vestact posted: " Market Scorecard US markets had a disappointing run before Easter, posting losses. The broad S&P 500 index dropped by 1.2% for the week, while the tech-focused Nasdaq Composite gave up 2.1%. This week we get into the meat of earnings season, w"
US markets had a disappointing run before Easter, posting losses. The broad S&P 500 index dropped by 1.2% for the week, while the tech-focused Nasdaq Composite gave up 2.1%. This week we get into the meat of earnings season, with some big company results to give us an indication of how the US economy and consumers are faring.
In company news, Elon Musk has made an offer to buy and delist Twitter. The board has rejected the approach but Musk has a few more options available to him. Elsewhere, Wells Fargo shares dropped 4.5% after the bank reported a fall in first-quarter earnings but Goldman Sachs, Citigroup and Morgan Stanley all reported earnings beats.
On Thursday, the JSE All-share closed up 0.35%. Yesterday the S&P 500 fell a tiny 0.02%, and the Nasdaq was down by only 0.14%.
Our 10c Worth
One Thing, From Paul
An important second-round election for the French presidency will take place on Sunday, the 24th of April. The incumbent, Emmanuel Macron will go head-to-head with Marine Le Pen, whom he defeated in 2017.
Interestingly, the first round of these elections saw the complete collapse of the centre-left Socialists and centre-right Republican parties that had governed France for decades.
From an investment perspective, we'd much prefer centrist, pro-European Macron to win. He supports capitalism and is a decent fellow. Le Pen represents the far-right, discontented under-classes and is also anti-Nato and anti-immigration.
Le Pen has made supportive comments of Vladimir Putin and Russia in the past, advocating closer cooperation before the invasion of Ukraine; she has condemned the war, but stated Russia "could become an ally of France again" if it ends.
Macron leads opinion polls with a 56% chance of winning, vs. 44% for Le Pen. Let's hope it stays that way. The results will be known late on Sunday evening.
Byron's Beats
When is the best time to buy into the stock market? Let's go through some historic opportunities from the last four years. Towards the end of 2018, the S&P 500 dropped by 20% because the China economy was about to experience a hard landing, bringing the rest of the world down with it. The timing didn't feel right.
Towards the end of 2019 markets were at an all-time high, US earnings were flying and unemployment levels were at multi-generational lows. But debt levels were rising, Trump's trade wars were creating friction and market valuations were above average. The timing didn't feel right.
In March 2020 the market dropped by over 30% in a matter of days as the world went into lockdown because of a global pandemic. No one knew how bad it would get and despite the massive market sell-off, it seemed like it was going to get worse. The timing didn't feel right.
Now we have a war in Eastern Europe, along with various other supply chain issues. Inflation is uncomfortably high and markets have taken a hit. The timing definitely doesn't feel right.
Since the lows of 2018 to now, including the recent dip, the S&P 500 is up 75% and the Nasdaq has more than doubled. There's always something going on that puts you off investing in the market, and always a noisy pundit reminding you of the risks. The timing will never feel 100% right.
The best time to invest in the market is now and often. Keep deploying your savings whenever you can. The longer you are invested, the more it will do for you.
Michael's Musings
Local economist Mike Schussler has noted that with our small tax base, someone earning enough to pay tax could be considered upper-middle-class in South Africa. That's a sad and scary stat. Only 18% of South Africans aged 15 - 64 earn more than R7 500 a month, the amount needed to pay income tax.
Having a large middle class is important for the functioning of any healthy economy. In a resilient economy, people spend money on many different things. As a simple example, the arts, culture and sport sectors can't sustain themselves without middle-class spending. Watching Swan Lake is low on the priority list if you are worried about buying food or paying for transport.
The goal for any society needs to be the eradication of poverty and the development of a vibrant middle class. For that to happen we need economic growth; that's the only medicine that will solve the ills facing us these days.
Bright's Banter
According to eMarketer, TikTok will grow its net advertising revenues in the US by an astounding 184% this year to hit $5.9 billion. The app's global ad revenues will triple to $11.6 billion in 2022. TikTok's US ad revenues will settle into a double-digit growth trajectory starting next year and could top $11 billion in 2024.
In 2022, the Chinese-owned video-sharing app will rake in 2.4% of the US's nearly $250 billion digital ad spend, put differently, only 1% less than what YouTube makes, but more than Snapchat and Twitter combined.
However, Instagram still leads by engagement among teens, with 89% of them saying they used it at least once per month, followed by Snap at 84% and TikTok at 80%. The typical social media user spends over 19.6 hours a month just scrolling through videos/pics and sharing moments with friends.
Linkfest, Lap It Up
Alphabet's drone delivery service Wing is set to deliver packages. The experiment will begin in Dallas and Fort Worth, starting with parcels from Walgreens - Wing initiates drone delivery in Texas.
Stocks in Asia are mixed this morning as investors weigh Chinese measures to support the economy. Equities were modestly higher in Japan and South Korea, while Hong Kong and mainland China declined due to volatility in tech stocks.
More importantly, US equity futures are in the green in early trade. We are looking forward to earnings out from Johnson & Johnson before the bell, and Netflix, later tonight.
The Rand is trading at R14.68 to the US Dollar. Here's to another four-day work week!
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