Markets are grinding higher as one would expect given the double dose of Fed dove and love, but the exciting story of the Day is Warren is shifting into Japanese Trading companies. Berkshire Hathaway has acquired stakes in Itochu (T:), Marubeni (T:), Mitsubishi (OTC:)., Mitsui & Co (T:), and Sumitomo (T:) of “slightly more” than 5%.
Warren Buffet continues to spread his international wings. After buying a piece of Canadain Gold miner Barrick Gold (NYSE:), Buffett has now reportedly purchased a 5% stake in Japanese trading houses. But I think what this rotation is telling us not that he is so much turning negative on US stocks but that he may be diversifying away from the US dollar.
This move started with his shift to buying Barrick the Canadian gold miner as gold stocks are underpinned by gold, which is an excellent hedge for a weaker .
Buying shares in the colossal Japanese trading houses are also a longer-term complimentary rebound trade. Once the global economy starts to lift off again when the virus burns itself out or, hopefully, via a vaccine, these giant trading houses that deal in the imports and trading of resources will be a hot commodity via a vaccine, so to speak as they will be the conduits to stoke Japan’s colossal economic engines on the global recovery. I would also expect more internalization policy in the near future geared to bring back key manufacturing jobs to Japan, possible via tax incentives.
Not only will these stocks flourish, but this is a definite hedge against MMT style monetary policy in the US that could see the dollar depreciate significantly over time.
I don’t think he is betting so much on a stronger but rather hedging against a weaker US dollar so we could see more Hathway global rotation shortly.
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