Jsedirect With Simon Brown

Offshore / US jobless claims remain at around 1.3million / Netflix drops 9% on weak Q3 guidance. / Jamie Dimon’s warning for the U.S. economy — nobody knows what comes next / Amazon stock had its worst week since February / Fiscal Cliffs Threaten Fragile U.S. Recovery as stimulus expires late July / Qantas has removed all of its international flights until March of 2021 Local / Tsogo Sun Hotels sells Maia resort for wild price / CPI May 2.1%, lowest since Sep2004 / astral enters the quantum fray and price still flying / Diamond sales collapse and Richemont update / Rights issues announced, TFG R3.95 billion (40 per 100 shares, 40% discount), SUI R1.2billion (93 per 100 shares, 25% discount) / Spur CEO resigns

Simon Shares Day 112 of lockdown and Covid-19 cases are still spiking in South Africa and no drink again. Load shedding. An economy on its knees now without power. Quantum Foods (JSE code: QFH) still booming as Astral (JSE code: ARL) buys a 6.42% stake to protect their broiler supply. Bell Equipment (JSE code: BEL) trading update says HEPS to least 80% lower. CPI for May 2.1%, (3.0% in April and 4.1% in March) below the target range albeit helped a lot by petrol that has since increased. The Foschini Group (JSE code: TFG) buys Jet for R480million. Tsogo Sun Hotels (JSE code: TSG) sells its 50% interest in Seychelles Resort for $27.8million. The UK economy shrinks 19% in three months to May. The US CARES act expires on 25 July. Currently, this gives extra support ($600/week) to unemployed Americans. If it is not extended past the 25 July deadline when the last cheques will be sent, then things will get real bad real quick. Currently, the average US households get over 6% of their household income from unemp

Offshore / Germany saves. Total retail deposits rose by €22.4bn in Apr and hit fresh All-time high at €2.46tn. The volume of retail bank deposits has doubled within 18 years. / German production and export data disappoints as they have nobody to sell to in a lockdown world. / Warren Buffett’s Berkshire buys Dominion Energy natural gas assets in $10 billion deal / Uber buying Postmates / Tesla still storming higher (as is Nasdaq) / Gold strong Local / SARB bought only R5.1billion bonds in June / Load shedding is back / Everybody wants Quantum Foods / Omnia results / Updates from Liberty 2 degrees and Growthpoint / Steinhoff sells Conforama / TFG buying JET for R480m and is looking to raise R3.95 billion in a rights offer.

“This week’s episode of JSE Direct is courtesy of IG.com, our preferred supplier in trading products.” Simon Shares Day 105 of lockdown and Covid-19 cases are still spiking in South Africa. Omnia (JSE code: OMN) results. Suddenly everybody wants to own cyclical Quantum Foods (JSE code: QFH). Standard Bank ETNs are expiring next month. Gold stocks are flying and everybody is asking me if they've missed the boat? Likely not, especially as this pandemic is not just a 2020 event. Dis-Chem (JSE code: DCP) fined R1.2m for its ‘exploitative’ behaviour. They will appeal. Steinhoff JSE code: SNH) is selling its Conforama France for a nominal sum and some property for Euro70million. They paid Euro1.2billion for the business back in 2009. The Reserve Bank bought only R5.1billion of local government bonds in the secondary market in June. This after R10billion in May and R20billion in April. MultiChoice (JSE code: MCG) has launched a new streaming service, Showmax Pro, with live sport, music and news channels. Not yet

Offshore / US unemployment 11.1% / Tesla now largest motor company in the world / Advertisers bailing on facebook / Goldman Lowers U.S. GDP Forecast, Sees 4.6% Contraction in 2020 (was 4.2%) / Fitch has downgraded a record number of sovereign ratings due to the coronavirus. 33 downgrades, 40 negative watch / Brexit talks started up again Local / Q1 GDP at -2% / Barloworld results / Capitec update / 1Nvest ETNs expiring 11 August (gold, silver, platinum & palladium) / Redefine sells R7.7billion of assets to reduce LTV / Steinhoff still muddling along and publishing results

