Please find below the 5 charts that tell interesting stories on Markets and Investing.

 

1) Oracle of Omaha goes bearish on Apple:

 

Berkshire Hathaway, led by Warren Buffett, has downsized its Apple holdings, slashing the number from 789 million to just 400 million shares. 

 

Berkshire’s cash pile has hit an all-time peak of $277 billion, representing nearly 30% of its market value. This increase in cash comes as Buffett sold off about $76 billion worth of stocks. 

 

The rationale behind Buffett’s decision, remains speculative. With Mr. Buffett at 93 years old, the market is keenly observing whether this move signals a cautious stance on Apple’s future performance or a broader skepticism towards the US tech sector.

 

Source : Financial Times

 

2) Is US Economy entering Recession?

 

ISM Manufacturing Index is widely regarded as a reliable measure of the United States’ economic cycles.

 

The index’s July figure fell to 46.8, a clear indication that the US economy is experiencing a slowdown. This metric is particularly significant because it reflects the health of the manufacturing sector, which is a major component of overall economic activity.

 

This unexpected dip in the ISM index has had a ripple effect, contributing to the struggles of both US and international markets.

 

 

3) When is US Fed going to cut the Interest Rates?

 

The recent weak economic data from the US, has changed the expectation of rate cut by the US Fed. 

 

The markets are now predicting that starting from September, the Federal Reserve will implement between four to five interest rate cuts, each by 25 basis points.

 

The faster rate cut by US is expected to increase the FII flows to Emerging Markets and Indian Equity. 

 

 

4) How will Stock Market behave when US Fed cuts Interest Rate?

 

US Rate Cut in September 2024 is a 'known' information. The 'unknown' is how will stock market react to the interest rate cut.

 

This will depend on whether the US economy will enter recession. 

 

Historically, stock market has always gone up when there is no recession after the US rate cut.

 

With recession, the stock market rally is a 50:50 play.

 

If we combine both recession and non recession period then there is more than 75% probability that equity markets continue to do well after the US rate cut. 

 

 

5) How is Stock Market correlated with GDP Growth?

 

As per research, there is a weak Correlation of GDP Growth and Stock Market Return.

 

Table shows 30 Years Real Return per annum for countries after adjusting for currency and Inflation.

 

Indian Real GDP has grown by 6.2% per annum in last 30 years and stock market has given a return of 3.6%.

 

US had Real GDP growth of 2.5% per annum and stock market has given a return of 5.9%.

 

China had Real GDP growth of 8.6% per annum and stock market has given return of -3%

 

Most of the countries with strong GDP growth has given weaker equity return. 

 

 

Source : DSP

 

Read more similar articles in our blog - https://alphacapital.in/blog/

 

Best Regards

 

Dr. Mukesh Jindal CFA, CFP, CAIA, Ph.D.

Alpha Research