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The 5 o' Clock Shadow with David Shapiro and Viv Govender · Strictly Business

• 0:00
  You're listening to Strictly Business Podcast with Lindsay Williams.
• 0:05
  The JEC has closed its doors, well almost closed its doors for another day, so it's
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  time for the 5 o'clock shadow.
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  And as always on a Thursday I speak to Viv Govender from the award-winning RAND Swiss
• 0:17
  in Johannesburg and to the
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  award-winning David Shapiro from Sassfin Securities who is in Manhattan.
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  I've already spoken to David about the war on Monday, Viv, so I want to start with
• 0:26
  you.
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  You've probably got some very strong views on it.
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  How is it looking at the moment from your perspective, from all perspectives as
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  well, morally and markets-wise?
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  There's no morality in the war.
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  There are no, like, I mean, Iran is not a good player.
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  I mean, forget about what they do with other countries, what they do to their own
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  people.
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  I mean, just a couple of weeks, a month ago in Saudi, they killed, you know, some
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  people say 40,000, some people say less,
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  but it was thousands of people protesting against it.
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  And why were the people protesting?
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  They were not protesting for some kind of weird thing, protesting not to cover their
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  hair if they're a woman.
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  They're protesting not to have this strict religious police team whatever they do.
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  And if you listen to some of the stuff that they do to women in prison, and I can
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  be frank about it,
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  barbaric beliefs, you know what I mean?
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  About, you know, if a woman is convicted of a crime that is a death sentence,
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  they do things to make sure she doesn't go to heaven, you know what I mean?
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  And that is literally medieval, barbaric.
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  That being said, in wars, you know, it never goes according to plan.
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  Trump has been quite lucky recently with Venezuela with the previous 12-day war
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  against Iran.
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  I think he had a bit of hubris built up and he thought he could do something like
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  this again without too much of a pullback.
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  I think Iran surprised him in terms of just what it's done in response.
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  I think it surprised a lot of people.
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  I mean, it's attacked Azerbaijan, it's attacked Cyprus, forgetting about the Gulf
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  states.
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  And the danger here is that the longer this goes on, the more the world is in
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  danger because
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  of the Straits of Hormuz and the amount of oil that goes through that.
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  I mean, we talk about 20%, I think, of the oil in the world, natural gas, travels
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  through this region.
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  And we've come to a point right now where the storage facilities in the various Gulf
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  states have been building up.
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  If it carries on, I think, more than 18 days, these facilities or these storage
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  facilities are maximized, are maxed out.
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  That means even if they basically restart production or transport, we're going to
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  lose that production, you know what I mean?
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  Permanently.
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  Or at least until they basically over time can build it up again.
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  Places like India, places like China, much of Asia, really under pressure.
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  And the Chinese, as we know, are crucial to the world's manufacturing.
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  So yeah, this is going to be really impactful if it goes on more than at the
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  end of this month, basically.
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  And we'll probably see our prices in excess of $100 a barrel.
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  At which point in time, that's probably close to 2%.
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  drop in GDP growth because of that.
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  If it stays there for a while though, I think it's all to do with the time period
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  that it stays there.
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  It can spike to 100 and not have any impact.
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  But if it stays between 90 and 100, which is what I've read, and if it's true, it's
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  not very good for GDP.
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  They didn't say two big points off GDP.
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  They talked about 0.8%.
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  But anyway, whatever it is, it's not going to be good.
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  Yeah, I think 0.8% at 80.
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  Yeah, if it goes to 100, I think it's 2%.
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  Yeah, if it stays at 100, 2%.
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  David, there was a chap called Richard Dalton who is a very crusty,
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  quite rigid and strict looking ex-UK ambassador to Iran.
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  And he was interviewed on CNN this morning.
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  He said you can't trust anything that America does or says anymore.
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  The lies that come out of Donald Trump's mouth are dangerous.
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  So don't trust anything that comes out of that country or that man.
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  And he just essentially,
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  he said that the statement Trump made that if they hadn't taken this action, within
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  two weeks,
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  Iran would have had a nuclear bomb is complete nonsense and is very dangerous
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  talk.
