You're listening to Strictly Business Podcast
with Lindsay Williams.
The JSE has closed its doors for another day,
so it's time for the 5 o'clock shadow.
And as it's a Thursday,
it's the doubleheader Dream Team edition with Viv
Govender from Ranswift and David Shapira from
Sasfin Securities. Viv,
I will start with you because on the local front,
we've had a really quite surprisingly good
inflation print down to 4.6% from
5.2%.
The market was expecting 4.8%.
So on September the 19th,
when the Reserve Bank next meets,
then there's a good chance that there'll be a half
a percent cut, I would have thought,
or a quarter at least, from the South African Reserve Bank.
And incidentally, that's a day after the Fed meets,
and the Fed's minutes were published yesterday,
I think it was.
And it seems to me that there's a consensus that they will
cut.
Would you agree with these sentiments?
Yeah, I mean, I don't know if you saw the Labour Department report that came out.
Yes.
And so basically,
I was always saying for the last year now,
I don't know if I said it in the show or not,
but it doesn't make sense.
It did not make sense to me how you had an unemployment rate
as low as it was, how you had job creation as high as it was,
and wages weren't increasing.
It made no sense.
Inflation was super high.
People were losing purchasing power.
Why were they not asking for higher wages when there was basically
no slack in the job market?
It turned out there was.
It turned out there was about 60 something thousand.
jobs per month that would be over counted and
this is the biggest you know over counting they've had since
basically 2009.
now i'm not saying this is 2009 2009 remember when this stuff was
happening 2009 they already had multiple months
of you know dropping gdp and you know everything was
pretty clear in the recession but it does show the u.s economy is
much weaker than we thought inflation is coming down
i think pretty much it's a guarantee at this
moment that we're going to have a cut in uh
you know the next bid meeting and here's the thing I mean,
a couple of weeks ago,
I was looking at the numbers and they were saying there's a one-third chance
of a half percent cut.
And I thought that was ridiculous.
I thought there's almost no chance.
In fact, I was thinking of ways to kind of, you know,
arbitrate because I thought, you know,
if this market has a one-third chance of a half
percent cut, this is obviously not going to happen.
Most of what's going to happen is a quarter,
and there must be some way to make some money off this thing.
And I was looking at that.
But after the labor number,
which I think was kind of expected to come out,
which I hadn't seen in advance, but when it came out, I was surprised by it.
I realize not.
Just to let people know,
the number of jobs was revised downwards.
Was it something like 808,000 or something?
Was it something ridiculous like that?
Yeah.
It's basically,
they had over 60,000 on average
jobs less per month over the last year.
Okay.
How do they make those mistakes?
I think the market just takes it in its stride.
I think there are a lot of other gauges.
Yes.
Viv said, I think most economists,
there was something I was reading from Capital Economics.
They said that this makes sense because they look at something
called, I'm trying to read it,
quarterly census of employment and wages,
you know, whatever that is.
And they were comparing it and, you know,
now it brings it in line with what they see.
So
I thought there'd be a reaction mainly because the
media can get hold of something like this and blow it out of
proportion, not realizing.
what it's all about but the market just kind of brushed it
aside there was a little bit of a wobble uh
s&p ended up higher nasdaq ended up higher
and it's kind of wavering today all waiting for tomorrow
so um
yeah yeah you're a man of
intelligent man i mean you're a mathematician you've got that
background well i think we you've
got a country that extends
you know as wide as the
the United States is 300 million.
How the heck can you ever get these kind of numbers
to be accurate?
You know, I just
I don't know how one can do it.
I don't know where you've got a model that can predict it with
accuracy, and hence we have to have these kind of adjustments.
So Yeah.
I think this is a good number
for the market.
I think the chance of a half percent rate cut in
the next meeting is probably a third.
I mean, if you think about it, this
We've now had, I think,
and this number officially puts the number of jobs greater than last
year.
We flow the population growth rate.
You know what I mean?
So it's about a half percent of the jobs in
the U.S.
are not there anymore, as what they thought.
