Market Scorecard
Yesterday, US markets ran out of steam and gave up intraday gains to end in the red. If today goes well we are still set for the longest streak of weekly gains since 2021. The panic about inflation is easing, and the broader S&P 500 is now only down 12% so far this year. There is still plenty of time for us to end 2022 with gains!
In company news, Illumina (NASDAQ:ILMN) fell 17% after hours as the gene-sequencing company missed earnings expectations and issued a softer outlook for the rest of the year. Oh dear! Elsewhere, Rivian Automotive (NASDAQ:RIVN) was down 2.4% in late trade after reporting decent revenues but softer forward guidance. This electric vehicle company hopes to scale up to profitability soon.
At the end of the trading day, the JSE All-share closed up 2.18%, the S&P 500 was down but only by 0.071%, and the Nasdaq fell 0.58%.
One Thing, From Paul
This Friday's "advice" comes from a poem by Danusha Lameris. It was sent to me by James Clear, and I liked it so much I decided to just put it here, in full. It's about being gracious as we interact with strangers.
Small Kindnesses
I've been thinking about the way, when you walk
down a crowded aisle, people pull in their legs
to let you by. Or how strangers still say "bless you"
when someone sneezes, a leftover
from the Bubonic plague. "Don't die," we are saying.
And sometimes, when you spill lemons
from your grocery bag, someone else will help you
pick them up. Mostly, we don't want to harm each other.
We want to be handed our cup of coffee hot,
and to say thank you to the person handing it. To smile
at them and for them to smile back. For the waitress
to call us honey when she sets down the bowl of clam chowder,
and for the driver in the red pick-up truck to let us pass.
We have so little of each other, now. So far
from tribe and fire. Only these brief moments of exchange.
What if they are the true dwelling of the holy, these
fleeting temples we make together when we say, "Here,
have my seat," "Go ahead ? you first," "I like your hat."
Byron's Beats
- The semiconductor industry is naturally cyclical. It has been that way since computing and chips became mainstream items. They are complex to manufacture with long lead times in developing fabrication plants, so managing the inventory can be tough. We have 522 clients that own Nvidia, the leading semiconductor chip maker on the planet. We need to understand these cycles in order to manage expectations.
- On Monday, Nvidia issued a surprise update, warning that sales would be 17% below their forecast for the latest quarter. That's a huge miss. The reason given by the company is a big slowdown in their gaming division. It seems that gamers have been delaying upgrades, or even dropping their consoles to get outside and take in some fresh air. Another example of post-Covid behaviour.
- Nvidia has also been caught in the crossfire of the wild crypto market. Their gaming chips are used to mine Bitcoin, so demand for chips soars when the Bitcoin price is high. Even when faced with high demand, Nvidia doesn't increase their prices because they want to protect their loyal gaming clients, and most of the profits go to chip resellers. When the crypto market drops, demand falls fast and Nvidia gets stuck with too much inventory. It is a tough cycle to manage.
- This happened before in 2018 after the first mainstream crypto rush up and subsequent crash. The share price of Nvidia is down 40% this year so far, but we have survived swings like this in the past.
- This company has incredible engineers and great technological prowess. We are still very optimistic about their data centre business and feel that they will manage through these demand cycles. It comes with the package. This stock is worth the ride.
Michael's Musings
- We don't like the term 'smart money'. Who is the smart money? There are a lot of clever professional investors out there, and when one rock-star investment manager loves a position, another rock-star manager might hate it. Who's the smart money in that scenario? I think people see what they want to see, to fit their narrative of the market.
- If I was forced to put a smart money label onto someone, it would be Warren Buffett. His track record speaks for itself. Over the weekend, Berkshire Hathaway (NYSE:BRKa) released its quarterly numbers showing that they were net buyers of equities over the last quarter. Buffett and his team were putting some of their $100 billion cash pile to work, buying the dip in the market.
- We agree with Buffett. If you have spare cash now, consider buying the dip. Even though markets have bounced nicely off their lows, there is still some way to go before we reclaim record-high territory.
Bright's Banter
- Earlier this week Serena Williams announced that she was retiring from tennis, although she didn't give a firm date for her exit. The tennis legend still hopes to play at the US Open in New York later this month. This brings us back to the old debate of who's the greatest of all time (GOAT) in tennis.
- When Andy Murray was asked the same question in an AMA (ask me anything) type engagement with his fans, he answered
"Serena"
- and I am told the internet broke down that day. His reasoning was that Serena has won more Grand Slam titles in the open era than any other player. She won her last slam while pregnant with her first child in 2017.
- Our friends at Statista remind us that her list of achievements goes far beyond her 23 Grand Slam singles titles. She's also bagged 14 Grand Slam doubles titles, 2 Grand Slam mixed titles, and 4 Olympic gold medals, making her the most versatile tennis athlete ever. This is true dominance in its purest form! She's been rallying with the best in the world for 27 years.
Signing Off
- Asian markets are mixed this morning. Japan is having an isolated catch-up rally after their Mountain Day public holiday. Markets in Hong Kong and South Korea are enjoying modest gains, while mainland China is slightly lower.
- US equity futures have edged higher in early trade. The Rand is trading at around R16.25 to the US Dollar.
- Have a good weekend. Let's hope the Springboks give the All Blacks a good Joburg howzit.
