Weekly Market Bites

end of week markets update

It’s been a big week in financial markets 🚀 after the landslide victory of Donald Trump:

• The S&P 500 hit yet another record—its 48th of 2024

• The Nasdaq 100 also hit a new all-time high

• Bitcoin touched $76,000 for the first time

International equities, both developed and emerging, lagged, and bond prices went down, as the 10-year Treasury yield rose. All of this while the Federal Reserve cut another 25 bps from interest rates.

Here’s a summary of this weeks action:

1) Donald Trump is going back to the White house in 2025 - and promising to put the American Dream back on the menu at affordable prices.

Up to election day most polls showed a dead heat between Harris and Trump.

But as we mentioned in last week’s market bites: betting markets and financial markets were signaling a likely Trump victory.

As a friend said on election day “Follow the money” 💸 

Meanwhile, French regulators are taking away the opposite lesson:

Freedom fries bitches 🍟 

2) On Wednesday the S&P500 had the biggest election day pop in history, rising more than 2%.

US equities have been flying all year thanks to:

• No recession

• Growing corporate earnings

• Massive AI spending boom

• Lower inflation

• The Fed starting to cut rates

With Trump’s election win, there’s even more fuel to the fire 🔥 of animal spirits.

With the S&P500 hitting 5,973, fat Tony is almost here:

This brings gains YTD to 26% 🔥 

But valuations are getting rich. In the short-term most of the juice of this years rally has been squeezed.

3) Bonds are struggling. Why?

Trump’s plans for tax cuts and increased spending would push the national debt higher and fuel inflation, motivating investors to sell U.S. Treasuries.

This sell-off drives up borrowing costs, with the 10-year Treasury yield heading towards 4.5%—its highest since July. Some experts predict it could even reach 5% if Trump’s fiscal policies unfold.

Higher yields mean:

• higher borrowing costs for the government

• Higher borrowing costs for companies

• Higher mortgage rates

• And all this according to legendary investor Stanley Druckenmiller could ultimately “snuff out the equity rally”

4) Crypto and the degenerate economy are cashing in a winning election lottery ticket.  

Donald Trump promises to be the most most pro-crypto President ever. Here’s a few of his campaign pledges:

• “On day one, I will fire Gary Gensler” - the current head of the SEC who has brought more than 100 actions against crypto firms.

• Create a Strategic national crypto stockpile 🪙 

• “If crypto is going to define the future, I want it to be mined, minted and made in the USA.”

The election rally was also fueled by the defeat of crypto critic Senator Sherrod Brown, chair of the Senate Banking Committee.

What’s up next?

charts

Warren Buffett’s Berkshire Hathaway continued selling stocks in Q3, pushing its cash reserves to a record $325 billion. Including selling more Apple, for the fourth straight quarter.

For context, $325 billion is enough to buy the entire NFL with room to spare.

Why all the selling?

Who knows. But with that kind of cash, Buffett seems to be saying that attractive investment opportunities are scarce. The world’s top investor is choosing Treasuries over stocks, signaling caution.

Lastly, stay focused on the long term my friends:

As much as elections have important ramifications, history shows that for long term investors what matters is staying invested no matter who wins and what party is in power.

So, buckle up and hold on for dear life and compound your way to riches.

And finally, some parting wisdom

Many of you are loving the election results while others are very disappointed.

Whatever the case may, always remember the words of the godfather Nassim Taleb: