Buffett on Negative Rates in Europe: We’d Be Better Off with a Giant Mattress

The cherry Coke swigging Warren Buffett did one of those marathon interviews with CNBCs Becky Quick this morning. When asked about the adoption of a negative rate policy being thrusted on people worldwide, his tone was a bit less sanguine, saying he’d prefer to place Berkshire’s Euro denominated cash under a mattress than have it sitting in one of their stupid banks losing value.

“We are doing something the world has never seen,” he said. “We do not know how this movie plays out.”

“Berkshire Hathaway is sitting with billions of dollars of euros in an insurance company … in Europe and they will bear a negative rate,” Buffett told CNBC “Squawk Box,” two days after issuing his highly anticipated annual letter.

“We would be better off with a big mattress in Europe that we just stick all this stuff in, if I could just find a person I trusted to sleep on that mattress,” he said. “It distorts everything.”

This Chinese yuan is dropping again, after the PBOC announced it was cutting the reserve requirements for their banks by 0.5%.

This, of course, is complete horseshit, as the Chinese have done this 5 times in a year.

With this move, most large Chinese banks will need to hold 17% in reserve. This, for some odd reason, is being viewed in a positive light on Wall Street this morning, sending Hong Kong futures up by 0.7% in what has hitherto been a wretched market throughout 2016.

But Michael Pearson is back at the helm, back from a very suspicious and delayed leave of absence–thanks to ‘medical reasons.’

Shares of VRX are plunging once again this morning, following conference call comments alluding to a delay in earnings and lack of guidance.

The losses absorbed by Bill Ackman’s Pershing Square, long VRX in its various forms, hitherto, should amount in excess of a billion dollars.

But who’s counting?

News out this evening regarding a planned liquidation of the Chinese coal and steel sectors has investors less than enthusiastic regarding Chinese shares. As such, they’re selling off accordingly.

Yin Weimin, minister of human resources and social security, said capacity cuts will lead to some layoffs in 2016, but added that he was confident of keeping employment stable this year despite downward pressure on the economy.

No timeframe was given for the 1.8 million figure cited.

To combat this massive reduction in the Chinese jobs market, China’s Premier Li Keqiang said a fund valued at 100 billion yuan has been established to succor the soon to be jobless workers.

As you read this, Dow futures are off by 73, Chinese markets are getting ransacked, and Leonardo DiCaprio is shining up his brand new Academy award for best actor. Aside from the well deserved Leo, there have been many winners, some of the surprise varietal worth nothing. Some of these stocks are merely up because they were buried alive in 2015. Nevertheless, it is my duty to report.

I will sort them by sector and not mention stocks that you’d expect to be up, like consumer staples or gold. Fuck that. I am going to show you carnival show acts of magnificent glory.

Basic Materials

CENX +53%

TCK +46%

STR +27%

AKS +22%

EQGP +21%

INT +20%

Consumer Goods

KORS +41%

ANFI +39%

SWFT +29%

FOSL +28%

REV +25%

CREE +18%

GNRC +17%

Financials

GDOT +27%

BAP +21%

O +14%

GLRE +13%

Healthcare

BITI +74%

EDIT +48%

ALR +37%

WX +36%

ANIK +21%

WCG +17%

Industrials

BIN +27%

BGG +22%

TEX +20%

TREX +13%

CMI +12%

FAST +12%

Services

MSO +46%

JCP +44%

ZUMZ +35%

BURL +33%

BGFV +33%

DDS +29%

NDLS +24%

M +24%

Tech

STRP +92%

VHC +90%

GLUU +58%

GRPN +46%

ROVI +35%

CRAY +31%

DDD +19%

DLB +18%

Utilities

BKH +22%

KMI +21%

UIL +18%

EXC +15%

EIX +13.6%

ATO +12%

The Chinese markets are down 2.7% this evening, just in time for some late night, hollywood styled (double entendre!), drama. It’s nice to see China sinking into the oblivion, as other asian markets do fairly well. For example, the NIKKEI is higher by 0.4% and the all unimportant KOSPI is flat.

Separately, gold is up 0.48%, which means people are scared shit.

Portuguese-German spreads continue to narrow, which is bullish, to 283bps.

Lastly, European futures are down 0.4%.

There is nothing to be learned from tonight’s helter skelter session.

As you were.

I know some of you dislike Warren because of his political leanings. All that aside, the man is a living icon. Although aging and his performance at Berkshire has been less than optimal, you’ve got to both love and admire his ceaseless optimism for America.

“For 240 years it’s been a terrible mistake to bet against America, and now is no time to start,” Buffett said. “America’s golden goose of commerce and innovation will continue to lay more and larger eggs.”

The 2015 Berkshire Hathaway annual letter can be read here.

I once went through a phase of watching foreign films. Sometimes I wonder where I found all this time to entertain myself.

This is one of my favorite samurai movies of all time, with an unexpected and unique twist at the end. I won’t ruin it for you by revealing too much.

If you want some action, great dialogue, albeit via captions, with a mysterious ending, go see this film.

Stocks edged crept lower throughout the day, as profits were taken and men of industry ran for the hills, ever so quietly. Although I’m cautiously pessimistic about the market, I do think, however, it can rally through April. Nevertheless, my selling is done and I have zero equity exposure.

For the year, thus far, long TLT and trading the oversold signals of Exodus, I am up 1.35%.

NOTE: Tonight at 7pm, Vince aka RAUL will be doing a demo for the Exodus market intelligence platform. For those of you who are on the fence about joining the league of men, purchase a ticket and also access the video archives of the last 4 days, featuring J. Macke and J. Kohler.

All in all, it was a fine week. The bulls retain the initiative heading into next week. Should oil move to the upside, or the Fed make some conciliatory comments regarding policy, I suspect the market will take another led to the upside, making it all the more punitive for anyone holding shorts.

Cheers

I don’t want to disparage Stoltzfus too much. Instinctively, I like the guy. He reminds me of someone I once hated and then learned to like. At any rate, he’s a lunatic. His target for the S&P 500 is 2,300, leagues and scores ahead of everyone else. He’s the outlier of the analyst community and he’s asking you to curb your enthusiasm.

The fuck?

The fuck is right, lads. He thinks stocks trade north, based on magnets from outerspace pulling them higher. Other than that, he’s rather melancholy about the whole ordeal–reminiscent of better global growth years, pining for reflators.

Well, sir, you shall not have any reflators!

Adjust your estimates, clown.