You're listening to Strictly Business Podcast with Lindsay Williams. The JSC has closed its doors for another day, so it's time for the 5 o'clock shadow. And as always on a Thursday, I speak to the giant brains of Viv Govender from the award-winning RAND Swiss and David Shapiro from Sassfin Securities. David, I saw the US CPI data following yesterday's PPI data. The CPI came out this afternoon and the market started to... not roar ahead, but steadily climb.
And the commentary was, oh, these are really good numbers for an interest rate cut. That rose from 2.7% year on year in July to 2.9% year on year in August. And the month on month was up as well. I don't see where the good comes in. To me, inflation went up. Am I wrong? Well, you know, this is the first, I mean, generally the Fed looks at inflation. But I think in this case, They're going to look at the job numbers and employment.
And I think if you look there, even today, the claims was up quite considerably. In other words, more people are losing their jobs, making claims on unemployment. So I think this is, you know, the dual mandate of full employment and the other is price stability. or so I think... You know what interested me is that I thought all I hear is, yes, there's a 25 point for September. I think that's in the market. But when I looked yesterday, it looks like there's more than one.
It could be up to three cuts this year in the market. Now, whether this is going to happen or not, we're going to hear next week what Mr. Powell says.
But I must say there's growing views that this is imperative for… you know for Powell to bring down rates and to give the other market a little bit or the other side of the economy a little bit of a kick you know as Viv says he's worried about the high levels of profits that he's making you know he feels he doesn't deserve it and he wants to give some back so what what I'm saying we can't talk about Viv's personal life David this is this is for public consumption, but anyway. Viv's laughing.
What I'm trying to say, that's the other market. You know, the AR market, I mean, is just crazy. And we'll talk about Oracle in a few minutes' time. Yes, we will. Larry Ellison, congratulations to him. At 81, he's the richest man in the world. I sent out a tweet. I wonder if you could measure who the poorest man in the world is. But Larry Ellison, would you rather be Larry Ellison or Elon Musk? I suppose Elon Musk has got a lot more time to spend. His ill-gotten gains, isn't he?
Viv, you're agreeing with me. You'd rather be Musk rather than Ellison. I mean, once you get to like, I mean, I even think, let's get a few hundred million dollars. The idea that you could reasonably spend that money, you know, in a lifetime is ridiculous because every year you're getting a few million dollars coming through just as, you know, passive income. So when you have billions, I mean, it's really going to be a case of ego.
$400 billion is an amount of money that in a year would generate. like over $10 billion just in like normal like returns, you know what I mean? In interest returns, risk-free returns. So yeah, you much rather be the younger person, whatever the person's name is. But with Adelie Edison, the interesting thing here is that he actually owns more of Oracle now than when he started off when it was first listed because of the fact that all the share buybacks.
And that's been like raising the amount that he owns in the company like over time. And the interesting thing about this is that also we are seeing the impact of, you know, The downstream things, for instance, the most valuable company in the world is really upstream. It's basically the guy who makes the chips. And then we have the people developing those chips and whatever downstream, which is like AI companies, like OpenAI and so on.
But also the cloud companies, because Oracle is basically getting this huge kickoff because of the cloud demand that's coming through because of AI. Okay. So there's our Larry Ellison chat. Go on, David. You know, Mr. Ellison has won the America's Cup. Oh, he's a sailor, is he? That's his hobby. Not racing, which can take up a few billion to build these machines. So I think he also fancies jets. I don't know what else, and fighter planes and that.
So I think there are plenty of areas where he can actually spend and enjoy it. Well, at least he does his on Earth rather than Mars, which is where Musk goes. Well, it's not in space, but it is pretty high up. Yeah, those yachts, you know, those America's Cup yachts are extraordinary. There used to be a couple of chaps with ropes and canvas and everything, but now it's the I mean, these are almost more sophisticated than a SpaceX rocket, these things. I don't know if you've seen them, Viv.
Yeah, but even Davidson, it's actually a couple of hundred million at most. So think of it this way. Larry Ellison at $400 billion, and if he gets even a 5% return, 20 billion dollars basically of uh you know of income coming in a year It will take not even a week for him to basically get more money than he could ever spend on the America's Cup. That is what I'm saying. When you have this kind of money, it's literally impossible to spend it.
