TRG Fast Facts

By TRG Advisors on August 9, 2024

Weekly data-driven insights on the markets and economy

1. Equity Markets Clobber Investors

A bruising start Monday to equity markets created sharp selloffs in all indices. The Nasdaq dropped 3.4%, the Dow an eye-popping drop of 1,033.99 points, and the S&P slid 3%. Tuesday saw a return in the green though, recovering some losses from the prior three trading days. Some traders point to the major unwind in the yen “carry trade” which contributed to the volatility. The Bank of Japan raised rates which affected the practice of traders borrowing that cheaper currency to purchase other global assets.[i]

2. Flight to Quality Buoys Bonds

Last week’s July jobs data and manufacturing sector gauge created a rush to haven assets like bonds. The weaker than expected reports led traders to now bet on at least 5 quarter-point cuts from the Fed by year end. Some economists at Citigroup and JPMorgan Chase predicted that the September and November meetings will each see cuts of a half-point. US two-year yield dipped below the 10-year for the first time since 2022.[ii]

3. Japan Sees Swings

Japan breathed a sigh of relief on Tuesday, logging its best day since October 2008. A small positive after a week in which the Japanese market saw its largest loss since the 1987 Black Monday crash. The Tuesday rally allowed Japan’s two indices to claw back into positive territory for the year. On July 30, the Bank of Japan raised rates to the highest level since 2008, causing the yen to strengthen to a 7-month high, pressurizing stocks.[iii]

4. Credit Card Debt Hits Record

Half of Americans are now carrying a balance according to a report by Bankrate, and a total of 57% of consumers rely on cards to make ends meet, according to a survey by Achieve. The New York Fed found that the collective balance now owed by Americans has hit a record $1.14 trillion. Researchers say that during the pandemic, many borrowers may have overextended themselves, and now roughly 9.1% of card balances have fallen into delinquency. [iv]

5. Buffett Takes a Bite Out of Apple

Berkshire Hathaway sliced roughly half of its Apple holdings, while simultaneously revealing its cash hoard of more than $270 billion at the end of June. Buffett praised Apple’s business at Berkshire’s annual meeting in May and commented that it will likely continue to hold the stock as Berkshire’s largest position. Berkshire also sold off some Bank of America holdings during the second quarter.[v]

6. A First Time for Everything

American Noah Lyles can now claim to be “the fastest man alive” after claiming the gold medal last Sunday night at the Paris Olympics. In a nail biter of a photo finish, Lyles crossed the line at five-thousandths of a second over Jamaica’s runner Kishane Thompson. This gold medal victory in the 100m is the first US gold in this specific event since 2004.[vi]

[i] Kim, Hakyung and Subin, Samantha, “Dow rallies 400 points as Wall Street rebound gains steam: Live updates,” CNBC, August 6, 2024, https://www.cnbc.com/2024/08/05/stock-market-today-live-updates.html. Accessed August 6, 2024.

[ii] Gledhill, Alice, “Global Bond Rally Accelerates as Market Bets on Big Rate Cuts,” Yahoo!Finance, August 5, 2024, https://finance.yahoo.com/news/global-bonds-erase-loss-us-012744479.html. Accessed August 6, 2024.

[iii] Butts, Dylan and Lim Hui Jie, “Japan’s Nikkei sees best day since October 2008; logs record single-day jump in points,” CNBC, August 5 2024, https://www.cnbc.com/2024/08/06/asia-stock-markets-japan-household-spending-rba-rate-decision.html. Accessed August 6, 2024.

[iv] Dickler, Jessica, “Credit card debt hits record $1.14 trillion, New York Fed research shows,” CNBC, August 6, 2024, https://www.cnbc.com/2024/08/06/new-york-fed-credit-card-debt-hits-record-1point14-trillion.html. Accessed August 6, 2024.

[v] Ilich, Robert, “Warren Buffett’s Berkshire Hathaway cuts stake in Apple by nearly 50%,” CNN Business, August 3, 2024, https://www.cnn.com/2024/08/03/business/berkshire-hathaway-apple-stock/index.html. Accessed August 6, 2024.

[vi] Bowman, Emma, “In a photo finish, American Noah Lyles wins 100-meter final to claim Olympic gold,” NPR, August 4, 2024, https://www.npr.org/2024/08/04/g-s1-15308/noah-lyles-gold-100m-final-paris. Accessed August 6, 2024.