E Reconsidered Boom

Today US markets reconsidered the boom which raised almost all boats Monday. One reason was that the dollar surge reversed. Another was that US oil demand rose and it looks like there won't be a federal tax to cut consumption despite global warming risks. The US markets tried to repeat the big rise from yesterday, and appears to have succeeded.

The Nikkei which lost 3% or more yesterday today reversed back up 3.112%. We finally seem to have gotten our Japan correspondent to realize that he has to cover this stuff. He was not aware that the website has been down for months and thought it was simply his computer. That may be because Japan seems to be so much better at tech than the USA.

Bank of America-Merrill strategists today called upon US investors to look for opportunities up north, in Canada. Our S&P 500 is trading at 1.4x earnings while the Toronto Stock Index is at 17x earnings, a two standard deviation discount, the greatest since the tech bubble. The thundering herd also cites the stability of the C$ compared to more distant currencies.

Israel has developed a new system for stopping rockets, drones, and aerial threat using lasers. This will cut its risk from Gaza without having to bomb the enclave.

Photo by Annie Spratt on Unsplash

Reporting Companies

*Naspers of South Africa and Prosus of Europe reported jointly today because they are proposing another move away from NPSNY to PROSY later this year. The idea is to cut the size of Naspers to 40.3% of the combo and up that of PROSY to 59.7% via another transfer of asseets. The Jo'berg remainder will keep South Africa from losing any revenues. The combo also tried to explain how the businesses of the two arms will be differentiated more. This follows an earlier move to cut the size of Naspers by 2% in April.

Now the idea is to double the size of Prosus to a euros 20 bn company. Naspers reported net trading profit of 5.03 bn for the 2020-21 fiscal year and an eps of $12.04, well up from prior year's $3.1 bn. Both are based on its Hong Kong Tencent stake and huge increases in the Naspers e-commerce businesses which doubled to $39.3 bn. It also did well in food distribution, up 127% because of covid-19 but it is uncertain how well this will do once the pandemic ends. Another winner was fin-tech, which saw a 38% increase in transactions but a 51% increase in volume to $35 bn, another gain at risk post-pandemic.Ads were less profitable because of the virus as people didn't shop. A SPAC was used to get into education technology with Skillsoft, while Eruditus was nabbed by Prosus. PROSY acquired Stack and a majority of the shares of Goodhabitz, workplace sites. At issue here is whether these acquisitions will be able to handle increased competition when covid-19 infections drop.

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I will give some Canada ideas to paid subscribers after today's news which is more global. Because I was able to vote early this morning the blog will be split again between paid and unpaid ...

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William K. 3 months ago Member's comment

As thorough as always, and interesting as well.