Finance

Investors may want to reduce their exposure to the world’s largest emerging market.
Perth Tolle, who’s the founder of Life + Liberty Indexes, warns China’s capitalism model is unsustainable.

“I think the thinking used to be that their capitalism would lead to democracy,” she told CNBC’s “ETF Edge” this week. “Economic freedom is a necessary, but not sufficient precondition for personal freedom.”
She runs the Freedom 100 Emerging Markets ETF — which is up more than 43% since its first day of trading on May 23, 2019. So far this year, Tolle’s ETF is up 9%, while the iShares China Large-Cap ETF, which tracks the country’s biggest stocks, is up 19%.
The fund has never invested in China, according to Tolle.

Arrows pointing outwards

Tolle spent part of her childhood in Beijing. When she started at Fidelity Investments as a private wealth advisor in 2004, Tolle noted all of her clients wanted exposure to China’s market.
“I didn’t want to personally be investing in China at that point, but everyone else did,” she said. “Then, I had clients from Russia who said, ‘I don’t want to invest in Russia because it’s like funding terrorism.’ And, look how prescient that is today. So, my own experience and those of some of my clients led me to this idea in the end.”

She prefers emerging economies that prioritize freedom.
“Without that, the economy is going to be constrained,” she added.

Arrows pointing outwards

ETF investor Tom Lydon, who is the former VettaFi head, also sees China as a risky investment.
 “If you look at emerging markets… by not being in China from a performance standpoint, it’s provided less volatility and better performance,” Lydon said.

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Warren Buffett walks the floor and meets with Berkshire Hathaway shareholders ahead of their annual meeting in Omaha, Nebraska on May 3rd, 2024.
David A. Grogen | CNBC

The mystery over Warren Buffett’s surprisingly defensive stance deepened over the weekend.
The 94-year-old CEO of Berkshire Hathaway sold more stocks in the latest quarter and grew a record cash pile even larger to $334 billion, but failed to explain in his highly anticipated annual letter why the investor known for his astute equity purchases over time was seemingly battening down the hatches.

Instead Buffett said that this posture in no way represented a move away from his love for stocks.
“Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities,” Buffett wrote in the 2024 annual letter released Saturday. “That preference won’t change.”
Berkshire’s monstrous ownership of cash has raised questions among shareholders and observers especially as interest rates are expected to fall from their multi-year highs. The Berkshire CEO and chairman in recent years has expressed frustration about an expensive market and few buying opportunities. Some investors and analysts have grown impatient with the lack of action and have sought an explanation why.
Despite his repeated selling of stock, Buffett said Berkshire will continue to prefer equities to cash.
“Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities – mostly American equities although many of these will have international operations of significance,” Buffett wrote. “Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned.”

Shareholders will have to wait a little longer it seems as the Omaha-based conglomerate net sold equities for a ninth consecutive quarter in the final period of last year, according to the company’s annual report, which was also released on Saturday.
All told, Berkshire sold more than $134 billion worth of stocks in 2024. This is mainly due to the shrinking of Berkshire’s two largest equity holdings — Apple and Bank of America.
Meanwhile, it appears Buffett is not finding his own stock attractive either. Berkshire continued its buyback halt, repurchasing no shares in the fourth quarter or in the first quarter through Feb. 10.
This is despite a massive increase in operating earnings reported by the conglomerate on Saturday.

‘Often, nothing looks compelling’

