by Samuel Mbaki | Jun 20, 2023 | Finance
Key Points
- Weeks ago, Warren Buffett’s Berkshire Hathaway was offloading some of its stocks selling $13.3B worth of stocks in Q1 2023.
- Now, Berkshire Hathaway is going hard on Japanese stocks after its gamble in Japan’s markets raked in over $17B
Berkshire Hathaway seems pretty convinced by Japanese markets after bagging over $17B to add its stakes in five different Japanese trading firms. Berkshire Hathaway said on June 19 that its wholly-owned subsidiary National Indemnity Company had increased its stake in five Japanese trading firms to average more than 8.5%.
Berkshire Hathaway filling its bags again
Berkshire has confirmed that it’s upping its stakes in five Japanese companies: Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo. It said it intends to hold its Japanese investments long-term, with CEO Warren Buffett pledging that the company will only purchase up to 9.9% of any of the five firms.
This purchase was made by National Indemnity Company, a subsidiary of Berkshire Hathaway, with a drive to average the stakes in the five firms at 8.5%. The company said that the aggregate value of the five interests surpasses that of Berkshire-holed stocks in any country outside the U.S., making them highly promising.
As such, the company is looking at the investment long-term. Warren Buffett visited Japan in April 2023 and promised Berkshire Hathaway would boost its investments in various Japanese trading houses to 7.4%. It was then disclosed that he had hit this level in August 2022.
These five stocks almost tripled after Warren Buffett started investing in them. They have gained an average of 181% ever since his original disclosure. That led to an upshot from $6 billion to about $17 billion in the present day. Now, Japanese stocks rank as Berkshire’s largest position.
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by Samuel Mbaki | Jun 19, 2023 | Finance
Key Points
- BlackRock iShares Spot Bitcoin ETF has caused a domino effect among TradFi institutions, with Fidelity wanting in
- Fidelity Investments is rumoured to want to file for a similar ETF with the U.S. SEC and or also look forward to submitting a bid for Grayscale, the largest digital assets manager.
Fidelity Investments is rumoured to be planning on filing for an iShares Bitcoin ETF on top of acquiring troubled digital assets manager Grayscale. The news comes at a time when the crypto space is anticipating the swarming of TradFi institutions into the crypto industry following an initial bold move by BlackRock.
BlackRock’s gravity pulls Fidelity into the crypto space
BlackRock’s June 15, 2023, move into the crypto space by applying for an iShares Bitcoin ETF might have caused a ripple effect in the traditional finance markets. As a result of the move, the third largest investment manager, Fidelity Investments ($4.3T in Assets Under Management), is reportedly planning on making a similar move.
However, Fidelity Investments could make a bigger shocker move by submitting a bid for troubled digital assets manager, Grayscale. Grayscale has been the largest digital assets manager in the world turmoil has rocked it lately owing to the ongoing bear market. As such, it could be available for sale, which is a move that could give Fidelity Investments an edge against other TradFi institutions that might enter the crypto market.
The news of the asset manager wanting to join the crypto industry hasn’t officially been confirmed, as Arch Public co-founder Andrew Parish broke it on Twitter. Parish claims an anonymous source presented it but does not go without expressing concern over the top TradFi institutions overbuying crypto assets as they have done with stock markets.
Keep watching Fintech Express for more updates on crypto, finance, and other Fintech-related developments.
by Samuel Mbaki | Jun 5, 2023 | Finance
Key Points
- Saudi Arabia has pledged further voluntary oil production cuts, increasing oil prices.
- According to a statement by the energy minister, the Kingdom is set to decline its production by a million to 9 million barrels a day.
- OPEC+ contributes around 40% of the world’s oil supply and plans to increase its oil production cuts over time.
Oil prices to keep increasing as production cuts increase
Oil prices rose on June 5, 2023, following news that Saudi Arabia had decided to slash their daily production by 1 million barrels. However, the Organization of the Petroleum Exporting Countries and its partners (OPEC+) have not changed their planned oil production cuts for the remainder of the year.
The world’s leading oil exporter Saudi Arabia has said that the new production plans will take effect in July. Following the release of the information on Sunday, International benchmark Brent crude futures traded a barrel at $77.34 (1.6% higher) at 11.15 a.m. London time and the Intermediate futures stood at $73.01, over 1.7% higher.
Several oil producers had revealed a combined 1.66 million barrels per day cut by the end of the year. This report shook the market a bit, but it didn’t expect Saudi Arabia to be cutting its production by a whole million barrels in a day so soon.
Whether the other countries will choose to reduce their oil production by higher than the set limit by OPEC+ remains to be seen. However, you can expect drastic changes in oil prices throughout the year. Keep watching Fintech Express for updates on this and other finance-related stories.
by Samuel Mbaki | Jun 3, 2023 | Finance
- Non-farm U.S.A. jobs increased in May by 339,000, which is much higher than the 190K that Dow Jones estimated.
