You're listening to Strictly Business Podcast with Lindsay Williams.
The JSC has closed its doors for another day, so it's time for the 5 o'clock
shadow.
And as always on a Thursday, I speak to David Shapiro from Sasson Securities,
currently in Manhattan,
and Viv Govender from Ransuisse, currently in Durban.
Viv, last week you spoke about the war and you were very sombre and you were very
sober
and you were slightly more pessimistic than I think either myself or David were
at the time.
time.
Now, things may have changed because it seems to me, and I'll start with you
again, Viv, if I may,
it seems to me that things are getting worse and Mr.
Trump's got a bit of a hole to dig himself out of.
Would you say that's right?
Yes.
And again, I've never been like somebody that's very anti-Trump, you know, it's not
like I try and call balls and strikes.
And like, as you say, this is so stupid.
He starts this war, right, at a time where he did not full up the US oil reserves.
The oil reserves were depleted under Biden.
Trump promised to fill them up.
Trump chooses to go to war with Iran.
Trump did not fill up the oil reserves in the months leading up to the war.
How stupid was that?
I mean, that is like the most, that is like one of the dumbest moves ever.
You could explain to a five-year-old, you know, what you would, what you would do in
war and the five-year-old thing, let's stock up on the stuff that's going to be
cut off because of the war.
I mean, it is such a stupid thing to have done, number one.
The next thing is that I think the Iranians.
As you go, you know, irrespective of the morality or whatever, from a game
strategic point of view, what they're doing is the only logical thing they can
do.
They have to keep on fighting for as long as possible, because should they stop,
they are just going to be attacked next year.
You know what I mean?
The way this is going at the moment, there is no deal that they can make other than
abdicating that's going to basically let them, you know,
not be attacked.
And given what they've done in the past, they can't abdicate because they will not
survive for long in the country.
after what they've done to that country.
You know what I mean?
There's enough, I think, ill will towards them, real ill will towards them, the
leadership of the Iranians,
that they won't be a viable life in the country if they basically give up
leadership.
So from their point of view, they are going to probably fight a lot longer than
you think.
From Trump's point of view, he can't really stop this thing until he gets some
real concessions from the Iranians.
And so I don't see how this ends, you know, quickly unless there's some outside
force acting here.
Exactly.
It's not going to end quickly.
In fact, and if he does put troops into the region, then I'm sorry, you've got
another Afghanistan on your hands.
David Forrest Gump once said that his mother told him, stupid is as stupid does.
Okay, now this applies to Mr.
Trump.
Viv, who's not an anti-Trumper, unless it's a strike.
But he really did do something stupid this week when talking about the school.
This is the latest in a string of gaffes that he's made.
He said, no, it was definitely the Iranians from what he's seen and heard, he
said.
And he talked about the fact that America sells Tomahawk missiles to other
countries,
almost implying that America had sold the Tomahawk missile to Iran that hit the
school.
Now, the only countries that they've sold it to is Australia, the Netherlands,
France.
and the united kingdom and those those people are really not involved so the the
way he keeps on putting his his
foot in it and says in kentucky last night the war's over we've won it and then at
the end he says but we're still going to continue
anyway david you have to come in on this one because you're at the heart of it
reading all the american media that we don't oddly
enough the striking of the school hasn't caused as much fuss as i thought it would
um and i think that's
That's why.
simply because of what the Iranians are doing, raining down on their allies, you
know,
being indiscriminate about their targets and the kind of missiles that they're
using as well.
So that I thought it would make more of a headline, you know, particularly in New
York,
which is hugely anti-Trump.
But I must say something else that the public support is starting to wane.
And particularly when they talk about, you know, ground troops.
And this is grinding on.
You know, this is not going to be over in a week or two or where we now going into
almost three weeks.
You know, this could go on for a month or even longer than that.
And the longer it goes on, the more the upper hand shifts towards Iran.
As much as we don't want to say it, you know, it really shifts towards their
incredible resilience.
the You know, the new...
Khomeini came out now, I don't know, within the last hour or so and gave a
statement saying, listen, you know,
we're going to keep the Straits of Hormuz closed.
