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 Viv Govender from RAND Swiss and David
Shapira from Sassford Securities,
Johannesburg and Manhattan, respectively.
Viv, I'll start with you because last week I started and I said, Viv,
you said that the war was going to get worse and it had got worse.
And today I'm saying Viv.
Last week, you said the war was going to get worse, and it's got worse again,
because I'm getting the feeling now that this is quite a serious one.
And the reason I say that is because of a sort of a strange rift between Israel and
the United States.
Israel attacked a large oil field co-owned by Iran and Qatar last night.
And President Trump at 3.30 this morning said, no, I didn't know anything about
that.
And Israel said, yes, you did.
Viv, this is strange, strange behavior, isn't it?
Yeah, look, I mean, here's the thing.
The Americans really don't want to have this go on to infrastructure destruction
kind of thing, because
I think Israel is vulnerable, but what's really vulnerable is like the Saudis, the
Qataris, et cetera, in the region.
I mean, the things they could be going after, for instance, is things like not
just the oil facilities, which apparently could take years to repair, quite frankly,
on the Qatari side.
But also they could go after things like desalination plants.
And this is a very dry part of the world.
You know, you're talking, you know...
Tens of billions of people could be facing, you know, a shortage of water,
which is, you know, life-threatening.
So they really don't want to go into infrastructure kind of like, you know, a
blot because it could really be disruptive.
And it would also mean that even if the war ended tomorrow, if you destroy like
the facilities in Saudi Arabia and Qatar and
Iran's own facilities destroyed, that supply is off the market, you know, for
the foreseeable future, which would mean oil prices above 200,
even if the war were to end.
So this is a very, I think, you know, dangerous escalation.
And here's the thing.
I've kind of come to the conclusion there's just two ways this thing ends.
It's either boots on the ground by the U.S.
or the Iranians get a nuke.
And that seems to be the only way out of it at the moment.
I think the Iranians at this moment are probably working as fast as they can
towards a nuclear weapon.
It's quite possible they weren't doing that previously.
But I think right now it's quite possible they are.
And if they are, it could be something, you know, which they will do like a...
test like the North Koreans did, you know, and after North Korea got a couple of
tests, you remember,
Donald Trump started being very friendly towards the North Korean leader.
Yeah, it's good to see you, Rocket Man.
Do you remember that famous quote?
Sorry, I shouldn't interrupt you.
He said, we fell in love.
I mean, this is what we should have known what we were dealing with then during his
first term, but nobody, nobody seemed to learn the lesson.
Viv, carry on with your diatribe.
It's very interesting.
And then if he does go to the boots on the ground thing, that becomes Iran or, sorry,
Iraq or Afghanistan, you know,
times three or four.
It's a vastly larger country, worse terrain in many ways than Iraq is, many
more people than Iraq had.
And probably, you know, unlike Iraq, where effectively the regime was destroyed,
it's very difficult to see how they would destroy the remnants of the Iranian
Revolutionary Guard here.
I think that it would be, you know, a very, very bad period for the U.S.
if they were to go, you know, boots to the ground.
But I don't see how it ends any other way.
The Americans can't just leave it alone because the Iranians are going to go for a
nuke.
The Iranians can't not go towards a nuke because at the moment, that's probably the
only thing that can, you know, guarantee that they won't get, you know,
bombed at some point in the future.
So, yeah, and that's pretty much how it goes.
And as for the future, it does seem like, you know, because this is the way it's
going to go.
It doesn't end next week unless something spectacular happens.
Okay.
Thanks for that very cheerful start to the 5 o'clock shadow.
David, we are going from Viv the pessimist to David the optimist.
You've always been an optimist, but maybe even you're starting to think, wait a
second,
this is not good what we've seen in the last 36 hours.
It's going nowhere.
And when I say nowhere,
it's not even making news headlines here in the US.
You know, I watch.
I hop channel from ABC to CBS to Spectrum One and so on,
just trying to get some perspective of what's happening.
