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The 5 o' Clock Shadow with Schalk Louw · Strictly Business

• 0:00
  You're listening to Strictly Business Podcast with Lindsay Williams.
• 0:05
  JSC has closed its doors for another day, so it's time for the 5 o'clock shadow.
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  And as always on a Wednesday, I speak to Skulk Glow, Portfolio Manager at PSG
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  Wealth Old Oak in Cape Town.
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  Skulk, you're an organised sort of fella compared to me.
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  Look, I mean, compared to me.
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  The big smog.
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  The big smog.
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  You could say to...
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  Anyway, I won't go on with that theme.
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  Sometimes, though, even an organised person like yourself, do you ever get
• 0:35
  overwhelmed with what's going on?
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  Or do you ever say to yourself, I'm being numbed by what's going on,
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  so I don't take it in anymore?
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  And I mean the constant flow of news that comes from areas that shouldn't really
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  concern us.
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  In other words, tweets from certain people.
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  Yeah, certain people.
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  Let's name and shame.
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  Come on.
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  You know what I mean.
• 1:00
  You know what I mean.
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  I know exactly what you mean.
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  No, it's a very, very difficult market.
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  I mean, I just read through, I mean, the S&P 500 opened now.
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  And to get an idea, you know, what's standing out for us.
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  And I think the main thing is actually they're mentioning the optimism and
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  why the optimism.
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  Well, Trump says the war is, quote, Close to over, unquote.
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  Exactly.
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  Exactly right.
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  I don't know what to believe.
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  I mean, I look at this and I think, are we going to get the next tweet later tonight
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  and say,
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  it's not over, we're closing the strait, and we're bombing the hell out of Iran
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  again.
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  I don't know.
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  I think that's the conundrum we're sitting with.
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  Yet, when you look at the S&P 500, we are flirting with that 7,000 mark again.
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  And, you know, approaching new highs.
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  I mean, who would have said?
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  I mean, we're sitting with a very tough market.
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  People, you're talking about something, a possible escalation to a third world war,
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  yet S&P 500 is sitting at close to being all-time highs.
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  Crazy, crazy market.
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  It really is.
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  And I was saying to a commentator, in fact, I'll name him.
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  Name and shame, he said earlier on.
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  I'll name him David Shapiro.
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  I said to him, David.
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  What is it going to take for the market to actually say, you know what, we're in big
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  trouble globally,
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  and it doesn't matter whether you're in Iran, America, or in
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  Myanmar. The point is that the world is in trouble because of oil prices being here
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  and the threat of nuclear war,
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  and there has been a threat of nuclear war.
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  If the wrong people have got the finger on the button and certain people have got
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  their finger on the button that are the wrong people,
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  something could happen.
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  It's a 5% chance.
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  But the point is, what will it take for the market to say, that's it, and I need a
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  10%, 15%, 20%
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  sell-off?
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  I don't want it, but I would have thought when I first started in the markets all
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  those years ago,
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  I would have thought this is exactly the right environment for that sort of
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  sell-off to be upon us.
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  And it's not.
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  I can't understand it.
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  Not to call it a sell-off.
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  I mean, that's what I'm hearing what you're saying.
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  You're not...
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  calling for the market to sell off.
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  It's just when you sit in the market, and there was a few themes over the past,
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  let's call it two to three years.
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  I think we had the theme that, you know, the tariff theme,
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  and that could put a bit of a dampen on some of the growth rate, we could see
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  inflation.
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  I think a massive theme for the past, I would say close to two years,
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  Is individuals calling tops?
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  People saying, well, the market, when I say the market, the S&P 500 is trading at
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  elevated,
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  not just expensive levels.
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  It's elevated levels.
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  It's levels that we've last seen in the 2000s. I mean, this is crazy.
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  And then you get an environment where we've got such a geopolitical.
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  You're talking about a 5% probability.
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  I mean, if we sat here exactly a year ago and we said, what's the probability of
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  this escalating?
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  You would have put 2% on it, and the year before that, it was probably not 1%.
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  This is really mind-boggling to sit in
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  the difficult geopolitically,
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  because we're not just talking about the US, Israel, and Iran.
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  I mean, we're talking about the US, specifically Trump,
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  calling out some of his best trading partners.
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  He's calling NATO names, and NATO is the like of the UK, Germany,
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  those type of countries.
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  You're talking about naming and shaming.
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  I mean, the names it's been calling, he's not making friends from yet.
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  Hey, yet the U.S.
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  market is flirting with 7,000 points.
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  I'm not here to understand it.
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  I'm just here to caution.
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  I think we're not trying to call tops in this market,
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  not trying to call bottoms in the market, but I would just caution anybody listening
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  to this message just to know that this
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  It's not over.
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  It's an actual fact far from over.
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  And one should just know that markets are not trading at cheap levels.
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  You know, when we saw the COVID-19 pandemic happening,
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  we had that period between, let's call it March and June, July-ish, where the market
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  retraced
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  25-30%. It went from being, ah, it's not cheap.
