Now we Grow

To market to market to buy a fat pig. It was budget day yesterday, which made many people nervous. Back in the days of Trevor Manual, the anticipation was around how big your tax cut would be. The market reacted favourably to the budget, with the All-share swinging from red to green and our bonds dropping below 8% for the first time in three years (read 'before Nenegate'). The reason for the positive reaction from the equity and bond market is due to the government showing they are willing to do what needs to be done by raising VAT.

Step one has been completed, we have avoided a debt downgrade. There is very little room to raise taxes further. Going forward, the government needs to be more effective and SOE's need to send corrupt employees to prison. Let's not kid ourselves though, there is still a monster hole in our budget. We desperately need growth, to get back to a balanced budget and to bring our debt to GDP ratio under control.

A VAT increase means less money for both rich and poor. The reality however is if we did not have a VAT increase, we would as a nation be in an even worse position down the line. A debt downgrade and potential bailout from the IMF won't stimulate the economy. Zero economic growth hits the poor the hardest.

An unintended consequence of raising VAT or a tax on consumption, may be increased savings. There are studies that indicate taxing consumption, leads to less consumption and higher savings. As you can imagine though, trying to predict people's spending habits is fraught with assumptions.

Market Scorecard. It was a very mixed day for US markets yesterday. Things were going along swimmingly until the Fed minutes were released, then all fall down. The Fed noted that the US economy is in its best shape since the crisis. What the market heard was that there are going to be more interest rate hikes than currently assumed. The Dow was down 0.67%, the S&P 500 was down 0.55%, the Nasdaq was down 0.22%, and the All-share was up 1.17%.

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Linkfest, lap it up

One thing, from Paul

One of our core holdings in New York, Priceline, is changing its name to Booking Holdings. The company will begin trading under a new ticker symbol on the NASDAQ: BKNG from February 27. Remember that the group is made up of these six primary brands: Booking.com, priceline.com, KAYAK, agoda.com, Rentalcars.com and OpenTable.

The CEO Glenn Fogel said yesterday, "Over the last two decades, our business has expanded from just priceline.com, operating solely in the United States, into six primary brands with headquarters around the globe, operating in more than 220 countries and territories in over 40 languages, fulfilling one unified mission of helping people experience the world. Today, our largest brand is Booking.com, which has more than 1.5 million properties, averages over one million bookings per day and produces a significant majority of Booking Holdings' gross bookings and operating profit."

I approve of this kind of thing! Investors like simple names, simple business models and simple corporate structures. Some of my favourite companies have names made up of letters that you can count on both hands. Like Amazon, Netflix, Discovery, Google, Aspen, Naspers, etc. Oh, and Vestact too!

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Michael's Musings

With all the concern about rising interest rates, what does history tell us about how markets react? It seems that when interest rates come off a low base, rising interest rates are coupled with higher stock returns. It is only when interest rates are above 5% that an increase in rates has a significant negative impact on the stock market. History is not the future, interesting numbers none the less - Are We Out of the Woods Yet?.

How can a disease that requires an inexpensive shot, be returning ? - The return of measles in Europe is "a tragedy we simply cannot accept"

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Home again, home again, jiggety-jog. After the finish for US markets, it is no surprise that the Alsi is lower this morning. The prospect of higher interest rates from the Fed has also strengthened the Dollar, currently we are at $/R 11.66. Data out later today is GDP from the UK, the expectation is for YoY growth of 1.5%.

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The World is Discovering Vitality

Market Scorecard. After their long weekend, US markets were red yesterday. Walmart, a player in both the Dow and S&P 500 was down 10% after poor results! (Walmart just saw $30 billion in market cap destroyed by Amazon fears) The Dow was down by 1.01%, the S&P 500 was down 0.58%, the Nasdaq was down 0.07%, and the All-share was down 1.32%. Bidcorp released their six-month numbers this morning, which the market seemed to like. The stock is currently up 2%.

