You're listening to Strictly Business Podcast with Lindsay Williams.
It's Monday, so it's time for Shapiro World with David Shapiro from Sasson
Securities.
And David, here we are bumbling along.
I think the last couple of chats that we've had, either on our own or with Viv
Govender,
it's almost as though we are waiting for something, but we don't know what it is.
And do you ever get the feeling that something seismic is going to happen with
the man Trump and his...
Slightly controversial, that's the politest way I can say it, is slightly
controversial cabinet.
Do you think something might trigger the market to say, wait a second, something's
not right or something is very right?
It's funny,
I spent a lot of time reading this weekend in an effort to try and interpret
what's come out, what's been said and how this is going to be applied.
And the backdrop to that is that, okay, we've got to...
We've got to reposition portfolios.
Is there anything we need to do?
You know, I like to, I don't like to make broad statements, you know, buy the UK.
If you say to me, buy the UK, I'll say, okay, which companies, you know, what
should I buy?
Or buy small caps.
Okay.
Give me a handful because I don't want to buy the bad small caps.
So I like to interpret it.
I like to take the theme and then say, okay, how does it play out?
What should we do?
And the thing is that as I started to read, you know,
and I spent quite a lot of time and many of the statements were the same.
It said, okay, if there's going to be, if he's going to impose tariffs,
where's he going to impose them?
Is it broad?
You know, is it against Mexico?
Is it only against China?
How much?
Which industries?
You know, those kinds of questions.
And Lindsay, after asking a lot of questions, even on tax cuts.
What kind of tax cuts?
And for which demographic?
And for which incomes stream?
It's all bluster at the moment, isn't it?
That's exactly what, that's the exact conclusion.
I said, I can't, I know what he's going to say and what he's going to do,
but how it's applied still remains very difficult to grasp, you know, to
understand.
And it's obvious this hasn't been thought through.
in great detail.
You know, even Elon Musk is going to trim, you know, the czar of the budget,
or he's going to be the minister of efficiency.
You know, where?
You know, yes, there could be waste.
I'm not going to question that.
Sometimes you might be able to take out waste and everything.
But I don't think anything has been translated or put into a clear policy.
So, you know, I think whatever drove us,
before I think is going to continue to drive us for the meantime.
But I must admit that my first conclusions as well,
if I'm going on a bit, is to say, okay, you know, the UK, I mean, if you look at
the UK markets,
they've been under a lot of pressure.
Really a sell-off, I think, on concerns about growth, on concerns about tariffs,
on concerns about China,
and it started to look cheap.
You know, seriously cheap.
And then, oh, you've got to worry about luxury goods.
I say, well, hold on, you know, Xi, I'm a bit worried about China,
but he's got a lot of levers to pull, you know,
and he's got to do things to get China out of the kind of, not mess,
but the melee that they're in at the moment, just this indifference.
So I'm saying, do I really want to sell out of good companies?
Maybe not, you know, maybe.
Maybe the opportunities in some of the companies that have been smashed.
So, you know, there's a lot of questions that I have to kind of sort out in my mind
that are not clear.
But I don't want to act impetuously.
You know what I mean?
I don't want to just do stupid things as well because you've got to give what's
happening now a lot of
thought.
Seriously, a lot of thought.
It's very interesting that you talk about luxury goods because it suddenly occurred
to me that who buys luxury goods now?
Is it people?
This is a stupid example, but I remember in the, I think it was in the
80s, you used to see football fans with Burberry caps on because it was
aspirational.
And it's like the lipstick factor, you know, you can't, during hard economic
times,
women and men would buy lipstick instead of buying a really fine dress
from Armani or something like that.
But in order to feel as though they were having something luxurious for a night
out, they would buy a really good lipstick.
Now, is that the case with the football fans?
They can't afford it.
They couldn't afford the whole gear, you know, the raincoat and everything from
Burberry.
So they bought the cap.
And maybe it was a ripoff.
I don't know.
But you see what I'm saying is in China, there are so many millionaires being
created, literally every single...
day and they can afford luxury goods.
The super rich are buying luxury goods all the time.
