The Directors of Contact Asset Management have just returned from a 10-day trip to the United States. We again attended the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska. In the lead up to the Berkshire Meeting, we were fortunate to meet with a number of influential companies and management teams including Amazon.com, Acme Brick, Boeing, CME Corporation, Equity Group Investments, GATX, James Hardie, Lendlease, Lizard Investors, WeWork and Walgreen Boots.
The Berkshire event, which drew another crowd of 40,000, provides access to two of the great investing minds of all time, Warren Buffett and Charlie Munger. We also gain great insights from discussions with a number of the Berkshire subsidiaries as well as other individuals and small business operators who attend the meeting.
In line with our hope to be transparent and informative for the shareholders of BKI Investment Company, URB Investments and Washington H Soul Pattinson & Co Limited, we share some of our key learnings from our travels.
A key takeaway: the US economy is strong. Very strong.
Over the 10 days, everyone was upbeat on the US economy. The recent tax reform seems to be having the desired stimulatory impact. Companies are using the extra capital from tax cuts to lift wages, pay down company debt, reinvest into their businesses or increase dividends paid to shareholders. All very positive for both investors and the broader economy.
Unemployment is also remarkably low which, is flowing through to investor and consumer confidence. The most recent Job Ads released by the US Department of Labor reported an unemployment rate below 4% for the first time since the year 2000. Some initial signs of wage inflation are starting to emerge, which is good for workers. Trading volumes at the CME are at record levels and Housing Approvals and Starts continue to improve.
The only frustrated people are the value investors. The economy is strong but widespread value in the US equities market is becoming hard to find.