Tag: securities

U.S. stocks end lower, but Nasdaq posts longest weekly win streak since February

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U.S. stocks closed lower on Friday as investors focused on debt-ceiling talks in Washington D.C., which Republican Rep. Garret Graves of Louisiana, a deputy for House Speaker Kevin McCarthy, said were on pause. The Dow Jones Industrial Average
DJIA,
-0.33%
ended about 109 points lower Friday, or 0.3%, near 33,426, but booked a 0.4% weekly gain. So did the other major U.S. indexes. The S&P 500 index
SPX,
-0.14%
closed 0.2% lower, while booking a 1.6% weekly gain. The Nasdaq Composite Index
COMP,
-0.24%
shed 0.2% Friday, but gained 3% for the week to advance for a fourth week in a row, its longest weekly stretch of wins since February 3, according to Dow Jones Market Data. Focus on Friday also was on regional banks after CNN reported that Treasury Secretary Janet Yellen said more mergers in the sector might be needed.

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May 19, 2023
Debt-ceiling talks are at a ‘pause,’ says McCarthy deputy

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Debt-ceiling negotiations are at a “pause” on Friday, said Republican Rep. Garret Graves of Louisiana, a deputy for House Speaker Kevin McCarthy.

“We’ve decided to press pause, because it’s just not productive,” Graves said.

It wasn’t immediately clear how long the pause would last.

Graves also suggested the Biden White House’s representatives in the talks were being “unreasonable.”

“Until people are willing to have reasonable conversations about how you can actually move forward and do the right thing, then we’re not going to sit here and talk to ourselves,” the congressman told reporters.

When asked if negotiators would be meeting in person over the weekend, Graves said, “I’m not sure right now.”

“We’re not there,” Graves also said, in a remark that indicated a deal wasn’t imminent.

U.S. stocks
DJIA,
-0.28%
sold off after his remarks to reporters, and the S&P 500
SPX,
-0.16%
was recently trading lower.

“There are real differences between the parties on budget issues and talks will be difficult,” a White House official said. “The president’s team is working hard towards a reasonable bipartisan solution that can pass the House and the Senate.”

Traders also were assessing remarks from Federal Reserve chief Jerome Powell as well as a report that Treasury Secretary Janet Yellen had said more bank mergers may be necessary.

Separately, Senate Minority Leader Mitch McConnell, a Kentucky Republican, said Friday that it is “past time” for President Joe Biden to get serious about the negotiations.

Stocks advanced Wednesday and Thursday, with credit for the gains going in part to upbeat comments from Biden and McCarthy on the debt-limit standoff, but some analysts have warned that markets may have turned too optimistic.

“While we agree that recent developments represent a meaningful positive shift relative to a week or two ago, we caution investors not to overestimate how quick or smooth the path to the finish line will be,” said Tobin Marcus, senior U.S. policy and politics strategist at Evercore ISI, in a note.

Marcus added that “the expectations being set on timing are slightly unrealistic, which could lead to market concern over setbacks next week.”

Terry Haines, founder of Pangea Policy, described Friday’s pause as a “predictable bump in the winding negotiation road,” adding that “what it means for markets is that there’s very little hope of a deal by the end of Sunday, and that negotiations will go into next week.”

Now read: Debt-ceiling standoff: Here’s what could go into a bipartisan deal

And see: ‘Doomsday machine’: Here’s what could happen if the debt ceiling is breached

MarketWatch’s Robert Schroeder contributed to this report.

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May 19, 2023
Nasdaq closes at fresh 9-month high as debt-ceiling optimism builds

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U.S. stocks finished higher on Thursday, with the Nasdaq Composite closing at its highest level since Aug. 25, according to FactSet as optimism over a potential debt-ceiling deal persisted. The S&P 500
SPX,
+0.94%
gained 39.28 points, or 0.9%, to 4,198.05, according to preliminary closing numbers from FactSet. The Dow Jones Industrial Average
DJIA,
+0.34%
rose by 115.14 points, or 0.3%, to 33,535.91. The Nasdaq Composite
COMP,
+1.51%
advanced 188.27 points, or 1.5%, to close at 12,688.84. House Speaker Kevin McCarthy has said he’s optimistic about talks on a deal to raise the debt ceiling, according to media reports.

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May 18, 2023
Ray Dalio says debt-ceiling debate sets stage for ‘disastrous financial collapse’

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“‘Increasing the debt limit the way Congress and presidents have repeatedly done, and most likely will do this time around, will mean there will be no meaningful limit on the debt. This will eventually lead to a disastrous financial collapse.‘ ”

— Ray Dalio, founder, Bridgewater Associates

That’s billionaire investor and Bridgewater Associates founder Ray Dalio, warning via a post on LinkedIn that while the U.S. government is likely to avoid a first-ever debt default, a lack of effective restraint on spending spells big trouble ahead.

