Can AI Value Stocks? Local | Yields at decade Lows

Worldwide Markets - Episode 666 📊

18 February 2025 🇿🇦 South African Economic Indicators

Unemployment hits 5-year low - but still a tragic 31.4% The Achilles heel: Need GDP growth to break below 20% 10-year bond yields at decade lows - 7.97% (down from 11% during load shedding) Government saving on new bond issuances, though impact is modest Potential budget windfall from precious metals next week

ZA 10-year yield | weekly

🤖 AI Valuations: Testing Anthropic's Opus 4.6

Can AI do DCF valuations? Testing on Dell (NYSE: DELL) Opus 4.6 created detailed discounted cash flow model in ~10 minutes 148 formulas, zero errors (after self-correction) Fair value estimate: $172 vs current ~$115 (significant upside potential) ⚠️ Important caveats: Sensitivity assumptions critical (WACC, terminal growth, risk-free rate) DCF is just ONE valuation methodology Rate limiting kicks in with heavy usage ($20/month tier) US stocks work better than local stocks currently

💼 US Economy Update

Strong fundamentals emerging:
$600B+ capex spend by hyperscalers (Alphabet, Meta, Microsoft) Better-than-expected January CPI Unemployment at 4.3% (jobs report revised down 1M though) GDP tracking closer to 3% than 1-1.5%
Two rate cuts still on the table for 2025 Tech infrastructure spending providing economic underpin

🚚 The Karaoke Company Logistics Disruption (?)

Algorhythm stock chaos: Up 222% Friday, another 15% pre-market Tuesday From karaoke company to AI logistics software ("SemiCab") in 6 months Entire logistics sector sold off on the news Reality check needed: Santova and others already doing this with Oscar software Market overreaction? Small operators still use fax machines Don't panic-short established players like Santova

📅 Upcoming Events

Power Hour Thursday 5:30pm - Tax efficiency & ETF revolution (Standard Bank Rosebank or webcast) ETF database updated with FNB, 10X, 1nnvest, Satrix funds Budget next Wednesday - Simon will be in Cape Town

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"Look after yourself. If you can look after somebody else as well." 💚

Simon Brown

* I hold ungeared positions.

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