Aurelia Butler

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In its quarterly report on Saturday, Berkshire said it sold about 100 million Apple shares, on top of several billion dollars of Bank of America shares.Berkshire repurchased none of its own stock in the quarter, suggesting that Buffett doesn’t view even his own company’s shares as a bargain.Operating profit from Berkshire’s dozens of businesses such as the BNSF railroad and Geico car insurance fell 6% to $10.09 billion, or about $7,019 per Class A share, from $10.76 billion a year earlier.Net income totaled $26.25 billion, or $18,272 per Class A share, compared with a loss of $12.77 billion, or $8,824 per share, a year earlier when falling stock prices reduced the value of Berkshire’s investments. More

Following the Fed’s 50-basis-point reduction in September, strategists note a pivot in sentiment, with speculation on when the Fed might skip a meeting.However, Deutsche Bank’s policy rule analysis highlights that further reductions are feasible under the current economic conditions, with the Fed likely to implement a 25-basis-point cut in December, keeping rates within the upper end of policy rule prescriptions.For the Fed to consider pausing, the bank’s strategists outline two primary conditions. First, inflation would need to prove “stickier,” with core PCE inflation consistently rounding to 0.3%, signaling persistent price pressures that could make further cuts less advisable.Second, downside risks to the labor market would need to diminish, with evidence of stable or improving indicators like payroll growth, a steady unemployment rate (targeted at 4.1% or lower), and a recovery in other labor metrics such as the quits and hiring rates.“These conditions could be in place by December, though hurricane-impacted data and the November CPI report coming during the December blackout period present complications,” strategists wrote.“Our baseline is that the Fed will deliver a 25bp reduction at that meeting given that they should still be able to comfortably reduce rates below 4.5%,” they added.As 2025 approaches, the case for a potential pause in rate cuts may strengthen, Deutsche Bank suggests.Key drivers include seasonal inflation effects that could temporarily lift inflation figures, likely making Fed officials cautious about further cuts.“The Fed will be closer to estimates of neutral, a repeat of residual seasonality could lift inflation early next year, and the election outcome could add to hawkish risks for the Fed,” strategists continued.“We therefore see risks tilted towards an earlier skip/ pause than in our baseline (Q2 2025).”As for the election outcome, Deutsche Bank’s team points out that a red sweep without tariffs would be a clearly hawkish result for the Fed, while other scenarios, such as a Trump presidency with tariffs or a Harris administration with a Republican Senate, could each present unique hawkish pressures depending on inflation levels and economic strength.The Fed’s rate trajectory remains sensitive to its estimates of the neutral rate—often linked to “r-star” or the equilibrium rate.Deutsche Bank observes that while policy rules suggest a nominal neutral rate around 3.5%, the precise rate is hard to pinpoint. This ambiguity poses a challenge; with the current policy rate only about 125 basis points above Deutsche Bank’s neutral rate estimate, the Fed has limited room for further cuts before approaching the neutral range.Thus, while a December rate cut is likely, “there will be some element of data dependence to policy decisions beyond November,” strategists note, with early 2025 potentially marking a pivot to a pause if inflation and labor conditions support it. More

