Worldwide Markets this week: peace in our time — we’ll find out Friday. The SpaceX IPO is up about 50%, local inflation came in slightly better than expected, plus the FOMC and stocks on the move.

Simon Brown, this is WorldWideMarkets episode 682 for 17 June. I’m recording this late Wednesday morning because yesterday, Tuesday, was a holiday, so we didn’t get to it then. But here we are now.

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So let’s have a look at SpaceX. It listed on Friday — $135 was the price. They ended up raising some $83, $84 billion. They’re not using that to buy Cursor; they are buying Cursor, but they’re using shares. The Cursor deal they announced back in April — it was $10 billion of business and maybe a $60 billion buyout. They’re now buying it out, but using shares, so no worries there.

I’ve got to say, the stock opened at $150, a little over 10% — and for the most juiced IPO in the history of IPOs, I didn’t think that was very much at all. It has traded better, and let’s be clear about that. It closed yesterday, Tuesday, at $208, and it’s now trading at $208.26 pre-market. That close is about 50% above the list price. That’s not bad. What I think works against it is that it’s now a $2.6 trillion company — massive pops are perhaps harder to come by.

But here are some fun numbers. We don’t have a P/E because there’s no E. Price-to-book is 33.9. EV-to-sales on the forward is 62. EV-to-EBITDA is 199. But let’s go forward and look at financial year 2028 — the expectation is almost $100 billion of sales. Let’s be generous and say they get their $100 billion for FY2028. That puts it on a forward price-to-sales of around 27. It’s a big number. Is it terrifying? I don’t know that it’s as terrifying as many of us thought it would be. To be clear, we’re looking way into the future — 2028 — and a lot can go wrong. But if they can do $100 billion of sales at that point, earnings per share is $0.07, which puts them on roughly a 2,000 P/E. The numbers are absolutely crazy. But at least they’re getting their price-to-sales right.

What are analysts saying? We already have some numbers coming in. On price targets: a low of $63, an average of $188, and a high of $310. One strong buy, four buys, and a sell. A sell is brave.

Would I be buying SpaceX? No, I totally wouldn’t. I’ve said this before — there’s a lot there, and a lot I don’t like. Grok is not very good. The deal with Cursor is for that very reason: Grok is hoping Cursor will turn it into a frontier model, because Grok is not a frontier model. When you talk frontier models, Grok is not on anybody’s lips. The frontier models are really owned by Anthropic and OpenAI.

Then there’s space — they want to put data centres in space. I wrote about data centres in space; it’s a lovely idea, but completely impractical at this point in time. At justonelap.com/AI you’ll find a column I wrote back in March: bold vision, brutal reality — not going to happen anytime soon. But the point is, SpaceX is there. It’s trading, it’ll start coming into some ETFs already, and it’ll come into the Nasdaq next week — maybe Friday, that’ll be day 15, so it can then move into that index. It’s not coming into the S&P: it needs a 12-month period and it needs to be making a profit, and both of those will take some time.

I also stick by my call: they’re going to make an offer for Tesla. Not just yet — give it some time to stew — but there will be an offer, and it will be for Tesla, just to clean things up. Having multiple businesses around and multiple ways to invest with Elon is going to be considered a little messy.

On 25 June, next Thursday at 5:30, we have a Power Hour with Standard Bank: getting paid in dollars. The idea is to build an offshore income portfolio — because what does everyone want? Everyone wants to earn in dollars. The rand is stronger now, but broadly we want to earn in dollars. How do we do that? We can work for an American company, or we can build a US dollar portfolio and earn dollars that way. That’ll be the focus. Go to justonelap.com/events for more information and bookings.

Before we get to peace in our time: the FOMC is tonight — the Federal Open Market Committee decides on interest rates. It’s going to be unchanged. It’s Warsh’s first meeting, and there’ll be no change to the rate.

Locally, South Africa had inflation earlier this morning. Expected was 4.7%, and it came in at 4.5% — nice, a little better. We were at 4.1% for April and 4.5% for May. The question is where to from here. June inflation is probably baked in to a degree, although we had some petrol cuts, but it’s going to fall quite fast.

On those petrol cuts: the Central Energy Fund gives us running updates on what the petrol and diesel price would be. This is for 16 June — Tuesday, a public holiday. To be clear, oil is down nicely, currently sub-$80, and the rand is currently around sub-16.20, but that’s only been the case for a day or two. We’re looking at around 270 cents off the petrol price, which is very important, and diesel down 440 to 475 depending on the blend. Of course, there’s still half of that levy cut to come — so about a buck fifty. Petrol is currently around R1.20 lower and diesel around R2.40 to R2.80 lower. But for the rest of the month this number is just going to keep coming down, and we’re going to get some fairly chunky petrol and diesel decreases come the first week of July. That will certainly help July inflation.

