Market scorecard
The Fed hiked US interest rates by 0.25% last night, and Jerome Powell opened the door for a potential pause in June but downplayed the prospect of rate cuts later in the year. Markets rose at first on the news, but gave up those gains at the close. Regional banks remained weak, and PacWest Bancorp crashed by 53% after hours. This half-arsed banking crisis smoulders on.
In more pleasing company news, Johnson & Johnson's consumer unit Kenvue will list shortly at $22 a share, valuing the company at more than $40 billion. Generac Holdings was the S&P 500's top performer, rising 11.6% after reporting amazing generator sales (including to South Africans, by the way). Elsewhere, cosmetics giant Estee Lauder dropped 17% after disappointing sales to Asian travellers.
Yesterday, the JSE All-share closed up 0.88%, but the S&P 500 fell 0.70%, and the Nasdaq was 0.46% lower.
Our 10c worth
Bright's banter
Alphabet Inc, also known as Google, reported better-than-expected first-quarter results last week with ad revenues of $58.07 billion, beating analysts' estimates of $56.98 billion. Total revenue came in at $69.8 billion, up 2.6% year-on-year.
The company's core search advertising business performed well despite increasing competition from Microsoft and OpenAI. YouTube also did better than expected. The cloud unit grew by 28% and turned a profit for the first time, making $191 million.
Google combined its two AI research groups into a unit called Google DeepMind, a move it said would significantly accelerate research. They plan to add conversational AI features to its flagship search engine, following a similar move by rival Microsoft.
Sundar Pichai has done a stellar job on cost-cutting, allowing the business to maintain its high profit margins even as advertisers trim their budgets. They also disclosed plans to buy back as much as $70 billion of stock, and its shares rose 5.9% on the good news.
Google remains one of our anchor Vestact portfolio positions. They've stepped up to the competition and soldiered ahead. The share price has good upside potential.
One thing, from Paul
Here's some financial advice from a booklet published during the Second World War. In the early 1940s everything was in short supply, so there was a big emphasis on scrimping, saving and making do with less.
The financial tips still make a lot of sense, in my view. (1) Waste nothing. Hoard nothing. Use everything. (2) Spend what you must and save what you can. (3) What is worth owning is worth treating well. (4) Spend money and it goes. Save money and it grows.
Life in 2023 is much easier than it was back then, but keeping things tidy and simple is advisable. Virtue is its own reward (Socrates).
Byron's beats
As you know, Apple has launched high-yielding savings accounts for Apple Card customers. Clients can get a decent yield of 4.15% with no minimum deposits or balance requirements. As with the card service, Goldman Sachs will be the banking partner in this venture.
Within the first four days, 240 thousand accounts were opened, depositing nearly $1 billion according to Forbes. That is a solid start. The picture below says 1000 words.
Simple and efficient products like these keep Apple clients entrenched. As the Apple wallet offerings increase, it may even become a profitable banking venture for Apple. But as you know, with Apple, it is very hard to move the needle.
Michael's musings
On Tuesday, the threat of AI disruption caused the share price of Chegg to drop by 50%. Chegg is an American education technology company that provides homework help, online tutoring, and other student services.
The company announced a 7% drop in revenue and 5% drop in subscribers, and then the CEO blamed these negative trends on customers turning to ChatGPT for answers instead of their offerings. Oops. Other education company share prices were also under pressure as a result.
Technology is changing quickly. Companies and investors need to make sure that they position themselves in areas that will still be relevant in the next decade.
Linkfest, lap it up
South Africa is sprucing up its banknotes and coins. This is the first change since Mandela's face was added to the notes in 2012 - The big five are joined by their offspring.
Durban Poison? Grandaddy Purple? Meat Breath? Who comes up with these weed names? - Branded cannabis.
Signing off
Asian markets are mostly higher this morning, which is a nice surprise. The MSCI Asia-Pacific is on course for its best day in three weeks, helped by a big advance in the Hong Kong Hang Seng, Shanghai Composite and the Japanese Nikkei 225. Other benchmarks like the South Korean KOSPI Index trimmed earlier declines.
Today we'll see earnings from our top client holding, Apple. They are joined by Anheuser-Busch InBev, Booking Holdings, Royal Dutch Shell and Shopify, among others. On the economic front, the European Central Bank will be out with a rate decision and news conference.
US equity futures are solidly higher this morning. The Rand is trading at around R18.21 to the US Dollar.
On this day in 1979 Margaret Thatcher became the Prime Minister of the UK. It's a pity that they don't make them like that anymore.
Happy Star Wars Day. May the 4th be with you.
Sent to you by Team Vestact.
No comments:
Post a Comment