Dalio wrote that he doesn’t expect the battle between the Biden administration and congressional Republicans over a debt-limit increase to lead to a default — or if it does, it will be resolved quickly. But any agreement is unlikely to deal with the “big issues” in a substantive way, and will instead likely tweak things in ways that won’t matter much, making no real commitment to cutting the deficit in future years.

See: Debt-ceiling standoff: Here’s what could go into a bipartisan deal

House Speaker Keven McCarthy, R-Calif., told reporters Thursday that he thinks an eventual bill to raise the borrowing limit needs to be on the House floor next week and that he can “see the path.” McCarthy and President Joe Biden have designated representatives to negotiate a deal while Biden is attending a G-7 meeting in Japan.

Both have said they are confident a deal will be reached before the government is unable to pay its bills, which could come as early as June 1. Debt-ceiling worries have made for volatile trading in short-term Treasury bills that would be affected by a potential default, but concerns have yet to exert lasting pressure on the stock market.

The Dow Jones Industrial Average
DJIA,
+0.34%
rose 115.14 points, or 0.3%, on Thursday, while the S&P 500
SPX,
+0.94%
rallied 0.9% to close at a nearly nine-month high.

Read: ‘Doomsday machine’: Here’s what could happen if the debt ceiling is breached

Dalio argues that continuing along the same path isn’t sustainable “because increasing debt assets and liabilities faster than income eventually makes it impossible to simultaneously pay lender-creditors a high enough real (i.e., inflation-adjusted) interest rate to have them hold the debt assets without having that real interest rate too high for the borrower-debtors to be able to service their debts.”

When the amount of debt sold is greater than what debt buyers want to absorb, central banks must decide whether to let interest rates rise to balance the supply and demand, which will crush debtors and the economy, or print money to buy the debt. The latter option is inflationary and encourages debtholders to sell, making the debt imbalance worse.

“In either case that creates a debt crisis that is like the runs on the banks that we have been seeing, but with government bonds being what is sold and the run on the bank being a run on the central bank,” Dalio wrote.

At the same time. not increasing the debt limit will lead to default and to cutbacks on basics for those who can’t afford cutbacks, causing financial havoc and social upheaval, Dalio said.

An agreement to raise the limit would ideally be accompanied by an agreement between Biden and McCarthy that overcomes the objections of the “more extreme” members of both parties, Dalio wrote, who either don’t want to lift the debt ceiling or aren’t willing to compromise on a long-term budget approach.

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May 18, 2023
Carl Icahn admits he was wrong to take a huge short position on the market that lost $9 billion

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“‘I’ve always told people there is nobody who can really pick the market on a short-term or an intermediate-term basis. Maybe I made the mistake of not adhering to my own advice in recent years.’”

— Carl Icahn, activist investor

That’s Carl Icahn, legendary activist investor and billionaire, admitting in a Financial Times interview that he was wrong when he made a massive bet that the stock market would crash.

In 2017, his bet lost about $1.8 billion on hedging positions, according to FT calculations, that would have made money if asset prices had fallen. The trade lost another $7 billion between 2018 and the first quarter of 2023, according to the paper.

Icahn’s investing arm Icahn Enterprises LP
IEP,
+0.06%
started to short the market after the 2008 financial crisis, and became more aggressive in subsequent years. The company used a strategy of shorting broad market indexes, individual companies, commercial mortgages and debt securities.

“You never get the perfect hedge, but if I kept the parameters I always believed in . . . I would have been fine,” he said. “But I didn’t.”

Instead, regulatory filings show that IEP lost $4.3 billion on short positions in 2020 and 2021 as the market rallied off the pandemic slump, buoyed by the Federal Reserve’s massive stimulus.

“I obviously believed the market was in for great trouble,” Icahn said. “[But] the Fed injected trillions of dollars into the market to fight COVID and the old saying is true: ‘Don’t fight the Fed.’”

Icahn also explained what exactly he did with margin loans he borrowed from IEP that were recently highlighted by short-seller Hindenburg Research in a stinging report.

Also read: What we know about Carl Icahn’s margin loan

The loans were disclosed in regulatory filings in early 2022, but few seemed to notice at the time.

The Hindenburg report accused the company of inflating asset values and quested whether a margin call would send the company into a spiral if the stock price were to fall.

IEP’s stock did fall after that report — at the cost of about $6 billion of market cap.

For more, see: Carl Icahn rebuts short seller Hindenburg Research’s report. It’s already cost his company $6 billion in market cap.

