vestact posted: " Market Scorecard Yesterday, markets climbed notwithstanding fresh data showing that the US economy contracted for a second straight quarter. All major indexes have risen at least 8% from their 2022 lows and we are headed toward strong monthly gain" Vestact - Money with a dash of funny
Yesterday, markets climbed notwithstanding fresh data showing that the US economy contracted for a second straight quarter. All major indexes have risen at least 8% from their 2022 lows and we are headed toward strong monthly gains. What a relief!
The US economy shrank 0.9% in the three months of April, May, and June, marking back-to-back quarterly declines. The debate was heated on Twitter on whether this means a recession has occurred, or whether we should wait for more data. The Democratic-run White House is desperate to avoid the use of the R-word, because the 2022 half-terms and 2024 presidential election will be a disaster for them if the US economy is seen to be going backward.
In thrilling company news, Amazon jumped over 13% in after-hours trading last night on strong results for the second quarter. Growth in the cloud business and the advertising segment exceeded expectations. Elsewhere, Apple shares also rose 2.8% after reporting better-than-expected iPhone sales. Conversely, Intel shares dropped 9% after posting yet another quarterly loss, and reporting weak sales to personal-computer makers and other product delays.
For the record, the JSE All-share closed up 0.27%, the S&P 500 rose 1.21%, and the Nasdaq was 1.08% higher. Let's see if we can keep this trend going today.
Our 10c Worth
Michael's Musings
As noted above, Apple reported a robust set of numbers last night, with revenue of $83 billion, a record for a June quarter. Sales of Macs, iPads, and wearables were down, but that was more than made up for by solid growth in the services division. A shortage of computer chips hampered Mac sales.
Apple noted that its installed base of devices is at a record in each region. Increasing the number of people in the Apple ecosystem is important for the continued growth of the services business, which is the company's future. The gap between the iPhone and services revenue is narrowing quickly. For the quarter, iPhone sales were $40 billion and services were $19 billion.
Services sales are a better quality of income for Apple. The division has a significantly better profit margin than hardware, and more importantly, is a consistent annuity income. Unlike the iPhone, where Apple has to work hard to drive sales, the services division gets to bill customers monthly for things like storage or Apple Music.
Apple is an incredible company; a cash-generating machine. Over the last three months, it returned $28 billion to shareholders through dividends and share buy-backs. This is the reason that it is one of our core holdings.
One Thing, From Paul
Friday advice time again. This one is short and sweet: travel to interesting locations outside of your country. There is no better way to gain perspective on your life.
Overseas travel was almost impossible during the pandemic, but that's now a thing of the past. I just returned from 10 days in Kotor, Montenegro. A very interesting place, with a stunning setting on a bay off the Adriatic Sea. There is an old town with stone walls, charming narrow alleyways, and public squares. See the picture below. We stayed in a delightful Airbnb on the water's edge.
Montenegro used to be part of Yugoslavia. From the late 14th century to the late 18th century it was ruled by the Venetian Republic. The infrastructure there is fairly good, the food is rather basic, and the people are aloof but pleasant. It was hot and lovely.
Bright's Banter
Once Asia's wealthiest man, Jack Ma is said to be making plans to give up control of Ant Group. This is part of the fintech giant's efforts to appease the Chinese Communist Party which continues to pester companies in the technology sector. Alibaba (which owns the rest of Ant) shares were down as much as 5.5% on the news.
According to Bloomberg, Jack Ma currently controls 50.52% of voting rights in the company. China's financial regulator has forced the company to accept a plan to re-organise the world's largest fintech company by separating investment, lending, and insurance from the main group.
Ant's attempt to list on the Shanghai Stock Exchange in 2020 was blocked, and doubts remain that an IPO is feasible soon, given that Chinese A-share companies normally can't go public if there's a key shareholding change inside the last three years.
Ben Clymer is one of the first journalists to ever see inside all four of Rolex's manufacturing facilities. He wrote this excellent piece on what he found - A four-factory Rolex tour.
Signing Off
The tone is a little sombre in Asian markets, hampered by a tumble in technology shares in Hong Kong. The Hang Seng index there is heading towards a 10% down correction since June. Japan and mainland China are also lower, but the market in South Korea is up a bit.
US equity futures are higher, on those blockbuster big-tech earnings numbers. The Rand is hovering below R16.45 to the US Dollar, a bit better than last week.
No comments:
Post a Comment