Every year, you have another 20 billion in the America's Cup. It's a problem to deal with in terms of more money coming in. Forgetting about how much money is making just for the stock price rising. So, yeah, it's a ridiculous amount of money. Viv, what you're going to do while I'm speaking to David briefly is... Work out the 400 billion at 5%. When does he become a trillionaire? That's a nice easy one for you. With compounding interest, when does he become a trillionaire? How many years?
Will he become a trillionaire before he's 100? David, while Viv does that, can you tell me a little bit about what happened on the JSC today? Because we had First Rand and the shares shooting up, and we also had Discovery. Did you look at both of those? I looked at them, yeah. There were two results out today. There was First Rand and Discovery, which used to have a connection at some point of their existence. But I couldn't see anything exceptional about First Rand. It's good.
It's a very solid result. Remember, I think they've got very good brands. I'm not a great supporter of the big banks, but they've got West Bank, they've got RMB. And they just produce very solid, steady profits. And, you know, 10% is probably at the top side of where we could have expected them. But, you know, it's a pretty decent earning. And why the markets responded the way it has, I'm not quite sure. I just, Lindsay, I just think markets are urging to go.
And you can feel that they want to go. You know, we've seen it with gold shares, platinum shares. And I think it's coming down to those companies that underperformed. And your good friend, the very nice hedge fund manager, value fund manager, Mr. John Bickard, I think could be right. I honestly, you know, for whatever reason, I think that some of those companies that have been smashed down, despite the fact that the SA economy is battling along, it's really struggling.
I think And there's a kind of urge to push these share prices up. And it's in line with the rest of the world. Interesting. Because I think headline earnings per share for first round was up 10% or something. It was very pedestrian. But I think what happened was that they performed well despite the fact they had a tax problem, David. No, I don't want to talk about tax. And it's still there. Yeah, exactly. That's still there. And they've made a provision for that. It may be, you know what?
In fact, you've hit on a point that may be why the share price went in. In other words, they've identified, okay, we're putting away X. Yes, exactly. Before it was open-ended. No one was quite sure how much this could cost them. Yes. This is the claim in the U.S., this motor claim, that that might be a very valid reason that you've just brought up, that people, it's almost relief. Okay, we can move ahead. It's held us back in the past.
There's an, we can identify how much they've set aside, which is likely the upper end of what a claim could be. Let's move ahead. Exactly. And it reminds me of what a bookmaker said to me in Johannesburg when I first came to Johannesburg. And, you know, it was very lax. You could run up an account and just pay when you could. And of course, I ran up an account and he said, Lindsay, it's been a month now. Pay and the pain goes away.
And I always remember, so that's what First Round are doing in a way as well. Viv, could it be a 50 basis point cut next Wednesday from Powell and his team? Because the last time that happened actually was quite recently. It was during, it was right at the end of the Biden administration. He cut 50 basis points then. And I think that people said that was politically motivated. Could there be a political 50 basis points from the Fed, Viv? It's possible. Thank you.
Just on first round, I mean, the results are 10%. But look at the P ratio, 11. Look at the dividend yield, 5. A company growing at 10%, well, that is still cheap, those ratios. But, yeah, looking at Powell's decision, I mean, did you guys see that million job miss? Yeah, 911,000. That's 76,000 a month. That was quite startling. Go on, Viv. Yeah. So that means that basically, I mean, there was a term coined at the end of Biden's administration called the vibe session.
And people are saying that the numbers look great, but people just don't feel happy. It turns out when you are given a choice between people's feelings and numbers, the people's feelings are usually right. And it appears that the US economy was actually a lot weaker than people have been thinking, just because the official numbers were basically overstating how many jobs there were in the country. Like I said, 77,000 every month for like the last year, until March, basically.
showing that if the economy is that much weaker, that it kind of makes sense that if the Fed was thinking, you know, about cutting previously to these numbers coming out, they should be much more convinced to cut right now. And maybe, like you said, a 50 basis point cut in this scenario might even be justified. Okay, well, we'll wait and see. Just before we go to the numbers, I want to talk about the assassination of Charlie Kirk last night because it was around about nine o'clock.
