Reverse Repurchase Programs Disrupting Near-Term Lending, Warren Buffett Remains Cautious

There is a growing concern on Wall Street that the unusual short-term lending surge experienced currently could lead to unrest in weeks to come. Investors, including banks and money-market funds, had parked almost $1 trillion in surplus cash at the Fed, which is the highest since 2013 when the Federal Reserve opened the facility for the reverse repurchase agreements. 

Fed uses repurchase programs to influence short-term lending rates 

Repurchase programs are the primary mechanism of moving cash for those needing it. Usually, the Fed uses them to control near-term interest rates. The cash flood into the repurchase agreements means investors and banks have surplus cash that the Federal Reserve is vacuuming up. 

The extent of the movers has raised wariness among some analysts who feel that near-term lending markets could be vulnerable to disruptions. Notably, the reason for the rush into the facility seems to be the Fed’s decision in June to increase the interest amount it pays to 0.05% from 0%. 

Berkshire Hathaway reduced share repurchase rate in Q2 

Despite the overall stock market marching higher, Warren Buffett is cautious, and in Q2, he was a net seller and reduced the rate of share repurchases by Berkshire Hathaway (NYSE: BRK).  In its Q2 2021 report, the company revealed that it had net stock sales of around $1.1 billion, a drop from $3.9 billion in the previous quarter. This will be the third consecutive quarter in which the company’s net stock sales have dropped. 

However, the company’s stock portfolio increased 8.7% to around $293.8 billion, up from $270.4 billion in the previous quarter. On the other hand, Berkshire bought BTKB stock worth $6 billion in the quarter.  Berkshire has been quiet in procuring deals as soaring prices and the surge in SPACs has kept Buffett playing defensive. 

Crypto researcher predicts BTC to hit $250,000 by 2025

Crypto researcher Joseph Edwards who predicted that Bitcoin price could rise to $60,000 in 2020, has called for its value to hit $250,000 by 2025. The former eSports coach also shared that two altcoins could also rise almost 20times in the coming years.

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