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 it's the first 5 o'clock shadow of 2025 with David Shapiro from SAS
FinSecurities and Viv Govender from
RAND Swiss.
And gentlemen, welcome.
Looking forward to a very interesting 2025.
That's the kindest way I can put it.
And David, a very interesting day.
in one of their favorite athletic classes, which has been under a wee bit of
pressure.
It's called Luxury Goods.
And today I looked at a headline that said Richemont up 17%.
And all the others, of course, followed.
What on earth has gone on?
Yes, demand.
And I think it came in the third quarter,
which was way above where analysts were expecting demand to be.
It was a blowout number.
And, Lindsay, if you analyze it, A lot of it is coming from tourism,
tourism in Europe and tourism in the U.S., tourism wherever.
In Japan as well, Southeast Asia.
Yes, China was down, but not at the same rate it was down before.
So I think it caught everybody by surprise.
No one expected anything like this.
And it was particularly in the jewelry area and, of course, in watches,
which we haven't seen for a long time in.
you know, in Richemont or in the market for very expensive watches.
And I must say, you know,
when I came back from the United States through UK in the middle of October,
you know, I noticed the enormous number of people in the airports and I couldn't
believe it.
I might have, on our shows, we might have mentioned it, etc.
But, you know, wherever you went, you were… You were, you know, elbowing people
out the way and so on.
There just seemed to be a huge number of people traveling.
And while they were traveling, I don't know whether we could translate that into
actually buying goods.
And these are expensive goods.
So I'm saying, you know, when you see Richemont, as you mentioned, I'm just
looking now,
it's up something in Europe.
It's up something like 15.5%.
I mean, that's an enormous gain.
Massive.
And it gives you an idea.
It gives you 15%.
It gives you an idea of how the markets are responding.
LVMH in Europe is up over 7%,
but we've seen Kering and Hermes and all these companies as well benefiting,
saying, okay, you know,
if they show those kind of sales, we're going to see a turnaround.
So it is a surprise in a market where people thought, you know, we're slowing
down.
It's very interesting.
It's also to do with the global economy.
Maybe before I come to...
go to Viv on the AI story, David.
How do you think it compares?
You go to an airport and you're wandering around, you've got two hours to wait
because you have to get there early,
and you see an LVMH shop, whichever one of their brands it is,
and do you really go there and buy a $20,000 watch?
What are the comparisons between, for example, the shops at an airport and say,
a shop on Fifth Avenue in New York or a shop on Bond Street in London?
What do you...
First of all, you don't get duty-free in America.
You know, you don't get it in the airports.
You might have luxury goods there, but there's no real benefit.
Maybe you're saving a bit of tax.
But when I came back from Sydney, you are saving various taxes.
You're certainly saving that, and you're saving what other taxes might be on it.
But I don't think the difference is that great, and that's what I can't understand.
And if you analyze the luxury businesses,
you'll see that the amount of sales of perfumes and goods
like that, of beauty products, of bags in Australia, the entire Sydney airport.
There's no such thing as duty free.
I mean, you know, when you used to go into an airport, you could buy soccer tops or
football tops or rugby tops.
Those shops don't exist today.
You can buy a tracksuit.
It's all luxury.
And somehow,
whether you've got guilty businessmen buying or whatever it is, but I have a
rule.
I never cross that threshold.
And people say, come in.
I say, no, I'm not coming in.
Just because, not that I'm going to buy, but it's just crazy what the prices are.
But obviously, people are buying.
You know, they've got the kind of money they could buy.
People are buying.
The global economy is growing, which we'll come to later on with our little bit of a
macro analysis.
But this comes from David Shapiro, who is an investor in the luxury goods sector.
And he's done well out of it for himself and his clients.
And I'm not speaking out of turn here, but he still wears a swatch that he bought 27
years ago.
Viv, let's talk about AI now.
I thought about you several times over our break.
And today I thought about you as well, because you sent me an article that I
couldn't open from the New York Times.
