Offshore
/ US existing home sales fell 9.7% the lowest level since October 2010. US jobless claims dropped to 1.48m
/ Wirecard into bankruptcy. EY never checked the bank account of the missing cash for 3 years.
/ HS Markit’s Eurozone PMI Composite Output Index rose to 47.5 in June,
/ Microsoft permanently shutting retail stores
/ Nike reports unexpected loss as sales tumble 38%
/ Boeing 737 MAX certification flight tests to begin today
Local
/ Supplementary budget & GDP tomorrow
/ Capital raises; City Lodge, Sun International, Pepkor, Harmony
/ Stor-Age* results
/ Telkom results, dividend cancelled to fund spectrum
/ Intu is not able to make a deal with lenders. Stock suspended on the JSE
/ Solid JSE trading update as volumes soared during the period
The JSE is currently awash with capital raising. Some just because it makes sense to make their balance sheet stronger, others because they're in real trouble if they don't. The problem is that issuing new shares gives a permanent right to profits, loans are better, but right now bankers are not lending with abandon.
Some have been via a quick bookbuild
Many others will be via a traditional rights issue;
This raises a real issue for many shareholders, do you send cash and follow your rights? If you don't you'll be severely diluted, especially with the bigger issues. So you need to decide which you'll follow, but also keep in mind that some of these raising capital may well be back again in the months ahead for more money, and then maybe even again. If you're worried about repeated capital raises, then exiting early may be better than not.
I would also add that we will most certainly see a lot more capital raises coming, heck the property stocks haven't even started aside from Stor-Age. So the requests for money will keep on coming and at the end of the day, it's going to be a lot of money requested.
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/ Wirecard and the missing $2.1bn
/ Hertz decides NOT to issue shares while under chapter 11
/ Reports on Sunday that British Finance Minister Sunak plans emergency cut in value-added tax
/ Index rebalancing in the Russell indices sees nearly half of the stocks being promoted to the Russell 1000 from the Russell 2000 will be healthcare names.
/ Apple will close 11 stores across Florida (2), North Carolina (2), South Carolina (2) and Arizona (6). This after re-opening 100 in May.
/ Fed Chair Jerome Powell warned millions of people will likely still be unemployed even as the economy is on the path of recovery.
/ The Federal Reserve started buying corporate bonds Tuesday as part of a $250 billion program funded by the CARES Act
Local
/ New level 3.something opens leisure and beauty (to a degree)
/ Marriott Group closing three hotels (Mount Grace, Protea Hotel by Marriott Hazyview and Protea Hotel by Marriott Durban Edward). The hotels are owned by Hospitality Property Fund.
/ Sasol update, lots of news but not on LCCP partial sale or rights issue.
/ Capital raising galore (COH, TCP, TFG, SUI, SOL, MRP)
/ Zero based national budget on Wednesday
/ New kinda wonder drug / Aspen Ascendis (latter Tanzania only)
/ Discovery putting aside R3.3billion for Covid-19 claims.
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Ascendis Healths subsidiary Remedica manufactures Dexamethasone which apparently helps combat severe cases and is being approved by the NHS. pic.twitter.com/XUw9VPHwdg
— Herenya Capital Advisors (@HerenyaCapital) June 17, 2020
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.
Offshore
/ China's PPI down 3.7% in May and factory output rises less than expected, retail sales continued to contract in May.
/ Fed kept interest rates flat and cautioned they expect conditions to remain tough into 2022. GDP 5% in 2021 and unemployment 5.5% in 2022
o S&P500 dropped -4.8% last week but remains +8.1% this month,
o Nasdaq dropped -2.3% last week but remains +6.4% this month,
o FTSE 100 dropped -5.9% last week but remains +5.3% this month,
o JSE Top 40 Index dropped -1.9% last week but remains +5.8% this month,
/ We’re starting to see the second Covid-19 wave in both the USA and China and this spooked markets. Detroit, Michigan is seeing new all-time case highs
/ Mnuchin says ‘we can’t shut down the economy again’
/ UK economy contracted by 20.4% in April, the largest monthly fall on record
/ Justeat-takeaway buys GrubHub
Local
/ The Rand hit 16.33 overnight on Wednesday but then came under serious pressure at 17.20 on Friday.
