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The Latest Fake Sugar High From Jim O'Neill
Does Jim O'Neill take sugar with his tea? No thanks Turkish, he is sweet enough.
I am back from my short trip to South Africa, and interesting to see this twist in global market mood. I have joked a few times since the World Cup started about how perhaps one might trade European CDs spreads and the Euro in line with the performance of teams at the World Cup, and here we are, ahead of a final between the Netherlands and Spain. Not too bad for Europe in the end eh?It also means there has to be a “new” winner, as neither has achieved that before. How exciting is that? What does this, if anything it tell us about broader matters? Could it be a sign that indeed Europe might be learning from the phrase “ never let a crisis go to waste?” Are we really on the verge of credible European bank stress tests that even involve some of those most untestable? What a change that would be!
On other matters, how has SA handled the hosting of the world’s greatest competition? I guess if you got stuck at Durban airport last night, you might have a different view from all those thousands enjoying the “ fan mile” before the Capetown semi final game I witnessed Tuesday night. Anyhow , amongst my musings;
1. The World Cup itself is nearly over ( some may be pleased to know……….) and all the post competition debate will get going. As for the final, I guess a lot more will be made in coming days about the interlocking nature of Holland and Spain, and the beautiful game , Cruyff etc, and so on. It is great to see two such “natural” footballing teams in the final. Lets hope we get a true cracker.
One thing I had not fully realized until I arrived there and presented some thoughts about the interlocking world of football and economics, is that of course, it is quite feasible that there will only be World Cups hosted by BRIC nations this decade. Brazil is done for 2014- how good will that be- and Russia seems to have a decent crack at 2018.
If China and India get their act together, perhaps it could be a “job lot” for the next two decades….
2. South Africa . it was fascinating chatting to all the tens of people I met, including a large number of investors, during my brief stay. I had not been down there for a couple of years, found myself engrossed in topics I used to spend a lot of time on. Generally speaking it seems to me that South Africa has hosted a pretty spectacular competition here, and looking forward, South African policymakers and all their citizens have to take a lesson from this. I was rather obsessed with South Africa for a while post Inflation Targeting, and I had a lot of time there during that rather weird “ Rand Enquiry” when I was a so-called international expert witness. It still seems to me that the country doesn’t take “IT” seriously enough and needs to focus on some simple things, and stop worrying about its past and give over feeling sorry for itself. When I compare Brazil and South Africa , two countries with troubled pasts- although entirely different troubles- who both introduced IT as a supposed cornerstone for change, no prizes for which one has seemingly done better from it –so far. This decade we have just started could see Brazil growing by close to double the rate it has done in past decades. If you speak to most South African analysts that know their stuff, they all think it is an issue as to whether trend growth can stay where it is, or decline. There is no special reason as to why this has to be the case, it is up to all the people there and its policymakers. Use this platform of the World Cup to change stuff.
3. BRIC(A)? At least 10 people I met wanted to know again a/ why not Africa as one of the BRICs and b/ how come the s isn’t an S for South Africa. On the latter, the above deals with that, and as I pointed out to a few people, we specifically discussed why SA wasn’t in there back in our infamous 2003 article. It doesn’t have enough people. When it comes to Africa, yes, combined the population is around 900 million I believe. While that gives the whole continent true BRIC potential, this number of people is still 200 million less than the one nation of India, and 400 million less than China. Of course, within this context, Egypt and Nigeria are both countries with lots of people , and that is why they are both in our “ N11” and I certainly both of these are most interesting. Nigeria, who recently took one of our colleagues to be their Finance Minister ( how awesome is that?) has about 20pct of the continent’s population in its borders, and this country strikes me as key. As I showed a few people, while Nigeria’s Growth Environment (GES) score is still low, it has nearly doubled in the past decade. If this carries on, I expect some people later this decade will shift from “ why don’t you drop to R in BRIC” , and “ when are you going to widen it to BRIIC?” to “ how about BRINC?”………… and before any smart Alec starts taking that idea over into exaggerated silliness’, we are quite happy to stick with the BRIC thank you very much.
4. US exports double in next 5 years? President Obama talked again yesterday about these ambitious plans and unveiled some of the key business people he is using to help promote the idea. I don’t think I have found anyone who agrees with me, that this is actually do-able. Yes I know it has never happened before, but the BRIC economies never all did what they are doing before. Germany is one of the “ best of class” examples of those benefiting. Just look at the continuing anecdotes pouring out of that country about how well their branded goods companies are doing. I believe Daimler reported some model sales to China trebled in June compared to a year ago, reported Tuesday is one of the latest to catch my eye.
The US can achieve it, to do so, it simply needs domestic demand this next 5 years to carry on in the BRIC ( and N11 world) how it currently is, it needs a US$ to not rise, and hey presto, done. Talking of which, this remains amongst the reasons why I find it so hard to join the now only too fashionable club of Euro haters. Put Obama’s export plans together with China’s move on the CNY, and 2/3 of any reason for disliking the Euro get taken away. The other 1/3 should relate to the forthcoming stress tests perhaps, and lets see what happens.
