I don’t know what to make of this:
NEW YORK (Reuters) -JPMorgan Chase & CO CEO Jamie Dimon said on Thursday the bank is convening weekly meetings to discuss the implications of a potential U.S. default, according to an interview on Bloomberg TV.
That bank’s so-called “war room” will probably start daily meetings on May 21, then ramp up to three times a day if the standoff over the debt limit drags on, he said.
Does Dimon know something that the rest of us don’t?
YES! He knows who is minions in congress are and they are telling him exactly what he needs to hear.
Who said that Dimon’s war room was a defensive room?
Cheers
Qazulight
Qaz,
Nonsense. It is a defense war room.
Open up the arrows on this page to see the “Cash and Due From Banks”. Meaning JPM is possibly a house of cards.
The derivative position is not listed on the balance sheet. I have not heard or read why the accounting changed in the last three years. Might have something to do with the pandemic.
Check out AR v AP…horrifying.
One thing that is interesting Buffett has cash but much less than most other years. He can not afford $5 billion here and $5 billion there. He wont be bailing out the banks.
Frankly JPM will hold on by the skin of their teeth. If they hold on. They are too big to fail. Meaning they are too big for Buffett to save.
Leap,
Your comment regarding Buffett having much less cash this year is completely false, assuming you are speaking about Berkshire. 130.6 billion of cash and equivalents is similar, if not higher, than most recent quarters. You tend to throw out “facts” like this quite frequently. It really hurts your credibility.
Jk
Qaz,
Nonsense. It is a defense war room.
Ok, so Leap says it is a war room.
I can see that, but I in no way KNOW that. What is more, I am convinced that congress is bought and paid for. So, it only follows that a banking crisis brought on buy congress was ordered buy the ones that own congress. That being the more obvious scenario, congress was ordered to bring the crisis on by the ones that own congress. And it follows that if congress was ordered to bring on a crisis then there is profit to be made from the crisis.
While the FED seems to have some independence from both banks and from politicians, there can be a case made that the banking crisis brought on by the rapid change in interest rates was not a power grab by the largest banks. On the other hand, the banking crisis brought on by the FED did move power from smaller banks to larger banks, so the suggestion that even the FED is controlled by the large corporations, just through a different non political mechanism, seems to have merit.
If this completely man made crisis is not resolved at the last hour and the U.S. debt defaults, then look for the winners and losers.
While the resulting losses are unknown and reeks of foolishness, one must remember this tenant from
The Basic Laws of Human Stupidity written by the Italian economist Carlo Cipolla.
“A stupid person is one who causes losses to another person or a group of people while they gain nothing or may even suffer losses.”
Cheers
Qazulight
Jk,
You would need to correct Yahoo finance. I got my information there on the balance sheet as published by BRK in 12/2022.
It is no where near $130.6 billion in cash.
Where are the cash equivalents? The AP are slightly higher than the AR in total.
Jim people are just going to take your comments about me as unreasonable. You are outdated. It will be the same old drill someone gets it wrong and does not come back to the board and admit it. I am one of the few people who admits when I am wrong. If you can find $130 billion I will admit it. If you count AR then you must count AP.
Jim there are a handful of people here who do very little due diligence of their own. Congrats on your six likes. Sarcasm
Folks lets hold a higher standard than that.
It is not just Yahoo finance.
Google result
How much liquid assets does Berkshire Hathaway have?
Berkshire Hathaway cash on hand for 2022 was $35.811B, a 59.39% decline from 2021.
Berkshire Hathaway Cash on Hand 2010-2023 | BRK.B | MacroTrends.
Berkshire Hathaway cash on hand from 2010 to 2023. Cash on hand can be defined as cash deposits at financial institutions that can immediately be withdrawn at any time, and investments maturing in one year or less that are highly liquid and therefore regarded as cash equivalents and reported with or near cash line items.
Adding…
Jim, I was assuming since you have ‘expertise’ in BRK you know this…but then I thought you have little to no expertise on BRK. So I will add it.
BRK has been losing money. Between operations and other metrics you will get all sorts of results but basically BRK is losing money.
Qaz,
In the last few years Buffett made some sort of comment about the banks that I can not do any justice to. I think he was asked about Wells. He MIGHT have said something to the effect that in the long run banks are a bad bet. Like I said I am not doing just to this. The interview was a discussion of his bailing out the banks last time.
NOTE he was not talking about the returns he had from bailing out the banks. He was not saying his returns in hindsight were bad. Not at all.
He was forward looking to put it one way unenthusiastic. He was also just out of Wells around that time and more into BAC. He sort of said he was done buying banks but I am going to say I am iffy on this because I want to be careful about putting words in Buffett’s mouth.
My take on this current set of problems any longer term wins for the banks will be modest and poorer returns.
Over the long haul rates will go higher. Inflation will go higher and capital will decline.
If institutions are playing the very long game banks are a poorer bet.