And of course, that's why oil is shot up like it has and equity prices and
everything else has come down.
You know, that's because they're not giving in.
And I don't think they are going to give in.
I think they're just going to keep grinding away.
And I think this is starting to...
worry, you know, really get to people and worry.
Okay, so what do we do now?
Who's going to win?
Is this going to be a truce?
Is this going to be a draw?
Whatever it is.
And if it comes out as a draw, you know, with both kind of teams standing down,
then Iran's going to claim victory.
You know, they're going to say, listen, you know, we stood up to these, to
America.
So Trump has got to do something big.
He doesn't want to hit the energy sources.
Meaning electricity.
You know, I'm not talking about oil reserves or anything like that,
or oil tanks or anything like that.
But really, he can put down their power source,
meaning electricity source on the grid and everything.
He doesn't want to do that because he doesn't want to stop a new regime coming
in.
And he says it will set them back a lifetime, almost take years and years to
do that.
But he's got to do something.
You know what I mean?
He's got to do something big now to show that he's in charge and that he is really
winning the war.
And I'm not saying he is.
I'm just saying he's got to do something.
If he doesn't, I think it's going to play against him as well.
You're going to find more and more opposition to where he is now and calling
for
Congress to intervene and so on.
I think he's backpedaling.
He's backpedaling.
He's got another problem as well, and in the form of Russia and China.
And he said that he's had a call with, what's his name, Putin.
And Vitkov said, we trust what Putin says.
He says, we believe him, we take him on his word that he hasn't been feeding
intelligence to Iran.
Now, how anyone can say that about Putin, doesn't matter what the subject matter is,
how anyone can say that we believe what he said is beyond me.
But the thing is about Russia is that if the Iranians can't export their oil to
China, 98%
of their oil goes to China, a little bit to Syria, a little bit to Venezuela,
funnily enough, but 98%.
And Viv last week was talking about Karg Island, which is the main refinery, which
they haven't hit yet because that would be disastrous.
Then oil would be at 125 to 150. So Russia is now probably saying,
or China is probably saying to Russia, look, We've got 88 days left of reserves.
We might need to keep on topping it up.
Can you sell it to us?
I don't know how oil trading works.
I don't think anyone apart from those right at the top do.
But Russia is a problem and China is a problem.
And Viv, you've been probably watching that as well, given the fact that you
brought up the Karg Island issue last week.
What do you make of it?
It's playing into Russia's hands to a certain extent.
In other words, boosting their foreign reserves.
Yeah, look, I mean, there's something called the shadow fleet.
I don't know if you've heard of that before.
But Russia has a shadow fleet that basically it uses to move oil around the
world, right?
And recently, the shadow fleet had been under a huge amount of pressure.
The U.S.
has attacked a few.
The Ukrainians have attacked a few.
Now, I think with what Trump is doing, he knows that he wants to have the Russian
oil in the market because it kind of helps him.
So the Russians are effectively allowed to move their oil quite a bit more easily
than they did in the past, which is going to really fill up their coffers.
It's going to, you know, if you're strangling somebody and you let them
breathe as much as they want to.
Suddenly, they basically have a lot more time.
A month of breathing allows them many months of continued resistance after this.
So the Russians right now are selling to the Indians.
They're selling to the Chinese.
They're always moving more freely than it was in the past.
And they're going to be selling oil when the oil price is $100.
A discount even here is going to give them $80, $70 a barrel, which is way higher
than they were getting in the past.
So it's going to be a huge windfall for the Russians, number one.
Number two.
You know, if they do have a draw, like David said,
it makes total sense for the Russians and the Chinese to rearm the Iranians.
Once this stops, they will be pumping as much as they can into Iran.
Why?
Because they know Iran acts as a distraction to the U.S.
Should something happen in Taiwan, should something happen in Ukraine, the Americans
can't just focus on that because now you have this Iranian regime
that's rearmed and dangerous again, if you know what I mean.
So it really...
does not make sense from a geopolitical point of view, this whole kind of thing
that the Americans have done at the moment.
