Archive for May, 2025

• Morning News: May 7, 2025
  Eddy Elfenbein, May 7th, 2025 at 7:07 am

  China Lowers Rates and Makes Bank Lending Easier in Response to Tariffs

  China Agreed to U.S. Tariff Talks but Is Likely to Play Hardball

  Countdown to China Trade Talks

  Why China Is Investing So Much Money in Moroccan Factories

  Dollar Faces $2.5 Trillion ‘Avalanche’ of Asian Sales, Jen Says

  German Factory Orders Jumped in March as Firms Braced for Tariffs

  Eurozone Shoppers Spend Less as Tariffs Weigh on Mood

  EU Floats Sanctions on Lukoil Dubai Unit for Shadow Fleet Link

  Canada Trade Deficit Narrowed in March

  Trump’s Threatened Tariffs Are So Large, 10% Feels Like a Relief

  States, Cities Face Funding Collapse Threat with Trump Cuts

  Trump’s Economic Message Sounds a Lot Like Biden’s. It Didn’t Work Then and It Won’t Work Now.

  Trump Still Has a Chance to Remake Rather Than Wreck Global Trade

  It’s In the Pessimism and Policy Errors That Recovery Can Be Found

  Wall Street Is Watching This Shipping Data to Gauge Tariff Impact

  Tax Evasion or Student Debt? The US Chose the Wrong Crackdown

  Let’s Reform a Tax Code That Costs Americans Billions of Hours

  Nigeria Says Exxon Commits $1.5 Billion to Deepwater Development

  Meta’s Purchase of Instagram Underscores the Genius of the M&A

  Startup SimpleClosure Sees Boom In Giving Fellow Startups ‘Peace of Mind’ to Die

  CrowdStrike to Cut 5% of Workforce

  Uber Swings to Profit on Bookings Growth; Sees Bookings Up in 2Q

  BMW Sticks to Guidance and Expects Tariff Relief From July

  A Global Drug Supply Chain Is Actually a Good Thing

  Novo Nordisk Investors Breathe Sigh of Relief Despite Guidance Hit From Copycat Drugs

  WeightWatchers Files for Bankruptcy Amid Wave of New Weight-Loss Methods

  Disney Earnings Bolstered by U.S. Theme Park Growth, Streaming Gains

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• CWS Market Review – May 6, 2025
  Eddy Elfenbein, May 6th, 2025 at 5:51 pm

  (This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

  Over the weekend, Warren Buffett announced that he’s stepping down as CEO of Berkshire Hathaway. On January 1, Greg Abel will take over. Berkshire’s board unanimously approved Buffett’s suggestion. Buffett is 93 years old.

  Yesterday, the A shares of Berkshire fell $40,000. I guess that’s a good sign of Wall Street’s respect for Buffett.

  Buffett’s track record is simply amazing. Since 1965, Berkshire has gained 5.5 million percent while the S&P 500 has gained a measly 39,000%. That means that if Berkshire fell by 99% tomorrow, it would still be outperforming the market.

  Until the big sector rotation earlier this year, CWS had (barely) outperformed Berkshire over a seven-year run. As for the other 60 years, ol’ Warren’s got a big edge.

  

  To be fair, most of Berkshire’s really big years came decades ago. Even Buffett has conceded that his portfolio won’t do as well as it did. Before Monday’s big drop, one share of Berkshire was worth more than $800,000.

  I wish Mr. Buffett a happy retirement.

  Yesterday, the stock market snapped its nine-day winning streak. The decline wasn’t that bad (-0.64) but it was the first daily drop since April 21.

  On Friday, the Labor Department said that the U.S. economy added 177,000 nonfarm payrolls last month. That news surprised Wall Street. Economists had been expecting an increase of just 133,000.

  The figure for March was revised lower by 43,000 to 185,000. The February number was lowered by 15,000.

  

  The unemployment rate held steady at 4.2%, which is low by historic standards. In fact, the unemployment rate last month was lower than every single month from 1971 to 1998.