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One thing, from Paul

I always view Budget Day with trepidation. The state has a vital role to play in a healthy society, taking on many functions which are more efficiently handled by public entities. It is vital to save the lives of the poorest of the poor with ongoing social grants, and to provide basic healthcare, schooling, infrastructure and security services. All this has to be funded by taxes, and I'm OK with the idea that rich people should pay more, as often they have had the benefit of generations of state support. I'm also OK with the idea that the democratically elected government of the day should get to decide on its main priorities, within the bounds of the constitution.

However, public entities are seldom run well, and many people go into politics and public service for the money, or to gain control of state resources, and to divert public funds in corrupt ways for their own personal gain. In South Africa, it's hard to find an organ of state which isn't in a state of crisis.

Tax revenues have slipped badly in the last decade, and SARS's credibility has plummeted, but state spending has roared ahead. Our public sector wage bill is huge and rising (but productivity is poor). Add to that the ghastly capital spending overruns at Eskom, and we are facing a dire fiscal shortfall. South Africa's debt to GDP ratio has spiralled out of control.

Spending needs to be cut, but that is hard for politicians. So, expect tax hikes today. That's on top of last year's unfortunate hike in the top marginal income tax rate to 45%, and the recent increases in both dividend withholding taxes and capital gains taxes.

This is really Cyril Ramaphosa's greatest challenge. It's very nice to go walking in the morning with the people, but can he take the hard decisions that are required to put our country back on a sustainable fiscal path?

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Company Corner

Byron's Beats

Yesterday Discovery released their interim results for the six months ending 31 December 2017. As expected from the trading update, the numbers looked good. Operating profit increased by 19% while normalised headline earnings per share increased by 31% to R4.11. The big drivers behind the growth in earnings was a solid showing from the UK business as well as profits coming through for the first time from the short-term insurance business as well as the Ping An joint venture.

The image below shows the contribution of each segment.

As always, Adrian Gore was very confident and passionate. He didn't skip a beat in his presentation. You can see he truly believes in his product and is genuinely proud that it is making the world a better place.

The local businesses all did well in a tough environment. Discovery Health and Life are the bread and butter of this business. As you can imagine, growth has slowed, but they are still stealing market share. If our economy goes through a growth spurt, these businesses will thrive. That includes Discovery Insure and Discovery Invest who have both leveraged off a good brand and some great incentive schemes.

Vitality UK is finally doing well. They now have over 1 million lives insured in a country where healthcare is mostly free. When your friends are getting free Apple watches, Starbucks coffees and discounted gym contracts because they exercise three times a week, the clients become the best salesmen. The preventative healthcare model is genius. It is cheaper and far better for your standard of living, to prevent than being cured.

Vitality Group. This is the part of their business that sells the Vitality model to third parties. This is what excites me most about Discovery. Selling on the preventive healthcare model to other insurers who have millions of clients has huge potential. This also includes corporates who have large employee bases. It benefits the insurers and their clients and it certainly benefits corporates and their healthy employees. Vitality Group now has 1.7 million members. Could this become the biggest healthcare membership in the world? The product certainly has the potential.

Ping An Health has been a slow process but the growth coming through in this last six months is very encouraging. Membership grew by 60%, and the business finally made a decent profit of R36 million. Within this joint venture, there are over 3 million people on the rewards program. They have a great partner in a tough country to crack. The potential here is huge.

These numbers represent good progress in the Discovery story. So many of the goals are becoming realities. We are very happy shareholders and clients of Discovery. This must be the only insurer on the planet that actually has happy clients!

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Linkfest, lap it up

Michael's Musings

Do you know that in Japan, only around 10% of houses sold are used houses? Most houses lose their value after 15 - 30 years, as a result Japan compared to the US, has four times as many architects - Why Are Japanese Homes Disposable?

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Bright's Banter

Ryan Coogler's Black Panther grossed around $235m at the box office on opening weekend across North America making it the biggest solo superhero, non-sequel, black directed movie of all time. It doesn't end there, it's also the 5th biggest movie debut of all time and the second largest Marvel debut after The Avengers (2012) and the list goes on. This movie is not done breaking records as non-US sales keep flying in.

