"My fear — and I do not say this lightly… I can actually conceive of a federal or Treasury rule coming in and saying, 'For the next 180 days, you can’t pull your money out of the banking sector.'"
— Hugh Hendry
It’s that time of year again.
It’s time to review Berkshire Hathaway’s annual shareholder meeting.
For those of you who aren’t familiar, Berkshire Hathaway is a conglomerate holding company led by famed investor Warren Buffett and headquartered in Omaha, Nebraska. The company holds a shareholder meeting every year known as the "Woodstock for Capitalists." It’s where Warren Buffett and his business partner Charlie Munger share their insights and perspectives on the company and the economy.
Thousands of investors flock to the conference to gain valuable insights from two of the most successful investors of all time. Through the performance of Berkshire Hathaway stock, Buffett and Munger are able to give us a snapshot of the overall economy. That’s because Berkshire owns subsidiaries in diversified holdings across the economy, including insurance, energy, technology, consumer cyclical, retail, manufacturing, transportation, and bank stocks. The company can see how goods are flowing through the U.S. economy and the world.
As of the latest meeting, the company’s top five holdings and the percentage of the total portfolio are as follows:
- Apple — 38%
- Bank of America —11.19%
- Chevron — 9.78%
- Coca-Cola — 8.51%
- American Express — 7.49%
The tone of the meeting felt a bit different from others in the recent past, as Buffett opened by saying, “Nothing is sure, nothing is sure tomorrow, nothing is sure next year, and nothing is ever sure, either in markets or business forecast or anything else.”
Hearing that Warren Buffett quote as an investor perked up my ears.
Now, this isn’t necessarily doom and gloom, but the Oracle of Omaha indicated that a lot of the businesses in Berkshire’s portfolio are going to report lackluster earnings this year. He noted, “In the general economy, the feedback we get is that… the majority of our businesses will actually report lower earnings this year than last year.”
Basically, consumers bought with reckless abandon during and after the pandemic, which caused businesses to order more goods that went into the backlog and couldn't get delivered in time because of the supply chain disruptions. So people continued buying goods at full price without waiting for sales. This caused a lot of inventory to remain on order and then it came as a surprise when all of a sudden the goods were delivered.
Fast-forward to today and people aren’t spending like they were last year. Buffett says people aren’t "in the same frame of mind as earlier.” So what we’re looking at is more sales and discounts on products in order to move this excess inventory.
Essentially, this year will be slower. As Buffett says, “It’s a different climate than it was six months ago.”
In the short term, that’s not a good thing.
One huge catalyst coming for the global economy and markets is banking uncertainty.
Buffett said he sold bank stocks first when the pandemic broke out and then sold some more in the last six months.
He noted, “We don’t know where the shareholders of the big banks necessarily or the regional banks or any banks are heading.” Join Wealth Daily today for FREE. We’ll keep you on top of all the hottest investment ideas before they hit Wall Street. Become a member today, and get our latest free report: “How to Make Your Fortune in Stocks”
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He said that everyone is confused today and that has real consequences, but that “nobody knows what the consequences are because every event is recreating a different dynamic.”
Investors should be very cautious about owning banks. Couple that with the debt ceiling shenanigans in Washington and we could have a big problem on our hands.
On the debt ceiling front, Treasury Secretary Janet Yellen said Monday, “If they fail to do it, we will have an economic and financial catastrophe that will be of our own making, and there is no action that president Biden and U.S. Treasury can take to prevent that catastrophe.”
But there's something going on behind the scenes…
All this uncertainty has caused the Fed to jump-start a nefarious new program that could put your hard-earned cash at risk…
It's called FedNow.
Never heard of it?
Well, you better prepare…
FedNow is a real-time payment service launched by the U.S. Federal Reserve. In theory, the service enables individuals and businesses to send and receive payments instantly, 24 hours a day, seven days a week, 365 days a year.
Sound like anything to you? (Ahem, crypto.)
According to the Fed, this service is designed to provide a safe, efficient, and ubiquitous payment system that can process payments in real-time, similar to other existing payment systems like PayPal and Venmo. The goal is to improve the speed and efficiency of the U.S. payment system, reduce the time it takes to clear and settle payments, and provide consumers and businesses with more choices and flexibility in how they pay and get paid.
FedNow will launch on July 27.
That's less than three months away!
To prove this isn’t some far-fetched conspiracy, check this out.
Online searches for FedNow have increased by 99x.
We’ve been covering this topic for months now.
Sure, FedNow will let you transfer or receive any amount of money to or from anybody instantly.
But there’s a catch…
It will also give the government TOTAL access to your bank accounts, purchase history, sensitive financial information, and more.
You can kiss your freedoms goodbye.
Scottish hedge fund manager Hugh Hendry posted an interview on Twitter citing his fears. He said, "My fear — and I do not say this lightly… I can actually conceive of a federal or Treasury rule coming in and saying, 'For the next 180 days, you can’t pull your money out of the banking sector.'"
That's because FedNow effectively makes the U.S. dollar “illegal tender” — and replaces it with a dangerous new form of currency.
If you have money in the bank, a retirement account, or especially in the stock market, you MUST take action now.
Stay frosty, Alexander Boulden After Alexander’s passion for economics and investing drew him to one of the largest financial publishers in the world, where he rubbed elbows with former Chicago Board Options Exchange floor traders, Wall Street hedge fund managers, and International Monetary Fund analysts, he decided to take up the pen and guide others through this new age of investing. Want to hear more from Alexander? Sign up to receive emails directly from him ranging from market commentaries to opportunities that he has his eye on.
Editor, Wealth Daily
After Alexander’s passion for economics and investing drew him to one of the largest financial publishers in the world, where he rubbed elbows with former Chicago Board Options Exchange floor traders, Wall Street hedge fund managers, and International Monetary Fund analysts, he decided to take up the pen and guide others through this new age of investing.
Want to hear more from Alexander? Sign up to receive emails directly from him ranging from market commentaries to opportunities that he has his eye on.