But do you think the aspirational side has now gone a little bit and not so many
millionaires are being created?
Is that what's impacting the sales in China?
In other words, the ones that are coming through the millionaire system?
Have I explained myself?
It's up to now.
I think it has up to now, but those things pass.
And the problem or not, no, the issue with luxury companies, yes, they did.
China did make up quite a big percentage.
But we go into a new base because that base was hurt over the last year.
So we're off a much lower base now as we look forward.
The rest of the world's doing fine, you know, in Europe, in the U.S.
Things are going along very nicely there.
Japan, the rest of Asia.
I don't know the Indian market at all.
whether there is a demand there for luxury.
So you're coming off a low base, which the market has already discounted.
And it's funny that you mentioned Burberry because if you looked at Burberry,
it bounced back something like 20% last week simply on a restructuring program and
also some
very encouraging remarks that came out of management saying, You know, it's not
going to go away.
In other words, they didn't say this is the end of the world.
You know, we're never going to sell another cap or coat in China.
And I just hesitated and said, you know, I'm not quite sure that I want to get rid
of my LVMH.
You know, they've served me well.
They're a good product.
Their balance sheet is strong.
You know what I mean?
The fact that China let them down didn't mean that they lost money.
They still make huge amounts of money.
So that's...
What I'm getting at through this conversation is that just don't be too
quick to jump to conclusions about
tariffs, about immigration,
about all the issues that Trump has spoken about until you've really thought it
through.
Because I'm not quite sure who he's going to impose tariffs against.
You remember, Lindsay, you know what happened last time?
What?
When they started to impose tariffs on China.
So what happened?
is an American company was producing widgets or whatever it is in
China.
It said, okay, we'll move that factory not back to America.
We'll move it to Vietnam.
Or we'll move it somewhere else, India or whatever it is.
So that's the whole thing.
They'll just shuffle around.
And the other thing that I thought, you know, you don't want a week.
They want a week in Mexico.
You know, he's got it in for Mexico because of the trade balance, because a
lot of motor manufacturers set up there.
We're going to get those boys.
And then suddenly the last country you want to destabilize on your border is
Mexico.
If you think, you know, you think they're not going to be able to go under the fence
or over the fence or around the fence, whatever it is.
You know, if they're desperate, they'll come.
So there's a lot of thought that has to go into so many of the things that Trump
said.
You know, I, and also if you start on Europe,
if you get to Europe, that's okay.
We'll find other markets, you know.
We'll find something, we'll find somewhere else to sell our goods to.
You know, we'll make our own packs.
Remember Canada and Mexico and all the other nations in that region with Asia,
they made their own trading packs which ignored Trump at that stage in the 2016.
So they came to their own.
So just a lot to, you know, a lot that I couldn't clear up in my mind, you know, no
new joke reaction.
I loved it when the markets went off, but I think you've got to think a lot more
about it.
Two quite, one funny and one pertinent.
Let's start with the funny one.
There was a picture of, it must have been the Trump jet, and there was a group of
them sitting there,
a group of chaps.
There was Trump.
sitting by the window.
And next to him, of course, was his new man.
It's almost like the Siamese twins, these two, Elon Musk.
How did he manage to get the ear of the 47th president of the United States?
But anyway, he's done it.
And he looks so pleased with himself about it.
Anyway, he's sitting there next to Trump.
Opposite is Donald Trump Jr.
and also RFK.
Jr., Robert F.
Kennedy.
And in the background is the Speaker of the House, Rob Johnson, I think his name
is.
Johnson, right, yeah.
And they're all sitting there, and in front of them is a great big table full of
McDonald's, you know,
Big Macs and chips and fries and everything.
And this RFK Jr.
fellow is the new Health Secretary, and his slogan is Make America Health Again.
And there he is tucking in to this greasy salt and sugar-laden.
a fast food thing and i sent that out and i must tell you something the south
africans are generally pro-trump because
i get nothing but abuse i don't get any democrats coming in and saying yes linda
you're absolutely right i get stuff from um from from
right wingers and not no you know obviously not the right wingers that are
down in mississippi or
something but um you know people that support trump so it's straight anyway that
was the funny one what was the other one i was
going to talk about um oh yeah food prices I saw an interview with a farmer, and he
said, well,
if they get rid of undocumented migrants, and even some of the other ones,
he said, Americans won't take this job.