It really is a very silly thing to have done.
But the one thing I would mention about Cog Island, yes, the Marines are
important, but 20% of the world travels through the Straits of Hormuz,
20%.
If you had to look at the last, I think, six, you know,
crisis energy crisis we've had in the past ukraine the one with the uh the
1970s and so on the current shutdown per day on a daily basis is worse than the
next
five combined that's how bad it is it's it's not just the biggest it's bigger than
the next five combined
so it is it is by far the worst energy crisis we've ever seen in the world and if
this lasts a month or two i mean we are talking uh
places like south africa places that are importing oil Thank you.
are going to be a real problem.
I mean, we're talking rationing.
What does rationing of oil look like in South Africa?
What does our economy do if this goes on to June or July?
We're not talking about years.
We're talking three, four months from now.
We are going to have a very different South Africa at that point in time.
It's very interesting.
Sorry, David, go on.
No, you go on.
No, I was going to say, I've been trying to do some work on what Viv is talking
about,
particularly from the South Africa.
African economy.
And we are incredibly vulnerable to this.
You know, we import the finished product.
You know, most of our refineries have been mothballed.
So we don't refine any.
We don't refine crude.
We bring in the product.
And when you bring in the product, you haven't got the storage facilities for
that.
And if nothing else is coming in, you know, you cause clog ups.
And if you can't store anymore or you can't take anymore, you know,
you're going to cause all kinds of issues with the supply chains.
But my big issue is that if we can't get this finished product, and
I lived through this in the 70s, where there was fuel rationing and also speed
limits imposed on the country,
we couldn't go more than 50 k's an hour or something.
Even if you were traveling, I think if you were traveling down to Durban, you
couldn't do 120.
I think you had to do 100 k's an hour, slow speed to conserve fuel.
So we have, and also you could only buy a certain amount.
So we've lived through something like this before, which was the other previous
crisis.
But I think South Africa, from an inflation point of view, there are many
areas in which, you know,
the knock-on effect of higher oil prices for our economy are quite disastrous,
including a possible shortage.
Yes, that's very interesting.
and someone said to me that they had South Africa's head two months of stock
available.
And that was 10 days ago or something like that.
But anyway, the markets are not panicking,
but there's something a little bit darker about the way that they're trading at the
moment.
When the markets open at midnight, I've just finished watching a Champions League
football.
David and Viv.
So I'm awake.
I can't sleep after watching that.
So I put the markets on and immediately oil spikes.
And it's been going up gradually ever since.
And when Khamenei came on or his spokesperson came on and said,
we're going to keep the straight closed, then it goes up a little bit more.
And the way that the futures, the index futures, started ticking down, it wasn't a
big spike down.
it was general selling and david just stay with you on this one because you've looked
at markets and the way they behave longer than we have
that's that's the way that a sort of a bear market behaves not a big rush just a
quick just a slow
grind lower yeah it's a it's a drip and there are no stories coming out at the
moment all the
corporate stories are just falling on
kind of uh deaf ears nobody's watching them the everybody's occupied with
the oil price.
Most of the discussion is around that.
I just wanted to add one point to Viv, which is quite interesting to you as well.
Sorry, Lindsay.
In the sense that, no, why I say that about America's oil reserves,
I don't think it's about America's oil reserves because they're net exporters.
I don't know the qualities.
I don't know all of that.
What Trump is worried about and that's what it comes down to.
I think what he says about allowing Russia to supply oil, he wants the price down.
It doesn't matter where it goes.
You know, Russia can supply anybody, but as long as the supplies are coming out,
the price will go down.
So I don't think America is going to be short of oil.
He wants that price down because he's promised the public, you know, the oil
price was
$45, sorry, a barrel, whatever it was.
And he promised that the pump, it will be $2.
below.
You know, that's it.
It's now 360.
So, you know, and as I've said before on the show, and, you know, to you, Lindsay,
in America,
everything at the moment in the US is about affordability.
Jobs are being lost.
People are battling with their...