If you haven't watched the movie yet, stop everything right now and buy tickets tonight for yourself and your loved ones (it's half-price Wednesdays at NuMetro today). Don't forget to dress up and have fun! #WakandaForever. This movie is worth every penny and the reviews such as this one (spoiler free) speak volumes.

Let's see if all this success translates to the well-deserved awards.

You will find more infographics at Statista

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Vestact in the Media

Byron gets a mention in a recent Forbes article - How To Lose $2.1 Billion In One Day.

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Home again, home again, jiggety-jog. Our market has been bouncing between red and green, ahead of the budget speech this afternoon. Good news for consumers, our CPI read for January was 4.4%, lower than the corresponding period and economist forecasts. Then expect some currency movements this evening, when the FOMC minutes are released.

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Will Gigaba be the VAT Rat?

To market to market to buy a fat pig. As we get closer to the budget speech, the two key questions being asked at the moment are, "Who will deliver the speech?" and "Will VAT be raised?". Twitter is convinced that we will have a new Finance Minister. Our current debt to GDP ratio is over 50%. If we like it or not. the people who are lending us money need to feel secure in who is appointed to oversee the coffers.

VAT is a far more touchy subject than who will be finance minister. When change hurts your back pocket, people pay attention. It seems that there is very little alternative than to raise VAT in tomorrows budget speech though. I get grumpy about having to pay extra tax due to corruption and the billions spent on blue light brigades. The low-security, morning runs taken by the new president is hopefully a sign of how things will change. Reading this article, Cosatu warns against VAT hikes, austerity measures ahead of Budget, Cosatu has some good points about government cleaning up its own act instead of burdening the people with extra taxes. Housecleaning takes time though, time we don't have.

In terms of the fairest way to increase tax collections, in my opinion VAT is the answer. It is targeted on consumption and you can't avoid it by lying to the tax man. The following slide from treasury shows which items are VAT zero-rated, they are the necessities needed for survival. Items that are VAT exempt include, transport and education.

"Cosatu will not support any attempt by government to balance budget shortfalls and deficits upon the backs of struggling workers. Workers are not the ones who have looted Eskom, SAA and the state."

As a country, workers, management and the unemployed, we elected the people who were responsible for Eskom, SAA and the state. As such, surely we all carry the responsibility and burden when those leaders loot?

Market Scorecard. It was a very subdued day yesterday due to the US being closed for presidents day and the Chinese market being closed for their new year. The All-share was down 0.71% on the day

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Linkfest, lap it up

One thing, from Paul

Did you miss the Blunders last week? I get disappointed if we can't get at least 1,000 views within five days and we are currently on 922. Go and watch it now!

This week: Jacob Zuma OUT; Valentines Day in India; Iceland runs short of electricity due to Bitcoin mining; and Kruger National Park lions eat poacher - Blunders - Episode 88

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According to a research firm called Global Market Insights, the worldwide seaweed industry will surpass $87 billion by 2024. I hardly knew that it existed?

The major uses are food and beverages, fertilisers in agriculture, cosmetics and pharmaceuticals. There are also applications in the manufacturing of biofuels, biomass and wastewater management.

Significant global companies in the industry are Aquatic Chemicals, Seasol International, Indigrow Ltd., Algea AS, Yan Cheng, Pacific Harvest, Chase Organics GB Ltd., Mara Seaweed, Acadian Seaplants Ltd. and CP Kelco.

Here is a link to the report, if this seems interesting? - https://www.gminsights.com/industry-analysis/seaweed-extracts-market

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Michael's Musings

Ask most people, what was the first financial bubble, and they will more than likely tell you 'Tulip Mania' - Tulip mania: the classic story of a Dutch financial bubble is mostly wrong.

"I was able to identify only 37 people who spent more than 300 guilders on bulbs, around the yearly wage of a master craftsman. Many tulips were far cheaper."

