This Week in Barrons: 5.11.2025

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• Warren Buffett’s annual conference did not disappoint. The Oracle of Omaha stunned Berkshire Hathaway shareholders Saturday when he told them, at the company’s annual meeting, that he plans to retire from his job as CEO at the end of the year. The reason there is so much attention on Buffett’s annual meeting is because of his stellar performance over the years.  Per Adam Kobeissi: “Since 1964, Berkshire Hathaway has returned over 5,500,000%.  That's 5.5 million percent.  A $10,000 investment in 1964 would be worth $550 million today.  This compares to a ~39,000% return in the S&Ps since 1964.  Buffett has outperformed the S&Ps by over 140 times.”  In his last rant, he talked about governments devaluing currencies at rates that are breathtaking.  He called out the printing of money as a major cause for concern.  Warren Buffett is stepping away as one of the greatest to ever do it.  There will be plenty of people vying to replace him, but my bet is that the next Warren Buffett will be nothing like the current one. 

• Try Lowering your Expectations … Maybe you deserve something, and you may even be entitled to it.  Unfortunately, expectations are a story we tell ourselves, and that story is totally made-up by us.  Per Seth Godin: A simple life hack is to lower your expectations, regardless of what you’re entitled to.  This will create the conditions for the outcome you seek, but leave yourself room if it doesn’t arrive.  Lowering your expectations is a way to ensure that tomorrow is even better than you had hoped.

• The GENIUS Act, legislation aimed at regulating stablecoins … hit a roadblock in the Senate when it failed to clear a key procedural hurdle.  The bill went down 48-49, with Democrats unanimously opposing it over concerns about former President Trump's cryptocurrency ties.  Three Republicans - Rand Paul, Josh Hawley, and Majority Leader John Thune - voted against it.  However, Thune's ‘No’ vote was strategic, allowing the bill to be reconsidered at a later date.  The bipartisan effort fell apart when Democrats pushed for tough anti-corruption measures, including rules that would stop elected officials (and family members) from dealing in crypto. It completely unraveled when Senator Elizabeth Warren and others voiced frustration about being asked to vote without being able to see the final version of the bill.  Senator Tim Scott expressed disappointment, saying that both parties missed a chance to work together on important tech regulations. 

• OpenAI will maintain non-profit control … as it transitions its business arm into a Public Benefit Corporation (PBC).  This marks a major reversal of its previous plans to become a for-profit entity.

• Global liquidity is just ramping up … “China's central bank cut their interest rates, and injected 1 trillion yuan 3 hours after agreeing to trade talks – to prop up their economy and give themselves ammo for tariff negotiations.”

• OpenAI is planning to cut its revenue share … to Microsoft and other partners – post-restructuring.

• Cisco unveiled an Entanglement Chip … that would allow quantum computers to be networked together and enable distributed quantum computing to speed up its practical timeline.

• The point was simple enough… Eddy Cue (SVP for services at AAPL) simply mentioned that adding AI-powered search to his company’s Safari browser – is inevitable.  [FYI: If Google loses both Chrome and Safari, could Google be one of the big losers in the AI business shake-out?]

• Ford is the first major automaker to do T-Tariffs price hikes … raising the price on three models it produces in Mexico by as much as $2,000.

• The Commercial Real-Estate crisis is worsening … as delinquency rates for office space rise to 10.3%.  [FYI: Delinquency rates during the Housing Crisis were only 10.7%.]  Current Multifamily delinquency rates have surged to their highest level since 2015, and mortgage delinquency rates have jumped to their highest level since January 2021.

• In 2027, Apple will introduce Meta Ray-Ban-style smart glasses …. with an in-house chip.

• Bill Gates will close Gates Foundation in 2045 … after donating 99% of his fortune.

• U.S. labor productivity fell -0.8% in Q1 … its first drop since 2022 – as GDP output sank -0.3%.

• Fortnite is BACK in the Apple Store … as a partial court win has weakened Apple’s grip on in-app payments.

• Google will pay $1.4B to settle 2 Texas lawsuits … that it secretly tracked users' locations, biometrics, and searches.  This marks one of the largest state-level privacy settlements ever.

• Bitcoin Scarcity Alert … In 2025, 9 TIMES more Bitcoin has been bought than mined – the supply squeeze is coming.

• New Hampshire (The ‘First in the Nation’ State) just became … the first state in the U.S. to have signed a law allowing for a Bitcoin (BTC) reserve.

• Global liquidity and cheap capital benefit Bitcoin the most …  as we enter another round of pseudo-QE, Bitcoin should push much higher.  After all, there is more capital pouring into Blackrock’s Bitcoin ETF than into the largest Gold ETF.

