From Gareth Stokes, MoneyWeek editor,

Dear Money Morning Reader,

Did President Jacob Zuma really promise 500,000 new employment opportunities by June 2010? The short answer is “yes he did!” But you don’t have to be a rocket scientist to know that the ‘promise’ is undeliverable.

In August this year the Statistics SA Labour Force Survey poured the first icy stream of water over the President’s ambitions when it revealed the South African economy had shed 267,000 jobs in Q2 2009! To make matters worse, more than 23.6% of the country’s ‘official’ work-seeking citizens are out of a job. The ruling party will offer the usual ‘misunderstanding’ defence when the opposition takes it to task. But to the thousands of unemployed in the mining and manufacturing sectors these excuses and denials will be purely academic.

The real concern is the link between unemployment and recession. This fact is best illustrated in the United States where millions of jobs have disappeared since the economy hit the skids in December 2007. The latest numbers – for August 2009 – confirm that 14 of the country’s 52 States have jobless rates in excess of 10%. The world’s largest economy lost 216,000 jobs in August (and 276,000 in July) and the nationwide jobless rate is expected to peak above 10% in 2010, from the current 9.7%. It’s no wonder US Federal Reserve chairman Ben Bernanke warns of a slow recovery!

Why are we so obsessed with the employment numbers? Each job cut ripples through the domestic economy impacting consumer spending, inflating insolvencies and negatively influencing the GDP growth number. You cannot emerge from recession without stemming job losses! So while you might take heart from recent positive moves in global macroeconomic indicators you’re going to have to watch local employment statistics with more than the usual trepidation.

*************
The high unemployment ratio is not our only concern. Many analysts hold that sustainable economic growth hinges as much on the quantity of employment opportunities as the quality of each job. Full employment might be a grand design; but it matters little if all of those opportunities are in the informal sector. Economists also point to the discrepancy between recent wage settlements and worker productivity. Companies plying their trade in South Africa are paying more to produce their goods and services. These companies are surviving inflation plus wage increases by gradually reducing their head counts. With the cost of labour escalating on two fronts new investment capital dries up, following the path of least resistance to destinations with less stringent labour regulations!

Given this information you should be asking questions about the 2009 equity rally. The rapid rise in the market capitalisation of the country’s major listed companies has nothing to do with economic fundamentals and everything to do with investors lusting after quick capital return. Have we learnt nothing from history? Rapid price rises create socalled market valuation ‘bubbles’. And market ‘bubbles’ quickly develop into a full blown collapse. In this week’s feature article MoneyWeek SA gets to grips with the value debate. We ask a number of market commentators and economists if the JSE All Share index can keep climbing through the final quarter of 2009. Is the current equity market rally sustainable – or do you have to brace for a rapid market correction… You’ll find the answer in this weeks MoneyWeek!

*************
Turning to the markets...

The JSE all share index slowed 1.79% on Friday. The gold mining index slipped 2.22%. Resources slumped 2.75%. Banks and financials fell 2.26% and 2.16% respectively. Industrials lost 0.62% and the platinum mining index closed down 3.92%.

London's FTSE100 decreased 1.71%. The Dow Jones traded 0.23% lower and the Nasdaq pulled back 0.46%.

Tokyo's Nikkei was 0.59% down. Hong Kong's Hang Seng lost 0.17%.

Brent crude is currently trading at $68.10 per barrel.

Spot gold's trading at $1,003.95 and platinum was last quoted at $1,279.50.

And here's how the rand is performing against the major currencies:
R/$7.62
R/₤12.19
R/€11.14

*************

Copyright (c) 2009 Fleet Street Publications Pty (Ltd)

You are receiving this email because you have given us permission to contact you on the email address %PERS_EMAIL%.

Unsubscribe from this e-letter? If you do not wish to receive further such emails, please click here. You will receive no further emails.

Do you have a query? Please do not reply to this email. Messages to the sending address will not be seen by customer services. All email correspondence should be sent to: queries@fsp.co.za Customer Services 0861 114 365.

Disclaimer: There is no magic formula to getting rich in the stock market. Like all forms of investment, success in selecting stocks with the best prospects for price appreciation can only be achieved through proper and rigorous research and analysis of publicly available company and industry filings and news releases. The opinions in this advertisement are just that, opinions of the author.

Warning: Stock/option trading involves high risks and you can lose a lot of money-you may even lose all the money you invested. So please, do not invest with money you cannot afford to lose. Past Results are not necessarily indicative of Future Results

The information in this email is confidential and may be legally privileged. It is intended solely for the addressee. Access to this email by anyone else is unauthorised. If you are not the intended recipient, any disclosure, copying, distribution or any action taken or omitted to be taken in reliance on it, is prohibited and may be unlawful. If you are not the intended recipient please return the message to the sender and delete it from your records. Alternatively, please contact Fleet Street Publications Pty Ltd on Customer Services 0861 114 365.