Trading Update

13/07/21

My heart and prayers today lie with all the citizens of South Africa who have chosen the side of civilised decency and have made a decision to stand against the orgy of violence and looting which is sweeping across large areas of the country. The political and security leaders have proved yet again that they appear to have a hidden agenda. The level of structural and financial damage being done to the country is enormous, yet the response is very muted. Private citizens are essentially standing alone in their efforts to protect their property.

The army has ostensibly been called in, but like the police, is largely invisible. The numbers are telling. During the country’s first covid lockdown 76000 soldiers were deployed to beat and harass the population. Now, in the face of widespread mayhem and destruction, only 2500 are required.

Massive warehouses are being looted at will, with cars queuing for miles on the highways to load stolen goods. The entire freight industry is in dire straits. According to the Road Freight Association there will be a domino effect along the entire logistics value chain. The warehouses are empty and shelves at shops are either empty or burnt. Restoration of supply is likely to be a difficult and slow process.

As Alan Paton wrote in 1948 – Cry the Beloved Country.

But now to global affairs.

Throughout the world most countries are trying to emerge from the darkness of lockdowns. Travel is sometimes a possibility, vaccinations are our new saviour and economic damage is evident everywhere. Strangely though most asset prices are booming. Used car prices are at all time highs. Copper, steel and lumber are at decade highs. The price of container shipping is at a 17 year high. The residential property market and global stock markets appear guaranteed to keep climbing.

The reality of our new world seems to have been largely ignored. The immense financial cost of a lockdown is no longer even mentioned. Not by our leaders and certainly not by the media. Perhaps people are too afraid to speak the truth. Perhaps it is safer to simply accept the narrative which we are being fed. This whisper, that perhaps all is not that well, brings me back to a quote from George Orwell – “The further a society drifts from truth the more it will hate those who speak it.”

There are many players in this game. You and I. Big business. Central Banks around the world. Modern Monetary Theory (MMT) and Quantitative Easing (QE). Personal, corporate and government debt levels. The rising spectre of inflation.

When I sat down to write this newsletter I wanted to try and cover the whole subject in a single article. I realise now that this will not be possible. It will have to be covered in a series of newsletters. I will endeavour to unpack and explain some of these factors. Hopefully this will assist you plot a course through the very dangerous financial waters that lie ahead.

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