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 it's a Wednesday, I speak to Skulk Lowe, Portfolio Manager at PSG Wealth Old
Oak in Cape
Town. South Africa in focus today, Skulk, for domestic and international regions.
On the international stage, Sir Ramaphosa jetting off at taxpayers' expense to see
President, what's his name, Trump.
That's it.
In the White House, and hopefully that goes well.
I don't know if they've seen each other yet, but you can comment upon that.
And domestically, the budget, of course.
Budget three, return of the budget.
And I don't know, it's embarrassing to get to the point where you're on budget number
three,
but good that they didn't just go through number one to avoid embarrassment.
What happened in the budget?
What happened to budget three, please?
Well, let's first look at...
the current um state of affairs uh in the north because that was the first part of
the question yeah um no they haven't
started so so uh though while we we we've just decided this podcast it's now
literally just passed five markets just
close so hence the five o'clock shadow so
um yeah in exactly half an hour the u.s president will greet uh the president of
africa president
then they will have a nice lunch you know at 1745 they will start with a very Very
nice lunch.
And then they'll start with the meeting exactly an hour later.
So I think, what's the thing about the pawpaw and the fan?
If there's such a thing,
it will pretty much hit that methodical fan,
anything between quarter to seven and quarter to eight,
because at exactly quarter to eight, they will start the press conference.
And unlike I know...
Our president, I reckon they will start promptly on time.
So I don't know what there will be,
how tense discussions will be in half an hour's time,
but they will have this conversation.
What's on Ramaphosa's agenda?
Because I think what he wants to talk about, of course,
is tariffs and the accusations by the Trump administration that South Africa
is marginalising certain elements of the population,
almost like a genocide they're talking about, which is a gross exaggeration.
There has been nastiness in the past, but that is what Trump is going to say.
Essentially, he's going to say that the black people,
the black population is behaving badly towards the minority white population.
That's essentially what goes into Trump's brain, isn't it?
And that's what he's going to talk about.
But also...
He must be having a look at what South Africa has that he wants.
And I was asking this of another commentator the other day, and he couldn't
think of anything.
But I noticed that a company called Renogen did well recently.
And that's all to do with, I think, is it to do with helium?
There's something that I read.
But again, I'm not an analyst, so I'm handing over to you on this one.
Yeah, I think it's going to be...
So most of the commentators that I've heard are...
to up to this point um i tend to think we're gonna have a let's call it a trump
zelinski part two type of and you remember what happened i think was a month or two
ago where where they had that
nice little meeting in jd vaughn's with with the zelinski
and he just stepped into a minefield and when i say minefield it was a bazooka of a
minefield and i
thought he handled that really well And the better handled it,
it just escalated into something that was really, really bad.
But be that as it may, a lot of commentators felt that
President Trump and Paulson were looking at a similar affair.
And I don't think so.
He's such an unbelievable diplomat.
What is Roof? What is the old chief negotiator of the National Party back
when…
Roof Mayer?
No, that wasn't him.
No, no.
No, it's Ruf.
It was chief negotiator.
And I remember him at one of the PSG conferences a few years ago.
And I'll give you time to search if you've got a laptop in front of you.
But because I think you might be right.
It might be Ruf Meyer.
Anyway, what was the point?
What did he say?
And he mentioned that back then, people tend to think that he is the best.
And when I say him, it was, I think it was Ruth Mayer.
Yeah, it was Ruth Mayer.
That's 100%.
He was the best negotiator that Africa has ever seen.
And he went like, no, no.
He still thinks to date, he's never met a better negotiator than...
than President Ramaphosa.
And I've got no doubt that he is well prepared for this conversation.
He knows it's not going to be an easy conversation.
I think President Trump has made that clear.
And I think, yeah, let's say Rome wasn't built in a day, but in South Africa,
it's like Cape Town being called the mother city.
You know, everything takes nine months to happen down here.
And I think South Africa in general,
has fallen that that that that that sort of timeline i i but i do think he's gonna
he's gonna
tell president you know trump that that a lot need to be done and let's
let's hope let's hope it goes well um because i know we we need the investment
you know from from the u.s um
you know we've we you you talked about it we had budget 3.0 today that like now you
know off the table.
So that means South Africa will, according to the budget 2.0,
will now have about 62 billion rand less revenue over the next three years.
And on a fiscal basis, we're already struggling.
On an economic growth basis, we're already struggling.
So we will need to step up and start showing the globe
that… that we're serious on fighting corruption.