So we are looking at the Fed, I think,
having a significant chance of cutting by half percent to the next
meeting.
So that's going to be great.
That'll be great for the markets.
No, I think the market's a bit nervous of that.
Yes.
You know, it might.
be an overstatement
or they might be overly worried.
So, look, whatever it is,
I think we'll accept whatever.
Half percent, quarter percent,
I think the market will be satisfied.
Okay, we're on track.
But, David, you make a very good point.
You make a very good point.
What will happen if it was a half a percent in Viv's world?
The market would immediately go shooting up,
and then people would say, half a percent.
Do they know something that we don't?
That makes me a bit nervous, and then comes back down.
You see that so many times.
But, yeah, half a percent, so what?
The rates are too high.
Five and a quarter to five and a half percent target range for the Fed funds
rate.
It is way too high.
There are other indicators,
and I'm going back to what Viv said about employment,
you know,
looking at why is nobody demanding higher wages and
so on.
What captured my imagination,
what I looked at was the Walmart results and
again, Target, where they are,
you know, where people are now buying down.
They're much more cautious about where they're spending.
And I mean,
this comes from the companies themselves looking for
bargains.
I would imagine they're going for house brands rather than
recognized brands, which are slightly higher,
the cheaper they can get it.
And of course, today, nobody really cares.
So I think there is pressure on the
bottom end of the market and might even be in the middle of the market
as well,
where people are more conscious of where
their money goes.
That doesn't mean that, you know, there's job,
when I say job securities, that people have you know,
have got abundance of cash, their savings are up and so on.
It does, you know,
it does point towards a
weakening economy.
All right, David, stay with you on this one,
because there's been a raft of results.
And so many trading statements and operational
updates and things like Sibani Stillwater coming out
today and saying, well, we've secured 500 million.
Green financing, I don't know what that is,
rands or dollars,
it just says 500 million because of that lithium mine that they
very cleverly bought in Finland and it was only clever for about a
year.
Lithium prices collapse and just are still
down in the doldrums.
But today we've had Adcock,
Ingram and Cashfield.
But prior to that,
the last two weeks has been absolutely packed.
What has been the theme?
I said to somebody yesterday, okay, the same question.
And I said, has it been good, bad or ugly?
And he says there's no bad and there's no ugly.
It's been generally a good reporting period.
Would you concur?
There are issues.
There's no doubt the issues.
I mean,
we're coming off a low base.
So that has also,
I don't want to say exaggerated,
but it's made results look a little bit better
because we've come from, as I say, a low base.
There's nothing knockout there.
And nor are the statements,
the outlook statements.
You know,
pointing towards a massive
amount of consumer consumption,
what is driving the market.
And I'm surprised because I looked at EPSA's
results where the numbers were poor.
They were negative, showing strain.
Admittedly,
on the right-down side of it,
the impairment side,
I'm talking about loans.
They were kind of flat,
but...
the share price goes up five, six,
seven percent and so on.
You know, everybody's, oh, this is too cheap.
This is ridiculously cheap.
So you've been getting those kind of attitudes.
There was a story.
I looked at Blue Label yesterday.
I couldn't understand the numbers because,
you know, when they come out with a trading statement,
you put out so many conflicting numbers that you don't
know what's happening.
But apparently what happens is that they now own
more than 50 percent of
Celsius, so they can.
incorporate their results or something like that,
or there were adjustments in the previous quarter.
If you look at the operating result, it's actually down.
But when they published it, it was up.
The share went up 15%.
15%?
Yeah, yeah.
And I might be getting the whole story wrong because
I try to look through the numbers that I don't know what they're trying to
say.
I don't know what the right numbers are.
Are they making money or not making money?
Whatever it is, but the share goes up 15%.
And I'm saying...
I would never have reacted that way at Coch Ingram
today.
Numbers are out, modest,
no moderate increases there,
a reasonable result,
share up 9%.
So there's enormous churning, you know,
whatever's coming out doesn't really
warrant the kind of gains that we're seeing.
But you have to understand
there's a huge float of money
that needs to go into the market.
And I think it's being pushed up just by belief
that sentiment is going to increase.
