You're listening to Strictly Business Podcast with Lindsay Williams.
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'm speaking to Skulk Lowe, Portfolio Manager at PSG
Wealth Old Oak in Cape Town.
Busy time.
This three days, actually.
I mean, it's over in South Africa, but it's just beginning in the United States
of America.
And the first big thing is, of course, the Fed.
They end their two-day meeting tonight, Skulk.
98% of the market says no change.
What do you say?
I say no change.
I'm not going to go against that.
I don't see Powell making any harsh movement now.
He's sort of drawn his line on the sand already.
And he's clearly not going to go back on that.
So, yeah.
So, the bottom line is, I think in about two or three hours' time,
we will hear that the Fed kept their rates unchanged.
And we'll most probably have Mr.
Trump or President Trump, for that matter, have something to say about that closely
after.
He'll be gnashing his teeth.
He'll be absolutely furious.
He'll call him stupid.
He'll call him dumb.
He'll call him a low IQ person because his empire, of course, relies on cheap money.
And unfortunately, cheap money is not what he's going to get unless inflation is
under control in the United States.
and quite clearly it's not running away.
but it's not going down.
And that's the ultimate tax.
Never mind tariffs.
The ultimate tax on the U.S.
consumer is U.S.
inflation.
Correct.
This is his stance.
Nobody is looking at it.
And for that very reason, he's kept that stance.
I mean, it's just interesting.
Now, you've already mentioned a 98% probability of remaining unchanged.
I reckon we can move that up to 100%.
It's more looking towards September.
September was sort of a foregone conclusion.
Let's first off, when we stood here this time around last year,
we were looking at at least another six cuts until the end of this year.
When we went into this year, they were talking about four cuts, at least four
cuts for 2025.
Here we're sitting, there is one, two, three meetings left.
So even if they cut in.
In each of these meetings, we'll only see three cuts.
So we know the four cuts, if today is unchanged, will be not happening.
But now, as we sit here, the September meeting, they are saying that now there's
only about a 60%
probability that we'll see the cut.
And I think we're going to see the cut in September.
I think, you know, if we don't see a cut in September, there will be no Powell.
as good They're the man in charge of the faith anymore.
But yeah, 60%, that's interesting.
I think you're quite right about Powell.
There could be some way that Trump manages to wheedle him out.
He'll find some way to get an executive order or something and to get his own way.
He usually does.
So that'll be the big thing.
And I wonder what the market would do.
Let's just quickly speculate before we get on to other things.
What would the market do if suddenly it was announced that Jerome Powell, the
chair of the U.S.
Federal Reserve, had been removed by Donald Trump, the 47th president of the
United States?
Okay, so if that happened,
that will effectively mean that his position is no longer independent.
position, independent from the US government.
It's sort of a safeguard for any central or reserve bank.
It's saying that this is something that is run independently from the country.
If that happens, that will mean that's no longer the case.
If that's no longer the case, I think Mr.
Markit will say, well, you know what?
This is really, really dangerous.
I mean, I think...
Making a long story short, I think we'll see a dollar run.
We'll see a collapse in the dollar.
I agree.
For three reasons.
Number one, uncertainty, but mainly because the new person is being put there
to cut interest rates.
And of course, if you cut the interest rates of a currency, the currency
depreciates.
There we go.
And that will effectively mean that you would see your
interest rates.
will be cut.
I think looking at your longer rates, that will put some pressure on your bonds.
And sitting with their debt levels as it currently stands,
I don't think the US can afford something like that.
Well, I know they can't.
No, they can't.
No, they definitely can't.
The world can't afford it either.
Some people will love the weak dollar.
Other people will say, goodness me, this is exactly what we don't need.
So anyway, we're speculating now.
Tomorrow, we've got the South African Reserve Bank's Monetary Policy Committee
announcing interest rates
in South Africa.
It looks like a 25 basis point cut is baked into the markets, Gunk.