We're serious on working together with the rest of the world.
Yeah, let's see.
I think we've got, let's call it an hour and a half, and then we'll start in two
and a half hours.
So I'll definitely have a better idea.
Okay.
Well, we'll also have a look at what the Treasury has said about the future.
I mean, what everyone says is you can tweak a bit here, you can tweak a bit
there.
You can raise VAT by 2%, which is an outstandingly bad, to
decision to even put it forward because it taxes the poor more than it taxes the rich
it's so stupid i know they've got a hold hold to fill
but not through vat so we'll find out exactly how the how they plan it but
everyone says never mind the fiddling
uh rome's still burning and you have to get growth going and i've been reporting
on that for more than 20
years every year it's the same where
is the growth stimulus where is the fiscal stimulus and we never ever get it
you as South Africans never get its go.
And it must be frustrating for you when you see the potential of the country.
I mean, if we sat with a scenario where we look at the whole of, let's call it the
continent,
the African continent struggling, then I would have said, ah, you know what,
we're a small fish in a big pond,
and unfortunately this is the pool that we've been dealt with.
But the case.
Some of these African countries, countries that have been way smaller in terms of
GDPs now are surpassing us.
Growth rates are 4% to 5%.
And we're struggling to get one.
We're not going to get one if the IMF is correct for 2025.
I mean, that is disappointing.
I mean, we're not even close to a population growth rate.
And that's dangerous.
You know, we're really sitting with official unemployment levels of 33, 34%.
And if you look at the sort of the unofficial levels, we're sitting between
50 and 60%
of the South African population sitting with our jobs.
And that we need to change that.
If we can't change that, we're sitting in a dire, dire situation.
I do think we can.
We've got all the resources.
I think we're sitting at a pivotal point.
Pivotal point in terms of political.
I mean, I think last year's...
election was a massive massive turning point um and and i think we've got
the opportunity now to change things let's see this takes a long time somebody put it
to me very simply the other day and that's what i like i
like uh a concept that is simply understood and if you went to somebody and
they said to you well explain unemployment to me
and you might say okay if you go to the Netherlands.
And you're walking along the street and you pass a hundred people of working age
and have the ability to work.
So in other words, they're employable.
They are part of the ranks of the employable.
Let's say four of those people.
wouldn't have a job.
96 of them would.
You go to South Africa and three people pass you, two of them haven't got a job.
Yeah, yeah.
Well, that's official figures.
No, what am I talking about?
One of them, the rate is 32.9%.
I do apologize.
So a third of the working population is unemployed.
So three people pass you, two have a job and one doesn't, which is staggering.
It is.
It is staggering.
And you can't build on that.
And if we're sitting in a scenario where we say, well, okay, the IMF came out and
said, oh, fantastic.
I mean, we might have a struggling year because remember,
the US just went into their first quarter contraction.
So we know two quarters, we were talking about a recession with their very Q1.
So it's always struggling for the largest country in the world.
are contracting in terms of to actually grow, considering the globe is sort of
contracting.
But, I mean, the IMF is not, I mean, IMF, World Bank, and all these local
economists,
they're not coming out and say, well, we're going to struggle a little bit this
year because the globe is going to be struggling.
But, man, oh, man, next year, Africa should be growing 2% to 2.5%
in the year after anything between 3% and 4%.
They're not coming out with that.
And while they're not doing that, You know, countries like the U.S.
and other countries, first world countries,
it's not going to have this massive target on South Africa stating that we need to go
and invest in that country.
And that's what we need.
We need investment.
And if we're going to get investment, we're going to get growth.
If we're going to get growth, we're going to get unemployment levels down, et
cetera, et cetera, et cetera.
Anyway, I do think we can do that.
But I would say even a thousand mile walk begin with the first step.
and I think tonight, now, in our South, definitely will be one of the first steps.
Let's see how it takes it.
Okay, why is the dollar so weak, Skalk?
Is it to do with budget negotiations in the United States of America?
In other words, Trump's big, beautiful bill.
Are people saying, well, if it does go through, even in a diluted form, it's
going to undermine the value of the US dollar?
Or is it something else?
What am I missing here?
Why is the dollar under pressure?
And why is that a good thing for precious metals, which is something that you're
looking forward to?
But first, answer the question.
dollar weakness well it's it's well firstly i mean we just talked about you
know that the first
quarter contractions um they're sitting with with massive massive massive debt
levels i think they're sitting with a very yeah usually i mean and for
the listeners out there you know what lindsay is saying you know we haven't seen
interest rate cuts um we went into
2025 um not hoping i mean all the smart people
out there were telling us don't worry we're going to see three We're going to
see three rate cuts in 2025.
