European Markets are Mixed as Economic Outlook Remains Unclear
European Markets are Mixed as Economic Outlook Remains Unclear
Warren Buffett Says He Has No Regrets Holding IBM Stock Instead of Apple
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European markets were mixed this morning as worries continued over the Eurozone economy. With inflation stable at 0.5% in June, some fear the single currency area is still perilously close to deflation. Yet Goldman Sachs analysts have lifted their outlook for growth in the U.K. economy to 3.4% this year and 3%, the next, raising the chances of an early interest rate rise. London-listed Pharmaceuticals company Shire announced a $410 million Canadian tax rebate, which may strengthen its hand as it fights a $45 billion takeover bid from Chicago’s AbbVie. Dutch electronics and healthcare company Philips will spin out its LED and Automotive lighting businesses into a separate unit and may seek outside investors for the business. Danish wind turbine maker Vestas announces big orders from projects in the U.S. French bank BNP Paribas may get time to prepare for a dollar dealing ban in the U.S.
Berkshire Hathaway (BRK.A) CEO Warren Buffett says even though IBM has underperformed the market, he has no regrets buying IBM instead of Apple shares. When asked if the stock market was overvalued and if investors should worry about a correction, Buffet responded that if you worry about a correction, you shouldn't be in the market. He says investors should buy something they like, at a price they like, and then hold it for 20 years. Buffett, who is always on the hunt for acquisitions, also says he'd like to buy something "sooner rather than later." During his annual meeting, he mentioned that he'd be interested in buying more local car dealerships and possibly making an acquisition in Germany in the next five years. This year Berkshire Hathaway will increase its investment in renewable energy, but Buffett says that renewables are not a great investment for the individual investors. Buffett will also invest more in his railroad BNSF, as new federal rules were released on rail safety. He also defended his acquisition partner 3G Capital, after shareholders criticized 3G's practices of laying off workers. On the economy, Buffett says he thinks it will be difficult for the Federal Reserve to push up interest rates here in the U.S. this year, given the negative interest rates in Europe. Buffett still carries a flip phone, and when asked if he'd like a smartphone for his birthday he answered "I haven't thought about it." Buffett spoke with TheStreet's Rhonda Schaffler in Omaha, Nebraska.
Investor Warren Buffett walks the convention floor ahead of the annual meeting of Berkshire Hathaway (BRK.A) as shareholders look on. Buffett visits various Berkshire Hathaway vendors on the floor, stopping by the Heinz Ketchup booth. Along the way, shareholders elbow their way toward Buffett, looking to get that one great picture. The highlight of Buffett's stroll along the floor is a newspaper toss with Bill Gates. Buffett was once a newspaper boy, so the newspaper toss is always a highlight for him. Buffett also makes sure he stops to snack on some junk food. This year marks the 50th year that Buffett has been at the helm at Berkshire.
Stocks were slightly lower in midday trading Thursday as a series of weaker earnings from the likes of Exxon Mobil (XOM) and Time Warner Cable (TWC) pressured markets. Apple (AAPL) was leading the tech sector lower on reports a component in its Apple Watch was defective. Exxon beat estimates in its first quarter, though sales tanked 37% as lower oil prices ate into the topline. Salesforce.com (CRM) extended yesterday's rally. The company's shares had surged on reports it was working with financial advisers to field takeover offers. Avon Products (AVP) fell after reporting an 18% decline in quarterly revenue due to a stronger U.S. dollar.
Altera (ALTR) was the best performer on the S&P 500 on reports Intel (INTC) could launch a hostile bid once a standstill agreement expires on June 1st. Wall Street enjoyed a solid start to May as stocks rebounded following a tech and biotech sell-off a day earlier. First Solar (FSLR) lagged the S&P 500 after reporting a quarterly net loss nearly double expectations. Revenue tanked 50% from a year earlier. Home Depot (HD) was the best performer on the Dow, caught up in a broad-based rally that boosted all sectors. Chevron (CVX) was the worst performer after reporting significantly lower quarterly revenue due to plunging oil prices.
Stocks may be flirting with record highs, but don't get too comfortable, one strategist warns. 'We have to be on edge about a correction,' said Jeff Tomasulo, CEO & head portfolio manager at Vespula Capital. 'I am very cautious right now. Since 2009, we are up tremendously and when you have a move that we've had from the bottom, you have to be cautious.' The S&P 500 is up 211% since its March 2009 low. 'In certain sectors, we're overvalued and other sectors we're at fair value,' he added. 'We're looking at the positions we have in certain sectors like technology and biotech and we're cutting that back and taking our profits.'
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