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Daily Dose

10 December 2018

Good Morning,


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On The Wires,

Huawei CFO seeks bail on health concerns…India and Pakistan turn to religious diplomacy as peace talks stall…All Around the World, Central Bank Independence Is Under Threat…Saudi Arabia refuses to extradite Jamal Khashoggi murder suspects…1,723 arrested in 'yellow vest' protests in France…South African Gold Industry Enters Final Phase of Slow Death…KPMG South Africa Apologizes for Scandals, Seeks Second Chance…Tyre scam probed at Newcastle city depot…22 fatalities in 12 hours on KwaZulu-Natal roads…Cape cops nab three for illegal firearms in separate incidents…Fiji break South African hearts at Cape Town Sevens…Suspected match-fixers arrested at Kingsmead…Baxter set for meeting with Chris Hughton to discuss Tau's future…India end 10-year win drought in Australia first Test…Man City lose to Chelsea, Liverpool go top…Baroka take the Telkom…King Louis wins the SA Open.

Two Cents Worth

“I stopped believing in Santa Claus when I was six. Mother took me to see him in a department store, and he asked for my autograph.”

– Shirley Temple

Currency Crackdown

On Friday the rand traded in a wide range of 13.93 to 14.19 but closed at a respectable 14.00. The reason for the late strength of the rand was the lower than expected US non- farm payrolls, which led to a weaker $ and added support to widespread opinion that the US economy might be cooling off. The $ has broken the 1.14 level against the Euro on the topside, and as a result, all currencies enjoyed late strength against the $. Weak equity markets, geopolitical concerns (US- China) and the resultant concerns about global trade wars have the markets on edge again. “Risk off” seems to be in charge and, as a result, all the gains that were made late on Friday have been given back. The rand, and its emerging market peers, start the day firmly on the back foot.

Looking at the indicators- US equity markets took a good smack again, and as expected, Asian markets have followed suit. This is all on the back of global trade concerns. Oil is higher again as OPEC agreed on production cuts (how is this allowed?), and gold traded to a 5 -month high, on the back of a weaker $ and the potential increase of tensions between the US and China, over the arrest of the Huawei CFO. Other metal prices declined as China import figures suggest that demand from China might be less than anticipated. US Treasury yields dropped again, as investors flee from the equity market, into the bond market. The local R186 yield is slightly higher this morning, on the back of a weaker rand.

Economic releases today include: nothing local, from Europe we have German trade balance and Eurozone investor confidence, and then from the UK, we have trade balance as well as industrial production. It must be noted that the UK parliamentary vote on Brexit will be held tomorrow. This vote will have an impact on global markets, and the strength, or weakness, of the GBP. For all GBP traders, please keep this in mind as the potential for a decent move is obvious. Take care!

As we move closer to Christmas, liquidity will start to dry up and hence volatility should start to increase. Take care when pricing, and make sure that you identify levels and act accordingly.

Did You Know?

Shirley Temple was the first winner of the Academy Juvenile award at age 6. By then she had already appeared in over 20 films!

Enjoy your week,

Wayne

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