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Market Scorecard
The main talking point on Bloomberg and Twitter at the moment, are yesterday's explosions in the Persian Gulf. The US have released footage of what they claim proves Iran was behind the attacks on the oil tankers. This is the second set of attacks on tankers in the Gulf this year and only serves to increase the tensions between the US and Iran. On the news of the attacks yesterday, oil immediately shot higher by 3%.
Regardless of who is responsible, it results in higher oil prices, which is not good for South African inflation. It would be disappointing if our rate cut is delayed because of geopolitical events. For now, that does not look to be the case, just as long as the US and Iran don't escalate matters.
Yesterday the JSE All-share closed down 0.02%, the S&P 500 closed up 0.41%, and the Nasdaq closed up 0.57%.
Our 10c Worth
Byron's Beats
When you create good shows or movies they become brands on their own. Look at how Disney has leveraged off its characters to make theme parks, games, toys and many other products. Did you know that Disney makes 34% of its revenues from Parks and Resorts alone? That is over $20bn a year. They also make $4.6bn of their revenues from Consumer Products and Interactive Media. That equates to profits of $1.6bn.
Why am I telling you this? Because Netflix Takes a Step Toward Multimedia Empire With New Video Games. According to the article, the game Stranger Things 3 will be coming out in July. Stranger Things is one of Netflix's most successful series, especially amongst teenagers so I can imagine the game will do very well.
As original Netflix shows hit cult-like statuses, Netflix can leverage off these brands. Just another revenue stream for the streaming machine.
Michael's Musings
Keeping track of trends helps us make better informed decisions when it comes to investing. One of the areas that we are invested in, is the internet - Mary Meeker's most important trends on the internet.
One of the key trends is that between 2017 and 2019, more than half the planet finally has access to the internet. That means there is still half the planet that doesn't have internet, which makes the opportunities in the space huge! Access to the internet is something that both Alphabet , SpaceX and Facebook are working hard on. These companies are experimenting with using balloons, gliders and satellites to beam internet down to areas that need it.
Another interesting trend is that e-tail is only 15% of total retail sales in the US. Expect that trend to continue growing, especially if Amazon gets fresh deliveries right.
Then from a general usage perspective, people are spending more time interacting with digital devices. Which is good news for internet companies in general. Overall, there is still massive potential in the digital space. Stay long!
Linkfest, Lap it Up
Nature has already evolved to a point where systems work and are efficient. It makes sense that humans can learn from nature, particularly when it comes to teaching robots to 'think' for themselves - The natural genius of ants is helping us build better algorithms
Who wants to spend the money or the time to go to see a movie, when the experience at home is almost as good? To compete, cinema companies need to offer experiences that you can't get at home - Luxury cinemas are fighting Netflix with steak tartare, expensive booze, and gourmet popcorn.
Vestact Out and About
Team Vestact gets a mention in the Business Day - Naspers shares rise on earnings increase.
Signing off
Next week the Fed meets, no rate cut is expected yet but the market will be watching closely to what is said. Then next week is also South African CPI released for May, the number needs to be below 4.5% for the sake of a rate cut. Today there is US retail sales. The JSE All-share is higher this morning.
Sent to you by Team Vestact.