Market scorecard
Markets were messy on Friday. The US unemployment rate climbed from 4.1% to 4.2%, and historic jobs data from May to June was revised downwards significantly, by a total of 258 000. All of a sudden, what seemed like a strong jobs market is looking rather shaky.
Trump didn't like the jobs numbers, so he fired the Bureau of Labor Statistics head and accused her of manipulating them for political reasons. The BLS said the lumpy data adjustments were due to fewer staff (budget cuts) and access to less data (budget cuts). Now a non-partisan entity has been dragged into the mud, the sort of thing that happens in Turkey, not the USA.
In company news, Reddit jumped 17.5% after reporting an increase of 21% in daily active users. Elsewhere, Amazon dropped 8.3% because its AWS cloud hosting unit only grew by 18%, less than the stellar numbers reported by main competitors Google and Microsoft. Finally, Coinbase fell 16.7% due to lower-than-expected revenue growth from crypto trading.
On Friday, the JSE All-share fell 0.79%, the S&P 500 flopped by 1.60%, and the Nasdaq ended 2.24% lower. Oof, that stinks.
Our 10c worth
Michael's musings
Last week, online travel company Booking Holdings announced strong revenue and profit numbers. The company said that room nights sold grew 8% year-over-year, gross bookings rose 13%, airline tickets were up 44%, and its revenue rose 16%.
The travel industry in the US has seen some headwinds this year as some visitors, particularly Canadians, are boycotting them for political reasons. For Booking, those headwinds have been offset by market share growth in Europe as Airbnb loses popularity there.
One big advantage for Booking is that they offer an integrated travel option, where you can arrange your whole trip through the company - airline tickets, rental cars, accommodation, and sightseeing tours. Being able to encourage users to use the website for more than just accommodation presents a good growth opportunity.
Locking in users and building brand loyalty is still a central goal. Booking spent 31% of its revenue last quarter on advertising, which is huge. The hope is that once this industry matures, and users are more loyal, this marketing spend can drop which should unlock further profits for shareholders.
We like the travel industry, and owning the biggest player is the way to go.
One thing, from Paul
Daniel Kahneman was the father of behavioural economics, for which he was awarded the 2002 Nobel Memorial Prize in Economic Sciences.
His work on the psychology of judgment and decision-making challenged the prevailing assumption of modern economic theory, which was that humans were rational. He showed that people actually have many blind spots and unfortunate tendencies, most of which were evolutionarily acquired.
If you want to learn more about his work, look out for the book 'Thinking, Fast and Slow' published in 2011.
I read a quote of his recently, which I thought was rather relevant to the business of investing. He said, "delay your intuition. Most people form an impression in seconds and spend the rest of their time confirming it. It's best to wait for all the information before letting your intuition speak."
This is valid for both stock purchases and stock sales. Sometimes a new company story sounds very compelling, but you need to give it time to see if it the business has a durable advantage. Conversely, don't be too quick to condemn a current holding to the dustbin. Give the company a chance to turn it around.
Byron's beats
Tesla may be under pressure trying to sell cars but they certainly have a lot of other things on the go. Self driving cars, robots, renewable energy and robotaxis are well-publicised but did you know that they recently opened a diner in West Hollywood?
Take a look at the cool video. Whilst getting your car charged you can pop into the futuristic looking diner and enjoy a good burger and milkshake. You can even get popcorn served to you by an Optimus robot. That's pretty cool.
It is not going to move the needle but it is a cool marketing gimmick.
Linkfest, lap it up
AI has been driving traffic away from news sites. News organisations are shifting to selling preferred access to their archives - Amazon to pay at least $20 million a year in AI content deal with New York Times.
Sometimes to solve a problem you need to think outside the box. AI works well because it doesn't even know there is a box - Some bizarre experiments get invented by AI algorithms, but they seem to work.
Signing off
The MSCI Asia Pacific Index is up 0.1% after starting the session in the red. BYD, the fast growing electric car maker saw its shares fall 4% after reporting only very slight revenue growth. Its shares are now down 28% from a recent high in May.
In local business news, the Sunday Times reported that the South African Breweries unit within AB Inbev was battling, but that ciders and sweet flavoured beers were growing fast and taking market share from other alcoholic categories. Total beer sales during the second quarter of the year fell 1.9% year on year.
US futures are pointing higher this morning as traders are now betting on a September interest rate cut from the Fed, some even think a 50 basis point cut is in play after the weak jobs data.
This week, we will see more earnings reports from big players like Amgen, Eli Lilly, Disney, Shopify and McDonald's. Today, high flying AI-company, Palantir, and South American e-commerce giant MercadoLibre report. The Rand is currently at $/R18.05.
Have a great week.