Market scorecard
US markets ended lower yesterday, for no particular reason. There are always things to worry about, like geopolitical tensions and stubbornly high interest rates, and some days sellers outnumber buyers.
The "Magnificent Seven" group of stocks were down 1.9%, even though Nvidia (NASDAQ:NVDA) gained 2.2%. Google (NASDAQ:GOOGL) sank 2.4% after more trouble from lawsuits. Amazon (NASDAQ:AMZN) slid 3.1% on a downgrade from Wells Fargo (NYSE:WFC) Securities, and Apple (NASDAQ:AAPL) dropped 2.3% after a Jefferies analyst grumbled about expectations for new iPhone sales this season.
In other company news, Generac (NYSE:GNRC) rose 8.5% due to huge demand for backup power systems in southern states that are being pummelled by hurricanes. Garmin (NYSE:GRMN) fell 4.1% after a downgrade from Morgan Stanley (NYSE:MS) analysts, who think the athletic device maker's sales will shrink in the coming quarters.
At the end of the day, the JSE All-share was down a tiny 0.03%, the S&P 500 fell 0.96%, and the Nasdaq was 1.18% lower. Disappointing.
One thing, from Paul
From time to time we are asked why we only offer direct investments in US equities. What about Europe, what about Japan? What about China or India?
The simple answer is that US companies are the biggest and best in the world. We don't need to scratch around for opportunities elsewhere.
The other answer is that we really like our platform partners in New York. That's our Wall Street broker-dealer, Seaport Securities, and our custodian, Fidelity.
The image below explains why we aren't missing out by being US-focused. The US now makes up almost 50% of world market capitalisation.
Byron's beats
Airbnb (NASDAQ:ABNB) released a report which highlights their impact on the Cape Town economy. The story was profiled by the Daily Maverick.
According to the document, over 700 000 Airbnb guests visited the city last year, contributing an estimated R14.4 billion to its GDP. That supported 42 000 jobs which paid up to R7 billion in salaries. Tourism is a great way to grow an economy and create jobs.
There is a lot of talk about the impact of short-term rentals on housing markets around the world. The simplified theory is that property owners would rather do short-term rentals, which removes supply from the long-term rental market and pushes up prices for locals.
Airbnb counters that narrative by noting that their listings are less than 1% of all accommodation units in the city. I agree, Airbnb is a great service for both travellers and the homeowners. The less red tape the better, especially when it comes to tourism.
Michael's musings
I dislike most politicians. Their job is to get elected, meaning those who rise to the top are generally the most charismatic with big egos, not necessarily the best person for the role. It annoys me that world leaders are treated like royalty when they are just ordinary people doing a job.
Yesterday, the Business Day noted that Presidential medical care in South Africa cost nearly R500 million over five years. Ouch, that's money coming straight out of our taxes.
The funds are spent on the presidential medical unit, which is 65 people strong and has 45 luxury vehicles. This seems like a waste given the high-quality medical care offered in South Africa. I wonder if the presidential medical unit falls under the new NHI plans?
DA spokesperson for defence, Chris Hattingh, made a good point, "Why should a former president or deputy president and all their wives and children be supported by the presidential medical unit while they belong to a medical aid?"
Bright's banter
A recent report revealed that 26% of marketers globally are using YouTube for influencer marketing, with another 25% leveraging it for organic content marketing.
In the US, YouTube influencer marketing spend is projected to hit $2.35 billion in 2024, making it the top platform in this space. Additionally, nearly 46% of marketers expect to use YouTube for influencer campaigns this year.
So, for youngsters trying to make a living as influencers, YouTube is the platform where you should spend most of your time and effort.
Signing off
Asian markets were mostly down this morning, with India being the exception. Chinese stocks surged after reopening from their week-long holiday, but the rally lost some steam in the afternoon. The CSI 300 Index jumped 11% at the open but eased back to a 6.1% gain after China's top economic planners held off on announcing any major new support measures.
In local company news, Richemont (JO:CFRJ) is selling Yoox Net-A-Porter (BIT:YNAP) to Mytheresa, an online luxury retailer. In return, Richemont will take a 33% equity stake in Mytheresa. They have battled to create a sustainable online luxury goods platform.
The Rand is trading at around R17.46 to the US Dollar. Brent crude rose above $80 a barrel.
US equity futures are rising in early trade. Pepsico (NASDAQ:PEP) will have earnings out before the opening bell.
Keep well.