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  Now, David, do you think Israel or America,
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  I've given you the nasty side of America as a preamble to this question.
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  Do you think it was Israel or America that started this?
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  because that...
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  intelligence they had to drop the first bomb on the supreme leader almost lends
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  itself to israel doesn't it
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  i i think that um they had this very narrow window which gave them this
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  opportunity to
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  take out uh the
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  iranian leadership and who pressed the button who said yes go ahead i'm not sure
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  you know but
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  it would never have been done without whether it was prompted by israel or not
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  Yes.
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  It wouldn't have been done without America.
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  It could have been America.
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  America, Trump is now coming and saying that he probably, he pushed Israel. You
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  know,
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  he's saying it wasn't an Israeli initiative.
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  So we'll never, as no one will ever know the truth.
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  We won't ever get to the bottom of it.
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  It's interesting in here, in the States, I go through the news all the time.
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  It kind of fades out.
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  I think people are just moving ahead.
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  As odd as it sounds, he comes out.
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  He does have a, you know, every day they interview the president.
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  He gives an update.
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  But I think if you look at markets today, there's hardly any kind of...
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  of response.
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  Lindsay, we discussed this on Monday, and I think the biggest subject here is
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  affordability.
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  And that's the midterms are going to be fought around price increases,
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  and right across the states.
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  So I mean, if you go to most of the Americans, I don't even think they're
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  involved in what's happening.
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  I walk through the streets here, and There's no protest, there's no response,
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  there's no reaction,
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  there's no talk of what is happening.
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  I think what is more important is what they can afford.
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  And I think Trump's underbelly, his soft underbelly, is going to be, as
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  Viv mentioned, is going to be the oil price or gasoline prices.
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  If they start to go up and start to be felt by consumers again who are already
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  tight.
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  I think that's going to be his undoing in this whole issue.
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  He's got to bring this to an end as fast as possible.
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  If not bring to an end, ensure that the safety of tankers going through the
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  straits is assured.
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  That's where it all kind of pivots.
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  For the meantime, if I turn on the news now,
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  I'm going to hear about the weather three times every second minute, about the
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  weather, about other things.
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  It's so odd that it's hardly headlines.
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  Yeah, I noticed on CNN they broke from the news about the war and went to the story
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  of a
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  woman who allegedly murdered her husband in
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  Utah and all the various text messages between her and her boyfriend and how
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  they're going to run off and
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  have a lovely life together.
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  They should have phoned me, I could have told them.
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  Maybe to rein back a bit.
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  But you know what I mean?
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  The point you make is quite valid now.
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  It's not quite as edgy as it was, the war coverage, that is.
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  David, I'll stay with you.
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  Viv, sorry, I'm going to stay with David because we need to cover a couple of
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  things on the JSC.
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  There's been trading updates, I think, from Sanlam and Stardio.
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  David, you might have had a quick glance at those.
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  But it was Impala Platinum this morning.
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  Was it as good as Valterra, do you think?
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  I mean, the share price has been punished today because of the metal price.
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  not because of the results, I think, but were the results as glamorous as
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  Valterra's?
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  Impala, that is.
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  You know, I can't really give you an answer because what's happened is the
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  increase in the
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  underlying metal has kind of obfuscated or kind of masked, you know,
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  any kind of issues with production and efficiencies within the system.
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  I'm not sure.
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  I must admit I've...
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  I've still got to go through them.
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  Remember, we're seven hours behind.
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  And so my day is only starting now.
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  Or it's very early in the day.
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  So I've still got the results to go through.
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  But, Lindsay, you know, the point I want to make,
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  and we were talking before we came on about trading and trading on the markets.
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  And I don't know whether I brought this up on Monday,
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  but what's concerning me is how in these times of stress, Everyone's run for the
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  dollar.
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  And the dollar today against the rand is 16.50, it's against 1.16.
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  Remember, we were 1.19 in the euro against the euro, we won 33 against the pound, we
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  were much higher than that.
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  And what's intrigued me is how quickly people have abandoned the so-called safe
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  havens and have run to the dollar.
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  And my view is that in real times of stress,
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  People do go back to the United States.
