Left out

Published 2024/09/16, 12:32
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Market scorecard

US markets ended the week on a high note, with both the S&P 500 and Nasdaq enjoying their fifth consecutive session of gains on Friday. It was the best week of 2024 so far.

The first interest rate cut of the cycle is finally here. In the US, the debate isn't if, but by how much. We will find out what the Fed decides on Wednesday, but there is a growing feeling that a 50 basis point adjustment is possible. Locally, the SARB should cut rates on Thursday, most likely by 25 basis points.

In company news, Uber (NYSE:UBER) accelerated 6.5% higher thanks to a deal with Waymo to offer driverless taxi rides in Austin and Atlanta next year. Elsewhere, Trump Media (NASDAQ:DJT) shares surged 11.8% following Donald Trump's statement that he has "absolutely no intention of selling" his stake, despite the upcoming expiration of a lockup period. Finally, Boeing (NYSE:BA) is facing the potential loss of its investment-grade credit rating, as the company braces for a prolonged workers' strike that could further hinder production and strain cash flow. When it rains, it pours.

On Friday, the JSE All-share was up 0.38%, the S&P 500 rose 0.54%, and the Nasdaq climbed another 0.65% higher. Great stuff.

One thing, from Paul

I'm encouraged to see that the ultra-left is being abandoned in elections around the world. We've all had to listen to more than enough Marxist nonsense, spouted by champagne socialists. These are grubby politicians who profess to be motivated by the dream of wealth and income equality for all but are only interested in power for themselves.

The outright rejection of the EFF in the recent election in South Africa was good to see. No doubt the red berets think that they will bounce back in the next one, but I doubt it. Their party is falling apart.

The newly elected Labour Party government in the UK has stuck doggedly to fiscal discipline, with Keir Starmer insisting that they won't spend money that they don't have. He's also determined to reform the public sector through productivity improvements, not wanton deficit spending.

Starmer favours "a contribution society: one where people who work hard and play by the rules can expect to get something back".

Byron's beats

Fears that Russia would invade Ukraine started doing the rounds in January 2022. The Vestact team didn't think it would happen, clearly we were wrong. After the invasion happened, we thought that it would probably be over quite quickly, again we were wrong. Over 36 months later the war is still raging and residents of Kiev have to flee to bomb shelters almost every night. Luckily we are not paid to predict wars.

I am sure there were some smart people out there who saw this coming and made the right forecasts. What would have been the wrong decision however was to liquidate your equity holdings because you believed the war would bring the global economy down with it.

My point, and I make this often, is that forecasting global events is one thing. Predicting their consequences, particularly for markets, is an entirely different kettle of fish. And more often than not, the reaction is completely different to what you would expect.

You should not be making long-term investment decisions based on global event forecasts; keep that lesson in mind as the US election in November approaches.

Michael's musings

No industry is safe from the reach of the big tech companies. A recent example is Apple (NASDAQ:AAPL) encroaching on the niche market of hearing aids. The share prices of hearing aid manufacturers dropped after Apple's device reveal event last week.

At Apple's event on Monday, the company announced upgrades to the AirPods, allowing them to perform hearing tests and be used as hearing aids. This is only for people with mild hearing loss, but I wouldn't be surprised to see its capabilities expand. My guess is that this will greatly benefit people who currently don't have hearing aids, but should have them.

According to the Apple website, you can perform a hearing test, and then based on those results, the AirPods adapt to enhance the required frequencies. Part of the technology is to reduce background noise and make voices louder. Read about it here - AirPod Pro 2.

The tech titans have the research teams, money and global reach to disrupt any industry. Another reason to be optimistic about their future.

Bright's banter

CoreWeave, a Nvidia-backed cloud computing provider at the forefront of the AI race, is in talks to sell existing shares at a valuation of $23 billion.

This deal, led by CEO Michael Intrator, could allow shareholders to tender $400 to $500 million worth of their holdings. CoreWeave has quickly built data centres using Nvidia's (NASDAQ:NVDA) chips to support AI applications.

With a $7.5 billion credit facility and a growing investor base, the company is also considering an IPO as early as next year, marking a significant rise in valuation since its $7 billion round in December.

The market seems to be overlooking Nvidia's strategic investments like this one, which could be key drivers of future growth. These areas, particularly in AI and data centre infrastructure, hold significant potential and may fuel the next phase of expansion for Nvidia.

Signing off

Hong Kong's Hang Seng China Enterprises Index slipped by 0.4% today, breaking a two-day winning streak. Property stocks were hit the hardest, with the sector's index falling by as much as 1.8%.

A powerful typhoon has made landfall near the Chinese financial hub of Shanghai. Typhoon Bebinca hit the coastal area of Lingang New City in Shanghai's east, and thousands of residents in the Shanghai metropolitan area have been evacuated, while all flights at the city's two main airports have been grounded.

In local company news, Barloworld (JO:BAWJ)'s share price plunged 12.5% on Friday, its largest single-day drop in over 17 years. This sharp decline followed the company's announcement that it had informed US authorities of potential export control violations by its Russian unit, Vostochnaya Technical, which is currently under investigation.

US equity futures are in the green pre-market. The Rand is trading at around R17.70 to the US Dollar.

Have a good week ahead. Next week is a short one.

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