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 Skunk Lowe,
who's a portfolio manager at PSG Wealth Old Oak in Cape Town.
And when I say always on a Wednesday, Skunk, we haven't spoken now for probably
five,
six weeks.
Firstly, it was your fault.
latterly it's been my fault and one of the things that we sometimes say during quiet
times before we go on air you say lindsey let's
just make this seven eight minutes because there's really nothing to say that's not
the case today skulk no fantastic
speaking to you again lindsey likewise yeah thanks for having me again it's it's
it's been a big big
not just week i mean it's been a a massive massive 2025 thus far
And the past 24 hours sort of just sort of went from bad to worse.
But we'll chat about that.
Yeah, I don't know where to start, really.
I mean, we could get into politics, but I'll leave that for my blog.
But the simple fact is that Trump has marked his territory.
The tariffs became effective today.
China has retaliated.
Markets have retaliated as well.
And we'll talk about the markets in a second.
But we may as well get it out of the way, first of all.
Because while I was lying around with nothing to do, watching telly and laptops
and things,
I did notice the gold went to 31.50.
Now, you can correct me on the high it went to, but I thought of you.
And every time it made a new high, I thought of Scalp Low.
You must have been jumping through hoops.
I was extremely happy.
But, yeah, I sort of look at the past 24 hours and I still believe that the best is
yet to come.
And that is crazy to think.
But, I mean, yeah, if we've seen what happened, I mean,
it's mind-boggling to watch this.
Watch this play out.
Now, I often get asked the question about, you know,
what is a black swan event?
How can you sort of identify a black swan event?
And I think...
That's the whole thing about a black swan event.
There's no indicator.
It sort of happens and nobody's sort of foreseen this happening.
Did we know that we're going to have tariffs?
Hell yes.
We always knew that 20th of January, President Trump will start his second
term.
He's made it blatantly clear while he was canvassing for votes that he's going
to...
That was...
Look at tariffs, he's got to look at a few other things, but tariffs was the main
thing.
So it's not a surprise, but I think nobody, and when I say nobody,
Lindsay, think to yourself.
I mean, we've had the announcement last week, and this caught everyone off guard.
It wasn't just sort of this one told that one, and that leaked to that media outlet
or that media outlet,
and people were sort of prepared.
It's like our budget.
We're going to see a VAT increase.
It was sort of leaked out before it was actually mentioned.
This remained shut, hush, hush.
And then they made the announcement, and it sort of shocked the market.
Yeah, because Trump says things, and then it's sort of forgotten about.
I can give you two very good examples of him saying things that he's just blurted
out.
I won't tell you what they are.
It's a classic example.
He says, oh, he thinks something when he's giving a speech, and then afterwards he
thinks, yeah, that was a good idea,
but it's not going to work like Gaza being the Riviera.
I mean, that's a classic one.
What's he talking about?
There's no Riviera being built in Gaza.
It's all forgotten already.
It's pathetic.
So I think people didn't realise that he was actually going to do it this time.
And, of course, now he can't go back on his word because he looks foolish.
He looks weak, and there's nothing more.
galling to President Donald J.
Trump, the 47th president of the United States of America,
than being made to look foolish and that he has given in.
He won't do that.
He'd rather be ousted midterm than be told that he was wrong.
There's two words in his vocabulary that don't exist.
One is sorry, and the other is wrong.
You're 100% right.
There's that saying that says, stop digging when you're in a hole.
And I sort of see him standing in this hole, just getting deeper and deeper.
I mean, China coming out and saying that, well, they're going to retaliate that, I
can't remember what it was originally, you know,
30 odd percent.
And then it went to 60 percent.
And then everyone just retaliated.
And immediately, it's sort of before the announcement actually land on Trump's
desk,
he retaliates immediately.
104 percent.
Tariffs fall for goods coming from China towards the US.
So let's just put this in perspective, Lindsay, because this is actually just
massive.
We had this meeting this morning and one of our, one of my colleagues,
a Teams meeting, a Zoom meeting, one of my colleagues,
he sat there and the next thing he did was make America great again.
Cap, put it on his head and everybody actually laughed.
And one of our mates actually said, well, one of the colleagues turned around and
said, well, just do me a favour.
Just turn that cap around and tell me where that cap is made.
Made in China.
But, I mean, let's just take a harder issue.
The purebred.
I think the purebred of purebred companies, there's a few companies like
Ford.
But one of the purebred companies is Apple.
Apple is a U.S. thoroughbred company.
