Warren Buffett says that although the ECB solved banks’ funding problems, equity remains an issue. “I don’t know if the euro will be here in 5 years,” he tells CNBC’s Becky Quick. David Rolfe, Wedgewood Partners CIO, also offers perspective.
we are on the stage at the century link center which is where warren buffett and charlie monger will be speaking to a crowd of about 35,000 tomorrow. he’ll be speaking to all thoseshareholders and they’ll have a lot of questions. but we also got the chance to catch up witim last night. we wanted to know what he thought about mario draghi and his position that the ecb has done enough for now. standing pat. listen to what buffett had to say. he put in a trillion euros and a trillion euros, call that a trillion, 300 billion or something. so he’s entitled to rest.he’s worked for six days. he can rest on the seventh. but it solved the funding problems for the banks. and that problem was serious when he did the first time. they were really worried about funding. it doesn’t solve the problems of whether the banks have enough equity, doesn’t solve all kind of other problems. it did solve the funding problems. and that was a problem that needed to be solved. but there’s still a lot morethat needs to be solved. it doesn’t solve the question as to whether or not the euro will still be here in five years. if you had to put odds on that, what would you say? that’s one i don’t know. it’s such an interesting question because we know thepresent situation isn’t sustainable and we know that it’s a terrible problem to unwind it and we know that we’ll face terrible problems if we don’t do something. and the something has to get 17 countries all going in the same direction. and one of the advantages we had in 2008 is if paulson and the president and eventually the congress said here’s what we’re going to do a we’ll do whatever it takes, you knew they could do it. but if somebody over this says we’ll do whatever it takes, then they have to look around and see if 16 other people agree withthem. the other big bit of news that we’ve been watching hasbeen what’s happening with earnings season. earnings have been coming in better than expected and that’s certainly something that mr. buffett has been paying attention to, as well.and watching the banks with partiterest. yesterday meredith whitney made some comments about what she expects with the bank earnings. take a listen. meredith whitney made comments where she said she thinks that the banks in the first quarter have kind of seen their heydays. she thinks from here on out it’s a lot tougher for the banks to put up numbers like that. as a big shareholder in we also if he also fargo and bank of america,do you think? the banks will get squeezed and to some extent wells has 100 billion that they would love to have out but banking bears no resemblance to four years ago. they’ve cleaned up the balance sheets, they have way more equity. and i sit and do a arithmetic about what i think wells will do and first quarter will not be their best quarter of the year in my view.why? just because of what i project out in terms of net interest ncome, other income, other expense, so on. i don’t know the numbers obviously, but if i had to — i would be glad to bet somebody that the first quarter would not be the best quarter.that’s an interesting bet and we wonder who will take him up on it. joining us on sta is david roth, chief investment officer of the wedgewood fund which has 7% of its clients’ money invested in berkshire. and that’s a pretty big stake. yeah, we typically only own 20 stocks in the portfolio. and berkshire is our secondlargest holding. so i’ll be all ears tomorrow. you heard what he just said about the banks and the bank earnings. have you given much thought to that? yeah, we owned a couple banksthat we actually sold in the third quarter of last year. we thought we owned some of the better banks in the tough neighbod. but the neighborhood’s pretty tough. so we sold those and moved on. but with wells fargo and goldman sachs warrants, there’s a nice little bank kicker in butch at the time’s portfolio about theydo better than what we think they’ll do. you will be listening for alot of things tomg, but what’s the main point that you would like to have addressed? i would like six hours of minutia in all the businesses, particularly the ones that are driving the biggesttransformation within the noninsurance side of berkshire,particularly burlington. it has been significant in changing the path of revenue growth and particularly the underlying profitability of the noninsurance subsidiaries. so anything and everything with burlington. and also there’s an extra railroad kicker within marmin and lurisol. the portfolio has changeddrastically. for the better or the worse? in your opinion in. if you go back to the better profit and, pretext margins right around 8%, 8.5%. we think they may come in around 12% this year and that is the significance driver of that is certainly burlington. so it’s changed meaningfully for the better. and in terms of just theannouncement with prostate cancer, how do you think he’llhandle that? i think we’ve heard quite a bit already. thank goodness it’s just stage one. and i imagine he may have acouple opening comments and then we move on. david, we want to thank you very much for your time. wae we’ll see you here tomorrow. thanks. warren buffett will be joining us live on monday. if you’ve got any questions or comments, anything about things you’d like to us bring up, send us a tweet to @cnbc. you can use the #buffett watch. we’ll feature your tweetsthroughout the show. and joe i’ll send it back over to you. i may check out that tweeting
Notes From Schwarzman, Sternlicht, Robert Smith, Mary Callahan Erdoes, Joseph Tsai And Much More From The 2020 Delivering Alpha Conference
The following are rough notes of Stephen Schwarzman, Steve Mnuchin, and Barry Sternlicht's interview from our coverage of the 2020 CNBC Institutional Investor Delivering Alpha Conference. We are posting much more over the next few hours stay tuned. Q2 2020 hedge fund letters, conferences and more One of the most influential investor conferences every year, Read More