China services activity slips
China’s services sector weakened in April, with activity dropping to 50.7, the lowest point in seven months, largely influenced by the effects of U.S. tariffs
- This underwhelming performance is likely to intensify concerns that the economy may face a sharp slowdown in the second quarter
- A component index tracking future business expectations declined to its second-lowest reading since inception in 2005, with only February 2020, at the onset of the Covid crisis, showing a weaker figure
- According to a Bloomberg survey, economists predict GDP growth will slow to 4.2% in 2025 — well below the government’s roughly 5% goal, which Finance Minister Lan Fo’an recently reiterated
- To cope with the economic slowdown, China’s central bank cut its policy rate and lowered the reserve requirement ratio
End of an era: Warren Buffett’s retirement
Warren Buffett, the “Oracle of Omaha,” retires after over 60 years leading Berkshire Hathaway. The company is a symbol of long-term value investing and financial discipline:
- Legendary investor: transformed Berkshire from a failing textile firm into an $800+ billion conglomerate
- Famous for his “value investing” philosophy and maxims like “be fearful when others are greedy“
- Designated successor: Greg Abel, current Vice Chairman overseeing non-insurance operations. Has been in Berkshire since 2000, known for prudent management and high alignment with Buffett’s values
- Buffett will remain in a symbolic role as advisor
Federal Reserve: defying Trump
Federal Reserve is expected to hold rates steady despite continued pressure from President Trump and concerns about a possible economic slowdown
- Last Friday’s job report provides comfort to Powell as Non-farm payrolls for April showed a healthy jump of 177k units – as long as labor market holds firm the Fed can justify keeping rates unchanged
- Unemployment rate was confirmed at 4.2%
- Fed’s favorite inflation gauge showed price pressures continued to slowly ease, even if tariffs risk upending progress – core PCE for March at 2.6% year-on-year (down from 2.8% in February)
- Several other Central Banks are scheduled to for the coming week – rate cuts are anticipated in the UK, Poland and Brazil whilst no changes are expected in Sweden and Norway
Turmoil in Romania
Romania’s prime minister Ion Marcel Ciolacu announced his resignation after George Simion, the far-right opposition leader, scored a first round presidential victory over the weekend
- Sunday’s contest was the second attempt to chose a president after the shock victory of another far-right candidate in November prompted accusations of Kremlin interference with the top court cancelling the ballot
- Simion will face independent centrist candidate Nicușor Dan in a runoff on May 18, after the ruling coalition’s candidate was unexpectedly eliminated
- Romanian assets sold off sharply, with local and external bonds underperforming and equities slumping
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