Market scorecard
Wow, what a week. Monday started with both the S&P 500 and the Nasdaq falling over 3%, their worst single-day performance in a few years. The rest of the week was rather volatile as the market processed new economic and company news. At the end of the five day period, the S&P 500 and the Nasdaq were only down 0.1% and 0.2%, respectively. In other words, much ado about nothing.
In corporate news, salad seller Sweetgreen (NYSE:SG) crisped up by 33.33% after a strong earnings report coupled with forecasts of higher-than-expected sales in 2024. Elsewhere, Temu's founder Colin Huang is now China's richest man. Bloomberg ranks him as the 25th richest person in the world with a net worth of $49 billion. Huang is a former Google (NASDAQ:GOOGL) engineer and only started Temu in 2022!
On Thursday, the JSE All-share closed up 0.47%. On Friday the S&P 500 closed higher by 0.47%, and the Nasdaq rose by 0.51%.
One thing, from Paul
We first suggested that investors should buy the shares of weight-loss drug maker Eli Lilly (NYSE:LLY) in this video clip published two years ago, you can watch it here, on YouTube.
In that presentation, I made the argument that you should go for Eli Lilly, not its main competitor, Denmark-based Novo Nordisk (CSE:NOVOb). That was despite the fact that Novo's Ozempic was more widely available than Lilly's only weight loss product at the time, called Mounjaro. In general, we prefer US companies over European ones.
In recent weeks, Novo Nordisk has gone backwards, due to errors in production and permitting, despite having larger current sales. By contrast, Eli Lilly is marching ahead. They have ironed out supply chain problems, and handled their relations with the FDA very well.
On Wednesday night, Lilly published results for the second quarter that were very pleasing. Mounjaro (diabetes medication) sales came in at $3.09 billion, versus expectations of just $2.4 billion. Zepbound (weight-loss medication) sales totalled $1.24 billion in the second quarter, less than a year after it hit the market, while Wall Street was only expecting $819 million.
In developed markets there is strong demand for these drugs, and people are paying cash for them, not even waiting for medical aids to cover the cost. Eli Lilly also have a wide array of other drugs on sale, and new, improved products for weight loss in the pipeline, including orally-ingested orforglipron.
Eli Lilly is poised to generate an additional $7 billion in revenue in 2025. They have opened a second major Zepbound facility in North Carolina, and launched a Kwikpen (which holds 4 doses and is not subject to the same manufacturing bottlenecks as auto-injectors).
The Lilly share price is up 15.2% since the results. Over 5 years, it's up 683%. In the same time Novo is up "only" 430%.
We are very happy with our stock-picking process on this one. Eli Lilly is still a strong buy.
Byron's beats
Sometimes I like to travel to remote places. But I also like to stay on top of my work, which requires access to the internet. I appreciate that it's good to switch off sometimes, but at this point in my life, I feel more relaxed when my inbox is empty. Don't judge.
I am currently researching Starlink products. The service is banned in South Africa for reasons that make my blood boil but there are ways around that. If any of our readers have some good advice from real life experiences, please send me a message.
The current minister of communications is Solly Malatsi from the DA. He is only 38 years old and surely an open thinker (because of his age, not because of his party). If anyone knows him, please tell him to let Starlink operate freely in this country. I can assure you, Facebook (NASDAQ:META), Google (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) do not have the right empowerment credentials and they operate just fine here.
Michael's musings
I spent 2 hours on Thursday trying to find something interesting to write about for today. I wasn't successful, so instead, I'll let Morgan Housel do the talking for me. Given the market volatility at the moment, and the fear that comes with it, his tweet from 2017 is still relevant today.
Market volatility is a feature of the market, not a bug. Having patience is a super-power when it comes to investing. As Housel says, 'Shut up and wait'.
Signing off
Asian markets are mostly higher this morning with Japan, Hong Kong, South Korea and Taiwan all green. The market in Shanghai is marginally below par.
A US CPI read on Wednesday will be very important for trader sentiment in the week ahead. There are also some important company results which will give us further insights into the state of the US consumer. Home Depot (NYSE:HD) is out on Tuesday and Walmart (NYSE:WMT) on Thursday.
Last week Thursday, MTN (JO:MTNJ) ended the day 10.5% higher, even though the group expects to post a large loss next week due to currency fluctuations. The market liked the news of the sale of smaller assets and the renegotiation of tower rental agreements in Nigeria, to better accommodate the rapid depreciation of the Naira.
US futures are very marginally higher at the moment, and the Rand is at $/R18.31.
Have a good week.