T+3 = More Liquidity

“Today the JSE aligns itself with international stock exchanges and goes to what is called T+3. What that means for the man on the street is that when you sell your stock, it takes 3 working days for your cash to come free. It used to be T+5.”


 

To market to market to buy a fat pig The so called biggest data point for this year did not disappoint on Friday. The number in focus is 287 000 new jobs added in the US in the month of June, smashing the expected number of 180 000. Remember the May number of only 38 000 new jobs, which is the reason markets think the FED won’t raise rates this year? That number was lowered further, to only 11 000 jobs added in May. The other important numbers in Fridays data release (Employment Situation Summary) was that unemployment increased by 20 basis points to 4.9% from 4.7%, this was due to more people coming into the work force. One of the interesting data points that does not get much attention is the number of part-time workers, wanting full-time work (involuntary part-time workers) dropped by 587 000, which also indicates the strength of the labour market. More on the positive data front, average hourly wages grew the most since 2008 with growth of 2.6% compared to last years wage. That might not sound like much but remember that the inflation rate in the US is very low, so in real terms workers are still going forward.

On the topic of the middle working class seemly going sideways. Would you rather be middle class in the developed world now or the top 0.1% 150 years ago?. As much as it is nice to be the top of the pile and the ego boost that comes along with it, the quality of life is probably better for a middle class American today than a King from 200 years ago. Antibiotics, air travel, cars, air-condition, TV, computers, internet and well the field of medicine in general.

How did markets react to the better than expected data? The S&P 500 closed up 1.5% just below an all time high, the Dow finished up 1.4% and the nerds of the NASDAQ finished up 1.6%. Good news is good news again. I say this because the market has been so obsessed with the Fed lately that the interpretation of data has been a bit strange. Normally when equity markets go up (risk on trade), the bond market goes down. On Friday after the jobs number the bond market also went up because the market still thinks that a FED rate hike is off the table for this year. Based on futures, the market is pricing in a 74% chance that the FED will do nothing this year. Around this time last year, market participants were pulling money out of equities because a FED rate hike in September was almost certain (with 4 more hikes on the cards over the next 12 months) and a rate hike meant that people would look to other asset classes to get some yield on their money. That hasn’t happened and interest rates seem set to stay low for a number of years (maybe now that everyone thinks this, things will change?). The point I am making is that as an investor central banks should not be the focus of your investment strategy.


 

Today the JSE aligns itself with international stock exchanges and goes to what is called T+3. What that means for the man on the street is that when you sell your stock, it takes 3 working days for your cash to come free. It used to be T+5, the long period was due to all the paper work involved before computers and electronic share certificates. Great news for equites as an asset class in general. Compare this to a house that takes you months and a big fee towards estate agents or transfer fees. Equities you can sell tens of millions in value in minutes and then have it in your bank account 3 days later, with costs very unlikely to be higher than 2%.


 

Linkfest, lap it up

Apple is building one of this generations iconic buildings. As a shareholder here are some interesting facts about the $5 billion building – 18 incredible facts about Apple’s new ‘spaceship’ campus

Scientists have found a planet with an orbit twice that of Plutos. What makes this planet unique though is it orbits 3 stars – Strange exoplanet found

The first crop of the season is considered to bring you good luck, hence the high price for a bunch of grapes – A Japanese supermarket paid $11,000 for a bunch of grapes, and is giving them out for free. The value of the bunch of grapes is up more than 5 times since 2009, if fruit didn’t go off this would be a very good returning investment.

It is amazing to see how big Airbnb has become. As the service grows the daily listing prices will drop which will encourage more people to list – Which Cities Have The Most Airbnb Listings?.

Infographic: Which Cities Have The Most Airbnb Listings? | Statista

You will find more statistics at Statista


 

Home again, home again, jiggety-jog. Our market is nicely in the green today following the strong day in the US on Friday, currently up around 1%. The Rand is also looking stronger today, with $/R 14.50 well in sight! This week also marks the kickoff to US earnings season, we will update on the stocks you own over the next few weeks.


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

Email us

Follow Sasha, Michael, Byron, Bright and Paul on Twitter

078 533 1063

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s