Worldwide Markets this week: MercadoLibre — both the Amazon of South America and the PayPal of South America. We’ve got FOMC updates, SpaceX trading below its listing price, Alan Greenspan passing away at 100, and stocks on the move.

This is Simon Brown, Worldwide Markets episode 683 for 24 June. I’m recording this early Tuesday afternoon. We’re back to normal — the holidays seem to be over for now.

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Alan Greenspan dies at 100

Let’s kick off with Alan Greenspan. The news yesterday, Monday, was that he had passed away at 100 years old. He was Fed chair from 1987 to 2006 — about 19 years, the second-longest tenure we’ve had. That put him under four presidents: Reagan, Bush, Clinton and Bush again.

His tenure included the crash of 1987, the 1997 Asian financial crisis and the dot-com bubble. He famously used the phrase “irrational exuberance” — and markets carried on going up for about another two years. He was also there for 9/11.

Many might say that the financial crisis of 2008 — when Ben Bernanke was chair — was in part down to Greenspan and his legacy. After he left, he did talk around it, although he never quite said “I messed up”; it was more “there was a small error.” One of the core tenets of his belief structure was that, left to their own devices, financial institutions — banks, lenders and the like — would regulate themselves. They didn’t. We saw that in the financial crisis of 2008 and 2009; they did not cover themselves in glory. In many ways that’s his legacy: he put too much trust in what he thought they could or would do, and they absolutely did not.

But he was a Fed chair, and in some senses my first Fed chair — probably around the 1997 Asian financial crisis, which became the 1998 emerging-market crisis, when I first became aware of Fed chairs and what they were doing. Greenspan has passed on. Condolences to his family.

Power Hour: getting paid in dollars (Thursday 25 June)

We have an event this Thursday, 25 June — a Power Hour with Standard Bank: “Getting paid in dollars.” How do we build an offshore income portfolio that pays us in dollars? Earning dollars — or euros, or any hard currency — is the dream. But most South African corporates pay you in rand. So can we build a portfolio that pays in dollars? We absolutely can: covered calls, REITs, bonds, and good old-fashioned income ETFs — the whole shebang. We’ll go into it in detail.

It’s at 5:30pm. You can attend in person at Standard Bank head office here in Rosebank, or via webcast. Visit justonelap.com/events for more information.

Brexit’s 10-year anniversary

23 June, the day I’m recording this, is the 10-year anniversary of the Brexit vote. Since then the UK has had six prime ministers, and it’s about to have its seventh by September now that Keir Starmer has stepped down. GDP is 48% lower, and only about 30% of voters think it was the right idea.

There are some things you don’t put to a referendum, because voters are too easily swayed. You don’t ask “should we have the death penalty?” — everyone says yes, and the death penalty is a terrible idea because one day the state will kill an innocent person. You don’t ask “should we abolish tax?” — everyone says “heck yeah,” and then you’re left with nothing but potholes. (If you’re in Joburg, it can feel like we’ve abolished tax already.) Anyway, it was a mess.

Oddly, I was in Durban when the Brexit vote happened, and a couple of months later, when Trump won the election, I was in Cape Town. Both mornings I went and had a Mexican breakfast. I don’t know why that sticks in my brain, but it absolutely does.

SpaceX listing

Let’s quickly touch on SpaceX. It’s been a bit of a horror listing — but to be clear, if you bought in at the $135 IPO price, you’re still ahead. It closed on Monday at $154.60, down $16 on the day. It’s now trading a little higher in pre-market at $156, having been down at $148 earlier today. So if you bought at the $135 IPO you’re in the money; if you bought in the market — which opened at $150 on the day — you’re a couple of dollars in the money.

Why the weakness? A few things. It’s a crazily overvalued stock, there’s no debating that. There are insiders who want out, although most are still locked in to some degree. And there’s index buying coming: Nasdaq starts buying this Friday — about 0.3% of the index — and MSCI is around 0.09%. Those aren’t massive numbers, simply because of the lack of free float.

