You're listening to Strictly Business Podcast with Lindsay Williams. BJC has closed its doors for another day, so it's time for the five o'clock shadow. As always on a Thursday, I've got the double-headed Dream Team edition, which is populated by, in order of, just in order, it's Viv Govender from Renswiss and also David Shapira from Sassfin Securities, both in Johannesburg. Now, I've got international and I've got local. Who wants to take? the local news. David, is that you?
I think it probably is. Yeah, I've kind of looked at it. Well, let me just give you my list. Sorry. You've got the South African Reserve Bank cutting rates by 25 basis points. I don't think that needs to detain us because we're expecting it. But I've got a retail story here. You've got Spar, Lewis and Mr. Price, all retailers, but in different fields, and all coming up with different sets of results because Spar up 4%. Spar up 4%.
Lewis is down 4 and a bit percent, and Mr. Price up 7 and three quarters percent. I don't know if you looked at any of those, but certainly there's a, if you're a retail analyst, you don't just blanket buy now, you cherry pick. That 8% or 7% that's come from, you know, that came from Mr. Price, a little surprising. Because I think when I looked at their revenue numbers, because I always compare it with what we, you know, what we thought would be without.
estimations and it was down on that when you read through it there was nothing exciting about it they did mention that you know the consumers under pressure so i'm quite surprised at the rate what might have prompted all of this is that it's a 25 point basis cut you know by the reserve bank governor that inflation's coming down we saw some good retail numbers so there's been supportive uh economic data but to be honest lindsay i i think a lot of these retail stocks have run well ahead
In other words, the prices have run well ahead of the underlying earnings. There's nothing dramatic about what's happening in our retail sector. So I think Lewis was surprising because I think that we've had this. We did have a warning before. I thought it was a rather good result. But their numbers come from rather insurance rather than actually selling couches and chairs and dining room tables and so on.
I think they load that with all kinds of add-ons, you know, which is so typical of installment sales. I haven't had a good look at SPAR. But I think overall sentiment at the lower end of the market, you know, I'm not talking about the top end, which is all our international stocks. There's been quite a bit of interest. But whether it's sustainable or not, you know, I'm still very skeptical that our economy doesn't it's improving. But I don't think it's it's strong enough to sustain these issues.
And just a last word, just look at what Lesetra said, what the governor said about growth. You know, 1.1% this year, 1.7% next year, 1.82%. So over the next four years, we're not even, you know, we are likely to grow about 3%. Very difficult to keep up, you know, selling goods with an economy that is just faltering, that's going nowhere. Okay. Viv, I do want to stick with local and come to you on this one.
Because yesterday, when 91's results came out, a giant asset management company, everyone, Viv, was completely flummoxed, not flummoxed, but surprised by the fact that they came out with this Sanlam deal. And I was speaking to another commentator yesterday after the results came out, and he said it must be the best kept secret. in South African corporate history, because normally these sort of things leak out, Viv.
But it's very interesting that this consolidation in such a creative way has come out. And what it essentially says is that 91 has got $17 billion worth of money to manage. And I wonder why it went ahead. Is it because their assets under management are not growing organically? What do you think, Viv? Yeah, look, obviously...
i'm surprised that you know this will pass uh competition uh you know uh because this consolidation is is pretty substantially in in the industry that i mean yes uh number one i'd be i'd be like you know it's a surprise because remember monocom had that 12 billion round deal blocked uh for those uh for that infrastructure and you know this is like you said the deal we're talking about you know 400 to 800 billion of assets you know that's going to be like involved in this thing
This is obviously a very difficult thing, but that being said, I mean... Like David says, we have an industry at the moment or an economy that's growing just barely. These things feed us off the economy. You need to have people saving money, people earning enough to save, to feed into the system, to actually make people make more money, etc. And I do think that in terms of the current situation, it kind of does make sense from that point of view.
We are looking at asset manager, you're talking about distribution combining. The synergies obviously are there to make sense. And especially, like I said, with an economy that's as weak as it is right now. But like I said, I'm surprised it passes the regulators. You know, Viv, you're on to a very important point there. When you look, just let me go back a bit. Let me go backtracking to the 90s or something.
