The 90-year-old Sage of Omaha sees US economy in super high gear

The 90-year-old Sage of Omaha sees US economy in super high gear
Berkshire Hathaway Chairman Warren Buffett said the US economy is faring better than predicted earlier in the pandemic. (Reuters)
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Updated 02 May 2021

The 90-year-old Sage of Omaha sees US economy in super high gear

The 90-year-old Sage of Omaha sees US economy in super high gear
  • Investor weekend scrapped for second year running
  • Holds $151 billion of stock in Apple and Bank of America

NEW YORK: Warren Buffett said on Saturday that Berkshire Hathaway Inc. is being lifted by a US economy faring far better than he predicted early in the coronavirus pandemic, though investor euphoria is making it hard to deploy cash.
Speaking at Berkshire’s annual meeting, Buffett said the economy has been “resurrected in an extraordinarily effective way” by monetary stimulus from the Federal Reserve and fiscal stimulus from the US Congress.
“It did the job,” Buffett said. “This economy, right now, 85 percent of it is running in super high gear.”
Buffett lamented how an influx of so-called special purpose acquisition companies and inexperienced investors hoping for quick riches have made markets feel like a casino, making it hard for Berkshire to deploy more of its $145.4 billion cash hoard.
But the 90-year-old retained his optimism for the future of the company he has run since 1965, including after he’s gone.
“We’ve seen some strange things happen in the world in the last year, 15 months,” Buffett said. “It has reinforced our desire to figure out everything possible to make sure that Berkshire is, 50 or 100 years from now, every bit the organization and then some that it is now.”
The annual meeting was held in Los Angeles, where Buffett joined Berkshire’s 97-year-old vice chairman Charlie Munger, to answer more than three hours of shareholder questions.
Greg Abel and Ajit Jain, Berkshire’s other vice chairmen and potentially successors to Buffett as chief executive, also fielded several questions.
Asked about their rapport, Jain said that they don’t interact as much as Munger and Buffett, but they talk every quarter about businesses they oversee.
Berkshire scrapped for a second year its annual shareholder weekend in its Omaha, Nebraska, hometown, an extravaganza that normally attracts around 40,000 shareholders.
But Saturday’s meeting, broadcast online on Yahoo Finance, was “kind of what you come to love about Berkshire,” said Steve Haberstroh, a partner at CastleKeep Investment Advisers in Westport, Connecticut. “It’s a little bit less about learning new things and more about being reminded about the old things.”
Many of Berkshire’s dozens of operating units, which include Geico car insurance and the BNSF railroad, have been rebounding as anxiety over COVID-19 lessens, more people get vaccinated, stimulus checks are spent, business restrictions are eased and confidence about the economy grows.
Gross domestic product grew at an annualized 6.4 percent rate from January to March, according to an advance government estimate. Some economists project the economy will grow in 2021 at the fastest clip in nearly four decades.
Buffett conceded that the recovery made his decision last year to exit stakes in the four major US airlines — American, Delta, Southwest and United — appear ill-timed.
Munger, meanwhile, downplayed concern that Congress and the White House might raise the corporate tax rate to 25 percent or 28 percent, saying it wouldn’t be “the end of the world” for Berkshire.
Shareholders rejected proposals requiring Berkshire to disclose more about its efforts to address climate change and promote diversity and inclusion in its workforce.
But both proposals received about one-quarter of the votes cast, suggesting greater discontent than Berkshire shareholders historically demonstrate. Buffett, who controls nearly one-third of Berkshire’s voting power, opposed both proposals.
Saturday’s meeting came after Berkshire said first-quarter operating profit rose 20 percent to about $7 billion, while net income including investments totaled $11.7 billion..
But there were signs Berkshire has grown more cautious about the markets.
While Berkshire repurchased $6.6 billion of its own stock from January and March, the pace of buybacks slowed.
Berkshire also said it sold $3.9 billion more stocks than it bought, though it still owned $151 billion of stock in just two companies, Apple Inc. and Bank of America Corp.
Buffett acknowledged that low interest rates made Berkshire’s $140 billion of insurance “float,” which it uses for investing and acquisitions, less valuable.
He also said the growth of SPACs, which take private companies public, has made buying whole companies pricey for Berkshire, which hasn’t made a major acquisition since 2016.
“It’s a killer,” Buffett said, referring to SPACs. “We’ve got probably $70 or $80 billion, something like that maybe, that we’d love to put to work, ... but we won’t get a chance to do it under these conditions.”
Berkshire’s leaders also heaped criticism on trading apps such as Robinhood, with Buffett saying they encourage a “gambling impulse” and Munger saying it was “just god-awful that something like that would draw investment from civilized man and decent citizens. It’s deeply wrong.”
Buffett stood by Apple, calling the iPhone maker an “extraordinary business” with “indispensable” products, and admitted he erred by selling a small percentage of Berkshire’s shares late last year.
As the meeting concluded, Buffett said the odds were “very, very good” that next year’s meeting would include shareholders again.
“We really look forward to meeting you in Omaha,” he said.