- The employment rate in the country spiked to 3.7% in May compared to the 3.5% recorded previously. The unemployment rate is the highest recorded since October 2022.
U.S.A. jobs increased at a higher-than-expected rate, and so did the unemployment rate
The U.S.A. has been battling a declining economy for several months with record-high inflation rates, debt ceiling crises, bank meltdowns, and job market shakedowns. A Friday report from the government shows that U.S.A. jobs in May increased by 339,000, better than Dow Jone’s estimate of 190K.
While non-farm U.S.A. jobs are increasing, unemployment is also higher than anticipated. It is at 3.7%, the highest figure recorded since October 2022. The growth in the number of U.S.A. jobs indicated in the Friday job market report marks the 29th straight month of positive growth.
The average hourly earnings, a key inflation indicator, rose by 0.3% in the month, in line with expectations. On an annual rate basis, wages increased by 4.3% in May, which is 0.1% below the estimate. The report also shows that the average workweek fell by 0.1 hours to 34.3 hours.
The U.S.A. jobs report was received well by the markets, with Dow Jones Industrial Average rising by more than 400 points in early trading. Treasury yields followed suit and rose as the market digested the report and developments behind the Senate passing the debt ceiling bill.
“The U.S. labour market continues to demonstrate grit amid chaos – from inflation to high-profile layoffs and rising gas prices,” said Becky Frankiewicz, president, and chief commercial officer of Manpower Group. “With 339,000 job openings, we’re still rewriting the rule book, and the U.S. labour market defies historical definitions.”
May’s hiring rate was almost at par with the 12-month average of 341K, which is great for an economy slowing down. The highest net hires came from Professional and business services, with 64,000 hires. The government also had a significant hire by adding 56,000 new jobs, while the healthcare sector contributed 52,000 new hires.
Other notable sectors were leisure and hospitality, which contributed 48,000 new hires, as construction contributed 25,000, and transportation and warehousing, followed by 24,000 new hires.
The U.S. had highly anticipated this labour report as it will be key in the decision-making process of the Federal Reserve regarding the next move in interest rates. The uptick in the unemployment rate remains a genuine sign of weakness in the market, with a rise in wages signifying that inflation could stick if not acted upon with urgency.
Keep watching Fintech Express for updates on the U.S. economy and Fintech-related developments.
by Samuel Mbaki | Jun 2, 2023 | Banking, Finance
Key Points
- The U.S. Senate has passed the debt ceiling bill preventing the U.S. from defaulting on its debt which would have been the first event of its kind.
- The bill won with a landslide 63 vs. 36 votes within 48 hours after the House passed.
- European stocks have turned around positively following the news that the U.S. wouldn’t default on its debt.
- Economists and on-lookers have shown mixed reactions on Social Media regarding the debt ceiling deal and its effects on the U.S. economy as de-dollarisation plans spread globally.
U.S. Senate prevents a possible debt default
The U.S. Senate has passed the Fiscal Responsibility Act that allows the U.S. to have no cap on the debt ceiling until January 2025. The bill had a landslide win with 63 vs. 36 votes on Thursday night, a day after the House of Representatives had barely passed it.
The new bill will be signed by the U.S. President soon ahead of the June 5 deadline that the Treasury gave as the final date that it would be able to pay its bills. While this bill has helped the nation avoid the first-ever debt default in its history, it has received mixed reactions.
The bill has been projected to allow the printing of $4T more whilst no significant spending cuts have been seen, which has made several lawmakers react with financial experts condemning it since international domination of the U.S. dollar remains in jeopardy now more than ever.
E.U. stocks rise as the U.S. Senate averts a debt default crisis
European Stock markets are headed in a positive direction as they opened higher on June 2, 2023, following news that the U.S. Senate had voted in favour of a bill that would see the nation not defaulting on its debt.
The ongoing debate to deal with the debt ceiling crisis has been going on for the past two weeks but never without influencing global stock markets though slightly. Though it has been settled now, it has just dealt with a minute issue in the U.S. economy as a recession could be possible as it’s reliant on the decisions the federal reserve will make regarding the progression of interest rates.
Recent comments from officials show that the federal reserve may choose to skip the interest rates hike in June as some prospects of the market, like jobs data, are coming out stronger than expected. However, it’s still a difficult decision as the market is sending mixed signals; mortgages are up, but the housing sector has yet to kickstart a price meltdown. Today will see the release of a closely watched labour report that may influence the decisions of the Federal Reserve in June greatly.
Though there is a possibility of rates pausing in the U.S., the ball will most likely roll differently in the U.K. ECB president Christine Lagarde has commented on the current 6.1% inflation rate that is haunting the nation, saying it’s still way too high to suspend interest rate hikes. ECB officials have also been giving signals that interest rates will continue being hiked until the bank closes near the 2% inflation rate target.