Icahn addressed the report on the day it was released and offered an update on IEP’s recent earnings, saying he was fully in compliance with loan terms.

He told the FT he had used the money borrowed from IEP to make additional investments outside of his publicly traded vehicle.

“Over the years I have made a great deal of money with money,” he said. “I like to have a war chest and doing that gave me more of a war chest,” he added, referring to the margin loan.

Earlier this month, IEP disclosed a federal probe into its corporate governance and other issues. It’s not clear if that was related to the Hindenburg report.

That same day, it posted earnings showing it swung to a loss in the first quarter from a profit a year ago, missing consensus estimates by a wide margin.

IEP shares have fallen 32% in the year to date, while the S&P 500
SPX,
+0.94%
has gained 9%.

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May 18, 2023
Brokerage firm lured politically right-leaning seniors into gold-coin scam, says U.S. regulator

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A finance company boasting hundreds of apparently glowing online “customer reviews” and an A+ rating from the Better Business Bureau was this week civilly charged with cheating over 700 investors — many of them senior citizens — out of more than $30 million over 5 years.

El Segundo, Calif.–based Red Rock Secured and its controlling chief executive, Sean Kelly, were accused by the Securities and Exchange Commission of playing on the retirement and tax fears of older investors to sell them gold and silver coins at vastly inflated prices to hold in self-directed IRAs.

The markup on the coins “was almost always above 100 percent, and typically 120 percent or more,” the SEC said in its complaint.

Between 2017 and last year, Red Rock pocketed more than $30 million of the $50 million investors paid for the coins, said the SEC, which also sued two former Red Rock executives.

Attorney Michael Schafler of the Los Angeles law firm Cohen Williams, representing both Red Rock and its CEO, said the company had “nothing to hide” and has been “completely cooperative” with the SEC investigation.

“Red Rock has demonstrated that it is focused on compliance and providing clients with information necessary to make reasoned and informed decisions about purchasing precious metals,” he added. “Red Rock stands by that. It looks forward to the opportunity to defend itself against the government’s allegations in Court.”

According to the SEC, Red Rock used an aggressive marketing campaign to target investors, especially those who were “conservative” or “right wing” politically and “over 59½ [years old].”

Sales personnel played on customers’ fears about government policy, inflation, the stock market and retirement to persuade investors to move IRA funds to Red Rock and invest in gold and silver bullion, according to the SEC. But then, using what the commission calls a “bait and switch,” they persuaded investors instead to buy niche “premium” gold coins with huge, but hidden, markups, which included an 8% sales commission.

These so-called premium coins included an obscure silver Canadian coin for which Red Rock Secured controlled the entire market, allowing it to claim falsely that the “market value” of the coin was more than twice the value of its silver content, the SEC said.

Red Rock Secured salespeople were told to pitch the idea of a “worry-free retirement” to potential clients, while warning them that in the stock market “you could wake up and half your retirement could be gone,” the SEC said.

“The defendants used fear and lies to defraud investors out of millions of dollars from their hard-earned retirement savings,” said Antonia Apps, director of the SEC’s New York office.

There was no hint of any of this in the company’s glowing online “customer reviews.” At Google, Red Rock had an average rating of 4.8 stars out of 5 from 136 self-described customers. At Trustpilot, it got an average rating of 4.8 stars out of 5 from 167 alleged customers. Trustpilot said the rating was “excellent.” At the Better Business Bureau, Red Rock got an average rating of 4.75 stars out of 5 across 96 reviews. At Consumer Affairs it got an average rating of 4.9 stars out of 5.

The Better Business Bureau, contacted by MarketWatch, said it had added an alert to its site about the SEC probe into Red Rock. But, it added, “BBB ratings are not a guarantee of a business’s reliability or performance. BBB recommends that consumers consider a business’s BBB rating in addition to all other available information about the business.”

The organization, which provides information about businesses through a rating system and handles consumer complaints, said its standard policy is to check that all reviews are from legitimate customers by contacting the company being reviewed. The BBB does not possess legal or policing powers.

Business-review platform Trustpilot also told MarketWatch it had added an alert to the Red Rock Secured review page.

“Trustpilot is an open, independent review platform, meaning anyone who has had an experience with a business can leave a review — whether positive or negative — on the business’s Trustpilot profile page,” the company said in a statement “We are currently investigating Red Rock Secured to ensure that they are using our platform in line with our business guidelines, and should we find any evidence they are not, we will take the necessary steps to prevent it.”

Alphabet unit
GOOG,
+1.28%

GOOGL,
+1.27%
Google and Consumer Affairs could not be reached for comment.

