Let’s See GDP

“Today is GDP day for both us (South Africa) and Europe, expect some market movement if either of these numbers miss expectations. For us, the annualised QoQ expectation is 2.3% growth and for Europe the YoY expectation is 1.6% growth.”


 

To market to market to buy a fat pig A rather quiet day for markets yesterday as the US was closed for their labor (labour?) weekend celebrations. The holiday falls on the first Monday in September and is the unofficial end to their summer. Our ALSI finished up 0.23% for the day, we may see more movement today after our GDP number is released.

On the commodity front, Brent Crude jumped 5% when Russia and Saudi Arabia announced that they were going to talk about stabilising the oil market. Given that Russia and Saudi Arabia are currently the worlds two biggest oil producers, with around a quarter of all production between them, they can have a market impact on oil prices if they feel the need. I don’t see that happening though, Russia have been steadily increasing their output recently to now be sitting at record production numbers. Brent crude prices settled after the initial spike to finish the day around 1.5% higher.


 

Opinions, every one has one about almost everything. As they say in the classics, opinions are like (rhymes with smarshole), everyone has one. Unfortunately many opinions are not that well thought through. We too often see shouting heads on the shows that we watch warning of this or that, or being an expert on everything from North Korean missile launches to Japanese Nuclear meltdowns, to how to cap Deepwater Horizon in the Gulf of Mexico. Before the events, we didn’t know anything and then supposedly, we are experts almost overnight.

As market watchers and “experts” we are supposedly in the know, and whilst that to some extent is of course very true, we do read a heck of a lot, tomorrow is as unknown for everyone today. In fact, my mother always taught me that the Japanese have a saying, tomorrow never comes. Of course once you get around to tomorrow, it is then today. And of course the next day is tomorrow. Repeat!

Should you trust opinions? Sometimes a simple visit to your medical practitioner can quite simply put your mind at ease, you feel better if they tell you that everything is going to be OK. There are so many opinions in financial markets that you are not quite sure who to trust. It isn’t like buying apples or pears, the grower of the goods knows that the user is going to use it up. With equities or bonds or currencies, there is a swap though. For every seller there is a buyer.

At that very moment in time, for whatever reason, the seller is happy to part with his stock at the prevailing price and the buyer is happy to pick up a stock at that same price. Their views differ on exactly the same thing. Surely only one of them is right from that point out? Well it depends what time frames both parties have in mind? And just when Ray Dalio or Bill Gross or Mohamed El-Erian says it is so, doesn’t mean that it is. The new normal? Jim Chanos, Hugh Hendry? Those guys were betting on a Chinese implosion. It may well happen, the outcome and action from the state may determine the depth of despair. The Chinese may well manage their way out of it, centrally, better than most. We forget often that capital markets in the newest format are only around 25 years old in China. Heck, the personal computer (remember that old Apple or Commodore 64) is older than capital markets in China.

The world has changed a lot in my life time (I am 40, neither old or young), and no doubt if I live to double my current age, it will continue to change enormously. Great gains will and can be achieved by simply doing the basics. My great grandmother on my mums side straddled three centuries, born in 1899 and died in 2001. Before she was born, there was no flight, wars were still fought on horses, the nuclear age did not exist and you could still die from a simple cut becoming infected.

By the time she died, there were mobile phones, the internet, high speed trains and supersonic flight (we went back to subsonic, more cost effective). And in that time humanity dropped atomic bombs on one another, fought two world wars that cost countless millions of lives, separated one another by ideology, walls and huge arsenals (communism and capitalism). Yet we still advanced. Records of all sorts were broken. Our lives were simplified, ATM’s (that are going obsolete eventually), transcontinental flight, the list could go on and on.

So whenever you are feeling a little down about the state of the world, the state of the nation, think about the progress that humanity makes, in spite of ourselves. Write down the timeline of progress and how your life has been made easier by technological advances. Air conditioning. Simple things that enable you to become incredibly more productive over time. Email, Excel spreadsheets and the list goes on. The next time you hear someone telling you the world is ending (again), ignore, OK? It may be hard at first, eventually you will condition yourself in that manner.


 

Linkfest, lap it up

Laws impacting the retail sector in India has meant that international retailers have been slow to move into the country, despite the huge potential. The laws have also made it difficult for e-tail companies to operate – Indian shopaholics in search of global brands are better off flying to Jakarta or Ho Chi Minh City.

Woolworth’s David Jones brand in Australia is expanding into food, taking on the premium food category. Similar concept to what they have done so successfully in South Africa – Why David Jones’ ‘less price sensitive’ customers are a threat to Woolworths and Coles. (Woolworths in Australia is not the same company as Woolworths in South Africa).

Aston Martin is expanding into a multi-product, luxury goods company. As I was looking at the products, I kept thinking “Would James Bond buy and use this product”? For most of them the answer was yes, apart from the baby stroller – Aston Martin Now Has a $4,000 Stroller and a Yacht for Dad


 

Home again, home again, jiggety-jog. Today is GDP day for both us (South Africa) and Europe, expect some market movement if either of these numbers miss expectations. For us, the annualised QoQ expectation is 2.3% growth and for Europe the YoY expectation is 1.6% growth. The Rand this morning is trading steady in the $/R 14.30s.


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

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