HAMBURG, Germany, April 29, 2021 (GLOBE NEWSWIRE) -- We are advised by GSB GOLD STANDARD BANKING CORPORATION AG that journalists and other readers should disregard the news release, “GSB Group doubts in gold reserves of Karatbars and the V999 Coin as well as the existence of the Osint Group” issued April 28, 2021, over GlobeNewswire.
China's 2021 gold demand will see annual growth and will revert to pre-pandemic levels if there are no dramatic changes to the global economic and geo-political situation, a World Gold Council (WGC) official said on Thursday. "For China we had better first quarter growth even compared to 2019 ... If things are stable, we are sure China can stay in such a positive growth," said Wang Lixin, WGC managing director in China, adding that the jewellery and investment segments would drive China's gold demand.
A record $1.8 trillion worth of bonds are set to mature in Asia this year, data shows, leading to a rush to refinance them in the coming months. Most of the maturing bonds in Asia are from China, South Korea, Australia and India and the region dwarfs Europe and the United States in terms of the total, the data from Refinitiv showed. The refinancing surge is set to bring a fee bonanza to banks, even though investors are viewing bonds from China with caution after some issuers defaulted, and as risk is growing in markets such as India due to a resurgence of COVID-19 cases.
(Bloomberg) -- The Treasury’s bill auctions Thursday drew the lowest yield in more than a year as an excess of cash in front-end of fixed-income markets kept borrowing costs anchored near zero.The U.S. government’s $40 billion sale of four-week bills on Thursday went off with a yield of 0%, the first time that has happened since March 2020, in the early months of the coronavirus pandemic. The Treasury also sold $40 billion of eight-week bills at 0.01%. Existing rules prevent issuing debt with negative yields at auction.The four-week sale last came in at that level when anxious investors were pouring cash into money-market funds. Fast forward to this year and rates on Treasury bills have been under pressure with the government reducing issuance of short-term securities to draw down its mammoth cash balance so it can comply with a possible debt-ceiling reinstatement and to cover expenses.“Given the outlook for bill supply, zero percent stops are going to be the norm going forward,” Jefferies economist Thomas Simons wrote in a note to clients.The rate on overnight general-collateral repurchase agreements remains cemented at zero, while yields on Treasury bills maturing in three months or less range from minus 0.018% to plus 0.01%. As a result, participation in the Federal Reserve’s facility for overnight reverse repurchase agreements is surging to the highest levels in more than a year.Pressure on secured rates also spilled over to unsecured benchmarks, with the Overnight Bank Funding Rate dropping 1 basis point to 0.05% as of April 28, according to New York Fed data released Thursday.Still, Fed policy makers have yet to make adjustments to benchmarks they use to control short-term funding costs. Chairman Jerome Powell said Wednesday the effective fed funds rate -- the bank’s key target -- remains within the 0% to 0.25% range and “money market conditions are fine,” while acknowledging there’s room for further downward pressure.Bill PaydownsIn its survey of dealers ahead of the refunding announcement on May 5, the Treasury asked about “the impacts that reinstatement of the debt limit could have on the Treasury market as well as on broader financial markets.” Related to that, it also sought comment on expectations for bill supply over the next three months and adjustments in issuance.Under current law, the Treasury’s cash balance must return to around $130 billion by July 30, the level where it was when the borrowing limit was suspended. It’s currently at $959 billion, and to close the gap it has to reduce debt in addition to covering the recent pandemic stimulus payouts. And that means downward pressure on short-term rates isn’t likely to ease anytime soon.Read more: Scale of T-Bill Drought Hinges on Biden Rescue, Income-Tax HaulThe Treasury has paid down about $415 billion of T-bills this year. Credit Suisse estimates about another $500 billion in paydowns may be needed, while TD Securities strategists believe Treasury will need to trim supply by another $300 billion to $400 billion by the end of July.“This means more pain for money fund investors,” said TD Securities strategist Gennadiy Goldberg. “The fear that there won’t be enough product for investors tomorrow is what is driving front-end rates lower.