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  They go back to the comfort of their granny or their parents, whatever it is.
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  So, you know, like...
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  screaming children.
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  They run for their money.
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  And it's odd to see where the rand, you know, where this is now.
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  And why I say that is if you look at the, you know, JSC stocks, I mean, there's a
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  big,
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  big sell-off in the miners.
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  And that will include, I think, today.
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  I haven't gone through it in great detail at the moment.
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  Let me see.
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  You know, there has been quite a big sell-off in all the resource stocks,
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  gold shares and platinum shares and that.
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  And that's odd.
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  They had a horrible day on Tuesday as well.
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  Yeah, yeah.
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  The JSU was down nearly 6%, an awful day.
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  But anyway, David, the gas prices in the United States,
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  you were talking about that at the beginning of the year when Trump was
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  saying, you know,
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  it's 180 a gallon in Iowa.
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  That was in the wholesale price.
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  It was never 180 a gallon in Iowa, by the way.
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  It's another one of his lies.
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  Yeah.
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  But in the wholesale market, the futures market,
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  $1.67 at the beginning of the year, January the
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  5th. And we're currently trading live at $2.62.
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  So work out the percentage.
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  Maybe one of you two clever chaps could do so.
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  From $1.70 to $2.60, it's almost a dollar a gallon higher.
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  So it's about 50% higher, isn't it?
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  Something like that.
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  and that's the wholesale price, and that'll be passed on once the stocks have
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  been drawn down at petrol stations, etc.
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  That'll be passed on to the consumer, and that's not good for Trump.
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  Do you think it's as simple as that, Viv?
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  Do you think it's as simple as somebody saying, well, I don't know who to vote
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  for,
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  but I don't want to vote for the person that told me there'd be cheap gas prices?
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  Yes, I mean, as I think it was, Bucklington says the economy is cheaper,
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  and nothing's going to affect the U.S.
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  voter as much as the economy.
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  And I think that's one of the reasons that we actually have not seen the reaction,
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  like David mentioned, in the U.S.
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  market.
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  I mean, basically, yes, we've had a bit of a volatility, but not as much as you would
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  think would be happening because of this thing.
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  And the reason is that they think that Trump cannot afford to go into the
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  midterms with, you know, much higher, you know, inflation and so on.
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  So he has to come to some conclusion to this war earlier than that.
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  And I think that's what we've seen from, I mean, I saw some traders talking about it
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  in the last couple of days, and they were saying basically
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  The pain for Trump is just too great for the midterms.
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  He has to end this quickly.
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  And he also believes that the U.S.
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  military has been incredibly successful with their attacks, etc.
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  And the belief is that the Iranians are going to buckle.
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  But, I mean, the problem is that why would they?
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  Yes, you can understand if their leadership is under threat, they're going
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  to die, they might want to buckle.
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  But, you know, up to this point, that hasn't saved them.
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  In the 12-day war, they haven't gotten any kind of benefit from, you know.
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  not going all out in that particular time.
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  In fact, you could argue that had they been more aggressive in their responses
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  back then, they'd be in a better position right now.
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  I think that is the danger.
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  It's the fact that the whole, I think Tucker Carlson was talking about this,
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  the whole strategy in the US right now relies on the restraint of Iran.
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  You know what I mean?
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  If they did not show restraint, this thing could really turn badly.
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  And right now they have not shown restraint.
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  Like I said, they've attacked Cyprus.
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  There's discussions that they've attacked Azerbaijan today.
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  they've attacked the Gulf states, which we're not expected to do.
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  And if they start attacking, like, you know, things like the desalination plants
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  in the Gulf states, it could have a very,
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  very big long-term effect on those places.
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  Okay, let's get away from that now.
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  And let's have our regular and rather haphazard sometimes AI feature,
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  which is brought to you by the obsessive and brilliant brain of Viv Govender this
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  week.
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  And it's something I sent both of you.
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  And it's the...
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  It's DeepSeek, Viv.
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  The launch, the rollout of V4 DeepSeek or something like that.
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  Was it as significant as this chat writing on the social media network implied?
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  Oh, it is.
