THE DAILY BRIEF ECONOMICUPDATE WEDNESDAY,18JULY2018 - CAPRICORN ASSET MANAGEMENT

The Daily Brief

Economic Update                                                 Wednesday, 18 July 2018

US plans uranium import probe that may lead to tariffs
The Trump administration plans to open an investigation into whether uranium imports are harming
national security, a move that could lead to tariffs on foreign shipments of the metal, said three
people familiar with the matter. US uranium producers Energy Fuels and Ur-Energy filed a petition in
January asking the Commerce Department to investigate the matter under Section 232 of the 1962
Trade Expansion Act, the same provision the president used to slap tariffs on steel and aluminum
imports. US industry wants the government to shield it from competition from state-owned
companies in countries including Russia and Kazakhstan. – Fin24

Big Mac Index: Rand should be trading at R5.63/$
The South African rand is undervalued against the dollar by as much as 57.9%, suggests the latest Big
Mac Index, released annually by The Economist. First produced in 1986 "as a lighthearted guide to
whether currencies are at their 'correct' level", the index uses purchasing-power parity – or the
notion that in the long run, exchange rates should move towards a rate that would equalise the
prices of identical goods and services in any two countries – to evaluate currencies' relative value.
The resultant system, or "burgernomics", has been updated regularly ever since. A Big Mac costs R31
in South Africa, The Economist said, versus $US5.51 in the United States, meaning there is an implied
exchange rate of 5.63. "The difference between this and the actual exchange rate, 13.36, suggests
the South African rand is 57.9% undervalued," the index noted. – Fin24

Stocks Gain After Powell; Dollar Extends Advance: Markets Wrap
Most Asian stocks advanced after an upbeat assessment on the U.S. economy from Federal Reserve
Chairman Jerome Powell comforted investors wary of a blowout in protectionism…Powell addressed
Congress with the underpinnings of the U.S. expansion looking solid. Unemployment stands close to
an 18-year low and inflation is around the Fed’s 2 percent target, though some sentiment indicators
are starting to flash warning signs over escalating trade disputes. He will appear before the House
Financial Services Committee Wednesday. - Bloomberg

Angola Cuts Borrowing Costs for the First Time in Four Years
Angola’s central bank cut benchmark borrowing costs for the first time in four years, and the same
man who presided over the last easing in July 2014 is now again in charge of policy. The Banco
Nacional de Angola’s Monetary Policy Committee led by Governor Jose Lima de Massano reduced its
key rate to 16.5 percent from 18 percent, it said in a statement on Tuesday. Massano, who served as
head of the bank for five years until January 2015, was reappointed in October after two previous
governors each lasted less than 18 months in the job. Inflation for Luanda, the capital, has slowed for

eight consecutive months to 20.15 percent in June after reaching a record high of 42 percent in Dec.
2016. The rate could fall even lower and the cost of credit is expected to decline, the central bank
said. – Bloomberg

Berkshire Frees Buffett to Buy Back Stock as Cash Pile Grows
Berkshire Hathaway Inc. shareholders may soon get their hands on part of a $109 billion mountain of
cash that’s bedeviling Warren Buffett. The company’s board announced Tuesday it’s removing a cap
on stock buybacks, giving the Berkshire chairman and chief executive officer greater leeway to parcel
out profits, rather than hunt for more acquisitions. Buffett and Vice Chairman Charlie Munger can
now make repurchases whenever they both believe the price “is below Berkshire’s intrinsic value,
conservatively determined,” the company said. The stock rose in late trading. It’s a tectonic shift for
Berkshire, which for decades has favored Buffett’s strategy of acquiring well-managed companies
and stitching them into an ever-growing conglomerate. But in recent years, the massive company
has turned out profit faster than it could redeploy the money. The war chest swelled past $100
billion last year, prompting some die-hard investors to wonder whether Buffett should just pay some
out. Now he can. – Bloomberg

Stats of the Day

Data Releases
            Local Time     Country       Indicator Name               Period
            10:00        South Africa    CPI MM                         Jun
            10:00        South Africa    CPI YY                         Jun
            10:00        South Africa    Core Inflation MM              Jun
            10:00        South Africa    Core Inflation YY              Jun
            11:00         Euro Zone      HICP Final MM                  Jun
            11:00         Euro Zone      HICP Final YY                  Jun
            11:00         Euro Zone      HICP ex F&E MM                 Jun
            11:00         Euro Zone      HICP ex F&E YY                 Jun
            11:00         Euro Zone      HICP ex tobacco MM             Jun
            11:00         Euro Zone      HICP ex tobacco YY             Jun
            11:00         Euro Zone      HICP ex F, E, A, T MM          Jun
            11:00         Euro Zone      HICP ex F,E,A&T Final YY       Jun
            11:00         Euro Zone      Inflation Ex-Tobacco Idx       Jun
            13:00        United States   MBA Mortgage Applications   9 Jul, w/e
            13:00        United States   Mortgage Market Index       9 Jul, w/e
            13:00        United States   MBA Purchase Index          9 Jul, w/e
            13:00        United States   Mortgage Refinance Index    9 Jul, w/e
            13:00        United States   MBA 30-Yr Mortgage Rate     9 Jul, w/e
            13:00        South Africa    Retail Sales YY                May
            14:30        United States   Building Permits: Number       Jun
            14:30        United States   Build Permits: Change MM       Jun
            14:30        United States   Housing Starts Number          Jun
            14:30        United States   House Starts MM: Change        Jun
            16:30        United States   EIA Weekly Crude Stocks     9 Jul, w/e
            16:30        United States   EIA Weekly Dist. Stocks     9 Jul, w/e
            16:30        United States   EIA Weekly Gasoline Stk     9 Jul, w/e
            16:30        United States   EIA Weekly Crude Imports    9 Jul, w/e
            16:30        United States   EIA Weekly Rfg Stocks       9 Jul, w/e
            16:30        United States   EIA Weekly Heatoil Stock    9 Jul, w/e
            16:30        United States   EIA Weekly Prods Imports    9 Jul, w/e
            16:30        United States   EIA Weekly Dist Output      9 Jul, w/e
            16:30        United States   EIA Weekly Crude Runs       9 Jul, w/e
            16:30        United States   EIA Weekly Refining Util    9 Jul, w/e
            16:30        United States   EIA Wkly Crude Cushing      9 Jul, w/e
            16:30        United States   EIA Weekly Gasoline O/P     9 Jul, w/e
            19:00        United States   EIA Ethanol Ref Stk         9 Jul, w/e
            19:00        United States   EIA Ethanol Fuel Total      9 Jul, w/e

                                                                        Source: Thomson Reuters

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