Warren Buffett Warns on Utility Stocks at Berkshire Meeting; Shares Drop Over 5% as Ackman Plans Buffett-Inspired Strategy

US • Business • 05/06 02:31
Warren Buffett Warns on Utility Stocks at Berkshire Meeting; Shares Drop Over 5% as Ackman Plans Buffett-Inspired Strategy

Warren Buffett warned about risks in utility stocks at Berkshire Hathaway's 60th annual meeting, citing wildfires as a threat. He confirmed Greg Abel will succeed him as CEO on January 1, 2026. Berkshire shares fell over 5% after the announcement. Bill Ackman plans to emulate Buffett's model with Howard Hughes Holdings. New U.S. tariffs on imported auto parts began on May 3, 2025, under President Trump's directive, affecting the automotive sector. Automakers are concerned about increased costs and supply chain disruptions, with some seeking exemptions.

Key Updates

05/07 13:02

Investors Rely on Soft Data Amid U.S. Trade Policy Volatility, Shifting from Traditional Indicators

Investors are increasingly relying on soft data, such as sentiment surveys and business confidence indexes, due to unpredictable U.S. trade policy changes under President Trump. Traditional hard data like employment figures are seen as outdated in this volatile environment. Experts like Jack Ablin and Jason Britton emphasize the timeliness of soft data, though some, like Treasury Secretary Scott Bessent, remain skeptical of its reliability. The shift is driven by frequent tariff changes, impacting economic planning and prompting a reevaluation of investment strategies.

05/06 22:31

Market Turmoil: Morgan Stanley Advises Large-Cap Shift as Dow Drops 400 Points and Tesla Faces European Challenges

Morgan Stanley advises investors to shift to large-cap stocks amid U.S. market volatility due to tariff fears and Federal Reserve uncertainty. The Dow Jones fell over 400 points on May 6, driven by trade tensions and anticipation of the Fed's policy decision. Tesla faces challenges in Europe, with sales dropping 80.7% in Sweden and 73.8% in the Netherlands, amid production delays and political controversies involving CEO Elon Musk. The broader economic impact of U.S. trade policy includes a decline in corporate mergers and acquisitions, affecting various industries differently.

05/06 21:01

U.S. Treasury Secretary Scott Bessent Leads Tariff Talks with 17 Nations to Tackle Record $140.5 Billion Trade Deficit

U.S. Treasury Secretary Scott Bessent is negotiating trade agreements with 17 key U.S. partners, excluding China, to address a record $140.5 billion trade deficit in March 2025. The deficit was driven by increased imports before new tariffs. Talks aim to reduce tariff and non-tariff barriers, with potential deals expected soon. China, facing a 145% U.S. tariff, has not entered talks, demanding tariff removal first. The U.S. seeks to finalize most agreements by year-end, with some announcements possible this week.

05/06 19:02

U.S. Apple Juice Supply Chain Crisis: Trump Tariffs on Chinese Imports Cause Cost Surge and Disruptions

The U.S. apple juice supply chain faces disruption due to a 145% tariff on Chinese apple juice concentrate imposed by the Trump administration. China, historically the main supplier, has seen its exports to the U.S. drop, leading importers to seek alternatives like Turkey. However, Turkey's capacity is limited, causing increased competition and prices. Domestic production cannot quickly fill the gap, and costs for apple juice and related products are rising. This situation highlights the broader impact of protectionist trade policies on consumer goods.

05/06 17:01

U.S. Trade Deficit Reaches Record $140.5 Billion in March 2025 Amid Pre-Tariff Import Surge; Chinese Imports Decline

The U.S. trade deficit reached a record $140.5 billion in March 2025, driven by a surge in imports as businesses stockpiled goods before new tariffs by President Trump. Imports rose 4.4% to $419 billion, while exports increased 0.2% to $278.5 billion. Imports from China fell to a five-year low due to 145% tariffs, while imports from other countries like Ireland and Vietnam increased. The data, released by the Commerce Department, highlights shifts in trade flows as companies adjust to the new tariff landscape.

