Warren Buffett on Saturday gave an upbeat assessment of the United States’ ability to withstand crises, even as he acknowledged that the coronavirus pandemic could have a wide range of impacts on the economy and his investments.
Buffett opened the annual meeting of his Berkshire Hathaway Inc in Omaha, Nebraska with 1-3/4 hour of remarks in which he tried to soothe shareholders as the pandemic batters the global economy and hurts even his own conglomerate.
Illustrating his remarks with dozens of plain black-and-white slides, the 89-year-old billionaire called dealing with the pandemic “quite an experiment” that had an “extraordinarily wide” range of possible economic outcomes.
But he said Americans have persevered and prospered through such crises as the Civil War in the 1860s, the influenza pandemic a century ago and the Great Depression, and the “American tailwind” would help them do it again.
“Nothing can stop America when you get right down to it,” Buffett said. “I will bet on America the rest of my life.”
The meeting was held virtually for the first time without shareholders because of the pandemic and streamed by Yahoo Finance.
It began several hours after Berkshire reported a record $49.75 billion first-quarter net loss, reflecting huge unrealized losses on common stock holdings such as Bank of America Corp and Apple Inc during the market meltdown.
While quarterly operating profit rose 6%, several larger businesses including the BNSF railroad posted declines, and Berkshire said some of its more than 90 businesses are facing “severe” negative effects from COVID-19, the illness caused by the novel coronavirus.
Buffett said operating earnings will, through at least this year, be “considerably less” than they would have been had the pandemic not occurred.
Berkshire’s cash stake ended the quarter at $137.3 billion, reflecting difficulty in finding good places to invest.
He also said he decided that he “made a mistake” investing in U.S. airlines, and that this accounted for some of the net $6.1 billion of stocks that Berkshire sold in April.
Berkshire Hathaway Inc sold its entire stakes in the four largest U.S. airlines, Chairman Warren Buffett said Saturday at the company’s annual meeting.
The conglomerate held sizeable positions in the airlines, including an 11% stake in Delta Air Lines and about 9% stakes in both United Airlines and Southwest Airlines Co at the end of 2019, according to its annual report.
Airline stocks have been hard hit by the near collapse U.S. travel demand amid the coronavirus pandemic.
Buffett said Berkshire had invested around $7 billion or $8 billion amassing stakes in the four airlines including American Airlines Group Inc.
“We did not take out anything like $7 or $8 billion and that was my mistake,” Buffett said. “I am the one who made the decision.”
The airlines did not immediately respond to requests for comment on the sales.
“It is a blow to have essentially your demand dry up…. It is basically that we shut off air travel in this country,” Buffett added.
The meeting is devoid of the surrounding three-day weekend of dining, shopping and other celebratory events that annually draw tens of thousands of people to Omaha for what Buffett calls “Woodstock for Capitalists.”
Buffett, after the initial presentation, started to answer shareholder questions at the meeting.
He was joined by Vice Chairman Greg Abel, 57, who has day-to-day oversight of Berkshire’s non-insurance businesses, and is considered by many analysts and investors a top candidate to eventually succeed Buffett as chief executive officer.
Abel is standing in for longtime Vice Chairman Charlie Munger, 96, who normally joins Buffett to answer shareholder questions.
Buffett said Munger is in “fine shape” and looking forward to attending Berkshire’s 2021 annual meeting.
Vice Chairman Ajit Jain, 68, who oversees Berkshire’s insurance businesses and is also a possible CEO candidate, did not attend either. Abel lives closer to Omaha than Munger and Jain.
Shareholders elected former American Express Co Chief Executive Kenneth Chenault to Berkshire’s board, making him the company’s first African American director.
BREAKING: Canadian job market surprises with 289,600 added in May despite COVID-19 – Yahoo Canada Finance
The Canadian economy added 289,600 jobs in May, as parts of the economy reopened during the COVID-19 pandemic.
Economists were expecting 500,000 jobs would be lost during the period.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The unemployment rate went up to 13.7 per cent according the the data from Statistics Canada, which is a record-high since data became available in 1976.” data-reactid=”25″>The unemployment rate went up to 13.7 per cent according the the data from Statistics Canada, which is a record-high since data became available in 1976.
The majority (219,400) of the jobs created were full-time positions.
Timing played a big role in the job creation surge.
“Labour Force Survey (LFS) results for May reflect labour market conditions as of the week of May 10 to May 16,” said Statistics Canada in its report.
