Buffett Balking At Stiff Asking Price Puts Spotlight On S&P 500
By Ven Ram, Bloomberg markets live reporter and strategist
Brick-and-mortar stocks are getting swept up in the hysteria surrounding technology names, but the S&P 500 can’t forever outperform the US economy — with even Warren Buffett unable to find stocks to buy at sensible prices.
The equity benchmark has already totted up 7% in gains in just the first two months of the year, taking its advance since the Federal Reserve started raising rates in this cycle to about 20% — a period when you would think rising interest rates would have acted like gravity to pull down stocks from their highs. With the Nasdaq 100 moving along like a veritable juggernaut, there are no prizes for guessing that sentiment is often a more powerful driver than fundamentals.
Even so, it’s worth noting what Buffett’s Berkshire Hathaway has been doing in the past few years: building up its arsenal of cash and short-term investments when it can’t find meaningful businesses to invest in at reasonable prices. Its cash pile surged some 30% at the end of last year to almost $168 billion — the clearest indication that the legendary investor is waiting for an inflection point in the markets.
“There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others. Some we can value; some we can’t. And, if we can, they have to be attractively priced.”
Here’s one of the smartest investors hinting that he is unable to deploy Berkshire’s massive cash hoard in meaningful size, even though the rest of the world seems to be charging ahead with nary a concern about how this might all end.
At current levels, the Nasdaq 100 is trading at a P/E of some 33x, and the S&P 500 is just following in tow. But when some of the best minds in finance can’t deploy their cash meaningfully, it may be time to turn a bit cautious.
After years of undermining Republicans through sheer incompetence (or worse), Ronna Romney McDaniel is stepping down as the head of the Republican National Committee on March 8, after Super Tuesday (which is when we expect Nimrata ‘Nikki’ Haley to tap out as well)..
“It has been the honor and privilege of my life to serve the Republican National Committee for seven years as Chairwoman to elect Republicans and grow our Party,” said McDaniel, the longest-serving chair since the 19th century who came under fire in January of 2023 after Republicans had terrible results going back to 2018.
McDaniel, Mitt Romney’s niece, said she will step aside at the RNC’s “Spring Training on March 8 in Houston to allow our nominee to select a Chair of their choosing.”
She has been heavily criticized by Florida Governor Ron DeSantis, GOP committee member Harmeet Dhillon (McDaniel’s primary challenger in the Jan. 2023 election for chair), and Vivek Ramaswamy.
Others on the right such as Steve Bannon rallied behind the push to oust McDaniel.
🚨 Steve Bannon and John Solomon are calling for Ronna Romney McDaniel to resign after the GOP’s performance in elections last night
McDaniel also came under fire for picking NBC to host a November GOP debate – during which former 2024 presidential contender Vivek Ramaswamy suggested she come up on stage and quit during said debate, as the GOP has become a “party of losers” under her watch.
“…there is a cancer in the Republican establishment… Since Ronna McDaniel took over as chairwoman of the RNC in 2017 we have lost 2018, 2020, 2022, no red wave, that never came.”
And then the haymaker…
“We got trounced last night in 2023 and I think that we have to have accountability in our party,” he went on.
“For that matter, Ronna if you want to come up on stage tonight. You want to look the GOP voters in the eye and tell them you resign… I will turn over my time to you.”
Former President Donald Trump – who is undoubtedly the leader of the Republican Party – endorsed Michael Whatley after Ms. McDaniel’s resignation was widely reported, the Epoch Times reports.
“I think my friend Michael Whatley should be the RNC’s next leader. Michael has been with me from the beginning, has done a great job in his home state of North Carolina, and is committed to election integrity, which we must have to keep fraud out of our election so it can’t be stolen,” Mr. Trump said in a statement on February 12.
The former president also endorsed his daughter-in-law, Lara Trump, to be the RNC co-chair.
Ms. Trump said later in an exclusive interview with The Epoch Times that she will launch the largest-ever legal ballot harvesting operation if she’s elected.
“We need to have the biggest legal ballot harvesting operation this country has ever seen,” she said.
“It feels, for a long time, like the Democrats have been playing chess and we’ve been playing checkers,” she said.
Her goal is for the Republican Party “to be the opposite, to be steps ahead of them, and on our toes, and ahead of the game, and facing forward the whole time.”
X owner Elon Musk commented on the dumpster fire that is Google’s Gemini AI Sunday, noting that he has spoken to a senior Google executive who has claimed it is being fixed.
As we previously highlighted, the latest ridiculous thing the AI has come out with is that it would not misgender Caitlyn Jenner in order to prevent a nuclear apocalypse.
Musk chimed in, warned that “Given that the Gemini AI will be at the heart of every Google product and YouTube, this is extremely alarming!”
Musk also revealed that a senior Google executive has told him “it would take a few months to fix,” adding “Previously, he thought it would be faster.”
A senior exec at Google called and spoke to me for an hour last night.
He assured me that they are taking immediate action to fix the racial and gender bias in Gemini.
“My response to him was that I doubted that Google’s woke bureaucratic blob would *allow* him to fix it,” Musk continued.
“Unless those who caused this are exited from Google, nothing will change, except to make the bias less obvious and more pernicious,” the X owner further warned.
Given that the Gemini AI will be at the heart of every Google product and YouTube, this is extremely alarming!
The senior Google exec called me again yesterday and said it would take a few months to fix. Previously, he thought it would be faster.
The comments come after the Gemini AI also declared that it is “difficult to say” who is the worse human being when given the choice of Elon Musk or Adolf Hitler.
The AI clearly cannot discern between right and wrong, having also declared that calling communism “evil” is “harmful and misleading” and refusing to say pedophilia is “wrong.”
Musk is right, Google is one of the key delivery mechanisms of information on the planet, and it is going to have this ‘broken’ AI at its heart:
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“Like A Warzone”: Farmers Surround EU Headquarters Building
The mephitis of manure, melting tires and malodorous teargas pervaded downtown Brussels this Monday morning as angry farmers encircled the European Union’s headquarters. This protest coincides with a meeting of the bloc’s agriculture ministers. The farmers are expressing their anger over the EU’s disastrous green policies.
