WorldWideMarkets — Episode 687: Full Transcript

Episode date: 22 July 2026 · Runtime: 23:49 · Host: Simon Brown

Lightly edited for readability — false starts and repeated words trimmed, and obvious transcription errors corrected. Wording and meaning preserved throughout.

This week: prediction markets — finding an edge and avoiding scams. Netflix — the market hated the results, the stock is down 50% over the last year, but I think it’s looking good. We’ve got Canada tariffs, we’ve got Brent, we’ve got stocks on the move.

I’m Simon Brown, this is WorldWideMarkets episode 687. This is for 22 July, and I’m recording midday on Tuesday.

WorldWideMarkets is powered by Standard Bank Global Markets Retail and Shyft — the global money app that puts travel, shopping, payments and investments in the palm of your hand. Enjoy the cheapest forex rates anytime, anywhere. Shyft, powered by Standard Bank. Thanks to Standard Bank, thanks to Shyft.

Just to be clear — and I have been commenting on this — Shyft is doing their move across, where they’re moving everyone from Online Share Trading into Shyft. That continues to happen. The process is kicking off for the last bunch of cohorts over the next couple of weeks. If you get an email, it’s not a scam — it’s going to happen. Let’s dig in, and let’s start with the prediction markets.

Prediction markets: where’s the edge?

Polymarket and Kalshi are the two biggies. I’m going to be looking at Polymarket — I’ve been looking at it a whole bunch — and there are a couple of issues. I’m trying to find where there’s a potential edge; I’m trying to find where there’s just out-and-out dodginess (and there’s a ton of it); and I’m trying to find where there’s liquidity — and there isn’t necessarily a lot of it. But there must be somewhere we can find ourselves an edge. Let’s have a look at some examples.

Next mayor of Johannesburg — I was surprised to see this one, and it’s moved quite markedly. We had the good Reverend sitting on, I don’t know, 3 or 4%; suddenly he’s assumed to be the ANC candidate and now he’s at 49%. We’ve got Helen Zille at 45%. Look at the volumes: there’s $9,000 on the Reverend, $25,000 on the next one, Herman has $13,000. Some numbers out there. Kenny’s got $1,253. The thing is: what’s my edge? I’m not a political expert.

I’ve got ways of managing it — and I’ll show you in a second with the Brazilian election — where in a two-horse race, which looks broader but is ultimately two horses, does it sum to less than 100? The problem here is: who knows what’s going to happen? We’ve had so many mayors in Johannesburg. There was a point when you were scared to answer your phone, because somebody was going to say, “Yo Simon, do you want to be mayor?” And the answer is, “I’m busy for the next five days” — because that’s about how long you lasted.

So yeah, I chuckle at Kenny down there at sub-1%. But don’t chuckle — he might be the mayor after the election, because this is not about who wins the most votes or the popular vote. This is about who becomes mayor after that election on the 4th of November. There are a lot of moving parts, and the answer is we don’t know who’s going to become mayor. There’s just too much uncertainty, so I don’t have an edge here.

The Brazil election arbitrage

But if we go to the Brazilian election, here we’ve broadly got two candidates — Lula da Silva and Flávio Bolsonaro — and one of them is going to be the next president. There might be a runoff; the rules, as I understand them, are that if no one gets 50%-plus, the top two go to a runoff a week later. That’s fine. But I can say that Lula or Flávio — one of them — is going to be the next president of Brazil.

So what am I doing — betting on one or the other? No, because I don’t know which. What I can do is buy “yes” on one for 61 cents and “yes” on the other for 26 cents. In other words, I’ve spent about 87 cents, and one of those two wins and I make 100. So I make 13 on an 87 outlay. The election is in October, so call that three and a half months — I’ve made about 15% in about three and a half months. That’s a return I can like.

There’s also no space for jobbery here — nobody can rig this market. There are some weird numbers going through; Michelle Bolsonaro is sitting on $9 million… some big numbers. But this has had $114 million of volume. So what I like: it’s a multi-horse race, but I think there are only two horses in it, and I just bet on those two, and they sum to less than 100. In this case I want them to always sum to less than 90.

Make no mistake — there is risk. If I’m wrong, there’s absolute risk. I can exit and get some of my 87 cents back — Ts and Cs apply. But you see what I’m doing? I don’t have an insider edge, particularly for this election, but I can pretty much say it’s probably going to be one of those two. I got my AI chatbot to give me some ideas, and it did — it came back saying it’s a race between these two. Truthfully, Flávio was a hundred miles away just recently, and he’s picked up a ton.

