🎯 Tariff Talks: Where Are We Now?

Simon Brown recaps the evolution of Trump-era tariffs, with recent developments around:

• US-China deal: effective 54% tariff on Chinese goods, 10% on US goods

• UK, Mexico, Canada, Vietnam likely settling around 10%

• Expectations for other regions like EU, Saudi Arabia, South Africa

• Conclusion: tariff escalation seems contained, reducing recession risks

Key Insight: Markets are stabilising as the worst-case tariff scenario is dialed back.

Trump targets high drug prices in the US, pushing for:

• 30-day deadline for pharmaceutical companies to lower prices

• Unclear legal basis; possible price controls debated

• Pharma stocks bounce back slightly after initial drop

Simon’s Take: Healthcare is risky for investors due to constant regulatory pressure — he stays away.

Lewis expects a 55–65% EPS increase, sparking:

• A ~16% stock price surge

• Ongoing share buybacks and high dividends (7.8% yield)

• Strategy: loan book expansion, carefully managing bad debts

Verdict: Strong fundamentals, still looks cheap. Simon and analysts are bullish. 📈

First results since Boxer listed:

• Modest headline earnings (new shares diluted results)

• 25 new superstores & 35 liquor stores planned annually

• Operating margins on par with Shoprite* (~5.5%)

• Stock trading at fair valuation (R64.77), analysts' target: R76.66

Insight: Promising growth but priced in. Shoprite still Simon’s preferred pick. 🏪

Highlights from AngloGold’s trading update:

• 7x increase in free cash flow

• New dividend policy: $0.125 quarterly minimum + 50% of FCF

• 26% production increase (aided by Egypt acquisition)

• Concerns: strong rand + weak gold price pressure the stock

Simon’s Position: Holds the stock, likes the dividends — cautious on expansion. 🪙

Property sector comparison:

• Calgro M3*: Sub-R1m homes, shifting from gov’t subsidies to open market

• Balwin: Mid-to-high-end units (R1.1m–R3m+), annuity income from parks & amenities

• Both cautious due to election risks and past invasions

Bottom Line: Simon owns Calgro, likes both for their contributions to housing. 🏡

Simon Brown

* I hold ungeared positions.

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🧓 Warren Buffett Steps Down as CEO of Berkshire Hathaway

• Buffett officially steps aside as CEO at age 94, replaced by Greg Abel.
• Still remains Chairman
• Berkshire A shares up ~44,000% since the 80s
• No dividends ever paid, only share buybacks
• His legacy: simplicity, repeatable process, and long-term vision
• Emphasis on reading years of balance sheets and loving cash flow
• Fun fact: 96% of his net worth came after age 65

🏦 Investing Lessons from Buffett

• Stick to quality companies at reasonable prices
• Focus on permanent capital and compounding
• Keep your process simple and repeatable
• Don’t chase hype — focus on fundamentals
• South Africa's Chris Seabrooke noted as a local Buffett-like investor

🌸 "Sell in May and Go Away" – Myth Busted

• Simon critiques the old market adage.
• S&P returns from May–October average 0.49%, Nov–Apr average 1.02%
• Transaction costs, taxes, and missed rallies make timing unreliable
• Verdict: It's a nursery rhyme, not an investment strategy

🛢️ Oil Falling as OPEC Hikes Production

• OPEC+ accelerating production increases
• Brent now ~$60/barrel

Impacts:

• ✅ Good for fuel prices & oil consumers
• ❌ Bad for Sasol (though price hasn’t reacted much)
• 🏚️ Fracking rigs in US may shut down if prices fall further
• Possible geopolitical angle: helping Trump by lowering gas prices

💵 Rand Strengthens

• ZAR at R18.24/USD, nearing a key R18.30 technical level
• Boosted by stronger exports, higher gold prices
• Could trend toward R17 if momentum continues

🪙 Gold Surging Again

• Gold bouncing back above $3,000 after recent dip
• Driven by:
  • Central bank buying
  • Rebound in ETF inflows (especially in Europe, Asia, and US)
  • General inflation and recession fears
  • Upcoming FOMC decision adding fuel to the rally

🏛️ FOMC Decision This Week

• Fed expected to hold rates
• US inflation stickiness, strong jobs data, and political independence from Trump all in play
• Simon expects no change but criticizes SARB for being too hawkish despite low SA inflation (2.7%)

🧠 Palantir Results – Big Numbers, Big Risks

• Q1 Revenue up 39% YoY to $884M
• Customers up 39%, EPS (non-GAAP) at $0.13
• Price-to-book: 58x ⚠️
• EV-to-sales: 100x ⚠️
• Heavy stock-based comp = shareholder dilution
• Analysts split: mostly neutral or bearish
• You’re investing in Peter Thiel’s vision, not value metrics

Simon Brown

* I hold ungeared positions.