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  But it went to very, very cheap levels.
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  We didn't retrace to cheap levels.
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  This wasn't a correction correction.
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  Anyway, it is what it is.
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  The other thing is that people say, well, the reason the market's doing well at the
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  moment, when I say at the moment, I mean the last three or four days,
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  is because of its earning season in the United States.
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  And the earnings are going to be good.
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  And the bank's earnings are going to be good.
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  And I think we saw one bank coming out in the last 24 hours with, you know, dam
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  busting results.
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  I mean, it's quite extraordinary numbers.
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  And I haven't looked at them, but I would imagine if someone said, what do you think
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  the bank's results are going to be like?
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  I'd say, well, they're going to be good.
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  Why is that?
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  Because the market's been good.
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  The market's been going to record highs, and they've got proprietary trading desks.
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  And also, they've been financing AI structures, AI companies, energy, that
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  sort of thing.
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  And if you look at the broad set of earnings of these banks, are they as
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  broad?
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  As they should be.
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  It's like saying the market was up 5% over the last month.
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  Was it a broad-based rally?
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  I don't know whether it was.
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  I mean, it's that example.
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  You'll know better than me what the banks are up to.
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  But I do think it's all slightly skewed, Skunk.
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  I don't think there's, I don't think it's a reality.
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  I don't think the word reality comes together when it comes to Main Street and
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  Wall Street is what I'm saying.
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  No, you're 100% right.
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  I mean...
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  Yeah, it's just mind-boggling.
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  We don't need to spend more time on this.
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  Yes, the banks brought out stunning results.
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  I mean, wow.
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  What results currently used banks, people that missed it.
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  Morgan Stanley, yeah, a whopper, absolute whopper.
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  We had Bank of America also coming out.
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  rise in first quarter profits.
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  That's also, they were looking quite upbeat.
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  So in general, that is looking good.
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  I looked at the latest data that I received from, that was once the Reuters
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  S&P 500 update.
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  What they do is, as the companies report, they run a dashboard to just show, is it a
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  beat?
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  Is it sort of in line?
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  Or was it a miss?
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  both in earnings and revenue.
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  And then it runs it until it runs through all 500 companies.
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  And it's not a lot of companies that's reported.
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  It's really been, I think, something like 20 or 25 companies.
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  Not a lot.
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  We just started the earnings season.
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  But those companies that reported, you know, that actually 80%
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  of them beat forecast.
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  So one can argue that most probably a lot of...
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  economists, or let's call it analysts, reduced their forecast for the year as we
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  went into this,
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  let's call it, geopolitical unrest.
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  We know before the whole Iran war, we had Venezuela.
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  We had the worries about Greenland.
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  So I think a lot of analysts might have looked at this and said, well, maybe I
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  should just reduce my forecast.
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  But still, 80% beat thus far.
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  This is going to be the interesting one.
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  Let's get through this reporting season.
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  Just for interest sake, I had a look at it the other day.
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  April month, for interest sake, is the best month for S&P 500, usually,
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  historically.
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  Interesting.
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  Hmm, April.
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  And September's the worst month, and April is the best month.
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  That's very interesting, isn't it?
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  Because normally you think October's the worst month, and I don't know what month.
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  I would have thought January or December would be the best month for the S&P.
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  But anyway, that's an interesting one.
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  That's one for the I've learned it from Skulk Notebook, if you like.
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  No, 65%.
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  65% of the time we see positive months for the S&P 500.
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  But more specifically, the best month on average usually is April.
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  And that's I would say on the back,
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  usually April we get the first quarter reportings.
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  And usually it's that's it.
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  So it's the first quarter reporting.
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  And I think this year is going to be no different.
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  So, yes, let's get through this reporting season.
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  Let's see what Trump does next.
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  If the war, as you mentioned, is close to being over and they get it over the line,
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  the straight stay is open.
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  Let's see where oil evens out because we know that inflation is still the biggest
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  worry.
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  We had the IMF brought out the economic outlook yesterday,
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  and they were sort of muted a little bit.
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  Not as optimistic as they've been last year.
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  used to the the world got it come off somewhat.
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  But that didn't dampen the optimism in markets.
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  Markets are going upwards.
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  Let's talk about markets now.
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  Dollar round is 1637.
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  Goodness me, that was above 17.
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  Not that long ago, Skunk, with the dollar being stronger.
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  Now the dollar has gone weaker again because everyone thinks the war is going
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  to be over.
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  So you don't buy the dollar as a safe haven asset.
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  What a world.
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  2222 is the British pound against the round.
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  The euro round is 1932.
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  EUR$1.1820.
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  The gold price is 4,808. That's not bad.
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  After eight minutes of talking, we haven't mentioned the gold price until now.
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  4,808, down two-thirds of a percent.
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  The platinum price is up one and a third percent to 21.28.
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  And palladium is down slightly, down half a percent to 15.83.
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  It's very, very quiet today.
