Jsedirect With Simon Brown

Global / Worst US unemployment since the depression, but lagging indicator. Likely 25% by end May / Last weeks PMI, local and global mostly setting records for worst ever / Nasdaq is up year-to-date / IMF warning that their 2020 GDP forecasts may be too low? Local / Comair business rescue / Phumelela Gaming business rescue / Our bonds are strong, 10 year at 9.3%, shorter dated below 8% / Anheuser-Busch InBev QoQ volumes down 9.3% / Property stocks and risk of losing REIT status

This week’s episode of JSE Direct is courtesy of OUTvest, our preferred supplier in retirement products. Simon Shares April was the best month for equity markets since 1987! Local ten year bonds are on a tear, just a week after we exited the World Government Bond Index the yields are back at pre-junk levels and even better as they trade below 8%. This is the search for yield playing out. If their mandate allows investors want yield, the rest they don't care about. This has also seen the Government Retail Bonds locally drop their April rate of 11.5% to 10% for May and likely will fall further in June. PMI shocker. The headline number was fine but that was due to some oddities. The real kicker was the business activity index that collapsed to an all-time low of 5.1 index points in April. During the 2008/9 crisis the lowest levels were low 30s. Oil bouncing higher, albeit at US$30 Brent is still over 50% off the January levels. Comair (JSE code: COM) went into business rescue less than a week after an update d

Simon Shares Moneyweb NOW, starting Monday. Live stream at 6.30am and podcast from 7am - both on Moneyweb.co.za or their app. Day 35 of lockdown, and last day of level 5, for now. S&P500 trading back at August 2019 levels and Top40 at January 2019 levels. So basically saying COVID-19 is no worry? Everything is going to be alright? Sure the US has thrown over US$2trillion at the problem, but some 13% of the US workforce has lost a job in the last month and it easy to fire, but will surely be a lot slower to rehire? This is why I am at best a W recovery person not a V shaped. We have another leg lower, no idea how much lower, but lower. Locally a Stats SA survey of 707 VAT-registered companies shows that 20% have already laid off staff and 30% have decreased working hours. We also see IMF forecasting a local GDP of -5.8% and an unemployment rate of 35.3% for 2020. Then 34.1% unemployment in 2021. These are horror numbers and if they're wrong, they be wrong on the light side with reality potentially worse.

Simon Shares Day 28 of lockdown. Oil, negative pricing? I thought I'd seen it all when interest rates went negative, but no ~ oil says "hold my beer". I Tweeted about it. Short version, don't now suddenly decide you are an oil trader. Overnight WTI Oil (West Texas Intermediate) traded at a negative $40. Yip -$40, traders were paying you to take their oil off their hands. Totally wild and now everybody wants to be an oil trader. But some caution before you jump in. 1/ — Simon Brown (@SimonPB) April 21, 2020   Bye-bye SAA. Staff have essentially been given termination letters for end April by the business rescue practitioner, payment subject to the sale of assets and this is the worst time ever to be selling airline assets. But public enterprises minister, Pravin Gordhan, has other ideas, a new “financially viable airline”. This in the middle of a pandemic when US airlines got US$25billion, and they want more? But here's the fun part, while the minister and government is insisting no new money, the bus

Lockdown day 25 22million unemployment claims in US in 4 weeks (entire 2008 saw only 8.8million) opening economy China GDP fell by 6.8% YoY in Q1 (first fall since 1992) Wall Street gained 15% in the past two weeks, its strongest fortnight in 80 years. Oil price .. crude oil getting smashed as global storage fills up Earnigs season kicks off in US this week, includes March so some sense of impact but not entirely Goldman Sachs cuts Apple to sell & cut its price target to $233 from $250 as it sees revenue dropping a third Amazon trading at all time highs Big cabinet meeting today (Monday) End of the road for SAA (US airlines getting $25bn, and that not enough) Another 1% repo rate cut, but still SARB expects SA to contract by 6.1% this year Treasury looking to borrow $60bn, potentially from IMF

Lockdowns being extend everywhere (Spain +15 days, Italy +2 weeks, US wait and see, but likely end April) ZAR blowing out US jobless claims 6.6m this week Unemployment at 4.4%, non-farm payroll down 701k jobs (first down in a decade), -100k expected Numbers don’t add up, latter is only to mid March Lots of lagging data, two issues here, one is data coming out at record worst, and even just a 1 month delay makes data largely useless Woolies update Famous Brands bails on GBK Spur suspends franchise fees amid Covid-19 closures Nampak gets their R1.5billion for selling glass biz Anchor reports record demand for fixed-income assets British American Tobacco working on COVID-19 vaccine

