggests as per the report:

• 1. Renewed consumer confidence which results in higher withdrawals and therefore spending,
• 2. Increased retail sales across relevant retail segments that host our ATMs,
• 3. Higher inflation over the past 18 months resulting in an increased cost for the average basket of goods, and
• 4. Lower interest rates resulting in increased disposable income for the average South African household.

If you look at the CPI inflation release by StatsSA for January you can see that there is almost an inverse relationship here. The lower CPI ticks, the higher the withdrawals. Although that is a slightly “stupid” observation. You would think that over time as inflation was heating up that people would withdraw more? But obviously with the lower rates and as food inflation is falling, consumers have more real disposable income in their pockets. Hence the higher ATM withdrawals as a consequence.

OK, so what do you make of PIC chief Brian Molefe not renewing his contract? If anything at all? You know my first suspicions were echoed in a telephone call later on in the afternoon when I asked: Do you think that some interference from Ebrahim Patel were one of the reasons? And the answer came back: You know Sasha, those were my first suspicions too.

Do you think it was a coincidence that both of us immediately thought the same thing at the same time? Because (and I know you can’t start a sentence with because) recently the stories about the state wanting to borrow five percent of pension funds to fund development. Of course pay back pension funds in time. Ebrahim Patel, minister of economic development, I dont know what to think.

So I found a slideshow for the ministry of economic development, not even a year old, to see what their actual job was:

The new Department is part of a new configuration of government that centres on the four inter-connected areas of policy-development, planning, effective implementation and continuous monitoring and evaluation.

What does that actually mean? Did anyone read Rob Davies, Department of trade and industry’s document 18 February: 2010/11 – 2012/13 Industrial Policy Action Plan. I am always amazed with this obsession over the manufacturing part of our economy. Is it just a case of that we can’t compete simply because our labour is not competitive enough. That is the same for most places around the world, not just here. You cant compete against a folks that sleep under their desk and take pride in their work with the least possible pay. Can you? Short answer: No. Currency manipulation, phew, a fight brewing between the US and China on that score.

What about tourism? Well, you get the sense that we take that so seriously that we stick environmental affairs with that portfolio. Sarcastic strike one. There is a fairly detailed overview of how tourism can create jobs, in the same econbomic report, but not enough in my view. You don’t have to build your environment. It is there already. My sense is that we should work with what we have. The Chinese, the Vietnamese, with all their natural beauty can’t replicate the Kruger, or Namaqualand, or Cape Point, the Wild Coast. St Lucia. Every province in South Africa is blessed with natural beauty. More emphasis here please. Not just five pages in the report.

OK, so that still does not answer our question, whether or not Molefe was pushed, the situation became untenable, he was a Mbeki guy, that sort of thing. Not a president Jacob Zuma guy. That sort of thing. I don’t know the answer, but I *do* care.

More reports. The Lehman Brothers bankruptcy report. I am guessing that there are very few people who have read through the entire 2292 page that was released by Anton Valukas (and his team) last week. And my suspicions were confirmed, when I found a copy on possibly the most underutilised web tool, Scribd. Here it is if you have twenty days to spare: Lehman Brothers Chapter 11 filing report. Thanks Zero Hedge. So I guess if you were in any way wondering what he and his team had been doing since January 2009, then now you know. Les Miserables, published back in 1862 was 1779 pages. War and Peace is around 1400 pages in a paperback, as per an Amazon reference. So 2292 pages is a monster report.

There is a South African connection here to Lehman Brothers. The last CFO before the bank blew up, imploded filed for bankruptcy was educated at Wits. The fellow in question has had a great CV, his name is Ian Lowitt. And granted that he took over as the bank’s CFO in July 2008, he had something dreadful facing him, he is not off the hook. The report does find him and the previous two CFO’s responsible, along with chief Dick Fuld.

Near the heart of the report lies something called Repo 105. Dylan Ratigan (not my favourite guy) did a simple piece of trying to explain what was going on with none other than Elliot Spitzer on his show on MSNBC. On of course the Dylan Ratigan show. Check out the clip, it is only (a long time on the interwebs) 11 minutes, but that is infinitely better than reading 2292 pages. I am not sure I agree with Ratigan using the steal word. This is going to become a highly charged piece and suggests that the auditor was also at fault. Yech, expect more in the coming days on this one.

