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 five o'clock
shadow.
And as always on a Thursday, I speak to Skulk Lowe, Portfolio Manager at PSG
Wealth Old Oak in Cape Town.
I don't think I've ever seen such ridiculous volatility.
And not volatility from the beginning of the week to the end of the week, Skulk.
It's every single day.
And sometimes there are three different market trends during one day.
You wake up in the morning and the Far East is down and the U.S.
futures are down maybe 1% or something.
And then someone wakes up in the morning, we won't say who, and says something.
And then the markets reverse.
And then in the evening, people say, well, wait a second, we don't believe him.
So it goes in the opposite direction again.
It's all over the place.
It's extraordinary.
And thank goodness we're not traders, Skulk.
Thank goodness you're a long-term investor.
Yeah, thank goodness.
I was sitting on Monday and listening to a commentator
reading out the top performers and the worst performers for the day.
And I think it was the first or the best or the second.
Yeah, the best performer was Cecil,
but the second best performer was the worst performer for Monday.
But I mean, the second best performer was Anglos.
And he said, oh, this is fun.
Fantastic.
Anglo-American, that is up there.
It's actually end of the day, 6%, 6 point something percent higher.
And then I just realized, wait a minute, this morning I switched on my computer.
And one of the first things that caught me, because it's in the A's, that caught
me, I was Anglo-American being down something like
8%. So that specific day, don't quote me, it could have been 12, it could have been
14%.
But that specific day, one of the largest stocks on the day is at a swing from being
down close to
6-odd percent, ending the day as one of the top performing, ending up 6%.
And likewise with some of these other companies.
I think, you know, I like following my goals sometimes.
And goldfields that specific day, that was down 10-point-something percent during the
morning,
ended the day close to 2% positive.
So that's in a sort of a one sentence or two sentence summing up the current
market conditions.
You will literally have a market that could swing 5%, 6% either way.
And that's showing us the type of volatility, this type of uncertainty.
Because the bulls can't decide, you know, is the bears actually winning?
And likewise for the bears.
It's this massive, massive.
I see, you know that thing that usually stands in front of the New York Stock
Exchange?
We had it on bulls and bears as well.
That bear that's trying to pull down this bull.
Yes, the famous statue, yes, yeah.
I'm seeing that every day.
I mean, this is now the best analogy for markers that we're currently seeing.
I think it was Monday morning, and what had happened was over the weekend, Donald
Trump had woken up and thought he should have a bit of a punt over the
weekend.
So he put some market making news out there.
He says you've got 48 hours.
And if you don't open the Straits of Hormuz within 48 hours,
I'm going to obliterate you.
Take out all your energy infrastructure.
You know the story.
And everyone was worrying.
And then on Monday, the markets opened and gold was down in dollar terms 10%
because the dollar was stronger.
But U.S.
bond yields spiked.
Market indices were all substantially lower.
And then he said, I don't know, and I'll give you another five days.
And the markets went through the roof.
But gold was down at 4,100 or something.
At the end of the day, it was 4,450 or something ridiculous.
Three $400 swings in gold.
It's astonishing.
And I thought of you, and I thought, how do you get on the phone this morning to
your clients?
And then what do you say in the afternoon when it's reversed?
It's testing your communication skills, Emma.
I must say.
Four seasons in one day.
But Elaine, did you read, I don't know the truth, I don't know the source, but I read
somewhere there was this massive,
massive trade in the options market that literally something like 20 minutes or
just literally just before that
Trump's truth report.
Five minutes actually in some cases.
Yeah, it's something like that.
We're this massive, massive long on the S&P 500.
We're talking about one or two million dollars.
We're talking about a massive long position in the S&P 500 and a massive
short position in
oil.
You know, that can't be.
That can't be just a coincidence.
No, of course it can't.
Nobody's that skillful.
And the other thing is that it came from several different sources.
And one of the platforms that was used apparently was Polymarket.
I don't know if you follow Polymarket.
It's a very sophisticated trading platform where you can literally punt on
anything.
But anyway, the point is Polymarket had some deals and they're looking at it.
But if you're going to inside a trade and you're too big to go to one particular
platform in
isolation, you have to go elsewhere.
And I bet every single other platform would take a decent order.
was getting the same sort of orders as well.
And we know what it was.
We know from where it stemmed.
But of course, will it ever be followed up?
I very much doubt it during this current administration.
Someone knew something from right from the top, I think, Skull, don't you?
For sure, for sure.
Like I said, it just can't be a coincidence.
It's absolutely not.
But I mean, that's the current market conditions.
Wars are not only...