Yeah.
So you're 100% right.
i think for now it's it's sort of uh a um if we had probabilities
i i would say i think we we most probably most probably a hundred percent
probability that we're gonna see a
a quarter of a percentage cut yeah and and for good reason i mean for good reason we
we should be seeing that
because i mean we've we've had the inflation number coming out three percent
it's the
ninth month in a row where interest rates remained
It's got below 3.2%.
Now, remember the bands, 3% to 6%.
This is the bottom side of the band.
For nine months in a row.
As long as it stays below 4.5%, to me, they can afford to cut rates.
I mean, that's the mid-range of the 3% to 6% target range.
But we'll talk about targets in a moment.
So definitely 25 basis points down.
But that's not enough, really.
It should be 50, I think.
No, no, no.
I'll tell you why.
I mean, so just I think for this, I've said, So I'm going for 100%.
Currently, as we set you the poll, and I'm using the Reuters poll,
there's 17 economists that participate in this poll, and 63%
of them already said that we're going to see a cut tomorrow.
And the cut is looking like a quarter of a percentage.
Now, this morning,
the IMF came out and they adjusted their forecasts for different
countries, for the globe, for the economic.
growth for the globe.
And the general trend was downwards.
So the IMF feel there's going to be a bit of an easing in global economic growth.
The good thing was South Africa remained unchanged.
The bad thing is they've already downgraded us to 1%,
where they originally thought we were going to be a lot stronger.
But Lindsay, 1%, come on.
I mean, South Africa...
It's a disgrace, actually.
It is a disgrace.
I mean, our population growth is closer to 3%.
So when your economy is only growing by 1%, it's not even the population growth.
And here's why it's actually a disgrace.
Because we are one of the largest commodity-producing countries.
And we're producing the commodities that's actually doing well currently.
We're the largest platinum producer in the world.
We're the second largest palladium producer in the world.
We're the largest rhodium producer in the world.
We're the eighth largest gold producer in the world.
We're one of the largest copper producers in the world.
And just for the listeners out there, go and Google all these commodities that I've
just shown you.
Then you can see, you know, this is the environment we said Africa or more
specifically our economy should be flourishing.
And we're not.
So we need to get to…
the basics right and and i do believe that the the quarter of a percentage is it's
not going to help a lot i mean
with all due respect i mean we're a quarter of a percent in in south african
terms we're still sitting with a reaper right
after the cut of then seven percent i mean seven percent is still high and the other
thing is skunk is
that the south african economy is not as interest rate sensitive as say
The American economy is because people have a lot of debt in America.
They use debt in order to fund their businesses, their expansion of their
businesses.
They use their credit cards an awful lot.
South Africa is not quite like that.
The vast majority of the population won't have exposure to interest rates, I don't
think.
Or am I a little bit late on that one?
Well, I think...
No, I would say no.
I don't think that not directly.
I mean, if you're sitting with such a large lower class, middle class, well,
let's go more lower class that's less sensitive to interest rates.
I mean, you can push the interest rates up to 20% in prime rate.
If 80% of your country don't have any debt or access to debt,
then it won't have a direct impact.
But.
I mean, it's definitely having an indirect impact, whereas, I mean, we've had
AECI reported this morning.
And I'm not going to do a long song and dance.
The results were flat.
I mean, we've got a...
I saw the share price doing absolutely nothing, yeah.
Yeah, well, it's been doing absolutely nothing for 10 years.
You can go and look at the profit.
I'm going to quote David Shapiro.
I mean, we were doing an interview this afternoon again where he said,
it's one of those shares that just goes a little bit up and then it goes a little
down and it goes a little bit up.
And it went on for about 10 seconds going like up and down and then eventually just
end up nowhere.
That's not the sort of stock that Shapiro is ever going to invest in.
I can tell you that.
And they're...
Why do people invest in it?
Is it because it's familiar?
Is it because it pays a dividend?
Does it pay a dividend?
