Warren Buffett's Berkshire posts record $30.8 billion annual operating profit - The Globe and Mail

Warren Buffett’s Berkshire Hathaway Inc on Saturday reported its highest-ever annual operating profit, even as foreign currency losses and lower gains from investments caused fourth-quarter profit to fall.

Buffett called 2022 a “good year” for Berkshire in his annual shareholder letter after the conglomerate’s dozens of businesses generated $30.8 billion of profit despite rising inflation and supply chain disruptions, including from the war in Ukraine.

Berkshire also bulked up its cash hoard, ending the year with $128.6 billion.

The Omaha, Nebraska-based conglomerate sold about $16.3 billion of stocks in the fourth quarter and found better value repurchasing its own shares, buying back $2.6 billion in the quarter and $7.9 billion for all of 2022.

Berkshire shareholders “trust us to treat their money as we do our own,” Buffett said in his letter. “And that is a promise we can make.”

Quarterly operating profit fell 8% to $6.71 billion, or $4,596 per Class A share, from $7.29 billion.

Results included about $1.2 billion of currency losses and more underwriting losses at the car insurer Geico, which has struggled more than some rivals with accident claims and properly pricing policies to reflect risk.

Profit also fell at the BNSF railroad, while Berkshire generated more profit from its energy businesses and more income from its insurance investments as interest rates rose.

Quarterly net income fell 54% to $18.16 billion, or $12,412 per Class A share, from $39.65 billion, or $26,690 per share, a year earlier.

For all of 2022, Berkshire lost $22.82 billion, largely because of losses in its $308.8 billion common stock portfolio.

Buffett considers net income a misleading performance measure because it includes gains and losses from stock holdings such as Apple Inc and Bank of America Corp, regardless of what Berkshire buys or sells.

A dearth of new investments helps explain how Berkshire boosted its cash stake despite having spent $11.5 billion in the fourth quarter to buy the insurance company Alleghany Corp.

That purchase helped Berkshire boost insurance “float,” which reflects premiums collected up front before claims are paid and help fund growth, 12% last year to $164.1 billion.

“We’re delighted to see the growth in float,” said Thomas Russo, a partner at Gardner Russo & Quinn who helps invest $8 billion, about 17% of which is in Berkshire stock. “Buffett often describes float as more important than cash.”

Berkshire also spent $8.2 billion on Jan. 31 to boost its stake in truck stop operator Pilot Travel Centers to 80% from 38.6%.

Berkshire’s share price rose 4% in 2022, far outpacing the Standard & Poor’s 500 which fell 18% including dividends, and reflecting Berkshire’s status as a defensive investment in rocky markets.

The shares have fallen 1.5% in 2023, while the index is up 3.4%.

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2023-02-25 17:53:30Z
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Move over, quiet quitting. 'Rage applying' is the latest form of worker revenge - CBC.ca

Cost of Living4:51#rageapplying is the new #quietquitting

First it was #QuietQuitting. Now it's #RageApplying.

As Canadians continue to evaluate their working conditions and flexibility during the pandemic, this latest trend has emerged thanks to a confluence of frustration and opportunity in the workforce, say some HR professionals.

"Essentially I was underpaid and overworked," said Amanda, who worked in digital marketing for an Ottawa brewery. Then she found out her employer was going to hire someone she didn't feel comfortable being around.

CBC has agreed to withhold Amanda's last name over fear of retribution.

"I was sort of hurt," Amanda told The Cost of Living, "very upset with the situation and how my boundaries weren't being respected."

So she started applying for jobs. Amanda applied for at least 15 positions.

"It was probably a week [of] rage applying," she said. 

And the result of her rage? A new job with a $25,000 increase in salary. She posted a video on TikTok about her experience, with the hashtag "RageApplying." It's been viewed more than two million times and shared more than 20,000 times.

Other videos with the #rageapplying hashtag have been similarly successful.

