You're listening to Strictly Business Podcast with Lindsay Williams.
The JCA 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 Scout Clow, Portfolio Manager at PSG
Wealth Old Oak in Cape Town.
I hate it when the market is sort of up a third of a percent or anything is up a
third of a percent, Scout, because I say, you know, get on with it.
Make it.
half a percent at least or one percent or flat on the day or down a bit but a third
of a percent which is what i'm looking at here
on the s&p 500 futures and also looking at the jse it's a good day because it's up
but it's not
exactly inspiring
is it no no it's and then also the volumes we will most probably
touch on the on the let's 20 20 odd billion trade for today
But it hasn't been the past four days.
I mean, the past four days, we've pretty much had a $44 billion day.
And then it was followed by the last three trading days with $33 and $34 billion
traded.
So today, I think it's just the market now getting to a point where we've reached the
latter
part of the reporting season.
We've had a few local yokels that actually did report.
So that was good But I mean From an S&P 500 point of view
We're now getting towards the end And it's been a live one You know when I say a live
one
When I say end We'll be sitting with 400 down As of yesterday
Pretty much 100 to go And as we sit here This will be
Let's call it the second best
reporting season in terms of beats compared to,
let's go third quarter 2023.
What did we have today?
We had Disney and McDonald's, I think, didn't we?
Yeah, I don't know.
I haven't seen what's going to be reporting today.
But it's been a big, big week.
I mean, we've had fairly big, big names reporting.
And most of them were big beats.
I mean...
We had the likes of the Microsoft,
those companies really beat handsomely.
I mean, the NVIDIAs, they came out very, very well.
So in general, the companies brought out.
But I mean, I've actually sitting with a graph in front of me where they look at
the actual
earnings growth.
And you can see this over the past, let's call it five years.
and how let's call it a year and a half ago these these companies were trading at
crazy
crazy high earning growth levels
now we've always said that sooner or later this will taper taper off it will will
start to slow down yes
um so so one can argue that with
the the initial tariff reaction in april is that most of these analysts
went back to their forecast and said oh this is not going to be good And maybe a
little bit more pessimistic.
And that's why a little bit more than 80% of the
S&P 500 companies beat expectations this reporting season.
But the growth forecast wasn't the bar wasn't set very, very high.
So you could see the likes of the Amazon now, there was good reasons every time
these companies dropped.
But the likes of the Amazon will come out as not looking too bad.
but the share price would drop 8%, 9%.
I would rather look, sorry to interrupt you, but I would rather look not at the
number of beats, because that can be fudgy, say,
well, go a little bit lower, because we're going to beat that, and then the market
will go up.
I'm sure that goes on in a very, very innocent sort of way, shall we say.
I would rather look at the prospect statements.
I'd so like to say the prospect statements over this quarter.
have been excellent compared to the previous quarter because most people say
that their growth figures or the revenue figures, whatever it is,
will be better than the quarter gone.
That's what we estimate anyway.
I mean, have you got any sense from people saying, well, it was a good quarter, but
the next one's going to be even better or something different?
No, no.
The general theme, the general theme was twofold.
The one most people say that...
the trading environment remains tough.
So that's the first point.
And I think the trend, and that's been local as well, where there is so many
focus.
I mean, we've had it with Gleamcore that came out with the official results today.
They're so focused on, we're going to do $1 billion worth of cost cuttings.
Now, exactly what you said, if the company came out, And the outlook,
I know you love your outlooks.
Love the outlook.
You sort of go straight to the end of the statement where you look at the outlooks.
If the outlook is looking positive, then… You feel warm and fuzzy and you would most
probably, if you're long,
stay long and don't have the company, you know, feel sort of, should I be going in
and buy these companies?
But I didn't get that.
None of these companies really gave me the feeling that they will back themselves,
that the latter part of this year is going to be looking way better than the first
part.
And the growth, as I mentioned, wasn't that good.
It was beats, but it wasn't that good.
And I think that's why we've seen some of these companies reacted.
Not too positively.
I want to look at trends.
I want to look at big trends today.
Just very briefly, Scalp, a couple of minutes, if you and I can manage a couple
of minutes on any subject.
It would be the big trend of weight loss drug companies, for example.
And I noticed that Eli Lilly and what's the European one, Novo Nadezhda,
their numbers have been not quite as good as they had expected.
Has the share price of those two companies come down?
Have you noticed?
Can you have a quick look?
For example, at Eli Lilly, if you can get that up.
