The S&P 500 is down 5.7% from its closing high on July 16, the largest drawdown of the year.
The index is still up 13% year-to-date including dividends. No risk, no reward. $SPX Source. Charlie Bilello
This is the most important chart in the world today: the Japanese Yen vs the USD. Why is it so important?
1. For 30 years Japan has 0% interest on their currency. 2. As a result for 30 years investor borrowed YEN at no cost and invested it globally. They invested in T-Bills abroad and a basket of risk assets including the Nasdaq. 3. For the first time in many year the BOJ increased interest rates this week by 0.25%. This was almost unprecedented. 4. As a result of the increased interest rates and the signal to the market, investors are now concerned that the money they borrowed for free is no longer free and therefore they are unwinding their trades and sending the funds back to Japan. 5. The estimated quantum of this trade is over $4 trln!! The only question that remains is how aggressive they will be. But for now WE MUST KEEP OUR EYES ON THIS CHART! If it keeps strengthening risk assets are going to get sold even more. If it weakens again then risk assets might rally (all else being equal). Source: Ran Neuner on X, Bloomberg
What does he know about Apple and the stock market that we don't?
Also interesting to see that Warren Buffett and Berkshire Hathaway now own 4% of all T-Bills issued to the public… Buffett has ~$277 Billion. The Fed has $195 Billion. Warren Buffett is now a larger holder of US Treasury Bills than the Federal Reserve. Source: FT, Geiger Capital
Berkshire Hathaway’s cash pile swelled to a record $276.9 billion last quarter as Warren Buffett sold big chunks in stock holdings including Apple
The Omaha-based conglomerate’s cash hoard jumped significantly higher from the previous record of $189 billion, set in the first quarter of 2024. The increase came after the Oracle of Omaha sold nearly half of his stake in Tim Cook-led tech giant in the second quarter. Berkshire has been a seller of stocks for seven quarters straight, but that selling accelerated in the last period with Buffett shedding more than $75 billion in equities in the second quarter. That brings the total of stocks sold in the first half of 2024 to more than $90 billion. The selling by Buffett has continued in the third quarter in some areas with Berkshire trimming its second biggest stake, Bank of America, for 12 consecutive days, filing this week showed. For the second quarter, Berkshire’s operating earnings, which encompass profits from the conglomerate’s fully-owned businesses, enjoyed a jump thanks to the strength in auto insurer Geico. Operating earnings totaled $11.6 billion in the second quarter, up about 15% from $10 billion a year prior. $BRK Berkshire Hathaway Q2 FY24. • Stock repurchase $0.3B. • $AAPL stake cut by nearly half. • Segment margin 14% (+2pp Y/Y). • Cash and short-term securities $277B. Source: App Economy Insights, CNBC
Is inflation in the US reaccelerating?
The 3-month annualized core PPI inflation rose to 5.0% in June, its highest since 2022. This metric has more than DOUBLED in just 6 months. This is also higher than in any period over the last 15 years, except for 2021 and 2022. Something to watch closely. Source: The Kobeissi Letter, Bloomberg
JUST IN: Over $2.9 trillion has been wiped out from major indices and stocks this morning due to growing fears of a global recession.
This is the worst day for stocks since March 16, 2020, during the COVID-19 pandemic fears. Source: Jacob King, Bloomberg
Are markets now pricing in a Kamala victory?
Source: PredictIt
Booking Holdings Trying to Rebound on Support
Booking Holdings (BKNG US) is trying to rebound on a major swing support zone between 3394-3477. Keep an eye on the close today. Source: Bloomberg
