Berkshire’s $1 Trillion Triumph

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Hello and happy Sunday! Today we’re covering some exciting developments and significant economic shifts. From Lego’s unstoppable success to the NFL’s new investment game, here’s what we’re diving into:

• Lego’s record-breaking sales: The toy giant is thriving while others struggle, thanks to fresh sets and smart strategies.

• NFL’s private equity play: New rules allow private equity firms to buy stakes in teams, opening the door to big money.

• Berkshire’s trillion-dollar milestone: Warren Buffett’s conglomerate joins the exclusive trillion-dollar club.

• U.S. economic strength: GDP growth and cooling inflation ease recession fears.

• Tough housing market: Sky-high prices and mortgage rates are dampening home-buying enthusiasm.

Who Doesn’t Love Building Lego Castles? 🏰 

Lego is crushing it right now, with record-breaking sales of 31 billion Danish kroner ($4.65 billion) in the first half of 2024, and a 26% jump in operating profit compared to last year. That’s impressive on its own, but even more so when you consider that the rest of the toy industry is struggling—while Lego’s sales soared, Mattel and Hasbro saw their revenues take a hit, with Hasbro’s dropping a whopping 21%. 🥲

Lego’s secret sauce? Keeping things fresh while sticking to what works. Even after 90 years, people can’t get enough of classic sets like Lego Star Wars, and they’re also loving the 300 new sets Lego rolled out in the first half of 2024. They’ve smartly tapped into older audiences with collections like the Botanical Collection, which really took off during the pandemic. On top of that, Lego is expanding its digital footprint with partnerships like their Fortnite collab and is making big moves in sustainability—30% of the resin they used in H1 2024 came from recycled or renewable sources. ♻️

PE Eating The World

The NFL just shook things up by letting private equity firms buy up to a 10% stake in teams, relaxing a long-standing ownership rule. This change makes sense as NFL teams are reaching sky-high valuations—like the Dallas Cowboys, now valued at $10 billion, 🤠💰 even though they haven’t won a Super Bowl since 1996. With the average NFL team worth around $6 billion, there aren’t enough billionaires to go around.

By letting in private equity, the NFL is tapping into a huge pile of cash. These firms have a record $2.6 trillion just waiting to be invested, 🤯 and they’re eager to put it to use. While a $600 million investment for a 10% stake might be small change for the biggest funds, the new rules let them spread their money across up to six teams, giving them more ways to make an impact.

Oracle Of Omaha Did It Again

Berkshire Hathaway just hit a major milestone, becoming the first U.S. company outside of the tech world to surpass a $1 trillion market value. With a 0.9% boost in its stock on Wednesday, Warren Buffett’s conglomerate joined the elite trillion-dollar club, usually reserved for tech giants like Alphabet, Meta, and Nvidia. Berkshire’s stock has been on fire this year, climbing 32% thanks to strong insurance results and overall economic optimism, easily beating the S&P 500’s 18% gain. 🚀 

Buffett and his late partner Charlie Munger spent decades transforming Berkshire from a struggling textile company into a massive business empire. The company’s market value has grown about 20% annually since 1965, nearly doubling the S&P 500’s returns, making Buffett one of the richest and most legendary investors out there.

While Berkshire’s had a stellar year, adding over $200 billion in market cap, analysts are a bit cautious. The company’s diverse portfolio, which includes everything from Dairy Queen to Duracell, is built to weather all kinds of economic storms, but lower interest rates could impact returns on its huge $276.9 billion cash pile. 💵 💰 And while Berkshire’s recent decision to trim its Apple stake was seen as a smart move to reduce risk, some wonder what’s next for the company in an unpredictable market.

Stop Talking About Recession, Pls

The U.S. economy is looking strong, growing by 3.0% in Q2 2024, which is even better than the earlier estimate of 2.8% and a big jump from 1.4% in Q1. This boost is mostly thanks to consumers who spent more on goods and services than expected, 🛍️ offsetting minor drops in business investment, exports, and government spending.

Earlier this month, strong retail sales and solid earnings from big names like Walmart signaled that consumer demand wasn’t slowing down, despite ongoing inflation worries. This latest GDP report should put to rest any recession fears that had Wall Street nervous after some weak labor market data earlier in the month. Plus, the Fed’s preferred inflation measure, the PCE price index, cooled off to 2.5% in Q2, down from 3.4% in Q1, adding a bit more comfort to the economic outlook. 👌

Not A Good Time, Really

If you're thinking about buying a house, now might not be the best time. Americans are facing a tough housing market with sky-high home prices and mortgage rates that have jumped to their highest levels since the early 2000s. It’s not just hard to find a home—it’s also getting harder to afford one. 🏡 💵 💵

Gallup’s latest Economy and Personal Finance poll shows that people’s enthusiasm for buying a house has taken a serious hit. Only 21% of U.S. adults now believe it’s a good time to buy a home, a big drop from 53% in 2021 and even further from pre-pandemic levels. In fact, this is the lowest level of confidence since Gallup started asking the question in 1978. Even during the 2008 housing crisis, the sentiment never fell this low.