We're getting this two-part system going to be released
next week,
where billions of rands are going to be helicoptered
into the economy as people
spend.
recklessly or wherever they need to.
And so I think there's quite a bit of,
you know, churning around those themes and that.
But it's not evident in the actual numbers that we see.
Certainly not in the mining.
Is there a chance, Viv, do you think that foreigners, I mean,
it's a tiny market, South Africa, let's face it.
It's not big in any of the major
indices that attract emerging markets.
But on the other hand, it just takes a small bit of money.
You have your morning meeting at the beginning of August and you say, right,
OK,
South Africa's got a government of national unity and it
promises stability.
Inflation's coming down.
The round is nice and steady and
things seem a bit better.
So let's buy a basket of
SA focused shares and just a few billion here
and there in dollars or pounds pushes the
market.
And as David said, was it justified?
But.
5% up on ABSA after poor numbers and then
2.5% the next day?
I don't know.
It just seems you're buying because it's cheap.
I mean,
I'd rather buy something because it's not that
cheap, actually.
Viv, is it foreigners or local people?
Look, I think the liquidity in South
Africa has gone down so significantly that it's quite easy to
see jump moves happening,
significant moves happening in relatively large volumes.
I mean, I remember a few months ago,
there was a trip that some of our
clients had been following that they decided to get out of APSA,
actually speak of APSA,
and they actually almost pushed the stock into auction because
of shares,
you know what I mean?
And it was, of course,
it was an automated system,
you had a stop loss and then you just automatically sell out.
And I do think that in terms of APSA, I mean,
the pricing on that share is so pathetically low at
the moment.
as david said the expectations are so low it's it's you
know even disappointing numbers look good in it in
comparison to what the price looks like at the moment uh but i do
think there is a possibility i mean i don't know if you've seen uh there's some
like really famous i won't say the names really famous people have been very
negative about africa and they started talking recently about africa
being a good buyer again
david said that as well uh you know people that have been
negative on south africa for like you know a decade here
um and you know it's not
just the fact that the genie we have physical things that are better now.
Load shedding has stopped.
I don't know why,
but it has.
But it has.
It's amazing.
And we are seeing signs that the economy is
recovering.
And like we talked about, inflation is coming down.
All these things are just reinforcing themselves.
Bad things reinforce bad things.
Good things reinforce good things.
Cut the interest rate by a bit.
Have load shedding be gone.
The consumer will return.
South Africans love to come, especially at Christmas.
you know the infrastructure the railway is done properly and we have
these companies export a bit more and suddenly their results look a bit better
you know people earn more money the banks get you know loans
repaid they look a bit better it is possible
that things could be turning around for south africa fingers crossed because you
look here
but you know there is a objectively signs that things are more positive now
than they were a few months ago the only thing is it's a sort of a
fly in the ointment in that one is the commodity prices at the beginning of
august commodity prices went down to a five-month
low across the board I mean, obviously,
it's heavily weighted towards crude oil and other energies,
but that's not good for the RAND.
And if you look at the average over this month,
it hasn't been good at all.
And South Africa is still a commodity currency
and a commodity country.
And on that note about load shedding, Viv,
David Shapiro has got a different story on load shedding,
haven't you, David?
Yeah.
There's not a week that goes by that we're not knocked out.
Vote.
Not because of load shedding,
but because the grid or the power
stations,
the sub-stations are falling over because they haven't
been maintained.
And the problem is it comes without warning,
and it can last anywhere up to five to ten
hours.
We've got the Sydney power station here and
Sibenza that are constantly being knocked out
for whatever reason.
So, you know, besides that,
we still have water problems.
That's why I say.
I'll only be confident on South Africa when I stop saying my
prayers.
And my prayers are, please, God, may I have water today.
Please, God, may I have electricity today.
You know, that's my daily prayer.
And so
I still think there are issues that the infrastructure
here, you know,
infrastructure has an enormous amount to go still.
The important point is the resource market.
And going through the numbers, you know,
going through the recent results, you've seen what it's,
you know, what lower.
commodity prices have done, and of course,
the increase in costs.
