The last third of us

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Market scorecard

Friday was an ugly day for US markets. All eleven sectors sold off with 460 companies out of the 500 in the big-cap index closing in the red. Financials were the biggest losers, sliding 3.6% on the day. Sticky inflation still lingers in the background, while tensions in the Middle East only add to market participants' concerns.

In company news, the world's largest money manager BlackRock closed down 2.9% after reporting better-than-expected top and bottom line numbers for the first quarter but issuing a wishy-washy forecast for the year. JPMorgan saw the largest drawdown of the day, off 6.5% because it also delivered a muted projection for the next coming quarters.

On Friday, the JSE All-share closed unchanged, but the S&P 500 stumbled by 1.46%, and the Nasdaq was smacked 1.62% lower.

One thing, from Paul

Open war in the Middle East. Grinding conflict in Ukraine. Rising oil prices. US inflation lingering above 3 percent. The possible re-election of Donald Trump. A trade war with China, or worse still, a Chinese invasion of Taiwan.

Investors in the stock market have plenty to worry about, as usual. But so far this year, resolute holders of stocks have done well: The S&P 500 index enjoyed its best first-quarter performance since 2019, up more than 10%. And that's on top of a great 2023, when it rose 24%.

The perma-bears are deeply depressed. There are people who always expect the worst, and have never met a market rally they did not distrust. In general, their early adult experiences shaped their perceptions of risk. They can't help themselves.

As Ben Carlson said recently, "Overthinking can be just as debilitating as not thinking at all. Investing involves irreducible uncertainty about the future."

In the face of global turmoil, our advice remains the same. Keep calm and stay fully invested.

Byron's beats

Here is some interesting data to start your week. During the recent solar eclipse in the Americas, Meta's (NASDAQ: META ) click-through rate dropped dramatically. People actually took their eyes off their screens and stared straight into the sun instead.

Click-throughs dropped 14% on the day which is similar to the drop they see over the 4th of July holiday.

This interested me for two reasons. Firstly it shows how engaged we are on our phones. It takes the sun disappearing in the middle of the day to actually go outside and look up. I guess that is a little sad. Secondly, it shows how easily big tech companies can track human activity these days.

Meta

Michael's musings

We are often asked if the current tech boom can continue. It is an important question because many of our key holdings are in this industry. We think the impact of computers and the internet on society is still in its early stages.

By 2018 only 50% of the world's population had access to the internet. Internet connectivity is now estimated at 66%, partially due to a jump in connections around the time of Covid, but there are still another 2.5 billion people, the last third of us, that need to get online. Each new connection is life-changing for the user, and creates an additional customer for technology companies.

Internet penetration varies widely across the world - Visualizing internet usage by global region.

Bright's banter

Salesforce (NYSE: CRM ) is in talks to buy Informatica, a data-management software company. Informatica's value shot up 43% to over $11 billion this year on takeover rumours.

Salesforce is all about cloud-based software for managing customer relations, while Informatica helps companies handle their data across different systems, whether on-premise or in the cloud. Informatica's clients include big names like Unilever (LON: ULVR ), Toyota (NYSE: TM ), and Deloitte.

For Salesforce, snagging Informatica would be a major move. It would be their biggest deal since they bought Slack for $28 billion in 2021. Salesforce has been busy beefing up its product line-up and cutting costs, which has helped its stock bounce back since late 2022.

Signing off

Asian markets have slipped to a six-week low this morning. Benchmarks fell in India, Hong Kong, Japan, and South Korea while they rose in mainland China.

In local news, Canal+ has been steadily increasing its stake in MultiChoice (JO: MCGJ ). Starting with a 6.5% purchase in October 2020, the French media group has aggressively bought shares in the open market, and now has breached 40%. When the mandatory offer announcement was made, Canal+ only had a 33.06% stake in the local pay TV company.

US equity futures are edging higher pre-market. The Rand is trading at around R18.86 to the US Dollar.

Aluminium and nickel prices surged in response to fresh sanctions on Russian supplies, imposed by the US and UK.

This week we will see earning reports from Goldman Sachs (NYSE: GS ), Charles Schwab (NYSE: SCHW ), UnitedHealth (NYSE: UNH ), Johnson & Johnson (NYSE: JNJ ), Bank of America (NYSE: BAC ), Morgan Stanley (NYSE: MS ), ASML (AS: ASML ), TSMC (NYSE: TSM ), Netflix (NASDAQ: NFLX ), Intuitive Surgical (NASDAQ: ISRG ), Blackstone (NYSE: BX ) and Procter & Gamble (NYSE: PG ).

Good times! Keep well.

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