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May 18, 2023
Dow climbs around 400 points, U.S. stocks end higher after President Biden’s remarks on debt-ceiling debate

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U.S. stocks ended sharply higher Wednesday, as investors appeared encouraged by President Joe Biden’s remarks concerning the debt-ceiling debate. The Dow Jones Industrial Average
DJIA,
+1.24%
closed around 400 points, or 1.2%, higher, while the S&P 500
SPX,
+1.19%
climbed 1.2% and the technology-heavy Nasdaq Composite
COMP,
+1.28%
gained 1.3%, according to preliminary data from FactSet. “I’m confident that we’ll get the agreement on the budget, and America will not default,” Biden said Wednesday during a brief speech at the White House. Treasury Secretary Janet Yellen has warned the U.S. could run out of cash as soon as June 1 if Congress fails to raise the debt ceiling.

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May 17, 2023
Biden expresses confidence on achieving debt-ceiling deal: ‘America will not default’

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President Joe Biden sounded upbeat Wednesday as a divided Washington continued to work on achieving a bipartisan deal that raises the ceiling for federal borrowing and avoids a market-shaking default.

“I’m confident that we’ll get the agreement on the budget, and America will not default,” Biden said during a brief speech at the White House.

“We’re going to continue these discussions with congressional leaders in the coming days until we reach an agreement, and I’ll have more to say about that on Sunday,” the president also said, adding that he planned to hold a news conference on Sunday.

Biden’s remarks came shortly before his departure for a Group of Seven summit in Japan, and after both the president and House Speaker Kevin McCarthy sounded positive about their second debt-limit meeting, which took place Tuesday.

Biden said on Wednesday that is cutting his Asia trip short to be there for final negotiations and to be able to sign a deal. He promised to be “in constant contact” with his staff while he’s at the G-7 summit and “in close touch” with McCarthy and the other top U.S. lawmakers.

In addition, the president said he didn’t think the curtailing of the upcoming trip was a win for China.

“We’re still meeting. We still have four good allies,” he told reporters, referring to his plans to talk to members of the Quad — meaning the leaders of Australia, India, Japan and the U.S. — during the G-7 summit.

Biden said he plans to speak or meet with Chinese President Xi Jinping at some point, saying that will happen “whether it’s soon or not.”

Earlier Wednesday, McCarthy told CNBC, “I think at the end of the day we do not have a debt default.”

On Tuesday, the California Republican said the “structure of how we negotiate has improved,” because the president has appointed White House staff to talk with the speaker’s team, rather than involving all four top U.S. lawmakers.

Biden remarked on that development Wednesday.

“We narrowed the group to meet and hammer out our differences,” he said. “In fact, they met last night. They’re going to be meeting again today.”

U.S. stocks
SPX,
+1.08%

DJIA,
+1.15%
traded higher Wednesday, as investors remained focused on the debt-ceiling talks.

MarketWatch’s Robert Schroeder contributed to this report.

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May 17, 2023
Dow ends over 300 points lower, loses grip on gains for the year

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U.S. stocks closed lower on Tuesday, with losses deepening into the closing bell and the Dow losing its grip on gains for the year. The Dow Jones Industrial Average
DJIA,
-1.01%
closed about 336 points lower, or 1%, ending near 33,012, according to preliminary FactSet figures. The S&P 500
SPX,
-0.64%
shed 0.6% and the Nasdaq Composite Index
COMP,
-0.18%
closed 0.2% lower, with all three indexes ending near the session lows. Stocks were under pressure as President Joe Biden was set to meet with four top U.S. lawmakers for talks on raising the federal government’s borrowing limit, with a goal of avoiding a market-shaking U.S. default. The White House Tuesday afternoon said Biden might cut short an overseas trip to deal with the debt-ceiling talks. For the year, the Dow was down 0.4% through Tuesday, while the S&P 500 was still up 7% and the Nasdaq was 17.9% higher, according to FactSet.

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May 16, 2023
Biden to cut short upcoming trip due to debt-ceiling standoff: report

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President Joe Biden plans to return to the U.S. on Sunday, cutting short his upcoming Asia trip, NBC News reported on Tuesday, citing an anonymous source. Earlier Tuesday, White House spokesman John Kirby said Biden might not make planned stops in Australia and Papua New Guinea that were expected to happen in conjunction with his trip to Japan for a G-7 summit. “We’re re-evaluating,” Kirby told reporters. “There’s not been a cancellation, as yet, but that could happen.” The developments are coming as Biden and the four top U.S. lawmakers are meeting Tuesday afternoon on raising the ceiling for federal borrowing and avoiding a market-shaking default.

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May 16, 2023

Tech-stock picks that are small and focused: This fund invests in unsung innovators. Here are 2 top choices.

