Berkshire Hathaway Downgraded By S&P From AAA to AA+, As BRK Launches Massive $8 Billion Bond Offering

Tyler Durden's picture

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deadhead's picture

ball in your court Moodys....that ought to generate a few phone calls....

AR's picture

Hey DH...hope you are well. W're starting to nibble (1st leg) on some gold down here in the low 60's. May still go lower, however, we think it a good possiblity that sentiment may shift a bit in the next month due to global events leaving the instrument as a possible emerging safe haven. Good luck our friend. Funny, only a month or so ago, folks wanted volatilty, well, they've got it. Unfortunately, few of the youngsters know how to trade it with appropriate risk parameters. Times like these makes us old timers alive again. Take care...

deadhead's picture

thanks AR....glad to see you back and look forward to more you know, PNC up to a secondary to try to remove TARP baby status...just before the announcement yesterday, BAC/ML reiterated their buy, price target @ 62....

as to the old timers, they seem to have more respect for the bear....i think he is going to be vicious for several years......

AR's picture

Hey DH / We're short PNC from above 58. Also short many of the others. we're trading though, taking profits, minimizing risk and exposure with every opportunity. Notice, that with 70% of all market volume quants, HFT's, government, or institutional computer led, instruments are getting whipped abnormally. Thus, when we're rewarded with moves of 5, 10, 20% in a week or month -- we aggressively book our profits and reset our risk and positions. You understand this, most don't though. Volatility will expand greatly this year (in our opinion). We just posted a little response on Tyler's "Blue Mountain" piece about managing risk and exposure. Be well our friend...


deadhead's picture

thanks AR!  glad to hear about PNC....i've reached my limit of the capital committed to this market but was awfully tempted to grab some OTM puts on STI.  however, i stuck to my rules and it is prudent for me to do so.

a much older guy once told me "nobody ever lost money taking a profit"....

agree with volatility increase....i still think we will print the nov 08 low of 751 this year.  lower if geopolitical events hit the boiling point and tip over...

AR's picture

Finally, we're also starting to build shorts (1st leg) in the 30-year up here into the close above the 118.28+ area. We have some event and weekend risk coming up (maybe to 120.04-09), however, we're willing to add to this position. We're targeting 115.10-20 area on the downside. Good luck. Heck, you and me are pioneers at our age. We still have fun though, do we not...

deadhead's picture

i just typed a lengthy reply but somehow lost it!!

oh well...


having a ball in this market and it seems to me that volatility is pretty much a solid thing through 2010 and into you said on the other thread, be aggressive taking profits, and i have been since Oct 2008......i use stops pretty frequently as well but not always.....i don't trade bonds, but watch very closely and understand the bond market well......  my concern on shorting treasuries is that i think bernanke sold his soul to the will be most interesting to watch the long end over the next year....good luck, please keep sharing your insights, it is appreciated and i am grateful for the education.


TraderMark's picture

This just in from the Greek people

"We don't do austerity"

strikes lines up in both public and private sector unions

even the tax collectors are going on 48 hour strike

heck even people in the finance ministry are striking - lol.

in a related note, the american sheeple look forward to next week's American Idol.  Oh yeh - they are sorta pissed about government but anything over and above venting on a message board is too much work.  Wait, the Super bowl is on this weekend... nevermind.

John McCloy's picture


I better make sure those bullets are hollow points. Davos 2011: "The Road to Civil Unrest"

moneymutt's picture

I get mad at American sheeple, then I see this type of thing from Greece and France, and it strikes me as bad I a sheeple? I remember reading the book 1776 where they said the mercenaries from German, the Brit soldiers couldn't figure out American colonist were have a revolution when the saw the abundant lifestyle average Americans had compared to european peasants (I'm sure they weren;t factoring slave population).


Anonymous's picture

Bear in mind that even in the South most of the wealth from slave agriculture was going to the gentry classes who were rich in Europe too. It's Native Americans who really suffered for the prosperity of ordinary American colonists. (Not that it was zero-sum, of course; the colonists accumulated more wealth than they stole.)

order6102's picture

Buffet is the greatest scambag of our times. If you looking for somone who was able to arb system to full - he is the man. Secure cheap funding via insurance company and use it to buy cashflow rich companies using regulatory loopholes. 

Anonymous's picture

Buffet is a weasle - BRK pays ZERO dividends, but he insists that everyrhing he buys must pay dividends. The only genuis he has is getting people to accept how he skims the dividends...

Hephasteus's picture

Too bad Geiko doesn't have a policy for getting a squirrel stuck up your ass.

Mr Lennon Hendrix's picture

Why did Berk split stock?  So when the hype commences people will be able to buy their stock and hold on for the ride.  Facebook btw will be hilarious!  People will buy facebook and then facebook all day and think of it like a job.  No joke.  "Hey what did you do today?" "I bought more facebook stock and then I went on facebook for a few hours."  "Did you see it gained 5% today?"  "Yeah, I think I will get back on, do a little farming, and help it go up more!"  "Haha, me too!"  Seriously, watch for it.  Buffett will be a savior over the next year while 'Merica rides into the hyper inflation nation.  Then once everyone realizes stocks went up because the Doelarr went down, they will turn on him.  They will turn on BS Bernanke.  They will turn.  Too bad the 'Merican people will be homeless and hungry and probably on drugs. 

suteibu's picture

That just took the shine off of the Bershire-B stock split and being added to the S&P.

