The clock is ticking—investors have precious little time to glean a few more lessons from billionaire investor Warren Buffett, who made the surprising announcement that he’s giving up the reins of Berkshire Hathaway at
the end of the year.
He always said to be fearful when others are greedy and greedy when others are fearful. But with the crowd switching between those two sentiments every five minutes, the current climate must be a challenge even for the Sage of Omaha.
The good news is that the S&P 500 managed to recover from the losses it suffered after President Donald Trump’s Liberation Day tariffs were announced at the beginning of last month. It’s not clear what happens next.
After a bumpy start to the year, a recession can’t be ruled out. But Friday’s jobs report was clearly a good sign that the real economy is still holding firm.
Federal Reserve Chair Jerome Powell’s thoughts on the
outlook will be particularly valuable when he announces the latest interest-rate decision Wednesday. No change is forecast, but the market is expecting reductions to start coming as early as next month.
Powell also finds himself under fire from the president, who reiterated that he’d like rate cuts immediately and that Powell can’t depart soon enough—though Trump doesn’t plan to dismiss him.
And there are more big earnings to come this week. Chip maker Advanced Micro Devices will be asked how tariffs will affect business, though they’ll likely respond like the rest of Big Tech—no one really knows. Oil producer Occidental Petroleum—one of Buffett’s big picks—also reports just after the Organization of the Petroleum Exporting Countries pledged to boost
production, sending crude prices lower. Earnings from Disney may have something to say about the latest tariffs proposal on movies made overseas.
Berkshire’s huge cash pile puts successor Greg Abel in a decent position, and its stock is hovering around record highs. But that’s still a heavy weight on the shoulders for any replacement from a group of investors also hungry for further Buffett wisdom.
—Brian Swint
*** Join Barron’s senior managing editor Lauren Rublin and deputy editor Ben Levisohn today at noon when they talk with Andrew Bary, Barron’s resident “Buffettologist,” to share his insights about the company’s future, and other investment topics. Sign up here.
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Trump Wants a Rate Cut. That Wish Likely Won’t Come This Week.
Just days ahead of the Federal Reserve’s next interest-rate decision,
President Donald Trump repeated his wish that Chair Jerome Powell cut the benchmark rate, but also said Sunday he wouldn’t replace Powell before his term ends in 2026. The Fed is unlikely to meet his demands.
- Lower rates could boost stocks, reflecting positively on Trump. The president has said in recent days that since there isn’t any inflation (the personal consumption expenditure index was flat in March and up 2.3% for the year), the Fed can cut rates. Powell has said they can go slowly.
- Trump suggested that Powell is deliberately holding out on cutting rates. “He’d rather not because he’s not a fan of mine,” Trump told NBC News. “He just doesn’t like me because I think he’s a total stiff.” Asked whether he planned to remove Powell before his term ends, Trump said no.
- Trump blamed predecessor Joe Biden for recent data that showed the economy retracted in the first quarter but he is embracing the good economic news. The Fed has been concerned about the effects of Trump’s high tariffs and immigration crackdown on inflation.
- Sameer
Samana, head of global equities and real assets at Wells Fargo Investment Institute, told MarketWatch other Republican economic policies, including tax cuts and deregulation, could also stimulate economic growth and potentially inflationary growth.
What’s Next: The CME FedWatch tool sees a 96% chance of the Fed keeping rates steady this week, and three cuts this year. Investors will listen for clues on a possible June cut, but the Fed could wait until a 90-day pause on Trump’s so-called reciprocal tariffs ends in July.
—Liz Moyer
Berkshire
Hathaway Without Buffett Is Likely to Change
Warren Buffett’s plan to depart as Berkshire Hathaway CEO at the end of the year has everyone guessing how the conglomerate will change after Buffett’s 60-year run. Greg Abel, 63, will get the top job at an age when many CEOs are retiring. But the energetic executive seems poised for a long run.
- One change under Abel could be Berkshire paying a dividend, perhaps as early as 2026 given its record cash reserves of nearly $350 billion as of March 31. Buffett has long opposed a dividend, but it may be tougher to make that argument with a new CEO.
- Abel has been waiting for the job since 2018, when he was named a vice chairman for non-insurance operations. His new job could see management changes. Insurance chief Ajit Jain, 73, could retire, to be succeeded by Joe Brandon, who joined Berkshire in 2022 with the purchase of Alleghany.
- The fate of Berkshire’s nearly $300 billion stock
portfolio also is unclear. Many Berkshire followers had assumed that investment managers Todd Combs and Ted Weschler, who now run about 10% of it, would take over, but Buffett wants Abel to oversee the equity portfolio just as he has done.
- Abel knows the utility and energy businesses very well, having headed Berkshire’s energy unit before coming to the parent company. Those could be areas for deals, including possibly buying the rest of Occidental Petroleum, in which Berkshire holds 28%. Buffett has said Berkshire isn’t interested in owning all of it.
What’s Next: While many investors own Berkshire shares for their association with Buffett, one thing that is unlikely once he leaves is a corporate breakup. Buffett opposes it and his three children, who will control his stock after his death through a foundation, probably will follow their father’s wishes.
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