In those days and before that, the 80s, if you never got any business from Old Mutual, Sunlum, Liberty Life, Alan Gray, you were dead. You could not conduct your business. That's how powerful they were. I call them the Champions League. In the EuroLeague, and I think Lindsay will appear it, in the Europa League, what were the pension funds? The Eskom Pension Fund, PIC, Mine Officials Pension Fund, Anglo-American Pension Fund, things like that. They were minor asset managers.
But these, you know, Board of Execs, Cyphers and so on, but those controlled the... investments of the country and they did a lot for PIC they did a lot for that you know they were also third party asset managers to see Sun Lam now give it all up just shows you is a shows you what's happened to the industry they're obviously not making any money out of it they obviously have huge costs with very little return and said hold on a sec we don't need this give it to 91 let
them manage it you know we'll go out and sell the products the underwriting products you know we'll sell insurance we'll sell whatever it is pass the money on to 91 and they'll invest it without without us needing to have a mining analyst you know of which there's no need so for me it's it's hold on this is this is really a dramatic turn and identifies just how far down you know our asset managers have for how difficult it is it's
I think this is a warning shot and it just shows you things are not that easy in the industry. So consolidation in the industry. And I would say that the more nimble of the two parties is 91 and Hendrik de Tooy at the helm saying, look, OK, I can see the writing on the wall, as you've just described well, David, and let's consolidate now before other people consolidate with each other.
And maybe, I don't know, maybe David staying with you, it'll... promote a rush of other consolidations as the South African economy continues to disappoint. If you talk to Viv, he don't talk South African market. He deals overseas. He's got clients who give him money. He goes overseas. He's got his own little business, very similar to mine. That's all I do. I've got clients. They like me or they trust me, whatever it is. I go offshore. I do not even try to compete.
in the local market because, to be honest, there's nothing for me to do. You know, there's nothing that excites me. Yes, we're talking about Mr. Price. We're talking about you know, you can't make you can't do big money around a handful of retailers or so. What's exciting about a retailer? Well, no, just wait a second. You do get excited about American retailers. We had Target yesterday, share price falling 20% plus. And then we had Walmart's numbers, which were really good.
So retail can be exciting. But you're saying The South African retailer is not exciting. In a low growth area, that's why I mentioned the 1.1%, 1.7%, 1.8%, 2% over the next four years. And how can Sunlum grow its asset management side? How can 91 grow its side against that? It can only do that by consolidating or stealing other people's business. You know, there's one pie, and you go and steal someone else's business. Well, steal's a strong word, David.
We know that financial services professionals would never steal from a client. Viv, the one that we really want to talk about, of course, after the bell last night and video's results came out, I looked at these things. I mean, just the headlines. Revenue doubled. Revenue doubled. doubled. How many companies in the world, unless they're coming off a very low space, we made $100 last year, we've made $200 this year.
How many people can say as a CEO, a chairman, whatever, and sit down in front of shareholders and say, we doubled our revenue. We're looking forward to in 2025 being a $4 trillion market cap company. Astonishing numbers, Mr. Governor. Yes. Look, firstly, I want to say that it's amazing. Like, you know, Steve Jobs is the byword. Elon Musk is the byword for entrepreneur, you know, in this current environment. They are nothing compared to Jensen Wong.
Honestly, if you look at the value Steve Jobs created while he was alive, okay, a lot of the creation of Apple happened after he had passed away. And like, you know, Tim Cook took over. Elon Musk, you know, his companies, of course, I think Tesla just passed a trillion or so. But you combine all of them together, you know, you're talking under two trillion. And now you have this $3.6 trillion company created by Jensen Wong.
He is the, by measure of actual creation of market capitalization and value, the number one entrepreneur of the last, I would think, probably century. You'd have to go back to the people like, you know, the Carnegie's or the, you know, the Ford's or the, you know, the Rockefeller's to find somebody that created something this valuable, you know, the former busboy, as he likes to say, even though that was only when he was like a teenager. But yeah, this is an incredible company.
Like you said, you're talking about a revenue of $35 billion. Looking to increase that for the next quarter to $37.5 billion. That's even ahead of Wall Street estimates. The only problem is because the market's been so used to expecting such brilliant results from this company that even with such incredible returns, we are seeing the share price down slightly today. Not dramatically, 2.5% or so.