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Bright's Banter

Carl Icahn has been very sceptical about investment products that buy and track the markets mindlessly and he's dead certain that it's the next bubble, as he explains in his short movie here titled Danger Ahead. Basically the gist of the story is that BlackRock is gonna cause the next market meltdown. Larry Fink (CEO of BlackRock) is the one driving the markets to the edge of the hill and the bus is gonna hit a "BlackRock" and that will be the end. It is worth noting that the video is from 2015.

Below is his most recent comments on index trackers and it seems like his mind is set with a determined resolution!

Carl Icahn Says There's A Dangerous Bubble In The Hottest Investment Product On The Market.

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Home again, home again, jiggety-jog. Locally, we are down this morning. On a data front, there is very little out today. As South African's all eyes will be on parliament today. Discovery came out with their six-month numbers this morning, they look solid and are in line with what the market was expecting. Their results will be broadcast from their new head office in Sandton this morning. Exciting times!

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Is Lithium Lit?

To market to market to buy a fat pig. Local markets continued to take a breather after the absolute scorcher on Wednesday. SA inc, which was leading the pack last week was hardest hit on Friday. But all in all it was a great week for markets and a great week for SA. All topped off by an inspiring SONA.

US markets had another great start as the "massive correction" of February 2018 slowly fades away into memory. I would say that the volatility will still be around, especially relating to news about inflation.

The good start unfortunately faded away as news about Russian interference in the US elections reared it's ugly head again. Trump went on another Twitter rage about the issue. Interesting times indeed!

Market Scorecard. Both the Dow and the S&P 500 had five straight days of gains last week, not bad considering the volatility at the moment. The Dow closed up 0.08%, the S&P 500 closed up 0.04%, the Nasdaq was down 0.23%, and the All-share was down 0.69%.

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Linkfest, lap it up

One thing, from Paul

Investors who like physical commodities are often excited when demand seems to exceed supply, prices are rising. Tulips! Whale oil! Platinum! Crude oil! Lithium! Easy money to be made!

Well, this article by Bloomberg correspondent David Fickling (based in Australia) takes a different view. His argument is that commodity markets never really stay in deficit for very long. Suppliers find ways of bringing more of what's needed on line. Consumers find ways of using the stuff more efficiently, and recycling where possible. If they don't, production innovations are sought to bypass the commodity altogether.

To be specific, he says that the current fixation with shortages of lithium for electric batteries is unlikely to last, so speculators loading up on lithium stocks might not make the quick fortunes that they hope for? Its not as if these elements are really rare, in the earth's crust.

Fickling uses the example of Platinum in the mid 1970s. Demand for catalytic converters was going through the roof, and all of the supply was trapped in apartheid South Africa and the Soviet Union. Prices spiked. Over time though, supply rose and prices calmed down. You can see this in the next two charts:

Here is a link to the article: Platinum's Lesson for Lithium-Ion Batteries

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Michael's Musings

I really enjoy watching the Olympics, the skill levels of the athletes is amazing. These robots are at the cutting edge of robotic technology, they still have a far way to go though to reach the impressive feats of olympians - Robots skiing reminds us how far away the apocalypse is.

For anyone who has done a forex payment recently, you will know that the bank you used made a tidy profit. The reason for the crazy transfer fees is because to send currency you need to use the SWIFT system. Blockchain (the system behind crypto currencies) is trying to change the monopoly financial institutions have - Saudi Arabia's central bank signs blockchain deal with Ripple. Having a central bank involved is pretty big.

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Vestact in the Media

Byron gets a mention in CNN Money, talking about the renewed optimism in South Africa - Is now the time to invest in South Africa?.

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Home again, home again, jiggety-jog. Our market followed the negative tone going into the close of the US market, we are down around 0.5% this morning. It is a very quiet day on the data front, both the US and China have public holidays today.

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He Gone

To market to market to buy a fat pig. An hour before the US market opened, we had as one analyst put it "The most highly anticipated inflation number for the last 10-years". The expectation was for inflation of 1.7%; it came in at 1.8%. Confirming market fears, inflation is coming and so are interest rate hikes. Futures immediately dropped over 1%.