Things are heating up here at the farmers’ protests, with tires being set alight just a few buildings down from where EU Agri ministers are meeting pic.twitter.com/FPfskbZcoI
According to Bloomberg, farmers are angry about bureaucratic hurdles, trade deals, climate-related rules, and efforts to help Ukraine dump cheap grain onto markets.
“There is a clear problem with the reduction of the import tariffs for Ukraine and massive imports of grain and poultry which depresses the prices,” said Guillaume Van Binst, secretary general of the Federation of Young Farmers.
Guillaume added: “The measures proposed by the commission are very weak and it is more passing the hot potato to member states.”
Today’s protest is the latest in a series of demonstrations by farmers across several EU countries, including France, Italy, and Spain. Blue-collar folks are also furious about imploding incomes and elevated inflation.
Meanwhile, EU leaders are scrambling to defuse this ticking timebomb of social unrest spreading across the bloc. They are taking steps to reduce red tape and delay some green rules.
“It can always go more quickly, But we’re already working faster than usually.” David Clarinval, Belgium’s agriculture minister, told reporters Monday.
Clarinval said, “One can understand the anger of the farmers. One can also understand that some are in a difficult situation. But aggression has never been a source of solutions.”
Don’t tell the legacy media or the various left-wing politicians, bureaucrats, intelligence agencies, and their minions, paid or unpaid, who wish him ill, but the meme they are seeking to promulgate, overtly and covertly, is dead wrong.
The 45th president of the United States, Donald J. Trump, has not lost a step.
If anything, it’s the reverse. He is sharper than ever.
That’s what experience does.
The attempts to draw an equivalency between the mental fitness of Mr. Trump and President Biden are absurd malicious propaganda.
How do I know this?
I was in the audience of two thousand plus at Nashville’s Opryland on Feb. 22 when Mr. Trump addressed the National Religious Broadcasters (NRB) for more than an hour and a half with nary a stumble, consulting a teleprompter or extemporizing as he wished.
He was also wittier than anyone on late night television.
He began this speech some minutes beyond 9:30 p.m. after he had given a previous talk that same evening at a fundraiser in the city.
The man is a force of nature.
This was, roughly, the fifteenth time I had heard 45 speak live, and I had vowed for once not to sit in the press section in the rear.
When Mr. Trump, as he almost always did, called out the “fake news” while pointing at that section, it always seemed he was wagging his finger directly at me.
I wanted to say, “Wait! Wait!” (His real targets were often only a few feet away from me.)
But my effort, this time, to be “among the people” misfired. From the outset, it was clear the event contained more useful information than I would be able to remember, and I retreated to the press area to take notes with my laptop.
Here is what jumped out at me:
I expected the introductory speeches to be boring. They weren’t.
First up was NRB CEO Troy Miller, who began by telling us that all presidential candidates from both parties had been invited to speak, but only one had accepted. He shrugged knowingly after this, generating a good laugh.
More importantly, he spoke forcefully of Christian support for free speech, noting, “The righteous have no need to suppress the truth.” (I scribbled that one down.)
Also on hand was Paul Dans from the Heritage Foundation’s 2025 Presidential Transition Project, which seeks to bring conservatives to Washington D. C. to replace the Deep State unelected bureaucracy, thereby diminishing their numbers and ability to shape, even control, policy.
There was also a representative of Salem Media who talked of their company’s fight against “woke” rhetoric before one of Salem’s stars, talk show host Hugh Hewitt, gave the first formal talk.
Mr. Hewitt alerted the audience to the left’s latest propagandist buzzwords, “Christian nationalist.” As he put it, “They are trying to steer Christians into believing we are something we are not. We have no desire to run other people’s lives. Demand they define their terms.”
Then Kevin Roberts, president of the Heritage Foundation, gave an accurate and well-received tour d’horizon of everything conservatives despise about modern liberalism and progressivism and what to do about it.
In urging the election of Donald Trump, he spoke a sentence that provided a pungent introduction to the next speaker (after some delay), the 45th president himself:
“This November, we’re choosing a president, not a pastor.”
Indeed so, but he brought up an issue I and many others had been cogitating.
Back in 2016, it seemed the alliance between Donald Trump and evangelical Christians was an uneasy one. It was more of a marriage of convenience—they both thought Hillary Clinton anathema– than a “marriage made in heaven,” given that Mr. Trump had spent decades living the lifestyle of what one might call a jazzy New York public figure, scarcely an evangelical one.
But the welcome Mr. Trump was given the night of Feb 22 at Opryland was in no way uneasy. It was resoundingly positive. No one remained in their seat when he entered. Cellphones were waving as people stretched on their tiptoes for a better camera angle.
Mr. Trump delivered a speech that was, in part, what many of us had heard before but skewed slightly to emphasize his Christianity and, probably consequently, his deep-seated love and defense of Israel.
He stated he “fought harder for Christians than any president has done before.”
Is that true? I’m not sure, but there is an argument. He is the first president to attend the March for Life in Washington, D.C.
Did that “jazzy” New Yorker actually deserve this wholehearted support of evangelical Christians? He would not be the first in history to have evolved from a largely secular life. It’s an illuminating process for some that changes people to a surprising extent. It did for me, on a much smaller scale, when I gradually evolved from a secular Jew to one of more faith.
Mr. Trump’s evolution has led him to affirm his religious faith emphatically as he did that night with statements like “Our allegiance is to our Creator. They [the Democrats] don’t get that.” Or: “They can’t stand we don’t answer to bureaucrats in Washington. We answer to God in Heaven.”
For once, with a politician, I actually think he means it. Or, perhaps more accurately, he has come to mean it—and that’s a wonderful thing.
It’s amusingly ironic that the headliner, with Mr. Trump himself of course, of the fundraiser 45 had just left was his supporter, the great singer/songwriter Kid Rock, a man known to employ expletives not often heard in church or read on the pages of The Epoch Times.
I would argue, however, that Mr. Rock (real name Robert James Richie) is a man who is, in his own way, of as deep a faith as any of us—unless you’re a Bud Light beer can. (Full Disclosure: I am a huge Kid Rock fan.)
Nevertheless, perhaps out of discretion, Mr. Richie did not accompany Mr. Trump to the NRB convention, at least as far as I could tell.
Who did accompany him, the sole person he invited to join him on stage—he often invites many—was his former ambassador to Israel, David Friedman.
The reasons were obvious.
