Buffett successor boosts Berkshire stake with $68mn outlay
Warren Buffett’s anointed successor Greg Abel on Monday disclosed that he had spent roughly $68mn buying Berkshire Hathaway’s class A stock in late September, dramatically increasing his personal stake in the sprawling conglomerate he may one day lead.
The investment has been awaited by shareholders after Berkshire spent $870mn in June to buy out Abel’s stake in its energy business. Abel, the vice chair of Berkshire who oversees all of its non-insurance operations, purchased 168 class A shares on September 29, according to filings with the Securities and Exchange Commission.
While he is among the highest paid Berkshire executives, earning $19mn a year for each of the past three years, the fact he held only 5 class A shares and less than $1mn of its class B shares had raised concerns for some stockholders. Buffett, Berkshire’s 92-year-old chief executive, by contrast owns a stake worth more than $90bn.
Abel, a hockey fan and former accountant, joined Berkshire in 2000 after Buffett acquired utility and energy company MidAmerican Energy.
Berkshire Hathaway did not respond to a request for comment.
US stocks jump to start new quarter while bond yields slide
US stocks rallied on the first day of the fourth quarter, notching their largest daily increase since August after the UK government on Monday reneged on its plans for an unfunded tax cut that had spooked investors and roiled bond markets.
Wall Street’s benchmark S&P 500 share index closed up 2.6 per cent, while the technology-heavy Nasdaq Composite added 2.3 per cent. Both indices recorded their biggest daily increases since August.
US stock indices have had a bruising year to date, with declines over each of the three quarters to September in the longest quarterly losing streak since 2008.
“What we’re seeing today is not necessarily healthy,” said George Goncalves, head of US macro strategy at MUFG. “People are very hopeful and wishful and want to put September behind them, but the underlying problems are still out there.”
US government bonds rallied sharply on the first trading day of the fourth quarter, with the yield on the benchmark 10-year Treasury note sliding 0.18 percentage points as its price rose. The two-year yield, which is more sensitive to changes in interest rate forecasts, shed 0.09 percentage points to 4.12 per cent. Ten-year gilt yields similarly slid on Monday, falling 0.19 percentage points to 3.96 per cent.
Concerns have intensified this year that the US Federal Reserve and other central banks will raise borrowing costs so fast in their efforts to curb inflation that they compound a global economic downturn.
Read more on markets here.
Biden administration urges Congress to speed up crypto rules
President Joe Biden’s administration has called on Congress to pass new laws to clear up how cryptocurrencies should be regulated, as officials warn delays on Capitol Hill could put investors at risk.
The US Financial Stability Oversight Council — a group of the country’s top financial regulators, which includes the Treasury — issued a report on Monday urging politicians to come to agreement on a number of different areas, including how to regulate bitcoin and other crypto assets sold on the spot market.
The report comes as members of Congress debate new proposals covering everything from the $140bn stablecoin industry to tax rules for crypto brokers. But while Biden administration officials worry about a repeat of the collapse of now-infamous stablecoin terraUSD, those close to negotiations say they are still months away from passing new legislation.
The FSOC report also comes as the crypto industry is reeling from a historic collapse in prices with several prominent companies falling into bankruptcy, raising questions about who ought to carry out chief oversight of volatile crypto markets.
Regulatory agencies such as the Securities and Exchange Commission and Commodity Futures Trading Commission continue to press for jurisdiction over the industry. SEC chair Gary Gensler has argued that most cryptocurrencies — and the platforms where they are traded — should be regulated by the SEC because many of the tokens qualify as securities under US law.
Read more on the push to speed up rules on crypto here.
UK chancellor Kwarteng to bring forward debt-cutting plan after tax U-turn
UK chancellor Kwasi Kwarteng is to accelerate the publication of his plan to cut Britain’s debt in an attempt to reassure markets after he was forced to make a humbling U-turn on a key part of his “mini-Budget”.
Kwarteng is expected to publish his medium-term fiscal plan, accompanied by official forecasts, later this month after previously insisting he would wait more than 50 days until November 23.
His attempt to reassure markets, confirmed by several government officials, came in the aftermath of a humiliating retreat on his plan to axe the 45p top rate of income tax in the face of a Tory revolt.
Kwarteng admitted in a speech to the Conservative party conference in Birmingham on Monday: “It has been tough, but we need to focus on the job in hand. We need to move forward. No more distractions.”
He said his September 23 fiscal statement had caused “a little turbulence”. It sparked a run on the pound, sent borrowing costs spiralling and forced the Bank of England to make a £65bn intervention in the bond market.
Kwarteng and Liz Truss, prime minister, agreed to abandon the plan to axe the top rate of tax late on Sunday night, after warnings from Tory MPs that they would not vote for it in the House of Commons.
Read more on the UK’s debt cutting plan here.