2025, March 15 - March 21

Financial Crisis

The US market is currently in a massive decline and it is evident through Warren Buffet, who is reportedly getting ready for the biggest crash since 2008. However, he has been selling off his stocks, and in fact has piling up a record breaking $334 billion in cash. Berkshire Hathaway has been stepping back from US Stocks and added to Japanese assets. It now owns more of Japan's leading suppliers: Mitsui, Mitsubishi, Marubeni, Sumitomo, and Itochu. His biggest sales are from Apple, Bank of America, and Citi Group which are Berkshire's other top investments. This was all from of course the ongoing conflicts with North American, Asian, and EU relationships from trade wars and tariffs conversations. According to an interview on CBS, Buffet stated “Tariffs are actually — we’ve had a lot of experience with them — they’re an act of war, to some degree.” Tariffs have not been historically this intense but have been beneficial. However, the tech and auto market agrees that President Trump may be overdoing taxes which may affect consumer prices, and short term relationships with brother countries. CNBC posted that Treasury Secretary Bessent says the White House will be heading off into a “guaranteed financial crisis”:

With 25% charges on imports from Canada, Mexico, steel, and aluminum, and 20% on all Chinese goods, the Trump administration has imposed tariffs forcefully.

Trade partners' retaliatory tariffs put American exports at risk of supply chain disruptions and cost increases for American companies.

Long-term investment decisions are made more difficult for firms by the uncertainty created by Trump's trade policies, which are characterized by frequent changes, delays, and threats.

Analysis shows the FOMC may be too late for rate cuts and uncertainty in DOGE has been reducing funding for businesses:

With core PCE at 2.6% in January, inflation has decreased but is still stubbornly above than the Fed's 2% target.

Monetary policy decisions are challenging because the Fed must strike a balance between preventing a recession and controlling inflation.

Compared to the Fed's December forecasts, the bond market indicates a greater likelihood of more aggressive rate reduction.

Under Elon Musk's leadership, the Department of Government Efficiency (DOGE) has slashed over 2,300 contracts and 222,000 government employment, saving an estimated $115 billion.

These layoffs can have a detrimental effect on GDP growth, lower consumer spending, and raise unemployment.

Job losses could be exacerbated by forced downsizing by private enterprises that depend on government contracts.

The next several months will be critical in determining whether the U.S. economy can maintain growth or slide into a downturn.