Good morning investors!
After an extended period of holding record amounts of cash, Warren Buffett is finally starting to make new investments.
The catch?
He's keeping his latest moves under wraps.
But I think I've figured out exactly what stock he's investing in, and even if I'm wrong, I found seven companies in the process that I think would make solid long-term investments.
I outline them all in my latest video, featuring a guest appearance from my kitten Rosie. Stay tuned to the end for some bloopers!
-Brian
In Today's Issue:
🥇 Stocks are Back in the Green
🥈 Trump Swings at Walmart
🥉 Consumers Lose Confidence
Markets
Up and to the Right 📈
Last week, the S&P 500 rose a whopping 5.29% after the U.S. and China appeared to make some progress during trade negotiations in Switzerland. While nothing concrete has come from this initial announcement, tariffs have been paused for a 90-day period while the two countries continue to negotiate.
Investors were ecstatic over the news and took the opportunity to bid the market higher. As a result, the S&P 500 is now UP just under 2% so far this year, though it is still off from February's all time high. As you'll see below however, the stock market is not the economy.
Tariffs
Just Eat the Tariffs 🍔
Last week, Walmart reported Q1 earnings and noted that consumers would start to see higher prices on Walmarts shelves as early as summer this year. (can you believe that's only like a month away?? I can't.)
President Trump reacted to this over the weekend, writing on his social media platform that Walmart should "EAT THE TARIFFS," i.e. lose profits for the sake of keeping prices low.
There is a lot to unpack here, but politics aside I'll just note one little circular paradox: If Walmart makes less money, they have less to pay their US employees. Their stock, which many U.S. investors own, will also go down. Sure, if they keep prices low, their U.S. customers will not lose in the sense that prices will stay flat. But many of those customers are also employees that could see shift cuts or even layoffs if this keeps progressing.
It's really a lose-lose situation all 'round...
Economy
Consumer Imposter Syndrome
Speaking of progressing, the Consumer Confidence Index has progressed lower this month as consumers' expectations for future economic conditions is at a 13 year low. That means that on average, we were all just a hair more optimistic about the future during a global pandemic and total economic shutdown.
However, the stock market is near record highs...what gives? The reality is that the stock market is not the economy. The S&P 500 is an index of the 500 biggest companies in the US. And these companies are likely the most well equipped to deal with supply chain uncertainty. So while consumers may feel the pain, the MAG7 may continue to see gains.
It's not all bad though: just because Consumer Confidence is low does not necessarily mean we will be in a recession. Just look at 2012 for example. At the time, there was much talk about a "double-dip" recession following the 2008 Financial Crisis. But the recession never came.
To handle this uncertainty, I am still pretty diversified across stocks, bonds, gold, treasuries, and physical real estate. That way I make money whether the market is up or down, and if it does go down (which I personally think it will), I'll be ready to reallocate into stocks.
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