So that is our soft underbelly,
because that's a massive
area of collection for taxes.
So we've seen CECL, you know, which was mainly,
funny enough, chemical prices.
But still, on the...
PGMs,
all the platinum companies had disastrous
results.
Iron ore, same thing.
The iron ore price is below 100.
You mentioned all the others, from nickel,
big write-offs.
Coal, we saw Tongala's prices as well,
Tongala down quite significantly.
So they're big
employers.
The mines are big employers.
But it's not only the mines,
it's the ancillary industries related to the mines
or associated with the mines.
that are also very important.
So it remains an area of concern.
As you mentioned, you've got the,
you know, if you look at the commodity market,
you always go to that CBOE index.
And you can tell where it was a year or two years ago and
where it is now.
And of course, that hurts us.
It really does.
I'm looking at the CRB.
And you were talking about Hulim in the other day, David,
and you said the aluminium prices were down, yeah, beginning of August.
So they went to a three-month low.
And three months doesn't sound like a lot, but.
It's indicative of a trend.
I think what's happened is that people have built up stocks
and now they're not buying in the open market because they don't
need it because they've got these stockpiles.
That's one of the reasons.
There are several others, of course.
Anyway, let's have a look at some market indicators now,
starting with currencies.
The rand has reclaimed 18,
or rather the dollar has reclaimed 18.
Dollar rand is 18.03.
British pound against the rand is 23.60.
Euro rand is 20.03.
Euro dollar 1105,
and the British pound has vaulted its way through
130.
In fact, it's very close to 131,
which is quite a big move.
Gold price has been 2,500 since we last spoke,
gentlemen.
It's now 2,477,
which is quite a big move on the day,
down $32 an ounce.
The platinum price is down 17 to
951, and palladium at 920.
Even with a weaker dollar,
those white metals just don't want to go anywhere, do they?
I really...
really are under pressure,
struggling for any sort of life.
Crude oil, I'll start with West Texas today,
7302, which has turned around.
It was down earlier on today and down yesterday,
up 1.6% today.
Brent crude up 1.5% to
$77.21.
Natural gas has fallen 6%.
And what else have we got going on there?
Weak down 6% as well.
Russia is undercutting everybody in the market now.
It's the Russian harvest.
It's the...
US harvest,
corn prices are down at a
multi-month low as well.
So commodities, agricultural,
actually across the board,
more or less under pressure.
S&P 500 futures coming off.
It's very slightly from their highs anyway.
We're 56.35.
We were 56.65 earlier on.
That's down very fractionally.
US 10-year bond is
3.84% out of Jackson Hole.
And what else have we got?
The South African 10-year, that's the one I'm looking for,
9.38%.
Bitcoin has had a bit of a surge in the last 48
hours, just below 61,000 at the moment,
about 1.5% higher.
Now, on the
JSC, I'm going to have a look at some of the movers today.
I noticed one thing as well,
that we've had a few good days over 20 billion,
but the last couple or three days,
it's been well below 20 billion.
I'm sure that's a function of the holiday season.
in the northern hemisphere and international trade is
not really doing much but uh that's up for
discussion sassel 6.6
higher is that correct yeah karu
ups in a quarter what is that one david sh
ccap is it shakespeare or uh shaftsbury
sharps free capital that's it property company at
4.1 percent ital tile up 3.6 and hammers and
another property company up 3 downside in
parlor platinum
to wit so here we go every single one on the downside is
commodities impala
5.8 down drd gold down
5.2 harmony down 4.4
percent anglo-american platinum down three and three quarters
gold fields down three just over three and a
half percent viv one step
forward two steps back on the commodities and
also on the jsc listed
commodity producers and as i said earlier on
It's a little bit disturbing, especially for the Rand.
Yeah, look, I mean, the thing with commodities, unfortunately,
is that it's China, and China is going through a very bad time.
I mean, I don't know if you saw,
I've been talking about the fact that I haven't been investing in China for the
last couple of
years because of Xi Jinping.
