Xi pushes China’s open-source AI vision at BRICS summit
It is the last day of our full lockdown, and the end of a three day week. Are you ready for your run tomorrow morning? This lockdown has hit global economies hard. Yesterday the US released its GDP figures for the first quarter of 2020. It was a drop of 4.8%, the worst since the financial crisis.
Also out yesterday, was the Fed's interest rate decision. As expected, the rate remained the same. At the press conference after the Fed's meeting, Jay Powell said that the Fed is now in wait-and-see mode, but that they will support the economy where they can. Ensuring liquidity and confidence in the financial system is helping to ensure that this crisis doesn't spread further into the economy.
Yesterday the JSE All-share closed up 1.66%, the S&P 500 closed up 2.66%, and the Nasdaq closed up 3.57%.
Michael's Musings
One area that I am waiting for a shakeup is in corporate property. Before this lockdown, the vast majority of employees would have to go to the office everyday. The one thing we have learnt over the last month is that many people are still effective working off-site or at home.
The implication for corporations is huge. It means that they no longer need these massive office footprints, saving the company money. My forecast is that office sharing like WeWork will become more popular. Traditional office spaces will become smaller, with the existing desks becoming hot desks, so that if people need to be in the office, they have space to work and collaborate.
The ripple into society from this shift will be even more significant though. If people don't need to be in the office five days a week, they won't feel the need to live in more expensive city centres. As people move out of the city, property prices will shift too. Maybe owning property in a city CBD isn't a great investment anymore?
Further than that, lifestyles will change too. People will go from living in 80 square meters to something much bigger, which also costs less. Is this when millennials start buying houses? Exciting changes are coming.
Bright's Banter
Stockholm-based music streaming giant Spotify reported strong first quarter earnings thanks to a change in listener behaviour which led to higher engagement on their platform. Monthly active users notched 286 million by the end of the quarter, a rise of 31% on a year-on-year basis, helping the company beat its own forecasts for the quarter.
Paid music subscribers surged to 130 million, up 31% as well, again proving that the music streaming giants business model is more resilient than one may expect. Revenues were up 22% to EUR1.85 billion even though the ad-supported revenue contributed just 10% of revenues with a EUR 148 million print.
Spotify CEO Daniel Ek said that "Morning routines have changed significantly and everyday now looks like the weekend". I am not sure if he was referring to the success of the new album by The Weeknd. He did say that "We saw a very, very strong release with The Weeknd".
The Weeknd's album After Hours was released on the 20th of March and debuted at the top of the Billboards albums chart with the equivalent of 444 000 album sales in the US. Over a third of the album sales came from the 221 million on-demand streams of the album songs, a new personal record for The Weeknd, meaning he shouldn't worry too much about Covid.
The company did mention that one in six people cancelled their membership in the US due to Covid-19, so the company is not totally immune to this pandemic. The share price of this music streaming juggernaut surged 10% in after-hours trading. Spotify continues to be one of my favourite businesses thanks to its unique business model and the algorithm that's just out of this world.
Signing off
Facebook and Tesla, two other companies that reported their results last night, are up over 8% in pre-market trading. This evening we have Apple and Amazon reporting their latest figures. Given the size of these businesses, their numbers will be market moving. The Rand is looking strong this morning, now trading at $/R18.10. Enjoy the long weekend, and get ready for a new normal on Monday.
Sent to you by Team Vestact.
