What an eventful week: The impeachment trial has begun, Russia’s government resigned, and Australia received some desperately needed rain. Locally, there have been many shifts too – the SARB lowered rates, the Zondo Commission resumed, and President Ramaphosa made forward strides with regards to Eskom.
Global News
- President Trump’s impeachment trial has begun. Democrat Adam Schiff read out the charges against the President on the Senate floor, accusing Trump of abuse of power and obstruction of Congress arising from his dealings with Ukraine. It remains unclear, however, how the Republican lead Senate will interpret and manage the trial, but we don’t ultimately foresee the vote carrying.
- The entire Russian government resigned on Wednesday. The Prime Minister said that the resignation came to give President Putin room to carry out the changes he wants to make to the constitution. The radical constitutional reforms that Putin is contemplating would entrench his power in Russian politics after he leaves the presidency in 2024. Putin also instated a new, previously unknown, Prime Minister, Mikhail Mishustin, who was unanimously backed by parliament.
- The first phase of the trade deal between China and the US has been signed. As part of the deal, China has promised to more than double its purchases from American farmers and the US has in turn undertaken to reduce tariffs on $120 billion worth of Chinese products. Markets have been buoyed for the last number of weeks in anticipation of this.
- Microsoft has committed to erase its carbon footprint, making a statement that it would be removing as much carbon as it has emitted in its 45-year life span.
- After horrendous wildfires that have ravaged Australia, thunderstorms have been welcomed. While not eliminating all the fires, the rains have massively cooled the inferno.
Local News
- The South African Reserve Bank yesterday unexpectedly cut its benchmark interest rate by 25bps, representing its lowest level in four years. The Governor, Lesetja Kganyago, confirmed reduced forecasts for inflation and economic growth.
- Telkom announced that it may have to cut 3000 jobs due to falling sales in its landline business and the weak economy.
- The Zondo Commission resumed this week. Zuma was due to appear before the commission in two weeks but has filed an affidavit saying that he is too ill to testify. This would be the second time the ex-president would not appear before the commission as a result of medical reasons.
- The Johannesburg High Court has ruled that Old Mutual does not have to reinstate Peter Moyo as CEO and may appoint a new permanent CEO to replace him. This came after Moyo was suspended and then fired last year, only to be reinstated by the courts.
- Follow this link to a very interesting article by Chief Economist at STANLIB, Kevin Lings, where he considers rand directionality through the convergence of two forces: fundamentals vs yield.
- Feeling helpless about Eskom and the South African economy? Well apparently, President Cyril Ramaphosa and Tito Mboweni did not take a break over the December period and have been working on some much needed problem-solving. Follow this link for Tito Mboweni’s pre-Davos breakfast speech.
