Apple knew

17 January , 07:59 am

Market scorecard

US markets took a breather yesterday after Wednesday's strong rally, with the S&P 500 and Nasdaq closing in the red. A dip in tech megacaps weighed on the broader market. You can expect this kind of ebb and flow, it's quite normal. Over time, the market moves higher.

In corporate news, Microsoft is upping the price of its Office apps for consumers, banking on demand for its new AI features. Elsewhere, Morgan Stanley climbed 4% after reporting fourth-quarter profits that more than doubled, thanks to stronger-than-expected trading revenues. Finally, Rio Tinto and Glencore are said to be exploring a merger, which could mark the mining sector's biggest deal yet.

At the close, the JSE All-share was up 0.17%, but the S&P 500 fell 0.21%, and the Nasdaq sagged by 0.89%.

Our 10c worth

Byron's beats

Having a large user base has many advantages. Consider Apple, who have over 1 billion loyal clients. A service called Apple News already has over 125 million monthly users in the US, Canada, UK and Australia.

Apple is a trusted brand which makes its news aggregator app even more valuable in a world where fake news is rife. People trust Apple to source news from reputable sources with a good balance of different political agendas.

Apple News is not yet available in South Africa but they are planning on expanding the offering to a host of new countries soon. I will certainly give it a go when it launches here.

Michael's musings

JP Morgan released some stellar results on Wednesday, delivering a record full-year profit of $58.5 billion. That makes JP Morgan the most profitable non-tech company in the US. When you see numbers like that, it becomes very tempting to buy some of the bank's stock. It trades on a price to earnings ratio of just of 14 and has a dividend yield of 2%. What's not to like?

We used to own JP Morgan in client portfolios. We sold it at $150 in early 2021 when it was going through a bad patch. That looked like an inspired move as it fell to around $100 in 2022, but since then it has gradually worked its way higher to around $250 per share. Over the past 5 years it has performed in line with the S&P 500.

There is a reason that banks trade on low P/E multiples. They are always one crisis away from needing a bailout. When the going is good, they print money. When things get tough in the economy, then banking profits plunge. Not to mention that financial sector regulations continually get more onerous.

As tempting as it may be, we will continue to avoid the banking industry.

Bright's banter

The looming TikTok ban in the US has sparked a wave of protest among its users, with many downloading a Chinese app called RedNote (Xiaohongshu), nicknamed "China's TikTok."

While not a TikTok clone, RedNote offers videos, images, text posts, and shopping features. It has quickly become the top free app on the Apple App Store.

Memes about "Chinese spies" and calls for Meta app blackouts have fuelled RedNote's popularity, alongside broader resentment toward social media politicisation. RedNote, launched in 2013, has 300 million monthly users, primarily women, and is already seeing adjustments to cater to its growing US user base.

Despite RedNote not being owned by TikTok's parent, ByteDance, concerns remain about potential bans, as US laws targeting "foreign adversaries" could extend to similar apps.

Signing off

Chinese markets are moving higher this morning after China's GDP and retail sales figures were higher than expected, coming in at growth of 5.4% and 3.5%, respectively. Interestingly, other data out this morning showed China's population shrank by almost 1.4 million in 2024, the third consecutive year of declines.

In local company news, PPC is partnering with Sinoma to build a state-of-the-art cement plant in the Western Cape for R3 billion. They aim to produce SA's lowest-carbon cement while cutting costs and emissions.

US equity futures are in the green pre-market. The Rand is trading at around R18.82 to the US Dollar.

Getting back into work at this time of year is hard, so well done for making it this far. Have a good weekend.