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  Look, I mean, like I mentioned in my AI thing I talked to you guys about a while
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  back, the Chinese are producing basically a very,
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  almost a dumping strategy around AI.
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  They effectively are making AI and giving it out for free.
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  And that is an incredibly, you know, strange strategy.
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  if it wasn't backed by a government, you know what I mean?
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  So these companies are basically producing AI for these models, probably costing not
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  the billions that the US models are costing,
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  but probably tens if not hundreds of millions.
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  DeepSeek famously said it also costs 6 million, but people say it costs more than
• 14:00
  100 million.
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  We take all the factors into play.
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  And then they give it away.
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  And that is the thing.
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  If they can keep a model that's close to what the US best models are like, and it's
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  free,
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  it totally undercuts the business plans of places like OpenAI or...
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  you know, anthropic, etc.
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  Even a Gemini may be coming to play.
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  And it would make all those billions and tens of billions that have been spent in
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  the U.S., you know, data center and training and so on, almost like, you know,
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  loss making.
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  Because how do you compete with free?
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  Especially free is almost as good as what you're making.
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  That's interesting.
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  David's ears have pricked up, David.
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  You're looking at your screen now and being tempted to press the sell button on
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  certain stocks,
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  having heard what Viv said and having read what I sent you.
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  It hasn't responded.
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  And that's...
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  I read the article and I thought there would be some kind of response, but we
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  haven't got that response.
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  I think markets are holding up pretty well here.
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  I'm trying to look now as we just opened.
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  Oh no, we've been open for about a half an hour.
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  This is a little bit of a sell-off in tech stocks, but Microsoft's up, Amazon's up,
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  Broadcom, various,
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  NVIDIA down slightly, but nothing of a major sell-off.
• 15:15
  It's a little weaker today, but certainly I thought there would be much more of a
• 15:20
  reaction.
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  And it just shows you that no one's really prepared to get out of the market at the
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  moment,
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  believing that this will come to a swift conclusion.
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  So, and I looked at Europe.
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  Europe recovered very nicely yesterday,
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  and still holding reasonably well today without any major sell-offs.
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  I think the sell-off that we have seen has come through.
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  as I say, emerging markets.
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  That's where we've seen the weakness, Lindsay, and particularly...
• 15:51
  That's the strong dollar, of course.
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  That's the strong dollar.
• 15:53
  Yeah, I mean, the whole EM trade has been based on a weaker dollar,
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  the dollar going into a long-term downtrend.
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  And these little blips, it's a bit of safe haven buying,
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  being a bit of inflation linked or potential inflation linked buying in the
• 16:10
  US dollar.
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  But again, you know, it's a moment in time.
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  and I'm as surprised as you are, David, about the resilience of the tech stocks.
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  I mean, it's almost as though they're war and recession-proof, these things.
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  But we'll see.
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  Viv is shaking his head there.
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  I can't see him, but I know he is shaking his head there.
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  Let me give you some markets.
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  You know, Lindsay, despite that, I would have preferred a big sell-off and said,
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  okay, let's come in again.
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  At the moment, I'm hesitant.
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  You know, and I'm a little reluctant to expose myself.
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  I don't know what the trading books look like, whether traders are going in and out
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  or what they're doing in this kind of market.
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  But I think we're all confused.
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  And it all comes down to how long this lasts and what happens from here.
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  My worry is, that's why I don't want to commit myself in any big way,
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  is that if it keeps stretching itself and, you know, viv...
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  I think the tactics of the Iranians, and as Viv has exposed, is to go and say, OK,
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  you know, all the allies,
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  all those vulnerable points that are not protected by domes, you know,
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  salination ponds, hotels, whatever it is, facilities, so on,
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  tankers that are harboured in harbour or so on, all of those kind of things are a
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  bit of a worry.
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  That's their tactic.
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  And that's causing disruption.
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  You know, it's causing people to get very, very nervous.
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  And you can see how many flights in Dubai have been cancelled, 23,000.
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  It means people are stuck there.
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  That's kind of a tactic as well.
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  It's scary.
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  And I think that's where the Azerbaijan story this morning, okay, it became
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  breaking news,
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  headline news for a little while, but it's significant.
