Date published - 2024-01-23

(This is a very shortened version highlighting excerpts of our full report which is available for our paid subscribers). 

Last week, the US stock market ended on a high note, with significant rallies across major indices on Friday pushing the S&P 500 to close at a new all-time high. The S&P closed the week 1.2% higher but was trumped by the tech heavy NASDAQ which ended the week 2% higher extending its own all-time highs. The Dow Jones lagged with a gain of 0.5% last week.

Notable rises in the tech sector included Nvidia (+8.5%) and AMD (+17.7%). Tesla fell 6.6% after reports that Elon Musk would consider building his Tesla Bot outside the company unless he had control of the firm. The healthcare, energy, and utilities sectors were down for the week.

In the oil market, Brent crude dipped on Friday but was still on track for a weekly gain. The US Energy Information Administration (EIA) and OPEC updated their demand forecasts (details in the full report). Gold remained steady around $2,020 an ounce on Friday but ended the week lower.

This week's trade ideas look at a luxury stock that has bucked the weaker trend and an international FMCG (Consumer Staples - reiterating our defensive tilt)

Educational Slide - Key Themes for 2024

The graphic below outlines some key themes for 2024. Many have been carried over from the latter part of 2023. The list is not meant to be exhaustive but rather to serve as a guide for investors to consider in their scenario planning for the year. It would also be beneficial to consider the impact that pendulum shifts  in market sentiment on these themes may well present risks and opportunities and investors would do well to keep their eye on these matters.

 

Some SA company highlights last week: (details in full report)

Fortress: Fortress +5% is set to eliminate its dual share class structure.

BHP: BHP -3% is halfway through its financial year, reporting strong first-half performance in copper, iron ore, and energy coal.

Motus: Motus (flat) reported on the six months ending December 2023.

Richemont: Richemont +8% surprised the market.

Grindrod: Grindrod's (+1.3%) investment in the Maputo Port Development company has paid off.

Northam: Northam Platinum +3.4% reported a sharp increase in production for the six months ending December 2023.

Economic:

Last week was busy on the macroeconomic front. We look at South Africa's retail trade and mining production data. China released GDP, retail sales, home prices and fixed asset investment data. Japan released inflation data. In Europe, we look at inflation, industrial production and German CPI. In the UK we look at retail sales and inflation with tobacco duties moving the needle. Lastly, in the US, Congress cleared a temporary spending bill and we look at retail sales, sentiment indicators and inflation expectations.

For the week ahead:

SA: CPI for December and SARB MPC (rates expected to hold)

US: GDP Q4, PCE (Fed's preferred inflation measure)

Global: ECB, BOJ, China rates decisions. Flash PMI's,.

Our Market's and Risk view:

Our risk indicators remain in 'Greed' territory and have escalated a little further last week given the extended momentum in equity markets. The VIX index (equity volatility) has eased further (more risk complacency) along with a decline in bond bond volatility while stock price breadth has eased marginally.

We remain cautiously long as signs of a correction are yet to emerge and be confirmed.

(Clients can contact us for more detail on our overall risk matrix). 

Our full report unpacks all of this in more detail as well as their implications for the markets.

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