Cash Buff Buffet A Whiff of Recession?

Does Warren Buffet smell a recession coming after the famed investor recently sold $75.5 billion in stocks, even shedding half of its massive Apple holdings, thereby boosting its cash hoard to a record $276.94 billion?

Note, Buffet’s Berkshire had also just dumped much of its investment in Bank of America. The investor’s key men insist the cash hoarding simply reflects a stock market that has grown more expensive. The WSJ says Buffett himself spoke about the difficulty of deploying the cash at Berkshire’s annual meeting in May. “We’d love to spend it, but we won’t spend it unless we think we’re doing something that has very little risk & can make us a lot of money, he said. Hmm. Exactly what’s so “risky,” Mr. Buffet, about today’s investment climate compared to last year’s? And, why is it wise to suddenly hold on to what’s inside Berkshire’s wallet?

Maybe ask Intel, which is laying off 15K employees after milking Uncle Sam of $8.5B under CHIPS Act. Or, ask the Swamp’s economic policymakers who were taken aback by July’s surprisingly lackluster July hiring report that sent markets reeling and triggered the closely-watched recession warning indicator that has predicted every recession since 1970. Up until now, the Fed has been laser focused on taming inflation & engineering a “soft” landing. But now it must also reckon with the possibility of a hard landing in an election year. Not that a major economic downturn still can’t be avoided. Says the WSJ: “Whether the latest data reflect an economic soft patch or more ominous downturn could depend on how the Fed responds in the months ahead & whether lower interest rates shore up a slowing economy.” Just last week, Fed Chair Jerome Powell “signaled a rate cut was likely next month.” But that was before the recession monitor’s bells rang out …

Davd Soul