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15 may 2024

The dollar’s global dance: Stability and strain

In this week’s exploration of economic narratives, we look at the almost omnipresent influence of the United States (US) dollar: A currency that wields unparalleled sway over the international financial landscape. While the US accounts for a modest 15.5% of global gross domestic product (based on purchasing power parity), its currency forms the backbone of global reserves and dominates international transactions. The implications of this scenario are profound, both economically and geopolitically.

8 may 2024

Corporate manoeuvres and macro-economic indicators

In this week’s economic commentary, we dissect an intriguing interplay between corporate manoeuvres and macro-economic indicators that could shape the financial strategies of investors and policymakers in the near future.

5 April 2024

Economic resilience, food inflation, and climatic uncertainty

In the vibrant tapestry of South African culture, the traditional barbecue, or “braai” as it is affectionately known, is more than just a culinary festivity; it is a national pastime that brings people together. Yet, in a fascinating twist, this cherished tradition has also become a lens through which we can glimpse the shifting sands of our country’s economic landscape. Bloomberg’s

20 March 2024

Significant economic shifts are on the horizon

Now, as the world stands on the cusp of significant economic shifts, investors find themselves navigating a landscape where global interest rates are hovering near 17-year highs. This environment, primed for a transition towards rate cuts, poses unique challenges and opportunities for those in pursuit of yield.

13 March 2024

Turning victims into victors

A victim can never be a victor unless they change themself into one. Consequently, a country stuck in a prevailing ideology of victim mentality cannot create sustainable, inclusive economic growth. Put differently, it cannot create wealth, which includes skills, jobs, and opportunities.

7 March 2024

SA’s investment puzzle: Navigating taxes and opportunities

In today’s investment landscape, investors must trust their financial advisors for guidance. Despite its historical significance, the South African equity market has seen a decline in global attention over the past decade. Many experts have extensively discussed this trend and retail investors have responded by hesitating to deploy capital within South Africa, often opting to invest abroad owing to concerns about local governance.

28 February 2024

The story behind this year’s Budget

Instead of merely reciting interesting numbers, our aim has always been to try and tell the story behind the numbers. The reason for this is simple: Stories relay the deeper truths behind numbers. The story behind this year’s Budget is an interesting one, mostly because it was so masterfully orchestrated. Maybe even as well as one of the Fitzgerald or Hemingway classics.

7 February 2024

Consumer relief and a strained fiscus

Battered by low wage growth, high interest rates, and increasing debt levels, many South African consumers are in the worst financial shape that they have been in for years, maybe even decades. The result is a persistently weak economy. But, the worst might be over.

1 February 2024

What the Tour de France and markets have in common

Long-term investing shares parallels with the Tour de France – a strategic journey where endurance prevails over short-term sprints. Much like cyclists navigating diverse terrains, investors navigate market fluctuations from quarter to quarter and year to year. Success demands patience, resilience, and a strategic approach, underscoring the significance of steadfast commitment in the financial race for wealth.

24 January 2024

An ear to hear, and some sense to see

During the last few years, it seems as though we have started each year in the same way: Warning investors about potential market volatility. This year, as local and global factors converge into a cooking pot of uncertainty, seems to be no different. In the end, however, our advice has been stellar and has rewarded investors who stayed the course.

6 December 2023

The tide is turning, especially for the hopeful remnant

years for as long as we can remember. Inflation has slowly been increasing since the 4% levels that we saw pre-COVID. In 2022, inflation reached nearly 7% and will most likely be around 6% in 2023. Higher inflation means that buying power deteriorates faster, making South Africans feel poorer.

22 November 2023

How policy continues to fail South Africans

To curb inflation, the South African Reserve Bank (SARB) raised interest rates by 4.75% to a 14-year high of 8.25%. Following the various shocks that our economy faced throughout COVID-19, inflation breached the upper limit of the SARB’s target range for 13 consecutive months, which led to the SARB tightening monetary policy since November 2021.

14 November 2023

The allure of bitcoin

Most investors understand that diversification is important. Research has shown that investors can produce better risk-adjusted returns by diversifying between, and often even within, different asset classes. Someone who uses traditional financial instruments to save for retirement will typically invest in a balanced portfolio. Depending on many factors, they will have around 40% to 60% equity exposure (local and global), 15% to 30% fixed-income exposure (mostly local but also global), and then some listed property, commodity, and cash exposure.

8 November 2023

Why diversification matters

Nobel Prize winner Harry Markowitz famously said that diversification is the only free lunch in investing. In simple terms, this means that you can quite easily keep your expected level of return constant, or even increase your expected return, without taking on additional risk. Diversification is one of the most important principles in investing: It involves spreading your money across a variety of assets or even across asset classes.


