Good morning! Here’s what you need to know.
Woodstock for capitalists. This weekend was Berkshire Hathaway’s annual shareholder meeting. CEO Warren Buffett and vice chair Charlie Munger talked about a lot of things including Berkshire’s portfolio companies, investing, the economy, and management. “If we get back to normal interest rates, stocks at these prices will look high,” Buffett said.
Buffett’s buying more IBM. IBM has been one of Berkshire’s more controversial holdings. On Saturday, he told CNBC’s Becky Quick that he bought “maybe 3 million” more shares of IBM in Q1.
Buffett makes no apologies for Clayton Homes. In April, The Seattle Times and the Center for Public Integrity published a troubling report accusing Berkshire’s Clayton Homes of predatory lending on lower-income home buyers. Buffett argued that higher risk borrowers warrant higher rate loans. “I make no apologies whatsoever about Clayton’s lending terms,” he said. “It’s true that manufactured housing hits the lower end of the market.”
Chinese manufacturing is slowing. China’s HSBC manufacturing PMI fell to a 13-month low of 48.9 in April from 49.6 in March. Any reading below 50 signals contraction. “China’s manufacturing sector had a weak start to Q2, with total new business declining at the quickest rate in a year while production stagnated. Fewer new orders appeared to stem from weaker domestic demand, as new business from abroad showed tentative signs of improvement,” Markit’s Annabel Fiddes said. “The PMI data indicate that more stimulus measures may be required to ensure the economy doesn’t slow from the 7% annual growth rate seen in Q1.”
Europe’s still growing, but it decelerated a bit. The Eurozone manufacturing PMI slipped to 52.0 in April from 52.2 in March. Germany, France, and Spain saw their PMIs slip a bit while Italy’s climbed to a a 12-month high of 53.8. “The eurozone manufacturing sector continued to grow in April, but the dip in the rate of expansion will serve to check recent optimism that the ECB’s quantitative easing programme has bought a guaranteed ticket to recovery for the region,” Markit’s Chris Williamson said.
McDonald’s to announce its turnaround strategy. The fast food chain will announce new plans to stimulate growth. According to BI’s Hayley Peterson, investors are expecting to hear about more menu simplification, faster customer service, better food quality, and fewer promotions.
Charter Communications is in talks with Time Warner Cable. “Top executives close to Charter Communications Inc. have begun reaching out to Time Warner Cable Inc. ‘s management to discuss a possible merger of the cable operators,” the WSJ’s Shalini Ramachandran reported. “Cable pioneer John Malone — the chairman of Charter’s largest shareholder, Liberty Broadband Corp. — called Time Warner Cable Chief Executive Rob Marcus in recent days to express Charter’s interest in pursuing friendly deal talks, people familiar with the matter said. That is in contrast to the unsuccessful hostile takeover Charter sought last year.”
SurveyMonkey CEO Dave Goldberg has died. “It’s with incredible shock and sadness that I’m letting our friends and family know that my amazing brother, Dave Goldberg, beloved husband of Sheryl Sandberg, father of two wonderful children, and son of Paula Goldberg, passed away suddenly last night,” Goldberg’s brother Robert wrote. Goldberg was the husband of Facebook COO Sheryl Sandberg.
Markets are up. US futures are pointing higher with Dow futures up 52 points and S&P futures up 4.7 points. In Europe, France’s CAC 40 was up 1.0%, Germany’s DAX was up 1.4%, and Spain’s IBEX was up 0.9%. British markets were closed for a holiday. Japan’s Nikkei and Hong Kong’s Hang Seng barely budged.
One economic report coming. At 10:00 a.m. ET, we’ll get the March US factory orders report. Economists estimate orders jumped by 2.0%.