Buffett’s Exit, Big Tech’s Edge

Warren Buffett is making headlines with his retirement, marking the end of an era at Berkshire. Meanwhile, Big Tech did its part last week, offering just enough optimism to keep the rebound narrative alive. But with oil prices sliding again to start the week—and tariffs, rate decisions, and growth concerns piling up—markets are still balancing between glass-half-full momentum and glass-half-empty macro risk.

Warren Buffett Steps Down – Greg Abel Takes the Helm at Berkshire

Legendary investor Warren Buffett is stepping down at the age of 94. He is handing over the leadership of his holding company, Berkshire Hathaway, to Greg Abel.

Abel is by no means an unknown figure in the financial world. The 62-year-old has been with Berkshire since 1999 and was given responsibility for the company’s non-insurance businesses in 2018.

Buffett built Berkshire into a company valued at over $1.16 trillion. In 2024, its group of businesses generated $47.4 billion in operating profit.

At the annual shareholders’ meeting over the weekend, Buffett also criticized Donald Trump’s trade policy—though without mentioning the president by name. “Trade should not be a weapon,” he said.

Despite recent market turbulence, Berkshire’s stock has proven resilient. It closed at a new record high near $540 on Friday, up around 20% year-to-date.

All eyes will be on Monday’s market reaction, though long-term investors are likely to view the leadership transition positively.

Big Tech’s Earnings Buffet Fuels the Rally

One after another, tech heavyweights delivered guidance that pointed to steady demand across devices, cloud, software, and digital ads. The reports weren’t flawless (Apple was the standout miss), but they went a long way in easing fears of an imminent tariff-driven hit to profits.

Earnings season helped ease concerns around AI capex too. Meta raised its full-year spend forecast, and Microsoft signaled AI-related investment will keep growing, just at a slower pace next year, good news for names like Nvidia and Broadcom. But it wasn’t all smooth. Tesla quietly dropped its guidance to return to revenue growth in 2025. Apple flagged a $900 million hit from tariffs this quarter.

Overall, it was a reassuring week for investors looking for signs that the market rebound might be more than just a bounce. The backdrop is still uncertain, but markets are leaning toward a glass-half-full take, for now. That said, the risk of renewed volatility remains, especially for tech, as the trade tensions play out. We won’t know the full impact of the tariffs until next quarter’s earnings. In the meantime,it may be best to favor a barbell approach: staying defensive, while holding onto quality tech names tied to long-term growth themes.

The Big Picture: Cautiously Optimistic (With a Side of Defense)

So where does all this leave us? In a nutshell, recent developments highlight a cautiously optimistic market that is still hedging its bets. Big Tech’s strength is a bullish beacon so far-  these companies have shown they can navigate storms (tariffs, costs) and are investing for future growth, which gives confidence that the economy isn’t falling off a cliff, just yet. At the same time, macro signals (falling short-term yields, oil weakness, defensive sector rotation) flash that many investors are preparing for a potential slowdown or at least a more challenging environment in the coming months.

For retail investors, a few actionable themes emerge:

Looking forward, the broader market direction will likely hinge on resolving that key question: Are we more worried about a growth slowdown or lingering inflation? If growth fears ease (or central banks show they’ll cushion the fall), we might see a rotation back into riskier assets. If, however, inflation proves sticky and limits policy support while earnings start to weaken, the market could stay range-bound or choppy, leaning on those big safe names.

For now, the market’s message is mixed but not gloomy. Tech is flying, consumers are still spending (albeit more carefully), and central banks are becoming friends rather than foes. Just don’t be surprised if the road gets bumpy. 

Production Increase Meets Uncertainty – Oil Prices Continue to Slide

At the start of the week, oil prices are once again under pressure. Rising production and lingering demand concerns amid the ongoing trade conflict are contributing to a fragile technical picture.

Brent is trading at 57 US dollars per barrel. However, the sell-off was initially halted just above the April 9 low of 55 dollars (see chart).