And you said it was quite shocking.
Please tell us more.
Well, it's an interesting article.
I've been talking to you guys for a while about the different demographic changes in
the world, as well as political changes and AI and so on.
And Ezra Klein, who's one of the smartest guys, even if you read the New York Times,
all the New York Times,
certainly above the caliber of someone like a Friedman or a David Brooks or
something like that there.
He wrote an article, which the title was, This is the Time of Monsters.
And he basically refers back to an Italian philosopher from the last, I think it was,
I think it was,
previous century before the last and we're just talking about the technological
changes happening in the world and mentioned that you know when you have such
uncertainty then you have monsters arise and it's quite interesting because just
after that you had world war one world war two and all those crazy things
and uh yeah it's an interesting thing the thing that i would like to point out this
week in ai is that the us right uh has gone out
and made a very strong play to basically cut china and a lot of the rest of the
world out of the ai chip market
what they've done is they created three tiers right for ai chips but the first
tier is the us western europe japan
australia and they you can do whatever you want there the other tier is everything
from yemen down
to singapore uh basically a huge swath of the world uh and you have restricted how
many ai chips you can get and then there's china you can get
nothing and what's amazing about this is the following if you think ai is going to
take say
10 15 years to come about you know take a long time to come about what they have
done is destroyed the us uh tech sector
or chip sector why because they've said to everyone from india to brazil to malaysia
indonesia like
i said every country in the world besides northern western europe
japan australia and the us this is entirely china's market if you want an ai
chip you go to china right
uh and if they basically see ai taking 10 years to happen the chinese will develop a
chip sector that will supply the world you know
what i mean so this is a very aggressive move on their part that i think is quite
interesting And so what you're saying is, I remember reading a book,
wasn't it a book called The Scramble for Africa?
And what you're talking about is people scrambling to get a foothold into this
particular market.
And it's pretty chaotic, Aviv, but is it chaotic in a good way?
I mean, is all this that you've just described briefly constructive or
destructive for the AI industry?
I think what this is, it shows that the US government especially thinks that AI is
not just going to come, it's going to come really quickly.
They're saying that AI is not going to take 10 years to come about or 20 years to
come about.
Because if that was the case, you're giving the Chinese market more than enough
time to create their own system internally.
And you're also handing them all of India, all of Brazil, South America, basically
Africa, most of Asia,
over to China as basically the sole supplier of these chips.
And Vidya can't supply to these guys because they are restricted by law.
You're taking your most productive chip maker and saying you can't supply to these
people because you're limited.
And that's obviously giving the market over to China.
You don't do that unless you believe it's going to happen so quickly that the
Chinese won't have a chance to actually catch up because they don't have enough
time to make
up their own chip sector.
So that is what's really interesting about this.
OK, we'll go from chips to the application of chips later on, Viv,
because I noticed there was a bit of a problem with Apple over the time since
we've last spoken.
But anyway, I want to move straight back to David,
because the bank's results are out this week or coming out this week from the
United States of America, shooting the lights out.
up, David.
It's mainly their asset management industry because the market's going up, of
course.
Yeah, it is that.
They're not making money on lending money.
In other words, the interstate differential or anything like that.
It's all on trading and it's all on M&A and issues around that.
So they are very good results.
And I mean, if you go through them without exception.
Morgan Stanley were out today, I've still got to go through it, I think at Bank of
America.
But likewise, they've all beaten their forecast.
So there is a lot of activity.
I've got to be honest, I thought that it was too early for that.
You know, one of the things we were looking forward to was that with rates
coming down,
we were going to see a lot more happening in the banking world.
But it happened earlier than we thought, and I think a lot of deals are going to
take place.
place is going to be a lot of consolidation.
So these are monstrous companies as well.
I mean, they're very, very huge and they're big results.
What I do like about it is that the market is responding to good numbers.
In other words, even with Richemont, as we saw, when good numbers come out, the
market responds.