Here is the FT editorial from Friday night. The lesson from Lehman’s failure. And of course the conclusion points to much needed financial regulation. Because ultimately everyone was to blame. The borrowers who fudged their income. The lenders who did not do their checks and balances. The regulators and law makers who let this pass them by. Instead of trying to figure out who did it, all parties must find it in themselves to accept responsibility for the blame. Having said that however, this looks like some serious banking regulation has more than enough fodder to convince law makers to act soon.

Ready to do a deal. Net-a-Porter to be bought by Richemont. Or so says UK Sunday papers. Richemont already own nearly one third of the business, so they would be looking for the balance, which includes the founder. It is interesting to me that Richemont are moving towards high end branded fashion. Or have been, this is a portal. I like these businesses. What do you think it really takes to make a pair of Jimmy Choo’s? The end customer pays 300 to 800 Pound Sterling for a pair. But what does it really cost to make? What we think we know, is that the deal could be worth 350 million Pounds. That part we think we know.

New York, New York. A nothing day Friday, notwithstanding much better than expected retail sales. Not by a whole lot, but showing that consumers braved the snow was enough to see futures turn green. Stocks ended near the top end of the days trade, having traded at the lows of the session at the get go. The Dow closed 12.85 points in the green to 10624, whilst the broader market S&P 500 lost a quarter of a point to 1149. Point 99. 1149.99. The nerds of NASDAQ lost 0.8 to 2367.

Commodities and the Looney tuning the Dollar. The oil price last crossed the wires at 81.95 Dollars per barrel. The gold price seems to be on the back foot, 1101 Dollars per barrel. The platinum price (the Bush Doctor) is currently 1605 Dollars per fine ounce. Dr. Copper at 336 US cents per pound. 30 day LME stocks down three percent in as many weeks. Or so the graphic tells me. The Rand, 7.40 to the US Dollar. 11.24 to the Pound Sterling. 10.16 to the Euro. Nearly Looney parity, last happened September 2007, when the Canadian Dollar and the US Dollar were the same. Nearly back at those levels. It is a big week. Local retail sales. In the US, CPI, PPI, housing starts, building permits, capacity utilization. Leading indicators.

Another big event this week: my birthday Friday. The family and I going to see my folks in the Klein Karoo. I should tweet along the way, some drive-by economics from Cape Town to the middle of somewhere for some.

Sasha Naryshkine
sasha@vestact.com
www.twitter.com/sashanaryshkine
011 022 5440

Jozi, Jozi. We ended off the session at the worst point for the day, in large part no thanks to the fact that the fellows out (the) state(s)side were opening up lower. We only get a paltry half an hour worth of real trade, I am so looking forward to the daylight savings shift. I thought it was supposed to have happened already? Ah well. It was resource stocks that took a bashing as investors market participants decided to sell down the market with concerns of Chinese PPI data running hot. Session end the Jozi all share index closed at 27944, down 176 points.

MTN reaction to their results yesterday were what you would expect. I guess. But this is the one point that I wanted to get across. The Nigerian Naira weakened from about 118 Naira to the US Dollar to 150 last year. Decreased around 30 percent during the year. The Rand to the US Dollar firmed over thirty percent last year.

The Nigerian local unit revenue growth was thirty percent. But in Rand terms, there was a double whammy, the Rand strengthening to the Dollar and the Naira weakening to the Dollar. That is the one point that must be stressed. Notwithstanding that from a very important part of the business, overall sales grew around ten percent. An important point not stressed enough. Paul has written up a piece on MTN and the broader technology and telecoms space that we will mail out later. The price has sold off, so my sense is that short term folks might be disappointed. The company suggested that they could add 20 million subscribers this year to 136 million subscribers.