You will then be surprised to hear that yesterday was the fourth straight day of gains for US markets. Why the gain then? At the same time as the inflation number release, US retail sales came out; Retail Sales in U.S. Decline After December Revised Down. Huh? The biggest part of the US economy went backwards and stocks went up?

As you might have guessed, it has to do with interest rates again. Weak retail sales today, means that demand push inflation dissipates tomorrow, and the concern of increasing inflation is gone. So there you have it, bad data is 'good' data again. Until it isn't, but you will only find that out after the fact.

Market Scorecard. Our market spent the day in the green, until 15:30 when the US inflation data sent global markets crashing. Luckily with only minutes left of trading our market managed to squeak into the green again. The Dow was up 1.03, the S&P 500 was up 1.34%, the Nasdaq was up 1.86%, and the All-share was up 0.33%.

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Company Corner

Michael's Musings

Last week one of our smaller holdings, Cerner released their FY numbers. They are the guys that are trying to remove all the paperwork you have to fill in every time you visit a medical professional. The goal is to create a network where you complete your information once, then from there, all doctors have access to it. Saving trees and saving you time. More importantly though, having the data in digital format, lowers the risk of bad handwriting leading to wrong diagnosis or the wrong procedure being done.

Built on to that is Cerner's management system, where hospitals can then use the information to easily see revenue and expense figures. It also allows them to see what operations are in the pipeline, meaning accurate forecasts can be made. Probably the most exciting part of the business is where they unleash AI onto the data. The clever algorithms take the data fed to it from all your medical tests, and at some stage in the future from your smartwatch too, and issue early warning signals around potential health issues.

Due to the time required and the capital-intensive nature of revamping a hospital group's computer systems, Cerner has a 'book' similar to that of construction company. For the 4Q, they had a record number of bookings, $2.3 billion, up 62% YoY. Over the last year, their revenue came in at $5.1 billion up 7% YoY. From that revenue they made a profit of $867 million.

Cerner ticks all the boxes, it is a technology company in the medical space. It is also defensive because once a hospital chooses Cerner, it is not easy to move to a competitor. Thanks to those characteristics, it trades on an 'expensive' 24 times earnings. Management expects earnings to grow by 11% over the next year so the multiple isn't going to unwind in a hurry. With many things in life, you get what you pay for. Paying up for Cerner is one of those things in our opinion.

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Byron's Beats

When Aspen released their full year results last year, the second half of the year was much better than the first half. Stephen Saad, at the results, mentioned that he expected this momentum to continue into the financial year 2018.

This morning we received a trading update which indicated as such. Here are the numbers.

This is all the info we have access to but let's delve a little deeper into each 6 month number over the last 18 months. To be consistent let's look at the normalised headline earnings per share (NHEPS). Last year this time the company made 692c for 6 months. For the full year they made 1463c which means they made 771c in the second half. This trading update suggests they have made 860c (middle ground) which shows an 11.5% improvement on the second half of last year.

The first half of last year was off a low base but the growth off a very solid second half base still looks strong. The market has reacted very positively to the news, the share is up 6%. The detailed numbers will come out on the 8th of March, more details then.

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Linkfest, lap it up

One thing, from Paul

Finally, Zuma is gone! Under his leadership South Africa slipped very badly. He says that he doesn't know what he did wrong? Well, apart from anything else, the country faces a dire fiscal crisis, thanks to his bungling.

His involvement in the gross mismanagement of public enterprises is well known, and the debts of a looted and bankrupt Eskom will doubtless be added soon to the sovereign debt mountain.

The ANC leadership crisis had already derailed the State of the Nation Address, and the postponement of the Budget Speech was next.

The Moody's Baa3 rating is the only thing keeping our bonds debt in the Citi World Government Bond Index, given that the grades from S&P Global Ratings and Fitch Ratings are already below investment grade.

The rules of the index require that a borrower can no longer be included once it's rated junk by all three rating companies. Moody's deadline is 23 February. They are probably waiting to see if the Government has the guts to do what must be done: raise the VAT rate from 14% to 16%.