With their budgets, the last thing they want as we go into summer is to pay more
for gas, you know,
more for petrol.
So I think he's, I don't think with him it's a supply issue.
I think it's a price issue.
It very much is.
He focused on the local economy last night when he was in Kentucky.
He looked wider than normal, by the way.
I don't know if he's...
He looks shiny.
He's enormous and he was sweating.
I mean, it's probably hot in Kentucky at this time of year, I don't know.
And the chap that he introduced with the beard, did you see him, David?
Did you watch him?
Did you see how he was sweating under his arms through his suit?
I don't know what he was on.
I thought he had some cream on his face.
He was on something.
I don't know.
But anyway, what was I talking about?
Oh, yeah, he said, chinks, cheese, milk.
He says they're all down.
And he didn't say by how much.
He said a lot since he's been in.
And The Economist on CNN.
Sorry, David, I watch CNN.
It's all I've got here at the moment.
The woman on The Economist, she said, what's he talking about?
I mean, this one's up 16%, that one's up 12.5%, et cetera.
He sounds like a broken record from his pre-Elections era.
And I don't know, people in Kentucky may be believing it, but I think people are
going to get fed up with him just like they're going to get fed up with the war.
The Standard Bank today, we had a couple of good ones from the short-term insurers
like Outsurance and Santam.
Viv, anything that's caught your eye outside of what we've been talking about?
Yeah, I mean, Sunarm, I think, is interesting here.
You know, they say volumes are at records.
I do think that, you know, obviously, you know, if you have the asset management
operations in Africa over the last year or so,
you are smiling at the moment.
We've had a very good, you know, return last year, the best we've had in several
years.
And obviously, if you are in that business, you're looking quite good.
With regards to, you know, Standard Bank's results, I think they are, again, you
know,
in an overall environment.
they are seeing gains in the digital retail sector.
The one thing I have to be concerned about, especially with the banking sector,
the shift to digital is happening,
but it also means that they're much more vulnerable now to these new banks out
there because you don't have that mode of your branch network to
help you out.
If customers are moving more digital, any digital bank can be your competitor out
there.
That's going to be, I think, quite an interesting overall environment in a
decade or so.
David, you're not a big fan of the banks, are you?
In South Africa, anyway.
So I know you've had a look at this is what I normally say to David.
David, have you looked at these results?
And he'll say, yes, I had a look at the headline and I had a look at the summary,
but I can't go through 105 pages of standard banks in an afternoon.
Is that exactly what you're going to say?
You've got to believe it.
But I think the one thing that captured my attention I'm not big on Africa
investment.
I confine my investments, as we've spoken so many times before here,
to the world's biggest companies, where the growth is coming and so on.
I'm not going to repeat that.
But I looked at Standard Bank and I think if you want to invest in Africa,
then go for our banks.
Because I think something like 40% of
Standard Bank's profits are now coming or earnings are coming out of Africa.
Or, you know, in the region, not international, not outside, you know,
outside the continent.
So I'm saying if the only thing that struck me is that, OK, it's a fairly
respectable earnings,
but they're making good money outside Africa.
That's whether you believe it's going to continue.
I think they're still growing.
They're very small areas.
But, you know, somebody wants to invest in Africa, in inverted commas, rather than
going for the shop riots or.
or the retailers and that, I think the banks are doing okay, and it's propping up
their numbers.
But on a broader scale, I agree 100% with Viv.
This is a very competitive area, where you're handheld,
instead of going and bowing in front of the managers, we used to do in those old
days,
go into the marble halls of the big banks, you just do it on your phone,
and you've got no loyalty anymore, you know, service.
And The way that fintech is taking over, there was a company called Home Choice,
which is pay now, buy now,
pay later.
I mean, very good results showing that, you know, how they use credit.
You buy over three, I don't know, you know what I mean, buy now, it used to be like
lay buyers.
You want a pair of shoes, you get them now and you pay over three or four
installments over a week.
Seriously.
So it's huge in the world.
There was a, what's it, Viv Klarner?
Yes, Klarna, exactly right.
Klarna is massive.
