Xi Wrong

Market Scorecard

US markets closed lower again on Tuesday as traders took some risk off the table ahead of a speech by Fed Chair Jerome Powell. He is set to speak at the Brookings Institution later today, and this will be his last public utterance before the next rate-setting announcement on 14 December. Hopefully he's not too hawkish or the market could have a sense of humour failure.

In company news, CrowdStrike (NASDAQ:CRWD) fell as much as 19% after hours after the cybersecurity company issued a revenue outlook that fell short of estimates. Elsewhere, entertainment company AMC Networks (NASDAQ:AMCX) dropped by 5.3% as its CEO Christina Spade stepped down from the role after less than three months. Lastly, HSBC rose 4.1% because the bank agreed to sell its Canadian arm to the Royal Bank of Canada for about $10 billion.

In summary, the JSE All-share was down 0.33%, the S&P 500 lost 0.15%, and the Nasdaq closed 0.59% lower.

One Thing, From Paul

There are public protests in China over working conditions and their absurd zero-Covid lockdowns. Some rioters have even openly called for Xi Jinping to resign. It's not clear if these actions will spread or fizzle out, or prompt a fierce reaction from the communists in Beijing.

Noah Smith has an interesting blog post up suggesting that authoritarian regimes are on the back foot everywhere, whereas liberal democracies are doing well. The US economy is strong and voters behaved well during their midterm elections. Europe is managing its energy crisis satisfactorily and is more united than ever. India is growing fast. Brazil is a little less crazy than usual. Elsewhere, life continues.

Smith: "China is not the only authoritarian power that seems to be stumbling badly lately. Russia is losing a war to an opponent a quarter of its size, while Iran is suffering its own sustained massive protests for women's rights. The fad of autocratic strongman leaders appears to be going out of style; while in liberal countries this just means they lose elections, in authoritarian countries the people are stuck with their Mussolini knock-offs".

We prefer pro-business conditions, the rule of law and governments that stay out of the private lives of their citizens. So, from a stock market perspective, these are encouraging developments.

Byron's Beats

We get fed a deluge of information these days, so it has become a skill to filter out the rubbish. I used to get a lot of information from Twitter but lately you mostly just see memes and videos there. I have found that email subscriptions are the best source of quality information. Here is my updated list of market-focused news updates.

Tim Cohen's 'After The Bell' is a favourite. That one comes with extra article links from The Daily Maverick.

Finimize, Bloomberg, Axios, Quartz, Business Insider, Statista and Visual Capitalist all have great daily newsletters. I'm a big fan of individual blogs by Matt Levine, Eddy Elfenbein, Josh Brown, Michael Batnick, Ben Carlson, Charlie Bilello and Morgan Housel.

For local updates, I enjoy The Ghost Daily Mail. FNB Securities and Anchor Capital also do nice daily summaries. I get Google news updates on all the individual stocks we own.

And to save the best for last, of course I read the Vestact Newsletter religiously every day (whilst doing the final edit).

Michael's Musings

Shoprite (JO:SHPJ) has been one of the leading innovators amongst South Africa's large corporations. They have been willing to experiment, with their biggest success so far being their online delivery service Sixty60. As a result, they have captured market share from competitors and shareholders have been rewarded, with the stock up 26% in a very tough year for most equities.

In their most recent set of numbers, they reported that they are spending up to R100 million a month on diesel to run generators at their different sites. Now they are quickening their move to solar power, both to reduce costs and to have reliable electricity during operating times.

Another way to reduce diesel costs is to transition their fleet of trucks to electric power. The idea is to charge them with solar panels installed on their distribution centres. If this works, it will be a good way to reduce emissions and operating costs.

Bright's Banter

Balenciaga pulled ads promoting its "objects" holiday drop. The company received backlash for shooting child models alongside their bondage-style bear handbags. In the background of the one advertisement there was an image of a child-related court document. It seems that Balenciaga either failed to assess the content before going ahead with the campaign, or intended to provoke controversy.

The Kering-owned fashion house released a mea culpa in an Instagram post on Monday "We strongly condemn child abuse, it was never our intent to include it in the narrative".

Kim Kardashian is the second major celebrity to come out publicly and state that she's "re-evaluating" her working relationship with Balanciaga after the distasteful ads. This is after her ex-husband Kanye "Ye" West called out Balenciaga and asked, "why are all the celebs working with the brand so quiet, are they being controlled?"

Balenciaga is now condemning the controversial campaign, saying "Our plush bags and gift collection should have not been featured with children." This can't be good for Kering (EPA:PRTP) considering that we're close to holiday season and this is when most of the profits are made.

Signing Off

Asian markets are choppy this morning, with stocks bouncing between losses and gains. Equities benchmarks in Hong Kong, mainland China, and South Korea moved toward small gains, while Japan was in the red following data showing a sharper-than-expected decrease in industrial production.

US equity futures edged higher in early trade, ahead of that Powell speech about the economy and the labour market. The Rand is holding strong at around R16.95 to the greenback.

Have a solid day. Live long and prosper.

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