They're not going to pick beetroots and strawberries and apples and pears, and
prices are going to go through the roof.
So this anti-inflation stance that Trump has taken is complete nonsense.
It'll be exactly the opposite.
And it'll be very interesting to see if he can.
deport over a number of months, maybe even a couple of years,
all these poor people who have been in America for years and doing a good job and
enjoying a good
lifestyle because they work hard at jobs that Americans don't want to do, David.
All the time.
Listen, I don't live on a when I'm there, I'm not on a farm.
But I can see when those huge trucks come from
Amazon or from the the food companies, you know, the grocery companies, or even from
Whole Foods, you know, who've got tricycles and they offload these packages
similar to our 60-60 here.
Yeah.
There's not one American.
You don't see the white-haired, blonde-haired college boys, you know,
wearing windbreakers or something.
Forget it.
These are Dominican Republic, you know.
These are all Central Americans from El Salvador and so on.
or alternatively from Eastern Europe.
And then you go into Central Park or something,
and the chaps who are selling the bicycle rides or peddling around or riding the
horses, you know,
those very romantic buggies that you see.
You know, not one of those people is American.
You know, not one.
So I don't know.
And then.
When you've got to take out the scaffolding around a building because, you
know,
all the buildings are inspected every couple of years or you've got to tar a
road.
There's not one American that does any of that work.
So where they're going to find people to replace these workers,
the economy will just grind to a standstill.
Behind Starbucks, wherever you go, you know, whether it's Starbucks,
whether you go to Bloomingdale's or whatever, they're all foreigners.
a lot yeah all foreigners but the immigrant i mean for goodness sake i mean
look what happened when the irish uh suddenly left ireland because of
famines etc they all went there and they went to you know the you've got the the
statue of liberty there and that was
that was that was the most incredible thing i mean some of the stories that you
read about people that sought their fortune in the united
states of america 100 years ago 50 years ago it doesn't matter you It's the land of
opportunity, and it still is, David.
I know you're very US-centric, and I have to say, I would agree with you to a
certain extent,
but if you've got half a brain and you've got an idea and you can work hard,
I can't think of anywhere better to go than the United States.
I don't know about you.
No, well, if you look, even if Vance, his wife, her parents were American, I mean,
sorry, Indian.
Yes.
But Kamala's parents came from all over.
Trump's father came from where Germany or his grandfather came from Germany.
So wherever you go, they're not third or fourth, fifth generation Americans at all.
So think this one through.
This is a lot of noise.
I understand that they have to make the borders more secure.
I'm not going to challenge that in any way.
And the argument there that I heard, and it's correct.
He said, you know, Lindsay, if you want to get an American visa, you've got to stand
outside the consulate, fill out forms,
or if you want a green card.
Whereas these chaps just go in, you know, just kind of scale the wall.
And therefore, why should they be given citizenship or acknowledgement?
And you can't, going through all of this, present your bank account and so on.
So I think there's a little bit of concern about the leaky borders, not necessarily
the immigrants.
But what...
What we're talking about now is that there's a lot of bluster, and to use your
words,
around what has been said and what will be implemented because it's a lot more
difficult
than just standing up there and making these promises.
So I'm still trying to kind of work at it.
I think from my point of view, okay, so I'll go back to… what I've been saying the
whole year, where we've been going the whole year.
So, okay, if there is, I like the deregulation side of that.
If that can come through and make things easier, I think that's going to be a
driver.
I think that we will still see interest rates being cut.
I think there are a lot of conflicting views.
I know that.
Well, it depends who the new Treasury Secretary is, because the new Treasury
Secretary, whoever it is,
is going to have the ear of Donald Trump.
In other words, now I'm saying it the wrong way around.
His ear will be constantly jabbered into by Trump.
Because let's face it, Trump has got really big debt problems.
He's got a $1.9 billion debt, which rises by something like like
300 million every month or something.
