The Buffett Boost

As traders and investors arise and rip their greasy heads away from those disgusting things they call pillows this morning, they'll likely see, if nothing changes as I write while most sleep, U.S. equity index futures trading in the green. This sudden burst of overnight optimism comes after Thursday's less than spectacular session.

So, what gives? Asian stocks are mixed. Europe does seem to be opening in the green. It's none of that, though. It's not optimism ahead of the Trump-Putin summit in Alaska or about expectations for this morning's July retail sales release. It was Warren. He's still got that kind of sway. Traders will realize that any gains made this morning across S&P 500 and Nasdaq futures are far more pedestrian than are the gains being made overnight by Dow futures.

Futures related to the Dow Jones Industrial Average are trading more than 300 points higher versus fair value or up 0.7% as the zero-dark hours pass. S&P futures are barely trading in the green at this hour. Nasdaq futures are actually in the red.

Second-quarter Quarterly 13-F filings are out. That means that the information is a little dated. It does not mean that there are no surprises. The Dow Jones industrials are looking to open higher because Berkshire Hathaway BRK.A, BRK.B revealed that the company that Warren Buffett had purchased more than 5 million shares of was beleaguered health insurer United Health UNH. The stock is up close to 13% overnight on that news. It didn't hurt that Michael Burry's Scion Asset Management initiated a long position in that name as well.

What else did Warren do? Apparently, during the second quarter, Berkshire reduced its holdings of both Apple AAPL and Bank of America BAC. Berkshire also revealed that home-builders Lennar LEN and DR Horton DHI as well as steelmaker Nucor NUE were the three "mystery stocks" that the conglomerate had sought confidential treatment over from the SEC at the end of Q1. Those three names are up 5.7%, 4.1% and 5.9% respectively as I work on this morning note.

As of the end of the second quarter, though reduced in size, both Apple and Bank of America remain among the largest long positions in Berkshire's portfolio. American Express AXP, Coca Cola KO and Chevron CVX round out Warren's top five.

Give Peace a Chance?

Today is the day. Presidents Donald Trump and Vladimir Putin will meet in Anchorage, Alaska later on Friday. The two will cover a number of topics broadly that at least the U.S. president hopes will result in a cease-fire between Russia and Ukraine. Long story short, Russia invaded Ukraine back in early 2022, occupied territories in the eastern part of the country and then got bogged down.

It's been an incredibly brutal war. The numbers are all over the map, but the British Ministry of Defense estimates that Russian forces have suffered more than 1 million casualties since February of 2022, with up to 250,000 Russian soldiers killed in action. Estimates, though difficult to make on the Ukrainian side, suggest up to 100,000 soldiers killed and up to 400,000 casualties. Civilian casualties are almost impossible to estimate in this conflict. To put all of that in perspective, the United States suffered roughly 7,000 killed in action and about 60,000 casualties in Iraq and Afghanistan combined from 2001 through 2021.

Pres. Trump has downplayed the prospects for any kind of peace at this meeting, as he attempts to manage expectations. He has said that if Putin agrees to a cease-fire and progress is being made, that a second meeting would be held possibly immediately that would include potentially flying Ukrainian President Volodymyr Zelenskyy to Alaska. Pres. Trump has threatened "very severe consequences" should President Putin not go for some kind of peace deal. President Trump is scheduled to return to Washington, D.C. this evening.

Defense News

On Thursday evening, news broke that the U.S. Army had awarded Lockheed Martin LMT a $4.23 billion modification to an existing contract for the production of the Guided Multiple Launch Rocket System. Total cumulative face value of the contract is now $13.27 billion. The estimated date of completion for the contract is October 20th, 2027.

Markets

Equities opened on weakness on Wednesday in response to a much hotter than expected report for July producer level inflation. However, throughout the session, investors steadily bought the dip and appeared to gain confidence going into the closing bell. This late optimism may have come ahead of President Trump's meeting in Alaska with Russian President Vladimir Putin or ahead of Friday's twin releases of July retail sales and July Industrial Production or ahead of the gems in a series of 13-F filings.

There were two other items that may have sharply impacted the algorithmic flow of capital in a positive way later in the session. Jefferies Market Strategist David Zervos, who has been mentioned as a potential candidate for Fed Chair come the end of Powell's term in May, spoke on CNBC. Zervos was about as dovish sounding as one could possibly get. He must really want the job because he did sound like he was auditioning. I have been outspoken about implementing lower short-term rates, but even I tapped the brakes on that idea in my producer price index piece after that hot PPI print. I felt somewhat embarrassed for Zervos after that interview.

Additionally, Intel INTC spiked into the close as Bloomberg News reported that the Trump Administration might be considering having the U.S. government take a financial stake in the troubled chip designer / foundry. I participated in that rush and held a few shares of Intel in inventory overnight.

The major indexes closed out the session essentially flat on the day after that rally into the closing bell. The S&P 500 closed up 0.03%, another new record high. The Nasdaq Composite gave back just 0.01%. Traders did rotate out of the small caps and the transports as the Materials gave back some of this week's gains on U.S. dollar strength.

Anyone Else Notice?

According to a survey at Freddie Mac, this week the average rate on a standard Thirty-Year fixed rate mortgage had dropped to 6.58%. This is a low rate not seen since October of 2024. In addition, according to Realtor.com, 33 of the 50 largest metro areas in the U.S. experienced a drop in average home prices for the month of July.

Trouble Ahead...

Shareholders of Applied Materials AMAT may need to wear their crash helmets this morning. The stock is down more than 14% overnight after issuing disappointing current quarter sales guidance.

Economics

(All Times Eastern)

08:30 - Empire State Manufacturing Index (Aug): Expecting -1.1, Last 5.5.

08:30 - Import Prices (Jul): Expecting 0.0% m/m, Last 0.1% m/m.

08:30 - Export Prices (Jul): Expecting 0.6% m/m, Last 0.5% m/m.

08:30 - Retail Sales (Jul): Expecting 0.5% m/m, Last 0.6% m/m.

08:30 - Core Retail Sales (Jul): Expecting 0.3% m/m, Last 0.5% m/m.

08:30 - Industrial Production (Jul): Expecting -0.1% m/m, Last 0.3% m/m.

08:30 - Capacity Utilization (Jul): Expecting 77.5%, Last 77.6%.

10:00 - U of M Consumer Sentiment (March-F): Expecting 62.1, Last 61.7.

10:00 - U of M One-Year Inflation Expectations (March-F): Expecting 4.7%, Last 4.5%.

10:00 - U of M Five-Year Inflation Expectations (March-F): Expecting 3.5%, Last 3.4%.

10:00 - Business Inventories (Jun): Expecting 0.2% m/m, Last 0.0% m/m.

1:00 p.m. - Baker Hughes Total Rig Count (Weekly): Last 539.

1:00 - Baker Hughes Oil Rig Count (Weekly): Last 411.

4:00 - Net Long-Term TIC Flows (Jun): Last $259.4B.

The Fed

(All Times Eastern)

No public appearances scheduled.

Today's Earnings Highlights (Consensus EPS Expectations)

Before the Open: FLO (.30)

At the time of publication, Guilfoyle was long INTC equity.