Every time you go and buy something online, it gives you the choice of Klarna.
They've completely monopolized that part of the market.
But this is undermining the traditional banking offering.
So, yeah, but our banks don't lend money.
That's why they're making so much money.
You know, they don't want to grow the economy.
They just want to make sure that they get a good return on equity.
So if you want to start a new business in South Africa, you've got no chance of
getting money.
Come to America where you've got just piles of it.
This is good.
You should be in advertising, David.
Come to America.
We've got piles of money.
Nice.
Let me give you some.
Let me give you some prices here.
The dollar-rand has spiked in the wrong direction.
The dollar has spiked, rather.
1676, that's a percent move for the dollar against the round.
2236, that's three-quarters of a percent gain for the pound.
And the euro-rand is, what is the euro-rand?
There it is.
1930, that's a 0.8% move.
Euro-dollar is 11530.
A bit of a rush to the dollar.
Not a rush, but again, a steady buy that I was talking about earlier on the gold
price.
has fallen $55 with that stronger dollar.
$5,119 per ounce, down a percent.
Platinum down 2.5% to 21.48.
David's been calling the top in the commodities for a couple of weeks now.
Palladium, David, well done, down 13% to $16.26 per ounce.
Now let's have a look at the all-important oil price, which has slowly made its way
now above 101.
Brent Crudewell, $101.17.
exactly 10% on the day.
10.9% is the gain for the West Texas, which is $96.75.
Natural gas prices up one and a half.
Gasoline prices in the States wholesale $2.94, up five and a quarter percent.
Heating oil, terribly important.
I didn't know that one and a half million homes in the UK still use heating oil,
mainly in rural areas, but nonetheless they use it.
It's an 8.1% gain.
So that's an important thing.
And everything's going up.
Soybeans, wheat, coal.
all up over two percent uh copper price going the other way bad for south africa
down 0.9 south african
10-year bond was gosh look at it now 867.
it's not as bad as it was a couple of days ago 867 but still a 19 and a half basis
points higher the yield going higher
the bond price coming down the us 10 year was 397 10 days ago where is it now um
4.24 s p 500 futures are down what one point 1.2%
if my screen, that's me making it up like Donald Trump, because I haven't got a
screen in front of it.
It's just gone off.
But last time I saw 1.2% down and Bitcoin just below 70,000.
Viv, before David gives us the indices and the movers on the JSC, can you give us any
AI update?
Last week, I sort of, I prompted you with the with the deep seek story, which hasn't
seemed to come to fruition.
Anything new this week?
David, sorry, Viv, I mean, sorry, David.
Yeah, look, I mean, with the AI stuff at the moment, I think we are waiting for the
deep sink, the move to come out.
I think that people are getting a bit more pessimistic about it because of the delays
that have been occurring.
And they do wonder whether or not it's going to be, you know, up to, you know,
the same level in terms of what it was related to the American models.
Some now suspect that it's going to be a greater, you know, fallback.
There's also discussions about whether or where exactly it was trained and what is
it trained on.
And people are saying it was trained on NVIDIA chips, but outside of China.
So basically, They had it done in some Southeast Asian countries that they
trained this thing up in, using still NVIDIA chips.
So that does mean that the
Chinese chip ecosystem has not caught up yet to what the Chinese government wants
it
to be at.
So yeah, I think the delays that are coming through, the fact that we have all
the other rumors about the trading around
NVIDIA chips, et cetera, these are not good news stories for the Chinese AI
story.
Okay.
So we'll wait for a deep seek.
I've actually downloaded the app on all my devices today.
Sorry, David, go on.
No, I'm just saying, if Tencent was up, I thought that was on some kind of release
of,
what's it, OpenClaw or something like that.
I thought this was all related to that.
But they shot up earlier on in the week, which gave Process and Asper's a bit of a
lift here.
Was that not connected with some release?
Yeah, they have a thing called Crayfish.
So open claw, right?
So they use claw because of claw for anthropic, but it's not a T-A-L-W-E.
And then they use molt because, you know, they changed the name like a lobster
molts.
And therefore it's claw, open claw.
