Twar with Tito

 

Market Scorecard


In Mzansi we finally got our own politicians who use Twitter as an instrument to communicate policy to the people. In this case it was the Gauteng Premier David Makhura, and Finance Minister Tito Mboweni. They were fighting about e-tolls in a heated exchange of tweets. You can read more about it here – Mboweni vs Makhura: Heated Twitter war over e-tolls saga.

It was jobs day in the US on Friday, where market participants were watching the number closer than usual. With the potential for an interest rate cut from the Fed, the number needed to be weak for June to confirm the cut. Unfortunately or fortunately, the numbers were stronger than expected. We are back in a situation where good news is bad for share prices. There was an increase of 224 000 new jobs for June, a huge increase from the 72 000 for May and higher than the 160 000 new jobs forecast by economists. Supporting the strong data there was good growth in wages and only a slight uptick in unemployment from 3.6% to 3.7%.

The good data means that it is unlikely that the Fed will aggressively cut rates for the rest of 2019. The realisation leads to a weaker equity market but a stronger US Dollar. Don’t let this volatility throw you off though. Strong economic data is good for long term share prices. More people employed, with higher salaries is a good thing!

On Friday the JSE All-share closed down 0.41%, the S&P 500 closed down 0.18%, and the Nasdaq closed down 0.10%.

Our 10c Worth


 

One thing, from Paul

Great companies are always innovating. That’s why it’s so thrilling to be a direct shareholder of these enterprises. I’m sure that you have seen the recent stories about Amazon becoming a giant in the shipping and delivery business.

According to this story that I read at the end of June, less than a decade after Amazon started handling some of its own logistics, it has become its own biggest shipper. Amazon is about 40% of all e-commerce in the US, and it now carries just over half of its sold items. That’s a big change from two years ago when the US Postal Service delivered more than 60% of Amazon parcels, and Amazon just around 15%.

It takes Amazon an average of 3.2 days to deliver a parcel, but for all other e-commerce companies, the average time is 6 days.

We had this experience last week, when we decided that we needed to buy a Dyson air heater, just to take the edge off the afternoon chill in our new office. According to the Dyson website, some South African retailers stock them, but not the latest models. It was really not easy to find out who actually had stock of anything (Michael tried, and he is good at shopping, both online and offline).

So I just ordered it on Amazon, paid in one-click and it arrived in three days. According to the paperwork, it was shipped from a warehouse in Hebron, Kentucky, and flown to South Africa by UPS, who cleared it through customs and brought it here to our door.

More on the broader Amazon story here, by Erica Pandey on Axios: Amazon, the new king of shipping.


 

Byron’s Beats

If you have been following our daily message for a while you would know that Richemont owns a large online luxury retailer called Yoox Net-a-Porter. Richemont consolidated the two businesses to achieve scale and now own more than 95% of the combined entity.

This Vogue Business article interviews the founder of Yoox and current CEO of the combined group, Federico Marchetti. As with most online retailers they are most excited about the spending habits they are witnessing. With that data they are able to target consumers in very specific ways.

Luxury retail is under threat from innovation. Paying thousands of Dollars for a watch that cannot tell you your heart rate may not appeal to people any more. But there is no replacing hundreds of years of brand development and quality. That is why we are happy as shareholders that Richemont has embraced the online shift with full force. And we have seen great results so far.


 

Michael’s Musings

Why do people rent cars? That seems like a straight forward question, and the primary reason is to get from A to B. There is a growing trend in Japan where people are renting cars for things like napping, storage or even just to charge their cellphones. Huh?

In Japan rental companies have made it easier to rent cars, particularly for short periods, where you can have a car for as short as 30 minutes. All of a sudden, car rental executives are rethinking their business model and the primary reason that they are in business. Can we say that this shift is truly thinking outside of the box? I wonder if rental car companies will respond with a new type of product, where they don’t do short-term rentals of cars but of some portable pod?

You can read more about it here – People in Japan are renting cars but not driving them


 

Bright’s Banter

Last week I read a very interesting institutional investor article titled “Inside the geeky, quirky, and wildly successful world of quant shop Two Sigma”.

Two Sigma Investments is a New York City based international hedge fund that uses a variety of systematic and technological methods, including artificial intelligence, machine learning, and distributed computing, in their investment process.

Two Sigma was founded in 2001 by ex-D.E. Shaw & Co director John Overdeck and computer scientist David Siegel, guys that are recognised as pioneers in the field of technology and investment management. They have more than 40 years of experience in the development of computer-driven, model-based trading systems.

Linkfest, Lap it up


Sometimes you have to keep on, keeping on. Imagine 50 meetings followed by rejection – SA fintech Fundrr finally lands funding after being turned down by 50 angels

It is not how much you earn that matters. It is controlling costs – This multibillionaire still calls the cable company when he thinks his bill is too high

Vestact Out and About


Byron gets a mention in this Daily Maverick article – SA stocks are not far off record territory, but should be doing better.

Bright was on Business Day TV’s Stock Pick show where he is impressed by Tesla’s huge production growth – Stock Pick, Tesla and cash.

Signing off


The JSE All-share is lower this morning, following global markets. The main economic news for the week ahead is that Jay Powell will appear before the US Congress on Wednesday and Thursday to talk about monetary policy and the US economy. Probably the biggest event for the week though is Bafana Bafana taking on Nigeria on Wednesday night. Our recent form against them has been good, hopefully that momentum can carry us through to the semi-finals.

Sent to you by Team Vestact.

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