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 it's a Wednesday, I speak to Skalk Lowe, Portfolio Manager at PSG Wealth Old
Oak in Cape Town.
Now, Skalk, I've got mixed feelings about the US election being over,
because I really enjoyed the fascinating, almost morbidly fascinating,
sight of Donald Trump standing up.
and giving a speech, and then giving another speech, and saying the most
outlandish things.
But on the other hand, I didn't sleep at night.
So now, tonight, I'm going to turn off CNN and Fox News and the BBC,
and I'm going to get a good night's kip, I hope.
I hope my body hasn't sort of started to get used to the fact that I'm up from 12
till 4 in the morning.
But anyway, never mind that.
I was watching the S&P 500 futures tick up to, like, 2....
to 2.3% higher as soon as it became apparent that Mr.
Trump would be the 47th president of the United States of America.
What a story.
Yeah, and what a whitewash as well, man.
It was, yeah, eventually it ended up just being a walk in the park for him.
I mean, that's the presidency, it's the House, and it's the Senate.
I mean, that's just the perfect trifecta.
I heard some stats, you know, last time we've seen.
Such a demolishment of the Democrats.
I think it was the 80s so yeah,
it's a it's a it's a massive massive best victory and
markets How does the same guys sanity will prevail?
I'm gonna change that up and say insanity will prevail because the men today I just
see a
Absolute insane market.
Yes, you're quite right and and I would really caution
you know most investors out there listening to this podcast saying that man
this is this is it we we need to follow it
like you know like a like a like a herd and because this is i mean we've had
goldman sachs coming out and
say well they definitely extremely positive about the outcome this is going
to be very very good for for
the um for the s p five and they're adjusting their forecast
and if people go look at what they've adjusted their forecast to when it's still
you know trading the market is now trading you know
above their current forecast with them being extremely bullish so you know
someone gets paid seven
figures to come up with that rubbish you do know that day the
s p is trading at 5 900 and they'll put out a report saying our target is 5
925 for the end of the year it's actually 4850 end of next year
So, and they're extremely bullish.
And yeah, anyway, I mean, naturally today the West is best.
I mean, I can't remember, I was always waiting to use this little poem of mine,
West is best.
We find ourselves, unfortunately, as the S within bricks.
And I know people say Brazil is also there in the West.
But...
You know, we find ourselves, unfortunately, on the side of the East.
And, you know, as positive the U.S.
performed today, I mean, that negative JSE actually followed.
Yes, well, we know why that is, and we'll come to that later on.
But when you look at what happened today on the S&P and also on the bond market, it
seems to me that people,
despite the fact that Trump has played during the run-ups of the election, he's
played the
I'm going to bring inflation down card.
The market's really saying, no, inflation is going to go up under you,
and whether it be because of the expansionary nature of the economy,
and companies will do well, and there'll be a whole load of money going into the
system, and people will be prosperous,
or whether it be the Trump tariffs, if they come,
putting the consumer under pressure and prices go higher, I don't know.
But certainly the bond market has done badly, and the stock market has done well.
Yeah, so, I mean, we're looking at the US.
I mean, it's interesting.
I look at this and I really laugh because, I mean, we're going to chat about a few
things.
I mean, for instance, gold dropping 3%.
I mean, the currency, the rent.
I mean, well, this year's dollar-dollar really strengthening.
It's as if the whole world forgot that Trump…
it's going to add even more debt um to to achieve what is promised to achieve he's
going to make
america great again um and and and to do that is is gonna make he's gonna
need to go into some serious debt.
As we sit here, the US are actually trading at debt-to-GDP levels,
and that's 2023, of 122%.
Now, the last time he became president, let's call it 2015,
it was still trading similar to the UK levels, you know, 99.8%.
You need to ask yourself the question, what?
What kind of ammunition do Trump have this time around to really do what he says he's
going to do?
So, yeah, to do that,
he will most probably need to build a bigger debt to equity ratio or
debt to GDP ratio.
And ultimately, I think it's just, it'll end bad.