It's a job-seeker's market

Vancouver-based HR consultant Cissy Pau says "rage applying" is just a new way to describe something that workers have done for a long time: telling an employer to, as Johnny Paycheck so famously sang,  "take this job and shove it."

However, applying for jobs online is much simpler now, she said. 

"You can just go on to LinkedIn … and you just kind of click, click, click and you apply."

The fact that it's very much a job-seeker's market also helps. 

Cissy Pau is a human resources consultant in Vancouver. She says 'rage applying' is just a new way to describe something that workers have done for a long time. However, applying for jobs online is much simpler now, she said. (Jonetsu Studios/Submitted by Cissy Pau)

"We've had a lot of people retire; we don't have enough professionals coming up to replace them," said Evangeline Berube, a vice-president at recruiting agency Robert Half.

Robert Half routinely conducts a "job optimism" survey. The most recent survey, conducted in October and November, interviewed 1,100 professionals working in finance, tech, marketing, creative, legal, HR and customer support. 

The company — which specializes in matching workers in those fields with potential employers — found that half the respondents said they planned to seek a new job this year. This was up from 30 per cent of respondents in a smaller survey done six months earlier.

Every day I go to work, and I'm so grateful that I got mad that one day ...- Amanda

That's a noteworthy uptick, said Berube, adding that besides higher wages and better benefits, the results showed workers are seeking jobs that continue to offer better flexibility.

But Pau urged people not to let their emotions drive their search for a better job, suggesting it's better to wait until you can consider your options analytically. 

"It's not necessarily going to be better at the next place," she said.

But Amanda has no regrets about making her move.

"Every day I go to work, and I'm so grateful that I got mad that one day [and] that it made a huge difference in my life." 

---

Produced by Jennifer Keene.

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2023-02-25 09:00:00Z
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PCE inflation index jumps to 5.382% YOY or 0.6% in January - Kitco NEWS

The preferred inflation index used by the Federal Reserve; the core Personal Consumption Expenditures (PCE) index jumped to its highest value since last summer. The core PCE increased by 0.6% in January when compared to the prior month, taking the year-over-year PCE to 5.382%. Today's PCE report was the result of surging consumer spending after a dramatic decline at the end of last year.

According to the BEA, "Personal income increased $131.1 billion (0.6 percent) in January, according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $387.4 billion (2.0 percent) and personal consumption expenditures (PCE) increased $312.5 billion (1.8 percent). The PCE price index increased 0.6 percent in January. Excluding food and energy, the PCE price index also increased 0.6 percent (table 9). Real DPI increased 1.4 percent and Real PCE increased 1.1 percent; goods increased 2.2 percent and services increased 0.6 percent."

The net result was strong declines in US equities and precious metals and gains in both US treasury yields and the dollar. This raises expectations that the Federal Reserve will raise rates by ¼% for the next three consecutive FOMC meetings. This also raises the expectations by market participants that the terminal fed funds rate will move to a higher target than 5.1%.

Most importantly, this report confirms that components of inflation remain sticky or persistent. This after an extremely hawkish monetary policy by the Federal Reserve has raised rates at the last eight consecutive FOMC meetings. The Fed raised its benchmark rate from near zero in March 2022 to 4.5% - 4.75% last month. It has also raised the probability of ½ a percent rate hike at the next FOMC meeting in March. According to the CME's Fedwatch tool, there is a 27% probability of that outcome.

Today's PCE report creates more bearish downside pressure for gold and silver. As of yesterday, gold futures were already priced below the opening price on January 3, the first trading day of the year.

Today's April gold futures gave up $8.80 or 0.48% and is currently fixed at $1818. March silver lost 2.66% or $0.57 and is currently fixed at $20.74 per ounce. Today's PCE report will only strengthen the resolve of the Federal Reserve to "do whatever it takes", to reduce inflation to their target level of 2%. However, their current target might be unachievable at least according to El-Erian, a Bloomberg Opinion columnist who doubts whether the Federal Reserve can achieve that goal. In fact, 3% to 3 ½% might be the new 2%.

For those who would like more information simply use this link.