Mesofacts. Rod had one yesterday and sent it to me, it is about motor vehicles on the road in Gauteng:

Cars on our roads, that’s a good one. In 2008 there were 533,387 new vehicles sold onto our roads. That is 44,450 per month. I reckon at least 65% of those were sold in Gauteng (perhaps 70% is feasible but I am not a NAMSA subscriber so don’t get their monthly regional breakdown. But someone in your network must….) Anyone have these numbers?

Rod carries on … At 65% that was 28,900 shiny new ones per month, with immaterial scrapping from the rolling stock. In 2009 the sales were less than 400,000, so about 30,000 per month nationally and roughly another 20,000 a month in Gauteng. So as everyone cheers for improving car sales, watch the brand new highways become instant parking lots, just bigger than before.

Summary: in 2008, 28,900 per month meant 347,000 for the year in Gauteng; in 2009 20,000 p.m. and another 240,000 for the year. Almost 600,000 in Gauteng over the past 2 years. At an average length of 5m (including a bit of space between these shiny beasts) that is a 3,000km queue (so you can line them up to Cape Town and back!!). And I know you are curious about where to park them: they need a single storey car park of 750 hectares tight packed and excluding circulation space, which is probably in the region of another 60%, so actually 1,200 hectares.

Thanks Rod, that is great. Keep them coming everybody.

This is awesome, it is an article about what it means for the US that China is this rising star. The article is titled: China’s Economic Rise Is Truly Glorious. Some of the small facts, like in 1978 there were only 15 skyscrapers in Shanghai, now there are around 3800 are truly remarkable. The conclusion is one that I suspect is generally accepted. Everyone will benefit from a rising China.

Paul managed to unearth this beauty. Wait for it, a table of the top stocks that mattered nearly 15 years ago. You are really going to have to live with the fact that the HTML code back then was rubbish. As such, tables like this one of the market cap of the JSE at their year-end around the end of 95 and beginning of 96 are hilarious. Check out who does not make the list and who has made rapid progress over the last fifteen years.

This deserves a lot more airtime and interrogation, I am just wanting to jog a few memories out there.

As if you needed another fact about cell phones. Fear not though, this is a little graphic that you probably knew anyhow. How the smartphone market will eclipse the PC market. Much easier to get a smartphone than it is to get a PC, different kind of purchase. Once you have clicked on the link below, then click on the GRAPHIC. Smartphone Market Will Eclipse PCs by 2012: Chart of the Day. And I bet those people with smartphones will browse more on their phones than they did in the past. On my phone I have a Bloomberg Application, a CNBC Application, Youtube, the Web, Twitter, all of which I use often.

Staying with phones and things smart, did you see that Nokia are about to patent a phone battery that works on kinetic energy. Nokia files patent for self-charging phone battery Wow. As you can see still years away though.

New York, New York. Unlike in Jozi, on Wall Street market closed at their best place when the bell rang for trade to close. Which is quite early, the trading session on Wall Street although furious is only from nine thirty AM to four PM. In the local market pre market starts at around 8:30 AM and the market closes up shop at 5 pm, with the futures markets running through to five thirty in the afternoon. Admittedly the US futures market trades almost continuously except for a 15 minute gap before the spot market opens.

OK, session end the Dow added 44 points to 10611, the broader market S&P 500 was 4.6 better to 1150 whilst the nerds of NASDAQ tacked on 9.5 points to 2368.

Commodities and currencies. I am seeing LME (London Metals Exchange) copper stocks at a 30 day low here on the charts (you see, some charts are actually useful), suggesting that the recent stories around aggressive Chinese buying are true. The metal, Dr. Copper was a little changed, down a touch to 337 US cents per pound. The gold price last crossed the wires at 1112.9 Dollars per fine ounce, the Bush-veld Doctor or the platinum price at 1613 Dollars per fine ounce. Wow. The Palladium price little changed at 461 Dollars per fine ounce.