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When investors think of technology stocks, they might automatically gravitate toward “the next big thing,” or to the giant companies that dominate the S&P 500
SPX,
-0.40%.
But Robert Stimson, chief investment officer of Oak Associates Funds, makes a case for diversification through exposure to smaller innovators which he believes are “overlooked in this environment.”

The River Oak Discovery Fund
RIVSX,
+0.98%
invests in tech-oriented companies with market capitalizations of $5 billion or less, with an average of about $2 billion. It has a five-star rating, the highest, from Morningstar, despite having what the investment information firm considers “above average” annual expenses of 1.19% of assets under management. The fund is ranked in the 6th percentile among 546 funds in Morningstar’s “Small Blend” category for five-year performance and in the 13th percentile among 374 funds for 10-year performance. The performance comparisons are net of expenses.

The Black Oak Emerging Technologies Fund
BOGSX,
+1.54%
has more of a midcap focus, with some small-cap stocks and follows a similar strategy to that of RIVSX. But with no restriction on the size of companies this fund invests in, “we don’t have to sell stocks,” Stimpson said. So long-term holdings of this fund include Apple Inc.
AAPL,
-0.05%
and Salesforce.com Inc.
CRM,
+0.69%.
This fund is rated three stars within Morningstar’s “Technology” category and has a lower expense ratio of 1.03%.

Both funds are concentrated. The River Oak Discovery Fund held 34 stocks and the Black Oak Emerging Technologies Fund held 35 stocks as of March 31. Lists of both funds’ largest holdings are below.

During an Interview, Stimpson, who co-manages both funds, said that when investing in the small-cap technology space, he and colleagues identify companies that are “focused on niches.

“I want a company that knows who they are, what they do and do it well, rather than a small company trying to growing into the next Microsoft, Google or Salesforce,” he said.

More about giant companies dominating stock indexes: This twist on a traditional S&P 500 stock fund can lower your risk and still beat the market overall

Stimpson said Oak Associates pays close attention to what corporate management teams say during earnings calls and in presentations, preferring comments related to improving sales and operations with a market niche, rather than expressions of grand visions for exponential growth.

That type of narrow focus can support higher valuations over time, Stimpson said. “They have better execution, a better ability to fend-off competition and they are quality acquisition candidates.”

“ “I caution everyone that until there is revenue, earnings and a product, the hype can be more dangerous than an opportunity.” ”

— Robert Stimpson, chief investment officer at Oak Funds, when discussing AI and ChatGPT.

All of those factors can be important to investors, considering how easily tech giants such as Microsoft Corp.
MSFT,
+1.00%
or Google holding company Alphabet Inc.
GOOGL,
+2.89%

GOOG,
+2.88%
can begin to compete with smaller innovative companies because they can afford to make such large investments, he said.

Simpson went further, saying that when running screens for “quality” metrics, such as improving free cash flow yields, the Oak Associates team also looks for “shareholder friendly practices.” For example, a company may be repurchasing shares. But are the buybacks lowering the share count significantly (which boosts earnings per share) or are they merely mitigating the dilution caused by the shoveling of new shares to executives as part of their compensation?

Finally, Simpson cautioned investors not to get caught up in tech-focused hype.

“When I talk to our clients, I get questions about AI and ChatGPT and how to play it. People get focused on a new great tech innovation,” he said. “You can replace ChatGPT with bitcoin, metaverse or 3-D printing.”

“I caution everyone that until there is revenue, earnings and a product, the hype can be more dangerous than an opportunity.”

Two examples

These companies are held by theRiver Oak Discovery Fund and the Black Oak Emerging Technologies Fund.

Cirrus Logic Inc.
CRUS,
-2.37%
is the largest holding of the River Oak Discovery Fund. Stimpson calls the company “a derivative play on the success of Apple.”

“They are focused on the chips that go into mobile and [vehicles],” as well as the needs of their customers, including Apple, “rather than problem areas of the chip sector, such as memory or PCs. They are not talking about chips for AI, for example,” Stimpson said.

Cirrus focuses on systems and related software used in audio systems..

Kulicke & Soffa Industries Inc.
KLIC,
+1.92%
makes equipment, tools and related software used by a variety of manufacturers of computer chips and integrated electronic devices.

Stimpson likes the company as a long-term play on the worldwide disruption in semiconductor manufacturing and supply, in the wake of the Covid-19 pandemic. “All chip companies learned that any supply disruption in Southeast Asia is a problem. Over time, the opportunities for semiconductor equipment makers are very good. There will be more plants in more locations, so more equipment,” he said.

He said KLICK was in a “protected” position, with returns on equity of about 20% and free cash flow yields of about 10%.