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Bright's Banter

My favourite academic Prof. Scott Galloway has been singing this song of breaking up big tech i.e. Apple, Amazon, Google/Alphabet, Facebook and Microsoft. Here's his reasoning on why we should build em and break em up!

Bust Big Tech Silicon Valley

Apple's smart speaker, the HomePod is now available for purchase, the sales went live this past Friday and the reviews are flying in! Apparently its a great quality speaker but is not in the same league as the competition when it comes to being "smart".

I think the problem is not the speaker, but Siri. Siri's had the first mover advantage but never really grew from there. On the other hand Alexa just lapped Siri on her amazing ability to learn.

The graph below shows how these speakers (Google, Amazon Echo, HomePod etc.) perform head to head.

You will find more infographics at Statista

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Home again, home again, jiggety-jog. The Rand is stronger this morning, trading at $/R11.68. No, not because we no longer have a president but because of the US inflation data. We know who our future president will be, the question that the market will be asking is who will be delivering the budget speech next week Wednesday? With the Chinese New Year, Chinese markets are closed today and tomorrow, and Hong Kong had a half day of trading today. After a busy news data day yesterday, there is nothing major out today.

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Google's Head in the Clouds

To market to market to buy a fat pig. Yesterday Stats SA released our labour stats for the last quarter in 2017. The headline number compared to last year is marginally worse, but compared to last quarter it is one percentage point better at 26.7%. It is never nice reading that we have 5.9 million unemployed people and a further 2.5 million people who are classified as discouraged work seekers but not unemployed. To be classified as unemployed you have to have looked for a job recently.

In total there are 16.2 million South African's employed, which includes Stats SA's estimate of 2.8 million people in our informal sector. Here is how they are employed:

The stat I enjoyed the most was that over the last year, employment in Gauteng dropped by 121 000, but employment in the Western Cape was up by 106 000. What! Does that reflect people were leaving the city of gold for the mountain and no water?

Market Scorecard. Yesterday was another day when US markets were both red and green at some stage, to a lesser extreme though. The Dow was up 0.16%, the S&P 500 was up 0.26%, the Nasdaq was up 0.45%, and the All-share was up 1.78%.Our market had a strong day, which included a surge during the home stretch. MTN was up 3.2%, Tiger Brands was up 3.5% and Naspers was up 2.9%.

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Linkfest, lap it up

One thing, from Paul

I'm a big fan of holding steady and carrying on doing what works. This is definitely a good idea in markets, where over-reacting to the latest headline is generally a bad idea.

So I enjoyed this snippet in a blog post I read recently. An analysis of football goalies facing penalty kicks revealed that they dive to the right or the left 94% of the time. They guess correctly 40% of the time and save about a quarter of the correct guesses. It turns out that if the goalkeepers didn't move at all their chances of saving the penalty increase from 13% to 33%.

So they pick a strategy which looks good, and feels right, because "at least I'm doing something", but that strategy ensures they have a lower success rate. Apparently this is called "action bias" by behavioural experts.

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Byron's Beats

Much is spoken about Amazon Web Services but Google Cloud does not get nearly as much airtime. According to estimates AWS revenues are about four times that of Google Cloud which is the third biggest cloud services provider. AWS is the biggest and Microsoft's Azure is a close second.

According to reports however, Google Cloud is the largest driver of increased headcount at the parent company, Alphabet. They also have established partnerships with big names such as Salesforce, SAP, Dell and Cisco.

Because the Google search business is so profitable, the potential of the cloud business sits in the cloudy shadows. This should not be underestimated. Cloud services are still coming off a low base and are essential creators of efficiencies for businesses all over the world. Not to mention the explosion of AI. Google has the brand strength (a lot of trust is required) and the capital to turn this into their second big trick pony.

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Michael's Musings

Iceland is a great country to host crypto-mining operations. The electricity is cheap and is mostly clean, and the weather outside is cold, reducing the need for cooling - Iceland will use more electricity mining bitcoins than powering its homes in 2018.

