vestact posted: " Market Scorecard US markets capped a turbulent week with a big rally on Friday. Investors were buying the dip across the spectrum, including high-growth stocks and alternate assets like cryptocurrencies. According to FactSet, last week, investors "
US markets capped a turbulent week with a big rally on Friday. Investors were buying the dip across the spectrum, including high-growth stocks and alternate assets like cryptocurrencies. According to FactSet, last week, investors poured about $3.6 billion into US ETFs alone. This helped undo most of the damage caused by Russia's incursion into Ukraine.
The S&P 500 ended up 0.8% for the week, while the tech-heavy Nasdaq composite ended up adding 1.6%. Things aren't looking so rosy this morning as the weekends' events have heightened anxieties in the markets. President Vladimir Putin ordered Russia's nuclear-deterrence forces to be put on high alert.
In company news, YouTube has suspended Ads from Russian state-owned media RT and other accounts included in the sanctions. They will also limit the way its algorithm recommends those videos to viewers.
On Friday, the JSE All-share closed up 0.72%, the S&P 500 rose 2.24%, and the Nasdaq climbed 1.64%.
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One Thing, From Paul
It feels like it's time to venture a comment or two about the situation in Ukraine. Apart from noting what's been going on, and urging you to just hold on to your portfolio holdings because wars blow over, we have not said much.
I did not expect Putin to order Russian troops into Ukraine, because I could not fathom why he'd do that. I was wrong, he's' clearly crazy. There is no way that this ends well for him, or his country. Perhaps he imagined it would be easy? That they would control Kyiv before other countries had time to organise and impose sanctions that had been threatened?
The Ukrainian people, led by the man of the moment, Volodymyr Zelenskyy, appear to be holding off the attack on their country. They refuse to allow a corrupt oligarch to take over their homeland and downgrade their democracy into a vassal state under Russia.
So far, the Russians do not control the airspace over the country, and all major Ukrainian cities remain in Ukrainian hands. Meanwhile, US and European allies are rolling out a slew of financial sanctions and other steps that will isolate Russia on many fronts.
Putin has put his nuclear missile launch system on "high alert" whatever that means. I really don't think that he will go as far as to drop a nuke on a meaningful target. Surely he understands that this would provoke a very severe military reaction from the rest of the world, and probably cost him his head.
All said, it feels to me as if Putin has severely overplayed his hand. He's on the back foot now. I expect that the conflict will decelerate quickly, Russia will be humiliated, and soon cease to be a market negative. I may be overly optimistic, but I'm calling it. I would not be surprised to see the market rally that started late last week, continues this week.
Byron's Beats
Often, when big global events occur, certain behaviour trajectories can change drastically. This will often impact your portfolio's direct equities, so we need to pay attention.
During the current Ukrainian war, there has been a big focus on cyber attacks. The Russians are experts at it and have been hacking crucial Ukrainian online infrastructure. The FBI has warned US businesses of an increase in ransomware attacks since the sanctions were imposed.
Cyber attacks are very effective and in my opinion, will probably get worse over time. CrowdStrike, a Vestact recommended stock, is a leader in cyber security. Its share price took note on Thursday and soared over 10%.
Another sector that should benefit is renewable energy stocks. With energy costs sky high at the moment, the alternatives make a lot more sense. Of course, our base is covered here by Tesla.
Michael's Musings
For vehicle manufacturers, the conversion to electric cars is not as simple as making a few tweaks to existing models. An EV is entirely different, from the chassis that use the battery pack for integrity to four motors driving a wheel. The carmakers need to design their factories from the ground up to accommodate all the changes. The shift in strategy to EV is expensive.
Last week, VW announced that they are considering listing Porsche as a way to raise money to fund their EV expansion. The VW market cap is around $130 billion, Bloomberg estimates that Porsche will be worth around $95 billion when it lists. The bulk of VW's value comes from Porsche, even though the supercar maker only produces 3% of VW's total cars.
Porsche has perfectly positioned itself, selling large vehicle quantities but with supercar profit margins. It is an incredible brand. Most of the vehicle industry has a net profit margin in the mid-single digits, pre-covid in 2019 Porsche had a net profit margin of 17%.
It is a brave call to sell down the stake in Porsche to fund the production of a battery-powered Polo.
Bright's Banter
According to EV-volumes data, global electric car sales more than doubled in 2021, reaching over 6.75 million units. This is an impressive number considering how difficult 2021 was for car manufacturers due to the global chip shortage and other supply chain-related issues.
China had a particularly amazing 2021 as they tripled their EV sales from 1.2 million to over 3.4 million. Europe is still the second-largest market for EVs with new registrations increasing by almost 70% to 2.3 million, of which almost half of those cars were plug-in hybrids. The US still trails with just over half a million EVs.
Electric vehicle sales will see major success once adoption picks up outside of China, Europe and the United States which account for about 90% of global electric car sales. The infographic below shows the growth in global EV registrations by region.
Your well-being is like a retirement account: the sooner you invest, the greater your returns will be. The big question is whether you will be happier ten, twenty, and fifty years from now, and what you can do today to achieve that happiness? This is part of a series titled "How to build a life" from The Atlantic - The seven habits that lead to happiness in old age.
Signing Off
Asian markets are mostly up this morning, with the exception of Hong Kong. US equity futures slid in early trade amid heightened uncertainty, giving back some of last week's gains. The Rand is trading at around R15.35 to the US Dollar.
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