So it's crayfish with crayfish have claws.
You know what I mean?
Yeah.
And so the Chinese are getting, are really switching on to this AI kind of thing.
But it's very different from the other labs.
So these agents have to use...
somebody else's LLM.
um so you you so if you have uh you know crayfish or you have open claw whatever it
is you still have a a link into
j deep seek or a chat gpt or clawed more likely and the clawed guys by the way are
still
considered to be the the for whatever reason these atropic guys seem to be able
to punch way above their weight in terms of you know uh i think they are
doing stuff that other people think is closer to agi than anything else and they
don't have the funding the other guys do have They have less funding than
Gemini, they have less funding than OpenAI, but they seem still to be the one
that you'd work through.
So where this works is you'd have this crayfish model fit into Kimi, fit into
Open, Kimi, fit into
DeepSeq, fit into Claw, whatever it may be, but you still have to have your local
model or the LLM running it basically.
And the fact of the matter is that right now it does seem that the
Clawed model from the Anthropic seems to be light years ahead of what the Chinese
have and the Chinese are not closing that gap.
In fact, that gap is probably increasing.
Yeah.
Interesting.
OK.
All right.
We'll keep an eye on that one.
David, you're going to get the indices ready.
I'm going to give you the movers and shakers to the upside and the downside on
the JSC.
Sassl, look at this thing.
It's 50 rand a share.
It's 172 rand a share, up nearly 6% today for obvious rand.
Higher chemical prices, higher oil prices.
Tungela up 4%.
Goldfield's up 3.5%.
British American Tobacco is weighing in with a 3.4% gain.
On the downside, we've got Optasia.
New listing on the JSC, 5.4%.
Sounds like a Disney film, I've always said that.
HCI down nearly 5%.
AlphaMin down 4.5%.
Sanlam down 3.7%.
And GrowthPoint down 3.4%.
David, I don't know how I'm doing in the challenge.
I'm going to look now.
No, no, please don't.
I either want to be in the bottom quartile or the top quartile.
I don't want to be in the middle.
It changes all the time.
It's quite remarkable how things change.
But I think what I want to point out is that our market's now beginning to reflect
an oil price of 100.
Yes.
And the impact that it's going to have on retailers and the banks and the property
sector.
Good point.
And even though the oil share was only down 0.38 of a percent,
some of the gold shares held up and also the rand provided some kind of a cushion.
But I mean, overall, you're starting to see weakness.
emerge in those areas.
And I think it's going to be tough.
You know, it's going to be really tough because we know when we never had
electricity what it was like,
and you're just going to get higher oil prices, higher diesel prices, higher
transport prices,
all of these things, I think, working their way into the price of food and
everything that we use.
So that whole business of me going for South African stocks, beating up South
African stocks, the bottom five performers from last year,
are they going to be the bottom five performers of this year?
Are they, David?
I was with you.
I called that with you as well.
I'm in the same kind of area.
But I think it's going to hurt the consumer unless this war is over in a week
or two and oil prices
retreat.
But we've just said it's not going to do that.
Viv has got me very hungry with all that crayfish and lobster talk.
So, David, can you just give me the closing indices, please?
Okay.
So the oil share ended down 0.38% at 116948.
Top 40 down 0.29%, 109287.
Resources just managed three quarters of a percent increase, but the rest of the
market down quite significantly.
Banks under a lot of pressure, as we mentioned now, and also some of the listed
property down almost.
2% as well.
And generally, industrials under pressure, even though they were supported by a
weaker end,
which helped British American, ABM, the processors, NASPERS, just on translation.
And they're big in the index, so they do carry weight.
Okay.
Gentlemen, thank you very much for your insight, as always.
David Shapiro is from SAS for Insecurities, speaking to us from
Manhattan.
And Viv Govender is from Ransuisse, speaking to us from Durban.
And that was the 5 o'clock shadow.
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entity other than the speaker or the author.
And since we are critically thinking human beings, these views are always subject to
change, revision, and revision.
and rethinking at any time.
Please do not hold us to them in perpetuity.