Europe slaps anti-dumping duties on MEG Saudi petchems product

Europe slaps anti-dumping duties on MEG Saudi petchems product
Updated 3 min 10 sec ago

Europe slaps anti-dumping duties on MEG Saudi petchems product

Europe slaps anti-dumping duties on MEG Saudi petchems product
  • The anti-dumping duties on MEG imports from Saudi Arabia are estimated at 11.1 percent

DUBAI: The European Commission (EC) announced proposed anti-dumping duties on monoethylene glycol (MEG) imports from Saudi Arabia and the US, Argaam reported.
The anti-dumping duties on MEG imports from Saudi Arabia are estimated at 11.1 percent, the financial news site reported, citing a document.
The companies affected by the new levy include Yanbu National Petrochemical Co. (Yansab), Saudi Kayan Petrochemical Co. (Saudi Kayan), Eastern Petrochemical Co. (Sharq), Saudi Yanbu Petrochemical Co. (Yanpet), Arabian Petrochemical Co. (Petrokemya), and Jubail United Petrochemical Co. (JUPC).
The original anti-dumping probe into Saudi and US MEG exports began in October 2020, Argaam said. It followed a petition from European ethylene glycol producers, which represent a quarter of total producers.
In December 2019, India also started an anti-dumping probe into imports of MEG from Saudi Arabia, Kuwait, Oman, the UAE, and Singapore, Argaam said.
Monoethylene glycol is used to make polyester fibers and film as well as engine coolant.


Jabal Omar losses widen on hotel closures in Makkah

Jabal Omar losses widen on hotel closures in Makkah
Updated 18 min 9 sec ago

Jabal Omar losses widen on hotel closures in Makkah

Jabal Omar losses widen on hotel closures in Makkah
  • Construction work extends across two square kilometers where some 40 towers are at various stages of development.

DUBAI: Jabal Omar Development Co. reported a widening first-quarter loss as hotels in Makkah were forced to close amid the pandemic.
The developer that is spearheading the vast redevelopment of land around the Grand Mosque in the holy city, said losses widened by 45 percent to SR345.3 million ($92 million). Sales fell 89 percent to SR21.6 million, it said in a stock exchange filing on Tuesday.
It blamed the performance on the “significant decline in revenues due to the decrease in the occupancy rate of hotels and commercial malls.”
At the same time its financial charges rose due to the non-capitalization of borrowing costs, it said in the filing.
Saudi Arabia is investing billions of dollars to develop hotels, malls and other real estate in Makkah to accommodate the expected surge in pilgrims.
Current construction work extends across two square kilometers where some 40 towers are at various stages of development.
They are expected to accommodate some 4,000 guests on any normal day, and up to 100,000 visitors on any given day during the Hajj and Umrah seasons.