When the news first broke about the results... there was a dip after market about five percent it ended down about say two three percent uh but if you look at the variation in the share price i mean uh even with the current fall we have at the moment uh for the month as a whole for the last month it's only down one percent you know and for the year to date it's this thing is up 195 percent you know that means it's created about two trillion dollars of market capitalization this year
alone and remember 2019 was the first time we had a normal company not a Saudi Aramco, but a normal company, which is Apple, passed the $1 trillion mark. And this company has created $2 trillion of market capitalization in the last year. It's quite astonishing the numbers that you've just trotted out there, Viv. David, you're a shareholder in NVIDIA. I don't know whether it's yourself, but certainly your clients. You must have been delighted with these things.
You know, these numbers, I don't think this is over. You know, when you analyze... when you actually analyze what the analyst said and it comes back to exactly your introduction i mean this is a phenomenal business you can't hear you know i always use the example you know even a logistic company sometimes the truck goes out and bursts a tire you know it's going to happen businesses are not going to go that smoothly they're going to be certain setbacks i'm not quite sure what the setback is
with nvidia just seems to be going along they might be certain delays in getting this new chip ready, there might be logistical problems, might be whatever. Matter of fact, it's crazy. The fact that they might have missed their margins, Lindsay, are over 70%. Hello, go ask Pecan Pay what their margins are, or go ask... 4% maybe, I don't know. Oh, you know, the others are, but not Pecan Pay. But whatever, this is 70%. And I mean, so, you know, the analysts are on a...
Well, you know, when margin's going to get back to whatever it is. So they so, you know, we're so, what's the word, obsessed with models. You know, we sit back at Sheetz and we try and work out these models and get back and kind of discount to the fourth decimal point what we think a company should be worth. You're missing the story, man. Let me ask you this. Let's both of you this. I'm going to ask both of you this question.
Is the only way that the 70% margin that David has just referred to and the market dominance that we've been speaking about for months, the three of us, is the only way that this can rectify itself or rather become more equitable? Is another company coming up with a chip and growing like NVIDIA did two, three years ago? years ago. And Viv, I'll go to you on this. Is this the only way margins are going to fall and revenues are going to stop doubling every year?
Or is there some other reason, i.e. AI doesn't become the popular theme of the future? Well, I mean, the thing with AI is, and this is a little bit more in depth than like most things. So there's a thing called scaling. And the scaling thing has been up to this point, what you do is you add data, you add... your computing power and you get a smarter machine. However this is done, who knows exactly what the mechanism behind it is, it's literally like magic, people don't know exactly how it works.
They have theories but they don't know exactly how this thing creates what it creates. And the thing is that, you know, we have hit a point in the last, I would think, year or so where it's emerged that it might be that either the data, probably the data is not at a high enough level because we're putting human knowledge into this thing.
If you put human knowledge into this thing, and there's a feeling of human knowledge, it's not creating new knowledge, it kind of tops off at the brainpower of a human, you know what I mean? And that's pretty much the way it is right now. It's topping off at the brainpower of a human. It can do the things that a normal human being does. Some people put IQ tests for this thing and say it comes with 101 or 100 IQ, which is the average human IQ.
Some say it's coming to the same level as a good graduate student or a good university student, which is kind of what you'd expect from the amount of information there is in the world. So that's the kind of tapping. It's not going beyond that at the moment. The question is, is the new set of stuff coming out, is the stuff that OpenAI is about to release in the next few months or Grok is about to release in the next few months, is that stuff going to be the next level?
And that's why people are, like, for instance, there was a tweet this week by Sam Altman saying there is no wall. And the term wall implies that there's a limit to how far this particular technology gets us. Now, we will know, like, the next thing, I would say by the first quarter of next year, we will know. if these machines can go beyond what they are currently.
If they can't, what will happen is that the machines or the programs we have will stay at the same intelligence, but they'll get smaller, and that's been happening.
So we've seen smaller and smaller programs achieve the same level of performance, make it more efficient and so on, which is probably not a good thing for NVIDIA in the short term, but probably a great thing for them in the long term because it means that AI becomes ubiquitous, and you put it everywhere because it's so small and so cheap.
