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Market Scorecard
After 5 days of green markets, thanks to lower interest rate talk, yesterday saw US markets end slightly in the red and Asian markets open lower this morning. Markets have priced in the risk of a trade war, they have also now priced in the chances of interest rate drops. So for now, markets will probably bob around until the next catalyst comes along. If nothing major comes along in the next few weeks, like an unexpected tweet, then markets will be given a push from earnings season that kicks off in July. Nothing like seeing bottom line figures to drive a share price, higher or lower.
Yesterday the JSE All-share closed up 0.49%, the S&P 500 closed down 0.04%, and the Nasdaq closed down 0.01%.
Our 10c Worth
Byron's Beats
I hear many people loathing Naspers for pushing offshore. Both with its listing and with its investments. In truth, South Africa is a tough place to scale in the tech space because we have a small population and an even smaller middle class. The Naspers management have shareholders interests to consider, including every single South African who has exposure to listed investments on the JSE.
On that note Naspers subsidiary PayU has agreed to buy Turkish digital payments company Lyzico for R2.4bn. Remember, Naspers already has big exposure to the Turkish online retail sector and this payments system will be a good fit. As we know, the Turkish economy has also been in the doldrums after some horrible politics so this acquisition feels opportunistic.
Naspers has also been investing in SA but our dear competition commission is currently investigating their purchase of We Buy Cars. Go figure.
Michael's Musings
Just because it is on the internet, doesn't mean it is true. It is something that we all need to remind ourselves of. I think our trust of the internet comes from the days of reading newspapers, where most things that were written had to go through a fact checking process first. We learnt to trust that process. Now in the digital age, anyone with a laptop and an internet connection can put their ideas onto the net.
In many cases, the more extreme and provocative the headline and content, the more clicks a site will attract. In an age where getting clicks leads to making money, people have incentives to make content that sells. You can now have a job creating fake news - I was a Macedonian fake news writer. We see it in our industry, where either websites pop up trying to sell people get rich quick schemes through buying crypto currencies and forex trading, or where sites 'predict' which will be the next big winner or loser in the stock market.
It is all about creating hysteria of some sort to then cash in on clicks. With the US elections in 2017, sites popped up to feed the fears of those on the left and on the right. For the companies that we own, fake news is the biggest challenge to Facebook and Alphabet. Both companies are spending piles of money to try combat the problem, where AI looks like it will be able to assist in the problem. We can help though, don't share things on social media unless you know it is true. Fake news writer, who would have thought that would become a job title.
Bright's Banter
Amazon announced yesterday that it will be shutting down its restaurant food delivery services "Amazon Restaurants" on the 24th of June, hanging up the gloves, caving to fierce competition from GrubHub, DoorDash, and UberEats. This is wonderful news for the remaining competitors in the US.
Amazon Restaurants was launched in the year 2015 and eventually expanded to more than 20 US cities and London. This was to give Prime members a way to order meals outside the usual products and groceries online. Prime Now, which is the service that delivers groceries to subscribers doors is not affected.
"A small fraction of Amazon employees are affected by this decision, and many of those affected have already found new roles at Amazon," the company said in a statement. "Employees will be offered personalized support to find a new role within, or outside of, the company."
Amazon doesn't appear to have given up on food delivery just yet,. In May, my colleague Byron wrote about how the e-commerce giant bought a stake in British delivery services company Deliveroo; so its more of a numbers game.
Linkfest, Lap it Up
We all struggle to save, here is another mechanism that you can try to assist in your journey - Learn About Kakeibo: The Japanese Art Of Saving Money.
Nothing like a TV show to help boost tourism. Just ask Iceland and Croatia after Game of Thrones - Chernobyl tourism is booming
Vestact Out and About
Byron chats to Fifi on CNBC about the pros and cons of suspending a share - Was suspending Tongaat right?.
Signing off
Today there are local retail sales, given the poor GDP figure how will these numbers fare? Then in the US they have GDP figures and crude oil inventories. The Dollar is weaker against most currencies, which makes the $/R exchange rate look better at a level of $/R14.65. The JSE All-share is lower this morning.
Sent to you by Team Vestact.