Arab News publisher SRMG rebrands to Saudi Research and Media Group

Arab News publisher SRMG rebrands to Saudi Research and Media Group
Updated 22 min 50 sec ago

Arab News publisher SRMG rebrands to Saudi Research and Media Group

Arab News publisher SRMG rebrands to Saudi Research and Media Group
  • The group owns several companies in publishing and media, including Saudi Research and Publishing Company and Asharq News Services

DUBAI: The Saudi Research and Marketing Group, the company which publishes Arab News, has rebranded to Saudi Research and Media Group.
The Tadawul-listed company completed the change on Monday, according to a bourse filing, but the move was first approved in April.
The group owns several companies in publishing and media, including Saudi Research and Publishing Company and Asharq News Services.
The rollout of Saudi Vision 2030 reforms, a booming entertainment sector and the opening of the Kingdom to foreign tourists are all contributing to the Kingdom’s rapidly expanding media landscape.


No new fossil fuel projects for net-zero: IEA

No new fossil fuel projects for net-zero: IEA
Updated 26 min 50 sec ago

No new fossil fuel projects for net-zero: IEA

No new fossil fuel projects for net-zero: IEA
  • The IEA predicted a “sharp decline in fossil fuel demand” in the next three decades as well as a 2040 deadline for the global energy sector to achieve carbon neutrality

PARIS: All future fossil fuel projects must be scrapped if the world is to reach net-zero carbon emissions by 2050 and to stand any chance of limiting warming to 1.5C, the International Energy Agency said Tuesday.
In a special report designed to inform negotiators at the crucial COP26 climate summit in Glasgow in November, the IEA predicted a “sharp decline in fossil fuel demand” in the next three decades as well as a 2040 deadline for the global energy sector to achieve carbon neutrality.
It called for a rapid and vast ramping up of renewable energy investment and capacity, which bring gains in development, wealth and human health.
IEA Executive Director Fatih Birol said the roadmap outlined in the report showed that the path to global net-zero by 2050 was “narrow but still achievable.”
“The scale and speed of the efforts demanded by this critical and formidable goal — our best chance of tackling climate change and limiting global warming to 1.5C — make this perhaps the greatest challenge humankind has ever faced,” he said.
Built using its industry network and energy modelling tools, the IEA’s roadmap lays out more than 400 milestones on the path to net-zero by mid-century.
These include “no new oil and gas fields approved for development” beyond projects that are already committed as of 2021.
It predicts “a sharp decline in fossil fuel demand, meaning that the focus for oil and gas producers switches entirely to output — and emissions reductions — from the operation of existing assets.”
The roadmap also said that sales of new internal combustion engine passenger cars would have to end in 2035 and energy efficiency would need to improve four percent annually this decade — around three times faster than the current trajectory.
With annual additions of solar and wind power reaching 630 and 390 gigawatts respectively by 2030, the IEA said that investment in renewables could put global GDP four percent higher by 2050 than it would be based on current trends.
By 2050, it said that renewables capacity and greater efficiency would see global energy demand drop about eight percent compared to today, even as two billion more people gained access to electricity.
Investment totalling around $40 billion a year — around one percent of current energy sector investment — is projected to hook hundreds of millions up to the global grid.
The IEA said that clean energy and access to clean cooking solutions could cut the number of premature deaths by 2.5 million a year by 2050.
Overall, fossil fuels are set to account for only around a fifth of energy supply by 2050, down from almost four fifths currently, the report showed.
Dave Jones, global lead at the energy think tank Ember, said Tuesday’s assessment was “a complete turnaround of the fossil-led IEA from five years ago.”
“This is truly a knife into the fossil fuel industry,” he said.


Under a scenario where all current national net-zero pledges are met on time and in full, the IEA outlined a changing energy mix in the coming decades.
Oil demand is predicted to plateau at around 104 million barrels a day just after 2030, the report showed.
Gas use is likely to increase significantly in the stated pledges pathway, as is nuclear.
It also said that all inefficient coal power plants needed to close by 2030 in order to achieve net-zero by 2050.
“This will be a huge step-up in ambition for so many countries, especially China,” said Jones.
“India and South Africa will need international assistance to meet this goal.”