Top holdings of the funds

Here are the largest 10 holdings of the River Oak Discovery Fund as of March 31:

Company	Ticker	% of portfolio
Cirrus Logic Inc.	CRUS, -2.37%	4.9%
Kulicke & Soffa Industries Inc.	KLIC, +1.92%	4.6%
Advanced Energy Industries Inc.	AEIS, +0.30%	4.5%
Cohu Inc.	COHU, +1.45%	3.7%
Asbury Automotive Group Inc.	ABG, -1.75%	3.7%
Korn Ferry	KFY, -0.96%	3.6%
Kforce Inc.	KFRC, -2.40%	3.4%
Ambarella Inc.	AMBA, -0.50%	3.3%
Applied Industrial Technologies Inc.	AIT, -1.71%	3.3%
Perficient Inc.	PRFT, +0.72%	3.2%

Click on the tickers for more about each company.

Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

Here are the largest 10 holdings of the Black Oak Emerging Technology Fund as of March 31:

Company	Ticker	% of portfolio
Apple Inc.	AAPL, -0.05%	5.7%
KLA Corp.	KLAC, +1.69%	4.6%
Advanced Energy Industries Inc.	AEIS, +0.30%	4.5%
Cohu Inc.	COHU, +1.45%	4.1%
SolarEdge Technologies Inc.	SEDG, -3.76%	3.9%
Cirrus Logic Inc.	CRUS, -2.37%	3.9%
Cohu Inc.	COHU, +1.45%	3.9%
Ambarella Inc.	AMBA, -0.50%	3.4%
Applied Industrial Technologies Inc.	AIT, -1.71%	3.4%
Salesforce Inc.	CRM, +0.69%	3.3%

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May 16, 2023

Berkshire Bought Capital One, Unloaded 2 Banks

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Berkshire Hathaway Sold U.S. Bancorp, Bank of New York Stock. Here’s What It Bought.

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May 15, 2023
Warren Buffett’s Berkshire Hathaway switched stakes in two banks, and the stocks head in opposite directions

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Warren Buffett’s Berkshire Hathaway Inc. made a change in banking targets for investment, sending two banks’ shares in opposite directions Monday afternoon.

Capital One Financial
COF,
+3.22%
shares rallied more than 5% in after-hours trading while Bank of New York Mellon Corp.
BK,
+1.37%
sold off in the extended session Monday after filings with the Securities and Exchange Commission showed Berkshire
BRK.B,
+0.32%
BRK.A,
+0.96%
switched its position. The quarterly filing showed a new stake of 9.9 million shares in Capital One as Berkshire sold off its 25.1 million-share stake in Bank of New York Mellon.

At Berkshire’s annual meeting, Buffett weighed in on recent scares for regional banks.

“In terms of owning banks, events will determine their future and you’ve got politicians involved, you’ve got a whole lot of people who don’t really understand how the system works,” he said.

Other changes included an increased stake in HP Inc.
HPQ,
+2.32%,
which grew by 16% to about 121 million shares. That growth was part of a combination of the holdings of General Re Corp., which Berkshire has owned since 1998 but had previously reported its holdings separately as part of New England Asset Management Inc.

“Beginning with the Form 13F to be filed later today, the holdings of Gen Re will be included in Berkshire’s 13F filing,” Berkshire said in a news release earlier Monday. “The NEAM Form 13F filings will no longer include Gen Re’s holdings but they will continue to include NEAM client holdings where NEAM is acting as an investment manager.”

Other holdings affected by that change included Apple Inc.
AAPL,
-0.29%,
Bank of America Inc.
BAC,
+2.07%
and Chevron Corp.
CVX,
+0.37%,
Berkshire said in its news release.

Other stocks that Berkshire made moves with during the first three months of the year included the former Restoration Hardware — RH
RH,
+1.89%
shares fell 3% after Berkshire disclosed selling off its 2.4 million stake. Berkshire also officially reported selling of its 8.3 million stake in Taiwan Semiconductor Manufacturing Co.
TSM,
+2.67%.

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May 15, 2023
U.S. stocks finish higher, Dow snaps 5-day losing streak as investors eye debt-ceiling talks

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U.S. stocks finished higher on Monday, with the Dow Jones Industrial Average snapping a five-day losing streak, as investors continued to monitor talks about a deal to raise the federal government’s debt ceiling. The S&P 500
SPX,
+0.30%
gained 12.37 points, or 0.3%, to 4,136.47, according to preliminary closing data from FactSet. The Dow Jones Industrial Average
DJIA,
+0.14%
rose by 47.98 points, or 0.1%, to 33,348.60. The Nasdaq Composite
COMP,
+0.66%
advanced by 80.47 points, or 0.7%, to 12,365.21.

