Market Scorecard
On Thursday, the stock market in the US went up. This was thanks to comments from Fed officials that they might pause their interest rate hiking sometime soon. Yada yada yada! Maybe we will have something else to say about these daily moves one day?
In actual company news, Tesla dropped 5.9% after Elon Musk held an open day and said they would build a factory in Mexico to make their next generation of cars. The presentation was a bit vague, apparently. Elsewhere, Salesforce closed up 11% as investors cheered the software provider's path to profitability. They are laying off 8 000 employees but are apparently still paying Matthew McConaughey $10 million a year for "creative help". Capitalism sometimes, huh? You have to love it.
In summary, the JSE All-share closed down 1.38%, the S&P 500 rose 0.76%, and the Nasdaq was 0.73% higher.
Our 10c Worth
One Thing, From Paul
Friday is my "dishing out life advice" day, and here's a humdinger: just sleep more.
According to running coach Jonathan Marcus, sleep deprivation has a number of negative consequences, including decreased cognitive function, poor balance, and increased risk of injuries. Lack of sleep slows down your reaction times and impairs decision-making. It leads to negative moods and poor motivation.
Lots of sleep results in better immune function, and helps athletes reduce their risk of illness and infection. As you slumber your body produces growth hormones which are essential for muscle repair and recovery. Finally, sleep plays a critical role in consolidating learning and memory.
Go to bed early tonight and see what happens. You'll be more positive and motivated tomorrow, I'm sure.
Byron's Beats
The competition for online advertising is dominated by three companies. Google and Meta (Facebook and Instagram) are established players but Amazon has really burst onto the scene in the last two years.
Take a look at the image below from our friends at App Economy Insights, which compares the advertising revenues of these three giants. Google is still the dominant player and manages to maintain that position through the seasonal cycles. But Amazon has more than doubled their advertising revenues since Q3 of 2020.
All three have shown tremendous growth recently but you can see the overall slowdown, especially for Google and Meta when comparing Q4 of 2021 to Q4 of 2022. The macro-environment has changed a lot.
Clearly we like this theme and we own all three stocks in our Vestact portfolios.
Michael's Musings
Inflation is a hot topic at the moment. Higher prices are bad for your pocket and for the stock market. The graph below from Mark Perry paints a very interesting picture of how prices have changed in the US over the last two decades. I imagine South Africa's changes are similar, particularly for the items that have seen deflation.
The graph highlights how inflation impacts us all differently. Particularly in a country like South Africa, where income and expenditure levels vary widely. The rich and the poor experience price changes in very different ways. Stats SA should probably publish CPI readings for different LSM groups, and that might lead to fresh policy debates and even a change in approach from the SARB.
Those industries that have seen price deflation over time are those where outsourcing is common, and improved technology makes a significant difference. These trends have helped to lower global inflation and resulted in a period of lower-than-average interest rates.
The question is, can society keep finding ways to innovate and bring prices down further? Some say the low-hanging fruit has already been picked. At Vestact we feel that there are still major gains to be made from new technology. The speed of technological change is increasing, not slowing down.
Bright's Banter
Coupang, the big online shopping site in South Korea backed by SoftBank, didn't do as well as analysts hoped in the fourth quarter of last year.
Even though the company turned a profit for the second quarter in a row, revenues only grew by 4.9% to $5.33 billion and active users grew by just 1%.
The company is now trying to save money by automating its distribution centres with robots, which it says will make them more than twice as efficient.
In order to keep customers coming back, Coupang is also offering subscriptions and looking to other areas like food delivery and streaming. Despite the competition, the company's customer base is still loyal.
This is an interesting time for e-commerce companies, and their shareholders.
Linkfest, Lap It Up
Spamming people is a bad idea. Stop pushing your press releases to irrelevant people - Better is better than louder.
A top football coach gets amazing results by focusing on excellence over success. Brad McCarty says the better his players get, the better they want to be - It's the process, not the outcome.
Signing Off
Asian markets are up this morning, on course to end a three-week losing streak. Bourses in Japan and Hong Kong led the gains, while South Korea and mainland China also rose slightly. Overall, sentiment is pretty much "risk on" thanks to a stronger-than-expected Caixin China PMI data.
US equity futures are slightly in the red this morning. The Rand is trading at around R18.20 to the greenback.
We have one session on Wall Street to get through, and then it's the weekend baby. Have a good one!
Sent to you by Team Vestact.
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