Simon Shares New weekly podcast in the RSS feed every Monday late morning. BUT only in the RSS feed, not on the website. So subscribe to the feed, it is here. Upcoming events; 09 April ~ JSE Power Hour: Trader’s game plan Lockdown, day six as I record (seven as you listen). COVID-19 numbers globally continue to rise, but I'm watching Italy. They're now at three weeks of lockdown and are seeing daily new cases decline, but still at 4,000 a day. I am also seeing reports that they'll extend lockdown to after Easter, which is bad news for us. Our new cases are minimal, but still likely to spike higher and come the end of three weeks surely we'll be winning but not wanting to let the virus back in the front door, so lockdown extended? My thinking is extended to first weekend in May. It's after the two public holidays and means we'd have been in lockdown for 5 weeks. Longer term we're waiting for a vaccine, and that's 2021 at best, so even if lockdown gets lifted, heavy restrictions will be the norm and new lock

Moodys junk (negative outlook) SARB bond buying Moboweni, world bank & IMF Motsepe R1bn US worst US jobless claims - EVER US $2.2trillion bail out Edcon CEO, they can’t pay suppliers TFG wants delay on rent Dividends being delayed

Upcoming events; 09 April ~ JSE Power Hour: Trader’s game plan New weekly podcast in the RSS feed every Monday late morning. BUT only in the RSS feed, not on the website. So subscribe to the feed, it is here. Subscribe to our feed here Sign up for email alerts as a new show goes live Lockdown T-1 day Will lockdown hurt the economy? Yes it absolutely will. Exactly how much we have no idea, but our economy is largely shutting down for three weeks (at a minimum). The impact too GDP, business (small and large but especially small) will be huge and right now is not quantifiable. How do we pay for it? We print money and take on state debt. Is this bad? Sure, under normal conditions. This is not normal conditions. This is a global emergency and it requires drastic measure. The extra and more expensive debt and more cash printed is all bad, but right now saving people and the country and its people takes priority over the economy. I know a broken economy is going to hurt, but no country or no people would make

Simon Shares Sasol (JSE code: SOL) is now talking a rights issue of some US$2billion, more than the current market cap. They hope to be able to avoid this by selling assets, finding a partner for Lake Charles and cutting costs. But the first two will be near impossible in the current climate, so expect the rights issue with a +50% dilution. In other words, a horror rights issue. Price will be weaker until those details and issuing of the rights. I am NOT buying, that may change when the rights issue hits. But not before. Brent oil is under US$27.00 a barrel. Big ouch for Sasol. Good news for petrol prices. I am seeing a flood of people wanting to get into the market, because it has fallen. On the one side, this is commendable. Yes cheap is best tine to get in. But this volatility is the worst time to try and start trading. If you want to start trading we have two series for traders, Boot Camp and Master Class. But frankly as always, ETFs the best place to start, especially in troubled times. Everybody asking

Simon Shares The Sasol (JSE code: SOL) share price has collapsed this week for three key reasons. Saudi Arabia has declared oil price war on Russia and sent Brent down to the low $30's as they try and get Russia to agree to production cuts. Sasol has not hedge the oil price. They usually hedge about a third pf production, but currently they only have ethane and ZAR hedges in place. Massive debt burden of some R150billion, now some 3x more than their market cap. This is spooking the market worried about a potential rights issue at current levels. I'd add that a right down on Lake Charles is surely a given and in time Sasolburg as well. All in this is a total mess and coupled with poor management the market is not happy. I fully expect Sasol to survive, but in what form or price have no idea and I would NOT be buying. Subscriber to our feed here Subscribe or review us in iTunes COVID-19 continues to create havoc with Italy shutting down the entire country of 60million people as deaths exceed 600 and confi

Simon Shares Recession, surely nobody surprised? Growth lower for longer. The budget is certainly designed to help, but the R160billion cut from pubic sector wage bill is not going to be easy. Likely we'll also now get at least 2 rate cuts this year, each 0.25% minimum. Last week of February was the worst week for global markets since 2008. It was violent and it's not going away. COVID-19 marches on. Of note, 94k sick but 3.4k dead. With mortality of 1% it should be 300k sick and at 2% mortality it should be 160k sick. Are markets ready for the spike in sick? We'll find out but the Fed is not waiting. Negative US rates in my life time as the Fed panics and cuts by 0.5%. Thing is COVID-19 is a supply issue, not a demand side. Fed can influence demand with rates, but that does nothing to the supply side. This after a G7 meeting, but only the Fed has responded so far and US markets sold off some 3% after the rate cut. At the post rate cut press conference; "the risks to the U.S. outlook have changed materiall

I chaired a panel discussion on the 2020 budget by Minister Mboweni and have included the audio from that panel. The biggie, which is not mentioned is that the annual tax-free allocation has been increased to R36k a year effective 2 March 2020. On the panel with me was; Elizabeth Fick ~ Tax and Fiduciary at Investec Jacques Conradie ~ Managing Director at Peregrine Capital Theunis (TJ) Strydom ~ Financial journalist and author Albertus Marais ~ Director at AJM Tax Subscriber to our feed here Subscribe or review us in iTunes JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.  