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  There was some damage to the terminal, but obviously the Iranians, if they did it,
• 18:03
  they denied the responsibility.
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  But if it was them, which it probably was, who else could it be?
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  been It's a tactic to say, well, if you can't fly from
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  Dubai and you can't fly from Doha, you're going to hotfoot it maybe to Azerbaijan.
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  So we'll stop you doing that by bombing it.
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  And maybe other airports will be targeted as well.
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  It is quite a difficult situation.
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  Should it continue?
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  Right.
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  Markets now.
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  Dollar round.
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  16.54.
• 18:30
  And that's a 1% gain for the US dollar.
• 18:32
  A British pound against the round is 22.07.
• 18:37
  1% as well there for the pound up against the rand.
• 18:40
  The euro up against the rand by not much, actually.
• 18:43
  Actually, 0.8%.
• 18:44
  It's not bad.
• 18:45
  19.19.
• 18:47
  Euro dollar is, where is that?
• 18:51
  One's just above one.
• 18:52
  It's about 1.16 on the nose, actually.
• 18:55
  Gold price, 5,099.
• 18:57
  A relatively quiet day.
• 18:58
  If it had been down $36 a couple of years ago, there would have been headlines.
• 19:02
  But $36 down on a day?
• 19:04
  Nothing at all.
• 19:05
  Very quiet platinum down 10 or about half a percent.
• 19:09
  And palladium down 11 and a third percent to $16.58 per ounce.
• 19:16
  Now then, the all-important oil price took a breather yesterday, but now it's got its
• 19:21
  breath back.
• 19:23
  It's taking a run to the upside because Brent crude oil is just below $84 a
• 19:29
  barrel, up over 3%.
• 19:31
  And West Texas crude is up 4 and a third percent.
• 19:33
  And the price there, $77.90.
• 19:37
  Yeah, Mr.
• 19:38
  Trump won't like that one.
• 19:38
  The copper price, $5.76.
• 19:40
  It's taking a real tumble in the last two days.
• 19:43
  It was $6.10 and now $5.75.
• 19:47
  Okay, the Bitcoin price has been very active and still above $72,000.
• 19:53
  $72,100 and a bit.
• 19:56
  It's down 1.75%, but it's had a terrific week.
• 19:59
  The US 10-year bond yield having been down below 4% is now 4.132% to be precise.
• 20:06
  S&P 500 futures with the real market half an hour in 68.72 which
• 20:13
  is unchanged on the day and what else have we got here the last one is the South
• 20:18
  African 10-year
• 20:20
  8.24%
• 20:21
  so quite a bit of selling obviously linked to the weakness in the South African round
• 20:28
  which is because of the strength of
• 20:30
  the US dollar.
• 20:32
  David, any movers?
• 20:34
  Have you had a chance to have a look at any movers on the JSC today?
• 20:36
  I'll get mine in a second.
• 20:38
  Stadia's numbers are good.
• 20:40
  And it just shows you that people have still been prepared to go and pay for
• 20:43
  education.
• 20:45
  They're up about 8%, which is a good move.
• 20:47
  The one that's been creeping up is Mondi, and I've been watching it.
• 20:51
  It's also a feature today.
• 20:53
  But Lindsay, when I look at Mondi and I say, okay, and I go back on a five-year
• 20:59
  chart,
• 21:01
  today's gains or the gains that we see don't even register a blip on their
• 21:05
  recovery.
• 21:05
  This is a company that's been absolutely annihilated over the last few years.
• 21:10
  And then Woolies, some of the retailers are staging some kind of comeback today.
• 21:17
  Woolies, what's it, City Lodge, Spur, and so on.
• 21:22
  Just looking at some of the other stocks.
• 21:24
  But on the downside, it's the miners taking a bit of a knock.
• 21:30
  I've got Tungela up 8.3%. Sassel, 4.5% higher.
• 21:35
  Mondi, as you said, 3.5% to the good.
• 21:38
  and Woolies up 3.4%.
• 21:41
  Downside, Impala Platinum, 6.3%, Wicca, Sunland 5.6%, Valterra 5.3%, Northam
• 21:48
  3.2%, and Nedcore down 3.5%.