And I find that encouraging, and especially over the results, because I
think if there's one thing that's going to define the market this
year, it's going to be earnings.
you know more so than worrying about inflation or geopolitical issues and that
and as long as businesses can come out with decent
earnings i think that's going to be the prop that doesn't mean we're going to have
a blowout market like last year but i mean it's going
to give support
and just steadily push up the uh um you know like the s p and so um i'm
i'm encouraged by by what we're seeing in the response to um those kind of numbers
okay macroeconomics now uh
viv i saw something that came from the bank of america actually and it said that
the world's bond markets uh
develop world bonds markets are in their sixth long-term bear market since the year
17 I don't know how many years we've been in this bear market,
but it's extraordinary to hear that.
If you've just come and got a job at a financial services company as trading on
the desk, you thought last year, goodness me,
we were in a bull bond market, but we're not.
In September, I think last year, the US 10-year was trading at something like 3.6%
yield.
Now it's, well, a few days ago, it was close to 5%.
Now back to 4.68% or something like that.
But the point is...
The U.S.
economy is still doing well.
Jobs are being created.
The inflation number from yesterday, I think it was, came in at 2.9 percent.
And people seem to be delighted with that, Viv.
Do you think the world is doing well?
Do you think China is going to do well in order to embellish the U.S.'s performance?
And do you think, Viv, that people are richer and that's why they're buying
watches at Sydney Airport?
I think also people are, I mean, not to bring it back to politics here, but I
mean, look at the banking, you know.
announcements yesterday.
These guys are making record profits.
And what are they talking about?
Lower regulation and lower taxes because the Trump administration is boosting
confidence.
Okay, so you're already seeing like Mark Zuckerberg going out and basically, if you
watch him, the Joe Rogan podcast,
totally going crazy about how wonderful Trump is.
And William has a statement on that thing about how horrible Biden is and how good
Trump is.
Amazon put a $40 million package together for a documentary on Melania Trump.
I don't know how interesting Melania Trump is, but she's not...
She's not interesting at all.
Hey, hold on a sec.
$40 million.
It's probably the most expensive documentary.
It's like David Attenborough's whole series of stuff.
It probably doesn't cost $40 million.
So I'm saying to you that corporate America is seeing regulations falling.
It's seeing taxes coming down.
And they are getting basically all in.
I mean, and here's another interesting fact.
You know, TikTok was banned, right, in the US?
Guess who's going to be at the Trump inauguration?
The TikTok CEO.
It's because he's paid a million dollars to be there.
That's why, Viv.
Not because he's going to be pardoned, or rather TikTok is going to be unbanned.
Oh, I don't know if TikTok won't be unbanned because Trump is pro-TikTok.
If you listen to him talk about it, because obviously they're one of the
places that allowed him to talk when he was banned on Facebook and other places.
Well, you must have read Biden's speech yesterday.
I don't know if you're going to read it.
I did, I did.
Did you get through it on New York Times?
It's covered there as well.
He speaks about the oligarchs.
Yes.
The tech industrial complex.
Yeah.
The tech industrial complex.
And look, I mean, the thing is that he's talking about it too late.
He should have been talking about it two, three years ago.
But the problem is at that point in time, they were on his side.
You know, Facebook was on his side.
But he was always realizing when it comes to these things that you can never put any
of these restrictions in place or support these industries too much because
one day they'll be on your side, the other day they'll be against you.
You've got to plan as if you want to be against them, you know what I mean?
And that is the mistake that I think the Democrats have made here.
And what I'm talking about with regards to all of the stuff is that I do think that
we are going to see a very volatile here in the market.
But it's possible that we could see things like China do really well.
If Trump comes in and he basically reverses some of these Biden
administration things, you could see there is a possibility you see China take off.
If he reverses the TikTok ban and the Tencent listing as a military company.
China could do really well, surprisingly.
And this is something that people are underestimating.
David, just before you go on, and before you lose your thread, when Viv was talking
about our dear First Lady, soon-to-be First Lady,
Melania Trump, the immigrant, why did you intervene there?