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Deutsche Lufthansa AG reined in capacity plans and London’s Heathrow airport lowered passenger forecasts as new waves of coronavirus infections dent prospects for a travel rebound by the start of summer.Lufthansa now expects to offer only 40% of its pre-pandemic capacity for 2021 as a whole, according to a statement Thursday, a figure that’s below the level it has said is needed to generate positive cash flow. Heathrow cut its outlook to as few as 13 million passengers, less than the number it attracted last year.Airlines and the hubs they serve are wrestling with an uncertain outlook as governments work toward reopening travel while the virus surges in countries such as India. Europe remains in the grip of the pandemic amid a sluggish vaccine rollout, with the International Air Transport Association forecasting that the region will be the slowest worldwide to reduce losses this year.Lufthansa shares were trading down 1% as of 9:03 a.m. in Frankfurt. The German airline, Europe’s biggest when flying a full schedule, posted a first-quarter operating loss of 1.1 billion euros loss ($1.3 billion). Closely held Heathrow had an adjusted pretax loss of 329 million pounds ($459 million).Lufthansa Chief Executive Officer Carsten Spohr said that with travel restrictions still in place in most parts of the world, a “significant market recovery” won’t come until the second half as inoculation programs progress, with only a gradual pickup in demand expected before then.The group’s individual carriers, which include Austrian Airlines and Swiss, will therefore ramp up flights later than previously planned to reflect the delayed lifting of curbs, he said. The full-year capacity estimate is at the bottom end of a previous 40% to 50% range.Long-Haul HitHeathrow, which is heavily reliant on the long-haul flights worst hit by the crisis, said it’s expecting a passenger tally somewhere between 13 million and 36 million, compared with a previous estimate of 37.1 million issued Feb. 24.The hub handled 22 million passenger in 2020, buoyed by three months of near-normal operations before the virus led flights to be grounded, and 81 million in 2019.European operators are closely monitoring plans to resume flights in the U.K., usually the region’s biggest aviation market.Heathrow CEO John Holland-Kaye said it’s vital Britain restarts international travel from May 17 as announced. Though the government plans to say how far flights will be reopened early next month, there’s concern that only a handful of destinations will be on a “green list” where no quarantine is required.Airbus GloomHeathrow’s investors including Spanish builder Ferrovial SA, the Qatar Investment Authority, private-equity firm Alinda Capital Partners and China Investment Corp.Planemaker Airbus SE CEO Guillaume Faury said Thursday that the first quarter showed “the crisis is not yet over for our industry,” adding that the market “remains uncertain.”Lufthansa reduced its monthly cash drain to 235 million euros in the first three months, though that was aided mainly by strong cargo demand, and sees a drop to 200 million euros this quarter. Spohr reiterated that he expects a lower operating loss for the full year.The group was able to offer only 21% of its 2019 seating level in the first quarter, when its airline brands flew 3 million people, down 90% on the pre-crisis number. Heathrow’s tally of 1.7 million passengers was 91% lower.(Updates with Heathrow outlook throughout, adds shares in fifth)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
HONG KONG (Reuters) -Major Chinese investors are in talks to buy a stake in Saudi Aramco, several sources told Reuters on Wednesday, as Saudi Arabia's state oil firm prepares to sell another slice of its business to international investors. Saudi Arabia was in discussions to sell 1% of Aramco to a leading global energy company and could sell further shares including to international investors within the next year or two, Crown Prince Mohammed bin Salman said in televised remarks on Tuesday. A stake of 1% would equate to around $19 billion based on Aramco's current market capitalisation.
AMD CEO Dr. Lisa Su talks with Yahoo Finance Live about the chip-maker's explosive growth and outlook.
On the same day that Ford Motor Co said it would be able to produce only half as many cars as planned due to a global chip shortage, Apple Inc announced blowout quarterly earnings as smartphone and computer sales soared, with the chip shortage having only a small impact on its business. The contrasting results show how major players in the electronics industry, accustomed to the long time horizons of chip production, have mostly avoided major disruptions from the chip shortage. Apple said Wednesday that it would lose $3 billion to $4 billion in sales in the current quarter due to limited supplies of certain older chips.
LONDON (Reuters) -Standard Chartered PLC is to reduce its global branch network by half to around 400 to cut long-term costs after the British bank reported a stronger than expected first-quarter profit. "Those markets that are higher on branch numbers we'll be looking at more closely," StanChart's CFO Andy Halford told reporters, without giving more details, beyond noting branch numbers in the lender’s most profitable market Hong Kong were modest. The cost-cutting drive came as StanChart posted an 18% increase in first-quarter pre-tax profit, beginning a recovery from the economic hit caused by the coronavirus pandemic.
