Random M2 Money Supply Update And Berkshire Earnings -- August 8, 2020

M2: definition.

M2 is a broader money classification than M1, because it includes assets that are highly liquid but are not cash. 

A consumer or business typically doesn't use savings deposits and other non-M1 components of M2 when making purchases or paying bills, but it could convert them to cash in relatively short order. M1 and M2 are closely related, and economists like to include the more broadly defined definition for M2 when discussing the money supply, because modern economies often involve transfers between different account types. 

For example, a business may transfer $10,000 from a money market account to its checking account. This transfer would increase M1, which doesn’t include money market funds, while keeping M2 stable, since M2 contains money market accounts. 

Ballooning money supply: and unlocking inflation in the US.  

• Normally characterized by slow, steady growth, the U.S. money supply has grown 20% from $15.33 trillion at the end of 2019 to $18.3 trillion at the end of July.
• Economist and former Treasury official Nathan Sheets counters that if businesses aren’t inclined to spend, the larger money supply may do little to fan inflation.

The growth rate has never been higher, with the 1970s the only period that comes close. Eurasiareview. 

In June, for the third month in a row, money supply growth surged to an all-time high, following new all-time highs in both April and May that came in the wake of unprecedented quantitative easing, central bank asset purchases, and various stimulus packages. The growth rate has never been higher, with the 1970s the only period that comes close. 

It was expected that money supply growth would surge in recent months. This usually happens in the wake of the early months of a recession or financial crisis. The magnitude of the growth rate, however, was unexpected. 

During June 2020, year-over-year (YOY) growth in the money supply was at 34.5 percent. That’s up from May’s rate of 29.5 percent, and up from June 2019’s rate of 2.04 percent. Historically, this is a very large surge in growth both month over month and year over year. It is also quite a reversal from the trend that only just ended in August of last year, when growth rates were nearly bottoming out around 2 percent. In August, the growth rate hit a 120-month low, falling to the lowest growth rates we’d seen since 2007.

***********************************
Speaking of Which

 Berkshire

While out at Flathead Lake, enjoying the beautiful scenery, with everyone on their mobile devices, the discussion turned to Robinhood.  

Someone asked, "I wonder if ..." 

Yup. You can. 

One of millennials in our group bought $1 worth of BRK-A ($314,000). 

Yesterday, 24 hours later, he had made two cents on his investment. And, oh, by the way, that's exactly right -- BRK-A was up 2% overnight.

BRK-A: earnings report. 

Berkshire Hathaway Inc on Saturday announced a $9.8 billion writedown and 10,000 job losses at its Precision Castparts aircraft and industrial parts business, as the coronavirus pandemic caused widespread pain for Warren Buffett's conglomerate.

Berkshire, which acquired Precision for $32.1 billion in 2016 in its largest acquisition, said COVID-19 caused airlines to slash aircraft orders, resulting in significantly less demand for Precision's products and revenue to fall by about one-third.

It also said results may continue suffering as the unit undertakes an "aggressive restructuring" to shrink operations to meet lowered demand. Precision ended 2019 with 33,417 employees, meaning it has since shed 30% of its workforce.

Precision was not the only drag on Berkshire, which said the pandemic has caused "relatively minor to severe" damage to most of its more than 90 operating businesses, which include the BNSF railroad, Geico auto insurer and See's candies.

Berkshire said it also took a $513 million charge on its 26.6% stake in Kraft Heinz Co, which on July 30 took writedowns on several of its businesses, including its Maxwell House and Oscar Mayer brands.

**********************************************
Conlin Obituary

 Link here.

Theresa Marie Conlin, 69, passed away on August 3, 2020 at Mercy Hospital in Valley City, North Dakota. 

Theresa was born at Mercy Hospital in Williston, North Dakota on September 2, 1950.  She was the first of ten daughters, along with her five brothers, born to John and Mary Conlin.  She attended St. Joseph School until 1958 when her family moved to Dickinson and attended St. Wenceslaus and graduated from Trinity High School in 1968.  She was at Dickinson State College for one year and worked for Gold Seal at Medora for two summers.