And most of the news is around kind of a fire in the Bronx or some cat up a tree in
Queens.
But the only thing that they focus on is that they will give you what the
price of petrol is at the pump and how that's gone up and that it's not as high
as it was in 2022.
No, they're not pro-Trump.
You know, this is not pro-Trump stuff.
This is almost an indifference.
The odd thing, Lindsay, is even talking to neighbours here.
You know, people in the lift or people you see in the lobby or whatever it is.
I can't say I've got any big friends here or very close friends here.
But, you know, you chat up, you end up conversating.
Most of them don't care.
I'm not worried about that.
You know, what do you think about?
No, I don't care about that.
You know, I'm worried about what's showing at the theatre or what this is.
It's quite remarkable how indifferent I'm finding people here.
There are no protests.
And it gives you an idea of the American people,
just how far removed they are from the world.
And so I'm a bit surprised by that.
But coming back to Viv's views and the war,
Trump has to get this oil price down, or let's put it this way.
the price at the pump.
If he doesn't get it down, he's toast.
And it looks like he's starting to burn a little bit.
You know, it's happening now.
I think he must be a very worried man and really not quite sure how to get out and
how to de-escalate, how to get out.
They use the word, you know, looking for an off-ramp.
I can't stand that.
But, I mean, you know, he's looking.
There is a view that, you know, I mean, he's got to bring this to an end here.
It can't keep going on.
So, but America is, you know, they are feeling it.
You heard from Powell last night.
I mean, you know, he's confused.
There's nothing going to happen.
And, but if I go out now around the world, you know, around the block for some
Italian hot chocolate because it's freezing,
you don't see people really worried about a war or anything.
Very strange.
Okay, so you're going for the hot chocolate in Los Angeles.
They're going for some chilled drink because it was 97 degrees there.
97 degrees.
So it's really, really weird.
Not only is America split along party lines, it's also split along weather
lines.
It's quite amazing what's happening in that country at the moment.
You talked about seeing Powell, I think it was, at the U.S.
Federal Reserve.
I watched the nut job Pete Hegseth giving a Pentagon press press conference earlier
on about a couple of
hours ago I mean this man is really he's very strange he started quoting the bible
a lot now you know you
know that things are going badly when you have to keep on saying that you've got to
pray for this and you've got to pray for that and and in
the name of Jesus Christ we're doing this and that and I think this is a bit odd um
Viv the you mentioned $200 oil you And it's 111 at the moment.
That's for Brent crude.
So petrol prices, if that happened, would be in South Africa.
When we were off air, you were mentioning, what was it, seven rand a litre?
Is that the price?
For diesel.
So we've got seven rand a litre for diesel and about five rand a litre for petrol at
the current levels of the round.
The round, by the way, hits 17 today.
And so, yeah, that's it.
What I also want you guys to understand, and maybe why the Americans aren't feeling
it as much, is because there is a big discrepancy as to how much the oil price
is changing
across the world.
So you get to look at, for instance, the American price for oil versus the Brent
crude price for oil, for instance.
It's almost $15 a pot.
You know what I mean?
It's a big difference.
And the further east you go, I mean, you go to places like Bangladesh, you go look
at India, you look at
Japan, the effect is worse there.
Because they are the ones that already are actually directly impacted by the
shortage.
I mean, Bangladesh, for instance, which has a big textile sector,
is a bit of a go slow to save energy.
India, they're talking about the lack of liquid natural gas, you know, the
cylinders.
They basically are looking at, you know, that is a very big part of that country's,
you know, where they actually cook their food, etc.
It's a big deal.
You know, we are seeing places like South Korea as well being affected.
And also, I mean, it's not just the energy thing.
I mean, we're talking about fertilizers being affected.
We are talking about helium, which is important for the manufacturing of
computer chips and other high-tech equipment, et cetera, being affected.
And the U.S., I mean, it's almost getting like almost just a washback.
And that's what's already causing oil prices rising in the U.S.
and already causing this difficulty.
