Life consists not in holding good cards but in playing those you
hold well. – Josh Billings
Italy, Spain and France sat together over the weekend to
twist Angela Merkel’s arm to allow the creation of Eurobonds. She only agreed
on a 130bil euro package to boost growth.
Now there is another European Union summit this week,
28-29 June. And the outcome will be…….. “It’s difficult to see too big a jump forward
from these meetings because we have had so many until now. The past experience
tells us not to expect a significant amount of news. It’s a very much
politically-oriented market and that makes it very difficult for investors.
Investors are also nervous ahead of the second quarter earnings season,” said
Keith Bowman, equity analyst at Hargreaves Lansdown.
And the earnings season cannot promise a lot; even though
we have some great big listed companies; growth at the end of the day comes
from consumer buying and the consumer currently struggles with spending his money.
Also, American Companies are mostly earning their income on exports; exchanging
the foreign revenue they earn back to a strong US dollar (as is the case
currently) has a negative impact on their financials.
A bit of information on iron ore, since I recommended
Exxaro and Kumba as a short last week. In the Chinese market (biggest buyer of
raw steel) we have more supply then demand that brings iron ore prices down. An
even higher oversupply is possible. According to a Singapore-based iron ore
trade there are some people holding back lots of stock that bought on a high
no happy campers on the weak growth outlook.
To conclude, our JSE is under pressure again, because our
commodities are out of favour. We still see the financial sector holding up on good
strength, but the Euro banks weakness will eventually trickle down to our
new US home sales
to home: Head
of Naspers & MIH of internet operations passed away/ New Kumba open pit
iron ore mine comes in on budget ahead of schedule / Moody’s downgrade may cost
ABSA / In a court case with Mr. Mahomed & other clients that were defrauded
by an ABSA employee, ABSA’s furniture was seized but returned from their Towers
in Johannesburg / Inefficient and corrupt authorities scare off new SA property
developments / ANC faces R19m lawsuit.
Source: www.fin24.co.za / www.buinessay.co.za / Reuters
Exxaro and MMI recommendations were
spot on – paid out. Still holding long JD Group which turns out to be a bit
chewy. Kumba / Nedbank shorts still open.
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