Three Things (11/4)

More cash, less Apple

Record reserves … Warren Buffett’s Berkshire Hathaway (BRK-A, BRK-B) delivered a mixed bag for Q3 2024, headlined by an all-time high cash stash of over $320 billion. Most of this mountain of cash is parked in short-term Treasury bills, giving Berkshire a safe return and the kind of “dry powder” Buffett loves to keep on hand for the right buying opportunities. With this cushion, Berkshire’s in prime position to pounce if market volatility picks up.

In one of the quarter’s standout moves, Berkshire trimmed its Apple stake by another 100 million shares. Although Apple is still Berkshire’s largest holding—currently valued around $69.9 billion—the selloff marks a pivot in Buffett’s tech investments. Experts say rising tax rates and Apple’s steep valuation may have nudged him to take some chips off the table, especially with Charlie Munger, a longtime tech advocate, no longer at Buffett’s side.

Berkshire’s Q3 also brought some challenges for its insurance business. Investment income rose, but hurricane losses cut into underwriting profits, which plunged by 70%. Berkshire Hathaway Energy, which the company recently assumed full control over, reported nearly triple the profits, hitting $1.6 billion. 

True to tradition, Berkshire dropped its earnings on Saturday, giving investors the weekend to digest. This goes back to Buffett’s long-game strategy: he wants shareholders to mull over the results, free from the immediate pressures of the market.

Fed to focus on data, not election

Decision nears … It may be the second-most important decision in the U.S. this week, but the Federal Reserve’s rate cut is still drawing plenty of attention. The Fed is widely expected to lower interest rates by 0.25% on Thursday, unfazed by the presidential election. Economists from ING argue that the Fed’s path remains clear regardless of any political changes. As the economy shows signs of cooling but steady growth, Jerome Powell and other officials are focused on guiding rates to a more neutral level.

Many economists agree that a quarter-point cut is the logical choice given current economic signals. The Q3 GDP growth rate of 2.8% and strong consumer spending have shown resilience, but hiring data points to a gentler labor market. The private sector averaged just 67,000 new jobs per month recently, the slowest since the pandemic, per The Wall Street Journal. October’s job gains were especially low at 12,000, due in part to hurricanes and labor strikes, suggesting both temporary disruptions and a larger trend of slowing hiring.

The Fed’s decision to stay on course would signal its confidence in the economy’s direction, even as inflation nears the 2% target. Recent data, while approaching target levels, remains variable, pushing officials to a more cautious, steady approach, reports Bloomberg.

With the meeting postponed a day to follow the election, Powell is expected to affirm the Fed’s apolitical stance and emphasize “data dependence” over politics. Thursday’s expected cut continues the Fed’s strategy of balancing economic growth with gradual easing, no matter who wins on Election Day.

This Week on Wall Street

Earnings season is in full swing, with another big batch of companies reporting this week. Here are some to watch:

Today 11/4: Crispr Therapeutics (CRSP), Cushman & Wakefield (CWK), Hims & Hers Health (HIMS), Loews Corp (L), New York Times Co (NYT), Palantir (PLTR), Wynn Resorts (WYNN), Zoetis (ZTS)

🇺🇸Tues. 11/5: Restaurant Brands International (QSR), Super Micro Computer (SMCI), Toyota Motor Corp (TM), Yum! Brands (YUM)

Weds. 11/6: Arm Holdings (ARM), Bally’s Corp (BALY), Costco (COST), CVS Health Corp (CVS), Duolingo (DUOL), elf Beauty (ELF), Hubspot (HUBS), Joby Aviation (JOBY), Lyft (LYFT), Match Group (MTCH), Mercado Libre (MELI), Novo Nordisk (NVO), Sunoco (SUN), Zillow Group (ZG)

Thurs. 11/7: Airbnb (ABNB), Affirm Holdings (AFRM), Block (SQ), Cloudflare (NET), Datadog (DDOG), DraftKings (DKNG), Dropbox (DBX), Expedia Group (EXPE), Halliburton (HAL), Molson Coors (TAP), Moderna (MRNA), Monster Beverage Corp (MNST), Newscorp (NWS), Oscar Health (OSCR), Pinterest (PINS), Planet Fitness (PLNT), Ralph Lauren Corp (RL), Rivian Automotive (RIVN), Solo Brands (DTC), Sweetgreen (SG), Under Armour (UA), Unity Software (U), Vital Farms (VITL), Warner Bros Discovery (WBD), Yeti Holdings (YETI)

Fri. 11/8: NRG Energy (NRG), Paramount Global (PARA), Sony Group (SONY)

One more thing: OPEC+, an alliance of oil-producing countries, has decided to push back its planned December oil output increase by a month, citing weak demand and concerns about economic conditions, especially in China. The delay is aimed at preventing a further drop in oil prices.