(Bloomberg) -- The European Union is looking to strengthen its hand against the growing economic threat posed by China, with new powers targeted at foreign state-owned companies.The European Commission, the bloc’s executive arm, proposed new rules to levy fines and block deals, according to a draft obtained by Bloomberg. While China isn’t specifically mentioned in the proposal, the move follows complaints from European businesses that the Asian nation’s firms get support they can’t match.Chinese business groups have already complained about the latest initiative, which will need support from EU governments before they become final. The document is a draft and could still change before it’s set to be proposed next week.It’s the next step in the EU’s efforts to ward off China, building on a push by member states to protect strategic companies from takeovers by non-European buyers.Amid the steepest recession in almost a century, Europe has shown signs of increasing protectionism. EU governments have been debating the “repatriation” of supply chains after the pandemic exposed the region’s vulnerability to disruptions, while France and Germany say the bloc should allow the creation of “European champions” big enough to compete with the U.S and China.Member states have voiced growing alarm at the prospect of European companies being bought by firms with unlimited credit lines or being forced out of business because rivals can afford to sell below cost.The new rules would run in parallel with oversight on foreign direct investment, which European governments have been ratcheting up in the last few years to give them more power to stop deals over industries or sectors they view as crucial. The increased scrutiny can be imposed even for minority stakes of more than 10%.Germany blocked a Chinese bid for the first time in 2018 by vetoing the potential purchase of machine-tool manufacturer Leifeld Metal Spinning AG. Last year, Chancellor Angela Merkel’s government agreed to buy a 23% stake in CureVac AG, at the time a key player in the race for a coronavirus vaccine which had been the focus of takeover speculation from the U.S.Alongside similar moves in other member states, Germany’s cabinet on Tuesday approved more changes to rules on foreign investment to give the government enhanced powers to scrutinize transactions that could impact national security. The new regulations, which need parliamentary approval, are targeted at high-technology sectors like artificial intelligence, autonomous driving and quantum computing.France recently halted the purchase of grocery chain Carrefour SA by Canada’s Alimentation Couche-Tard Inc., citing food sovereignty and the need to secure supply chains amid the pandemic. The country also vetoed the Teledyne Technologies Inc.’s purchase of Photonis, a company that makes night-vision gear for the military, citing strategic interests.In recent weeks, Italy coordinated with France to protect truckmaker Iveco SpA from an takeover by China FAW Group Co. Prime Minister Mario Draghi also sent a message by blocking a bid by China’s Shenzhen Invenland Holdings Co. for the small semiconductor firm LPE SpA.Spain’s government has signaled it could block at least two deals, one involving a utility and another involving a maker of aviation components.Under the draft EU rules, companies that generate at least 500 million euros ($600 million) of revenue in Europe and received more than 50 million euros of support from a foreign state in the last three years will need the bloc’s approval for deals.The EU also wants to be able to fine companies as much as 10% of their yearly revenue if it finds a firm unfairly benefited from a foreign subsidy -- including an unlimited state guarantee or credit line that undercuts European rivals. It warns in the draft that it could cancel government contracts granted to firms that gain an unfair advantage from such subsidies.European officials are seeking the power to inspect companies’ offices outside of Europe, with the permission of the company and the knowledge of the foreign state, according to the draft.Regulators suggest ways that companies could allay concerns over subsidies, including granting rivals access to infrastructure, licensing on fair terms or publishing research. Companies can also reduce capacity or market presence, divest assets or refrain from investment, according to the document.The European Commission declined to comment and the Chinese mission to the EU didn’t respond to a request for comment.Despite the tougher stance, the EU continues to actively build business ties with China, including an investment agreement. The bloc has promoted the deal, which could enter into force early next year, as a way to rebalance economic relations with its second-largest trade partner.The accord expands access to the Chinese market for European investors in industries ranging from cars to telecommunications. It also seeks to tackle underlying Chinese policies deemed to be market-distorting, such as industrial subsidies, state control of enterprises and forced technology transfers.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Archegos, a family office run by ex-Tiger Asia manager Bill Hwang, along with major banks that financed the fund’s trades, lost billions of dollars last month as its leveraged bets on media stocks quickly soured. "It seems as though there were risk management breakdowns at some of the firms, not all of them, and that's what we're looking into," Fed Chair Jerome Powell said in response to questions at a press conference following the end of the Fed's two-day policy meeting.