• Coinbase acquires Deribit (a major crypto options platform) … for $2.9B.

• Meta will use stablecoins … to manage its platform payouts.

• Wednesday:  Our FED (as expected) announced no changes to monetary policy today. Rates remain the same, but what didn't remain the same was the verbiage in the statement.  #1: Risks associated with higher unemployment and higher inflation have increased.  #2:  Risks surrounding the upcoming fiscal and geopolitical outlooks have also increased.  Between no cut and Trump calling Powell a “loser”, markets took a bit of a hit this afternoon.

• Friday:  Trump and U.K. Prime Minister Starmer announced a limited bilateral trade deal that leaves in place Trump's 10% tariffs on British exports, modestly expands agricultural access for both countries, and lowers prohibitive U.S. duties on British car exports.  Markets are now focused on the outcome of this weekend’s trade talks between China and the U.S.  Trump is expecting substantial progress on a U.S. / China trade agreement, and predicting that punitive U.S. tariffs on Beijing of 145% will likely come down to between 60% and 80%.

• Tariffs + Weaker Dollar + U.S. Manufacturing … The U.S. Dollar is the global reserve currency, and because of that we've had to run trade deficits.  When you're the world's reserve currency, everyone needs dollars, but their demand is ‘un-natural and non-organic’.  This artificial demand keeps the Dollar’s value high, but when your currency is high – you can't compete with lower cost nations.  This has caused our country’s manufacturing base to decline, because our goods cost too much for the rest of the world.  So, countries take our Dollars, build their own plants, and make their own stuff – cheaper.  Pres. Trump isn’t pushing for rate cuts to spur buying, but rather to weaken the dollar – especially given the $9T in debt refinancing we need to do.  The changes include drawing some manufacturing back to the U.S. by leveling some of the playing field(s) with tariffs.  If we can negotiate a ‘proper’ tariff with our trading partners, we'd have: a weaker dollar + more manufacturing + tariffs that are off-setting trade deals.  It’s a big gamble, and will require a lot of pieces to fall into place at the right time – and the U.S. has never been all that good at timing global economies & markets. 

• Factually: This rally has stalled at resistance, and seasonality is signaling that downside risk is imminent.  However, the risk-off signal is fragile, and could switch quickly from bear-to-bull at any time.  The word ‘Recession’ is on every earnings call, and could become a self-reinforcing prophecy.  Overall, a bull-bear stalemate has set in.  Per Callum Thomas: This market is sitting on a window of optimism and anxiety, our floor and ceiling have been set, and there’s an explosive third option lying in wait.

• Markets will move on tariff news…  making markets dangerous because they can move a long way, quickly, and on a small catalyst. 

• Our FED is awaiting more data, and saying nothing … which is a risk in and of itself.  But, it’s not clear that markets know anything, because the Volatility Futures are showing the exact same number(s) through September.  [FYI: Yes, that’s weird.] 

• Boring markets cause traders to get ‘punchy’ and force trades …  when they should be taking their foot OFF the gas.  Currently volume is very low – which only amplifies small moves.  We still have a $130 Expected Move for next week, and that adds enough excitement to make this market – ‘dangerous’.

• The S&P (SPX = $5668) Expected Move (EM):

  - Last Week’s EM = +/- $127 … and we moved ~$20.

  - Next Week’s EM = +/- $130 … and we are waiting on every tariff tweet.

• TIP #1: Buy more Bitcoin (IBIT) and Gold – then sit back and enjoy the show.

• HODL’s: (Hold-On for Dear Life)

  - (+) PUBLIC.com Bond Portfolio (7.74% yield) / TLT (10-year T-Bills)

  - (+) IBIT – Blackrock’s Spot Bitcoin ETF ($58.7 / in at $24)

  - (+) Physical Commodities = Gold @ $3240/oz. & Silver @ $32/oz.

  - Bitcoin (BTC = $103,600 / in at $4,310)

  - Ethereum (ETH = 2,350 / in at $310)

  - (+) GLD – Gold ETF ($306.7 / in at $212)

• Options for Income:  De-Risking a Portfolio… (using IBIT for example)

  - BUY-n-HOLD the IBIT ETF

  - BUY PUTs: 1 Std. Dev. Lower, Expiring = 3-weeks away, OTM (out-of-the-money) for protection.

  - SELL Covered CALLs: 0.75 to 1 Std. Dev. Higher, Expiring = 2-weeks away, OTM for income and to finance the PUTs.

• ‘De-Gen’ Economy:

  - Singapore (SE = $139 / in at $107)

   

  Please be safe out there!

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