Before digging in, I am away this week taking a break, going out to the village with the hope of star gazing. The Markets Daily might be late as it is today (the usual time it lands in your inbox if you are a subscriber at https://imhlanga.com/ is while you are sleeping), in part because of lack of fibre connectivity (the spectrum is yet to be auctioned) but also due to the fact that there are a lot more interesting things in the village than markets....

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The growth in annual Consumer Price Inflation (CPI) accelerated to 3.2% y/y in July 2020, from 2.2% y/y in June 2020 slightly ahead of market expectations of 3.0%, buoyed by higher fuel prices and the annual electricity tariff hike earlier in the month. On a monthly basis, the CPI increased by 1.3%. The main contributors to the uptick in the headline were food and non-alcoholic beverages; housing and utilities; and miscellaneous goods and services categories, which increased by 4.3%, 3.2% and 6.7% y/y respectively. Collectively, these categories added 2.6 percentage points to the total. Annual transport inflation moderated to zero percent following a 0.9% contraction (up by 4.8% m/m), driven by the increase in the purchases of vehicles, despite subdued demand, as economic activity continued to reopen. Core inflation, that which excludes alcoholic beverages, fuel and energy, remained unchanged at 3.2%....

Tracking economic statistics whose compilation has been partly disrupted by covid-19 is extremely necessary to gauge the extent of the damage from the crisis. However, the magnitude of swings in outcomes needs to be assessed with care. Looking at several indicators to confirm a trend in one important indicator has never been more necessary than in the current environment. Trust the wisdom of the crowd more often, and look at a consensus as data issues is a global problem, not just domestic....

Statistics South Africa published data on insolvencies and liquidations of companies yesterday and there is no glaring blood bath in company failures in the data. The number of total liquidated companies rose by 5.5% y/y in July to 193 from 183 in July 2019.  Compulsory liquidations declined by 26% y/y to 17 from 23 while voluntary liquidations rose by 10% to 176 from 160. ...

For those that still doubt why independence is necessary, with the firing of the central bank governor, Zambia has just offered us a natural experiment in economics, which don’t come often. For context, Zambia’s inflation was 15.8% year on year in July 2020, which is twice its stated inflation target of between 6% to 8% over the medium term. The country’s cabinet has approved a US$418 million fiscal stimulus, which will likely be funded through debt financing. Let’s watch how bond yields adjust this week and how the financing of the stimulus package unfolds after the unexplained firing of the central bank governor, who is also a seasoned PhD economist and replaced by an accountant....

Politicians must never instruct monetary policymakers what decisions they should make on issues of monetary policy. That independence of monetary policymakers is the one that gives central banks the credibility which enables them to have so much influence on financial markets and ultimately on economies....

Countries around the world have taken unprecedented measures in their response to the Covid-19 pandemic, yet the thrust of their responses has been broadly similar....

Countries around the world have taken unprecedented measures in their response to the global Covid-19 pandemic, yet the thrust of their responses has been broadly similar.The main focus is on saving lives and livelihoods, which means capacitating healthcare sectors to be able to deal with those that require hospitalisation, while cushioning citizens from hunger by providing income directly through cash transfers for the permanently unemployed, or indirectly for those that might lose their jobs via the the provision of access to cash flow for companies in distress....