Consumer confidence rose less than expected in February as people's assessment of current conditions wavered, data released Tuesday by The Conference Board showed.
The consumer confidence index came in at 130.7, up from 130.4 in January. Economists polled by Dow Jones expected a print of 132.6. The Conference Board's present situation index, which accounts for consumers' assessment of the current business and labor environment, dropped to 165.1 from 173.9 in January.
The confidence index's weaker-than-forecast print comes a day after the stock market had its worst day in two years, with the Dow Jones Industrial Average falling more than 1,000 points, amid concerns over the coronavirus' impact on the global economy.
"Despite the decline in the Present Situation Index, consumers continue to view current conditions quite favorably," said Lynn Franco, senior director of economic indicators at The Conference Board, in a statement. "Consumers' short-term expectations improved, and when coupled with solid employment growth, should be enough to continue to support spending and economic growth in the near term."
Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.
The request includes $1.25 billion in new funding for the Department of Health and Human Services, as well as the ability to transfer an additional $535 million set aside to fight Ebola and use it for the coronavirus response instead.
“To this point, no agency has been inhibited in response efforts due to resources or authorities. However, much is still unknown about this virus and the disease it causes,” acting White House Office of Management and Budget director Russell Vought wrote to congressional leaders. “The administration believes additional federal resources are necessary to take steps to prepare for a potential worsening of the situation in the United States.”
Amazon's checkout-free Go concept has officially morphed into a supermarket. Amazon Go Grocery opens in Seattle today, with 5,000 items for sale across the 10,400-square-foot premises. Using a range of cameras, shelf sensors and software, shoppers can pick up the items they want and simply walk out the door -- their accounts are charged via a smartphone app as they leave.
While this isn't a brand new concept – Amazon has been running a number of Go convenience stores since 2018 -- this is the first time the technology has been implemented on such a large scale. Shoppers can choose from a much wider range of goods, such as organic produce and wine, making the concept a much more viable alternative to the usual weekly shop involving scanners and checkouts. Indeed, the store has been positioned closer to residential areas -- as opposed to business districts -- to encourage this.
And it could get even bigger. Speaking to The Wall Street Journal, Amazon Go vice president Dilip Kumar said, "There's no real upper bound. It could be five times as big, it could be 10 times as big." Kumar hasn't clarified exactly how many Go Grocery stores the company has planned, although it has previously said it hopes to open as many 3,000 Go convenience stores by 2021.
Leveraging Amazon's Go technology on this larger scale, however, has not been without challenges. As GeekWirereports, implementing accurate weighing and pricing for goods such as loose produce has been a major focus for the larger stores, especially ensuring it's done in a way that shoppers can intuitively engage with. Other obstacles have been circumnavigated entirely --– there's no meat or seafood counter, for example, and no on-site food preparation. Fresh meat products are instead brought in throughout the week, individually wrapped. When it comes to alcohol, there's a human on hand to check IDs.
While the new store is certainly indicative of Amazon's own plans for cashless grocery shopping in the future, it's also designed to act as a showpiece for the technology overall. As The Wall Street Journal reports, the company has been discussing licensing its cashless platform to a number of potential partners, including other convenience stores and shops in airports and sports arenas. And as this kind of technology is implemented in more and more spaces, it might not be long until the concept of carrying a wallet is almost completely redundant.
All products recommended by Engadget are selected by our editorial team, independent of our parent company. Some of our stories include affiliate links. If you buy something through one of these links, we may earn an affiliate commission.
Since the debate between the hard and soft pronunciation of the G in GIF began, we here at Snacktaku have been waiting for the J.M. Smucker Company to figure out how to tap into the argument to sell Jif peanut butter. We are pleased to report that our wait is over.
Just in time for National Peanut Butter Lover’s Day on March 1, a completely legitimate holiday that’s on a website and everything, Jif has teamed up with GIF host Giphy for a clever if a bit late “Jif Vs. GiF” marketing campaign. Giphy is doing what it does best, hosting a series of Jif-themed GIFs. Meanwhile, Jif is selling a limited-edition 40-ounce jar of peanut butter on Amazon with a special double-sided label that clears up the whole debate. Or at least makes the hard G folks feel a little better.
Advertisement
That right there is five dollars of peanut butter in a 10-dollar jar. It’s too bad Amazon doesn’t support animated GIFs in its product listings. Fret not, Jif has a spinning jar over at the campaign’s website.
Great job, J.M. Smucker Company. It’s good to see JPEG Interchange Format peanut butter taking a stand.
Economist Mohamed El-Erian told CNBC on Tuesday that investors should hold off on buying equities that were hit hard in the latest coronavirus-driven plunge.
