GIULIETTA TALEVI: Ramaphosa unleashes the hairdressers on a shaggy nation
The lifting of restrictions on certain sectors of the economy announced last night will be welcomed by many, not least those who may now return to their jobs. But there are some strange inconsistencies in the new regulations
Hallelujah; I love the smell of leg wax in the morning. As for that shaggy look you’ve been cultivating in lockdown – well, its days are numbered.
Last night, President Cyril Ramaphosa announced that restrictions would be eased on a whole range of economic activities in some of SA’s most employment-intensive sectors: restaurants (sit-down meals are back!), hotels, casinos, and all personal care services. Hairdressers, who’d been reduced to trimming in dark alleys on the sly, are now legally allowed to wield the scissors again.
Ramaphosa, whose address last night was as much a brutally frank assessment of SA’s failure to protect women and children from violent crime as anything else, said the decision was taken “with due care”, appreciating the risks. “Altogether these industries employed well over half a million people before lockdown. We’ve had to think about these people and those who depend on them.”
The news was met with ringing cheers by hairy home-bodies everywhere – imagine a meal out with people who haven’t been inhabiting the same house as you these past 84 days.
However, there are plenty of bizarre inconsistencies that Ramaphosa’s national command council will have to address. For example, you can go out and have a meal, presumably with friends, but are still officially not allowed to visit people. You can attend a theatre or cinema, but you can’t go for a walk on the beach. And you can frequent a hotel, but Airbnb is off-limits.
Lobbying from big business, remarked Institute of Race Relations researcher Ivo Vegter, has obviously paid off.
Still, we’ll take it. Whether the public will feel comfortable enough to re-embark on these activities without a second thought is another matter.
On that note, New York Times journalist Sarah Kliff has this lovely story on quirky economic indicators – like what dental practices say about a nation.
“Dentist offices tend to be stable businesses that stick around for decades, unlike restaurants that open and close frequently. Dentists earn a healthy salary – a median of $159,000 – and offer services with no clear substitute. If you need your teeth cleaned or a cavity filled, the dentist is the only option,” writes Kliff. “This makes them, in the eyes of some economists, the perfect barometer for gauging the country’s recovery from the shock of the pandemic.”
So what is happening to the tooth-yankers? Well, according to America’s bureau of labour statistics, dentists’ offices account for most health jobs gained in the US last month – a good sign, you’d expect. The problem is that Americans, cavities notwithstanding, are not returning in droves to sit in that chair, either for fear of contracting the virus or because they’ve lost medical insurance and their jobs. It’s a good indicator that the return to anything resembling normal activity is a long way off.
But in the meantime, the US Federal Reserve is ready to do whatever it takes (this is no exaggeration) to keep markets aloft and a semblance of animal spirits alive. A week ago we wrote about markets “crashing upwards”. Then they, well, crashed.
But on Tuesday afternoon, the Fed kicked off a corporate bond-buying programme to buy individual bonds from corporates. “We feel we need to follow through and do what we said we’d do,” said Fed chairman Jay Powell. “I don’t see us as wanting to run through the bond market like an elephant or snuff out price signals.”
The effect on a flagging market was electrifying. And as Bloomberg’s John Authers wrote on Tuesday, “If this doesn’t look to you like a market in urgent need of a rescue financed with public money, I would have to agree. Further, the timing looks awful, if the Fed wants to avoid the impression that it is just attempting to provide a ‘put’ under share prices, and intervene to keep them up.”
While markets gallop on, safe in the knowledge that Powell and his band of moneymakers are behind them, not everyone is convinced this is a good move at all.
Former Fed governor Kevin Warsh, for one, tells Bloomberg that the Fed is not doing what it should to help Main Street rather than Wall Street.
The free money, after all, is finding its way into stocks that really should not be rising the way they have these past few weeks: think bankrupt car rental agency Hertz, for example. But you may by now have heard of the army of Robinhood investors – the teenagers, wannabe hedge fund managers and outright gamblers who have been piling into these junk stocks through commission-free brokerage platforms such as Robinhood.com.
The theory is that these excitable novices have been a lead contributor to markets rallying in the past six weeks or so. But is this just a convenient narrative to explain away perplexing market moves? Or are they the real deal? Well, investment banks Societe Generale and Barclays did a little digging and the FT writes about their conclusions here.
If there’s one conclusion to reach from it all, maybe it’s that we need to ditch the term “back to normal”. After all, if you can now get your legs waxed but still can’t buy a pack of Marlboro lights, how normal is that?
*Talevi is the FM's Money & Investing editor.
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