Market Scorecard
US stocks fluctuated between gains and losses on Friday, after a stronger-than-expected jobs report. The November employment data showed that the US economy added 263 000 jobs and the unemployment rate remained below 3.7%. Normally, strong economic data is good news for investors, but this year, a tight labour market is seen as further incentive for the Fed to raise rates to slow down the economy.
In company news, the US Federal Trade Commission filed a lawsuit seeking to block Microsoft (NASDAQ:MSFT)'s $69 billion acquisition of gaming company Activision Blizzard (NASDAQ:ATVI). Microsoft says it will fight. Locally, Brait has cancelled the listing of Premier Group, citing an environment that isn't conducive to a successful public offering.
On Friday, the JSE All-share was down 0.93%, the S&P 500 was 0.12% lower, and the Nasdaq slipped a mere 0.18%.
One Thing, From Paul
Lord Keynes wrote that "anything we can actually do we can afford". His point was about fiscal policy: if a society wants to achieve an objective, then deficit spending is not necessarily a bad idea.
Here in South Africa, the opposite seems to be true. Our government can't actually do anything properly, so it's not worth spending the money.
Well, that's not entirely fair, I'd say that social grants (actual cash transfers) have a good effect, since they put money in the pockets of the poor, to use as they see fit.
Education, healthcare, infrastructure management, policing, air travel and postal delivery - those things don't work in this country, and it's not due to a shortage of money. Government departments and state-owned enterprises are overstaffed and underwhelming. They exist mostly to provide jobs for the people who work there, not to actually serve the nation. The idea of privatisation is unthinkable to the ideologues in power.
This is why the ANC's idea to create a National Health Service is so annoying. Public hospitals are a mess. How about fixing those first? How can you dream up a centralised scheme based on new taxes, the coercion of doctors and the stealing of private medical aid members savings?
It makes zero sense. It's just political posturing, I should make a follow-up episode of the Blunders about this issue, don't you think?
Byron's Beats
The first Tesla Semi trucks have been delivered to Pepsi. Other customers who have ordered them, Walmart (NYSE:WMT), Meijer and JB Hunt (NASDAQ:JBHT) are still waiting patiently. Elon Musk thinks they can produce 50 000 trucks in 2024. That would add about $10 billion worth of revenue, around 6% of 2024's estimated sales according to Loup.
Here are some specs of the truck if you are an EV enthusiast. Their range is 500 miles (800km). The towing capacity is 82 000 pounds which is the legal maximum in the US. Acceleration is 0 to 60 mph with a full load in 20 seconds. You can charge up to 70% in 30 minutes and the life expectancy is 1 million miles. The autopilot is a huge help to drivers travelling long distances and is a lot safer.
Sounds like the future of trucking to me!
Michael's Musings
As mentioned above, strong US labour market data resulted in stock markets moving lower. We are back to a situation of good news being bad for share prices.
There are currently more job openings in the US than there are people looking for jobs. This means that employers need to up salaries to attract new hires. Higher salaries can fuel higher inflation, which the Fed is trying to mute. So, a strong labour market is seen as bad because it pushes the Fed to increase interest rates further.
In the short term this strength might be seen as a bad thing for stocks. In the long term, having a booming job market is very good for the economy and future profits of corporations.
Bright's Banter
Airbnb (NASDAQ:ABNB) is branching out into sublets to expand its business in multi-family buildings, where owners shun short-term rentals. The home-sharing company will offer a new listing service for rental units with some of the biggest US landlords and property managers, but it will only include apartments where short-term sublets are allowed.
The service will feature 175 buildings managed by Equity Residential (NYSE:EQR), Greystar Real Estate Partners, and ten other companies. Tenants who sign a lease can sublet their units for a fixed number of days a year. Airbnb aims to attract big landlords with a 20% cut of its rental sales in most cases.
Airbnb is making a big bet that if these sublets are financially worthwhile and the model works, more landlords will want in on the action. This has the potential to open up a largely untapped market in multi-family buildings which only accounts for 14% of Airbnb listings currently.
Signing Off
Asian markets are in positive territory this morning and the MSCI Asia-Pacific index is headed for its highest level since August. Provincial administrators in Shanghai and Hangzhou (Zhejiang) eased some Covid lockdowns after protests. Bourses in Hong Kong and mainland China led the gains, and Japan has edged into the green.
US equity futures are marginally lower in early trade. The Rand is trading at around R17.29 to the greenback, regaining some poise after Cyril Ramaphosa said he would battle on in office.
Have a good week. It's almost holiday time, just keep going.