"I stress, this is different," the Allianz chief economic advisor said in a "Squawk Box" interview, a day after the Dow Jones Industrial Average plunged over 1,000 points or 3.5%, in its worst single-session in more than two years.
Just because buying market dips has worked in the past does not mean it's going to work this time, he said. "I would continue to resist, as hard as it is, to simply buy the dip."
Disruptions to corporate earnings and economic growth from "shock" events such as the coronavirus tend to stick around longer than more fundamental downturns, said El-Erian.
"We're going to have a lot of risk-aversion on the part of economic actors. It's going to take time," he said. "Economic sudden stops are hard to restart."
The World Health Organization on Tuesday countries around the world to ready for the coronavirus to come "knocking at the door."
On Feb. 3, El-Erian first warned investors not to buy market drops as they might have in the past. He said at the time that the coronavirus is going to "paralyze China," adding that it will "cascade throughout the global economy."
That's exactly what's happening.
The spike of coronavirus cases beyond China, specifically in South Korea and Italy, sparked concerns about a prolonged global slowdown due to the outbreak and erased $1.7 trillion in global stock market values Monday.
U.S. stock futures were pointing to about a 100-point higher Tuesday open on Wall Street for the Dow.
Home Depot beat Wall Street's expectations for the fourth quarter, and its CEO Craig Menear said the results indicate its significant investments in the company are paying off.
Here's what the company reported compared with what analysts expected for Home Depot's fiscal fourth quarter, based on Refinitiv data:
Earnings per share: $2.28 vs. $2.10, expected
Revenue: $25.78 billion vs. $25.76 billion, expected
Same-store sales: 5.2%vs.up 4.8%, expected
The Atlanta-based home improvement retailer's shares were up more than 2% in premarket trading on the earnings news. It also increased its dividend by 10% and backed its prior forecast for the year.
For the fourth quarter that ended Feb. 2, Home Depot reported that net income rose 5.8% to $2.48 billion, or $2.28 a share, from $2.34 billion, or $2.09, a year ago. Analysts surveyed by Refinitiv expected the company to earn $2.11 a share.
Revenue fell 2.7% to $25.78 billion from $26.49 billion a year ago, but it outpaced analyst estimates of $25.76 billion.
Home Depot's sales per square foot were $425.70, up nearly 3% from $414.17 a year ago. Its average ticket also increased to $68.29, up about 4% from $65.59 a year ago.
Home Depot's shares have been trading near an all-time high, buoyed by a strong U.S. economy and a housing market with appreciating home values. But the company is been under pressure as it spends billions of dollars to integrate its brick-and-mortar stores and its online business. It announced in 2017 that it would invest about $11 billion over three years as part of its "One Home Depot" program.
The company cut its forecast twice in 2019. In December, Home Depot said its forecast for 2020 sales would be below Wall Street expectations and its margins would be pressured by its investments. That news caused the company's shares to temporarily fall.
But on Tuesday, Home Depot reiterated its forecast for fiscal 2020, calling for total sales growth between 3.5% and 4% and same-store sales growth of between 3.5% and 4%. It plans to open six new stores in 2020.
Menear said that fiscal 2019 was "marked by significant progress as we invest to transform ourselves into The Home Depot of the future."
He said the company has "more conviction than ever that our strategic initiatives are creating a value proposition that is unique to the marketplace and will extend our leadership position for years to come."
Home Depot leaders have said its investments will peak this year. The company plans to spend $3.9 billion, up from $3.6 billion in 2019 and $3.3 billion in 2018.
Home Depot's investments have fueled changes, such as improving signage to make its big-box stores easier to navigate, revamping its supply chain to speed up deliveries and adding lockers in stores for pickup of online purchases.
The company's shares are up nearly 25% over the past 12 months. It has a market value of about $261.5 billion.
Investors will listen on Tuesday's earnings callto hear if Home Depot and its supply chain will be hurt by the coronavirus outbreak. About 70% of the company's products are sourced from the U.S., but 30% come from other parts of the world — with much of that coming from China, according to company spokeswoman Sara Gorman.
Home Depot is gearing up for spring, its busiest sales season. Home Depot said that it plans to hire 80,000 additional employees, with many part-time hires staffing its garden center. That's on par with seasonal hiring in recent years.
Home Depot is the largest home improvement chain in the country. It has about 2,290 retail stores and more than 400,000 employees across the U.S., Canada, Mexico.
Stocks on Wall Street plunged Monday, but futures trading suggests a rebound — or a least a respite — on Tuesday.