But like I said, this has now just been announced.
And We'll hear in the next few days, you know,
more of what is he going to start off first.
Because there's been so many things.
I mean, he's going to stop the war.
I mean, that we know he said many times.
Okay, let me just write these things down because I've got so many things.
Okay, the wars will stop.
And he said he'll stop the war in Ukraine within 24 hours.
Okay, then he'll stop the war in the Middle East.
The other things he said is there'll be a mass deportation.
like the world has never seen, of illegal immigrants.
So there'll be 15, 20 million people immediately kicked out of the United
States.
Well, who's going to fill their jobs?
Because they're there working.
And I'm sorry, but that is the most outlandish statement.
So we've got the mass expulsions.
We've got inflation coming down.
We've already debunked that.
So the inflation rate comes down.
We've got, he said on several occasions, He will bring energy prices down
50% in the first year.
How are you going to bring down energy prices 50%?
And don't give me that fracking argument, Donny J, because it's just not true.
You can't bring energy prices down 50%
unless you close the international futures markets or something like that and just
use what you've got internally.
I just don't understand it.
What else did he say?
And tariffs, of course.
China is going to be hit with 60% tariffs.
It's going to be huge.
25% across the board.
And Mexico, I don't know, companies like John Deere, for example,
who've set up a plant in Mexico, if they don't dismantle the plant and suddenly put
it back in America,
the goods that they make in Mexico and re...
import or import or export rather what i'm talking about to the united states
there'll be a 200 tariff on those
because the plant is in mexico this is total madness also he'll get rid of nafta
the north american
free trade association because mexico and canada have got an unfair advantage on the
united states
he'll get he wants to leave nato or he won't pay for nato he's got a hell of a
shopping list
yeah he's got a big shopping list i mean uh his christmas list is getting longer
and longer um but i mean i just want him
to see and like i said i mean a few things you just mentioned forget about night air
but all these tariffs is
is paying to hike i
i want to see him do this you know without and at the same time actually also you
know
bring inflation down i mean it's just going to be it's going to be fantastic to
see
It's going to be great.
I would say, I mean, if you phone me up now, I would say, listen, have a nice
time.
Look forward to Christmas with your family.
You don't have any friends, but with your family and get ready for January, because
then all these promises you've made,
if you don't fulfill those promises, then the people that voted for you will turn on
you very, very quickly.
You've seen the people that vote for him.
There's been some beauties on the TV that I've watched.
Not all of them are, you know.
Well, Trump, I would say that Elon Musk, maybe, I don't know,
that might be not so beauty.
What do you make of Elon Musk, just as an aside, because he seems very awkward.
I didn't realize he had 12 children.
Did you know that?
Well, that he knows of.
Well, yeah, but I mean, obviously money plays a part here in order to get him to,
you know,
I won't be crude, but he's got 12 dreams.
But when he comes on stage and he's always being interviewed,
he's got this funny sort of twitch and this body language and he looks very, very
awkward around human beings.
Yeah, it does.
I mean, I get the same feeling.
I remember back in the days when
Windows 95 launched and they had Bill Gates and all his
– back then, his gang, the Kool and the Gang.
I remember that same interview and dance they did with the launch.
I get that same awkwardness now with with looking at Elon Musk.
But this is an important thing.
I mean, Tesla today, I think at one stage, over 16% up.
I think currently as we sit here, I'm going to quickly have a look.
15.1% up today.
This is crazy to think about it because, I mean, what does Mr.
Marker tell us?
Are they telling us that Trump will now look after?
Elon Musk and his company, Terry Sluss.
Of course, that's the deal.
Of course, it's the deal.
Okay.
But that's going to be difficult because, remember, they're big pals now.
I mean, they're buddies for life.
But remember,
Elon Musk has extensive business interest in China.
This could be an interesting one.
You know, will Elon say, well, buddy, I'll… I mean, I've helped you now.
I hear what you say about these tariffs and really going all out on China.
But I mean, you know that, you know,
I will get hurt just as badly if you really hit all these tariffs that you
actually say
you're going to be doing.