/ Solid Multichoice results and first dividend payment as sports starts to resume.
/ Tsogo Sun Gaming results show debt of over R11billion. Casino industry wants to re-open ASAP
/ Solid Sygnia results
/ Sasol Draws Multiple Bids for Stake in U.S. Chemical Site
/ Hyprop update shows good recovery after the hard lockdown of April. Still opens below 100%, but looking better
Hyde Park Corner 67%
Rosebank Mall 76%
Canal Walk 85%
The Glen 85%
Woodlands Mall 85%
Clearwater Mall 88%
Capegate 89%
Somerset Mall 92%
Atterbury Value Mart 97%
Foot count at Hyprop’s malls:
March 2020 Down 24%
April 2020 Down 71%
May 2020 Down 39%
June 2020 (seven days) Down 24%
/ JSE Index balancing this Friday, Redefine is exiting both the Top40 and Fini15 to be replaced by Exxaro and Quilter respectively.
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British Airways is auctioning off art worth millions as pandemic weighs on earnings
US unemployment came in at 13.3% (from 14.7% in April) as the US added jobs in pretty much all sectors. The expectation had been for further job losses and an unemployment rate closer to 19%. Perhaps the biggest miss ever.
Now sure some funnies in the number, but they existed n the April numbers as well so net-net the miss would have happened.
But what is important is that it shows the US economy opening up and bouncing back strongly, but perspective is still needed.
Current US unemployment remains the worst numbers since the great depression with the 2008/9 financial crisis peaked at 10%.
It is a long way back to single-digit unemployment and even longer to the sub 4% from the beginning of the year.
The driver here will remain the pandemic and what we need to watch remains the rate of infections in the US with 14 states still reporting growing numbers. This could slow or even reverse the positive jobs data we saw.
My thinking is that we will likely see the US unemployment rate improve further over the next few months with 10% possible by the end of their summer (August / September). My logic here is that lockdown saw millions at home and the lifting of lockdown saw many return to work. But what we don't know is how many businesses are still in business because a bankrupt business doesn't employ anybody. So while 10% is very possible getting below that number may be a lot harder and could take years.
That all said the key point is that while nobody truly expected an improving US job situation this quickly it did happen and there is no point denying it. Instead, we adjust our expectations as expected data reveals itself. As important is to remember that while this was a massive positive number, it stills remains a massive number that shows an economy under severe pressure.
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.
Global
/ US May unemployment rate seriously strong at 13.3%
/ PMI bounces from April lows but still below 50
/ China May exports slip back into contraction, imports worst in four years
/ Opec extend cuts by another month
/ AstraZeneca Approaches Gilead About Potential Merger
local
/ Apple mobility and Yoco transaction data shows about 65% economic activity in week 1 of level 3
/ JSE allows share issues without shareholder approval
/ Rand below 17 as foreigners buy our bonds and equity
/ Reserve Bank takes up R10.2bn in government bonds in May
/ More banking updates
/ Bidvest update gives insight to Comair and Adcock Ingram
/ Capital Appreciation solid results and increased dividend as they operate in payment terminals and cloud services (there are always some winner)
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Levi opening stores and they say “everybody has a new size, a larger size”
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.
Global
/ US past 40million initial claims and Q1 GDP updated to -5.0% from -4.8%
/ Personal saving rate 33% in April
/ Germany’s Business Climate Index rose to 79.5 in May as the country reopens
/ Reuters ~ China's May factory activity returns to growth but demand remains weak
/ China US tensions increasing
/ Bill Ackman's Pershing Square Capital Management announced it had sold off its entire stake in Berkshire Hathaway. BH has $133.3 billion hoards of cash vs S450 market cap (third of assets are lazy and not been deployed).
Local
/ PSG announced CPI unbundling details (14 CPI for every 100 PSG)
/ Woolies update, spending AU$100million on Australia
/ TigerBrands results as branded goods come under further pressure.
/ Famous Brands very pessimistic on casual dining recovery
/ Stats SA delayed April CPI by a month due to difficulty collecting data
/ PIC talking about converting Eskom debt to equity