Friday 29 May 2026

[1] The South African Reserve Bank (SARB) increased the monetary policy rate (“repo rate” in SA) with 25bps to 7%. SARB Governor Lesetja Kganyago stated that the primary reason for the increase was inflationary pressure felt as a result of increased energy prices stemming from the US/Israel war in Iran. See below for an explanation of what this means.

SARB Monetary Policy Rate (2019 - current)

Source: Bloomberg

[2] The US and Iran reached a tentative deal to extend a ceasefire (a ceasefire which includes bombing the $&*% out of each other, apparently) by 60 days and launch further talks on Tehran’s nuclear program. Trump lap dog and VP JD Vance stated that the countries “are going back and forth on a couple of language points” (Farsi can be difficult). US Treasury Secretary Scott Bessent, who supported Trump’s plan to take over Greenland and dismissed Denmark, a country with 6 million people, as “irrelevant”, reiterated that Trump’s three red lines are reopening the Strait of Hormuz (which was open before the war), Iran surrendering highly enriched uranium (which they would not have had had Trump not backed out of a Obama negotiated nuclear deal) and ending its nuclear program (which there is still not concrete proof they had in the first place). The extension sent the MSCI All Country World Index up 0.3% to an all-time high and Brent oil dropped 0.6% to $93.10.

Brent Crude Futures

Source: Bloomberg

[3] SpaceX lowered its IPO valuation target to $1.8 trillion (previously $2 trillion) and Anthropic (which was valued at $380 billion in February) raised their IPO valuation target to $1 trillion (previously $900 billion), further proving just how accurate and fundamentally sound these valuations are (Benjamin Graham is rolling over in his grave). Another notable and very real valuations includes Open AI at $852 billion following a funding round which closed in April.

[4] Jeff Bezos found enough money in his second wife’s Botox budget to build a rocket called Glenn which was set to spearhead a challenge to Musk’s SpaceX. It did not. Glenn exploded in a massive fireball while undergoing a test in Florida. Luckily, none of the satellites which Blue Origin, Bezos’ space company, is attempting to put into orbit was on board (confident much?). Glenn, which is key to Blue Origins plans for space exploration, is years behind schedule. While the team at DNF enjoys shooting spit-balls at Musk, we must give credit to the engineering prowess of SpaceX, which seems to be miles ahead of competitors.

[5] America’s PCE price index - the Federal Reserve (the US SARB equivalent) preferred inflation gauge - rose by 3.8% YoY in April. It is the biggest increase since May 2023. Rising prices continue to squeeze economic growth - revised figures showed that America’s GDP grew by an annualized 1.6% in Q1. Luckily for the average American consumer, who is falling behind on their collective $1.25 trillion credit-card bills at record pace, with 90+ days delinquent loans at an all time high, the UFC is hosting an event at the White House.

[6] The worst outbreak of Ebola since 2018 is spreading fast in the Congo. More than 1,000 cases and around 250 suspected deaths have been recorded. The real tally is almost certainly higher. The response has been late and chaotic. Scientist are racing to make an experimental vaccine, which will take, at best, two to three months.

[7] Donald Trump continues his insider trading tirade in broad daylight. After buying more than $5 million of Dell shares since February and saying “Go out and buy Dell” on May 8^th, the company announced a five-year, $9.7 billion Pentagon software agreement for the US Military. Dell shares rose 39% (!) after-hours.

[8] [Fun] The Enhanced Games – a series of Olympic style events which allows athletes to compete on steroids – went exactly as you would expect. Terribly. Who would’ve thought that allowing a bunch of juiced up gym-rats with limited professional training would produce only one world record? Everyone. The single “world record” was set in the 50m freestyle with a time of 20.81, beating the actual world record with 7 split seconds. Greek swimmer and steroid user Kristian Gkolomeev took home the gold using an illegal suit, which might have been the actual reason for the record (his enormous shoulders probably increased his drag, offset by the illegal suit). Two things to learn: firstly, most Olympic athletes are already on gear (9 out of the last 10 100m world record holders have tested positive for banned substances somewhere in their career, the exception being current world record holder Usain Bolt, confirming his GOAT status) but simply cycle on and off to beat testing. Secondly, given the viewing numbers, there is little appetite to watch cheaters compete, even when they admit their substance use.

[9] [Fun, but concerning] The White House, in the midst of a war with Iran which sent global energy markets into disarray, caused thousands of deaths and increased the cost of living for just about everyone in the world, posted a homage to Harambe, the gorilla which was shot at the Cincinnati Zoo in 2016 and subsequently became a viral meme, on their official X page. While we appreciate a friendly Gorilla as much as the next Substack page, the US political scene continues its demise and consistently looks more and more like a Simpsons episode. The post on X called Harambe a “true patriot” – blurring the definition further.

[10] Arsenal won the Premier League for the first time since 2004. The club’s valuation soared 23% in 2025 to EUR4.9 billion. Zohran Mamdani, the socialist mayor of New York, celebrated by attending a Eid event in the Bronx in an Arsenal themed kurta. Arsenal is now the 5th most valuable club in Europe. The Gunners are set to face PSG in the Champions League final on Saturday.

Football Club Valuations:

Source: Bloomberg

[11] Finally, after lobbying (a fancy word for throwing money at a problem) by the tobacco industry, the Food and Drug Administration (FDA) reversed course on a ban of flavored vapes without a scientific review. 25 years ago, 30% of US high school student smoked cigarettes. By 2024, the number had fallen to 1.7%. The tobacco industry, knowing that vapers often become smokers, rejoiced as the American youth can again happily indulge in lemon and strawberry flavored air from Chinese chemicals.

Explanation: SARB Monetary Policy

The monetary policy rate (repo rate) is the interest rate at which the SARB lends money to commercial banks. You borrow money from the banks at the repo rate plus a markup (previously, the repo rate was 6.75%, plus a markup of 3.5% which returned 10.25%, the Prime rate). The SARB, like the Federal Reserve in the USA, has a mandate to protect the value of the Rand. Because of the increase in energy prices caused by the US invasion of Iran, the SARB is worried about inflationary pressure. When inflation runs hot, the SARB wants to decrease the amount of money in the economy. The mechanism they use is the repo rate, which makes money “more expensive”. Because borrowing money is now more expensive, people are less inclined to do so, therefore there is less money in the economy, therefore there is lower demand for goods, therefore inflation cools and prices don’t run away. Every household with a mortgage, a car bought with financing or an overdraft facility on a bank account, essentially any form of debt which has an interest rate tied to the prime rate (called a variable rate), is now more expensive. Because consumers spend more money servicing their debt on their cars, houses, or other goods, they have less money to spend, which cools inflation. This might seem like a small change, but across millions of loans it adds up. From a market perspective, bond* prices fall (yields rise), the Rand should strengthen (higher demand for local bonds because of the higher yields, more demand means higher price). For equity markets the impact is more nuanced. Industries that rely on leverage to juice gains, such as real estate, suffer because they are paying higher interest rates. Companies that rely on disposable income, such as gambling stocks, also suffer as the pundit now has less money to spend in the casino. Typically, financials strengthen due to higher income from interest income. This is the theory, the reality is often quite different. As Sir Isaac Newton said after losing most of his life savings in the stock market: “I can calculate the motions of heavenly bodies, but not the madness of people." Maybe if a pear instead of an apple fell on his head, he would have been a better investor.

*A bond is a fancy word for a loan that investors make to the government.

Have a great weekend, we will be back on Monday!