A fort with missiles and the A's and boots on the ground, it's not being done.
in financial markets.
That's a crazy war.
But anyway.
Yes, but anyway, the important thing is, what have you done?
Have you done anything?
Are you still sitting with your positions, but just a little bit slightly,
a slightly more frazzled scalp, though, than the last time we spoke, which
incidentally you were two weeks ago because of technical problems last week.
Yeah, Lindsay, I think you know I've been
been been been been having this this podcast for for many many years and and
you know over the past few months uh i've been
really cautious and and that cautiousness did to a certain extent um made me
take some chips off the table so
to speak um but but i'm not just my portfolio's currently is is sitting with
the the largest
cash position um
I don't think it had a larger cash position in COVID.
So it's definitely sitting more defensively.
But now you need to start looking.
Start looking at opportunities.
Your magnificent seven.
I saw a heat map today of the S&P 500.
And when you look at the map, it sort of looked red.
But it's only red, well, mostly red with these magnificent sevens.
not so magnificent anymore.
But if you look at the rest of the S&P 500,
it's actually held up pretty solidly in this really turmoil market because when
you look at
the remaining, let's call it 493 stocks, they're mostly positive, they're mostly
green.
So we've seen a bit of a disconnect coming from that side as well.
And that's going to create some opportunities.
When you look at the likes of Microsoft, that is now down 31%, 32%.
It's still the second largest company, one of the best managed companies,
and a product which has been the largest company 25 years, and we will most
probably sit here,
you and I, 25 years from now.
Yeah, of course.
I'll be here in the same seat talking to you, Scott.
Absolutely no problem.
Same nonsense, I'll talk to you.
You'll say the same rubbish back to me.
Yeah, of course we will be.
Carry on.
But I think...
Kids, grandkids, those people will still have Microsoft around.
And giving you the opportunity now to buy something 31% cheaper than what you would
have bought it.
I agree with you entirely.
It's a blue chip.
And if it's down 31%, there's a reason it's down 31%
because of AI purportedly taking over software data that
Microsoft has developed and has made its fortune on.
But Microsoft isn't stupid.
Microsoft will turn it around.
It's not like BlackBerry or something like that, which went out the window.
We never saw it again.
Microsoft will bounce back, I think.
And that's not a trading recommendation, by the way, or an investment
recommendation.
What about Tesla?
Also technically in a bear market, more than 20% off its highs.
I mean, you can think what you like about Musk, and I don't like him at all.
I think he's a reprehensible character.
But goodness me, he's clever.
And something will happen to Tesla that will...
get it back in its position as the top of the heap of electric vehicles and whatever
else is attached
to the Tesla share price at the time that he's dreamed up.
So I think if you are liquid, Skulk, then there are lots of opportunities for you.
But I'm saying this humbly, don't rush in yet because I think there's a lot more to
come.
No, I looked at some ETFs yesterday.
And it's just themes.
It always gives you a nice one where you look at and I do it per calendar year,
and I've done it for the past close to 10 years, where you look at I take a
commodity ETF,
MSCI world value, MSCI world growth, developed markets, emerging markets, all
these different themes.
And it's interesting when you look at it.
And where we sit in currency, you pretty much got to repeat.
of the theme that we've seen in 2022, where commodities are currently leading.
You had in second place, but quite far down second place, we had value stocks,
which usually tend to do better in volatile, uncertain times,
where you see some people go back to valuations rather than hype.
And usually at the bottom of the list in 2022, it's no different.
where the U.S.
growth stocks were the worst performers.
And when you look at the current year to date, that is like following that trend to
the T.
And the only difference is we're not nearly done.
We're not even close to seeing the lows that we've seen in 2022.
And I do feel And that doesn't make me a bear,
but I do feel that valuations are still more stretched than we've seen it in 2022.
And I do think that our environment compared to a, let's call it a
post-current environment,
I think is worse.
It's worse than the environment that we've seen three years ago.
So, yes, I agree in totality with you.
I think people shouldn't look at this as this is the buying opportunity for the
broad market.
The market has done what it's done.
JSE, I think on one stage, was off 15% from its highest.
That's as bad as it's going to get back in.
I think you should be a stock picker.
Really be selective on what you buy.
I won't go and buy the S&P 500 now,
but I do think to start nibbling on something like Microsoft is not a bad
idea.
I wouldn't necessarily go out and buy the JSE, but going into a like stuff, a
Richemont,
which is 22% down year to date, Fifth worst performing stock on the JSE.
A company that's, I still think, you know, luxury goods are defensive products.
But also when you look at the Richmond, Richmond's sitting with 7.6 billion euros
in cash, no debt.
