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Warren Buffett is more worried than usual
The “Oracle of Omaha” first showed its usual optimism on Saturday at the Berkshire Hathaway Annual Meeting, held online for the first time. But, Andrew writes in his latest column, Mr. Buffett looks pretty grim if you dig deeper:
It was disturbing on Saturday to hear him say “I don’t know” repeatedly. He was careful to say that markets would improve in the long run – although his time frame for certainty is decades, not months or even necessarily years. Of the current climate, he said: “You can bet on America, but you kind of have to be careful how you bet.”
The clearest sign of hesitation was her closed wallet, Andrew notes. Mr. Buffett did not buy stocks during the recent market crash, unlike his spending spree amid the carnage of the 2008 financial crisis. At the time, he wrote an op-ed in the New York City. Times a month after Lehman Brothers filed for bankruptcy: “In the short term, unemployment will rise, business activity will weaken and the headlines will continue to scare. So… I bought US stocks.
• Mr. Buffett missed his chance to strike the kind of high-priced bailout deals like the one he offered to GE in 2008, Bloomberg notes, because the Fed quickly intervened with a slew of bailout packages. Berkshire is now sitting on $ 137 billion in cash.
Mr Buffett sold his holdings in the four largest US airlines, claiming that the airline industry “has changed in a very important way”.
• All told, Berkshire sold $ 6.5 billion worth of shares last month, putting most of the money in Treasuries.
The meeting came after Berkshire reported a loss of $ 50 billion in the first trimester. Mr Buffett has long argued that fluctuations in the value of Berkshire’s investments are not a good indicator of the health of the company, but the conglomerate has also recorded blows to wholly owned operations like its Burlington Northern Railroad and its retail businesses.
Mr. Buffett left investors with a silver lining: “The American miracle, American magic has always prevailed and it will start again,” he said.
J. Crew is the first major retailer to fall into the pandemic
The clothing brand filed for bankruptcy this morning, after the coronavirus pandemic pushed the chain to its limit. It is unlikely that he will suffer on his own.
Retailer plans to cede control to creditors, led by hedge fund Anchorage Capital, swapping $ 1.65 billion in debt. The company will keep Madewell, the denim brand it once considered parting ways. E-commerce operations will continue to operate and stores will reopen once closures are lifted.
• J. Crew was already in bad shape, struggling with heavy debt and strategic missteps like not focusing on e-commerce and fashion trends.
This is the latest sign of trouble for the retail industry. Clothing and accessories sales in the United States fell by more than half in March, and April is expected to be even worse.
Who’s next? Neiman Marcus and JC Penney are still in discussions with creditors about financial recovery plans, with Chapter 11 being considered in both cases. Other retailers like Brooks Brothers have hired advisors to look at their options.
Overview of corporate bailouts
Small businesses are afraid to spend on bailout loans. Complicated rules for canceling loans and how to avoid potential fraud charges have left businesses sitting on funds.
The primary recipient of small business loans returns the money. Hotel companies linked to publicly traded Ashford Inc. will repay at least $ 70 million in loans, citing new government guidelines and media outcry. The Group’s subsidiaries had requested $ 126 million.
More money on the way? Larry Kudlow, the White House economic adviser, said a third injection of funds may be needed, as the first $ 350 billion was quickly used up and more than half of the second $ 310 billion injection. dollars is counted. Generally speaking, discussions on additional stimulus measures are in “a kind of hiatus period,” he said.
Business and Economy
Lobbyists are going on the offensive. Anticipating the end of stimulus measures, lobbyists are arguing for tailor-made support, reports the Wall Street Journal.
Bailout fatigue sets in. Former Obama economic adviser Austan Goolsbee writes in the Opinion section of the Times that a lack of transparency risks eroding public support for fiscal stimulus. In the Wall Street Journal, former Fed vice chairman Alan Blinder worries that “some people in government and financial markets are looking too much at the Fed for solutions.”