I don't know.
Yeah, I've got it up.
I mean, when you look at Eli Lilly, definitely the big hype.
When you look at the New York Soccer Chance listing, I mean, that whole, what
is that drug called?
It begins with an O, doesn't it?
A limp something.
Yeah, yeah, yeah.
Okay, we'll get it now.
Or is that the European one?
I don't know.
No, no, no, no.
I don't know.
But bottom line is we all know what drug they're talking about.
Yes.
Which they're now using as a weight loss drug.
When there was this major hype around that drug a little bit more than a year ago, I
mean,
this share price was trading at way over $950 per share.
And now?
Today it's trading at $750 per share.
That's a big move.
And I know you like your graphs and your trends and that kind of thing.
of things and i'm looking at this graph and i'm no no no expert but i'm looking at
this and this is not looking too
healthy because remember this the share price did did go off when you you look at
2003 levels this the share price was trading at 350 dollars so it's still still
looking really really
good but uh yeah people people there's a major major we've often had this
conversation similar to ai Bye.
I mean, AI, I've got no doubt that AI will take over the world.
But man, it's like the internet in the early 2000s. We all knew that the internet
was going to take over the world.
But the prices you paid in 2000 made for a top three company.
It's a very interesting story because you know what people say, it's different this
time because this thing magnifies itself every few minutes
or something like that.
And there's a new...
grok or chat gpt or co-pilot by microsoft coming out to and now look what it can do
how much more can it do to
me i don't know but i'm not i'm not the customer it's the big corporations that
are the customers but yes if you
look back and you ignore the fundamentals of the company just say to somebody this
is what happened with the tulip mania in
in the netherlands uh hundreds of years ago and you go through the big the
big mad uh rushes to buy stuff you know usually ends in the same way, doesn't it?
Yeah, that's exactly my point.
I mean, we all knew 2000 that, well, not all knew,
but the same reports came out in 2000 where they said, people,
the internet is going to take over the world.
Every day there's more companies connected to this thing called the interweb or
whatever they called it back then.
But it's this is going to be massive in a few years time you're not going to stand
in any
banking queue you're going to do
your banking via this internet thing you're not going to go to any travel agent
or
airport you're going to book your airline tickets over the internet no you're crazy
that
can't be yep that's going to be that that's exactly what we're going to do and
that this is going to take over the world
And that's why you should buy the likes of the Microsoft back then, was it Cisco
Systems?
What is the other one?
What was the third largest?
General Electric.
Why?
Because these things, these computers need power boxes.
Every single person will need a computer to run this thing called the Internet.
And what happened?
I mean, we've had, that was the three largest companies, funny enough, back in
the S&P 500 in 2000.
or the end of 1999.
And when you actually, you know, fast forward, I think it was three years later,
two or three years later,
eventually, yes, they did take over the world.
We didn't stand in any queues to go to the bank.
We did buy our airline tickets over the internet.
But.
Microsoft dropped by 52% over the next three years.
Cisco Systems, I think, was...
Oh, General Electric was something like 54% down.
And the Cisco Systems, which actually connected these things, that was down 74%
over the next three years.
How long did it take the NASDAQ?
You know, when the NASDAQ crashed in March, I think, of 2000, from a peak of
5,000 or something like that.
And how many years did it take for it to get...
back to that high wasn't this seven or eight years wasn't it maybe even longer
well i could do the
easy calculation because if you take the period may 1999 and i'm not don't have any
data so please
if i make a mistake with
maybe a month or two we're used to them um yeah won't be the first but I mean if you
take the period
May 1999 to May 2009
The S&P 500 over that 10-year period yielded a negative return.
I think it was something like negative 0.5 or something like that.
But the bottom line was it actually had negative performances over 10 years purely
because everybody
bought at these highs.
I mean, it's just crazy.
It is crazy when you look at that.
And I'm not saying that history will repeat itself this time around.
Please do not think I'm saying that.
I do like where the AI is going.
I just look at, you could see that the earnings growth are tapering down,
yet these companies are still trading at fairly, fairly high valuations.
And what's that game where the music stops and then...
Simple Simon Says or what's it?
No, no, it's Musical Chairs, isn't it?
The music stops.
Yeah, it is.
They take the chair away.
Yeah, Musical Chairs.
I used to love that.
I was rubbish at it, but I loved it.
No, no, I can promise you when the music stops, I promise you it's going to be a
few people without chairs.
Okay.
Let's have a look at something else, Skalk.