You wanted to say something.
Well, if you know her history, you'd like to see a documentary about her, you know,
a fully explicit one as well.
I mean, understanding where she came from.
She came from the old Yugoslavia, didn't she?
Oh, no.
She had a very beautiful mother.
She wasn't, yeah, I know.
She was beautiful herself.
She wasn't exactly came out of a monastery or whatever it is.
Anyway.
So what you're saying is that you will be watching this documentary?
Oh, yes.
It's so predictable.
The other thing is, just on the Biden speech, which you both read, and I've sort
of watched snippets of it,
his concerns over the new oligarchy in the United States was compared to a speech, I
think it was Eisenhower,
am I getting my memory right?
Eisenhower made in 1961. And he was saying that either he lifted it from there,
or it's just a...
a convenient coincidence what is what are your thoughts on that one both of you I
didn't read Eisenhower's speech.
I was a little too young at that stage.
But
I think the point he makes is right.
And what he's referring to is the whole, what do you call them,
the PayPal mafia or Peter Thiel and all those people,
all those ultra-rich people who are muscling their way into government.
And he's saying it's not for the good of all the people, it's for the good of
themselves and self-enrichment.
And I think that's the whole message,
is that the people who are running it are not really running it for the good of the
country,
but more with a lot of self-interest.
Yes, with one straw that's stirring that drink, and that straw is Donald J.
Trump.
And I'd love to know what's going on there.
Okay, it's a million dollars for a seat at the inauguration.
But there must be so much more stuff going on behind the scenes.
I think you're wrong.
Look, I mean, Marc Andreessen, the guy that did Netscape, is interviewing
candidates for the Trump administration.
So he's actually basically the hiring manager for the Trump administration.
Marc Andreessen, okay?
Peter Thiel, okay?
We're talking about, obviously, we know J.D.
Vance was a Peter Thiel employee, vice president.
Basically, One of the biggest moves, my AI portfolio, the biggest return I had last
year was in Palantir,
founded by Peter Thiel.
Okay, 200 plus percent up for the year.
Okay, obviously, you know, but Elon Musk, obviously, you know about Chikoros, you
know, Ramaswamy as well.
He's also a billionaire.
He's like, not as much as a billionaire as Musk, but a billionaire, still a
billionaire.
And of course, we're talking about, you know, like this Amazon thing.
It's obviously bribery.
I mean, you can't be...
two ways about it.
You may argue that she's going to have an interesting documentary and whatever, but
$40 million for a documentary about a first lady,
that is just bribery.
It's no other word for it.
Okay.
And basically what Zuckerberg is doing, what's the Zuckerberg interview with
Rogan? And he comes across as being like, almost like he had a gun to his head
because of Biden.
And Biden was this monster that was basically shouting at him on the phone and
that kind of stuff.
He talks about Biden officials basically charging the phone and threatening him
with prison and whatnot,
and how he's almost free for the first time under Trump.
And this kind of move is...
I thought they'd be more favorable towards Trump than Biden because of a number of
factors, but what I've seen over the last couple of weeks has been amazing.
It is coming down to almost like I mentioned, the tech industrial complex,
where it's almost a group of oligarchs have gotten together and said, we can
control the world now.
But there's this you know what's interesting and and if you look at
zuckerberg zuckerberg was it uh by
by nature he would have been a democrat he would have been brought up as a democrat
you know understanding
his background and and what is interesting
what his attitude does is almost depict what's happened to the democrat you know
democratic party
how it's changed its attitudes because it was always uh
it was a blue collar company you know it was the blue collar party,
really favoring kind of people like Zuckerberg, et cetera.
You know, just their general upbringing.
The fact that he's gone and they put pressure on him says a lot for people's
views towards the Democrats.
You know, how this neo-left or these left liberals started to take over and put kind
of pressure or tie and
enforce their, you know, their policies.
And I think it had a lot to do with, you know, it had a lot to do with the demise
or the fall of the Democrats.
