US Market cont'd to soar this week ? What gives ?
Despite a weak US Non-farm payroll report for April 2025, US market closed off May’s first trading week on a high note. (see below)
On Fri, 02 May 2025 when 4pm came a-knocking:
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DJIA: +1.39% (+564.47 to 41,317.43).
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S&P 500: +1.47% (+82.53 to 5,686.67). Erased post-'liberation day' losses as it logs longest winning streak since 2004.
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Nasdaq: +1.51% (+266.99 to 17,977.73).
US Non-farm Payroll (April 2025).
Below is what most prints have reported, about US’s April 2025 non-farm payroll data:
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Latest Nonfarm Payrolls (key indicator of economic health) showed an increase (?) in employment numbers.
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Actuals came in at 177K, ‘showing’ a growth in the number of people employed in April, excluding the farming industry.
This is “irresponsible” reporting.
This is because:
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Firstly, March 2025 non-farm payroll was a downward revision to 185,000 jobs from earlier 228,000 jobs
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It has been overstated by 43,000 jobs.
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For April 2025, there was no ‘increase’ jobs but a smaller ‘loss’ of -8,000 jobs.
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US Non-farm payroll has been falling since February 2025, the month after Trump’s inauguration.
Trade War Thaws.
A more plausible reason for US market rally was the first sign of trade-war thaw between US and China. (see below)
On Fri, 02 May 2025 a spokesperson for China’s Commerce Ministry issued a non-committal statement stating that “US has recently sent multiple messages to China thru’ relevant parties, hoping to start talks with China and China is evaluating this.”
In a subtle tone shift:
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There was no outright denial unlike past occasions when each time Trump mentioned about speaking to China about the ongoing tariffs.
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It acknowledged receipt of US’s request, is evaluating and that could open the door for negotiations.
It is a fact that the trade war unilaterally initiated by US is hurting everyone, including US themselves.
It has its Q1 2025 GDP (preliminary) data of -0.3% to show for.
Now that US is able to slip a note pass China’s Red gate, comes the tricky part on how China is able to open the gate without admitting defeat.
Trump on his part better know:
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When to keep his big mouth shut if ever a negotiation is staged.
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Show restraint and not behave like a thug.
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Most important keep his (disgrace) vice president out of sight.
The Week Ahead.
The week of May 05 - 09, will still fall squarely on (a) Economic reports and (b) Quarterly earnings.
(1) Economic Activities / Reports.
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Tue, 06 May 2025 - US Trade Balance report.
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Wed, 07 May 2025 - FOMC press conference.
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Thu, 08 May 2025 - US weekly jobless claims.
(2) Quarterly Earnings.
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Mon, 05 May 2025 - $Palantir Technologies Inc.(PLTR)$, Ford Motor Company (F).
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Tue, 06 May 2025 - $Advanced Micro Devices(AMD)$. Energy Transfer (ET),
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Wed, 07 May 2025 - $Novo-Nordisk A/S(NVO)$, Walt Disney (DIS), Arm Holdings Plc (ARM), Applovin Corp (APP), Fortinet (FTNT), Occidental Petroleum (OXY).
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Thu, 08 May 2025 - ConocoPhilips (COP), Shopify (SHOP).
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Fri, 09 May 2025 - Enbridge Inc (ENG).
Looking at the curated list of companies reporting their earnings this week, technology stocks are the mainstream, followed by energy.
My viewpoints: (mine only).
(1) CME Fedwatch tool.
It is widely expected that US central bank will hold rates steady at 4.25 -4.5% for May 2025.
CME Fedwatch tool’s probability of interest remaining unchanged has increased from 91.1% (as of 28 Apr 2025) to 97.2% (as of 03 May 2025). (see below)
So, no surprises from the Fed come Wed, 07 May 2025.
Question is - how will Wall Street reacts to this at the 2pm press conference post FOMC meeting when Fed chair Mr Powell will socialize with media and provide insights to committee’s decision.
If Mr big mouth verbal diarrhoa on Truth Social about interest remaining status quo, it will again, have a negative impact on the market.
(2) Earnings’ Guidance for Q2 2025.
One of the energy stocks that I will be watching closely this week will be $Occidental(OXY)$, due to its intertwined relation with $Berkshire Hathaway(BRK.B)$. (see below)
Lately, rumours of Berkshire Hathaway “buying” Occidental Petroleum began swirling again.
Afterall, Berkshire Hathaway (or Warren Buffett) have been consistently buying up stakes in this energy stock with its latest purchase dating back to February 2025. (see below)
According to regulatory filing. the Nebraska-based conglomerate scooped up 763,017 shares of the Houston-based energy company for $35.7 million, making Berkshire Hathaway - Occidental’s biggest investor, holding a 28.2% stake.
However, it is interesting to note that OXY is one of Warren Buffett’s worst investments over the past decade.
Its share price hit its lowest level since 2022 in early trading on Wed, 08 Apr 2025 at $36.11 per share (see below)
Thankfully with the recent onset of euphoria in the US market, OXY has regained some lost grounds.
As estimated by Barons, Berkshire Hathaway, is sitting on about a $5 billion paper loss on the Occidental holding, that totals 265 million shares, or a 28% stake in the big energy company.
OXY’s CEO, Vicki Hollub would love for the takeover because :
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Financial Strength & Stability: Berkshire Hathaway has the resources to buy the remaining shares of Occidental, offering financial security and the ability to support Occidental’s long-term projects.
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Strategic Alignment: Berkshire is already Occidental’s largest shareholder, and has consistently increased its stake, signaling strong confidence in Occidental’s management and assets.
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Operational Synergies: Berkshire’s expertise in energy and utilities, as well as its appreciation for Occidental’s investments in carbon capture and its strong position in the Permian Basin, align well with Occidental’s strategy and future growth plans.
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Market Conditions: With Occidental’s share price down significantly from its highs and oil prices at recent lows, a buyout at a premium could be attractive for shareholders and ensure stability amid industry volatility.
Will Berkshire Hathaway bite, given that Mr Buffett has officially announced Greg Abel will be running Berkshire Hathaway henceforth. New rein, new ruler, new rules?
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Do you think Berkshire Hathaway will buy up Occidental Petroleum ?
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Do you think Berkshire Hathaway investment style will evolve with a new CEO ?
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But if inflation is running at 5%, your purchasing power actually drops by 2%.
“Wages are up!” → Technically true, and sounds positive
“Real wages are down!” → Also true, but paints a different picture
Both statements use the same data — the difference is in what’s highlighted and what’s left out. That’s the power, and the problem, with statistics.
“Trump on his part better know:
When to keep his big mouth shut if ever a negotiation is staged.”
Pls "Re-post" so that more get to know. Tks! Rating is important (to me).
Consider "Follow me" and get first hand read of my Daily new posts? Thanks!). Tks!!
Indeed, majority is, but some is tumbling.
Great article, would you like to share it?
Nice