Load Error
Dow Jones Industrial Average futures (YM00) rose more than 200 points on Tuesday, while S&P 500 futures (ES00) gained 0.8% and Nasdaq Composite futures (NQ00) added more than 1%
A pause or bounce-back would not be unusual. The past 10 times that the S&P 500 index fell by as much as 3%, for example, it declined just 0.27%, on average, in the next trading session, according to Dow Jones Market Data.
Researchers at Bespoke Investment Group also said Monday that, over the past 11 years, declines of more than 2% for the S&P 500 have tended to see healthy rebounds, particularly when that daily slide happens on a Monday. “Since March 2009, there have been 18 prior 2%+ drops on Mondays, and SPY has seen an average gain of 1.02% on the next day (Turnaround Tuesday),” they wrote.
Crude oil prices, which tumbled 5% Monday, ticked up in electronic trading, with West Texas Intermediate crude for April delivery (CLJ20) and April Brent crude (UK:BRNJ20) , the global benchmark, each up around 0.5%.
Gold prices (GCJ20) , which jumped 1.7% Monday to their highest point in seven years, slipped 1.5% to $1.651.80.
Asian markets continued to fall, with Japan’s Nikkei (JP:NIK) — which was closed for a holiday Monday — last down over 3%. Australia’s S&P/ASX 200 (AU:XJO) fell 1.6%, though South Korea’s Kospi (KR:180721) , which fell 4% on Monday, rebounded 1.1% on Tuesday.
Monday on Wall Street, the Dow finished more than 1,000 points lower, marking its third-worst daily point drop in history, as the global spread of the coronavirus raised worries that the impact on economic growth could be worse than investors expected, hurting the prospects for a global recovery in 2020.
The Dow Jones Industrial Average (DJIA) shed 1,031.60 points, or 3.6%, to settle at 27,960.80. The S&P 500 (SPX) slumped 111.86 points, or 3.4%, to close at 3,225.89, and the Nasdaq Composite (COMP) off by 355.31 points, or 3.7%, to finish at 9,221.28.
Amazon is getting more serious about its brick-and-mortar retail ambitions with its first-ever Amazon-branded grocery store. The store opens today in Seattle’s Capitol Hill district, confirming reports from last year that Amazon was developing a more ambitious version of its cashier-less Go model. The new store, which The Verge toured late last week, is indeed modeled after a standard Amazon Go location, but it has been expanded to include a wide array of grocery items you’d find at, say, Amazon-owned Whole Foods.
In fact, the store does source a number of its items, including some produce and meat and other fresh food, from Whole Foods suppliers. It also carries Whole Foods’ 365 brand for certain items. But Amazon’s store offers other products, including breakfast cereal and soda, that you won’t find at Amazon’s higher-end, organic-focused subsidiary.
Amazon says the store combines the product availability and low prices of a grocery chain like Publix or Walmart with the convenience and quick shopping times of its Go model, with a selection that includes both big mainstream brands and local, organic produce. It joins the nearly 20 Go stores currently open throughout the country in cities like New York and San Francisco.
Amazon Go stores use overhead cameras and computer vision technology, paired with smartphone geofencing, to track both shoppers and items throughout the store. That way, the system can identify when a specific person has picked something off the shelf and placed it in their cart, and even when they decided to put something back.
The end result is that customers don’t have to sit through check out. When you’re done at a Go store, you just walk out and your receipt is sent to you through Amazon’s companion app. The same is true of Amazon’s new grocery store, which features shopping carts, but no checkout lanes or counters.
Amazon says its Go system has been trained to handle tricky situations that are unique to grocery stores, like customers handling unpackaged produce that looks similar and sits next to other fruits and vegetables or unboxed baked goods that might get stuffed into a single plastic bag. You can even buy alcohol by taking it off the shelf and walking out, although a human employee will have to check your ID before you enter the store if you intend to peruse the libations aisle.
Go stores have so far focused on prepared foods, snacks, and a light amount of grocery items including frozen food and condiments. Some have acquired licenses to sell alcohol, too. But no Go store to date has the size or scope of Amazon’s new Go Grocery, as it’s called. The location, at 610 E. Pike Street, is 10,400 square feet, while a standard Go store tends to fall between 1,200 and 2,300 square feet.
This grocery effort is starting small, Amazon’s Dilip Kumar, the company’s vice president of physical retail and technology, tells The Verge. Kumar says Amazon has no immediate plans to open more grocery stores. But if it succeeds, an Amazon-branded grocery store using its Go model, which allows customers to get in and out much quicker, could become a fast-growing avenue for the e-commerce giant to continue expanding its offline footprint.
