You're listening to Strictly Business Podcast with Lindsay Williams.
JSC has closed its doors for another day, so it's time for the 5 o'clock shadow.
And as always on a Wednesday, I speak to Skulk Clough, Portfolio Manager at PSG
Wealth Old Oak in Cape Town.
Now, in a few hours time, Skulk, way beyond the scope of this podcast, unless
you're feeling really chatty,
the US Federal Reserve will announce its decision.
on interest rates in the United States.
Now this is of course important because it's anticipated so much by the market and
also in the macro sense it
is the price of money in the world's largest economy.
Now here's my scenarios.
They cut rates by 25 basis points because they're quite conservative.
Everyone's expecting that and I'm a bullish person so I say cut this very
fantastic.
This means that there's probably going to be two more, given what Mr Powell said,
because he makes his comments, you know,
actually before the decision.
No, it's not.
It's after.
I can't remember.
No, he's before.
He's made his comments anyway, whenever it is.
And they're fairly dovish.
So we're expecting more cuts.
So this is great for growth stocks.
We'll just carry on buying, never mind Nvidia being banned from selling its chips
in China and all that sort of thing,
and never mind stagflation.
And never mind tariffs, we're going to sweep that all under the carpet.
It's cheap money we're looking for, so buy the market.
He cuts by 50 basis points instead of 25.
And the bulls say, fantastic, it's even cheaper money.
Trump is having his effect on the US Federal Reserve.
There's political influence here.
This will continue.
Great, we'll buy the market even more.
And the market goes to all-time record highs.
Tonight and...
In the ensuing days.
That's the bullish argument.
Bearish argument, they raise, sorry, cut rates by 25 basis points.
They say, oh, it's all in the market.
Let's sell.
This is all anticipated.
Let's sell this thing because it is a little bit overpriced.
They cut by 50 basis points.
The bears say, goodness me, they must know something that we don't.
This stagflation thing is obviously taking a hold.
The job market must be worse than expected.
And yeah, inflation is going to pick up, but there's a political influence of 50
basis points.
I'm scared I'm going to sell.
So you can convince yourself anyway is what I'm trying to say in a long winded
way.
Yeah.
You convince yourself with any argument will work, in other words.
Good evening, Lindsay.
Hello, Skelk.
I forgot you were there for a moment.
To all the listeners, that was quite the intro.
Basically, I think you've explained pretty much the conundrum we're sitting with.
Because on the one side, we're going to hear good news tonight,
regardless of what the outcome.
I mean, a quarter of a basis point, 50 basis points.
Currently, if we look at the CME tool and we listen to what Paul said over recent
weeks, we're going to see the cut.
We're going to see the cut in the next few hours.
And yeah, that's going to be the step one.
You're right.
I absolutely back your second scenario by saying that if we see 50 basis points, and
we've had this conversation,
I think, two, three weeks ago where nobody put any probability of a 50 basis points
cut.
We had this scenario where we said, you know, don't be surprised.
I mean, people are saying, well,
the market are trading at ridiculous levels and sooner or later,
the music is going to stop.
And that's going to be a problem.
And I said, well, I agree, but if we see a half a basis points,
we might see that push higher before we see the drop lower.
And I agree with you.
I absolutely agree with you.
I think 50 basis points would most probably be seen as good news is bad news.
Because why would they I mean, they've waited this long.
And to Trump's point, let's say Trump for a second is right, because he said, you
know,
Powell was way too late to start raising your rates,
and he's now way too late cutting it again.
You're not going to make up for time by cutting half a percent.
If he goes into this gradually now, I think at least inflation will be under
control.
Trump is saying that the economy most probably won't be, but at least inflation
will be under control,
according to Powell.
But I must say, if he cuts half a percent, I think that's going to be desperation.
And to your point?
That is political interference to the highest, highest degree.
Yes, the other thing that hasn't really been explored in either of our
explanations is
the state of the market at the moment.
If the market was middling along at reasonable valuations, so what?
If it was really low, you'd say, goodness me, a cut is going to boost this market
from a low base.
When it's so elevated, there's your problem if you're a bull.
That is your problem.
Do you buy NVIDIA at 170?
Do you buy, I don't know, what are the other ones that are doing well in the
United States?
Oh, Tesla's gone berserk recently.
What is it, 420 now, Tesla?
Something like that, Scott?
Yeah, yeah, it has gone berserk.
As we sit here, it's...
You're talking about the market cap?
What are you talking about?
No, the actual price in US dollars.
It's trading at 170 US dollars.
What am I talking about then?
Tesla.
Tesla, yeah, yeah.