Yeah.
Yeah, it was a and that's where I want to get to.
I mean, it was a high-dividend-paying stock.
I mean, and just for the listeners out there, it's one of the stocks that I own,
so that might look bad.
It looks good.
I love my bang-bangs because I often have the conversation on this podcast
elsewhere.
So why do I like bang bangs well i like bang bang you have to explain what bang
bangs is i mean it's
because on the old jsc floor it's uh it's a company that makes explosives i mean
that's one of its businesses but
that's what it was known for explosives for the mining industry
so hence bang bang just in case we've got some 18 year olds listening skull but
but i'm so glad you explained that because that was the main reason why i bought this
um let's call it about
five years ago because Remember, we've had this conversation where I say, you know,
some of these mining companies have done so well.
I mean, I'm starting to look for the secondaries.
The secondaries for companies that will benefit out of a commodity or more
specifically a mining commodity boom.
Because if your likes of your
South Deeps and those type of gold companies are doing well, they're doing
well.
then naturally they will need to do more, buy more explosives, and eventually the
secondaries will do well.
Udeco is another example.
The reason why I'm holding Udeco is close to 20%
of Udeco's turnover is made up from the mines.
So they create these diesel engine parts,
and when these mines do maintenance, these type of companies will benefit.
Now back to ASCI today.
Yeah, don't spend too long on AECI, because if it's done nothing for 10 years,
then that's the story.
I've got 10 years to make up for this.
We started off by saying, why is South Africa sensitive to interest rates?
And this is where I want to get to.
The likes of AECI I mentioned in the report this morning, they had exuberant
debt levels.
And this is why they had this restructuring.
They sold two of the...
They're the company, Shroom, and that other company as well.
And they've literally half their debt because they were feeling the pinch of the
higher interest rate environment.
And when you feel the pinch on a higher interest rate environment, you will do
cost cuttings.
And by doing cost cuttings, you will inevitably either not employ people or go
to the extreme and retrench
people.
And if you're a trench people while we're already sitting with the third official.
number of the country that's sitting unemployed, then it's definitely going to
affect your country.
So this is where I want to get to.
You know, mid-2000s, we had a similar commodity boom,
but we've managed to actually use this to create jobs.
We took the unemployment rate also from about 32%, 33% levels early 2000s.
And by 2009, our unemployment rate was 21%.
100%.
just because we will be able to use the commodity boom,
use the lower interest rate environment to actually create jobs and really, really
grow our economy.
We need to do the same thing again.
I mean, so yeah, we need to reduce the interest rates.
We had to do it way, way earlier.
We started way earlier, but be that as my long-winded way of saying, I think we will
see a cut
25 basis points tomorrow by the SOP.
And you very neatly managed to go...
get interest rates in the latter part of your ACI discussion.
That was very good.
I didn't even notice it.
Suddenly, I drifted off a bit during ACI, and then suddenly you're talking about
interest rates.
But I want to tell you a story now, and I want you to sit down.
While you're waiting, get up a Valterra chart, please, which used to be
Anglo-American Platinum.
I'm not lying, Lindsay.
I've literally got it in front of me now.
Thank you very much.
That's all I need.
Now, listen.
Many weeks ago.
I saw something.
I saw the first move of the end of a bear market.
And it was a really big jump in white metal prices, PGMs, platinum group metals.
And I thought something's going on here.
And I watched the market for a couple of days.
And I thought, no, this could be the real thing.
So I phoned around to various fund managers and various analysts, etc., both
here and in London.
And I said, can I talk to somebody about PGMs?
And they said, oh, no.
there's nothing going on there we haven't really got much to say i said well that's
the whole point nobody's got anything to say nobody is
interested in these things and that's when they start to take off and i got really
quite
infuriated by not being able to talk about it and of course since then the price has
gone up of pgms
and also by association the price of companies like of veltera so before i go
on give me the
veltera price action this year please
okay so so the the valterra price so we went into this year um let me quickly just
get that up
so the on the 31st it closed at 500 i'm not just going to round it up
569 ram per share 569 and it's currently 869 isn't it is that
869 or 889 860.
yeah there we go i don't know 886.