But in terms of the profit margin, it also means that... you know, it's more possible to compete because without the driver of having to build these multi 100 billion or 100 billion or billion dollar data centers, you basically they could focus more on costs.
And you're not as focused on basically just trying to be first because right now, the idea they have is that you are in a race, an exponential race, and being six months behind means you're two times or maybe half as powerful as somebody else, you know, and therefore you want to be the first one there, no matter what the cost.
gives you a huge advantage and i do think that like i said next say three four months we will know for certain is it a case of walls with it or not and that i think is the real danger competitors i don't know who the competitors are amd is not competitor intel is falling apart uh you know armies has its own problems so i don't know i mean there is a company called grok this is the other grok not the elon musk rock okay it's another
grok big inference but they're not trying to go against uh actually uh nvidia in terms of the training data, the training system, sorry. So until we hit that wall, I don't think NVIDIA has a real issue with competitors coming and taking their money away. Unless there's something happening in China we don't know about. That could be possible. It could easily be. They'll unleash it on an unsuspecting world. Okay, but both of you are still holding on. I'm being presumptuous here.
I'm putting words in your mouth. But you're both holding on to your holdings in NVIDIA, which have served you so well. You know, there are certain businesses like NVIDIA Take NVIDIA out the equation now. I understand what Viv's saying, and we'll find that out in a six-month time. But for the meantime, there is no competition. It's the same thing as ASML. There are certain monopolies, there are certain businesses that are pivotal to the existence of this technology.
And when you look at the pure numbers that this company earns, I mean, it's phenomenal.
And to kind of nip... pick over over issues and i think every every um every kind of uh uh analyst tries to outsmart the next one you know because that's the only way you kind of uh attract any kind of attention i just i just leave it you know you've got to just get past the noise i saw that nvidia was down about two and a half percent after close it's it's picked up it was up at one percent it's down a little bit now but i think there are other issues that
are uh are just dominating the US market at the moment. I think that has more to do with the Middle East and, sorry, Ukraine and Russia and issues like that. We'll talk about that as we close the show, actually, because I got rather disturbed when Mr Putin rolled out these mobile nuclear bomb shelters, which is just something to scare the West, I'm sure. But the fact that he's doing it is a bit of saber-rattling.
But anyway, let's get... back to more mundane and less unpleasant matters by looking at the dollar round which is 1802 so a nice rally for the uh for the red and fall for the dollar to the tune of two-thirds of a percent british pound against the round is 2277 and the euro round is 1898 the euro dollar is 105 35 which is a euro which is slightly weaker gold price uh 2667 which is up 18 dollars you per ounce. The platinum price is still below $1,966, even though it's up $5 on the day.
And the palladium price is $10.39, which is up $15. In the old days, that used to be meaningful stuff that I would be talking about now, but nobody cares anymore. I can hear you two yawning in the background. Brent crude oil is $73.90, which is up 1.5%. West Texas crude is up 1.5% as well, $69.78. Copper's fallen 0.5%. What else have we got here? Steel prices up 3.5%. S&P 500 futures. are 5,926. The high, all-time high achieved about a month ago was 6,053.
So it's off, and it's off today by 0.2%, but nonetheless, getting itself ready. I think warmongering isn't helping the matter.
The South African 10-year bond yield after the South African Reserve Bank cut rates by a quarter of a percent is 9.23%. percent and the u.s 10-year bond yield stubbornly high just below 9.40 percent um david what u.s is 9.3 4. sorry 4.39 percent did i say nine yeah so for the incident yeah maybe one day when trump gets in in after two years of a trump administration maybe it will be 9.39 4.39 thank you for pointing that out david um you And, yeah, Bitcoin is a bit of a go, isn't it?
I mean, goodness me. It's OK. So it's 96,320, up one and two thirds percent, but was higher. It got to 98,344 earlier today. What is that? I just have a worry that there's going to be a bit of a shock in that. And I just think that trying to push through regulations, you know, and just I don't know what Trump. and Mr. Musk's policy, you know, what their aim is or their agenda. And I don't know what they want to make, you know, of Bitcoin.
But I think that somewhere along the line, once you try and put this into regulation, you know, into a regulatory environment where it enables you to monitor what's happening, I think it's going to be a lot more difficult for him, the kind of moves that we see. Now, in fact, I think all Trump's policies are not just going to glide through as easily as... And his relationships as well. And I can predict one thing for 2025. Maybe he'll hang on till then.