Shares of Franco-Italian chipmaker STMicroelectronics bounced back in early trading on Thursday after boss Jean-Marc Chery signalled sustained demand from the smartphone industry, which includes top client Apple. Investors poring over STMicro's latest earnings report had first winced at rising operating costs despite a global surge in demand for semiconductors that helped it beat market expectations in the first quarter. Apple is one of STMicro's 10 biggest clients.
(Bloomberg) -- Bitcoin is facing a make-or-break moment following a recent bout of selling, according to technical analysis.Though the cryptocurrency has rebounded above its average price over the past 100 days, it’s still trading below its 50-day moving average. Such a dynamic typically indicates an asset is nearing an inflection point.If Bitcoin can’t overtake its 50-day mean -- which currently sits at about $57,000 -- then it might be in for a period of volatility as the gap between the two trend lines converges. Technical indicators suggest breaking out might not be an easy feat -- Bitcoin failed to do so on several occasions last week.Trading in the world’s largest digital asset has been choppy in recent days after it hit a record high in mid-April above $64,000. It’s down more than 15% since then, though it rebounded earlier this week amid positive news, including comments from Tesla Inc.’s chief financial officer that reiterated the company’s commitment to the cryptocurrency.“The drastic -- relative to what we’ve seen of late -- pullback certainly was a point of eyebrows being raised, but at the end of the day, I think the fact that things were able to rebound and stabilize is a good thing,” said David Tawil, president of ProChain Capital. “It shows real power to the token, the staying power to the asset class.”The coin fell 1.4% on Wednesday following an announcement by the Securities and Exchange Commission that it will delay a decision on a Bitcoin exchange-traded fund. It was at about $54,586 as of 9:43 a.m. in Hong Kong Thursday.Sam Stovall, chief investment strategist at CFRA Research, says that if the stock market continues its advance, he expected Bitcoin to follow.Despite its recent turbulence, Bitcoin is still up 511% over the past year. Inflation and central bank policies have been its biggest drivers during the past 12 months, according to Quant Insight, a London-based analytics research firm that studies the relationship between assets and macro factors.While some dispute the idea that Bitcoin can act as an inflation hedge, the argument has been a key tenet for its bullish thesis and rings true for a lot of crypto fans. Proponents have seized on the money-printing narrative to promote the notion that Bitcoin is a store of wealth, an explanation that’s gained traction in recent months with economists expecting price pressures to pick up.Read more: Don’t Count on Bitcoin to Be a Sure-Thing Inflation Hedge“No question about it -- what drives a big chunk of the interest in Bitcoin has been just the tremendous amount of money that has been printed and will be printed and really the fundamental thought that you cannot have that much money in the system and not have it be inflationary,” said Chuck Cumello, president and chief executive officer of Essex Financial Services.(Updates markets in the sixth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Sanjeev Gupta’s GFG Alliance approached buyers for the potential sale of some engineering assets, people familiar with the matter said, signaling he may not be able to keep his embattled business empire intact.Since the industrialist’s main financier Greensill Capital collapsed in March, Gupta has been in a race to find new sources of cash, though has insisted he’ll find new lenders to replace about $5 billion he’d borrowed from the supply chain finance firm.But in recent days, GFG’s advisers contacted potential buyers for parts of its engineering business that’s largely based in the U.K., according to people familiar with the matter, who asked not to be identified discussing private information. The talks are at an early stage and there’s no guarantee of a deal, one of the people said.GFG declined to comment.It’s not clear exactly which assets he may be willing to sell. His Liberty Engineering Group Pte has assets in several countries including the U.K., France and United Arab Emirates, according to the Singapore entity’s financial report for the year ended March 2019, the latest available. The units include assets Gupta took over from administration, such as businesses that used to be part of Caparo Industries Plc in the U.K. and vehicle converter Durisotti in France.Gupta’s empire employs some 35,000 people worldwide, with steel and aluminum plants in the U.S., U.K., France, Romania and Australia. As he fights to stave off insolvency, he’s benefiting from soaring steel and aluminum prices.“I’m confident that we will achieve refinancing,” Gupta said in a podcast for employees earlier this month. “Because our business is so spread out across the world, and each business is different and separately funded, it takes time to get things done. But one by one we’ll get to all of them.”Still, he acknowledged that the future was bleak for some of his businesses, with the U.K. one of the “challenged spots within our alliance.” Some of GFG’s units in France were put in insolvency proceedings earlier this month, Bloomberg has reported.Last month, GFG asked the U.K. government for a 170 million-pound ($237 million) bailout, a request that was rebuffed. Business Secretary Kwasi Kwarteng told a parliamentary committee this month that it would be irresponsible to give taxpayers’ money to the group, describing it as “very, very opaque” and having “liabilities that nobody seems to have got to the bottom of.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Multinational bank and asset manager JP Morgan has published a note to investors stating that Ethereum is outperforming Bitcoin due to improvements in liquidity and a higher turnover on the public Ethereum blockchain.