Wishing you as always good trading,

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2023-02-24 23:00:00Z
1799549501

CIBC profit falls but tops forecasts on trading gains, lower loan-loss provisions - The Globe and Mail

Canadian Imperial Bank of Commerce CM-T reported lower first-quarter profit but beat analysts’ estimates as the lender set aside fewer loan loss reserves and benefited from a boost in trading activity.

CIBC earned $432-million or 39 cents per share, in the three months that ended Jan. 31. That compared with $1.9-billion or $2.01 per share, in the same quarter last year.

Adjusted to exclude certain items, including a provision for a lawsuit with a New York hedge fund, the bank said it earned $1.94 per share. That beat the $1.73 per share analysts expected, according to Refinitiv.

The bank kept its quarterly dividend unchanged at 85 cents per share.

CIBC is the first major Canadian bank to report earnings for the fiscal first quarter. The rest of the Big Six banks release financial results next week.

In the quarter, CIBC set aside $295-million in provisions for credit losses – the funds banks set aside to cover loans that may default. That was lower than analysts anticipated and included $36-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, CIBC had recorded $75-million in provisions.

Total revenue rose 8 per cent in the quarter, to $5.9-billion. But expenses ticked higher to $4.5-billion, which the bank said was driven by higher compensation for staff and strategic investments.

“We have clear momentum in attracting and deepening client relationships, a resilient capital position, and strong risk management and credit quality,” chief executive officer Victor Dodig said in a statement.

Profit from Canadian personal and small business banking was $589-million, down 14 per cent from a year earlier, largely on higher provision for credit losses, as well as expenses related to the bank’s acquisitions of the Costco credit card portfolio in Canada and employee compensation. But loan balances were up 8 per cent year over year.

The Canadian commercial and wealth management division generated $469-million of profit, up a slight 2 per cent as higher revenue and lower expenses were offset by bigger loan loss provisions. Commercial loan balances increased by 14 per cent from a year earlier.

Capital markets posted $612-million of profit, rising 13 per cent as activity in its global markets and direct financial services businesses offset a slower investment banking quarter.

Profit from the bank’s U.S. arm fell to $201-million as the unit set aside more money for potential bad loans.

CIBC took a previously-announced legal provision of $1.17-billion after a U.S. court found the bank liable for losses incurred by a New York hedge fund in debt deals related to the 2008 U.S. housing crisis. Last week, the lender said that it agreed to pay US$770-million Cerberus Capital Management LP, less than the amount it had set aside. CIBC said that the difference will be reflected in the bank’s second-quarter financial results.

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2023-02-24 12:18:44Z
1802866220

BOJ Ueda: standard monetary policy to not immediately respond to supply-driven inflation - ForexLive

Ueda testimony before the lower house of the Diet as part of his nomination and confirmation process

More to come

• Need to guide monetary policy based on economy, prices and their outlook
• Takes certain time for effects of monetary policy to play out in economy
• Current monetary easing appropriate
• By supporting economy with monetary easing, boj must support corporate efforts to hike wages
• Will work closely with govt to guide policy appropriately
• Japan still needs more time for inflation to sustainably hit 2% target
• It is standard monetary policy to respond preemptively to demand-driven inflation but not immediately respond to supply-driven inflation
• Want to achieve price stability sustainably and stably
• Inflation to fall below 2% around the middle of the Next fiscal year

Japan's fiscal year begins April 1, so the middle is around October. Thus Ueda is expecting inflation to fall from October this year.

Re the points I have bolded above, this is what I was talking about earlier.

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2023-02-24 00:38:00Z
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Loblaw earns $529M in Q4 profits as Canadians continue to be hit with higher food prices - CBC News

Loblaw Companies on Thursday forecast annual earnings above analysts' expectations, after the Canadian retailer's fourth-quarter results beat estimates, helped by strength in its pharmacy business and as demand held up for groceries.

