Weekly Market Recap: Warren Buffet Sells Billions, Fed Drops interest rates, iPhone Demand Craters

Hello traders, Marcello here, founder of The Day Trading Academy, bringing you the weekly recap of what happened in the markets. We have major developments with Starlink expanding its internet services, Warren Buffett continuing to sell billions in shares, and the big news: the U.S. Federal Reserve finally decided to lower interest rates. Let’s get started!

The Fed Lowers Interest Rates by 0.50%

The U.S. Federal Reserve, which controls the country’s monetary policy, made a surprise move by cutting interest rates by 50 basis points (0.50%). This was more than the expected 0.25% cut, signaling that the Fed is focused on stimulating the economy. This rate reduction is significant because it helps lower borrowing costs, allowing consumers to spend more, which drives economic growth.

Why is this important? The U.S. economy, like most industrialized nations, relies heavily on consumer spending. In fact, nearly 70% of the U.S. economy is based on it. By lowering rates, everything from mortgages to credit card interest becomes cheaper, making it easier for consumers to buy homes, cars, and other essentials. This move should help boost sectors like real estate, which makes up around 17% of the U.S. economy.

Other major economies, like Germany and Japan, are also heavily dependent on consumer spending, with about 50% of their economies tied to it. Lower rates in the U.S. will likely influence global markets in the coming months as central banks react to the Fed’s decision.

U.S. Markets and Global Stock Performance

Despite the Fed’s rate cut, U.S. stock markets had a mixed week. The Dow Jones was the only major index to close positive, while the S&P 500 and Nasdaq ended in the red. Canada’s market, often referred to as the “Communist Republic of Canada,” went up by 1.12%.

In overseas news, European markets were mostly higher, with Russia leading the way if you consider it part of Europe. Latin American markets were mixed, and Brazil’s Bovespa stock index fell by 2.91%. The Middle East and Africa saw mostly positive results, with South Africa being the biggest winner. In Asia, the Nikkei and Hang Seng posted solid gains.

Conspiracy News: Climate Study and CO2

Some alternative news this week—reports from various universities, NASA, and the European Space Agency suggest that clouds and the sun, not carbon dioxide (CO2), might be the primary drivers of climate change. Remember, CO2 makes up only 0.04% of the atmosphere. This study challenges the mainstream narrative and offers a different perspective on what’s driving global climate changes.

Bitcoin and Crypto News

In a surprising twist, former President Donald Trump used Bitcoin to buy hamburgers at a bar in New York, humorously calling them “crypto burgers.” Trump’s move to use Bitcoin marks another high-profile endorsement for the cryptocurrency.

Singapore’s largest bank, DBS, launched Bitcoin and Ethereum options trading services. Singapore, despite being a small nation with no natural resources, is one of the world’s largest financial hubs. Their entry into crypto trading is a signal that other global financial players may follow suit. For the week, Bitcoin rose over 5%, crossing $63,000.

Commodities and Energy

Sugar futures surged due to persistent drought conditions in Brazil, which now affect 59% of the country. The Amazon River is so low that boats can’t travel in some areas, impacting transportation and trade. Brazil, the world’s largest exporter of coffee, is also seeing price increases due to shortages. Arabica beans hit their highest price since 2011, with shortages in Vietnam exacerbating the issue. Vietnam, the world’s second-largest coffee producer, has seen a 40% price spike for robusta coffee, further driving up demand for Arabica beans from Brazil and Colombia.

Meanwhile, U.S. crude oil rose over 3% to $71 per barrel, and Brent crude climbed over 4% to nearly $75. The global energy landscape is under pressure, with weather disruptions and geopolitical tensions playing significant roles.

Gold Surges as Dollar Weakens

Gold hit another record high this week at $2,622, settling at $2,578, up 1.71%. As the Fed lowers interest rates, the value of the U.S. dollar declines, leading to higher demand for commodities priced in dollars, like gold, silver, and oil. Silver also rose by 1.26% to $31.24 per ounce.

The U.S. national debt continues to grow, now nearing $36 trillion. The government has already spent over $1 trillion this fiscal year just on interest payments, the second-highest expenditure after defense. As older debt issued at lower interest rates matures, the cost to service new debt at higher rates will increase dramatically, adding pressure to the U.S. economy.

Warren Buffett Sells Off Billions

Warren Buffett, often regarded as the greatest investor in history, has been offloading stocks in 2024. Since mid-July, he has sold $8 billion worth of shares, including a significant portion of his stake in Apple. He also sold $836 million worth of Bank of America stock this week. If Buffett is selling, it’s a signal that he expects rough times ahead, potentially a market crash or recession.

Corporate News: BlackRock, Microsoft, and Apple

In corporate news, BlackRock and Microsoft have teamed up to create a $30 billion investment fund for artificial intelligence (AI). Meanwhile, Apple’s stock fell almost 3% after reports of sluggish demand for its new iPhone models. Early sales were down 12% compared to the same period last year.

Tesla had a strong week, rising 7% thanks to the interest rate cuts and positive sales numbers from China, the world’s largest electric vehicle market. Tesla’s stock is up 33% over the last three months.

International Events: Armed Gangs in the U.S.

On a more concerning note, U.S. police and the FBI are warning that armed Cuban and Venezuelan gangs are targeting oil fields in the Permian Basin, the largest U.S. oil-producing region. These gangs are stealing oil and committing violent crimes, adding to the challenges in securing the nation’s energy supply.

Final Thoughts

That’s the market recap for this week. Interest rate cuts from the Fed are the big story, and we’ll see how they impact the economy in the coming months. Keep an eye on commodities like gold and oil as inflation and the weakening dollar continue to affect global markets. And remember, always pay attention to what major investors like Warren Buffett are doing, not just what they’re saying.

Let me know if you have any questions, don’t forget to subscribe, and remember—the preppers were right.