The oil price was last at 82.2 Dollars per barrel. You know the whole theory of peak oil. The moment when maximum oil extraction is reached. The moment when the collective efforts of the oil extractors is at its highest. Peak oil. There are some awesome visuals from a press slide show titled IEA’s World Energy Outlook 2009 – Presentation to the Press London, 10 November 2009. The presentation shows a massive ramp up in demand from emerging markets which will comfortably eclipse the developed world in the next couple of decades. Just thinking out loud here, but this is supposing that the combustion engine is still going to play as important a part. And BTW (by the way) the dudes at the Business Insider have this one: Here’s Why Peak Demand For Oil Is Still Very Far Away.

What about today? OK, with the ramp up of Wall Street at the end of the session, Asia looking mixed, what will help us out here will be a higher commodities complex. Good, that ought to help. US retail sales are interesting later, expectations are for February to show a 0.2 percent drop, versus a 0.5 percent gain in February. Three thirty this afternoon will tell all.

Sasha Naryshkine
sasha@vestact.com
www.twitter.com/sashanaryshkine
011 022 5440

Jozi, Jozi. We started lower, but by mid morning had gained back everything and then we settled comfortably into the green. From that point we stayed level for the day. On the flat plains from there, session end the Jozi all share index closed up shop at 28087, gaining 189 points. Cool. Financials and banks really strong, but that was in part a follow through from the US, where government stakes in financial services and banks businesses could be paid back soon. Which is great, that is what we ultimately want. Citi have been on a tear.

MTN results for their full year to December. Right where analysts expected the results to be, 754 cents per share worth of earnings. On an adjusted basis, excluding the impact of functional currency losses, as it is put in the results: up 8,5% to 878,9 cents. All very nice to tell someone what it would have been, if there had not been, I shall go with the headline number thanks. Bear in mind that this is a Quality Street of Vestact, we like it a lot. Dividend of 192 cents per share.

OK, other MTN numbers. Revenue up 9.2 percent to 111.9 billion Rands. Subscribers 116 million, that seems slightly higher than folks anticipated. Divisionally, South Africa tough, in their own words, Nigeria performed well, Iran grew their subscriber base enormously.

And here is the real kick in the chops though, from the results release: Currency movements affect the income statement through translated earnings, functional currency adjustments and the effect of the written put option held by a minority shareholder in MTN‘s Nigerian subsidiary. The ZAR closed 21% stronger at R7,39 to the USD on the 31 December 2009, compared to the closing rate of R9,35 the year before, R9,49 in March 2009 and R7,72 in June 2009. Translation of earnings affected by movements in the various local currencies to the USD was compounded in the second half of the year by the strong ZAR.

Many investors miss why one would like to own a stock like MTN. Utterances like, oh well the market here in South Africa is saturated, leads me to believe that for those types it is all about voice. It is not. It is about data. Usage of existing sms services to do more things, like mobile money in East Africa, which is *HUGE*. Listen to this too. We almost fell off our chairs here. Iran has a population of 72.5 million people. Got that. MTN have been here for around three years. There are three mobile operators. Got that. MTN have 40 percent of the market. Nice. Iran is already has 80 percent mobile saturation. Can’t use the other word.

In three years 80 percent of the population have phones, admittedly the state operators before had not done a good job. You don’t have to go to the presentation like Byron, you can see it online. MTN Group Limited Final audited results for the year ended 31 December 2009.

Fortunes richest list released yesterday and a new number one. And no, unfortunately I don’t know anyone personally on the list. Eminem asked back in 2000: I’m Slim Shady, yes I’m the real Shady/All you other Slim Shadys are just imitating/So won’t the real Slim Shady please stand up, please stand up, please stand up? And slowly Carlos Slim did, he slowly stood up. Well, not really slowly, Carlos Slim had apparently amassed a wealth of around 40 million Dollars by the time he was 26, no mean feat for anyone I guess. Last born out of six siblings, was a massive overachiever. And now the worlds richest guy, surpassing Gates and Buffett.