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🎙 Episode Summary:
This week, Simon unpacks Alphabet’s surprisingly cheap valuation, troubling US economic data, South African CPI figures, Trump’s trade mess, and the implications of Aspen’s customer fallout. Plus, he previews the Berkshire AGM and upcoming JustOneLap events.

📉 US Economic Data Shock

• Q1 GDP: Expected +0.2%, came in at –0.3% 😬

• Imports surged 40%, skewing GDP down

• Retail inventories and trade balance signal deeper issues

• PCI inflation at 1.8% vs. 1.2% expected

• Recession fears intensify

US GDP Q1 2025

🇺🇸 Trump’s 100-Day Trade Tangle

• Trump promised 90 trade deals in 90 days — none signed yet

• India might come to the table soon

• Tariff chaos continues, shelves may empty by July

• Xi Jinping not engaging — trade uncertainty remains high

📊 Alphabet (GOOGL) is Looking CHEAP

• PE under 20, forward PE ~17 🔥

• YouTube: $9B in rev, larger TV share than Netflix

• Cloud turning profitable; Waymo surging

• Risks: Antitrust cases, weakened core search, AI competition

• Analyst sentiment: 13 Strong Buys, 39 Buys, 12 Holds

• Price targets: Avg $202, High $240

🧠 Search Wars: Google vs. AI

• Google Search = cluttered & ad-heavy

• Simon prefers Perplexity & ChatGPT for clean, accurate info

• Questions around ad revenue in AI-driven search era

💥 Aspen: Trust Broken

• Lost a major take-or-pay client 🧪

• Share down ~33%; questions around facility utilization

• Replacing lost volume could take 12–18 months

• Confidence in management fading

Aspen | Weekly 29 April 2025

📉 SA CPI Drops to 2.7%

• Well below target band midpoint of 4.5%

• Inflation lowest since mid-2020

• Will SARB cut rates? Depends on FOMC outcome on 7 May

📚 Budget 3.0 Incoming

• New budget after VAT hike rejection

• 21 May – Stay tuned for more policy drama

🏛 Berkshire Hathaway AGM

• Saturday @ 14:30 SA time 🧓

• First meeting without Charlie Munger

• Warren Buffett expected to address investment outlooks and succession

Simon Brown

* I hold ungeared positions.

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Gold Pullback in Focus

• Gold surged to $3,500 before a sharp pullback to $3,321.
• Simon breaks down what caused the spike — including comments from Trump about Powell and rate cuts.
• Weekly chart shows potential kangaroo tail reversal — possible zone to watch: $2,800–$3,000.

Gold | Weekly | 23 April 2025

Trump, Powell & IMF Forecast Downgrades

• Trump critiques Powell and Fed policy while possibly setting up a scapegoat.
• IMF cuts global growth forecasts from 3.2% to 2.8%.
• South Africa's expected GDP is now at 1% — far below Treasury’s 1.9% target.

Rare Earths: Not So Rare, Still Strategic

• China's dominance in rare earths: 69% production, 90% processing.
• Simon looks at the VanEck Rare Earth/Strategic Metals ETF (REMX) as a thematic play.
• Pros & cons of investing in rare earths — not fully sold on the ETF himself.

Flashback: 5 Years Since Negative Oil

• Remember April 2020? Oil went negative (-$40.32)!
• Breakdown of why it happened (physical settlement, lack of storage).
• One of the wildest moments in market history.

21 April 2020 | WTO goes negative

New Battery Tech from China’s CATL

• Sodium-ion batteries could rival lithium: cheaper, safer, fast-charging.
• CATL is profitable and pays a dividend, but listed in Shenzhen, making access tricky.