So his main priority, being president, is to preserve Trump,
not to preserve the average American.
So he will want interest rates to, at worst,
stay where they are or to come down to relieve the burden on the Trump
organization's debt.
And that's my opinion.
It's not anybody else's, but that's what I think.
And his stock portfolio, et cetera.
That's what it is.
So the new Treasury Secretary, which will be announced in the next week or so, is
terribly,
terribly important, David.
Yeah, I'm sure.
Listen, it's a very important position.
It's, you know, the Chancellor of the Chequer, ex-Chequer, lives next door to
the Prime Minister in the UK.
How does that work?
He holds the purse strings, sure.
So I think it is...
pretty important position.
And I don't know who it's going to be.
That's why there is a delay.
This hasn't quite been announced yet.
So I think everybody's waiting for that.
But you know with Trump, though, your Elon Musks, your
Kennedys, all those characters you saw from the last administration, they last
three months.
They won't last.
Exactly right.
Three or four months and then they're gone.
That's how things happen with Trump.
He's got no staying powers.
You can't tell him from one day to the next.
It's very interesting.
I saw an interview.
It was talking about the Palestine-Israel situation.
And he's a well-regarded author.
He'd written a story about the history of Palestine, et cetera,
and the conflict between the two entities.
And he said, what do you think that Donald Trump is going to do?
do when he gets into power regarding you know gaza and uh west bank etc he says
simple
depends what day it is depends who he's talking to depends how he feels it
completely depends on how he is when he wakes up in
the morning yeah yeah and it's it it's that sort of thing is a bit scary i think
david
yeah no i think that's who he is um everybody knows that you know that's
that's who he
is is uh depends on the last person he spoke So you've got no idea what you're
going to get.
And he says that.
He says that he's effing crazy.
He says that's why Xi is scared of him because you never know what he's going to
do.
And I don't think he's wrong.
I don't think you know what?
I was having a talk this morning with some people and just talking about
administration.
Lindsay,
people forget that running a country is not a matter of getting up on a soap box
and making all these promises.
The worst thing is that Trump's got to wake up in the morning, and this is where
he failed in his first term.
And his chief of staff present him all kinds of memos that have come in and
reports.
He's got to read them.
Yeah, exactly.
He's got to read them.
It's like when people say.
You know, you're standing in front of this church in D.C.
with the Bible and you're saying, yeah, and suddenly he's a great Christian.
And the interviewer said to him, you know, he was digging away.
And he said, what's your favorite quote from the Bible, your favorite apostle or
whatever it was?
And he said, you know, that's very personal.
I don't want to say that.
That's between me and God.
In other words, you have never read the Bible.
Ever.
And I think that's one thing about going into politics.
So do you think Musk listen, Musk's built up some wonderful business, but do you
think he's going to go through 300 pages?
I don't know how big the American budget is.
Have you ever seen it?
How many trillions is it?
Yeah, they show it to you when it's published.
I mean, it's like five, six inches thick, and he's not going to go through this.
None of these chaps are.
They haven't got the time.
They haven't got the inclination.
They're not, there's a special brand of administrators, you know, remember what
was it?
Yes, minister.
Remember the show?
Yes, there was yes minister and then yes prime minister.
Yes, it was a very, very clever program.
but they the chaps who run the country you know they do it and uh the chaps above
them haven't got the inclination
and they switched all around you know suddenly you're you're you're in charge of
treasury in the next month we don't like you so we're putting you to health
you know how can you know what's happening yeah okay there's only a couple of things
that came out from south africa
today um astral uh result um difficult time
for them the one that really stood out is telcom
I was very bearish of Telcom and suddenly my target has doubled.
I thought it was going down to around 15 Rand a share.
It's currently 30 Rand, above 30 Rand, David.
It smacks of corporate activity.
I think the results came out today, but it tells me there's going to be some
corporate activity.
And the market's known about it because obviously it's a very leaky institution.
I'm not being nasty.
But it's done very well recently.
Is Telkom something that could be a takeover target because of its
infrastructure?
They've had that, you know what the danger is there.
And I think the big danger is they've still got the legacy business.
