vestact posted: " Market Scorecard Good morning from a chilly but sunny Johannesburg. US markets declined modestly on the first day of June, with all three major indexes softening into the close. Positive news about US manufacturing activity was counteracted by gru" Vestact - Money with a dash of funny
Good morning from a chilly but sunny Johannesburg. US markets declined modestly on the first day of June, with all three major indexes softening into the close. Positive news about US manufacturing activity was counteracted by grumpy comments about the economic outlook from JP Morgan CEO Jamie Dimon. Don't listen to him, listen to us!
In company news, Salesforce's shares jumped 10% after the cloud-based software company beat on revenues and boosted its profit outlook. The biggest decliner in the S&P 500 was Albemarle Corp. What do they do? Oh yes, they make lithium for batteries.
The final tally was as follows. The JSE All-share lost 1.73%, the S&P 500 fell 0.75%, and the Nasdaq gave back 0.72%.
Our 10c Worth
Byron's Beats
Visa had a tough time during Covid because their cross-border payments business was basically shut down. According to their latest monthly data, April and May have been very strong months as the world opens back up. Cross-border payments grew 47% compared to last quarter and are now 21% higher than pre-Covid 2019.
Total transactions for April and May grew 17% year-on-year and are now 37% higher than in 2019. The business is well and truly back on track.
The Visa share price trailed the overall index in 2020 and 2021 but has outperformed this year. Visa shares are only off 3% in 2022 compared to the Nasdaq which is down 23% year-to-date.
We expect good profit numbers from Visa next quarter and are happy long-term holders of this wonderful business.
One Thing, From Paul
According to econo-blogger Matthew Klein, the US is enjoying a surge in entrepreneurship and new business formation.
The US Census Bureau says that Americans are applying to the tax authority (IRS) for Employer Identification Numbers in record numbers. The applications were 30% above the pre-pandemic average in 2021 and only slightly lower than that level so far in 2022.
Klein believes that this is due to the robust US economic policy response to the pandemic. "Disbursing trillions of dollars to consumers, businesses, non-profits, and state and local governments helped avoid outcomes that would surely have been much worse. Not only that, but the massive influx of money may even have helped set up the US economy for more success in the future."
Hopefully, South Africa is experiencing a similar uptick in new business registrations. As I keep saying, the rest of this decade is going to be a doozy. In case you don't know, the word doozy is informal American for something outstanding.
Michael's Musings
Glencore confessed last week to paying bribes and rigging some illiquid commodity markets. This was not really a surprise because the commodity trading industry is well-known for these tactics. Glencore used to be called Marc Rich and Co. and there are lots of stories about how that firm had a "get it done" attitude to business. The company will pay $1.5 billion to avoid further prosecution in the US.
So far, there has been no mention of breaches by Glencore in South Africa, but accusations about their operations here may still come to light.
I'm slightly surprised that there hasn't been more outrage about this story. Perhaps the view is that if government officials regulating the mining sector weren't so dishonest, then there wouldn't be a need to pay bribes?
This article in the Daily Maverick argues the case for prosecuting Glencore executives. This ties into my ongoing series about executive remuneration. Managers were paid big bonuses after paying bribes, but now shareholders are required to pony up for hefty fines. That seems unfair.
Bright's Banter
Sheryl Sandberg, the chief operating officer of Facebook/Meta, has announced that she will be stepping down, ending 14 years in the role that made her one of the most powerful and richest figures in Silicon Valley. Sandberg announced her departure on her own Facebook page yesterday.
She said, "When I took this job in 2008 (at age 23), I hoped I would be in this role for five years. Fourteen years later, it is time for me to write the next chapter of my life". She will continue to serve on the board.
Mark Zuckerberg commented that it's "the end of an era" and said Sandberg "deserved the credit for so much of what Meta is today." Her position will not be filled, as the social media giant is in the middle of reinventing itself and restructuring leadership roles.
Sandberg has been a key figure in shaping the company and overseeing responses to many controversies that the company has battled. She will be missed.
Lehman Brothers was the most complicated bankruptcy in history. The bank had over $600 billion in assets and is only now in the final stages of being wrapped up. Interestingly, bondholders of the EU part of the bank got back all their money, plus interest - The Last of Lehman Brothers.
Signing Off
The MSCI Asia-Pacific index retreated for a second day, with shares in Hong Kong leading the decline. Markets in India are up, reflecting a solid year for that economy.
US equity futures contracts are steady in early trade. We expect a quiet day of trading, with more drama to come tomorrow when the May US employment report is published.
The Rand is trading at R15.60 against the US Dollar.
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