Well, most of the, let's call it moralists.
200 million iPhones that they produce every year,
most of those iPhones are produced, is produced in China. Yes, exactly.
So now, they've already looked at the release of the iPhone 17, and there's a
few calculations being done,
and this is just whisper numbers for now, but they are really talking about, as we
now sit here,
that these iPhones will need to increase 40% in price.
to still make it profitable.
Now, that's crazy.
That's just iPhone.
So look at this thing.
Now you ask your question, will the people around the world, will people be, you
know, not just, you know,
able, will they be willing to pay 40% more for...
Of course they won't be.
At some point, of course, there's always iPhone loyalists, Apple loyalists.
but they won't be able to absorb that sort of price increase for what essentially is,
it's a useful luxury,
but a luxury nonetheless.
There are other phones that do similar things, not quite as good, in my opinion,
as the iPhone.
But anyway, he lies.
This is the other point.
He put out on Truth Social today when China announced the 84% increased tariff.
He said this is the best time to come to America.
You won't pay any tariffs like Apple are doing.
I don't see Apple doing it.
Because, you know what,
you've got these almost like labor camps where the Apple workers stay and they
produce the components for the iPhone and then they assemble.
You don't just get an iPhone, it pops out of a machine and you bung it on a ship and
it goes over.
It has to be assembled.
And it's quite a skillful job.
And Chinese workers work six days a week for wages that would be sneered at.
in the United States of America.
So let's say that Apple said, OK, everything's being shipped out.
It's going to cost us a couple of hundred billion just to dismantle it and send it
all over and all that sort of nonsense that occurs when
you change location of a giant factory.
When you get to America, who's going to do this job?
Migrant workers are being kicked out.
Americans, even if they were available to do it,
would do it for maybe four or five times the price that the Chinese workers do it,
and they're unionised.
and they only work five days a week, it would be a disaster.
40% might be a similar figure.
The cost would increase in America because you've got some hick from Mississippi with
a corn pipe and a pair of dungarees
trying to put an iPhone together.
Come on now, Scout.
He's lying.
And he's so lied about the Honda factory in Indiana.
Honda produces the Honda Civic original in Indiana.
Now they've got this brand new Honda Civic coming through.
And Trump says...
They're building the biggest, most sophisticated factory to produce the new
Honda Civic.
And they came out and they said, we never said that.
We haven't made that announcement.
We're not doing it.
He's lied again.
It's extraordinary.
My prediction?
He will not last a full term.
Not only are his powerful allies ganging up against him now, behind his back, in
little corners and discussing strategy,
but he's galvanised the Democratic Party.
They still haven't got a good leader.
But if you watch Bernie Sanders tonight at a CNN town hall, if you're up at that time
in the morning, which I sometimes am,
it'd be very interesting to see the mood in the Democratic Party.
I mean, even if even Colonel Bernie Sanders can can can make a splash,
that really tells you what the Republicans are suffering at the moment.
He won't last four years.
I mean, you had Ted Cruz already yesterday or two days ago made it verbally.
100% clear that he's totally against.
You can see more and more, you know, these, and I get the feeling he just went
and did this.
I don't think he's properly consulted.
And I think that the whole decision-making process and structures will be changed.
I've got no doubt in my mind.
I foresee them getting together very, very soon because the way this is heading,
this is heading for a massive.
massive massive massive crash I mean a lot of people think the one thing enough we've
been seeing
when you look at the VIX VIX for the past 30 years only went above 50%
three previous times.
I'll use that.
1998, we had the Asian crisis crash, the Russian-Asian crisis crash.
Yes.
Then 2008, we had the world financial crisis crash.
That was the other time.
Then more recently, 2020, COVID crash.
We've seen the VIX go above 50%.
As we sit here- The VIX is trading above 50% for the fourth time in 30 years.
And the previous three times, every time it's actually trading above these 50%
levels,
was most probably one of the best buying opportunities.
Why am I not feeling comfortable calling this a buying opportunity with those type
of indicators?
Well, the mere fact that we don't know the outcome yet.
We don't know where this tariffs will be.
be ended because we see China going back and forth.
We've had Spain saying earlier today that, well, we're not going to,
we're going to start talking to China because it's a little bit closer and it
might be more convenient.
What we're seeing, Lindsay,
is we're not only seeing the likes of merging markets or the non-allies turning
against
Trump. We're now starting to see allies of the U.S.
turning against Trump.
against Trump's tariffs.
I'm starting to see actual Republicans now starting to turn against Trump and his
tariffs.