05/06 02:31

Warren Buffett Warns on Utility Stocks at Berkshire Meeting; Shares Drop Over 5% as Ackman Plans Buffett-Inspired Strategy

Warren Buffett warned about risks in utility stocks at Berkshire Hathaway's 60th annual meeting, citing wildfires as a threat. He confirmed Greg Abel will succeed him as CEO on January 1, 2026. Berkshire shares fell over 5% after the announcement. Bill Ackman plans to emulate Buffett's model with Howard Hughes Holdings. New U.S. tariffs on imported auto parts began on May 3, 2025, under President Trump's directive, affecting the automotive sector. Automakers are concerned about increased costs and supply chain disruptions, with some seeking exemptions.

05/06 00:31

Mattel to Increase U.S. Toy Prices and Shift Manufacturing from China Due to Tariffs

Mattel Inc. plans to raise prices on some U.S. toys due to a 145% tariff on Chinese imports, part of President Trump's trade policy. CEO Ynon Kreiz stated the company will adjust prices to offset costs, with some products already seeing increases. Mattel is also reducing reliance on Chinese manufacturing, aiming to lower China's production share to below 40% by 2025. Despite a 2% sales increase in Q1, Mattel reported a $40.3 million loss and withdrew its full-year earnings forecast due to trade policy uncertainties.

05/05 22:31

West Coast Ports Struggle as 145% Tariff on Chinese Goods Cuts Shipping Volumes

The ports of Los Angeles and Long Beach are experiencing a significant decline in business due to a 145% tariff on Chinese imports, enacted by President Donald Trump in early April. This has led to canceled sailings, reduced container volumes, and uncertainty among shippers. Port officials, including Gene Seroka and Mario Cordero, report a 35% drop in cargo arrivals compared to last year, with 17 sailings canceled for May. The disruption is comparable to early COVID-19 pandemic levels, with no clear recovery timeline as the peak shipping season approaches.

05/05 13:30

Wall Street to Open Lower Amid S&P 500 Streak, Fed Meeting, Disney Earnings, and Trump's Film Tariffs

Wall Street is expected to open lower on Monday, May 5, after the S&P 500's nine-day winning streak, the longest since 2004. The index's rise was driven by strong corporate earnings and a positive April jobs report. However, investor focus has shifted to renewed trade tensions, a Federal Reserve meeting, Disney's earnings, and Warren Buffett's leadership transition at Berkshire Hathaway. Additionally, former President Donald Trump announced a 100% tariff on foreign films, impacting media stocks. The Federal Reserve is anticipated to maintain interest rates, with investors watching for future economic guidance.

05/03 19:01

U.S. Ends De Minimis Exemption for China: Tariffs Up to 145% Impact Shein, Temu, and Other Ecommerce Platforms

On April 25, 2025, the U.S. ended the de minimis exemption for low-value imports from China and Hong Kong, impacting ecommerce platforms like Shein and Temu. The change, enacted by an executive order from President Donald Trump, imposes tariffs up to 145% on packages under $800, previously duty-free. This policy shift aims to curb illicit imports and protect domestic businesses, affecting cross-border ecommerce, logistics, and consumer prices. Temu halted U.S. deliveries from China, while Shein adjusted pricing to include tariffs, reflecting significant industry adjustments.

Buffett Sounds Alarm on Utility Stocks

At the annual shareholder meeting in Omaha, Warren Buffett cautioned investors about the growing risks in the electric utility sector, a space long considered a defensive play due to its stable cash flows and essential services. Buffett pointed to the increasing threat of wildfires as a key factor undermining the sector’s reliability.

“The public utility business is not as good a business as it was a couple of years ago,” Buffett said. He cited the financial fallout from wildfires involving companies like Hawaiian Electric, PG&E, and Edison International. Hawaiian Electric’s shares plunged as much as 76% following the deadly Maui fires in 2023, while PG&E filed for bankruptcy after being held liable for multiple California wildfires between 2017 and 2021.