OPEC+ has agreed to increase production by more than 400,000 barrels per day starting in June. And that may not be the end of it. Saudi Arabia has signaled the possibility of further increases of a similar scale.

Oil companies are under pressure as falling prices weigh on profitability. At the same time, energy costs are declining, which reduces inflationary pressure – a potentially positive signal for the Fed.

Technically, the market remains vulnerable. Support at 55 dollars is critical. A sustained move above 72 dollars – the starting point of the most recent sell-off – would be needed to regain traders’ confidence.

Oil (Brent) daily chart

BoE Rate Decision: UK Braces for a Cut

Coming up this week: central banks take the stage. The Bank of England meets on Thursday, and markets are overwhelmingly betting on a rate cut. A rate reduction could have immediate impacts: interest-sensitive sectors like homebuilders and utilities might get a boost from cheaper borrowing costs. Lower mortgage rates can spur home demand, and utility companies could enjoy lower interest expenses (making their juicy dividend yields even more attractive in a lower-rate world). Overall, the BoE’s decision will set the tone for UK markets: a cut might cheer the stock market and housing firms, while a surprise hold could jolt the currency higher. With four total BoE cuts priced in for 2025, Governor Andrew Bailey’s commentary will be just as important.

Macro Tug-of-War: Growth Scares vs. Inflation Fears

The market mood is oscillating between growth jitters and inflation worries. Lately, the pendulum is swinging toward growth concerns and we can see it in the bond market. The 2-year US Treasury yield (sensitive to Fed moves) has been trending near recent lows, even as the Fed has hinted at pausing hikes. This slide in yields suggests traders are seeking safety and bracing for a slowdown. In other words, the market is effectively yelling that the Fed should be cutting rates soon. 

Fed Rate Decision: Markets Demand Signals as Trump Increases Pressure

Investors are hoping for clear signals from Jerome Powell: But the Fed does not have a crystal ball. Given the unresolved tariff issues, it is likely to deliver a cautious message. The administration, meanwhile, continues to publicly pressure Powell. The Fed must preserve its independence and credibility. Especially in this sensitive market phase, it cannot afford monetary policy mistakes.

Rate decision on Wednesday evening: The administration has a major influence on market expectations. It is fueling speculation about rate cuts, and protectionist trade policy is weighing on the growth of the US economy. Despite this, a rate cut in May is seen as unlikely. However, markets expect four additional rate cuts of 25 basis points each by the end of the year: in July, September, October, and December.

All eyes on J. Powell: His press conference is considered a key moment for the markets. We expect an assessment of the economic impact of tariffs and potential downside risks. It is a balancing act for the Fed. Powell must signal support, but not too much, in order to avoid triggering additional market volatility. Markets are questioning whether their rate expectations are accurate or whether a correction is needed. In the current environment, almost any scenario seems possible.

US recession risks have increased: Whether a recession is on the horizon depends largely on trade policy. A resolution in the trade dispute with China is still pending. Valuable time is passing as the global economy waits for clarity. The more the US economy cools, the greater the pressure on the Fed. 

US stock index near key resistance: The S&P 500 has staged a significant recovery in recent weeks, forming an ABC pattern. However, the upward move stalled just below the March 25 high at 5,786 points. Unless this level is sustainably broken, the medium-term downtrend remains intact. A monetary policy impulse through Fed communication could provide the momentum needed to break through this resistance this week. A dovish message, meaning one supportive of rate cuts, could give the stock market fresh upside.

Bottom line: The Fed is likely to remain on hold for now but stays under pressure to act. Economic weakness, tariff uncertainty, and the US administration’s influence increase the risk of monetary policy misinterpretation by investors. A dovish message could particularly support tech, growth stocks, and rate-sensitive sectors such as real estate and utilities. If clear signals are lacking, setbacks in equities may follow, especially among cyclicals and export-oriented companies.

S&P 500 daily chart

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