And according to Kumar, Amazon Go Grocery is not intended to be competitive with Amazon’s Whole Foods chain, but complementary instead. “Customers shop in many different ways, in many different locations. Sometimes you want it to be delivered, some times you go to the store, some times you go to Whole Foods. Our job is to be able to figure out how to add value,” Kumar says. “Because the customer has different needs... and different things that they look for at different stores, what is it we can we do here in this type of format in this neighborhood to add value? That to me is the selection we carry, the pricing we have — plus the convenience of just being able to walk out.”
While Amazon dominates many sectors of online retail, it has yet to make large inroads into the much larger offline retail market, a large segment of which is related to food and beverage consumption. People spend $800 billion a year on groceries in the United States, of which only about 2 percent happens online. Amazon’s domestic retail rival Walmart currently leads the grocery market in volume, and Walmart’s huge retail footprint throughout the country has always put it in a strong position to sell customers everything else they might need on a shopping outing. The same is true of Kroger’s, the largest dedicated grocery chain in the country.
That’s because not only do a majority of people buy fresh food in person from grocery stores, they also use those same trips to buy household goods, alcohol, and a number of other products that a company like Amazon could more easily sell in-store than online. Although Amazon has services like Prime Pantry for selling bundles of household goods and a grocery delivery service called Amazon Fresh, it would be immensely difficult and costly to scale those services to reach every grocery shopper in the country. That’s why Amazon has been investing in brick-and-mortar retail in the first place.
That complexity inherent to the grocery market is why Amazon chose to brand its new store as a Go one, instead of choosing to bring its cashier-less Go model to an existing Whole Foods location. Amazon wants the freedom to sell people products from major brands they might find at a city bodega, a neighborhood CVS, or a Kroger store, and not just the organic and high-end ones Whole Foods sells today. That sets up Amazon to service a wider variety of customers: Go stores for the office lunch crowd, Go Grocery for the everyday residential shopper, and Whole Foods for the organic-minded and more affluent.
“This is not a bigger Amazon Go store. It’s a separate format. We worked backwards from what constitutes a neighborhood grocery store,” Kumar says. “We have a section for pet food, household items, health and personal care, oral care, skin care.” Kumar says that to satisfy the needs of a grocery store, you have to “go beyond food” and include those items that people might normally buy during a standard grocery outing, from paper towels and dish soap to shampoo and deodorant.
In addition to all that, the Go Grocery store has a bakery section, as well as a prepared meals and snack section similar to what you’d find in the smaller standard Go store. Amazon says it will also offer items from local Seattle businesses including pastries from Seattle Bagel Bakery, yogurt from Ellenos, and sausage from Uli’s.
Whether Amazon Go Grocery takes off is an open question, but the steady rollout of Go stores so far seems to suggest that the cashierless model has been a worthwhile investment for the company so far. Kumar says key for Amazon right now is making sure it’s doing something customers actually want.
“How big it gets and how fast it goes, customers get to decide that,” Kumar says.
“Cryptocurrencies basically have no value,” Warren Buffett said in an interview on Monday.
Speaking to CNBC reporter Becky Quick on Feb. 24, the fourth-wealthiest person in the world discussed his impression of Bitcoin following a fundraiser. In attendance was Justin Sun, CEO of Tron, and long-time believer in crypto.
In May 2019, the two gathered with others at a fundraiser for the Glide Foundation, a charity organization that helps the homeless in San Francisco. Speaking billionaire to billionaire, the young Sun suggested the seasoned Warren consider investing in cryptocurrency.
However, when pressed on whether Sun had given him any Bitcoin after the exchange, Buffett balked:
“I don’t own any cryptocurrency. I never will… You can’t do anything with it except sell it to somebody else.”
He also commented on the fact that the cryptocurrency has been associated with money laundering and terrorism:
“Bitcoin has been used to move around a fair amount of money illegally.”
Buffett made the bulk of his fortune from hedge funds and insurance. He has an estimated net worth of $88.9 billion.
Billionaire investors in cryptocurrency
Bitcoin has seen major investments from millionaires and billionaires alike, but as Warren demonstrated, some who made their fortunes using more established means are reluctant to accept cryptocurrencies. Mark Cuban, the billionaire who rose to fame in the dot-com bubble, has said he’d rather “have bananas” than Bitcoin.
On the other hand, there have been some success stories. Tyler and Cameron Winklevoss may not have reaped the benefits of Facebook, but the two have a combined net worth of over $1.4 billion after founding the crypto exchange Gemini.
In an interview just released on CNBC, billionaire financier Warren Buffett reiterated his long-held position that cryptocurrency has no intrinsic value, and made clear that he would never own any. Buffett insisted that Bitcoin serves no real purpose, which is why it has not achieved mainstream use.