So when I'm looking at more from a social point of view, he would have been brought
up a Democrat.
You know, now that he's saying, oh, thank goodness we got rid of them, I think says
a lot.
Yeah, it does.
And the other thing that says a lot is the grilling of the Trump nominees for his
cabinet, for want of a better word.
And I saw I watched with great deal of fascination.
Morbid fascination of
Pete Hegseth getting grilled by people and yet people were slapping him on the back
and there was lots of
fist pumping and smiles afterwards.
He's a disaster.
And also Rav Aswami, who you just mentioned, Viv,
they say he's the other one that will get a grilling but will still get through.
And who's that other woman, Tulsi, what's her name?
Yavit.
Yes.
Vivek Ramaswamy won't be grilled because he's not going to be in a position that
has a grilling.
He's like Elon Musk.
He's appointed to something that that's what people were mistaken when they saw
Ramaswamy and Musk being given these positions at Doge.
They thought, oh, this has no power.
In reality, it is much more powerful, do you think, because it doesn't have that
same grilling that these guys go through.
Gabbard will be grilled because of links apparently to Russia.
Rubio is already through.
The other pawn is Bondi, who is the AG that's been replaced.
that's the place that Matt Gaetz I saw her yesterday as well she did okay I think but
the thing
with Pete Hexer that you don't realise is that he's playing to the MAGA base or
whatever you want to call it
and these guys are much they like to see a tough guy what is Trump?
Trump is basically a tough guy with a veneer of toughness that's what they how
is Hexer
not playing exactly the same role Trump is playing.
In fact, you would probably see he has higher competence levels than Trump
because he went to, I think, a couple of high school schools.
Not difficult.
He's served multiple years.
But he's served in the military for several years.
He's got, in terms of like pure ability, in terms of like whatever, he's got more
ability than Trump.
He's qualified to be like the Virginia is, but he's not going to be kicked out
because of his inability.
He's showing the kind of, how can I say, almost the macho thing that Trump is
pushing forward with.
That's why they're supporting it because that's what they're paying for.
They're not paying for ability.
They're paying for this much of posturing that is so.
Yeah.
Okay, gentlemen, let's get back to reality now and have a look at some market prices.
We've got the dollar round at 1884.
We've got the British pound against the round at 2302.
And the euro round is currently trading at 1940.
Euro dollar, just below 103.
When will it break parity?
Will it break parity?
Will it go into double figures?
rather than the above one who knows but it's been a hell of a ride the dollar is a
bull market let's face it british
pound against the us dollar 122 18 and the woes of the uk with rachel reeves who's
hopelessly out of her depth as chancellor of the
exchequer has hit the pound horribly okay
other things commodities gold price 27 15 it's up a couple of dollars nothing there
platinum mired below a thousand
nine fifty but it's up 18 today let's give it some credit
and palladium is down seven to nine fifty eight dollars per ounce other commodities
now this is an interesting one
i've just looked at a
25-year graph of the crb index the last time it was here where it is now which is
376.04 an index level that is was in september 2008 uh so the
it's it's gone from and i'm fiddling around with my senior downtrend clb this
is a
This is a huge uptrend.
April 2020, it was at 126 point.
What?
It was 125, let's call it.
It's now 376.
Commodities are on the up.
And we know why.
It's the energy complex, which is hugely influential in the index.
Brent crude oil, $81.33.
And West Texas crude, $79.30.
They're both down today nearly a percent.
But these are really big moves to the upside.
And other things, copper up 1.1%.
100%.
and steel up to an half percent and so on.
I don't know what this is.
Is it the US recovery or rather continued US boom?
Is it the perception that China is going to do well?
Because obviously that's inextricably linked with the fortunes of commodities.
But nonetheless, there it is.
Bitcoin is 98,000, we'll call it, down a little bit.
