Today's big stories

Warren Buffett’s Berkshire Hathaway announced a $10 billion natural gas acquisition
We assess how you can create an investment mix suitable for these troubled times – Read Now
Chinese stocks jumped to a five-year high, boosting other markets around the world

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Full Of Beans

What’s Going On Here?

After lying low during lockdown, investment legend Warren Buffett’s Berkshire Hathaway conglomerate has finally let rip with a $10 billion takeover deal – its biggest in over four years. Pardon the gas…

What Does This Mean?

Berkshire’s buying the natural gas transport and storage business of American firm Dominion Energy for $4 billion, as well as taking on $6 billion of its debt. It’s a natural fit: Berkshire’s existing (and extensive) energy subsidiary already owns the largest such pipeline network in the US (tweet this).

While Berkshire is thus betting on the ongoing importance of natural gas as a “transitional” fuel, Dominion – which will simultaneously scrap a major new pipeline project – appears to be focusing on clean energy. The company is working towards net-zero emissions by 2050, and wants 90% of its future “operating earnings” – i.e. the profit it makes from day-to-day activities – to come from its electric power business.

Why Should I Care?

The bigger picture: Served Buffett-style.
For years Buffett bemoaned stocks’ rallies to record highs, claiming few companies offered an attractive prospect at the price – so some investors were surprised when he didn’t swoop as markets fell in March. After selling off all its airline shares (plus a number of bank ones) in response to the pandemic, however, Berkshire had $137 billion cash just begging to be put to use. Since many investors pay close attention to (if not simply copy) Warren Buffett, other US energy operations might now appear more attractive to public and private investors alike.

For markets: Deals all over the shop.
Uber confirmed on Monday that its own proposed takeover of US food delivery rival Postmates would go ahead as an “all-share” deal, meaning Postmates’ investors will receive Uber stock as payment. Uber’s tastier money-saving outlook helped send its share price up 4%. Still, looking at recently listed stocks, investors seem happy to gobble up just about any deal.

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2/3 Premium

Rum Punch

What’s Going On Here?

Like the perfect summer cocktail, creating an investment portfolio requires a blend of complementary ingredients. Thankfully, our analysts dug into a full bodied report from Pimco detailing their top recipe for the coming season. With the global economy facing either a strong recovery or a second wave of coronavirus, the asset management giant has a portfolio that’ll work no matter what.

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3/3

Shooting Stars

What’s Going On Here?

Chinese stocks experienced their biggest single-day jump in more than a year on Monday – and the Super Mario-style momentum gave markets around the world a boost as well.

What Does This Mean?

The five-star performance seems to have been stoked by the Chinese government: a front-page spread in the state-sanctioned equivalent of the Wall Street Journal said a healthily rising stock market was key to the nation’s economic strength. That was followed by a surge in small-time Chinese “retail investors” setting up brokerage accounts and seeking to take advantage of the government’s tacit endorsement of stock-buying.

Usually individual investors, even when they club together, don’t have much of an impact on markets. But larger state-backed buyers are also known to snap up stocks on the government’s say so. Their combined influence helped a key Chinese share index to rise almost 6% to a five-year high on Monday, while Hong Kong stocks leaped 4% into “bull market” territory. And the positive vibes sent markets around the globe up too, with the MSCI World Index hitting its highest level since early June.

Why Should I Care?

For markets: Buyer of first resort.
The Chinese government’s article suggested investors would enjoy “the wealth effect of the capital markets”, implying it may take steps to prop up share prices if necessary. Yet such support is by no means just a Chinese phenomenon. The US Federal Reserve has begun to buy corporate bonds – and by pushing their prices up and yields down, return-hungry investors have been driven towards even expensive-looking stocks.

The bigger picture: World 2-1.
Stock markets aside, this economic game’s got a long way to go before things get back to anything remotely resembling normal. Investment bank Goldman Sachs, for instance, just cut its US economic growth forecast for this quarter, saying consumer spending probably wouldn’t pick up as much as predicted. The president of the European Central Bank, meanwhile, is warning that the eurozone economy will undergo a massively disruptive shift over the next two years.

Dive in: How China’s economy impacts investments all over the world.

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💬 Quote of the day

“Faced with what is right, to leave it undone shows a lack of courage.”

– Confucius (a Chinese philosopher and politician)

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🤔 Q&A · RE: Number-Crunching

“What’s the mistake that keeps cropping up in the US unemployment rate?”

– AJ in Florida, USA

“The US unemployment rate is calculated by asking a sample of Americans on a specific date each month whether they’re employed. Ordinarily, a simple question would get a simple answer, but the pandemic has made things anything but. Lots of people who hadn’t been laid off but whose workplaces had been shut in response to coronavirus answered ‘yes’ when technically they should’ve said ‘no’. The mistake may be understandable, but it still led to a lower reported unemployment rate than was accurate – and the US government daren’t change the historical record for fear it’ll seem like political manipulation.”

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Don’t let the banks rob your business!

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📚 What we're reading

Do you have the right digital persona? (Harvard Business Review)
Is hiking the new CrossFit? (The Cut)
What the jellyfish genome says about complexity (Nautilus)

Finimize - 🤨 Buffett bets on fossil fuels

Today's big stories

Full Of Beans

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Rum Punch

Happy earning nothing from your bank?

Shooting Stars

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Don’t let the banks rob your business!

Older messages

👑 Hail Tesla, king of carmakers

😜 US stocks become US stonks

😫 Uber’s getting desperate

🎟 Newsletterest, Your Virtual Event Invite

🖕 Coke gives Facebook the finger

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