The Rundown - Dow Drops 1,000 Points, Nvidia's New Chip Delayed Due to Design Issues

Episode Date: August 5, 2024

Stock market update for August 5, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zad Admani, and today is Monday, August 5th. In today's episode, we talk about the mayhem happening across the markets all over the world and why some are calling for emergency rate cuts from the Fed. We also discuss how markets are reacting to Warren Buffett selling half his Apple stock and delays with Nvidia's latest AI chips. Then stick around to the end of the show to find out the last time the Fed did an emergency rate cut. It was over four years ago.

All right, let's go. We had more pain in the stock market last week as the S&P and NASDAQ dropped again. Last week, the S&P dropped by more than 2%. And the NASDAQ was down by more than 3% after the July jobs report showed that job growth is slowing in the U.S. And unemployment jumped to 4.3%. And that weaker than expected jobs report has investors freaking out about an economic slowdown. Some people are now even forecasting a recession happening. And look, the markets have been in a slump for three weeks in a row now, and it doesn't look to be

changing this week because the start of the week has been nothing but mayhem. Stock markets all over the world are getting cooked. The Japanese Niki dropped by more than 12% today. The FTSC index in London is down by more than 2%. Stock market futures for the S&P and NASDAQ are also down by more than 2%. And even crypto is getting wrecked, with Bitcoin dropping below $50,000 and Ether dropping below $2,500. Both haven't been that low since February.

So it's been an absolute brutal start to the week. And get this, the markets are now pricing in a chance of the Federal Reserve doing an emergency rate cut within the next week, which is pretty wild to think about because the Fed literally met last week and decided to hold off on rate cuts. But now the markets think the Fed is going to panic and might do an emergency rate cut in the next week or so and not wait until September's meeting. I personally don't think that's going to happen, but the fact the markets are even pricing that in is pretty wild.

I mean, it just goes to show you the level of mayhem that we're having this morning. There's a lot going on right now. Usually I like to take Monday mornings a bit easy, you know, but not today. I'm already on my third cup of coffee, and the markets haven't even opened yet. I feel like it's going to be a pretty wild week. We're going to be covering all this madness every day here on the rundown. So definitely subscribe to the podcast if you haven't already. Hit that notification bell on Spotify so you're notified as soon as an episode goes up.

I mean, I thought last week was going to be the wild one, but it might end up being this week. Let's run through some headlines. Warren Buffett is sitting on more than a quarter trillion dollars. in cash after selling about half his stake in Apple in Q2. Warren Buffett's company, Berkshire Hathaway, reported earnings over the weekend, and these earnings show that Warren Buffett's stake in Apple now stands at around $84 billion, down from the $140 billion that it was at the end of Q1. These earnings also show that Berkshire Hathaway is sitting on a record $277 billion in cash.

In total, Berkshire Hathaway sold over $75 billion in stock in Q2, most of that being Apple. Now, Apple has been a big part of Warren Buffett's portfolio. Warren Buffett started buying Apple back in 2016, and at one point, Apple became more than 50% of Berkshire Hathaway's portfolio. But then Warren Buffett has been slowly trimming his Apple steak. In Q1, he's sold 13% of his stake in the company, but selling 50% in Q2 is the most he's ever sold in a quarter. And that's why it's catching people's attention. What's notable is that Apple stock had a great Q2, up more than 25%. I think investors got pretty hype after Apple showed off their Apple Intelligence AI plans at WWDC back in early June. But it looks like Warren Buffett

isn't convinced that Apple intelligence is going to help sell more iPhones and he saw this as an opportunity to take profit. Now when Warren Buffett was asked about why he sold his Apple stock in Q1, he hinted at tax reasons. So maybe that's it. Or maybe he's worried about the overall economy. Maybe he's worried about the future of Apple. Maybe he's not convinced about the whole AI hype. It could be many factors here. I mean, Apple is still Berkshire's largest holding. Obviously, the markets aren't reacting so kindly to this. Apple stock is down more than 10% in the pre-market, which is crazy. Let's talk about another multi-chillion dollar company making some news this morning.

