—— Buffett Increases Apple Holdings While Cutting Bank Stocks; U.S. CPI in January Exceeds Expectations; Global EV Sales Surpass $1 Trillion; Credit Suisse Leads Funding for Crypto Infrastructure Firm; Air India Orders 470 Aircraft; Element Loses $1 Billion on Wrong-Way Bet; Powell’s Salary Lags Behind Wall Street Associates
1. Buffett Increases Apple Holdings, Cuts Bank Stocks
According to regulatory filings released today, Warren Buffett’s Berkshire Hathaway has increased its holdings in Apple Inc. and Paramount Global.
The documents show that Berkshire added 2.4 million shares of Paramount before the start of 2023, valued at approximately $40 million.
Apple remains Berkshire’s largest holding, although the value of that position recently declined by $7.4 billion.
In addition, Berkshire reduced its stakes in three major banks—U.S. Bancorp, Bank of New York Mellon Corp., and Ally Financial Inc.—as well as in Activision Blizzard and Taiwan Semiconductor Manufacturing Company (TSMC). Other holdings in the portfolio saw minimal changes.
On average, Berkshire Hathaway has delivered over 20% annual value growth for its shareholders.
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2. U.S. CPI in January Exceeds Expectations
According to data released today by the U.S. Bureau of Labor Statistics, the Consumer Price Index (CPI) rose by 0.5% in January, marking the largest increase in nearly three months. Compared to a year ago, CPI rose by 6.4%.
Excluding energy and food, core CPI increased by 0.4% month-over-month and 5.6% year-over-year—both exceeding economists’ expectations.
A series of new data points highlight the resilience of the U.S. economy and consumer purchasing power, suggesting that the Federal Reserve may need to implement higher and longer interest rate hikes to contain stubborn inflation.
Details in the report show that housing costs were the biggest driver of January’s CPI growth, accounting for approximately 50% of the increase. Used car prices declined for the seventh consecutive month. Meanwhile, energy prices rose for the first time in three months.
January’s CPI growth marked a three-month high, mainly driven by rising housing costs.
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3. Global EV Sales Surpass $1 Trillion
According to the latest industry report released by Bloomberg, global electric vehicle (EV) investments reached $388 billion in 2022, a 53% year-over-year increase. At the same time, total global passenger EV sales have now surpassed $1 trillion.
This indicates that if an automaker does not offer electric models, it is likely to miss out on a major industry shift.
However, since mass production of electric vehicles began about a decade ago, global auto sales have exceeded $25 trillion. Therefore, the $1 trillion in cumulative EV sales still accounts for only a small portion of the total.
More importantly, attention should be paid to the growth rate of EV sales. In the past 18 months, 60% of that $1 trillion was generated. Today, EV sales may even surpass $500 billion annually.
In 2022, total global spending related to EVs surged year-over-year, reflecting the rapid development of the electric vehicle industry.
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4. Credit Suisse Leads Funding for Crypto Infrastructure Firm
Swiss company Taurus SA, which develops cryptocurrency infrastructure, recently secured $65 million in funding led by Credit Suisse.
According to Taurus, Deutsche Bank, Pictet Group, Arab Bank Switzerland, and Investis Holding also participated in this financing round. The company’s valuation was not disclosed but is reported to be in the hundreds of millions of dollars.
Co-founder Sébastien Dessimoz stated that Geneva-based Taurus will use the funds to hire more staff, enhance its technology, and expand into regions such as Paris and Dubai.
Over the past year, the cryptocurrency sector has entered a downturn, with Bitcoin and other asset prices plummeting and numerous major industry players collapsing.
According to data from PitchBook, Q4 2022 saw the lowest level of venture capital investment in the crypto sector in two years. Nevertheless, many prominent banks continue to invest in the industry.
Taurus primarily develops platforms that enable users to issue their own cryptocurrencies.
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5. Air India Orders 470 Aircraft
This week, Air India announced plans to purchase a total of 470 aircraft from Airbus and Boeing, marking the largest plane order in global aviation history.
Air India plans to acquire 40 long-range widebody jets and 210 narrowbody aircraft from Airbus.
The airline will also purchase 190 Boeing 737 Max narrowbody jets, 20 Boeing 787s, and 10 Boeing 777X aircraft.
Airbus did not disclose details of the order, but Boeing’s total list price for the order is estimated to be around $34 billion before any discounts. Airlines often receive discounts of up to 50% on large orders.
Air India has not disclosed a delivery timeline, but aircraft supply chains have experienced significant delays in recent years.
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6. Element Loses $1 Billion on Wrong-Way Bet
Element Capital, one of the world’s largest macro hedge funds, lost over $1 billion during last month’s U.S. stock rally and now plans to reduce its assets under management and improve investment performance.
Founded in New York by Jeffrey Talpins, Element manages $12 billion in assets and has long been regarded as a top-performing fund in the industry.
However, the nearly month-long rally in U.S. stocks last month caused Element’s portfolio to drop 9.6%, as the firm’s algorithms had bet on an overall market decline.
Sources revealed that Element will temporarily lift its 25% investor withdrawal cap in order to reduce AUM and increase investment flexibility.
In 2022, Element lost 3.4%, having bet that inflation would prove temporary—a view that did not pan out.
When hedge funds grow too large, it can limit their flexibility in executing trades and managing investments.
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7. Powell’s Salary Lags Behind Wall Street Associates
Last week, 70-year-old Federal Reserve Chair Jerome Powell revealed during a conversation with Carlyle Group founder David Rubenstein that his annual salary is approximately $190,000.
According to financial industry research firm Wall Street Oasis, investment banking employees with 3 to 4 years of experience typically earn between $150,000 and $200,000 annually. Powell began his career as a lawyer in the 1970s and later worked as a banker. In light of this, his salary as Fed Chair appears notably low.
Patrick Curtis, founder of Wall Street Oasis, remarked that Powell holds one of the most important financial positions in the world, yet his pay is surprisingly modest.
Investment bankers can receive annual bonuses equal to 50% to 100% of their base salary, far exceeding Powell’s total compensation.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.