Simon Shares “This week’s episode of JSE Direct is courtesy of OUTvest, our preferred supplier in retirement products.” Day 98 of lockdown and Covid-19 cases are spiking in South Africa. Local GDP for the first quarter came in at -2%, helped by agriculture +27.8% For the first time since July 2019, PMI respondents expect conditions to improve in six months’ time. The index tracking expected business conditions rose to 51.2 in June. Overall PMI for June was 53.9 but remember this index records monthly changes in expectations so it is expected to improve as lockdown levels improve. Barloworld (JSE code: BAW) results were a horror even as they were for the period ending March. The stock lost 11.5% on Tuesday and the headline news was Tweeted by Hilton Tarrant; Avis and Budget Rent a Car Southern Africa (owned by Barloworld):

Offshore / US existing home sales fell 9.7% the lowest level since October 2010. US jobless claims dropped to 1.48m / Wirecard into bankruptcy. EY never checked the bank account of the missing cash for 3 years. / HS Markit’s Eurozone PMI Composite Output Index rose to 47.5 in June, / Microsoft permanently shutting retail stores / Nike reports unexpected loss as sales tumble 38% / Boeing 737 MAX certification flight tests to begin today Local / Supplementary budget & GDP tomorrow / Capital raises; City Lodge, Sun International, Pepkor, Harmony / Stor-Age* results / Telkom results, dividend cancelled to fund spectrum / Intu is not able to make a deal with lenders. Stock suspended on the JSE / Solid JSE trading update as volumes soared during the period

Simon Shares Tencent hit a new all-time high on Tuesday and again on Wednesday pushing Naspers (JSE code: NPN) and Prosus (JSE code: PRX) higher and helping the JSE overall. Gold seems to be breaking up out of the consolidation zone it has spent the last few months trading in. Good German PMI data, still under 50, but only just again suggests that April was likely the worst month. Albeit the route back to normal is going to be long and rocky. Mboweni budget; No changes to taxes, but a rough budget. Some key points; The South African economy is now expected to contract by 7.2% in 2020. This is the largest contraction in nearly 90 years. Global GDP -5.2%, broadest collapse in per capita income since 1870 "A post‐lockdown future will require that we build high‐quality physical bridges, roads, railways, ports and other infrastructures.". Some changes in the R200bn Covid loan scheme. Removed the R300m turnover limit. South Africa will "shortly" fall into a sovereign debt crisis if it does not act urgently.

/ Wirecard and the missing $2.1bn / Hertz decides NOT to issue shares while under chapter 11 / Reports on Sunday that British Finance Minister Sunak plans emergency cut in value-added tax / Index rebalancing in the Russell indices sees nearly half of the stocks being promoted to the Russell 1000 from the Russell 2000 will be healthcare names. / Apple will close 11 stores across Florida (2), North Carolina (2), South Carolina (2) and Arizona (6). This after re-opening 100 in May. / Fed Chair Jerome Powell warned millions of people will likely still be unemployed even as the economy is on the path of recovery. / The Federal Reserve started buying corporate bonds Tuesday as part of a $250 billion program funded by the CARES Act Local / New level 3.something opens leisure and beauty (to a degree) / Marriott Group closing three hotels (Mount Grace, Protea Hotel by Marriott Hazyview and Protea Hotel by Marriott Durban Edward). The hotels are owned by Hospitality Property Fund. / Sasol update, lots of news but not o

Simon Shares Here's a gem from the Herenya Capital Advisors Twitter account, albeit Remedica is up for sale and we've had lots of early hype on drugs that quickly fizzled out. Ascendis Healths subsidiary Remedica manufactures Dexamethasone which apparently helps combat severe cases and is being approved by the NHS. pic.twitter.com/XUw9VPHwdg — Herenya Capital Advisors (@HerenyaCapital) June 17, 2020   That said, Aspen (JSE code: APN) issued a SENS stating "It is confirmed that Aspen owns rights to this product and distributes both injectables and/or tablets containing dexamethasone in a number of countries." But most importantly, is it really a new wonder drug to treat Covid-19 (dexamethasone). Because ouch, you need to already be in ICU and then if you're on a ventilator it saves 1:8 (12.5%) and of those needing oxygen, it saves 1:25 (4%). Aren't those very modest numbers? On MoneywebNOW yesterday I chatted with Easy Equities CEO, Charles Savage and he dropped some amazing stats. They're opening 1,500-

