Nasdaq rises slightly ahead of CPI, Buffett is bullish on Japanese stocks | 9th Financial Tankan

5/9 (Tue) morning market trends (compared to the previous day)

traditional finance

• NY Dow: $33,618 -0.1%
• Nasdaq: $12,256 +0.1%
• Nikkei Stock Average: ¥28,949 -0.7%
• USD/JPY: 135 +0.04%
• US dollar index: 101.3 +0.1%
• 10-year US Treasury yield: 3.5 +1.7% annual yield
• Gold Futures: $2,028 -0.02%

crypto assets

• Bitcoin: $27,596 -4.2%
• Ethereum: $1,844 -3.4%

Buffett bullish on Japanese stocks

At the annual general meeting of shareholders of Berkshire Hathaway, the world’s 6th largest listed company in terms of market capitalization, held on June 6, Warren Buffett spoke about his investment strategy for Japanese companies, saying, “We will continue to invest in Japanese companies. We will look for investment destinations,” he said, showing a positive attitude toward further collaboration with the Japanese general trading company that he invested in.

In the background, Mr. Buffett, who visited Japan on the 11th of last month, said that he would like to consider additional investment in Japanese stocks.

Berkshire Hathaway, led by Mr. Buffett, said in a domestic media interview at the time that the shareholding ratio of the five major trading companies, Mitsubishi Corporation, Mitsui & Co., Itochu Corporation, Marubeni Corporation, and Sumitomo Corporation, all increased to 7.4%. . The holding ratio of each of the five companies, which was 5% in August 2020, was raised to 6% in November 2022, and this seems to have been the second increase in purchases. It also indicated the possibility of further acquisitions (up to 9.9%).

At this year’s annual shareholders’ meeting, Buffett said he sold a large amount of shares (most of the $4 billion investment) in Taiwan Semiconductor Manufacturing (TSMC), a major chipmaker, citing worsening relations between the United States and China. On the other hand, “Japan’s five major trading companies are “pleasantly surprised” by their progress, for example, due to the fact that they pay proper dividends and buy back their own shares,” and “I look forward to doing business with them. I do,” he explained. Based on the fact that the stocks of the five major trading companies were undervalued despite their high dividend yields, some analysts believe that the business model of the major domestic trading companies is becoming an investment company like Berkshire Hathaway. It is speculated that Mr. Buffett, who advocates investing in value stocks, felt synergies with the benefits of being said to be highly resistant to economic instability.

On the other hand, regarding the bank credit problem, which has been shaken by the recent bankruptcy of a US regional bank, he pointed out that if the US FDIC had not moved to fully protect the deposits of Silicon Valley banks, “the situation would have been catastrophic.” Regarding First Republic Bank, which JPMorgan Chase rescued and acquired, he cited the fact that he provided a large real estate loan (jumbo mortgage) at a fixed interest rate that exceeded the government guarantee limit and suffered an unrealized loss due to the rise in interest rates. Punishment is necessary for those who make erroneous business decisions.” First Republic’s bankruptcy is believed to have been caused by a drop in the value of its huge low-interest mortgage debt following the FOMC rate hike.

He said he would continue to hold only Bank of America in his current banking stock portfolio.

In addition, Berkshire Hathaway’s earnings report for the January-March 2011 period showed that it had acquired shares of $2.8 billion ($10.4 billion net selling) during the same period, and in March it announced that it had invested in Occidental Petroleum, a major U.S. oil company. He reported that he had increased his stake to about 24% by purchasing additional shares equivalent to a total of $1 billion. Net profit for the quarter was $35.5 billion, up 6.4 times year-on-year.

NY Dow today

Today’s NY Dow dropped slightly at -55.6 dollars. The Nasdaq closed at +21.5. With the US April consumer price index (CPI) due to be released on Wednesday, October 10, the market appears to be in a wait-and-see mood.

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The US Federal Open Market Committee (FOMC) decided last week to raise interest rates by 0.25 points, raising the target range for the Federal Funds (FF) interest rate to “5.00-5.25%”.

economic data of the week

• May 10, 21:30 (Wednesday): US April Consumer Price Index/Core Index (CPI)
• May 11, 21:30 (Thursday): US April Wholesale Price Index/Core Index (PPI)

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US stocks

Buybacks to US regional bank stocks continued in some markets on Monday. PacWest+3.6%, Western Alliance+0.6%, Comerica-0.7%, etc.

Many regional bank stocks have been targeted by short sellers over fears of a cascade of bank failures, and the American Bankers Association (ABA) said on May 4 that short-sellers may be manipulating the market. I have expressed my concerns to the US Securities and Exchange Commission (SEC).

Analysts at JP Morgan also underscored this concern in their report, speculating that the SEC may temporarily ban short-selling of regional bank stocks. Meanwhile, Politico reports that the SEC is not considering such action at this time.

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In addition, compared to the previous day for individual stocks of US IT/tech stocks: NVIDIA +1.6%, c3.ai +2.8%, Tesla +1%, Microsoft +0.6%, Alphabet +2%, Amazon +0.1%, Apple -0.04% , Meta +0.2%.

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Virtual currency-related stocks fall

• Coinbase | $58.1 (-0.2%/-0.2%)
• MicroStrategy | $294.6 (-9.8%/-9.8%)
• Hat 8 Mining | $1.7 (-4.7%/-4.8%)

Coinbase CEO Brian Armstrong hinted at the possibility of placing Coinbase’s strategic hub in the United Arab Emirates during a visit to the UAE on the 8th. The company announced its financial results last week.

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