5. World recovery faltering, pausing, , W, L both letters back in vogue. V seems to be now off anyone’s radar? Interesting to see the IMF GDP forecast “ upgrade” which brings them much closer to us, they are now 4.6pct for this year. As I written about last week, and talked endlessly to people about, re our China forecast change, yes, we have lowered 2010 now to consensus, but we did not change 2011. Upward momentum in the recovery-globally-has slowed, nothing more.
6. Markets. So am I an optimist or pessimist these days for markets? People tell me that I am confusing them. “ Sell in May and go away come back on St Legers/After the US Mid Term elections” still grabs me significantly as there are lots of niggling issues that are going to stay around. Therefore this bounce that has started this week might indeed not be the beginning of the real deal, but after having three wonderful days in Africa, I continue to think the real “new normal” is “ BRIC plus related new normal”, not the one so many G7 obsessed people talk about and the world is a better place. Growth is, and will remain more balanced, less dependent on internal demand in the US and the West. And I continue to think a fresh structural bull market in equities was probably born on the back of more countries starting to look after themselves post 2008 credit crisis. It is just a debate as to whether we have to see a lot more pain wringing until the Autumn or not.
Good luck.
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This guy is going to be out of a job in 12 months when Goldman goes bankrupt. Maybe he could get a job as a football cheerleader?
"Generally speaking it seems to me that South Africa has hosted a pretty spectacular competition here, and looking forward, South African policymakers and all their citizens have to take a lesson from this. "
Jimbo, even Hugo Chavez can put on a good show. I'm sure the guy waking up in Soweto this morning will be pleased to hear you had a good time. Idiot.
+10 Best line in Snatch reference
Even O'Neill thinks doubling our exports in 5 years is a joke. This is frightening that our President listens to these advisors or perhaps his magic cue ball that believe the value of the soundbite on the 5pm news nowadays is enough to fool the common public in between Sloppy Joe's and grabbing a Bud from the fridge for Dad.
"Whats thay you say? Unemployment % is down and we are doubling exports? This Pres. must really know his stuff"
What can we possibly export that people want? Itunes and other digital media? Fender guitars?What exactly do we make that people want to import? Even our popular clothing brands are made outside the U.S. Only thing I could imagine is grains and food which we price fix.
read it again, he thinks it IS doable.
i'd like to know exactly what it is that these guys think we're going to export? some manufactured item that we make better and cheaper than anyone else? excuse me, we don't do that here any more.
I forget which MSM channel it was, but I always have one on (for the babes and background noise really)...but one of the commentators actually asked a guess something to the effect: Are they getting these customers from Mars!
the "Mars" word was direct from the quote/statement!!
Yes, Mars...I about fell out of the chair ROFL. Wish I could find the clip of that...
I am not Chumba Bumba Numba Rotumba or anyone else...
".....listens to these advisors or perhaps his magic cue ball....."
Bernanke?
'No thanks Turkish, he's sweet enough already'! Excellent! AHH HA HA HAAA!!!
Jim Oneil....sheesh what a collosal douchebag.
Somewhere in the world, a twit is smiling.
This twit is smiling.
But not about "what's his name's" reports from Africa.
IMO, Africa is always going to be very different but they have had "their" World Cup. They are lurching into the modern world with raw materials to sell. Cell phones are already a hot item. And with that, can hand held visual Ipod devices be far behind? Corruption is endemic but those cell phones are a relatively cheap way to have communication between villages and gatherings. That communication, in time, will somewhat empower the "common people".
What Africa won't have is high tech manufactured goods. IMO,they will be, to a certain extent,the type of market that South America was in former years; however, probably closer to Europe than S.A. was.
What we have had in the US is a couple of decades of gratuitous consumption on what amounts borrowed real value. How much of everything do you think we want rather than how much do we need.
But what really goes into quality of life? How often do we stop to "smell the flowers"? Are we "overdriving our headlights"?
The coming inflation will reduce buying power of pension holdings for people like me. But, IMO the country is not going to go out of business.
It is going to take awhile to get over the headache from last decade's excessive partying. But there is GE at around 15. BA is not too cheap but they are close to a carbon fiber materials capability that will beat the socks off of Airbus (until Airbus goes the same route). There are others that IMO, offer some protection against inflation but stockpicking is not my business so I had better shut up.
I agree that the actions of some in our Congress and other parts of government are essentially criminal. But my read of history is that out wealth began with the confiscation of Indian hunting grounds and during development has include some pretty expreme examples of corruption since. In these times, at least we have ZeroHedge and the like to keep the public informed.
I am in total disagreement with (almost) everyone here with regards to Goldman Sachs (go ahead, hit "junk", whatever). That said, Jim O'neil is like your embarrassing uncle at Thanksgiving, walking around the living room half-cocked, double-dipping in the veggie dip, and making vulgar comments. If I were Lloyd, I would toss Jim O'neil out onto West Street on his kiester.
Confirmed. Junk hit...
I am not Chumba Bumba Numba Rotumba or anyone else...
If the World economy is faltering, why not BRAICS? That way, when they start faltering as well, one could say 'brakes applied to BRAICS'...
Just a thought!
DavidC
Hahaha BRICtop quote. Nice.
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