Roller Coaster Ride

“Monday was seemingly just a bad nightmare. Last Friday was a monster fall. We are led to believe that 3 trillion Dollars was wiped out from global stock markets last Friday, it is not so much fun and doesn’t make good headlines to tell us how much is “back””


 

To market to market to buy a fat pig Growing up in the eighties I recall the Bon Jovi song (how bad were their hairstyles?) “Livin’ on a Prayer”, which included the following lyrics:

 

Woah, we’re half way there

Woah, livin’ on a prayer

Take my hand, we’ll make it I swear

Woah, livin’ on a prayer

 

Have I been spelling “whoa!” wrong all these times, or is this a different kind of Woah? That aside, we are half way there. 1 July 2016 is the 183rd day in a leap year, and there are, after today, 183 days left in the year. I suspect that at midnight tonight, provided that you are still up and chipper, you can witness the change from the first half to the second half. As discussed in the message yesterday, today marks the 100th anniversary of the start of the battle of the Somme, one of the bloodiest and costliest human conflicts. An area known today (and then) as Pas-de-Calais, or next to the Strait of Dover if you prefer. It looks pretty lovely now, back then, not so much.

It is also a week on from the events that rocked the world, the vote in which the upshot was that David Cameron resigned as Prime Minister of Britain, effective October this year. Which is funny, as that coincides with his 50th birthday. Happy birthday David, here you go, a parting present of sorts. He does have three children, remembering that one of his children passed away a number of years back, perhaps he will give them all of his time.

UK politics took another turn yesterday, with Boris Johnson announcing that he will not be running for the leadership of the Conservative Party. Instead, he would go have a haircut. Kidding. See the Guardian – Boris Johnson says he is out of Tory party leadership race after Gove challenge – as it happened. I quite like the challenge from Theresa May, who is polling favourably amongst Conservative voters. In the office I often make it known to the chaps that my view is that only woman should partake in politics, it would make “things” simpler.

Would you believe me if I said that the S&P over the last 1 month has gained 0.09 percent. And since last Thursday evening (i.e. 5 trading sessions), the market is down 0.68 percent. Monday was seemingly just a bad nightmare. Last Friday was a monster fall. We are led to believe that 3 trillion Dollars was wiped out from global stock markets last Friday, it is not so much fun and doesn’t make good headlines to tell us how much is “back”. Nonetheless, last evening signalled the closeout for the second quarter and equity markets once again favoured the bulls, stocks in New York, New York, closed out the session much higher. The broader measure S&P 500 added 1.33 percent on the day, as did the nerds of NASDAQ, blue chips in the form of the Dow Jones Industrial Average managed to tack on a little more, a smidgen more.

Non-cyclical consumer goods was where the action was, Hershey’s stock flew up over 16 percent as rumours circulated that Mondelez (spun out from Kraft) was looking to have a go for the maker of all things wonderful and confectionary. I am not too sure if you have ever had a chance to have the peanut butter cups, those were my favourites. Don’t fear Banting people, I suspect that in the coming years these companies, all of them, will swing towards making products that are more desirable for a large growing portion of the population. If you are looking for a piece of it here in Jozi, all things sweet and Banting/LCHF, then look no further than this organic market Jacksons in Bryanston. The few times I have been there, lovely really. We are sitting on a trend, one has to remind oneself that it is a rich people trend. To finish off, CNBC reports that Hershey board unanimously rejects preliminary offer from Mondelez. So there!

Closer to home, the city founded on gold had another decent day at the equity markets grindstone. I wonder if hipsters like their grains milled in a good old fashioned millstone? I recall a place in Swellendam in the Western Cape that has an organic process, they are called Eureka as per my internet snooping. Food, as Bright pointed out yesterday, never goes out of fashion. And as Paul also points out often enough, it is more addictive than cigarettes and booze. For as long as our species has been around, the fight for sustenance has been a daily “grind”. In an era where poverty rates have plunged, and calories more plentiful, it has meant that obesity has become a thing. Imagine what our forefathers would think, as my wife often says, eat to live and not the other way around.

