Delta Air Lines and initial claims — What you need to know in markets on Thursday

Myles Udland
Markets Reporter

Sure, stocks usually go up. But they can’t go up everyday.

And so for the first time in 2018, all three major indexes finished in the red, though only fractionally. The Dow lost about 16 points to log the slimmest percentage loss on the day while the Nasdaq and S&P 500 were both off about 0.1%.

On Thursday, investors will have a muted economic schedule with the weekly report on initial jobless claims serving as the big highlight while earnings out of Delta Air Lines (DAL) will punctuate the corporate earnings schedule.

A nearly empty arrivals area of the Delta Airlines terminal is seen at LaGuardia Airport during Storm Grayson in New York City, New York, U.S., January 4, 2018. REUTERS/Mike Segar

In markets on Wednesday the 10-year Treasury, which has come into focus after a big backup in yields to start the year, settled with a yield of around 2.55%. Earlier on Wednesday the 10-year climbed to about 2.59%.

Treasuries were in the headlines on Tuesday after both Bill Gross and Jeff Gundlach said yields could be on the verge of breaking higher and ending the bond bull market, while a Bloomberg report Wednesday morning suggested that China has considered slowing or halting its purchase of U.S. Treasuries.

The Canadian dollar was also volatile on Wednesday after a Reuters report said Canadian officials are increasingly convinced that Donald Trump will pull the U.S. out of NAFTA. The next round of NAFTA talks are set to end on January 28th, with Capital Economics noting that Trump’s first State of the Union address is set for the January 30th. The firm asks rhetorically, “Is [Trump] going to announce a withdrawal [from NAFTA] to a prime time national audience?” Certainly a thought worth keeping in mind in the days ahead.

The next Warren Buffett

Warren Buffett isn’t getting any younger.

And with his latest move at Berkshire Hathaway (BRK-A, BRK-B), the 87-year-old investing legend is preparing the company he controls for life after he is gone.

On Wednesday, Berkshire announced that Greg Abel, the current CEO of Berkshire Hathaway Energy, and Ajit Jain, the of Berkshire’s reinsurance operations, would become members of the board of directors as well as vice chairman. Abel will serve as vice chair for non-insurance business operations and Jain will be vice chair for insurance businesses.

On Wednesday, Buffett told CNBC the move was “part of the movement toward succession.”

Warren Buffett won’t be the CEO of Berkshire Hathaway forever. And Wednesday’s personnel moves show he is thinking about the future of the company.

So this announcement adds some clarity to how succession could work when Buffett inevitably steps down as CEO of the holding company he founded.

Last year, Bloomberg Businessweek outlined why Abel is perhaps the most likely successor to Buffett as CEO of the company, with Abel’s age — 55 to Jain’s 66 — acting as a not insignificant part of this calculation. Before the appointment of Abel and Jain to Berkshire’s board, speculation about who would succeed Buffett had also included on Todd Combs and Ted Weschler, the investment managers responsible for Berkshire’s investment portfolio.

But there’s another possibility, which is that the next CEO of Berkshire Hathaway is neither of the four executives mentioned above, but that recent moves to empower independent investment managers and integrate corporate operators into the board of directors is setting the stage for the next CEO, who will come from outside this group.

Back in his 2014 letter to shareholders, Buffett addressed the question of succession writing that he and the board of directors “believe we now have the right person to succeed me as CEO — a successor ready to assume the job the day after I die or step down.” Since this letter there have been no major departures from the senior ranks at Berkshire’s premier operating units.

Buffett added in his 2014 letter that, “Our directors believe that our future CEOs should come from internal candidates whom the Berkshire board has grown to know well. Our directors also believe that an incoming CEO should be relatively young, so that he or she can have a long run in the job.

“Berkshire will operate best if its CEOs average well over ten years at the helm. (It’s hard to teach a new dog old tricks.) And they are not likely to retire at 65 either (or have you noticed?).”

But that the next CEO would have the same corporate landscape that Buffett has enjoyed during his time also seems unlikely. Bringing some of his most highly-touted business operators in Abel and Jain into the boardroom, and giving them the title of vice chair held solely by Charlie Munger, is nothing short of a major management reshuffle relative to how much tends to change at Berkshire Hathaway.

And it is a move clearly aimed at laying the groundwork not only for Buffett to be succeeded, but for Berkshire to look a whole lot different when he’s gone.

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

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