And don't forget Russia as well, because according to the New York Times,
Elon Musk has been talking to Putin and Putin phoned him up when, gosh, there was
something.
that he wanted.
But anyway, he's doing things.
Oh, that was it.
It was Taiwan. When Taiwan had a typhoon and knocked out all the communications,
Putin apparently spoke to him and said,
don't put Starlink into Taiwan because I want to help out President Xi and
President Xi doesn't like Taiwan.
It's a very, very complicated web of intrigue that has been spun by Elon Musk.
And he may be getting in over his head at some point in the future.
Yeah.
Again, I think it's going to be so many things.
I mean,
I got myself halfway through the Joe Rogan interview with
Trump. I couldn't watch it.
I did an hour and a half and I just couldn't do it anymore.
But, I mean, the amount of promises that he's made.
I mean, what do you call it?
Unemployment will go to the lowest levels.
the US has ever seen.
Like no one's ever seen before.
That's his phrase.
Yeah, it'll be the greatest economy the world has ever seen.
It's this and that.
And he throws these comments away and people say, oh yeah, that makes sense.
Yeah, okay.
We believe you.
Based on fantasy, not fact.
Anyway, let's have a look at something more important and probably close to your
heart.
The commodities getting slaughtered.
Resources stocks on the JSC tumbling, falling out of bed, Skulk.
Yeah, I mean, we'll chat about the resource sector.
Let's just get the elephant out of the room.
I'm in gold.
Gold, gold is making me old.
Yeah, it's one of those days.
I mean, like I said earlier this week, I've got no doubt that if Trump succeeds,
which he now has done,
that would be, let's call it a short term, let's call it a breather for gold.
Because.
Naturally, we've seen that the currency will improve.
He said he's going to stop the wars immediately.
I mean, naturally, that will take away all geopolitical unrest, like immediately, if
he does that.
So if all the things happen or flourish, which he said he'll be doing,
naturally, the gold price will have the effect that we've seen today.
But...
As I mentioned, people tend to forget that for Trump to do this,
he will need to take on more debt.
And more debt just means, oh boy, gold still looks good.
And here's an interesting factoid.
When you look at Trump's first term, that was that period,
I think 2016 to 2020.
Over that four-year period, gold rose.
Effectively, $1,200 per ounce to $2,000 on its first.
That's what's annualized 14%.
If it's second verse, same as the first, we could very much see the gold price at
anything between $4,000 and $5,000.
Not today, though.
Not today.
But I'm just saying, listeners out there, I'm not just touching on gold,
but you can add into the mix.
You can add in PGMs because PGMs got slaughtered as well.
Oil, like you mentioned, oil, he just, his comment was, we've got more gold,
we've got more liquid gold, referring to oil, we've got more liquid gold than
Russia and Iran has combined.
No, he threw in Saudi Arabia.
He says we've got more oil reserves than Saudi Arabia, which, of course, again, is
pure fiction.
Nonsense.
Absolute nonsense.
So, yeah, I mean, you can add some of these resources.
I don't think, I mean, yes, I mean, we know that AGOA is definitely now under big
threat.
And that's the South African arrangement.
I mean, we know that that's going to be an interesting one.
But I think it's been under threat.
I think even Biden tried to pull it through, you know, one of his last hurrahs
before he went to bed.
It's just.
I think just listeners out there, maybe just switch off your screens.
Keep your TVs on because I think it's going to be fun listening to some of his
intro speeches.
I want to see if his first speech as president is going to be a rerun of his
2016 speech.
Is he actually going to write a new one?
And what is he going to say?
But I think besides that, I would really not be reading too much.
into the market movement that we've seen today.
In actual fact, be very careful following this.
Because as I mentioned, you know, some of the more bullish banks out there, aka
Goldman Sachs, even they,
really, really bullish, still see the S&P 500, for instance,
trading at lower levels than, well, it's currently trading.
Yes.
Well, we'll see.
But as I said, these analysts are very...
backward looking rather than forward looking.
