Market scorecard
US markets continued to climb yesterday, extending August's rally as traders remained optimistic about potential Fed interest rate cuts. Technology stocks led the charge, and all major sectors in the S&P 500 were in the green. The index posted gains for the eighth consecutive day, marking its longest winning streak since November.
In company developments, chipmaker AMD rose 4.5% on the news that it will acquire server manufacturer ZT Systems for $4.9 billion. Palo Alto Networks ticked 1.9% higher after-hours thanks to pleasing results. By contrast, Estee Lauder had a tough day yesterday, down 2.2% after pasty quarterly numbers and a blotchy forecast, another setback for the cosmetics giant which has been in turnaround mode for a while.
At the end of the day, the JSE All-share closed up 1.18%, the S&P 500 rose 0.97%, and the Nasdaq was 1.39% higher. Good stuff.
Our 10c worth
One thing, from Paul
The world's total net wealth was around $454 trillion in 2023. That sounds like a big number, but it's not really. It is only five times the world income (GDP), which was $105 trillion in the same year. These numbers come from a recent blog post by Noah Smith.
Global wealth is made up of equities, bonds, property and household goods, all of which are tradable in markets, so you can put a value to them. That's all good and well, but in a financial crisis like the ones in 2008-09 or 2020, the prices of most assets are hammered. So wealth can disappear fast. In those crashes, many rich people overextended themselves and ended up poor. They go from rags to riches and back to rags.
The wealth of rich people can't solve the world's problems. For instance, the aggregate wealth of America's billionaires was about $5.2 trillion in 2023. But US federal government spending in 2023 was more than that, at $6.4 trillion.
Smith: "Confiscating every last penny from Jeff Bezos, Elon Musk, and all the other billionaires wouldn't fund the US government for one year. And of course you could only do it once."
Byron's beats
Good life advice does not need to be long-winded. In fact, the simpler the better. I thoroughly enjoyed the below quote from author Brad Stulberg.
The older I get the more I realise that patience and consistency are the key to building something meaningful. Be it a business, a good reputation, relationships, a skill, fitness, a newsletter or an equity portfolio. Most great things are built over time.
Michael's musings
Last week, Bill Ackman's Pershing Square announced that they had accumulated 3 million Nike shares. That sounds like a lot, but it is only 0.2% of Nike's outstanding stock. As a result, Nike's shares have risen 10% over the last week.
After seeing Starbucks' share price pop on the announcement of its new CEO, the market seems to be hoping something similar could happen at the shoemaker. Nike is going through a transition, trying to address a variety of problems. Its shares are still down 20% this year, even with the recent 10% jump.
I'm not sure if Ackman owning 0.2% of Nike is going to change much at the company, but more pressure on management to implement a turnaround strategy is a good thing. Nike has a great brand and cash in the bank. There is no reason it can't start a new chapter of growth from here.
Bright's banter
Ferrari had a solid second quarter in 2024, with revenues climbing 16% to EUR1.7 billion and net profits reaching EUR413 million. This sent its share price up over 5% on the day of release.
The luxury carmaker has raised its full-year forecast, thanks to a spike in customised orders and strong future sales, with its order book looking strong through 2026. This quarter also marked the first deliveries of the SF90 XX Spider, a special series hybrid, and Ferrari revealed plans to launch its first electric vehicle by late 2025.
Ferrari shipped 3 484 units in Q2, marking a 2.7% year-on-year increase. Notable contributors to sales included the Ferrari Purosangue, the Roma Spider, and 296 GTS.
Ferrari's adjusted profits rose by 14% to EUR669 million, surpassing the EUR650 million consensus forecast. Part of the revenue beat is thanks to sales of the exclusive EUR2 million Daytona SP3 and the limited-edition EUR5 million 499P Modificata.
CEO Benedetto Vigna highlighted that a richer product mix and heightened demand for personalisations fuelled the double-digit rise in revenues and profitability. In contrast, Porsche recently slashed its sales and profit forecasts, citing supply chain issues.
Linkfest, lap it up
The global move to renewable energy has been lumpy. China installed a monster 217 gigawatts of solar last year - China added more solar power last year than America's cumulative total.
Online sports betting hurts consumers. Lawmakers are debating the issue - Gambling will ruin your finances.
Signing off
Asian markets are mostly higher this morning. Equity benchmarks rose in India, Japan, South Korea, and Taiwan, while they fell slightly in Hong Kong and mainland China.
In local company news, ABSA is on the hunt for a new CEO following Arrie Rautenbach's early retirement, making him the sixth CEO to step down since 2019. The board has appointed Charles Russon as interim CEO, while Yasmin Masithela will temporarily lead the investment banking division. With this transition, ABSA is just one CEO away from reaching its "righteous eight."
US equity futures are higher pre-market, which is promising. The Rand is trading at around R17.73 to the US Dollar.
Today is another day for you on planet Earth. If you are alive, be grateful.