Attention: Fitness for work
Michelle Leder, the founder of the SEC filing site Footnote*, spotted something unusual in the latest batch of corporate disclosures about the coronavirus crisis, which she writes below. You can follow her on Twitter at @Footnote.
As the economic disruption from the coronavirus enters a new month, more and more publicly traded companies are revealing what it means for their businesses.
After markets closed on Friday, industrial giant Ingersoll Rand provided an unusually detailed description of the problems the company faces in an unanticipated regulatory brief. Among other things, he said he plans to delay filing his quarterly earnings report, as allowed by a new SEC rule written in response to the Covid-19 crisis.
Typically, large companies like Ingersoll Rand are required to file detailed quarterly reports with the SEC 40 days after the quarter’s close, which this year would have been May 11. On Friday, she said she would be filing “no later than” May 19. .
A deferred income report was not the only reason for filing. The company also disclosed a new 1,000-word risk factor, detailing all kinds of issues it faces as a result of the pandemic. For example, he noted the potential for “declining worker productivity due to remote work arrangements, increased medical, emergency or other leaves.” It described the daily “fitness for duty” checks of all employees, which include “temperature and symptom checks and the provision of personal protective equipment”.
A spokesperson for Ingersoll Rand was unavailable for comment over the weekend.
It’s not the only company talking about the need to monitor employee health for signs of fever, one of the common symptoms associated with Covid-19. But only one other company – Vivint Inc. of Provo, Utah – chose to describe this as “fitness for the job.” Others could follow as the crisis continues.
The coming week
?? US-UK trade negotiations have to start tomorrow. After Brexit, Britain is eager to conclude a free trade agreement with the United States (the destination of 19% of British exports), in particular to put pressure on the blocked negotiations with the EU (which represents 45 % of exports).
🚗 Automakers have been hit hard by the coronavirus shutdowns: dealerships are closed, factories are inactive, and consumer wallets are closed. Expect to see more of the damage caused by Fiat Chrysler tomorrow and General Motors Wednesday.
📺 Streaming is up, but advertising is down: Disney (tomorrow) and ViacomCBS (Thursday) should explain the effects on their latest earnings.
🎮 Home orders give people more time for video games, as reports of Activision Blizzard and Electronic arts tomorrow and Zynga Wednesday should show.
?? KKR releases its quarterly results on Wednesday, revealing how badly the private equity group’s investments have been hit and whether the crisis presents opportunities for low-cost deals.
?? Job numbers end the week on a dark note. Weekly unemployment claims data on Thursday – improving, but still terrible – is followed by monthly employment data on Friday. Analysts say April’s figures could show a drop of more than 20 million jobs and an unemployment rate of around 16%.
🗣 Other noteworthy companies reported profits this week, including AB InBev, Air France-KLM, Beyond meat, Bristol Myers Squibb, InterContinental Hotels, News Corp., Siemens, Total, Tyson Foods and Wendy’s. (As good as The New York Times Company.)
• Silver Lake agreed to invest $ 747 million in Jio, the Indian telecommunications company, weeks after Facebook invested $ 5.7 billion in the company. (TechCrunch)
• US and European banks are on track to build more than $ 50 billion in bad debt provisions. (FT)
Politics and politics
• Jeff Bezos, CEO of Amazon, has been called to testify before Congress in connection with an antitrust investigation. One of the firm’s fiercest critics is Representative Pramila Jayapal, the Democrat who represents much of Seattle, Amazon’s home port. (NYT)
• Tesla shares plunged on Friday after company chief Elon Musk tweeted that the automaker’s share price was “too high.” (CNBC)
• Elliott Management, the activist hedge fund, is reportedly funding a patent lawsuit against Quibi, the new streaming service. (WSJ)
The best of the rest
• Bankers are overworked even after leaving the bank. (eFinancialCareers)
• There is a run in the Japanese toilet. (FT)
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