InvestmentNews.com reported this week that Warren Buffet has shortened his bond holdings after reports that the Federal Deficit and spending could lead to more increased inflation.
From the article:
“It may be a sign that Buffett expects interest rates to start rising, maybe sooner than them conventional wisdom,” Meyer Shields, an analyst in Baltimore at Stifel Nicolaus & Co. who has a “sell” rating on Berkshire, said in an interview.
Inflation has fallen to a 44-year low even as the Federal Reserve more than doubled its balance sheet in two years to $2.33 trillion to help draw the economy out of recession. A U.S. jobs report last week showing that companies hired fewer workers than forecast in July pushed the two-year Treasury yield to a record low. Bill Gross, founder of Pacific Investment Management Co., advised investors to buy longer-dated maturities.
Buffett, 79, urged Congress last year to guard against inflation as the U.S. economy returned to growth. In an August 2009 op-ed in the New York Times, the Berkshire chief executive officer said government must address the “monetary medicine” that was pumped into the financial system after the 2008 crisis. “The United States is spewing a potentially damaging substance into our economy — greenback emissions,” Buffett wrote. “Unchecked greenback emissions will certainly cause the purchasing power of currency to melt.”
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