TRG Fast Facts

By TRG Advisors on November 10, 2023

Weekly data-driven insights on the markets and economy

1. Last Week on Fleek

Last week, the markets rebounded strongly, with the S&P 500 surging by 5.85%, marking its most significant weekly gain in nearly a year, while the Nasdaq jumped by 6.61%[i]. This came after the first down quarter since 2020, triggered by a weaker-than-expected U.S. payrolls report, which led to the belief that the Fed might halt interest rate hikes and even consider cuts in the coming year.

2. Yield Rollercoaster

The benchmark 10-year Treasury note, which had dipped to five-week lows last week, reversed course, reaching a high of approximately 4.67% as the market prepared for Treasury auctions of approximately $112 billion in three-year and 10-year notes, along with 30-year bonds.[ii]

3. Results Are In

Democrats came out of Tuesday’s off-year elections victorious in many states, sparking a glimmer of hope for their party in the presidential election taking place a year from now. The off-year elections had implication from Governorships and Legislatures to State Supreme Courts and provide a snapshot of American politics heading into 2024. However, when the two leaders of the opposing parties – Joe Biden and Donald Trump – appear head-to-head, polling remains tight.

4. Dealbreakers and Discounts

Higher mortgage rates are causing a surge in canceled home purchase agreements, with nearly 16.3% of deals falling through in September 2023, the highest since October 2022 when mortgage rates surpassed 7% for the first time in 20 years. Homebuilders are now offering more concessions to close deals as 32% of them cut prices in October, aiming to address buyer frustrations and affordability concerns. [iii]

5. Buffett’s Balancing Act

Berkshire Hathaway, led by Warren Buffett, reported a substantial quarterly loss due to falling stock prices, particularly for holdings like Apple.[iv] However, their operating profit reached a record high, thanks to rising interest rates and improved performance in insurance. Berkshire also maintains a cautious stance on stock valuations and consumer sentiment, with a significant cash reserve for potential acquisitions.

6. New Chapter

WeWork, the once mighty coworking giant, has officially filed for Chapter 11 bankruptcy, a startling fall from its peak as the world’s most valuable startup. Struggling with debt amid the pandemic-driven shift to remote work, WeWork’s stock plummeted by over 99%, and its valuation sank from $47 billion to just $45 million before bankruptcy.[v] The company plans to continue operations, renegotiating leases and debt with the support of investors holding 92% of its secured debt.

7. Demand Dilemma

Oil prices tumbled over 4% due to concerns about “demand destruction” and China’s sixth consecutive month of declining exports[vi], reflecting a global demand slowdown. Daily price moves of more than 2%[vii] in either direction have become a common occurrence since Hamas’ surprise attack on Israel last month, keeping oil futures volatile but in a downward trend over the past two weeks.

8. AI with Attitude

Elon Musk is dipping into the world of AI with his new chatbot, Grok. Musk’s brainchild will carry undertones of humor and sarcasm, even dishing out cheeky advice, like earning a chemistry degree to make cocaine, before eventually clarifying it’s just kidding. With real-time data access via X/Twitter, Grok aims to outshine its more restrained competitors, making it the wild card of the AI chatbot era. Just remember, its sense of humor is Musk’s personal touch, so results may vary!

[i] Mikolajczak, Chuck, “Wall St extends winning streak; eyes Fed speakers, Treasury auctions,” Reuters, November 6, 2023, https://www.reuters.com/markets/us/futures-edge-up-rate-cut-hopes-fed-speakers-awaited-2023-11-06/. Accessed November 7, 2023.

[ii] Mikolajczak, Chuck, “Wall St extends winning streak; eyes Fed speakers, Treasury auctions,” Reuters, November 6, 2023, https://www.reuters.com/markets/us/futures-edge-up-rate-cut-hopes-fed-speakers-awaited-2023-11-06/. Accessed November 7, 2023.

[iii] Cruz-Martinez, “More homebuyers back out of deals as mortgage rates hit 23-year high,” Yahoo! Finance, November 4, 2023, https://finance.yahoo.com/news/more-homebuyers-back-out-of-deals-as-mortgage-rates-hit-23-year-high-130617893.html. Accessed November 7, 2023.

[iv] Stempel, Jonathan, “Buffett’s Berkshire posts bigger loss as stocks fall; operating profit sets record,” Reuters, November 4, 2023, https://www.reuters.com/article/berkshire-results-idTRNIKBN31Z06C. Accessed November 7, 2023.

[v] Thorebeck, Catherine, “WeWork files for bankruptcy,” CNN, November 7, 2023, https://www.cnn.com/2023/11/06/business/wework-bankruptcy/index.html. Accessed November 7, 2023.

[vi] Associated Press Finance, “Chinese imports rise in October while exports fall for 6th straight month,” Yahoo! Finance, November 6, 2023, https://finance.yahoo.com/news/chinese-imports-rise-october-while-055129550.html. Accessed November 7, 2023.

[vii] Ferre, Ines, “Oil slides amid worries of ‘higher for longer’ interest rates, ongoing Middle East conflict,” Yahoo! Finance, October 26, 2023, https://finance.yahoo.com/news/oil-slides-amid-worries-of-higher-for-longer-interest-rates-ongoing-middle-east-conflict-155009803.html. Accessed November 7, 2023.