US Markets Dip as Buffett Retires and OPEC Ramps Up Output

May 5, 2025

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Market Moves:

US futures declined after a nine-day winning streak, the longest since 2004. Russell 2000 futures led losses, down over 1%.
Bond futures gained despite yields rising 12.5 basis points post-strong jobs data.
Oil prices fell sharply, with Brent crude dropping below $67/barrel after OPEC+ agreed to increase output.

Corporate Highlights:

Warren Buffett announced his retirement from Berkshire Hathaway, effective year-end. Shares fell nearly 2.5% pre-market.
Shell is reportedly considering acquiring BP, with shares up 2% in London trade.
Ford, Palantir, and Tyson Foods are among companies reporting earnings this week.

Currency and Trade:

The Taiwanese dollar surged 7% against the USD in two days, prompting central bank intervention warnings.
President Trump hinted at imminent trade deals, potentially lowering China tariffs, though specifics remain unclear.
Trump proposed a 100% tariff on foreign-produced films, targeting Hollywood’s globalised production.

Central Bank Watch:

Fed, BoE, Norges Bank, and Riksbank meetings this week are expected to strike a cautious tone amid growth-inflation trade-offs.
DZ Bank’s Sonia Martin noted dollar weakness is pressuring currencies like the Swiss franc and Taiwan dollar, with potential intervention risks.

Commodities:

OPEC+’s faster-than-expected supply hike (411,000 bpd from June) signals a strategic shift toward market share over price stability.
Goldman Sachs and Morgan Stanley revised Brent forecasts downward, citing oversupply concerns.

Actionable Insights:

Monitor Berkshire Hathaway’s capital allocation under new CEO Greg Abel, given its $350 billion cash pile.
Watch for potential FX interventions if dollar weakness persists, particularly in Asia and Europe.
Energy sector M&A activity (e.g., Shell-BP) may accelerate amid lower oil prices.

The week ahead hinges on central bank communications and trade deal developments, with disinflationary pressures from oil adding complexity to the Fed’s calculus. Investors should brace for volatility in equities and currencies as positioning adjusts.

“In bear markets, stocks usually open strong and close weak. In bull markets, they tend to open weak and close strong.” – William J. O’Neill

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