vestact posted: " Market Scorecard US markets plunged on Friday, undoing gains from earlier in the week. Earnings from some big healthcare and retail stocks have been a little underwhelming. The broad S&P 500 fell by more than 1% for the third consecutive day a"
US markets plunged on Friday, undoing gains from earlier in the week. Earnings from some big healthcare and retail stocks have been a little underwhelming. The broad S&P 500 fell by more than 1% for the third consecutive day and the tech-focused Nasdaq Composite lost more than 2% for a third straight week.
In corporate news, HCA Healthcare dropped 22% after the hospital chain lowered its guidance for the year, blaming rising labour costs. Elsewhere, Gap shares plunged 18% after the clothing retailer complained about weak sales and announced the departure of the boss of its Old Navy business.
On Friday, the JSE All-share closed down 1.48%, the S&P 500 sank 2.77%, and the Nasdaq slipped 2.55%.
Our 10c Worth
One Thing, From Paul
The S&P 500 fell again last week. After staging a nice recovery in mid-March, we are now close to the lows of the year, which means down about 11% from the 1st of January.
Big drawdowns in the stock market are not nice, but they are actually quite normal. On average, the S&P 500 experiences a 14% drawdown from its high in any given year. Equity investors have to suck up the pain to make the gains.
Remember that you own shares in good companies, that will thrive in the years ahead, and justify their current valuations. The global economy is strong, and getting stronger. The Fed won't kill the post-Covid recovery, and the Russians won't drop a nuclear bomb. The US Dollar will stay strong, and inflation will subside. Trust me, it will all be alright.
If it feels like I am repeating myself, that's because I am repeating myself. That's a big part of our job, as responsible asset managers - to help our clients to maintain a balanced perspective. Keep calm and carry on.
Michael's Musings
It's interesting to see how black markets form to circumvent government regulations. Last week the Wall Street Journal reported that the number of oil tankers leaving Russian ports with a 'destination unknown' travel log has significantly increased since before the Ukrainian invasion.
Intermediaries can buy Russian oil at a $20 - $30 discount to market prices, then they obscure its origins and sell it on at a tidy profit. One way of doing this is for smaller tankers to take Russian oil to large tankers waiting offshore, mixing Russian oil with other oil. Shell, for example, only classifies it as Russian origin if more than 50.1% of the oil originated in Russia.
When there is enough incentive, the market will always find a way. History has a few examples, from the Iranian and Israeli governments co-owning oil pipelines while technically being at war with each other, to Marc Rich and Co. selling oil to the Apartheid government at a premium in the 1980s.
Bright's Banter
Physical book sales are on the rise again. According to data from Publishers Weekly, 2021 was a very good year for physical book sales in North America. This is thanks to best-selling fiction titles, with sales in young adult fiction jumping 30.7%, while adult fiction sales rose 25.5%.
This is interesting because there's been a big shift in the last two decades to digital consumption of all forms of media, including books. I for one, read daily before I go to bed and I haven't picked up a physical book since 2017; however, I have bought a few physical books every year for myself and my loved ones.
Even though physical book sales are up in North America, time spent reading for pleasure and personal interest is at all-time lows. According to the Time Use Survey by the Bureau of Labour Statistics, the average American spent about 23 minutes a day reading in 2004, which has since dropped to just 16 minutes in 2019.
The above data is skewed downwards by a rise in individuals who don't read books at all. The good news is that if you remove non-readers from the equation, Americans 15 years and older who read for pleasure spend an hour and a half consuming their favourite titles. Employed individuals read far less, spending fewer than 9 minutes on leisurely reading.
The best thing you can ever do for yourself is to pick up a book and read. I can't imagine a life without reading, not only to gain knowledge and improve on certain skills, but as a form of escapism. I always encourage everyone around me to be reading. I'm currently reading Bill Gross's autobiography titled "I'm Still Standing: Bond King Bill Gross and the PIMCO express." You will find more infographics at Statista
Asian markets are in the red this morning following sharp declines in Hong Kong and mainland China. Japanese stocks are not looking fresh either. The MSCI Asia-Pacific index has fallen in six of the past seven sessions, amplified by the Covid situation in China.
This week tech giants will be releasing their earnings, so we'll keep our eyes peeled for numbers from Amazon, Apple, Google, and Meta Platforms.
US equity futures have dropped in early trade, despite the pleasing win by Emmanuel Macron in the French Presidential election. The Rand also had a rough week and is trading at about R15.65 to the US Dollar.
Let's see how the trading day unfolds, it's still early. Sent to you by Team Vestact.
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