2 November 2023

Main Street vs. Wall Street: The strange relationship between stock markets and economies

American stockbroker, Peter Schiff, delivered a timeless reminder: “The stock market is not the economy, and the economy is not the stock market”. What Schiff was trying to say is that the stock market, often referred to as Wall Street, is not always an accurate reflection of what occurs on Main Street, that is, the real economy. Schiff’s statement has never rung truer than in the ever-fluctuating landscape of today’s financial world.


25 September 2023

Financial crises and emerging markets

Shortly after the turn of the century, following the Asian financial crisis in 1997-1998 and the dot-com bubble burst in 2000-2002, investor sentiment swung increasingly in favour of emerging markets. China was the main driving force, growing at an average rate of about 10% annually between 1990 and 2000, and almost reaching an 11% annual growth rate between 2001 and 2007-2008.

17 September 2023

Balance and restraint: Let the game flow

Like most passionate South Africans, we thoroughly enjoy watching the Rugby World Cup. Setting aside the tragic events that have unfolded in Ukraine and Israel, this sporting event often resembles strategic warfare between nations. Just as governments play crucial roles in ensuring success within their respective domains, referees are vital to maintaining order on the rugby field.

11 September 2023

What to do when things get a lot worse in South Africa

In the immediate term (three to five years), things can get much worse in South Africa (SA). Each South African must, therefore, decide if they will sit back and blame others or if they will act and make the most of it. In the end, there is one of two decisions: Blaming or changing, which stems from being passive or active, which, ultimately, stems from your worldview (whether you are, generally, pessimistic or optimistic).

4 October 2023

How short-sightedness hurts your investments in the long term

Taking a hiatus from checking your investment portfolio for a month can be akin to stepping back from the canvas of daily market fluctuations. It is a deliberate act of patience, allowing the market’s ebb and flow to paint its own picture before returning to assess the masterpiece.

27 September 2023

The answer to South Africa’s predicament is complete state reform

In his address to the public last week, Lesetja Kganyago, the Governor of the South African Reserve Bank (SARB), announced that the Monetary Policy Committee will keep the repurchase rate unchanged at 8.25%. This came shortly after Statistics South Africa showed that consumer prices were contained well within the SARB’s target range of 3% to 6%. 

19 September 2023

Bottom-up and top-down investment strategies

The investment industry, like most other professions, has evolved over time with various approaches and strategies coming to the fore, each with its own inherent characteristics. When investing in listed shares, two dominant approaches stand out: Fundamental bottom-up and top-down investment strategies. These approaches represent distinct methodologies for selecting and managing investment portfolios, each rooted in a unique perspective and analysis framework.

13 September 2023

Tough times never last

Last week, prices of both grades of petrol went up by R1.71 per litre while diesel increased by close to R3 per litre. The recent jump in fuel prices is driven by a twofold weakening of the exchange rate and a substantially higher oil price. Having started at around R17 to the United States (US) dollar at the start of the year, the rand has now depreciated by more than 11% year-to-date. The oil price, in turn, has increased by more than 10% already this year, reaching its latest level just above $90 a barrel. A higher oil price will likely add to inflationary pressure, although the impact of higher fuel prices is usually overstated.

8 September 2023

Redefining Wealth: Are Alternative Assets Rewriting The Rules Of Traditional InvestmeThe superiority of independent, holistic financial advicents?

The term “economics” has its roots in ancient Greece. It is derived from two Greek words, namely “oikos”, which means “house”, and “nomos”, which means “law” or “custom”. When combined, “oikonomia” roughly translates to “household management” and concerns itself with the efficient allocation of resources within a household.

29 August 2023

Stick to the principles

Central banks in many countries around the world keep on talking a big game, and rightfully so. If consumers start believing that above-trend inflation is over, they might push inflation higher into unwanted territories again. But for now, it seems as though central banks have succeeded in containing inflation. Amidst the sea of short-term noise, it is difficult to determine how the global economy will make it out in one piece. But, fundamentally, we should see stronger emerging markets on the other end.

22 August 2023

Redefining Wealth: Are Alternative Assets Rewriting The Rules Of Traditional Investments?

The world of finance and investments is often associated with numbers and statistics but the real-world experience looks a bit different with behavioural patterns often playing a significant role in financial markets. Behavioural finance is the study of the psychological influences and biases that both investors and financial practitioners experience when making financial decisions. 

15 August 2023

Behavioural finance and why it matters

This week, we venture into the realm of alternative assets, where the mundane gives way to exhilarating possibilities. We discover the enchantment of cryptocurrencies, vintage wines, and fine art, all unconventional yet alluring avenues for wealth growth. This uncharted territory blends innovation with risk, rewriting the rules of traditional investments.

3 August 2023

Towards a more equal

For almost three decades, the ruling party in South Africa (SA) has been relying on redistributive policies to build a more economically-just society. In doing so, SA’s inequality, as measured by the Gini coefficient, improved but only marginally. Unfortunately, SA is still the most unequal country in the world. But by using the incorrect policies, we now also have the highest unemployment rate, especially if we consider youth unemployment and that almost half of our population still lives in poverty.