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May 15, 2023
Short sellers are more bearish than they’ve been in a long time

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Short sellers see major trouble ahead for the U.S. economy and the stock market. We ignore that at our peril.

You might dismiss the short sellers’ bearishness because—by definition—they bet on lower prices and therefore are predisposed to seeing the glass as half empty. Actually, however, short sellers’ collective bearishness fluctuates widely over time. And right now they are more bearish than they’ve been in a long time.

You…

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May 15, 2023
The Debt Ceiling Could Be a Mess. How to Play It.

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The debt-ceiling standoff between the GOP House and the Biden administration will likely cast a long shadow over markets. President Joe Biden met with House Speaker Kevin McCarthy and other congressional leaders this past week, but their talks ended without a resolution, and a Friday meeting was postponed as staffs met.

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May 12, 2023
U.S. could run out of cash ‘at some point in the first two weeks of June,’ CBO says

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The U.S. government faces a significant risk that it will no longer be able to pay all of its obligations “at some point in the first two weeks of June” if Congress doesn’t raise the federal borrowing limit, the Congressional Budget Office said Friday.

The nonpartisan agency’s projection falls in line with a forecast that Treasury Secretary Janet Yellen made on May 1, as she said her department’s best estimate is that it could become unable to continue to satisfy all obligations “by early June, and potentially as early as June 1.”

It also fits with an estimate released on Tuesday by a think tank, the Bipartisan Policy Center, which said the government is likely to have insufficient cash to meet all of its financial obligations as soon as early June.

“The extent to which the Treasury will be able to fund the government’s ongoing operations will remain uncertain throughout May, even if the Treasury ultimately runs out of funds in early June,” the CBO said. “That uncertainty exists because the timing and amount of revenue collections and outlays over the intervening weeks could differ from CBO’s projections.”

While a breakthrough hasn’t happened yet in Washington’s debt-ceiling standoff, there is increasing chatter about what could go into a bipartisan deal that ends the stalemate and avoids a market-shaking default.

See: Debt-ceiling standoff: Here’s what could go into a bipartisan deal

President Joe Biden and the four top U.S. lawmakers had planned to hold another meeting Friday on the debt limit after a parley on Tuesday, but it was postponed. A source familiar with the meetings called the delay a “positive” development, as staff work is continuing and Friday wasn’t yet the right time to re-convene Biden and the congressional leaders.

The CBO also said Friday that the government could end up staying solvent through the end of July without a debt-limit hike.

“If the Treasury’s cash and extraordinary measures are sufficient to finance the government until June 15, expected quarterly tax receipts and additional extraordinary measures will probably allow the government to continue financing operations through at least the end of July,” the agency said.

But it warned that if the debt limit is not raised or suspended “before the Treasury’s cash and extraordinary measures are exhausted, the government will have to delay making payments for some activities, default on its debt obligations, or both.”

“Those actions could result in distress in credit markets, disruptions in economic activity, and rapid increases in borrowing rates for the Treasury,” the agency said.

U.S. stocks
SPX,
-0.16%

DJIA,
-0.03%
were trading lower Friday.

In addition, the CBO updated a budget forecast on Friday, saying its “current projections show a federal budget deficit of $1.5 trillion for 2023 — which is $0.1 trillion more than the agency estimated in February.”

“The project cumulative deficit over the 2024–2033 period — $20.2 trillion — is about the same as the shortfall CBO projected in February,” the agency said.

“Measured in relation to the size of the economy, deficits grow from 6.0 percent of gross domestic product (GDP) next year to 6.9 percent in 2033 — well above their 50-year average of 3.6 percent of GDP.”

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May 12, 2023
Biden debt-ceiling meeting with lawmakers delayed, but move called ‘positive’

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President Joe Biden’s Friday meeting on the debt ceiling with congressional leaders has been postponed until next week.

A White House spokesperson said staff will continue working in the meantime.

The group met on Tuesday but did not reach a breakthrough on spending or raising the debt ceiling.

A source familiar with the meetings called the delay a “positive” development, as staff work is continuing and Friday wasn’t yet the right time to re-convene Biden and the congressional leaders.

Biden has insisted that Congress raise the U.S. borrowing limit without condition. House Speaker Kevin McCarthy and his fellow Republicans are demanding spending cuts in exchange, and neither side is budging so far.

See also: Debt-ceiling standoff: Here’s what could go into a bipartisan deal

Treasury Secretary Janet Yellen has warned that the federal government’s first-ever default could happen as soon as June 1 if Congress doesn’t raise the borrowing limit.

There is increasing chatter about what could go into a bipartisan deal that ends the stalemate and avoids a market-shaking default, as MarketWatch reported earlier this week. There could be agreement on government spending caps, unused COVID-relief money and energy-permitting reforms.

