Market scorecard
US markets finished in the red again yesterday, closing out their toughest month of the year so far. The broader S&P 500 dipped 4.2% in April, a disappointing slump after a strong showing in the first-quarter. We are still 5.81% higher in 2024.
In company news, Amazon rose 2.3% after it reported first-quarter profits that were well ahead of expectations. Eli Lilly surged 6% on Tuesday after the manufacturer of popular weight-loss drugs raised its full-year profit forecast. Stryker also delivered solid results and raised its full-year guidance, but the share price went down. Lastly, Starbucks tumbled by a shocking 15.9% after the coffee maker experienced stalled growth in China.
On Tuesday, the JSE All-share closed down 0.55%, and yesterday, the S&P 500 fell 0.34%, and the Nasdaq was 0.33% lower.
Our 10c worth
Bright's banter
Alphabet (the holding company of Google) delivered very good first-quarter numbers last week and announced its first cash dividend. Revenue jumped 15% year-on-year to $80.5 billion, even better than the previous quarter's 13.5% rise.
Ad revenue, a key revenue driver, rose by 13% to $61.7 billion of which $46.2 billion was from Search. The Google Cloud division saw a 29% increase in sales to $9.6 billion. YouTube's advertising revenue grew by 21%, to $8.1 billion. Those are all amazing outcomes!
Cost control measures contributed to improved margins during this period, and additional job cuts were announced in certain divisions. The company remains focused on investments in AI programs, although specifics about the impact on financials were not extensively discussed during the earnings call.
Competition in the AI space has intensified, with Google facing off against rivals like Microsoft and startups like OpenAI. The company has announced investments in new data centres and chips to stay in the game.
While challenges remain, including a recent hiccup in the rollout of certain AI features on Gemini, Alphabet shares have shown great resilience, up 18.6% year-to-date. The company's core business continues to perform strongly.
Alphabet plans to maintain its dividend payments and has authorised $70 billion in share buybacks. These moves underscore the company's confidence in its financial position and long-term growth prospects. Stay long Alphabet, good times lie ahead.
One thing, from Paul
Vestact aims to deliver returns of around 10% per annum in New York, in US dollars. We picked that number as our target because that's what the S&P 500 has done over the last two decades.
Here's Ben Carlson: "From 1994 to 2023, there was the dot-com bubble, a 50% crash, 9-11, a housing bubble, the Great Financial Crisis (which came with another 50% plus crash), a handful of wars, 3 recessions and a pandemic. The stock market was up 10% per year."
As Michael noted recently, the Vestact model portfolio rose by more than 16% per year in the last 10 years, trouncing the average gains of the S&P 500.
Please note that some years were fine, some were bad and others were spectacular. Finance blogger Sam Ro reminds us "Expecting average returns doesn't mean you should expect average years".
The legendary Italian football player and coach Gennaro Gatuso (pictured below) expressed that even more colourfully.
Michael's musings
Ryan Reynolds and Rob McElhenney have been very busy. Their Welsh Football side, Wrexham, is doing well, earning two league promotion in as many years, so they are now buying part of a Mexican football team. The duo have bought an undisclosed, but sizeable stake in Club Necaxa. Unlike Wrexham, Necaxa is in the top-flight league in Mexico. Part of the deal involves a 5% sale of Wrexham to the current consortium of Necaxa owners, which include big names like Eva Longoria, Mesut Ozil, and Kate Upton.
Reynolds is building a sporting empire for himself, as he owns stakes in ice hockey, F1, and football teams. His timing looks good with the value of sporting franchises climbing quickly. For example, the NBA is currently in talks to renew broadcasting rights for the league. It looks like the NBA will be able to sell its broadcasting rights for at least double the value of the current deal. Amazon is in line to buy some of the matches to add it its streaming package.
Sport is entertainment, and Reynolds knows and understands entertaining people. I'm not much of a football fan, but thanks to Reynolds' brilliance, I now keep tabs on Wrexham's performance, and recently even caught myself looking around its online shop for club supporters.
Linkfest, lap it up
Amazon created a TV series based on the Fallout video game. The Jonathan Nolan series looks amazing - Fallout reaches 5 million players in one day.
Vaping is addictive. Young adults who started as teens still can't shake the habit - They're hooked.
Signing off
Asian markets are mostly higher this morning. Benchmarks gained in Australia, India, Hong Kong, and Japan, while falling in South Korea. Mainland Chinese markets are shut for Labour Day which started on the 1st and ends on the 3rd of May for some odd reason.
Locally, MTN Nigeria faced a setback in the first quarter, reporting a loss as its subscriber base declined by 2 million quarter-on-quarter. The company attributed this to a challenging operating landscape marked by rising inflation and currency depreciation affecting the Naira.
US equity futures are in the green pre-market. The Rand is trading at around R18.57 to the US Dollar.
Today, Apple and Amgen will report their quarterly numbers, after the closing bell.
It's almost the weekend, hang in there.