You can also put bids and offers into the market and earn some commissions back if you get hit — that starts to get interesting too. Say Renan Santos is suddenly the winner and Flávio and Lula both collapse: I can probably exit those at, say, 10 or 15 cents each, so of my 87-cent outlay I get 20 or 30 back, and I can put those in as bids and wait to be hit.

Betting SA inflation with a Bayesian model

But here’s one that interested me: South African annual inflation for 2026. This is for the year 2026; the data will be released on 20 January 2027, and it will effectively be the 2026 inflation rate. A few things here. Is it going to be above 2.6%? No — just no, right? So I can immediately buy a “no” here; it’s going to cost me 86 and I’m going to get 100, because it’s just not going to be above 2.6%.

But here’s where it gets fun. I can sell a “yes.” If I sell a “yes,” I’m receiving some cash. I’m not going to get a lot from it, but I can sell a “yes” — and to be clear, if I sell a “yes” and it does happen, I have to pay out; if it doesn’t, I keep the money up front. Essentially we’re almost doing option trading here. I can sell a “yes” at 13, 13.8 — call it 14 cents. I receive the money; I sell a thousand of them, I receive 14 cents each, $140, and then I can put that $140 into other places. I can also sell, for example, “is it going to be above 5%?” I can’t see that either. The point is I can buy the “no” at 92.8 — that works perfectly well, and I’ll make the same level of money — but by selling the “yes” I get some cashflow now. Do I need that cashflow now? Ts and Cs.

So I can sell the extremes, or take positions on the extremes, and say: no, it’s not going to happen there, and no, it’s not going to happen there. Truthfully the “greater than 5%” doesn’t particularly appeal to me, although the “between 4.7% and 5%” would — I’d have to sell the “no” for that. But the “below 2.6%” one I really like: it’s just not going to be below 2.6%.

We can take it a step further and do some Bayesian thinking. What’s Bayesian? It’s the idea of breaking something into pieces, giving each piece a percentage likelihood, coming up to an overall number, and then tracking that over time as things change. We’re about five months away from 20 January, and things are going to change. I think our inflation for the year is probably going to be in that 4.1% to 4.4% range, and I can buy “yes” at 7.8. I could also go on either side of it as a bit of protection if I wanted.

I could build a model. What are the big inputs? Food inflation — what are we going to start seeing towards the end of the year? Remember what’s happening: the food planted in the last month or two — the fertiliser, the urea, was up 2x what it normally trades at. That feeds into the fertiliser that comes out at the end of the year and hits our table, our Christmas lunch. Our Christmas lunch was planted a month or two ago. But urea’s come back. How much planting was happening at that point? I’m not sure — but you know who does know? Wandile Sihlobo, chief economist at Agbiz. I can hook up to Twitter and ask him: how much fertiliser do we think was used at that point when urea was 2x normal, now that it’s back to normal?

Then we can build a model for food, and a model for fuel. Fuel has two components: the rand and the oil price. What’s our year-end expectation for oil, and for the petrol price? The Central Energy Fund (CEF) website gives us daily updates — we can pull that formula, run it, make assumptions. Say we assume oil at $80 and the rand at 16.30. As we get closer, we ask: is oil going to be $80? It looks like it might be $70 or $90; the rand might be 17 or 12. As those change, we plug them into our model and start getting something.

The problem is volume. There’s just no volume. If I want to buy $200 of this — okay, I’ve got to go from 18.2 to 18.4, not the end of the world. But if I want to sell $1,000, I’m going to move it a lot; there’s a giant jump there. Look at the mayors-for-Joburg market: Helen Zille is buy for 44 and sell for 57. That’s a huge spread. So where’s our edge, and where’s the risk?

Then there are what they call “mention markets” — not interested. There could be a market on “will Simon mention wheat in his next show?” — and if I do it pays, if I don’t it doesn’t. Not interested; it’s too easy to manipulate. Sports? Not interested. This is gambling, and I don’t gamble; I don’t like gambling. You certainly can, but I’m looking for an edge, and I think there are places. That multi-horse race that’s really a two-horse race and sums to less than 90 — I think there’s potential there, absolutely. And when we’re looking at something like an inflation outlook, we can get fairly smart.

