Politically Democratic

“Democracy is a relatively new thing for most of humanity. 100 years ago my wife and daughters would not have a say. In this country, 25 years ago, it literally depended on what you looked like in order to vote, crazy. In fact there are many, many countries that do not enjoy the benefits of true democracy at all.”


To market to market to buy a fat pig Ouch! Retailers were crushed yesterday, as a collective they were down 6%. Mr Price was down much more though, down 16% at the close yesterday and TFG down 7.8% in sympathy. The trading statement showed that the company went backwards over the 18 week period they are reporting on, sales were up 1% but comparable sales were down 2.4% and product inflation was 11.2%, so in real terms they went backwards by 10%! The reason for the poor performance was due to winter not really arriving this year. Most other retailers have said the same thing, Woolies implemented their winter sales in the middle of winter to clear stock. MR Price said in their statement that they should have started their winter sales earlier. Here is the trading statement – Mr Price Group Limited – Trading Update

The ALSI ended the day down 1.3%, resources also had a poor showing, down 3.2% for the day. Our currency was under pressure due to weaker trade data than expected, our trade surplus was lower than analysts had forecast. Given that over the last 5 years we have been more in a state of trade deficit than trade surplus, having a smaller surplus than expected is not too bad. Economics 101, a trade surplus means that we are exporting more than we import, which means on balance more people are buying our currency to pay for the exports than people are selling our currency to pay for imports. So the inverse, where you have a current account deficit, puts pressure on the currency (more sellers than buyers).

US Markets ended in the red yesterday, The Dow down 0.3%, The S&P500 was down 0.2% and the Nasdaq was down 0.2%. The result is that both The Dow and The S&P 500 were very marginally down for the month of August (down around 0.1%), which means they have broken their streak of positive months. Don’t fret, markets can’t go up all the time, going sideways or even down means that you have more time to buy these stocks at lower prices.


There are certain topics in which you are never going to please all of the people, all of the time. It is of course in opinion pieces not your intention to please all of the people, all of the time, rather the objective is to be exactly that, objective. My mother always said, no religion, no politics with strangers. Indeed that may extend to beyond strangers too. Somehow we are unable to be objective when it comes to these things. Perhaps added to that mix must be football, I am reminded that two Central American countries went to war over what was just a simple match at face value. It was a qualifying match between Honduras and El Salvador and whilst the root of the war wasn’t the actual football, the match saw the tensions escalate to violence.

Democracy is a relatively new thing for most of humanity. 100 years ago my wife and daughters would not have a say. In this country, 25 years ago, it literally depended on what you looked like in order to vote, crazy. In fact there are many, many countries that do not enjoy the benefits of true democracy at all. Democracy lets the people decide and then you get to deal with the consequences. The weighty matter of deciding budgets and allocating spending then rests with government officials and bureaucrats, their job is to deliver. Like we have recently found out (that pesky mark still sits on my left thumb, no matter how many showers), the accountability can be a powerful citizen tool.

Democracy allows everyone to decide what they should and shouldn’t do, that counts economically too. We forget (and should never) that just over a generation ago in South Africa most of the population had (for a long time) no access to services of any quality and could not change that at the ballot box either. You cannot fix the impact of multiple generations of oppression in a single one. Unfortunately, not everybody wants to hear that. The resources pot that government has is not that deep, and that counts for most governments. There are a few exceptions, let us just say that we are not all Nordic looking (large oil reserves small populations).

There is a direct link between allowing your citizens the benefits of an open economy (and making sure that there are no impediments) and actual improvement in living standards. Think of the opposite. The best example sadly is the two Koreas. The people of a certain generation in the North are shorter and look different as a result of malnourishment during their respective childhoods during times of great famine. When the state controls the resources, people are just numbers. When people can decide and choose what they want to do, the outcomes look like the South and not the North in Korea. Freedom to decide what haircut you want.

Don’t fret about democracy, rather be happy that you are having the conversation and are not witnessing acts of barbarity in the town square. Human progress is made, won and then maintained. We are in the maintenance part right now. Look at what happened in Brazil overnight. Labour and their global support bases might not like it, the wheel does however turn, make no mistake, not everyone is happy that Dilma Rousseff needs a new place to stay. She may well find an uncomfortable small room in her golden years I am afraid, I am sure that some politically would welcome that.

Citizens look for accountability, those who control the vast purse strings must do so as if it was their last cent, there are of course many a government that has run out of money. Even in one of the oldest democracies, Greece. Although the root of the problems that they have may well be linked to a lack of democracy. If you are on the wrong side of change, it may not make you feel comfortable, most especially when you are engaged in a session of musical chairs, the fewer, the stiffer the competition. The recent outcome of the local government elections will see reflection of all sorts.

Lastly, the money and to follow that is important. Capital is always binary as I say, the starting point is to always look for the best and only outcome acceptable, to make money. If capital and in this case Futuregrowth doesn’t lend as it feels the risks are too much, then that is the outcome of not having kept your ducks in a row. The pot runs dry and real decisions are then made. Futuregrowth has obligations to the people who invest money with them, those are the people that they answer to, at the end of the day. Don’t run around like headless chicken as a result of someone else’s actions.


Linkfest, lap it up

It will be interesting to see the results from this test, will workers be more productive comparatively and will less work pressure result in more creativity/creative solutions to problems? – Amazon Tests 30-Hour Work Week. Remember that Amazon has a slight image problem regarding treatment of workers and working hours.

Stock piling oil or when that stock piling slows it will probably have a marked effect on demand and supply dynamics and then the price of oil – Mystery of Oil Held on Chinese Islands Puzzles Crude Markets. My favourite line in the article was this though: “Nobody replied to a fax sent to the press office of the National Energy Administration”, very 20th century of them.


Home again, home again, jiggety-jog. Our market is in the green this morning, Mr Price is tanking again this morning currently down around 7.5%. The Rand is holding steady this morning around the $/R 14.70s. Significant data out today is vehicle sales in our local market and then initial jobless claims in the US.

Sent to you by Sasha, Michael and Byron on behalf of team Vestact.

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