The company says it earned a profit available to common shareholders of $529 million. Its fourth-quarter revenue rose about 10 per cent to $14.01 billion, topping estimates of $13.75 billion.

On an adjusted basis, Loblaw earned $1.76 per share, beating analysts' expectations of $1.71 per share.

Consumers spending on essentials

The cooking oil aisle at a Toronto Loblaws grocery store is pictured on Oct. 18, 2022. Retailers are leaning on sales of food and medicines as rising prices are forcing consumers to prioritize spending on essentials and trade down to cheaper private-label alternatives from higher-priced brands. (Evan Mitsui/CBC)

Retailers are leaning on sales of food and medicines as rising prices are forcing consumers to prioritize spending on essentials and trade down to cheaper private-label alternatives from higher-priced brands.

Loblaw posted a 9.7 per cent rise in retail segment sales, reflecting strong growth in its food and drug businesses, with steady demand for cough and cold medicines, as well as high-margin beauty and cosmetics products.

Retail bellwether Walmart Inc., however, forecast its full-year earnings below estimates on Tuesday, and warned that tight spending by consumers could pressure profit margins.

Loblaw, on the other hand, expects its full-year 2023 adjusted earnings per common share to grow in the low double-digits compared with the average analyst estimate of 9.64 per cent, according to Refinitiv IBES data.

A lack of competition

Groceries are pictured in a Vaughan, Ont., supermarket on Aug. 16, 2022. Several converging factors are putting upward pressure on food costs, including geopolitical events like the war in Ukraine, as well as climate-related disasters like a surge of avian flu in North America that is driving up poultry prices. (Evan Mitsui/CBC)

Dr. Phoebe Stephens, an assistant professor of food security and sustainable agriculture at Dalhousie University, said that grocery retail in Canada is heavily concentrated, with about 80 per cent of sales controlled by five major chains, including Loblaw.

"Whether or not greedflation is at play is really, really difficult to nail down," Stephens said, noting that food processing and manufacturing are also heavily concentrated parts of the sector.

"So there is a lack of competition there as well. And that might be allowing these companies to raise prices more so than they would be able to if there was greater competition."

Several converging factors are putting upward pressure on food costs, including geopolitical events like the war in Ukraine, as well as climate-related disasters like a surge of avian flu in North America that is driving up poultry prices.

"But there is also a question mark about the role of market concentration and a lack of competition in driving up these food prices," Stephens said. "Because of their unique position in the food system, grocery retailers actually have power over both suppliers and consumers."

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2023-02-23 14:42:36Z
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As tip amounts rise, many Canadians say they'd rather skip the tip — and some restaurants agree - CBC News

Customers intent on leaving tips at Vancouver's Folke restaurant tend not to get very far. 

"They'll hide it under napkins or under their plate," said co-owner Pricilla Deo. "If we catch it while they're still here, we just hand it back to them and politely remind them that we're a no-tipping restaurant."

When diners do make it out the door without tips being noticed, she says the money is used to fund staff dinners.

Folke introduced its no-tipping policy when the vegan restaurant opened in June 2022. Deo says employees earn well above minimum wage ($15.65 per hour in B.C.) and get full benefits. All overhead costs, including salaries, have already been factored into the menu prices, so customers simply pay the bill.

"It was really important to us to have an inclusive work environment where everyone was compensated fairly," said Deo. "It's not our customers' responsibility to pay our staff properly. … It's our responsibility to make sure that our staff are taken care of."

It's a concept that recent polls suggest many Canadians would like to see catch on, as inflation has led to higher menu prices (up 8.2 per cent higher in January compared to the previous year), and diners say they feel pressured to dole out bigger tips. 

Server Jeanine Fahlman clears plates at Folke restaurant. The owners of the vegan eatery that operates on a no-tipping model said they feel it's their responsibility — not their customers' — to ensure their staff is fairly compensated. (Rafe Arnott/CBC)

A new Angus Reid poll found that 59 per cent of Canadians surveyed would prefer an all-inclusive, no-tipping model where staff is paid a higher wage. 

