Short-term bond market realizes the reality of higher for longer; This is not a “Soft Landing” environment…

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Warren Buffett may be bracing for a recession – and Michael Burry’s latest big short is a ‘good move,’ says top economist Steve Hanke

Warren Buffett and Michael Burry have rattled financial markets with bearish disclosures this month. Steve Hanke says the Berkshire Hathaway CEO and the investor of “The Big Short” fame are likely preparing for trouble.

Berkshire sold a net $8 billion of stocks and slowed its pace of buybacks last quarter, sparking a 13% rise in its money pile to a near-record $147 billion.

The sprawling conglomerate has now disposed of a net $33 billion of stocks over the past three quarters, fueling a $38 billion increase in its stash of cash, cash equivalents, and Treasury bills during that time.

Buffett’s second-quarter moves “are consistent with the anticipation of a recession and the fact that stocks are currently pricey,” Hanke told Insider.

“It’s also consistent with his long track record of piling up cash in anticipation of storm clouds ahead with the capacity to pounce on bargains once the storm hits,” the professor of applied economics at Johns Hopkins University added.

Hanke is also known for serving as the president of Toronto Trust Argentina when it was the world’s best-performing emerging market mutual fund in 1995.

Buffett prides himself on conserving plenty of cash to ride out tough periods and capitalize on stock-market downturns and economic malaise. For example, he struck deals with Goldman Sachs, General Electric, Harley-Davidson, Mars, and other cash-hungry companies in the depths of the 2008 financial crisis.

 

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