The stock markets have been in great shape for the past two weeks. Trump hasn’t said “too much crap,” and as a result, things aren’t going too badly. There’s hope for a way out of the crisis with China, and quarterly earnings aren’t too bad. Of course, it’s all a matter of interpretation, but all in all, it’s going okay. Last week’s economic data was awful – but luckily, Friday’s employment figures saved the day because they were “BETTER THAN EXPECTED.” Even if we need to say that with caution, because the revisions were terrible, and next month won’t be as fun.
The First Consequences in June
Not so fun, because according to experts, we’ll start to feel the effects of tariffs. We all know the value of “experts'” opinions, but it’s something to cling to and a reason to stay cautious over the next month. That said, there’s no need to panic just yet since employment isn’t our biggest worry – we’ve got plenty of other things to digest first. Things like the upcoming FED meeting, Powell’s decision not to cut rates, and the inevitable wrath of the American President, who won’t miss a chance to throw sweet words at his Federal Reserve Chairman.
But first, let’s go back to last Friday’s employment numbers. I’m sure you spent your entire weekend analyzing the Bureau of Labor Statistics report, but just to get our week started on the right foot, here’s a quick summary: the US economy added 177,000 jobs in April – that’s 42,000 more than expected. If we try to stay as optimistic as the market has been for the past two weeks; employment is holding up, investors are breathing easier, and Trump is shouting from the rooftops that everything is fine, that we’re in a “transition,” and that “prices are falling” (we’d love to see that on the shelves, not just in statisticians’ theories). The unemployment rate remains at 4.2%, and the markets loved it.
The Power of Forgetting
Markets loved it, but I still think they’ve forgotten a bit too quickly that during the last week of April, we had bad numbers from ADP, bad Jobless Claims, bad JOLTS data, weak GDP, and an inflation rate that’s no longer rising… But all of that was forgotten because expectations were beaten by 42,000 jobs… EVERYTHING ELSE WAS FORGOTTEN – this market shows an almost indestructible resilience – sometimes.
Still, let’s remember a few things about the NFPs:
For now, layoffs remain rare – I repeat, “FOR NOW”
Wage growth is slowing down (+0.2% in April)
The chances of a Fed rate cut are collapsing – only a 1.3% chance of a cut this Wednesday – according to the latest polls – but we’ll get back to that
The February and March revisions are horrendous – a total of 58,000 jobs were removed from the previous two months… AND WE’RE ALL EXCITED about 42,000 more in April – we’re really forgiving!!!
Long-term unemployment is rising, with 23.5% of unemployed people out of work for more than 27 weeks
And to top it all off, more and more Americans are working multiple jobs to get by – not to mention the rising number of supervised parking lots where people can sleep in their cars.
In short, the labor market is standing – but on a thread. The sectors that have been hiring for the past two years – government, healthcare, education, hospitality – are all under pressure. Plus, federal spending is declining, tourism is down (-12% foreign visitors in March), flight tickets to the US have never been so cheap, consumer spending is down, as is consumer confidence. And the trade war is still ongoing – there’s hope, but it’s still here. But everything’s fine because last Friday, the S&P 500 closed higher for the 9th time in a row!
The Week Ahead
Whatever you think, the market is doing relatively well because it seems to have accepted that Trump doesn’t have only hostile intentions toward it, and maybe – just maybe – the Chinese and Americans will end up vacationing together. But better book those flights quickly, because the risk of empty shelves all over the US is rising fast – ideally, we’d like the situation to improve before the end of the month. And that’s being optimistic. But before looking 30 days ahead, let’s talk about what’s happening in three days.
On Wednesday night, Jerome Powell will announce that he’s doing nothing with the rates – that’s what experts say, with a 98.7% chance that the Fed Chair stands firm and doesn’t move the rates, stating he wants to “first see the impact of tariffs on the economy,” because you can’t just cut rates wildly without risking reigniting inflation. How that will be received depends on Powell’s speech – if he’s very DOVISH and hints he’ll align with Trump’s wishes as early as next month, it should go smoothly. But if he stays vague or appears HAWKISH and focused more on inflation than economic stimulus, markets won’t like it. And one thing is certain – if rates stay unchanged Wednesday night: Trump will roast him using every tool at his disposal, and I bet we’ll start hearing talk of Powell being fired for “gross misconduct.” In short: rates likely won’t fall, and the Trump-Powell showdown is set for a new round.
