Daniel King

If the SA government wants to structurally reduce consumer inflation in the long term, while also avoiding punitively high interest rates, they need to more deliberately target two big costs: Rent and medical aid. Policy design should flow from this fact.

I wonder whether the history books will indeed record this as a large and scrumptious TACO or a strategic success.

Winning as an active investor is rare, and even with the few who win consistently, separating luck from skill is tough to do, and there are broad differences in market views and investing approaches.

Several presidents of democratic South Africa, including the incumbent, are apparently trying to derail or at least significantly setback an inquiry into failures by the NPA to prosecute TRC cases. The grounds for this don’t appear to me to be substantive at all. Why then?

The odds of a repo rate cut have all but evaporated in the last month. 12x15 FRAs, which essentially bet on where 3M JIBAR will be in 12-months time, are now at 7.35% (from as low as 6.07% a month ago). That’s a big swing in monetary conditions.

It’s stupid that we conform to anglo american office dress codes in the South African summers.

Escalation games. Very unfortunately, the only thing which stops this tit-for-tat, long term, is a complete annihilation of Iran's ability to fight.

@JohannBiermann1 I hope I don’t get cancelled for this but my favourite day is Thursday.

1. Saturday 2. Sunday 3. Friday 4. Thursday 5. Wednesday 6. Monday 7. Tuesday

@pkoutrom @BaragwanathBiz That would be ideal.

@DanielKing043 @BaragwanathBiz South African manufacturers can become competitive by importing Capital Goods now.

Given the structure of SA’s economy, the ZAR is too strong for broad-based international competitiveness in the manufacturing sector. Excl. precious metals, the merchandise trade balance has generally been in a deficit of about R100bn-R200bn p.a. for the last 20 years.

Not sure how actionable this is for the average investor but yes, in an AI utopia, the only constraints that are real are physical. Land and critical minerals, really.

If I read correctly, the discussion paper published by Treasury regarding tax treatment of CIS returns is potentially huge. Interest and REIT distributions could be taxed at capital gains rate (not income tax rate). This could stimulate huge flow into property and income funds.

@Brad_Setser Perhaps ignorant question: why do you equate fx accumulation to US Treasuries/USD accumulation (rather than EUR, JPY, CHF or any other alternative out there?).

Setser out. Do read my FT piece! ft.com/content/9ea52a…

Me, in the Financial Times -- On the surge in China's intervention, and the impossibility of diversifying away from dollar assets/ Treasuries when the state banks are buying $100b a month in FX 1/

A report which partially reinforces an idea I discussed in our last webinar: South Africa (and much of Africa) is a hotspot of contestation between global superpowers. Expect geopolitically-induced bursts of volatility to continue to feature in our markets (remember Lady R).

A classic risk off rotation over the past month with the S&P consumer staples sector outperforming consumer discretionary stocks by over 19%

Consumer staples now at trading at same forward multiples as tech despite meaningfully lower earnings growth estimates. A clear risk reversal as investors are willing to pay up for certainty of cash flows.

Mining Indaba plus UCT students back in town = hell week on Cape Town roads. Underinvestment in (and even destruction of) passenger rail capacity has turned out very badly for the average person.

Most of the time, policy rates in emerging markets will be calibrated to sit slightly below average nominal GDP growth. South Africa, however, has been a global anomaly in the recent past. If inflation remains subdued, the repo rate, and bond yields, can settle much lower.

We covered an enormous amount of ground in our webinar today. I made the case for a repo rate at 4% over the next few years, with nominal bond yields at 6% or so. I also spoke about gold for a bit (see below). Full webinar recording here: #recording/viewRecording/1859189953057942101/4758122728717733463/invest@merchantwest.co.za" target="_blank" rel="nofollow noopener">register.gotowebinar.com/#recording/vie…

RSA: 2-year gov issued inflation-linked bond (code:R210), currently paying CPI+4.1%. In my opinion, this is preferable over money market for short term capital (the repo rate likely moves significantly lower if current conditions persist).