John McCloy's picture

I had a feeling the split for the B shares was a desperate ploy to suck in some retail cash.

Anonymous's picture

that's my thinking also.

Anonymous's picture

It's interesting that all these years Buffet was able to increase value in BRK, yet value was a function of the lax lending standards and credit easing that we have seen worldwide. I don't particularly think he is that useful to our country, yet many in the financial community think he's a God.

What does Buffet make? Does he build roads? Schools? We need productive people to pull us out of this mess, not further stock market manipulations and balance sheet adjusters.

I see him as a very intelligent, white collar extortionist of the capitalitst system. I do not envy him, nor honor him, as I see his empire is starting to falter. And this is common with all successful men who enter the golden years and don't acknowledge when they should step down and move aside.

Anonymous's picture

He's a welfare queen, he was all in favor of TARP to bailout Wells Fargo, American Express, Sun Trust and M&T Bank.

Anonymous's picture

What's even scarier is his followers, i.e., shareholders.

Go visit a stock message board. They put him up on a pedestal. He can do no wrong. He is their god, their savior. They go to great lengths to show how Wall Street is undervaluing their stock by 30%, 50%, 100%, at any given time. And heaven forbid you should ever speak ill of the man, his performance, or his actions or words.

They drink gallons of the Kool-Aid by the day.

It's truly sickening and even disturbing.

Quite the cult.

moneymutt's picture

I really see him as a symbol for his generation, I call them the luckiest generation businesses and invest during biggest, longest bull run in history of country...if you are 70, 80 now, you didn't need to be smart, super talented to make a good life, just a HS education, show up to your manufacturing job everyday and you could single-handedly support family of four, nice house, retirement etc..Buffet just stayed in too long, outlived the bull market that did him so well, for so long.

People in 70s 80s made good middle class salaries, went to college on the cheap if they even bothered, bought houses cheap, sold them when they were high, got pensions, got a good deal from Soc Security/Medicare, have a baby boom wind at their backs, etc...its an end of era and Buffet represents it.

anynonmous's picture

this should help

Berkshire Cuts 3,000 Jobs After Demand Falls for Carpet, Bricks


(did Mr. Buffett offer odds on his "all in bet on America")

Mr Lennon Hendrix's picture

Not sure Buffet knows what odds are.  He does know free ride however.

Rainman's picture

....and the best ride of all is insurance. Government mandated for vehicles, bank mandated for homes with a mortgage. Suck up the cash premiums and grind down the claims.

I suppose they'll be stuffing that slimy little gecko up our ass 6 times per hour soon , versus the usual 4. Got to make more cash to pay off the choo-choo.

Anonymous's picture

Maybe Buffett should have said the market will tank the day after BB is sworn in.

Assetman's picture

S&P assumes that Warren and his buddies have not kept up in managing the portfolio of risks at Bershire due to complexity.

I disagree.  Warren knows about those embedded risks very well.  He also knows that his losses will likely be socialized if those risks don't pan out in his favor.  

Anonymous's picture

Buffet's holdings in GS, WFC and especially GE will get crushed when the great debt unwind happens. Maybe today is the day that markets finally began the the unwind?

Anonymous's picture

Deleveraging of debt will be an ugly bitch!

moneymutt's picture

Toyota having quality problems, Buffet going down....what is going on? Next thing you reveal is that house prices don't always go up....I liked 2005 so much better...

Anonymous's picture

That's our problem at the moment, right? The dream of 2005 dies hard.

Forbes's picture

If BRK has been downgraded to AA, what does that suggest about the rating of GE?

(Or did I miss GE's downgrade?)

Anonymous's picture

ouch that has to hurt. couldn't happen to a nicer guy than that old curmudgeon warren buffet, the most intelligent invester the world has ever seen....ha ha ha

ATG's picture

Fitch and Moodys already lowered BRK and GE

credit ratings. The WEB weapons of mass

financial destruction naked put portfolio could

not only drop BRK earnings 96% again, and wipe

out the BRK public investment portfolio,

WEB overpaid for BNI, COP, Cadbury and Irish

banks by his own courageous admission.

The BRK/B 1500:1 split goes against long-held

WEB principles, as do moral hazard bailout

stims of once free economies.

Now S&P lowers the boom as WEB emulates

Geithner by extending duration for cash

"before iRates rise."

($TNX almost doubled last year so far.)

This market may take no prisoners from here

on out. Time will tell.

There are only 4 AAA credits left, with two

of them headed south.

We have had a sell on BRK/A below 116,910

BRK/B below 101.10...

Anonymous's picture

Funny that S&P downgrades BRK after Buffett sleezily convinced them to add BRK to the S&P 500. BRK's holdings include 33 S&P constituents already. Why would they need to be added to the index?

MarketTruth's picture


He bails out Goldman Sachs like a good little soldier and then dares to compete with the U.S. Gov to sell bonds? Hope this wolf in old man sheep's clothing realizes how it feels to get it without any lubricant like the rest of us.

Besides, Morgan is the retail arm of the Federal Reserve (and a member/owner of the fed), what did Buffett expect to happen to his ratings if he dared to sells bonds when the USA Gov needs to do the same at record levels?