Billionaire Warren Buffett said Monday that while the U.S. economy still looks healthy, it isn’t as robust as it was even half a year ago thanks to headwinds like the Trump administration’s trade war and the burgeoning coronavirus.
“It’s strong, but a little softer than it was six months ago, but that’s over a broad range,” Buffett told CNBC’s Becky Quick in a “Squawk Box” interview. “You look at car holdings —rail-car holdings, moving goods around. And there again, that was affected by the tariffs, too, because people front-ended purchases, all kinds of things.”
“Business is down but it’s down from a very good level,” added the chairman and CEO of Berkshire Hathaway, speaking from the conglomerate’s headquarters in Omaha, Nebraska.
The “Oracle of Omaha” said that the Trump administration’s tit-for-tat trade war and, increasingly, the coronavirus threaten corporate America’s bottom line.
“Tariffs — the tariff situation was a big question mark for all kinds of companies. And still is to some degree. But that was front and center for a while. Now, coronavirus is front and center,” he said.
During the interview, Buffett pointed to several macroeconomic headwinds that when combined, appear to have weighed on U.S. growth over the last year.
Fourth-quarter GDP growth in the U.S. was 2.1% and 2.3% for 2019, the slowest year of growth in three. That number is expected to slump further in the first quarter of 2020 due to the impact of Boeing’s 737 Max crisis and the impact of the novel coronavirus.
Buffett said several Berkshire businesses were feeling an impact from the deadly virus, which has now spread beyond China and threatens to disrupt the global economy.
“We have maybe 1,000 Dairy Queen franchises in China … [and] a great number of them are closed. But the ones that are open aren’t doing any business to speak of,” Buffett said. “I’ll guarantee you that a very significant percentage of our businesses one way are affected by it. But they’re being affected by a lot of other things, too.”
“I mean our much bigger holding is Apple. We own 5.6% of Apple and the company came out and said that [the virus is] affecting not only its stores but all kinds of things, supply chains,” he added. “I find that a certain number of our companies have supply chain arrangements that are being affected by this.”
Buffett’s comments on Monday came amid reports that the coronavirus outbreak in countries outside China has worsened, especially South Korea and Italy, which reported a spike in the number of confirmed cases in recent days. South Korea raised its coronavirus alert to the “highest level” over the weekend, with the latest spike in numbers bringing the total infected there to more than 750.
Despite these worries, Buffett did say that he was a net buyer of stocks for the moment and that he still recommends buying equities over the long term.
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(Bloomberg) — The head of the International Monetary Fund warned the US that the global economy is closely watching interest rates and industrial policies given the potential spillovers from the world’s biggest economy and reserve currency.
“All eyes are on the US,” Kristalina Georgieva said in an interview on Bloomberg’s Surveillance on Thursday.
The two biggest issues, she said, are “what is going to happen with inflation and interest rates” and “how is the US going to navigate this world of more intrusive government policies.”
The sustained strength of the US dollar is “concerning” for other currencies, particularly the lack of clarity on how long that may last.
“That’s what I hear from countries,” said the leader of the fund, which has about 190 members. “How long will the Fed be stuck with higher interest rates?”
Georgieva was speaking on the sidelines of the IMF and World Bank’s spring meetings in Washington, where policymakers have been debating the impacts of Washington and Beijing’s policies and their geopolitical rivalry.
Read More: A Resilient Global Economy Masks Growing Debt and Inequality
Georgieva said the IMF is optimistic that the conditions will be right for the Federal Reserve to start cutting rates this year.
“The Fed is not yet prepared, and rightly so, to cut,” she said. “How fast? I don’t think we should gear up for a rapid decline in interest rates.”
The IMF chief also repeated her concerns about China devoting too much capital and labor toward export-oriented manufacturing, causing other countries, including the US, to retaliate with protectionist policies.
China Overcapacity
“If China builds overcapacity and pushes exports that create reciprocity of action, then we are in a world of more fragmentation not less, and that ultimately is not good for China,” Georgieva said.
“What I want to see China doing is get serious about reforms, get serious about demand and consumption,” she added.
A number of countries have recently criticized China for what they see as excessive state subsidies for manufacturers, particularly in clean energy sectors, that might flood global markets with cheap goods and threaten competing firms.
US Treasury Secretary Janet Yellen hammered at the theme during a recent trip to China, repeatedly calling on Beijing to shift its economic policy toward stimulating domestic demand.
Chinese officials have acknowledged the risk of overcapacity in some areas, but have largely portrayed the criticism as overblown and hypocritical, coming from countries that are also ramping up clean energy subsidies.
(Updates with additional Georgieva comments from eighth paragraph.)
©2024 Bloomberg L.P.
The head of the International Monetary Fund warned the US that the global economy is closely watching interest rates and industrial policies given the potential spillovers from the world’s biggest economy and reserve currency.
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Published Apr 18, 2024 • 2 minute read
(Bloomberg) — The head of the International Monetary Fund warned the US that the global economy is closely watching interest rates and industrial policies given the potential spillovers from the world’s biggest economy and reserve currency.
“All eyes are on the US,” Kristalina Georgieva said in an interview on Bloomberg’s Surveillance on Thursday.
Article content
The two biggest issues, she said, are “what is going to happen with inflation and interest rates” and “how is the US going to navigate this world of more intrusive government policies.”
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Article content
The sustained strength of the US dollar is “concerning” for other currencies, particularly the lack of clarity on how long that may last.
“That’s what I hear from countries,” said the leader of the fund, which has about 190 members. “How long will the Fed be stuck with higher interest rates?”
Georgieva was speaking on the sidelines of the IMF and World Bank’s spring meetings in Washington, where policymakers have been debating the impacts of Washington and Beijing’s policies and their geopolitical rivalry.
Read More: A Resilient Global Economy Masks Growing Debt and Inequality
Georgieva said the IMF is optimistic that the conditions will be right for the Federal Reserve to start cutting rates this year.
“The Fed is not yet prepared, and rightly so, to cut,” she said. “How fast? I don’t think we should gear up for a rapid decline in interest rates.”
The IMF chief also repeated her concerns about China devoting too much capital and labor toward export-oriented manufacturing, causing other countries, including the US, to retaliate with protectionist policies.
China Overcapacity
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Article content
“If China builds overcapacity and pushes exports that create reciprocity of action, then we are in a world of more fragmentation not less, and that ultimately is not good for China,” Georgieva said.
“What I want to see China doing is get serious about reforms, get serious about demand and consumption,” she added.
A number of countries have recently criticized China for what they see as excessive state subsidies for manufacturers, particularly in clean energy sectors, that might flood global markets with cheap goods and threaten competing firms.
US Treasury Secretary Janet Yellen hammered at the theme during a recent trip to China, repeatedly calling on Beijing to shift its economic policy toward stimulating domestic demand.
Chinese officials have acknowledged the risk of overcapacity in some areas, but have largely portrayed the criticism as overblown and hypocritical, coming from countries that are also ramping up clean energy subsidies.
(Updates with additional Georgieva comments from eighth paragraph.)
Article content
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