25 July 2023

Global uncertainty and some good news for South Africans

The global economy is heading towards an evermore uncertain place. Late in 2021, markets anticipated that central banks around the world would start to increase interest rates, and they subsequently did. Now, almost 18 months later, economies are giving mixed signals. Inflation is coming down in key regions, like North America and Europe, but not enough. Some economies, like India, are showing signs of life but others, like China, are really struggling.

18 July 2023

Information overload is limiting investment returns

Since the arrival of the internet, talks about the “information age” and its many benefits have taken place continuously. Benefits such as cheap, or even free, access to large volumes of information. But the discussion rarely progresses to the potential negative impacts that might arise from too much information. We believe that the benefits of access to information are real, clear, and well-documented, however, as with anything in life, too much of a good thing is generally bad.

11 July 2023

Do not miss the shift towards emerging markets

The strong June jobs report in the United States (US) is likely to leave the Federal Reserve (Fed) on course to raise interest rates to a 22-year high during their next meeting to cool off the economy and to combat inflation. Employers in the US added 209 000 jobs in June, causing the unemployment rate to fall from 3.7% in May to 3.6% in June. This is ever closer to the 53-year low of 3.4%. June’s increase was the smallest since December 2020 and is one of the indicators pointing towards a slowdown in the world’s largest economy.

6 July 2023

The active versus passive debate

The active versus passive investment strategies debate has been raging for many years, with both sides trying to make the case for their own strategy at the expense of the other. Without pre-empting our own beliefs on this matter, we will start with the words of John C Maxwell: “A great idea is simply the combination of many good ideas”.

27 June 2023

Masala money madness: Spicing up your portfolio in incredible India

Over the past two decades, we have arguably witnessed the greatest era in men’s tennis. We saw a constant tug-of-war between Roger Federer, Rafael Nadal, and Novak Djokovic. Federer, who originally held the most Grand Slam titles, was overtaken by Nadal, who was recently dethroned by Djokovic. It now seems likely that Djokovic will be crowned the Greatest of All Time. Well, at least until the next tennis star comes along.

20 June 2023

The Fed halts and the rand strengthens

At their latest Monetary Policy Committee meeting, the United States (US) Federal Reserve (Fed) decided to leave interest rates unchanged at 5% to 5.25%, following 10 consecutive hikes over a 15-month period. But the Fed remains unwavering in its commitment to bringing inflation down to its 2% target. Jerome Powell, the Chairman of the Fed, therefore, made the comment that more hikes may be needed later this year.

13 June 2023

The individual’s role in South Africa’s recovery

To understand why South Africa (SA) will not become a failed state, it is important to understand how we differ from states that have failed. States like Yemen, Somalia, and Syria. According to research conducted by Fund for Peace, countries that we often ascribe failure to, like Zimbabwe and Venezuela, are not extreme cases of failed states. But before we address the question of SA’s failure, it might be worthwhile to distinguish between a state and a government.

7 June 2023

Why South Africa’s economy will not slip into the abyss

Over the last couple of years, we were often asked by both local and global investors if South Africa will become the next Zimbabwe or Venezuela. Today, this question seems more relevant than ever but, still, the answer remains an unequivocal no. As bad as things have become, there are five specific forces that work together, like reinforced concrete, to keep us from falling into the abyss. These forces are:

1 June 2023

Be Greedy When Others Are Fearful

Warren Buffett once said that a prudent investor should “be fearful when others are greedy, and greedy when others are fearful”. This sounds rather easy, but it is much more difficult to apply in practice because of the nature of uncertainty. Even though historic analysis gives us a fairly good indication of the potential outcomes, we, as humans, often complicate decision making by adding too many what-ifs.

23 May 2023

From Banks To Blackstone: How Private Equity Continues To Change The Banking Space

In 2007, on the eve of the global financial crisis (GFC), Hilton Worldwide announced that it was being bought by the private equity (PE) behemoth Blackstone. After the acquisition, Hilton’s fortunes changed abruptly under its new owner. Almost overnight, Blackstone managed to double the amount of Hilton rooms while tripling its own return on investment. Hilton Worldwide is only one of many PE success stories.

16 May 2023

Our dearly beloved rand

Over the past year, the rand has been battered and it seems as if there will be no relief any time soon. Consequently, we have had to revise our year-end USD/ZAR forecast up from R16.50 to R17.50 and we will consider taking money offshore for our clients at R18.00 levels.

9 May 2023

How to avoid permanent capital destruction

We all know the age-old adage that has held true throughout history: “It is not about timing the market; it is about time in the market”. As investment managers, we have the pleasure of celebrating the wisdom of this adage with our clients when they achieve their long-term investment objectives. Unfortunately, we also witness the flipside of the coin, when clients sell out of underperforming investments and buy into the flavour of the month based on short-term return differentials.