Tesla has just shot 415 US dollars down today.
Yeah.
But I mean...
It was 422, I think, yesterday.
And at the low after Liberation Day, I think it was...
And also with what's-his-name being kicked out of the White House,
it was something like 225, 220 to 225.
So that's a $200 a share rally.
Mr.
Musk has been buying the stock, and on one day, I think, he bought a billion dollars
worth.
It was announced that he'd bought a billion dollars worth.
So that got the bulls going as well.
Goodness knows why, because, you know, just because he's buying doesn't mean to
say that they're going to sell more of their overpriced cars.
First time that he's buying, I mean, yeah.
And I think he had a tweet saying, as they forecast it, or after his...
boards.
I mean, that was just a crazy one.
I mean, he's had his run-ins with the SEC
where they slapped him and said, well, you are mighty close to doing things like
front running.
I just think he's tickling the lines
behind again here by doing these things.
But yeah, $1 billion.
A year worth of Tesla shares.
Yeah, no, it's a crazy market.
Lindsay, I think it most probably will get crazier because
I think tonight the prudent thing will be for Paul just to come in and cut a quarter
of a percent.
He didn't succumb to any pressures earlier,
let's call it in President Trump's presidency up to now.
And I wouldn't succumb now.
I'd just continue, stay the course, and that's it.
And I think that would most probably be the best outcome for markets over the next
day or two.
If it just comes through tonight, announce the quarter of a percentage,
announce that we would most probably see another quarter of a percentage.
He will never say another quarter of a percentage, but he will most probably
indicate the likelihood of a further cut.
at the next meeting will be higher, then I think markets will take it as positive.
Yes, yes, they will.
Is there money waiting in the wings?
There probably is.
They'll find it somewhere.
But anyway, it's going to be a fascinating time.
And so I shall be glued to my television set briefly around about 8.15
this evening, South African time.
Let's have a look at South Africa now, because we spoke about Woolworths, didn't
we, a while back?
Yeah.
And today the share price up 4%.
Why it's up 4% I don't know.
Maybe because of the retail sales number that came out from South Africa of a 5.6%
gain.
Is that the reason why?
Yeah, I don't know.
I think there was some podcast a few weeks ago of a very,
very highly regarded radio show, Strictly Business.
Oh, you think it's… They interviewed a highly regarded fund manager,
Mr.
Bickard, and I think that sort of got the ball rolling.
And today… Today we had another announcement.
The announcement came through today that I think it was Coronation.
Coronation announced that they are also buying Woolworths.
Look at that.
Interesting stuff.
Yeah, here we go.
We received formal notification that Coronation Asset Management, on behalf of
its clients,
has acquired in aggregate an interest in the ordinary shares of the company, blah,
blah, blah, to the amount of FAP.
percent of the total issued there we go yes notification in terms of section 122
in brackets three of the companies act
there we go see you got the ball rolling you got the ball rolling well you know we
do what we can here at
strictly business podcast in in the five o'clock shadow uh more
seriously let's have a look at another one as well momentum uh annual results for the
year ended
30th of june share price bucking the trend going down in other words down 0.7 percent
momentum.
Do you look at this company?
Yeah, I do look at the company.
Lindsay, it's sort of a sweet and sour announcement.
So let's just get the most important thing.
Did I think the results look bad in any shape or form?
No, it actually looked pretty good.
Listeners will ask them, why did we see a retracement in the price?
Well, they already guided.
gave a trading statement a week or two ago.
So we're pretty sure what to expect out of the results.
So for those who didn't see the results, the normalized headline earnings,
that was up 41%.
So that was really good.
Headline earnings were up 50%.
Basic EPS up 57%.
One that stood out for me, more important, because
We know that they bought back about 2 billion rands worth of shares.
Now, that's a crazy amount.
I mean, again,
this is where the sweet and sour comes through because when a company announced
that they've bought back,
especially bought back 2 billion rands worth of shares, I say, well, that's a
right mark and a wrong mark.
Right mark in the sense that, yes, they've got the confidence of the company.
And if they've got the confidence of the company to buy their own shares, then as
shareholders, and I'm not a shareholder,
as shareholders, you should feel more comfortable still holding your share or
even buying more.
My question is usually, isn't there anything else to be buying?
I mean, we're sitting a year later.
Clearly not.
No.
The South African market, given, predominantly driven by the likes of
commodity stocks and...
and also NASPAS process.
But the South African market has been under pressure for many years,
trading at low valuations.
And that just means as a company,
they can't find any other acquisitions and other opportunities to buy than rather buy
the company back.