And they can't get rid of it.
And they're forced to, because of history, to maintain that.
And that's costly.
I know slowly the other areas are taking over and people are not using those fixed
lines.
But, you know, sometimes...
you've still got to have them.
I mean, if you look at Telcom, it looks, you know, if you look at a chart of
Telcom, I mean, this is a company that's come from,
what, five or six years ago.
It's come from about 90 Rand down to where it is now.
And it's slowly trying to creep its way up as it improves certain parts of its
business,
but it's still dragged down by that, you know, that old stuff, that old, and it's
hard to get rid of it.
No one wants that, you know.
No one wants the copper in the ground or those old-type phones.
Funny enough, I've got an old phone.
Oh, you've still got an old phone?
A landline, you mean?
Yes, a telecom service.
So I've got a landline.
So the phone rings and you pick it up, and it's not anything to do with mobile
cellular telephony.
It's an old-fashioned 011.
Well, a lot of businesses have them.
You know, if I look at businesses, most of them are on the 011 numbers, which are…
which are good old-fashioned landlines, you know.
So I think that's the only thing dragging them back.
The other part of it, Lindsay, is that, and we've discussed this often,
is that if you really want to expand your mobile service and your digital, you know,
you're up against MTN and you're up against Vodacom.
And they don't want to let in ground.
You know, Telcom are trying very, very hard.
But I think as soon as they get a bit bossy or something, Remember, I think MTN
wanted to buy Telkom.
Well, they couldn't do it.
They weren't allowed to do it.
So maybe somewhere along the line this is allowed.
But you know the worry with our local market?
That's what we do.
We look for these kind of deals.
There's not much excitement in the local market.
There's not much to buy.
So we're always looking for something like this.
Is it a takeout?
Is it going to happen?
I don't know.
It doesn't appeal to me.
No, I know it doesn't.
The one thing I would say about our chat we've had today is that you,
for once there was a slight hesitancy when it came to luxury goods.
You said, should I keep them?
Should I not keep them?
Yeah, it obviously hasn't plagued you,
but it's sowed a few seeds of doubt recently, recent results and recent
economic trends.
But you're sticking with them, right?
I am.
And that's, you know, I'm...
I'm scared to make a poor decision because these things can turn around.
Structurally, they're not bad.
This is a China story.
And you know what also prompted me this?
My son's down in Australia.
He's a journalist.
He went down to Adelaide where every year they're following an example said by
SOHN, the SON, every year.
And it's a lovely story, the SON story, where… They raise money for, I think,
pediatric cancer.
The reason is that one of the Son's brothers died at a very early age in his
20s from cancer, and they put back into cancer research.
So they hold a conference in New York, and it's a donation rather than a ticket.
You give a donation, and they get fund managers, 10, 12, or whatever it is,
to give it.
An investment idea, that's it.
You don't get up there and start talking about interest rates.
You give an investment idea.
And among the investment ideas, so they do this in Australia as well.
And one of the stocks that was chosen was Estee Lauder, you know, coming back from
the dead.
Just simply, they've got such really good brands.
What happened is that management just got the whole Chinese stories wrong.
And that can be tweaked.
You know, it's not like the brands are not well supported.
They've got incredible brands.
And then you think, hold on, those brands are good, you know, with a little bit of
tweaking.
and proper management as we've seen in the past with Gucci and things like this,
things can turn around fast.
So that alerted me to say, well, hold on, maybe not so fast.
So I think shares Lindsay, you know what I'm going to do?
What are you going to do?
Tell me.
We must get I did this once with you, remember, with local stocks.
But I think we must get some fallen angels in the U.S.
market.
Okay.
Well, maybe we should look at what I often do.
In fact, I do it every year.
As I note down the worst performers in the S&P, actually, sorry, the JSE,
and the best performers.
And I say, right, this is my hedge fund.
The worst five I'm going to buy, the best five I'm going to sell.
That's my hedge fund.
And sometimes it works spectacularly well, David.
I've done it for about five years now.
I think this is going to be a good time to do it.
And if I go through the U.S.
market and I look and say, what are the dogs?
