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 five o'clock
shadow.
And as always, on a Wednesday, I speak to Skullclo,
Portfolio Manager at PSG Wealth Old Oak in Cape Town.
I want to talk about politics and maybe we'll weave it into the conversation
later, Skullclo.
Let's talk about earnings season in South Africa.
There's been so many results out in the last 10 days or so.
What have you made of it all?
highlights and lowlights if you will hello lindsay and uh hello to all the
restrictive business
listeners thank you yeah i would i would say very similar like today
um and why do i say that i mean you've had quite a few companies report and
it either looked really really good or really really bad i find something that's
sort of sort of in
between and and there's a general trend in in things like Like today,
we had a few companies report.
I'm not going to try and cover them all.
No.
But, I mean,
if you could look at the company that reported today that the worst
results were, again, let's call it Woolworths, 6.3% down.
Also, Hero also down 6%.
But there was nothing that sort of brought out results and just stayed flat.
Because everything was either… 6% up like in Quilter's case or 6% down in Woody's
case.
And that's an interesting market environment because it tells us that these
companies that is deemed to be value companies either now turn out to be, you
know, yes,
they are looking like value companies and that's why they're reverting or re-rating
in the
market or they turn out to be value traps.
and get hammered even further.
I mean, let's just take Woolies for a second.
I mean, Woolies today closed at 53 Rand, just over 53 Rand.
I mean, this is the...
It seems to have been around that 50 Rand mark for a long time, Skulk.
I mean, I haven't watched it and I haven't looked at the five-year graph, but it
seems to me that it's been there for ages.
Yeah, I mean, naturally, COVID was sort of the exception,
but this is the worst levels we've seen in three years.
So this is a three-year low for Woolies.
And if you look at it on a 10-year basis, this company traded exactly 10 years ago.
We're trading at 90 bucks.
March 2015,
this was a company that traded at 90 rand and eventually went on to go and touch and
surpass the 100 rand levels.
And today, 10 years later, 10 years later.
it is trading at 50 rand and yeah so i think you know to to sum up what i just
said on a very long winded
way um yeah we've very much got a market that that either are not starting to see
some of these value
flows starting to play out because south africa is doing well the
jse you know compared to the us this year uh are doing really really well still one
of the top top 10
best yeah but let's qualify that please scalp it's not doing well domestically
Let's face it,
if you have a look at the results over the last 10 days to two weeks,
there's been the most extraordinarily diverging performances from the companies
that have been reporting.
I mean, you look at Trellidor today, it's up 14%.
You look at Momentum, it was up 10%.
You've got other companies going down.
It's very, very volatile.
It's a split market.
And not just split into two, but split into two or three pieces.
So you can say it's doing well.
But what aspects of the JSC's all-share index are propelling that index to these
new highs all the
time?
Yeah, I would say lately it's been, I mean, last year, if you look at the last
12 months, resources are still,
let's call it lagging, lagging the JSC all-share.
But we know we had a 20% month in January.
We had a, let's call it 6%, 7% month down.
And this month, again, I would say...
March and we're only five days in, but are dominated,
absolutely dominated by resource counters.
So, yeah, I agree with you.
It's sort of a strange, strange market.
And that's not just in Africa.
There's a very nice indicator, which I found this month.
And listeners can go and have a look.
It's the AAII.
What does that mean?
It's another acronym I've got to try and digest.
A-A-double-I.
It's the American Association of Individual Investors, and they run
different surveys.
I usually just follow the asset allocation survey.
This is where they look at all the fund managers globally,
and they say this is their percentage in stocks and bonds.
But they also run a very nice survey, which they call the sentiment survey.
This is where they look at individual investors.
Yes.
And they
that they do the survey and they they they either bullish neutral or bearish very
simple very very simple yeah i love it i love it and it is unbelievable this is
the this is the quickest i've seen the
sentiment go from bullish to berries ever why is that is that since trump has been
in power was
it a quarterly figure or what no it's literally over the past two weeks three
weeks um
It went from still bullish, it did slice through neutral into a two-to-two-berry
scenario.
And for the listeners out there, I've actually drawn up a graph, a 30-year
graph,
but I think it's more interesting when you look at it since the turn of the century
with the dot bomb,
we had the world financial crisis, the world recession, COVID,
the crash in 2022.
I mean, when you look at it, every single time, This thing went into this, what they
call bearish sentiment.
Markets followed shortly after and really usually corrected.
Now, I don't want to call one seller a summer.
I'm not one of those people who said, I'm a person that's going to call a crash.
But this indicator,
one of the indicators that I would say is the closest ones that indicates either
a big correction in the market or a crash.
But I think the most important thing is not the indicator itself.