And I think Sheldon's, they've got a lot of, there's quite a few companies out
there that's doing acquisitions, taking their money,
taking their cash.
looking for other opportunities.
And I think therein might be a reason why we see a bit of a retracement.
The shareholders just felt, no, it was good, but what's the upside?
Well, the upside is, I suppose, apart from the share buybacks, which always helps an
existing shareholder,
the company is doing okay.
I mean, look at this.
It says, in a tough market, it says here, this is the introduction.
Someone got a bit enthusiastic.
with their words, a momentum group delivered a remarkable set of results.
Not a good set of results, not an excellent set of results, not a good set
of results given the circumstances,
but a remarkable set of results they delivered.
That's going a bit far, isn't it?
Yeah, you buy your own shares back then.
Well, the actual EPS, headline EPS, and those things should look remarkable.
It was good.
I mean, to me, the most important thing was the embedded value per share.
42 and 51, that's up 15%.
That's the most important thing when I look at a life insurer is the embedded
value of the
company.
And if the embedded value...
of the company, less remarkable.
15% is still good.
Maybe just less remarkable.
My point is I want to see and I want to hear more.
Because they mentioned, they mentioned the inflationary environment.
They mentioned the economic growth.
They mentioned the jobs uncertainty.
Because when people lose their jobs, Lindsay, and we've had a few.
companies closing plants.
There's been some job losses in Africa lately being in the news.
I mean, the first thing that these people usually do is they switch off their
metropolitan
life insurance or momentum RA because they need to eat.
I mean, they lost their jobs, which is really, really unfortunate.
So I think...
It shows me that Metropolitan, they're looking at that,
and they are maybe a bit on the cautious side, which is not always a bad thing.
Not always a bad thing.
Okay, that's momentum.
There's another one.
They're going to buy another billion rand, or they applied to buy a further one
billion rand.
coming financial year.
And yet the share price down 0.7% so someone sees something that they don't
like.
Now have a look at this one because it came out at eight o'clock this morning.
It's not something you look at a lot I wouldn't imagine.
Metrophile Holdings Limited.
Share price caught your eye up 14.25% as I look at it.
But one of the more interesting reasons or probably for me the most interesting
reason is it's a joint firm intention announcement
from the company in respect of an offer to acquire...
All of the issued ordinary shares in Metro file, another delisting from the JSC.
In other words, should it go through, Skulk?
Yeah, yes, it is crazy.
I mean, that's my point.
I mean, what I made earlier, you know,
besides if you strip out the likes of the commodity stocks,
gold stock specifically, and you strip out the likes of Process, NASPAS, then...
And the JSE, I mean, these companies are still trading at great valuations.
I mean, if you look at our banks, and they've brought a solid set of results.
Yet, if you compare their performances in 2025 to the JSE,
you can see they are seriously, seriously lagging.
Quite a bit of retracement, some of these banks.
It just shows you that there's companies that's not really catching the eye of...
international investors.
And that just puts some of these companies in a position to say, well, like
Metropolitan, Momentum,
let's buy back some of our own shares.
Like Metrophile saying, well, let's just buy back our own company.
It's trading at good enough valuations, and there we go, another company going to
delist it from the JSC.
It's sad to a certain extent.
I mean, we've lost a few great names over the years, and, yeah,
I hope the interest comes back in the JSC.
We don't lose all our good stocks.
All we need now is a government that delivers fiscally while the South African
Reserve Bank delivers monetarily and everything's fine.
The first one, yeah, okay, we won't talk about politics.
Any other corporate news in South Africa before we go to the markets, please,
Skalk?
No, I think Premier Foods, that was another one that brought out results.
Or Trading Studies, more specifically.
They brought a trading statement for the six-month end of September. For the
listeners out there who don't know Premier Foods,
they've got the likes of Impala and Blue Ribbon, Dove Soap and Snowflake, very,
very well-known food brands.
And they mentioned that their headline earnings per share is set to increase
anything between 20%
and 30%.
Now, that out of the market, we're really, really excited.
As mentioned, the share price up 6.2%.
I just quickly had a look and just to see what
Bloomberg, the consensus, Bloomberg,
they've got the EPS or the headline earnings per share
forecasted for this period at just over 11 rand.
11 Rand per share.
Now, if you take it from the previous year, that's about a 23% increase in
headline earnings per share.
So this trading statement looks, what was that word you had earlier?
Marvelous or?
Remarkable.
The trading statement did look remarkable, stating 20 to 30% growth in headline
earnings per share.
But that's pretty much what Bloomberg's currently got as consensus.
Is that bad?
No, that's not bad.