The thing goes to 5,900, the S&P, and they said it's going to be 5,850 next year.
But the narrative is still fairly bullish under a Trump administration.
Let's have a look at some numbers, Scott.
Dollar round is 1765.
British pound against the round is 2374.
And the euro round is 1893 with the euro dollar 107.25.
So the euro has, what is that, about a third of a percent move down for the euro,
stronger for the US dollar.
which has scuppered some of the metals that you so love.
British Pound is 128.80.
Let's have a look at that gold price now, because it was nearly 2,900.
It might have even touched 2,900 last week, but is now 2,674, which is down
2.4%.
Was worse off than that.
The platinum price is down 1.5%, or $15 an ounce, to 9.86.
And palladium, down $37 an ounce, or 3.5%.
That's the worst off.
but still above $1,000, $1,040.
The oil price has been interesting.
It was down about 3% at one stage earlier today, but has recovered to only being
down a third,
actually 0.2% now at $75.36.
That's Brent.
And West Texas is exactly flat at $71.98 per barrel.
Other things going on there.
Silver down 4%, copper down 4.7%.
That's a big move.
Yeah, so...
It's been a mixed day, but generally a red day.
What else?
The S&P 500 futures, all-time record highs this morning.
They've come off a little bit.
They were up 2.5% nearly.
Now only up, well, I say only, only up around about 2%, 59, 30, whatever the
price is.
It's flicking all over the screen today.
US 10-year Treasury bond yield, this is quite a big one, 4.45%, which is a rise in
yield of 16 basis points,
around about 4%.
And the SA.
10 year following its american peer and is
960 which is um according to my screen 28 basis points higher maybe that sounds a
bit exaggerated
but anyway you get the picture bond yields rising so bond markets falling equity's
doing very well so it's very
interesting and whether this trend can continue i don't know bitcoin i think is
also at record highs i think trump's got something to do with
crypto hasn't he now so him in the white house people love that 6.6% up for
Bitcoin,
74,200 we'll call it.
So lots of stuff going on, Skulk.
If you looked at the S&P and then looked at the all share, you'd probably say,
well, the all share is going to be up one and a half, two percent, given that.
But not a bit of it.
The resources stocks thwarting the ambitions of the local market.
Yeah, yeah, you're 100 percent right.
But usually when you see this,
because the JSE is so rand hedged, I mean,
more than 60 percent of its earnings are actually.
it burned in foreign currency so when you see a day like today where the where the
ran pretty much lost
two percent of its value uh you tend to think well that that should in theory be
positive for for for what
the market but hell no i
mean uh so so when you look at the i mean i know we're gonna chat about the actual
market movement but when you look at
a jse all share dropping 1.5 the top 40 which is Even more rent hedged,
1.6% down.
That is pretty much, you know, if you add, let's call it a close to two, I'm just
going to do very simple math,
to add a 2% drop in the currency.
In dollar terms, that's pretty much 3.5% to 3.6% drop in our market today.
Well, as you just mentioned, I mean, the S&P 500, that's up 2%.
Just look at the Dow Jones.
Dow Jones, 3.1%.
percent positive today and not not nasdaq also up over two percent so we lost in in
real
terms or let's call it comparative terms against the years anything between five
and six percent today in dollar terms so
it's massive massive massive and and you need to you know ask yourself the question
what what
happened to south africa well nothing happened to south africa
it's just you know trump isn't necessarily that's big on on you know
China and and all its friends there's gonna be so much volatility in the next
three months six months four
years It's gonna be you're gonna have to be on your toes Skunk, but I know that you
will cope now.
Here's some individual stocks I'll get rid of the the rats and mice at the top of the
table here
Alpha min up three point three percent and no disrespect to any of these companies
Karoo up three point three percent Renet a three percent winner British American
tobacco two and three quarters higher
and avi up nearly two percent now this is where it gets horribly interesting sebanya
down nearly nine percent
in plats down 7.2 northern platinum down 6.7 and anglo-american platinum down six
percent
i thought a while ago speaking to somebody who's a resources bull and this the cycle
was turning and everything that we'd seen
the bottom but it seems to me there may be another leg down before the thing starts
to consolidate
What do you think, Skalk, especially the PGMs?
