What to know today

  • So much Fed-speak this week.
  • Berkshire sees value in Apple. 
  • So, Saylor says to Buffett…
markets

The Slowdown We’ve Been Waiting For

Wage-growth pressures appear to be easing.

Investors, traders, and speculators bid up stocks on Friday in renewed anticipation of a September rate cut after the April employment situation report from the Bureau of Labor Statistics showed some softening in the labor market.

By “softening” we’re talking about an economy that added 175,000 jobs last month and an unemployment rate that ticked up to 3.9 percent from 3.8 percent.

It’s true that hiring slowed compared to March. But that number was revised upward to 315,000. And the unemployment rate has been below 4.0 percent for more than two years, the longest such streak since the 1960s.

The labor force participation rate was stable at 62.7 percent.

Average hourly earnings were up 0.2 percent from March and 3.9 percent year over year, trailing forecasts of 0.3 percent and 4.0 percent but giving further comfort to those hungry for signs of easing inflation pressures.

Is this the slowdown we’ve been waiting for?

Average hourly earnings growth slowed to 0.3 percent month over month and 3.9 percent year over year in April.

Coming off a fortnight of relative quiet leading up to last week’s Federal Open Market Committee meeting, this week is full of speeches by central bankers.

Richmond Fed President Tom Barkin and New York Fed President John Williams are up today.

If one appearance more than any other is likely to move markets, it’s Minneapolis Fed President Neel Kashkari’s conversation with New York Times Federal Reserve and economics reporter Jeanna Smialek at the Milken Institute’s annual conference tomorrow at 11:30 a.m. ET.

We’ll also hear from Fed Vice Chair Philip Jefferson, Boston Fed President Susan Collins, and Fed Governor Lisa Cook on Wednesday.

San Francisco Fed President Mary Daly speaks on Thursday.

Fed Governor Michelle Bowman, Chicago Fed President Austan Goolsbee, and Fed Vice Chair for Supervision Michael Barr close out the week with public appearances on Friday.

Investors, traders, and speculators will of course want to know what the latest numbers mean for their inflation forecasts.

As far as incoming data, we’ll see consumer credit for March on Tuesday, wholesale inventories for March on Wednesday, initial jobless claims for the week ended May 4 on Thursday, and the University of Michigan consumer sentiment index for May and monthly US federal budget figures for April on Friday.

Earnings reporting will continue – and numbers so far have been good for morale – with Palantir Technologies $PLTR and Tyson Foods $TSN up today.

BP $BP, Occidental Petroleum $OXY, and Walt Disney $DIS will report on Tuesday. Airbnb $ABNB, Anheuser-Busch InBeV $BUD, and Uber $UBER are up on Wednesday. 

Warner Bros. Discovery $WBD reports on Thursday and Honda Motor $HMC. reports on Friday.

deep dive

The Oracle Has Spoken

He still likes AAPL.

Warren Buffett hosted Berkshire Hathaway’s $BRKA $BRKB annual meeting over the weekend, the first without his longtime partner Charlie Munger.

Buffett marked the occasion by broadcasting for the first time ever the annual meeting movie that’s usually reserved for shareholders.

It was a loving tribute to an accomplished investor and a legitimate thought-leader, Buffett highlighting Munger’s advocacy of BYD $BYDDY and Costco $COST

“Charlie in all those years, only two times said, 'Buy, buy, buy.' BYD was one of them, and Costco was the other. Looking back, I should have been more aggressive in Costco. He was right, big time, in both companies.”

Buffett copped to other mistakes, including a major wipeout in Paramount Global $PARA.

“I was 100 percent responsible for the Paramount decision,” Buffett explained. “It was 100 percent my decision, and we’ve sold it all, and we lost quite a bit of money.”

Berkshire also sold some Apple $AAPL shares, its position down to $135.4 billion at the end of the first quarter from $174.3 billion at the end of 2023. Berkshire also sold some AAPL shares during the fourth quarter.

But AAPL is no mistake in Buffett’s eyes.

Apple $AAPL was up nearly 6 percent on Friday, May 3, 2024, its best day since November 30, 2022.

Buffett described Apple as “an even better business” than either American Express $AXP or Coca-Cola $KO and said “unless something extraordinary happens” Berkshire will own AAPL, AXP, and KO when his designated successor Greg Abel takes over.

And it’s “extremely likely” that AAPL will remain Berkshire’s biggest holding at the end of 2024, Buffett said. He also said that the iPhone may be one of the greatest products of all time.

AAPL was up nearly 6 percent on Friday – it’s best single-day move since November 30, 2022 – as the market absorbed news of the biggest stock buyback announcement ever.

It was trading higher early in the pre-market on Sunday evening, as it continues to recover from a selloff that had taken it down more than 10 percent year to date before its earnings announcement.

Keys for AAPL remain its position in China – CEO Tim Cook is optimistic after a revenue beat in the market – and its plans for artificial intelligence.

We’ll look forward to hearing more about those issues and many more during Apple’s annual Worldwide Developers Conference June 10 through June 14.

And AAPL’s “Let Loose” product event – which could include a new iPad launch – is happening tomorrow at 10:00 a.m. ET.

deep dive |
May 6, 2024

The Oracle Has Spoken

CRYPTOCURRENCY

Bitcoin for Berkshire!

Michael Saylor has a recommendation for Warren Buffett.

Bitcoin $BTC traded down into the $56,000s last Thursday, well off its March rise up into the $73,000s, before rallying over the weekend back into the $64,000s.

It was a wild week for the world’s No. 1 cryptocurrency, highlighted by a renewed commitment from perhaps its most aggressive evangelist, MicroStrategy $MSTR executive chair Michael Saylor.

In a series of tweets over the weekend, Saylor BTC’s emergence and that it represents hope for Buffett’s Berkshire.

MicroStrategy $MSTR executive chairman Michael Saylor has a recommendation for Warren Buffett and Berkshire Hathaway $BRKA $BRKB.

Late on Sunday, Saylor noted that the Bitcoin network has now processed more than 1 billion transactions.

“Eight hundred weeks and one day after Bitcoin launched on January 3, 2009, with the minting of its genesis block,” writes The Block’s Zack Abrams, “the world's most valuable cryptocurrency has surpassed one billion processed transactions.”

According to my go-to crypto analyst, Louis Sykes of All Star Charts, we could be coming up on more volatility for BTC.

Bitcoin $BTC is facing a challenging technical setup, with the 60,000 level a key area of support.

“From a pure technical lens,” Louis writes, “we're setting up for a nasty downside resolution in price action.

“Bitcoin's 20 and 50-day averages are now both definitively sloping down. Prices have formed their first lower high and are now on the cusp of breaking below all this key support. I'm looking at this 60,000 area which coincides with the bottom end of this range which also coincides with the [anchored volume-weighted average price] off the post-ETF selloff lows.”

Let’s keep an eye on that $60,000 level.

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