😎 Buffett's months of pools and beers

What’s going on here?

According to Berkshire Hathaway’s latest filing, Warren Buffett swapped Wall Street for beer and swimming pools last quarter.

What does this mean?

Berkshire backed away from the big banks, trimming stakes in Bank of America and Capital One while ditching Citigroup completely. Instead, the conglomerate doubled its holdings in Pool Corp (a wholesale distributor of most things swim-related) and Constellation Brands (a world-leading producer of alcohol brands like Corona). Thursday’s filing also showed that Berkshire’s hoarded $333 billion in Treasury bonds and cash – money that’s earning interest by the day. Investors respect the strategy: Berkshire’s shares are up 12% this year, trouncing the S&P 500’s flatline.

Why should I care?

For you personally: Do your own homework.

Filings of this kind – called “13F”, and mandated for investment firms with over $100 million in assets – might seem like an investing cheat code. See, the filings display the firms’ US stock holdings – only, they don’t put everything on show. For instance, one of Berkshire’s positions isn’t included, having been granted confidentiality by regulators. Plus, the firm recently raised its stakes in major Japanese trading houses – but because they’re listed outside of the US, you won’t see that on its 13F. You won’t see short trades or certain derivatives (investing contracts like futures and options) either. Remember, too, that the filings are roundups, not real-time updates: a simple copy and paste won’t produce the same results.

The bigger picture: Close enough… welcome back, Buffett.

Billionaire investor Bill Ackman seems to be realizing his dream of building his very own Berkshire Hathaway. Copying elements of the Buffett playbook, he’s developing a controlling stake in a business focused on real assets – suburban landowner Howard Hughes – and layering on an insurance arm. That’s the start of a diversified holding company. And sure, Ackman’s firm won’t benefit from Buffett’s Midas touch. But with the Oracle of Omaha leaving his CEO desk next January, soon neither will Berkshire.

What’s going on here?

Japan’s economy shrank for the first time in a year, falling by a worse-than-expected 0.2% last quarter – so forgive the country if it needs to vent.

What does this mean?

Lopsided trade was Japan’s main issue last quarter: it imported more than usual while exporting less, which knocked 0.8 percentage points off economic growth. It didn’t help that consumer spending – which makes up half the economy – fell flat. So now, things are on a knife-edge. See, US tariffs could be the financial equivalent of ankle weights. (Case in point: Japan’s all-important carmakers are bracing for a $19 billion blow from the levies.) And if the economy shrinks again this quarter, Japan would technically be in a recession. The stock market has already been punished by investors: the Nikkei index is down 5% this year, landing 10% below its peak from last summer.

Why should I care?

Zooming out: “Timber!”

Before this data, the Japanese government had already reduced its economic forecast for this year. But, determined to limit the damage, it’s reportedly considering new ways to financially support households and businesses – although tax cuts have been taken off the table. You can also see why traders now see just a 12% chance of an interest rate hike by July, down from 78% just weeks ago. Higher rates would only stifle the economy more, after all.

For you personally: Not-so-comfort food.

As the US has lamented the price of eggs, Japan has stressed over rice. The country’s staple food has doubled in price over the past year, forcing the government to tuck into its emergency stockpiles of the grain. Sure, shoppers could swap for other starches, like noodles or bread – but Japan’s consumers are already low on financial confidence, and visibly rising price tags on even basic goods won’t help. And if consumers tighten their purse strings, the economy will feel the pull.