Market scorecard
US markets ended Friday in the red, capping a very sloppy week, the worst since March 2023. Almost every major sector in the S&P 500 dropped. The grumpy mood was due to a marginally soft monthly jobs report, which reignited fears that the US economy is slowing down, and consensus that the Federal Reserve has taken way too long to cut excessively high interest rates.
Nonfarm payrolls increased by 142 000 last month, bringing the three-month average to its lowest level since mid-2020. To keep things in perspective, the unemployment rate dipped to 4.2%, which is really rather low. Come on folks, let's all just be patient.
In company news, Darktrace CEO Poppy Gustafsson is set to step down after orchestrating a $5 billion sale of the British cybersecurity company to private equity firm Thoma Bravo. Meanwhile, Boeing (NYSE:BA) has proposed a four-year deal with a union representing over of its 32 000 workers, offering a 25% wage increase to avert a strike. This is a notable win for Boeing, as the union's initial demand was a 40% raise.
On Friday, the JSE All-share closed down 0.95%, the S&P 500 tanked by 1.73%, and the Nasdaq was punished by 2.55%. A very unseemly end to the week.
One thing, from Paul
Apple (NASDAQ:AAPL) is holding its annual product refresh event tonight. This launch has been billed as "It's Glowtime" and was moved a day earlier to avoid clashing with the Trump-Harris debate on Tuesday.
The main feature will be the announcement of the iPhone 16 with a better camera, a faster A18 chips made using TSMC (NYSE:TSM)'s 3nm N3E process, and longer battery life. Significantly, these phones will soon feature onboard AI features as they are updated with the latest iOS operating software.
iPhones still contribute over 50% of Apples revenues, so that's where the focus will be, but planned updates to the Apple Watch (series 10) and 4th-generation AirPods should be noteworthy.
We'll be monitoring trends in the average selling prices of all these devices. The market will be pleased by a chunky price hike for the Pro and Max iPhone models.
To be quite honest, we expect most product upgrades to be incremental. Apple is a juggernaut, with an enormous installed base of loyal customers, who buy all of their devices and use all of their services, year after year. I'm certainly in that category. A happy user and a happy shareholder.
Byron's beats
I am heading back from a 10-day trip to the US. We did a one-week road trip through California starting in San Francisco and ending in Los Angeles (LA). Then we visited family who are based in Nashville.
While in San Francisco, I was fortunate to visit a friend who is the director of data science at Meta (NASDAQ:META), and I got a full tour of their head office. I will describe that in more detail soon in another daily note.
Here are my main takeaways from the trip. It's great to travel - it opens your mind, you meet interesting people and it makes you appreciate home. America is huge and each State is very different. They are all very proud of their country and the unique cultures in the areas that they live in.
San Francisco is the tech innovation hub of the world but it certainly does not feel like a futuristic city. Other than the self-driving Waymo cars, which you see from time to time, the place was quite underwhelming. There are many homeless people on the streets. The wifi was so slow that I could not even watch the Springbok game properly.
The drive down to LA on the Pacific Coast road was beautiful. LA itself had a great vibe, and the city and its surrounds were far more picturesque than I was expecting. Nashville was definitely the highlight of trip, with great trees, a vibey honky-tonk downtown area and very friendly people.
Of course, politics is on everyone's mind at this time, and there were Harris and Trump signs everywhere. The political allegiances in California and Nashville were very different.
The whole country was very busy: shops, restaurants and the roads were all pumping. The massive US economy feels like it is in great health.
Michael's musings
South Africa has its problems, but things could be much worse. Our inflation is at a steady 4.6%, much better than Turkey and Argentina at 52% and 263%, respectively. We recently had a free and fair election, and a power-sharing deal between the two biggest parties was peacefully negotiated.
In Venezuela, they have very high inflation and extreme political violence. After a national election on 28 July, the incumbent strongman, President Nicolas Maduro, was declared the winner after only 80% of the vote was counted. All independent observers say he lost the election by a mile, and the country's election commission hasn't been able to provide proof of his victory. At least 20 people have died and a further 1 700 jailed in post-election protests. Edmundo Gonzalez, the opposition leader who won the election, has now fled to Spain for safety.
Maduro announced last week that Christmas celebrations will start in October. I don't know what that means, perhaps it's a ploy to shift the focus away from political issues. Things are a mess in that country, worse than before. We can be glad that we don't live there, even though the EFF view it as a model to copy.
Bright's banter
In late July, Hermes posted impressive sales growth for the second quarter, outpacing its peers in the luxury sector amid a general slowdown.
Revenue rose 13.3%, beating analysts' estimates, with first-half operating income reaching EUR3.15 billion. While the company's growth was solid across most regions, demand in China was weak, but strong in Japan.
Shares of Hermes rose as much as 2.4% on the day of the results. Known for its high-end products like Birkin and Kelly handbags and strong pricing power, Hermes tends to be less affected by market fluctuations than other luxury brands.
Executive Chairman Axel Dumas highlighted resilient demand for the brand's flagship leather goods and ready-to-wear items, despite a dip in demand for more affordable goods like silk scarves. The company's steady performance contrasts with weaker results from luxury rivals like LVMH (EPA:LVMH) and Kering (EPA:PRTP).
Signing off
Asian markets are mostly in the red this morning, with China's CSI 300 index down just over 1%. Since hitting a high in May it has fallen over 13%. If the benchmark continues to slide, it will soon hit levels last seen in early 2019, highlighting the struggle of years of policy efforts to revive the world's second-largest economy.
In local company news, City Lodge Hotels (JO:CLHJ) reported a 13% revenue to R1.9 billion, thanks to higher occupancy levels and a 22% jump in food and beverage sales. Earnings rose by 10% year-on-year, but its shares were down 5.5% on Friday.
The Rand is trading at around R17.83 to the US Dollar.
US equity futures are up in early pre-market trading, suggesting that the rotten market close on Friday was unwarranted.
Keep moving, and have a good week.