vestact posted: " Market Scorecard Yesterday, US markets closed slightly lower to start the new month. Major indexes spent much of the session flitting between gains and losses and slipped slightly lower just before the close. In company news, Boeing rose 6% aft" Vestact - Money with a dash of funny
Yesterday, US markets closed slightly lower to start the new month. Major indexes spent much of the session flitting between gains and losses and slipped slightly lower just before the close.
In company news, Boeing rose 6% after the FAA said they could resume deliveries of their 787 Dreamliner. Elsewhere, Pinterest jumped 21% in extended trading after the social media company reported resilient sales and user numbers. Locally, MTN said it expects to report a huge increase in earnings for the six months ended in June. Good news all round!
Yesterday, the JSE All-share closed down 0.42%, the S&P 500 fell 0.28%, and the Nasdaq was 0.18% lower.
Our 10c Worth
Bright's Banter
Visa reported earnings last week that topped expectations and gave an upbeat outlook as spending volumes recovered. The payments giant had revenues of $7.3 billion for the quarter, up 19% year-on-year thanks to a massive 12% increase in payments volume and a 16% increase in processed transactions. Profits soared 32% to $3.2 billion.
The most profitable part of the business, cross-border payments, enjoyed a transaction volume climb of 40%, led by a big 48% increase in intra-Europe money swaps. Consumers are back on the road, visiting various corners of the world. Cross-border travel volumes surpassed 2019 levels for the first time since the pandemic began.
Management also mentioned that they're seeing a change in consumer behaviour as individuals switch from buying less discretionary items to buying more staples, meaning people are trading down from branded goods to house brands. However, this is not affecting Visa much since they take a slice of spend, regardless of what we buy as consumers.
The next big tailwind for Visa's cross-border travel recovery will come from Southeast Asia when China finally reopens post-Covid. This may take some time but it's something to look forward to. Visa has been one of our better performers this year, which is why I reiterate our strong conviction that Visa should be an anchor position in every offshore portfolio.
One Thing, From Paul
Everyone is worried about Meta Platforms, the company that used to be called Facebook. I am too, and so are the 495 Vestact clients who own their shares. Even the CEO and controlling shareholder, Mark Zuckerberg, sounds concerned.
We are carefully reviewing our investment in the company, after it reported disappointing quarterly results again, for the second quarter in a row. We don't rush these decisions. It's usually best to hold on to the shares of good companies going through a bad patch.
There are two points I'd like to note now, both in Meta's favour.
Firstly, Meta has an absolutely amazing advertising sales team. They are on track to sell $120 billion worth of targeted ads on Instagram and Facebook. No one else in the social media industry comes close to that.
Secondly, while their plan to operate their platforms in the metaverse may sound a bit far-fetched, the idea could have some potential. Someone just wore an augmented reality (AR) contact lens for the first time. Maybe phones aren't the future of information access? Meta wants to lead the way here. More on the story: Huge milestone as human subject wears AR contact lens for the first time.
Byron's Beats
Cloud computing has been a strong theme in the current tech sector earnings season. We were astounded to see that Azure cloud and related services now contribute 50% of Microsoft's total revenues after growing 28% in the last quarter.
Amazon Web Services grew by 37% and was responsible for all of Amazon's net income for the last quarter. That business alone makes an operating income of $24 billion a year and would probably achieve a market cap of more than $650 billion as a stand-alone business.
Google Cloud is still quite young compared to the two giants mentioned above, but they are growing fast. Sales were up 35% last quarter to $6.3 billion. Due to heavy infrastructure spending, the segment made a loss, but I believe this will be a huge profit driver for Alphabet in a few years' time.
Michael's Musings
I mentioned last week that I'm doing some significant renovations on a new house. It was tough to decide on the extent of the upgrades. I suspect that the total capital invested in this property will only hold its value, in line with inflation. Meanwhile, interest rates are rising and the stock market offers many great buying opportunities, so if I only sought to maximise my wealth, I'd still be living in a flat, investing all the money saved.
But life is about more than just money. There's no point in being the richest person in the graveyard. Also, I'm not part of the FIRE revolution (Financial Independence, Retire Early), where people save as much as possible now to quit working at 40. I plan to still work well past the traditional retirement age. We only have one go at life, so I might as well enjoy the journey in a house that brings me joy. It is about finding a balance between current gratification and planning ahead.
I decided to cap the spend on the renovation at a level where the bond repayments are still manageable, leaving me with enough disposable income each month to keep building up my share portfolio. I also hope to live for a least 20 years in this house, to extract all the value from these improvements.
Medical science is still advancing in leaps and bounds. A multi-disciplinary approach is assisting those with hearing issues - Restoring Hearing With Beams of Light.
Asian markets are down this morning as US-China tensions over Taiwan mounts. US Speaker of the House Nancy Pelosi is set to land in Taiwan today, making her the highest-ranking American politician to visit the island in 25 years. The Chinese authorities are furious and are threatening to retaliate in unspecified ways.
US equity futures are also in the red in early trade, but not by all that much. The Rand is trading at R16.50 to the US Dollar.
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