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Daily Mail
41 minutes ago
- Daily Mail
Warren Buffett's quiet moves send shockwaves through Wall Street
Famed investor Warren Buffett has quietly executed a series of multi-billion-dollar exits from major US banks. It appears to be a strategic shift that analysts say signals a sharp turn in sentiment from the world's most closely watched investor — and a growing belief that America's booming financial sector is headed for turbulence. During the first half of 2025, Buffett's Berkshire Hathaway sold more than $3.2 billion in shares tied to the banking industry, including a $1 billion exit from Citigroup, a $2 billion reduction in Bank of America, while also trimming holdings in Capital One. The moves were disclosed through SEC filings and confirmed by analysts monitoring Berkshire's quarterly portfolio updates. 'Berkshire has clearly been reducing its exposure to U.S. bank stocks,' said Larry Cunningham, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware to The Telegraph. 'That activity signals a cautious or even bearish outlook on banking.' The divestments come at a moment of strong profitability in the sector. Goldman Sachs this week reported a 22% jump in quarterly earnings, while Citigroup profits surged 25%, both beating Wall Street expectations. The KBW Nasdaq Bank Index is nearing record highs. Yet despite these short-term gains, Buffett is building a historically large cash position — now exceeding $350 billion — and repositioning Berkshire's portfolio toward energy and consumer staples, including fresh investments in Occidental Petroleum and Constellation Brands. Buffett famously warned about derivatives as 'financial weapons of mass destruction' years before the 2008 collapse. He quietly accumulated cash before the COVID crash in 2020. Markets may be known for their irrational behavior, but Buffett's moves are usually based on numbers, patterns, and a gut instinct honed over seven decades. His legacy is built not just on the billions he made, but the crashes he avoided. His cooling on banks is the classic contrarian signal the Oracle of Omaha is famous for. The rapid repositioning has not gone unnoticed by investors already rattled by political volatility, surging inflation, and uncertainty surrounding US monetary policy. 'Part of this could be driven by expectations that these current equity valuations are not sustainable,' said Gennadiy Goldberg, head of US rates strategy at TD Securities. Buffett's moves align with a broader pullback among major industry leaders. Jamie Dimon, CEO of JPMorgan Chase, sold $31.5 million in company stock in April, following a $125 million sale in 2024. It was his first personal sell-off since becoming CEO in 2005. Such exits come as Wall Street deals with rising inflation and uncertainty over Trump's economic policy. The Trump administration's revived trade wars have injected volatility into the markets and uncertainty into long-term growth projections. US inflation hit 2.7% in June, and the Federal Reserve has twice slashed its 2025 GDP forecast, from 2.1% to 1.4%. The central bank's projections signal weakening consumer demand and a potential slowdown in growth during the second half of the year. Higher inflation could force long-term Treasury yields up — triggering a domino effect of rising loan defaults, declining merger activity, and stress on bond portfolios. 'The big, big red flag is going to be consumption,' said Kambiz Kazemi, chief investment officer at Validus Risk Management. 'If unemployment goes up and consumer spending drops, it triggers a feedback loop through the entire borrowing ecosystem.' Concerns are also rising over the Trump administration's confrontational stance toward the Federal Reserve. Meanwhile, Trump's escalating threats to remove Federal Reserve Chairman Jerome Powell have rattled investors and bank CEOs alike. JPMorgan's Dimon, Goldman Sachs' David Solomon, Citigroup's Jane Fraser, and Bank of America's Brian Moynihan have all warned the White House against destabilizing monetary policy. 'Uncertainty around tariffs, and more generally, uncertainty about most subjects — the way the administration is running things — is going to be slowly eroding the trust in the system,' Kazemi added. 'The reality has to catch up.' A shake-up at the Fed could lead to artificially lowered short-term interest rates, further distorting inflation expectations. While trading revenues have remained strong amid tariff-driven market volatility, other banking segments, particularly corporate lending and dealmaking, are already showing signs of strain. The bond market has begun to reflect broader investor skepticism. Bill Gross, co-founder of Pimco and widely regarded as the 'Bond King,' issued a warning on X earlier this week: 'Investors wake up! I for one am moving defensively — more cash, buying value with 4–5% dividend yields. And an emphasis on non-US.' Gross's comments underscore growing unease in global markets, with inflation, rate uncertainty, and trade policy reshaping the investment landscape faster than Wall Street earnings can keep up. Although Berkshire Hathaway maintains significant exposure to the financial sector — 16.4% in American Express and 10.1% in Bank of America — its trajectory seems clear. The firm is reallocating toward sectors traditionally seen as more resilient in downturns. 'It's always hard to know how much of Berkshire's selling reflects macroeconomic pessimism versus firm-specific or internal considerations,' Cunningham said. 'But the concentration in energy and staples suggests a shift toward stability and defensiveness.'