It's how quickly, how quickly we went from a period, and we're talking about a two,
three-year period since 2022, two-year period,
where the market stayed in this close to extreme bullish environment.
I mean, people just so bullish.
We saw the S&P 500 go new highs, make new, new highs.
Everybody was talking about the high valuations and how we should see a
correction in the U.S.
because we… But why didn't we see the correction?
Well, the sentiment was still extremely bullish.
Now, suddenly, this in two weeks' time went from bullish straight through neutral
into bearish.
And I think this is where things are going to get interesting now.
Definitely interesting.
Let me just read something to you from the CNBC feed that I get sent every day.
It says here, excuse me, industry warnings.
Industries from retail to autos warn that Trump's tariffs will hit their...
businesses best buy a very very big retailer its ceo said price increases are
highly likely noting that china and mexico are the company's top two supply chain
sources
data and forecasting firm s&p global mobility meanwhile caution that roughly a
third of vehicle
production in north america could be cut next week as a result of tariffs and so it
goes on so from
cars high oh
high priced purchases to low priced purchases in other words the stuff that
you go and get every couple of days
at the supermarket are being hit and i don't think we quite understand how much
that is going to impact people because
if you've got 100 rand for example in your pocket and you're going to have 15 rand
less because prices have gone up that
impacts you and that impacts the economy skulk and
this is only the start i mean i just i mean open up
my feed this morning i i've got bloomberg playing at the in my background you know
pretty much the whole day
and they were speaking to us and see the name of speaking to some german german
chanda then and then they asked him about the terrace
and um
can't quote him 100 but but the line was um yeah naturally your tariffs
won't be good for for for germany it will be really really bad but um we will find a
way to
to filter the the prices through to to the end consumer eventually i mean and and
that's
ultimately what it comes down to i mean i just just saw a thing that pops up where
um uh the the the mexican president uh were quoted by saying that that
they they would
most probably now look at some other trading partners to try to mitigate these
tariffs.
This is not going to end well.
I mean, I've got no doubt in my mind.
I keep on showing that graph of the late 70s, beginning 80s, where you had that
massive stagflation.
You and I have that conversation ever so often.
I mean, we've got this environment where...
big rise in inflation.
They sort of got it under control.
They pulled the trigger too quickly.
And we had that second trance inflation that literally doubled.
That period, the interest rate, the U.S.
interest rate for that first trance went from 2%, which they capped at first, and
then they uncapped 2%,
and went up to 9%, got it under control, moved too quickly to reduce interest rates
again.
And their second trance, they had to take the interest rates up to 18%
just to get inflation under control.
I mean, that's crazy.
That's to think in a South Africa currency has got a prime rate of around about 11%.
But that's 10 times.
That's like our prime rate going from 11% to 110%.
That's effectively what happened in the late 70s.
Now, they barely got...
inflation under control now, barely.
I mean, we know this is still the hot topic any central bank has got.
They think they've got inflation sort of under control now.
Now you've got these tariffs, which most of the countries say, well, China already
said, I mean, this is all fun and games,
but we're going to retaliate.
We're going to retaliate from our side.
We're not just going to accept these tariffs.
I mean, I see that retaliation not as a bullet or a...
a rocket.
I see retaliation as price increases, and that's going to be really, really bad for
interest rates.
And ultimately,
I would not be surprised that countries go into a serious recession if that should
happen.
If the JSC Securities Exchange charged more to transact with them,
you would put your prices up to your clients, wouldn't you?
You'd have to.
Correct.
As a I mean, we've had a few companies today that reported, but as a listed, a
PSG,
it's a listed company.
Naturally, you've got two things.
You've got clients and you've got shareholders.
And just like ShopRite, I mean,
you go to ShopRite and if the guy that eventually sell you the tomatoes decide to
push
up his prices by 20% on tomatoes,
I can promise you ShopRite won't keep the tomato prices unchanged.
pick up the moderate price.
He'd be a lost leader, but I know what you're saying.
Across the board, if prices went up, they'd have to pass it on to the
beleaguered consumer.
And that's what you would have to do.
It's a natural thing.
And that's where Donald Trump, I mean, it's all this jingoism.
It's nonsense that he says, make America great again.
What he's not doing is making America great again.
And he's going back on his promises from his rally speeches over the last
year or so.
But anyway, let's not...
Before we go on, you're making an extremely, extremely good point.
I mean, what did I just say?
If we say inflation could become a serious problem in the next few months,
which will mean that central banks will need to react, kicking up interest rates.
Remember, you and I had this conversation last year about credit card debt in the
US.
Yes.
What was the number that you quoted?
Because you were the leader of this conversation.
Wasn't it a trillion or something?
That's it.
It went over a trillion dollars for the first time ever in October last year,
September,
October last year.
Do you want to guess what the credit card debt currently is standing at?