Disclosures:

As of writing, AAPL and SQ are holdings in Titan’s Flagship strategy, and MELI is a holding in Titan's Offshore strategy.

Advisory services are offered by Titan Global Capital Management USA LLC (“Titan”), an SEC registered investment adviser. Titan’s affiliate, Titan Global Technologies LLC (“TGT”), is a registered broker-dealer and member of FINRA/SIPC. Newsletters provided by Titan reflect the opinions of only the authors who are associated persons of Titan and do not reflect the views of Titan, or any of its subsidiaries or affiliates. They are meant for educational and informational purposes only, are not intended to serve as a recommendation to buy or sell any security and are not an offer to buy or sell a security. They are also not research reports and are not intended to serve as the basis for any investment decision. The information provided does not take into account the specific objectives, financial situation, or particular needs of any specific person. Any third-party information provided therein does not reflect the views of Titan or any of its subsidiaries or affiliates. All investments involve risk, and the past performance of a security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not ensure a profit or protect against loss. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The price of a given security may increase or decrease based on market conditions and clients may lose money, including their original investment and principal. Any rewards or free trials offered through Titan's client referral program are subject to full program terms & conditions.

Titan newsletters are curated digests of business news stories delivered daily. Titan newsletters’ goals are to make business and financial news accessible to all. The Titan newsletter team has editorial independence. Authority over all news decisions that appear in Titan newsletters, including what news we cover, our tone, and any accompanying media, lies with the Titan news team. Titan newsletter editors conduct daily research through a variety of primary (e.g., press releases, financial reports, public statements, economic data, social media accounts, interviews, etc.), and secondary sources (e.g., Fortune, The Wall Street Journal, The New York Times, Bloomberg, CNBC, TechCrunch, Jalopnik, Business Insider, Fox Business, etc.). The editors then determine the stories to be featured, covering a mix of headline news as well as less reported, yet relevant stories. Titan can’t cover everything, but the Titan newsletters aim to deliver a well-rounded serving of news. Titan newsletters make every attempt to report the facts fairly and accurately and provide “Takeaways” based on our understanding of the trends, our business experiences, and our personal opinions. We deliver the crucial information and our unique perspective so you can assess the news critically. Titan newsletters may contain forward-looking statements, which reflect the author’s current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. We do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Smart Cash is offered by Titan as one of its RIA product offerings. Titan's Smart Cash strives for tax optimization; after-tax yields are estimates, and actual outcomes may vary. Yields are subject to market conditions, will fluctuate, and are not a guarantee or forecast of future earnings. While Titan can provide general tax information and guidance, any information provided should not be taken as tax advice as Titan is not a tax professional. Consult a tax professional for personalized tax advice. View Smart Cash risks and disclosures at titan.com/smart-cash-disclosures.

Various Registered Investment Company products (or “Third Party Funds”) are offered by third-party fund families and investment companies on the platform as one of many potential investment options available to Titan’s clients, that may or may not be recommended based on an individual client’s investment objectives and risk tolerance. Certain Third Party Funds are offered through Titan Global Technologies LLC. Other Third Party Funds are offered to advisory clients by Titan. The Third Party Funds that are available on the platform are interval funds. Investments in interval funds are highly speculative and subject to a lack of liquidity that is generally available in other types of investments. Actual investment return and principal value is likely to fluctuate and may depreciate in value when redeemed. Liquidity and distributions are not guaranteed, and are subject to availability at the discretion of the Third Party Fund. Please review the Third Party Fund’s prospectus, available on www.titan.com, in its entirety for a full list of risks associated with investing in the interval fund before making any investment decision.

Investments with exposure to crypto assets are only suitable for investors who are willing to bear the risk of loss and experience sharp drawdowns, as they still carry inherent risk associated with cryptocurrencies. You are solely responsible for evaluating the merits and risks associated with the use of any information, materials, content, user content, or third party content provided before making any decisions based on such content.

If there are substantive errors when published, corrections will appear in the following day’s material or within a business day of discovery of the error. When Titan or the author of a newsletter owns stock in a company mentioned, we’ll disclose it at the bottom of our newsletter.