May, no May!

“We are of course talking about Brexit, Theresa May’s interview and the impact on Sterling yesterday. That had a knock on impact with our market, anything with a British flavour (baked, boiled, fried) was beaten. Intu had a bad time of it. Steinhoff (still waiting for clarity on the Shoprite deal), Mediclinic and Hammerson, Mondi and Old Mutual, as well as Discovery, all businesses that have a business or listing there.”


 

To market to market to buy a fat pig Do you remember that song “I love Rock and Roll”? It was written (by the Arrows) over 40 years ago, and performed famously by Joan Jett and the Blackhearts in the early 1980’s, coinciding with music videos age and MTV. The 70’s were a wild time, I know folks, the 80’s had better tech in order to achieve mainstream popularity. We can shuffle those lyrics up a little to suit our purposes. Sing it (below) to the lyrics, check out this old nugget – I Love Rock N Roll. Just the first verse:

I saw her dancin’ there by the SkyTV

I knew she must a been over sixty

The beat was goin’ strong

Playin’ my least favorite song (thing)

An’ I could tell it wouldn’t be long

Till we were with May, yeah May,

An’ I could tell it wouldn’t be long

Till he was with May, yeah May, singin’

And then the chorus, for that you can make up your own words. Although this chorus was chosen by the masses in the “Brexit” vote last year. 2016 was a real page turner, part horror movie, part suspense thriller, all action. Of course it depends what side of the aisle you sit. I am of course referring to an interview that British PM Theresa May gave with Sky TV with Sophy Ridge on Sunday. You can watch the whole thing, nicely scripted by the Guardian – Theresa May’s interview with Sky’s Sophy Ridge – Politics live.

We are of course talking about Brexit, Theresa May’s interview and the impact on Sterling yesterday. That had a knock on impact with our market, anything with a British flavour (baked, boiled, fried) was beaten. Intu had a bad time of it. Steinhoff (still waiting for clarity on the Shoprite deal), Mediclinic and Hammerson, Mondi and Old Mutual, as well as Discovery, all businesses that have a business or listing there. And by there, we mean London. Britannia. Ruling the waves way back then if not the currency stakes. Check this out: Pound fell against 56 world currencies in 2016: Analysis.

Score-check – the JSE ALSI closed down nearly one-third of a percent, resources were down just over nine-tenths of a percent, gold and platinum miners took some heat. UK stocks? The FTSE? Trading at an all time high as international revenues of local businesses (UK listed businesses with businesses in Europe and other places) will no doubt juice things up in the short term.


 

Stocks across the oceans fell, a few key areas sucking a little wind. Still, this has been the best five day start (effectively one week) for the equity markets since 2013, I read in Barron’s (not related in any way to our Byron) – Stocks Fall, But Dow, S&P Get Best Start To The Year Since 2013.

The US economy is OK, the Fed is tepidly confident they can raise rates, business is at least optimistic on the ability to build out (and that has real knock on effects), and most importantly, we will have to wait to see what the new administration plans doing. The first 100 days we are told are key in setting a new agenda for the next four to eight years. In making the greatest nation on earth, (by money metrics) greater. Sorry, I mean great again.

By some measure, if manufacturing jobs do come back to the US en masse, it will be the robots that benefit. I mean … the shareholders of the businesses making and using the robots. See this – America’s economic future isn’t about factory jobs and trade deals. It’s about robots.

Amazon is a good example of what the world is likely to look like in the future, having doubled their human workforce over the last three years to 300 thousand, their robot “workforce” has tripled to 45 thousand. See – Amazon Increases Robotic Workforce by 50%. And with drone deliveries a reality, I am pretty darn sure that the robot number will continue to rise. In a world where consumer demands are increasingly being met ASAP, expect robots to continue to fulfill a bigger role. That means we will have to continue to up-skill and “be better” at our existing vocations. I can’t see the mileage in getting anxious about robots leaving us with more time to be creative.

OK, quick check at the scoreboard from last evening at the Street, the Dow Jones Industrial Average (of thirty shares, chosen by some dudes and dudettes) sank 0.38 percent, the broader market S&P 500 was off 0.35 percent, whilst the nerds of NASDAQ enjoyed a good, if not great day, up nearly one-fifth of a percent. The record books will chalk up another all time high for the NASDAQ. Not so fast for stocks in general and Dow 20K will have to wait. And wait. Energy stocks were laggards, the oil price sank a little, financials also came off the boil. I suppose it is natural for Mr. Market to step back from the “Trump trade” and wait for a little more clarity. Healthcare was a benefactor, and technology too.

Oh, on that comment made above about stocks being chosen (the Dow 30), as opposed to the market capitalization index, the S&P 500, here is a nice, if not older, article of the index, from a WSJ editor who is partly responsible for choosing the index, a good read – Secrets of the Dow Jones Industrials. That is the first picture I have ever seen of Charles Dow and Edward Jones. Giant beards and moustaches and slicked back hair. If you gave them a leather bag, canvas shoes and rolled up pants (as well as perhaps a social media job), they may well pass for hipsters today. They probably did drink urban brewed beer from the local pub and organic coffee, it was 1898 (there and thereabouts) however.


 

Linkfest, lap it up

Uber has been in business for 8 years this March. The company has grown to 450 cities across the globe and is easily usable for all and sundry. With revenues of 1.5 billion Dollars, the transport revolution set in motion is clear for all to see. The company has another gem, they have been collecting data along the way, that will help cities plan their own public transport better. Called Uber Movement, which shows travel times in each specific city. I can’t help think that Waze (owned by Google) has missed a trick or two here. And whilst I may never buy a share in Uber, I am still waiting for their IPO with as much excitement as the next person – Uber is finally releasing a data trove that officials say will make driving better for everyone.

A lot of people spend a lot of time getting anxious about when the market will fall next. So much time that they miss rallies and have undue stress. Do not overthink “things”. If markets do go down, you have no way of knowing by how much. The sensible thing almost always is to ride it out, markets fall 5 percent on average three times a year, 10 losses are recorded maybe once a year, whilst losses of 20 percent plus happen around every three to four years. The trick is never to be spooked – How Market Crashes Happen.


 

Home again, home again, jiggety-jog. Jozi is not all back at work, I would say around 80-85 percent back. Markets locally have started a bit better, stocks across the continent and into the cold (Europe) look like they may open flat.


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

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