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There is a Ghost in my Restaurant.

Market Scorecard



We are still waiting for final numbers from the US mid-term elections, but it is safe to say that the Democrats won control of The House and the Republicans maintained their control of The Senate. This means that we won't see any major changes to US legislation until, at least, the next elections in 2020. One political commentator said this morning, the Democrats want increased spending, the Republicans want lower taxes and we are now stuck in the middle where there is just one massive budget deficit.

Having no significant law changes over the next 2-years is probably a good thing for markets. It gives some certainty, something investors thrive on. As I look at it, US futures are higher, and the Dollar is weaker.

Yesterday the JSE All-share closed down 0.85%, the S&P 500 closed up 0.63%, and the Nasdaq closed up 0.64%.



Our 10c Worth


One thing, from Paul

We don't have any US Dollar billionaires in our Vestact client base, which is disappointing. That would really help our assets under management!

The UBS/PwC Billionaires Report 2018 is out, and shows that total billionaire wealth grew by 19 percent to a record $8.9 trillion. Good work! Jeff Bezos did his part, that's for sure. The chart below (from Felix Salmon at Axios) shows where most of the aggregate billionaire asset growth came from. Asia is on fire. Not too surprising, given the rate at which those economies are growing.

Also noteworthy: there are 701 billionaires who are over the age of 70, accounting for nearly 40% of the wealth.



More here: UBS executive summary






Byron's Beats

Yesterday I took a look at the USD price of Tencent versus the USD price of Naspers over the last 6-months. Here are the two share price graphs below, thanks to Google Finance.



As you can see, during a tough period for Tencent, Naspers has actually outperformed. This means the discount gap between Naspers' stake in Tencent and its market cap has closed a bit.

What does this mean? Is the market awaking to Naspers' other assets? Or is Naspers just a less volatile proxy for Tencent? Meaning that when Tencent goes up, Naspers goes up less and when Tencent goes down, Naspers goes down less.

It is probably a bit of both. But my gut feels like it is more of the latter unfortunately. When Tencent recovers, we will have to see how Naspers reacts.






Michael's Musings

I have spoken in the past about the rise of 'ghost restaurants'. A ghost restaurant is where the restaurant only has online, and no sit-down, customers. The advantage of this offering is that you don't have to pay the high-end rent needed to attract customers. Having lower costs means your profits are higher or more likely, your selling price will be lower.



Ghost restaurants are possible thanks to the likes of Uber Eats delivery services. Cheap delivery of food is not the only thing that Uber Eats does though. They are collecting consumer eating data on a mass scale.

With that data they are taking ghost restaurants to a whole new level. Doing analysis, Uber Eats can predict future eating trends. They then take those trends to existing restaurants, who have spare capacity. The restaurant then starts making that food item, but under a different brand name.

From the restaurants perspective, this is a low-risk strategy that has the potential for big profits. Minimal investment is needed because the kitchen already exists, and because the product sells under a different brand, there is no brand risk to the existing restaurant brand.

As a consumer, all I care about is getting tasty food, on time and at a cheaper cost. Ghost restaurants and Uber Eats are making that happen.

Here is an article from Bloomberg talking about how things are changing - Uber's Secret Restaurant Empire






Bright's Banter

This morning I was listening to a podcast by Reid Hoffman called Masters of Scale. This was a fascinating interview with a Swedish gentleman by the name Daniel Ek.

Daniel Ek is the co-founder and CEO of Spotify Technology, a music streaming platform that transformed the music industry.

In this podcast Daniel Ek talks about how he helped build trust, very quickly, in an industry that had lost all hope due to illegal downloads. This podcast was a master class on the inception of the music streaming business and how to build trust.

Reid Hoffman Interviews Daniel Ek On Masters Of Scale




Linkfest, Lap it Up


Once these computers have finished 'learning', they will be quicker, cheaper and more accurate than having a doctor screen you for certain types of cancer. Machines might take over the world one day, but until then, we can use them to help humanity - Startups in India are trying to train AI to fight cancer.

This Bloomberg page is keeping track of how tariffs are impacting US-listed companies. Clicking on the link you would expect to see only a handful of examples. At the moment it has been negative for 57 companies and positive for 7 - Here's How $260 Billion of Tariffs Are Biting Third-Quarter Profits



It is good to see the gap is close to zero for younger generations. I wonder what the trend looks like in other countries - Gender pay equality ends at 40.

Infographic: Gender pay equality ends at 40 | Statista You will find more infographics at Statista




Vestact Out and About








Signing off


For the rest of the day, expect business TV channels to be filled with further breakdowns from these elections. The farmers hit by the trade wars, how did they vote? Steel worker communities, how did they vote? Richer communities how did they vote? Then there is a RSA business confidence read coming out at 11:30 and EU retail sales numbers coming out at 12:00. The JSE All-share is slightly lower on the open this morning.

Sent to you by Team Vestact.


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