South African 10-year bond, what is that doing?
won't let me in so i'm not going to do let's go straight to the u.s 10-year
4.66 we'll call it i was just going to get try and go back yes the south african
10-year bond
9.40 percent s&p 500 futures doing very little after a really good day best day
for two months
yesterday it's down slightly to 5
980 which is the futures price and uh yeah david anything on the jsc today
well i mean apart from regional yeah you Funny enough, that's all it is.
Because if you look at, say, the top 25 capitalized stocks, I'll give you some
other.
The only one that really performed was Richemont up 14.85.
And that has an enormous influence on the underlying index.
Take that away.
It was actually negative.
We still saw, I'm just looking at some of the banks, they were negative.
NASPAS was down.
And the RAND was steady, so it didn't have anything like that.
You know, ABM went down a bit, BHP.
So all of those in negative territory.
But of course, Richemont dictated where the index would be.
It has a big, big weighting on, big influence on where the index closes.
So, you know, just before that, we ended up 0.17%.
But I think a lot of that had to do with, you know, with Richemont's contribution.
It's a very unusual move.
And I don't know.
I don't know how you approach it as an investor.
It seems to me that 17 percent for such a big company smacks of either thin
conditions or short
covering or both.
Yeah.
You know, this was an area where people were very when I say short, short in
attitude,
whether they actually put positions on the market.
I'm not sure.
But generally they were negative.
You know, they did make.
They thought with Chinese consumerism under pressure, the economy under
pressure,
that's where the big demand for commodities came.
And so it was a total surprise to see.
you know the growth outside of china and how big that was so i'm sure there were
people saying hold on a sec you know if we are short let's
cover it we'll just watch what happens so uh it it we'll see if it holds you know if
if these
prices uh are sustainable as well which will give you a clue of where the market
was positioned of
the shares that will interest us on the upside on the jse today the aforementioned
richmond about 14 and a half percent on the close
angler gold ashanti Up 3.2%.
On the downside, Implats down 4.6%.
They're having a terrible, terrible time, these white metal producers.
Sappy down 4.5%.
Anglo-American Platinum down two and two-thirds.
Sassl down 2% despite the booming oil market and the weaker rent.
And yeah, Fortress B, the property company, down 1.9%.
Outside of your AI obsession, Viv, anything else that you're looking at?
I'm interested in what's been happening around Jekyll and Cecil here.
I mean, it's had a very good run until just recently.
I mean, obviously last year was a disaster for it.
But, you know, the last few months, Cecil's come back quite nicely.
You know, it's the last few weeks, in fact, not the last few months, last few
weeks.
And so, yeah, I would expect a bit of a pullback, you know, after a run like that.
But I do think that, you know, the moment, it's a surprising thing, like you said,
considering the fact that oil prices are recovering as they are, the round is as
weak as it is.
and this company is significantly lower than it was a year ago.
David, give us the closing JSC indices, if you would, and also the all-important
trading volume, trading value.
I'll give you the value straight away.
We traded around about just under 20 billion, and it was Richmond that
dominated,
making up 12.5% of the market, trading in about over 2 billion rand.
Then came NASPERS, which every day is...
at the top 1.3 billion traded seven and a half percent so a reasonable day uh
nothing
special we're starting to see this uh you know getting back to these kind of volumes
which is still too low for us to make
a living but they all share up 0.17 percent at eight three six five nine uh
resources up north one
one five percent uh without any real features there i think the big feature
banks down
funny um Financial generally under pressure.
The industrial index was up 0.88% solely because of the Richmond contribution.
And I'm looking at the consumer discretionary index,
which was up over 4.5% again because of Richmond.
But if I do go through the full,
what I call the top 80 capitalized stocks, probably 50-50.
there were as many gainers as there were losers.
And you've mentioned, you know, those stocks that, you know, that were up and
those that were down.
Good.
Okay.
Gentlemen, thank you very much.
It's lovely to have you back.
David Shapiro is from SAS for Insecurities.
Viv Govender from RAND Swiss, both in Johannesburg.
And that was the 5 o'clock shadow, back same time next week.
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