The devastation you'll see in Asia will be much, much worse.
than whatever you see in the West.
And even today, I mean, after the attack on the, the Tifatat attack, first on
Israel, on Iran's gas,
and then Iran on Qatar's gas, at one point this morning, the price of liquid natural
gas in, I think, Europe was almost 30%
up.
yeah you know it's not double digits positive but it's uh it was almost 30
percent up you know early in the morning um this is 20 of the world
supply and like i said the damage that they've done to that facility could take
years to repair it's a really uh bad situation
uh on the east yes it is and i'm just looking at the commodity um commodity
board on my uh phone actually dutch ttf natural gas i didn't even know that they
traded it it's
uh up 12 and 3 quarters percent at the At the moment, it wasn't.
up 23% when I looked at it at lunchtime.
Things coming off getting a little bit better.
Gold at one stage was down 8%.
Now only down 5.2%.
But that big...
The one-year graph, David, I don't know if you look at it, but it was completely
destroyed this morning,
the one-year uptrend.
The big long-term trend is still there, but the one-year, no, it's out the window.
So gold's going to take a while to get back to things.
David, there's been quite a bit going on since we last spoke.
I think there's been a total of eight central banks that have announced their
decisions on domestic
monetary policy.
The US, of course, and the ECB all flat, Bank of England, etc.
But if the prices do persist, there's no way that the next move is down.
In fact, maybe towards the middle or the end of the year.
The next move might be up.
I mean, look, the yields are rising across the globe in international bond markets.
It's such a dilemma.
You don't want to put up prices at a time where petrol prices are going up.
You don't want to help this along.
So we saw this, I think, going back in 1973, where they did exactly that,
put up rates.
And I mean, all that did is create.
an enormous recession.
So I think it's a very delicate situation on how to handle it.
And that's the assumption that this is going to last, which we're not going to
get out of it quickly,
but this could be a few months.
And I don't know, I'm not a central banker,
but I think we'd be loathe to kind of start doing things like that, if anything.
You know, one would expect them to lower rates here so that it becomes more
affordable.
So it's, you know, you could hear the indecision in Powell if you listen to him.
Yeah, he said he didn't know where he was going.
People like certainty.
If he had said, well, we know what is going to happen, that's one thing.
But he said, no, we didn't know.
Well, nobody knows.
And if Powell doesn't know, then it's a difficult one.
What about the...
uh ai stocks viv the i don't know if i've joked before that maybe they're recession
proof maybe they're war proof
um they nothing's been drastically affected okay we got the markets down what
about 0.6
percent at the moment something like that but when you get um the the top man and
video coming out with these
incredible revenue projections and i Open claw Chinese stock surging.
I think I sent both of you that article, Aviv.
This just keeps on going, this juggernaut.
Yes, it does.
I mean, I saw a recent report that was quite interesting.
Basically, there's a thing called the H100, which is the previous generation of
chips.
And right now they're selling for more in terms of rental than they were when they
first came out in some cases.
They're really holding up in terms of the value.
It doesn't make sense because the...
The speed of technological improvement here is vast.
So you're getting like, you know, five times the capacity coming out for like 50%
more cost.
If that was the case, you know, effectively the old chips would be
dropping by one third,
by one third the current value or the previous value because of the fact that
they're just basically being, you know, there's something that's, you know,
five times better for 1.5 times, there's three times effectively the improvement.
But it's not happening.
The demand is so great that people are actually spending whatever it takes to get
these chips.
And the bottleneck in that sector is, I think, quite worrisome at the moment.
The fact that Jensen Wong says he's going to spend a trillion, the question is, is
it actually going to be possible?
Because there's a couple of things here.
Firstly, will they be able to actually make the stuff to sell?
There's definitely the demand out there, no doubt about that.
But do they have the supply, number one?
The next thing is, if they do get this thing out there, how are they going to
power all this stuff?
I mean, you do a trillion dollars of AI chips, that translates into so many
gigawatts of energy that's required.
You know what I mean?
There's a very clear-cut thing.
