Berkshire Hathaway's results weren't A-grade | China's gone heavier on coal |

Hi Finimizer, here's what you need to know for February 28th in 3:12 minutes.

☕️ Finimized over an espresso tonic at VENUE in Prague, Czech Republic (2°C/35°F 🌤)

Today's big stories

  1. Warren Buffett’s Berkshire Hathaway reported lackluster results in some of its key businesses
  2. Four factors could be about to bring stocks down a notch – Read Now
  3. China approved a ton of coal power plants last year, but there's hope for the country's green side yet

Not So Buff

Not So Buff

What’s Going On Here?

Warren Buffett’s Berkshire Hathaway reported shrug-worthy results over the weekend.

What Does This Mean?

Buffett’s unrivaled reputation wasn’t born out of thin air: the value of his company’s stock has, on average, increased by twice as much as the US stock market every year for over 50 years. But Berkshire’s latest report hardly screamed success: the conglomerate’s all-important insurance and railroad businesses helped bring home record full-year operating earnings, sure, but hefty costs and slimming demand meant it ended the year in a slump. Berkshire’s $300-billion stock portfolio dropped off too. Now, Buffett often calls those slides meaningless given the firm’s long-term view, but the blip still dragged the firm to a nearly $23 billion loss last year.

Why Should I Care?

For markets: Money to burn.
Buffett’s annual letter – a surprisingly short one this time round – pushed one big point of contention: stock buybacks. See, there’s a new tax on buybacks in the US, with some arguing the cash would be better spent on workers’ pay or investing in the firm’s future. Buffett, though, defended their merits, saying they’re a smart way to use extra cash, especially when bought for fair prices. (Remember, buybacks reduce the number of shares available and give existing shareholders a bigger stake in the business and any profit.) Berkshire’s been a big fan of that tactic lately: with fewer promising acquisitions to spend money on, the firm bought back almost $8 billion of its shares last year.

The bigger picture: Gotta have faith.
Buffett sold more than $16 billion of stocks last quarter, dumping firms like TSMC, US Bancorp, and Bank of New York Mellon. That pulled its cash pile up to nearly $130 billion by the end of last year – but Buffett’s not completely pessimistic about markets. The Oracle of Omaha reminded investors to have faith in the US, saying there’s no reason to make a long-term bet against the world’s biggest economy.

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Analyst Take

Five Things That Could Send Stocks Lower

Five Things That Could Send Stocks Lower

By Luke Suddards, Analyst

The S&P 500 had a supercharged start to the year.

Retail investors helped power it along, snapping up about $1.5 billion in US stocks a day – the biggest volume on record.

The problem – for the market anyway – is that it might not last.

See, a string of US economic data suggests there could be even more interest rate hikes ahead, and investors could well be growing more cautious.

That’s today’s Insight: retail investors and four other factors that could send stocks lower.

Read or listen to the Insight here


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Coald Truth

Coald Truth

What’s Going On Here?

Data out on Monday showed that China approved a whole load of new coal plants last year.

What Does This Mean?

Extreme heat tore through China last summer, with droughts drying up hydropower reservoirs and firing up demand for devices like air conditioning systems. And with the country – the world’s biggest energy importer, by the way – suffering a series of severe power shortages as a result, it turned to its old reliable: coal. In fact, China approved a batch of coal plants in 2022, with a cumulative capacity that equals all of the UK's combined. The whole shebang was lightning quick, with projects getting permits, financing, and breaking ground within a matter of months. But with China’s ongoing constructions already six times more than the rest of the world’s combined, the country’s climate goals look less tangible than ever.

Why Should I Care?

Zooming in: Let’s (not) get dirty.
In fairness, China still leads the world in clean energy investments. And with commodity prices swinging from left to right, the incentive to get greener is solid: making energy from wind and water is free, after all, once systems are up and running. So if there’s enough clean power to keep the country going, those coal plants won’t even need to get their hands dirty. But China might have to up its investments to make that happen, especially because some energy-hungry Chinese sectors could soon rebound now the country’s reopened.

The bigger picture: Some serious green.
Europe and the US are doing their bit too: the US’s inflation reduction act will pour up to $369 billion into clean energy programs over the coming decade, and the EU is currently spending over $70 billion in renewable energy subsidies a year. That’s all promising for green firms, and might just be why wind turbine manufacturers said this week that they expect business to go from lemons to lemonade next year.

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💬 Quote of the day

“I want my children to have all the things I couldn’t afford. Then I want to move in with them.”

– Phyllis Diller (an American stand-up comedian, author, and musician)
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💸 How To Pick Winning Exchange-Traded Funds: 5pm, March 7th
🌥 Do Recessions Have A Silver Lining?: 5pm, March 8th
🌎 Three Ways Long-Term Investors Can Act On Climate Change: 12pm, March 21st
🚀 What Will Be The Next Big Thing In Artificial Intelligence?: 1pm, March 22nd

🎯 On Our Radar

  1. Thrifty business. Maybe second-hand shops aren’t for everyone.
  2. We can finally live in peace. Science could cure a very annoying ailment.
  3. Ah, the sweet tones of artificial intelligence. Super-smart tech is coming to a radio near you.
  4. Open wide. Films with teeth have a bit of extra bite.
  5. Check your cupboards. Chicken nuggets might need warning signs.
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