4 May 2023

The good times are here to stay – or are they?

“We believe in what people make possible.” This is the slogan of one of the fastest-growing companies in the world, Microsoft. Currently, Microsoft seems to be achieving feats beyond what is possible. Growth within the world’s largest economy, the United States, has recently slowed down. Gross domestic product figures show that the number of goods and services created in the last quarter registered the weakest pace of expansion since the second quarter of 2022.

25 April 2023

The long-term effects of the tightening cycle

The global economic landscape has been experiencing a tightening cycle for roughly a year, and it is becoming apparent that its effects are both spreading and deepening as disequilibrium becomes more apparent. Recently, we have also experienced that the banking system is likely to be a contributor to the damage being done.

18 April 2023

How to grow the South African economy

Theoretically, it is not difficult to grow an economy. But practically, it is a nightmare to execute. Although there are many ways to approach economic growth, I would like to focus on the collective ideas of improving the ease of doing business and facilitating sound money. Overall, these collective ideas can encompass most of what is needed to sustainably grow the South African economy. However, knowing what to do, or even how to do it, is not as important as knowing why you are doing it. We should have more capitalist collectivism and less bureaucratic collectivism.

12 April 2023

Why more interest rate increases in South Africa do not help

To understand why more interest rate increases in South Africa (SA) may not effectively combat inflation, one must first understand the broader economic factors that contribute to higher inflation rates in emerging countries when compared with developed nations. 

6 April 2023

Another Lehman Brothers? Luckily not!

Welcome to the world of banking crises, where there is a consistent flow of money and the stability of a shaky Jenga tower! Here, banks can go from being the pillars of the economy to crumbling ruins faster than you can say “subprime mortgage”. So, grab your wallets and hold on tight as we unpack the events that unfolded in March.

28 March 2023

United we stand, divided we fall

South Africa (SA) is in a peculiar place. For the first time, in a long time, the ruling party might not remain in power. Since the African National Congress came into power in 1994 many South Africans have started to question the party and their policies. Very few, if any, of the promises that were made almost three decades ago, have come to fruition.

15 March 2023

“Binge-drinking alcoholics” or astute stewards of capital?

Ray Dalio, a billionaire hedge fund manager, once described politicians who continuously raise the debt ceiling in the United States (US) as “a bunch of alcoholics who write laws to enforce drinking limits”. And to no one’s surprise, the US has, once again, reached the point where they need to increase the debt ceiling.

8 March 2023

A recession in the US and its benefits for SA

Research by the world’s largest financial institutions seems to support our view that the monetary policy tightening cycle in the United States (US) is approaching its third stage, an economic downturn. We have been expecting this for quite some time and have made the necessary changes to our investment strategies.

2 March 2023

Investing offshore and the 2023 Budget

Two things stood out during February: The question around offshore investing, and the 2023 Budget in South Africa (SA).

21 February 2023

A definitive shift in SA’s long-term economic trajectory

It is undeniable that South Africa’s (SA’s) economy is in a poor state. But evidence suggests that the rate of deterioration has slowed down considerably. In fact, a strong case can be made to show that the rate of improvement is greater than the rate of deterioration. And, if that is the case, the long-term trajectory is towards a flourishing rather than towards a withering economy, an economy where employment income and life expectancies increase rather than decrease.

15 February 2023

China’s Yue Fei moment may be upon us… Again!

Yue Fei, the son of an impoverished farmer from Northern China, is one of China’s most decorated and celebrated war heroes. As the Jurchens invaded Southern China in the 1130s, it was Yue Fei who showed tremendous courage as he and his troops fended off the advancing army. He was so courageous that he once, with only 500 men, defeated 100 000 Jurchen soldiers. To this day, Yue Fei is a national symbol of hope during difficult times.

8 February 2023

Interest rates: To increase or not to increase, that is the question

Last week, the South African Reserve Bank (SARB) increased interest rates for the eighth consecutive time since they started their rate-hiking cycle in November 2021. Since then, the prime interest rate has increased by 3.75% to 10.75%, its highest level since 2009. This means that every R1 million debt that a household has, will now be roughly R3 125 more expensive each month; a thought that is keeping many South Africans awake at night.

2 February 2023

Stocks and Soccer World Cups

The market-based losses of 2022 make it tempting to look back in awe, in frustration, and in anger. But do not. The first month of 2023 provided active investors with a glimpse of what might lie ahead in 2023.

26 January 2023

Stocks and Soccer World Cups

Global markets were all over the show the past week, trying to digest the myriad of, often opposing, data that was released from all around the world. When considering the likely growth trajectory of the global economy market, observers turn towards the large economic blocks: The United States (US), Europe, and China (which is often also used as a proxy for growth in Asia). Data from the US and China stole the show last week.

