What’s Eating Warren Buffett?

It takes quite a bit to put Warren Buffett in a bad mood.

Everything from a lackluster market, to tense international relations, to the potential robot uprising was on the agenda for Buffett and his right-hand man Charlie Munger at the annual Berkshire Hathaway shareholder’s meeting this past weekend. Nothing a Cherry Coke and a game of bridge can’t fix though, right?

All is Well-ish

Firstly, don’t worry about Buffet. Berkshire is still worth a ludicrous $700 billion after posting a $35.5 billion profit in the first quarter, but it’s getting a little bit harder for Buffett and company to decide exactly where to put their billions to work in a market that has grown less and less appealing.

In Q1, the conglomerate sold $13.3 billion worth of shares and invested just $2.9 billion. Another $4.4 billion went toward buybacks. Last month, Munger told the Financial Times that investors should have low expectations for stock market returns as the Federal Reserve raises interest rates and the economy slows.

Buffett is still confident Berkshire will navigate any lengthy economic slowdown or recession just fine, but he does expect declining earnings at some of its portfolio companies this year. “It isn’t that employment has fallen off a cliff or anything, but it is a different climate than it was six months ago,” he said. “A number of our managers were surprised. Some had too much inventory on order.”

Though hardly doomsayers, Buffett and Munger had some choice words for the global economy during the meeting as well:

• The China-United States trade war has intensified in the past year as the nations decouple from one another while pumping hundreds of billions of dollars into funding green tech and semiconductor chip production. Munger had three simple words for the situation: “stupid, stupid, stupid.” Buffett agreed and said both countries “have to get along with each other.”
• Industry leaders boast that artificial intelligence can do, well, pretty much anything you tell it to, and that doesn’t sit right with Buffett, who compared the superfast tech to nuclear weapons. “It was enormously important that we (built the atom bomb),” he said. “But is it good for the next 200 years of the world that the ability to do so has been unleashed?” Christopher Nolan might just have his next project after Oppenheimer releases in July.

Bank Shot: Like many Americans, Buffett is worried about the state of banks, but he doesn’t blame the banks themselves. He helped bail out Goldman Sachs and Bank of America during the Great Recession, and he invested in Wells Fargo throughout its scandals over overcharging clients billions of dollars. Buffett is a big supporter of the banking industry but believes politicians, regulators, and the media have created an environment of fear around the failures of Signature, First Republic, and Silicon Valley banks. ”Fear is contagious,” he said, adding that “you can’t run an economy” when people worry if their money is safe in banks. The only thing to fear, it seems, is the angst of uninsured depositors.