Weekend brief: Berkshire's operating profit slips 6% as it buys back $9.6 billion, and CPI lands Tuesday

U.S. stock markets are shut until futures reopen at 6 PM ET Sunday, so every market figure below is as of Friday's close. The week ended with the Nasdaq still in correction, a strong jobs report keeping a December Fed increase in play, and oil sharply lower on hopes for a U.S.-Iran deal. Berkshire Hathaway reported this morning.

Friday's close

Index closes are as reported by CNBC and detailed in our Friday close story, which also carries the weekly changes (Nasdaq down 3.4%, S&P 500 down 2.7%, Dow down 0.9%, per CNBC). Yields are from the Treasury's par yield curve. Oil and gold are Yahoo Finance front-month futures, as in our War Room brief; day changes are our arithmetic.

Berkshire: profit down, buybacks up, insurance is the soft spot

Berkshire's third-quarter release shows operating earnings of $12.705 billion, down from $13.485 billion a year earlier, a fall of about 5.8% by our arithmetic. Net earnings fell further, to $22.112 billion from $30.796 billion (down 28%), because investment gains were $9.4 billion against $17.3 billion. Berkshire itself calls quarterly investment gains "usually meaningless" for judging the business, so operating earnings are the cleaner read. Over nine months, operating earnings are $37.034 billion, up 8.0% from $34.286 billion.

The detail is where the story is. Insurance underwriting earned $1.352 billion against $2.369 billion, down 43%. Insurance investment income slipped 14%, to $2.734 billion. Against that, BNSF railroad rose 19% to $1.729 billion, the utilities arm 8% to $1.612 billion, and manufacturing, service and retailing 12% to $4.042 billion. That last segment is the closest read on the economy Main Street lives in, and it grew.

Berkshire repurchased about $9.6 billion of its own stock in the quarter, and about $14.4 billion in nine months. That means roughly $4.8 billion in the first half and $9.6 billion in the third quarter alone, double the earlier pace. The balance sheet in the 10-Q shows $36.0 billion of cash and equivalents plus $336.7 billion of short-term Treasury bills in the main reporting lines, about $372.8 billion by our sum. A Seeking Alpha headline cites $377.4 billion for cash, a different definition we did not reconcile. The pile earns at the short-term rates the Fed controls, which is one reason a December increase matters to Berkshire too.

The week ahead

• Sunday, 6 PM ET: equity-index and gold futures reopen. Nasdaq-100 futures closed Friday 1.3% above Thursday, per our Nightcap, so the first print shows how the weekend's Iran and Anthropic headlines land.
• Monday: Stephen Miller starts as White House chief of staff, according to our report.
• Tuesday, Nov. 10, 8:30 AM ET: October consumer price index, per the Bureau of Labor Statistics schedule. It is the first inflation print since the jobs report revived the December-hike debate.
• Thursday, Nov. 12: Freddie Mac's weekly mortgage survey. The last reading, from the PMMS history, is 7.18% for the 30-year fixed, down from 7.24% a week earlier. On a $400,000 loan, six hundredths of a point is about $16 a month by our calculation.
• Friday, Nov. 13, 8:30 AM ET: October producer price index, per the BLS schedule.

We could not confirm consensus forecasts or a full earnings list from a primary source this morning, so we leave them out. Check our economic calendar once it rolls to the new week.

What it means for owners

A restaurant or retailer with a floating-rate line should treat Tuesday's CPI as the next test of the December-increase odds: a hot number keeps the 2-year near 4.5% and the payment pressure on variable debt, a cool one eases it. A trucker or contractor has the opposite exposure to oil: Brent's drop this week helps diesel costs with a lag, but Friday evening's U.S. strikes on Iran, covered in the War Room brief, mean Monday's open decides whether that relief holds. Bitcoin sits at $75,815 per today's crypto report.

Sources: Berkshire Hathaway news release and 10-Q; U.S. Treasury; Freddie Mac; BLS; CNBC and Yahoo Finance via the Chronicle stories linked above. This is market information, not investment advice.