Market scorecard
US markets were closed yesterday for the Thanksgiving public holiday. In Europe, stocks rebounded after two days of losses, led by tech gains on hopes that US restrictions on chip sales to China might be less severe than anticipated. Semiconductor stocks like ASML (AS:ASML) (+2.4%), VAT Group (SIX:VACN) (+1.1%), and Aixtron (ETR:AIXGn) (+0.71%) were among the top performers.
In company news, Direct Line Insurance (LON:DLGD) shares soared up to 45% after the company turned down a GBP3.3 billion takeover offer from Aviva (LON:AV). Elsewhere, Amazon (NASDAQ:AMZN) reported strong signups for their Prime Video streaming service, because of the scheduled NFL game between the Las Vegas Raiders and Kansas City Chiefs.
Here in Joburg, the JSE All-share was down 0.37%. That's it.
One thing, from Paul
Johannesburg is the best place to live in the world, even though the infrastructure is falling apart. That's because it has the best people. Joburgers are known for their openness, warmth and inclusivity.
That's a line from my speech at the year-end party of my running club in Parkview last week. It was received with raucous cheers of approval.
The most important thing about the place you choose to live is the community. Great people can make any city great. If you have no friends, you will be miserable, no matter how attractive the scenery is.
Making friends takes work. You need to get out there. Don't stay in your comfort zone watching Netflix (NASDAQ:NFLX) at home. If you live in this area and are looking for a running club to join, send me a message by hitting reply to this email.
As Byron suggested recently, ask new acquaintances about themselves, their families and their work. When appropriate, ask for their phone numbers and invite them to do things. Say yes when people invite you back.
Byron's beats
This map provides some perspective of the scale of the US economy. It shows all the countries in the world with a GDP bigger than California. There are only 3, namely Germany, China and Japan.
The state of California has the 4th biggest economy in the world if you exclude the US. Due to anti-business regulations and high taxes, quite a few corporates are moving their headquarters outside of California, so it may decline in years ahead.
Inter-state competition is a good thing; it keeps the regulators in check and allows smaller states to bring in investments by being more business-friendly.
Michael's musings
It's been a great two years to be invested in US markets. Thanks to good gains across the board and Nvidia (NASDAQ:NVDA)'s heroics, a number of clients have doubled their money over the last 24 months. What to do now?
After making that much money so quickly, it's easy to convince yourself that a crash is coming. What goes up, must come down - surely? History says no. Since 1950, if the market has had two consecutive strong years, 75% of the time it goes on to have another up year. In other words, what goes up, keeps going up.
There are very good reasons to believe that the market will continue higher in 2025. Interest rates are dropping, US consumer spending has remained strong, unemployment is low, and Trump will introduce business-friendly policies. As we always say, be long and strong.
Bright's banter
Starbucks (NASDAQ:SBUX) faces tough decisions in China as the new CEO Brian Niccol navigates a business turnaround. Despite nearly 20% of its stores being in China, the region contributes less than 10% of revenue, with same-store sales plunging 14% in the third quarter.
Local competitors like Luckin Coffee (OTC:LKNCY) and Cotti Coffee are eroding Starbucks' market share faster than you can say "venti white mocha, quad shot, 2 shots on bottom, two on top with almond milk and caramel drizzle."
Luckin, once scandal-hit, has rebounded with affordable pricing, while Cotti, founded by Luckin's ex-leadership, is scaling rapidly with plans for 50 000 stores by 2025. Starbucks' premium pricing and corporate-owned model with slow expansion means it is struggling against China's booming milk-tea market.
Selling a stake in its China business could allow Starbucks to partner with a local operator better suited to the market dynamics. Historically, such moves boost valuations and free up capital for growth or shareholder returns. Niccol's upcoming visit to China may provide clarity on this pivotal strategy shift.
We're happy to be out of this one.
Signing off
Asian markets had a mixed session this morning. Gains in China were driven by food and beverage stocks after officials pledged to boost consumption. The bourse in Seoul fell as a surprise rate cut shifted focus to slowing growth concerns.
In local company news, UK-based Frasers Group, owner of brands like House of Fraser and Sports Direct (LON:FRAS), has acquired Holdsport (Sportsmans Warehouse & Outdoor Warehouse) from Old Mutual (JO:OMUJ) Private Equity for an undisclosed sum. Elsewhere, Spar Group (JO:SPPJ) delivered decent full-year numbers, with turnover rising by 4% to R152.3 billion.
US markets will be open today for a half-session. Trade will be thin because most portfolio managers and traders are recovering from a turkey hangover.
The Rand is trading at around R18.05 to the US Dollar.
Monday will be December, and for most of us in the southern hemisphere, there are only two weeks left of the working year. Sounds good, right?
Have a good weekend.