Oh, there we go.
Yeah, that's it.
I've got 880.73 on my screen, but it's behind you.
I'm just, again, rounding up.
Let's call it 885.65.
Yeah, exactly.
885.
But anyway, the fact is it's gone up.
What is that?
About 60, 65%?
Yeah.
I can give you the figures if you want.
Yeah, let's do it properly.
And I don't think that you really need to look for the auxiliaries.
in the mining industry, like the Bang Bangs and the Hudekas of this world,
because there is still a prime commodity run on its way and about to go further.
And the reason I say that, apart from the fact that I've seen commodity runs before,
and this has got all the characteristics of a one, two, three year run to the
upside bull market, in other words,
the other thing is, is when you hear the CEO of Valterra, whose name briefly
escapes me,
He sounds like a very reasonable man and he doesn't want to sound bullish but he
can't help himself.
He keeps saying things with a hint of bullishness to them.
He says things like,
we're not going to get any increased production in the industry until the price
goes a lot, lot higher.
And that means to me that they are not going to increase production until the
price is going higher.
And he's saying that because he knows the price is going higher.
he knows from the people he's talking to who buys his product his platinum his
palladium his rhodium etc and all the other
little ones he knows from talking to them where this price is going i think it's
going up skulk and i'm nailing my colors
to the mast well okay firstly for the listeners out there this is not the first
time you've said
this i can distinctly recall a few weeks ago go.
You've actually had the same conversation.
Am I boring you?
Sorry.
You can have no, no, no, no, no, not to this extent.
I mean, not yet.
But you did mention that this is a sign of a change from something that goes from a
bear market to a bull market.
Yes.
And I can remember because of price actions that you looked at, you looked at
the white metals.
But to your question, I mean, Volterra year-to-date, so from the 1st of
January up to yesterday, it's grown 64% year-to-date.
That's, that's.
Amazing.
But I sort of used the time because you were going on long enough so I can
actually… I learned from you, Scott.
I learned from you.
We can talk about gold now.
So, Impala Platinum, that has grown 108% over the same period.
Northern Platinum, 126% to date.
And the one that really struggled up to the end of last year, Subhania Stillwater
That has grown 175%.
Neil from Foreigner Man.
Well done, I say.
Goodness me.
Is he there yet?
I know he sort of stepped down, but I don't know if he's officially stepped down
as CEO,
but I know he said he's finished.
Oh, well, anyway, he built the whole thing.
I hope he didn't sell everything yet.
No, I doubt it.
In fact, I'd say knowing him, he'd be buying more.
but This is the point.
Okay, you can talk 64%, it's the biggest producer, it's less sensitive to price
moves,
let's put it that way, and then you've got the others, 120, 130.
The point is it sounds like a lot, but see where it came from and where it's come
from now as well.
And you think to yourself, yes, listening to the words of the CEO of the world's
biggest producer,
I think there's still some legs in this.
So, yes.
Go to your auxiliary mining companies that serve the primary mining industry,
but don't ignore Platinum Skull.
I know you love gold.
Get a bit of white in there as well.
No, no, no, no.
I think we had this conversation, and
I'm going to be an open book as well because we've had this conversation, I
think, about a month or two months ago.
It was literally just, I think, two weeks after Valterra.
actually were unbundled out of Anglo-American. And remember, I told you,
this is where we're up.
I mean, we've had this conversation, same story.
You could see the change of and it's also that the demand is just way, way more than
the supply.
But why are we there?
I mean, a lot of people will say, you know, I'm so glad I rather had the Impala
or Sabanias.
