Hey Snackers,
E.T. phone home(land security): during the first UFO-related congressional hearing in more than half a century, Pentagon officials said reports of encounters with “unidentified phenomena” have surged — and some remain a mystery.
Stocks surged yesterday with tech, airlines, and banks leading the rebound. Investors were encouraged by positive econ news, including that retail spending jumped in April for the fourth straight month.
Exchanging USDs for gelato… A year ago, one US dollar would get you 0.82 euro. Today, you can exchange $1 for about 0.95 euro — the currencies are almost equal. That's because the USD has "appreciated," or gained in value, compared to the euro. In fact, the greenback has gained against many currencies (like the Japanese yen, the Chinese yuan, and the British pound). That's good for:
Moment of appreciation... for the golden currency of nations. The USD's stable rep has long made it the world's reserve currency for international purchases. Think: countries buy crude oil in USDs. But what's behind the recent appreciation streak? It all comes down to the “d” word: demand for dollars is higher.
Everything’s relative… That’s literally true in the foreign-exchange world. USD demand has risen because (1) US interest rates are significantly higher than in other countries, which gives investors more reason to park their money in America, and (2) compared with other big economies, the US is looking peachy. Europe’s trade situation has been wrecked by Russia’s war on Ukraine, and China’s Covid crackdown has decimated chunks of its economy. The flip side: a strong dollar makes US exports pricier, which could check economic growth.
Some people love a bargain… Warren Buffett’s holding company, Berkshire Hathaway, has invested billions in battered stocks over the past few months, a recent filing showed. The Oracle of Omaha sat tight last year while stock prices soared, selling more than he bought. But now that markets have cooled, he’s buying again. Big time:
When the going gets tough… Buffett gets buying. The 91-year-old guru famously seeks stocks that are low priced relative to their potential long-term value. But those “value stocks” were hard to find last year since (according to Buffett) everything was overvalued. So Berkshire ended the year with a near-record cash pile. Now it’s trading time:
This is Warren-nomics 101… Thanks to Fed’s rate hikes, booming “growth” stocks have fallen back to Earth (#corrected). That’s created ideal conditions for Berkshire to shop for bargain-priced “value” stocks. Meanwhile, growth stocks — whose value often rests on distant returns — may keep struggling as the Fed keeps raising rates. To weather a downturn, even growth-hungry investors might jump on the Buffett wagon and invest in slow-and-steady stocks.
Authors of this Snacks own: shares of Berkshire Hathaway, Apple and Walmart
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