I think that's about 100 gigawatts of energy that's probably going to be
required for that.
That's a lot of energy.
And obviously in an environment like we're talking about right now, with oil prices
and natural gas prices going crazy as they are,
it's going to be quite difficult.
That being said, we didn't really do too much in Vidya, despite the significant
downs.
But we did see a couple of things happen in terms of some other players out there,
especially downstream.
And I think the real bottleneck in this whole system, even beyond energy, is you
guys in the Netherlands with the ASML.
Apparently, that's the real bottleneck in this entire system.
It's the fact that ASML just can't make enough machines quickly enough.
And even if they were to go all out and basically boost their production to the
max that they could,
they could probably only increase by about 50-70% their total production in like five
years' time.
You know what I mean?
That is over the next five years.
That's not a great...
you know, thing to have when the world, like I said, is basically being
bottlenecked by their progress.
David, results coming out of the JSC Securities Exchange.
There's been quite a few.
Today we've had Momentum.
That's another insurance company.
Have you looked at the results since we last spoke?
Have you seen any that you like?
I mean, you're very much focused on the United States of America, but you still
look at the JSC, obviously.
The JSC is, I think we're facing a lot of issues here.
And I'm not, you've seen the gold price come down quite dramatically.
I think the signal or the warning happened when the war broke out and gold
ran up to, what, 5,300 and then did an about turn and settled around 5,000 and
did nothing since.
And that was a concern.
And as oil kept going up, this didn't prove to be a hedge against inflation.
There were more worries about interest rates going up and the cost of holding.
your gold position.
And we've seen that come down.
But what happens is, but I think also from a South African point of view, I mean,
this means a massive increase in the petrol price.
And we're a nation that needs petrol.
You know, we use petrol a lot.
We travel a lot.
It's especially from an individual point of view.
You know, you fill your car up at what, 20 20 rand a litre or something, which is
going to go up.
I worked it out as about 15 rand a litre here, and these are the high oil prices
that we're facing at the moment.
So there is a premium that we are paying.
I thought it would be more.
But there's going to be a lot of pressure on spending in South Africa.
And, you know, if inflation goes up and the Reserve Bank doesn't reduce rates,
which it's not going to do in this environment.
If anything, they won't raise rates, but they're certainly not going to reduce
rates.
So I think South African business already feeling or South African consumers already
feeling
tight.
It's going to have a big impact on spending.
So I'm just looking at there's an interesting thing when you look at
momentum.
and I saw this in quite a few of the, most of the, you know, insurance companies
coming out.
New business is falling.
And new business is the pipeline into the future.
It's all very well you're doing good business now.
But if you're not increasing the rate of new business, you're not expanding it,
it's going to hurt down the line.
It's a bit too early.
Most of the companies are very efficient and they got the boost from market
performance.
But that's what worries me.
And Momentum is a good company.
You know, it used to be an ugly sister.
I think Jeanette Marie has turned it around and doing very well there.
And I think the loss of business or the loss of, oh, sorry, the fall in new
business is more, it's not structural.
I think it's more to do with the environment than them losing ground.
So, you know, the share price has done pretty well, as we've seen with most of
the assurances.
But I'm a bit concerned about SA Inc.
and the outlook for the economy.
Yeah, I'm also a bit concerned about SA Inc., especially in my Crystal Challenge
portfolio.
We've got it wrong.
No, I've got no chance now, David.
I mean, since it started, SASL has doubled.
And you've got a fair sprinkling of people with SASL in it.
So I'm finished now.
I'm going to be...
I said to you I want to be either in the top part or the very bottom part, and I'm
really going for the very bottom part.
Now, David, I know you've got to go, but have a look at the indices, if you would.
And when I finish with the markets, you can give us the closing indices on the JSE
because we've got the dollar round.
Viv mentioned it got to 17.
It's currently 16.86.
British pound against the round is 22.56.
And the euro round is 19.43 with the euro dollar.
Well above 1.15 again, so around 1.15 at the moment.
