CAISSA analyzes global events monthly, assessing their potential influence on our client’s wealth plan. We are diligently having strategic discussions with our portfolio managers, ensuring that our position remains informed and aligned with current market dynamics.

Below, you will find CAISSA’s perspective on these global events.

Berkshire Hathaway Owns About 3% of the T-Bill Market

Like many individual investors, large companies are also taking advantage of higher interest rates to make money on their cash.

CAISSA Perspective: For months, investors have speculated about when the Fed will cut rates. Despite this anticipation, persistent inflation has kept rates steady. With interest rates at decade highs, companies like Nvidia and Berkshire Hathaway earn without spending. Bloomberg reports that approximately 1 in 10 non-financial S&P 500 companies earned more interest than they paid in debt expenses in Q1 2024. Mid-single-digit returns with low risk allow companies to hold cash in reserve without pressure to find higher-yielding investments. The question then becomes: what will they do with the cash when rates come down?

Stock Splits are Having a Big Year

Stock splits can be interesting events for investors to watch, but they should not be the primary reason for buying or selling a stock.

CAISSA Perspective: In 2024, Walmart, Nvidia, and Chipotle announced stock splits, making their shares more affordable for potential buyers. While some companies see short-term price increases after a split due to increased investor interest, this is not a reliable predictor of long-term performance. Investors should approach stock splots with a clear understanding that they are primarily a cosmetic change, not a signal of improved financial performance or a guaranteed path to higher stock prices.  

The U.S. Presidental Debate Kicks off Election Season

President Biden and former President Trump squared off the first presidential debate as the road to the White House ramps up. 

CAISSA Perspective: We know the Election will certainly command headlines from now through November; however, we believe the market is likely to continue to focus on the Fed. With only a July and September meeting left before November 5th, the immediate impact of the election may be how it influences Fed Policy over the next few months. Fed Funds Futures currently indicate a mere 8.8% probability of a July rate cut, with September pricing in a 61.7% likelihood. The Federal Reserve should operate independently and make policy decisions based solely on the underlying economic data. However, some investors believe that the Fed may be reluctant to lower interest rates for the first time in September, just ahead of the U.S. Presidental Election, would delay the first rate cut until after the election in November or December.