17 January 2023

Markets and economics: What to expect from 2023

Here we are, another new year with all of its potential, whether good or bad. Most investors seem anxious, and for good reason, as the last few years have not been kind. So, what do we expect from 2023? Well, first, it is important to remember that forecasts are, at best, well-informed guestimates. We do not have a crystal ball; we simply use our experiences and historic data to mathematically extrapolate what can potentially occur in the future. To do this, we use age-old cause-and-effect relationships and consider different scenarios. In this economic update, we will share the scenarios that we think have the greatest probability of occurring, that is, our base case scenarios.

8 December 2022

Recency bias and how 2022 affected investors

Finally, we come to the end of another volatile year that tested the best of us. Since the latter parts of 2018, global markets have not been kind towards investors. Markets fell by roughly 15% in the final stretches of 2018, then recovered, and then the COVID-19 pandemic in 2020 beat down the markets by more than 30%. After governments stepped in with substantial fiscal and monetary support, which ballooned debt and overstimulated demand even more, the recovery was quick.

22 November 2022

Stocks and Soccer World Cups

The 2022 Soccer World Cup that started on 20 November has become a hot topic at social gatherings, birthdays, and even work functions. With people’s spirits up because of more positive markets, coupled with the smell of summer and the December holiday around the corner, soccer supporters will undoubtedly fancy the chances of their favourite team winning this year’s tournament.

15 November 2022

Good CPI, good markets, bad FTX

Global markets received some welcome news last week when the annual pace of consumer price inflation (CPI) in the United States (US) was lower than expected in October, coming in at only 7.7%, down from 8.2% in September. Pre-holiday retail discounting, a decline in used car prices, and a welcome easing in rental inflation were key drivers of the overall decline in CPI. Lower inflation will provide some relief to consumers and investors, as well as give some momentum to the idea that the worst is now behind them.

8 November 2022

Strong global demand and a hawkish Fed

Airbnb, an online marketplace focussed on short-term homestays and experiences, reported its highest quarterly profits ever, confirming that the travel industry continues its pandemic recovery in the face of historic inflation. This, in turn, confirms that global demand is still strong and that central banks will need to do more to curb demand and the upwards effect that it has on high inflation.

3 November 2022

October Economics: Optimism amid uncertainty

Investors have experienced a rigid “dichotomy” in financial markets over the past two months: September and October stood in stark contrast to one another. Within the space of two months, we have experienced one of the worst and one of the best months of the year.

25 October 2022

How Do The Rich Get Richer? They Stay Invested And Buy More!

During the last couple of months, we have partnered with many financial advisors, doing our utmost best, to keep investors calm during this period of extreme volatility. It has not been an easy task. Since the last quarter of 2018, global markets have seen three major disruptions. In 2018, indices such as the S&P 500 contracted by more than 15% during the last quarter.

18 October 2022

Year-end rally? Christmas may come twice this year…

After having suffered through September, global markets, historically, tend to experience more positive performance during the last three months of the year. Even though the chance of this may look slim this year, when compared with previous years, a year-end rally may just be on the table.

11 October 2022

How to achieve above-average investment returns over the next decade

After more than a decade of above-trend market performance, many developed markets have started a process of mean reversion. Many leading global banks and asset managers believe that the average annual share performance among companies in the United States (US) will only be 5% in USD over the next decade. This is far less than the above 20% annual growth that we often saw over the past decade.

6 October 2022

September economics – ouch!

“Historically, September is the worst month of the year for equities.” We used these cautionary words in our previous monthly newsletter to describe a possible poor month for markets in September. It would seem that we could not have chosen our words any better for what lay ahead.

27 September 2022

How painful can things get?

Last week, the United States (US) Federal Reserve (Fed) increased interest rates by 0.75% for the third consecutive time this year. Interest rates in the US now range between 3% and 3.25%, and many expect that rates will, most likely, increase to 4.40% by the end of the year. Fed Chairman, Jerome Powell, made it clear that they are willing to do whatever it takes to ensure that inflation is brought under control.

20 September 2022

Global inflation, gold, and local retail sales

In the United States (US), government data last week showed that the annual increase in the Consumer Price Index (CPI) had slowed slightly in August to 8.3%, but that prices continued to rise month-on-month, increasing by 0.1%. The US and other developed economies have been battling historically high price increases for months, owing to extremely high energy and food bills. This has been caused to a large extent by supply constraints after economies reopened following their coronavirus pandemic lockdowns, and in the wake of Russia’s invasion of Ukraine.

13 September 2022

It all starts, and ends, with government

There are many rumours going around again about how bad our economy will perform this year, and possibly in the years to come. Many South Africans blame a variety of aspects for this poor performance. If your political convictions lean to the right in South Africa (SA), you have the more erroneous view that government can do a better job than the market when it comes to allocating scarce resources. Your answer to the current low economic growth environment is, therefore, to nationalise resources.

8 September 2022

Is erratic market behaviour here to stay?