So where will this end?
Well, if they don't stop him or go sit down and say,
let's really start negotiating with people.
Because even if you're not to go back and say, okay, guys, okay, I'll tell you what,
we will be imposing a blanket.
10% tariffs on all countries.
I still think that there will be some sort of, or if it did that,
there would have been some sort of win for the US because most of the countries will
be unhappy but still happy.
They say in any negotiation process both parties should always be a little bit
unhappy.
Now, if you impose a blanket 10%, I think both parties will be a little bit unhappy,
but I think Mr.
Market will see it as a win.
Currently, I don't see any winners.
I'm sorry.
So I'm not yet at the position to be looking to buy the dips.
No, I don't think so either.
And you're quite right.
And what has happened on that so-called Liberation Day, many people called it
Obliteration Day,
he just sat down with a few people and they said, we've got this press conference
tonight.
Let's get on with it.
Let's get a really simple formula.
So we take this number and that number, divide it by two.
That's what we're going to charge them.
Now, just look at Madagascar, just off the coast of your lovely country.
And it's one of the poorest countries in the world.
It sells spices.
This is very simplistic, but it sells spices and vanilla.
He whacked a 47% tariff on that.
Now, what is that?
He doesn't, they don't export anything to America, apart from what I've just
mentioned.
They can't import anything very much anyway, because they're too poor to do so.
So they're not going to whack a tariff on him.
I mean, why Madagascar?
Why not be like the European Union and actually be considered and measured if you
are going to retaliate,
just like Ursula von der Leyen has done today?
And she's targeted certain industries and been very reasonable about the tariffs.
She's got to do something, otherwise she looks weak as well.
But Trump just doesn't care.
He doesn't think.
He goes and plays golf.
Very badly, I understand.
Well, I don't know.
I still believe that the current approach has been extremely aggressive.
Now we know it's aggressive.
But as we currently stand, I do think that this is not going to be good for the U.S.
And, you know, the train of thought, you know, the theory,
the main theory around what we've seen over the past week was this is actually a
big
plot.
And, you know, the plot was if they.
come out really strong aggressive we're not eventually going to end with this this
this these tariffs that he's imposing or
proposing i mean uh is we're gonna end with something very softer but we're gonna
then eventually see a a
massive shock to the market we're gonna start seeing investments moving out of
risky assets a
risk off scenario and
as investors sell out of equities where do they go to oh easy they usually go
to But have they, Skulk?
No.
Well, I'll get you that now.
Because remember, they've got more than $9 trillion worth of debt maturing this year,
and they need to refinance this debt.
Well, five years ago, when they floated most of these bonds in COVID,
we had the 10-year yield trading more or less half a percentage.
Now today, it's trading at 4.5%.
And I know most of it is not the 10-year yield.
There was a lot of...
investments been floated earlier, but $9 trillion, if they can create sort of a
shocker to the market,
get all the investors to move from risky assets to US bonds, refinance the debt,
all wealth ends well.
And then the past 24 hours happened.
Suddenly investors are running out of US bonds.
And so, the US bonds are running out of US bonds.
What does the saying in Afrikaans go?
Slim fang say boss.
What does that mean?
It means you actually think you're smart, while smart just, you know,
the slim fang say boss, smart just go to court as boss.
It just says you're too smart for yourself.
And I really think they're way too smart for themselves currently.
I think this is potentially a movement away from the US.
not just in terms of assets, investments, bonds, but also as reserve currency.
We know the reserve currency has been twiddling downwards from the 70-odd
percent levels to the 60 percent levels.
I think this could hurt the U.S.
They can't afford to go into a recession.
We had, what was it,
a former treasury.
secretary, what is he?
Larry Summers.
That's it.
He came out.
I don't know if you watched that interview today.
I did.
I saw him being interviewed yesterday.
He was scathing, wasn't he?
Yesterday, sorry.
He looked didn't look as strong as I remember
Larry Lawrence Summers.
But he made it clear.
He said well, looking at this he's got, he's pretty much sure that these tariffs
are going to...
cause a recession and and and he foresee that at least two million people will lose
their jobs um
now that's that's crazy so so let's let's let's let's look at that and let's say
that's going to be because a lot of investment
houses actually are also following this route saying that well now the probability
of a recession
suddenly increased massively so so
if they're right we're going to see a a let's call it a drop in in
economic growth.
We're going to see a massive, massive increase in unemployment.
And now, I mean, we just had this example of iPhone,
but now adding to the mix that suddenly we're not just sitting with inflation, we
can sort of sit with a hyper,
hyper inflation.
