Three Things (8/5)

Buffett selling spree

An SEC filing on Saturday revealed that Warren Buffett, one the world's most successful and widely-watched investors, sold nearly half of his position in Apple, netting $76 billion in the process. Buffett had trimmed the Apple stake by 13% in the first quarter and hinted at the Berkshire annual meeting in May that it was for tax reasons. Despite the recent selling, Apple still remains Berkshire’s largest position by a large margin.

The timing of the sale is pretty important because even though Buffett didn't specifically say why he's unloading the stock, he has indicated in the past that he plans to hold onto the company's shares "unless something really extraordinary happens." The stock sales and mountain of cash show the challenge Buffett has encountered finding good investments that are priced low enough to make a solid return. With $277 billion sitting in Treasuries and cash (a larger pile than the Fed, no less), Buffett is playing defense. When everyone else is desperate for cash during a crisis, Warren Buffett is usually ready to clean up and we have to wonder if this is revealing of potential tumult to come.

Market declines

A volatile week in markets turned uglier on Friday after a weaker-than-expected July payrolls report showed job growth slowing and unemployment rising to the highest level since 2021. The stock declines extended a fall that began a day earlier, after data showed weakness in manufacturing and construction. By the end of day Friday, investors were pricing in overwhelming odds that the Fed will cut rates by half a percentage point in September, a meaningful change to expectations from even just a couple of weeks ago.

Friday’s jobs report was the first clear sign of employment slowing across virtually every metric and caused an extension of the already painful rotation away from what has been working in markets recently. There’s now a drumbeat of skepticism about the benefits of AI and whether it will actually deliver profits and productivity at the level that’s been promoted. It’s not surprising that the ebb of enthusiasm is taking place at the same time we’ve seen some economic weakness. How the Fed reacts will likely determine whether hopes of a soft landing can survive.

Risk aversion

Bitcoin is under pressure as risk aversion in global markets is spilling into other corners of the risk assets. The largest digital asset experienced its heftiest weekly loss since the collapse of the FTX exchange in 2022. The token fell to $56,700 after losing 13.1% in the seven days through Sunday. Smaller cryptocurrencies such as Ether and meme-crowd favorite Dogecoin also nursed losses.

The price swings are something to monitor as Bitcoin has collapsed through its 200-day moving average price over the past several days. The technical weakness opens the door for a deeper pullback as algorithmic buyers monitor these technical support levels closely. Favorable political rhetoric has helped cryptocurrencies over recent months but the influx of new competition into the presidential election isn’t doing the asset class any favors. Just as equity investors are taking profits, it appears crypto investors are doing the same.

As of writing APPL is a holding in Titan's Flagship strategy and IBIT is a holding in Titan Crypto.

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