There are reports that Nvidia's new AI chip will be delayed due to design issues. This is according to a report from the information. Now, the impacted AI chip is the Blackwell series. The release date is now going to be pushed to Q1 of 2025. The chip was originally supposed to be released later this year. The Blackwell series is supposed to provide bigger GPUs and make AI easier to deploy. It was how Nvidia was differentiating itself from the real. rest of the AI competition from AMD, Intel, and more. I'm not even sure if I should put Intel in

that group right now. So maybe this opens the window for Nvidia's competitors to catch up. Nvidia investors definitely panicking a bit. Invita's shares are down more than 12% in the pre-market. And I'm sure it's not just because of this news. I mean, there's an overall panic happening right now all over the world. But this news definitely doesn't help right now. Let's talk about some stocks making moves today. Stock markets are a bloodbath right now, but surprisingly there is a stock that is having a nice morning. the company formerly known as Kellogg is a big in the pre-market, after reports that Mars, the candy giant behind Eminems and Twigs and Snickers,

is an advanced talks to acquiring the company. This is according to reports from the Wall Street Journal. Now, Kelanova used to be part of Kellogg's, but it was spun off last year into its own company as a market cap of around $22 billion. It sells iconic brands like Pringles, Cheez-Its, Pop-Tarts, egg-a-waffles, just to name a few. I mean, that's like the Mount Rushmore for snacks as a kid.

Now, if this deal goes through, Kellenova could be valued at close to $30 billion, according to the Wall Street Journal. The Mars company, which is privately held, has been making moves into the snack business. They recently bought the Kinebar company back in 2020. So this purchase of Kelenova would make some sense. Kellenova stock has had more than 22% in the pre-market on this news. I wonder if this means that we'll get like Snicker-flavored Pop-Tarts or Eminem-flavored Pringles. Actually, that sounds gross.

I don't know what I was thinking. Speaking of gross, the entire stock market is grossed right now. There are a lot of stocks getting crushed this morning. a lot of big tech stocks especially. But I wanted to highlight Coinbase and Micro Strategy. Both these shares are falling in the pre-market as Bitcoin continues to take a hit. Price of Bitcoin is down nearly 13% so far today after falling more than 22% in just the past five days. And whenever Bitcoin and crypto markets go down, these crypto-related stocks like Coinbase and Micro Strategy go down with it.

By the way, Bitcoin's market cap is now below $1 trillion as of this recording. Coinbase stock is down nearly 19% in the pre-market and Micro Strategy is down almost 27%. So just absolutely brutal right now. Let's wrap the show with a fun fact. And let's talk about emergency rate cuts from the Fed. Emergency rate cuts have been utilized during global financial crisis. The last time the Fed had to do an emergency rate cut was back in March of 2020 in response to the pandemic. The Fed cut rates 150 basis points to zero, where they kept them for two years.

The Fed also did emergency rate cuts back in 2001 after the tech bubble burst and also after the 9-11 attacks. But those are all pretty historical. Black Swan events. So I don't really know of an emergency rate cut is warranted here. But I guess we'll see how it plays out.

But I do bet the Fed and Jerome Powell wish they cut rates last week. Because now everyone's talking about how the Fed is behind the ball again. Well, all right, guys. That's the rundown for today.

What a crazy start to the week. I was not expecting this. But we're going to be here all week, recapping all this madness, and we're still in the thick of earnings season, okay?

We have a lot of companies reporting earnings this week. Uber, Reddit, Airbnb, Airbnb, Shopify, Disney. It should be another action-packed week. If you guys enjoyed the show, don't forget to hit us with a five-star rating on Apple and Spotify, and don't forget to vote in today's Spotify poll. That engagement really does help us out. Thank you guys so much for listening. Shout out to Connor and Mike for all

the help behind the scenes, and we'll see you guys back here tomorrow. This is the rundown, your real-time resource for news events and trends in the markets. All views presented in the show reflect the opinions of the guests. You should not take any mention of a publicly traded security as recommendation to buy, sell or hold that security. Run-down guests are not financial advisors and are not affiliated with public holdings board subsidiaries. You should make your own financial and investment decisions or consult. Respected professionals. Learn more at public.com disclosures. In partnership with Zaid and money, brokerage services for U.S. listed, registered securities are offered by open to the

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