What stood out for me in the trading statement, really interesting,
was where they mentioned the deflationary environment for the softer commodities.
Now, for a company, producing bread,
naturally a deflationary environment for softer commodities like, for instance,
wheat, will be positive.
I mean, if you see wheat prices, which it did, drop by 7% over the past 12 months,
if you look at sugar.
which a lot of premier groups products use.
If you look at the sugar price over the past 12 months, that's dropped over 25%.
And we can continue.
There's quite a few of these other soft commodities, which they mentioned.
The soft commodity deflationary environment definitely helped the company.
Not cocoa, though.
Not cocoa.
That's been going up, but they probably don't use cocoa products.
Just for interest sake, cacao over the past 12 months is down 5%.
Yeah, coffee, coffee on the other hand, that's up 53%.
But cacao, cacao is down over the past 12 months.
I saw a recent rally in it.
So the 5% must be over, obviously over a longer period.
But the recent move has been to the upside.
Coffee prices, well, goodness me, even I started drinking coffee.
I'm a very good, when I stopped drinking.
The shares of Diageo went plunging, I think it was.
But let's not talk about that.
I want to do another quick informal survey.
Keep on walking.
Given the fact that it's Retail Sales Day in South Africa, do a quick informal
retail survey now, Skyle.
Are you a shower gel or soap man in the shower?
I'm actually going to go one step further.
I am a premier group man.
I am a dove soap man.
So am I.
I'm a dove.
It's the right shape for your body, isn't it?
It's just perfect.
It feels so perfect in your hand.
Yeah.
I love the quality.
I'm with you.
And I'll even take it one step further,
that sheer body butter flavoured one.
Oh, man.
I haven't seen that.
I just used the traditional white one.
Yeah, that's my default if I don't find the sheer body butter one, but go pamper
yourself.
I've got to write this one down.
I think I should check the dove range.
It just shows you, you get set in your ways.
Okay, that's the retail survey over.
Let's go to, should we go to the markets?
Let's go to the markets because the round is lovely.
I love the round at 1736 against the US dollar with the dollar on the, we'll see
in a minute, euro dollar,
for example.
But the dollar is on a slippery slope and you love that dollar index.
You'll tell us what it is in a moment.
But anyway, the dollar round, 1736, that's a near 2% gain or loss rather for the
dollar.
against the RAND.
The British pound against the RAND, 23.73, barely changed, and barely changed against
the euro as well,
which is 20.58.
It's the dollar RAND that's doing it.
Euro dollar, 1.1850.
The euro nearly 2% higher against the dollar in the last 24 hours.
Remarkable stuff.
Let's use that word remarkable again.
British pound against the US dollar, 1.3665, with the 1.9% higher.
Now then, The gold price went shooting through 3700 yesterday.
And it thought, wait a second, I don't like it here.
Even though one of the major U.S.
investment banks has bravely announced that this gold price target is now 4000.
It's not exactly the bravest thing.
I'd love to be a gold analyst at one of these banks and just say, excuse me, boss,
let's make it 4000.
And they'll say, certainly, Williams, off you go.
And good luck with your Christmas bonus.
Nudge, nudge, wink, wink.
Platinum price down 19 to 13.83.
Palladium down 11 to 11.89 dollars per ounce.
Now the all-important other commodities.
Let's have a look at the oil price and of course the copper price because it's so
important for a couple of South African interests.
Now crude oil in the United States, West Texas, is down 0.7%
to $64.09 a barrel and Brent crude oil down two-thirds of a percent to
$68.04.
for the copper price.
is very similar to what it was the other day, actually, which was $4.58 per pound.
It's now $4.57 per pound, but in the last 24 hours,
down 1.4%.
Okay, the South African Tenure Bond, this is a hell of a story this year.
It's now 9.17%, another 6.5 basis points weaker.
Again, remarkable stuff, and it's all because of the RAND.
We don't...
We're importing relative deflation compared to what we would do if it was
1850.
US 10-year, 404, we'll call that one.
So it doesn't like being below 4%.
It has been there a couple of times in the last few days.
S&P 500 futures ahead of the Fed.
Barely changed at 6,664.
And that's the December futures.
We switch from September to December.
They do it quarterly.
And what else can I say?
The Bitcoin price.
It is bobbing along at 115,657.
Scout, what were the moves on the JSC today, please?
And I'll give you mine afterwards.
We've mentioned a few companies already that was moving and shaking,
but let's look at them.
So for a lot of people, there's been some ex-diffs.
So Life Healthcare did not drop by 0.9% today.
There was a massive, massive dividend that's been spent out of that.
So no need to worry about that one.
Cup, that was down 3.87%.