Offshore / China's PPI down 3.7% in May and factory output rises less than expected, retail sales continued to contract in May. / Fed kept interest rates flat and cautioned they expect conditions to remain tough into 2022. GDP 5% in 2021 and unemployment 5.5% in 2022 o S&P500 dropped -4.8% last week but remains +8.1% this month, o Nasdaq dropped -2.3% last week but remains +6.4% this month, o FTSE 100 dropped -5.9% last week but remains +5.3% this month, o JSE Top 40 Index dropped -1.9% last week but remains +5.8% this month, / We’re starting to see the second Covid-19 wave in both the USA and China and this spooked markets. Detroit, Michigan is seeing new all-time case highs / Mnuchin says ‘we can’t shut down the economy again’ / UK economy contracted by 20.4% in April, the largest monthly fall on record / Justeat-takeaway buys GrubHub Local / The Rand hit 16.33 overnight on Wednesday but then came under serious pressure at 17.20 on Friday. / Solid Multichoice results and first dividend payment as sports

Simon Shares Bankruptcy stocks are the new excitement in the US. Hertz in chapter 11 saw its stock price back at the levels from when it announced Chapter 11. Tsogo Sun Gaming (JSE code: TSG) results to end-March show debt at R11.2billion, more than double the market cap. EOH (JSE code: EOH) update says debt is being paid off quicker than planned. But it remains a long road for the company. British American Tobacco (JSE code: BTI) update sows solid DM demand but reduced EM demand. Hyprop JSE code: HYP) update details foot traffic and open rates with their malls between 67% (Hyde Park Corner) and 97% (Atterbury Value Mart). In large part, the number depends on the number of sit down restaurants. Foot traffic was down 71% in April and in the first seven days of June is now only down 24%. Again this shows that April was very likely the worst point and that things are improving, but the last stretch of improvement is going to be the hardest. China's PPI down 3.7% in May. China is opening but exports are struggl

Global / US May unemployment rate seriously strong at 13.3% / PMI bounces from April lows but still below 50 / China May exports slip back into contraction, imports worst in four years / Opec extend cuts by another month / AstraZeneca Approaches Gilead About Potential Merger local / Apple mobility and Yoco transaction data shows about 65% economic activity in week 1 of level 3 / JSE allows share issues without shareholder approval / Rand below 17 as foreigners buy our bonds and equity / Reserve Bank takes up R10.2bn in government bonds in May / More banking updates / Bidvest update gives insight to Comair and Adcock Ingram / Capital Appreciation solid results and increased dividend as they operate in payment terminals and cloud services (there are always some winner) ==== Levi opening stores and they say “everybody has a new size, a larger size”

Upcoming events; 09 June ~ South China Seas structured product Q&A 10 June ~ Margin, gearing & exposure explained 17 June ~ Trading 101: A traders plan 18 June ~ What it means to Invest Globally, Locally Simon Shares Day 70 of lockdown, week 1 of level 3 and I got drink (still no smokes) but court locks down lockdown? Markets are surging, taken off flying and chasing the stars. Overall value is decent but not spectacular. Coupled with the ZAR at 17 we likely have a risk on trade and some epic sort squeezes. The general view for the currency is at least 16 in the short-term maybe stronger but as always, be careful because this can turn on a dime. Of course, my crash puts are getting slaughtered in this run, but that's the plan. if my cash puts are losing then my portfolio is winning. WTI and Brent both having a good week with the latter back above US$40. Sasol (JSE code: SOL) the easy winner here, likely based on higher oil and short squeezes. Will it close the gap at R160? Certainly, the possible

Global / US past 40million initial claims and Q1 GDP updated to -5.0% from -4.8% / Personal saving rate 33% in April / Germany’s Business Climate Index rose to 79.5 in May as the country reopens / Reuters ~ China's May factory activity returns to growth but demand remains weak / China US tensions increasing / Bill Ackman's Pershing Square Capital Management announced it had sold off its entire stake in Berkshire Hathaway. BH has $133.3 billion hoards of cash vs S450 market cap (third of assets are lazy and not been deployed). Local / PSG announced CPI unbundling details (14 CPI for every 100 PSG) / Woolies update, spending AU$100million on Australia / TigerBrands results as branded goods come under further pressure. / Famous Brands very pessimistic on casual dining recovery / Stats SA delayed April CPI by a month due to difficulty collecting data / PIC talking about converting Eskom debt to equity