And as soon as it came up and said, they don't know what his condition is, I knew he was dead. And the blame game has started. Who started what? We've got to stop this rhetoric, and it all started with this person. That means nothing. What it does show, and David, you're going to the States next week. It shows a desperately and disastrously divided nation, and it's quite dangerous, isn't it? Totally.
You know, when it came out and I saw it, and I actually saw a video, Which is really of him being shot. Someone was taking a picture and you just see the bullet hit his neck and you see the blood spurt out. It's something that they couldn't even do in the movies. And it is really frightening. But you know, you bring it up. This is a divided nation. And where you have a divided nation like this, where the rhetoric is so angry and so bitter. you're going to get individuals acting this way.
You know, because they come frustrated that they can't get their way, I think they exercise their anger. And this is not groups. These are individuals. They exercise this anger, you know, by extreme measures, which is like assassinations. And I think, you know, as you mentioned, I think they will occur in a country that is kind of polarized or fragmented. So, and, you know, to be honest. The man at the top is not exactly an angel. You know, he's not the man.
He himself is a man who creates or has created a lot of division within the population on both sides. So it's not only you're getting extreme right-wing violence, you're getting it on the left as well. We assume it was on the left, but yes. So, you know, I... For me, it identifies where America is. And the strangest thing is that today it's 9-11, hey? And this was the last act where actually people felt unified. They felt American. It lifted their spirits. It made them very bipartisan.
Everybody was in the same boat. And it's so strange that it's come. And here you are 24 laters. You've got a completely divided country. Anyway, I just feel very bitter, angry about it and very sorry, you know, certainly that this is the way that people are venting their frustration. Maybe it'll be one of those things where people say, right, that's enough now. Let's tone it down on social media. I mean, that woman that we follow occasionally, David Jojo from Jers.
I mean, she's funny and everything, but down there she deeply, deeply hates Donald Trump. Yeah. And that does come across maybe people like her.
on the left and you know people like um james woods the actor on the right have have got to stop now viv you can come in come in here looking looking at this i saw a video and it's quite sad because i've got a daughter the same age and he's a video his daughter running up to him like you know at some previous point you know not a bit at that date and calling no daddy and stuff and then apparently she was at the event or his family was at the event and so i just think to myself you
know that's it's a person with a kid a very young child a three-year-old uh and i think another a younger child as well uh and then from from that's just that's your point of view it's not these people you know that are killed but what i do have to say that you know the us has a history of this i mean people forget how dangerous the 60s were you killed the president you killed the president's brother you killed the number
one civil rights leader in the country you killed uh he's number two as well You talk about murders were happening all the time, multiple bombings. The US has a very violent kind of streak through it. I mean, something you don't see in many other countries. I mean, you might have seen that in the UK with the IRA, but you're not seeing the Tories and the Labour Party going like that. But the US, you might be seeing something like that happen.
And the danger here is that normally in these situations, you have people in charge that are going to tamp things down.
I remember when Barack Obama had that whole kind of... with thoughts and prayers kind of stuff happening when uh that uh madman killed a whole bunch of people in a black church uh trump is not doing that trump is saying you know we're gonna go after the people that did this he's ramping things up uh and you know my fear is that you know we don't trump will push things when the economy is the thing that went against him. We see an economy that's weak at the moment.
It'd be a very easy thing for him to do to try and push forward. You know, we're under threat. It's a dangerous kind of environment. If, you know, the economy is suffering and that kind of stuff. And that is the fear I have at the moment. It's that, you know, he's going to be using this not as a case of, you know, he's going to use this as if George Bush used it as a political event.
And basically went after his enemies and said it was the Democrats that led all these, you know, foreigners into the country around 9-11. It could be a very different country at the moment. And I think, unfortunately, Trump's going to do something like that. Oh, gosh. Well, I hope not. OK, let's move on to things that we can try and understand. And that's the markets where the dollar round is 1741. The round really is doing so well. And I had an interview yesterday with somebody who's in the.
in the bond market and the South African bond market, if you look at it compared to its developed market peers, has done so well. For example, I'll come to that in a second, the 10-year. But let's carry on with the currencies. British pound against the round 23.63. The euro round is 20.44. Euro dollar 1.1740. That is a euro that is a percent higher in 24 hours. British pound against the US dollar 1.3575. The pound up 1.2%. percent Gold price is $36.37, which is down slightly.
