Warren Buffett's comments at his annual Berkshire Hathaway
This year, his remarks were even more anticipated as there's a huge amount of uncertainty about the economic outlook. On one hand, the stock market seems pretty sanguine and seems to be projecting a V-shaped recovery. In contrast, economic indicators are pointing to a much rougher ahead and more of a U-shaped recovery.
Buffett's Bearish Tone
While Buffett tends to be generally optimistic about the state of the economy and his holdings, he was much more cautious at this weekend's meeting. Most notably, he nor his primary money managers, Todd Combs and Ted Wechsler put any money to work despite the steep drop in March. He said that they're not buying stocks, as it's still early in the crisis. Additionally, he doesn't believe that valuations have reached attractive levels.
Buffett also revealed that he had completely exited his positions in the airline stocks which included Delta Airlines
Praise for the Fed
Buffett was effusive in his praise for Federal Reserve Chairman Jerome Powell given his early and aggressive intervention in financial markets. On the expansion of the Fed balance sheet, Buffett said that there would likely be some cost to it that is unclear at the moment, but the alternative of letting the economy seize up would be worse.
During the depths of the Great Recession in 2008, Buffett was aggressive in deploying cash and lending to companies. This time, Buffett hasn't lent any money due to the Fed's actions. Buffett said that this is a great time to borrow money but not a good time to lend money.
Buffett did reiterate his belief and optimism in America in the long-term. He said that the country has survived worse situations including the Civil War and World War 2 and that he expects the country to continue growing once this crisis passes as well.
Currently, Berkshire is long about $180 billion in public equities and has about $150 billion in cash. Its top equity positions are Apple