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Globalization Strikes Back – Economic Shift
Open Terms – Week of May 3–May 9, 2025
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Table of Contents
Our Week in the Market
Stocks: The rally finally hit a speed bump. U.S. equities snapped a 9-session win streak and ended the week slightly lower (S&P 500 down ~0.6%) as trade jitters crept back in. European and Asian markets managed modest gains in a holiday-shortened week, buoyed by local optimism even as Wall Street took a breather.
Bonds: Treasury yields flatlined (the 10-year hovered around 4.4%) as the Fed’s mid-week meeting proved. Even a trademark Truth Social tantrum from President Trump – who blasted Fed Chair Jerome “’Too Late’ Powell as a FOOL” for standing pat – couldn’t stir the bond market. In the UK, the Bank of England delivered a widely-expected 0.25% rate cut in a split decision (a “hawkish cut,” as traders dubbed it) emorningcoffee.co. Net result: global yields barely budged.
Commodities & FX: Commodities staged a comeback after weeks of weakness. Oil prices jumped off recent lows on hopes of easing U.S.-China trade tensions and signs that OPEC’s internal price war may be cooling. Gold caught a safe-haven bid, rising off last week’s lows – a solid gain until a late-week dash into risk assets trimmed its advance. The dollar softened on Friday, giving back some gains, but still notched a small weekly uptick thanks to earlier Fed optimism and upbeat White House remarks.
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Globalization Strikes Back – Economic Shift
In an era when deglobalization was the buzzword, suddenly 2025 is feeling like the year globalization makes a comeback. This week brought a flurry of under-the-radar trade breakthroughs that could quietly reshape economic winds:
US-UK Trade Deal: Washington and London signed a tariff-cutting agreement with great fanfare. President Trump was so giddy he literally urged Americans, “You better go out and buy stock now… [the economy] will be like a rocket ship”. Dry reality check: the deal’s immediate impact is modest (the US actually ran an $11.9 billion trade surplus with the UK in 2024), but symbolically it ends a drought of U.S. trade pacts.
UK-India Pact: Not content with one trade win, Britain also inked a new trade agreement with India. This post-Brexit bolstering of ties gives the UK a toehold in South Asia and India a welcome partner as it jockeys for global manufacturing and services clout. It didn’t grab major headlines, but “Global Britain” finally has a tangible victory to toast (beyond royal weddings and cricket scores).
U.S.-China Tariff Thaw: Here’s the big one. American and Chinese negotiators are meeting in Geneva in an effort to dial back their tariff ware. Word is the U.S. side is prepared to climb down on some tariffs and even offer relief on rare earth suppliese – a remarkable U-turn from the heated decoupling rhetoric of recent years. In other words, the two largest economies might be tiptoeing toward a truce in the trade cold war that has bogged down global growth since 2018.
Why does this matter? If these trade détentes gain traction, it could be a stealthy tailwind for the world economy. Lower tariffs and revived export markets would ease cost pressures and boost corporate earnings in multiple sectors (from autos to agriculture). It’s all happening with surprisingly little fanfare – overshadowed by domestic political dramas – but investors would be wise to keep an eye on this globalization 2.0 trend. In a market obsessed with central banks and tech stocks, an old-fashioned trade boom could be the dark horse that “goes straight up”, to borrow Trump’s rocket-ship imagery morningcoffee.com (just maybe without the same level of hype).
Subcontinental Standoff – Geopolitical Development
Because the world needed another source of heartburn, nuclear-armed rivals India and Pakistan decided to ratchet up tensions this week. Reports surfaced of Indian military strikes on militant targets across the border in Pakistan. Pakistan, predictably, cried foul and vowed to respond in kind – sparking fears of a familiar tit-for-tat cycle in South Asia. The U.S. State Department even felt compelled to issue a travel warning as the skirmishes escalated, which is never a comforting sign between two nations that collectively hold about 200 nuclear warheads.
