You're listening to Strictly Business Podcast
with Lindsay Williams.
It's Monday,
so it's time for Shapiro World with David Shapiro from
Sassfin Securities in Johannesburg.
Public holiday,
or rather bank holiday as the British call it in Britain,
apart from Scotland,
and so therefore the JSE is very quiet.
We've also got Labor Day weekend coming up, David,
and people are really gone from Thursday afternoon
and they go off and it's a big driving weekend and it
signals the end of the US summer.
traditionally that's that's the theory anyway the first
monday in september is always labor day and
that's the end of it and everyone comes back from the hamptons or wherever they go
and we can start getting busy again it's been an
interesting summer and it was an interesting friday in jackson hole
wasn't it it
was um i listened to the talk i listened
to the speech and the subsequent discussions
and you know it's interesting to see how
he changed course what i liked about it and what i'm
picking up on,
and it's something we've said for a long time in
discussions,
that nobody really knew what was going on.
And I think for the first time they've admitted,
we didn't really know what we were doing.
I'm putting it into my own words,
in a rather crude form.
But I think they fiddled,
and I think what's happening now is that they've got to go
back and say, you know, what did we do right?
What did we do wrong?
What can we learn from it?
So, but I think, I think...
The message that everybody's taking, of course,
is that rates will start to come down.
And the discussions now are,
is it 25 points?
Is it 50 points?
How long is it going to go?
I would reckon another consistently
down for another, what,
two full percentage points.
That's 200 points down.
And we'll see from there.
Lindsay, it doesn't mean everything's out the woods.
You still got to work out how the economies are.
operating, how they're functioning,
and what this means.
Does it kickstart the economy?
Does it improve the economy?
Does it pick up things?
That's going to be the next discussion.
So, yeah.
I think one of the things he said, and again, in my words,
not his,
I think he said the economy is still strong,
which is very encouraging,
but the labor market and inflation
is under control.
He said the risks to the upside haven't gone,
but they're not as pronounced as they were.
And we said that the labour market, and there was one other said,
I can't remember which indicator it was.
But anyway,
certainly the labour market showing signs of
weakness.
And so that is almost justifying his
decision to definitely cut on September the
18th.
But as you quite rightly say, the point is 25 or 50,
knowing Powell, it's going to be 25, I think.
Yeah, I think they'll take it slow.
Unless something really dramatic happens with the
employment numbers, which I don't think is going to happen.
So.
Look, markets are going to drift.
We're now going to look for something to latch on
to.
It's going to be either the U.S.
election or it's going to be the wars in the Middle East
and in Ukraine.
It's going to be earnings.
Everybody's getting excited about NVIDIA's
earnings, which come through on Wednesday.
So it's up and down with NVIDIA.
I was just looking now.
They were up about a percent,
and now they're down a percent.
I didn't see that.
You're getting massive volatility in those
markets around the stock.
It scares me that it's all around one stock.
I must admit,
it just makes me very nervous when
too much focuses on one company's results.
They'll have to be spectacular to maintain these
levels of
PE ratios and every other measure that people use.
They'll have to.
If there's a slight miss, David,
then it is vulnerable to a 5% to 10% correction,
not in a day, but over a period, don't you think?
Oh, yeah.
No, absolutely.
You know, this is like poor Harlan taking a penalty.
You know, you don't expect him to miss,
and then one day he misses,
then everybody's going to start questioning what's happened to poor man.
You know, that's like NVIDIA.
It's just, this is it.
It's crazy.
It's a very good business.
They're writing a lot of business.
They've got a good product,
but sometimes everybody tries to
outmaneuver someone else, you know, another analyst.
So I don't know what you know,
you know what if you told me the results today, okay,
and you said to me listen
I've got an insight track in NVIDIA.
Their sales are going to be, what, 190 billion.
I wouldn't know how the market's going to react.
Exactly.
In other words, for me, they'd be spectacular.
But I don't know how the market's going to react.
I've got no idea whether that's good or bad.
Well, it wasn't expecting it.
It was expecting it.
This is more than, you know, you can't read this anymore.
So you just go with what the traders are
building into the algorithm.
Yeah, the market, it does what it wants to do.
I mean, let's use a...
