Rock Around The Clock

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Market Scorecard

US markets closed slightly lower yesterday, for the third consecutive session. Technology, media and communications companies were down the most, while property stocks enjoyed a good day after Credit Suisse (SIX: CSGN ) put out a bullish report on the sector. Really? Some people still care what Credit Suisse thinks? That's nice..

In company news, General Motors (NYSE: GM ) said that its recall of Chevy Bolt cars will cost $2 billion, but no worries, it will recover most of that from its battery supplier LG Electronics (KS: 066570 ). Elsewhere, Apple (NASDAQ: AAPL ) is likely to pare back iPhone 13 production targets for 2021 due to the ongoing chip shortage. Covid bottlenecks continue to bedevil businesses around the world.

At the end of day's trading, the JSE All-share was down 0.17%, the S&P 500 was down 0.24%, and the Nasdaq was down 0.64%.

One Thing, From Paul

According to Matt Levine at Bloomberg, a startup trading platform called 24 Exchange is seeking approval from the Securities and Exchange Commission to launch the first US stock exchange that would operate around the clock, including on weekends and holidays.

For the record, US markets are open from 9h30 to 16h00 Eastern Standard Time, Monday to Friday, with some less-liquid extended hours in the morning and evening. At Vestact, we trade your orders soon after the markets open, which is at 15h30 South African Standard Time. Then we go back to reading at out desks, and later, spending time with our families, and even later, just sleeping.

24 Exchange already offers non-stop trading in FX and crypto. They say that there is a growing demand for round-the-clock stock trading from individual investors, who "trade as a hobby after their workday is over and who want more time to do that".

In truth, night-time trading will probably be spotty and volatile, which works better for the market maker than for the trader. Mind you, what kind of idiots want to trade stocks all night?

Says Klein: "If you are making markets for retail at 3 a.m. you can probably charge them a pretty wide spread because they're not there for tight seamless execution, they're there for a good time."


Michael's Musings

On Monday, the annual Nobel prize for economics was awarded. Well, the award is formally called the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel. It is not an 'official' Nobel prize because it wasn't funded from the estate of Alfred Nobel and only started in 1969, whereas the others date back to 1901. Anyway, the only people that seem to care about that are economists.

The world of economics is generally theory-driven because it is very difficult to do cause and effect tests on a large scale. This year, the prize went to three academics for their work on bringing economics into the real world through some cleverly designed natural/unintended experiments instead of controlled/intended experiments.

One key issue addressed by their work was the connection between higher minimum wages and employment levels. They studied two neighbouring cities in different US states, where the minimum wage laws had recently changed in one state and stayed the same in the other. The city where nothing had changed was their control group. They found that raising the minimum wage did not reduce employment levels. That surprised many people.

The one weakness in their approach is that it's very hard to rerun experiments, with slight tweaks to the inputs to understand the cause and effect relationships better. In one case, raising minimum wages had no negative effect on employment but in another setting, it probably would have. When is it okay to raise the minimum wage and when is it not? For policymakers to create better laws, we need to really understand the levers and mechanics of the local economy.


Bright's Banter

Yesterday, Google (NASDAQ: GOOGL ) Cloud announced a new feature that provides its users with custom carbon footprint tracking, to track the emissions their cloud usage generates. This is the first step towards being carbon-free, a goal that Google Cloud has set to achieve in the next decade.

Microsoft (NASDAQ: MSFT ) already has a similar tracker showing the emissions associated with the electricity used to store and process customer data. The fun bit about these trackers is that they warn customers when they're wasting energy on inactivity.

This tool could be used across industries to ensure that there is no inefficient use of electricity in farming, manufacturing, distribution centres and more. This is not a new invention from Google as the Google Earth Engine has been around since 2009, and has been used for a while by used by researchers and other specialist groups.

Signing Off

Asian markets are mixed this morning. Japan and mainland China markets are down a bit, while South Korea is outperforming, "Squid Game-style".

US earnings season kicks off today with quarterly results out from JP Morgan and BlackRock (NYSE: BLK ). This earning season will provide a much-needed data about corporate profitability, and inform the market outlook for the year ahead.

US futures are down slightly in early trade, but it's too soon to say what lies ahead. The Rand is trading at around R14.95 to the US Dollar. Keep cool and stay busy.

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