Latest news with #US economy
Yahoo
4 days ago
- Business
- Yahoo
Warren Buffett Warns Inflation Turns Business Into ‘The Upside-Down World of Alice in Wonderland' But Weeds Out ‘Bad Businesses'
Warren Buffett, chairman and CEO of Berkshire Hathaway (BRK.B) (BRK.A), is known for his clear-eyed assessments of economic forces and their impact on business fundamentals. In his 1981 shareholder letter, Buffett addressed the distorting effects of inflation on corporate behavior, writing: '...inflation takes us through the looking glass into the upside-down world of Alice in Wonderland. When prices continuously rise, the 'bad' business must retain every nickel that it can. Not because it is attractive as a repository for equity capital, but precisely because it is so unattractive, the low-return business must follow a high retention policy. If it wishes to continue operating in the future as it has in the past — and most entities, including businesses, do — it simply has no choice.' More News from Barchart China, Chips, and Chaos: Where Smart Investors Are Putting Their Money Now Alphabet Had a 'Standout Quarter.' Should You Buy GOOG Stock Here? The Saturday Spread: Leveraging Practical Math to Extract Alpha in Hidden Places Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines. This observation came at a time when the U.S. economy was grappling with high inflation and rising interest rates, conditions that posed unique challenges for both investors and managers. Buffett's metaphor of an 'upside-down world' captures the counterintuitive reality that, in inflationary periods, even companies with poor returns are forced to reinvest heavily just to maintain their existing operations. Unlike high-quality businesses that can generate surplus cash and reward shareholders, low-return enterprises must retain capital simply to keep pace with rising costs of inventory, receivables, and fixed assets. Buffett's authority on this subject is grounded in decades of experience navigating different economic cycles. Since taking control of Berkshire Hathaway in the 1960s, he has consistently emphasized the importance of investing in businesses with durable competitive advantages and strong pricing power — traits that allow companies to pass rising costs on to customers and maintain profitability in inflationary environments. By contrast, businesses with weak economics are forced into a perpetual cycle of capital retention, leaving little room for dividends, growth, or debt reduction. This insight has enduring relevance for investors and corporate leaders. Even as inflationary pressures ebb and flow over time, the underlying principle remains: capital allocation decisions should be based on the ability of a business to generate real returns above the rate of inflation. Buffett's warning also serves as a caution against being misled by headline earnings or reported profits during inflationary periods. What matters most is not the nominal growth in revenues or assets, but the true economic value created for shareholders after accounting for the 'silent tax' of inflation. Buffett's 1981 letter to investors continues to be studied for its timeless lessons on business quality, capital allocation, and the dangers of inflation. His ability to distill complex macroeconomic realities into practical guidance has made his annual letters essential reading for investors seeking to build resilient, value-driven portfolios in any market environment. On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on
Bloomberg
11-07-2025
- Business
- Bloomberg
Bloomberg Surveillance TV: July 11th, 2025
- Jose Minaya, Global Head of BNY Investments & Wealth at BNY Wealth - Steven Ricchiuto, Chief US Economist at Mizuho - Jeannette Lowe, Director: Policy Research at Strategas Securities - Angelo Zino, Head: Technology at CFRA Research Jose Minaya, Global Head of BNY Investments & Wealth at BNY Wealth, joins to discuss his outlook for markets and a potential pullback in the equity rally. Steven Ricchiuto, Chief US Economist at Mizuho, discusses US economic bullishness amid continued policy uncertainty. Jeannette Lowe, Director: Policy Research at Strategas Securities, talks about President Trump's tariff proposals as the administration looked to deliver more clarity on tariff rates this week. Angelo Zino, Head: Technology at CFRA Research, discuss Nvidia's market cap record and the outlook for big tech.
BBC News
06-06-2025
- Business
- BBC News
Lululemon shares plunge as tariffs bite
Lululemon shares have plunged by more than 20% after it cut its annual profit forecast, as the company navigates tariffs and fears about the US economy slowing."We experienced lower store traffic in the Americas, partially reflective of economic uncertainty, inflationary pressures, lower consumer confidence, and changes in discretionary spending," Lululemon said in a athleisure brand joins a growing list of big companies to warn about the impact of US President Donald Trump's trade policies. The Trump administration's approach to tariffs has triggered concerns over rising prices and a weakening economy. "We are planning to take strategic price increases... on a small portion of our assortment, and they will be modest in nature," Lululemon's finance chief Meghan Frank company also said it will cut costs and negotiate with its year, 40% of its products were made in Vietnam, and 28% of its fabrics came from mainland and footwear brands are among the businesses hit hardest by tariffs as they make goods in Asian countries, which have faced steep levies from the April, sportswear giant Adidas warned that import taxes imposed by Trump will lead to higher prices in the US for popular trainers including the Gazelle and Samba."Since we currently cannot produce almost any of our products in the US, these higher tariffs will eventually cause higher costs for all our products for the US market," chief executive Bjorn Gulden in April, footwear maker Skechers withdrew its annual results forecast, citing economic uncertainty."The current environment is simply too dynamic from which to plan results with a reasonable assurance of success," Skechers' chief operating officer, David Weinberg, told investors in a post-earnings month, Nike said it would raise prices on some trainers and clothing in the US from early sportswear giant did not name US tariffs explicitly as a reason for the increase, saying it regularly made "price adjustments".
Bloomberg
30-05-2025
- Business
- Bloomberg
Gold Holds Gain as Fresh Trade Uncertainty Stokes Haven Demand
Gold recovered some heavy losses sustained earlier this week, as markets were once again rattled by uncertainties around US President Donald Trump's global tariffs agenda and the strength of the US economy. The precious metal traded near $3,314 an ounce, following a gain of nearly 1% on Thursday after a federal appeals court offered Trump a temporary reprieve from a ruling threatening to throw out the bulk of his tariff agenda. A weakening dollar also helped, driven by growing fiscal risks and renewed political pressure on the Federal Reserve to lower interest rates.