So how quickly can we expect the Reserve Bank to cut rates? It would be very unlikely soon — this is all prefaced on us getting peace on Friday (I should have done the peace deal first; I’ll come to that in a second). Assuming we get peace in our time and oil carries on falling — Brent is currently sub-$80, the rand at 16.19 — there’s a lot taken into account there. We should see inflation having now peaked at 4.5% for May. June is probably around that, and by July inflation will be coming down, with August and September back in the zone. Maybe we get a rate cut at the September meeting; otherwise it’s down to November, which is very far away.

So the big news: Trump and Iran have agreed to sign a cessation of hostilities. I’m not calling it a peace deal, because there’s so much still to be worked out — but call it what you will. It’s happening, allegedly, on Friday. I think they’re going to Switzerland to do it. Why not Switzerland? Lovely place by all reports.

So we have a cessation of hostilities — peace in our time. What does that mean? In the immediate term, the price of oil has somewhat collapsed, and we’ll be very much liking that, as does everybody else, because oil has been absolutely hurting us. A couple of things to take from the oil story. One: we lost 20% of global oil and it went as high as $120, but that was all. One of two things — and I’m not sure which — is that we’re less dependent on Middle Eastern oil than we thought, or there was a lot more use of reserves than we thought. I think it’s probably a blend of each.

I did a couple of interviews with folks who pointed out that the economics — the unit of oil per percentage point of GDP growth — is much smaller than it was in the 1970s. It’s even smaller than when oil was at $150 in 2008, and every event like this makes it smaller again. So the short answer is we probably got away a little bit lucky with oil. It’s trading under $79 right now — $79.11, and it’s been down at $77; I think we’re looking at Brent here. In essence, it looks like we’re probably getting back to the low $70s. I did not expect this — it was not on my bingo card — but I’ll take it with both hands. Oil coming off, and quite aggressively, is absolutely good news.

The rand, same story — trading at 16.23, which is sort of back at that support zone. I’d expect it to break 16.00; I expect it to move stronger, but slowly. I don’t think it’s going to run.

And then the big one: gold. How’s gold doing? Gold is also loving this. Gold got firmly into support — last week the low was around 4,135 (I added lower on futures), but it’s bounced strongly and is now trading at 4,300. This is very much a support zone that has held. If that had gone, we were going to 4,000 and then sub-4,000. But gold has held. So, peace in our time — lekker.

What does that practically mean? Where to from here? Let’s go back to February and how things looked then. We’d had 14 green months in a row on the JSE — February was the 14th. We’re now pretty much flat year-to-date. We had expectations of rate cuts; there was no cut in January locally, and there was a lot of upset about that. The plan was that Trump was going to get Warsh in as the new Fed chair and he’d be cutting rates. We had inflation on the way down — not so much in the US, they haven’t been at target in some time, but locally we were at 3% inflation, so we were looking at a couple of rate cuts coming through. We’d had sovereign upgrades, and we’ve had more since: at that point it was just S&P; since then Moody’s moved the outlook to positive, and now Fitch has upgraded us too. We’re still two notches below junk on all three agencies, but nonetheless, we were sitting pretty.

The story was that big tech was still good but was the old trade — emerging markets were the new trade. We could see it; Korea had been going crazy. And then everything fell apart, because Trump decided to invade. Now we sit here with inflation at almost two-year highs, we’ve had rate increases, we’ve had lots falling over. It really does bring the question of where to now.

In dollars, our market is up about 1%, which is nothing. Korea’s up 110%. Year-to-date on our equity market, we came in at 109 and we’re trading at 107 — about a percent down. Not the worst thing in the world, not lekker either.

So do we just go back to where we were at the end of February, before Iran got attacked? In some sense, yes — because inflation is now coming down. So the conversation changes from “will we get more rate increases?” to “when do we get that rate decrease?” To be clear, back at the end of February we were expecting two, maybe three rate cuts this year. Maybe now we get one — which basically takes us back to where we started the year. That’s the key thing.

That notwithstanding, a lot is looking better. We can’t just go back to that 27 February Friday when everything looked hunky-dory, before Trump attacked Iran on the Saturday morning — we’re not going back to that. But we are going back to a world of more certainty: the war in Iran is largely going to be over, and the Strait of Hormuz will largely be open. There’s a lot to be done beyond just opening the strait. There are a lot of tankers stuck that will immediately leave with oil because they’re loaded — a lot of them the very big ones, two million barrels of oil each. That’s still a lot of oil. But there are a lot of tankers on other routes that will struggle to get there. I’ve had a look — the urea price (fertiliser) has already come back down a whole lot. So a lot goes back to normal; a lot will take time; a lot of infrastructure needs to be repaired. I don’t think oil is going back to the $60 where we started the year anytime soon — although I didn’t think we’d get back into the $70s this quickly either.

