PPC and Telkom: unlikely heroes

Good morning Voornaam,

Hello from the M20 on the way to Dover. I'm currently in Transit. No, really - the back of a Ford Transit. Of course, we are on our way to Le Mans this weekend! After London completely recalibrated my brain on what true developed market wealth looks like, I'm looking forward to the French countryside. More than that, I'm looking forward to my all-time bucket list event. If we are really lucky, those Ferrari hypercars will deliver another excellent victory! If nothing else, feel grateful today if you have a garage that a normal-sized car fits in. Even the gazillionaires in London usually don't have one.
Fresh out the oven:

Ghost Bites: PPC and Telkom are surely the unlikeliest of heroes, delivering the good news on a day that saw Motus, MultiChoice, Spar and Vunani reflect earnings going in the wrong direction. Get all the details in Ghost Bites>>>

There's a brand new Ghost Wrap podcast that I put together just before leaving. You need just five minutes to get up to speed on Capital Appreciation, MultiChoice, Spar and The Foschini Group, thanks to Mazars. Find it here>>>

Elizabeth Magie invented Monopoly in 1903. It just took a long time and a decade-long court case for the world to remember that. This is the story of how Parker Brothers monopolised Monopoly - and how one man took them down. Told by Dominique Olivier, you can read it here>>>

In case you missed it:

There is only one free lunch in investing, as this Ghost Stories episode with Kingsley Williams shows. We had an excellent general conversation about investing. Brought to you by Satrix, you can enjoy it here>>>

Fedgroup thinks differently about portfolio construction and how important elements like yield and inflation protection can be brought in. Michael Field joined me to discuss their approach. Find it here>>>

This year, SA is set to become the tenth-largest solar market in the world. In episode 4 of The Current brought to you by Investec, Iman Rappetti spoke with Investec's Melanie Humphries, Bernard Geldenhuys and De Wet Taljaard from the South African Photovoltaic Industry Association (SAPVIA) to explore SA’s apparent solar boom. Enjoy it here>>>

In Magic Markets, we went back to our roots and covered local topics around the rand, South African bond yields and the state of play for South African consumers. Are we facing coalition politics, or collision politics? The podcast and full transcript are available at this link>>> ​

The only free lunch in investing

Local company news:

PPC and Telkom have been through some very tough times. Life still isn't easy for either of them. It's quite something to see them as the highlights on a day on which we saw some particularly ugly numbers on the local market.
At Motus for example, we knew that the favourable cycle during the pandemic would eventually turn. The effect of this is clear in the latest numbers. At Spar, mistakes continue to haunt the group, ranging from European messes through to the IT disaster at the KZN distribution centre. As for MultiChoice, I think the Canal+ offer couldn't have come fast enough.
Vunani's earnings are also down sharply, but we don't have the reasons why yet, as only a trading statement has been released.
These stories are all covered in detail in Ghost Bites at this link>>>

Steal, hustle and lie: the Monopoly story

International business news:

I find the car industry fascinating at the moment, especially as I'm now being properly exposed to the trends in European markets and the uptake of electric vehicles, along with what they are like to live with. Stellantis sits at the centre of all these trends, with a wide range of brands that include some absolute icons (looking at you, Maserati) and some really marginal brands. I'll not mention any brands in that category in case I offend anyone!
For those interested in this industry, Stellantis usually trades at the lowest multiple in the sector. This is the polony of automotive stocks, with all kinds of stuff thrown in there. Value investors love it.
An investor day is scheduled for this Thursday. The market is expecting details on cost cutting initiatives against the backdrop of the threat from Chinese brands. We've decided to cover Stellantis in next week's Magic Markets Premium show, so keep an eye out for that if you're a subscriber.
We covered Lululemon in Magic Markets Premium this week. To get access to this research and the rest of the vast library, subscribe to the platform here.

Macroeconomic Update

In May, US inflation eased for the second consecutive month, with the core consumer price index up 0.2% from April and 3.4% year-on-year, the smallest increase in three years.
Fed chair Powell acknowledged that modest progress has been made in inflation moving closer to the 2.0% target but noted that policymakers don't have the confidence to cut rates yet. The Fed's dot plot shows one cut this year and four cuts in 2025.
Today, we have the release of the US PPI data along with the weekly jobless claims number.
The rand continues to be driven by the softer dollar and the hopes of an investor-friendly Government of National Unity (GNU).
Key indicators: USD/ZAR R18.42; US 10-year 4.32%; Gold $2,311; Platinum ZAR R17,466; Brent Crude $82.36
This macroeconomic update is based on TreasuryONE's morning update.