Buffett Bets Big on Oil

• 3 min read
Buffett Bets Big on Oil

MARKET MOVERS

  • Berkshire earnings decline in the first quarter on slowing economic growth. The company’s net earnings came in at $5.46 billion, down more than 53% from $11.71 billion in the year-earlier period. Berkshire’s operating earnings were flat year over year at $7.04 billion. The flat operating results were impacted by the slowing U.S. economy, which contracted in the first quarter for the first time since the onset of the Covid-19 pandemic.

  • Warren Buffett significantly increases Chevron bet, now in Berkshire’s top 4 positions. The “Oracle of Omaha’s” Chevron investment was worth $25.9 billion at the end of March, the company’s first-quarter filing Saturday showed, a big jump from its value of $4.5 billion at the end of 2021. Together with the $10 billion in OXY preferred, Berkshire’s bet on the oil sector is now over $40 billion. Read more here.

  • Goldman offers its first Bitcoin-backed loan. A significant step for a major U.S. bank that accelerates Wall Street’s embrace of cryptocurrencies. The cash loan was collateralized by bitcoin owned by the borrower. A spokesperson for Goldman Sachs explained that the deal is interesting to the investment bank due to its structure and 24-hour risk management. Read more here.

  • 10- and 30-year Treasury yields finish April with their biggest monthly advances since 2009. Treasury yields have moved up sharply in 2022 as inflation has continued to run hot, with the consumer price index hitting a level last seen more than four decades ago. The Federal Reserve’s preferred measure of inflation rose a sharp 0.9% in March, and the increase was largely from surging gas prices.

  • Record fertilizer prices drive investors, farmers to microbes. Companies such as Pivot Bio, Kula Bio and Anuvia are pushing development of farm fertilizers by harnessing microbes or plant-based products to deliver nutrients that corn and other crops need. They aim to replace traditional fertilizers produced from natural gas or mined underground. Read more here.

  • 65% of buyers would make an offer within 3 days. Twenty percent say they’d make an offer immediately, according to Bank of America’s new 2022 Homebuyer Insights Report, based on about 2,000 responses. Homes spent an average of 17 days on the market in March. 87%t of homes sold in March were on the market for less than a month. Read more here.

  • The savings boom is over. Personal savings rate feel to 6.2% in March. The lowest since 2013. This means that the setup is there for us to contract what we are able to spend as a society. The odds even push further to the direction that we could have more quarters of negative GDPs. This might lead to a scenario where the Fed raises forward to tackle inflation into a slowing economy. Source(33:13)

WHAT TO WATCH

  • Convenience-store giants Couche-Tard, EG Group in deal talks. Should the companies combine, the new group would have over $70 billion in annual revenue and some 21,000 fast-food joints, gas stations and grocery stores in more than 30 countries. It would bring together EG’s network in the U.K., Western Europe and Australia with Couche-Tard’s in the U.S., Canada, Northern Europe.

  • Meta Is investing in AI and video to defeat the existential threat of TikTok. To defend against TikTok, Meta is putting more resources into the short-term video while deploying artificial intelligence to power content recommendations. Mark Zuckerberg thinks that people will increasingly turn to AI-based Discovery Engines to learn things and also be entertained. Read more here.

  • If yields rise too much, the Fed will probably do yield curve control, says Jurrien Timmer. YCC is what the Bank of Japan has been doing. If the Fed believes the the yields are rising and is going to undermine the economy, the Fed will probably do a yield control. Under yield curve control, the Fed would target some longer-term rate and pledge to buy enough long-term bonds to keep the rate from rising above its target. Source(41:42)

  • Amazon will close six whole foods stores in four states, almost two months after shutting dozens of bookstores and gift shops around the country. The closed locations, out of more than 500 stores nationwide, are in Montgomery and Mobile, Alabama; Tarzana, California; Brookline, Massachusetts; and the Englewood and DePaul neighborhoods of Chicago, Amazon said Friday. Five stores will close by May 6 and the Englewood location in the coming months. Read more here.
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