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Buffett scorns tricky Wall Street accounting, but defends buybacks


Billionaire investor Warren Buffett on Saturday attacked what he saw as tricks used by U.S. companies to boost earnings and stock prices, but he defended one oft-criticized practice: share buybacks."As the subject of repurchases has come to a boil, some people have come close to calling them un-American –characterizing them as corporate misdeeds that divert funds needed for productive endeavors," Buffett said in his annual letter to shareholders."That simply isn't the case: Both American corporations and private investors are today awash in funds looking to be sensibly deployed. I'm not aware of any enticing project that in recent years has died for lack of capital."Some critics, including BlackRock Inc (BLK. N) Chief Executive Officer Larry Fink, think the practice of companies buying back their own shares to boost earnings has been used to excess. Repurchasing shares boosts earnings per share by reducing the shares remaining on the market. Critics contend the money can be better used to hire employees or buy equipment.

Buybacks fell to an average $2.3 billion a day during the January-February earnings season, TrimTabs Investment Research Inc data showed on Monday, after spiking to $5.7 billion a day in early-to-mid 2015. Last month, Fink warned CEOs of S&P 500 . SPX companies in a letter that the world's largest asset manager would be looking for an explanation of how cash from corporate tax cuts touted by U.S. President Donald Trump will be used, especially if it is deployed for buybacks. Buffett can buy Berkshire's own shares back at 120 percent or less of book value, but that has "proved hard to do," Buffett said.

"Our buying out 'partners' at a discount is not a particularly gratifying way of making money. Still, market circumstances could create a situation in which repurchases would benefit both continuing and exiting shareholders," he said. "If so, we will be ready to act."ACCOUNTING TRICKS

Buffett was less sanguine on other practices used by public companies, saying "too many" are deviating from generally accepted accounting principles

China says supports WTO after U.S. trade threat


BEIJING China supports the work of the World Trade Organization (WTO), the country's foreign ministry said on Thursday, after U.S. President Donald Trump's administration said it might defy WTO rulings it viewed as interfering with U.S. sovereignty. Maintaining a fair and open multilateral system with the WTO at its center benefits global economic growth and is in the interests of everyone, foreign ministry spokesman Geng Shuang said."Since China joined the WTO it has always proactively supported the WTO's work, and this position will not change," he told a daily news briefing, when asked about the U.S. proposal. China's Commerce Ministry declined immediate comment.

In an annual trade policy agenda document released to Congress on Wednesday, the U.S. Trade Representative's office said the administration "will not tolerate" unfair trade practices that distort markets. These range from currency manipulation and unfair government subsidies to intellectual property theft, it added.

The document signals that the administration may try to push the limits of what is acceptable under WTO rules in its quest to make good on campaign promises to slash U.S. trade deficits with China and Mexico, and bring home manufacturing jobs. It marks a departure from the Obama administration's strict adherence to WTO compliance in its challenges to unfair foreign trade practices.

China, worried that its export-dependent industries will suffer, has repeatedly urged global leaders to reject protectionism, which Trump has championed with his "America First" campaign.