  The key stat I like to watch is average hourly earnings. After all, worker pay eventually translates to revenue for a company. Last month, average hourly earnings rose by 0.3% which was 0.1% below expectations. Over the last year, average hourly earnings increased by 3.8% which isn’t much higher than inflation.

  The labor force participation rate increased to 62.6% and the broader U-6 rate dropped to 7.8%. Wall Street has been looking hard for signs of the impact of tariffs but so far, it hasn’t found anything.

  Here are some details:

  Health care continued to be a leader in job creation, adding 51,000 jobs. Other sectors posting gains included transportation and warehousing (29,000), financial activities (14,000), and social assistance.

  The federal government reported a loss of 9,000 jobs on the month amid Trump’s efforts, led by Elon Musk and the Department of Government Efficiency, to trim payrolls in the public sector. Federal government jobs have declined by just 26,000 since January, as employees furloughed but still receiving severance are not counted as unemployed, according to the BLS.

  Manufacturing saw a slight loss of 1,000 jobs as well.

  President Trump took to Truth Social, “Consumers have been waiting for years to see pricing come down. NO INFLATION, THE FED SHOULD LOWER ITS RATE!!!”

  He may get his rate cut soon. The Federal Reserve began its two-day meeting today. The Fed will release its policy statement tomorrow afternoon. I don’t expect to see a rate cut this time, but one may be coming at the Fed’s June meeting, in six weeks.

  Traders currently place the odds of a rate cut next month at 68%. All told, traders see the Fed lowering rates by a total of 0.75% by the end of the year. At the June meeting, the Fed will also update its economic projections for the next few years.

  Does Job Growth Tell Us When Recessions Are?

  I was curious to see how changes in nonfarm payrolls have historically aligned with recessions and expansions.

  I reviewed the last 1,000 months’ worth of data. Of those 1,000 months, job growth was negative 219 times. Of those 219 months, the U.S. economy was in a recession for 113 months which is about half the time.

  Even when the economy is shedding jobs, that only indicates a roughly 50% chance that the economy is officially in a recession.

  For April, job growth was 0.11% which comes in 616th out of the last 1,000 months. The important takeaway is that recessions almost never line up with that type of job growth. To get a real recession, you need more than job losses – the economy needs to be shedding jobs.

  Looking at the data, it seems that job growth of -0.13% is the turning point. In today’s terms, that’s a loss of 207,00 jobs. Of the last 1,000 months, there have been 125 months with that level of job losses, and 71% of those months have come during a recession.

  Just going by the jobs report, the economy very likely isn’t in a recession. The next big test for the market comes a week from today when the government releases its CPI report for April. The last report showed a tiny bit of deflation.

  That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

  – Eddy

• Morning News: May 6, 2025
  Eddy Elfenbein, May 6th, 2025 at 7:04 am

  China Services Sector Gauge Slips to Seven-Month Low Amid Trade Spat

  French Industry Produced More Ahead of Tariffs

  U.S. Could Collect More Than $100 Billion With Broader Tariffs, EU Trade Official Says

  EU Targets €100 Billion of US Goods With Tariffs If Talks Fail

  Tariff Fears Loom Large at Milken as Executives Try to Stay Calm

  UPS and FedEx Once Handled a Deluge of Packages From China. That’s Changing.

  Trade War Turbulence Masks China’s Long-Term Metal Demand

  The Cost of Trump’s Trade War on Just One Ship

  The Closer We Get to Zero Tariffs, the Greater We Become

  Marathon Petroleum Swings to Loss on Lower Refining Margins

  Why Has Taiwan’s Dollar Soared in Value, and Who Benefits?