A rather less glamorous
example of ABSA's results.
They were terrible.
Share price went up 5%
on the day of the results, up 2.5% the day after.
You think, what is that?
I mean,
there could be a blockbuster set of numbers with lots
of noughts on the end, and Nvidia could come down 5%,
because people like Goldman Sachs and all the other massive banks
that are in there have sat down and said,
we need to see this in order to justify buying this
share.
And if they don't get it, then they trim it a bit.
That's what I think.
No, you're right.
So that's why I'm saying even if I had an inside track,
I would have no idea, you know,
what the reaction is going to be.
So we're in for that period now.
You know, we're in,
even though we've recovered from a couple of weeks ago,
I think markets are twitchy.
You know, they're, okay, you know,
we're coming back now.
What are we going to do?
What's the next big story?
What are we going to focus on?
I like where we are in the sense
that
We are now going into a period of rates
coming down,
and we're going to focus on the economy,
focus on getting growth back.
And why it's necessary is that this market,
if it wasn't for chat GPT,
if it wasn't for the AI releases in November
22,
I think we would have had an awful 23 and
awful 24.
Right up to now, markets would have been, you know,
we wouldn't have even been talking.
We would have been moaning every week.
for the last one and a half, almost two years.
So we were saved by
AI. And now
I'm hoping we get back to a period where
we get global growth, the breadth of the market,
you know, the market, sorry, develop some breadth,
that there are other stories that we can start to look
for.
But, you know,
we're going to have to wait for that.
But at the moment, it's still very much aligned to
AI and, you know, one or two other areas.
What's her name's a disaster?
Yo, it's China.
I just saw these.
I was just looking at, yeah,
I saw this.
What's it?
PDD.
Pinduoduo.
No, I'm not familiar.
What is PDD?
Pinduoduo.
Yes.
What is it?
It's a Chinese internet business.
Oh, okay.
And, you know,
it was one of these very hot
businesses at the time.
I think internet.
I'm not exactly sure what they do.
But I think they provide a lot of services as well.
I'll have to look up.
But I just saw them down like 25%,
27% on disappointing earnings.
And, oh, my God, you know,
that's another one.
So things are not going
well there.
And we need China.
We need China back in the mix to keep the global
economy going.
You know, when I say it's all very well for U.S.
to come out of it and Europe and so on,
but I think you need Chinese growth as well.
I noticed that a senior Chinese banker left
his position today.
I don't know if you saw that.
Not from the People's Bank of China,
not the central bank, but a commercial bank,
a very, very big one.
And I looked at this and he says he's left for personal reasons.
You don't leave for personal reasons in China because it's a sign of
weakness.
There's no personal reasons.
If he's got personal reasons,
then the powers that be will say,
you are in this position because we put you there and we
need you there.
Get over your personal reasons.
unless you're on your deathbed or something like that.
But I just think that there's something a little bit rotten in
the Chinese system that we will never hear about, David.
And again,
it's a horrible generalization based on no
fact whatsoever.
But just as a sort of a market watcher for a
number of years now, it didn't seem right to me.
No,
that's what worries me about China.
There's so many things that are not going well.
And particularly on the growth side,
I know they're trying to pull all kinds of levers and
they're trying to
get things going, all dragged down by
the property market.
And also the way that
COVID was treated and the lockdowns and so on.
It's never really come back.
But it's such a
large economy.
I mean, it's the second largest in the world.
It's what, 16% of...
total global growth.
Yeah, if you put Europe together, I mean,
Europe as a whole is much bigger,
but still it's very important in the
mix and
I'm a bit concerned it's
taking us down.
And it also, you know, these are just further
These are kind of further evidence of
slowdown, of things going wrong there.
And then we've got, you know,
you've got to watch the commodity market.
And in South Africa,
everybody gets carried away with the commodity market.
It's bottoming.
It's time to go in now.
It's this and that.
And I'm, you know, I'm looking frantically saying, well,
give me a sign, you know, give me a sign.
Just show me that it is the bottom.
