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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: orkrious who wrote (3752)	12/3/2003 7:28:25 PM
From: patron_anejo_por_favor	Read Replies (2) \| Respond to of 4916

Here's a nice one...I know he's been expecting a big drop in the Rand eventually: Date: Wed Dec 03 2003 10:59 trotsky (Rand/dollar) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved by now this is downright stupid...South Africa's export earnings as well as the services part ( mostly tourism ) of its current account are in freefall due to the Rand's strength. the SA economy is no doubt going to slow down sharply, with the concomitant effects on the government's budget - which has been well behaved in recent years, but won't be much longer. at 8:1 or 7:1 the Rand may have been seen as pricing in all the good news about SA, and the fact that the chaos in Zimbabwe didn't prove contagious. but this is ridiculous - there is zero risk premium left. as for the carry trade inducement due to the rate differential, note that SA has had a HUGE rate differential with developed world countries for 25 years running - and it has never before helped the Rand ( and is thus not a satisfactory explanation for its strength ) . in short, buyers of the Rand here are either desparate shorts throwing the towel, or bubble-blowers. note that while rising pm prices are a Rand positive, the mining industry's importance and relative size vis-a-vis the SA economy as a whole has declined sharply over the past 2 decades - gold is something like 4% of SA'a export revenues if i recall correctly, negligible really. so gold and plats strength is likewise an inadequate 'reason' to buy the Rand. buying the Rand at these levels means one thinks there is NO risk in SA, neither political ( well, that was always hopelessly exaggerated anyway ) nor economical. i'd say the political risks are indeed very low, but the economic risks are now quite large. so, as soon as it turns technically, SELL the Rand. Date: Wed Dec 03 2003 12:53 trotsky (newtron, 11:07) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved the Rand has been rising much faster than the Euro. this is inter alia due to the fact that it's a relatively illiquid market as currencies go. anyone buying size drives up the price before he's even finished relaying his order. one day all that 'hot money' will want out of the Rand, and then we'll see how small that exit really is. Here's another on his favorite topic, the illusion of hedonic pricing: Date: Wed Dec 03 2003 11:35 trotsky (Takachi, 9:03) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved the answer to the conundrum is quite simple: the productivity data are completely bogus ( in this context, note that commerce was forced to revise down the 90's productivity gains sharply, and as it turned out, gains in the 50's and 60's were far stronger, in spite of no hedonic indexing at the time ) . the culprit is the statistical methodology, the very same methodology that concludes that a 13.5% SLIDE in nominal IT spending over 3 years actually represents a 58% 'GAIN' in 'real', 'chainweighted', 'hedonically indexed' dollars. in short, the productivity data describe something that doesn't exist - just as GDP describes something that doesn't exist. how anyone is supposed to arrive at informed economic decisions based on these bogus data is a mystery. inter alia, they help to prop up the stock market and allow it to trade at completely unrealistic levels - a function of the fact that most market participants are blissfully unaware of the extent of this government produced fantasy. however, no amount of hedonic indexing can change reality as is, only the perceptions of same. government's statistical fariy tales edifice contributes to reckless behavior on the part of both consumers and producers - which will ultimately hasten and deepen the country's economic decline. it's almost like coin-clipping, only more insidious.