vestact posted: " Market Scorecard Last night, US markets gave up major gains to end flat, after the Fed suggested that an interest rate hike was coming in March. Jerome Powell reiterated the Fed's determination to quell inflation, and predicted a strong recovery f"
Last night, US markets gave up major gains to end flat, after the Fed suggested that an interest rate hike was coming in March. Jerome Powell reiterated the Fed's determination to quell inflation, and predicted a strong recovery from the pandemic. While stock market indexes are down this year, perhaps the future seems a little clearer now? We shall see if investors start to cheer up from here onwards.
In company news, Microsoft shares closed up 2.9% after the software giant said its earnings continue to grow and its cloud-services business was looking promising. More on those results from Michael below. Elsewhere, and as expected, Nvidia is walking away from its potential acquisition of ARM due to regulatory hurdles.
In summary, the JSE All-share closed up 2.05%, the S&P 500 was down 0.15%, and the Nasdaq was up a smidgeon, just 0.02%.
Our 10c Worth
Michael's Musings
Microsoft posted better than expected numbers for the 12th straight quarter on Tuesday evening. These days, strong companies are expected to beat expectations. Microsoft managed to post revenue of $52 billion, up 20% from a year ago. This was the first time that they managed to cross $50 billion for a quarter, which is amazingly fast growth off an already large base.
The Azure web-hosting business was the primary driver, up by 46%, but other divisions also did well. Windows products grew by 25% due to strong computer demand from companies, and LinkedIn showed growth of 37% thanks to very tight labour markets in the northern hemisphere.
Microsoft has many different contributing divisions and with the announcement of the Activision Blizzard purchase, gaming will grow in importance. Microsoft is a well-diversified tech business and one that seems to fly under the radar of most regulators. This one is a strong buy.
One Thing, From Paul
I'm a little tired of the ceaseless commentary on global macro indicators, earnings and the market outlook, so I'm writing about something quirky today.
One of my favourite bloggers, Samuel Arbesman, writes about technology and change. He has a good Substack that you can check out here. His latest post is called Constructing Signposts in the Memescape and deals with creating "catchy" concepts that often combine two or more words in unexpected ways, creating a mental hook, that then goes viral.
Some recent examples he lists are terms like "luxury beliefs", "scout mindset", the "Lindy Effect" and "mesofacts". Another that I saw coined this week comes from an analyst at Wells Fargo, describing markets in 2022 as undergoing a "cathartic puke".
Byron's Beats
One person's sell is another person's buy, that's what makes a market. Bill Ackman's Pershing Square hedge fund is seeing the recent sell-off of Netflix shares as a buying opportunity, and they have not held back. Pershing are now one of the top 20 shareholders by value after buying $1 billion worth of stock in the last few days. This is after Netflix dropped by a gut-wrenching 20% when they released their results last week.
Netflix shares are now trading back where they were in February 2020, just before the world locked down and the company enjoyed their best period of subscriber growth ever. The vast majority of those new subscribers have stuck around. Netflix has 40 million more subscribers than the last time the share price was at these levels. You can see why Ackman is excited.
What makes the trade even more "rockstar" is that the funds for the purchase came from an interest rate hedge which recently made the fund huge money as treasury yields increased. Of course, not all trades like this work out, and it remains to be seen how Netflix will do. But these big ballsy moves are great to observe for market nerds like myself.
Bright's Banter
Apple is working on a new service that will allow small businesses to accept payments directly on their iPhones without any extra hardware. This is a big blow to companies that offer external payment terminals such as Square/Block internationally, and Yoco locally.
This comes after Apple acquired a company called Mobeewave in 2020 for $100 million, to help build this feature. The Canadian startup is developing payment technology for smartphones to let individuals tap their credit cards on iPhones. This will likely use near field communication (NFC) based on a chip that Apple already has on all iPhones and iPads.
If all goes according to plan, your existing iPhone or iPad could turn into a terminal and you could start accepting card payments right away. This takes Apple Pay to the next level. It will be interesting to see what benefit there is for payment processing companies like Visa and Mastercard, thanks to all the additional payment volumes that will be generated.
To make email less intrusive, a new app was inspired by snail mail. Pony is an emailing app that sends and receives email just once a day, just like a postman - The Subversive Genius of Extremely Slow Email.
Signing Off
The MSCI Asia-Pacific index is not looking fresh this morning, sinking to its lowest level in 14 months. Mainland China and South Korea are pretty close to bear territory, which means more than 20% off their highs. Meanwhile, Hong Kong and Japan are also losing ground this morning. It's red across the board.
US futures retreated in early trade, shedding over 1.5% for both the Nasdaq and S&P 500. It's early still, let's see how the mood develops. The Rand has weakened to R15.42 per US Dollar on the back of a much-revived greenback.
Stay strong and don't take life too seriously. Live another day. Tough times never last.
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