Stocks down on energy shock concerns, global yields hit fresh highs
Market scorecard
US markets inched higher on Monday after a quiet trading session. The energy sector saw some gains as Brent crude oil surpassed $95 per barrel for the first time since November last year.
In company news, Apple (NASDAQ:AAPL) climbed by 1.7% on reports that iPhone 15 pre-orders are well ahead of forecasts. Elsewhere, Moderna (NASDAQ:MRNA) shed 9.1% after the Pfizer (NYSE:PFE) CFO said demand for Covid shots was weaker than expected. Lastly, Disney (NYSE:DIS) is in talks with potential buyers of its streaming and television business in India.
At the end of the day, the JSE All-share closed down 0.91%, the S&P 500 rose a mere 0.07%, and the Nasdaq was 0.01% higher, ok flat.
One thing, from Paul
Here at Vestact we only offer direct equity portfolios, in your own name. You are a shareholder in big-cap, blue-chip companies that trade on the stock exchange. If you want to get out, we'll sell them for you immediately and send your money back two days later.
You aren't locked into some fancy hedge fund or unit trust or fund-of-funds feeder structure. We don't charge complicated, performance-based fees, just our bog standard 1% per annum. Just equities, no bonds. No derivatives. Definitely no endowment wrappers with 5-year lockups.
I liked this line from someone I follow on finance twitter, called Ed Borgato: "Avoid complexity. Investing isn't like gymnastics, there's no extra points for difficulty."
Byron's beats
Statista came out with some interesting data about the US Dollar last week. Take a look at the graph below. The US is responsible for 9.3% of global trade and represents 25.4% of global GDP. Yet 46.5% of all SWIFT payments, 56% of official FX reserves and 88.4% of FX transaction volume is in US Dollars.
In other words, the global influence of the Dollar is far greater than the influence of the US economy. Keep that in mind when you see articles going around about the demise of the mighty USD.
Michael's musings
Shares in companies are by far the best asset class. Consider the graph below, you can see that it isn't even a close call. Forget about owning gold or property. In addition to superior returns, equities are highly liquid, so you can get your money out within a week.
One disadvantage of shares is that the stock market is very volatile. In the short term, human emotions drive stock prices, not fundamentals. For example, in 2022 stocks dropped around 30% because investors were worried about inflation. Ouch! You need a strong stomach to hold through slumps like that.
This Visual Capitalist article shows why small changes in your average annual return can have significant implications for your wealth in years to come. The solution is to put your money into the best asset class and then let it grow. Don't try to complicate things by jumping in and out of the market - How long does it take to double your money?
Bright's banter
Last week we reported on JM Smucker's deal to buy Hostess Brands, maker of Twinkies. Uncrustables is another Smucker's bestseller. The crimped, crustless sandwich originated as a simple idea and became a modern-day success story.
Uncrustables are frozen sandwiches that can be popped in the microwave oven for a child's lunch. Adults are also jumping on the bandwagon, tossing them into their sports bags or carrying them in their briefcases for a quick and easy meal.
The brand was founded in 1995 by David Geske and Len Kretchman as "Incredible Uncrustables". The two friends decided to mass-produce their kids' favourite sandwiches - peanut butter & jam without the crusts. They secured a controversial patent for their "sealed crustless sandwiches" and later sold the brand to Smuckers for $1 million in 1999.
Smucker has seen growing demand for Uncrustables with sales jumping by 11% in the latest quarter. They churn out 4 million sandwiches every day to satisfy America's appetite for convenience.
The sales trajectory of Uncrustables resembles that of a hot AI startup. The range now includes chocolate hazelnut spread, honey spread and turkey & Colby jack bites. Smucker shipped approximately $685 million worth of these snacks in 2022. Sales are expected to reach $800 million this financial year.
Signing off
Asian markets have mostly traded lower this morning. Equity benchmarks slipped in Japan and South Korea, while Hong Kong and mainland China pared earlier losses to trade sideways. China's faltering economic recovery isn't really helping the region much either; the struggling property sector remains a drag on growth and sentiment.
US equity futures are slightly lower in early trade. The Rand is trading at around R19.01 to the greenback.
Today sees Eurozone CPI data being released as well as US housing starts. The San Francisco-based grocery delivery company Instacart starts trading today on the Nasdaq with the ticker symbol CART, and a market value of around $10 billion.
Have an excellent day.