Benjamin Graham, Warren Buffett’s mentor, once described the global stock market as a manic-depressive person whose erratic behaviour changes daily. Let us call this person ‘Mr Market’.

31 August 2022

Where does that leave us?

Markets in the United States (US) were shocked when Federal Reserve (Fed) Chair, Jerome Powell, gave his annual address at the Central Bank Summit in Jackson Hole. In the past, this event has been used to make important announcements about central bank policy. In the early 2000s, US central bankers used the event to announce that they would start cutting interest rates to support economic activity, which finally led to the 2008/2009 global financial crisis.

24 August 2022

A friendly glance at crypto-“currencies”

The Financial Sector Conduct Authority (FSCA) recently said that it will soon publish the regulatory framework for cryptocurrencies in South Africa. Many in the industry, especially those who support the technology, have been anxiously awaiting this legislation for quite some time. 

17 August 2022

US inflation, a slump, and a final buying opportunity

Investors breathed a sigh of relief last week after data from the United States (US) Department of Labor showed that US inflation finally eased from its four-decade high. The Consumer Price Index (CPI), an index used to measure the rate of price increases among households, came in lower than analysts expected: It increased 8.5% from a year
earlier, cooling off from the 9.1% high that we saw in June.

11 August 2022

EFBC - Another emerging market crisis This time it is different…

Millennials and Generation Z are unlikely to remember that, back in 1997, Asia was dealt a significant blow by the United States (US) Federal Reserve (Fed), who, through their actions, caused the US dollar to appreciate substantially. Halfway around the world it was July 1997 and monsoon season was on its way in Thailand, but that year the country’s currency, the baht, would experience a monsoon of a different kind.

3 August 2022

The tale of interest rate increases

During July, the main themes on the economic front were interest rates and the fight against inflation. Most central banks across the globe have now set their firing power against inflation. Past rumours around ‘transitory’ (read temporary) inflation have long since quietened down.

26 July 2022

The cost of higher interest rates in SA

In total, interest rates have increased by 2% during the current hiking cycle in South Africa (SA). In November 2021, the South African Reserve Bank (SARB) started the hiking cycle by increasing interest rates by 0.25%. Many South Africans hoped that these types of increases would continue, especially after a similar increase was made by the SARB in January 2022.

12 July 2022

An update on the rand

Until recently, the rand has remained resilient against the United States (US) dollar. But during the past couple of weeks, the pressure has simply been too much for the rand to bear, causing it to depreciate to levels around R17.00. In the past, the rand’s demise was primarily driven by bad local politics, which led to bad policies, which, ultimately, led to negative sentiment.

7 July 2022

Household income and the real cost of higher fuel prices

In June, BankservAfrica released another set of dismal monthly salary data for South Africa (SA). The Take-home Pay Index (BTPI) showed that, during the month of May, the average real monthly salary (removing the effect of inflation) in SA was only R14 696; this plummeted by 6.7% since May 2021.

28 June 2022

Inflation and the unlawfulness of cadre deployment

Statistics South Africa (Stats SA) reported last week that, during the month of May, household prices increased by roughly 6.5% year-on-year. Higher inflation was partly driven by a low base effect, but more so by higher fuel prices, which have been increasing owing to the ongoing war in Ukraine as well as the sanctions imposed by the West. Fuel prices in May of this year are 32.5% higher than they were a year ago.

21 June 2022

What investors should do as volatility increases

Even after increasing interest rates by 0.75%, the United States (US) Federal Reserve (Fed) still believes that it is possible for the central bank to achieve a soft landing in which they can tame inflation without pushing the economy into a recession. Consumers, however, seem to disagree, and this is in line with economic data showing the worst reading of consumer confidence since the 1970s. 

14 June 2022

A resilient rand

The rand has remained resilient, albeit volatile, as negative global drivers continue to clash against many positive local drivers. At one point, the rand touched R15.18 last week, before poor performing global indicators caused the rand to depreciate back to levels around R15.90. But, excluding the rumours that President Ramaphosa might have to step down, the multitude of positive local factors caused the rand to close last week off at R15.36.

8 June 2022

The economic legacy of the ANC

It has been almost three decades since the African National Congress (ANC) came into power. Our job, as economists, is to interpret the economic results of their actions, or, in this case, the lack thereof. To do this, we try to determine how the decisions of the ruling party, in aggregate, impact on the economy and, by implication, on the livelihoods of South Africans. 

31 May 2022

Do not panic, manage your risk, and buy the dip

During the first week of May, the Federal Reserve (Fed) in the United States (US) increased interest rates by 0.5%, the first time since 2000. Later, during the last week of the month, the South African Reserve Bank (SARB) followed suit. We agreed with the decision of the Fed but disagreed strongly with the decision of the SARB.

24 May 2022

The impact of interest rate decisions on South Africa and China

In a daring move, the South African Reserve Bank (SARB) last week decided to increase interest rates by 0.5%, despite the pressure that it will undoubtedly place on South African consumers. Although 15 out of the 24
analysts that were surveyed, expected a 0.5% increase, I cannot help but wonder if it was not a little too much.