WARREN BUFFETT STATES CRYPTOCURRENCY “DOES NOTHING”
The discussion centered on Buffett’s recent dinner with Justin Sun, who paid over USD $4 million for a dinner with Warren Buffett as part of a charity auction. Buffett noted that Sun and his other guests behaved very well, and the conversation was respectful. Nevertheless, Buffett insisted that the Tron founder failed to change his mind in any way on this subject.
It is worth noting that during the interview Warren Buffett makes a number of references demonstrating that he understands blockchain technology. He clearly understands the idea behind the digital ledger, as well as the fixed supply of Bitcoins. Also, when pressed on the idea that Sun gave Buffet some Bitcoin at the dinner, Buffet became visibly uncomfortable, and reiterated that he did not own any.
BLOCKCHAIN ASSETS REMAIN OUTSIDE LEGACY FINANCE
Buffet’s view on cryptocurrencies has remained consistent, and is unlikely to change. His stance is likely due to the fact that blockchain assets do not fall within the realm of traditional finance. In other words, they are too risky, and too disruptive, to be considered worthy investments.
As perhaps the most successful investor of the modern age, Buffett’s genius is without dispute. Nevertheless, his remarkable success has come from following a very short list of very conservative, simple strategies. He has long avoided new asset classes or highly speculative investment schemes. The fact that Warren Buffett has zero interest in crypto is thus not surprising.
Crypto advocates may deride the argument that Bitcoin has no intrinsic value, yet Buffett’s statement also points to the unresolved, and highly controversial, question of Bitcoin’s long-term status as the top platform. Whereas there is no doubt that that blockchain assets are here to stay, Bitcoin may very well fall out of first place. Buffett clearly understands this fact and has no intention of entering the debate.
Warren Buffett is one of many financial experts from the legacy space that have decided to avoid cryptocurrency. His decision to do so will not stop blockchain development or cryptocurrency investment. Also, his assertion that cryptocurrencies are extremely risky holds true. Thus, perhaps the best move for crypto advocates is to stop trying to change his mind.
What do you make of Warren Buffett’s latest comments on crypto? Add your thoughts below!
"Cryptocurrencies basically have no value and they don't produce anything," he told CNBC's Becky Quick in a "Squawk Box" interview. "In terms of value: zero."
"I don't have any cryptocurrency and I never will," added Buffett, who was interviewed two days after he released his annual shareholder letter.
Buffett has been a long-time critic of the world's largest digital coin. He called bitcoin "probably rat poison squared," ahead of the 2018 Berkshire Hathaway annual shareholder meeting. A "mirage," "not a currency," and "tulips" are among the descriptors Buffett has used for bitcoin, according to CNBC's Warren Buffett Archive.
Berkshire Vice Chairman Charlie Munger has called it a "turd," and said that trading cryptocurrencies is "just dementia."
Last year, in an attempt to change Buffett's mind, Justin Sun, founder of cryptocurrency TRON and CEO of file-sharing company BitTorrent, bid $4.57 million in a charity auction to have a meal with the bitcoin skeptic.
"When Justin and four friends came, they behaved perfectly and we had a very friendly 3½-hour dinner and the whole thing was a very friendly exchange of ideas," Buffett said. He added that neither he nor Sun changed their stance on bitcoin.
"My flip phone is permanently gone," Buffett told CNBC's Becky Quick during a Squawk Box interview on Monday. "I've been given several of them, including [from] Tim Cook."
Once a fan of the $20 Samsung SCH-U320, Buffett is now using Apple's latest iPhone 11. He's been a longtime user of the flip phone, even though Apple is Berkshire Hathaway's third largest business, behind insurance and railroads. But, he says the flip phone is "permanently gone" even though he admits he mostly uses the iPhone for phone calls.
"You're looking at an 89-year old guy who's barely beginning to get with it," Buffett said, though he doesn't use "all its facilities like most people."
"I use it as a phone," he said. Buffett said in the past that he uses an iPad to check stock prices and do research.
Cook has said he would fly to Omaha, Nebraska, to help Buffett set up his new phone.
"I told him I'll personally come out to Omaha and do tech support for him," the Apple CEO said in 2018.
Buffett said earlier Monday that Apple is "probably the best business I know in the world." Berkshire owns roughly 5.5% of Apple, according to Buffett. Berkshire owned more than 245 million shares of Apple, worth nearly $72 billion, according to a Dec. 31, 2019 filing with the government,
Apple shares are up about 80% over the past 12 months.
"I feel very good about the banks we own. They're very attractive compared to most other securities I see," Buffett told CNBC's Becky Quick on "Squawk Box" on Monday.