Simon Shares I bought Sibanye Stillwater* (new JSE code: SSW) last week, average price 3950c. You want to own single commodity miners when price has already boomed and underlying commodities are flying. We have both here and if prices hold they'll print money for the rest of this financial year ending June. I'll add on the fifteen day EMA and hold for as long as it runs. Metrofile* (JSE code: MFL) got nailed on Monday down at 230c while there's still a delisting on the table at 330c plus mid year dividend (likely to be at least 5c judging from last trading update). So is the deal off? Officially it is not and it seemed to me to be a fairly low risk deal. So a panicked seller who needed cash? No idea. But current offer is 280c and assuming the deal happens that's a potential 55c profit by mid year when I would expect the deal to conclude. Coronavirus (COVID-19) continues to spread with over 75,000 confirmed cases and over 2,000 dead. But it still remains very much contained to China with 750million people on

Simon Shares Ecsponent (JSE code: ECS) have announced they will default on their March preference share dividends. This is a mess and preference shareholders are in a real bind. If you hold any, contact your lawyer. AngloGold Ashanti (JSE code: ANG) confirms the sale of their Mponeng to Harmony (JSE code: HAR) for US$300million meaning it'll no longer operate in SA from June. Coronavirus (COVID-19) continues to spread with almost 45,000 confirmed cases and over 1,100 dead. But it remains very much contained to China. Reports are it will already take 0.2% - 1% off global 2020 GDP. Upcoming events; 20 February ~ A new Tax-free year starts Subscriber to our feed here Subscribe or review us in iTunes Don't shoot the messenger Gina Schoeman, South Africa economist for the Citibank Global Economics team. I attended a S&P Dow Jones Global event on Tuesday where Gina delivered the keynote and here are my notes on what she said. Any errors are mine, not hers. Gauteng is 35% of SA GDP. Service delivery pro

Simon Shares Tesla (Nasdaq code: TSLA), epic short squeeze. Steinhoff (JSE code: SNH), epic short squeeze. Coronavirus continues to spread, fast, with almost 25,000 confirmed cases. People are recovering and we now have two deaths outside China. Tongaat (JSE code: TON) results are out and the suspension has been lifted. The results were a horror show with debt of some R13billion and negative equity of almost R4billion. They need a rights issue of at least R4billion and the share lost over 50% when it resumed trading, currently at 488c after being suspended at 1321c. No Sasol* (JSE code: SOL) that was not "a satisfactory set of operational results for the six months". Both financially and operationally the last six months (six years?) has been a horror show. I hold Sasol since 1994 and haven't added since the 2009 lows, but will be exiting. Upcoming events; 20 February ~ A new Tax-free year starts * I hold ungeared positions. Subscriber to our feed here Subscribe or review us in iTunes Law of large nu

Simon Shares Correction, last week I said Naspers got some R100billion from selling Prosus shares. It was more like R22billion. Apple (NYSE code: AAPL) results knocked it out the park, again. Profits up 11% to US$22.2billion, EPS up 19% to US$4.99 and revenues up 9% to US$91.8billion (US$1billion revenue for each trading day in the quarter.). All above expectations and even iPhone sales grew 8%. Coronavirus. Is this the end of the world, half an end or nothing much? Likely not much but at this point we truthfully don't know. It is spreading and it is lethal, but part of the increase in numbers is due to health officials being on the alert. Also most deaths are aged people and those already susceptible to an infection, how bad is it for healthy people? Do we convincingly know of somebody who got the virus and has been clear for 14 days? Reports are of over 100 being 'cured'. Lots of questions and thus far very few answers. Certainly global markets have been jittery, but no real panic as yet. That said, there

Simon Shares Deutsche Bank has redeemed three of their ETNs. DBCHIN, DBEMER & DBAFRI. As ETNs they would have expired anyway, but that was due to happen next June. Holders of these ETNs last week will receive cash at net asset value (NAV) for the ETNs and it lso means Deutsche Bank is no longer active in the listed passive space on the JSE. Richemont* (JSE code: CFR) trading update was strong, but with one concern - online. Single digit growth is very pedestrian for online even if they had issues with flooding at one of their warehouses. Strong Shoprite* (JSE code: SHP) trading update. Revenue +7%. Rest of the continent is still struggling, home local was lekker. Wednesday saw Naspers (JSE code: NPN) sold 22million (1.4%) or their Prosus (JSE code: PRX) holding at a price of about R1,080. Naspers claims this is due to demand for the shares from investors. Prosus was off some 3% at just over R1,100. The logic here was that many would buy their new Prosus and sell straight away into the market, netting a s

2020 predictions show Every year Marc Ashton, Keith McLachlan and Simon Brown do a predictions show. Three wild and wooly predictions for the markets followed by a call on the Top40 and ZAR for the year ahead. Importantly we start each show with a review of the previous years predictions and you’ll find the 2019 predictions show here. Subscriber to our feed here Subscribe or review us in iTunes JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

FTSE 100 structured product In the last show for 2019 Simon chats to Viv Govender and Gary Booysen from Rand Swiss on their latest structured product. This time it is an auto call over the FTSE100 in US$. We also chat a bit about Brexit and what it actually means; good, bad or ugly. Subscriber to our feed here Subscribe or review us in iTunes JSE – The JSE is a registered trademark of the JSE Limited. JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.