We're sitting in May month.
We're not going to see one.
I mean, as it stands, we're not going to see one this month or next month or July.
I mean, now if we look at the CME Fed tool,
that's a tool which sort of gives you probabilities.
They trade that.
They trade the probability of rate cuts or hikes.
and that probability is currently trading at about a figure of 49%
probability that we'll only see the first one in September.
Now, I mean, 50-50 is way better than the odds we're currently seeing for the next
few months.
But while we're not seeing these rate cuts, one would have said, well, the
currency should be increasing because,
remember, higher rates is good.
It's a good thing.
But also remember, um
It's also telling us that the longer they keep the rates higher,
the larger the probability is that the US will go into a full-blown recession.
One more quarter, if Q2 is a contraction as well,
they will be in a full-blown recession.
And I think Mr.
Marker is telling us things are not well.
I mean, they're sitting with debt levels way, way too bad.
And...
they need to get out of these debt level scenarios.
And I don't think they know how to do that for now.
No, I don't think so either.
Skalkia, it is the lower tax bill in the United States that is causing the
problems.
But every cloud has a silver lining.
Every sword has a double edge, and the double edge is coming up now.
But let me just start with other markets.
The rand is very good indeed, 1789,
which is about a quarter of a percent down for the US dollar.
British pound against the rand is 2405.
Euro rand is 2030, so not much there really.
Euro dollar, 11350, which is about 0.6% up for the euro.
and um Then we go to commodities, which are really, really good fun for commodity
bulls.
The gold price is up 2.5%.
I've got 33.12 on my slightly delayed screen.
$80 plus.
Fantastic.
You said it the other day, and you said the case for gold hadn't changed, and
indeed it hasn't changed at all.
In fact, it's probably even more rosy.
The platinum price is staggering, up nearly 10%.
$97, we'll call it.
$1,089.
Per ounce, broken three levels with, sorry, four figures with a vengeance.
Palladium up 3.2%, 1,050.
And did all this start with talks between Ramaphosa and Trump being mooted and
saying, well,
maybe this is good for the platinum industry?
I don't quite see the link, but that's what people were saying.
But Skulk, weaker dollar, white metals taking off.
Fantastic news.
Yeah, we need that.
I mean, we're the largest producer of palladium, second largest of platinum,
largest by country mile in rhodium.
So these type of commodities as lag, but it's been an uptick in commodities in
general.
I mean, the CRB Commodity Index, which you follow very, very closely,
I mean, that was trading at the 340 levels.
a month ago in April, now trading closer to 370 levels already,
or 365 levels.
So definitely increasing as well.
So in general, if we see a weaker dollar,
one can expect these commodities to improve or
increase, which naturally will be great for South Africa.
And we're seeing this.
I mean, this will be good for our current account.
with the eighth largest producer of of gold uh we're a large producer of copper
so this this will be really really good it's
just how how do we deploy it can we can we benefit out of these these commodities
improve yeah i
don't think the the case case for uh gold or precious metal for that matter as
as diminished i think it's uh very much in play um and the weaker the dollar will get
the more
interesting these commodities will become.
Other commodities, West Texas crude down half a percent to $61.71.
And Brent crude oil, $65.04 per barrel, also down half a percent.
Looking at the CRB graph, it's made a sloping double bottom.
Looks as though it's going to challenge the recent highs of $3.80 plus.
To me, it does anyway.
Natural gas down 1.1%.
What else we got?
Copper barely changed.
Okay, S&P 500 futures coming off their lows.
with a bit of a vengeance, actually, only down 0.2% now.
We're down around about three quarters of a percent.
The US 10-year Treasury bond yield has been sharply in focus.
I know the 30-year has gone above 5%.
The 10-year bond yield in the States now 452,
which is four basis points higher in terms of the yield.
And obviously the reciprocal arrangement is that the actual bond prices go down.
So yield up, bond prices down.
So a bad day.
for the US bond market.
And what else have we got going on here?
An extraordinary move in Bitcoin.
It's close to all-time record highs.
It's up 3.5% at the moment, 109,057.
I mean, come on now.
I think that is a record high, actually.
Look at that thing.
I don't know, but I can't recall hearing it ever at those levels.
So I think you might be right.
Yeah, it was 108 before.
