PCE Stalls at 3.8%, OPEC+ Extends Cuts & Buffett Sits on $350bn
The Fed's favourite inflation gauge hasn't moved in four months. OPEC+ extends cuts to defend oil prices. And Warren Buffett just broke his own record for cash on the sidelines.
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Finance Explained Simply The Brief 3 things that moved markets this week · 4 min read |
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01 Inflation ↑ Sticky PCE Inflation Prints 3.8% — The Fed’s Favourite Gauge Shows No Progress Toward Target in Four Months April’s PCE (Personal Consumption Expenditures) inflation — the measure the Federal Reserve explicitly targets — printed at 3.8% year-on-year. That is virtually unchanged from January’s 3.6%, having barely moved since the Fed began cutting rates in late 2024. Services inflation, led by shelter, insurance, and healthcare, is the culprit: it remains above 5% and is insensitive to higher interest rates in the short run. Why it matters: The Fed targets 2% PCE. At 3.8%, any future rate cuts look premature — and markets are now pricing in no easing before late 2026 at the earliest.
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02 Energy ↓ OPEC+ Holds OPEC+ Extends Production Cuts to Q4 2026 — But the Cartel Cannot Stop the Rise of US Shale OPEC+ agreed to extend its 3.66 million barrel-per-day production cuts through December 2026. Brent crude sat at $71 heading into the meeting — below Saudi Arabia’s $85 fiscal breakeven. The cut extension is a floor-building exercise: OPEC+ needs higher prices to fund its members’ government budgets, but every cut cedes market share to US shale, now pumping at a record 14 million barrels per day. The bigger picture: For energy importers like the UK, Japan, and the EU, lower-for-longer oil is deflationary relief. For the green transition, cheap oil reduces urgency to switch to EVs and renewables. | |
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03 Investing ◆ Signal Berkshire Hathaway’s Cash Pile Hits $350 Billion — Warren Buffett Has Not Found Anything Worth Buying Berkshire Hathaway’s latest filing confirms $350 billion in cash and short-term Treasuries — a new record. Buffett has been a net seller of equities for eight consecutive quarters, trimming Apple, Bank of America, and other core positions. At the S&P’s current valuation of 28x trailing earnings, Buffett apparently cannot find businesses priced attractively enough to deploy capital. The silver lining: That $350bn earns roughly $16bn a year in risk-free Treasury interest at current rates. Buffett’s patience has a yield. He can wait for better prices. | |
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