I dare to think.
Go on.
Over $1.3 trillion.
So it's gone up 30%.
Yeah.
Literally in less than six months.
Now… Do you know what will happen if suddenly the U.S.
is sitting in an environment where all the stuff that they're getting from China,
all the commodities that they're importing from places like Mexico, South Africa,
those people say,
well, I understand what you're saying,
but we need to kick up prices with the amount that you put the tariffs on.
That's just how the cookie crumbles.
I don't know.
personally think this will make the the world financial crisis because remember
back then the us
kick up the the credit card debt from 300 billion dollars to 600 billion dollars
over a
period of of less than less than 18 months and that's one of the main reasons why why
when when
the whole, let's call it, financial system collapsed, a lot of the U.S.
citizens say, well, sorry, I can't afford my home loan because I've got a 110%
bond and my property suddenly is worth 80% or 70% of what it was worth a year ago.
I'm sitting with credit card debt double or triple what it was a year ago.
Sorry, man, do what you want to do.
I can't pay.
When they get maxed out, what happens?
They can't go to another credit card company because of credit checks, etc.
And therefore, they are using their credit card credit that they've got left to buy
basics.
It's a very scary situation.
And then demand collapses, and you've got a recession.
And if inflation is rising, then you've got something that we've mentioned many
times.
It's called stagflation.
Stagnant economy and inflation at the same time.
which is horrible, 1930s style.
Yeah, yeah.
Yeah, no, I would say, and it will make that period look like a kindergarten
party.
Just want to correct myself.
I said $1.3 trillion.
So it's $1.2 trillion.
It's 20% higher.
So $1.2 trillion.
Well, forgive me for that, Skilk.
But I mean, we're talking about two to three months.
That is crazy.
that is crazy let's have a look at the market scalp if we can dollar end is uh
1839 and i'll tell you the reason for that in a moment uh
the british pound against the rent is 2366 the euro rand is 1978 and the
euro dollar this is the key here this big big move it's a near three percent move
for the euro against the dollar on the upside
107.55 for the euro dollar exchange rate i thought it was going to par but now look
at
that euro Rallying, manfully.
British pound, 128.60 against the dollar.
The all-important gold price, it's done nicely, actually.
It's up $38 today, or 1.3%, to
$29.19 per ounce.
Platinum, these white metals are just horrible.
$9.76, okay, up $15 today for platinum.
And palladium, $9.50.
Up $10 or 1.1%, but still looking just horrible.
Nobody seems to like them.
Their day will come.
Other commodities.
Now, this is interesting.
2.3% down for Brent crude oil.
People are worried about the global economy because of you know who.
$69.32 for Brent crude oil.
And West Texas, $66.19 per barrel.
Down just over 3%. Really horrible.
Copper price, though.
that's good for certain south african companies notably anglo-american plc up
five and a half percent to four
dollars 78 per pound as they do it in the united states for america and yeah so
quite interesting stuff
the clb index though under huge pressure the s p 500 futures are
um let me just press a couple of buttons here are slightly higher 0.2
5802 but they've had a really volatile time Because, again, of you know who,
the U.S.
10-year bond yield is 4.22%.
The South African 10-year bond yield is 10.70%. And Bitcoin, all over the place as
usual.
It's currently, what is it,
88,300, 400.
So it's down a bit.
But it's, as I said, it's been up to nearly 100,000 again.
And down to 83,000 yesterday.
Currently 88,000.
And...
bit lots to make sense of of scalp and when you have your meeting your strategy
meeting it's going to be
it's going to be a difficult one isn't it i think no definitely caution and you've
got to put you've got to put safety
guards in place you've got to you've got to have options on the upside and the and
the downside that's
that's my simplistic view
that's it i mean so so firstly we know any any equity investment it's uh
It's a long-term investment.
And whenever you take that investment, you should be looking at that.
But then again, also, you need to re-evaluate those positions.
And I know a lot of investors made really stunning,
stunning growth and performances over the past 10 years.
Having some of these offshore, having some of these S&P 500, and having some of these
magnificent seven type of companies.
I would just urge people not to become short-sighted, but somewhere along the
line,
you just need to do some risk management.
And I think this typically will be the time where you want to be seriously
looking at your risk.
If you feel that your risk is fine and you can see a drop in because in
2022, the S&P 500 ended the year 18% down.
One stage was down over 25%.
The NASDAQ Ended the year down close to 30% in one stage, down way over 30%.
So if you can stomach such a, let's call it, performance year, by all means, sit
tight.
You're a long-term investor.
If by any chance you're sitting in a scenario where you say, well, I might be
retiring in the next year or two,
this will put me in a really, really different space if I need to retire with,
let's call it, 80%
of the value or 70% of the value.
Well, that's your keynote.