  Tariffs Could Wreck What Bangladesh’s Garment Workers Have Gained

  Immigration Crackdowns Put an $800 Billion Lifeline at Risk

  Fed Confronts Lose-Lose Scenario Amid Haphazard Tariff Rollout

  The Stock Market’s Fear Gauge Is Misunderstood

  Goldman Says Bear Market Rallies Are the Norm

  Cowboy Boots, Baby Clothes, Flight Simulators: Berkshire Hathaway Is Everywhere

  Telemarketers Are Using a Weird Trick to Sell Bare-Bones Health Plans

  Tech’s Strong Earnings Results Obscured by Tariff Uncertainty

  Microsoft Is Key Holdout for OpenAI Restructuring Plan

  Palantir Technologies Raises Outlook on Continued AI Demand

  China’s Pony AI Is Uber’s Latest Robotaxi Partner in Middle East

  Welcome the Driverless Trucks

  Ford Says Tariffs Will Cost Company $1.5 Billion in 2025

  Ferrari Backs Guidance as Earnings Beat Forecasts

  Boise Cascade Reports Lower Sales, Profit as Home Construction Slows

  Philips Cuts Earnings Margin Target On China-U.S. Trade War

  DoorDash Agrees to Buy Deliveroo in $3.9 Billion Deal

  DoorDash Swings to a Profit and Plans to Buy SevenRooms For $1.2 Billion

  Trump Walks Back His Idea for Film Tariffs Amid Mass Confusion

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• Morning News: May 5, 2025
  Eddy Elfenbein, May 5th, 2025 at 7:05 am

  Oil Prices Slide Further on OPEC Plans to Increase Supply

  OPEC+ Supply Hike Forces Wall Street to Redo Sums, Yet Again

  Democrats Have Been at War With Oil for Too Long

  Taiwan’s Markets Jolted as Currency Surges Most Since 1980s

  US Seeks to Weaken Global Development Finance Efforts, UN Document Shows

  Inside the Dizzying Chaos of Running a Freight Business Under Trump

  The World’s Top Jet Fighter Is About to Get More Expensive

  Effort to Close De Minimis US Tariff Loophole ‘Could Get Messy’

  Trump Says He Will Put 100% Tariff on Movies Made Outside U.S.

  Trump Downplays Economic Concerns as He Looks to Cut Trade Deals

  Trump Suggests Some Trade Deals May Come as Soon as This Week

  Economic Concerns Are Mounting, but the Fed Isn’t Cutting Rates Proactively

  Kevin Warsh Is Viewed As A Future ‘Adult’ At The Fed. That’s Dangerous

  This Earnings Season Is a Rorschach Test for Investors

  Trump’s Tariffs Are Lifting Some U.S. Manufacturers

  Corporate America Is Leaving More Jobs Unfilled

  CEOs Celebrate Buffett as He Calls a Close on 5,500,000% Run

  Buffett’s Astonishing Track Record in Five Charts

  Warren Buffett to Remain Berkshire Hathaway Chairman

  How Warren Buffett Changed the Way Investors Think of Investing

  The Buffett View of Trade Deals

  Who Is Gregory Abel, Warren Buffett’s Successor?

  As Buffett Steps Down, Omaha Is Grateful—and a Little Worried

  Erste Acquires 49% Stake in Santander’s Polish Unit for $7.7 Billion

  Sunoco to Buy Canadian Fuel Seller Parkland for $9.1 Billion

  As Iowa Farmers Plant, They Consider Rain, Rates, Tariffs and Trump

  The Antitrust Stranglehold on America’s Tech Sector

  AI Spending Is the Only Certainty in Silicon Valley Right Now

  It’s The End of Cheap Flying as Americans Tire of Budget Airlines

  Tyson’s Profits Jump as Chicken Gains Outweigh Beef Losses

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• Morning News: May 2, 2025
  Eddy Elfenbein, May 2nd, 2025 at 7:01 am

  South Korea Inflation Flat in April, Possibly Paving Way for Policy Easing

  Trump Ends Chinese Tariff Loophole, Raising the Cost of Online Goods

  How a U.S. Tax Loophole Supercharged China’s Exports

  Asia Factory Activity Sputters as Trump Tariffs Hit

  Head of the Port of LA Sees a Brewing Trade Storm

  U.S. Payoff for Ukraine Minerals Deal Faces Many Hurdles

  Eurozone Inflation Holds Close to Target, Lining Up New Rate Cuts to Counter Tariffs

