Market Scorecard
US markets took a step backwards yesterday, retreating from recent highs. Nvidia (NASDAQ:NVDA) shares slid 2.6% after China launched an anti-monopoly probe into the chipmaker, in what sounds like a tit-for-tat reaction.
Attention now turns to inflation data that could shape the Fed's rate outlook, at its meeting on Wednesday next week. The signs are that a small cut is in the offing.
In company news, Apollo Global Management (NYSE:APO) and Workday (NASDAQ:WDAY) are being added to the S&P 500. The former will join Blackstone (NYSE:BX) as another alt-asset manager in the world's top equity index. Elsewhere, Mondelez (NASDAQ:MDLZ) is eyeing a sweet deal to acquire Hershey, which could create a $50 billion snacks and chocolate powerhouse. Finally, Omnicom (-10.3%) has agreed to buy Interpublic Group to form the world's largest ad agency.
At the close, the JSE All-share was up 0.81%, but the S&P 500 fell 0.61%, and the Nasdaq slid 0.62% lower. You can't win them all.
One Thing, from Paul
Vestact is an asset manager, not a financial planning firm, so we don't dispense general life and money advice in a formal way. We do get asked questions about those topics though, and have some views.
One such question: "Is insurance a good idea?" I can think of 6 major types of insurance sold in South Africa: health, life, disability, car and personal effects cover, home replacement cover and various kinds of gap cover.
If you buy all of those, you probably won't have much money left over for retirement savings and other goals.
In South Africa, you should really have private health coverage. Treatment in public hospitals is bad. If you have poor health or genetic conditions, you should have comprehensive cover with low co-pays, low out-of-pocket maximums and fewer restrictions on the medical providers you can use.
Parents with young families should have ample life insurance. Car owners should have vehicle cover, and mortgage (home loan) lenders insist borrowers have homeowner's insurance. The self-employed should have disability cover.
Very rich people can probably ditch all of these products, and cover themselves.
Byron's Beats
US stocks now make up over 70% of all listed assets. If you are buying the MSCI World Index ETF you will end up with 74% exposure to US stocks (see the details in the image). That's crazy when you consider that the US is only 26% of global GDP and has less than 5% of the world's population.
We attribute much of this success to a favourable regulatory environment in the US that encourages entrepreneurship, innovation and business growth. Companies there are encouraged to create and invest in world class products which they can then go and sell all over the planet.
A lack of growth in other regions has also contributed to US dominance. China and Europe have hamstrung their large corporates with overreaching regulations.
We are very happy to remain focused on US stocks. There is no need to go searching for assets in uncertain regions for the sake of it.
Michael's Musings
Last month, a Bill Gates-backed company, TerraPower, signed a deal to turn a coal-fired power station into a nuclear, next-generation small modular reactor. These nuclear power stations need a special fuel called high assay low enriched uranium (HALEU), which currently is only produced in commercial volumes in Russia.
TerraPower is teaming up with ASP Isotopes, a US-listed company with South African roots, to manufacture HALEU. Many of ASP's key scientists are South Africans who were involved in our nuclear industry in the late 1980s, and they own PET Labs Pharmaceuticals, a South Africa-based company that creates medical-grade enriched uranium.
ASP believes that its enrichment technologies can be deployed quicker and cheaper than its competitors. If all goes according to plan, ASP will create HALEU in South Africa for use in TerraPower's Wyoming power plant, which is expected to come online in 2030. If these small modular reactors work, many other companies will want to get their hands on this specialised fuel.
You can read more here - TerraPower signs agreement for HALEU facility in South Africa.
Bright's Banter
EV-maker Rivian (NASDAQ:RIVN) has come out tops in an owner-satisfaction survey, according to Consumer Reports' latest study, for the second consecutive year.
86% of Rivian owners say they'd buy again, outpacing big names like Tesla (NASDAQ:TSLA), BMW (ETR:BMWG), and Porsche (ETR:P911_p), which tied for second. Tesla moved up in the rankings but saw a slight dip in its repeat purchase score.
Consumer Reports highlights that brands with fewer models, like Rivian, can score higher as their limited lineups consistently meet expectations. Meanwhile, Jeep landed at the bottom of the list, with surprising laggards like Mercedes and VW not far behind.
For Rivian and Tesla, their all-electric status is a big draw. Once owners go electric, they rarely want to return to petrol. While reliability issues are often covered under warranty, making them less of a factor, Rivian's excellent service and owner experience keep customers happy. Overall, the EV market thrives on loyalty and innovation.
Signing Off
Asian markets are trading higher today, buoyed by signals from China's politburo of a bold stimulus plan to revive its slowing economy. Mind you, we've all heard that before.
In local company news, UK-based Supermarket Income REIT (LON:SUPR) is set to debut on the JSE on December 13 via a secondary listing. SUPR owns a GBP1.78bn portfolio of 73 omnichannel grocery properties across the UK and France, leased to big names like Tesco (LON:TSCO), Aldi, and Carrefour (EPA:CARR).
US equity futures are mixed in pre-market trade. The Rand is at around R17.81 to the US Dollar. It's probably a good time to externalise some US Dollars and invest with us before your annual allowance refreshes on January 1st.
Have a good Tuesday.