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May 11, 2023
Dow posts 4-day decline as regional-bank woes resurface

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U.S. stocks ended mostly lower on Thursday, with the Dow booking a fourth day in a row of losses, as selling pressures returned to shares of regional banks. The Dow Jones Industrial Average
DJIA,
-0.66%
shed about 221 points, or 0.7%, ending near 33,310, according to preliminary FactSet data. The S&P 500 index
SPX,
-0.17%
fell about 0.2%, while the Nasdaq Composite Index
COMP,
+0.18%
closed 0.2% higher. Disappointing earnings from Disney Co.
DIS,
-8.73%
tied to its streaming business helped drag down the blue-chip Dow, while shares of PacWest Bancorp
PACW,
-22.70%
fell more than 20% after it disclosed a 9.5% decline in deposits in recent weeks. Short-term rates remained volatile on Thursday as investors hoped for progress on the debt-ceiling stalemate in Washington D.C. The 2-year Treasury
TMUBMUSD02Y,
3.891%
was pegged at 3.906%, up four of the past five trading days, according to Dow Jones Market Data. The 6-month Treasury bill was at 5.11%.

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May 11, 2023
Icahn stock renews skid as Hindenburg says latest company disclosure raises more questions about company debt, losses

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Icahn Enterprises LP’s stock was trading down 0.7% Thursday, after short seller Hindenburg Research intensified his bearish bet on Carl Icahn’s investing arm, and said he’s now taking aim at its bonds.

Hindenburg, run by Nate Anderson, said the latest disclosures made Wednesday by IEP raised more questions about Icahn’s personal margin loans, or debt, from the company as well as portfolio losses at IEP. The short seller also said disclosures, intended to counter Hindenburg’s May 2 report, failed to address the issues raised.

The original report raised questions about asset valuations and Icahn’s own borrowing from the company using his units as collateral.

Hindenburg Research, which typically aims to profit from the decline in value of the shares of companies that it writes negative reports about, kicked off such a bet against Icahn Enterprise earlier this month but has now also set its sights on the company’s debt.

For more, see: Icahn calls Hindenburg short-seller report self-serving, as market value of his company’s stock plunges by $4 billion

“As noted in our earlier report, Icahn had not disclosed “basic metrics around his margin loans like loan to value (LTV), maintenance thresholds, principal amount, or interest rates.” This is still the case,” said Hindenburg.

IEP has not said why Icahn had borrowed against his holdings. The company didn’t respond to a request for comment on Thursday’s report.

On Wednesday, IEP disclosed a federal probe into its corporate governance and other issues. It is unclear if that investigation by the Southern District of New York is related to Hindenburg’s report and allegations, but the news put further pressure on the stock.

The bonds, which have been more active than usual since the first report, took another leg down on Thursday, as the attached charts from market-data company BondCliQ show, as Hindenburg said it has taken a short position in them.

The longest-dated bonds, the 4.375% notes that mature in February of 2029, were trading at around 75 cents on the dollar, as of midmorning.

IEP corporate bond prices. Source: BondCliQ

IEP bond volumes. Source: BondCliQ

Icahn owns 84% of IEP shares and disclosed in a 2022 filing with the Securities and Exchange Commission that he had pledged more than 181 million units, or 60% of his holdings, for margin loans.

On Wednesday, IEP
IEP,
-1.77%
said that pledge had increased to 202 million units, which Hindenburg estimates was valued at $6.5 billion as of Wednesday’s close, based on his calculations.

The battle between the iconic activist investor and the short seller has clobbered IEP’s stock, which has fallen 39% in the month to date at a cost of more than $6 billion of market cap.

Also read: What we know about Carl Icahn’s margin loan

IEP posted an unexpected loss on Wednesday of $270 million, or 75 cents per depositary unit, for the first quarter, after income of $323 million, or $1.06 a unit, in the year-earlier period. The FactSet consensus was for income of 19 cents.

Revenue fell to $2.758 billion from $2.968 billion a year ago, ahead of the $2.559 billion FactSet consensus. Analysts on its conference call didn’t pose any question of executives who briefly outlined the quarterly numbers.

The company on Wednesday also issued a rebuttal of the May 2 report from Hindenburg and said it would “take all appropriate steps to protect our unit holders and fight back.”

Icahn acknowledged that the investment segment has underperformed in recent years, which he blamed on its bearish view of the market and large net short position, which it has now scaled back.

IEP offers exposure to Icahn’s personal portfolio of public and private companies, including petroleum refineries, car-parts makers, food-packaging companies and real estate. Its unit holders are mostly individual investors, which means the market-cap loss prompted by the report has hurt those individual investors, said Icahn.

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May 11, 2023