(Bloomberg) -- The Argentine central bank’s fight against inflation is upending the local bond market and squeezing government finances as the country struggles to regain traction while the pandemic rages on.Long known as some of the world’s most prolific money printers, Argentine policy makers are cutting back on the largesse in an effort to curb inflation running at more than 40% a year. While the move toward orthodoxy has often been urged by economists, the timing is difficult. Slower expansion of the money supply over the past six months has cut liquidity and sapped demand for debt, pushing up interest rates and making it harder for the government to fund itself given its lack of access to overseas markets.The policy clash between the central bank and Treasury means the government has had difficulty raising pesos from recent sales in the local market, even as spending climbs ever higher to offset the economic effects of coronavirus lockdowns and appeal to voters before congressional elections set for October. Now, less than two years after Argentina emerged from its last default on local debt, investors are eyeing the situation with trepidation, with some increasingly concerned it isn’t sustainable over the long term.“There is an inconsistency between fiscal and monetary policy,” said Juan Manuel Pazos, the chief economist at TPCG Valores in Buenos Aires. He said a debt auction today, at which the government will seek to sell inflation-linked bonds and other securities as 123 billion pesos ($1.3 billion) of notes come due, will provide a test of investor demand.A central bank spokesman declined to comment. An Economy Ministry spokesman didn’t immediately reply to a request for comment.For years economists and international finance officials urged Argentina to get a handle on inflation by tightening the money supply and paring back government spending. While the U.S. and much of the developed world has gone decades without seeing significant price pressures even amid huge increases in the money supply and plenty of deficit spending, fear of inflation is so ingrained among Argentines after multiple currency and economic crises that any signs of trouble ahead tend to ring alarm bells.And to be sure, the 52% growth in Argentina’s money supply over the past year is still very high. But the slowdown in money printing has been drastic. The annual rate of expansion was as high as 81% in October.Meanwhile, President Alberto Fernandez’s goal of paring the budget deficit excluding interest payments to 4.2% of gross domestic product this year from 6.5% last year now seems like it will be hard to meet amid pandemic-related spending. Fernandez announced new aid measures in recent weeks, including extra payments for social-service beneficiaries and a one-time bonus for health-care workers. Last year, the deficit including interest payments totaled 8.5% of GDP.So with foreign markets effectively closed to Argentina and amid delayed talks with the International Monetary Fund, the country has no choice but to seek funding from the local bond market, and that’s been difficult.Investors rolled over the smallest percentage of maturing debt in nine months at an auction in early April, and the 51% pace of rollovers so far this month is on pace to be the lowest in more than a year. Traders are even avoiding notes that compensate holders for inflation -- pushing the interest rate on the securities to 1.9% this month from 0% in March.“The market is low in volume, with little liquidity,” said Federico Perez, who helps oversee 33.5 billion pesos at Mariva Asset Management in Buenos Aires. He says demand has been further weakened because the government is issuing new maturities, which investors fear will be even less liquid.Investors also see trouble on the horizon from the government’s increasing reliance on inflation-linked bonds. Since Fernandez took office in December 2019, the total amount of debt outstanding that compensates holders for consumer-price increases has tripled to 3.8 trillion pesos. Linkers now make up 74% of the local debt stock, up from 53% when Fernandez took over.If inflation continues to accelerate -- as it has for the past four readings -- it could help fuel a cycle of ever-expanding debtloads. There’s also some concern that Argentina could seek to manipulate inflation data to score political points and reduce its payouts, a practice the government of former President Cristina Fernandez de Kirchner, who is now vice president, was accused of during her time in office from 2007 to 2015.“The auctions are getting complicated and this can be seen in the rise in rates, both for the discount notes and for CPI instruments,” said Adrian Yarde Buller, the chief economist in Facimex, a brokerage in Buenos Aires. “The government will have to engineer a reduction in the fiscal deficit or raise the rate of economic growth.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
China's Huawei Technologies saw revenue fall 16.5% in the first quarter compared to a year earlier, hurt by a dip in sales after selling its budget smartphone unit Honor in November. "2021 will be a challenging year for us, but it's also the year that our future development strategy will begin to take shape," Huawei's rotating chairman Eric Xu said in the statement. The ban put Huawei's once lucrative handset business under immense pressure, prompting the sale of its Honor budget smartphone unit to a group of agents and dealers in November.