Telegraph
an hour ago
- Telegraph
Trump has every right to berate the technocrats
Knucklehead or numbskull? Donald Trump uses both terms to describe Jerome Powell, the chairman of the US Federal Reserve. It depends on which day of the week it is. His attacks on Powell are now so frequent they have lost the power to shock, but imagine the horror if Sir Keir Starmer started regularly describing Andrew Bailey, the Governor of the Bank of England, as a nitwit or a simpleton. Or if France's president, Emmanuel Macron, were to refer to Christine Lagarde, the president of the European Central Bank, as a 'nigaud' or 'crétin'. Imagine also if they let it be known that they were examining ways of ridding themselves of their troublesome monetary priests, as Trump has done in the US. The entire political and economic establishment would be up in arms and there would be mayhem in the bond markets. Yet Trump is Trump and iconoclasm comes with the territory. Trump's bark may in practice turn out to be worse than his bite. It often does. It is none the less worth considering whether in this instance he might not have a point. Looked at objectively, the unwritten understanding that presiding governments should never criticise their central banks is one of the modern world's more absurd conventions. Of course, we all know how it came about. It was part of a much wider shift in which key parts of government were removed from direct political control and vested instead with independent technocrats. Free from the need to win elections, it was argued, these arms-length bodies would do a much better job than the politicians in keeping things on the straight and narrow. In Britain, granting the Bank of England independent control of monetary policy, was very much part of the then-Labour government's attempt to sanitise itself with markets and present the UK as a trusted and stable monetary regime that had finally put its post-war inflationary past behind it. As with most other central banks, independence has been buttressed by provisions that make it virtually impossible to sack the incumbent governor except in the case of madness or misfeasance. Much as he would like to dismiss Powell, even Trump has struggled to find a way around these guardrails. The ballooning costs of renovating the Federal Reserve's grandiose Washington headquarters may be evidence of public sector waste and incompetence but it is not, on the face of it, a case of outright fraud. All the same, the lavish nature of the Fed's refurbishment touches a chord that characterises central banks as out of control, unaccountable and often just plain wrong. And now they build themselves palaces and cathedrals as symbols of the once-ruling idolatry. Admittedly, Trump's own vulgar redecoration of the Oval Office in his trademark gold chintz is in some respects just as bad, even if far less expensive. But at least Trump is elected, while Powell is a mere appointee. This in itself is causing much amusement, for in this week describing Powell as a 'terrible' chairman, Trump added that he was 'surprised he was appointed', seeming to forget that it was he who originally chose him. He soon regretted it and, by the end of Trump's first presidency, the two were barely on speaking terms.
Auto Car
7 hours ago
- Auto Car
How Subaru plans to go electric
Word association time: what comes to mind when you think of Subaru? Easy: a blue and yellow Impreza flying sideways down a rally stage, somewhere around – or possibly just beyond – the limit. Here's something that doesn't come to mind, though: electric vehicles. With the heavy cost of electrification and an influx of cut-price Chinese manufacturers, these are difficult times for even the largest car makers operating in Europe. And for the smaller ones struggling for every sale they can get, it's enough to make you wonder: why go to the trouble? Subaru Europe boss David Dello Stritto understands why you might ask that. 'You could think: 'Okay, we're selling around 30,000 cars a year in Europe and we're doing around 700,000 in the US, so why bother?'' says the Scot. 'That would be a fair question.' Yes, Subaru is far more successful in markets where its utilitarian 4x4s are more in vogue and electrification is less of a hot topic – and its one-time great rallying rival, Mitsubishi, drastically scaled back its efforts in Europe years ago. But with all the commitment of Colin McRae on the ragged edge, Dello Stritto says: 'I'll tell you what, Subaru Corporation has said repeatedly they have no intention of leaving Europe. They want to stay in Europe.' He notes that Subaru couldn't shift its European sales to the saturated American market – which already accounts for around 75% of the brand's volume – and it's struggling in China against domestic firms. But, most importantly, there's pride at Subaru about being a global company. So Subaru wants and needs to be present in Europe – but that creates a challenge. While large manufacturers can now hedge their bets and spread their resources between developing electric and combustion lines, smaller ones such as Subaru can't. It's partly why its early EV efforts, the Solterra and forthcoming Trailseeker, have been co-developed with Toyota.
