Category: Daily Instagraph

Financial markets react to the fact that the Iran conflict is unresolved as hostilities continue. Brent futures for year-end are moving back toward $95 this morning, and the whole curve has shifted higher. What stands out is the lack of reaction in equities. Despite higher oil and rising inflation expectations, US stocks remain near highs. … Continued

Berkshire Hathaway is now sitting on close to $400bn in cash. Put differently, this is enough to buy almost any company in the S&P 500 — 478 of the 500 companies are smaller than Berkshire’s cash pile. In Europe, this war chest would also allow Berkshire to take out names like LVMH, Volkswagen and Sandvik … Continued

The gap between profit margins and free cash flow is increasingly linked to AI capex. Large technology companies are investing heavily in infrastructure—data centers, chips, and energy—to support AI. This is starting to show in the numbers: earnings remain strong, but free cash flow is under pressure as cash is reinvested. In that sense, parts … Continued

The UAE’s exit from OPEC weakens the cartel structurally, but markets are focused elsewhere: the Iran conflict and the Strait of Hormuz. The impact is already visible. Inflation expectations are rising and rate expectations have shifted sharply. US rate cuts this year are no longer expected by investors, while investors are pricing two hikes by … Continued

Is the market right to look past the conflict in Iran? With Brent at $108 and risks around the Strait of Hormuz, the concern is real. But as John Authers writes in Bloomberg Opinion, the more structural driver remains earnings. 12 months forward profits have been revised up by roughly $600bn in four months (+12%), … Continued

The Strait of Hormuz highlights a clear asymmetry: the US is largely insulated, Europe moderately exposed, and Asia highly dependent—China and India most of all. As political economist Shirley Ze Yu argues, China is caught in a trilemma it cannot escape: it cannot afford an Iranian victory, it cannot afford an Iranian defeat, and it … Continued

Since the recent peak, US technology stocks are down only around 2%, yet valuations have corrected much more meaningfully. The adjustment has therefore taken place through multiple compression rather than price declines, while earnings continue to grow. In effect, fundamentals are catching up with valuations. With the spread now close to -26%, a significant part … Continued

Capex at large tech companies has clearly taken off. A growing share of EBITDA is being reinvested into AI infrastructure, while the rest of the companies remain broadly flat. This is the key point: we have moved into an investment phase. The strategic logic is clear — AI will require massive upfront spending. The question … Continued

The dominance of the “Magnificent 7” has defined recent market performance, but the relationship with the broader market is starting to shift. The 100-day correlation between the S&P 500 Equal Weight Index and the Magnificent 7 has recently turned negative again, meaning mega-cap tech and the rest of the market are moving in different directions. … Continued

Since the announcement of Warren Buffett’s retirement in May last year, Berkshire Hathaway has underperformed the S&P 500 by roughly 40%. This relative weakness comes despite a succession that, in our view, is built on continuity rather than disruption. Greg Abel, now at the helm, has worked alongside Warren Buffett for more than 25 years, … Continued