Banks are a big part of Berkshire Hathaway's portfolio, which is worth more than $248 billion.
"Banking is a good business if you don't do dumb things on the asset side, I mean, basically," Buffett said. "The banks we own earn between ... 12% and 16% or so on net tangible assets. That's a good business, that's a fantastic business against the long-term bond at 2%."
Buffett highlighted banks buying back stock as a top reason for why he likes the sector. For example, Bank of America "is buying in a lot of stock every year," Buffett said, "so our ownership of Bank of America this year will probably go up 7 or 8% without us spending a dime."
"I'd like to own any business, any good business, where my ownership just goes up 7 or 8% every year without me spending any money and, on top of it, I get a dividend," the Berkshire chairman and CEO added in the interview from the conglomerate's headquarters in Omaha, Nebraska.
Warren Buffett joins CNBC's Becky Quick with an exclusive three-hour interview on Squawk Box Monday morning.
Follow along below for the highlights:
7:05 am: Buffett warns that 'reaching for yield is really stupid'
The Berkshire Hathaway founder said that investors should not reach for yield beyond their risk-tolerance, even with interest rates so low and stocks seemingly like the only place to get a return. "Reaching for yield is really stupid. But it is very human," he said, delivering sobering advice to folks near or in retirement. "People say, 'Well, I saved all my life and I can only get 1%, what to do I do? You learn to live on 1%, unfortunately."
7:00 am: Berkshire's cash pile stands at $128 billion, we'd 'like to buy more'
Berkshire Hathaway's cash balance now stands at $128 billion, leading some investors to question why the Oracle of Omaha hasn't put the firm's war chest to work. "We'd like to buy more," he said, after being asked about his cash on hand.
6:55 am: Buffett says American public going 'wild' with enthusiasm for index funds
As passive investing becomes more and more popular, Buffett likened index funds to conglomerates, saying the American public is going "wild" with enthusiasm for passive investing. "You buy 500 businesses all put together, and I mean that's the ultimate conglomerate."
6:46 am: Buffett says economy is 'strong,' but a 'little softer' than 6 months ago
6:39 am: Buffett won't reveal why he sold Wells Fargo
Berkshire Hathaway sold some of its Wells Fargo position in the fourth quarter, filings revealed, but when Buffett was pressed for why the firm decreased its position he wouldn't reveal why. "We've bought Bank of America and sold Wells Fargo," he said.
6:25 am: 'Very significant percentage of business' impacted by coronavirus
As the ongoing coronavirus outbreak hits stocks, Buffett said "a very significant percentage of our businesses one way are affected." He added, however, that the businesses are being affected by a lot of other things too, and said the real question is where those businesses are going to be in 5 to 10 years. "They'll have ups and downs," he said.
Specifically, he pointed to Apple and Dairy Queen being hit, as well as carpet maker Shaw Industries.
6:19 am: Buffett says he's bought stocks every year since he was 11
Buffett said that no matter what's going on in the market, he's always been an overall net buyer of stocks. "I've been a personal net buyer of stocks ever since I was 11, every year."
"I haven't bought stocks every day. There have been a few times where I thought stocks have been quite high, but that's very seldom" he added.
6:11 am: Don't buy or sell 'based on today's headlines'
As volatility in the market increases because of the coronavirus, Buffett said not to make investing decisions based on day-to-day moves. "You don't buy or sell your business based on today's headlines. If it gives you a chance to buy something you like and you can buy it even cheaper, you're in good luck," he said, adding that "you can't predict the market by reading the daily newspaper."
6:06 am: 'That's good for us,' Buffett says of dropping stocks
As stock futures drop, with the Dow pointing to a more than 800 point loss at the open, Buffett said "that's good for us." "We're a net buyer of stocks over time," he said. "Most people are savers, they should want the market to go down. They should want to buy at a lower price."
Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.
TurboTax maker Inuit Inc. is close to an agreement to buy personal-finance technology portal Credit Karma Inc. for roughly $7 billion, the Wall Street Journal reported, citing anonymous sources.
The deal, which will be in cash and stock, would push Intuit further into the growing online consumer finance sector. The company is expected to announce the agreement on Monday, people familiar with the matter told the newspaper.
The acquisition would be Intuit's largest in its 37-year history. Intuit shares have risen nearly 14% since the beginning of the year, and the company is expected to report second-quarter earnings on Monday.
Credit Karma, a startup headquartered in San Francisco, was valued at about $4 billion in a private share sale roughly two years ago. The platform offers users free access to credit scores and reports, and gives personalized loan and credit card recommendations based on the users' credit history.
Under the agreement, Credit Karma would function as a stand-alone business with its chief executive, Kenneth Lin, staying in charge, one person told The Journal.
