Buffets cashing in as many investors go to the races.

Last week’s rather indifferent UK economic data did not stop the FTSE 100 from having one of its best weeks in a while. All clouds, they say, have a silver lining, and this one was a weaker pound, trading back closer to 1.25 to the US dollar. Large-cap UK equities are often expected to do better during periods of a weaker pound as many earn their rewards overseas. This week is generally a quieter but positive one for stocks, as it’s Thanksgiving week. The focus will be the monthly price update, which is closely watched by the Federal Reserve released on Wednesday. The personal consumption expenditures index is expected to have risen 0.2% in October from the prior month and 2.3% from a year ago. Should the reading come in below forecasts, this will likely boost the market’s expectation of the final rate cut of the year in December.

According to S&P Global, who, to be fair, put the data together, the flash PMI survey data for the US showed business activity growing at a strong and accelerating pace in November, with output rising amid strengthening demand. The UK economy seems to be suffering the woes of the recent budget; in contrast, US economic sentiment has improved since Donald Trump’s election.

Again, according to S&P Global, the monthly survey showed price pressures cooled further as the average prices charged for US goods and services barely rose, registering the smallest monthly increase seen this side of the pandemic. S&P Global believes this bodes well for US GDP and inflation numbers in the coming week. Prices are down, and the economy remains resilient, music to the Fed’s ears. We shall also hear their thoughts at their last meeting this week as the minutes of that meeting will also be released. In contrast to the US data, the Flash PMIs for Europe continue to point to a renewed downturn in business activity. This coming week, we also get the monthly eurozone inflation report.

The US stock market continues to rise; goodness knows how many new highs have been made this year. Bullish sentiment on several measures remains stretched, but that is not deterring investors. According to Bank of America, US equity fund inflows have hit extreme levels this year, with almost 500 billion dollars of annualised inflows into US stocks this year so far. If Buffet’s phrase “get fearful when others get greedy” rings a bell, in contrast to the broader investor community, Mr Buffet is apparently loading up on cash. According to a Bloomberg source, Mr Buffet, the world’s biggest bull, has almost 30% of his money in cash. The week seems to be starting on a positive note.