vestact posted: " Market Scorecard US markets had a bad day on Friday, wiping out slender gains accumulated earlier in the week. The S&P 500 ended down 1.2% for the whole week, while The Nasdaq sagged by 2.6% in the same period. That was an unpleasant setback a" Vestact - Money with a dash of funny
US markets had a bad day on Friday, wiping out slender gains accumulated earlier in the week. The S&P 500 ended down 1.2% for the whole week, while The Nasdaq sagged by 2.6% in the same period. That was an unpleasant setback after we'd had a straight run of gains four weeks in a row.
In company news, Deere & Co. enjoyed a good rally after reporting soft earnings but satisfactory revenue growth. CEO John May complained that higher costs and production inefficiencies caused a dent in their profits for the period. Elsewhere, sports retailer Footlocker shares soared 20% after making more money in the quarter than had been expected.
In summary, the JSE All-share was down 1.82% on Friday, the S&P 500 fell by 1.29%, and the Nasdaq was a disappointing 2.01% lower.
Our 10c Worth
One Thing, From Paul
Owning direct equities can be emotionally challenging. Following the daily coverage of the stock market by the financial media is like being on a never-ending rollercoaster ride.
Take a look at the chart below. If you've owned Amazon, Tesla, or Apple in a Vestact portfolio for the last few years, you might have felt like that when looking at your weekly mini-statement. Those stocks have all been a lot higher, then a lot lower, then higher again.
The trick is to avoid getting whiplash from all the short-term noise. Keep in mind that you own shares in real companies run by real people, selling real products. You can safely ignore most of the global macro-economic news. Don't worry too much about current stock prices. What counts is where you end up after being invested for a few decades.
Byron's Beats
After a short break, Prosus is back to making deals. This time they have offered 1.5 billion Euros to buy out the 33.3% stake in iFood that they don't already own. iFood is the biggest food delivery company in Brazil with a market share of around 80%. They process 65 million orders a month from 300 000 restaurants. The business has real scale.
Like many of its rivals in the food delivery sector, it is losing money at the moment. They burned through 135 million Euros last year. But that is the nature of the industry at the moment. To offer a comprehensive service you need scale, so you need to spend a lot of money very quickly to squeeze out your rivals. You are basically subsiding the drivers and the consumers at the beginning.
Eventually, the maths will make sense. If you are doing 65 million deliveries a month and get a small cut every time, you will make money. And food delivery is a service that consumers really like and are happy to pay for.
I am also glad to see Prosus making deals during a downturn in the private market, hopefully getting better prices than last year.
Michael's Musings
Normally, governments create laws to discourage the consumption of alcohol, particularly in countries where there is universal state-sponsored healthcare. The use of alcohol increases the medical costs borne by society. One way drinking is discouraged is through high levels of 'sin taxes.' The Japanese government got too used to the income from sin taxes. Younger generations don't have the same drinking habits as their parents.
Last week, the national tax agency launched a campaign to try to encourage people to drink more. In 1980, 5% of national tax revenues came from alcohol taxes, but by 2020 that fell to just 1.7%. The government also wants to stimulate the local sake (rice wine) industry, which is seen as positive for economic growth.
People don't have endless spending power. I wonder if policymakers have thought about which sectors will suffer if consumers switch their spending to alcohol consumption. Saying that the youth needs to drink more to boost the economy seems like muddled economic thinking.
Bright's Banter
Saudi Aramco announced its second quarter financial results, posting a 90% year-on-year increase in profits to an eye-watering $48.4 billion and declaring a dividend of $18.8 billion. These record-breaking quarterly profits are due to higher crude oil prices and volumes sold, as well as strong refining margins.
Russia's invasion of Ukraine has forced countries to look for alternatives to Russian oil and gas, including turning to other oil-rich nations - such as Saudi Arabia. Aramco President and CEO Amin H. Nasser expects oil demand to continue to grow for the rest of the decade despite the downward economic pressures forecasted.
The infographic below shows that Aramco's quarterly profits are larger than those of Microsoft, Apple, Meta Platforms, and Tesla combined!
Linkfest, Lap It Up
Can mental work tire you out as much as physical labour? Sitting at a desk reading and writing can take its toll - Why thinking hard makes you tired.
Asian markets are mixed this morning, which is pretty normal. Japan and South Korea declined, while Hong Kong and mainland China gained despite power shortages in core industrial heartlands.
US equity futures are down in early trade. This week central bankers from around the world will meet in Jackson Hole, Wyoming for the Federal Reserve Bank of Kansa City's annual economic policy symposium. Traders will be listening for clues on what the Fed is thinking.
The Rand has weakened to R17.00 to the US Dollar, after the Dollar had its largest one-week percentage increase since March 2020. Higher rates tend to bolster the greenback as yield-seeking investors pour more money into US dollar-denominated bonds and other securities.
We'll be here for the rest of the week. Have a good one.
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