Aspen's R2 Billion Hit

• Brief mention of Aspen's contract dispute and loss.
• Lack of transparency continues to damage trust in management.

Simon Brown

* I hold ungeared positions.

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🌍 Global Markets Rundown

• Goldman Sachs suggests gold could plausibly hit $4,500/oz by year-end.
• Gold is currently around $3,200/oz, but volatility and uncertainty are driving prices higher.
• Gold miners are benefiting from the price surge, with big leverage showing up in earnings.
  • Example: Pan African Resources made $900/oz at $2,250; could make $2,900 at $3,250.
• Big upside still possible if gold just holds or drifts higher.
• SA gold stocks (YTD performance):
  • Pan African Resources +106%
  • Harmony +76%
  • AngloGold Ashanti* +72%
  • Gold Fields +30% (with mine-related issues)

Gold | Weekly chart |15 April 2025

📉 Recession Watch

• Larry Fink (BlackRock) & Jamie Dimon (JPMorgan): “US may already be in a recession.”
• Trump’s constant tariff changes add more uncertainty.
• Growth is slowing, and inflation is stubbornly high (risk of stagflation).
• Treasury buyers are hesitant—money is going into gold, not US 10-year bonds.
• China's potential bond moves could rattle the entire global system.

💸 Currency Check

• The Rand recovered from nearly R20/USD to around R18.75/USD.
• Driven by dollar weakness, global uncertainty, and DXY dipping below 100.
• Local support for ZAR remains tentative but improving.

📊 ETFs & Resources Rally

• Satrix RESI ETF* now ~50% gold miners, up ~44% YTD.
• Resource-driven tax windfalls (like in 2021/22) show how profitable miners benefit the broader economy.

📈 Local Market Highlights

• Purple Group* (EasyEquities) finally breaks out:
• Strong results: HEPS up 204%.
• Thrive initiative charging inactive accounts adds meaningful revenue.
• Stock rallied from 92c to 118c in just over a week.
• Possible end to aggressive selling pressure—more upside ahead?

Simon Brown

* I hold ungeared positions.

All charts by KoyFin | Get 10% off your order

🇿🇦 South African Budget & Political Risk

• Budget framework passed (barely) – VAT increase to 15.5% effective 1 May.
• GNU under pressure as ANC signals reformulation talks with partners.
• Rand volatility: Touched nearly R19.90/USD before recovering to ~R18.70.

💥 Global Markets in Turmoil

• S&P 500 down 18.25%, Nasdaq down 22.5%.
• Massive selloff: One of the steepest 4-day drops since 1950.
• But historically, markets rebound over 1, 3, and 5 years post similar dips.

S&P500 | Weekly | 08 April 2025

🇺🇸 US Tariffs – Trump’s Economic Disruption

• 104% tariffs on Chinese goods kick in; highest in 100+ years.
• Aimed at reshaping global trade, raising revenue (~$600B–$1T est).
• Massive uncertainty over whether Trump reverses course.
• Impacts already visible: Nintendo delays Switch 2 US preorders.

🌐 Global Repercussions & Recession Risk

• Supply chain shocks, rising costs, and job losses in producing countries (Vietnam, China).
• Major US banks now see a >55% chance of global recession.
• Countries shifting alliances; US being carved out.

🏦 US Treasuries Drama

• Wild 10-year yield swings overnight – unusual volume raises eyebrows.
• Could China be retaliating by offloading US debt?

💡 What To Do As An Investor

• Avoid panic. Focus on quality and defensive stocks.
• Opportunities:
  • SA: Capitec, Shoprite*, BIDCorp, RSA Retail Savings Bonds
  • Global: Ferrari (Race), Johnson & Johnson, ASML, Europe
  • Sectors: Healthcare (STXHLT), Tobacco, Alcohol, Staples

Simon Brown

* I hold ungeared positions.

All charts by KoyFin | Get 10% off your order

Chapters
00:00 Market Overview and Budget Implications
02:59 Global Economic Concerns and Market Reactions
05:54 Trade Wars and Tariff Impacts
09:10 Investment Strategies in Uncertain Times
12:04 Sector Analysis: Opportunities and Risks
14:58 Future Market Predictions and Closing Thoughts

Simon Brown chats with Glynn Allen from Shyft Global on the history of the app and the recent introduction of JSE shares and a look ahead to new features.