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  Even markets need to take a breather sometimes.
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  What else have we got here?
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  The South African 10-year bond yield, interesting one, 8.40%.
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  Stronger, of course, the yield falling since the round has started strengthening
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  again.
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  The U.S.
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  10-year yield is 4.28%.
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  Still looks vulnerable to me.
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  In other words, the yield rising, but that's me not believing Trump.
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  The S&P 500 futures, you mentioned the spot price floating with 7,000.
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  The futures price, the June price.
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  7,027, which is up 0.3% on the day.
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  And going back to commodities, I'm doing it out of order today.
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  Crude oil also steadying after a big sell-off in the last couple of days.
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  Brent crude oil, $95.20, which is up 0.4%.
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  And West Texas, $92.45, up 1.25%.
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  Bitcoin has had a really good few days.
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  Currently down, though, 1.5%.
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  to 74,160.
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  Earnings season in the US, what's the earnings season been like in South Africa
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  since we last spoke, Skulk?
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  Anything that really stood out for you?
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  I can say nothing because there was no companies that reported today.
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  Exactly, good.
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  Lovely, I like that.
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  What about the performers on the JSC?
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  What's been up and down?
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  Because again, this is a day that we don't often see, the JSC Top 40 Index.
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  Down by 0.3%.
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  And when I say we don't see that often, it's just because the increment of 0.3% is
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  unusual.
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  It's usually much higher or much lower than that.
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  Yeah.
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  Yeah, it was a funny day.
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  Because originally when I started the day, when the market opened,
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  it was quite optimistic and bullish.
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  And it was just as the European markets opened up.
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  or the UK market opened up,
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  it did lose somewhat of its steam and ended the day in more negative territory.
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  But in general, I thought it was quite a stable day, a really stable day.
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  Okay, I've got AlphaMin on the upside of 4.85%, Harmony up 2.8%, Discovery
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  2.2% better, Bytes up 2.4%, Sasol up 1.8%.
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  On the downside, the JSC itself, why is the JSC down 7%, Skulk?
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  Think about that before I go on to Tungela down 4.1%, Quilter down
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  3.4%, Anglo Gold down 2.8%,
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  and Goldfields are 2.75%.
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  Loser.
• 14:46
  JSE, XDIV, what?
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  yeah so all of them except uh um goldfields and angler gold all of them
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  ex-dev scenario and i think on on the
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  on the upside of top top performers i i don't think you mentioned shop right shop
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  right was in the top five as well yeah that was that was up
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  that was up 2.2 percent for today okay
• 15:05
  the other thing uh before we go is um i need to ask you if you uh joined the
• 15:13
  crystal challenge the david shapiro's crystal challenge you know the stock
• 15:19
  picking competition that he does every year.
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  Did you join it this year?
• 15:23
  Every year.
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  Last year I had FOMO that I literally just missed out.
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  And this year I sort of went, like, I need to remember, I need to remember.
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  And you and I had a conversation about the crystal.
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  I think you said you had one or two companies.
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  You've got two companies in.
• 15:37
  Yeah.
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  You joined it.
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  I entered it.
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  I just wondered if you entered it as well.
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  You didn't tell me which.
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  I know.
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  I know you didn't.
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  And you're not going to tell us over.
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  You're not going to tell us either.
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  But when you mentioned that, I'm like, oh, no.
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  I missed it again.
• 15:55
  But, yeah, so, yeah, unfortunately missed it again.
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  But we'll set a reminder for next year.
• 16:00
  Yes, exactly.
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  I'm going to set a reminder as well for my application to running the London
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  Marathon.
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  Skulk,
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  I am out of 490 people who are in the challenge.
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  Why are you laughing?
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  You're laughing at me now, aren't you?
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  Guess where I am.
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  My goal was to be in the top 10 or the bottom 10.
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  I don't want to be in the middle with everybody else.
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  I think you had quite a great feel for the market this year.
• 16:33
  So I'm going to be guessing you're going to be closer to that top 10, if not in the
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  top 10,
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  than at the bottom because you had quite a...
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  quite a few good calls out of 490 companies i'm number 386
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  that's companies people so for all the listeners out there do what lindsey said
• 16:56
  don't do what lindsey do
• 16:58
  skulk low is uh we won't mention golf skulk low is a portfolio manager at psg
• 17:04
  wealth old
• 17:06
  oak in cape town and that was the five o'clock shadow the views and opinions
• 17:10
  expressed in these podcast are those of Lindsay Williams.
• 17:12
  and various contributors and do not reflect the policy, position, or opinion
• 17:17
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• 17:19
  employer, or company associated with StrictlyBusinessPodcast.com.
• 17:22
  Assumptions made on the analyses are not reflective of the position of any other
• 17:29
  entity other than the speaker or the author.
• 17:31
  And since we are critically thinking human beings, these views are always subject to
• 17:35
  change, revision,
• 17:37
  and rethinking at any time.
• 17:38
  Please do not hold us to them.
• 17:39
  in perpetuity.