Warren Buffett has set alarm bells ringing on Wall Street
At the end of this year, the 94 -year -old boy, who will retire as the Chief of Berkshire Hathaway, built a record of 350 billion dollars of cash in the earlier this year before the markets fell and said that the analysts saw the accident. Millions of loyal followers are watching every move.
Can the decision to abandon banking stocks show that there is a collapse on the cards?
Politics Rollercoaster
Buffett is not alone on sale. JPMorgan’s General Manager Jamie Dimon sold $ 31.5 million at the investment bank in April. This followed the sale of shares worth $ 125 million in 2024, which has been the first sale since 2005.
Analysts believe Trump’s economic policy Roller Coaster will hit the American economy in the second half of the year.
The US inflation rose to 2.7 percent in June, and economists say it is a sign of future things. For any economic problems, banks will be canaria in the coal mine.
The recent threats against the President of the President of the Federal Reserve Jerome Powell will only increase the concerns of economic policy.
Buffett may have made a bet on the summit of America’s banks.
“Some of this can be guided by expectations that these existing self -values are not sustainable, Gen said Gennadiy Goldberg, President of the US strategy of US rates in TD Securities.
US banks had a great run, but there are open problems on the horizon for the sector and the wider US economy.
One of the biggest questions is the appearance of long -term government borrowing costs.
Trump’s trade tariffs are expected to increase inflation, which means higher return on US treasures as investors demand more return.
Banks will benefit from higher interest rates in bond portfolios, but higher Treasury returns will provide a new wave of pressure in the credit sector. Bad loans may increase as debtors fight back.
Higher Treasury returns will make other investments look less attractive and will trigger a decrease in merger and inheritance activities. Bad news for investment banks that have performed very well so far.
‘Reality Control’
Then the Fed has a question of what happened to Powell.
If Trump overthrows the FED president and changes it more flexible, interest rates probably decrease, but 10 -year Treasury returns, ie long -term borrowing costs, rise over higher inflation expectations in the future. Lower borrowing costs will also increase concerns about inflation.
Bill Gross, the founding partner of Bond trade giant Pimco, said in X: “Investors are waking up! […] I am moving in a defensive way for one-I buy more cash, 4-5 percent dividend return. And emphasis outside the USA. “
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The bank bosses also alarm.
Goldman Sachs General Manager David Solomon, Citigroup boss Jane Fraser and Bank of America President Brian Moynihan and Jpmorgan, Dimon, called the FED president against overthrowing.
Beyond what happened on the Fed, concerns about the appearance of the US economy are increasing. Trump’s trade war is injecting sand into the engines of growth.
A large number of estimates reduced growth expectations, including federal reserve, which reduced the GDP forecast for 2025 from 2.1 percent to 1.4 percent in December.
Kambiz Kazemi, Chief Investment Officer of Validus Risk Management, believes that “reality control” has come.
“The uncertainty around the tariffs and more generally, the uncertainty about most issues, the way the administration carries out something, will slowly overcome the confidence in the system. Reality should be raised.”
At the end of this year, the 94 -year -old child, who will retire as Berkshire Hathaway Chief, made a record of $ 350 billion in cash before the markets fell earlier this year.Credit: Bloomberg
When the economy is worsening, banks always perform low in the wider market because they play such a central function in the economy through credit books.
So far, the trade branches of the banks have benefited from volatility as investors are struggling to move their stocks. However, it is unlikely that other departments that write credit, advise agreements or undergo international trade will be fee.
Kazemi, “the large, large red flag will be consumption. Since inflation increases, if things cost more expensive, unemployment increases, it will affect consumption,” says Kazemi.
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“When consumer expenditures decrease, everything has a fluctuation effect on borrowing. It becomes a little feedback cycle.”
Berkshire Hathaway still has important assets in the banking sector. 16.4 percent of the current portfolio invests in American Express and 10.1 percent are still in Bank of America. However, exposure is definitely decreased.
“It is always difficult to know how much of Berkshire’s sales reflect the company -specific or internal issues, Cun says Cunningham, Cunningham says.
“[But] Berkshire has recently focused on energy and consumer goods (for example, Occiental oil and constellatory brands) can show a shift towards sectors seen as more flexible in a variable environment. “
In other words, shake hands – and do not bet the banks.
Telegraph, London
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