17 May 2022

A prolonged bear market? I do not buy it…

Despite the robust rally at the end of the week, all three major equity market indices in the United States (US) – the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite – posted weekly losses. In total, the Nasdaq has lost $7.6 trillion in the current decline. This is more than what it lost during the dot-com bubble and the COVID-19 sell off, at which times the declines were only $4.6 trillion and $4.4 trillion, respectively. 

10 May 2022

Do not panic, buy the dip!

We ended April anticipating the announcement from the United States (US) Federal Reserve (Fed). Because of all of the uncertainty, the technology-heavy Nasdaq Composite contracted 13.3% in April, its worst monthly drop since the global financial crisis in 2008. Even the broader benchmark index, the S&P 500, had its worst month since the pandemic erupted in 2020.

5 May 2022

A roller-coaster month across the globe

The past month has been a wild one! The technology-heavy Nasdaq Composite, a stock market index that includes almost all of the stocks listed on the Nasdaq stock exchange in the United States (US), contracted 13.3% in April. This was its worst monthly drop since the global financial crisis in 2008.

20 April 2022

Floods, house prices, and inflation

Following the severe floods in KwaZulu-Natal, many companies have suspended their operations to recover and to restore damaged equipment and infrastructure. Container depots, terminals, and warehouses that have been damaged will likely further constrain local supply chains.

13 April 2022

Recession… so what?

In the past week uncertainty caused volatility in global stock markets to drag on. Uncertainty about war,
commodity prices, inflation, interest rate increases, lockdowns in China, global economic growth, and the likes, are all keeping investors, and the markets that they represent, both nervous and restless.

6 April 2022

The end of easy monetary policy

In global markets: This past month has been all about the war in the Ukraine and its impact on the global economy. The war has almost caused investors to forget about the long-term shift in monetary policy that finally started when the United States (US) Federal Reserve (Fed) increased its interest rates.

29 March 2022

Higher interest rates in South Africa

The South African Reserve Bank (SARB) has, again, increased interest rates by 0.25%. This is the third
increase since December 2021, bringing the repurchase, or policy, rate that the SARB offers banks up to

23 March 2022

Is there a recession on the horizon?

Between all the headlines of war, interest rate hikes, volatile markets, and the concerns emanating from
these, theories about an upcoming recession are becoming ever-more frequent.

15 March 2022

What to expect from fuel prices in South Africa

As the war in the Ukraine continues, you might have heard some rumours about fuel prices in South Africa
(SA). Some commentators that I would not refer to as experts even believe that fuel prices can reach R40 a
litre. Although nothing is impossible, I doubt this has much more than a 10% probability of occurring.

1 March 2022

Russia, the Ukraine, and South Africa’s Budget

During February, market uncertainty peaked, and this caused volatility to erupt. After a lot of
negotiations, media staging, propaganda, and hard sanctions, Russia invaded the Ukraine.

22 February 2022

Cryptocurrencies, an alternative asset class

As market, economic, and finance experts, we often get asked questions about investing in alternative assets,
from property to cryptocurrencies. Because these assets fall outside of the scope of many of the regulatory
bodies of traditional finance in South Africa (SA), we can, at best, use our expertise to inform and to educate
clients; we cannot give advice.

15 February 2022

A pro-business State of the Nation Address: How President Ramaphosa's economy can once again flourish

In his latest State of the Nation Address (SONA), President Ramaphosa, once again, delivered a pro-business message. He explained that: “The key task of government is to create the conditions that will enable the private sector to emerge, to grow, to access new markets, to create new products, and to hire more employees”.

8 February 2022

Market volatility and economic activity

We all knew that markets would be volatile this year, but I doubt that many thought that they would see something like the 26% single-day fall in the share price of Meta, Facebook’s parent company.

1 February 2022

Don’t worry, be happy

January usually starts with a lot of ‘hopium’, that is, irrational optimism. Consumers come back from holiday, well rested and ready for the new year. A new year full of new opportunities: #newyearnewyou, #2022, and #thisismyyear fill reels on Twitter and Instagram.

26 January 2022

If not into equities, where will all the money go?

Most investors in South Africa (SA) have more exposure to the South African equity market than to any other global market. This unfortunate strategy has cost them much in terms of returns over the long term but will continue to benefit them in the short term.

19 January 2022

A wonderful new year, the rand, and the markets

And so, the new year is upon us! Because we always get the same questions at the beginning of each year, I thought I would use this year’s first newsletter to introduce you to the main themes that we are considering and to provide you with some forecasts.

8 December 2021

Fortunately for us

At the end of 2021, we find ourselves at the tipping point in terms of global macroeconomics. For more than a decade, most of the world’s largest economies have been running an (unsustainable) monetary experiment, keeping interest rates at historic lows, and forcing liquidity into the system with tools such as quantitative easing (QE).