Quick check in on Jozi, Jozi markets yesterday, stocks were comfortably off their best levels yesterday, we still ended solidly in the green. The Jozi all share index added nearly two-thirds of a percent, with the banks and financials leading the charge. The whole idea percolating around the market is that in light of recent geopolitical events (read Brexit), central banks are likely to not hike rates any time soon. In fact, governor of the Bank of England George Clooney Mark Carney suggested that they could cut rates. And as such, emerging markets globally are all likely to benefit from the flows, those looking for yield. Which is us of course.

Our minister of Finance, Pravin Gordhan was being quizzed by Bloomberg’s Jonathan Ferro, I watched with interest – I Have Confidence of Cabinet. He handled a very tricky situation very well actually, suggesting that he is not dodging Ferro’s question, rather there is no such thing as certainty. Make that man president please! Or at least a contender. He certainly has friends on all sides.

The upshot of the renewed search for yield globally has meant a recovering currency, which is great for the outlook for inflation locally. A quick check this morning will reveal that the Rand is trading at 14.76 to the Dollar, 19.63 to the Pound Sterling and 16.38 to the Euro. All markedly firmer than this time last week. In fact, these are the strongest levels of the Rand to the Pound in 11 months. And the All share index in Rands? That has delivered nothing over 12 months. Nothing. Zip. Niks. It certainly has been tough going, in my relatively short career in this industry I can’t recall a “flat” market. In truth though, whilst the scoreboard prints that not much has gone on, there have been pretty wild swings and roundabouts.

At the lowest point in August last year (just over 47 thousand points on the All share) and in January late this year (nearly below 46 thousand points), the All share has been 10 percent lower than where it is now. Equally, with the local market at over 54 and a half thousand points in November last year, we were up in the higher single digits from where we are now. From intra-year peak to trough (November to January) stocks were down over ten thousand points. Lots has happened as you can see!


 

Company corner

The WSJ (subscription only) is reporting that Apple is in talks to acquire the streaming service Tidal. Obviously according to people familiar with the fluid situation. As per the article, the company has 4.2 million subscribers, paying for the streaming service, which has two services, the full at 20 bucks a month and then 10 bucks for the standard feature. I subscribe to Apple Music, it is awesome for me to be able to simply plug in any artist and get their songs on demand, without paying more and more each time you acquire an album.

Which is why this irritates artists, they feel like they are not getting their fair shake. According to Forbes, Taylor Swift is 26 and worth 250 million Dollars. Beyonce (Jay Z’s spouse, the Tidal driver and part owner) is worth 265 million Dollars at the age of 34. According to the same publication, Jay Z is worth 610 million Dollars, he is 12 years older than his wife. If his wife stuck her entire net worth into an index tracker, she would need a return of 7.2 percent per annum to be at the same level as her husband, obviously not adjusted for inflation. Beyonce is smarter than that, it is quite hard to believe that artists are no longer held by managers, they make their own decisions and good ones at that. We wait and see, Beats was relatively big, Apple has hundreds of billions of dollars. No really, they do.


 

Linkfest, lap it up

Amazing to see that Facebook now pushes more traffic to news sites than Google does – Facebook’s Importance to Online Publishers

Infographic: Facebook's Importance to Online Publishers | Statista

You will find more statistics at Statista

There have been a number of companies who have said they are considering relocating their head offices – Why Vodafone might vote to leave Britain. Note how significant Vodacom is to Vodafone.

As South Africans are getting excited about getting 50Mbps internet connections to our homes, Google just flicked on the switch of a 60 Tbps cable! – On Thursday, Google will begin using the fastest undersea cable ever built


 

Home again, home again, jiggety-jog. Stocks across Asia are mixed to higher, it is a long weekend in the US, with Independence Day (from Britain, their own Brexit back in 1776) on Monday. I suppose that fits nicely, rather than being mid week. It is also the 20 year anniversary of the original movie by the same name, the franchise has been expanded to a new one. I can’t say that I will be watching that one any time soon. Portugal, I am sure that all the folks with Portuguese heritage are thrilled by the result last evening. They haven’t actually won a single match in regular time, yet find themselves in the semi-final. Muito bom Portugal! Good luck to the rest of your teams out there sports lovers.


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

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