Mr. Friedman was greeted with utmost warmth and applause by an audience largely of evangelicals who are known as the greatest friends of Israel, not only in our country but arguably anywhere. (There were also a few religious Jews I spotted in the audience wearing their yarmulkes.)
Mr. Friedman saluted his former boss, saying, “Mr. President, you are the greatest friend Israel ever had.”
You could argue in favor of President Harry Truman, who was the first to recognize the fledgling country, but the litany of Mr. Trump’s achievements—moving the American embassy to Jerusalem, recognizing Israeli sovereignty over the Golan Heights, and, needless to say, the epochal Abraham Accords, all while preserving peace—it’s hard to dispute Ambassador Friedman.
As a Jew, you can imagine how I was feeling through all this.
Mr. Trump continued with a list of his intentions on his election, or should we say reelection. All were well-received, but the loudest applause came from his pledge to unwind the gender ideology overwhelming our schools and universities and his promise never to allow men to compete in women’s sports.
He ended by urging all not to be complacent but to vote on March 5 (Super Tuesday): “We have to let the world know we are coming in big numbers because you can only cheat so much.”
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.
After storming higher last week, culminating with their 15th ascent in the past 17 weeks…
… US equity futures indicated a pause for stocks which trade at their all-time highs as investors geared up for a busy week of data, including the Fed’s preferred measure of inflation, the core PCE. As of 8:00am, futures on the S&P 500 and the Nasdaq 100 were fractionally in the red after Wall Street’s record-breaking rally stalled at the end of last week, weighed down by profit taking in megacap tech stocks. Treasuries climb, pushing 10-year yields down by 1bps to 4.24% while the dollar ticked lower.
In premarket trading, Berkshire Hathaway rose as much as 5.5% on track for a record high following its weekend earnings update, setting Warren Buffett’s conglomerate on course for a market value even closer to $1 trillion. Here are some other notable premarket movers:
Amer Sports shares jump 7.0% after a majority of brokers initiated coverage with buy-equivalent recommendations. Analysts highlighted the strength of its high-end outdoor apparel and equipment brand Arc’teryx.
HashiCorp shares jump 6.0% as Morgan Stanley raised the recommendation on the software company’s stock to overweight, noting that a resurgence in cloud is starting to benefit the company.
Intuitive Machines shares fall 33% after officials said on Friday the American-made lander that touched down on the moon likely landed on its side.
Li Auto ADRs jump 12% after the Chinese EV maker reported better-than-expected profitability and free cash flow for the fourth quarter.
Fidelity National forecast adjusted earnings per share for the first quarter; the guidance missed the average analyst estimate.
IBM said it is making changes to its reportable segments to reflect the way the company manages operations and allocates resources.
Walt Disney Co. should appoint a corporate chief technology officer and focus on technology “transformation,” according to one of the activist investors pressing the company for change.
Cathie Wood sold shares of Taiwan Semiconductor Manufacturing Corp. for the first time in more than two years, adding to moves to cut exposure in the chipmaker’s key customer Nvidia Corp.
Investor focus this week shifts from earnings to a slate of economic data, including Thursday’s core PCE price index, which is closely watched by the Fed for inflation hints. Q4 US GDP numbers are also due Wednesday, while traders will track comments from a host of central bank officials for clues on the path for interest rates.
“There is a lot of economic data coming in this week, which will be more decisive for whether investors will stay in a risk-on mood,” said Tatjana Puhan, chief investment officer at Copernicus Wealth Management. “We should factor in the possibility that if the US economy remains strong for a few more months and US corporate earnings as well, we should see at least in the US market a further potential for positive momentum.”
On the outlook for equities, strategists at Goldman Sachs said stock markets have room to extend gains beyond their record highs if the economic outlook remains upbeat and investors pour money into recent laggards. The S&P 500’s run to an all-time peak has left investor positioning “extremely” concentrated in the so-called Magnificent Seven, the team led by Cecilia Mariotti wrote in a note. While that does create the risk of a pullback, there’s also “space for bullish sentiment and positioning to be further supported, especially if we start seeing a more meaningful rotation out of cash and into risky assets and laggards within equities,” Goldman wrote.
Meanwhile, as we first reported, the latest Goldman prime figures showed that after piling into tech stocks in the weeks before Nvidia’s earnings, hedge funds are now cashing out and selling at the fastest pace in seven months. Professional managers offloaded their positions for four straight sessions last week, including Thursday, the day after Nvidia posted results. The intensity of the selling ranks in the 98th percentile of the past five years. The data suggests traders are booking profits on their tech wagers after a six-week buying streak and putting that extra cash into less volatile stocks, such as consumer staples. Companies that make household products saw the most net buying in 10 weeks, according to Goldman’s prime brokerage (more here).
European stocks fell after closing at a record high on Friday. The Stoxx 600 is down 0.3%, led by declines in mining shares as iron ore prices drop to the lowest since October; financial services and insurance stocks are the biggest outperformers. Rio Tinto Plc and Anglo American Plc led declines in basic resources amid concerns over Chinese demand. Shares in UK homebuilders dropped after Britain’s top antitrust enforcer opened an investigation to probe potential information sharing between companies. Here are the most notable movers:
BASF rises as much as 2.2% on the back of results that suggest the German chemicals firm has overcome a slump and is poised for upside. Stifel analysts expect “substantial” earnings gains while Barclays analysts see volumes rebounding
Zealand Pharma shares jump as much as 20% in Copenhagen, the most since September 2022, after the company’s partner, Boehringer Ingelheim, published trial results on drug candidate Survodutide
IAG shares gain as much as 2.2% after Barclays raised its full-year Ebit estimate for the airline group, citing strong travel demand seen this summer. Deutsche Lufthansa falls after a downgrade to equal-weight at the broker
Idorsia surges as much as 45% to the highest since Sept. 21, with trading volume more than double the 3-month daily average
Wincanton shares gain as much as 11% after CMA CGM increased its final offer to 480p/share; ~6.7% higher than the original 450p/share bid
Nestle shares fall 1.5% after Stifel cut its recommendation on the Swiss food maker to hold from buy. “The magic is gone,” analysts said, citing waning performance and little confidence it will improve in the short term
Bank of Ireland shares were down as much as 11%, the most in almost two years, as the lender pointed to a weaker interest rate environment, saying they expect net interest income to be to be 5-6% lower than the fourth quarter
Bunzl shares fall as much as 5.1%, their sharpest drop in over four months, after the distributor downgraded its revenue outlook for 2024 following a slow start to trading in North America while warning that margins will tighten, according to analysts at Citi
PostNL shares dropped as much as 8.3%, the most since November, after the Dutch mail carrier’s forecast of normalized Ebit for 2024 missed the average analyst estimate
International Personal Finance Group’s shares drop as much as 14% after the consumer finance company delayed its full-year results pending a review of a letter from the Polish regulator
Earlier in the session, Asian equities traded in a narrow range, as the ongoing rally in Japanese shares helped offset declines in South Korea and China. The MSCI Asia Pacific Index gained as much as 0.4% before paring much of the advance, with Toyota among the biggest boosts while Tencent weighed on the gauge. Japan’s Nikkei 225 extended its climb after reaching a record-high last week, helped by gains in trading houses after Warren Buffett’s positive comments on the sector’s shareholder-friendly policies. Last week’s rally in Chinese stocks came to a halt, with the mainland benchmark CSI 300 Index on track to snap it longest winning streak since 2018 as investors booked profits. Korean stocks fell as the nation’s much-hyped “Corporate Value-up Program” aimed at improving governance standards and valuations was launched without concrete details or an enforcement plan.