Buffett’s sitting on his hands amid a raging bull market that’s seen the S&P 500 gain more than 20% for two years in a row and move into the green again so far this year. Some cracks have begun to develop in the past week, however, with some concerns growing about a slowing economy, volatility from rapid policy changes from new President Donald Trump and overall stock valuations.
Berkshire shares were up 25% and 16% respectively the last two years and are up 5% so far this year.
Buffett did offer perhaps a small hint about stock valuations being a concern in the letter.
“We are impartial in our choice of equity vehicles, investing in either variety based upon where we can best deploy your (and my family’s) savings,” wrote Buffett. “Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities.”
In this year’s letter, Buffett did endorse designated successor Greg Abel in his ability to pick equity opportunities, even comparing him to the late Charlie Munger.
“Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities. Greg has vividly shown his ability to act at such times as did Charlie,” Buffett said.At last year’s annual meeting, Buffett surprised many by announcing that Abel, vice-chairman of non-insurance operations, will have the final say on all Berkshire’s investing decisions, including overseeing the public stock portfolio.
Some investors and analysts have speculated Buffett’s conservative moves in the last year are not a market call, but him preparing the company for Abel by paring outsized positions and building up cash for him to deploy one day.
Buffett did signal he would be deploying capital in one area: the five Japanese trading houses he began buying nearly six years go.
“Over time, you will likely see Berkshire’s ownership of all five increase somewhat,” he wrote. More

The Warren Buffett-led conglomerate said its operating profit — which encompasses earnings from the company’s wholly owned businesses — skyrocketed to $14.527 billion during the final three months of 2024.
That was led by by a whopping 302% jump in insurance underwriting from the year-earlier period to $3.409 billion.

Warren Buffett walks the floor ahead of the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 3, 2024. 
David A. Grogen | CNBC

Berkshire Hathaway on Saturday reported a massive surge in fourth-quarter earnings from its operating businesses, driven in large part by insurance, while its cash holdings swelled to record levels.
The Warren Buffett-led conglomerate said its operating profit — which encompasses earnings from the company’s wholly owned businesses — skyrocketed 71% to $14.527 billion during the final three months of 2024. That was led by by a whopping 302% jump in insurance underwriting from the year-earlier period to $3.409 billion. Insurance investment income also ballooned by nearly 50% to $4.088 billion.

Operating earnings also popped 27% for the full year, coming in at $47.437 billion.
“In 2024, Berkshire did better than I expected though 53% of our 189 operating businesses reported a decline in earnings. We were aided by a predictable large gain in investment income as Treasury Bill yields improved and we substantially increased our holdings of these highly-liquid short-term securities,” Buffett, chairman and CEO of Berkshire, said in his annual letter to shareholders. “Our insurance business also delivered a major increase in earnings, led by the performance of GEICO.”
To be sure, Berkshire warned that the wildfires that broke out in Southern California will lead to an estimated pre-tax loss of about $1.3 billion for its insurance business.

Cash holdings top $330 billion

Berkshire Hathaway ended 2024 with $334.2 billion in cash, up from $325.2 billion at the end of the third quarter. This fortress comes as Buffett struggles to find his next big investment target.
In his annual letter, Buffett defended the large cash holdings.

“Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities. That preference won’t change. While our ownership in marketable equities moved downward last year from $354 billion to $272 billion, the value of our non-quoted controlled equities increased somewhat and remains far greater than the value of the marketable portfolio,” he said, adding that “Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities.”

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Berkshire Hathaway 1-year chart

Investment gains slowed sharply in the fourth quarter to $5.167 billion from $29.093 billion in the year-earlier. Indeed, Berkshire pared stock investments during the year. Notably, it sold a chunk of its Apple stake through 2024.
To be sure, Berkshire always notes in its earnings releases that: “The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules.”
Berkshire’s total earnings for the quarter came in at $19.694 billion, a 47% decrease from the year-earlier period of $37.574 billion. For the full year, the company’s bottom line came in at $88.995 billion, down 7.5% from $96.223 billion in 2023. More

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Walmart stock may be a steal.
Former Walmart U.S. CEO Bill Simon contends the retailer’s stock sell-off tied to a slowing profit growth forecast and tariff fears is creating a major opportunity for investors.

“I absolutely thought their guidance was pretty strong given the fact that… nobody knows what’s going to happen with tariffs,” he told CNBC’s “Fast Money” on Thursday, the day Walmart reported fiscal fourth-quarter results.
But even if U.S. tariffs against Canada and Mexico move forward, Simon predicts “nothing” should happen to Walmart.
“Ultimately, the consumer decides whether there’s a tariff or not,” said Simon. “There’s a tariff on avocados from Mexico. Do you have guacamole with your chips or do you have salsa and queso where there is no tariff?”
Plus, Simon, who’s now on the Darden Restaurants board and is the chairman at Hanesbrands, sees Walmart as a nimble retailer.
“The big guys, Walmart, Costco, Target, Amazon… have the supply and the sourcing capability to mitigate tariffs by redirecting the product – bringing it in from different places [and] developing their own private labels,” said Simon. “Those guys will figure out tariffs.”

