February 24, 2025
Good morning,
The S&P 500 Index declined -1.71% on Friday, the worst one-day selloff of the year (so far). Selling was expected on “de-risk-Friday”, as mentioned, but only selling was unexpected. There was no market moving catalyst to explain the market decline; there were just more sellers than buyers. This is not uncommon when valuations are stretched, and uncertainty (currently around White House announcements) is running high – the market is labeled “fragile.” Buyers were scarce on Friday morning, and a little selling into a market thin on buyers tends to beget more selling, and the loop doesn’t end until the closing bell. There is rarely much to take away from a one-day selling event. The markets’ behavior this week will color Friday’s selloff as important or not. This morning’s price action in equities and fixed income looks to be reversing some of Friday’s big moves, in direction at least, if not magnitude.
Today, no major data is slated for release. Questions persist about the state of the economic cycle after last week’s data, which suggested that both consumer confidence and business activity are sputtering a bit. The big event this week is Nvidia’s earnings announcement; the less big event is Friday’s – PCE (Personal Consumption Expenditures Price Index), a Fed favorite.
Berkshire Hathaway reported over the weekend. The company has more cash on its balance sheet than the market capitalization of 93% of companies that are members of the S&P 500. It cannot seem to find a single candidate for a major acquisition. It reported that it has more than $334 billion in cash, a record high. In Warren Buffet’s annual letter, there is not a single mention of a bubble or overvaluations. Mr. Buffet’s actions have always been louder than his words.
Be well,
Mike