Remember to be courteous and polite in all of your interactions within the gates of Shrewd'm.
- Manlobbi
Halls of Shrewd'm / US Policy❤
No. of Recommendations: 0
No. of Recommendations: 0
Dimon
No. of Recommendations: 5
Buffett will read Dimon's letter if he hasn't already.
Warren has been highly complimentary of Jamie in the past. I'd wager that Buffett will quote from Dimon's letter at the upcoming annual meeting.
Reading through it now. Pretty good stuff. Sobering.
This jumped out:
"This may be a once-in-a-generation sea change, with material effect.
Of course, there is always uncertainty. I am often frustrated when people talk about today's uncertainty as if it were any different from yesterday's uncertainty. However, in this case, I believe it actually is.
Less-predictable geopolitics, in general, and a complex adjustment to relationships with China are probably leading to higher military spending and a realignment of global economic and military alliances.
Higher fiscal spending, higher debt to gross domestic product (GDP), higher investment spend in general (including climate spending), higher energy costs and the inflationary effect of trade adjustments all lead me to believe that we may have gone from a savings glut to scarce capital and may be headed to higher inflation and higher interest rates than in the immediate past.
Essentially, we may be moving, as I read somewhere, from a virtuous cycle to a vicious cycle."
Potential tough times ahead in other words. Berkshire should do better than most in a world starved for capital.
Looking on the bright side, perhaps we will see more opportunities to intelligently deploy large amounts to capital than we have in the past few decades.
No. of Recommendations: 0
Good morning, Barry Sternlicht was on cnbc for an hour early this morning. If you missed it this 4 minute clip is enter than nothing. ' Inflation is going to drop hard, says Starwood Capital CEO''. Sorry I can't post a cnbc video??
No. of Recommendations: 0
No. of Recommendations: 0
Dimon is definitely in the "higher for longer" camp on interest rates:
"We are prepared for potentially higher interest rates, and we may have higher inflation for longer.
If we have higher inflation for longer, the Fed may be forced to increase rates higher than people expect despite the recent bank crisis. Also, QT may have ongoing impacts that might, over time, be another force, pushing longer-term rates higher than currently envisioned. This may occur even if we have a mild ' or not-so-mild ' recession, as we saw in the 1970s and 1980s.
We have always looked at the 'fat tails' of higher interest rates, particularly on our own company. We were premature in thinking about the possibility of interest rates going to 5%, 6% or 7% -- which still might not happen, but we always want to be protected against this outcome. For example, we have spoken about stockpiling cash, not investing in sovereign debt when rates were low and being willing to forgo income to protect against rising rates. Rest assured, our company can handle significantly higher interest rates no matter how anyone analyzes capital.
Higher interest rates will obviously have an important impact, not just for banks but for some of those who borrow on a floating rate or those who have to refinance in a higher rate environment. If this tide goes out, you should assume that it will expose additional weaknesses in the economy. However, our company is prepared ' not only for higher rates but for a potential recession that could arise and related credit losses. That preparation includes analyzing all of our clients (in particular our leveraged lending, real estate and other clients) for what the impact of higher rates may mean for them. We believe the risks within our own portfolio are manageable. And we try to analyze the impact of these factors on companies and industries away from us. For example, we do expect that some types of real estate in certain locations may come under pressure.
Who else do we know that has been hoarding cash?
No. of Recommendations: 0
Obviously Dimon is one of the few bankers who earns his compensation. Buffett has been long too much cash, for decades. Lets see what he thinks is a steal. Sternlicht said, he knew of a B building in new york, 300 million mortgage, offered for 70 million, the tenant passed. Scary stuff.
No. of Recommendations: 1
I have wondered for years now, where Jamie Dimon will end up in retirement.....I believe there is a comfortable billet ready for him at BRK....