I don't know if you saw the images of how he had
all the Chinese athletes come up,
applauding for like 20 minutes as he walked past them.
Not even applauding them, them applauding him.
I mean, all the guys to the Olympics.
Ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha
Yeah, so it doesn't matter,
but you don't have to have something like that.
It would turn on an economy like China that's going through a bad patch at the
moment.
You know what I mean?
Leadership does matter in that case.
And until China turns around,
unfortunately,
our commodity prices are going to be a bit under pressure.
We can be as efficient as we want to,
but all we're going to be is trying to fight our competitors in
Brazil and in Australia to provide the cheapest stuff to
the Chinese.
We need for them to recover.
And unfortunately, right now, I don't see much hope for it in the near term.
Okay, David,
we'll talk a little bit about politics.
As I said, when just before we came on air to both of you,
I've been stupid to be completely
enthralled by the
Democratic National Convention in Chicago.
And I've had every intention of just watching the big speeches,
but I've ended up watching a very good chap,
Governor Wes Moore, for example,
young black governor,
ex military man and everything made a really, really good speech.
And what I've really liked is that there's been some quiet.
hardcore
Republicans that have come and spoken on behalf of
the Democrats.
And they've said, don't get me wrong, we're still Republicans.
We're not the turning party.
We're just, we cannot vote for
Trump and Vance.
We just can't do it.
And that must really,
must really rankle with Trump, David, wouldn't you?
He would be seething about that.
Yeah, I think that there's,
there's no doubt what the response has
been to Kamala.
Kamala, you know,
and just it's kind of renewed,
as we've been saying,
the interest in the Democratic Party.
What's happened is
I think she is attracting a lot of young
voters,
certainly a lot of women of color or
people of color.
Yes.
And of course, not only that,
I think women as well.
So I'm not sure, you know,
kind of the old Democrat.
I'm trying to think who,
maybe the Biden supporters or older
white men.
I'm not sure that they swayed by her
to the same extent as younger people.
And
I think that Trump is, you know,
I don't know enough about politics to know where he is
at the moment, but he must be swerving.
And for once, he's getting his own back.
I mean, both.
Obama and his wife Michelle and all other
people there have given it to him and have
identified what kind of a character he is.
To your point about maybe
Harris is not bringing in,
is not appealing so much to the old sort of Biden style
typical voter,
that's why she brought in Tim Walz of course and he made
a great speech last night, he was very folksy.
He didn't say much about policy, but he didn't need to.
It wasn't a policy speech.
It was,
thank you very much for making me your VP
nominee.
And this is what I've done.
I've been the school teacher.
I've been the football coach.
I've been in, I was in the National Guard for 24 years.
That's what people wanted to hear.
Tonight, of course, it will be different.
Viv, I'll bring you in on this because tonight it's Kamala
Harris and she's got to say something about the economy.
She can't.
just have the big smile and laugh and everything like that
and say, you know,
we've got such energy in the auditorium and we're all
joyous and happy and we're all full of hope.
She's got to say something, I would have thought, wouldn't she?
Yeah, look, unfortunately,
I don't know if she does, because, I mean, here's the thing.
Kamala is like almost the default
candidate that got put into place.
She would not have been what anyone would have chosen had the
crime never been stopped, to be fair.
The thing that worries me is,
have you seen the policies that you bring out?
Capital gains up to 30-something percent.
The scary one is the unrealistic capital
gains tax.
What that would be is that imagine you start a company,
and before you sell the company,
you'd be forced to pay a portion of the value
of the company increase.
Imagine what happened to Jeff Bezos, right?
Starts Amazon,
gets over $100 million in terms of valuation,
and he'd be forced to sell a piece of that Amazon.
shares every year to pay off this tax that we should be
creating.
These are the extremes that come about
because obviously we're not talking about going through the process where
you have the moderate thoughts in place.
Hopefully it comes up with a more centrist kind of economic policy.
And the second thing to note about the US is that it comes down to less than
20% of the voters.
The other 80% of the voters in the US don't matter at all.
You live in California, you live in New York, you do not matter.
