Day 56 of lockdown
- Don't fight the Fed (The Federal Reserve). Markets are in full rally mode and the forward PE of the S&P5- makes it the most expensive in the last decade. During a pandemic and worst US unemployment since the great recession? Bu the point is simple, if the Fed is buying with guns blazing, don't stand in the way, markets will rally higher even if everybody I speak to is bearish.
- With that in mind, I have bought some TOPSBZ as insurance against another market collapse. It is a put warrant over the Top40, expiry is December and strike is 41,000. So a decent amount of time and about 18% out-the-money.
- Richemont (JSE code: CFR) raises Euro2billion of cheap debt to go with their almost Euro2.4billion of cash on hand. Now they've always been a conservative company, but they are storing up that balance sheet like crazy.
- Dischem (JSE code: DCP) results disappoint and buys Baby City for R430million.
- Solid Santova (JSE code: SNV) results, but to end February.
- Oil is moving higher as production cus finally start taking effect.
- Commodities remain strong. Makes no sense unless one assumes a massive post-COVID-19 infrastructure spending boom, and that does make sense.
- I've been watching countries lifting their lockdowns, gentle but certainly lifting. Germany started lifting in late April (some stores open again) and then more broadly in early May. So far new cases continue to trend down, albeit the early May stats would only start coming in now. But early evidence is that an initial hard lockdown works and then slowly lifting restrictions seems to do the trick. Very early days, but the data is hopefully. Importantly, this is not about removing restrictions, just reducing them.
- Liberty 2 degrees (JSE code: L2D) update gives great insights into the property sector. April & May saw rental collections around 40%, most malls are now operating at 60% - 70% GLA and foot traffic at 60% pre lockdown levels. All stats are improving during level 4.
- ZAR at 18 as I record.
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