Market scorecard
US markets got punched in the face on Thursday, for reasons that are not entirely clear. Muted inflation numbers were released, and the initial reaction was positive, but stocks fell as traders rotated out of large cap stocks to smaller players in the S&P 500. The small-cap Russell 2000 index surged 3.6%, its best day in 2024.
The "Magnificent Seven" fell by the most since July 2023, with Nvidia down 5.6% and Meta dropping 4.1%. However, the S&P 500 and Nasdaq are still up 17% and 22% for the year, and we have to take the rough with the smooth.
US inflation cooled significantly in June, marking the slowest pace since 2021. This was largely due to a long-awaited slowdown in housing costs, providing a strong indication that the Federal Reserve might cut rates soon. Sticky inflation is coming unglued.
In company news, Tesla sank 8%, snapping an 11-session winning streak on news that its robotaxi unveiling will be delayed to October. Elsewhere, Delta Air Lines fell 4% after the company reported a surprising drop in profit for the second quarter, despite record levels of air travel.
In summary, the JSE All-share closed up 0.81%, but the S&P 500 flopped by 0.88%, and the Nasdaq got thrashed, ending 1.95% lower.
Our 10c worth
One thing, from Paul
According to George Mack: "Normal behaviour is forgotten. Only the weird behaviour survives. Nobody tells stories of when you did the expected".
He suggests that unconventional, quirky conduct may cost you in the short term, but you'll be remembered fondly for your eccentricities and irrational behaviour.
Perhaps that's why I like making video clips that contain bad language and strong views about current affairs? Life is complicated, but a good rant is fun to watch. Here's the latest one: Blunders - Fixing the vote.
Michael's musings
On Wednesday, Tim Cohen wrote a great piece about South Africa's unemployment rate. You can read it here. Officially, we have an unemployment rate of 33%. If you include discouraged work seekers (you must be looking for a job to be officially unemployed), then the rate jumps to 42%.
Based on those statistics, almost 1 in 2 South Africans are jobless. Cohen argues that the real rate is much much lower because Stats SA is undercounting the informal economy. Here is one fascinating point he raises:
"A recent survey by a group called African Response found that among people who classified themselves as unemployed and looking for work, 41% are earning up to R15 000 a month through income-generating activities such as baking, building and hairdressing - the 'side hustle'."
I don't know what our real rate of unemployment is, but it's not 42%. If it were that high there would be riots on the streets. South Africans are resilient, hardworking and entrepreneurial. These activities don't show up on official surveys, because hustlers run cash-based micro-businesses, and they don't like paying taxes.
Bright's banter
Athletic Brewing, the top nonalcoholic beer brand in the US, has closed a new financing round valuing the company at around $800 million, roughly doubling its valuation from two years ago. Growth investment firm General Atlantic led the $50 million equity-financing round.
Athletic was co-founded in 2017 by Bill Shufelt, a former trader at hedge fund Point72, and is the leading nonalcoholic beer brand by sales in US grocery stores, surpassing booze-free products from Heineken and Budweiser.
The new capital will help Athletic expand, including the acquisition of a third US brewing facility to double its capacity. The company also launched its biggest marketing campaign, "Ask For Athletic." Athletic Brewing's products include Free Wave Hazy IPA and Upside Dawn Golden, with a brewing process that keeps alcohol levels extremely low.
The nonalcoholic beer market is growing as more Americans, especially younger ones, cut back on alcohol consumption. However, overall beer sales are declining due to shifting consumer tastes.
Keurig Dr Pepper invested over $50 million in Athletic in 2022, valuing the company at about $400 million back then. Other notable backers include JJ Watt, David Chang, and Lance Armstrong. Some of those names are a little sus. As in, suspect.
Athletic exceeded $90 million in sales last year, helped by increased shelf space in stores. As part of its investment, General Atlantic will secure a seat on Athletic's board and participate in a secondary offering, bringing its total funding in Athletic to over $50 million.
Linkfest, lap it up
Before Kyalami, there was the Lord Howe race track in Kelvin. Sandton's forgotten circuit - Grand prix racing in Johannesburg in the 1930s.
Preparation for life on Mars is ongoing. Three people stayed in a 157 square metre enclosure for a year - NASA crew emerges from test habitat.
Signing off
Asian markets are mostly lower this morning with the MSCI Asia Pacific index down as much as 3.2%. Benchmarks in Hong Kong and India rose, while those in mainland China, Japan, South Korea, and Taiwan fell.
In local company news, Bytes reported strong numbers, with revenue and profits up double digits. However, the market reacted negatively to their profit outlook, and shares slumped 6.3%. Elsewhere, Vukile reported that its BEE shareholder of 11 years, Encha Properties, sold its entire stake valued at around R820 million. Who could be their new BEE partner?
The Rand is currently at around R17.95 to the US Dollar.
US equity futures are flat again pre-market. A reversal of yesterday's moves would be good. Earnings season kicks off today with reports from JP Morgan, Wells Fargo and Citigroup.
Have a great weekend. We'll be watching the sport on TV, including cycling, tennis, and the final of the Euros between England and Spain on Sunday.