“By then, some provinces had begun to re-evaluate and gradually ease public health and other restrictions, including allowing some non-essential businesses to re-open.”
Quebec accounted for nearly 80 per cent of the jobs created.
Ontario, which along with Quebec has been hit particularly hard by the pandemic, was the only province to lose jobs in May.
Trevin Stratton, the Canadian Chamber of Commerce’s Chief Economist and VP of Policy, called the numbers the “Schrodinger’s cat of job” markets. He says we shouldn’t read too much into them.
“It is indeed a strange time when we react favorably to slowing job losses that by any standard measure would be catastrophic. Today’s figures (290,000 jobs gained, but 13.7% unemployment) are both terrible and positive at the same time,” he said in a release.
We are still in an unprecedented economic downturn, but the unemployment rate is slowing. Canada avoided the worst-case economic scenario and the economic impact on the global economy has peaked, according to the Bank of Canada’s latest outlook.
Brendon Bernard, economist at Indeed, says there are signs of encouragement including a rise in jobs postings. But a number of factors will determine how a recovery plays out.
“How much the re-opening of shuttered areas of the economy boosts net-employment growth will in-part depend on whether layoffs slow,” said Bernard.
“Growth in CERB applicants has eased through early June, but haven’t stopped, suggesting shockwaves from the pandemic continue to reverberate throughout the labour market. Durability of the rebound is going to require Canadians to have reason for optimism about the outlook for the economy, and the public health situation.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The Canadian economy shed around 3 million jobs in March and April.” data-reactid=”38″>The Canadian economy shed around 3 million jobs in March and April.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.” data-reactid=”39″>Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Download the Yahoo Finance app, available for Apple and Android.” data-reactid=”40″>Download the Yahoo Finance app, available for Apple and Android.
Bombardier to lay off 2,500 aviation workers amid COVID-19 struggles – CBC.ca
Bombardier will lay off 2,500 aviation workers throughout the year as the company struggles to keep its operations afloat during the COVID-19 pandemic.
In a release Friday morning the Quebec-based transportation company said it is expecting to see a 30 per cent year-over-year loss in business jet sales, forcing it to reduce its workforce.
In a statement to Radio-Canada Friday, the company said 1,500 of the layoffs will be in its Quebec facilities and 400 in Ontario, with the rest of the layoffs in its international facilities.
“These are permanent layoffs,” the company confirmed in a statement.
Bombardier paused all operations in March in an effort to protect employees from the spread of the novel coronavirus.
It gradually resumed operations again last month, but had already reported a loss of $200 million US in its first quarter.
The layoffs are just the latest in a series of struggles for the aerospace giant.
In February, Bombardier exited the commercial plane business, selling its remaining stake in the A220 program to Airbus, in an effort to pay off a multibillion-dollar debt.
That same month, the company also sold its rail-building unit to French train giant Alstom SA, marking its exit from the rail business.
More to come.
History Suggests Record 50-Day Stock Market Rally May Be Just The Beginning – Benzinga
The S&P 500 has gained a record 39.6% since it hit its 2020 low back on March 23. Not only has that rally erased much of the year’s COVID-19-related losses, it’s also the best 50-day stretch in the history of the market.
After such a strong rally, traders are understandably getting uneasy the market is overbought and due for a pullback. However, from a purely historical perspective, the strongest 50-day periods have generally led to even more gains over the year that follows, according to LPL Financial Senior Market Strategist Ryan Detrick.
A Closer Look
On Thursday, Detrick looked at the seven other times since the S&P 500 was constructed in 1957 that the index has gained at least 20% over a 50-day period. In all seven instances, the index gained at least another 5.2% in the year that followed.
“Big 50-day rallies in the past have taken place near the start of new bull markets, and the returns going out a year were quite bullish,” Detrick wrote.
LPL found that the S&P 500 averaged a 1.1% gain over the month following the best 50-day stretches. The S&P 500 has averaged a 6.2% gain over three months, a 9.1% gain over six months and a 19.4% gain over the year following these exceptional 50-day stretches.
Detrick said traders are right to be concerned about the durability of the rally in the near-term given potential red flags in the put-to-call ratios among option traders. However, history suggests the next six months to a year could be very kind to investors overall.
It’s difficult to step in and chase the SPDR S&P 500 ETF Trust (NYSE: SPY) today after the market has had its best 50 days in history. However, LPL’s research suggests long-term investors with dry powder should consider scooping up S&P 500 stocks on any near-term pullbacks.
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© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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