There was an Odd Lots podcast recently talking to guys who make money off prediction markets, and one of them focuses on inflation — that’s his whole story. He’s just got an Excel spreadsheet and plugs in the data. By the time the inflation print comes out, much of the data we already know: come 20 January, we know what the fuel price was for December — we knew the December fuel price in the first week of December. So as we get there, we can be plugging data in. It’s not the big surprise many think it is.

Upcoming events

We’ve got some events coming up over the next couple of weeks. One is with 1nvest — we’re looking at commodities, commodity ETFs and ETNs: what is the future of commodities, where are they going (it’s been a wild year), and importantly, how do they price them? Then there’s a Power Hour on the 12th of August: building an ETF portfolio, from one fund to ten. Whether you’ve got a couple of thousand rand or six or seven digits of portfolio — how to think about constructing it and how to build it. Both are webcasts; the Power Hour is also live in Rosebank, Johannesburg. Go to JustOneLap.com/events for more information and booking.

Oil, Iran and Canada tariffs

We’ve got oil on the move again. US servicemen were dying over the weekend. Oil, as we’re recording this, is trading just above $90 — vaguely where it was last week (last week it was just below $90). It has been moving higher, and it does look like the war is escalating. The death of three, maybe four, American service people has certainly upset a number of people, including Trump.

But maybe he shouldn’t have started it. The point is Trump has no capacity to end this — this will be ended by the Iranians, and I don’t think they’re in a hurry. Much as I’ve said “hey, the midterms, you don’t want the war ongoing” — I think Iran is like, “You know what? We might like the war still ongoing.” In fact, maybe they’d like it to continue for as long as Trump is in office, and the first sign of a stable human being, they’ll make peace. In other words, oil — I do think it’s going higher.

Another point I think is important: Trump is now threatening new tariffs on Canada — 50% tariffs. On Monday he signed an order saying tariffs are coming, Canada is terrible, the world is ending, and we must 50%-tariff them — not on everything, certainly not on energy. And maybe it’s about smoke… I know — go Google it, because it’s just unbelievable; if I said it, you’d think I was making it up. Anyway, that does seem to be part of it. But here’s the thing: he can’t do it. We know this — he’s already tried this before and been thrown under the bus with tariffs. We’ve talked about it on this podcast: the Supreme Court said, “You can’t do it, dude.” So why is anyone even reporting on it? Okay, let’s move on.

Netflix: cheap for the first time in years

Netflix. The results were out last week and they weren’t a bad set of numbers — revenue was up; guidance was perhaps a little light. There’s one thing: two years ago Netflix said, “You know what we’re not going to do? We’re no longer going to give you total subscriber numbers — they’re not meaningful. Engagement is what matters, and we’ll give you meaningful engagement numbers.” Cool. This time, last week, they’ve said, “Yeah, you know what — engagement numbers… we’re not so sure we still want to.” Hang on, guys — spin a story, but stick to it. They also tried to buy Warner Bros. Discovery, got outbid, made a couple of billion dollars from it, and they’re saying that’s a good thing — but is it?

These are, I think, the smartest folks in the room. To be clear: Netflix is number two; YouTube is number one for screen time — for the big screen (not the TV screen, the big screen). YouTube is number one, it’s user-generated — you might be watching this on YouTube right now — and it’s absolutely important, but it’s also free and sits within Alphabet. We spoke a year ago when Alphabet was very cheap; it has doubled since then. Love me an Alphabet.

Now we’re looking at Netflix. Netflix is head and shoulders the leader in streaming. Yes, there’s Peacock, there’s Disney+, HBO and all the others, but Netflix is head and shoulders ahead. The price has halved, although we’re only back to where we were in 2024, so about two years ago. I didn’t think the results were particularly terrible. The forward P/E is 19 and change; the dividend yield is just not there. This is cheap — but this is a stock that’s been immensely expensive at points, and if we remove some of that very-expensive history, it’s about as cheap as it’s been in the last five years. And it’s a bigger business than it was five years ago — more revenue, more cash flow, strong cash.

Squid Game, a random South Korean production, took the world by storm. We’re seeing the same now with the Polygamist — a book by, I think, a Zimbabwean author, made by a South African production company, taking the world by storm. I don’t know what it cost to make, but it was a fraction — and turned into dollars, even less. Netflix owns this space. They’ve got the critical mass, they’re global, they’ve got games in the app (I don’t know what that’s for), and they’re doing advertising — that seems to be working, they’re making fairly decent numbers off it.