Simon Shares Day 63 of lockdown, level 3 on Monday. As I record we're still waiting for details as to what is allowed under level 3, but it seems that rather than saying what we can do, the regulations will tell us what we can't do and that list will be short. We will be able to exercise, retail is open but restaurants and bars not. Alcohol will be sold, but not tobacco products. Personally I will pretty much stay in lockdown (aside from my daily radio show), but now with a drink. NYSE trading pit opened again on Tuesday. A throwback to the days before technology but always fun to watch, not that I have been to the NYSE. I did see the JSE in the mid 80's on a trip to Johannesburg. It was wild and made no sense to me but it was energetic and I wanted to be a part of it all. Famous Brands* (JSE code: FBR) results presentation made two comments “restaurant landscape will be irrevocably transformed” because of Covid-19. The market recovery in the casual dining segment will be “slow and unforgiving”. Woolies (JSE

Offshore / Hertz bankruptcy / US initial jobless claims now over 38million (160m labour force), UK ver 10million (35million labour force) / This on the back of German Q1 GDP released this morning coming in at -2.2% / Moderna vaccine excitement, and then they raise capital on share price spike / Commodities having another good week. / Apple mobility data shows Europeana and US economy opening. Local / 0.5% rate cut / Stor-age raises R250m in bookbuild. / Grand Parade Burger King sale being repriced? / Liberty 2 Degrees update, nice insights. / Nedbank update also offering solid insights. / Richemont raises Euro2billion debt as they strengthen their balance sheet / Online sales surging

Upcoming events; 21 May ~ Solvency and liquidity in the time of COVID-19 28 May ~ Managing risk as a trader with Garth McKenzie 03 June ~ Pandemic investment scenarios 10 June ~ Margin, gearing & exposure explained 18 June ~ What it means to Invest Globally, Locally Day 56 of lockdown Simon Shares Don't fight the Fed (The Federal Reserve). Markets are in full rally mode and the forward PE of the S&P5- makes it the most expensive in the last decade. During a pandemic and worst US unemployment since the great recession? Bu the point is simple, if the Fed is buying with guns blazing, don't stand in the way, markets will rally higher even if everybody I speak to is bearish. With that in mind, I have bought some TOPSBZ as insurance against another market collapse. It is a put warrant over the Top40, expiry is December and strike is 41,000. So a decent amount of time and about 18% out-the-money. Richemont (JSE code: CFR) raises Euro2billion of cheap debt to go with their almost Euro2.4billion of cash o

**Global** / UK two-year government bonds traded negative last week as UK GDP -2% for Q1, -5.8% for March & retail sales fall 19% year on year. Biggest in 25 years / Tencent’s Q1:20 results showed a +19% jump in gaming subscriptions, overall Group revenue grew +26% and, on almost all metrics, the Group beat analyst estimates. / US, jobless claims came out as another nasty number today, now totally around 36m (the worst number since the Great Depression) while April retail sales collapsed -16.4% m/m. **Local** / Barloworld is attempting to back out of its deal to buy Tongaat Hulett’s Starch business due to COVID-19 likely negatively impacting the business’s EBITDA and triggering a “Material Adverse Clause”.  / Dis-Chem announced the acquisition of 100% of Baby City / Richemont released FY 20 results showing revenue flat but profits collapsing by two-thirds. and are proposing a possible warrant instead of a dividend / Strong Aspen update while Life healthcare says EPS for full year likely 20% lower after m

Simon Shares Day 49 of lockdown Pick 'n Pay (JSE code: PIK) results were slightly down, but no dividend as they conserve cash. Sibanye Stillwater* (JSE code: SSW) first quarter results knock it out of the park, strong cash flow and debt down 40%. Tongaat (JSE code: TON) sale of their starch business to Barloworld (JSE code: BAW) has collapsed with the buyer claiming "material adverse change" due to COVID-19. UK two-year government bonds traded negative this week. UK GDP was -2.0% for the first quarter (QonQ) with March saw a 5.8% contraction. Retail sales fall 19% year on year. Biggest drop in 25 years as 'excess deaths' top 50,000 but look to maybe have peaked, for now. Norway oil fund exits Anglo American (JSE code: AGL), Glencore (JSE code: GLN) & Sasol (JSE code: SOL) as they "derive at least 30% of their income from thermal coal, base at least 30% of their operations on thermal coal, extract more than 20 million tons of thermal coal per year, or have a coal power capacity of more than 10,000 megaw