vestact posted: " Market Scorecard US stocks fell on Tuesday after comments by US Fed Governor Lael Brainard that more aggressive rate hikes may be in store. This fixation with interest rates is rather tiresome, don't you think? Keep in mind that monetary policy is"
US stocks fell on Tuesday after comments by US Fed Governor Lael Brainard that more aggressive rate hikes may be in store. This fixation with interest rates is rather tiresome, don't you think? Keep in mind that monetary policy is normalising after the extreme interventions of the Covid period. Keep calm and carry on.
In company news, Twitter shares rose another 2% after the company announced it would appoint Elon Musk to its board. That was on top of the 27% gain on Monday.
In short, the JSE All-share closed down 0.72%, the S&P 500 fell 1.26%, and the Nasdaq shed 2.26%.
Our 10c Worth
One Thing, From Paul
A lot of what happens in the world is the product of chance, and we are generally just reacting to these events. Who would have thought that this decade (the 2020s) would include a global pandemic, followed by a war in Eastern Europe? Not me, that's for sure.
Humans are a highly adaptive species, so I'm sure we will get past these setbacks, and prosper. Optimism really is the best policy. This is also why it's important to stay fully invested in the stock market.
Whatever happens in your personal life, you just have to shrug, smile and keep going. Do your best. In the words of the great comedian Jack Benny (pictured below), when accepting a prize:
"Everything good that happened to me happened by accident. I don't deserve this award, but I have arthritis and I don't deserve that either".
Byron's Beats
South Africa may be doing well in certain areas but there's still a lot of room for improvement. A friend who works in the rail industry told me the following over the weekend.
In 2017 Transnet moved 76 million tonnes of coal to Richards Bay (pictured below) for export. Today they are moving just 58 million tonnes a year. This is not a supply issue, it has to do with logistic bottlenecks. At current coal prices, that's R54 billion in lost revenue due to Transnet inefficiencies.
Apparently, this applies to most of our mineral exports. We are letting another commodities boom slip by us. I say "another" because we did not take full advantage of the last boom spurred by China's rampant infrastructure growth which ended in 2014.
Australia managed to reap the rewards. They built massive ports right next to their mining areas which shipped billions of tons of minerals straight to China. This resulted in the longest period of GDP growth in history for any country. As a result they built a more sustainable consumer and services economy.
Commodities booms do not last forever, we'd better get our act together soon.
Michael's Musings
The Starbucks share price has had a tough time recently. It's trading at $84 a share now, down from around $115 at the start of the year. In the middle of March it reached a low of $78 a share, but then had a nice rebound on the news that Howard Schultz was returning as CEO.
The share price weakness can be attributed to a few things; supply chain issues, high inflation eating into profits and operating disruptions in China due to Covid lockdowns. China is their major growth market, so store closures have a noticeable impact on profit growth. On Monday, Schultz announced the suspension of Starbucks' share buyback program, causing the stock to drop 7% over the last two days. The money that would have been used for share buybacks will now be used to invest in workers and stores.
The market doesn't like surprises and this announcement is a double whammy. Fewer buybacks means lower profits per share. Worse still, the share buyback money will be spent on things that increase expenses; higher expenses means profits reduce further!
I suspect Schultz's sudden return as CEO may be due to the growing unionisation movement inside the company. Starbucks is meant to be a company that champions its employees. If stores are voting to unionise it could be that employees no longer feel valued - to Schultz that would have been viewed as a failure of top management.
The changes at Starbucks probably won't be good for the share price in the short term. Schultz is looking long term though, setting up the company for sustained growth over the next decade.
Bright's Banter
As an avid gamer, when I think of "video games", the first thing that comes to mind, is a PC or game console like my Playstation 5 or an Xbox. However, smartphones and tablets are the dominant platforms as more players frequent the mobile versions of all games.
My favourite game developer, Respawn, recently launched a mobile game version of their best-selling title Apex Legends to capitalise on the fact that more people play on mobile. Apex Legends has over 130 million monthly active users. It previously had only 10 million daily active users across platforms, with the new mobile version out, that number has grown to 40 million.
According to Statista, the app stores of Google and Apple made over $90 billion in gross revenues from games in 2021 alone. In Apple's case, that's 70% of all app store revenues. The infographic below shows which devices people regularly use to play video games.
A recent Microsoft study found that more people are working between 9pm and 11pm. It's not clear if they are spreading their work out or just putting in more hours - Office workers are logging in at night.
Signing Off
Asian markets are down this morning after data from China indicated that activity in its services industry contracted in March. Japan and Hong Kong are dragging down the MSCI Asia-Pacific index.
US equity futures are flat so far. Aimless, awaiting further developments, perhaps? The Rand is trading at R14.73 to the greenback.
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