BUFFETT SELLS

In Q1 last year…

Not many tend to report on the reasons WHY Buffett might have sold.

So let’s dive in (and read til the end to find out some trades we might be putting on soon in Fink Ultimate…

Last year, Buffett started selling and built up a rather lovely cash pile (as he usually does).

Why?

Well, he probably saw the SPX price to book approaching its recent high, a breach of which would have been the highest since DotCom.

He probably has a horizon to exit the market at best price too, so would start getting out earlier as demand is still available and the marginal buyer is still there.

This is less about Buffett and more about the world we've just entered though.

A Trump presidency = higher vol -- fact. It was like this in 16-20 too.

I recall frantically refreshing Twitter an hour or two before market open to see if he had tweeted anything to do with Chinese trade OFTEN.

This higher volatility is feeding through to slightly elevated credit spreads too since he came in, perhaps related, perhaps not, but who cares -- when these tick higher it's prudent to pay attention.

Two views.

1) It's going to take a good 6-9 months to digest Trump's regime.

2) I think there's a bit of a reckoning coming with employment.

Initial claims were very high on yesterday's print and it seems like there are very early signs of a trend higher forming.

Why does that matter?

Well this part of macro has been able to be ignored for a long time as government jobs have made up a large amount of the labour market gains in the US...

A cycle slowdown in private hiring, combined with government jobs going ain't good for demand generally, and I think this is why we're seeing a bit of rounding off in equities.

I am pushing a little defensively and I'm likely to cut down risk today.

However, I am happy to add two tickers: COKE and buy into the naysayers on TLT.

I think having some longer dated bond exposure here can make sense, while COKE is a consumer staple (our model has had consumer discretionary as a big outperformer over the last 90 days and the macro makes me feel this tide is turning along with a slowdown in model momentum = shift to consumer staples under pressured consumer).
Last year, Buffett started selling and built up a rather lovely cash pile (as he usually does).

Why?

Well, he probably saw the SPX price to book approaching its recent high, a breach of which would have been the highest since DotCom.

He probably has a horizon to exit the market at best price too, so would start getting out earlier as demand is still available and the marginal buyer is still there.

This is less about Buffett and more about the world we've just entered though.

A Trump presidency = higher vol -- fact. It was like this in 16-20 too.

I recall frantically refreshing Twitter an hour or two before market open to see if he had tweeted anything to do with Chinese trade OFTEN.

This higher vol is feeding through to slightly elevated credit spreads too since he came in, perhaps related, perhaps not, but who cares -- when these tick higher it's prudent to pay attention.

Two views.

1) It's going to take a good 6-9 months to digest Trump's regime.

2) I think there's a bit of a reckoning coming with employment.

Initial claims were very high on yesterday's print and it seems like there are very early signs of a trend higher forming.

Why does that matter?

Well this part of macro has been able to be ignored for a long time as government jobs have made up a large amount of the labour market gains in the US...

A cycle slowdown in private hiring, combined with government jobs going ain't good for demand generally, and I think this is why we're seeing a bit of rounding off in equities.

I am pushing a little defensively and I'm likely to cut down risk today.

However, I am happy to add two tickers: COKE and buy into the naysayers on TLT.

I think having some longer dated bond exposure here can make sense, while COKE is a consumer staple (our model has had consumer discretionary as a big outperformer over the last 90 days and the macro makes me feel this tide is turning along with a slowdown in model momentum = shift to consumer staples under pressured consumer).

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