The platinum price is flat at $13.98. And Palladium, which had a really good day yesterday, has had another good day today. $12.32, up $20 or 1.6%. Now, other commodities. And I'm adding copper, gentlemen, to the normal, just crude oil, apart from the precious metals, because of what Harmony has done. And also, more importantly, the tech and Anglo merger, which is all about copper. But we've got West Texas crude at $62.57, down 1.7%. Brent crude oil at $66.52, down 1.4%.
And the copper price is up 0.9% in New York. This is dollars per pound on the commodity exchange in New York, 4.583, which is, as I say, it's close 1% up so it's 458 And doing rather nicely. What else we got? We got the US 10-year Treasury bond, which is just about to break 4%. 4.003 at the moment, another two and a half basis points down on the yield. And that's after the CPI data and the jobs data today.
The South African 10-year, five months ago, almost to the day, this was 11.08, I think it was. It's now 9.38. Another 10 basis points down. The strength of the RAND, the strength of the bond markets overseas. This is an extraordinary performance. It's like 170 basis points in five months. If you'd have been long of that, well done to you. S&P 500 futures, 6583, up 0.7%, close to all-time record highs. In fact, they are all-time record highs.
And the Bitcoin price also doing very well indeed, 114,500. plus a little bit of change. So, David, things going well. This is an extraordinary bull market, isn't it? It just keeps on going. I know. And, you know, it could continue for some time. I'm not, you know, one does get a little nervous, but you can feel the momentum, you know, building up and ready to go. And a lot depends on what Powell says. But if he says the right thing.
and he moves towards reducing rates, then this can continue and can broaden out. The one thing, this is still very much an AI market. I use AI in a much broader sense. It's still driven by 20-odd tech companies or maybe a little more, some of the smaller ones. We haven't quite seen it migrate or go into… other areas of the market. So for the first time actually today with the CPI, I have seen companies like Walmart and JP Morgan, Visa and those companies, Costco and that pick up as well.
But I think that's starting to now reflect lower rates. But look, after Oracle's numbers yesterday, where I have never in my life seen a company of that magnitude. This wasn't a small company. put on 40 percent. It wasn't as though it was at the bottom end of the market. This was already had a very high cap, you know, it was in maybe the top 20 shares on the S&P. And I'm just absolutely astonished.
But what and I'd love Viv's view on this, because when you look at what they're saying, the amount of money that's going to be spent. On their cloud, you know, it's an astonishing outlook. And I think that has given the AI market or the technology market just another boost, another lift. Viv, that's your invitation. Look, I mean, it kind of makes sense.
If you're going to have a $4.5 trillion company making the chips, the guys that are going to be buying the chips have to make more money than that. You know what I mean? And then the guys that are going to be using these clouds and stuff have to make more money than that.
We need to start seeing... huge huge gdp increases to justify these things here and the fact that we are seeing demand coming through as strongly as you are for cloud gives me some hope that we are going to be seeing uh you know these these things coming through and it also makes me wonder as well you know if you look at um the why did the jobs numbers miss that much because the jobs numbers are a sample samples only work when the underlying entity has not changed you know what i mean so if you
take a sample of something it correlates within the state of the underlying entity but if the underlying entity has changed in some fundamental way. samples no longer give you the same kind of accuracy. And it makes me wonder whether or not the U.S. economy is changing so dramatically in a way that sampling is no longer working as well because the underlying economy has changed fundamentally.
And I think that could be something also indicating that AI may be feeding into the economy faster than people have been anticipating. Does it also tell you that there's a lot of money going into mutual funds in the United States? in order to fuel this market? Because where's the market coming from? Viv, stay with you on this one. What do you think? No, but I mean, the mutual funds aren't buying Oracle's cloud services, you know what I mean? So there is actually something happening there.
There is actually some underlying demand coming through that Oracle thinks that it's going to be seeing this huge kind of cloud demand at the moment. So I do think that there is something happening. I mean, businesses... Maybe they are overdoing it. Maybe it's dot-com part two. But at the moment, it does appear that there is some kind of use case out there that businesses are seeing or someone is seeing that they want to be using Oracle's cloud to basically utilize AI.
