Market Scorecard
Yesterday, US stocks were mostly down on very thin trading volumes. Historically, September has been a weak month for returns. The theory is that individuals return from their summer holidays in September ready to lock in gains as well as harvest tax losses before the tax year ends.
The second-quarter earnings season is almost over, and so far S&P500 companies have seen their profits increase by 92% on average from a year ago, according to FactSet. The actual S&P500 index has more than doubled since its March 2020 lows when the first Covid-19 case was reported outside of China.
In company news, shares of online-dating giant Match Group (NASDAQ:MTCH) jumped 7.5% after news that the company would be included in the S&P500 index. Elsewhere, Toyota (NYSE:TM) plans to spend between $9 billion and $13.5 billion on electric vehicle manufacturing facilities and battery technology.
At market close, the JSE All-share was up 0.39%, the S&P 500 was down 0.34%, and the Nasdaq was up 0.07%.
One Thing, From Paul
According to Wikipedia, Artificial intelligence (AI) is intelligence demonstrated by machines, as opposed to the natural intelligence displayed by humans or animals.
AI applications include advanced web search engines, recommendation systems (used by YouTube, Amazon and Netflix), understanding human speech (such as Apple's Siri or Amazon's Alexa), self-driving cars (Tesla), and security systems such as facial recognition and message keyword detection.
The machine learning computer systems that host AI applications often use specialised chips (developed by Nvidia) in special data centres (Amazon AWS, Microsoft Azure and Google Cloud).
This all sounds marvellous, and our portfolios are invested in most of the companies listed above. However, humans still need to use their brains to control these applications, as they do for all software.
Here's a basic example of where human oversight is absent, causing suboptimal outcomes. Popular software used by companies to screen job applicants sometimes does a terrible job because they often rely on "negative" logic to reduce the size of the applicant pool. If badly configured, a good CV may get binned.
In one case reported in a Harvard Business School study, hospitals looking for nurses set "computer programming" as a keyword because they needed employees able to enter patient data into a computer. They struggled to find suitable applicants.
Michael's Musings
What are the odds of success for a new city in the desert in the US, which will cost $400 billion? When I first saw the headline of the article below, I thought it was a PR stunt. After seeing who is involved, this one might actually get off the ground.
Marc Lore is the person behind the project. He founded Jet.com, which was bought by Walmart (NYSE:WMT) in 2016 for $3.3 billion to build out their online offering. Lore was appointed head of Walmart's e-commerce division, tasked with closing the gap on Amazon (NASDAQ:AMZN). When you read about Walmart's brilliant growth in online sales, you can thank him.
The new city project architect is Bjarke Ingels from BIG (Bjarke Ingels Group). They have designed the proposed living-quarters on Mars, and have also been hired by Toyota to create a 2 000 person town at the foot of Mount Fuji. They have also completed more practical projects like Google (NASDAQ:GOOGL)'s new headquarters in London and California.
The University of Johannesburg (UJ) brought Bjarke to Joburg in 2017 for a lecture. I managed to attend his talk; he is a very inspiring person.
Lore and Bjarke are real visionaries who get things done. These are the two ingredients for making history and changing the future of humanity. In my view, if a company isn't run by a visionary, it is only a matter of time before it becomes irrelevant.
Bright's Banter
Shares of cinema operator AMC Entertainment (NYSE:AMC) surged 8.66% after the company said more than two million people watched movies at its US theatres, and about 800 000 at its Europe and Middle East operations. This is partly thanks to Marvel's new blockbuster "Shang-Chi and the Legend of the Ten Rings" which had a record Labour Day weekend debut, grossing over $90 million in North America alone.
The second highest earning movie for the weekend was Universal Pictures' horror film "Candyman", which raked in an estimated $13.4 million. According to Comscore, Labour Day weekend is expected to bring in over $135 million in ticket sales.
The most impressive comeback has been the share price of AMC which traded as low as $2 in April 2020. It bounced to $59 and is at $47.83 now. Kudos to those who had the cojones to buy AMC at $2 and hold it through all the ups and downs.
Signing Off
Asian markets are steady this morning. Japan continues its rally while South Korea, Hong Kong, and mainland China markets are slightly lower. US futures are as flat as a pancake in early trade.
There's some market chatter that US President Joe Biden is about to announce whether he will appoint a new Fed Chair, or play it safe and ask Jerome Powell to serve a second term. Here at Vestact we are on #TeamPowell.