Market scorecard
US markets made modest gains yesterday, after an uptick in retail sales. Stocks in the financial sector stood out, particularly asset management firms. The S&P 500 briefly touched an all-time high. Year-to-date, the S&P 500 and the Nasdaq Composite have gained 18.8% and 19.4%, respectively. The Vestact model portfolio is up 25.1%, after costs.
Today is finally Fed day. Futures markets predict a 55% chance of a 50-basis-point rate cut. So now a 25-basis-point-cut might be a disappointment to the market?
In company news, Microsoft closed up 0.9% after announcing a 10% increase in its quarterly dividend and a $60 billion stock-buyback program. Meanwhile, Salesforce slipped 0.7% following a shift in its artificial intelligence strategy revealed at its annual Dreamforce conference. Lastly, JPMorgan Chase is in talks with Apple to take over a credit card portfolio that Goldman Sachs has been looking to offload.
In summary, the JSE All-share was up 1.24%, the S&P 500 rose a tiny 0.03%, and the Nasdaq added a slim 0.20%.
Our 10c worth
One thing, from Paul
Are you intelligent? If you are reading this newsletter, I'm going to give you the benefit of the doubt and say "yes", lol.
You may be smart now, but will you stay that way? In a book by Ian Deary called "Intelligence: A Very Short Introduction", these 7 factors are noted to assist favourable cognitive ageing.
(1) Having no cardiovascular or other chronic diseases. (2) Living in a pleasant environment mediated by high social class. (3) Being involved with complex and intellectually stimulating activities. (4) Possessing a flexible personality style in midlife. (5) Living with a spouse with high mental ability. (6) Maintaining a fast level of processing speed in the brain. (7) Being satisfied with life in middle age.
That's a demanding list! Perhaps you don't have to succeed at all 7 to age well? Just do your best.
Byron's beats
South Africa's grid needs some big upgrades to support the transition to renewable energy. Luckily, a Jeff Bezos-backed fund which focuses on climate and biodiversity is looking to help, according to News24.
The Global Energy Alliance for People and Planet (Geapp) has some big-name backers, which include the Rockefeller Foundation, the Ikea Foundation and the Bezos Earth Fund, and they are setting up a program along with some local partners to fix up our municipal grids.
Geapp has already set up a training facility in Komati which is preparing workers for the world of renewable energy. Rustenburg in North West and Newcastle in KwaZulu-Natal have also been earmarked for support. Sounds like a win for South Africa.
Michael's musings
On Monday, Amazon became the first of the tech titans to require all workers to return to the office five days a week. The move was a bit of a surprise to me. I had forecast that most companies, particularly those in tech, would settle on a hybrid work policy, requiring employees in the office three days a week and then allowing remote work for the other two.
Last year, Amazon moved to mandate workers to be on site three days a week. Andy Jassy, Amazon CEO, said that the advantages of being on site had only become clearer since then.
One worry about requiring workers back five days a week is that some top talent will quit and go to competitors with more flexible working requirements. A few other big organisations, like JPMorgan, Boeing and UPS, already require some departments to be in the office full-time. It will be interesting to see if any of the other big tech companies follow Amazon.
Bright's banter
When John Fieldly joined Celsius as CFO in 2012, the company was barely on the energy drink market radar. That industry is dominated by giants like Monster and Red Bull. Back then, Celsius had a market cap of just $5 million and struggled to gain mainstream traction.
Fast forward to today. Celsius has become a significant player with over $1.3 billion in annual revenue, a market share of 11% in the $19 billion energy drink space, and a valuation of $8.2 billion.
Fieldly, who became CEO in 2018, attributes Celsius' success to a mix of strategic decisions, market trends, and a bit of luck. As energy drinks evolved from being heavily caffeinated beverages to health-focused options, Celsius found its niche.
The company's sugar-free, low-calorie drinks, packed with ingredients promoting workout and energy benefits without a crash, fit perfectly with the growing consumer demand for 'better-for-you' products.
Celsius also differentiated itself with unique flavour combinations like Green Apple Cherry and Kiwi Guava. They sponsor music festivals, motorsports teams, and college athletes, and have a strong presence in gyms, convenience stores, and even fast-food chains like Dunkin' Donuts.
They're exploring new usage occasions, such as positioning Celsius as a mealtime drink or an alcohol substitute. The partnership with PepsiCo, which took an 8.5% stake in Celsius in 2022, has been instrumental in scaling distribution.
Linkfest, lap it up
A man tried to game the music industry but got arrested. He deployed thousands of bots to listen to his AI-generated music 24/7 and scoop up royalties - He managed to make $10 million.
The older we get, the more we hate change. To aid this, try new things that you won't be good at to start - I've picked up Padel, and I (Bright) suck at it.
Signing off
Chinese chip-related stocks surged after the country announced a significant breakthrough in developing homegrown chip-making equipment. Shanghai Zhangjiang High-Tech Park Development rose by the daily maximum of 10%, while Changchun UP Optotech and Sai Micro Electronics also posted strong gains.
In local company news, Outsurance reported a strong 30.3% increase in earnings, reaching R3.5 billion for the year ending in June. This impressive growth was primarily driven by a rise in gross written premiums across both its South African operations and its Australian business, Youi. This helped the company declare a special dividend of 40c per share on top of the normal dividend of 113.2c, which was raised by 29%.
US equity futures are marginally higher pre-market. The Rand is trading at around R17.57 to the US Dollar.
We'll be standing by to assess the impact of the Fed cut later today. There may be some short-term volatility, but lower interest rates should be positive for equities between now and the year-end.
Over and out.