Has the Oracle of Omaha delivered his prophecy? Is Warren Buffett signaling that we need to stay on the sidelines and get ourselves a cherry-topped sundae? 

His Berkshire Hathaway sold a whopping $36.1 billion of stock in the third quarter, the company announced Saturday, including big tranches of Apple and Bank of America stock. It bought a mere $1.5 billion.

Deal or No Deal

Berkshire is now sitting on more than $325 billion in cash, which Edward Jones analyst Jim Shanahan told Reuters “begs questions about whether Buffett thinks stocks are overvalued or an economic downturn is coming, or is trying to build cash for a big acquisition.”

So, are stocks overvalued? Some market participants are indeed worried we’re in a “melt-up,” the opposite of a meltdown. That’s what happens when a variety of circumstances — like Fed interest rate cuts and solid economic growth — push stocks to unsustainable levels. The S&P 500 has hit nearly four dozen record highs this year, and its price-to-earnings ratio is a steep 24.5, well above historic averages. The cyclically adjusted ratio is even higher, prompting Goldman Sachs to warn of a yearslong market slide.

Recession fears, meanwhile, have greatly receded — Goldman pegs the odds at 15% for the next 12 months, thanks in part to the economic growth that’s helping push stocks higher. Which begs the question: What is Buffett looking to acquire?

• Earlier this year, Berkshire completed its staged acquisition of a truck stop chain it bought in 2017, and last month it took full control of its energy subsidiary. But Buffett has bemoaned what he calls a lack of “meaningful deals” for over two years now. With price-to-earnings ratios still high, it’s unlikely the frugal nonagenarian CEO spends big until — or unless — valuations come down.
• Piling up cash seems to be the plan for now: Berkshire has been a net seller of stocks for eight quarters; its $69.9 billion worth of Apple shares at the end of September is down 67% from a year ago. Berkshire said Saturday that investment gains propelled profits to $26 billion in the quarter, a marked improvement from a roughly $12.7 billion loss a year ago due to unrealized investment losses.

Buyback Backtrack: Berkshire shares are up 25% this year, besting the blue chip S&P 500’s 20%, but investors will be saddened to hear Berkshire didn’t repurchase any of its own shares in the third quarter.

Right now Shell must be feeling like the world is its fossilized oyster.

Last week the Big Oil companies weighed in with their earnings reports, and it was mostly a pretty sorry assembly. Exxon, Chevron, and BP all took a dent thanks to falling oil prices, but one energy giant stood head-and-shoulders above the rest. Shell comfortably exceeded Wall Street’s expectations thanks to its liquified natural gas (LNG) business. 

Gas It Up

The price of a barrel of Brent crude oil has been coming down since April of this year, with a few peaks and troughs. Although prices have occasionally jumped up in response to conflict in the Middle East, they are sinking overall because of falling demand, especially in China. Some of oil’s biggest cheerleaders, namely the Organization of Petroleum Exporting Countries (OPEC) and the energy giants themselves, tried to talk up oil demand in the second half of the year, but now they seem pretty resigned to their fate. OPEC gave up on trying to drive prices higher in September. That said, OPEC is still maintaining a pretty brave face — today it offered a demand forecast for the rest of the year that’s much higher than other forecasters’ predictions.

This spells big trouble for the oil giants, as demand is not likely to zip back up anytime soon. “2025 looks very problematic for high prices with supply almost certainly outpacing demand by 500,000 to 1 million barrels a day,” Tom Kloza, global head of energy analysis with the Oil Price Information Service, told the AP last month. But for Shell, there’s a silver lining: 

• Shell’s chemicals and products division — which encompasses its oil refining — suffered just like the rest of the industry, with adjusted earnings falling from $1.1 billion in the second quarter to $463 million in the third quarter.
• Its integrated gas earnings, on the other hand, grew from $2.7 billion to $2.9 billion, and provided a nice cushion against ailing oil prices.

Hot Air: Right now, LNG’s price is riding high on demand from Asia and continued uncertainty over Russian gas exports — plus, European gas prices are at their highest point this year because of a production outage at Norway’s key energy company Equinor. But the International Energy Agency predicts that gas, like oil, is going to hit its demand peak sometime before 2030, so it can’t afford to get too puffed up.

The hours have not been happy for TGI Fridays. 

This weekend, the casual chain restaurant filed for Chapter 11 bankruptcy, making it the latest in its class to raise the white flag.

Party’s Over

TGI Fridays was pinched by the same forces afflicting all its industry peers: inflation, shifting consumer tastes, and increased competition from down-market options like Chipotle and Shake Shack. And, of course, the long hangover from a pandemic that shuttered restaurant locations and decreased foot traffic, which has stayed low. In a statement released Saturday, the company called the pandemic the “primary driver of our financial challenges.”

Since the start of the year, the chain, owned by TriArtisan Capital Advisors, has quietly been closing locations by the dozens across the US, marking the beginning of the end for a company that’s always pretended it was the end of the week:

• All 39 remaining locations owned directly by parent company TGI Fridays Inc. will remain open as the company undergoes restructuring, it said in a statement. Meanwhile, a separate entity, TGI Fridays Franchisor — which owns the brand and its IP, as well as 56 franchised locations — is not included in the proceedings.
• In court filings, TGI Fridays Inc. listed both its assets and liabilities as worth between $100 million and $500 million.

Join the Club: The bankruptcy adds TGI Fridays to a list this year that includes Red Lobster, Rubio’s Coastal Grill, and Italian chain Buca di Beppo. Meanwhile, Hooters is in talks with lenders and advisors about its own financial troubles, Bloomberg reported in September. Rest assured, casual-dining fans: Chili’s and Applebee’s are still alive and kicking. For now.