Golden Highs & Trump Trade Shambles

02/06/25 • 18 min

WorldWide Markets with Simon Brown

Trump Trade Tariffs & Global Market Impact:

Initial tariffs of 10% (China) and 25% (Canada, Mexico) announced but later revised.
U.S.-Canada relations strained, with Warren Buffett warning of reputational damage.
Global negotiation shifts—China, Russia, and Europe eye opportunities.
Continued U.S.-China trade tensions, including semiconductor restrictions and rare earth tariffs.
Market volatility expected; long-term investment strategies recommended.

Investment Strategies Amid Uncertainty:

Volatility is high—avoid panic selling.
Keep cash reserves for opportunities (buy the dip cautiously).
Long-term focus: presidential terms are temporary, investments span decades.

Interest Rate Decisions & Market Reactions:

Bank of England expected to cut rates.
U.S. Fed Chair Jerome Powell pauses rate hikes due to inflation concerns.
South Africa’s MPC cuts rates, prime now at 11%.
Analysts predict one to two more rate cuts in 2024.

Gold Market Strength & Outlook:

Gold price hovering near $2,900, with potential to break $3,000.
Supply constraints—minimal new gold mining projects.
Strong central bank purchases—1,000+ tons bought in 2023.
Retail ETF inflows return after three years of outflows.
Gold miners like Harmony, AngloGold*, and Pan African positioned well.

Gold weekly | 06 February 2025

Retail Sector & Consumer Spending:

Mixed trading updates: Pick n Pay and Boxer show early turnaround signs.
Modest growth in TFG, Mr. Price*, and Clicks; Shoprite* remains strong.
Cautious consumer spending patterns persist.

Two-Pot Retirement System:

Initial withdrawals lower than expected—around R50 billion.
Future ongoing withdrawals expected as a structural component in SA’s economy.

Vehicle Sales Trends:

January sales at 46,400—stronger than expected.
Used car market expanding, Chinese brands gaining traction.
Auto sector investment options: CMH*, Motus, and Zeda.

Such African monthly vehicle sales

Sasol’s Ongoing Struggles:

Six-month trading update—earnings per share around R14.
Continual asset write-downs and operational challenges.
PE ratio suggests market pricing for bankruptcy, but survival likely.
No clear turnaround signals yet—investors should wait for stronger confirmation.

Simon Brown

* I hold ungeared positions.

All charts by KoyFin | Get 10% off your order

00:00 Market Overview and Podcast Introduction 01:10 Trump Tariffs and Global Trade Dynamics 06:25 Interest Rates and Economic Implications 10:02 Gold Market Trends and Predictions 12:51 Retail Sector Performance and Consumer Behavior 14:17 Vehicle Sales Insights and Market Trends 16:40 Sasol's Financial Challenges and Future Outlook

Trump Trade Tariffs & Global Market Impact:

Initial tariffs of 10% (China) and 25% (Canada, Mexico) announced but later revised.
U.S.-Canada relations strained, with Warren Buffett warning of reputational damage.
Global negotiation shifts—China, Russia, and Europe eye opportunities.
Continued U.S.-China trade tensions, including semiconductor restrictions and rare earth tariffs.
Market volatility expected; long-term investment strategies recommended.

Investment Strategies Amid Uncertainty:

Volatility is high—avoid panic selling.
Keep cash reserves for opportunities (buy the dip cautiously).
Long-term focus: presidential terms are temporary, investments span decades.

Interest Rate Decisions & Market Reactions:

Bank of England expected to cut rates.
U.S. Fed Chair Jerome Powell pauses rate hikes due to inflation concerns.
South Africa’s MPC cuts rates, prime now at 11%.
Analysts predict one to two more rate cuts in 2024.

Gold Market Strength & Outlook:

Gold price hovering near $2,900, with potential to break $3,000.
Supply constraints—minimal new gold mining projects.
Strong central bank purchases—1,000+ tons bought in 2023.
Retail ETF inflows return after three years of outflows.
Gold miners like Harmony, AngloGold*, and Pan African positioned well.

Gold weekly | 06 February 2025

Retail Sector & Consumer Spending:

Mixed trading updates: Pick n Pay and Boxer show early turnaround signs.
Modest growth in TFG, Mr. Price*, and Clicks; Shoprite* remains strong.
Cautious consumer spending patterns persist.

Two-Pot Retirement System:

Initial withdrawals lower than expected—around R50 billion.
Future ongoing withdrawals expected as a structural component in SA’s economy.

Vehicle Sales Trends:

January sales at 46,400—stronger than expected.
Used car market expanding, Chinese brands gaining traction.
Auto sector investment options: CMH*, Motus, and Zeda.

Such African monthly vehicle sales

Sasol’s Ongoing Struggles:

Six-month trading update—earnings per share around R14.
Continual asset write-downs and operational challenges.
PE ratio suggests market pricing for bankruptcy, but survival likely.
No clear turnaround signals yet—investors should wait for stronger confirmation.

Simon Brown

* I hold ungeared positions.

All charts by KoyFin | Get 10% off your order

Previous Episode

Cristal Challenge Stock Picks for 2025 (#616)

The Cristal Challenge runs until October, with participants picking five local stocks (no ETFs or sub-20c stocks) to hold through the year.

Simon’s picks include a mix of stable “banker” stocks and speculative plays:

Richemont*:

High-end luxury giant with strong fundamentals and global market appeal despite challenges in China.
Trading near R3,500, with long-term potential boosted by luxury market recovery and stable global demand.

Shoprite*:

Dominant grocery retailer in South Africa, benefiting from market share growth and diversified business lines like 60/60 delivery.
A steady performer with consistent earnings growth and market dominance, trading at a PE of 24.

ADvTech*:

Education sector leader, well-positioned to meet growing private schooling and tertiary education demands.
Education giant trading below its historical PE average, supported by asset-light growth strategies.

Calgro M3*:

Affordable housing developer, thriving on demand for low-to-mid-income housing in South Africa.
Value pick with a PE below 3 and a focus on affordable housing, addressing a critical market need.

Purple Group*:

Innovator behind EasyEquities, leveraging platform fees and expanded product offerings to drive revenue growth.
Growth potential through EasyEquities' platform fees, rising customer base, and additional financial products.

Simon Brown

* I hold ungeared positions.

All charts by KoyFin | Get 10% off your order

Next Episode

China Running and Finally a Sasol Reversal Pattern?

Market Updates & Analysis:

Sasol Reversal Pattern? – Examining Sasol’s technical setup and the significance of a ‘kangaroo tail’ pattern.
Rand Stability Amid Trump’s Threats – Despite geopolitical concerns, the rand remains steady.
Top 40 at All-Time Highs – Market momentum and investor confidence.

South Africa’s Budget Speech (Wednesday, 2 PM SAST)

Revenue shortfalls and potential tax bracket adjustments
Universal Basic Income and National Health Insurance funding discussion
Expectations for the fiscal policy outlook

Stock & Sector Insights:

Telkom: Revenue up 0.9%, in a turnaround phase, but Simon remains skeptical about telcos.
Santam: Strong earnings growth (40-60% increase in HEPS), but insurance sector risks remain.
Shoprite*: Consumer stock pullback; long-term bullish outlook despite short-term pressure.

China Stocks & ETFs:

Alibaba up 40% on Apple collaboration
Satrix China ETF – is it time to reconsider investing in China?
General sentiment split between ‘China is uninvestable’ vs. ‘China has potential’

Bond Market Watch: