Breakfast News: Fed Back in Focus

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1. Interest Rate Decision

The Federal Reserve will decide on interest rates at its FOMC meeting Wednesday, to be followed by a press conference hosted by Fed chair Jerome Powell. The economic signs are mixed, with GDP down and inflation up, but April employment figures were better than hoped. The full effect of global tariffs is yet to feed through to the underlying data.

• "Today's number should remove any doubt that they are on hold next week": Writing about the latest jobs report in a Friday note, Michael Feroli at JPMorgan (JPM 2.22%) thinks we'll see no change and adds "the bar for cutting is now even higher for June." The CME Fedwatch tool this morning shows a 98% chance of rates remaining unchanged this week, with a 34% likelihood of a cut in June. 80% of respondents predict lower interest rates by July.
• Presidential pressure: President Trump continued to urge for a cut, writing "No inflation, the Fed should lower its rate!!" on Truth Social on Friday.

2. Warren Buffett to Hang Up His Hat

Berkshire Hathaway (BRK.B 1.76%) CEO Warren Buffett closed Saturday's annual shareholder meeting with an announcement. He'll retire at the end of the year and hand over the reins to his already-named successor Greg Abel. Answering shareholder questions, Buffett said "We should be looking to trade with the rest of the world," adding "and we should do what we do best, and they should do what they do best."

• Closed Friday on an all-time high: Berkshire revenue and earnings missed expectations, but those measures don't reflect its underlying health. The company's cash pile reached $347.7 billion with no share repurchases in the quarter, and investors will want to see how it's used. Berkshire stock looks set to open a couple of percent down today.
• "I would still hang around, and could conceivably be useful in a few cases": Buffett says he has no plans to sell any Berkshire stock, as he played down recent market volatility. Let's leave the last word to him: "The long-term trend is up."

3. S&P 500 Winning Streak

Friday marked the S&P 500's longest run of gains in 20 years. It's now ahead of market close on April 2, having recovered its losses since President Trump's big tariffs announcement sent markets into tailspin. The president hinted over the weekend that some trade deals could be struck this week, though he said there's no meeting with Chinese President Xi Jinping currently planned.

• Stock futures cooling: After a rally Friday with hopes for trade talks between the U.S. and China growing, S&P 500 and Nasdaq futures were both down 0.7% at the time of writing Monday morning.
• Economy weighing on markets: With GDP contracting in the first quarter for the first time in three years, recession fears are back in the headlines. Two quarters of GDP falls are typically taken as a sign, though a recession is defined as any economywide decline that lasts more than a few months. March's trade deficit figure is due Tuesday.

4. Pick of The Week's Earnings

Realty Income (O -0.47%) will report its first quarter after the closing bell today, after missing earnings expectations in each of the last four quarters. Investors will want to see how the company's recent debt refinancing might affect the outlook for this year. Dubbed "The Monthly Dividend Company," it offers a 5.7% forecast annual dividend yield. Ford (F 0.93%) also reports after today's close, as the motor industry feels tariff pressure.

• Up 267% in 5 years: MercadoLibre (MELI -0.74%) posts a Q1 update Wednesday following a strong finish to 2024. Q4 saw revenue rise 37% with adjusted earnings per share up 288%, both easily beating expectations. Advanced Micro Devices (AMD 2.18%) reports the same day, as global chip competition escalates.
• Earnings beats in 3 of the past 4 quarters: Thursday brings Q1 results from Shopify (SHOP 2.34%), with all four quarters this year forecast to come in ahead of their respective 2025 quarters.

5. Foolish Fun

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