Japan, NVIDIA & Berkshire: What’s Moving the Markets?

February 12-14, 2024, may have unveiled valuable information about the state of the global economies and markets. From NVIDIA’s new disclosures to Japan’s economic decline and Berkshire’s sale of Apple shares, here’s what you need to know:

More Investments for Chip Giant NVIDIA?

On Wednesday, February 14, the tech giant NVIDIA (NVDA) revealed that it has stakes in the British semiconductor company Arm Holdings (ARM) which surged 68% this year (as of February 14) and 2.8% on Wednesday night.

This announcement comes four years after NVIDIA attempted to purchase Arm for $40 billion but gave up in 2022 due to regulatory issues. 

Furthermore, it may be worth noting that at the end of 2023, NVIDIA owned $147 million worth of Arm stock. 

Additionally, besides Arm, NVIDIA disclosed its stakes in the voice Artificial intelligence (AI) company SoundHound AI, further strengthening its commitment to the AI boom. It also revealed its stakes in the medical imaging company Nano-X Imaging.

Since the beginning of the year, NVIDIA has shown robust growth as it soared by 55.2%, and it will be interesting to see how its latest revelations and investments will impact its trajectory.

Berkshire Sells Apple?

It was disclosed on Wednesday that Berkshire Hathaway (BRK.B), the American multinational conglomerate largely owned by the tenth-richest person in the world, Warren Buffet, reduced its equity holdings in the tech behemoth Apple (AAPL) by selling 10 million AAPL shares. This action brought its total holdings to 905 million shares, valued at approximately $166 billion. Interestingly, this sale occurred despite Berkshire's lucrative investment in Apple, which has yielded an estimated paper profit of about $135 billion. 

Furthermore, Berkshire decreased its investment in Paramount Global by approximately a third, now holding 63 million shares of the media company. It also lowered its stake in HP (HPQ) by 80 million shares. 

On the flip side, it was also revealed that Berkshire acquired 16 million shares of the energy leader Chevron (CVX), bringing its total investment to 126 million shares valued at about $19 billion.

While the effects of these acquisitions and sales are yet to be determined, it would be worth keeping tabs on the aforementioned stocks to see how Berkshire’s investments may influence their share prices.

Has Japan Been Dethroned as the World's Third-Largest Economy?

For a long time, Japan was deemed the world’s third-largest economy. However, recent data released on Thursday, February 15, show otherwise.

According to Japan’s Gross Domestic Product (GDP) report on Thursday, one of the world’s biggest economies has slid into a recession as it unexpectedly contracted for the second consecutive quarter in 2023.

During the last three months of 2023, following a contraction in the previous quarter, the Japanese economy shrank by 0.4% on an annualized basis, whereas many market experts projected a 1.1% expansion.

The cause appears to be attributed to both a weakening Japanese yen and an aging and declining population. Additionally, rising housing costs, low wages, and sluggish domestic activity are contributing factors, with inflation putting a strain on spending. Consequently, private consumption decreased by 0.2%, and household spending dropped by 2.5% in December compared to figures from the previous year, marking the tenth consecutive month of decline.

As a result of the above, Japan lost its third-largest economy status to Germany, becoming the world’s fourth-largest economy.

What Does this Mean for the Bank of Japan (BoJ) & the Government?

Before the release last week, Governor Kazuo Ueda of the Bank of Japan (BoJ) stated during a parliamentary session that Japan's financial environment would remain “accommodative” in the near future, even following the end of negative interest rates.

This statement appears to align with Thursday’s results, which may have underscored the importance of maintaining a loose monetary policy. This is because the data highlighted Japan's reliance on external demand for economic growth and specifically emphasized the significant contribution of net exports.

Moreover, it may be interesting to note that Japan’s revitalization minister, Yoshitaka Shindo, sees this deployment as an “imperative” for promoting structural reforms, such as increasing the inclusion of women in full-time employment and reducing barriers to foreign investment. Shindo also affirmed Japan's commitment to “deploy all policy steps to support pay rises.”

Only time will reveal Japan's approach to addressing these issues and whether it can reclaim its former status. (Source: The Guardian)

Conclusion

A plethora of financial events materialized, providing valuable insights about the state of the global economy and the financial markets. Traders will have to wait and see what the near future brings for both.