I don't know how we got onto that.
We were talking about, in general, trends and how they eventually, most of them
eventually,
correct themselves in some way.
We looked at the weight loss thing.
Now, the weight loss thing is very interesting because there was a woman on
television I saw, she said, well,
I bought this thing and my medical insurance wouldn't cover it, so I paid for
it myself.
It was fantastic.
and I read all sorts of other benefits that...
but it has as well to do with, I don't know,
it would help against having a stroke.
It would help my blood pressure and all those sort of things.
So fantastic.
And I lost 12 kilograms.
And she said, I couldn't afford it anymore.
So I stopped it.
And I put on 10 kilograms in half the time that it took me to lose the 12,
just because of going back to my old habits of eating, the same habits I...
I'd had before.
So I think those sort of anecdotal stories don't do the share price of Eli Lilly and
the European
one.
They don't do the share price much good, do they?
People on television saying that sort of thing.
Man, I'm rather going to stay quiet here because I know a few people that said, no,
I mean,
there's no shortcuts.
Come on, to good health, there's no shortcuts.
You're quite right.
I mean, that's just my...
I'll tell you my weight story one day.
It's fascinating.
And that sort of leads into my next thing, Escalcon.
That is alcohol companies.
We had, when was it, last week, AB InBev fell 10% in one day.
That was correct, wasn't it?
Yeah.
Well, we've had numbers out of Diageo as well.
And, yeah, the headline numbers looked horrible.
But then it was all to do with restructuring.
It wasn't to do with sales and drink trends changing, et cetera.
It was mainly to do with restructuring.
In fact, they said they did incredibly well with one of their premium brands, Don
Julio, the tequila.
I know you like a tequila occasionally, don't you?
Just between you and I.
We're not the greatest of friends.
I mean, we've sort of got a love-hate relationship, me and tequila.
I love that.
That's the whole point.
My Mexican friend.
Because he can do one thing to you one night and another thing the next.
That's the whole point about it.
Anyway, Don Julio.
Also Guinness doing very well amongst a certain sector of the population, young
people.
But young people not drinking has been a big factor.
But non-alcoholic beers, sales of Diageo went up, not beer,
any non-alcoholic drink went up 40%, which is off a lower base than the booze part of
their business,
but not bad.
I don't know.
Do you ever drink a zero beer?
I do.
Oh, do you?
Yeah, yeah, yeah.
If I'm really, really sick.
Yeah, it is.
It's torture, isn't it?
If you like a proper beer.
I'll tell you a very quick story before we get on to more important things like, what
was I going to talk about?
I want to talk about a couple of companies that reported on the JSC.
I had two non-alcoholic beers, a very nice Dutch brand, after I had a sauna today.
I drank these things and I got up and I felt woozy.
And you know what it was?
It was my brain being told the action of me opening a bottle and putting it in my
mouth and
drinking it and it's got beer written on it.
It fooled my body for a moment into thinking that I was drinking alcohol and I
felt a little bit woozy, you know,
because I don't drink.
So my body was completely discombobulated by this whole thing.
It's fascinating.
Well, it's a placebo effect, eh?
Yeah, that sort of thing.
Exactly right, yeah.
I think it won't last for long.
When I get to number five, it'll be, wait a second, my body, wait a second.
Who are you trying to kid?
Exactly.
No, no, I thought the trends were, I mean, it's like you mentioned, it's definitely,
you can see there's a major shift in the younger generation.
They're doing different things.
I mean, I like watching these MMA.
MMA sports, and you can see the different drinks, the energy drinks that they've
got.
I'm not going to mention, but when you switch on either the Formula One or the
MotoGP,
any sports these days, you've got these energy drinks,
which become more popular than any of these alcoholic drinks.
So unhealthy.
I know.
It's a different poison.
But you're 100% right.
You could see, I mean, that I think it was high.
I think it was 46%, if I'm not mistaken, the growth in their non-alcoholic beers.
And they've mentioned that the amount of the volume, how that has dropped down.
What was a little bit worrying for me when I looked at Annalisa Bush was,
you could see very similar to the likes of British American Tobacco Company.
Every year, their volumes actually drop down,
yet they manage to grow their revenue.
And by doing that, they're increasing the profit margins.
So just increasing the beer prices.
And the actual beer drinkers won't stop drinking beer.
You can charge them 50 rand for beer, or you can charge them under the 50 rand for
beer.
They will most probably just how does the same go?
