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Warren Buffett sees ‘hot’ economy with rampant inflation

(Bloomberg) – Warren Buffett delivered a clear verdict on Saturday on the state of the US economy as it emerges from the pandemic: “It’s almost a buying spree,” the CEO of Berkshire Hathaway Inc. said during of the conglomerate’s annual conference. meeting, which took place virtually from Los Angeles. “People have money in their pocket and they pay higher prices,” he said. Buffett attributed the faster-than-expected recovery to swift and decisive bailouts from the Federal Reserve and the U.S. government, which helped revive 85% of the economy. in “super high speed,” he says. But as growth returns and interest rates remain low, many – including Berkshire – are increasing prices and there is more inflation “than people would have anticipated six months ago,” said he declared. partner Charlie Munger for this year’s reunion. Munger did not attend last year’s meeting in Omaha, Nebraska – Buffett’s hometown – due to closures across the country. Some shareholders were relieved to see the duo answer questions together again. “I really feel that Charlie and Warren have shown their usual and incredible level of sharpness and intellectual energy,” said James Armstrong, who manages assets including Berkshire shares as chairman of Henry H. Armstrong Associates. Buffett and Munger have spent hours answering questions, economics, climate and diversity, the PSPC boom, taxes and inheritance. Here are the facts: Climate pressure: Berkshire has faced pressure from two shareholder proposals, one to improve transparency related to its efforts on climate change. The topic had to be a feature of the meeting – and it was. When asked about the proposals, Buffett stuck to his previous position. The moves to produce big diversity and climate reports for its industries ranging from energy to railways were, he said, “absurd.” The proposals were subsequently rejected and Buffett was also asked about Berkshire’s stake in oil and gas producer Chevron Corp., which he revealed earlier this year. Buffett said he had “no qualms” about his ownership in the business, which he said had benefited the company in many ways. While acknowledging that the world is moving away from hydrocarbons, the people at the ends of the two arguments are “a little crazy,” he said. Greg Abel, chairman of Berkshire Hathaway Energy, called climate change a “material risk”. He added that they were setting targets and spending $ 18 billion over 10 years on transmission infrastructure Killer SPAC: Buffett warned investors Berkshire may not have much of a chance to strike deals in the middle the boom in special purpose acquisition companies that have taken hold of the market over the past year. “He’s a killer,” Buffett said of the influence of the PSPC companies on Berkshire’s ability to find companies to buy. “It won’t last forever, but that’s where the money is now, and Wall Street is going where the money is.” Buffett, 90, also spent part of the Berkshire annual meeting on Saturday discussing the recent boom in retail and day trading. A lot of people have entered the stock market’s “casino” over the past year, he said. He added that antitrust laws and tax policy could make a difference for the company, but the new tax laws would not change its no-dividend policy. Estate: Buffett and Munger, 97, answered the majority questions at Saturday’s meeting, but their two main assistants Abel and Ajit Jain, who runs the insurers, also shared the stage. Investors were able to take a closer look at the couple who are seen as the best candidates for the job, with Munger dropping a small mention of the post-Buffett years that sparked speculation on social media about the most likely candidate to succeed to Buffett. The CEO stressed that decentralization does not work everywhere because it requires a certain type of culture that companies must have. “Yes, but we do,” insisted Munger. “And Greg will keep the culture.” Abel has long been considered the best candidate to replace Buffett, especially when he was promoted to vice president overseeing all non-insurance operations, giving him a wide range of responsibilities, including oversight of the BNSF railroad and energy sector. Errors: Buffett offered some mea culpas at Saturday’s meeting. He noted that the sale of certain shares of Apple Inc. last year was a mistake and even said that Haven, the healthcare company with JPMorgan Chase & Co. and Amazon.com Inc., thought it could. tackling the “tape worm” of American health care. “It was probably a mistake,” Buffett said of those sales of Apple shares last year. Berkshire still held an estimated $ 110 billion stake in the iPhone maker at the end of March. “Actually, Charlie, in his usual low-key way, let me know that you also thought it was a mistake,” he told Munger, who shared the scene with him. released its first quarter results, giving investors a plunge into the 19.5% operating profit gain during the period. Berkshire ended the quarter with a near-record $ 145.4 billion in cash, as he continued to generate funds faster than Buffett could deploy. But Buffett also stopped withdrawing some levers of capital deployment during the period. It repurchased just $ 6.6 billion of Berkshire’s own shares, below the record $ 9 billion set in previous quarters, and ended up with the second-highest level of net share sales in the first trimester in nearly five years. Please visit us at bloomberg.com Subscribe now to stay ahead with the most trusted source of business news. © 2021 Bloomberg LP


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