The Woodstock of Capitalism
Warren Buffett, annual shareholder meeting has been going on. Highlights include:
- Buffett is taking a hard line against the David Sokol/Lubrizol incident. He has said that he should have been more vigilant in knowing about Sokol's trades.
- His successor, although not named, is "straight as an arrow."
- Due to Japanese earthquake, Berkshire may have to incur the first underwriting loss in years
- The "elephant gun" is still loaded. The Sokol/Lubrizol incident will not slow Buffett down and look forward to future deals. Most likely, the deals will be overseas (i.e. India)
- Berkshire's value would go down if Berkshire paid a dividend. It would signal to the market Mr. Buffett could not re-invest capital at a high enough hurdle rate.
Berkshire Gets Tough With Sokol As Meeting Nears (click here)
Berkshire May Have Underwriting Loss on Disasters (click here)
Guessing Game Builds Over Buffett's Next Deal (click here)
Berkshire Stock Would Drop If Company Began Paying Dividend (click here)
Bernanke & inflation
I couldn't agree with this analysis anymore! From CNBC:
...But quantitative easing does seem to be doing a good job of creating inflation expectations. As Larry Kudlow pointed out yesterday, “inflation-sensitive market-price indicators — like rising gold, oil, and commodity indexes, and the falling dollar exchange rate — are trying to signal higher future inflation.”
I suspect that the cause of this breach between inflation expectations and reality is that we have so little experience with these unconventional policies. Markets understand pretty well how to anticipate the future consequences of the ordinary Fed policies like targeting interest rates. But the very newness of quantitative easing means that the outcome is difficult to predict...
The irony is that nearly everyone is misreading what has happened.
What Bernanke is worried about is not that we’ll get too much inflation—he knows he can just put a stop to inflation by hiking rates—but that anticipation of inflation will get out of hand. And that is something he cannot directly control.
Inflation Expectations and New Monetary Policy (click here)
From marketwatch.com:
We have now entered just the beginning of the third [and final] phase of the bull market in precious metals” — the phase in which everyone has become aware of the bull market but aren’t yet engaged and involved in it, he said. The third phase is far from over but when it ends, “precious metals will become a bubble with heavy public participation...
...Karnani never expected, however, that silver would be near $50 by the end of April.
“I am not bearish on silver. I am only concerned over the pace of the rise of silver,” he said. “For long-term sustainability, silver prices must fall for a week and then rise. If silver prices continue to rise, then a bubble will be formed and silver prices can crash to $25 next year.”
$50 Silver Price Screams Caution (click here)
Weak dollar, strong stocks
Kudlow & Co. clip feat. Rick Santelli (click here)
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