Market Scorecard
US markets ended slightly lower on Friday, but the S&P 500 climbed 0.8% last week and the tech-heavy Nasdaq eked out a 0.1% gain. Market volatility subsided as concerns about troubled regional banks ebbed away, and results out from large banks were very good.
Citigroup (NYSE:C) rose 4.7% after the firm said higher interest rates lifted its profit by allowing it to charge more for loans. JP Morgan jumped 7.6% following its report of record quarterly revenue and a 52% leap in profits. Elsewhere, Indian software firm Infosys slumped 10.8% on weak growth guidance. This weighed on India's Nifty 50 index this morning, with information technology shares plunging as much as 6.5%.
On Friday, the JSE All-share closed up 0.52%, the S&P 500 fell 0.21%, and the Nasdaq lost 0.35%.
One Thing, From Paul
So, another US earnings season is underway. As I said a few days ago, we love that the asset class we are invested in gives us detailed quarterly updates. As managers of quite focused stock portfolios, we are keen to check that our companies are doing well (or not), and see how the market reacts.
Sometimes share prices change violently in response to earnings numbers which surpass expectations or come up short. This is even true of very large companies.
Keep in mind that despite some bumpy times (short recessions), aggregate earnings of the S&P 500 have moved relentlessly higher over time, which is why stock prices go up too. That can be seen in the chart below, which shows earnings over the last 40 years.
We will update you as our owned companies report over the coming weeks, and let you know if we need to make any portfolio changes. Mostly, we will just celebrate these giant corporations' progress, sit tight, and go along for the ride.
Byron's Beats
Michael Jordaan shared this image of per capita electricity generation from solar, by country, on Twitter. South Africa might be late to the party but stage 6 loadshedding should propel that purple line almost vertically higher over the next few years.
There's a silver lining to this Eskom disaster, and I am optimistic that in few years, solar and other renewables will add the extra capacity that Eskom is losing. As with almost everything in South Africa, let the private sector fix the problem.
Michael's Musings
Amazon (NASDAQ:AMZN) just announced the launch of Bedrock, a platform which will provide access to cutting-edge language models that compete with ChatGPT and Google's (NASDAQ:GOOGL) PALM. In plain English, Amazon is giving its customers the ability to create their own AI systems through their cloud hosting on AWS.
Microsoft (NASDAQ:MSFT) and Google recently announced similar product offerings, so this isn't new, but it means that AWS is keeping up with the competition and is able to keep customers locked into its ecosystem. We can add Amazon to the list of AI-focused companies, along with Nvidia, Microsoft and Google.
For customers, being able to create their own AI bot has massive potential. Imagine a multinational like Visa (NYSE:V), training its own AI bot on all of their secret and sensitive data, and then using that bot to assist in making decisions for the business.
Bright's Banter
Luxury company Kering (EPA:PRTP), which owns popular fashion brands like Gucci and Balenciaga, has launched a new website called KNXT to test out innovative fashion ideas.
The website features a ChatGPT-powered bot called 'Madeline', which acts as a personal shopper to help customers find fashion items.
I tried it out by asking for a substitute for a favourite Patagonia 'finance-bro' vest with a budget of $4 000, and Madeline recommended the Bottega Veneta black vest.
The bot highlighted the vest's features, such as a medium fit, intrecciato tech nylon with snap closure, making it an ideal choice for someone who values style and practicality.
Signing Off
Far eastern markets look fine this morning. Benchmarks in Japan, Hong Kong and mainland China are up. The People's Bank of China kept their key lending rate unchanged and made the smallest net injection of liquidity into the system since November. The Indian market is down, as mentioned above.
Charles Schwab (NYSE:SCHW) and State Street (NYSE:STT) report their earnings after the market close tonight. More important for us this week are earning reports from Johnson & Johnson (NYSE:JNJ), Netflix (NASDAQ:NFLX) and Tesla (NASDAQ:TSLA).
US equity futures are slightly higher in early trade. The Rand is trading at around R18.05 to the US Dollar, not the $/R19.00 that was doing the rounds on social media this weekend - Google had a glitch.
If you are running the 127th Boston Marathon today, good luck. If not, which is more likely, have a good day at work.