Apple announced that it could take a $3 billion to $4 billion hit due to the global chip shortage, but the iPhone will remain unscathed.
Cathie Wood's flagship Ark Innovation fund has allowed its stake in Tesla Inc, its largest holding, to slip below 10% this week for the first time in over a month. Tesla made up 9.7% of the Ark Innovation ETF as of Thursday, down from 10.9% a month ago, with a net sale of about 252,000 shares over that period, according to portfolio listings on the website of fund manager Ark Invest. The fund's remaining Tesla stake is worth $2.4 billion.
(Bloomberg) -- A year after Warren Buffett revealed he was unloading airline stocks as the pandemic took hold, Berkshire Hathaway Inc. shareholders are eager for his sense of what’s next for the conglomerate with more Americans emerging from lockdown.On Saturday, Berkshire’s chief executive officer will address shareholders via video-conference to conform with health guidelines, scrapping for a second year an arena event in Omaha, Nebraska, that typically attracted thousands of adoring fans. He’ll likely recount how the global crisis took a toll on some of the company’s wide-ranging businesses while bolstering some others.Investors will seek insights into the pulse of the U.S. economy from Buffett, whose company owns the BNSF railroad and has a stake in truck stop chain Pilot Travel Centers.“The first thing we’re going to be looking for is a demeanor on his part that should reflect a greater degree of confidence and visibility on the impact of the pandemic,” Cathy Seifert, an analyst at CFRA Research, said in an interview. At last year’s meeting, when uncertainty continued to plague businesses and markets, Seifert “had the sense that he was truly frightened,” she said.A representative for Berkshire declined to comment ahead of the meeting.Last year’s event was a modest affair with Buffett striking a subdued tone amid uncertainty from the pandemic, as he sat spaced apart on stage from his deputy Greg Abel. Buffett, 90, moved the meeting to Los Angeles this year, where his longtime business partner and Berkshire vice chairman Charlie Munger, who is 97, lives.While the billionaire investor could offer a unique perspective on how the economy is faring, investors have been largely in the dark recently about how he views the fallout from the Covid-19 crisis. His 15-page annual letter in February mentioned the pandemic only once: One of his furniture companies had to close for a time because of the virus, the billionaire noted on page nine.But some of his other businesses also felt the strain. The pandemic weighed on sales for retailers such as See’s Candies and party-goods supplier Oriental Trading Co. Precision Castparts, a maker of aerospace and energy industry equipment, was largely behind the $11 billion writedown Berkshire took last year when the virus slashed demand for flights. But Geico reported lower losses as shutdowns decreased the level of driving across the U.S. Kitchen-supply seller Pampered Chef posted higher earnings in 2020.“There’s a lot of opportunity for him to probably share some really interesting insights into the pandemic,” Jim Shanahan, an analyst at Edward D. Jones & Co., said in an interview. “He could probably talk about parts of the country that have had more robust recoveries to this point and parts of the country that are lagging in a way that some executives can’t do.”Whatever the commentary he delivers, Berkshire has been shaking things up among its investments since last year’s meeting. The company, which dumped airline stocks including shares in Delta Air Lines Inc. and Southwest Airlines Co. early in 2020 as the pandemic crushed travel, has been trimming its bank holdings over the past year in a major shift for a portfolio that had roughly 41% of its fair value concentrated in banks, insurers and financial firms at the end of 2019.When he addresses shareholders, another potential theme could be how businesses adjust as the recovery unfolds: With vaccines rolling out, large corporations are re-examining everything from customer demand to their return-to-office plans. JPMorgan Chase & Co. said this week that U.S. staff should expect to come back on a rotating basis in July. Other companies, including Mitsubishi UFJ Financial Group Inc., are considering ways to cut real estate footprints in regions such as the Americas.Other topics the meeting might address:Spending That CashBerkshire ended 2020 with more than $138 billion of cash, even after spending a record $24.7 billion on buybacks last year. The constantly swelling pile has been weighing on the conglomerate’s stock, with Berkshire Class A shares falling short of the S&P 500’s 102% price gain over the past five years.