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Market Scorecard
US markets retreated on Tuesday, following weaker-than-expected economic data. All three major US indices closed in the red, with the S&P500 and the Dow snapping their five-day winning streaks.
US Commerce Department data showed that there was a 1.1% decline in retail sales in July, a measure of purchases online, at restaurants and at physical stores. Economists had only pencilled in a 0.3% decline month-on-month. Are consumers growing more price-conscious as inflation ticks up and pandemic-era handouts fade away?
In company news, Home Depot closed down 4.27%, its largest drop since November 2020, after the company reported earnings showing that customer transactions fell about 6%, even though the average transaction size grew. Elsewhere, Walmart reported a beat in earnings thanks to a bounce in groceries sales, but those shares were mostly unchanged at close.
In summary, the JSE All-share closed up 0.17%, the S&P 500 closed down 0.71%, and the Nasdaq closed down 0.93%.
Our 10c Worth
One Thing, From Paul
Apple is our largest holding and it's trading at a new all-time high, above $150 per share. Whereas having a cellphone in your hand or clamped to your ear used to be considered a bit strange, these days it's totally normal. Literally every economically-active person on the plant has a smartphone.
Here's a case in point: Pope Francis, birth name Jorge Mario Bergoglio. Mike Allen from Axios points out that this pope has had quite a lot to say about smartphones in the past. In 2019 he moaned that priests taking cellphone pictures during Mass is "a very ugly thing". He has also urged his followers to "switch them off at times, and put them away during meals".
Well, he's changed. This week at the Vatican, when he usually has an audience with the public, Francis interrupted himself to take a call on the phone, then walked around for a few minutes chatting animatedly with whoever was on the other end. When he was done, he got back to work, allowing people to take selfies with him.
I rest my case. Buy an Apple phone and also buy the shares. You can't own too many.
Michael's Musings
Amazon now holds the crown for being the biggest retailer outside of China. Its market cap surpassed Walmart years ago, but now their sales have passed them too. This is a very impressive stat considering that most people still prefer to shop at physical stores. Less than 15% of US sales are through e-commerce channels. During hard lockdowns last year, it briefly shot above 15%.
In the opinion piece below, the journalist argues that Amazon might not have the sleekest website around, but it's a brand that people trust. The journalist points out that "Amazon works for most consumers most of the time for most of the things". Consumers also know that delivery will be quick and if there are any issues, they can easily return the product.
From day one, Bezos put the customer ahead of staff and shareholders. When you have happy customers, your staff and shareholders seem to end up happy too.
Read more here - How Amazon Won Shopping.
Bright's Banter
According to data from the US Consumer Technology Association, this will be another record year for the tech industry. The pandemic year (2020) was record-breaking, but the CTA forecasts that technology retail sales will grow by 7.5% to north of $487 billion in 2021.
There is unprecedented consumer demand for tech-related services for school, work, entertainment, and lifestyle. Gary Shapiro, the CEO of CTA said:
"The pandemic strengthened consumers' relationship with tech forever, from working to learning, staying connected with loved ones and taking care of our health, tech played a crucial role in improving our lives in the face of a crisis."
The most interesting fact is that the US will achieve all of this while it deals with supply chain shortages, labour gaps, and people not wanting to take vaccines. The infographic below breaks down which categories will benefit the most, and I'm happy to say that Vestact clients are fully invested in this trend.
You will find more infographics at Statista
Linkfest, Lap It Up
Working from home has allowed some employees to get multiple jobs. There is even a website dedicated to assisting those with issues caused by having more than one boss. One discussion point is "How to Set Low Expectations At Your Two Remote Jobs" - Some remote employees are secretly working multiple jobs.
Modern economic life is said to be far worse than a game of Monopoly. At least in the game, everyone starts with their own nest egg - Monopoly isn't a game, it's a prophecy.
Signing Off
Asian markets are up this morning, snapping a four-day losing streak. Markets in mainland China, Hong Kong, Japan, and South Korea are all in the green today.
US futures are also up in early trade. The Rand is steady at around R14.86 against the US Dollar. Looking ahead, the latest minutes from the Fed meeting will be released, so we will be on "taper watch" again. On we go!
Sent to you by Team Vestact.