Walmart shares just saw their worst weekly performance since May 2022 — tumbling almost 9%. The stock price fell more than 6% on its earnings day alone. It was the stock’s worst daily performance since November 2023.
Simon thinks the sell-off is bizarre.
“I thought if you hit your numbers and did well and beat your earnings, things would usually go well for you in the market. But little do we know. You got to have some magic dust,” he said. “I don’t know how you could have done much better for the quarter.”
It’s a departure from his stance last May on “Fast Money” when he warned affluent consumers were creating a “bubble” at Walmart. It came with Walmart shares hitting record highs. He noted historical trends pointed to an eventual shift back to service from convenience and price.
But now Simon thinks the economic and geopolitical backdrop is so unprecedented, higher-income consumers may shop at Walmart permanently.
“If you liked that story yesterday before the earnings release, you should love it today because it’s… cheaper,” said Simon.
Walmart stock is now down 10% from its all-time high hit on Feb. 14. However, it’s still up about 64% over the past 52 weeks.

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The chairman and CEO of hedge fund Point72 said he turned bearish for the first time in a while after President Donald Trump’s aggressive trade policy made him worry about inflationary pressures and lower consumer spending.
“Tariffs cannot be positive, okay? I mean, it’s a tax,” Cohen said Friday at the FII Priority Summit in Miami Beach, Florida.

Steve Cohen, chairman and CEO of Point72, speaking to CNBC on April 3, 2024.

Billionaire investor Steve Cohen doubled down on his negative view of the U.S. economy due to a backdrop of punitive tariffs, immigration crackdown and federal spending cuts spearheaded by the so-called Department of Government Efficiency.
The chairman and CEO of hedge fund Point72 said he turned bearish for the first time in a while after President Donald Trump’s aggressive trade policy made him worry about inflationary pressures and lower consumer spending. Meanwhile, his tough stance on immigration could mean a constrained supply of labor, he said.

“Tariffs cannot be positive, okay? I mean, it’s a tax,” Cohen said Friday at the FII Priority Summit in Miami Beach, Florida. “On top of that, we have slowing immigration, which means the labor force will not grow as rapidly as … the last five years and so.”
The prominent hedge fund investor took a stab at DOGE’s cost-cutting moves led by Elon Musk, saying they could only hurt the economy more. Musk has said his goal is to cut federal spending by $2 trillion.
“When that money has been coursing through the economy over many years, and now, potentially it will be reduced or stopped in many ways, has got to be negative for the economy,” Cohen said.
Cohen believes a pullback in the stock market could be likely given the uncertain macroeconomic environment. He sees the U.S. economy’s growth slowing down to 1.5% from 2.5% in the second half of the year. 
“I think we’re seeing the regime shift a little bit. It may only last a year or so, but it’s definitely a period where I think the best gains have been had and wouldn’t surprise me to see a significant correction,” Cohen said. “I don’t think it’s going to be a disaster.”

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GameStop Chairman Ryan Cohen.

GameStop CEO and billionaire investor Ryan Cohen has increased his personal stake in Chinese e-commerce giant Alibaba to roughly 7 million shares worth about $1 billion, The Wall Street Journal reported Thursday.
Citing people familiar with the matter, the Journal said the sizable stake in Alibaba is a bullish bet on China’s economic growth in the long run.