And what's more, we need.
we need the chinese to come into those markets and give us a bit
of a lift as well but they're not doing that so
okay have a look at this illusion the chairman of bank of china
has stepped down after more than three years in his role as
confirmed by a statement filed by the shanghai stock exchange
it's one of the four major state-owned banks okay so stay
owned there's the first flag it's not personal reasons
it says here before joining bank of china as
vice president the president he served as the chairman of the china
everbright bank
It comes at a time of intensified scrutiny
and regulatory oversight in China's financial sector
as President Xi
Jinping continues a widespread
anti-corruption campaign that has targeted the
country's largest financial institutions,
etc, etc.
So we know what's happened, David.
We're long enough in the tooth to know the signs
there.
Yeah, but normally he doesn't resign, he just
vanishes.
Exactly.
Sends a message to his wife Sorry darling, I might be late for dinner
Might be late You can go away
quite easily actually Not
difficult to disappear in China
David, a couple of little companies coming up With results
from the JSC Stardio and
Italtile And what was the other one?
There was another one as well Let me have a quick look
Italtile and Stardio
And I thought there was another one as well.
Advertek, that's another one.
Any of those, you must have glanced,
it's your habit to read everything, David.
Any of those caught your eye?
We discussed education stocks,
I think, last week.
Both of those came out with trading updates.
Very, very good numbers.
Solid, you know.
And it just shows you my interpretation,
of course, is that people are not holding back on education.
The company Stardio came out of the Kuro
camp and is offering tertiary
education.
It's still in the development stages,
so it still has to hold back capital, but a good number.
People are buying into it.
In other words, it's increasing its students.
They call them learners here.
I don't know where that word comes from, but
I can't stand it.
No.
But I'm a learner.
Pupils or learners.
Or students, yes.
Yeah, I'm a pupil.
Pupils or scholars.
I mean, that's word being used for since Shakespeare,
so I don't know why we have to change it.
But
anyway, for me, I'll be old school.
Students are increasing quite rapidly.
And it's a, you know,
it's a very decent, they're giving good numbers.
Advertisement stands out.
And I think simply because I don't think it's held
back by the need for capital
investment, you know, big capital investment.
But good numbers.
And I think stand out against a whole series of
other companies that have reported.
In total, nothing they can do.
No money in this economy,
no money being spent on housing,
no building taking place.
So it does hold them back.
And the problem is, as they say,
there's a lot of manufacturing taking place,
too much supply for too little demand,
causing obviously price wars and that.
So they're a well-run business.
very well run but uh they can't fight
the you know the trend in the economy so
down yeah when did you buy a box of tiles
me yeah you no
no i i haven't not at all
i i'm just trying to think when we've done anything i haven't done for
years for ages but there are a lot of people i
i'm always amazed when i when
i go in and i've got to buy something you know and i'm not a
wayne mccurry Wayne loves his shops.
He can walk around them forever.
That and the spur.
He loves those kind of things.
But I couldn't tell a hammer from a nail.
I mean, I wonder how.
You put him in a motor car spare shop.
I mean, he'd disappear.
You'd have to be putting flyers on
lampposts saying, missing fund manager.
He's still in there wandering around the aisles.
He loves it.
But I have to tell you a funny story.
When I was from Scrooge.
into the Air Force.
You know, we do our basic training,
marching around with 303s in these funny overalls.
And then you get busted.
You get put out somewhere.
You get a security guard, air rider,
a photographer.
None of us could get those jobs.
So I became a stormman.
Anyway, and the reason I became a storeman is that
we all had to do these IQ tests or
occupational, I don't know what you call them, like a test.
Yeah, yeah.
And he had to do these things and they had all these
tools.
What is this?
What is that?
In other words, you had multiple choice.
I had absolutely no idea what anything was,
just completely out of my depth.
So, I mean, they certainly couldn't put me in a...
in a technical training group at all.
So that's why I was dispensed to the accounting side.
You've got to know what you're good at and what you're bad at.
What's the word?
It begins with an M, I think.
Anyway, I'm the same.
I was watching a film the other night with Clint Eastwood called Gran
Torino, a very good film.
And he takes this young Korean boy under his wing
and he gets the kid a job at a building site
and he takes him to...
a hardware shop and he says you're going to need this which is this and that
which is that and i'm looking at all the array of
tools and and other bits and pieces that are in these
hardware stores and i thought i wouldn't have a clue i wouldn't know
what to do if someone said to me lindsey put this
shelf up will you and i'll be i'll be back in an
hour well i won't be here mate
i'm sorry yes it's very difficult i still back
thing to put petrol in my car but on my own
david uh did you read anything of interest this weekend you
I think, you know, funny enough, I think, as you mentioned,
we're in that last period of the holidays,
so very little is being covered.
