Trade Talks a Test Match


Market Scorecard

Over this week, stocks globally have been focused on trade talks and the looming US shutdown. Every time there is a new tweet or press statement, there is a shift higher or lower, the dollar moves and bond prices change. At the moment, trade talks seem to be going slower than the market was expecting.

I think trade talks are a bit like test cricket, where the potential result ebbs and flows with each passing session. So trying to judge what the end result of the trade talks will be just based on a tweet or two, is like deciding how a test match will finish based on the last two overs bowled from Dale Steyn.

Yesterday the JSE All-share closed down 0.03%, the S&P 500 closed down 0.27%, and the Nasdaq closed up 0.09%.

Company Corner


Byron’s Beats

We often talk about Stryker as a consolidator in the Medical Devices arena. But let’s not forget that Johnson & Johnson has a $27bn per annum medical devices behemoth that is, in fact, twice the size of Stryker. Stryker has annual sales of $13.6bn.

Earlier this week it was announced that J&J Acquires Robotic-Surgery Firm Auris for $3.4bn.

Auris makes robotic surgical scopes operated with a handheld device used to identify cancerous tumours on peoples lungs.

The deal value could increase by $2.35bn if certain targets are met. As we have said before, this sector has the most incredible innovations but unless you work in the field you are not exposed to it. Even the patients have no idea what devices are being used. We are very excited by the developments taking place within the medical devices area and are happy holders of J&J and Stryker in this sector.

Our 10c Worth


One thing, from Paul

Hong Kong is the world’s most expensive place to rent a high-end office. It beat Tokyo, London and Paris by a wide margin. At the other end of the spectrum, Kuala Lumpur, Bengaluru, Jakarta and Warsaw are among the places which have the cheapest office rents in 2019.

Vestact is moving at the end of May to an office that we bought for ourselves in the Rosebank Firestation. We are busy fitting it out now. Where does our rental rate here at Melrose Arch fit in with the numbers in the chart below? It’s tricky, because they are expressed in annual amounts per square feet, in US Dollars.

There are 10.8 square feet in every square metre and 14 Rands to a US Dollar and 12 months in every year, so best I can figure top rentals here in Johannesburg are about $40 per square foot per year? That’s way cheaper than in Honkers!

The Bloomberg article here summarised information collected by Knight Frank


Michael’s Musings

Over the last few years, the topic of wealth inequality has increased in popularity. Many ‘solutions’ to the wealth inequality problem have been proposed, mostly involving finding new taxes against the rich.

One idea that interests me is that of having a universal basic minimum income, where the government will pay each person a small sum each month. The idea is that this will allow people to become more creative and help them make some really amazing things. It is also hoped having a basic income will make poverty less of a multi-generational issue.

Picture only working two days a week, in a creative and stimulating job, where all the monotonous jobs are done by robots, who will pay a form of income tax. That tax is then used to pay the basic income amount to citizens.

Finland has started to experiment with the concept, where they are particularly looking at what happens to labour supply when a universal basic income is implemented – The Basic Income Experiment 2017-2018 in Finland. Preliminary results. It is still early days in the experiment. So far it shows that people are happier but there is no material impact on reducing the time that someone is unemployed for.


Bright’s Banter

Jamie Dimon has famously dubbed Bitcoin “a fraud” so it comes as a surprise to me that JPMorgan has created their very own cryptocurrency called “JPM Coin”. This is of course an attempt to adopt cryptos in a more institutionalised fashion.

JPMorgan believes that JPM Coin “will yield significant benefits (a slogan every company uses when they have a new product) by reducing clients counterparty and settlement risk, decreasing capital requirements and enabling instant value transfer”.

Our friends at Bloomberg remind us that this is of course not JPMorgan’s first time trying something like this. The bank has worked on a network based on the Ethereum blockchain to share information between 157 banks and process payments more quickly.

Linkfest, Lap it up

If you applied to be one of four people to be stranded on Mars, I’m afraid that the venture went bust – The end of an out-of-this-world scam: Mars One Ventures crashes to earth

Fear not, Elon Musk still plans to get people to Mars. The only difference is that you will have to pay to get there – Elon Musk: A round Trip Ticket to Mars Will Cost Just $100 000

Vestact Out and About

This week on Blunders: Eskom situation is hopeless; Apple’s own lawyer is insider trader; Tinder but for cows; and Houston weed dealer has tiger in his garage – Blunders: Episode 133

Signing off

The JSE All-share is down this morning, and Naspers is below R3 0000 a share again. Last night Nvidia reported numbers that the market liked, the stock is currently up 7% in after hours trade. Next week is a short week for the US market, as they celebrate Presidents Day on Monday. It is a big week on the local front, Bidcorp, Discovery and Woolworths all report numbers, and then there is our budget speech on Wednesday. Byron is very excited about Super Rugby kicking off today.

Sent to you by Team Vestact.

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