Well, anyway, it's all going to fall in the heat when the electricity gets turned off because your companies that you're both invested in are using far too much electricity. And I saw a chap at the World Economic Forum on their website, and he came up with a very plausible argument as to why they're going to go into space and put these giant solar panels and beam it back down to Earth.
And that will solve the problem because there's not enough space on Earth to put the power facilities in order to power AI. So that's solved. Okay. On the JSC today, the first Rand share price was the top. performer of the top shares, 6.1% higher. African Rainbow Minerals up 3%, Life Healthcare up 2.6%, and AVI up 2.3% on the downside. This is extraordinary, because David, we spoke about Discovery after their trading update the other day.
And the trading update was really good, and the share price jumped 10% or something like that. Well, it's fallen around 10%. In fact, it's fallen on the results 9.25%. So what are they seeing in the results that weren't in the trading update. And there's miscommunication there from their PR company. And I think that's very naughty or remiss of them. Go on. I was one who was captivated by the trading update, particularly what they were doing in the UK.
But they do say now that I hate the word headwinds, but they use the word headwinds. They're finding both headwinds in China. and you know in the UK and this is where the growth came. If you look at the local business, things are down. You know, in other words, they're not selling as many policies now as they did. All the growth in policies is beginning to slow down considerably. So what they call their, what's it, premium income, their, you know, annualized premium income.
And that's starting to come down. So when you look at, you know, their health, life, invest and insure, all of those are slowing down, even though the numbers were good. I think that scared people. But new business volumes, we see it in all the insurers, are very, very difficult to grow in an environment which you point out is not growing. The other one is that the bank, the bank's still chewing cash, another 68 million rand loss or something. I don't know what the exact number was.
So I was disappointed. I was quite, you know, I was quite optimistic for the first time in a long time when I saw the update. But when you dig down into the numbers, I think there are a few obstacles that they have to get through. To me, that bank was an ego driven folly. But anyway, that's just me. Anyway, other companies not doing so well. Tungela down six and a quarter percent. Bytes down nearly four percent. Pan African Resources down two and a half and Northam's down. 2.1%.
Okay, before we go to the indices, I've got to ask you a question, you two. And Viv, I'll start with you on this one. A friend of mine phoned me up today and she said, my company's issued what they call a code red. They've already been cutting back this company. It's a giant global conglomerate. The share price has been doing horribly over the year, bucking the bull market trend. They've now issued a code red. They're forcing people to come back to work four days a week.
I think trying to put people off and saying, OK, I'll leave because they they want to cut costs. And even silly things like 50 euros a month that they would give out as fitness benefits. You know, if you can prove that you've improved your fitness via your app on your watch or something, you get this 50 euro voucher from a shop. That's all gone. All benefits gone. Four days a week. Come back into the office. code red and we're cutting back in all our European centers. Would you say that's good?
So I must have a look at this share price because they're getting rid of the fat and therefore it'll go up. Or would you say this is a death knell for this company? Viv, what would you say? Are you an optimist or a pessimist? A company like that, I'd be a pessimist. I like a company that has a growing revenue, not a company that's trying to improve by cutting costs.
Unless it's something like, you know, where you're basically spending tens of billions of dollars on the thing that only marks a couple of weeks. Yeah, stop cutting your nose off and therefore you'll basically feel a lot better. Okay, so that's a sell from Viv. David, I tend to think, sorry Viv, you're breaking up a little bit there. I didn't mean to interrupt. David, I think you're a pessimist with Viv on this one. Yeah, I'm very happy at home. I love to go into the office. I go in there.
The problem is that I do about a tenth of the work and I'm far more efficient at home than I am in the office. I realize that I'm being selfish because I'm not passing. I'm not communicating with young people and not mentoring them and so on. There's time to do that, but I'm enjoying home and I promise you, Lindsay, I'm 100% more efficient. then, well, that's a bit of an exaggeration at my age. But, I mean, even now, here you are.
Instead of going home now, as we come off the conversation, I'm going to just go through a few points and finish off and I'll be finished in about 6.30 or something and then that's it. Whereas I would never do that at the office. Okay, well, thanks for your domestic arrangements. But what I was really asking was would you be a buyer or a seller of the company that I just described? You're a seller as well. Okay. Sorry for that long window. No, no, I enjoyed it.