This year's letter includes a lot: company performance, Buffett's critique of accounting rule changes, and how much Berkshire paid in income taxes ($3.6 billion, which Buffett says accounts for 1.5 percent of all U.S. corporate income tax).
You can always find more in these annual letters, and in fact I ran the whole text through a word cloud generator, to try to learn from Buffet's word choices and diction. (You can find that result here.)
If you're a business owner, however, there's an especially important truth contained in this year's letter. It took Buffett just nine short words to address it.
And it's something almost nobody wants to admit.
The succession question
The brutal truth Buffett found himself addressing is about leadership and corporate succession.
As Buffett acknowledges, it's something of an "urgent" question at Berkshire, given that he's 89 years old, and his vice-chairman, Charlie Munger, is 96.
"Charlie and I long ago entered the urgent zone," Buffett acknowledged. "That's not exactly great news for us. But Berkshire shareholders need not worry. Your company is 100 percent prepared for our departure."
The last nine words are the key. Very few people want to face their mortality.
But if you build a successful organization, that means people will be counting on you: shareholders in Buffett's case, but also employees, their families, and other stakeholders. Quite frankly, they need to know what happens if you can no longer be the leader.
With a company led by a near-nonagenarian and an even-older top lieutenant, here's what Buffett did to try to reassure key stakeholders that there's a succession plan in place--even without actually naming who will take over for him.
Signaling commitment
If he's not willing to name a successor publicly, Buffett has to signal somehow that he actually cares what happens to Berkshire Hathaway after he's gone.
I think he's done so effectively here by stating that:
Almost his entire net worth (99 percent) is tied up in Berkshire Hathaway stock.
He's never sold any of his shares. (He's given some away as gifts and charitable donations, and said he had to trade some Berkshire stock in 1980 for stock of a bank he'd acquired, because of a change in banking regulations.)
HIs will requires his executors and the trustees to hold onto his Berkshire holdings for years afterward. Buffett wrote that he believes the restrictions he's put in place mean "it will take 12 to 15 years for the entirety of the Berkshire shares I hold at my death to move into the market."
Munger's net worth is similarly tied up, Buffett said, and the message is clear: they wouldn't be so heavily leveraged in their own company if they didn't have faith in what it will do after they're gone.
"Key to my 'Berkshire-only' instructions is my fate in the future judgment and faith of Berkshire directors," Buffett added.
Giving air time
There's a lot of speculation that the ultimate successor to Buffett will be one of the firm's top two "other-than-Warren-and-Charlie" executives. Buffett said he plans to give them each a greater voice at the annual shareholders meeting in May.
"I've had suggestions from shareholders, media and board members that Ajit Jain and Greg Abel--our two key operating managers--be given more exposure at the meeting. That change makes great sense."
Jain, 68, is the company's vice chairman of insurance operations; Abel, 57, is vice chairman of non-insurance operations.
Giving them a bit more "air time" makes it more likely stakeholders could become comfortable with them.
Of course, it might also influence which of them, if either, ultimately gets the nod. Either way, it lets shareholders see and become more comfortable with either potential successor.
Why it matters
You're probably a lot younger than Buffett and Munger. But, it's worth considering that smooth company successions are often the exception to the rule.
Last year there were 1,640 CEO changes at big companies, according to Challenger, Gray & Christmas. Many of them were clearly unplanned, and under difficult circumstances.
So that's the key takeaway: Think it through, and have a plan.
The plan can change over time. It might have to change, especially if you wind up staying in charge longer than you might have originally thought.
But the very fact of having a plan, along with sharing as much detail about it as you can, and projecting confidence in its success, will leave your company and your stakeholders in a better position.
That's what Buffett clearly believes. And in most cases, you could do a lot worse than to follow his example.
FOX Business' Jackie DeAngelis says coronavirus fears caused selling pressure on the floor of the New York Stock Exchange.
Intuit Inc. is nearing a deal to buy personal-finance portal Credit Karma Inc. for about $7 billion in cash and stock, in a move that would push the bookkeeping-software giant further into consumer finance, according to people familiar with the matter.
Continue Reading Below
The maker of TurboTax could announce a deal to buy privately held Credit Karma by Monday, assuming talks don't fall apart, the people said. Credit Karma was valued at roughly $4 billion in a private share sale about two years ago.
The deal would mark Intuit's largest acquisition by far in its 37-year history and the first sizable transaction under Chief Executive Sasan Goodarzi, who took over a little more than a year ago.
Credit Karma offers its customers free access to their credit scores and borrowing history, alerts to possible data breaches, credit monitoring and tax preparation and filing. Customers in turn receive offers from other companies for credit cards and loans tailored to their credit history, and Credit Karma makes money when customers use those products.