But I believe that there's going to be a bust up between Trump and Musk because of these two giant egos. And one day Trump's going to wake up and say, this chap's more important than I am. You're fired. That's what will happen. They're calling him Elania. Yes. Elania. Yes, exactly. That's not fair. Yeah. Let me tell you why, right? Is that the other people that have got into Trump's all-road and they want to do something are doing it because they have a policy. They want to fight a war.
They want to have a policy out here. I'm of the impression that both Vivek and Musk are more self-serving. And they are not going to cut spending. If they do, it's going to be small. They can't cut spending that much.
what they are going to do in their respective things like rebecca remember i told you guys has that company roivant which is a direct you know depends on the on the on the uh from the way the fda functions so he's going to know exactly how to mess with the fda to make his company more valuable right and musk already i think has gotten approval for five times more launches on his starship five times it was five more five times more next year than he had before And I think that Starship, I mean,
the last valuation was over $200 billion on SpaceX. That's going to go through. The Tesla one, I don't think it's going to be as easy, but probably going to do something with driverless vehicles or whatever. But the SpaceX one is probably going to go significantly higher than it is right now because of Trump in there. And again, I don't think that, you know, the reason that you had fallouts with like, which was bolted and you had fallouts with like Tillerson and so on.
was because those guys have actual philosophies, like Bolton wants the world to look in a certain way. And you know, Mali and all these other guys have the intelligence of what the world to look in a certain way. They weren't just there to make themselves rich or money, as much as you like. And I think if you're just there to make money, and you don't mess with Trump, you just give him whatever he wants, you know, say whatever he wants, feel like RFK and eat at McDonald's if he says so.
I just worked it out, yeah. But I do think there's a couple of things. Firstly, it's not Trump that's going to be moving these things. It's going to be these people that have specific industry requirements. It's like putting lobbyists in charge of something. And they're going to do things here that are going to be very, very paradigm shifting in terms of where the U.S. government works. Just because they know what it is, because this is what their companies do.
These are professionals in the industry. that are coming in and saying exactly how they should be regulated if i was to take any of us like imagine me and david had to go and be in charge of the fsca you know what we would do It's not some politician getting involved here. Me and David at the FSEA, and suddenly, you know, we'd be billionaires, right? If we had no morals. Well, there's a thought. Yes. Don't forget I introduced you to my little cat.
Okay, well said, Viv. On the JSC today, Mr Price, the top performer, up 8.3%. Spar was up 3.75%. True was up 3.6%. hanging onto the coattails of other retailers. And TFG, the same thing, just over 3% higher on the downside. There's Sibania down 2.75%, Anglo Platinum down another 2.5%, DRD Gold down 2.2%, and BHP Group down 2.1%. If you're missing the theme there, they all dig commodities out of the ground.
And with the combination of stagnant commodity prices and a stronger RAND, that is what's... happened. David, give us the closing JSC indices and the value traded, please. Yeah, the all-share closed up 0.29%, 85523. Resources, as you mentioned, were down. The resource index down 1.1%. The rest of the market up, you know, just driven by those consumer stocks. The consumer discretionary index up nearly 1.8%.
Overall, the industrial 25 up 0.4%. uh banks up 1.23 percent so you know financials and industrials did well and it's strange enough property shares also creeping up as rates come down and a better feeling about it just on the value side yeah interesting to say we were over 22 million i'll give you the billion i'm going to give you the exact number here uh probably about 24 or 25 billion but what's interesting and i'm not quite sure there was a trade that went through in anglo gold
5.3 billion which made up 23 of the market today so uh there's some cool productivity there obviously yeah there's obviously a big line that's gone i'm trying to work out what uh what time it went through but i'll get that in a second whether it was right at the end or not no it seems to be steady throughout the day i think it was an amazing auction okay well watch out for that one consolidation in the financial services industry maybe in the gold industry as well We shall see.