You live in Texas, you do not matter.
It only matters if you live in, I think,
about seven or eight states in the U.S., okay,
and whoever wins those particular states wins the
election.
Because, like, California is going to go Democratic no matter what,
you know, like, parts of the South are going to go Republican no matter what.
And so, yeah, it comes down to that.
The one thing that you could say about Tim Walz that was not great
is that normally, and same thing with J.D.
Vance as well, that they brought in
Walz to basically, for whatever reason,
but he doesn't even help us.
Like, Walz doesn't help Trump in terms of the election.
Had they brought in someone like, I think the guy whose name is Josh Shapiro.
Yes.
I mean, another Shapiro out there.
David Kitt goes to talk about how great Shapiros are.
But he would have been better.
He would have been better.
because he would have given them a state that they need
to win to win the election.
Unfortunately,
the Democratic Party is a bit anti-Jewish at the moment,
to be mild about it.
And that probably would have been seen to be
anti-her because it would affect
some of her support.
But yeah, it is a very complicated race.
Right now, I think most polling has it as a dead heat.
Basically like a 50-50 or like
45-45 down heat.
So,
I don't know where the entire town is going to be in
60 days.
She's a couple of points ahead, but the margin of error, I think,
across all polls is something like 3.5% to
3.7%, something like that.
The points ahead do not matter.
Like I said, it all comes down to the states.
She could be six points ahead.
If it's all in California, it's all in New York, it makes no difference.
It has to be in Pennsylvania.
It has to be in those particular states.
North Carolina, maybe.
That makes a very good point.
And I think that might be her drawback.
Shapiro was a much better,
more suited candidate.
But there were concerns, obviously.
And Trump's been playing on it.
He says, you didn't choose Shapiro because he was Jewish.
And you're scared of the reaction.
You're anti-Semitic and so on.
So he's been playing up on that.
But there's this.
There's a little bit of truth behind it,
but I think it would have been a much better candidate,
particularly on the economy and around
issues like that,
on which this election is going to be fought.
But still, it's close.
She's getting the support.
People like her,
and she certainly empowered the
Democratic Party again.
Shapiro spoke last night.
I watched him.
He's OK.
He's a little bit manic.
He sort of shouts at you, unlike you, David,
with your calm, cool and collected approach to
oratory.
And also, I'll tell you who else was quite good,
was the gay chap.
Butter Weep.
Butter Geek or something, whatever his name was.
Yeah, he was also excellent.
So it's been great fun, and I will be getting up again
as I've got an easy day tomorrow,
and I will be watching Harris
accepting the nomination.
should be good.
David, please give us the closing JSE indices, if you would.
We came down from around about 10.30.
We were up quite significantly and then gave it all back right
at the end with a big sell-off towards the end.
And that was mainly in commodities, you know, in the mining shares.
So we ended down about a half a percent
at 83621 with
the miners doing most of the damage, particularly,
as you mentioned earlier, you know,
the platinum and gold shares coming under quite a bit of pressure.
even though the RAND has weakened a
bit.
So the resource index is down 2%,
with the precious metals and mining down
3.5%. Banks are also down
1.5%.
The only area of gain were
industrials.
Industrial index up just over
0.5%.
So still holding its own.
I think if you go into the broader market
outside of the index, Related stocks,
there's still a lot more gainers than losers.
There's lots of trading activity
in the smaller caps.
I think lots of punting going on.
I don't know whether it's hedge funds or people just
having a go at this market.
And we discussed some of the moves and some of the
very little liquidity.
Just on that quickly, Lindsay,
you mentioned the low levels of turnover.
Today we...
barely got to 15 billion, just over 15 billion.
Wow, that's really bad.
And the banks have been holding up, you know, Capitec,
First Rand, Absa, MedBank, Standard Bank,
all among the leaders.
Very, very low volumes.
Disturbing for the JSC limited share price.
Okay, gentlemen, thank you very much for your time, as always.
David Shapiro is from Sasser and Securities.
Viv Govender from Randsmiths, both in Johannesburg.
And that was the 5 o'clock shadow.
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