Market Scorecard
US markets finished the day slightly lower after a relatively quiet session. After a good January, markets were softer in February thanks to steaming hot economic releases, go figure. The S&P 500 and Nasdaq Composite slipped 2.6% and 1.1%, respectively, for the month, but they're still up 3.4% and 9.4% this year.
In company news, Target closed up 1% after reporting that shoppers spent more on food, beauty, and essentials in the December quarter. Elsewhere, Goldman Sachs dropped 3.8% as CEO David Solomon said they are considering strategic alternatives for its struggling consumer platforms business. They'll have to stick to investment banking and trading.
In summary, the JSE All-share closed up 0.28%, the S&P 500 fell back by 0.30%, and the Nasdaq was a mere 0.10% lower.
Our 10c Worth
One Thing, From Paul
Here's a somewhat amusing Wall Street joke that's at least one hundred years old, and resurfaces every now and then.
Today's market report: Helium was up, feathers were down. Paper was stationary. Fluorescent tubing dimmed in light trading. Knives were up sharply. Cows steered into a bull market. Pencils lost a few points. Hiking equipment was trailing. Elevators rose, while escalators continued their slow decline.
Weights were up in heavy trading. Light switches were off. Mining equipment hit rock bottom. Diapers remained unchanged. Shipping lines got stuck in a channel. The market for fruit dried up. Coca-Cola fizzled. Caterpillar stock inched up a bit. SunPower peaked at midday.
Finally, toilet paper touched a new bottom.
Byron's Beats
We're monitoring US inflation (CPI) data very closely because that's what's currently moving markets. In the latest report, the price of shelter was still moving higher. Because it is 34% of the inflation basket, the number is very influential over the general trend.
The graph below shows shelter CPI versus US rents. As you can see, the CPI number continues to rise despite rentals coming down. This is because most leases are at least 1 year long. People are still paying the high rentals they locked in last year. The new rental agreements at lower prices will only filter into the CPI data in a few months.
This is good news because once that very influential figure starts coming down it will be a big tailwind for downward inflation.
Michael's Musings
We avoid investing in commodity companies because it is just too hard to forecast what will happen to those prices. The boom and bust cycles make it a very bumpy ride for investors, who generally don't enjoy much capital appreciation over the long term.
It's hard to forecast commodity prices because we don't know what will happen with supply and demand. Miners are always trying to increase production volumes and consumers are trying to become more efficient with their use of materials. Recycling resources is also a factor to add to the mix.
Here's an example, the price of cobalt has more than halved over the last year. There's been a massive drop in demand for the mineral due to fewer electronic devices being made, and some of the hype around EVs has died down. A mine in the DRC has also been stockpiling copper and cobalt due to a fight between partner companies. Bloomberg reports the value of the pile has reached $1.5 billion.
The lithium market is also in turmoil. Did you see that India had a big lithium find recently? Suddenly India has the 5th biggest lithium reserves, from almost nothing.
Lastly, the price of coal went from $50 a ton in 2020 to $435 at the end of last year, and is now trading back down at $196 a ton. What happened there? Coal was supposed to be dead, as nations moved to cleaner alternatives, but when Russia invaded Ukraine, Europe was scrambling to find energy sources to get through winter. Then China instructed their state companies not to buy coal from Australia for political reasons, pushing up prices further. The subsequent slump in the coal price was due to a mild European winter added to the easing of Chinese buying rules.
As I said, far too volatile and much too difficult to forecast all the moving parts. Avoid.
Bright's Banter
Warner Bros. Games announced that "Hogwarts Legacy", the action role-playing game set in the Wizarding World of Harry Potter, has earned $850 million in global sales and moved over 12 million units in its first two weeks post-launch on PlayStation 5, Xbox Series X|S, and PC.
The game has also set a Twitch record for single-player games with 1.28 million peak concurrent viewers at launch. "Hogwarts Legacy" has become the biggest global launch ever for the Warner Bros. Discovery-owned brand.
The game's success has also led to a 300% increase in traffic on the Wizarding World Digital platform, according to the company. It was developed by Avalanche Software and published by Warner Bros.
"Hogwarts Legacy" features an original story set in the 1800s and invites players to embark on their own Wizarding World adventure as a fifth-year student at Hogwarts.
However, the game's success has also sparked debate within the "Harry Potter" fandom due to author J.K. Rowling's controversial views on transgender people, even though she was not involved in the game's creation.
Linkfest, Lap It Up
Here's a map of who is winning the streaming wars. Surprisingly, Showmax is number one in 15 countries - The most popular streamers by country.
Software is usually created to solve a problem. Grayson Hoare invented code to fix the lift in his building - Rust is the fastest-growing programming language.
Signing Off
There has been an outbreak of optimism in Asia today. The MSCI Asia-Pacific rose by the most in a month as Chinese stocks rallied. The Hong Kong Hang Seng index rallied by 3.9% as the gauge of China's manufacturing activity climbed to the highest level in more than a decade. No more lockdown baby! Japan, mainland China, and South Korea are also showing healthy gains.
US equity futures pared early losses and are now in the green. The Rand is trading at around R18.29 to the US Dollar.
According to the authorities, the unemployment rate in South Africa is 32.7%. So if you are at work and reading our message, consider yourself fortunate.
All the best.
Sent to you by Team Vestact.
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