Market scorecard
US markets had another low-volume day with major indices wobbling between small gains and losses. The S&P 500 and Nasdaq Composite have moved by less than 1% for two weeks in a row now. So far, 90 of the S&P 500 companies have reported results and about three-quarters of those have topped profit expectations, according to Factset.
In company news, Coca-Cola closed 0.2% lower after reporting strong sales. Elsewhere, First Republic Bank plans to cut as much as a quarter of its staff and shrink its balance sheet after deposits fell more than expected. Oddly, its share price rose by 12% in normal trading, but fell 22% after hours. Finally, Rupert Murdoch's media company Fox Corp fell 2.9% after announcing that Tucker Carlson is leaving the network.
Yesterday, the JSE All-share closed up 0.27%, the S&P 500 rose 0.09% again, but the Nasdaq slipped 0.29% lower.
Our 10c worth
One thing, from Paul
Investment fads come and go. Don't be seduced into buying the current "hot trend". Sometimes these themes become mainstream, but often they just peter out after a year or two.
Here's an incomplete list of such fads, with examples of stocks that were overhyped at the time, and have since fallen back to earth. I've tried to list them in chronological order.
Chinese start-ups (Luckin Coffee), marijuana (Canopy Growth), fintech loans (LendingClub), fake burgers (Beyond Meat), cryptocurrency (Microstrategy), blockchain (Riot Platforms), the metaverse (Roblox Corp), buy-now-pay-later financiers (Afterpay/Block), pet care (Petco), and working from home (Zoom Inc).
The current hot trend is artificial intelligence (AI). At least this time the companies being talked up are huge ones, like Microsoft, Nvidia and Google. You can't go wrong there.
Michael's musings
Yesterday LVMH became the first European company to pass the $500 billion market capitalisation mark. Nestlé, the world's largest food company, and Danish drugmaker Novo Nordisk, are second and third in Europe, with market capitalisations of EUR 326 billion and EUR 272 billion respectively.
I'm surprised it has taken this long, as many US companies are well past that level. Apple and Microsoft have market caps of $2.6 trillion and $2.1 trillion respectively. Google, Amazon, Berkshire, Nvidia, Tesla and J&J also all have market caps above $500 billion.
My guess is that the fragmented nature of the EU makes it harder for one company to dominate the whole area. Instead there are many large regional players. The EU also has much more restrictive laws than the US, making it more expensive and tricky for businesses to operate. The US is a much better place to invest.
Bright's banter
Ermenegildo Zegna Group, the owner of ZEGNA and Thom Browne brands, reported revenues of EUR428 million for the first quarter of 2023, representing a year-over-year increase of 13.4% and 13.1% at constant currency.
Excluding the impact of Tom Ford Products, revenues were up 19.1% and 18.9% at constant currency. Direct-to-Consumer revenues rebounded strongly, up 24.9% year-over-year and up 25.1% at constant currency.
All regions, including Greater China, showed strong underlying momentum. Chairman and CEO, Gildo Zegna, said that the results reflect the success of their strategic priorities, including growth in productivity and the success of their Luxury Textile Platform.
Zegna also launched ZEGNA X, a digital ecosystem and customisation tool. The Group is also set to complete the Tom Ford Fashion business transaction alongside The Estée Lauder Companies in the second quarter of the year.
Linkfest, lap it up
Kai Lenny has conquered just about every water-sport. He was treated as an outcast in Maui's cool-kid surf culture - The wave conqueror.
About 66 million years ago, a meteor wiped out the dinosaurs. Scientists have now modelled the tsunami that resulted from the impact - One mile high wave did some proper damage.
Signing off
Asian markets are softer this morning, dragged down by Chinese shares. The Shanghai Shenzhen CSI 300 Index fell for a fifth day in a row, while the Hang Seng China Enterprises Index headed for its lowest close in five weeks. South Korean markets were also down, while Japan traded slightly higher.
US equity futures are in the red at this time. The Rand is trading at around R18.16 against the greenback.
This morning it's junk food Tuesday, with results out before the market open from McDonald's and Pepsico. Later this evening Microsoft, Google, Visa and Illumina all report results.
Exciting times! We'll update you on the highlights tomorrow.
Sent to you by Team Vestact.
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