Market scorecard
US markets soared to record highs yesterday, with the S&P 500 jumping 2.5% - its best performance ever for the day after an election. The rally came as Kamala Harris conceded to Donald Trump, signaling a time of policies favouring lower taxes and looser regulation, which investors expect to boost corporate earnings. Banks and oil stocks rose, and large tech companies facing antitrust problems soared.
In company news, Tesla went up by 14.9% on "good vibes" since Trump and Musk are now firm buddies. Elsewhere, fraud-accused Super Micro Computer failed again to file quarterly results, so its shares crashed another 18.1%. If you like chip stocks don't be greedy, just own Nvidia.
After a tumultuous day, the JSE All-share was down 1.52%, but the S&P 500 rose 2.53%, and the Nasdaq flew 2.95% higher. Can you see why we always advise you to be fully invested at times like these?
Our 10c worth
One thing, from Paul
Microsoft had results out on Wednesday last week, and the market was slightly underwhelmed. Despite a solid revenue and profit beat, their forecast for the Azure cloud-hosting business unit in 2025 was a little subdued.
CFO Amy Hood (pictured here) explained that Microsoft doesn't have enough data centre capacity to meet customer demand for its generative AI and cloud services. OpenAI, which provides the models that underpin those services, has more work than Azure can handle. That's why it's trailing the growth rates of their main competitor, Amazon (AWS).
We are long-term investors in this great business, so we are not deterred. Microsoft is in a league of its own in-office software for business users, and its Windows server division is rock solid. Their gaming and devices unit is also doing well.
To fix the Azure issue, Microsoft will ramp up capital spending even further in the months ahead. CEO Satya Nadella believes AI is a massive, generational tech shift, similar to the personal computer or the internet. That means the risk is investing too little, not too much.
The Microsoft share price is lower now than it was in July, but we think that next year will be better.
Byron's beats
There are now over 2 billion calls made per day over WhatsApp. That's mind-blowing. The cellphone network companies won't be chuffed. In the US, Apple iMessage still dominates this sector, which may come as a surprise because South Africans usually use WhatsApp exclusively.
Monetisation of WhatsApp grew 48% year-over-year, according to the latest earnings release, thanks to its business message service, which is really taking off.
Now that AI is all the craze, Meta is using their massive WhatsApp network to show off their capabilities. Have you tried Meta AI yet? You don't have to leave WhatsApp, just type a question in the search bar at the top of the app. The world is literally at your fingertips. I get the sense that this will be the go-to AI bot on mobile phones.
The importance of WhatsApp is growing amongst the Meta family of Apps. I am excited to watch it flourish.
Michael's musings
Wow, there have been some significant changes to asset prices over the last 24 hours. The divergent directions of the bond and equity markets are most interesting to me. It's not often that yields climb, and equity markets do too.
In this case, the stock market seems to be rising in the hope of a more business-friendly White House. Tech stocks are a bit stuck because JD Vance has repeatedly said the industry needs more regulation.
The bond market move is what worries me. Yields jumped because anti-trade policies cause inflation, and inflation means higher interest rates. Coupled with that, if Trump's promises from the campaign trail come to fruition, the US will run massive fiscal deficits and government debt levels will soar. Higher debt means higher risk, and higher bond yields.
Let's hope that all the talk in the election lead up was just talk, and the final actions are significantly less radical.
Bright's banter
Lyft is ramping up its efforts in the driverless car space through new partnerships as it tries to catch up to its bigger rival, Uber. The company announced collaborations with Mobileye, allowing any vehicle equipped with Mobileye's tech to join Lyft's platform.
The ride-hailing company also partnered with May Mobility to deploy self-driving Toyota Sienna vans in Atlanta starting in 2025, and formed a data-sharing pact with Nexar.
While Uber has already secured partnerships with major players like Alphabet's Waymo, Lyft's moves signal a renewed push, after selling its self-driving unit in 2021 and pausing previous partnerships.
Linkfest, lap it up
Modern solar panels only do an okay job of absorbing energy. Scientists have struggled to make significant efficacy improvements in the last decade - The next-generation solar technology.
The best horror films of 2024. From Longlegs, The Substance, to Violent Nature - Watch these in the dark.
Signing off
Asian markets rose this morning, with Hong Kong and China benchmarks rallying, reversing yesterday's losses. Fears of a trade war were overcome by optimism about further stimulus measures from Beijing? Who knows.
In local company news, Pepkor reported a 7.8% increase in group revenue for continuing operations, reaching R85 billion. The retailer anticipates full-year headline earnings per share to be slightly up or slightly down. So, no fireworks.
US equity futures are mildly positive in early trade. The Rand is at R17.51 to the US Dollar.
Tonight, Airbnb report earnings. The Fed will be out with an interest rate adjustment today. Let's see how that goes.
All the best!