Just remember, the amount of shares that suddenly hit the market,
when it was unbundled out of anglo-american is massive yeah a massive
massive massive so many people that
held anglo-american that now said well i've already owned impala and or the other
at the other pg encounters i'm not gonna have altera as well just flog it just get
it out of there.
And that had an overhang on the market.
And that created, in my view, still an opportunity.
So I agree.
I agree still to this date.
If any listener out there is interested in buying into a
PGM-producing company, I mean,
I do think Valtteri is looking attractive relative against any international peer.
Very good.
Okay.
I had my day in the sun skunk with Valtteri.
I won't mention it again.
You'll mention it, of course.
You'll say, by the way, Lindsay, Volterra's at 1,000 rand per share.
Well done.
And I'll say thank you very much.
And yes, let's have a look at some prices, if we can.
The dollar rand ahead of the Fed is 1795.
That's a 1.4% rally for the US dollar.
That is very much locally based on the rand with the anticipation of interest
rates being cut tomorrow, I think.
British pound against the rand is 23.85 and the euro rand is
20.61 with the euro dollar 114.80.
And that's a euro that has fallen by one and a quarter percent.
That's a really, really big move.
British pound against the US dollar is 133.
OK, let's have a look now at some lovely commodities.
Gold price not so lovely today.
It's down $28.
It's broken through.
3,300 if my screen is correct, 3,299.
So that's having a bit of an off day.
That's currency related.
What else have we got here?
We've got platinum also down 2.4% weaker at 1,385.
And palladium is down just around about half a percent at 1,272.
The oil price has been doing well lately.
Let's have a look at the update now.
And this is from my CRB commodity index page.
Oh, goodness me, look at this.
$72.74 per barrel, up another third of a percent today.
It's had a good run since we last spoke, Skulk.
The West Texas crude, $69.45, also a third of a percent to the good.
Anything else of note?
Nothing that I can see.
So we'll go to the U.S. 10-year bond, keenly watched after tonight's.
Fed decision.
Currently 436.
It's unusual with the oil price doing what it's doing.
I thought it would be in the 440s, but not to be.
The salav continue, meanwhile, is trading merrily away at
9.81%. What else have we got?
S&P 500 futures.
A snap to six-day winning streak yesterday, I think it was.
And today is flat at 6,404.
And that's the September futures.
Bitcoin.
i have to say that because apparently people buy it uh 118
249.1 per coin that's up 0.7 on the day
skulk um what went up and down on the jsc today please so
i just wanna yeah i think your your plats did did really really well um and they
they
had a great day but despite the price
despite despite the platinum price so so when we look at the the movies and shakers
uh we had volterra up
3.9 percent for today impala platinum three percent positive uh blue telecoms
uh 2.8 northern
platinum 2.7 and the the company i just mentioned earlier udeko up 2.7 percent
yeah um and And then on the downside, man, METAIR, that was down 3.2%.
Aspen just can't catch a break.
I mean, man, oh, man, this company is just keeping the pressure going.
2.6% down for today.
Do you remember that day when I said to you, tell me about Aspen, Skulk.
Is there some kind of corporate activity that I should know about?
Why is the share down 30%?
Do you remember that day?
I remember.
Because neither of us knew why.
We thought it was some weird thing that happened.
But no, it was real.
It was a trading statement.
the share price fell in the wild by 30%, and it's never recovered.
You don't recover from that sort of shock very easily.
No, no, no.
And they've been in trouble.
If you look at the past five years,
they just kept on hitting bad weather among bad weather among bad weather.
But I hope it gets on track again because it's been a darling in many, many
share and fund portfolios and hopefully hopefully it could make a make a comeback
i hope so because even sounds a good bloke yeah sorry
go on Same story.
Sasol also being under pressure today and also lately, making a little bit of a
comeback from the
50-rand levels, over 100 grand, I think, two or three weeks ago, and then caught
all the way back again,
making two steps forward, three steps back.
But Sasol down 2% today, and then Anglo Gold, as you mentioned, Anglo Gold also 2%
down with the gold price retracing.
