Michael Avery and guests put the week into perspective
25 August 2022 - 21:14
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Federal Reserve chair Jerome Powell. Picture: JONATHAN CROSBY/REUTERS
Markets have clearly been anxious in the lead up to Jackson Hole, as investors and traders await the next policy clues out of Fed chair Jerome Powell later this week.
The declines in equities and bonds of late suggest that Powell will strike a hawkish tone to fight rampant inflation at the expense of economic growth. If Powell’s commentary forces markets to further price in more supersized Fed rate hikes, that might trigger more declines for equities and gold, while King Dollar would continue to exert its dominance across the forex universe.
Meanwhile, Finance minister Enoch Godongwana is under siege amid allegations of sexual assault. Godongwana had indicated he will step aside if formally charged. While the legal process must obviously now take its course, there are clearly unintended economic consequences that could follow for SA if he does soon have to step aside or even resign as finance minister.
Immediately ahead lie challenges such as the medium-term budget policy statement in October, tough public sector wage negotiations and the ANC’s elective conference policy recommendations on issues such as the status of the SA Reserve Bank. All of these require experienced and smart policy footwork. So, lots to discuss with Warwick Lucas, head of Galileo Securities; Isaah Mhlanga, chief economist at Alexforbes; and Raymond Parsons, professor in the School of Business and Governance at Northwest University.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
BUSINESS WATCH WITH MICHAEL AVERY
WATCH: The week in perspective
Michael Avery and guests put the week into perspective
Markets have clearly been anxious in the lead up to Jackson Hole, as investors and traders await the next policy clues out of Fed chair Jerome Powell later this week.
The declines in equities and bonds of late suggest that Powell will strike a hawkish tone to fight rampant inflation at the expense of economic growth. If Powell’s commentary forces markets to further price in more supersized Fed rate hikes, that might trigger more declines for equities and gold, while King Dollar would continue to exert its dominance across the forex universe.
Meanwhile, Finance minister Enoch Godongwana is under siege amid allegations of sexual assault. Godongwana had indicated he will step aside if formally charged. While the legal process must obviously now take its course, there are clearly unintended economic consequences that could follow for SA if he does soon have to step aside or even resign as finance minister.
Immediately ahead lie challenges such as the medium-term budget policy statement in October, tough public sector wage negotiations and the ANC’s elective conference policy recommendations on issues such as the status of the SA Reserve Bank. All of these require experienced and smart policy footwork. So, lots to discuss with Warwick Lucas, head of Galileo Securities; Isaah Mhlanga, chief economist at Alexforbes; and Raymond Parsons, professor in the School of Business and Governance at Northwest University.
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