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Market Scorecard
Markets are struggling to make up their mind about which direction they want to go; it's a proper tussle between the bulls and bears. Both local markets and US markets were red and green at different points in their trading sessions. Part of the confusion came from China calling the looming US tariffs a violation of the accords reached by Presidents Donald Trump and Xi Jinping. Are tensions thawing or getting worse? There is simply too much information to try digest and then to try to make a short term forecast of what will happen. The best way to reduce your risk when investing in stocks is to invest for the long term. During these volatile periods, the best thing to do is to turn down the noise. Your investments, in the long run, will thank you.
Discovery released a SENS announcement this morning stating their views on NHI. A key paragraph in their statement is the one below. If you want to read the whole thing you can here - Discovery's view on the NHI Bill and the future role of medical schemes.
- "Our view is that substantially limiting the role of medical schemes would be counterproductive to the NHI because there are simply insufficient resources to meet the needs of all South Africans - this is an unavoidable reality. Crucially, by preventing those who can afford it from using their medical scheme cover, the burden on the NHI will be increased and will drain the very resources that must be used for people in most need. This would be detrimental to all South Africans, and would undermine the objectives of the NHI as we understand it."
Yesterday the JSE All-share closed down 2.11%, the S&P 500 closed up 0.25%, and the Nasdaq closed down 0.09%.
Company Corner
One thing, from Paul
Hold on, we have one more earnings season update for you! Nvidia shares were up sharply last night after the company reported July-quarter earnings results that beat Wall Street estimates.
Nvidia designs and sells GeForce graphics processing units (GPUs) for the gaming and professional graphics markets, as well as Tegra system on a chip units (SoCs) for the mobile computing and automotive market.
Nvidia also makes specialised parallel-processing chips for high-performance computing applications. They sell these for use in data centres, autonomous cars, supercomputers, deep-learning platforms and artificial intelligence applications.
That all sounds great, but you might know that Nvidia has been our most unsuccessful stock over the past 12 months, declining by over 40%. What gives? Well, as previously mentioned by my colleagues and I in prior daily notes, the stock got a bit overheated in 2018 when the cryptocurrency craze resulted in a very high level of chip sales, that confused the revenue and profit outlook. The stock is up about 15% this year, but has been quite volatile in the last six months.
Anyway, the numbers. They reported adjusted earnings per share of $1.24 for the quarter versus the consensus of $1.15 cents. Revenue came in at $2.58 billion, down 17% year-over-year but better than the $2.55 billion average analyst estimate. The guidance was in line with prior forecasts.
Nvidia CEO Jensen Huang said in the company's news release that "Nvidia's accelerated computing momentum continues to build as the industry races to enable the next frontier in artificial intelligence, conversational AI, as well as autonomous systems like self-driving vehicles and delivery robots."
Nvidia shares were up 5.6% to around $157s in after-hours trading. I have previously gone on record as saying that this stock will be back at its all-time high of $293 in due course. So it still has a way to go. Buy some!
Our 10c Worth
Byron's Beats
Many companies are targeting India as the next big growth opportunity. Well, it is already massive and growing fast, but much of the economy is still informal. We know that Amazon has already put in over $5bn trying to create a presence there. That has come with mixed success. The Indian government is favouring local businesses.
Earlier this week news came out that Amazon Nears Deal for Up to 10% of India's Second Largest Retailer.
According to the Bloomberg article, Future Retail, a brick and mortar retailer, is the second largest in India by turnover. It makes sense to me. The company's brand Big Bazaar is well established. This will give Amazon an extra avenue to go online as well as get a better feel for the Indian consumer. Each country and its consumers are unique. Often it is much better entering an unknown territory with a local.
Two days ago it was also announced that Naspers is investing a further $125m in Meesho, India's largest social commerce platform. The investment was made in tandem with Facebook.
As a shareholder of Naspers, Amazon and Facebook, I fully endorse these moves.
Michael's Musings
Did you see that Apple has finally released its credit card? They are partnering with Goldman Sachs and Master Card (unfortunately). The card is designed to integrate with your phone to make it easier to track your spend, there are increased security features, and it is easier just to tap and pay. They are aiming at having low interest rates and no fees. Oh, and the card is made out of titanium. Fancy!
There are a few things to note from the move. The first, notice how everyone wants to be in the fintech game? This is because the industry is ripe for disruption, and if a company reaches scale they can print money. The second is that the majority of these fintech providers run on the credit card networks - a great reason to own Visa. Third, Apple is using their card as another way to integrate you into their ecosystem, which makes it harder to switch to other phone makers.
For the next few years the Apple card won't move the needle when it comes to contributing to Apple's group profits but this looks like a good move for the future. You can read more about it here - Apple Card and Apple, Goldman Sachs start issuing Apple Cards to consumers.
Linkfest, Lap it Up
Old age is becoming less daunting thanks to advances in medicine - There are a lot of promising blood tests for Alzheimer's.
This is why getting a mobile money license is huge for MTN. Cellphone banking is the future - Mobile phones are replacing bank accounts in Africa.
Vestact Out and About
This week on Blunders: Russians fooling around with nuclear rocket engines; All is not well in Argentina; Tumblr was an epic social media business fail; and a California vanity licence plate blunder - Blunders: Episode 152.
Signing off
There is very little relevant economic data out today. There is Hong Kong GDP data out at 10:30 though, which might move the Richemont share price. The JSE All-share is lower this morning and the Rand is a bit stronger than yesterday. Good luck to the Bokke tomorrow.
Sent to you by Team Vestact.