The legendary investor has been a net seller of stocks for seven consecutive quarters. His Berkshire Hathaway sold 11 stocks in the second quarter of 2024.
It would seem Uncle Warren is raising cash for future bargains in the stock market.
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Consumer products companies continue to report earnings challenges as consumers continue to be more selective on spending.
Rate cuts should help but may take months to get results. Two consecutive qtrs of declining GDP – definition of recession – seems at least 6 months away. Will recovery kick in before that happens? Ie soft landing? Markets seem to think so.
Falling consumer stocks should give buying opportunities.
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GDP is increasing so at this point in time a recession does not seem to be in the cards. It went to 3.0 percent from 1.4 percent in the first quarter.
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Call me cynical, but the way government numbers are revised well after the news cycle has ended, you might not know you’ve had 2 consecutive declining quarters until the 3rd one.
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That’s true, but the GDP numbers are revised by usually less than 0.1%. GDP growth in Q2 was 3.0%.
Subjectively, the business headlines over the past few months have been positive. A number of companies have reported record earnings this year (Exxon, Alphabet, American Airlines, etc.). Earnings for the S&P 500 as a whole are up nicely this year.
Similarly, unemployment numbers are still bouncing around down near the bottom of historical averages.
If this is a recession, it sure doesn’t feel like it.
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That’s because 3% GDP growth is a long ways from a contracting economy. The Atlanta Fed is projecting a 3.1% growth rate for the quarter just ending.
I would focus more on the EU and China.
DB2
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I can only go by the numbers, according to a lot of cynics out there we have been going to have a recession for 2 years now and it hasn’t shown it’s head yet. A lot of people making money while the people waiting for a crash have been sitting in cash.
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Especially China. I suspect they will start pumping cash into their economy soon.
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NASDAQ does not think so, so why worry?
The world is in the midst of great upheavals, in war, in trade, and in technology. While it might be troubled waters the outcomes look good to me.
The Captain
o o o o o o o o o o o o o o o
Two days ago, while exploring Porto, I stumbled upon Automobile Row. All the most famous brands were there.
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Another nothing burger. Recessions during demand side econ periods are very shallow. Not worth writing home about.
The market though can swing more widely. We will probably have some seasonality in the new year. The press will light up with scary claims.
If GDP goes down in the 4th quarter you can thank the longshoremen.
DB2
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Instead of making a vacuous claim explain that.
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I thought it was obvious. In case you haven’t been following the news, the union is set to go on strike at midnight. Closing all the ports from Maine to Texas can cause massive disruptions to supply chains and take a long time to recover.
We’ll see how long the strike lasts.
DB2
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Does that worry you DB2?
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Yes, they are very concerned that holiday sales might be limited by inadequate inventory if the strike goes on very long.
I think toy show is still in May. Goods are ordered and manufactured over the summer and shipped in time for the holidays. Those containers are probably already in transit, but noone wants to carry the inventory. So arrival abt Nov 1 is probably ideal.
Maybe they anticipated the strike and decided to order early. Or already are developing alternative plans. Land on the West coast (not on strike) and across country by rail–serving at least the midwest and points west.
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Of course, it is more than toys. Food (especially refrigerated items) pharmaceuticals (air freight might help here) auto parts (probably a biggie) autos, plastic resins, precision instruments, computers, fabricated steel, furniture, et cetera, et cetera.
DB2
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That is not the official definition of recession. That is the rule of thumb definition of recession. The official definition of recession is when NBER declares a significant, widespread, and prolonged downturn in economic activity…
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‘I will cripple you’ — dockworker’s union vows to shut down U.S. economy with strike
https://www.marketwatch.com/story/i-will-cripple-you-dockworkers-union-vows-to-shut-down-u-s-economy-with-strike-70780b57?mod=home-page
This was the warning given by the International Longshoremen’s Association’s chief negotiator, Harold Dagget, in September…
The ILA chief negotiator, who first joined the dockworkers union in 1967, said the walkouts over pay and job security will slowly lead to a shutting down of America’s economy that will eventually lead to layoffs if shipping firms fail to meet the strikers’ demands.
“First week, be all over the news every night, boom, boom. Second week, guys who sell cars can’t sell cars because cars ain’t coming in off the ships, they get laid off. Third week, malls start closing down, they can’t get goods from China, they can’t sell clothes.”
“Construction workers get laid off because the materials aren’t coming in. The steel’s not coming in. The lumber’s not coming in. They lose their jobs. Everybody’s hating the longshoremen now because now they realize how important our jobs are.”
DB2
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