Now that, I mean, you and I have been having this, it's called a debate because
we've agreed since day one,
we're going to see stagflation.
So the probability, you know, for stagflation sort of
increased in my view over the past uh 48
72 hours increased a hell of a lot so state flash in my view is sort of and the
gold
price today is telling us that gold price up three percent is telling us well they
they see you know state inflation being written all over this
okay just a very very brief comment
on tariffs and the history of tariffs in 1922 it started uh people don't quite
realize what what went on there but
as truman says you There's nothing new in this world, only the history you don't
know.
So if you don't know this history, listen now.
The Fordney-McCumber Tariff Act of 1922, America raised, it's called a tariff bill,
really.
And they raised tariffs to 40% on stuff being brought in to
America. Americans were clever, though.
Then they offered very affordable loans to European countries.
But eventually Europe caught on.
And France, having had a 45% tariff, caught on.
tariff on u.s automobiles uh whacked it up to 100 spain raised its tariffs on
american goods by 40
percent and so it went on germany did the same they and italy raised their tariffs
on wheat sorry the american
agricultural businesses farms in other words lost 300 million dollars and that
was a lot of money in the
1920s so this went on then we had the great crash 1930 what did america do they
signed another
tariff bill which was smoot hawley Now, Smoot-Hawley, of course, coming on the
back of the Great Depression,
and in the middle of the Great Depression, in fact, and the crash of 1929, was
exactly the sort of thing you shouldn't do.
And it was because of the farmers and the manufacturers of certain equipment.
asked Hoover to do it.
So Hoover and the other two chaps, Smoot and Hawley, got together and said, right,
they signed it.
Between 1930 and 1934, world trade tumbled by 66%.
Now, the backdrop is, of course, the Great Depression.
So that could never happen today.
A robust world economy wouldn't allow it.
But the point is, it doesn't help.
And if you look at any tariff initiative over the centuries, over the decades, it
doesn't work,
Skalk.
It only causes disaster.
And we've got disaster written all over Wall Street.
Yeah, desperate times, desperate measures.
They're sitting in a very, very difficult position.
As I mentioned, Trump, you know, 1.0, didn't sit with such a deficit,
didn't sit with such.
Yes, they had quite a bit of debt, but it wasn't to the extent that they currently.
They need to start looking at reducing these debts.
these deficits.
Yeah, and tariffs was it.
I think the US are sitting between a rock and a very, very hard place.
I think refinancing the state is going to be very difficult.
Unfortunately, this has been very, very bad for Japan, because
Japan, we know the story about Japan.
Last year, Japan always had sort of a fixed, not sort of, they had a fixed
interest rate.
And with inflation over the past few years, we need to start using inflation.
We need to start using interest rates, increasing interest rates.
And we start seeing it increasing slightly.
We know the forecast is still that the Bank of Japan will be increasing rates
going forward.
But this is actually, I'm sorry for Japan now,
because as we sit here, let's call it a quarter.
of the U.S.
debt are held by non-U.S.
countries.
So it's quite a large, large portion.
If you did the largest holder of U.S.
debt is Japan.
They hold just more than $1 trillion worth of...
They're getting whacked.
Massively, massive, massive, massive.
Second largest is China.
They've got about, let's call it 400 billion.
But...
I wouldn't be surprised if this major sell-off that we've seen over the past 12
to 13 hours
has been China.
China is saying, well, that's fine.
We're going to use this 400 billion kitty that we've got.
And we're going to start putting some pain, serious pain on the bonds.
Because then if they refinance, I mean, it's going to cost the U.S.
economy.
an arm and a leg to refinance at four and a half five or even higher levels but yeah
that's it's interesting
interesting times for sure certainly let's have a look at some interesting numbers
today the rand yes all-time record lows against the dollar
pains me to say so dollar
rand 1984 british pound against the rand 2635 euro rand is
2194 oh my goodness so let's call it 22.
Eurodollar 110.63.
The dollar is falling, tumbling, and the euro doing extremely well.
Big move today, I have to say.
The gold price, 3,086.
$71 higher.
I haven't got a fancy screen like yours, but mine says $71 or 2.4% higher.
Platinum doing nothing.
9.17, barely changed.
And Palladium doing nothing.
Nothing happening there.
barely changed 8.92 dollars per ounce if we go to the rest of the commodities the
one that is very
interesting which i picked last year but i was four months too early and that was the
demise of the oil price uh brent
crude oil 60.29 which is down four percent skull glow uh west
texas crude 56 you called that one yeah i know i did yeah did i make any money out
of it You know the answer.
