Do elections matter for markets?

SPEAKER_1 (0:02)

You're listening to the MoneywebNOW podcast series with Simon Brown. Live streamed every weekday at 6:30 a.m. It's Monday, 5 October.

Simon Brown (0:16)

Today, 1962, the first James Bond movie is released, Dr. No. I'm Simon Brown, coming at you live and loud from the Moneyweb Studios in Charlton, Johannesburg, on the show today, Nick Kunze, Sanlam Private Wealth, US jobs data, weaker than expected, although I think we should be clear, it's not like a disaster number, just perhaps not as strong as hoped. And you've got elections in a month, US and local. Does he position specifically, or is it a case of elections come, elections go? Keith McLachlan from Element Investment Managers, AI Trade, actually been having a fairly decent year in many cases. But where's he finding value outside of the big tech? There's other stuff out there. We've spoken about this in this show, we get more from Keith. And then we're chatting with Schroders, they had the latest multi-asset views, particularly I want to touch on EM bonds.

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Winning headline Moneyweb, a difficult quarter for the JSE. SA Inc shares fall hard as consumer hardship amounts. And business day, fuel efficiency now a priority, second only to price for SA vehicle buyers.

Money markets, US was green on Friday. S&P 0.7 higher, Nasdaq up a percent. The East is mixed. We've got Sydney down 0.2 percent. Tokyo up 2.5 percent. Hong Kong a few points green, 0.01 percent. And Tencent off 0.2 of a percent. Commodities red, gold, 4,171. That's the futures price. Brent, $101.50. Platinum, 1,726. Palladium, 1,172. The round is 1670 Bitcoin, 86,300. And top 40 opening call, Red Open Expected, 390 points or 0.4 percent lower.

SPEAKER_1 (2:09)

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Simon Brown (2:13)

Chilling out with Nick Kunze, Sanlam Private Wealth, Nick. Jobs day on Friday out of the US. Non-farm payrolls, 29,000. It was lower than the expected. I think the market was looking for around 90,000. The previous number had been around 133, and the unemployment rate went up, but it went up to 4.2 percent. I mean, these are, I suppose, maybe not horror numbers, maybe just light on expectation.

Nick Kunze (2:38)

Good morning, Simon. Good morning to the listeners. Yeah, you're right. I mean, as you said, not a horror number. I mean, headline 29,000 against 85,000 was the number expected. But the damage was actually in the revisions. You have to look back a little bit. So July is now a loss of 10,000 and August came down to 133 So that's what you kind of sort of dig into. And as you said, unemployment ticking up to 4.2, not the end of the world.

You know, this is a US labor market. It's not stopped hiring. It's just not one that is collapsing, I guess. You know, employers are remaining what appears to be cautious. And if you drill down again into the detail, health care seems to be most of the heavy lifting at the moment.

Simon Brown (3:18)

Where does this leave the Federal Reserve? Because of course, they've got inflation on the one side, which is their concern, jobs on the other.

I mean, I don't know. I'm not a Fed person at all. But if I was, I would think to myself, inflation, perhaps the bigger worry of the two at this point. Because as you say, I mean, 4.2 unemployment is, that's a really, really small number.

Nick Kunze (3:37)

It is a small number. And in all intents and purposes, economists would tell you, this is actually full employment. So, employment is not a problem. But your inflation, I mean, we all know that number. Don't know why, but 2% has been this sort of anchor they keep talking about for years and years.

And in fact, it's been years and years, they've been above that 2% target. So, that is where the problem is. I mean, why does this matter? I guess, because the Fed's not cutting. I mean, you can obviously see that.

But this does, I guess this gives them a reason to hold, just to weigh the rates. And you saw the price, actually, the risk assets. Your markets cheered this miss, because I guess it takes a little bit of pressure of a hike. But they're not out of the woods yet, that's for sure. And the next move is probably going to be a hold, but it's not going to be a cut.

Simon Brown (4:24)

Yeah, yeah, 100%.

Let's change tactically. Elections coming. 3rd of November is the US, which is 4 weeks tomorrow. And then the day after is our local government election. Elections come, elections go. Do you sort of position portfolios accordingly? Or, I mean, they have impact, I suppose, but maybe they're more over the longer term.