Going by JPM financials the cash due from other banks is in some part going to dry up. That figure on the balance sheet today wont be very trust worth tomorrow. JMO But more than my opinion it has become higher risk.
You know vastly less than you think you know. Read the 10q
(Barron’s article):
Berkshire’s total cash investments hit $130 billion at the end of March, more than a $1 billion higher than at year-end.
(Wall Street Journal article):
Meanwhile, Berkshire ended the quarter with $130.6 billion in cash and cash equivalents, up slightly from around $128.6 billion at the end of 2022.
Your prowess as a financial reporter leaves much to be desired.
When rates were near-zero, companies with lots of cash often just left it as cash, literal cash in an account somewhere, or solely in very short-term instruments that are also called “cash” for balance sheet purposes. But now that rates are more meaningful, they will invest their cash into various instruments that may or may not be classified as cash, even though effectively, over the periods of time the companies may need the money, it can be treated as “cash”.
So it’s all still “cash” for discussion purposes.
Berkshire Hathaway cash on hand from 2010 to 2023. Cash on hand can be defined as cash deposits at financial institutions that can immediately be withdrawn at any time, and investments maturing in one year or less that are highly liquid and therefore regarded as cash equivalents and reported with or near cash line items.
Goof show me where this is wrong?
This is pretty much what the balance sheets say.
Goofy and Jim I will eat some crow over the $130 Billion. My apologizes for not jotting the j.
But you will need to reconcile what Buffett himself is saying in Omaha on the CNBC video of him. Buffett is saying the assets come from liabilities even though he and BRK are rare among US corporations to think that way.
Does Berkshire Hathaway have long term debt? Google result
Berkshire Hathaway Total Long Term Debt (Quarterly): 122.74B for Dec. 31, 2022.
Yes BRK has short term investments…but you have to look to their liabilities as to why they have assets at all according to Buffett.
Borrowing $122.74 B to have $130 B in short term investments and some actual cash? Okay now! And that is Buffett’s more intelligent take. He talks about liabilities in the video just before he talks his cash position. Pay attention.
The context of this discussion is important to us if we want to stay on topic. Buffett wont en masse bail out the banking system this go around if the system fails. He might cherry pick a few positions that is up to him but the system wont lean on him this time. Also JPM is too big to fail and too big for Buffett to bail out.
Qaz,
Thanks for posting this link.
Very humorous and quite witty. And, as with all great humor and wit, it contains a large element of truth.
Of course, along with Cipolla’s Basic Laws of Human Stupidity, we shouldn’t forget Ron White’s basic tenet about this subject:
“You can’t fix stupid.”
(snip)(snip) FIXED !!!
GAAP accounting rules include unrealized gains/losses from the stock portfolio. If you exclude those (which is the logical thing to do) and look at operational earnings, BRK is printing money. Set a record in 2022, in fact.
The problem with doing that as an insurance company, those gains and losses are to offset a liability. Not entirely, I get that it is not nearly that simple. But with a major insurer you can not exclude that.
You think Buffett really excludes all of that? He wont take a short cut in the accounting.
The economy is not centrally planned or controlled.
For such an imperfect economy it is ultra rich.
I am not claiming to know much. I am claiming to have a feel for the books at a glance. Meaning I agree with Buffett that his cash and cash equivalents as an asset are created by a liability. Meaning he has around $26 B in cash as my resource said. He is not going to risk spending anywhere near $130 B in a crisis to pick up properties on the cheap.
The discussion hinges on Buffett cleaning up a banking crisis. He does not have the money other to make a two or three investments in the banks. Again that makes your $130 B nonsense. Buffett is calling it a liability. See Goofy’s linked CNBC video.
You are throwing the $130 B number in there like it is magic.
Goofy you quoted this. I am right that his BRK’s cash position is in the $30 B area. Odd then you proved he had cash equivalents. You also proved BRK has net negative resultant if you take into account longer term liabilities.
Find BRK’s long term debt and subtract his cash equivalents. See for yourself. Makes BRK’s actual cash position even smaller if it was paid in full as of today.
Buffett sounds like he wants to steer clear of more banking shares last I heard him on the issue.
Since Jim and Goofy know more than me. Why does BRK have so much debt? What were they spending it on? Would they sell their cash equivalents in your opinion to buy equities and why?
That is a more interesting conversation. The contest to see whose is bigger is getting old.
Remember how Buffett works. He looks at companies that are significantly under-valued in the current market AND have long-term viability. So he has an idea of what he wants. Some years ago, BH had $114B in cash then (+equivalents) to invest. It would not surprise me if he had more now–because “cash is king” when buying a company. Particularly attractive to the owners when the current management stays and runs the business for BH. Buffett does NOT want to get involved in operations at all. He is looking at the cash throw-off (i.e. profit paid to BH) the business can do over time.
Sure you can. It isn’t actually a gain or a loss until it is realized. And this is a fairly recent change to GAAP accounting by the way. Like last three or four years, IIRC.
In the annual letter he said straight up he excludes it and he recommended everyone else should too.