You know, there was nothing new.
It all had to do with PAL and the focus around PAL.
But
I didn't pick up anything worthwhile,
you know, to help.
I think we've just got to get through the next couple of weeks until
we get back into the swing of things.
So, and, yeah,
it's...
You know, I'm just,
the volumes must be very low.
I'm not changing course.
I think the big discussions we have at the
moment are concerns about perhaps the pricing of some
of the tech shares, the pricing of NVIDIA.
I see NVIDIA is under a bit of pressure today.
And my big question is, okay,
so we sell, what do we do?
You know, what do we do?
So you're saying that the opportunity cost of selling
NVIDIA and saying, well, we've done really well.
It actually starts to weigh on your decision because you'll
say in two weeks'time, oh, look,
it's now another couple of percent higher than we sold,
and yet we haven't deployed this money anywhere.
We haven't put it anywhere because we don't have a better alternative.
Yeah, absolutely.
And that's why even in the
U.S.
market,
there's nothing that we can guess our way in.
In other words, guess, oh, if rates come down,
this is where it's going to go and so on.
I've got I looked at Walmart's results.
I looked at Target's results.
I like what we see because I think that people are going to be looking
for bargains.
I like Costco because I think people are still very
conscious of where they spend their money.
And, you know,
that is more of an attraction than
anything else in saying, oh,
we've got to buy industrials or infrastructure stocks or anything
like that.
So that to me poses a problem at the moment.
I haven't got any real
good ideas i feel like the you know it doesn't mean i've
dismissed the eli lilies and over nautas and some of the other
good companies like the uh some
luxury businesses and that but but overall
it's you know a bit too early to take advantage
of rates coming down and saying it's going to go
here it's going to go there that's that's come back
to the commodity side as well you know to say okay
is there something looking interesting there if rates go
down you know can we see signs of building taking place
Not yet, Lindsay.
So I think that's a little bit of a
danger.
It's a bit of a discussion point of what to
do if we do take profit.
Of course, we're not short of philosophers
in the stock exchange,
people who come out with all these different
aphorisms and so on.
No one's ever lost money taking a profit,
that kind of stuff.
Or I'd rather have a…
I'd rather have cash than a stock that's going down, you know,
that kind of stuff.
And, well, I can't live by that, you know.
I said, no, give me a switch.
Don't give me
philosophy.
Okay, so you're not doing anything different.
There was nothing that you read over the weekend.
The only thing that really caught my eye politically over the weekend
was Robert F.
Kennedy Jr.
Yes.
Endorsing Trump.
I mean.
I saw
Trump. Even Trump didn't seem too infused,
but he said, anyway,
you're a fine man and he's going to have a place in his cabinet if he does get
in.
But then they gave the microphone to Kennedy.
He can't speak properly.
I don't know if he's got something wrong with his throat or whatever,
but he's riddled with scandals, sexual assault scandals.
What is this thing about dumping a bear in Central
Park?
Have you read that story?
No.
Do you know about the bear in Central Park?
I've got to try and find it for you.
There are two animal scandals in his life.
And he did something.
I've got to find it now.
While you're sort of philosophizing about
other things, I've got to find out about dead bears.
Hold on.
Wait a second.
But his own political career,
his poll numbers were plummeting.
So he had to do something because he's desperately keen to be
in the limelight.
And when people see this,
anti-Trumpers see this.
they say well this is it i mean there's two complete idiots
joining forces and
there we go and i've just googled it john f
kennedy bear a wild story about rfk
jr and a dead animal has
resurfaced gotta find this because it's a monday
afternoon the market's very quiet we've got to see it and the
whole family i mean over the years i mean john f kennedy
himself was a fantastic man and
as
trump has said that he will open all the files on
the assassination
He's going to get a special commission going to investigate
assassinations.
Oh,
he's used a chainsaw to cut off the head of a dead whale.
That's one thing he's done.