  EU Could Offer to Buy $56 Billion of U.S. Products to End Trade War, Top Negotiator Says

  The Brickbats Keep Coming for Oil Market Bulls

  Exxon and Chevron Report Lower Profits While Girding for Tariffs

  At a Dubai Conference, Trump’s Conflicts Take Center Stage

  The MAGA Cheering Squad Is Losing Faith

  DOGE’s Damage Makes Way for Serious Government Reform

  GDP: A Worthless Number Meets Mindless Economic Policy

  Corporate America Owes the Rest of Us $87 Trillion

  U.S. Job Growth Expected to Have Slowed in April

  Middle-Income Consumers Feel Pinched. That’s Bad for Some of America’s Best Known Brands.

  Home Builders Are Piling on Discounts as They Struggle to Entice Buyers

  Everyone Could Use a Little Rudyard Kipling In Their Financial Planning

  Trump Says Harvard Will Lose Its Tax-Exempt Status

  Colleges Know How Much You’re Willing to Pay. Here’s How.

  NatWest Narrows Guidance After Profit Beat

  Amazon, Apple Show Big Tech Not Immune From Tariff Pain

  Apple to Source Billions of US-Made Chips in Supply Chain Shift

  DuPont de Nemours Sees Tariffs Costing $60M

  BASF Confirms Outlook But Warns of Tariff Uncertainty

  Cigna Group Swings to Profit, Posts Higher Revenue

  Wendy’s Adds to Restaurant Pullback on ‘Challenging’ US Market

  How an Israeli Hostage Negotiator Outsmarts Ransomware Hackers

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• Morning News: May 1, 2025
  Eddy Elfenbein, May 1st, 2025 at 7:06 am

  Trump’s ‘Unprecedented’ Tariffs Lead Japan to Slash Its Growth Forecast

  Why Reciprocal Trade Negotiations Will Fail

  U.S. Economy Shrank in First Quarter, in Reading Clouded by Messy Trade Data

  A Flashing Economic Warning and a Sharp Political Jolt

  Under Trump, Stocks Have the Worst Start to a Presidential Term Since 1974

  Fed Should Ditch Current Policy Framework, Group of Former Top Central Bankers Says

  Musk Says DOGE ‘Should Definitely’ Examine Federal Reserve Costs

  US Economic Weakness Is Being Exaggerated – For Now

  Morgan Stanley Plans to Offer Crypto Trading to E*Trade Clients

  CEO of $41 Billion Payments Giant Swings Series of Megadeals in M&A Standstill

  AI’s Second Boom: How the Next 24 Months Could Transform Your Portfolio

  Zuckerberg Pushes Full Tilt on AI Spending in Face of Economic Uncertainty

  Judge Rebukes Apple and Orders It to Loosen Grip on App Store

  Gates Foundation Is Rattled by Trump’s Threat to Its Mission

  Gen Z’s Hole in the Labor Market Could Soon Grow

  The Rising Cost of ICE Flying Immigrants to Far-Flung Detention Centers

  Blackouts in Spain and Portugal Show the Need to Supercharge Grid Upgrades

  How the U.S. Oil Industry Has Taken a Beating Under Trump, in Charts

  Rio Tinto Shareholders Reject Activist Bid for Review of London Listing

  Chinese Automakers Report Robust Sales Growth in April

  BYD Posts Best Month of Sales Yet in 2025 With Pure EVs a Hit

  European Automakers Scrap Forecasts Amid Tariff Uncertainty

  GM Expects Tariffs to Cost Up to $5 Billion in 2025, Slashes Outlook

  Harley Pulls Guidance Amid Tariff Worries as Sales Tumble

  Lilly Cuts Earnings Guidance on Research Costs, Shares Fall

  Arm & Hammer Owner Church & Dwight Slashes Growth, Profit View as Growth Slows

  McDonald’s U.S. Sales Decline in Shaky Economy

  Hershey Expects Tariffs to Cost Up to $20 Million in 2Q

  As a Shipping Loophole Closes, Small Online Sellers Scramble

  Rory McIlroy Dives Deeper Into Private Equity

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