Morning Roundup

By Mark Masterson on May 6, 2024

Good morning,

Below are the news items moving markets today:

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Executive Summary:

Happy Monday!

Here is a look at what is on tap for the economic data this week…..

• *CONSUMER CREDIT (TUES.)
• *JOBLESS CLAIMS (THURS.)
• *CONSUMER SENTIMENT (FRI.)

We have a long list of Fed speakers on tap as well……

• *FOMC MEMBER BARKIN (MON. 12:50PM)
• *FOMC MEMBER WILLIAMS (MON. 1:00PM)
• *FOMC MEMBER KASHKARI (TUES. 11:30AM)
• *FED VICE CHAIR JEFFERSON (WED. 11:00AM)
• *FOMC MEMBER COOK (WED. 1:30PM)
• *FOMC MEMBER BOWMAN (FRI. 9:00AM)
• *FOMC MEMBER GOOLSBEE (FRI. 12:45PM)
• *FOMC MEMBER BARR (FRI. 1:30PM)

Stock buybacks are on the rise again….

• Corporates increasingly moving out of their buyback blackout periods, while buyback announcements have also ramped up.
• Deutsche Bank noted S&P 500 buyback announcements jumped to over $130B last week, pushing the total so far for Q1 earnings season to $262B.
• Pointed out that while high-profile announcements from Apple and Google have attracted outsized attention, announcements from other companies have totaled a solid $82B.
• Firm has previously discussed how even as earnings have rebounded, buybacks have yet to recover and sit at the bottom of the 40-60% band of the gross buybacks to earnings ratio that has prevailed since the GFC.
• Noted that just moving back to midpoint of historical range could drive buybacks from a LTM run rate of $800B to over $1T. Goldman Sachs currently expects 2024 buybacks at $1.15T, up nearly 16% y/y.

Interesting fact….

Did you know that 33% of all S&P 500 stock trades are now executed in the last 10 minutes of the trading session.

What do you make of that?

Bloomberg 5 6 24

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Articles of Interest:

Berkshire Hathaway gains as insurance lifts first-quarter profit and cash nears $200 billion

Warren Buffett’s Berkshire Hathaway cut Apple investment by about 13%

Stocks: Where We See Opportunities After An Ugly April– Dave Sekera, Morningstar

 Inside The Biggest Investor In The World– Marc Rubinstein, Net Interest

They Just Wanna Sell You a Bond Fund– Bill Gross, Bill Gross

The Fed Is Raining On Biden’s Economic Parade– Desmond Lachman, AEIdeas

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Charts of the day:

Much has been made over Buffett’s cash raise.

Berkshire Hathaway’s cash pile reached a new all-time high of $189 BILLION in Q1 2024.

This is a $19 billion increase from their cash balance seen in Q4 2023, and a 70% increase in cash since 2022.

To put this in perspective, Berkshire Hathaway’s cash balance is larger than the market cap of Starbucks and Target combined.

When asked about this, Warren Buffet said “I don’t mind at all, given current conditions, building our cash position.”

“Warren Buffett thinks of cash as a call option with no expiration date, an option on every asset class, with no strike price.”

Take a look….

Financial Times 5 5 24

Take another look at the cash pile.

Notice that Buffett historically has raised cash at the right time.

Before the 2000 tech bubble burst he was raising cash.  He put it to work very fast after that bust.

He was raising cash into the 2008 top, and put it to work fast after the bust.

He was raising cash into the 2021 top, and put it to work fast after the bust.

He is raising cash again.

Financial Times 5 6 24

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Quote of the day:

“I don’t look to jump over seven-foot bars; I look around for one-foot bars that I can step over.”

— Warren Buffett