So the stronger dollar really whacking commodity prices as evidenced by gold.
It's off its lows.
Gold was down nearly 8%.
It's currently down around about 5% and that is 5.25% actually, 46.15,
4,615.
And that is almost exactly $1,000 off its high, the intraday high.
was $5,625.
So, in fact, we're $1,010 off the highs.
And that wasn't that long ago.
It's extraordinary stuff been going on in precious metals.
Platinum hasn't been spared, down 5.2%.
1939 and palladium, oh my goodness me, 22%
down at $1,462 per ounce.
If we go now to the all-important energy markets, not quite as glamorous as they
were.
West Texas crude $97.15, which is up only 0.9%, but they close at different times.
So Brent crude up 4.4% at the moment, $112.10 per barrel.
What else have we got here?
Copper.
Yeah, that's really getting hit as well.
It's down 2% at the moment.
It's had a torrid few days, $5.44 per pound.
The South African 10-year bond, look at this, 100 basis points.
Worse off than it was a week ago, or actually, let's call it two weeks ago,
905, 9.05%
yields rising.
David says that this Reserve Bank won't raise rates and they've got no
justification to do so.
But if it goes to 10%, yeah, maybe that's telling us it will.
US 10-year, 4.27%.
That's been in a range of 4% more or less to 4.3%, more or less.
So it's right at the top of its range.
And if the 430 goes, then all hell will break loose.
S&P 500 futures only down 0.4%, 66.50 we'll call it.
And what else have we got here?
Bitcoin has been to 74,000, now below 70, 69,373.
If you look at the performers on the JSE individual stocks-wise,
it's being dominated by two resources companies.
Number one, Tungela, up just over 6%.
And Sassalong up 5.6%, 214 rand a share.
It was 50 rand a share at its lows.
It was 100 when David started his crystal challenge.
So, yeah, that's extraordinary.
Boxer of all stores up 3.1%.
And Pepcor up 2.1%.
That's a winner.
Downside, Cibagno down 10.2%.
Impala Platinum down 10%.
Pan African Resources down 9%.
Valterra down 9%, and Northern Platinum down 8.5%.
What about the indices, David?
Well, in fact, we were worse during the day, but they also ended it down, say,
2.75%
at 110.572.
So it's better than its worst levels of the day.
But, you know, we're now in negative territory for the year, and I think about
12%, 13% of the high.
which was at the end of February as the war started.
But losses were right across the board with miners naturally under pressure.
The resource index down 6%.
What else?
You know, base metals.
In fact, it was mainly the precious metals, those shares that took the market
down.
Subania, Impala, Harmony, Pan African, Valtiero,
all of those down quite significantly today.
Banks, the rest of the market.
down but perhaps not at the same level but still in a pretty weak across the board
Probably just looking at my list of shares, a couple of winners there, but
losses maybe three to one today.
So I must look at the volume.
Volumes have been good, hey?
I've been very interested in the volume today.
Again, we're up at, oh well, this must be, what do you call it, balancing,
because it's an 84 billion day today.
Wow.
I don't know what...
I think it must be futures closeout day.
March futures expire.
makes sense 84 billion that just gives you some kind of level of the speculation that
we see in our markets
and there must be a lot of people hurting at this closeout sure I remember in the
old days Viv there used to be futures
closeout parties in Jamsburg everyone would get together and lie to each other
about how much business they'd done it was all very good but
anyway David's got to go so we're going to close this now gentlemen thank you very
much for your time as always
Viv Govender is from Rands Swiss in Johannesburg.
David Shapiro from Assassin Securities currently in Manhattan.
And that was the 5 o'clock shadow.
The views and opinions expressed in these podcasts are those of Lindsay Williams and
various contributors and do not reflect the policy,
position or opinion of any other agency, organisation,
employer or company associated with StrictlyBusinessPodcast.com.
Assumptions made on the analyses are not reflective of the position of any other
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 rethinking at any time.
Please do not hold us to them in perpetuity.