When the price of food actually goes up, you'll eat less.
And when the prices of beer go up, you'll eat even less.
I wouldn't know I'm a non-drinker but I mean D'Age was interesting
D'Age was interesting and you mentioned it the initial thought when I looked at the
results
I was worried and then immediately what I usually do is when I look at this
I look at the pre-market prices and you can see it was something like 4%
up and I was like wow this is interesting I mean And
And you mentioned a few things that they've done because the sales were
something like
1.7% up and operating profit was down like 1%.
But when you look at these trends and you like look at these trends,
the one thing that stood out for me is they mentioned how some of these drinkers
now go to
these exotics, cannabis type of drinks.
I don't even know that that exists.
But they mentioned that there was quite a growth in that market.
So, yeah, I thought very interesting.
It is very interesting.
And it will settle down, of course, just very quickly, again, if we can.
Would you buy British American tobacco or Diageo?
Okay, so firstly, I own both.
Okay.
Would you top up either more than the other?
No, no, I'm struggling to justify.
British American tobacco at the thousand buck levels is trading at all-time highs.
I always struggle buying any company when it's trading at all-time highs.
Not for the pure reason.
I'm struggling with the likes of British American tobacco company.
And what is positive on them is you can see how they mention every result
release, how they, you know, it's called smoking products.
is becoming less of a percentage of their total revenue.
So they're clearly working on creating a...
I want to use the word healthier type of product.
But it's always going to be, I mean, it's always going to be, when your company is
called British American Tobacco Company,
it's going to be a tough one.
So it's a great dividend buyer.
As I mentioned, it's a company that always managed to increase the prices of their
products.
But I think over time, this will be a company that I most probably exit and not
enter again.
That's just one of them.
Okay, so I'm leaning towards Diageo with you, because you did not answer the
question.
But good, I'm glad I got that.
A lean towards Diageo.
I wanted to talk about the bond market today because it's being really bombarded
with so many different
fundamentals, and I don't know which one is going to prevail.
But we'll do that next week because it's quite a long story, and it's a very
interesting story.
But for now, we've got to have a look at some prices, Scott.
I said it was a pretty routine day, but let's see if the numbers confirm that.
And have a look at the RAND.
The RAND, I thought the RAND was going to go on a bit of a trot to the downside, but
not a bit of it.
The dollar RAND 1778.
OK, the dollar is 0.4% up against the mighty local currency,
but still we're solidly below 18.
British pound against the RAND is 2373 and the euro RAND is 2070.
the Eurodollar.
£1.1645, which has barely changed.
British pound, £1.3345, which is half a percent full for the pound.
Now then, on to commodities.
Gold price, it was last week it was below £3,300, I think.
Or was I dreaming it?
No, it was.
It was £3,298.
I remember reading it when I was interviewing somebody and thinking, hello,
that's not good.
Now, it's not that far away from £3,400.
£3,377, down just a tad on the day.
Platinum up.
a little bit, up about a percent to $13.43 an ounce.
Palladiums had a horrible day, down four and a third percent or $52 per ounce.
Now the oil price, and that was in the news this week because of the OPEC quota
rise,
and it fell a couple of percent on that day, but we all knew that was going to
happen, so of course we all bought it, didn't you Skulk?
$68.24 for Brent crude oil, up 0.9%.
And West Texas crude, $65.71, around about the same,
around about 0.8% higher.
Any other news there?
Heating oil, that's nothing we look at.
No, that's okay.
Bitcoin is $115,000, let's call it, which should be up about 2%.
South African 10-year bond, $9.675.
The U.S. 10-year, $4.215.
And the S&P 500 is currently 63.51, up 0.4%.
That's the S&P 500 futures for September.
Skull, tell me about Glencore and Quilter, if you would, on the JSC before we get the
other numbers.
Yeah, Glencore, I mean, they guided well enough.
So last week we had the trading statement.
And, yeah, at...
I already saw in the trading statement,
you could see the production in both coal and copper was really flat.
It didn't look exciting at all.
And as I mentioned, when you look at the balance sheet,
they're still sitting with quite a bit of debt.
Net debt increased to close to 15 billion US dollar now.
and then they've got this major major focus where they
where they focus on the cost-cutting exercises.
So that, as I mentioned, is always a big question mark.
They did mention that they announced a share buyback as well.
But either as it may, I didn't think that the I mean,
the $1 billion cost-saving didn't really excite me.
