Market Scorecard
Surprisingly, the JSE All-share closed lower yesterday. We opened in the green, then moved higher at 10:00 when CPI came in at 4.5% -which points to a rate cute from the SARB next month- but after that we gradually dropped through the rest of the day. Over in the US, the Fed kept rates on hold as expected but hinted at a rate cut this year. The results are a much weaker US dollar, currently the $/R is below 14.30, and a buoyed US market sitting around 1% away from all-time highs.
Yesterday the JSE All-share closed down 0.11%, the S&P 500 closed up 0.30%, and the Nasdaq closed up 0.42%.
Our 10c Worth
One thing, from Paul
Genetic sequencing machine maker Illumina has had a slow start as a Vestact recommended stock. It has fluctuated between $275 and $370 per share in recent months. The current price is $351.94.
Goldman Sachs put out a research note last week after hosting Illumina CEO Francis DeSouza at their 40th Annual Global Healthcare Conference from 11 – 13 June 2019 in Rancho Palos Verdes in California. The company is seeing good demand for its newest NovaSeq machines and the associated consumables. The company has a very good lead on its competitors, other than in China where its rivals basically steal its technology and get away with it. The recent acquisition of Pacific Biosciences will add another element to the product mix, and another team of really good scientists.
Apparently, Illumina is very positive about population sequencing projects, which are massive state- or health insurer-funded programmes to study the genes of large groups of people. Illumina is supplying machines to over a half dozen active projects globally and preparing for 50 more.
Management expressed enthusiasm about rising demand for sequencers used to perform liquid biopsies, which are a simple and non-invasive alternative to surgical biopsies in a cancer sufferer. A blood sample is put through an Illumina sequencer and traces of the cancer’s DNA in the blood can give clues about which treatments are most likely to work for that patient.
In the consumer genomics field, the market seems to be transitioning from services focusing on genealogy to more health-centric applications. In addition to market leaders like 23andMe and AncestryDNA, there are over 100 early stage companies in consumer genomics.
This is a good stock to own. If you don’t own them already, consider sending more funds to your account in New York to add them to your portfolio.
Byron’s Beats
When people talk of Nvidia you often think of gaming, cryptocurrencies and data centres. But one of their fastest growing sectors is self-driving cars. This article talks about Nvidia and Volvo who have partnered up on driverless trucks.
The need for driverless trucks in the US is huge because they are struggling to find truck drivers. When demand is higher than supply, prices go up. When prices are high companies look for an alternative.
Nvidia, of course, would supply Volvo with the AI capabilities. Volvo already has a few driverless vehicles operating on mines in Norway. It sounds like a good fit.
Nvidia is already working with over 370 partners when it comes to self-driving projects. These include Toyota, VW, Mercedes-Benz and Audi. This certainly has a lot of potential for the company.
Michael’s Musings
The first phase of the African free trade agreement came into effect two weeks ago. I’m not sure I’ve seen any mention of it in the media though? It will still be a number of years until this is fully implemented, current estimates are for 2030, but each step counts – What Trade War? Africa Sidesteps Tariffs, Starts Free-Trade Pact.
Making trade between African countries easier, should increase the amount of trade that happens. Increased trade leads to increased wealth, which should benefit all countries. Next on the list needs to be visa free travel.
Bright’s Banter
Los Angeles-based producer of plant-based meat substitutes, Beyond Meat, is still the talk of town thanks to the fact that its competition Impossible Meats, had a shortage of burgers in White Castle and Red Robin.
The maker of the famous Beyond Burger priced its IPO at $25, yesterday it closed at $169.28 with over $10.1 billion in market cap, a surge of over 577%. The alternative meat market is definitely getting a lot of attention since big players like Nestle and Tyson Foods have entered the space and Barclays has valued its potential at $140 billion.
In 2018, the company supplied its Beyond Burger to Restaurants & Foodservice channels, which according to Statista accounted 42% of Beyond Meat’s sales, up from 22% the year before. JPMorgan estimates that the company could surge a further 30% if it can secure a partnership with McDonald’s, which apparently Nestle is busy negotiating.
The company went from trading at a lofty valuation to a stratospheric one in a very short period of time. In the past few trading days the shares tumbled because Taco Bell refused to put their burgers on their menu. The business has a lot of potential but the valuation is impossible and Beyond (pun intended) my understanding, happy to watch from the sidelines.
You will find more infographics at Statista
Linkfest, Lap it up
Interesting. Some of these Roman buildings are symbols of the might of Rome, and are possibly still standing due to their shape and how that interacts with the waves generated in an earthquake – Roman amphitheaters act like seismic invisibility cloaks
Two interesting reads about how your mentality and focus can determine success or failure – Recession mentality and The Good Old Hot Dog Stand Story.
Vestact Out and About
Paul gets a mention in this Business Day article, talking about Multichoice’s results – MultiChoice’s shares soar to record high
Signing off
It is SONA today. There probably won’t be too many surprises, but it will set the tone for the next year and the Ramaphosa presidency. Ratings agencies will be paying close attention, which means the Rand will react based on what is said. This morning there is UK retail sales, then this afternoon US initial jobless claims, and tonight the Bank of England Governor will be speaking publicly. The JSE All-share is higher this morning.
Sent to you by Team Vestact.
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