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05.01.2022 01:55 PM
American Premarket on January 5: Buffett earns $120 billion on Apple

US stock index futures traded quite diversely during the morning session after the Dow Jones Industrial Average closed with a record gain on Tuesday. Investors are once again starting to pay more and more attention to the shares of companies that can increasingly benefit from the economic recovery this year. Dow futures rose by 28 points. S&P 500 futures were unchanged, while Nasdaq 100 futures fell 0.2%.

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Today, we need to pay attention to the ADP report on jobs in the private sector. Economists expect an increase of 375,000 people. Investors are also waiting for the publication of the minutes of the December meeting of the Federal Reserve System.

During the last meeting, politicians decided to accelerate the pace of reduction of the bond purchase program, hinting at an expected increase in interest rates next year. It is predicted that in 2022, there will be three interest rate increases by a quarter of a percentage point. In minutes, it will be possible to get acquainted with the forecast for inflation and economic growth. The market will also be looking for more information about how Fed policymakers look at the economy further and what will happen to the Fed's balance sheet of almost $9 trillion. The main question is when it will begin to be reduced.

No one doubts that the Fed will pay special attention to reducing the balance sheet, since inflation remains quite high, which may lead to an increase in the yield of 10-year bonds. However, all actions of the central bank will certainly be considered and cautious, as more aggressive decisions can disrupt the economic recovery and cause a recession.

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Yesterday, the Dow index rose by 200 points to a new high, the high-tech Nasdaq Composite fell by 1.3% amid a rapid increase in treasury bond yields, which amounted to 1.71%, which triggered sales of growth-oriented shares of technology companies.

Buffett makes money on Apple

And in conclusion, I would like to note that after Apple recently became worth $ 3 trillion, Warren Buffett was able to earn more than 120 billion on the shares of this company. Apple's 5% stake, which Berkshire Hathaway acquired in 2018 for $36 billion, is now worth $160 billion. Buffett's company also regularly received dividends from Apple - an average of about $ 775 million per year. Berkshire's stake in Apple currently accounts for more than 40% of its stock portfolio.

Berkshire Hathaway's first purchases were noted in 2016, and by mid-2018, the conglomerate had accumulated about 5% of the iPhone maker's shares, which was worth $36 billion. Now investments in Apple reach $ 160 billion since before the New Year it was possible to observe the continuation of the rally in the securities of this company. Without a doubt, this is one of the largest investments Berkshire has made in the last decade.

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As for the technical picture of the S&P 500

In the event of a return of pressure on the index, the support will be provided by the level of 4,772, which has repeatedly kept the trading instrument from a larger drop. Its breakdown will dump the S&P 500 to $4,722 and $4,665, below which buyers will have really serious problems. Buyers have another problem - going beyond the hysterical maximum of $4,818. Such a scenario will lead to the renewal of new levels: $4,856 and $4,901.

Jakub Novak,
Analytical expert of InstaForex
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