Capital goes on Strike

“In his opinion, and Tim must talk to a lot of leaders of business, the removal of “hope” (call it confidence) has led us down this path. There is almost a strike by those with capital. And as we discussed in the office yesterday, when the wireless and the TV start talking about the downturn, you then know that people are likely to change their spending patterns and unfortunately (for the economy and perhaps not their personal finances), the outcome is likely to reveal even softer demand.”


 

To market to market to buy a fat pig Stocks in the city founded on a monster pile of gold fell as a collective again, down one-quarter of a percent on the day. The R word is doing the rounds, colloquially it is all pointing to a lack of confidence. Paul retweeted an answer from veteran journalist Tim Cohen (Editor of Business Day) when challenged by a BBC journalist as follows: “Here’s a challenge to journalists – explain the recession, without the financial jargon.” I left out some hashtags there. Tim’s answer was pretty on point: “An economy is built on the creativity, confidence, and sheer audacity of its wealth creators. Take that away, hope melts into recession.”

In his opinion, and Tim must talk to a lot of leaders of business, the removal of “hope” (call it confidence) has led us down this path. There is almost a strike by those with capital. And as we discussed in the office yesterday, when the wireless and the TV start talking about the downturn, you then know that people are likely to change their spending patterns and unfortunately (for the economy and perhaps not their personal finances), the outcome is likely to reveal even softer demand. With soft demand comes lower tax receipts as a result of weak economic activity. Ironically the SARB could stimulate the economy, they are watching politics impact the levels of the currency, flows to the market (as a result of the downgrades) and understandably are reluctant to budge. Until demand sees inflation much lower, that may be when the MPC move.

Just to give you perspective on how investors are starting to react, there were multiple new 12 month lows than before, MMI, Brait, Sun International, Sasfin, Spar, Pioneer Foods and another whole host of smaller businesses. To add insult to injury was the fact that there was not a single 12 month high from any listed business out there. Amongst the majors that were lower were the likes of Amplats, Steinhoff, Nedbank, FirstRand and Standard Bank. There were an equal amount of winners as there were losers, the likes of Glencore, Hammerson, NEPI and South32 …. The UK elections are today. Yip, that may have an outcome on how markets react over the coming days.

There are Steinhoff results that we are also looking at and will revert shortly. Hopefully tomorrow. The market didn’t like it, there were gains in the local market with PEP, indicating that the consumer is perhaps shopping down a little. Relative to some of the other retailers, this is a better performance. Some of the international investors must be less than pleased in this evolving business, as usual there are many moving parts.


 

Stocks in New York, New York ended the session higher after political worries abated a little, Barron’s writes The Market Shows Relief Over Comey Testimony. Comey actually testifies today. It is expected to be an epic event. Session end the Dow added 0.18 percent, the broader market S&P 500 a little less than that, whilst the nerds of NASDAQ ended the session with gains of just over one-third of a percent. Energy stocks and commodities in general went off the boil as the Dollar gained some ground. The moves are ever so marginal. Oil prices sank as a result of an unexpected rise in inventories ……

Apple stock seems to have caught another bid post their fairly sizeable announcements, as we know, it is more about the release of the new phones and whether their customers continue to refresh to the newer models. The next phone release is going to be massive. Without a doubt, this will be the biggest moment for the company in their history. In their 4 decade odd history. Whilst investors may be calling for tons of new products, we can be holders of an inventive company and a perfecter. They certainly have the resources. We will stay long on a “until then” basis, whilst others worry about what the share price is likely to be in the coming months!


 

Linkfest, lap it up

A huge positive for diabetics! Wow, I found this pretty amazing – Medtronic’s long-awaited ‘artificial pancreas’ makes U.S. debut. As the article points out, this is the ONLY “FDA-approved insulin pump that automatically delivers basal insulin to control blood glucose levels in people with Type 1 diabetes.” We remain long and committed to our investment in JNJ and Stryker, diagnostics and devices businesses that change the world incrementally!

This is an epic read, it really is very long. Well worth the read though, a stunning article and some more insight into one of the entrepreneurial geniuses of our time – The Real Story Behind Elon Musk’s $2.6 Billion Acquisition Of SolarCity And What It Means For Tesla’s Future-Not To Mention The Planet’s. We remain invested in Tesla. I am as surprised as Musk by the share price performance. BTW, Musk posted on Instagram that they have been listed now for 1000 years, which is 8 in binary. A nerd’s nerd!

This is certainly a huge step in autonomous controlled transportation. It makes sense too. BHP Billiton are working on technology that will see bulk commodities delivered without the help of humans, by ship.Robot Ghost Ships to Extend Miner’s Technology Drive to Seas. Crewless ships, according to the article, could save miners 86 billion Dollars a year in the iron ore industry alone. It points to cheaper mining costs and cheaper commodity prices!

Just for fun, we love his music! And what is not to love? Ed Sheeran went for a drive in LA with James Corden. Ed reveals that he doesn’t actually have a phone anymore. He only does email – Ed Sheeran Carpool Karaoke. #2nd trending YouTube video at the time. This is a little PG, brilliant though! Thank us later. If that doesn’t make you feel better, nothing will!


 

Home again, home again, jiggety-jog. Spare a thought for all the souls who are impacted by horrid weather conditions, be it the wind, storm surge of the Western Cape or the rain and cold, equally the fires in Knysna! Whilst there is little you can do about these events, know that you live in a place that does have resources to deal with the disasters. Stay safe out there sports lovers. Stocks are mixed across Asia.


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

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