Warren Buffett’s Berkshire Hathaway has quietly executed a series of multi-billion-dollar exits from major US banks, sending shockwaves through Wall Street. The divestments, which include $1 billion in Citigroup and a $2 billion reduction in Bank of America, signal a sharp turn in sentiment from the world’s most closely watched investor.
Analysts say Buffett’s moves are a classic contrarian signal, indicating a growing belief that America’s booming financial sector is headed for turbulence. Despite strong profitability in the sector, Buffett is building a historically large cash position and repositioning Berkshire’s portfolio toward energy and consumer staples.
Buffett’s warnings about derivatives as “financial weapons of mass destruction” years before the 2008 collapse have become eerily relevant once again. His legacy is built on avoiding crashes, not making billions off them.
The rapid repositioning has not gone unnoticed by investors, who are already rattled by political volatility, surging inflation, and uncertainty surrounding US monetary policy. Industry leaders, including JPMorgan Chase’s Jamie Dimon, have also sold significant amounts of company stock, citing rising inflation and uncertainty over Trump’s economic policy.
The Trump administration’s revived trade wars have injected volatility into the markets, and the Federal Reserve has twice slashed its 2025 GDP forecast, from 2.1% to 1.4%. Higher inflation could force long-term Treasury yields up, triggering a domino effect of rising loan defaults, declining merger activity, and stress on bond portfolios.
“The big, big red flag is going to be consumption,” said Kambiz Kazemi, chief investment officer at Validus Risk Management. “If unemployment goes up and consumer spending drops, it triggers a feedback loop through the entire borrowing ecosystem.”
As investors scramble to adapt to these changing circumstances, Buffett’s moves serve as a reminder that even the most seasoned investors must stay vigilant in the face of uncertainty.
Source: https://www.dailymail.co.uk/yourmoney/article-14922287/Warren-Buffetts-quiet-moves-send-shockwaves-Wall-Street-Canary-coal-mine.html