Yeah, I mean, you just mentioned it.
The worst performers today, all of them.
All of them, if they were digging, they were losing.
I mean, that's it, just bottom line.
If it was platinum, palladium, gold, it doesn't matter.
They lost.
But you need to ask yourself the question, a little bit less than a month,
two months ago, what changed?
You know, when this whole commodity cycle changed, where we had the change in the
interest rate cycle,
followed by China that said, well, we're going to be stimulating a little bit.
And that suddenly put a whole new perspective on this market.
I don't think that has changed at all.
We are still a commodity producing country.
Commodities that, you know, Trump with.
One of the things he also said is he's going to be infrastructure focused.
He's going to – well, I don't know if it's infrastructure or building walls,
but he's going to really be needing some of these commodities we are producing.
And I still think that that hasn't changed.
And I think just to top it off, there was a very, very nice article that I read on
– I think it was Zero Hedge.
I don't have it in front of me now.
But where this writer actually – oh, sorry, it was on Tech Central.
Sorry, that was on Tech Central.
The writer actually very, very solidly argued that
– and here I'm going to quote the heading of the article.
China is better prepared for Trump 2.0.
They were sort of unprepared for him last time around.
But here, what's the other saying?
Fool me once, shame on me.
Fool me twice, shame on you.
Or shame the other way around.
Shame on you and then shame on me.
I do think that China is a little bit more prepared.
And I wouldn't be surprised if we see or hear another sort of form of
stimulus being announced from China very, very soon.
So just… Just watch the space and be careful just reading one side.
I think this is, like you mentioned, it's going to be very interesting, and I think
volatility is going to be the order of the day.
Yes, it is.
You're going to be sending out letters to your clients.
You're going to be preparing your sort of summary of the year.
But I wouldn't start writing it too soon, Skulk.
I would be waiting until maybe mid-December or something, because
otherwise you'll lose people.
It'll drop on the doormat.
or be in their inbox and they won't look at it.
But I think there's a few twists between now and year end, don't you?
Yeah.
Yeah, I do think.
Do I know what it's going to be?
No, not at all.
But I think, you know, I just want markets to sort of just calm down now and, you
know,
work on real valuations.
Because as we said here, the U.S.
are elevated.
Their markets are elevated.
If you look at the levels they're actually trading at, And I'm talking about forward
price-earning ratio, price-earning ratio,
trading at levels that we haven't seen for two, three years prior to the, let's call
it,
2022 crash.
And also before that, levels we haven't seen since the 2008 crash.
Be very, very careful.
I know that Trump is going to bring something different now.
I mean, I'm not going to argue that fact.
He's got a lot of plans.
but he needs to implement them with not as much ammunition as he had back in
2016.
okay good give us the closing jsc indices if you would skulk so the jse today as i
mentioned closed down
1.52 percent at 85 330 points the top 40 77
232 points also down 1.61 percent the baddie of the day is
four percent down 4% down for resource sector.
Even industrials, I mean, couldn't be helped by the likes of British American
Tobacco, Richmont.
I mean, both these companies doing fairly well.
British American Tobacco Company, as you mentioned, 3% up for today.
Richmont up 1.22%.
This is rant edges.
Couldn't help them.
They were still down 0.86%.
Naturally, Naspas and Process played their part.
And then financials closed down 98%.
basis points and property sector with this drop in the currency and also the pop in
the long bond rate didn't help.
So that is also down 0.74%.
We look at the value traded for today.
Not too bad.
I mean, I wouldn't disregard this as just a low volume day,
22.6 billion traded today.
So fairly strongish volume coming through as well.
Very good.
Skulk, thank you very much for your analysis on this extraordinary day.
Skullclaw is a portfolio manager at PSG Wealth Old Oak in Cape Town, and that was
the 5 o'clock shadow.
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