Yellen sparks rally

“When the most powerful woman in the world (Janet Yellen, in case you forgot) says that she thinks it is best to be cautious right now, given that the global outlook is uncertain, best we all listen. As Paul said in a tweet, that means rates are never going up, if everything is likely to always be uncertain. Speaking at the riveting location of the Economic Club of New York yesterday, the Fed chair didn’t give any timing of the rates cycle movement, it was interpreted as on hold for now.”


The new blunders video (if you missed it) is out: Blunders – Episode 7. To never miss an episode, subscribe to the Blunder Alert!, and get the mail delivered to your inbox. The new ones are delivered to your inbox Friday.


To market to market to buy a fat pig Caution, caution, chevron left and fly, fly, fly. I can imagine being a co-driver is painful for most of us, we like control as human beings. Strapped into the passenger seat in a modified sedan screaming down narrow dirt roads and studying our pace-notes (co-driver shorthand), whilst being in complete faith with the driver must be another interesting experience in itself. Trust takes many years to create and in some instances, minutes or days to erode. Or shorter. Control is something we crave. We are afraid of activities in which machinery is involved that we have zero control over, even though statistically speaking we may well be safer with innovation. Remember a time when people were scared of electronic banking. I guess people still write checks. Or cheques if you prefer.

When the most powerful woman in the world (Janet Yellen, in case you forgot) says that she thinks it is best to be cautious right now, given that the global outlook is uncertain, best we all listen. As Paul said in a tweet, that means rates are never going up, if everything is likely to always be uncertain. Speaking at the riveting location of the Economic Club of New York yesterday, the Fed chair didn’t give any timing of the rates cycle movement, it was interpreted as on hold for now. You can read the speech here: The Outlook, Uncertainty, and Monetary Policy. There is some fellow who wrote in and said that it irked him when I wrote Jozi, Jozi. I am guessing that the sub header will drive him nuts: At the Economic Club of New York, New York, New York.

Jozi, Jozi comes from paraphrasing old blue eyes, Frank Sinatra in New York, New York. Start spreading the news and so on. I guess it is important to always know context. Stocks over on Wall Street were the blue eyed boy. The speech was interpreted as heavily dovish, and as such markets rallied like nobody’s business. Not everything, financials and banks, which are reliant on ratcheting rates for higher interest income, didn’t appreciate the news. Wells Fargo and JP Morgan Chase were amongst the losers on the day.

Most of the rest was comfortably in the green, stocks rallied hard, the blue chip Dow Jones Industrial average rallied just over half a percent, the broader market S&P 500 added 0.88 percent, whilst the nerds of NASDAQ added just over one and two-thirds of a percent. Apple, Microsoft and Alphabet (Google) were all comfortable winners on the day. Year to date the tech laden NASDAQ is still in the red. And with the quarter nearly out (today and tomorrow are the last two days), tech stocks are unlikely to have a positive quarter. Unless you are expecting a 3 percent plus gain in a couple of trading sessions, something similar to the session prior.


Over in Jozi, Jozi, local wasn’t always lekker and we didn’t have the benefit of a Yellen inspired rally. Of course by the time we closed up shop here, the Economist Club of New York (don’t snore) shindig and main speaking attraction hadn’t started yet. Stocks locally sank over a percent, the resource and in particular platinum stocks took some heat. South32, Glencore, Anglo and Amplats were amongst the losers in the big caps, Brait, Redefine and Mediclinic were at the other end of the spectrum. There is not too much on the companies front, as far as news is concerned.

I saw that Spar are raising 2 billion Rand via an accelerated bookbuild. The proceeds of the cash are being used to deleverage and used to fund the recently announced Spar Switzerland 60 percent purchase. Two billion Rand is not chump change, it is 6 percent of the current market capitalisation. Over the last 5 years the stock has doubled, some decent acquisitions abroad against the backdrop of an iffy local environment. The announcement this morning no doubt will confirm that South African institutional management will continue to invest in this business. The biggest shareholder for interest sake is the Government Employees pension fund, owning around 18 percent of the listed shares, I am guessing that they may have participated, we will see.


Linkfest, lap it up

When we hear people quote global stats we normally miss what the numbers represent. Breaking the numbers down to a level if there were only 100 people on the planet brings a free perspective – If the world were 100 people. Where do you fall in these 100 people?

I am not a smoker but I would imagine that being able to smoke a real cigarette beats that of vaping. A new form of e-cigarette uses real tobacco but doesn’t get hot enough for the tobacco to combust, thus creating no smoke – Smoke without fire: Japan becomes test ground for real tobacco e-cigarette. We will have to see if there are any regulations placed on the new device.

It is amazing the lengths that people go to to master their trade. Who would have thought swimming 6 miles a day would be required to be a master engraver – Inside the studio of the “micro-engraver” who works between heartbeats to keep his hand steady​.

It almost seems too futuristic this article – Top Robots for Farmers for 2016. Again, revolutions in farming techniques continue to push yields higher and higher, proving the Malthusian catastrophe theory wrong over and over again.

This ex Apple employee, from the early days when the stock price was way low (I hope she kept her stock) has some good life lessons in business for all of us – Three Lessons On Innovation I Learned During My 12 Years At Apple. Broken down, Consensus is not your friend, Don’t run back and forth seeking interim feedback and lastly Be wary of received wisdom.

Good question from our pal over at a Wealth of Common Sense – Are European Stocks Cheap or is the U.S. Expensive? I think that the conclusion should be that they are both appropriately priced for the relative risks.


Home again, home again, jiggety-jog. Brazilian president Dilma Rousseff is likely to be impeached in May, succeeded by an older fellow, the current vice president. See the Bloomberg article: Rousseff’s Likely Successor Has Legal Problems of His Own. He may well be more market friendly than her, which may well be exactly what the country needs. Although policies entrenched are not easily unwound, getting people to adjust to new ways is hard. In so much that earlier we discussed that people are control freaks, they are also set in their ways. Markets globally are rallying. Quit moaning, this is the Yellen!


Sent to you by Sasha and Michael on behalf of team Vestact.

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