You want to when the likes of the copper prices are moving, you want to see
extra focus being placed on production, ways to produce and not ways to save.
So, yeah, I didn't think it was too good.
And even after a bad trading statement guided towards this,
it's called a flattish result, we still saw a major reaction today.
In an environment where the resource index was positive today, Linko dropped 5.8%
today.
So that after results came out very bad.
Quilter not quite so glamorous in terms of up or down.
It was just, yeah, it was okay.
It was okay, but also, again, well-guided.
So we saw a bit of a positive reaction when they already mentioned.
I mean, I'm not a shareholder in this company, and I would most probably not
become a shareholder.
But I think, you know, the positives is they've grown their assets under
management and administration, you know,
with 6%, up £126 billion.
And one can say, well, yeah, that must be, you know, 6% must be all growth in the
market.
And it wasn't the case.
I mean, we've seen net inflows.
They mentioned net inflows of that amount is £4.3 billion.
And market and currency movement was 2.6 billion pounds.
So very, very good to see a company like a wealth asset management company like
Walter,
you know, growing, attracting new assets.
So, yeah, I think the market just expected more.
I just think market expected more.
Well, you know quite a bit about it, despite the fact that you don't hold the
share and you sound as though you don't want to hold the share.
So, therefore, you can have a look at it, at this question rather.
And help me out from a distance, if you want.
What about the name?
Where does the name come from?
What does that mean?
What does quilter mean?
Is it a thing that I'm missing?
Is it an in-joke somewhere?
What is it?
Yeah, it's, well, what is, but are you going to tell people what 91 means first?
Because that's...
Yes, I know what 91 means.
That's the year the company was formed.
That's the year that Hendrik de Duy sat down with a couple of computers and a
couple of phones.
and maybe a couple of staff and started building a legendary company.
That's why it's called 91.
Why is Quilter called Quilter?
I've got no idea.
I've actually, you know, while you were talking about 91,
I thought we'll get some insights and what it actually means.
But no.
1991, that's what it means.
Skulko, let's forget about Quilter.
No, no, no, I'm talking about.
quarter i always see right right 91 i know 91 i know 91 i just wanted you to explain
to a few people because that's
how the name 91 ellen gray is easy that's that's but what what where where does the
name quarter
came come from so yeah if anybody knows please yes please contact skulk no
no no don't contact us just um put it on strictly business uh either x or yes
that would be nice.
LinkedIn.
Give us the answer.
Where does the name Kota come from?
Good idea.
I'm going to give you the top five major moves from my screen now.
DRD Gold on the upside by 3.6%.
MTN up three and a third.
Anglo Gold, another gold company, 3.1% higher.
Italtal up two and two thirds.
Sun International up 2.6% downside.
The aforementioned Glencore down 5.8%.
Pick and Pay down 4.4%.
Aspen two and a quarter percent in the red.
Vukile down 2.1%.
And We Buy Cars.
down 2.1 as well scout any other movers that caught your eye no i think the one on
the upside is
maybe a little bit too small but the fourth best performing company today was
was after a map matt and yeah we've been talking about
and been been holding out from matt because they struggled with this their
iron ore or side um also they they um cement business not doing as well as bpc
is done
but they've mentioned that how they focus i still believe that aftermath it's a
quality management.
It's a great little company, isn't it?
Yeah, yeah.
I'm not an older, so that's an easy conversation for me.
And we had this conversation, I think, a few weeks ago when it was trading, I
think, 40 odd-ranked levels.
And it's still trading there.
But, I mean, today, 3% rise.
Maybe forming a bit of a base there.
Maybe forming a bit of a base.
We'll keep an eye on that one.
Give us the indices, if you would, Scout.
Closing indices on the JSC, plus, of course, the all-important volume.
So the JSE today closed at just over 100,000 points, 100,153 points.
That's up 0.48%.
As mentioned earlier, resource index having a great time.
I mean, the gold count is really having a wonderful, wonderful time.
Today closed up 1.34%.
Industrial index up 0.34%, while the financial index was up 0.
1.9%.
I'm going to mention the SA Property because they've been one of the best
performers in
July. Today, taking a bit of a breather, down 0.18%.
When we look at the volume traded, I started off and say, well, we should be
around about the $20 billion mark.
We ended the day just short, $23 billion value traded through the JSC.
Very good, Scott.
Thank you so much for your insight, as always.
Scott Lowe is a Portfolio Manager at PSG Wealth Old Oak.
Cape Town, and that was the 5 o'clock shadow.
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