And it comes back to the point I made earlier: our reliance on oil is either less than we think — and that’s not to say we don’t use a hundred billion barrels a day — but when we see global GDP growth, is oil consumption going up in the same linear relation? The answer is no. And that’s telling. We learn to use less of it, and I think this war has helped that a little more. Someone out there bought an EV instead of an ICE because of the cost of fuel — and when I say someone, I mean many people, potentially.

So we kind of go back, but it’s changed. There’s a case of “it’s changed, but not” — if that makes sense. We’re back to where we were, but there are differences in what we expect. That does mean I’m back to being bullish on emerging markets, and back to being bullish on gold. It was my niece’s birthday — I bought her some gold, as one does. We’re back to where we were; it’s just a slightly different story. I think banks have a good opportunity in this environment, particularly coupled with the upgrades we’ve seen, and some of the consumer stocks are perhaps looking good. A level of normality — and we’ll take it with both hands.

So, some stocks on the move — a fairly interesting list today. I want to start with Clicks. On my weekly chart, I’m seeing a bit of a kangaroo-tail reversal pattern on last week’s candle, and I quite like that. I’ve said before that Clicks is looking cheap. If we pull up the snapshot, it’s trading on a forward P/E of 15, whereas the mean is 29 and one standard deviation below the mean is 24. Clicks is cheap. We know why — consumers — but are we kind of solving that problem to a degree? We have a low price target of 275, an average of 350, and a high of 396, with three holds and five buys. I think Clicks is cheap, and I think that’s a nice-looking chart. It’s definitely a stock on the move.

Discovery also popped up. It’s a less compelling chart, but it’s trading at effectively all-time highs, breaking up to new highs.

Bidcorp popped up. Bidcorp’s been under the kosh for a bunch of reasons — worries about what consumers are spending at restaurants and takeaways, which hurts Bidcorp, and worries around currencies. But we’re seeing some movement. It’s a messy chart that really hasn’t done anything: it rallied up to around September 2023, and in the almost two-and-a-half to three years since then it’s more or less gone sideways. I don’t think it’s necessarily an expensive stock — forward P/E is 15, which isn’t a horror show, and the dividend yield of 2.7% isn’t the worst. From the analysts: three holds, two buys, and a strong buy. The lowest target is 437, the stock is at 430, the average is 481, and the high is 520. So it’s looking cheap.

Some other stocks on the move. Outsurance popped up on the list — this is an automated list my AI generates. Outsurance is looking interesting. We’ve got some resistance, and I’d say it’s at or breaking through it. Again, not a stock I think is particularly expensive — forward P/E of 23. Of course, that’s a bit of a dirty number, because in that period a lot of it wasn’t necessarily Outsurance; remember it was RMI, so a lot came from that. Not quite a fair reflection.

Another one on the move is Growthpoint, which interested me. Growthpoint is trading at 0.9x book and a 7.7% dividend yield — both moderately attractive, but I think there’s perhaps better out there. The market is pretty much giving it the average price target of 17.32; it’s trading at 17.30. On the chart — which is what got my AI interested — it’s breaking up, higher lows building through to higher highs. And if you’re looking for some, Grindrod is certainly on the move too.

Then MTN is on the move. Is it all-time highs? I wasn’t sure — we had to zoom out a lot. It is indeed all-time highs. MTN is breaking higher; the big number was that 210 level. If you see a pullback to that, folks might be interested.

And on the downside, there’s only one stock on my bearish list: Mondi PLC. I want to look at it in sterling first to see if we get a different picture — and the answer is no. The sterling picture is bleak; it’s at five-year lows. And in rand it’s the same thing — forget five-year lows, we’re sitting at eleven-year lows. This is a very sorry tale for Mondi, and I don’t know why it’s getting so hit. It’s been falling, but it’s not cheap: forward P/E is 22 against a mean of 15.6, so this is not a cheap stock. On price-to-book it’s at 0.8 versus a mean of 2.1, so in that regard it’s cheap — but it’s not screaming “buy me, I’m ridiculously cheap.” It’s got two strong sells and a sell, something you seldom see. Its low target is 146 and it’s trading at 160, so it’s not even at the low target. We’ve got six holds and four buys, an average of 187.63 and a high of 229.31. Mondi’s just looking ugly — there’s not a heck of a lot positive to say about it right now.

Anyway, those are our stocks on the move. Clicks is the one that’s most interesting to me at this point.

WorldWideMarkets, 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 — remember, they’ve got SpaceX and everything else there too.

Remember, we’ve got an event next Thursday, which is free, either in person or via webcast — justonelap.com/events for more information. Otherwise, we’ll leave it there. My name is Simon. No more public holidays for a while, so normal activities will resume.

Until next week, look after yourself — and if you can, look after somebody else as well. Cheers, all.