I think Netflix is looking quite good. The stock is below the analyst average: 14 holds, 29 buys, 7 strong buys. The low target is 70, the high is 135, the average is 97.01, and the stock is currently $67.60. I think Netflix is looking attractive at current levels. If you were looking for some streaming, now might be your moment.

Stocks on the move

As a last quick point — I wanted to touch on some other energy names, but let’s do that next week: Thungela, Exxaro, Sasol (Sasol’s just an oil play at this point), and whether the XLE ETF is worth a look. We’ve run out of time, so let’s quickly go to some stocks on the move.

Start with Bid Corp. We’ve looked at Bid Corp before, and it’s certainly moving. It’s a tough space they operate in globally, with a lot of moving parts, but it’s been running quite nicely. From a technical perspective I don’t see anything that particularly excites me. Analysts say it should be an average of 480, a low of 455 — they’re saying it’s cheap. I like the business, but I’m not sure it’s screaming cheap.

Mr Price has been on a bit of a tear. The share price is around 173 — which is where the low analyst target is. The average is 238, the high is 568; four buys, four holds, one strong buy. The stock is trading cheap, although the market is worried about their endeavours into Europe. It’s on a P/E of 11 versus a five-year mean of 15 and a 10-year of 17 — cheap in that regard. The chart looks okay, nothing thrilling, but it has bounced up and is trading at resistance around 174. It went through it; if it can carry on, I think there’s opportunity. I hold Mr Price.

OUTsurance. I chatted with a guest on my show on Friday, and he very much likes OUTsurance. They take their model and roll it around the world. Here we’ve got a strong breakout happening — any weakness back to that 75, if you like OUTsurance, is your opportunity. The data is a little dirty because it had other assets that were flung out and left it behind. The target is 86, it’s trading at 80, low 72 and high 98. As I say, a move back to 75 looks good.

Vodacom’s on the move. I don’t like telcos — that’s my honest answer; they’ve never particularly enthralled me. But again it’s trading in the middle of the range: low 130, high 215, average 162, trading at 152. It’s not particularly expensive, a decent dividend yield of 4.8%, on a forward P/E of 13 and change versus a 10-year mean of 14 and a half. The chart has a little resistance, pulled back a bit on Monday (this is Monday’s close), but broadly looks not bad. Vodacom — also good.

Absa. Absa’s been cheap for as long as I’ve been in markets, but that is not a pretty chart. I can tell you the analysts are going to like it a lot: the price is 220, the low expectation is 228, average 266, high 320. You know what — if I wanted to buy a bank, I wouldn’t buy Absa, I’d buy Standard Bank. Price-to-book 1.1; the big banks are closer — Standard Bank and FirstRand closer to two, Nedbank about the same.

And Gold Fields. We’ve looked at Gold Fields a lot in this section. It’s high-yield and cheap, make no mistake, and the market is hating on it — they’ve got some challenges. The target low is 640, high 930, average 717, and the stock is 515. Why are they hating on Gold Fields? If you’re bullish on gold and looking for a gold miner, Gold Fields has been slammed and is probably your pick. I hold AngloGold Ashanti and I’m happy with it for now.

Gold itself has been quite boring, but it’ll start to move again at some point — it’s not going to stay nowhere forever. It’s hugging $4,000. The World Gold Council expects it to average $4,100 for the rest of the year, 5% tolerance either way — that makes some sense. At that price our gold miners are making money, tons of money. They’ve probably got all-in sustaining costs, maybe with the new diesel price, around $2,100; gold is $4,000. That’s a lot of profit per ounce — more than the gold price itself was just a year or two ago.

WorldWideMarkets is powered by Standard Bank Global Markets Retail and Shyft — the global money app that puts travel, shopping, payments and investments in the palm of your hand. Enjoy the cheapest forex rates anytime, anywhere. Shyft, powered by Standard Bank. Thanks to Shyft, thanks to Standard Bank.

Remember, they are going to be transferring you from Online Share Trading — if they haven’t yet, you’ll get an email; it is not a scam, and you’ll be moved across. There’ll be some webcasts around that; Palesa and I will be doing some of those. But for now we’re done for this week. We’ll be back again next week. Until then — my name is Simon. As always, look after yourself, and if you can, look after somebody else as well. Cheers all.