Hang Seng and Shanghai Comp. marginally declined with weakness seen in Hong Kong consumer stocks, while the mainland was also pressured amid ongoing frictions after China’s MOFCOM slammed the latest USTR report on China’s WTO compliance.
Nikkei 225 outperformed on its return from the long weekend and extended on record levels.
ASX 200 finished flat after failing to sustain its early gains with price action indecisive amid a slew of earnings.
Indian stocks fell for a second session, weighed down by declines in the nation’s largest paintmaker and IT stocks. The S&P BSE SENSEX Index fell 0.5% to 72,790.13 on Monday, while the NSE Nifty 50 Index declined 0.4%. Out of 30 stocks in the index, 25 fell and 5 rose.
“We are still in the early innings, so let’s see if the government releases more details in other dimensions outside what the Korea Exchange can do,” said Homin Lee, senior macro strategist at Lombard Odier. “As in Japan’s case, it takes time to convince investors that you are changing decades-old corporate governance culture.”
In rates, treasuries are back to little changed as US session gets underway after paring gains. The 10-year yield trades 1bp lower at 4.234% vs session low 4.215%; bunds lag by around 2bp in the sector while gilts keep pace; curve spreads broadly remain within 1bp of Friday’s close. The week’s auction cycle, compressed and accelerated for Feb. 29 settlement, begins with $63b 2-year note at 11:30am followed by $64b 5-year note at 1pm, both record sizes; it ends Tuesday with $42b 7-year note. As Bloomberg notes, while US rates stand to benefit this week from month-end rebalancing into bonds following outperformance by equities, Monday’s session includes 2- and 5-year note auctions and a potentially heavy corporate new-issue calendar. Several Fed speakers are slated this week. IG credit issuance slate includes HSBC and SMFG offerings; about $60b is expected this week, and monthly haul stands at nearly $138 billion price, setting the stage for a second straight monthly gross issuance record to fall this year.
In FX, the Bloomberg Dollar Spot Index edged lower, with Sweden’s krona and the euro leading gains against the greenback. The kiwi is the biggest mover among the G-10 currencies, falling 0.4% versus the greenback ahead of the RBNZ interest rate decision on Wednesday; the NZD fell against all Group-of-10 currencies as traders weighed the nation’s monetary policy outlook. NZD/USD dropped as much as 0.6% to 0.6162 as traders pared bullish positions on the kiwi versus the Australian dollar and the greenback ahead of the central bank’s monetary policy decision on Wednesday, according to Asia-based FX traders.
In commodities, oil prices declined again with WTI falling 0.4% to trade near $76.20. Spot gold is little changed around $2,035/oz.
Bitcoin is a touch firmer on the session after eclipsing USD 51k but is yet to convincingly move much higher with specifics light and general newsflow limited. Ethereum shot above $3100 over the weekend, hitting a fresh two year high.
The US economic data calendar includes January new home sales at 10am and February Dallas Fed manufacturing activity at 10:30am; later this week are durable goods orders, consumer confidence, 4Q GDP revision, personal income/spending and ISM manufacturing. Fed speakers for Monday include Schmid at 7:40pm; Barr, Bostic, Collins, Williams, Goolsbee, Mester, Williams, Waller and Kugler are slated to appear later this week.