Buffett acknowledged that Berkshire Hathaway Energy, the conglomerate’s utility arm, is not immune to these risks. “Berkshire Hathaway Energy is worth considerably less money than it was two years ago based on societal factors,” he said.

Greg Abel, who oversees Berkshire’s non-insurance operations and chairs Berkshire Hathaway Energy, echoed Buffett’s concerns. “There are no silver bullets,” Abel said. “But every day our teams across utilities are working hard to reduce that risk, recognizing the fundamental risk of the wildfires is not going away.”

Berkshire Hathaway Shares Slide After CEO Succession Plan

Berkshire Hathaway’s Class A shares fell 4.87% to $769,960, while Class B shares dropped 5.12% to $512.15 on Monday, following the board’s unanimous approval of Greg Abel as Buffett’s successor. The transition is set to take place at the end of 2025, with Buffett remaining as chairman.

The announcement, made during the shareholder meeting, caught some investors off guard despite Buffett having named Abel as his intended successor in 2021. “I do think this still caught a lot of investors off guard,” said Edward Jones senior analyst Kyle Sanders. “I think there’s a good portion of the investor base who just thought that Warren was going to keep running the company until he passed away.”

Buffett emphasized that he will remain involved in a limited capacity. “I would still hang around, and could conceivably be useful in a few cases, but the final word would be what Greg said,” he noted.

Despite the stock drop, Berkshire Hathaway remains one of the largest companies in the S&P 500, with a market capitalization of approximately $1.1 trillion. Year-to-date, the company’s shares are still up more than 13%, outperforming the S&P 500, which is down 4%.

Bill Ackman Aims to Build a Modern-Day Berkshire

Investor Bill Ackman, CEO of Pershing Square, announced plans to transform Howard Hughes Holdings into a diversified holding company modeled after Berkshire Hathaway. Speaking on CNBC, Ackman said his inspiration came from Buffett’s writings and investment philosophy.

“When I came into this business, the first book I read was Ben Graham’s ‘The Intelligent Investor.’ The next thing I read was basically Berkshire Hathaway shareholder letters,” Ackman said. “I always sort of aspired to build a diversified holding company and turn it into a valuable enterprise.”

Ackman recently took a significant stake in Howard Hughes and was appointed executive chairman of its board. He described the company as a “free money-generating company” and said it is “highly likely” to follow the Berkshire playbook. Ackman also expressed confidence in Berkshire’s future under Abel’s leadership, stating, “I wouldn’t bet against Berkshire.”

Howard Hughes shares rose 3.83% to $70.06 on Monday, while Berkshire Hathaway’s Class B shares were down 4.51% at $515.38 at last check.

New U.S. Tariffs on Auto Parts Take Effect

On May 3, 2025, a 10% tariff on imported auto parts officially took effect, following the earlier implementation of a 25% tariff on imported vehicles on April 3. The tariffs were enacted under a proclamation signed by President Donald Trump in March, invoking Section 232 of the Trade Expansion Act of 1962.

The new tariffs apply to a wide range of components, including engines, transmissions, powertrain parts, and electrical systems. The administration cited national security concerns as the rationale for the measures.

Domestic automakers and trade groups have expressed concern over the increased costs and potential supply chain disruptions. Six industry groups recently petitioned the Departments of Treasury and Commerce for more time to adjust their supply chains. In response, President Trump indicated on April 14 that he might temporarily exempt the auto industry from the tariffs, though no specific timeline or details have been provided.

General Motors previously forecasted its 2025 adjusted EBIT to range between $13.7 billion and $15.7 billion. However, the company and others are now reassessing their financial outlooks in light of the new trade policies. Mercedes-Benz has already announced plans to increase U.S. production at its Tuscaloosa, Alabama plant to mitigate the impact of the tariffs.

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