vestact posted: " Market Scorecard US markets closed higher again yesterday. Shares drifted around early in the day but gathered steam to close well into the green. This rally is most pleasing. Consumer discretionary, technology and real-estate stocks rose, but ene"
US markets closed higher again yesterday. Shares drifted around early in the day but gathered steam to close well into the green. This rally is most pleasing. Consumer discretionary, technology and real-estate stocks rose, but energy shares declined by 2.6%.
In company news, Tesla gained 8% after the electric car-maker announced that it would seek shareholder approval for another share split. Elsewhere, meme stonks GameStop and AMC Entertainment added 25% and 45%, respectively, representing their largest percentage gains since last year. That's crazy!
In conclusion, the JSE All-share closed down 0.18%, the S&P 500 gained 0.71%, and the Nasdaq rose 1.31%.
Our 10c Worth
One Thing, From Paul
The first quarter of 2022 ends on Thursday. That means Q1 earnings season is just around the corner. We love reviewing numbers from our portfolio companies.
The past three months have been a dog show, with Russia's bizarre invasion of Ukraine, Chinese regulators going mad, supply chain problems, surging oil and wheat prices and inflation numbers running hot. The Fed also raised interest rates for the first time since 2018. These points are in the "negative" column.
In the "positive" column is the fact that post-Covid business activity has been strong. In the US, consumer debt levels are low and cash savings are high. Companies have been raising prices, and getting away with it.
I'm optimistic. Remember that earnings growth drives stock prices. All the rest is just noise.
Byron's Beats
The recent rally in the stock market has been a welcome relief for Vestact clients. But is it justified? Markets usually rally long before the coast is clear. The justification for the move will come later, or it won't, and the market will tumble again.
We're still digesting the impact of the war in Eastern Europe and its financial repercussions, so uncertainty remains. We're still in the thick of it.
As media houses and analysts search for reasons to explain the rally, a recurring headline that I've noticed is that money is moving into safe-haven assets like blue-chip US equities. In other words, big US tech stocks are now seen as a safe place to park long-term money. This is interesting because historically, tech stocks were seen as high-risk growth assets, not defensive portfolio backstops.
We'll take it though. In truth, the daily news is interesting to follow but should be ignored by serious investors, even if it involves big global events.
Michael's Musings
The South African Reserve Bank (SARB) has an excellent global reputation, and our governors regularly receive international accolades. We were one of the first countries to shift to inflation targeting instead of trying to control the amount of money in circulation. So it makes sense for the SARB to participate in Project Dunbar, an international project to investigate the viability of cross-border digital currency payments.
Many countries are investigating the practicalities of issuing their own digital currencies. The Chinese version is already beginning to circulate. The logical next step is to create an international system to facilitate the cross-border transfer of these new digital currencies. Currently, the SWIFT network is used for international transfers, but the system is old, slow, expensive and ripe for disruption.
Facebook already tried with their Diem (formally known as Libra) digital currency. The idea was to allow anyone with a Facebook account to transfer money to any other Facebook account. A quick, secure and cheap way to make international payments. The project has been shelved because regulators didn't want so much power concentrated in the hands of a few private companies.
It's exciting to see the SARB involved in the next phase of the evolution of global currencies.
Bright's Banter
The list of the world's most valuable companies is dominated by North America, and Apple is currently sitting at the top spot. Apple surpassed the $2 trillion market cap threshold for the first time in 2020, a historic milestone that only the oil giant Saudi Aramco had crossed before. Since then, Microsoft joined Apple in the prestigious club; we're still waiting on Amazon and Google to get their act together!
Today, I'm sharing a very interesting infographic that takes Apple as the largest North American company and contrasts it to each continent's biggest public company. After looking at this, I realised just how big $2.85 trillion is. The only company that comes close is Aramco, the rest fail to land any punches against Apple's might.
Uber has reached an agreement to list all New York City cabs on its app. This alliance will hopefully ease the ride-hailing driver shortage and offer more competitive pricing for customers - Uber and New York City yellow taxis join forces.
SpaceX developed the Starlink satellite network to get internet access to remote places. It was also used to restore the internet to Tonga after a volcanic eruption earlier this year. SpaceX is now targeting in-flight internet too - Starlink wants to disrupt in-flight WiFi.
Signing Off
Asian markets are mostly up this morning. Stocks in Hong Kong, Japan and South Korea are all higher but Shanghai is down.
Oil extended its slide, taking NY Merc crude below $105 a barrel, on concerns that further lockdowns in China might sap demand. Elsewhere, Bitcoin rose for the fifth consecutive day, to trade above $47 000 after turning positive for 2022 thanks to $400 billion of inflows into crypto in the last 30 days.
US equity futures are modestly higher in early trade. The Rand is at R14.67 to the US Dollar.
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