Space Craze

 

Market Scorecard


Markets are still keeping one eye on the coronavirus outbreak. In China, their one week holiday for New Year celebrations has been extended by three days until the 2 February. As you will see in the linkfest below, the Chinese New Year is the biggest migration of people each year. To try to keep the outbreak contained the Chinese government wants to limit the number of people travelling.

Other big global news is that this is the last week that the UK will be part of the EU. Not much will change on the 1 February though, because there will be a transition period to allow everyone a chance to get their house in order and for the UK to negotiate trade deals of their own.

On Friday the JSE All-share closed up 0.64%, the S&P 500 closed down 0.90%, and the Nasdaq closed down 0.93%.

Our 10c Worth


 

One thing, from Paul

I’m hoping that Elon Musk will list SpaceX one day, so that we can consider owning it in Vestact portfolios.

The reason that humans haven’t returned to the moon since 1972 is because it costs too much. NASA is a US government bureaucracy that has never been at all cost conscious. Also, we’ve never had reusable rockets. The Space Shuttle had disposable launch rockets, and even the part that returned to Earth was basically rebuilt after every mission.
SpaceX has changed all that. According to the Wall Street Journal they charge roughly $60 million for a Falcon 9 launch, which is one-quarter to one-half of what the Boeing-Lockheed venture typically charges. The first stage of their Falcon 9 launch system returns to Earth and lands itself safely on a solid surface.

Some say that space travel will create a “plan B” for humanity in the event of a calamity on Earth, but my view is that building a space-based economy will create new industries and opportunities. In the same way that railroads and highways opened up the hinterland to development, and the Internet created new businesses and new ways of living, space travel will make all sorts of innovations possible.

Musk founded SpaceX in Hawthorne California in 2002 with the goal of reducing space transportation costs to enable the colonisation of Mars. SpaceX was the first private company to send a spacecraft to the International Space Station (ISS) and has since flown 18 resupply missions there. In addition to interplanetary projects, SpaceX is making lots of money by dominating commercial and military satellite launch contracts.

With the recent success of Tesla, Musk’s personal balance sheet is looking good, so perhaps he won’t rush to access public markets for SpaceX’s funding requirements. He can raise as much debt as he needs. We will have to wait and see.


 

Byron’s Beats

The South African minibus taxi economy is a fascinating place. It is a classic example of how the desire for profits, filled an integral role in our society. Of course, it is not without its problems, including a death toll of three people a day in car accidents.

The journalists at Business Insider went through the Transaction Capital annual report and came out with some really interesting stats. Remember, Transaction Capital owns a majority stake in SA Taxi which provides financing for most of the Taxis on our roads.

Here is the article. What you need to know about the state of SA’s minibus taxi industry.


 

Michael’s Musings

This morning on Bloomberg, Eskom was in the news due to the anticipated announcement of a restructering plan. We all know the huge threat that Eskom poses to our economy, both due to supply issues and due to their massive debt burden. One of the big debates going on at the moment is around IPP’s (independent power producers), and their role in our future. Each camp throws around different figures, either in support or against increasing IPP’s contribution to the grid.

This article from Forbes caught my eye last week – Renewable Energy Prices Hit Record Lows. Thanks to economies of scale, and a surge in R&D spend, the cost of renewable energy has plummeted. “Over the last decade, wind energy prices have fallen 70% and solar photovoltaics have fallen 89% on average”.

What seems to be clear is that building a coal fuelled power station today would be madness, both solar and wind are now cheaper and getting more so by the year. A big question for power utilities though, is around turning off already built coal fueled power stations. Once built, coal is rather cheap to operate. In the case of Eskom, they can’t produce enough power from coal alone, so that isn’t much of a concern for them. It seems clear that the future of power in South Africa must be from renewable?

Interestingly though, our existing renewable producers are still rather expensive. I suspect it is due to older technology being used in their construction. When technology is changing so quickly, the difference in one year between construction dates can have a massive impact on the cost.

In the case of Eskom, they sell electricity at an average cost of R0.90/kWh, but IPPS average cost is R2.06/kWh. This Engineering News piece explains the costing and why the author thinks IPPs have been good for Eskom – Opinion: Are renewable IPPs destroying Eskom?.


 

Bright’s Banter

Today marks 10 years since the birth of the iPad, Happy Birthday iPad! News is out that the top-end iPad, which is called the iPad Pro will be getting a massive update in the next few months. The next generation iPad Pro will have a Smart Keyboard that is out of this world, this is according to Taiwanese tech website Digitimes.

The Smart Keyboard is a very cool Apple accessory that uses a physical connector on the back, unlike those clunky bluetooth keyboards that need to be woken up by frantically hitting the keys. The Smart Keyboard doesn’t need to be recharged as it uses the same power as the iPad Pro, game changing if you use the tablet.

This should help the sales of the iPad, which have been slowly going down since its peak in 2013 where the iPad was 26% if Apple’s total sales. Tomorrow Apple is going to release their numbers. iPad sales should show some strength as we’ve seen in the last two quarters.

Infographic: 10 Years of iPad | Statista You will find more infographics at Statista

Linkfest, Lap it up


Australian fires caused an unprecedented amount of damage. The silver lining is that with some of the bush removed, archaeologists are finding things that have been long covered – An ancient aquatic system older than the pyramids has been revealed by the Australian bushfires.

Over the weekend was the Chinese New Year, where most of the country travel to see family. Imagine the infrastructure needed to transport 400 million people, all wanting to travel at the same time.

Infographic: The World's Largest Human Migration Is About To Begin | Statista You will find more infographics at Statista

Signing off


It is a big week ahead with big players like Apple, Amazon and Tesla reporting numbers. Also happening is the fed meeting to decide on US interest rates. The expectation is that their rates will remain the same. As always though, traders will be paying close attention to what is said during the press conference. Asian markets are still closed today. The JSE All-share is lower this morning and Rand is at $/R 14.44.

Sent to you by Team Vestact.

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