The firm predicts strong fiscal tailwinds, reduced regulatory measures, energy permitting reform, and continued tech restrictions as some of the key factors that will likely occur regardless of the election’s outcome.The report indicates that a significant portion of funding from the Biden era for infrastructure, semiconductor production, and energy transition is still unspent, with more than 75% of the allocated funds available through the end of September.Tax credits under the Inflation Reduction Act (IRA) are also largely untapped, with around eight years left to utilize them. Raymond James estimates these represent over $800 billion in appropriated funds and more than $500 billion in tax credits yet to impact the U.S. economy.“There may be attempts to repeal portions of the IRA in a Trump victory, but we remain skeptical,” analysts led by Ed Mills said in the report. “Overall, we expect to see a strong fiscal tailwind to the economy regardless of the outcome of the election.”Energy permitting reform is also on the horizon, with bipartisan support and increasing energy demands from the AI industry providing impetus for legislative change.Raymond James is closely monitoring the debt limit debate in 2025, which could serve as a legislative vehicle for passing energy permitting reforms. Moreover, recent Supreme Court decisions are expected to streamline environmental reviews under the National Environmental Policy Act, expediting the permitting process.The report further suggests that four years from now, there will be less regulation across industries due to the Supreme Court’s recent rulings.Decisions such as the overturning of the ” Chevron (NYSE:CVX) deference” and the establishment of the “major questions” doctrine will curb the expansion of regulatory power, according to the report.“The case that has re-opened the statute of limitation on all regulations will be the avenue to strike existing rules. This will take time, but will be a benefit to heavily-regulated industries,” analysts noted.Meanwhile, support for critical minerals is anticipated to grow, with a focus on reshoring supply chains and securing domestic production of minerals vital for national security. While this initiative is still developing, it may gain similar backing as the semiconductor industry has received from Washington, D.C.Another bipartisan issue, tech restrictions, particularly concerning sales to China, are expected to continue.Analysts note that a Trump administration might pose more risks to the sale of legacy technology, whereas a Harris administration would likely maintain a steady tightening of these restrictions.Regarding geopolitical risks, Raymond James expects U.S. and NATO defense budgets to rise, regardless of who wins the election. The firm anticipates that global threats will necessitate robust defense spending, whether under a Trump or Harris administration.Lastly, the looming fiscal challenges, including the debt limit and the expiration of the individual provisions of the 2017 tax law, are set to dominate the agenda in 2025.Raymond James projects that, following the passage of a tax package, there is a high likelihood of an increased child tax credit and the reinstatement of the R&D tax credit and bonus depreciation, independent of the electoral results.“We expect the debt limit to be raised, but will be looking for its impact on U.S. Treasuries,” the report concluded. More

According to CME Group’s (NASDAQ:CME) closely-monitored FedWatch Tool, markets are currently pricing in a nearly 95% chance the central bank chooses to slash rates by a quarter-percentage point from its current range of 4.75%-5% after its upcoming two-day gathering.In September, the Fed cut rates by an outsized 50 basis points, largely in an attempt to bolster the labor market during a time of waning inflationary pressures.Since then, data has pointed to fading — albeit lingering — price growth and broad resilience in job demand.An inflation metric closely monitored by the Federal Reserve slowed as expected in the year to September, potentially bolstering the case for the central bank to slash interest rates again this year.The personal consumption expenditures price index decelerated to a 2.1% annual increase during the month, cooling from an upwardly-revised reading of 2.3% in August. The figure was in line with economists’ estimates. On a monthly basis, the index sped up slightly to 0.2% from 0.1% in August, matching projections.Meanwhile, the so-called “core” metric, which strips out more volatile items like food and fuel, came in at 2.7% annually — faster than expectations of 2.6% and equaling August’s pace. Month-on-month, it accelerated slightly to 0.3%, meeting expectations.Commerce Department data also showed core PCE at 2.2% in the third quarter, easing from a prior reading of 2.8% but faster than projections of 2.1%, while headline PCE cooled to 1.8%.On the employment front, the US economy added far fewer jobs than anticipated in an October, although the figures were impacted by devastating recent hurricanes and ongoing labor actions. Nonfarm payrolls rose by 12,000 during the month, falling from a downwardly revised 223,000 in September. Economists had expected a reading of 106,000.Separately on Thursday, weekly claims for first-time unemployment benefits dipped to 216,000 from 228,000 in the prior week.Earlier in the week, private payrolls for October unexpectedly jumped to 233,000, pointing to resilience in the labor market despite a string of potential disruptions from devastating hurricanes and ongoing strikes. The all-important nonfarm payrolls report is due out on Friday.Crucially, these are some of the final economic indicators that will be made available to voters prior to the Nov. 5 US presidential election. Issues like high food and housing costs remain front of mind for many Americans, with many viewing the state of the economy as poor, according to a poll from the Associated Press-NORC Center for Public Affairs Research.The US economy grew at a slower than expected rate in the third quarter despite signs of waning inflationary pressures and solid wage gains, an advance estimate of gross domestic product from the Commerce Department showed on Wednesday. “Since the Committee last met, US economic activity has generally surprised to the upside and suggested ongoing resilience,” analysts at Wells Fargo said in a note to clients. More