Go back, go do some risk management with this.
I think just, I don't want to say, you know, you need to buckle up because I
think things are going to get nasty.
Okay, let's talk about the good side of the JSC today because the JSC has done
well, and you'll give us the indices in a moment.
But let me give you my individual stocks.
Impala Platinum, 9.5% higher.
Northern Platinum, 8.3% of good.
Anglo-American Platinum, 6% up.
Harmony.
6% up.
Quilter, 5.7%.
Downside, PHP prop.
PHP prop, sorry.
8.3% weaker.
Power down 7.4%.
Woolies, we've spoken about that.
6.3% down.
Your favorite shop, Skulk.
Mass down nearly 6%.
And Old Mutual down 5.2%.
Any ex-divs there in the downside ones?
I don't think so.
No, no.
Actually, the other companies that's really...
exeter today is tfg brevspark is that so you've got south 32 bhp bulletin and and
yeah so
that's that's pretty much the ex-diffs um yeah i don't think we're gonna i think
we're gonna lose a few people if
we start digging
into some of these these these companies again but um willies willies we've already
chatted about that
earlier today horrible horrible results um again the food not looking too bad i mean
spin it off, Skulk.
Spin off the food.
Exactly.
I mean, how long should we be sitting here and say, well, the food has grown by
11.4%,
but fashion, beauty, and home, only 2.5%.
And then you look at things like Country Road, that is doing all right.
Just spin it off.
Come on, for Pete's sake.
Let's just get a Woolies food and get it.
Like Pick and Pay is done with Boxer last year.
And see how...
positive that simplify it skulk they've got too many offerings you talked about
simplification with
that indicator which was ai i a or whatever it was a buy buy sell or
or neutral keep the simplicity at woollies and get back to basics i mean this stuff
used to be really
good now you go into a shop and there's four different brands i want to buy a
jumper a v-neck jumper you know all you can do when
you get to our age skulk you buy a v-neck speak for yourself shut up
okay give us the closing indices if you would or if you've got more to say gary
carry on please no no no you asked me the companies that stood out i mean it's all
the companies that's really reported we've mentioned that from the
bottom it was willie's old
mutual reporter today uh 5.22 percent down so but on the other hand like i said
quilter the offshore i don't want to say offshore mutual because it's not all
mutually more they were up 5.71 after they
uh you know result both the cure and starters not looking healthy not looking
good in terms of the
education companies you're talking about just in case people don't know what you've
just said but yeah what happened
no they also they also brought out a um a audit results
And I think a bit of a disappointment for the market.
Kiro down 6.2% and Stardew down 3.2%.
And GrowthPoint.
GrowthPoint had a voluntary trading statement today.
Things looking good.
They were just mentioning that dividends are going to be higher.
So dividends, we're looking at anything between 3% and 4% higher than the previous
period.
The market loved it, naturally,
because one of the biggest reasons why you would buy a property company is for that
dividend.
And the share price reacted close to 4% up for today.
So that's, I would say, in a nutshell, what the companies that stood out, all the
companies that really reported.
Jay, see you today.
End of the day, 1.14%, up 87,718 points.
Jay-Z top 40, also up 1.2%, 80,407 points.
Market was led by resources.
Surprise, surprise, 3.34%.
I mean, look at your top performers.
I think all three of your top performers were all white metals.
Four out of five, actually, yes.
Diggers, anyway, yeah.
Correct, diggers.
That helped the resource index gaining another
3.34%. Industrials up 0.87%, while financials also up 0.33%.
And like I mentioned, with a little help from GrowthPoint, the SA property index
were up 0.8%
for today.
When I look at the value traded, value traded, not too shabby, not too shabby at
all.
I thought yesterday was a good day at $25.5 billion today.
26 and a half billion value tries looking really really good interest whether it be
good interest or bad interest i don't know but 26 and a half
billion jc limited must be very happy one thing i've never done skull because we
closed this conversation is uh
you telling us how we get in touch with you because i get a little bit of feedback
about you actually for some extraordinary reason people
like you how do we get in touch with you all right so thank you very much lindsay
so if people that want to get to touch me i think that The easiest,
I can tell you, you can look at my Twitter handle.
It's at Skullclaw.
You can look on Facebook, LinkedIn.
All of them are at Skullclaw.
Or if they just want to get in touch with PSG Old Oak,
they can literally just go and type in www.oldoak.co.za.
And remember, it's not the old oak like Lindsay and myself.
It's like the tree, oldoak.co.za.
In other words, go to oldoak.co.za.
Oak being O-A-K.
And yeah, I'm sure one of Scout's representatives will reply to you almost
immediately.
Scout Glow is a portfolio manager at PSG Wealth Old Oak in Cape Town.
And that was the five o'clock shadow.
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