• 21:53
  Before you'll get...
• 21:55
  Just, if you can, while I speak to Viv, David, just get a couple of the indices
• 22:02
  closing.
• 22:04
  And Viv, I noticed when I asked you about the war, You were less...
• 22:08
  optimistic than most people I've spoken to about the idea that it might be over with
• 22:15
  quickly and
• 22:17
  with no real consequences.
• 22:17
  And I say that rather glibly.
• 22:20
  So forgive me for that.
• 22:21
  But you know what I mean.
• 22:23
  Do I sense the mood correctly?
• 22:26
  Yes, you do.
• 22:27
  Look, I think the reason is that from the Iranian point of view, what's the upside
• 22:32
  of stopping?
• 22:34
  Because if we do stop right now, it'll just be another attack in a couple of
• 22:37
  months' time or a year's time or something.
• 22:39
  And you know that is the the issue here but the one thing i want to mention before
• 22:41
  we
• 22:41
  finish off here i don't know if you talked about kaga island yet kaga island
• 22:44
  is a very important hub for the iranians thus far it's been not been like you know
• 22:51
  targeted uh it's like i think 90
• 22:53
  percent of their oil economy goes through that thing uh and
• 22:55
  if it is targeted i think that would mark a new state for the war i think the us is
• 23:02
  holding back from doing anything there because they think it
• 23:04
  that that might be the one thing that the Iranians think is still, you know, um,
• 23:06
  what China's saying if you know in a deal because nothing does go then the Iranian
• 23:11
  economy is pretty much done
• 23:13
  I don't think they can rebuild it themselves they it would basically destroy
• 23:18
  their own economy and it would be almost like you know a game over for them as a
• 23:20
  functioning economy so I think that is the one thing that the US still has as a trump
• 23:25
  card for them to get the pun but I think other than
• 23:27
  that I mean they killed the the leader they killed I think like a couple people
• 23:29
  down
• 23:29
  the line if you're like you know making decisions in Iran at the moment Basically,
• 23:36
  if you do make a deal, what's your likelihood of surviving the next year?
• 23:38
  You know what I mean?
• 23:43
  Thanks for that.
• 23:44
  David, wrap it up, please, with a few of the indices.
• 23:47
  You mentioned resources earlier on, having dragged down the JSC. Is that the main
• 23:52
  mover?
• 23:54
  Resource index down about just over 2%, 2.2%, with most of the damage.
• 24:02
  In fact, it's quite widespread across all.
• 24:05
  You know, the diversified miners as well as gold and platinum shares and that the
• 24:10
  overall index
• 24:12
  was down 0.78 percent, still just on 120,000, still in record territory.
• 24:17
  But also we saw a general sell off in consumers and financials as well.
• 24:23
  No outstanding features.
• 24:24
  I think you've covered, you know, those that that have led the market up.
• 24:29
  But overall, a weekday, big volumes.
• 24:31
  The one thing we are seeing.
• 24:33
  is that volumes remain pretty high.
• 24:34
  You saw it in the JSE's numbers results.
• 24:38
  So a value trader today, I think over $30 billion.
• 24:41
  But once again, it's in the gold shares, Angler Gold, Goldfields, Impala, Valtira,
• 24:48
  platinum shares as well.
• 24:50
  First-ranked in the high, also quite a bit of trade there.
• 24:51
  Their results came out today.
• 24:52
  And always NASPERS because it buys back at shares.
• 24:55
  So always amongst that as well.
• 24:58
  Thank you very much, David Shapiro.
• 25:00
  from SAS for insecurities.
• 25:02
  He's been speaking to us from Manhattan.
• 25:04
  Viv Govendor is from around Swiss in Johannesburg.
• 25:07
  And unfortunately, David, I haven't got time to talk about Arsenal.
• 25:10
  And thank goodness for that.
• 25:12
  That was the five o'clock shadow.
• 25:15
  The views and opinions expressed in these podcasts are those of Lindsay Williams and
• 25:22
  various contributors and do not reflect the policy,
• 25:24
  position or opinion of any other agency, organisation,
• 25:26
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