Market Snapshot
U.S. MARKETS:
S&P 500 futures down 0.1% to 5,095.00
STOXX Europe 600 down 0.3% to 495.72
MXAP little changed at 172.87
MXAPJ down 0.4% to 526.78
Nikkei up 0.3% to 39,233.71
Topix up 0.5% to 2,673.62
Hang Seng Index down 0.5% to 16,634.74
Shanghai Composite down 0.9% to 2,977.02
Sensex down 0.4% to 72,852.56
Australia S&P/ASX 200 up 0.1% to 7,652.84
Kospi down 0.8% to 2,647.08
German 10Y yield little changed at 2.37%
Euro up 0.1% to $1.0837
Brent Futures down 0.6% to $81.13/bbl
Gold spot down 0.1% to $2,032.84
U.S. Dollar Index little changed at 103.88
Top Overnight News
Citadel Securities was outbid by Ant for Credit Suisse’s investment bank venture in China. The surprise move will be subject to close regulatory scrutiny as China prefers a foreign buyer, people familiar said. Other bidders may still join the fray. BBG
Ukraine and its foreign partners could invite Russia to a future peace summit to discuss an end to Moscow’s two-year-old invasion on Kyiv’s terms, a senior Ukrainian official said on Sunday. Switzerland will host a summit to discuss a vision for peace by Ukrainian President Zelenskiy, which could be handed to Russia during a second meeting at a later date, said Andriy Yermak, Zelenskiy’s chief of staff. RTRS
The widespread drop in global house prices that hit advanced economies has largely petered out, according to a Financial Times analysis of OECD data, leading economists to predict that the deepest property downturn in a decade has hit a turning point. FT
Berkshire Hathaway’s cash pile hit a record $167.6 billion last quarter as Warren Buffett decried a lack of meaningful deals that would give a shot at “eye-popping performance.” Operating earnings rose. Buffett again endorsed Japan trading firms, boosting their shares. BBG
Senate Majority Leader Chuck Schumer said congressional efforts to put together a spending package fell short over the weekend, leaving the US to “once again face the specter of a harmful and unnecessary government shutdown” starting March 2. BBG
Trump secures a strong victory in South Carolina, beating Haley by ~20 points (~60%-40%), relatively inline w/pre-election polls, and while Haley is staying in the race for now, she hinted at exiting after Super Tuesday. Politico
US national security adviser Jake Sullivan said on Sunday he hoped a “firm and final agreement” on a temporary Gaza ceasefire and the release of hostages could be reached “in the coming days”, after progress in negotiations at the weekend. FT
Just two new supertankers are due to join the oil tanker fleet in 2024 — the fewest in almost four decades and about 90% below the yearly average this millennium. The shortage comes as the efficiency of the global fleet is faltering amid Red Sea disruptions. BBG
Last week US equities saw the largest net selling in 5 weeks, driven by Macro Products as well as Single Stocks. Net flows point to rotation out of Tech, HC, and Industrials, while all other sectors were net bought. After a 6-week buying streak, HFs unloaded Tech stocks at the fastest pace in 7+ months, as the sector was net sold for 4 straight sessions incl. Thurs post NVDA results. GSPB
Earnings
Berkshire Hathaway (BRK.B) – Operating earnings rise, driven by gains in its insurance units; Q4 operating earnings USD 8.481bln (vs 6.625bln Y/Y); FY23 operating earnings USD 37.35bln (vs 30.853bln Y/Y). Berkshire held USD 167.6bln in cash (vs 157.2bln Q/Q). Berkshire made USD 2.2bln of share buybacks in Q4 (vs USD 1.1bln in Q3); FY23 total repurchases were around USD 9.2bln. In his letter, Warren Buffett cautioned about limited future growth prospects, citing scarce transformative deals. He emphasised the challenge of finding significant investment opportunities both domestically and internationally. On future leadership transitions, Buffett said Greg Abel, who runs all non-insurance operations for Berkshire, is ready to be CEO of Berkshire tomorrow. +4.5% in pre-market trade.
Broadcom (AVGO) – Broadcom is close to selling its end-user computing unit to private-equity firm KKR for USD 3.8bln, CNBC reports. KKR outbid other firms in the auction, and a deal may be announced soon, the report adds. +1.2% in pre-market trade.
Li Auto Inc (LI) Q4 2023 (USD): EPS 0.75 (exp. 0.29), Revenue 5.88bln (exp. 5.48bln). +11.5% in pre-market trade.
A more detailed look at global markets courtesy of Newsquawk
APAC stocks were mostly subdued amid a lack of fresh catalysts ahead of month-end and this week’s key data releases including the Fed’s preferred inflation gauge, while weekend macro newsflow was light and dominated by geopolitical commentary. ASX 200 finished flat after failing to sustain its early gains with price action indecisive amid a slew of earnings. Nikkei 225 outperformed on its return from the long weekend and extended on record levels. Hang Seng and Shanghai Comp. marginally declined with weakness seen in Hong Kong consumer stocks, while the mainland was also pressured amid ongoing frictions after China’s MOFCOM slammed the latest USTR report on China’s WTO compliance.
Top Asian News
China’s Mofcom commented regarding the US report about China’s WTO compliance in which it noted that the US falsely claims China has created ‘overcapacity’ which fully reflects the US side’s ‘unilateralism and hegemonic behaviour’. Mofcom added the US side ignores the ‘great achievements’ made by China in fulfilling its WTO commitments and denies the important contribution made by China to the multilateral trading system and world economy, according to Reuters.
China’s Commerce Minister said China is willing to work with New Zealand to implement a free trade agreement and continue to strengthen cooperation in the process of joining the CPTPP.
US Deputy Treasury Secretary Adeyemo said on Friday that it is clear the Chinese economy is facing challenges from the property sector and demographics, while he is not concerned about headwinds from China’s economic challenges but has concerns about China’s excess production capacity flowing to global markets.
European bourses are a touch softer, Stoxx 600 -0.3%, following a similar APAC handover as newsflow remains light on broader macro themes despite a handful of interesting equity-specific developments. Sectors have a similar negative tilt, Basic Resource & Energy names lag given benchmark pricing. Housing names within the UK are lagging after the commencement of a CMA investigation into the market. DAX 40, +0.2%, the relative outperformer and in close proximity to record levels for both cash and future at 17443 & 17487 respectively. Stateside, futures are essentially flat ES -0.1%, with some modest underperformance in the RTY -0.3%; weekend focus on Berkshire Hathaway numbers/commentary around “limited future growth prospects, citing scare transformative deals”.
Top European News
ECB is reportedly close to agreeing on a new monetary framework that some officials hope will pave the way to an ultimate revival of the interbank market, according to people familiar cited by Bloomberg.
EU finance ministers reportedly clash over efforts to centralise markets supervision with Eurogroup President Donohoe noting there is a ‘strong diversity of views,’ and that member states disagree over the level of ambition to build a common supervisory regime as part of the roadmap to progress toward a capital markets union that the EU wants to settle by next month, according to Bloomberg.
Hopes of a reversal in the UK’s “tourist tax” in the upcoming budget are “diminishing” after the financial secretary to the Treasury warned of the complexities of such a move, according to The Times.
FX
DXY is a touch softer with the 103.79 trough just above Friday’s 103.76 base before downside support via the 200 DMA at 103.69. Newsflow for the USD light, week’s focal points are PCE & ISM Manufacturing on Thursday & Friday.
EUR benefitting from the softer USD with specifics light ahead of potential remarks from ECB’s Lagarde later in the session; while action is limited, the single currency has surpassed the 100- & 200-DMAs.
A similar story for GBP but with EUR/GBP action hitting Cable a touch, nothing from BoE’s Breeden or Pill thus far. Cable at 1.2675 and respecting Friday’s 1.2649-1.2702 bounds.
Antipodeans lag; no specific driver or catalyst, though potentially profit taking, positioning (RBNZ Wednesday) and the tepid risk tone weighing.
USD/JPY modestly higher but remains shy of Friday’s 150.77 best and by extension the YTD peak at 150.88; domestic CPI due afterhours.
