In Case You Missed It: Key Charts of the Week:

By Mark Masterson on August 16, 2024

It has been said “a picture is worth a thousand words.”

Interesting look at Warren Buffett’s stock sales over the past quarter…..

• ‘As a proportion of total assets, Berkshire’s cash and equivalents are now officially back to their highs from the mid-aughts, before the financial crisis when a cash-rich Buffett famously scooped up iconic investments at bargain prices.’ https://bloomberg.com/opinion/articles/2024-08-05/warren-buffett-s-277-billion-hoard-after-unloading-apple-is-a-warning?sref=X9N3NABa
• Berkshire Hathaway cash & cash equivalents as $ of total assets skyrocketed to 25.0% in Q2 2024, above the Q2 2005 high of 24.5%.
• The company’s cash rose by $88 billion, or 46.5% in Q2 to a RECORD $277 billion.

He now has the most cash as a percentage of Berkshire since 2005/2006.

He put a lot of that cash he raised back in 2005 to work in the Global financial crisis of 2007….

Bloomberg 8 10 24

At the same time, Americans have more stock today than ever before……

‘Today, the proprtion of Americans’ financial assets invested in public stocks is nearing record highs, just shy of the peak seen in 2021.’ https://visualcapitalist.com/american-stock-ownership-by-share-of-financial-assets/

by

@VisualCap 8 12 24

Updated chart showing the value in commodities versus stocks.

The below chart is the ratio of the Commodity index to the S&P 500 index.

When it is falling, stocks are outperforming commodities.

When it is rising, commodities are outperforming stocks.

We remain near the lows as stocks have undergone an extreme period of outperformance due to liquidity from the central banks…..

IGWTreport 8 12 24

Noted this week that hedge funds are betting heavy against commodities today….

Hedge Funds have now built the largest net short position on commodities in 13 years

With growth slowing, that does make sense.  Commodities are cyclical.

However, the below chart may suggest the positioning is extreme, and a good bit of the downside may be priced in.

Bloomberg/ Barchart 8 12 24

One commodity is a favorite of central banks…..

Gold.

They just keep buying.

IGWTreport 8 12 24

Will the AI euphoria last?

I don’t know – but Bank of America highlights how the euphoria often fades after the initial surge.

BofA 8 12 24

Quietly gold has pushed to new highs.

I like new highs with little fanfare.

In fact, gold is outperforming most stock markets year to date.  Will it continue?  I like its chances……

Strategas 8 13 24

Strategas 8 13 24

Strategas 8 13 24

I noted bank CEO’s are calling for rate cuts.

*BANK OF AMERICA CEO MOYNIHAN CALLS FOR THE FED TO START CUTTING RATES

Perhaps this is why…..

Goldman Sachs now pricing in a 41% chance of a U.S. Recession.  This is up from just 29% back in April.

Goldman Sachs 8 14 24

Quick observation on the S&P 500…..

After the sell-off from the highs, this weeks bounce has brought it back to the 50 day moving average, and back up to the downtrend line.

From a technical perspective – this is an important juncture.

The market will need to break through both.

This is also a point where rallies – if they are more of a dead cat bounce from short term oversold conditions – tend to roll over.

Adding to the gold charts from yesterday – another positive (potentially) for gold to continue its move higher.

“In all US easing cycles since 1990, the gold price has risen 5–6% after the first rate cut.”  – ANZ

Sorenthek 8 14 24

Housing starts were weak.  This continues the string of mixed economic signals.  Some stronger while others rolling over.

• July housing starts (blue) -6.8% month/month vs. -1.5% est. & +1.1% prior (rev down from +3%)

According to the data from Bloomberg – homebuyer sentiment has never been lower…..

Homebuyer Sentiment falls to Record Low

Yesterday Wall Street rejoiced at better retail sales.

Yet – were they really that great?

• US Retail Sales increased 2.6% over the last year but after adjusting for higher prices they were down 0.4%.
• Both of these numbers are well below the historical averages of +4.6% nominal and +2.0% real.

Can you trust the numbers?  I have posted how the jobs data gets revised lower every month over the past year.  Same looks to be true for the retail sales…..

Retail sales prior month revisions: red means down

Zerohedge 8 16 24

As mentioned, the US job numbers have been revised lower by 778,000 jobs since February 2022, according to BlackRock.

• This year alone, non-farm payrolls were revised down by 279,000 from January to June.
• Furthermore, the US economy LOST 192,000 jobs in Q3 2023 and added 344,000 jobs in Q4 2023, according to the BED survey released by BLS.
• On the other hand, nonfarm payrolls data showed that the US labor market added 663,000 and 577,000 new jobs in Q3 and Q4 2023.
• This is a jaw dropping 1,088,000 difference in job count over just two quarters.

Yesterday I noted that the S&P 500 is right at a key juncture.

It cleared that hurdle as you see in the chart below. 

After the sell-off from the highs, this has brought it back to the 50 day moving average, which it cleared yesterday. 

From a technical perspective – this is an important juncture.

The market will need to hold, or it will prove to just be another short covering, retail FOMO bounce. 

Interesting to note that the volume is very light on this rally.   That suggests institutional money is sitting this out.