March 4th, 2008

So while the world around me appears to at this point not be in as much chaos as i once assumed, my trading is certainly experiencing its greatest challenge in my career. A disastrous week away, getting the Thailand decisions completely wrong, etc. has left me down for the year as of the beginning of March. Hopefully now i can bunker/hunker or however you want to say it, down, and start achieving some success. I think the main thing is I need to just get excited about this job again, bring back the enthusiasm that's necessary.

Game time.

- RBA hiked rate by 25bp to a 14yr high of 7.25% but language suggested could be end of tightening cycle
- Prime Minister Rudd said a "double blow" for consumers
- India's largest bank ICICI disclosed large subprime losses (largest private sector bank) which pushed stocks down 8% at one point
- FX swaps in HKD softened after end of China Railway Construction IPO ends on March 5th
- HKD inflation will be a huge problem from USD peg / CNY appreciation, as most goods from China + oil prices
- Temasek auctioning off 56% stake in Bank International Indonesia to comply with Indonesia regulation that prohibit foreigners from owning controlling stake in more than one bank (they already control Bank Danamon at 68%)

ZAR
- Vehicle Sales fell overnight for 11th straight month (annual 12%) with higher IR hurting demand; consumer demand driven indicators should not show too much effect as market already well aware of effects of SARB tightening cycle
- with inflation exceeding banks 3-6% range since April, has raised rates 4 times to 11%
- Currency enjoying support from dollar-propelled rally in commodities
- Weak macro factors (c/a deficit, electricity cap, inelastic labour market)
- Weak political factors: Zuma's end of honeymoon with Cosatu and SACP, made evident by SACP's all-out attack on ANC budget policy
- SACP staunch enemy of SARB's inflation targeting regime and of Treasury's conservative discal policy
- this will be a factor in 6 months when Zuma is on criminal trial will need all the political support he can get so could relax conservative monetary views
- with GDP high, credit extended and high inflation + energy crisis hurting mining jobs in H208, if Zuma tinkers with Treasury or SARB to address job losses, market will sell off SA assets