It has been Walgreens and CVS.
A lot has to do with health there.
And those two, it's like boots.
Those two companies are like boots, I think, in fact.
It is, you know, Walgreens own boots.
And if you go to America, if you go into New York, Duane Reade, which is part of
Walgreens, you know,
it's on every corner.
And these are like click.
And all it needs is, they just lost.
They just became messy.
You know, never looked at their shops.
And all it needs is a little bit of tweaking.
I know they've come under a lot of pressure also because of their exposure.
to health care, you know, to offering health care services.
So you're looking at that.
You're looking at Estee Lauder.
I don't know about Intel.
It's going to be with a canter.
Boeing, Boeing, Boeing is one.
Nike.
You know, there are a number of companies there that we've got.
Pelotons maybe.
I don't know.
Peloton companies like that that have been whacked.
I think Europe.
Yeah.
Okay, well, let's do this.
Let's make it into a social media thing and say, this is the principle, this is
what we're doing,
these are the stocks that you've chosen,
because you're the one with the facts and statistics at your fingertips.
And we should do it.
I reckon so, whether we put it on X or not, or not threads.
What's the other one?
Blue Sky.
I'm going to Blue Sky.
I'm not going to get off X, but I'm going to Blue Sky.
You know, the day after the election, David, X lost 115,000 people in one day.
They just said, no more Musk.
Thank you very much.
I know it's a tiny amount compared to how many they've got.
But still, it was a statement from people saying,
we don't like the toxic dictatorial stance that the owner of X has taken,
trying to divert people's attention with his rhetoric and influence a political
outcome.
So anyway, that was just an aside.
Okay, we'll do it.
I think that was very real.
I think what you're saying there, their influence was very real.
And, you know, I was reading in The Guardian.
You read The Guardian.
I do.
I don't know if you only read the sports pages, but I mean, there's… David, don't
be nasty.
Of course I read the headlines.
The cat who's… I can't remember his name.
I just know he's got a big mop of hair.
He's already in his 70s, and for 40 years he's been forecasting the outcome.
And he got it wrong, and he explained why.
He says what happened was the influence of social media,
a huge amount of, and to put it in my words, not theirs, the lies that were
spread, the false news,
had an enormous impact on voters.
Yes.
But he did, I love one comment, because he's not a fan of the, well, he's
democratic,
but not a fan.
He just said, he says, the Republicans, he says the Republicans have no principle.
He says the Democrats have no spine.
And that was one of the reasons that they tried to satisfy every
kind of part of the party.
And at the end of the day, it went nowhere.
And the Republicans just went on lying, doing what they do so well.
So, yeah.
Yeah.
Anyway, it's all terribly interesting.
But I've got a binding social contract with you now, David,
to do this thing for the new year.
Sell the best, buy the worst, and see what happens as a hedge fund.
Okay.
We want to talk about sport because there isn't any sport.
I don't want to talk about England against South Africa.
But this time next week, we'll be talking about Ipswich beating Manchester United,
which is next Sunday, by the way.
And it's Ruben Amarim's first game for Manchester United as manager.
And I think Ipswich are going to disappoint him.
David Shapiro.
Yeah, go on.
No, I'm just saying the one thing that I watched, which was, besides Cheslin Colby,
you know,
those are the two most exciting things I saw, was...
the Indian knock on Friday night in a T20, which was across the road from me.
Floodlights were on.
Just unbelievable.
280 odd.
No, incredible.
Absolutely.
They just wiped the poor Proteus.
But two of the best innings I've ever seen.
Indian made 284 or whatever it was in
20. In a T20?
Gosh.
In a T20.
I've never seen.
Batting like that, it was just outstanding.
And then I listened for the crowds because I know when there's a wicket, you hear the
whole stadium erupt.
And then when it's a protea wicket, there's just silence.
The whole time I was watching, but you could hear the stadium was absolutely
stunned.
They were absolutely murdered.
Very good.
I must look at the highlights.
Thank you for that.
David Shapiro is from Sesson Securities, lives in Corlett Drive and works in Mayor
Roy's Arch and that was Shapiro World.
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