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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