While most of the global CO2 reductions until 2030 in the net-zero pathway come from “technologies available today,” the IEA said that around half of reductions by 2050 would be provided by “technologies that are currently only in demonstration or prototype phase.”
These include direct air capture and storage of CO2 from the atmosphere, which it said could be “particularly impactful.”
Teresa Anderson, climate policy coordinator at ActionAid International, said that the IEA’s net-zero plan still relied too heavily on as-yet untested technology to remove carbon pollution.
“Any role of future technologies should be to replace fossil fuels, not justify their use,” she told AFP.
“Given all the uncertainties and risks around long-shot technologies and land availability for bioenergy, the IEA would do better to focus on bringing emissions down to real zero, rather than using ‘net’ zero accounting to pander to the fossil fuel industry’s fears of losing profits.”


Stocks fall as tech shares weigh, gold climbs

Stocks fall as tech shares weigh, gold climbs
Updated 18 May 2021

Stocks fall as tech shares weigh, gold climbs

Stocks fall as tech shares weigh, gold climbs
  • Amid a flight to safety, the precious metal is seen as a hedge against rising inflation

NEW YORK: Stock indexes were lower globally on Monday with technology shares on Wall Street falling, while US Treasury yields traded little changed even after a report showing the highest prices ever paid in a May manufacturing survey for New York state.

Concerns over inflationary pressure helped to lift gold prices to their highest in more than three months, however.

The Empire State Manufacturing Survey, produced by the New York Fed, showed the prices paid index rose to a record 83.5, the highest since the data series began in 2001, said Tom Simons, money market economist at Jefferies & Co.

Wall Street’s declines follow the S&P 500’s biggest one-day jump in more than a month on Friday.

While the week is expected to be relatively quiet for economic data, investors will be anxious to see minutes on Wednesday from the Federal Reserve’s policy meeting last month which could shed more light on the policymakers’ outlook of an economic rebound.

“The volatility has picked up because a lot of the good news has been priced in, and last week we finally saw fears of inflation,” said Greg Marcus, managing director, UBS Private Wealth Management.

The spread of the coronavirus was also a drag in some markets, with Singapore reporting the highest number of local infections in months and Taiwan seeing a spike in cases.

The Dow Jones Industrial Average fell 120.02 points, or 0.35 percent, to 34,262.11, the S&P 500 lost 20.43 points, or 0.49 percent, to 4,153.42 and the Nasdaq Composite dropped 121.39 points, or 0.9 percent, to 13,308.58.

The pan-European STOXX 600 index lost 0.05 percent and MSCI’s gauge of stocks across the globe shed 0.26 percent.

In the Treasury market, the yield on benchmark 10-year US Treasury notes was up 1 basis point at 1.645 percent, below a spike to 1.77 percent in late March.

The dollar was steady near recent lows as new restrictions in Asia to contain COVID-19 supported safe-haven currencies, while bitcoin extended its slide.

The dollar index fell 0.116 percent, with the euro up 0.12 percent at $1.2154.

Bitcoin dropped to a three-month low after Tesla Inc. boss Elon Musk suggested over the weekend that the electric automaker may have already sold some of its holdings in the digital currency.

Oil prices edged higher. Brent crude rose 56 cents, or 0.8 percent, to $69.27 a barrel, and West Texas Intermediate (WTI) crude was up 63 cents, or 1 percent, at $66.

In China, meanwhile, retail sales rose 17.7 percent in April from a year earlier, although they fell short of forecasts for a jump of 24.9 percent, while industrial output matched expectations with a rise of 9.8 percent.

Gold prices climbed to their highest in more than three months on Monday. Spot gold jumped 1.3 percent to $1,866.45 per ounce, after hitting its highest since Feb. 1 at $1,867.15. US gold futures gained 1.5 percent to $1,866.40.

“There’s a flight to safety out of the equity markets ... and anticipation that we’re going to continue to see inflation numbers trend much stronger going forward,” said Jeffrey Sica, founder of Circle Squared Alternative Investments.

“The Fed is going to continue to hold on to the notion that the increase in inflation has to do more with the reopening of the economies than to do with any real inflation,” Sica said.

Gold is seen as a hedge against rising inflation. On a technical note, the gold market has breached the 200-day moving average and that’s supporting prices further, said Eli Tesfaye, senior market strategist at RJO Futures.

Elsewhere, platinum rose 0.7 percent to $1,234 per ounce.