I am not really caring about the number, rather than the shift in where the wealth is coming from. From the Fortune clickaway to the new billionaires: A much better year for world markets meant improved odds for breaking into the world’s billionaires ranks. In fact, 97 people debut, 62 of whom are from Asia. The vast majority made their own money, rather than inherited fortunes, in everything from hedge funds and fertilizer to chicken processing and Tibetan medicine

Did you read that carefully? The 62 new billionaires out of 97 are from Asia. And the richest new comer of the lot is not a European or American, it is a fellow from Chile, a family conglomerate is how he/they made their money. Second place on the newcomers list goes to a fellow from Japan who sells consumer personal healthcare products. Third place is the Geely fellow, Li Shafu, who turned Geely from motorcycle business less than twenty years ago to what will become a global brand.

South Africa has three billionaires on the list, Oppenheimer & family (5bn USD and in 154th place), Patrice Motsepe and Rupert & family (sharing 421 place with 2.3 bn USD apiece). There are only five billionaires under the age of thirty. The youngest? Facebook geek dude Mark Zuckerberg is apparently worth 4 billion Dollars. This is also interesting for me, the other four inherited their wealth, Zuckerberg made his. Two of the “others” are Chinese, one is Lebanese and the last German.

Zuckerberg made his wealth with the “interwebs”. It may not come as a surprise that the second youngest self made billionaire is a Japanese fellow called Yoshikazu Tanaka, who created a social networking site called Gree. One consonant away from being a hot debt basket case newsy item.

My take away from the list. New billionaires being made outside of the traditional wealth pools that we are so stuck on. A shift of wealth to Asia. Technology helping create wealth as companies like Google, Baidu, Yahoo, EBay, some of the traditional. Mesofacts. See below.

Remember the Boston Globe article the other day? The one that was referring to mesofacts, facts that change all the time, but not enough for you to sit up and take notice and suddenly it is like, Whoa! Where did that come from? If you missed it, it is brilliant: Warning: Your reality is out of date. This graphic is amazing and out of date too: Mobile phone subscribers per 100 inhabitants 1997-2007

For more useful mesofacts, including this one, go to: Mesofacts: slowly changing facts. These guys need some help with their content, but my sense is that they are just starting out. Do you think that you have any useful mesofacts on the local front? Stuff like how much the middle class has grown over the last 15 years. How many extra cars on the roads. Peoples calorie intake. Those types of things.

BlackRock’s Bob Doll: This Recovery Is Real, Get On Board. That is what the fellows from the Business Insider said yesterday. Do it ok. Check out that piece.

Guys, listen, because Blackrock at the end of December 2009 had 3.35 trillion Dollars worth of assets under management. So when they say something, I guess you must listen. I have always wondered, of the worlds investable pot of money, what is the Blackrock percent of that? I only managed to dredge up an old map, which pretty much sums up what I say a lot, the worlds investable assets pot still belongs to the developed world. Old, but gets the point across World’s Assets Hit Record Value Of $140 Trillion. Anyone with a newer number or an idea of what that pot could be?

New York, New York. After a powerful start stocks ended in the green, taking heart from Chinese growth and copper usage. A broad based rally, I saw that Citi preferred stock, versions H,P and I rallied strongly, what does that mean? Is this not what the government owns? Nope, this is to pay back government it seems: Citigroup Sells $2 Billion of TruPS With 8.5% Yield. That is a new one, not so? If you had bought these Citi prefs back in Feb 2009, you would have been rewarded 4 to 5 fold in 14 months, for taking on disaster risk. How difficult is Citi to understand? Anyone?

Session end the Dow closed nearly three points better to 10567, the nerds of NASDAQ up by a much better 18 points to 2358. The broader market S&P 500 added five points to end at 1145.

Commodities and currencies. Righto, the oil price last at 81.62 Dollars per barrel. Dr Copper, 335 US cents per pound. The gold price, 1108 Dollars per fine ounce. The platinum price (is that Dr. Bushveld or the Bush Doctor?) last at 1587 Dollars per fine ounce. Silver who cares price per fine ounce, 17.01 Dollars. The local unit, the rand last traded weaker to the US dollar, at 7.45, 11.17 to the Pound Sterling and 10.17 to the Euro. An iffy day to start here. Not much data out of the big pot, I mean US this week.

Sasha Naryshkine
sasha@vestact.com
www.twitter.com/sashanaryshkine
011 022 5440