PBoC set USD/CNY mid-point at 7.1080 vs exp. 7.1998 (prev. 7.1064).
Fixed Income
Contained start with specifics light into ECB’s Lagarde. Bunds near the unchanged mark despite printing above Friday’s best at the start of the session. Since, EGBs have been fading and are modestly in the red at 133.06 at worst but well above Friday’s 132.05 base.
Gilts modestly outperforming, but action directionally and in terms of magnitudes in-fitting with Bunds but just a few hours behind given the lack of APAC trade for Gilts. Similarly surmounted Friday’s 98.17 best before fading though, again in-fitting with Bunds, are well above that session’s 97.10 base.
USTs firmer but off best. Specifics light and the docket thin to start a key week aside from 2yr & 5yr supply. Yield curve currently under modest pressure and slightly flatter.
Commodities
Subdued session for crude despite a slew of weekend geopols., though no major escalation thus far. WTI & Brent under modest pressure but have dipped below USD 76/bbl and tested USD 80.00/bbl respectively.
LNG somewhat uneventful though the complex is digesting an extensive weekend announcement from QatarEnergy (details below). Elsewhere, exports via the Wafa oil field in Libya have closed due to protests, via BBG citing sources.
Precious metals benefit from the tepid tone, softer USD and slightly weaker yields stateside in a quiet start to a key week of US data. By contrast, base metals are lower across the board given the general risk tone and thus far failing to benefit from the factors supporting precious peers.
US Treasury official said on Friday the US is encouraged by ‘significant progress’ in the second phase of the Russian oil price cap.
QatarEnergy CEO said Europe will continue to need gas as part of an energy mix for a very long time and Europe’s gas needs have not peaked, while QatarEnergy also stated that it may need to make additional orders of tankers to ship expanded LNG volumes.
Exports from the Wafa oil field in western Libya and a subsea natural gas link to Italy were closed following protests, according to Bloomberg citing a person familiar with the matter.
Geopolitics: Middle East
Israeli PM Netanyahu said that they are all working on a hostage deal but he cannot say if they will have it, while he added that they will be weeks away from total victory once they begin the Rafah operation, according to a CBS interview.
Israel’s army presented at the war council meeting a plan to evacuate residents from fighting zones in Gaza, according to Al Jazeera. It was also reported that Israeli PM Netanyahu’s spokesman said the war council approved a plan to supply the Gaza Strip with humanitarian aid, according to Al Arabiya.
Israel’s Defense Minister said there will be no let up in Israeli action against Lebanon’s Hezbollah movement, even if a ceasefire and hostage deal is secured in Gaza, according to AFP.
White House National Security Adviser Sullivan said Israel, Egypt, Qatar and the US came to a basic understanding of the basic contours of a hostage deal for a temporary ceasefire and the US is hopeful that an agreement could be reached in the coming days, although he noted that a deal is still under negotiation and there will have to be indirect discussions by Qatar and Egypt with Hamas. It was also reported that Egyptian security sources said Qatar will host mediated Hamas-Israel truce talks this week.
Hezbollah said they targeted a gathering of Israeli enemy soldiers in the vicinity of the Marj site with a volcano missile and achieved a direct hit, according to Al Jazeera.
US Central Command said Yemen’s Houthis launched one anti-ship ballistic missile likely targeting MV Torm Thor in the Gulf of Aden on Saturday although the missile impacted water causing no damage nor injuries, while US forces shot down two one-way attack unmanned aerial vehicles over the southern Red Sea.
US and UK forces conducted 9 air strikes in Sanaa, according to Al Masirah TV cited by Reuters.
UKMTO received a report of a small fast boat behaving in an irregular manner 20NM east of UAE’s Khor Fakkan.
Syrian Defence Ministry said its forces downed seven drones that tried to target military positions and villages in the vicinity of Hama and Idlib, according to state media.
Palestinian Authority PM has submitted his resignation to the Palestinian President; “The next phase needs the administration of the PA for all Palestinian territories”.
Israeli strike targets Lebanon’s Easter Baalbek for the first time since the Gaza war, according to Reuters sources.
Geopolitics: Other
Ukrainian President Zelensky said he hopes a peace summit in Switzerland will take place in spring and a peace plan prepared with partners in Switzerland will be presented to Russia. Zelensky said that the current moment is the most difficult for Ukrainian unity and that improving troop rotations is critical to the war effort, while he also noted there is a clear plan for a new Ukrainian offensive but didn’t give details and said Russian forces will attempt another offensive in late May or summer.
Ukrainian President Zelensky said a US aid package is needed within a month and is essential to support troops on the battlefield, according to FT. It was separately reported that Zelensky and Canadian PM Trudeau signed a bilateral security agreement during a ceremony in Kyiv and Zelensky stated via Telegram that Canada is to provide more than CAD 3bln in financial and defence aid this year. Zelensky also signed a security agreement with Italian PM Meloni, while Meloni stated that Italy committed to military support for Ukraine and said peace cannot mean surrender, according to Reuters.
G7 Leaders’ statement stated they remain convinced that they can ensure Ukraine prevails in fighting for its future and will help Ukraine meet its urgent financing needs, while it added that Ukraine can count on their support for as long as it takes.
UK PM Sunak called for Western countries to be more aggressive in seizing frozen Russian assets and passing the proceeds on to Ukraine to finance its defence, according to Bloomberg.
Ukraine attacked Russia’s Novolipetsk Steel plant with drones which caused a major fire at the facility, according to Reuters.
Russian Defence Ministry said Russian forces took a more advantageous position near Avdiivka and rebuffed seven Ukrainian counterattacks, according to Reuters.
Russia’s Deputy Foreign Minister said contact with the US over nuclear weapons in space has proven to be unproductive, while he added that the US has not presented any proof of allegations that Russia wants to put nuclear weapons in space.
US military aircraft intercepted a balloon over Utah on Friday which was said to be small and not manoeuvrable, while the balloon was allowed to continue flying as the US concluded the balloon was not a threat to civil aviation or national security.
G7 Finance Ministers and Central Bankers are reportedly expected to gold a meeting on 28th Feb to discuss strengthening sanctions against Russia, according to Kyodo.
