Market Scorecard
US markets rose sharply yesterday as investors cheered the prospect of interest rates nearing their peak. This renewed optimism saw both the S&P 500 and the Nasdaq Composite jump, with big cap tech stocks on fire.
This has been the best start to a year for the Nasdaq since 1975. Wow, that's a long time ago! The pop song that topped the charts that year was Rhinestone Cowboy by Glen Campbell.
In company news, shares of Apple, Amazon, and Google fell by more than 3% in late trade, after releasing their holiday quarter earnings reports. Apple reported a revenue decline for the quarter no thanks to factory shutdowns in China, as expected. Amazon had decent numbers but its outlook for the rest of the year was subdued. Finally, Google posted a drop in profits as demand for ads slowed. We will go into these updates in greater detail in the days ahead.
In short, the JSE All-share closed down 0.02%, the S&P 500 gained 1.47%, and the Nasdaq was 3.25% higher.
Our 10c Worth
Bright's Banter
Meta Platforms, the parent company of Facebook, Instagram, and WhatsApp, reported numbers on Wednesday night that were very well-received by the market. Shares soared 23% on Thursday after fourth-quarter revenue beat expectations and management announced a $40 billion buyback programme.
Full-year revenue came in at $116.6 billion, down 1%, its first-ever drop in annual sales. Profits fell 41% to $23.2 billion due to a costly round of redundancies and heavy losses in Reality Labs, which houses its metaverse operations.
CEO Mark Zuckerberg announced that the company will focus on efficiency, using AI tools to improve content recommendations after the fallout from Apple's app-tracking changes in 2021. This has already attracted advertisers back to Meta's platforms.
Meta continues to have the four most downloaded apps in the last decade, and its ad-centric business model is proving to be resilient. All those advertisers that left Twitter must go somewhere to attract an audience for their products. Their cash flows are strong and their margins are very good.
The Meta share price has rebounded by 51% in the last month, and more than doubled since its November lows. This is a reminder that patient investors with a long-term orientation will be rewarded. Let's hold this one as it heads back to its all-time highs.
One Thing, From Paul
Ok, it's Friday advice time again. Here's an obvious one: be inclusive and kind.
It's a well-known fact that people will better remember how you made them feel, not what you said. As I've noted before, learning someone's name and repeating it out loud is a great way to make new friends.
Welcome newcomers, and promote diversity. Invite people into the circle. Cliques are horrible, and should be broken down. Don't be a snob.
When I arrive in a social setting with lots of people milling about, I like to scan the room to identify the person who is enjoying the most attention and making the most noise, in order to avoid them. I prefer to find the person looking the least comfortable and most awkward, and going over to chat. Give it a try.
Byron's Beats
There are many types of investors in this world. Some feel immense pain and anxiety when the market drops. When it goes up they do not trust the rally. Others feel incredibly happy when the market rises but try to block their emotions when the market drops. Some have minimal feelings either way. There are even people who are overly affected, whether the market is going up or down.
It helps to get professional advice during your investment journey because it can be an emotional rollercoaster. Being a successful investor is not just about finding the right stocks, sticking with them through thick and thin is crucial.
If you are highly emotional about these things my advice would be to not follow it closely. Focus on your own day job and only check in every few months.
Michael's Musings
I had a look at our government's borrowing rate over the last few months. I assumed that our borrowing rate would have increased in line with global interest rates, plus a bit extra due to loadshedding and falling commodity prices. In fact, the opposite has happened.
In December, when there was a risk-off mood in global markets, our longer-term debt cost the government around 11%. Over the last six weeks, that rate has fallen to 9.6%. Every bit that we save on interest costs is important.
This is some good news for a Friday morning.
Linkfest, Lap It Up
Good relationships are the key to a good life A Harvard study of adult development notes the importance of your deep relationships - Nurture your nearest and dearest.
More progress on brain control of robotic limbs. So, how about we all get a third arm? - Neuroscience makes additional extremities conceivable.
Signing Off
Asian markets are mixed this morning. Hong Kong and mainland China are down, but Japan and South Korea edged higher. Market participants seem to be wondering what to make of the weak US tech stock results referred to above. In the same vein, US equity futures are lower in early trade.
Later today US non-farm payrolls data will be out. Oil headed for a second weekly drop as optimism over a recovery in Chinese demand dimmed and US stockpiles keep rising. The Rand is trading at around R17.13 to the US Dollar.
Have a good weekend, relax and get some rest. We'll write to you again on Monday.
Sent to you by Team Vestact.
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