Business As Usual

Business As Usual

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  • Warren Buffett brushed off Fitch's downgrade of the US credit rating, affirming that it "doesn't alter the current actions of his firm, Berkshire Hathaway." Last Monday, Berkshire purchased $10 billion in US Treasury bonds. Speaking to CNBC, he stated, "We bought $10 billion in Treasury bonds on Monday. The only question for next Monday is whether we buy $10 billion in 3-month or 6-month Treasury notes."
  • Buffett asserted, "There are certain things people need not worry about, and this is one of them." On Tuesday, Fitch Ratings downgraded the US foreign exchange issuer's long-term default rating from "AAA" to "AA+". The rating agency cited "anticipated financial deterioration over the next three years, increased debt, and governance erosion."

Why it matters

The downgrade triggered a sell-off in US stocks, with the S&P 500 down 1.4% on Wednesday. Buffett noted, “These concerns are valid, and the sly old man said he doesn't agree with everything the federal government does. However, it is not enough to change his views on US Treasury bonds and the dollar. Buffett continued, "The dollar is the world's reserve currency, and everyone knows that."


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