Pre-market stocks: Warren Buffett is still betting on the US economy

What’s going on: last quarter, Warren Buffett Berkshire Hathaway (BRKA) strengthened its holdings in Apple (AAPL) of 3.9 million shares, according to new financial information. It also increased its stake in Allied Financial (ALLY)a Detroit-headquartered financial services company, 21 million shares, and repurchased 2.3 million shares of Chevron.
Berkshire’s top holdings are now Apple, Bank of America, Coca Cola (KO), Chevron (CLC) and American Express (AXP)according to data from Refinitiv.
Buffett has reduced his stakes in companies like Kroger (KR), General Engines (GM) and American bank (USB)and completely liquidated its positions in Verizon and Royalty Pharma.

But the famed investor’s willingness to keep buying signals continued confidence in the direction of the US economy and financial markets.

Berkshire reported about $3.8 billion in net stock purchases during the second quarter. That’s on top of more than $40 billion in stock Berkshire bought in the first quarter.

Why it matters: Given Buffett’s track record of success and consistent focus on the long term, his investing habits are closely watched by traders.

The economic data that Buffett and others on Wall Street are currently reviewing is muddled, making their job difficult.

The New York-area manufacturing industry suffered a significant and unexpected setback in August, according to a survey released Monday. The New York Federal Reserve said its Empire State Manufacturing Survey fell 42 points. This is the second largest monthly decline on record, behind only April 2020, at the start of the Covid-19 pandemic.
Yet other measures seem more promising, as my CNN colleague Matt Egan recently noted:
  • The economy added more than half a million jobs in July. That pushed the unemployment rate to 3.5%, tied with the lowest level since 1969.
  • Gas prices fell below $4 a gallon.
  • Consumer confidence rebounded from record lows.
  • The US stock market has gained ground for four straight weeks.

“It’s not a recession. It’s not even in the same universe as a recession,” said Mark Zandi, chief economist at Moody’s Analytics.

Should Disney part ways with ESPN as sports betting grows?

disney (SAY) wowed Wall Street last week with strong earnings on the back of strong Disney+ subscriber gains and healthy theme park attendance. But one activist investor thinks he could do more to revive his lagging stock.
Latest: Daniel Loeb’s Third Point said on Monday that he’s bought a new stake in the entertainment giant and is pushing for change, my CNN Business colleague Paul R. La Monica reports.

One of the most dramatic of its pitches is that Disney spins off ESPN.

The sports network is an attractive part of the larger streaming bundle with Disney+ and Hulu, Loeb acknowledged. But he thinks there is a “strong case” for ESPN to stand on its own given the rapid growth of the sports betting industry, which could generate huge profits but damage Disney’s image in as a “family first” business.

“ESPN would have greater flexibility to pursue business initiatives that may be more difficult within the Disney framework,” Loeb wrote in a letter to the company outlining his proposals.

CEO Bob Chapek said last week that his team was “working hard” on a sports betting offering.

“We hope to have something to announce in the future in terms of partnering there that will allow us to access that revenue stream,” he told analysts.

Still, Loeb thinks Disney stocks would perform better if ESPN were to be separated, a popular trend among big companies trying to simplify their presentations to Wall Street investors.

Investor Insight: Shares of Disney soared more than 2% on Monday. But they are still down almost 20% this year, making the company one of the worst performers in the Dow Jones.

Ex-WeWork CEO woos investors again

I spent a lot of time thinking about the WeWork fiasco. To me – and many financial commentators – the implosion of the company’s glittering debut on Wall Street in 2019 reads like a parable of Silicon Valley excess, as investors, loaded with cash, poured money in unprofitable startups and gave little thought to the consequences.

If you watched “WeCrashed” on Apple TV+, there were other lessons to be learned as well. The ousting of former CEO Adam Neumann was touted as payback, as a selfish, unsupervised founder suffered a late reality check (even while floating on a golden parachute).

But when are the stories always so tidy?

Neumann’s comeback: Andreessen Horowitz revealed on Monday that he is backing Neumann’s new venture, a residential real estate company called Flow. The $350 million investment from the prominent venture capital firm valued the startup at more than $1 billion, The New York Times reported.
In a blog post, co-founder Marc Andreessen highlighted his belief in Neumann, whom he called “a visionary leader.”

“Adam and the WeWork story has been comprehensively, at times accurately, chronicled, analyzed and fictionalized,” Andreessen wrote. “Despite all the energy devoted to covering the story, it’s often underestimated that one single person fundamentally re-engineered the desktop experience and led a paradigm-shifting global company in the process.”

That said: details about the operation remain scarce. And Neumann will make his next act in a much tougher climate, as recession fears and market volatility upend the startup ecosystem and force once high-flying companies to drastically cut valuations.

Next

Home deposit (HD) and walmart (WMT) publish the results before the opening of the American markets.

Also today: US housing starts and building permits data for July arrives at 8:30 a.m. ET. Industrial production data follows at 9:15 a.m. ET.

Coming tomorrow: Economists polled by Refinitiv expect to hear that U.S. retail sales for July rose just 0.1% month-on-month.

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