“We expect capital management will again be a key topic at this year’s annual meeting,” UBS Group AG analysts led by Brian Meredith said in an April 26 note to clients. They estimated that Berkshire repurchased about $5 billion of its shares in the first quarter.Buffett’s desire to snap up even more of Berkshire’s own stock has offered the billionaire investor another way to deploy capital, especially as the popularity of special purpose acquisition companies makes the environment for takeovers even more competitive. Earnings on Saturday should give investors a sense of how much money he spent on repurchases in the first three months of the year.Berkshire was able to strike a few deals last year. The company invested in five Japanese trading houses and purchased some natural gas assets from Dominion Energy Inc. But the conglomerate was foiled at the start of the pandemic when the federal government swooped in to help companies that might have otherwise turned to Berkshire as a safe haven.“There will be some questions about that, too, because if anything, there’s as much or more capital on the sidelines in competition with him than there was before,” Shanahan said, referring to Berkshire’s dealmaking. “The SPACs were kind of a new wrinkle.”Biden EraBuffett has been careful to tread lightly around political topics in recent years. While he has campaigned for candidates in the past, he kept mostly mum about last year’s election.With President Joe Biden’s newly released tax plan and infrastructure proposal now making the rounds, Buffett could weigh in on their potential impact both on the economy and on Berkshire in particular.Climate Change, DiversityBerkshire is facing two shareholder proposals at the meeting this year, one about climate change and the other about diversity and inclusion. Both seek to push the company to publish more information on its efforts on those fronts.The board is advising investors to vote against the proposals, while acknowledging that managing climate risks and addressing diversity are important issues. Buffett has long said that Berkshire’s decentralized approach -- where each subsidiary handles their own business with very few functions for the conglomerate -- makes producing multiple comprehensive reports or finding ways to report data in a uniform way for such varied businesses burdensome. Each unit should be addressing these risks individually, according to Buffett.The company is also contending with moves by two proxy advisory firms. Glass Lewis recommended withholding votes or voting against the election of audit committee chair Thomas Murphy, citing lack of climate change risk disclosure. Institutional Shareholder Services advised that votes be withheld for four board members because of ineffective oversight on compensation.”I don’t recall there ever being an issue with any of the proxy solicitation firms going against a slate of directors,” said Seifert. On the specific topics of climate change and diversity, “for Berkshire to turn a deaf ear and a blind eye to these to me, at best, looks tone deaf.”SuccessionBuffett routinely faces questions about succession given his age and length of tenure. But in 2018, he took a step toward addressing the matter by promoting Greg Abel and Ajit Jain to vice chairmen roles, alongside Munger. Both Abel and Jain will be at the meeting.One lingering question is Todd Combs’ role leading Geico. Combs, a portfolio manager alongside Ted Weschler, took on that job managing the auto insurer in a move Buffett said was temporary. Any update on his responsibilities could be key, Shanahan said.Stock MarketMany investors tune into Buffett’s annual meetings to hear his thoughts on the stock market. This year offers new themes he might address, after mania surrounding trading of GameStop Corp. and drama with Robinhood Markets Inc.Munger has criticized online brokers that attract inexperienced retail investors, saying they’re essentially offering gambling services. His comments in February also touched on firms that offer commission-free trading, which he called one of the most “disgusting” lies.“Robinhood trades are not free,” Munger said. “When you pay for order flow, you’re probably charging your customers more and pretending to be free. It’s a very dishonorable, low-grade way to talk. And nobody should believe that Robinhood’s trades are free.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Smartphone shipments at China's Huawei Technologies Co Ltd, once the world's biggest smartphone maker, halved in the first quarter in China, as U.S. sanctions choked its supply chain even as the overall smartphone market rebounded. China shipments fell to 14.9 million handsets in the quarter ended March from 30.1 million in the same period last year, according to research firm Canalys. Outside China, Huawei shipped 3.7 million units.
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