More than three in five Canadians also said that over the past few years, they've been asked to tip more often and dole out larger tips.

The poll surveyed 1,610 adults online. For comparison purposes only, a probability sample of this size would carry a margin of error of plus or minus two percentage points, 19 times out of 20.

There's also hard evidence that Canadians are shelling out more in tips. The average gratuity jumped from 16 to 20 per cent between Jan. 1, 2019, and Jan. 1, 2023, according to technology and payment services company Square, which says it counts hundreds of thousands of Canadian businesses as clients. 

What's fuelling push for increased tips

Two big factors are driving customers to up their tips, suggests Marc Mentzer, an organizational behaviour professor at the University of Saskatchewan's Edwards School of Business.

First, he says, the pandemic has generated sympathy for the hospitality industry which suffered big losses during lockdowns. 

Second, said Mentzer, the pre-programmed tip amounts on electronic credit and debit card readers may be goading some people into tipping more.

"There are percentages that are pre-programmed into the device," said Mentzer, noting it can be awkward to navigate the self-select tip option. "Even more awkward if I have to ask the server, 'How do I leave a non-standard tip?'"

WATCH | Some restaurants going tip-free: 

Some restaurants going ‘tip free’, opting to boost wages instead

12 hours ago

Duration 2:08

Some restaurants are doing away with tipping to combat ‘tip fatigue’ amongst cash-strapped customers, opting to adjust menu prices and boost servers’ wages instead.

Back at Folke Restaurant, customer Anshul Bhandari said he's noticed drastically higher tip-prompt amounts on card readers over the years. 

"It's gone as crazy as … up to 30 per cent — even for take-out," he said. "It's not nice from a consumer point of view."

Bhandari applauds the transparent, no-tipping model. So does customer Jason Yip. 

"I would prefer knowing exactly what the bill would be at the end of the day and also knowing that the server is getting paid a fair wage," he said.

Tipping ingrained in Canadian culture 

Mentzer said he takes issue with tipping in general, because a server's age, gender or race could affect how much they make in gratuities.

"It's really a weird way of compensating people," he said. "There are some serious issues of human rights."

In several countries, such as Japan and Denmark, gratuities are not expected and the service is included in the bill. 

Even so, Mentzer said he believes tipping is here to stay in Canada, because it's ingrained in our culture. 

Richard Alexander, the Atlantic vice-president of industry group Restaurants Canada echoes that thought. He estimates no more than two per cent of restaurants in the country have adopted the no-tipping model. 

"The gratuity is firmly established," he said. "What we hear from consumers is they prefer to have the control."

At Lazy Daisy's Cafe in Toronto, customer Mike Stepko said he always leaves a tip, but wants the option to top it up — when warranted. 

"There are times where the service is pretty much outstanding," he said. "That's where you want to give 20 to 25 per cent. … I don't think that should ever change."

Dawn Chapman, owner of Lazy Daisy's Cafe in Toronto, says she's supportive of the no-tipping model, but isn't quite ready to adopt it because she'd have to raise prices and risk losing customers. (James Dunne/CBC)

Another hurdle is that many restaurants may not be ready to shift to a no-tipping model, fearful of the consequences. 

Lazy Daisy's owner, Dawn Chapman, supports such a model, but said she would only adopt it if it became the norm across Canada. That's because, in order to boost wages, Chapman estimates she would have to raise menu prices by 20 per cent. 

"It's too risky," she said. "My worry is that people would come in and say I don't wanna pay $15 for a breakfast sandwich. I'm gonna go to the place where I can pay $11 and choose a 10 per cent tip."

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2023-02-23 12:13:49Z
CBMiR2h0dHBzOi8vd3d3LmNiYy5jYS9uZXdzL2J1c2luZXNzL25vLXRpcHBpbmctbW9kZWwtcmVzdGF1cmFudHMtMS42NzU1OTQ00gEgaHR0cHM6Ly93d3cuY2JjLmNhL2FtcC8xLjY3NTU5NDQ