Australian virologist and Nobel prize winner Sir Frank Macfarlane Burnet declared in 1962 that one of the most important revolutions in history was the “virtual elimination of social diseases”. After all, within two decades, smallpox and polio would be eliminated from most advanced nations. Yet, according to the Financial Times, Burnett had not fully considered the “paradox of progress”: The more humans continue to destabilise the planet in the pursuit of advancement, the more pathogens are unleashed. For every human advance, from speed of travel to intensity of farming, there are hidden dangers. The same factors that allow us to create food surplus and vaccines open us up to the risk of pandemics worse than the one we are experiencing right now. As humans tip the world into disequilibrium through population increases, destruction of biodiversity, and the raising of atmospheric temperatures, the greater the threat of pathogens we cannot control.
This is where the great paradox emerges in that by definition, a paradox is a statement or proposition that seems self-contradictory or absurd, but expresses as a possible truth. The paradox principle is illustrated in the above graphic as floating 3D solids in zero gravity.
“By denying scientific principles, one may maintain any paradox.”
– Galileo Galilei, Italian astronomer, physicist and engineer
- One would think that a world slowly easing itself out of the Covid pandemic might only be good news for governments and economies. However, the surge in the price of energy, metals and crops is highlighting the strengths of some and the vulnerabilities of others. For more insight into who the real winners and losers are from surging oil and commodity prices, take a read here.
- US President Joe Biden’s $1.9 trillion Covid-19 relief bill is a major political victory for the new president. At the same time, the partisan divide over the bill foreshadows the difficulty he will have in enacting the multi-trillion-dollar economic programme he wants later this year. Most Americans will receive direct payments of $1,400 within days, including new health insurance subsidies and child-tax credits, while extending $300 per week unemployment benefits into September. The S&P index reached an all-time high last night on this news.
- Consumers in the world’s largest economies have amassed an additional $2.9 trillion in extra savings during Covid-related lockdowns. It is these retail savings pools that stock market bears feel have been propping up equity markets at unsustainable levels, including via platforms such as Robinhood.
- Two months after the UK left the EU on trade terms agreed by Boris Johnson’s government, research from manufacturing trade group Make UK has shown that 74% of more than 200 leading industrial companies are facing delays with EU imports and exports. Brexit red tape and disruption to global trade from the pandemic has left businesses ‘severely strained’.
- In evaluating China as an investment destination, billionaire Jack Ma personifies the contradiction inherent in China’s governing ideology. His ability to survive in a “market Leninist” system that stamps out alternative sources of power raises the question about what this truly means for foreign investors.
- The anti-money laundering (AML) requirements imposed by asset managers are becoming increasingly onerous, causing frustration to clients and Dynasty alike. The additional vigilance on AML by these service providers is largely attributable to the fear of fines being imposed for non-compliance. For example, UBS is pushing for a fine reduction in money-laundering cases and Swiss banks will start a three-week long appeal after landing a $5.4bn penalty for helping French clients to avoid taxes.
- Cabinet inaction is delaying plans to merge three Central Energy Fund (CEF) subsidiaries, namely PetroSA, SFF and iGas into a new company provisionally called the National Petroleum Company of South Africa (SANPC). This is apparently due to solvency and liquidity challenges at PetroSA as the biggest subsidiary, and to avoid the potential collapse of the CEF Group.
- On the back of surging oil prices, economists have warned that a weaker rand and the introduction of additional fuel taxes mean South Africans will continue to pay more for fuel in the coming months – to levels last seen in the second quarter of 2019. The price of Brent crude surged above $70 a barrel on Monday after Saudi Arabia said the world’s largest crude terminal had been attacked.
- Although commodity prices are hovering near an eight-year high which is good news for South Africa, certain analysts believe that the price of raw materials matters less for SA’s currency than the movement in US Treasury yields. Should commodity prices rise with an accompanied rise in Treasury yields, the rand would more likely weaken than strengthen.
- Foreign investors have sold SA government bonds at a rate last seen during the March 2020 virus-induced panic, with daily outflows averaging R3.5bn over the past ten days. (This being according to figures published on Monday).
- The South African economy contracted 7% in 2020 compared with an increase of 0.2% in 2019 as announced by Statistics SA. This represents the country’s worst economic performance since 1946.
- Highlighting fragile economic recovery, business confidence in South Africa is down in the first quarter of the year which, according to RMB, saw 70% of senior executives raise concerns about current business conditions.
- The perilous financial position of SOEs remains topical, but the looming financial disaster within municipalities may also place a greater demand on the fiscus and worsen SA’s debt-to-GDP ratio. The situation is so desperate at local government level that citizens’ groups are revolting against inept local government service delivery and taking control of municipal functions by delivering services themselves.
- Last year’s biggest cryptocurrency scam may have been a jolt to South Africa’s regulator, but not everyone will hold their breath to see how things pan out. While major financial hubs like Singapore have withdrawn legislation in an effort to lure crypto firms, and the UK government faces calls to embrace digital currencies, South African exchange Revix is moving its head office to the UK and planning another location in Germany, and Luno is registered in London and has a presence in Singapore due to uncertainty over government regulation.
Sources: Dynasty, Bloomberg, The New York Times, The Wall Street Journal, Economist, Daily Maverick, BizNews, Business Day, Business Insider SA, Moneyweb, etc.