[TOP STORY] Sibanye trading update spooks; Nasdaq has horror day

‘The wage conversation is still weighing quite heavily on Sibanye’ and Nasdaq’s day was ‘less about the rates decision [but more] about…inching closer to a US recession’: Independent analyst Jimmy Moyaha.

SIMON BROWN: I’m chatting now with Jimmy Moyaha. He is [an] independent [analyst]. Jimmy, I appreciate the time this morning. That Sibanye-Stillwater update … earnings at R13.7 billion – that’s almost a third off the first quarter of last year, the comparable quarter, which of course was a record. The stock down, what, 7.8%, 7.9% below 50%. I didn’t think the update was that horror[ific], but the market disagreed with me completely. Your take on it?

JIMMY MOYAHA: Good morning, Simon. The update –  from a numbers perspective I think what spooked the market or spooked investors was the fact that they mentioned that they’re not going to give any further sort of forward guidance around production. They outlined that production was down 45%, or gold output was down 45% in the first quarter, and that the market didn’t like. We’ve seen the commodity super-cycle that happened last year. All miners benefited from that, they did really well there. The expectation at this point, of course – with the concerns around the Ukraine, and the overall global uncertainty and those tensions – is that miners and guys in the commodity space will be doing really well with the higher prices, higher PGM prices, higher gold prices and that sort of thing.

For Sibanye to come out and say, one, our output for gold is lower, two, we’re still dealing with the wage negotiations, and three, we’re not going to give any further operational guidance going forward because we don’t want to over-commit to something – that’s definitely something that’s going to spook the market.

But I also think the wage conversation is still weighing quite heavily on Sibanye at this point. You’ve got miners on the one side saying they want R150 more, and then you’ve got executives on the other side saying ‘we’re not going to pay you more, but our executive pay has just topped R300 million in the case of the CEO’. It’s a bit of an awkward conversation. It is a very, very awkward conversation at the moment.

SIMON BROWN: I take your point on that….The guidance. I agree, that was a surprise. Yes, they’ve got a strike, but …

Let’s quickly touch on Nasdaq. When (US Federal Reserve chair) Jerome Powell spoke on Wednesday evening, the market was like this is ‘lekker’, went off to the races, and then kind of woke up on Thursday and decided that it didn’t like what he said. And the Nasdaq had a horror day. It’s in essence more of that volatility, more of that uncertainty.

JIMMY MOYAHA: Absolutely. I think it’s less about the rates decision that happened and all of that … it’s about the fact that we’re inching closer to a US recession. We know that Europe and the ECB [European Central Bank] and the UK have already outlined to say that their inflation is out of control, and they are happy and even considering triggering a recession on their end to get things under control. The US is still on that mandate of saying, no, our policy’s still all right. Everything’s still fine. Inflation’s still running sideways. We’ve still got non-farm [payroll] numbers to come out today, jobs numbers to come out today.

The inflationary pressure and the unemployment numbers are contradicting the US’s ‘We’ve got this under control’ thing, and we know what happened the last time the US said they’d got it under control.

And so you’re seeing that fear filter through to the markets.

You’re seeing that scepticism filter through to US equities, in particular, as if to say, if we’re going to have a recession, which is where most of the indicators are leading towards, then why are we still in the equity markets at this stage?

Why are we not getting out early to sort of curb this or prevent this, or sort of pre-empt whatever might come. Jerome Powell hasn’t done much to address those recessionary concerns that institutional investors and retail investors are seeing at the moment.

SIMON BROWN: Yeah. I take the point to that. We are already, what, halfway to a recession in the US because we’ve got that negative GDP for Q1, which came in at -1.4%. So inching, maybe even in some ways – I don’t want to say leaping – certainly moving towards [it].

We’ll leave that there. Jimmy Moyaha is an independent analyst.

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