Investors, financial experts and on-lookers weigh in on the U.S. debt ceiling deal
The ongoing tension between U.S. and BRICS economic bloc has caused several investors, financial experts and observers to condemn the recently passed Fiscal Responsibility Act. The U.S. is set to go into a money-printing frenzy without a debt ceiling cap until 2025, which concerns several experts.
While it is significant that the U.S. will not default on its debt and cost over 8 million jobs sending millions more below the poverty line, some experts like Balaji feel that the current situation in the U.S. economy will most likely be a liability in the long term.
In his argument, Balaji says that the U.S. dollar will still be in a crisis as international investors are not buying treasury bonds but prefer gold and its financial products. He says that the collapsed banks were buying the Treasury bonds only to realize later that they were interacting with the “new toxic waste.”
Other Representatives of the House had aired their thoughts on the bill condemning it and saying that they wouldn’t vote for it. Though it passed, they felt it would not serve the country well.
Hilariously, one citizen posted a cartoon reaction that depicts poor leadership as the reason behind the financial crisis in the country. He sarcastically thanks President Biden for passing the bill in the U.S. Senate.
by Samuel Mbaki | Jun 1, 2023 | Banking, Finance
Key Points
- Eurozone inflation has fallen faster than anticipated a month ago, easing living costs.
- U.K. house prices are falling at the fastest annual rates since 2009
- Former U.S. Treasury Secretary Larry Summers says Brexit was a “historic economic error” that has hurt the U.K. economy, driving up inflation.
Eurozone inflation falls further than anticipated easing pressure on the U.K. economy
The inflation rates in the Eurozone have fallen faster in May than previously anticipated resulting in lower energy prices and a drop in core CPI (Consumer Price Index.) The zone’s CPI slowed to 6.1% in May YoY (Year over Year) vs. the expected 6.3%, a significant drop from the 7.0% rise recorded in April.
The Core CPI also dipped to 5.3% in May vs. 5.5%, which was expected, a significant drop from the 5.6% recorded in April.
The fall in the inflation rates takes the annual inflation closer to the European Central Bank’s (ECB) target of 2%. However, the prices are still rising three times fast as the ECB is aiming for. The inflation rates in commodities are as follows:
- Food, alcohola& tobacco +12.5%
- Other goods +5.8%
- Services +5.0%
- Energy -1.7%
European stock markets are rising from their lowest level in two months
The FTSE 10o index has gained 48 points/ 0.65% to 7494, following news that the U.S. House of Representatives had passed the Fiscal Responsibility Act n Wednesday. Investors are taking this news well, sending the U.K. stock market into greener zones, last recorded two months ago.
U.K. house prices fall at the fastest pace since 2009 while mortgage approvals fall
The prices of houses in the U.K. are falling fast at an annual rate last seen in 2009. The prices of houses decreased by 3.4% in the past 12 months ending May 2023, the biggest drop since July 2009, when an annual fall of prices by 6.2% was recorded.
A report from Nationwide indicates that house prices had remained flat over the past month after seasonal effects had been considered. Now they stand at an average price of £260,736 which remains 4% below the peak last seen in August 2022.
Though the prices are falling, Robert Gardner, the Nationwide chief economist, has warned that headwinds to the housing market will most probably strengthen over the coming months. He says investors should prepare to acquire mortgage deals for fixed rates above 5% as the government may keep increasing interest rates.
“If maintained, this is likely to exert renewed upward pressure on mortgage rates, which had been trending down after spiking in the wake of the mini-budget in September last year.”
The housing market is still unstable in the U.K. economy as the number of mortgage approvals has fallen as buyers return. A report from the Bank of England shows that there were 48,690 new mortgages signed off in April, down from 51,488 recorded in March.
The new mortgage figures are also 26.0% lower than the average numbers recorded between 2018 and 2019.
Brexit was a catastrophic economic mistake; Larry Summers
In an interview with Radio 4, Larry Summer, a former U.S. Treasury Secretary, said that Brexit was a historic economic error that pushed up inflation and will go down as the event that reduced the competitiveness of the U.K. economy globally.
When asked why inflation is haunting the U.K. in a significantly bigger way than the U.S., Summers said:
“I think Brexit will be remembered as a historic economic error that reduced the competitiveness of the U.K. economy, put downward pressure on the pound and upwards pressure on prices, limited imports of goods, and limited in some ways the labor supply. All of which contributed to higher inflation.”
Reports have found that Brexit food trade barriers have cost the U.K. economy 7 billion Euros. As such, it has made the inflation rates more menacing, pushing citizens to the corner. When asked about the possibility of a recession, Summers said he would be surprised if two more years passed before the U.K. entered a recession.
Keep watching Fintech Express for updates on finance, banking, and other FinTech-related developments.
