Market 11/06: Extending the rally streak after positive interest rate and fiscal policies

Positive effect on the early week market

Last week, the entire market rallied the strongest in a year (due to the influence of Fed stopping interest rate hikes and Treasury announcing lower-than-expected debt plan).

Bank stocks recorded quite impressive gains.

Stock rally causes short sellers to suffer the largest weekly losses in nearly 2 years.

Treasury announces lower-than-expected debt issuance plan

Treasury expected to issue debt lower than expected, pushing 10-year and 30-year benchmark bond yields to 16-year highs.

Bond volatility MOVE index rises quite high, level with pre-2008 period.

Bank deposits unexpectedly reverse to increase

Bank stocks rose strongly last week despite banks borrowing record amounts from Fed's emergency support program, along with significant deposit withdrawals from investors.

After seasonal adjustment, total bank deposits increased by 52.2 billion USD.

However, unadjusted total bank deposits fell 22.3 billion USD, the lowest since June.

The gap between bank deposits and money market fund assets continues to widen.

Fed's adjustments turned outflows of 33 billion USD (NSA) into inflows of 51 billion USD (SA).

On the other hand, lending increased sharply in a short period (24.6 billion for large banks and 5.4 billion for small banks), the largest increase since mid-March.

Investors' investment trends last week

Investors withdrew about 2.3 billion USD from technology funds, the largest net withdrawal in 8 weeks.

Meanwhile, financial funds recorded net outflows of 1.8 billion USD, the highest in 13 weeks.

Q4 growth likely to be quite slow

According to Atlanta Fed forecast, growth will only be 1.x, corresponding to average Q4 2023 earnings forecast of only 3.9%.

Berkshire Hathaway ER: Cash holdings hit record high

Revenue up +21% year-over-year, reaching 93.2 billion USD.
Share buybacks reached 1.1 billion USD.
Unrealized losses reached 24.1 billion USD, mainly from AAPL.
Despite recording significant increase in operating income, the company still acknowledges negative impacts from geopolitical risks and inflationary pressures.

Cash and short-term securities reached 157 billion USD, a record high due to Berkshire reducing US stock ownership ratio for 4 consecutive quarters.

Events this week:

Fed Chair speech - Wednesday.
Initial jobless claims - Thursday.
Fed Chair speech - Thursday.
Consumer sentiment data - Friday.
10% of S&P 500 companies report earnings this week.

Some other news:

Citigroup expects to cut at least 10% of staff in some major business units.
Over the past nearly 1 year, except for JPM, major banks have all taken steps to cut staff.