September 22: Warren Buffet Sells Billions, Fed Drops interest rates, iPhone Demand Craters (Recap ep293)

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In today’s recap, Marcello talks about how Warren Buffett’s Berkshire Hathaway has been aggressively selling off billions in stock, including $896 million worth of Bank of America shares and around $8 billion in Vodafone since mid-July. Meanwhile, the Federal Reserve made headlines by cutting interest rates by 50 basis points on Wednesday—the first reduction in 2.5 years. Also, Apple shares fell -2.78% amid reports of sluggish demand for its latest iPhone models, with iPhone 16 sales down 12% compared to the previous year’s launch.

The U.S. national debt has ballooned to $35.378 trillion, and the Treasury Department has already spent $1 trillion this fiscal year. By the end of 2024, interest payments on the debt are projected to total $1.2 trillion, second only to Social Security spending at $1.5 trillion. Under Trump, the national debt increased by $7.3 trillion, but Biden has already surpassed that with $8.4 trillion in new debt.
Warren Buffett’s Berkshire Hathaway has been actively selling off its stake in major companies throughout 2024, including dumping $896 million in Bank of America shares, reducing its position to 836 million shares (a 10.8% stake). Berkshire has also offloaded around $8 billion worth of Vodafone stock since mid-July. Meanwhile, the Federal Reserve cut interest rates by 50 basis points on Wednesday, marking the first rate reduction in 2.5 years, bringing the fed funds rate to 4.75%-5%.
Apple shares fell -2.78% on Monday to $216.32 after reports of sluggish demand for its latest iPhone models. Analysts noted that iPhone 16 demand is down 12% compared to the iPhone 15 during its launch weekend, with data suggesting weaker sales for the Pro models.
The U.S. Federal Reserve cut interest rates by 50 basis points Wednesday, the central bank’s 1st rate reduction following a two-and-a-half year crusade against inflation that raged in the wake of the pandemic. The new federal funds rate is 4.75% to 5% , a large rate cut that signals the Fed’s confidence that its war against inflation is coming to an end. The Fed incrementally increased interest rates from near 0 in March 2022 to a range of 5.25 to 5.5% last July, as it battled rising inflation, which peaked at 9.1% in June 2022.
Sugar futures surged to their largest weekly gain in years, driven by “unusual and persistent weather events” in Brazil. Roughly 59% of the country is currently facing drought conditions, with some Amazon rivers hitting all-time lows, making several waterways unnavigable. This severe drought has led to fears of reduced crop yields, causing a significant spike in sugar prices.
Gold prices have soared to unprecedented levels, setting a new record high and closing price. This surge is attributed to a perfect storm of economic and geopolitical factors, primarily driven by the Federal Reserve’s recent monetary policy shift and escalating tensions in the Middle East. December gold was trading at $2,647.10 on Friday.
The U.S. delivery giant FedEx shares plunged -15.23% on Friday at $254.64, after reporting a steep quarterly earnings drop. The firm also lowered its full-year revenue forecast. CEO Raj Subramaniam said industrial demand was softer than expected, while FedEx’s customers continued to shift to cheaper, slower delivery options, which has squeezed profits. The stock is up +0.66% in 2024, but down -2.47% y/y, with a market cap of $62.21B.
Tesla shares +7.36% Thursday at $243.92, as the EV maker rallied along with other auto-makers due to the larger than expected interest rate cut by the Fed . Vehicle insurance registrations last week in China declined sequentially, but the firm is still trending towards its best ever quarterly deliveries total in the world’s largest EV market, with just 2 weeks left in Q3.Tesla registrations in China, a rough gauge for deliveries, are up +26% vs last quarter & have increased over +20% vs. a year ago.Tesla’s China vehicle registrations in Q3 are now nearly +5% above Q4 2023, the EV giant’s best ever quarterly performance. The stock is up +33.28% in the past 3 months, but still down -1.84% in 2024 & -0.39% y/y, market cap of $779.24B.

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