30 November 2021

Interest rates in South Africa

Little over a week ago, the South African Reserve Bank (SARB) decided to increase interest rates by 0.25%, as we expected they would. With a slight 3-2 majority, the Monetary Policy Committee voted in favour of an increase rather than to keep the rates unchanged. Markets seemed unhappy with the news and the rand faltered.

16 November 2021

Inflation and reforms

And then, it finally happened… Inflation in the developed world erupted. Germany’s inflation came in at 4.5% in October, whereas inflation in the United States (US) rocketed to a 30-year-high of 6.2%. In the United Kingdom (UK), the Bank of England warned consumers that inflation could breach 5% in 2022.

9 November 2021

Load shedding, pills, and jobs

A few years back we set out to estimate the economic cost of load shedding in South Africa (SA). Because our focus was purely on the economic side, we excluded the social costs associated with load shedding, which would, of course, have inflated our findings.

3 November 2021

Spending, taxes, and volatility

Democrats in the United States (US) will do what Democrats do, that is, spend more (mostly on the “not rich”) and tax more (mostly on the “rich”). In the past, we discussed the proposed $1.75 trillion infrastructure plans that President Joe Biden has, as a clever way of increasing the long-term returns (gross domestic product (GDP) growth) of the US economy.

26 October 2021

Pandemic stimulus and interest rates

Recently published research showed that pandemic stimulus failed in emerging markets. Among the top emerging and developed economies, there is no correlation between the stimulus programmes of 2020 and the strength of the ensuing recovery. The disconnect was, however, the largest among emerging markets.

19 October 2021

Markets calm down as Bitcoin starts to surge

Last week, markets were concerned about the persistent nature of higher-than-expected inflation, its implications for tighter monetary policy, and the eventual negative impact of tighter monetary policy on financial markets.

12 October 2021

The United States economy and global energy prices

Given the recent deceleration in COVID-19 cases and the pickup in activity indicators, we believe that the United States (US) Federal Reserve (Fed) will follow through with their planned taper announcement at the upcoming policy meeting in November.

6 October 2021

September economics

Something we try to do as economists is to observe and to report on shifts in long-term trends. This is
an important task because it can help individuals and businesses to make better long-term decisions.

21 September 2021

Economic activity and the Fed’s pending decision

Last week’s economic activity data reinforced our feeling that gross domestic product (GDP) growth in South Africa (SA) will remain subdued, and that we are still some distance away from pre-pandemic levels.

14 September 2021

How South Africa can get out of the poverty trap

Last week, Statistics South Africa (Stats SA) reported on South Africa’s (SA’s) second quarter gross domestic product (GDP). We were glad to see that GDP growth came in better than expected.

7 September 2021

As the world slows down, the rand strengthens

More and more data from major economies in the Northern Hemisphere is showing that economic recoveries have started to lose steam. This is evident from both survey and hard-activity data that were released during the Northern Hemisphere’s summer break. 

1 September 2021

August Economics

Markets in the United States (US) continued to reach new all-time highs in August. In fact, US equity valuations are now nearly as high as they were just before the dot-com meltdown. However, this by no means implies that we are heading in the same direction. 

24 August 2021

South Africa’s Fiscal Multiplier

During the past week or so, there has been considerable talk about South Africa’s (SA’s) fiscal multiplier, a ratio that illustrates by how much output rises for each level of government spending.

17 August 2021

More positive indicators and local policy amendments

Last week another collection of positive economic indicators emerged from the United States (US). Many more experts have, therefore, voiced the opinion that the US Federal Reserve (Fed) might start to curb their monetary support by the end of 2021.

11 August 2021

Goldilocks growth and a new cabinet

The United States’ (US) second-quarter gross domestic product (GDP) growth was disappointing, coming in at 6.5% instead of the expected 8.5%. However, the US has in fact now recovered from its largest peak-to-trough fall in output on record.

3 August 2021

July economics Chinese regulations and inflation

In a recent newsletter, I briefly mentioned our concern around regulatory uncertainty in
China. In July, however, this became one of our main themes after the MSCI China, a broad
index that tracks the Chinese equity market, fell by 18.8%.

27 July 2021

The latest economic news from the United States and South Africa

In the United States (US), inflation, once again, surprised to the upside. Compared to June 2020, headline inflation increased to 5.4% in June 2021, up from May’s 5.0%. 

20 July 2021

A subjective view of South Africa’s long-term trajectory

How you interpret the world around you and, subsequently, forecast what may be, is based on your worldview. Your worldview is, to a large extent, shaped by your external environment (experiences and exposure) and your internal thoughts and emotions

13 July 2021

What a world we live in: falling oil prices and spending less time working

The Organization of the Petroleum Exporting Countries (OPEC), together with their new ally, Russia, have, once again, been unable to reach an agreement about global oil supply.