The Shutdown is Shutdown

Market Scorecard


The US shutdown has been put on hold for three weeks while politicians try to resolve their differences. Can you see the Republicans backing down on their demand for a wall or the Democrats opening up funding for a wall? As it stands, another shutdown is on the cards for just after Valentine’s day.

It is a rather busy week ahead, where on Tuesday the UK will vote on an amended Brexit deal, Wednesday the Fed announce their latest interest rate decision, and then throughout the week most tech giants announce their results. Of particular importance will be Apple revenue from the iPhone, remember they will no longer be giving us iPhone unit sales.

On Friday the JSE All-share closed up 0.77%, the S&P 500 closed up 0.85%, and the Nasdaq closed up 1.29%.

Our 10c Worth


One thing, from Paul

In the US, spending to treat all orthopaedic problems including pain in the muscles, bones and joints represents about 15 percent of overall healthcare outlay for those with medical insurance.

The Blue Cross Blue Shield Association is a US federation of health insurers with more than 106 million people on their books. In a recent report they note that spending on planned knee and hip replacements is increasing, driven mainly by an increase in the number of procedures among people under 65. The number of knee replacements increased by 17% between 2010 and 2017, and hip replacements rose by 33%.

Vestact portfolio holders are invested in leading knee joint manufacturers, Stryker and Johnson & Johnson’s Synthes division.

You can read the longer Blue Cross Blue Shield Association Report if you have the time.


Byron’s Beats

Slowly but surely Naspers have been deploying their excess cash from the sale of some Tencent shares last year. On Friday Naspers said they bought out minority shareholders in a business called Avito, a Russian classifieds business. The investment was worth US$1.16 billion, at an implied enterprise value of US$3.85 billion, to acquire a further 29.1% stake in Avito which will fall within the OLX group for Naspers.

Naspers is clearly going long classifieds in a big way. They are consolidating businesses around the world who have managed to achieve some sort of scale. Apparently they want to push these businesses all on to one platform. Just like Uber and Airbnb, an online aggregator in the classifieds space needs to achieve scale for the service to work best. At this stage it is a race for the real estate.

You can read more about the deal in this Fin24 article titled Naspers sees single global classifieds focus amid Avito deal


Michael’s Musings

The Hamilton Project has done some research on how different education levels weathered the Great Recession and then how quickly they recovered. Given that the jobs, particularly in developed countries, are knowledge-based it makes sense that those with more education do better than those with lower levels of education.

Here is the conclusion from the blog post, “College raises average lifetime earnings, and it also helps insulate workers from economic downturns, providing economic security in the times they need it most.”

You can read the entire article here – Workers with Low Levels of Education Still Haven’t Recovered From the Recession


Bright’s Banter

This morning I was listening to a podcast by Michael Samuels called According To Sources. This was an incredible interview with hedge fund manager John Paulson.

John Paulson is the founder of Paulson & Co., a New York based investment management firm specialising in merger arbitrage.

In this podcast John Paulson talks about his career, how it started, and how he helped his clients make money in the great financial crisis by betting against the housing bubble. A crazy set of events that were well documented in the movie and book “The Big Short” by Michael Lewis.

Michel Samuels Interviews John Paulson On According To Sources

Linkfest, Lap it up


One of the biggest e-mail crimes is when you hit ‘reply-all’ to a massive group e-mail. You would think the tech guys at Microsoft would know better – As many as 11,543 Microsoft employees got swept up in a reply-all email apocalypse

Here is the famous Big Mac index, which shows the relative strength and weaknesses of currencies. According to the index the Rand is weak.

Infographic: Burgernomics: The Price of a Big Mac in Global Comparison | Statista You will find more infographics at Statista

Vestact Out and About


The Sunday Times had an article about Steinhoff where Michael gets a mention – Polish factories go as Steinhoff sheds assets.

Byron gets a mention in the Sunday Times talking about Massmart’s numbers out last week – Walmart’s priorities sideline Massmart.

Moneyweb has a look at how Emerging Markets are expected to fair in 2019, where Michael gets his say – Will the pressure on emerging markets persist in 2019?

Signing off


Asian markets are mixed this morning. Tencent was up 1% going into the Hong Kong market’s lunch break. When traders got back, the stock promptly dropped into the negative. The JSE All-share is lower this morning and the Rand is currently at $/R13.60.

Sent to you by Team Vestact.

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