Good morning

The headlines:
  1. The next Spanish Debt auction is happening today, where the Spanish Government will sell 12 month and 18 month treasury bills. Yesterday, yields of Spanish 10-year bonds rose to 6.16%. The concern is that 7% was the barrier at which Greece, Ireland and Portugal all sought bailouts. But that’s on long-term debt. What will be interesting is the yields achieved on the short-term debt – which will give an indication of the market’s opinion as to how likely a Spanish default would be in the next 12 to 18 months. The higher the yield, the greater the risk associated with the debt. And we’ll just infer that the risk assessment is the risk of default. The other test will be the cost of buying default protection on these treasury bills. That said, the Eurozone took a really long time to let Greece default. On the face of it, a Spanish default in the short-term has too many powerful negatives for it to be a real likelihood. We shall see. Link: Euro weakens ahead of Spanish Debt Auction.
  2. The US Senate has blocked the Buffett Tax rule. The bill would have imposed a minimum tax rate on households earning adjusted gross income of more than $2 million a year. Obama scolded the Republicans for rejecting this “common sense” measure. But I do wonder how much of it is common sense, and how much of it is something to do with the 6 out of 10 voters being a fan. Common sense would imply that there is a substantial contribution to be found here. The figure floating around is $47 billion over the next decade (purely from the tax rule – the figure is higher if you include the increase from not extending the tax breaks that expire at the end of 2012). So $4.7 billion a year. Mitt Romney is throwing around accusations that this will fund “11 hours of government”. So I went to, which estimates that Federal fiscal spending for 2011 at $3.6 trillion (I believe that State and Local spending are funded at a State and Local level). Assuming a 52 week year, working five days a week, for eight hours a day: I make that a funding of about 3 hours of government. Mr Romney must have been including the “not-extending the tax” breaks part. Because yes, that’s an increase of $162 billion; which makes it about 10 hours. Link: Senate sees Cents.
  3. Apple’s stock is declining. Up to now, analysts have been debating whether it would break the $1,000 mark (it’s floating around $580 at the moment). The decrease is being ascribed to waning demand for the iPad 3, and removal of subsidies on iPhones. With all due respect to the iPad 3, I’m just not convinced that I should be upgrading. I’m used to being awed – higher resolution and faster processors, whilst awesome, are not for amateurs. We like the cool stuff. Stop with the 3G and 4G – you’re changing the wrong thing – we want 3D. And iPad Siri! Come now. As for the subsidies – telecom providers are making noise about charging for upgrades (makes sense to me – if consumers will pay for the phone, why not take advantage?). On the other hand, maybe everyone is starting to wonder if the Apple share price is just inflated by over-enthusiasm. Link: Apple Falls for Fifth Day.
  4. Jim Yong Kim will be the next president of the World Bank. See: And the Oscar Goes To…
  5. Zimbabwe’s Ministry of Mining has ordered 469 local and foreign miners to resubmit applications for their exploration rights. The news has taken everyone by surprise, particularly the foreign miners (AngloAmerican, Impala Platinum, etc). I’m not entirely sure why though – I mean yes, it’s generally surprising. But not really unpredictable. Zimbabwe is not exactly famous for its respect of property rights. And here is a government that has lost its primary source of income (printing money), sitting on a mineral wealth that includes some of the largest platinum reserves in the world. The logical step is a short one. Particularly when Impala Platinum waltzes around trying to avoid empowerment laws; which is the political equivalent of poking a very-much-awake dragon in its sore eye with a burning brand. Lest anyone forget, the 2000 farm invasions began three days after the government lost a referendum on a new Constitution, following a campaign against it spear-headed by white commercial farmers. That same government? Still in power. Watch this space. Link: Zimbabwe Orders Miners to Resubmit Exploration Rights Applications.
  6. And the African Business News in brief. Link: ABN Briefs. The highlight:
    • SABMiller plans to invest $2.5 billion in Africa over the next five year. The money will be spent on building and revamping breweries. Hurrah for beer.
That’s all for now.
Have a good day.