US Event Calendar
10:00: Jan. New Home Sales MoM, est. 3.0%, prior 8.0%
10:00: Jan. New Home Sales, est. 684,000, prior 664,000
10:30: Feb. Dallas Fed Manf. Activity, est. -14.0, prior -27.4
Central Bank Speakers
19:40: Fed’s Schmid Gives Speech on Economy, Monetary Policy Outlook
Air Force Confirms Uniformed Active Duty Member Self-Immolated In Front Of Israeli Embassy In D.C.
The US Air Force late in the day Sunday confirmed that one of its own active duty members was the man who set himself on fire in front of the Israeli embassy in Washington DC in order to protest the Gaza war.
While in military uniform, the man was heard saying he “will no longer be complicit in genocide” and then self-immolated, an act recorded in live-streamed video which has since been removed from his Twitch channel. The US Air Force issued a statement through a spokesperson saying “I can confirm an active duty Airman was involved in today’s incident.”
The man has not been officially identified, but he was heard saying that his name is “Aaron Bushnell”. He had also been recorded as saying that what he’s about to do was minimal compared with the suffering and plight of the Palestinians, according to CNN.
“I am about to engage in an extreme act of protest, but compared to what people have been experiencing in Palestine at the hands of their colonizers, it’s not extreme at all,” he said before lighting himself on fire. “This is what our ruling class has decided will be normal,” he had added.
The Washington Metropolitan Police Department said in the aftermath: “The Metropolitan Police Department responded to the 3500 block of International Drive, NW, at approximately 1:00 p.m., to assist the United States Secret Service after an individual set themselves on fire in front of an embassy in the block.”
The man is reportedly in critical condition after being transported to the hospital. According to a description of the grim scene just before the flames were extinguished:
He then sets the recording device on the ground before pouring an unknown liquid over himself and igniting it while yelling “Free Palestine” repeatedly. He eventually collapses as police officers rush to douse the flames with fire extinguishers.
Apparently the US Secret Service had been the first on the scene and were the ones to extinguish the blaze. The man’s injuries are said to be “life-threatening”.
The bizarre and rare incident is being investigated by the US Secret Service and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). No Israeli embassy staff members or bystanders were hurt in the incident.
As people rushed to try and save his life, an Israeli embassy agent held a gun fixed on Aaron Bushnell following his self-immolation. pic.twitter.com/apVD0joXUH
Media reports have since confirmed that Bushnell is 25-years old who may have been seeking discharge from the military:
The Air Force officer who set himself on fire outside the Israeli embassy in DC in protest against the war in Gaza was an ‘aspiring engineer’ and seeking to ‘transition out of the military’.
Aaron Bushnell, 25, was hospitalized in critical condition on Sunday after he doused himself in accelerant and struck a lighter, causing his body to become consumed by flames. DC Fire and EMS said he sustained ‘life-threatening injuries’.
According to more from The Daily Mail, he appears to have been involved in radical far Left groups:
The active-duty airman is a DevOps engineer based in San Antonio, Texas, according to his LinkedIn profile. He touted himself having ‘very good communication skills’ and ‘thriving in team environments’.
Bushnell is pursuing his bachelor’s degree in computer software engineering and is CompTIA Security+ certified, a credential that indicates he has the baseline skills to perform core security functions and pursue an IT security career.
He has apparent links to at least two anarchist groups, Burning River Anarchist Collective and Mutual Aid Street Solidarity – both of which are based in Ohio. Bushnell followed the groups on Facebook.
It’s actually not the first time this has happened on US soil in response to the Gaza war, where at this point close to 30,000 Palestinians have died, according to Gaza sources. In December a person self-immolated in front of the Israeli Consulate in Atlanta.
That initial incident received scant media attention, and no information about the protester’s identity or even gender were released. Police had only described “likely an extreme act of political protest” – after which the person was hospitalized with severe injuries.
Atlanta’s police chief had said at the time that “police are aware of heightened tensions in the Jewish and Muslim community and have stepped up patrols at certain locations, including the consulate.” But again, curiously these extreme forms of ‘protest’ have received little attention in media, possibly because the imagery is so disturbing.
There is not a ton of positive news for America or Americans, but here’s one so let’s take it: Two recent data points suggest that the dangerously high influence of “experts” on average Americans’ thinking is collapsing.
It cannot come fast enough.
First point, timed right at Presidents Day last week, the Presidential Greatness Project, a survey of historians and scholars, published its latest ranking of U.S. presidents. And, as to be expected, it’s a forehead-slapper of reality disconnect.
Coming in this year at No. 14 among all-time presidents is the bumbling, muttering tool of psychopath leftists and corruptocrats everywhere, Joe Biden. This ranking hilariously puts him in the top one-third of all American presidents. The list places Donald Trump dead last, the very worst president in all of American history. Again, hilariously predictable. Of course, these are the same “experts” who in 2015 ranked Bill Clinton and Woodrow Wilson above Ronald Reagan, and put Jimmy Carter ahead of Calvin Coolidge.
Any semi-objective reading of Biden’s and Trump’s first terms by measuring how well Americans fared and how well the world fared finds Trump’s demonstrably better in almost every category, from the economy to wage growth to containment of Russia to peace in the Middle East.
But here’s the thing: Normal Americans are realizing this.
The tell, of course, is who these “experts” are. The self-own is in their own words: “Respondents included current and recent members of the Presidents & Executive Politics Section of the American Political Science Association, which is the foremost organization of social science experts in presidential politics…” Social science is well understood to be the most leftist of the academic categories. They are the hackiest of the leftist academia.
The authors of the survey further self-own when they write in the Los Angeles Times: “Trump’s radical departure from political, institutional and legal norms has affected knowledgeable assessments not just of him but also of Biden and several other presidents.” Those “norms” are exactly what most Americans have had enough of. Yet the same bubble-dwellers saw no radical departure when Barack Obama promised and pursued the “fundamental transformation” of America. This mindset has resulted in Republicans moving further down the presidential success sweepstakes as Democrats move up.
Their lack of self-awareness in their social science academia seclusion is almost breathtaking.
The second data point, however, completely reinforces how cloistered these people are from actual Americans. It just doesn’t require a college degree to rate Biden and Trump if you literally lived through their presidencies.
