Market scorecard
US stocks wavered yesterday, drifting from red to green and back again during the afternoon. The S&P 500 and Nasdaq managed to end the day in positive territory due to a last hour surge. The market leaders were Nvidia (+3.1%), Eli Lilly (+3.3%) and Uber (+8.5%)
In company news, Amazon fell 4.0% in after-hours trade as its Q4 results hit the wires and AWS sales and guidance looked a little tepid. Philip Morris International rose 10.9% to an all-time high after the tobacco company forecast higher demand for its Zyn pouches (lol, yuck). Finally, military aircraft carrier-maker Huntington Ingalls Industries fell 18.3% after missing estimates. That must be a complicated business!
In summary, the JSE All-share closed up 0.67%, the S&P 500 rose 0.36%, and the Nasdaq closed 0.51% higher. Not bad, we'll take it.
Our 10c worth
Michael's musings
Last week Tesla released some underwhelming numbers. For the whole of 2024, revenue rose just 1% to $97.7 billion. For the fourth quarter, Tesla reported revenue of $25.7 billion, only 2% higher than the same quarter the year before. The automotive division went backwards by 8%. All the heavy lifting was done by the energy generation and storage division, which grew by 113%, and services, which grew by 31%.
Despite those disappointing numbers, Tesla shares closed higher on the day. Why? On the earnings call Tesla CEO Elon Musk said that paid, unsupervised FSD (Full Self-Driving) is coming to Austin, Texas, in June. Unsupervised FSD is expected to be available throughout the US by the end of 2025 and the rest of the world by the end of 2026. If this happens, Tesla's revenue and profit will soar.
The beauty of the FSD functionality is that it is just a software update to all the Teslas already on the road. Almost overnight Tesla can open a new business unit that serves millions of customers. Given that FSD is software, the profit margins are huge too.
We shouldn't get too ahead of ourselves because FSD technology has been 'just a year or two away' for the last decade. Elon has a track record of overpromising and underdelivering when it comes to new products. Having said that, he and the Tesla team are amazing engineers who almost single-handedly brought viable EVs to the world.
Where to from here? Tesla remains a very high-risk holding. You own it today for the future potential from FSD, and maybe their robotics and renewables divisions. Shareholders trust Elon Musk to create amazing things at scale. Proceed with caution.
One thing, from Paul
I'm passing along a useful blog post today. It's by Ryan Holiday and the title is Here's how I'm preparing for the next four years.
Under Trump 2.0 we are going to get bombarded every day by news that's designed to rile us up. We've already seen how the last few weeks have unfolded. We live in the age of culture wars, virtue signalling and raw politics.
Holiday's reminders to himself include these points: (1) I'm reading old books, not watching the news. (2) I'm treating people well. (3) I'm not always having an opinion. (4) I'm focusing on the things that don't change. (5) I'm refusing to become cynical.
Linkfest, lap it up
The diamond industry is in turmoil. De Beers CEO compares lab-grown diamonds to having a photocopy of the Mona Lisa on your wall - Anglo plans to divest from De Beers by the end of the year.
Jaguar recently rebranded. The car manufacturer erased its past, in the hope of building a new future - Bold move or costly mistake?
Signing off
Asian markets are in the green this morning, other than in Japan. India's central bank cut their key interest rate for the first time since 2020. This was RBI Governor Sanjay Malhotra's first policy meeting after he took charge in December.
In local market news, steel-maker ArcelorMittal published their final results for the period to December 2024 and they read like a horror story, with gargantuan losses on revenue of just R38.6 billion. Worse still, no meaningful improvement in the steel market is anticipated and they are begging for government support. Good luck with that.
US equity futures are featureless so far, and the ZAR-USD exchange rate is little changed at around the R18.50 mark.
Later today we'll have US non-farm payroll data out, which is always a market mover. Economists expect an addition of 170 000 jobs in January, and the unemployment rate steady at 4.1%, according to consensus estimates compiled by Bloomberg. A slightly softer number will be market positive.
Have a good Friday and an epic weekend.