Markets, however, mostly shrugged at the South Asian saber-rattling. Chalk it up to conflict fatigue – or the assumption that this too shall pass without spiraling out of control. But seasoned geopolitical watchers know that any serious India-Pakistan flare-up could have far-reaching effects. A miscalculation would threaten regional stability, disrupt emerging markets, and send oil prices (and risk aversion) higher in a hurry. For now, cooler heads are hopefully prevailing. Both governments are under domestic pressures – cynics might note a convenient distraction from economic woes – and neither side actually wants to test how markets (or misses) would react to a full-blown conflict. Consider this a simmering background risk: largely ignored by traders this week, but lurking in case things boil over. In a market already juggling trade wars and monetary jitters, a South Asian crisis is the last thing anyone needs – which is all the more reason to keep one eye on it.
Oracle of Omaha’s Farewell – CEO Shuffle
An end of an era snuck in quietly: Warren Buffett is finally (finally, a well-deserved retirement!) stepping back from the driver’s seat at Berkshire Hathaway. The 94-year-old investing legend announced he will retire as CEO of Berkshire, though he’ll stay on as Chairman – because let’s be honest, it wouldn’t feel right if the Oracle of Omaha didn’t still cast a long shadow in the boardroom. Buffett’s impending hand-off to his heir apparent (vice-chair Greg Abel, long groomed for the role) has been telegraphed for years, so markets took the news in stride. Berkshire’s stock hardly flinched, and investors have had ample time to come to terms with the inevitable.
Still, it’s a sentimental milestone. Buffett has been at Berkshire’s helm since 1965 – that’s 60 years of folksy wisdom, folks. In that time he turned a struggling textile company into a half-trillion-dollar conglomerate spanning insurance, railroads, ice cream, and everything in between. Along with the late Charlie Munger, Buffett defined an entire era of value investing. His departure as CEO marks the last of the old guard stepping aside in corporate America (the man literally outlasted generations of Wall Street CEOs).
Expect Berkshire’s culture and steady approach to continue under new leadership – Abel isn’t likely to turn into a meme-stock day-trader overnight. And Buffett isn’t really riding off into the sunset; as Chairman (and largest shareholder) he’ll still have a say, not to mention his ~$100 billion war chest for opportunistic investments. But we’ve officially entered the transition phase. The next Berkshire annual meeting might feel a little different without Buffett’s one-liners on stage and his never-empty can of Cherry Coke. The torch is being passed, even if the old master is still watching closely from the sidelines. For the rest of us, it’s a moment to appreciate that even legends do eventually take a bow – though in Buffett’s case, it’s after an encore lasting about a decade longer than anyone else’s. 🎩
What to Look Forward To Next Week
May 13 – U.S. CPI (April) – The latest inflation report [BLS] lands Tuesday morning. Will price pressures stay on their downward glide path or throw the Fed a curveball?
May 13 – U.S.–Gulf Diplomatic Tour – President Trump kicks off a Middle East visit, starting in Saudi Arabia and Qatar [White House]. Oil traders and geopolitical junkies will watch for any gaffes or surprise deals (arms, oil, or otherwise) from the trip.
May 14 – Cisco Earnings (CSCO) – Networking giant Cisco reports fiscal Q3 results after the bell. A barometer for enterprise tech spending – and AI hype – in the post-PC era.
May 14 – OPEC Monthly Oil Report – OPEC releases its oil market report [OPEC], giving an updated read on global supply/demand. With crude rebounding lately, any signal from the cartel here could sway energy markets.
May 15 – Walmart Earnings (WMT) – Retail king Walmart posts Q1 earnings. Consumers have been pinched by inflation; now we’ll see if Americans kept shopping or traded down to ramen noodles and store brands.
May 15 – U.S. PPI (April) – Producer Price Index [BLS] hits Thursday. Factory-gate inflation has been cooling – further easing could reinforce the “peak inflation is behind us” narrative.
May 18 – Poland Presidential Election – On Sunday, Poland votes in a presidential runoff. The outcome may influence the EU’s stance toward Russia and the strength of Europe’s united front – a sleeper geopolitical event for euro watchers.
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