Date published - 2023-11-28

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

In a holiday shortened trading week in the US, stocks closed slightly higher, marking four consecutive weeks of gains, with a positive performance in nine out of eleven sectors. Health Care led the gains, while Communication Services and Technology lagged. Retail sentiment remained positive, as retail investors net bought +$4.8B of cash equities, the highest weekly inflow since April 2022 – although this is usually viewed with caution as a contra-indicator.

There were some notable company stories including drama around the firing and then subsequent return of OpenAI founder, Sam Altman. Nvidia's shares fell 3.4% last week despite robust results, citing potential declines in China sales due to the Biden administration's export controls. For the week, the Dow gained 1.27%, the S&P 500 advanced 1%, and the Nasdaq Composite tracked 0.89% higher.

Brent crude futures slipped again last week marking a fifth consecutive weekly decline, falling below $81 per barrel. Gold prices steadied above $1,990 per ounce ending the week above the $2000 mark, close to a six-month high. US bond yields were steady for the week as the market digested the latest FOMC minutes (see more in Economic section).

This week, we consider our fear and greed risk indicators to inform our carousel trades and include 2 new trade ideas.

Overall as the heading suggests, we see several indicators which has given us reason for some caution and this has informed our trading strategies outlined in the full report. We cut one speculative long and maintain 4 speculative longs in our equity carousel, hedged somewhat by a commodity spec long and we initiate another speculative long in FX this week.

Some SA company highlights last week:

We look at the drivers and results behind moves like MTN (+8.8%), Sibanye (-15%), City Lodge (+6.6%), Growthpoint (+4%), Telkom (+17%), Mr Price(+9.6%).

For more detail on the announcements and highlights, consider a paid subscription for our full report.

Our educational slide this week discusses the recent credit ratings announcement for SA from Standard and Poor's, how the ratings align and what these mean for market and economic variables.

Economic:

The minutes from the Federal Open Market Committee's (FOMC) latest policy meeting revealed unanimous agreement among Federal Reserve officials to “proceed cautiously” with interest rates. They also updated the inflation and growth outlook. We also look at durable goods and sentiment indictors in the US.

In South Africa, the focus was on the release of inflation data for October as well as the SARB’s interest rate decision. South Africa's annual inflation rate rose for the third consecutive month, reaching 5.9%, the highest in five months and surpassing market estimates of 5.5%. Upward pressure on inflation came from various sectors, including food and non-alcoholic beverages which rose almost 9%. However, the annual core inflation, eased to a 14-month low of 4.4% in October, down from 4.5% in the previous month.

This was followed by the SARB’s MPC meeting where the South African Reserve Bank (SARB) unanimously decided to maintain its key repo rate at 8.25%, in line with market expectations. The decision was unanimous in contrast to a split decision at the last meeting. We also look at the SARB's growth and inflation forecasts which have been updated.

For the week ahead:

SA: Money supply and credit, PPI, Trade Balance (rand sensitive), Vehicle Sales

US: PCE Price index (Fed's preferred inflation measure), Personal income and spending, GDP revisions

Global: PMI data from several countries.

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