Using AI to analyse Famous Brands results and Awesome Local CPI (#608)

JSE Direct with Simon Brown

Local Inflation Update

  • Inflation at 3.8% - lowest since March 2021 (3.5 years ago)
  • Well below SARB's target range midpoint of 4.5%
  • Q3 year-on-year inflation at 4.3% (vs SARB's expected 4.4%)

SA CPI YonY September 2024

November MPC Meeting Outlook

  • Rate cut expected, but size uncertain
  • Possibility of 25bps vs 50bps cut
  • Factors affecting decision:
    • Rand weakness
    • Rising oil prices
    • Global economic conditions

Important titbit about today's SA headline CPI print. It meant that CPI rose by 4.3% y/y in Q3 2024. In Sept, SARB expected 4.4% for Q3, implying Sept print largely in line with their expectations. Therefore, today's number will not change SARB's thinking. Folks should calm down.

— Hugo Pienaar (@hugopien) October 23, 2024

Currency Markets

  • US Dollar showing significant strength
  • DXY moved from 100.42 to 104.33 (≈4% increase in one month)
  • Strong capital flows into US
  • Rand trading at R17.73
  • Potential to move above R18
  • Long-term targets of R16.80 and R15.50 looking less likely short-term
US Election Impact
  • Potential implications of different outcomes
  • Trump's proposed policies could be inflationary:
    • Planned tariffs
    • Immigration restrictions
  • Impact on labor markets and prices
Famous Brands Results Analysis Using AI
  • Demonstration of AI analysis using Google Notebook LM
  • Key findings:
    • Leading Brands: Operating margin >50%
    • Signature Brands: Operating margin -6.7%
    • Manufacturing: Improved margins due to diesel savings
    • Geographic performance varies:
      • South Africa: 1.8% margin
      • UK operations showing significant decline
      • Cash generation at R498 million (7% decrease)
      • Plans for 89 new stores

Chapters

00:00 Local Inflation and Economic Outlook 06:01 Using AI for Investment Analysis 12:06 Famous Brands Results Analysis 18:05 Comparative Analysis with SPUR

Simon Brown

* I hold ungeared positions.

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