Dead Cat

Hate to say it but don't get too excited about this bounce today. I see the JSE and world markets are all trading up a bit as the European rescue plan is mooted...

But just think for a minute - what has fundamentally changed since today and Friday? Yes Europe has agreed to shovel money into equity markets to try and prevent future collapses, but this doesn't mean much in the bigger scheme of things.

Read the JSE Sens announcements this morning and you will see where the real problem is coming for South Africa.

Sallies - the fluorspar miner - has confirmed they will be closing down its Buffalo operations putting 130 people out of work. Banks are either cutting jobs or at the very least not hiring.
Miners are seeing their base and precious metals get prices get slaughtered - why would they be hiring?

What is going to happen when these people come into the ranks of the unemployed?
Who is going to pay their bills? This is the problem that SA businesses are likely to face going forward? Unemployment is already an issue in South Africa, a recession, depression or "global slowdown" as the strategists like to call it will be the catastrophe our system didn't need.
If we are repossessing 6-7000 cars a month at the moment, then what is going to be the case when the unemployment figures start to bite?

I heard a figure today at lunch that 130 motor dealerships had closed up in the last few weeks. More jobs disappear from the system?

You walked through many of the shopping centres in the last few weeks? Look at the number of shops closing their doors and doing closing down sales...

Lets not get too excited about a little bit of a bounce in the stock markets... the pressure remains to the downside....