The NASDAQ takes a Whack

“Across the oceans and seas, it was a monster turnaround for tech stocks. And by monster, tech stocks were driven over by monster trucks after a great start. It was plain sailing and all good by midday, and then heavy selling by machines or algorithms or generally unsettled humans by the valuations (or all) led to a pretty heavy sell off of the high beta technology stocks.”


 

To market to market to buy a fat pig Friday. So long ago. Next Monday of course will feel further away from the prior Jozi trading session, it is of course a long weekend! The dust settled on the “disastrous” UK election outcome for the incumbent, there were more than just a few embarrassing moments for the current British PM, Theresa May. This FT article suggests that she is on borrowed time, even though she intends serving out the rest of her term – Theresa May faces party showdown after disastrous election.

The suggestion by May is otherwise in the article, her political number is seemingly up. Her appointment of a pro European as her 2-IC suggests that Brexit hardness will be watered down. Ha-ha, further down in the article, the jostling for power suggested that the number one aim was to keep Jeremy Corbyn out of Downing Street. My recollection of Downing Street is that other than if you have the ability to get in through the steel gates, you can’t get in (If you know what I mean). It is heavily guarded.

Corbyn is actually quite cool in terms of his choices, vegetarian, pro-peace and anti-war, he enjoys minimalism and rides bikes (I think he owns 2, an excess) for transport. Perhaps he really walks the walk. In terms of policies, I couldn’t be more in disagreement with having government control of everything, something Labour believes in. I believe in individuals. Always. We are hardcoded to both care for one-another at a family level and be selfish, to make their lives better than your own. That requires intensive hustling. Capitalism works better than any other option, open trading and markets make more people better off across both the seller and buyer. Not the opposite, where you hold onto your old theories of the world.

Anyhows, British politics aside, markets here in Jozi ended comfortably green into the weekend. Perhaps they knew something about the Boks and Bafana that we didn’t. A weaker Pound Sterling meant that BATS and Hammerson were at the bottom of the leaderboards, Amplats and Shoprite were at the top. The Jozi all share index added exactly half a percent, industrials up half a percent, Naspers pulling BATS ahead to close the market higher. Gold and Platinum stocks were the real winners on the day, reality setting in that we are moments away from across the board non-investment grade. This came to the fore post the market close, see here – Moody’s downgrades SA one notch, assigns negative outlook. Whether you like it or not, capital dictates terms when you need to borrow, not the other way around.

The points that Moody’s make are all well known to us, erosion of institutional strength, lower growth expectations and erosion of fiscal strength, as a result of lower growth and lower tax receipts. Question is, what can be done to arrest us from this state? The point that we find ourselves currently? Where do we go from here? For starters, when there is a trajectory down, you need to level off at a point to convince the people who are lending you money (let us not forget that), that you are reliable and trustworthy and that things are still on track. Confidence is the best kind of stimulus. That seems sorely lacking at this point in time, you can see it all around you. If that changes, i.e. confidence returns, there may well be a marked pickup in all things financial.

Tell that to Mr. Market. Who does not really care! The Rand is the best performing currency out of the developing market ones that Bloomberg covers, this I saw on my timeline this morning. And by timeline, I mean Twitter, the only truly customisable news application. Fake news or not, individuals must always think before they tweet, or take everything verbatim. Talking of which, have you ever held something to be completely true and then been taken as a sucker for fake news? Or is it hype and caution first and then ask questions later?


 

Across the oceans and seas, it was a monster turnaround for tech stocks. And by monster, tech stocks were driven over by monster trucks after a great start. It was plain sailing and all good by midday, and then heavy selling by machines or algorithms or generally unsettled humans by the valuations (or all) led to a pretty heavy sell off of the high beta technology stocks. The NASDAQ lost nearly 300 points from 11am to 2.50pm, some stocks turned tail over ten percent in a few hours. Why? Well, for some time now there has been talk of the new and inviting technology stocks, as well as some of the old favourites. New acronyms, “stocks are missing the political risk” they say. Year to date the NASDAQ is up over 15 percent. And earnings have definitely driven stock prices higher.

All the big names took a beating, Apple, Alphabet (Google), Amazon, Tesla, NVIDIA, Facebook, Microsoft, Alibaba, it was unrelenting. In fact, of the top 20 technology stocks by market capitalisation, only one was higher, and that was IBM. No surprises there, bearing in mind that the valuations are lowest for the older technology company. In fact, if you sort by the top 80 technology sector stocks by market capitalisation, there was only one other stock in the green. Mobileye is the only other stock up there. And that is only as a result of the company being subject to a buyout from Intel. So it is more currency related (they, Mobileye, are based in Israel).

80 top technology shares and a company founded in 1911 is the only one out. Year to date? IBM is down over seven percent. And now my friends, you know why IBM was the only stock up amongst the 80 biggest technology stocks. By the end of the session, tech stocks and nerds lay licking their wounds, chipped screen, cracked Oculus and fried hard-drives, down 1.8 percent for the NASDAQ.

By complete contrast, the Dow Jones Industrial average added over four-tenths of a percent, energy stocks getting a huge lift! The broader market was somewhere in-between, down nearly one-tenth of a percent by the close. Financials and healthcare stocks were also winners on the day. Regardless of what you think about politics in DC, it seems that the market will only care if worst case scenario transpires. I saw a poll that suggested that “investors” still expect tax reform to get done.


 

Linkfest, lap it up

Today marks 200 years since the bicycle has been around – The bike at 200: World’s craziest rides, then and now. There are some interesting adaptations of the two wheels.

Have you seen the headlines recently talking about how US households now have more debt than in 2008? Rather misleading headlines which can be considered “click bait”. The truth is that the US consumer is in a much healthier position now than they were in 2008 – The Myth of the Indebted American.

Research shows that to be happier it is as “simple” as living closer to work – The Problem With the Relentless Pursuit of Happiness.


 

Home again, home again, jiggety-jog. Stocks across Asia are all lower, US futures are lower, including more tech pain a little later. I am guessing that the high beta stocks could be under attack for a while. We should start lower here ….


Sent to you by Sasha, Byron and Michael 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