Warren Steps Down
Over the next three days, we’ll have plenty of time to dig into this topic. But THE BIG NEWS THIS WEEKEND was Warren Buffett officially handing over the reins to his successor: Greg ABEL. At the very end of his 60th annual general meeting, Warren Buffett – now 94 years old – announced he was stepping down from leading Berkshire Hathaway. Even Greg Abel himself didn’t know the moment had come. This marks the end of an era: the era of the Oracle of Omaha, builder of a $1.2 trillion conglomerate.
At age 62, Abel headed Berkshire’s energy division and gradually earned Buffett’s trust over the decades, notably through several successful acquisitions. He’s been overseeing non-insurance operations since 2018 and was named successor in 2021. But he didn’t even know the day had come. Abel now inherits a portfolio including flagship holdings like Apple and American Express, businesses in railroads, energy, insurance, candy, and most importantly… a mountain of cash: nearly $350 billion uninvested.
What to Expect
With Buffett’s departure, shareholders are eager to know what will happen to Berkshire’s war chest — whether the company’s uniquely low-bureaucracy culture (no dividends, minimal interference in subsidiaries) will change. And above all… whether Berkshire will retain its “Buffett premium,” that market valuation boost tied to absolute trust in its founder.
Greg Abel lacks Buffett’s charisma and folksy wisdom. He also doesn’t have a track record in portfolio management — that’s still left to the two long-time investment managers, Todd Combs and Ted Weschler. However, Abel is recognized as an excellent industrial operator, a rigorous manager, and above all, he has Buffett’s full confidence.
When asked what he’ll do with the massive cash reserves, Abel stayed vague. He mentioned continuity but gave no clear vision — surprising some shareholders used to Buffett’s inspiring metaphors or Charlie Munger’s razor-sharp analysis. Buffett’s departure raises strategic, cultural, and even structural questions about Berkshire Hathaway’s future. Some even mention the possibility of a partial breakup in the long term. For now, Abel promises to stay the course laid out by Buffett, who remains a major shareholder and is still available as an advisor at 94 years old. And to think some people complain about having to wait until 65 to retire…
Oil Market News
Crude oil prices plunged sharply Sunday evening, dropping nearly 4% to around $56 a barrel. The fall was triggered by OPEC’s announcement of another planned production increase in June — the second in as many months. The move adds 411,000 barrels per day. Why did OPEC do this? Officially, to punish cheaters — countries like Iraq and Kazakhstan recently exceeded their quotas, destabilizing the cartel. But it’s also seen as a diplomatic gesture to please Trump, just ahead of his trip to the Middle East. Over the month of April, U.S. crude oil lost 18.6%, its biggest monthly decline since November 2021.
This morning, the Australian stock market is down, dragged lower by disappointing earnings from Westpac Bank, weighing on the entire local financial sector. Most regional markets — Japan, China, Hong Kong, and South Korea — are closed for holidays, leading to very low trading volumes. Markets are also awaiting key data this week on Chinese foreign trade, which will help assess the real impact of new U.S. tariffs. There’s already talk of deflation risks in the region. Gold is at $3,264 and Bitcoin is trading at $94,100.
Media Highlights of the Day
We’re kicking off the week with talk of tariffs: Trump wants to impose a 100% tax on films produced outside the U.S. He seems to be running out of things to tax. He also suggested that anything going well in the economy is thanks to him — and anything going poorly is Biden’s fault. Honestly, it feels like we’re back in kindergarten. And to top it off, Trump hinted again that he plans to stay in office for 8 years — a scheme to increase term limits seems to be looming. What a joy — I know I’ll have plenty to write about on finance and Trump, and Trump and finance, for another 8 years…
Besides the Fed, earnings season continues. After a week dominated by tech giants’ results, Wall Street will now focus on key players from other sectors. This week, Disney and Warner Bros. Discovery will offer insights into consumer behavior in entertainment and streaming — a key indicator of U.S. consumer health. Mattel and Hasbro will also report, with a focus on how tariffs are affecting retail sales. It’ll be an interesting test of purchasing power resilience. Ford is expected to comment on the impact of ongoing tariff changes, especially on auto parts and imports.
In short: this week will serve as a barometer for the real-world effects of U.S. trade policy on consumer industries.
For now, U.S. futures are under pressure, pointing to a 0.8% drop at the open. It looks like nine straight days of gains are triggering some well-deserved profit-taking — especially since nothing has changed on the tariff front!
It’s May 5, 2025 — the “Sell in May and Go Away” season has officially begun, and strangely, no one’s talking about it this year! Have a great day, a good start to the school year for those going back, and we’ll see you tomorrow for more adventures!
See you tomorrow!
