Merry Xmas: SA petrol price on its way back to R10/liter

As long as government doesn’t take the opportunity of a collapsing oil price to pass-through a fuel levy to cover eTolls and bail out Sanral (don’t share the idea with them), petrol prices may be heading back to levels last seen in 2012. That means a price of around R10 a liter for 95 ULP petrol in Gauteng could be on the cards.

The global oil price in Rand terms has fallen around 40% from the levels of late 2013 and most of 2014.

oilzar

And the pump-price follows this global oil price pretty closely, although is less volatile, because it is regulated. As things stand there’s around a R1 per liter price decline coming in January.

sapetrol

 

Lower CPI inflation, cheaper to run your and Eskom’s generators, and likely to keep the Reserve Bank in a friendly mood with unchanged interest rates for longer.

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Africa Eurobonds collapsing

It’s been quiet here on the blog, but as quiet as it’s been here I’ve been busy at work. I’ll try pick things up a little on the blog, but keep to twitter-length posts.

African Eurobonds are taking an absolute beating at the moment and the proximate cause of this collapse seems to be the oil price collapse where the Brent crude price has nearly halved in the last few months.

africaeurobonds

My thoughts on the –at the time, still coming– Africa Eurobond collapse are outlined in this report I sent to African Alliance clients on October 15, 2014.

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Cape Town, Nairobi, London, and NY in next two months

I’ve hit the ground running here at African Alliance and published five macro & equity strategy reports in the past month. As a result the blog just hasn’t been a priority. I’m getting material together for upcoming roadshows to Cape Town, Nairobi, London and NY in the next two months. Our team has developed some good views , and we’ll be making some more big calls in the next few weeks as well. If you’re in any of these cities and would be keen to meet up for a drink or meeting, get in touch.

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AngloGold Ashanti predicted to perform well in mining efforts

By Guest Contributor

Fatalities in Africa’s gold mines have always been a problem. This is troubling but common news, with around 100 -120 casualties being reported every year. As for AngloGold Ashanti (NYSE: AU), 16 fatalities in 2009 happened in their mines in South Africa.

Since 2007, AngloGold Ashanti was able to reduce their operational casualties by around 70%, thanks to the efforts of a safety program spearheaded by the company’s very own CEO Mark Cutifani. With its new technology called Reef Boring, the company might even reduce its casualty to nothing in years ahead.

Continue reading

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I’m Joining African Alliance Securities As Lead Macroeconomic Strategist

Today I join African Alliance Securities as lead macroeconomic and equity strategist. African Alliance is an investment banking group operating in Africa, providing local and on-the-ground investment banking services across the African continent. African Alliance doesn’t have a commercial banking license in any country as far as I’m aware, but they have a massive presence on the ground in Africa with 11 offices scattered across the continent.

My time at ETM Analytics has been incredible, but as they say, all good things come to an end. It’s been amazing to work so closely with some of the brightest minds in SA economics, with the likes of Russell Lamberti and George Glynos never far away for an economic debate or discussion. I’ll miss having them and the rest of the team around, but I look forward to joining another excellent research team consisting purely of equity research analysts (rather than economists) – which means my research focus and final outputs will take on a slight tilt toward the listed equity market now – a new and refreshing change. African Alliance Research has just been voted Best Research House in Africa in the Euromoney Research Survey for the third consecutive year.

Bloomberg News ran the following story about my move: ETM Analytics Market Strategist Becker Joins African Alliance

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SA’s road repair bill estimated at R149 billion

This is according to Engineering News, following ‘acting transport director-general’ Mawethu Vilana’s comments in parliament’s transport portfolio committee yesterday. Watch this number inflate sharply in coming years as the cost of building materials, labour and government waste also gets added in (for more on this last point listen to this interview I did earlier this year on Moneyweb).

I would also point out that this is only the resources required to fix roads in the “poor and very-poor” category. When we consider that what government believes are ‘good’ roads are also well below original ‘spec’ and in need desperate need of maintenance and investment spending, this bill starts to ramp sharply higher.

The problems here are the same as elsewhere in the public sectors. As I wrote back in early 2012 regarding electricity infrastructure:

“The maintenance backlog of municipal electricity infrastructure is at about R35bn and rising by R2,5bn a year, Parliament heard yesterday. Municipalities are failing to invest in infrastructure because they need funds for operational expenses and because of uncertainty over the future ownership of the assets,” reports Business Day.

Back of the napkin calculation based on the above figures shows that maintenance of municipal electricity infrastructure has been neglected for about 14 years.

This is a problem underlying each and every service provided by government, including water utilities. Taxation, whether direct or indirect, is going to climb dramatically to pay for crisis management, ala Eskom tariff hikes.

A major reallocation of capital into these areas will be required that will be a huge drain on the private sector and the economy.

What all this means is that tax rates and indirect taxes can be expected to rise sharply in years ahead – it’s negative for the private sector and disposable incomes. I’ve also written lots about this trend in crumbling water infrastructure (here’s an article with several links to those water articles).

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Ridiculous attack on Austrian economics

…By the academic Noah Smith who – very obviously – has never read a chapter of Bohm-Bawerk, Mises, Hayek or Rothbard in his life.

Here’s Noah Smith trolling the Austrian economists on Bloomberg View.

Although I don’t believe Smith’s article is even worthy of a response as it’s so misguided on so many levels, Bob Murphy, Mish Shedlock, Gary North, and Peter Tenebrarum have all done a good job explaining exactly how far off base he is.

Professor Bob Murphy: “Noah Smith Boldly Goes Where Thousands of Austrian Critics Have Gone Before

Gary North: “Assistant Prof. Noah Smith’s Life on the Welfare Rolls. Will He Get Tenure?

Mish Shedlock: “Brain Worms – Bloomberg Writer Noah Smith Has Them

Peter Tenebrarum: “In Defense of Austrian Economics

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