7.6 billion.
What do you think they're going to do with this cash in this, let's call it, bad
market environment?
They'll also look for opportunities.
and when things recovery eventually again.
So that's where I'm at currently.
I still sit with a large amount of cash, but I do see some opportunities sticking
out.
Do I think the market has done, did we see the correction?
No, I still think this volatile,
let's call it uncertain environment is going to persist for the next few weeks.
Okay, I hope your mind is mossy now and fertile, Scott, because I'm going to ask
you a question.
And it does sound as though it is.
Okay, so here's the question.
I believe that the gold price peaked that day that I said it would peak or the day
before
I said it would peak.
And it did peak at $5,626 per ounce intraday on the futures market.
Okay, it's not the spot market, it's the futures market.
The spot market was less than that.
because of the contango.
Now, it is currently 4,555.
That's the spot price.
Is there a chance that the gold shares will continue to be in a bull
market and may even go higher and may go to new highs simply because of the
earnings that will come through,
even with a gold price $1,000 per ounce less than the peak it achieved?
Or have we seen the peak?
In Lindsay Williams' world, have we seen the peak in both the gold price in US
dollar terms and also the shares in RAND terms,
for example, on the JSC?
That's my question of the week for you.
Can I answer you next year this time?
Yeah, that works.
No, no, Lindsay, I've got to answer for you.
So we had this golf association there in the,
let's call it the build-up to the highs in gold.
And you called it absolutely spot on.
It was maybe a day or two left.
It was one day early, yeah.
Yeah, yeah, yeah, exactly.
It was spot on, But we also had the conversation to the buildup.
You often ask me, are the miners reacting exactly the same as the gold miners
reacting,
the actual gold miners?
So, well, originally, the gold miners did.
But that, let's call it January, February, the gold miners sort of, as if the market
didn't.
believe the gold price will stay at those $5,000, $5,400 level,
which now subsequently shown to be the right view to have.
These miners are, look at the gold fields.
They mine their gold still at current levels at $1,800 per ounce.
When you look at Anglo Gold, similar story.
Harmony, a little bit higher, they $2,000, $2,100 per ounce.
But, but.
Let's call it average.
Let's make it $2,000.
Our miners are mining this metal, $2,000, and they're still selling it,
$4,000, $4,500.
They've still got a gross profit margin of more than 50%.
They're still sitting with zero debt.
None of these miners really got debt anymore.
And so they're pumping cash.
So, yes, I do agree with you.
I will feel to your question.
that eventually as the results come through,
that it's going to surprise the market and gold miners will justify
that it's because of the price levels it's trading.
But here's the thing.
Here's the thing.
I'm looking at this war and we can go left or right.
I'm not going to try and call an end to the war because that'll just be stupid.
Because as you just mentioned, Trump went from,
we're going to blow up every power station in Iran if you don't do this and this and
this by
noon that time.
And hours later, he said, well, hey, there we go.
Now we've got a great tool to date.
conversation and we're going to not attack Iran for five days and yeah and Iran went
like what did we miss and we're clearly on the same WhatsApp group so we're not going
to try and
call but eventually hopefully
all these parties will sit around the table and we'll see an end to this war
what will happen then
so firstly nobody will convince me
that that inflation is not going to kick up from current levels nobody it already
is it's bubbling skunk we've seen all the good
numbers we've seen the good number from south africa at three percent we've seen
the good number from the united states at 2.4 percent forget
those numbers even if it's just transient remember
that phrase transient oh yeah even if it's just six months the point is it'll shock
the markets and you can see the bond market for
goodness sake the u.s 30 year nearly went to 5%.
The U.S.
10-year was in the mid-440s.
People know that inflation numbers are going to be horrible in the next three to
six months.
Yeah.
And then you get certain very intelligent individuals that keep on explaining to us
that, yes,
inflation is going to be a problem, but we're going to be running into a
recession.
When I say we, the U.S.
are going to be running into a recession way before then.
Nobody's going to convince me again that this is not going to put a lid on economic
growth worldwide.
What we're seeing and experiencing currently,
I'm convinced that that's going to negatively impact economic growth globally
and could even
put countries, U.S.
specifically, in a recession.
So see where I'm getting.
We're already saying we're going to see higher inflation.
I'm telling you, we're going to see a much lower economic growth than people
forecasted going into
2026.
And we've already seen the employment numbers coming out from the US not really
shooting the lights out.
You again, see where I'm going.
There's a stagflation written all over it.
But then on the other hand, you've got President Trump that made it blatantly
clear before he went to do this walk.