5G will be a game changer for consumers, it is 100 times faster than current 4G technology! At this rate, fibre is going to be obsolete by the time it is fully rolled out - 5G Is Making Its Global Debut at Olympics, and It's Wicked Fast.

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Home again, home again, jiggety-jog. Politically, the changing of the guard seems to have reached its climax today. The JSE is also in the green this morning, which is good to see after a rough few weeks for equities. At 13:00 today, we will get the retail figure read for South Africa. Remember our last read shot the lights out thanks to South Africans embracing Black Friday.

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Correcting the Correction

To market to market to buy a fat pig. This week marks the start of the biggest human migration of the year, the Chinese New Year. It is estimated that around 710 million people will be on the move! The holiday starts on Thursday and will last all the way through to next week Wednesday. Here are some interesting facts about the tradition - 21 Things You Didn't Know About Chinese New Year.

To give you an idea of the scale of this holiday, Statista has compared the numbers to the US's Thanksgiving weekend - How Chinese New Year Compares With Thanksgiving

You will find more infographics at Statista

Market Scorecard. It wasn't smooth sailing yesterday, but at least we finished in the green. The US market opened around 1% higher, then weakened to be flat an hour into trading. From there it was a steady rise to 2.3% higher, and finally finished off with a slight weakening. The action during the day shows that volatility is back; the bull and bear tussle continues. The Dow was up by 1.70%, the S&P 500 was up by 1.39%, the Nasdaq was up by 1.56%, and the All-share was up by 0.54%. Resilient was in the firing line again yesterday, down 7.42%. I can't say what the fair value of the company is, looking at the price action though I think that this is a case of sell first, ask questions later. Short-term the price is being driven by fear, long term though it will all come down to fundamentals.

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Company Corner

Byron's Beats

It has been a tough few years for Woolworths. Their purchase of David Jones has not gone as planned. The global clothing retail market has been turned on its head by super fast retailers like Zara and online disrupters. The initial David Jones purchase was to access the Australian clothing market, but it seems that the strategy has also shifted to food more recently.

The Woolworths team have found a gap in that market for high-end grocers. It seems this gap also occurs in New Zealand. The following article talks about the new David Jones store in Aukland, how the business is growing its presence online and how they are opening standalone David Jones grocery stores. It is an interesting article from an Australian publication/perspective.

David Jones expands to New Zealand as commitment to food strategy stays strong.

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Linkfest, lap it up

One thing, from Paul

Coverage of last week's stock-market mini-selloff was pretty excitable. One thing I have noticed over the years is that the prices move, and the explanation follows later. In other words, the market indices spike or tank, and then financial journalists scramble around finding reasons to explain the move.

To be fair, the news media has its own challenges. They operate in a competitive market for ears and eyeballs, so they like to crank it up a bit. Here's a good cartoon which makes that point, that's been circulating in the last few days.

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Michael's Musings

As I write more, I have become aware of subtle (sometimes not so subtle) grammatical improvements I can make. I only learnt about the Oxford comma last year, lucky my ignorance didn't cost Vestact millions! - A lawsuit over the absence of an Oxford comma was settled for $5 million.

One of the best ways to combat poverty is quality education. It was interesting to see that the entrance exam to the one school was a blind test, so that any biases around the person or their family would not form part of the admittance decision - Russian Billionaires Are Building Mega schools to Rival Eton and Exeter.

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Bright's Banter

According to a research firm called Canalys, 2017 was a year to remember for the Apple Watch. It had the best quarter ever in the history of all luxury watches. The company shipped around 8 million watches between the first day of October to the last day of December which led to a total of more than 18 million Apple Watch units sold for the year! This is more than the entire Swiss watch industry combined!

You will find more infographics at Statista

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Home again, home again, jiggety-jog. Our market is following the lead of the US and Asian stocks, the All-share is currently up 1.2%. Relevant data out today is; UK unemployment and CPI, and locally we have unemployment figures at 11:30 and then the ANC NEC has their press briefing at 14:00. Whatever happens, we need to remember that change is slow, even if the market's default reaction is to assume all the wrongs will be righted.

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