As for the bear, I can't...
Hey, I'm going on too much, David.
Football over the weekend?
I watched a lot.
Yeah, me too.
I did.
Well done, Arsenal.
It was tense.
You know, they're a good team, Aston Villa.
I must say,
they will certainly come within the top
five.
I think they're very skilled and very good.
They miss it, but that happens every week.
There's somebody you're going to miss.
I don't think anything serious in
it.
No, Arsenal played well.
I was just,
I'm trying to think who else was there.
Liverpool looking okay,
but not great.
I think they still got it.
Man United was disappointing.
Very disappointing.
I know the fans are saying, it'll come right, it'll come right.
Chelsea, I just don't know.
Still trying to wonder.
They seem to have a decent team against Wolves.
I don't know where Wolves went.
They just went crazy, just crazy.
By crazy, I mean it was too all.
I don't know.
They went down 3-2 and then just tried
too hard to equalize.
Instead of being steady and playing their good game,
you know, good game and waiting for the opportunities,
they went wild and, of course,
just left it open for Chelsea to score
six or an extra four in the second half.
But I enjoyed the weekend, I must say.
It was great fun.
And we've got the Champions League
draw on Thursday at five o'clock, I think,
or six o'clock our time.
So that'll be interesting to see who Arsenal get and City
and all that lot.
I have to finish this now because it was bugging me.
Earlier this month, the 70-year-old Robert F.
Kennedy Jr.
came clean about taking a dead bear cub from the road
and planting it in Central Park in
2014.
Ahead of his involvement in the bear story being reported,
Kennedy told comedian Roseanne Barr in a video
posted on X that he intended to skin the animal
and store the meat in his fridge.
However, at the encouragement of his friends,
he went ahead with the prank in
Central Park instead.
This is a man that could be serving
in the cabinet of, if heaven forbid,
President Trump's administration.
I mean, how bizarre is this?
And the other one is that he got a chainsaw and cut the head off a
whale and put it in the back of his car.
And these are both been verified.
This is not just wild X rumors.
This is the truth.
What for?
I don't know.
I don't know what kind of a brain he's got.
Anyway.
Yeah, that's it.
He can be Trump.
He can be on that side.
I think a lot happening.
I love Trump.
He can't take it that
Harris is drawing this publicity and
drawing this adoration.
I'm not.
contesting on the economic front,
but he can't take it.
You know, he can't take competition.
And when he gets worried, he gets flustered,
and he starts to just talk and ramble and go on and
on.
I mean,
even boring his
loyal supporters, you know, who just say this man's unhinged.
So, you know, he's going to unhinge himself.
Instead of just fighting it, you know,
fighting her on economic policies and other policies,
he's just.
He can't take it that somebody else has got the limelight.
And the Harris campaign for the debate on September the 10th,
there's two debates,
one between the potential presidents and there's
the VP debate as well,
a week or so later.
And the Trump campaign has said we want
Mike's to be muted when he's finished answering the question
because he can't stop himself.
He has to blurt things out and he'll do that while Harris is
giving her answer.
And he says he cannot concentrate for one and a half hours
on the script that we've given him.
and he'll make a fool of himself.
So that's quite a big thing.
And also the other thing is he's seven points behind in a national poll
published this morning in America.
Seven points behind.
That's a decent amount.
I think he's playing himself out.
You know,
he's actually destroying himself and
playing into her hands.
And he just can't, you know, he can't.
He's got to let it out, as you say.
He can't just keep control and say, okay,
how do we fight this?
you know,
and how do we get back on course?
How do we get back using economic policy and
trying to attack her on some of her weaknesses?
Because some things that she's saying, you know,
some of the economic policies, especially over price control,
are nonsense and worrisome,
but he can't.
He's so easy
to rattle,
and he's been rattled by her youth and
by her appearing on
covers and, you know.
People want to interview her rather than him.
So anyway.
Yeah, he's falling behind and he's in danger of losing it.
Even the most vehement media
fans of his are saying he's losing
this election, which is great.
Oh, for son of a...
Losing two in a row, how fantastic that would be.
David, thank you very much for your time.
As always, we'll speak again with Viv on Thursday.
David Shapiro is from Sassfin Securities.
That was the Shapiro World.
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