Cohen wasn’t immediately available when CNBC reached out for comment.
The news came after the Chinese titan posted a sharp profit hike in the December quarter amid strength in its Cloud Intelligence unit and e-commerce segment. Shares of Alibaba surged 8.1% on Thursday.
In 2023, the investor urged Alibaba to increase buybacks as he believed the stock was severely undervalued, the Journal said.
Alibaba’s outspoken founder, Jack Ma, who has largely kept out of the public eye since 2020, was among the entrepreneurs who attended a rare closed-door meeting headed by Chinese President Xi Jinping on Monday, during which the Beijing leader urged private businesses to “show their talents” and strengthen their confidence in a “new era” for their activity.
Cohen became CEO of meme stock GameStop after his involvement in the video game retailer partly triggered a historic trading mania on Wall Street in 2021. The investor, who co-founded Chewy, has been leading a turnaround in the brick-and-mortar retailer over the past few years.

Under Cohen’s leadership, GameStop has focused on cutting costs and streamlining operations to ensure the business is profitable even though it is not growing. Earlier this month, CNBC reported GameStop was considering investing in bitcoin and other cryptocurrencies.
— Click here to read the WSJ story.

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The Treasury Department set a March 21 deadline for businesses to report “beneficial ownership information” or risk civil and criminal penalties.
It delayed the prior deadline by 30 days.
The delay comes after a Texas district court struck down a nationwide injunction on enforcement of the Corporate Transparency Act.
The Treasury Department left open the possibility of further delays.

People take pictures of the U.S. Treasury Department building in Washington, D.C., on Feb. 6, 2025.
Mandel Ngan | AFP | Getty Images

The Treasury Department has set a new deadline of March 21 for millions of businesses to fulfill a new reporting requirement on “beneficial ownership information,” after a court order allowed the federal agency to start enforcing the measure.
The Corporate Transparency Act, which Congress enacted in 2021, requires small businesses to disclose the identity of people who directly or indirectly own or control the company. The measure aims to prevent criminals from hiding illicit activity conducted through shell companies or opaque ownership structures, according to the Treasury.

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Businesses have suffered a degree of whiplash from the on-again-off-again deadlines to file BOI reports. A string of court orders had prevented the Treasury from enforcing the measure, only to then see courts strike down those rulings.
The U.S. District Court for the Eastern District of Texas on Feb. 18 lifted a nationwide injunction that had prevented the Financial Crimes Enforcement Network, known as FinCEN, which is part of the Treasury, from enforcing the Corporate Transparency Act.

Room for more delays?

The BOI reporting measure applies to about 32.6 million businesses, including certain corporations, limited liability companies and others, according to federal estimates.
Businesses and owners that do not comply with reporting rules are potentially subject to civil penalties of up to $591 a day, adjusted for inflation. They could also face up to $10,000 in criminal fines and up to two years in prison.

FinCEN left the possibility of further delays on the table even as it extended its previous reporting deadline by 30 days.
“FinCEN will provide an update before then of any further modification of this deadline, recognizing that reporting companies may need additional time to comply with their BOI reporting obligations once this update is provided,” according to a Feb. 18 FinCEN notice.
FinCEN also said it would prioritize enforcement for businesses that “pose the most significant national security risks.” More

President Donald Trump said his administration is going to audit the U.S. gold reserves kept at Fort Knox in Kentucky.
“We’re going to go to Fort Knox, the fabled Fort Knox, to make sure the gold is there,” President Trump said Wednesday on Air Force One.

A drive to audit Fort Knox has gained steam from comments by Elon Musk on X recently. Over the past few decades, conspiracy theories have emerged from time to time about whether the government is being truthful about the amount of gold stored there because of the fort’s high security.
The Treasury Department gives the exact amounts of the U.S. gold reserves on its website and says there are 147,341,858.382 troy ounces in Fort Knox.
“I think if this administration presses for an audit, that’ll be a good thing for everybody,” said Alamos Gold CEO John McCluskey on CNBC’s “Squawk Box” Thursday.

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Gold futures, 1 year

Treasury Secretary Bessent’s comments from earlier this month, to “monetize the asset side of the U.S. balance sheet for the American people” also added to recent investor speculation that the U.S. government should audit its gold reserves and perhaps revalue them. The Treasury Department’s current gold holdings are priced at $42 per ounce, a level that is set by law and hasn’t changed since 1973.
Spot gold on Thursday rose, hitting another record high of $2,954.69 earlier in the session. That’s bullion’s tenth record high of the year. More