Adding the buzzy startup to its stable would give Intuit a stronger foothold in the burgeoning realm of online personal finance. In addition to TurboTax, the online software that millions of people use to file their taxes, Intuit's offerings include QuickBooks bookkeeping software used by businesses and Mint, an online-budgeting platform that also pitches individuals financial products. Intuit has a market value of roughly $77 billion.
Under the deal being discussed, Credit Karma would operate as a stand-alone unit with its chief executive, Kenneth Lin, remaining in charge, one of the people said. But joining forces could allow both Credit Karma and Intuit to fine-tune their recommendations to customers by expanding the trove of financial data they use to make suggestions.
The move would cap a rapid rise for Credit Karma, which is backed by funders including private-equity firm Silver Lake and financial-technology venture firm Ribbit Capital. Based in San Francisco and founded in 2007 by Mr. Lin, Nichole Mustard and Ryan Graciano, Credit Karma at one point was eyeing an initial public offering no earlier than late 2019.
But the IPO market has looked more dubious after the disappointing debuts of some startups including Uber Technologies Inc. The merger market, especially for financial technology companies, has remained strong. Such deals have accounted for several of the largest transactions announced so far this year, including Morgan Stanley's $13 billion purchase of E*Trade Financial Corp., announced this past week, and Visa Inc.'s $5.3 billion acquisition of startup Plaid Inc. announced last month.
Mountain View, Calif.-based Intuit was founded in 1983 and went public in 1993. Best-known for its bookkeeping software, the company has said it wants to push further into the finances of the individuals and businesses it serves by adding more offerings to its platform. It is set to report its fiscal second-quarter earnings Monday afternoon.
Intuit Inc.
INTU -1.22%
is nearing a deal to buy personal-finance portal Credit Karma Inc. for about $7 billion in cash and stock, in a move that would push the bookkeeping-software giant further into consumer finance, according to people familiar with the matter.
The maker of TurboTax could announce a deal to buy privately held Credit Karma by Monday, assuming talks don’t fall apart, the people said. Credit Karma was valued at roughly $4 billion in a private share sale about two years ago.
The deal would mark Intuit’s largest acquisition by far in its 37-year history and the first sizable transaction under Chief Executive
Sasan Goodarzi,
who took over a little more than a year ago.
Credit Karma offers its customers free access to their credit scores and borrowing history, alerts to possible data breaches, credit monitoring and tax preparation and filing. Customers in turn receive offers from other companies for credit cards and loans tailored to their credit history, and Credit Karma makes money when customers use those products.
Adding the buzzy startup to its stable would give Intuit a stronger foothold in the burgeoning realm of online personal finance. In addition to TurboTax, the online software that millions of people use to file their taxes, Intuit’s offerings include QuickBooks bookkeeping software used by businesses and Mint, an online-budgeting platform that also pitches individuals financial products. Intuit has a market value of roughly $77 billion.
A Credit Karma deal would be Intuit CEO Sasan Goodarzi’s first sizable transaction in the job, which he has held for a little more than a year.
Photo:
Adm Golub/Associated Press
Under the deal being discussed, Credit Karma would operate as a stand-alone unit with its chief executive,
Kenneth Lin,
remaining in charge, one of the people said. But joining forces could allow both Credit Karma and Intuit to fine-tune their recommendations to customers by expanding the trove of financial data they use to make suggestions.
The move would cap a rapid rise for Credit Karma, which is backed by funders including private-equity firm Silver Lake and financial-technology venture firm Ribbit Capital. Based in San Francisco and founded in 2007 by Mr. Lin,
Nichole Mustard
and
Ryan Graciano,
Credit Karma at one point was eyeing an initial public offering no earlier than late 2019.
But the IPO market has looked more dubious after the disappointing debuts of some startups including
Uber Technologies Inc.
The merger market, especially for financial technology companies, has remained strong. Such deals have accounted for several of the largest transactions announced so far this year, including
Morgan Stanley’s$13 billion purchase of
E*Trade Financial Corp.,
announced this past week, and
Visa Inc.’s$5.3 billion acquisition of startup Plaid Inc. announced last month.
Mountain View, Calif.-based Intuit was founded in 1983 and went public in 1993. Best-known for its bookkeeping software, the company has said it wants to push further into the finances of the individuals and businesses it serves by adding more offerings to its platform. It is set to report its fiscal second-quarter earnings Monday afternoon.
:format(webp):no_upscale()/cdn.vox-cdn.com/uploads/chorus_asset/file/19743151/nstatt_200221_3917_0006.jpg)