Just, I mean, I couldn't help.
Getting back to Bang Bang's, a share price that just goes sideways.
And I could not help thinking about, you know,
companies that just goes nowhere.
I mean, when you look at British American Tobacco Company,
British American Tobacco Company in, let's go to 2013,
the share price was around about the 550 levels.
You know, fast forward.
Five years later, 2019,
it's trading 550 levels.
Fast forward again to July last year, it's trading 550 levels.
So it's been a company, great dividend payer, like ACI of old,
great dividend payer, but the share price just don't go anywhere.
And then suddenly it's as if a light switch just went on, hit some of the value
buyers,
trading screens.
People start looking for defensives earlier this year.
They like to buy the tobacco and the alcohol companies.
And boom, I mean, there goes British American Tobacco Company.
I mean, also a company year to date looking at, well, currently sitting at 44%
positive for this year.
And now...
reaching new all-time highs.
So it just shows you sometimes if a company has got good management or it's a
good story bound,
not that I say tobacco company, it's got a good story bound, but it's always been a
well-managed company.
Sometimes it's just wise to just stick it out because if you get out One day
something will happen to it.
Someone will buy it or it will break itself up or something into different
divisions.
And the real bulls and the people with the technical analysis leaning will say,
it's been going sideways for 10 years.
It's been building a base.
That's what they'll say.
It's been building a base.
And when it breaks out of that base, watch out.
It'll go shooting up.
And they could be right.
I haven't seen the graph.
I'm just going by your 10-year comment earlier on.
No, for sure, for sure.
But it's been a frustrating ride for me, to say the least.
I know I'm a long-term investor.
but man this is testing my patience for sure last question from me i've got two
questions actually i want the jse
indices before i dash off but also i want to know did um shapiro when you were
chatting together on television today mention
luxury goods because gucci had a horrible trading statement or horrible set of
results did
he say anything about luxury goods no no no we didn't chat about that um
But it's not a surprise to me.
It's not really surprising.
We've had this conversation on the likes of Richemont.
And when you look through the Richemont results, which also came out, I think, a
week or two ago,
you could see that most of the good results were made up out of Cartier.
I mean, if you strip out the other luxury goods in the Richemont stall,
it was flat or negative, mostly negative.
So, I mean, and we had this conversation, we're not going to have this conversation,
but ultimately we're going to end up on gold again.
But we did speculate that people are buying these watches, not necessarily to
feel good,
but most probably looking at some investment opportunity.
Like they buy your typical Kruger coins or gold staffs and those kind of things.
Most probably they're buying the Scottier watch because they're not buying the other
luxury goods and Gucci.
handbags and wallets those kind of things just shown again ah that's not that's not
not not what what
what um consumer out there is looking for clearly they're looking for something hard
they're looking for something shiny
and looking for something that could hold investment value that's it okay scalp give
us the closing indices please on the jsc
JSC today closed at 99,315 points.
That was up 15 basis points.
Resource index, in a day, just in negative durability, down 48 points,
so six basis points.
The industrial index, that was down 22 basis points, while the financial index
were up 71 basis points.
Even the SF property index had a solid day.
They were up 90 basis points.
We'll look at the value trader today.
Let's quickly have a look.
Oh not a bad day today we went over the 20 billion mark 21 billion were traded
through the jse today not bad on a day when most people are waiting for the fed
and also economic data from the
states on thursday and friday of course got the jobs data on friday because it's
the first friday of
august sculpt thanks very much for your time as always thanks for listening to my
pgm rant the the last one of
the year and because I'll be too busy watching it go through a thousand
up to 1200 1500 that's next year and ultimately peaking around 1750 i'm talking
about valterra and this
of course is a complete fantasy skulk low is a portfolio manager at psg wealth old
oak in cape town and that
was the five o'clock shadow the views and opinions expressed in these podcasts are
those of lindsey williams and various
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