Udeko down 3.2%.
Yeah, so small companies, no big ones.
I think the biggest mover on the downside was Richemont.
But again, that is a dividend story.
So ex-dividend story, 2.6% down.
Then if we look at the upside, Oceana, they had a bad dish day yesterday,
but also brought out some results.
It looked like they struggled, but the market clearly expected them to do way
worse.
But the share price today, after the announcement, 6.7% up.
Devon Riddipoer, deep, 4.2% up.
Carew, 3.4%.
The one that we mentioned, Woolies, 3.3% up.
And Supergroup was up 2.7%.
I think we just need to just go number 6 as well.
Because as mentioned earlier, when process...
is up 2.5%, 2.6%, and NASPA is up 2.5%.
You know, that's the perfect environment for the JSE.
Indeed.
So, yeah, that was the ups and downs.
Okay, and talking about 3.3%, which was the move to the upside for Woolies after
its coronation announcement,
the South African...
And CPI data came out today, which I've neglected to report, which I'm going to
correct now,
because the South African CPI rate, that's the consumer price inflation rate, came
down from 3.5%
the previous month to 3.3%. So in the last three months, it's gone 3% to 3.5%,
3.5% to 3.3%. And that was one of the reasons as well why perhaps the bond rate
is at
9.17%.
That's the South African 10-year.
And people are expecting that perhaps there will be another interest rate cut
because of inflation coming down.
Personally, I don't think so.
I've got, yeah, let me give you mine.
Premier up 6.2%.
DoD Gold up 4.2%.
Carew up 3.4%, let's call it.
Woolies, we've done.
Processor, we've done.
Life Healthcare on the downside, we've done.
You've done Richemont.
Sappy down two and a third.
Anglo's down nearly 2%.
And Aspen down 1.9%.
So that's what we've got, Skouk, apart from the closing JSC indices, if you
would.
Yeah, the JSC is over 105,000.
105,368 points, that is up another 46 basis points today.
Resources took a bit of a breather today, down 22 basis points.
While the industrials, naturally, if you're going to have process NASPERS up
with those amounts, you're going to have an
Indy that will be flying.
Indy It's up 1.1%, while the financial index was up 0.3%.
Is it property?
Also up 0.3%.
And yeah, value traded through the market today.
Let's quickly have a look.
Value traded, quite a slow day.
Oh, wait a minute.
Now my screen is not updated.
Oh, you see.
Oh, wait, but make it quick.
Yeah, okay.
That's what you said.
Yeah, yeah.
That came back to bite me.
So not that quiet.
I thought we're going to be quiet.
So as I refreshed it, it actually went above $20 billion.
So it was actually $22 billion value traded for today.
You asked for it earlier.
I'm going to just give it a quick mention.
Dollar index.
Yeah, dollar index.
Currently trading at 96.4.
Now, that's quite interesting because it's slightly up, and you can see it's
struggling to stay positive.
We'll see.
I think it pretty much doesn't matter.
We will.
quarter pass quarter pass i i promise you the the dixie won't be trading at the
current level now this is what you want this is what
you want you you've got a feeling in the back of your mind that something's going
to happen there's going to be a bubble bursting somewhere but you don't want
that to happen you secretly do because
you you could you feel it yes you do i'm sorry you're fibbing you're fibbing to me
it's gonna go i never never said
which direction it's gonna go It could be 97, 98.
I'm talking about the whole market.
You've got a feeling that something's going to happen.
I've got a feeling.
Yeah, but you don't want it to happen.
So what you want to happen is there to be a rate cut and a talk of future rate cuts
as well.
So the dollar falls further, so the gold price goes shooting up back above 3,700
and on its way to infinity and
beyond.
Borrowing a word from Toy Story.
Not to color this any further.
I mean, I totally agree with you, Lindsay.
We've had a market that's...
grown more than 25%.
I'm talking about a local market and even the offshore markets is now in that type
of region.
That's a very, very nice environment for all listeners, for all investors, for
everyone.
I just want us to just...
Finish 2025 with this sort of just...
It's September the 17th. You're already looking forward to your holiday.
Wait, it's only the 17th of September.
No, Al, then I'm taking that back.
We're going to...
All Al is going to break loose before the year ends.
No, it's not.
Everything's going to be fine.
We know that.
The algorithms, the clever chaps will write an algorithm that overrides whatever
the Fed does.
You know that, Skulk.
Skulk, thank you very much for your time, as always, on a Wednesday.
Skulk Lowe is a portfolio manager, PSG Wealth, Old Oak in Cape Town.
And that was the 5 o'clock shadow.
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