If you blinked, you may have missed it. January 2021 has come and gone. Apparently, time not only flies when you’re having fun, but also when you are trapped in the continuing drama that is Life Under Global Lockdowns.
- January was a relatively boring month for the US Stock Markets with only one interesting story to tell, that of GameStop. Never heard of it before? Neither have we!
- Reddit forum with 2,2-million-members decided this is quite fun, let’s tell all of them to invest in this unknown share. Why did this happen? Because some clever people at this forum looked into the world of game consoles and related equipment and noticed that a number of huge offshore investors had shorted the share at Gamestop, this means they thought it would fall, they then bought in and in 10 days it went from $39 to $348. Where will it end? No one knows, but it might end badly.
- While this may be amusing, it is also a sign that there are a lot of desperate people out there that have lost their jobs due to Covid or aren’t earning enough income and are now resorting to trying to invest in shares and earning a quick buck. We do not think this is a very wise idea and we think it might end terribly.
- US unemployment is now at 6.7%, this is a lot better than a 15% in May last year, but it is still double the figure of 2019.
- During its first month free of the European Union, the UK navigated their new reality. Focussed on dismal Covid-19 numbers, the day-to-day practicalities of being out of the union probably did not get the media attention it deserved. To name a few; online shopping from the EU is more expensive all of a sudden, smaller UK businesses are finding it extremely difficult, with all of the red tape, to do business with companies in the EU. Shops in Northern Ireland have empty shelves and trucks are often travelling half full. These all seem to be minor/temporary niggles, but if these sorts of issues are not resolved, it can lead to terribly dire economic situations for England ahead.
- The extended furlough schemes seem to be keeping unemployment levels in the UK relatively low at 5%. December retail sales were up from November, but still at their worst levels in 25 years.
- European markets saw a slight drop during the month with many European countries still firmly in the grip of the pandemic. Germany and France (Europe’s largest economies now that the UK is no longer in the union) saw a slide in consumer sentiment. Confident consumers is generally a leading indicator to strong spending, which in turn leads to economic growth.
- No major global central banks amended their interest rates during the month of January, with our local Reserve Bank also sitting tight for now. The problem is most developed markets interest rates are almost 0.
- After a slight reprieve in December, South Africans faced load shedding again in January, serving as another reminder that, while our stock markets enjoyed a very strong month, the risk remains on the downside.
- The Rand depreciated by just under 3,5% to end the month at R15.15 to the US Dollar. Bad news for importers, but good news for any investors with some offshore exposure in their portfolios.
- One-month index movements:
- JSE All Share Index: 5.6%
- S&P 500 (US): -1.2%
- FTSE (UK): -0.8%