Something unusual has happened in the markets in the last week. The high-flying tech stocks that investors have sought refuge have declined, but so has the recovery of COVID-19 in the travel and leisure sector.
Instead, not only finance has gained ground as big banks have reported results, but also the energy, industrial and materials sectors, where value stocks are located. The S&P 500 SP500V value index,
has risen 5% over the past week, outperforming the broader SPX,
.
Which brings us to what some would now consider a high-value action: Berkshire Hathaway.
Warren Buffett’s company has remained silent during the pandemic, and recently agreed to spend $ 10 billion of its $ 137 billion in available cash on a natural gas transmission and storage business.
He has also found something else: his own company, according to the Rational Walk blog. The blog says, according to a presentation by the Securities and Exchange Commission made in early July, that there is likely to be a buyback on the order of $ 5 billion to $ 5.5 billion from Berkshire Hathaway BRK.A,
BRK.B,
Share. (It involves mathematics derived from Buffett’s 15.54% ownership of the company that was reported in the filing, and the comparison to Berkshire Hathaway’s outstanding shares reported in a form on March 31.)
It will not be clear until August, when the company publishes its second quarter results, whether or not the company will disclose the extent of its share repurchase activity.
So if there were any buybacks, the question would be why.
“It seems likely that Buffett’s views on the range of possible COVID-related economic outcomes have narrowed somewhat, and that he might view the worst results as less likely than when he spoke at the May 2 annual meeting,” says the blog says.
While it is true that some of the publicly listed companies own Buffett, particularly Apple AAPL,
– It met during the second quarter and in July, you could get a glimpse of the companies that Berkshire Hathaway operates directly, like Geico Auto Insurance and Duracell.
“Your own assessment of the portfolio’s intrinsic value, as well as the intrinsic value of Berkshire’s operating companies, is what will inform your thinking when calculating Berkshire’s intrinsic value,” says the blog.
The buzz
There is good and bad news on the coronavirus front. Testing has actually increased, with a record 831,918 tests performed in one day, but the bad news is that the positive test rate remained at a high 8.6%, according to the COVID-19 monitoring project. In May, the World Health Organization recommended not to reopen until positive test rates were below 5% for at least 14 days.
The leaders of the European Union meet to discuss a proposal for a recovery fund of 750 billion euros.
Data on a part of the economy that is apparently experiencing a V-shaped recovery, the housing market, will be obtained when the home start numbers are released. Consumer sentiment data is also available.
Netflix NFLX,
Shares plummeted in premarket trading after the transmission company led to much worse subscriber numbers than forecast in the third quarter. “As expected, growth is slowing as consumers overcome the initial COVID shock and social constraints,” the company said. Netflix also named the company’s chief content officer, Ted Sarandos, as co-CEO.
Credit Suisse doubled its target price for shares in Tesla Inc. TSLA,
at $ 1,400 from $ 700, but said the shares are “perfectly valued,” meaning that any material alteration would lead to a correction.
BlackRock BLK,
exceeded earnings expectations after generating $ 100 billion in net inflows during the quarter.
The market
Dow futures YM00,
were slightly higher, although the Nasdaq-100 NQ00 contract,
It was particularly strong.
CL.1 Oil,
futures slipped, while GC00 gold,
bordered higher.
Euro EURUSD,
was trading above $ 1.14 with the critical EU summit underway.
The graphic
In an article on racial inequality, Goldman Sachs chief economist Jan Hatzius shows that the United States has less intergenerational mobility, as well as a more unequal income distribution, than its peers. Policies that improve African Americans’ lifetime earnings prospects will also add to the country’s economic potential over time, he says.
Random readings
The Washington Post’s exposition of the area’s soccer team was published, with 15 complaints of sexual harassment against the club.
Another accusation of a violent altercation over a buyer’s refusal to wear a mask.
Take a look at the ultra-black nightmare fish, or not, if you haven’t had your coffee.
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