Yeah, I'm looking at the graph now.
It's sliced through the highs.
And so a lot of people are making an awful lot of money.
And Trump, I think, being one of them because of his meme and they all follow
each other.
But goodness me, strong buys on all the analysts from all the analysts on the on
the
cryptocurrencies.
If you're making money, good luck.
If you're not a little bit too late.
I think the South African 10 year bond after the budget, I've got 10.735 percent,
which is.
Yeah, it's a little bit higher.
A scope.
anything on the JSC today I saw results from Southern Sun and I've seen the
platinum stocks of course dominating the
upside when it comes to the board the big movers on the upside anything else you've
seen I'll come to the platinum stocks in a second
Yeah, I mean, you mentioned all the platinum stocks.
I mean, Northern, Stillwater, Impala, and Amplas, you know,
the four of the best and the top five.
The one that actually stood out for me over the past few days must be Sasol.
Sasol, yeah.
It's one of those, just when you want to give up, it's just, I just can't take this
anymore.
Let's just, you know, just...
go let's just get out of this then it sort of gives you throw your bone and then
assassin has definitely thrown you know the
shell there's a bone again today close to five percent up trading over 83 events so
that's that's one that sort of marked
my interest or got my interest over the last few days and and then i think that
the one
that really stood out was was um multi-choice um they came out with their
sense announcement
basically just saying that the competition Commission recommended.
that the competition tribunal approved the proposed acquisition.
Now, we know that the offer currently on the table, you know, from Channel Plus,
or, you know,
as we know it here, Channel Plus, is now currently, you know, on 125,
125 Rand.
So today, after this sense announcement came out,
share price had a lecker run up from this morning, previous close, 112 Rand,
today closed.
just shelf 117 rand so it seems like it seems like it's that that that thing is
going to go through so there's
still a little bit a little bit of meat on the bone but just always remember your
trading cost be careful
okay thanks for that advice you're from your friendly broker scout low uh northern
platinum up 7.8 the big winner sebanya still water up 7.6 we'll call it impala
platinum
7.2% in the green.
Anglo-American platinum, just over 5%.
And Sassler, 4.5%, 83 rand 17.
Go back to April the 9th of this year, Skulk, and it was flirting with 50,
53 rand per share.
So 53 to 83 is 30.
30 divided by 50, more than 60% up in a month and a half.
Not bad.
Yeah, I don't want to tell you where it came from.
Don't spoil it, Skulk.
I mean, I love it when you make it.
our glass half full because we are full type of persons.
Exactly a year ago,
this share price was trading at well over 130.
I've got a price here of 138 Rand.
If you just turn the clock back two years ago, May 2023,
the share price was trading 240 Rand levels.
Today's Your movement up to 83.15 is a definite win, as you mentioned, from the
50 odd grand levels we've seen in April.
But it's still got a hell of a lot of way to run just to catch up.
But yeah, I'll take it.
I'll definitely take it.
It's been a nice ride over the past few days.
On the downside, it's rats and mice, really.
And some of them I don't even recognize.
It's El Tal, of course.
That's the worst performer, down 5.5%.
a surer power Premier, Premier down 1.8% and Datatech down 1.5%.
So fairly quiet stuff in South Africa, apart from, of course, the PGMs.
And this is fantastic.
I know people that have been sitting this one out for a long,
long time and biting their nails and just holding on and thinking, is this the start
of something?
It might be.
You often get that big move, don't you, to start with.
Comes shooting out the blocks, then it calms down.
and then it starts to build.
I hope that's the case this time, because we really should be boosting the coffers
of South Africa with some revenue
from these mines, Skulk.
Oh, yes.
We can remember the last time we saw big runs in the PGM process,
how good it was for our current account.
Yes.
And usually when it's good for our current account, it's good for our currency,
which, again,
it's good for inflation, it's good for interest rates that can come down, And
then eventually...
you know great for for economy so let's hold thumbs let's hold thumbs let's see
you know hopefully this will continue and
uh as i mentioned we just need to get to do the basics right make sure that uh
we'll be able to to
to mine these these these uh um these pgms get
them on on railway or trucks get them on on ships and make sure that they that they
that they efficiently get
distributed to where they should be produced.
As I say, let's hope it's not a flash in the pan, today's moves.
Enjoy it while you can.
Skulp, thank you very much for your time.
As always, Skulp Lowe is a portfolio manager at PSG Wealth, Old Oak in Cape
Town.
And that was the 5 o'clock shadow.
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