On that Fox interview in February, he said three things.
He said, firstly, the U.S.
should undoubtedly have the lowest interest rates in the world.
Secondly, a 1%
drop in the interest rates or the Fed interest rates should see an
increase in the GDP of 600 billion U.S. dollars.
and I 2% drop in interest rates could wipe the deficit in totality, which I don't
believe,
but that's what he said.
Nonsense.
Everything you've just said is nonsense, but it's not what you're saying.
It's just what you're reporting upon.
It's not going to happen.
It might be not going to happen, but we know he's going to try.
That's Trump.
He's going to try.
So when the dust settles around the conflict in the Middle East, which might
take some time,
we know the next step will be.
We're going to lower interest rates.
We're going to lower interest rates to the lowest level.
We're going to try and reach the lowest levels in the world.
And what's that going to create?
Well, that's going to create a much, much weaker dollar.
And you've got a much weaker dollar, you've got a much higher gold price.
So, yes, I think that the gold price or the move that we've seen from
$5,000-odd, you're right.
That was the anticipation of the most.
or let's call it the price of the most anticipated war ever.
Everybody knew this war was going to happen in Iran.
And the gold price just reflected that prior to the actual shots being fired.
But now, did it change the reason why you should be investing in gold?
Hell no.
I think it's actually now even more important to have some gold in your
portfolio.
Very good.
Good speech, Skull, and well backed up.
I hope you are right.
Now, let's have a look at some numbers, shall we?
Because I've got a confusion here, a conundrum.
Actually, I look at a site called investing.com and I look at a site called
the CRB
Index site.
It's from Trading Economics.
But anyway, we'll get to that in a moment.
But anyway, what I do know is...
The dollar round is 1691, which has barely changed from yesterday.
The British pound against the round 2263 with the pound slightly weaker against the
round.
And the euro round is 1958,
a third of a percent down for the euro.
Euro dollar is 115.75.
Let's get on to commodities now.
I've got the gold price at 4560, let's call it, which is up around about 2%.
The Platinum price is up 2.75% to 19.45%
and the Palladium price is up 3.25% at 14.39%.
As I speak, my internet goes down.
You've had some problems in that department.
So I'll give you another couple of pages.
I've got the South African 10-year bond yield at 8.97%, which is 6.5 basis points
weaker.
So it's changed its big figure from 9 to 8.
the S&P 500 futures.
are 66.59, which is up 0.8%, I think.
And what else have we got?
The US 10-year bond, that's been interesting.
It's been fascinating.
The bond market suddenly, as you get older, becomes more interesting than all
the other things like Bitcoin.
4.32%.
Speaking of Bitcoin,
Bitcoin is sort of establishing itself around this 69 to 71 level in the
short term.
It's now 71,278, Skulk.
Yeah, my internet is definitely down.
What have you got for oil?
Because I've got two different oil prices.
Let's quickly see.
Because I've got oil at Brent crude at like 101.40 on my CRB screen.
And yet on my investment.com screen, it says it's 96.60, which is correct.
There's obviously a difference between the futures markets that they're looking at.
One's looking at, for example, the March expiry and the next one's looking at April
or something like that.
What have you got?
I've got the Brent price in front of me and that's currently trading at 101.52.
That's down, let's call it, just close to 3% from the back.
Exactly.
That's exactly what I've got as well.
And West Texas Intermediary is 89.88.
It's below $90 now.
Yeah, I've got that as well.
OK, so that's what we'll go with.
Oil price above $100 a barrel, let's call it that, and that is horrible for the
world economy.
It doesn't matter if it stays there and doesn't go to the new highs of $120, $150,
even some people calling it $200 per barrel.
The fact is that it was, at some stage in the last 52 weeks,
$58.40 per barrel.
So it's doubled in price, essentially.
And we've got to get used to that.
And as you quite rightly said, inflation is going to ignite.
And when inflation ignites, the peasants, they are revolting.
Because the biggest enemy to anybody, whether they're an investor or a shopper,
is inflation, Scott.
Oh, 100 percent.
That is the biggest.
Because remember, we went into this year, not just as South Africans,
but the world was looking at not a matter of if.
It was just hard.
How many rate cuts will we be seeing this year?
And I know some people were forecasting two, some were saying even three rate
cuts.
But rate cuts was the order of the day for 2026.
Well, we went from 28 February, there was a 60% probability,
and that's according to the CME Fed tool, 60% probability that the Fed will cut
rates at the
April meeting.
As we sit here, there's now no chance.
zero chance for a rate cut in April, there's actually just close to a 20%
probability that they'll have a rate hike.