Gentlemen, the final note is something that is about an hour and a half away from me on the train in a place called Den Haag, or The Hague, and it's the International Criminal Court. Now, they have arrest warrants out for some Sudanese leader, stroke terrorist, I think his name is Bashir, or Bashar, or something. Anyway, I don't know, that's rude of me, but anyway, there's that. There's an arrest warrant out for Putin.
And today, David, Netanyahu, yeah, I mean, I wouldn't want to be Netanyahu's travel agent because he's not going to be getting any business in the near future. And also the defence minister as well. And also, posthumously, I think, because he's dead now, is the Hamas leader was also slapped with an arrest warrant, which seems to be a bit meaningless to me. But more seriously. These are very serious charges and they do mean something, even though he'll never, ever be arrested.
David, what do you think? You know, there's nothing I can say about it. I mean, the fact that the international court have done what they've done, whether they're ever promulgated or whether these people are ever arrested. But you know what's happened. Of course, there are going to be defense mechanisms, etc. But I think from... When I see the G20 get together and everybody's kissing, you know, and they're all shaking hands, in the meantime they hate each other.
They're all, you know, it's the most dysfunctional kind of G20, or certainly the United Nations is dysfunctional. And I've got, listen, Netanyahu's not my favourite person. I don't know whether he's a criminal of that nature, and I don't know where it's going to go. But I think obviously there's going to be an outcry.
When Trump comes in, all it's going to do is... you know the people who brought these charges mainly south africa it's not going to india south africa to uh mr trump you know and you can see it by the appointments he's making so he is mr mr uh ramaphosa is now um you know for the next year um i think he's a leader of the g20 or what when i say leader yeah he's the chairman whatever it is but um i you know i don't think it endears
ourselves to to the americas now i thought they would be making other kind of overtures. This is from a long time ago, but who knows? But my whole point is that, you know, what we're not doing... And what South Africa is not doing is making any attempt to improve relationships with the United States. We think we're cute. I'm not sure we are. No. Viv, your final word from you on this one.
I think one of the points that the ICC makes is that Israel, under the leadership of Netanyahu, is using famine as a weapon of war. In other words, starving the people in Gaza. And that sounds very emotive, etc. But when you see 109 trucks being looted. And they'll say, well, we had nothing to do with that. The 109 trucks were looted by criminals who are going to sell the food on. But surely there should have been a military escort or whatever it is. And I don't want to get too political.
But Viv, the final word on this matter from you. I don't think it will be Netanyahu that suffers. The season is mid-70s. So by the time politics changes enough in the U.S. for this to be a positive, he'll be in his 90s. You know, we're talking about probably a decade or two from now.
it's unlikely they're going to arrest him with like you know treatment trial though it has happened in the past you know to people that you like like former nazi guards etc who've been arrested the night is i think it's more of a problem for the commanders in the 40s and the 30s and stuff in in the the idf at the moment because what's going to happen is that look i mean here's here's here's a guaranteed future forecast that pretty pretty trim now the muslim population the
us will be larger you already see they're making a difference in places like michigan and so on in the us it's going to impact how the U.S. treats, you know, these kind of things going forward. And in, like, say, 20, 30 years'time, it's going to be a large enough bloc that you can't ignore it. It's already large enough in Europe that you can't really make an anti-Muslim kind of statement, you know, without some kind of big backlash.
And so I think that Israel's kind of backing the ICC from the U.S., which is the only backing it has of real power, will in, say, two or three decades be gone. And so if you were, like, dead in your hell, you're dead. If you are 30, 40 years old at the moment, you're in your 60s and 70s, And then suddenly someone's going to come to you and arrest you for a war crime you committed a lifetime ago. And I think that is the danger of this going forward.
It's not going to be Netanyahu, but it will be people that are currently, like I said, in their 30s and 40s that are going to be I would be amazed if at least a few of them don't go to prison for the state in a couple of decades'time or have some kind of trial around it. Because the demographics just work in that way. Politically, it'll be possible for you to be pro-Israel, anti-Palestine as a US politician with a national election, I think in the next, say, 20, 30 years.
Troubled geopolitical times. And we didn't even mention the Putin nuclear story, but that'll unfold over the next week before we next speak. That was Viv Govender from Rensuisse, David Shapiro from Sasson Securities, both in Johannesburg. And that was the... Always excellent Thursday night edition of Viv and Dave, the five o'clock shadow.
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