5 Things You Need to Know to Start Your Day: Americas

Good morning. A slew of data releases will provide a test for markets this week and Berkshire Hathaway’s cash pile hits a record. Here’s wha [View in browser]( [Bloomberg]( Good morning. A slew of data releases will provide a test for markets this week and Berkshire Hathaway’s cash pile hits a record. Here’s what’s moving markets. — [Sam Unsted]( Data dump Stock futures are [marginally lower heading into a data-heavy week]( that will help determine whether investors stick with the risk-on mood that has pervaded in recent weeks. [Top of that agenda will be the PCE index](, the Federal Reserve’s preferred metric for inflation. It is expected to show underlying inflation rose in January by the most in a year, again underlining the long and bumpy path ahead for getting price-growth back to the central bank’s target. Treasury test The raft of data will [provide a test for the Treasury market too](, with investors heading into the week with yields across the curve just short of year-to-date highs. In addition, the bond market will be bracing for the impact from heavy Treasury and corporate issuance as the month-end approaches. Steven Major, global head of fixed income research at HSBC, said [valuations on Treasuries look “quite good”]( at the moment and he’s taking a “mildly bullish” view on the market. Buffett’s cash The [cash pile for Warren Buffett’s Berkshire Hathaway hit a new record of $167.6 billion]( and the veteran investor bemoaned a lack of meaningful deals that would provide the chance of an “eye-popping performance” for the group. Berkshire’s profit jumped, helped by its insurance holdings and Buffett’s [endorsement of Japanese trading houses sent their shares higher in Tokyo](. With its shares rising more than 5% in premarket trading in New York, Berkshire is getting closer to the [$1 trillion market capitalization]( milestone. Broader potential There is [room for stock markets to extend gains beyond the record highs]( that were hit last week should the economic outlook continue to be upbeat and investors turn their attention to recent laggards, according to strategists at Goldman Sachs. Investor positioning is “extremely” concentrated in the so-called Magnificent Seven tech stocks, which leaves space for a broadening out. Strategists at JPMorgan, meanwhile, said profit margins could be peaking and noted that all of the profit growth in the past few quarters for the S&P 500 has been driven by the Magnificent Seven. Coming Up… Before the PCE inflation reading later in the week, there will be new home sales and the Dallas Fed’s manufacturing activity index on Monday, with plenty more to come as the week progresses on the housing, mortgage and personal income fronts. Domino’s Pizza is the main earnings report on a relatively quiet Monday, with software giant Salesforce, online auctions group EBay and retailer Best Buy to come. There is also a cavalcade of speakers from the Federal Reserve, starting on Monday with Jeff Schmid. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - [Shutdown countdown]( on the Daybreak podcast. - The Koch network to [stop funding Nikki Haley’s campaign](. - [Cathie Wood doubles-down]( on cutting chipmaker exposure. - [From AI to Ambani](: Mark Zuckerberg’s Asia tour. - The challenges facing the [world’s best-performing hedge fund bet](. - The impact of [China’s quant clampdown](. - BYD’s [EV supercar]( to rival Ferrari and Lamborghini. And finally, here's what Ven’s interested in this morning Brick-and-mortar stocks are getting swept up in the hysteria surrounding technology names, but the S&P 500 can’t forever outperform the US economy — with even Warren Buffett unable to find stocks to buy at sensible prices. The equity benchmark has already totted up 7% in gains in just the first two months of the year, taking its advance since the Federal Reserve started raising rates in this cycle to about 20% — a period when you would think rising interest rates would have acted like gravity to pull down stocks from their highs. With the Nasdaq 100 moving along like a veritable juggernaut, there are no prizes for guessing that sentiment is often a more powerful driver than fundamentals. Even so, it’s worth noting what Buffett’s Berkshire Hathaway has been doing in the past few years: building up its arsenal of cash and short-term investments when it can’t find meaningful businesses to invest in at reasonable prices. Its cash pile surged some 30% at the end of last year to almost $168 billion — the clearest indication that the legendary investor is waiting for an inflection point in the markets. In his annual letter to shareholders delivered over the weekend, Buffett wrote: “There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others. Some we can value; some we can’t. And, if we can, they have to be attractively priced.” Here’s one of the smartest investors hinting that he is unable to deploy Berkshire’s massive cash hoard in meaningful size, even though the rest of the world seems to be charging ahead with nary a concern about how this might all end. At current levels, the Nasdaq 100 is trading at a P/E of some 33x, and the S&P 500 is just following in tow. But when some of the best minds in finance can’t deploy their cash, it may be time to turn a bit cautious. Ven Ram is a cross-asset strategist for Bloomberg’s Markets Live. Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. [Bloomberg Markets Wrap: The latest on what's moving global markets. Tap to read.]( Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Five Things to Start Your Day: Americas Edition newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. 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