I've got this lovely picture in my mind now of you sitting down and doing a few points and going off for a run or something, getting a takeaway, whatever it is. But very nice. Thank you. Okay, so we've got two sellers on this one. I'll send you the chart of the company. Sorry, go on.
David says that he's more efficient, but the point about him passing on knowledge, I would bet the amount of value David adds by being in the office and just, like, you know, shooting the breeze with young people is... Quite vast, actually. Imagine the experience these guys are getting by talking to him and understanding the history of the market, et cetera. And it may seem like intangible, but I mean, that is why the company has a future. It's because of that tradition of passing information.
And being at home, you do your own KPIs, yes, but the benefit to the company that they lose out for not having you actually just passing information. It's going to be quite large. Well, yeah, the youngsters are boring today. Hey, hey Lindsay. Oh God, I can't stand the... I really can't stand young people and it's obviously because we're getting old, but I can't stand them. They're not the same people that we were, David. I don't know about Viv. He's a dark horse.
I agree with you, they're terribly boring, but Viv makes a very good point. They should wheel out old people like you occasionally. to come in and have a chat and say things like, I remember in the old days we used to do this and this and this. And I am being facetious, of course, but it is terribly interesting. I mean, that's why I love talking to you. We do it twice a week. And usually I learn something. There's some wisdom there. You know, Lindsay, everybody's going to the Coldplay concert.
They don't even know who Coldplay is. It is. They don't even know who Asus is. So I say, why do you want to go to the concerts? You don't even know who these people are. Yeah, it's very true. I stopped going to my... I listened to him on Spotify. Anyway, I stopped going to my hairdresser because the drivel that she comes out with. Just to shut her up, I said, I'd say something like, did you hear about Charlie Cook? And she'll say, who's that? Is he with Coldplay or is he...
Is he the drummer in Watson? No, it's the youth of today. I fear for the future. David, closing indices, please. If you've got them. Yeah, yeah, come on now. By talking so much, my computer is logged out. Even your computer turned off. Okay. Well, look, I can help a little bit on this one. I can help, yeah. How can you? Is it on again now? Because it was a good day on the JSC, despite the fact that the commodities were down. Go on. You mentioned resources were down.
There was a little bit of easing off there. Nothing serious. The resource index down 0.7%. The overall index up a third of a percent, 103.927. I don't know whether this is new records. I think we're making it every day. Financial strong, I think, picked up with first round lifting the index. It has a big weight in the banking index. And, you know, financials, I mean, industrial is pretty strong as well. That's despite the RAND improving, you know, which takes some of the edge off.
The other one we must watch is I see property going up every day. Yeah. Every day that property market is improving as those rates come down. You mentioned the long rate coming down. You know, as that come down, it makes some of the property companies a lot more attractive, even though they're still battling along at the moment. Growth point numbers came out yesterday, of course. shit Okay, so, and the overall indices were what, please, David, on the close?
So, the all-share index was at 103.927. That was up a third of a percent. The top 40, 96529, also up 0.3%. Very good. Okay, value traffic. Volumes were down. Yeah, volumes have been very high. That Valterra deal, you know, the Anglo-American getting out of their full. You know, they're holding. Those shares have been circulating and trading up and down all over the place and have picked up, you know, made volumes up pretty high.
Again, even if you look now at Goldfields, First Rand, Angler Gold, Naspers, Feltera, all the main traders, it wasn't as big as it has been. But the volumes have been pretty brisk. Very good. Okay, it'll be quiet until next week. Oh, next week, you know what, I've got to, I'm not here next week. So we'll take a break. And we'll be, it'll be the week after that we resume and the world will be a different place. Then I can promise you that. David, thank you very much for your time.
David Shapiro is from Sasson Securities, Viv from RAM Swiss. And that was the five o'clock shadow. The views and opinions expressed in these podcasts are those of Lindsay Williams and various contributors. and do not reflect the policy, position, or opinion of any other agency, organization, employer, or company associated with StrictlyBusinessPodcast.com. Assumptions made on the analyses are not reflective of the position of any other entity other than the speaker or the author.
And since we are critically thinking human beings, these views are always subject to change, revision, and rethinking at any time. Please do not hold us to them in perpetuity.