So it just shows you how things have changed.
Yes, we've got the SARP meeting tomorrow, the Reserve Bank meeting tomorrow.
And as we sit here, the polls are telling us that it should be a no change.
And I do agree with that.
I don't think they should be jumping the gun because the Reserve Bank was...
very slow lowering rates.
And why am I saying that?
When you look at the past 20 years,
the difference between the RIPA rate and the inflation rate was roughly 1.5%.
So that's just subtracting the inflation rate from the RIPA rate.
So when that gap is high, meaning that inflation is way lower,
that gives the Reserve Bank a bit of ammunition to lower rates,
which it didn't really do as aggressively as some of our international counterparts.
As we sit here, that difference is more than 3%.
So hopefully...
Hopefully, the Asia Reserve Bank will look at this and say, well, as slow as we were
in lowering rates,
if we need to start hiking with higher inflation, hopefully we'll just be as
slow.
Yeah, we'll wait for that decision.
Over the next few weeks, the next two or three months, it's going to be very
difficult for the South African Reserve Bank to juggle.
And it has a juggling act every time it meets.
But this time it's very difficult.
What do they say?
This is just a moment in time.
So inflation will come back down again.
So we're not going to keep rates on hold or even raise rates.
We are going to continue with our cutting policy.
On the other hand, they'll say, well, we've got to keep inflation under control
because that's our mandate.
So we'll see.
Skulk, before we get to the ups and downs on the JSC, please tell me about Remgrove.
Numbers out today.
I thought it looked really good.
I mean This is a company, you know, that I follow and really like.
And for T's and C's purposes, I'm invested in as well.
And the main reason for buying this company, well, the two main reasons.
One, when you look at the portfolio of stocks, it gives you a great South African
Inc. representation.
And we know it's been the place to be invested.
And then secondly, it's the fact that it...
trade it.
I mean, if you look at the since 2009, the average discount to its intrinsic value
was roughly about 20, 21%.
And for the past few years, we've seen this company trade well above the 40%
discount to its intrinsic value.
Market telling the company, come on, you need to now either start unlocking value
or give us the shares back.
And we know they've done that.
They've done quite a few innovative things over the past few years.
Most recently, selling the F&B exposure.
But the companies within Remgrove did really well.
Mediclinic, phenomenal, really good set of results.
Even Rainbow Chickens, which has always been sort of a tongue-in-the-cheek type of
company, that did well.
And when you look at the company's intrinsic value, now trading slightly
below the 40% levels,
but let's call it a 38-odd percent discount, I still believe...
And it's offering a lot of value.
They're sitting with quite a bit of cash.
That's, I think, a positive.
And yeah, in general, it's just a really, really good set of results.
Very good.
A nice, robust Remgrove assessment there from a shareholder at Skunk Low.
Let's have a look at some of the other shares on the JSC today.
Diskem up 6.75%, Karoo up 6.3%, Northern Platinum 6.2% of the good.
Here come the diggers.
Northern's followed by Harmony up nearly 6%.
And Anglo Gold is 5.2% higher on the close.
On the downside, there isn't a day where Tungela is not either at the top or at the
bottom.
Tungela today down 7.2%. Another digger, but of a specific commodity.
Property company, Hammerson, down 4.1%.
Boxer.
down 3.75%, Exaro down 3.1%, Motus down two and a third.
Skulk, any outside of those?
Yeah, Emerson and Motus ex-diff scenario,
but nothing really standing out.
I think in general it was just a solid recovery day in the market.
Let's hope it's not a dead cat bounce.
How are the indices?
I noticed that the ones that you have been watching very keenly for a couple of years
are doing very well today.
Give us the details, please.
Yeah, the resources did well.
I mean, we could have started there at 4.8%, but as I mentioned, it was across
the board.
Today, we've seen industrials that actually were up 2.3% as well,
and financials up over 3%, asset property up over 1%.
So, yeah, in general, it was just across the board a very, very solid day.
But again, mostly driven by recovery and some of these resource stocks.
I'm just going to give you the S&P to just to conjure with in the last few hours of
trading.
66.50 for the June futures, up 0.7%.
I would say that they'll be flat or down by the end of the day because people are
not taking into account the fact that Iran has had a look at this
so-called 15-point plan from Trump, which he probably wrote in crayon or something.
And...
They've just said, sorry, surely you jest, Mr.
President.
And it's not going to be good.
So that's just me and just following the pattern of the last few weeks.
Skullclaw is a portfolio manager at PSG Wealth Old Oak Division in Cape Town.
And that was the 5 o'clock shadow.
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