$57.05 per barrel for West Texas crude, down 4.3%.
And so it goes on.
What other ones have we got?
Steel and coal all getting walloped.
Iron ore down 2.75%.
Okay, let's have a look at some other numbers now.
And a toss a coin.
I'll say heads up, tails down.
Okay.
tails tails down i'll say s&p 500 futures no wrong up again up 0.2 percent to
5031 there's 5000 level i think closing below there on two or three sessions i
think will be the the
key to the future of this market at the moment it's hovering it's orbiting 5000
skunk us
10-year treasury bond yield which we've been focusing on 4.432 percent which you
couldn't have imagined three
months ago um bitcoin 77102, what's the South African tenure,
Skyle?
For some reason it's not on my screen, because it's obviously under pressure.
Oh, massive, massive.
Remember, we went into 2025 with the trading below 9%.
And here we're sitting today, it's 11.37%, 11.37% as we sit here.
So there's been a massive, massive movement in our long bond yields.
And, well, it can't be good.
It can't be good at all.
No, it can't be.
Bitcoin is 77,070, so about to break below 77,000.
It's a near 2% move.
To the downside.
What about the JSC indices, Skulk?
I know the financials today looked horrible.
Yeah, with the RAND, it did what it did.
It's sort of a general sell-off in banks overall across the world.
But yeah, like you mentioned, the JSC financials, they actually ended the day
just shy of 5%,
down 4.63%.
Let's go to JSC AllShare.
82,486 points.
That is down 2%.
2.1%.
Top 40, 75,600 and down just over 2%
resources with a little help from gold and
I think there were some of the platinum counters as well, but precious metals in
general definitely helped the resource index.
Up 2.4% in industrials.
Down 2.31%. Look at the turnover.
I mean, Lindsay, yesterday we had close to 46% billion day.
Previous day, we had a $45 billion day.
Previous day, before that, $44 billion today.
Today, another $38 billion.
So massive volume being moved through the market.
One can argue that there's been some massive sellers just get the hell
out of any risky assets, but somebody's buying it.
So that's major, major market.
to market movements as well as major size going through the jsc individual stocks i
don't know what assura is but i assume it's something
that digs things out the ground but anyway it's up 9.4 pan african resources 8.3
percent higher
uh sorry 6.3 percent higher anglo gold ashanti 5.6 up harmony up five and a half
nearly and gold fields up three and a third
downside led
down by the blue bank standard bank 10.1 weaker ned bank
8.6% down.
Old Mutual down 8.4%.
Tungela down 8%.
These are numbers.
I mean, I've been through the crash of 87 and 2008 and everything like that.
But this is very different, Skull.
Very, very different indeed.
This looks like it's got legs and it's not just an event-driven one-off or two or
three-month event where it
just bounces back and we forget about it.
This looks much, much more serious to me.
To me, this is, you're right, and why?
Why?
Because when we've seen these type of movements, you know, last time when we had
the VIX and COVID trading at,
it's called over 50% levels,
the one thing that the media started sort of murmuring in that period was,
what type of recovery will we see?
Will it be a V-shaped type of recovery?
Will it be a U-shape or maybe a W-shape or some alphabetical shape?
type of recovery well to date we still haven't had any any let's go to major
investment i was talking about
any form of recovery but i mean i've been having bloomberg running non-stop down and
the one thing that i keep
on hearing is as you know are we going to see the the second leg down are we going
to see a
third or even a fourth leg down and when when
these type of big investment houses not talking about a what type of recovery but
How many legs down we're going to see?
Hey, man, you're right.
I haven't seen these type of movements.
I mean, you touched on the
1930s, and let's hope we're not seeing a history repeating itself of the
1920s, 1930s, because that was a horrible, horrible period.
For now,
I would say my advice is if you're looking to try and buy the dips,
be very, very careful.
I see.
and foresee quite a few falling knives going around this type of market.
This is the type of market where you need to be just calm, collected, and if you're
buying, by all means,
buy for the longer term.
But if you're buying to trade, be very careful.
Indeed.
Bottom pickers often become cotton pickers, as one chap that I used to work
with would say.
So, Skulk, it's so nice to speak to you again.
I really already am looking forward to next Wednesday.
Who knows what happens in the interim seven days, but whatever it is, it's going
to be interesting.
And I know that you'll cover it beautifully as always.
Scott 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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