Look, I love the idea of space and of Starlink, but more broadly I’ve no interest in xAI, X, Twitter or anything else. On the analyst side we’ve got one sell, one hold, one strong buy and five buys. The average target price is $187.80, with a high of $310 and a low of $62, against Monday’s close of $154.60. Keith McLachlan on Moneyweb did a DCF on SpaceX and came out at roughly $10 — maybe $4 to $12. Short answer: not very much at all.

More than anything, it’s the volatility. It was sub-$150; it’s now green in pre-market. This is not necessarily the end of the road.

MercadoLibre deep dive (MELI)

Now to a company that absolutely fascinates me. It’s South American, Nasdaq-listed, code MELI — MercadoLibre (and I’m probably mispronouncing it; my apologies). It’s the Amazon of South America, although its home is Brazil, and it’s also the PayPal of South America. It has 29 quarters of over 30% revenue growth, and it’s accelerating — the last quarter was 49%.

Why am I looking at it now? Because the stock is down some 40% for the year, and I’m scratching my head. This is a stock I’ve long been interested in, but it’s always been a bit of a flyer. We’re back to December levels — and to February 2024 levels — giving up about two years of gains.

To be clear, we’ve seen sell-offs before. During the tech sell-off it went from about $1,900 to $600 — a 60% drop. So this sell-off isn’t even that aggressive in absolute terms.

They started life as the Amazon of South America — a nice, simple story. But what they’ve evolved into is far more interesting: they’re becoming a payments business too. It makes sense — Amazon has its own card. You’ve got a giant platform of third parties and clients buying and selling, so why not offer credit cards and the like?

The stock isn’t cheap. Forward PE is around 40, forward EV/sales is 2.1, and there’s no dividend. On price targets: the low is $1,750, the stock is under $1,600, the average is $2,200 and the high is $2,800 — with four holds, 15 buys and five strong buys.

So what do they actually do? Think of them as the Amazon and the bank of Latin America. Right now they’re sacrificing profit to grab market share — exactly what we watched Amazon do for a decade or more. Revenue is accelerating, but operating margins have been cut in half. That’s the tension, and that’s what’s spooking the market.

Two flywheels feed each other. First, commerce: the marketplace, first-party retail, advertising and logistics — the part we understand. Second, fintech: Mercado Pago — payments, digital wallet, credit cards, investments and insurance. It started as the PayPal for the marketplace but is now becoming a fully fledged digital bank.

They operate in 18 markets, but the three big ones are Brazil (the home market and about half the business), Mexico and Argentina. So this is a Brazilian story.

In Q1 2026 revenue was up 49% year on year — the fastest growth since Q2 2022. Gross merchandise volume (GMV — the goods sold across the marketplace) was up 42%. Total payment volume hit $87 billion, up 50% — that’s now bigger than GMV, growing faster and generating more revenue. In other words, the banking side is much wider than just platform users.

Operating income was $611 million, but margin was just 6.9% — down six percentage points year on year, and that’s what’s spooking the market. Why are margins down? Because they’re taking the money and spending it. It’s a land grab. Brazil items sold were up 56%, Argentina up 41%, Chile up 40% and Mexico up 28% — Argentina looking strong as that economy stabilises. Full-year net income was about $2 billion, and this quarter alone delivered $600 million in net income — after halving the margins.

How are they spending it? They’ve lowered the free-shipping threshold, so it’s cheaper and easier to qualify — which means they deliver more, at a cost to them. They’re issuing credit cards aggressively — three million cards in the last quarter of last year alone. They’re holding more inventory. And cross-border trade brings extra logistics costs and challenges.

The competition is Shopee, Shein and Amazon, but as far as I can tell MercadoLibre is by far the biggest in the region. Fintech users sit at 83 million, up 29%, and the credit portfolio is up 87% — almost doubling in a year. They’re explicitly saying they want to be Latin America’s biggest digital bank. When I was writing an article on AI and banking a while ago, they kept coming up as the one to watch. On e-commerce share, MercadoLibre is around 30%, Amazon about 16% and Shopee around 10%. They’re already the biggest, and they’re aiming to get bigger.

It’s that ecosystem lock-in: marketplace, payments, credit, logistics and ads, all reinforcing each other. There are threats — Amazon, Shopee, Shein and others — and that’s what the land grab is about. Market cap is about $83 billion and the PE is 43, with earnings under some pressure.