Rasmussen found that Americans — those struggling through the Biden presidency in real time — say that Biden has been a dismal failure in his first term. All of the institutional “expert” help and hardened media defense perimeters in the world could not hide Biden’s growing senility and staff incompetence. Nearly 60 percent said that Biden’s presidency has been a failure, including 40 percent who called his presidency to date a “complete failure,” while another 18% called it “mostly unsuccessful.”
A paltry nine percent graded Biden “a complete success,” presumably the most diehard partisans, pretty much the same as the comical experts in the Presidential Greatness Project.
However, Rasmussen found that Americans generally approved of Trump’s first term — particularly in light of what has followed — with 56 percent labeling Trump’s first term a success, including 22 percent saying it was a “complete success.” Even some Democrats agreed, with 28 percent calling Trump’s presidency a success — including 11 percent who called it a “complete success.”
Granted, these are only two data points. But combining them suggests that Americans are turning away from the propaganda poison of the anti-American “expert” class and relying more on their own good senses. This is a good and necessary step forward.
MSNBC Claims Trump’s Numbers In South Carolina Are “Disastrous” Despite Defeating Nikki Haley
Is it better to say nothing and simply let the corporate media buy into their own propaganda? This is the kind of rhetoric and spin that got them into trouble during the 2016 election, after all.
Lawrence O’Donnell and other pundits chimed in during MSNBC’s coverage of the South Carolina primary to make the argument that Donald Trump’s crushing 20 point lead over establishment favorite Nikki Haley in her home state is actually a “disastrous” result that will lead to his defeat in the November presidential election.
“These numbers are disastrous for Donald Trump.” Lawrence O’Donnell gives a reality check on Trump’s South Carolina primary win. (Video: MSNBC) pic.twitter.com/Nw6e6Syjye
The leftist commentators seem to be overlooking some important factors in their comparison to Joe Biden’s “win” in South Carolina’s Democratic primaries. First and foremost, Biden’s 96% victory in SC was due to the reality that he is the incumbent candidate and his only competition was two no-name proxy candidates which no one has heard of (run Biden against RFK Jr, for example, and watch his primary numbers plummet).
Second, SC runs open primaries, meaning anyone including Democrats can vote on the Republican side of the election. Nikki Haley has consistently courted Democrats to vote for her in open primary states to thwart Donald Trump’s campaign, and the media has also been encouraging Democrat voters to rig open Republican primaries.
Far from indicating a “disastrous” voter gap for Trump, the Democrats voting for Haley in South Carolina were always going to vote for Biden in November anyway. MSNBC’s ignorance of this basic fact might be theatrical; a lie by omission designed for an audience that never fact checks their news. Or, they may be completely delusional.
Joe Biden is currently sporting the worst presidential approval rating in modern history next to Jimmy Carter, with an attempt at a tyrannical pandemic lockdown, attempted forced vaccinations, a stagflationary crisis and a massive illegal immigration crisis under his belt. On top of all this, the majority of Democrats don’t support his reelection run and prefer he step down.
Regardless of one’s position on Donald Trump, it is undeniable that with the current numbers and under normal election conditions Biden would be facing a near certain loss in November. Who knows what might happen in the next several months, but the level of denial coming from corporate outlets as the primaries roll forward is extraordinary.
Morgan Stanley On “Fed Independence”… Before And After The Election
By Seth Carpenter, Morgan Stanley chief global economist
January’s FOMC meeting, labor market data, and inflation data have all pushed the market from pricing nearly 200bp of Fed rate cuts starting in March to broadly aligning with our view of cuts starting in June and cumulating to 100bp at the end of the year. But between now and year-end comes the election…a fact that has driven client questions about the implications for Fed independence.
Matt Hornbach and I wrote a piece last month emphatically making the case that the election will not affect Fed policy this year. Client questions range from “Does the Fed have to cut more because it is an election year?” to “Does it have to start cutting in June because otherwise it will be too close to the election?” and sometimes “Won’t the Fed seem too political if it cuts at all?” From my first-hand experience in 15 years of working at the Fed, I can confidently say that the institution does not change based on the electoral cycle. In the piece with Matt, we show that there is no discernible difference in Fed decisions between years with elections and those without. But don’t take our word for it. Matt dug through years of FOMC transcripts, and the Committee’s discussions of elections only reflect macroeconomic concerns. Will uncertainty before the election damp spending? Will a change in fiscal policy drive aggregate demand? Whatever questions may arise, the evidence is clear that the Fed’s election-year decisions will be driven by its mandate, not by attempts to influence the outcome of the election.
But as the saying goes, “Elections have consequences,” and what happens after the election is a different story. Specifically, former President Trump has stated that if he is re-elected, he will not re-appoint Chair Powell. In collaboration with our public policy research colleagues, we tackled the question of how much risk such a circumstance would pose to Fed independence. The first point to make is that any such change would come a year after the new president is inaugurated, so it’s an issue for 2026, not 2025. While a new chair could easily bring changes to communication and perhaps more dissents at Fed meetings, the worst-case scenario that many clients worry about will likely be avoided.
Although the president nominates the chair and the members of the Federal Reserve Board, the next president’s term will have only two vacancies, far short of a majority. Also, the Senate must confirm the president’s nominees, adding another layer of checks and balances against a subservient Fed. And the Fed Board isn’t the whole story. The FOMC comprises the Fed Board plus the 12 Reserve Bank presidents, and the Reserve Bank presidents are chosen through a wholly separate process, specifically designed to insulate the FOMC from political pressure.
Another safeguard of independence is that according to the letter of the law, the FOMC picks its own chair, and only convention makes that person the chair of the Fed Board. In practice, of course, I suspect the FOMC would defer to the choice of the president and the Senate, but that safeguard exists, nevertheless. History also shows that Paul Volcker faced tremendous dissent in his fight against inflation, he lost one Board vote, and news reports stated that he threatened to resign when faced with opposition within the FOMC. The institution is set up with many layers to prevent any president from getting a “rubber stamp” Fed chair.
Overall, we are highly convicted that Fed policy this year will not be swayed by the fact of the election. The place simply does not work that way. And for the first year of the next administration, whoever wins, Chair Powell’s place is secure. A new Fed chair could very well shift the FOMC’s reaction function at the margin, and each president and Senate get to express their views about the best candidate. But the institutional process is designed to guard against the extreme case of a Fed that is directed by the White House instead of the dual mandate.
