- US Stocks fall as Fed Minutes Damp Stimulus Expectation. The S&P 500 fell yesterday on signs of less stimulus, after rising to its highest level since 2008 on Monday based on news that US manufacturing was showing signs of better-than-expected growth. Because <insert sarcastic tone here> manufacturing, in and of itself, is always a good thing. Can I get a “not”? And here’s why: if I were a manufacturer, I would hike production when there’s lots of demand (probably a good thing), or when it’s cheap to produce (probably not such a good thing). In the States situation, as a manufacturer, I would look at the deficit crisis; and I would think “Obama or Romney or Santorum – they’re all going to cock it. Obviously – because the right decision here is an unpopular one, and these men are politicians. And then they’re going to monetise the debt by getting Bernanke to toss more stimulus into the mix, and then we’re going to hyperinflate”. Do you know who wins in hyperinflation? Manufacturers. Because they get to constantly self-hedge. And now – now interest rates are really low (so cheap to produce on borrowed money), and the Fed is quantitatively stimulating (let’s look forward to higher prices). Yes – I would certainly manufacture. And yes – if the Fed announced less stimulus, markets should be concerned that I made the wrong call. Which they are. Link: Stocks fall on Fed Minutes.
- In more Petronas news (who was yesterday eying out Canada for a $5 billion purchase), its South African unit Engen has announced that it has suspended its purchases of oil from Iran. Engen normally sources about 80% of its fuel from Iran. And according to Petronas CEO Shamzul Azhar Abbas, Engen is yet to source alternative supplies! And this is after Sasol also stopped purchasing Iranian fuel (about 20% of its supply) last month. So to clarify: Engen imports raw crude from Iran and refines it at its Durban refinery; and the refinery is built/modified to process Iranian crude. So things will need to be re-modified once new supplies are sourced. All this sounds like the beginning of a series of fuel shortages in Johannesburg. And then I will not be happy. And then it will make me want to say some things about this US sanction business that would probably blacken my name on any and all future US Visa applications. How I hate to bite my tongue. Link: Engen suspends Iranian Oil imports.
- China has increased the quotas for foreign investment on its capital markets. The quotas for qualified foreign institutional investors over their investments in stocks, bonds and bank deposits have been increased from $30 billion to $80 billion. This is seen as a shift in the current export-driven model that China employs. This is also meant to be part of China’s commitment to liberalise the yuan. And take over the world. However, that said, since the China Securities Regulatory Commission (CSRC) first initiated the program in 2003, it has only granted $24.6 billion of the original quota. So this may not be a practical reality so much as a theoretical limit. And therefore: lip service. Link: China “opens” its capital markets.
- An 11 year-old Dutch boy has won a €100 prize for his plan to fix the euro that involves describing money as a pizza. This suggestion was in pursuit of the Wolfson Economic Prize, the second highest honour in the field of Economics (after the Nobel Prize which isn’t a real Nobel prize – because it only came about years after Nobel’s death). The topic for this year’s Wolfson is finding a way to let a country leave the Eurozone without ensuing economic chaos. The kid didn’t make it into the top 5 (presumably, the moderators prefer pasta), but the top 5 do have some interesting theories. Link: The Ten Year Old Euro Exit Plan: Pizzare.
- And the African Business News in brief. Link: ABN Briefs. The highlights:
- Ethiopia has purchased thirty-five thousand tonnes of Russian wheat. The purchase now hinges on the approval of the World Bank, which is financing the transaction.
- The JSE and FTSE are set to rebase the FTSE/JSE Africa General Industrials index (J272) on 26 April.
- Despite fears, Sudan and South Sudan have begun peace talks.
- South Africa’s total new vehicle sales increased by almost 5% year-on-year in March, but exports declined by almost 20% over the same period.
That’s all for now.
Have a good day.