The bull case: they’re winning, and they now have the ability to squeeze — throw away margin, halve profit — to take share. It’s self-inflicted, but they’re buying market share, and not just in shopping: in banking too. And I don’t think the fintech is priced in. I think this is still being priced as an Amazon, with no one really looking at the fintech.

There are risks. Can they reverse the operating margin when they need to? You always got the sense Jeff Bezos had a lever he could swing to decide how much profit Amazon made — do they have that? There’s credit quality: as they push into lending, non-performing loans become a risk. And advertising and first-party retail are the higher-margin pieces that could fund the rest — but there’s risk there too. Look at what Amazon does on advertising these days.

Total payment volume is now bigger than gross merchandise volume, and it’s the fastest growth in four years — they’re growing faster than they were four years ago, which is spectacular, partly funded by halving the margin. They want to be the biggest bank and the biggest credit card, and they’re already the biggest online retailer. It’s a compelling story.

The share is under pressure, and I think to myself: I could like some of that at current levels. Has the chart bottomed? I don’t know. When this episode launches, give me a day or three and I’ll start picking up a little here and there — I’m not going to rush it. But I like the business, and the current price is the most attractive we’ve seen in at least two years, for a business that’s almost twice the size it was back then.

SA inflation & the petrol price

Our inflation came in at 4.5% for last month, slightly better than the 4.7% expected. In the old days that would have been smack in the middle of the target band — but no longer. We’re now well outside a band heading toward 3%, plus or minus 1%.

I’m keeping an eye on the petrol price. Brent is down at $77, and we’re looking at petrol coming down around R2.90 — but we have to give about R1.50 back to Treasury, so call it R1.40 net (this is based on 20–22 June, so the lower oil price is still filtering through). Diesel is looking R4.60 to R5 cheaper, but with about R2 to give back, so call it R2.60 to R3 down. Both are good numbers, heading in the right direction for inflation.

Will we get more rate increases, or a hold? I don’t know. The consensus is a quarter-point increase in July. It’s a horror.

FOMC and the new Fed chair

To the FOMC. This was our first meeting in eight years with Jerome Powell no longer chair. (Trump appointed him — every time Trump asks “who appointed this guy?”, the answer is: you did.) No change on rates.

The new chair did not produce the dot plot. The press release was much shorter than usual — about 150 words — and at the press conference it looked like there’d be no questions, though in the end a few were taken.

According to Bank of America, expect 75 basis points of hikes this year — three increases, starting in September. From September there are four meetings (September, October, November, December), and BofA expects increases at three of them. That’s nasty. US inflation hasn’t gone away.

Brent oil & the supply scare

Brent is looking better. I couldn’t pull it on my usual chart — it kept telling me the Brent market wasn’t open — and Koyfin is a bit of a mess, so I’m using TradingView, which isn’t my preferred charting. They call it UK oil there. We’re basically back at “war levels”: that last candle was the last week of February, then we bounced higher, and now we’re back down — $61 to $77. That’s pretty much where Brent was on the Monday morning of 2 March, after the attacks of Friday/Saturday 28 February.

It’s come back more strongly than I expected. There’s a lot of ship traffic going through the Strait of Hormuz, and there is damaged infrastructure. But I think we’ve learned a few things. Global stockpiles might be larger than we thought — and not just at country level; I suspect India and China, who’ve been buying a lot of Russian oil, were stockpiling more than we realised. There’s also been some demand destruction — some economies told people not to go to work, and so on, to reduce demand. And I can’t help wondering whether industry held bigger stockpiles than assumed: if you’re a refinery, we’d assume maybe three days of stock in the tanks — but maybe it was three weeks.

I’m surprised at how well oil has held up if we really did lose 20% of global supply. That’s the key point: if we did, oil has done spectacularly well.

Sign-off

Let’s park it there. My name is Simon, and we’ll be back again next week. If you’re still listening, please leave us a review and a rating in your favourite podcatcher — we’ve been going for 15 years, and a rating always helps. Look after yourself, and if you can, look after somebody else too. Cheers all.