dkass

Sep 192017
 

I am quoted in the Washington Post with respect to upcoming changes in monetary policy at the Federal Reserve.

“The stock market has essentially been expecting this for a while,” said David Kass, a professor of finance at the University of Maryland. “It will be a gradual unwind of the Fed balance sheet and has been incorporated into current prices.”

Kass said that so far, the Federal Reserve has straddled a careful line and fulfilled its twin goals of price stability and maximum employment. Now the central bank wants to begin easing back and let the economy run on its own.

“In terms of interest rates, the goal is to get back to a level before quantitative easing,” said Kass, referring to the Fed’s strategy of buying government bonds, which helped keep interest rates low. Kass said he expected interest rates to gradually rise to around 3 percent. Rates are between 1 and 1.25 percent currently.

 Posted by at 6:49 pm
Sep 172017
 

I am quoted in a Morning Consult article about a poll for the Bloomberg Global Business Forum that indicates U.S. support for free trade in the Trump era.

“Even one basic economics class shows that free trade is a way to maximize consumer welfare for all,” David Kass, professor of finance at the University of Maryland School of Business, said in a phone interview Friday. “There are always winners and losers, of course. But I think the majority of people have seen the benefits of free trade over recent years and decades.”

But American consumers are still likely to favor free trade since it largely leads to lower prices, according to Kass.

Americans “are able to purchase goods from other countries that may be less expensive than those produced here,” he said. “This would result in increased purchasing power for the consumer and an increase in standard of living.”

 Posted by at 12:21 pm
Sep 082017
 

I am quoted in a Washington Post article about Amazon seeking a second headquarters in North America.

But some say opening a sprawling new headquarters could help the tech giant win over local lawmakers.

“It would create a very favorable political environment wherever they located, such that the congressmen and senators where they locate would be supportive of the company if issues came up in Congress with antitrust,” said David Kass, a professor of finance at the University of Maryland. He added that if Amazon were to choose a location represented by both Democrats and Republicans, “they would be creating friends in Congress in both parties.”

He added that the Washington area, where Bezos recently bought a $23 million house, could be a likely contender. The area has a highly educated population and a growing pool of young workers. Plus, he said, keeping Amazon’s headquarters in the United States could help ease relations with the president, who has in the past been critical of the company.

“Amazon would be scoring many points with the president by saying, ‘Look, we are creating 50,000 American jobs,’” Kass said. “I think the president would appreciate that.”

 Posted by at 8:55 pm
Aug 302017
 

Warren Buffett was interviewed on Fox Business and asked about Berkshire Hathaway’s current cash position of about $100 billion.  He responded:

(1) “There will be periods when stocks go down a lot and we will be buying.”

(2) He also mentioned that there are one million shareholders of Berkshire Hathaway.

(3) Warren Buffett also predicted that there would likely be a tax cut in 2017.

 Posted by at 6:31 pm
Aug 302017
 

Warren Buffett was interviewed on CNBC today.  He discussed several specific Berkshire Hathaway investments:

(1) Apple:  Berkshire owns 2 1/2% of Apple’s shares.  Initially one of Buffett’s portfolio managers (Todd Combs or Ted Weschler) bought 10 million shares of Apple (during the first quarter of 2016).  Warren Buffett subsequently purchased many more shares (during the first quarter of 2017).  During the second quarter of 2017, Combs or Weschler sold 2/3 of his stake in Apple to free up funds for other investments.  (They each manage $11 billion).  At the same time, Buffett bought more shares of Apple than Combs or Weschler sold.

(2) IBM:  Buffett has more confidence in Apple than in IBM.

(3) Bank of America:  Berkshire just converted its warrants into 700 million shares of Bank of America common stock and plans to hold those shares for a long time.

(4) Wells Fargo: This is still a good long-term investment.  Its problems will be corrected.

(5) Kraft Heinz: Retailers such as Amazon/Whole Foods are becoming stronger relative to the food companies.  Specific brands will succeed through advertising (such as Berkshire owned Duracell batteries).  Kraft Heinz will not be acquiring Mondelez nor Unilever.  Berkshire/3G Capital will not engage in hostile takeovers.  It is hard to fight retailers with mergers. What matters is the strength of individual brands.

 Posted by at 11:50 am
Aug 302017
 

Today is Warren Buffett’s 87th birthday.  Happy Birthday, Mr. Buffett!

This blog was launched 7 years ago today on the occasion of Warren Buffett’s 80th birthday.  I hope it has been helpful to all who have visited this site.

(Note: Warren Buffett will be interviewed on CNBC at 11:00 a.m. EST today.)

 

 Posted by at 10:21 am
Aug 292017
 

Berkshire Hathaway exercised its Bank of America warrants to purchase 700 million shares at $7.14 per share.  These shares have a current market value of about $16.5 billion.  Berkshire’s initial cost in August 2011 was $5 billion (6% preferred stock plus warrants to purchase 700 million shares at $7.14).  Berkshire’s $5 billion investment has resulted in a profit of about $13 billion ($11.5 billion capital gains in Bank of America common stock, plus $1.8 billion in Bank of America preferred stock dividends).  Its return of 28% per annum includes its compounded annual rate of return of 22% on Bank of America common stock plus its 6% annual dividend on Bank of America preferred stock.

 Posted by at 5:26 pm
Aug 282017
 

I an quoted in the Washington Post on Uber’s new CEO Dara Khosrowshahi.

2.  He’s (relatively) young and experienced

At 48, Khosrowshahi isn’t as young as the hoodie-wearing Mark Zuckerberg, who created Facebook when he was 19. But he’s still young as far as U.S. CEOs go. “He has substantial CEO experience at a relatively young age,” said David Kass, a professor of finance at the University of Maryland. “Youth and experience are very important qualities in Silicon Valley.”

As Uber continues to reshape how people get around cities, that youthful vitality will come in handy to improve its services, which are frequently used by customers in their 20s and 30s, Kass said.

5. He’s no Travis Kalanick. But he’s still another male CEO.

Unlike Kalanick, the former chief executive who was seen as brash and armed with a short fuse, Khosrowshahi’s demeanor is viewed as “even keeled and low-key,” Kass said. “He is not as volatile or unpredictable as the previous CEO.”

 Posted by at 4:40 pm