Buffett-Style Market Commentary, Every Tuesday

Key Takeaways

1. Fed rate cuts look near certain, but inflation is still being tricky.

2. Bank of England made a split decision cut, while China held steady.

3. Trump extended the tariff truce with China and floated peace talks.

4. Tech earnings were loud: Microsoft and Apple soared, Amazon stumbled.

5. Dollar is dragging, commodities are moody, bonds keep confusing everyone.

Central banks continue to steal the spotlight, mostly because nothing gets investors more excited than the idea of cheaper money. The Bank of England cut rates by a hair, which apparently required a 5-4 vote. It’s comforting to know they’re evenly split between “inflation is dead” and “inflation is just hiding behind the couch.” Meanwhile, the Fed is signaling that rate cuts are practically baked in, with markets giving it near certainty. Of course, markets also had near certainty that inflation would be “transitory,” so let’s just say history doesn’t repeat but it sure rhymes.

U.S. inflation cooled slightly, giving traders another reason to throw a party. Core inflation ticked up though, which makes the Fed’s decision look less like careful navigation and more like flipping a coin with extra flair. Treasury Secretary Scott Bessent even suggested a bigger cut, basically admitting they should have done more earlier. In other words, the Fed is playing catch-up again. Color me shocked.

China, meanwhile, has decided to keep rates steady. Instead of flooding the economy with easy money, the People’s Bank of China is taking the “diet version” of monetary stimulus—focusing on structural measures. Translation: less fireworks, more fine print. Investors holding their breath for sweeping moves may want to exhale before passing out.

On the political side, Trump extended the tariff truce with China for another 90 days. That avoided what could have been triple-digit tariffs, because nothing says “Merry Christmas” like higher prices on imported toys. He also hosted Zelenskyy and other European leaders for peace talks, floating the idea of a Putin-Zelenskyy summit. Let’s just say if this were a poker table, Trump showed his cards and Putin hasn’t even sat down yet.

Earnings season brought its usual mix of fireworks and fizzles. Microsoft and Apple crushed it, with AI helping push Microsoft’s market cap to $4 trillion. Meta is rolling in ad dollars, while Amazon tripped over AWS margins and faceplanted into a 7% stock drop. The message is clear: tech is still the loudest kid in class, but not everyone’s report card is fridge-worthy.

Commodities also gave us some drama. Gold slipped but is still up massively from a year ago. Silver is showing off like it’s 2011 again, and copper got slammed after tariffs, even though China barely exports the stuff to the U.S. Oil prices eased as well, mostly because demand is cooling and OPEC+ looks ready to pump more. If commodities were people, they’d be that unpredictable uncle at Thanksgiving who tells wild stories nobody asked for.

Finally, the dollar is looking more tired than a college freshman after finals week, down 11% year-to-date. Emerging market currencies are dancing on its grave, while bond markets are doing their usual trick of confusing everyone. Long-term yields ticked up, short-term yields dipped, and investors once again pretended they understood the yield curve. As for me, I’ll stick with Buffett’s wisdom: focus on owning real businesses at fair prices, because in the end, markets are a voting machine in the short run and a weighing machine in the long run. Right now, it feels like the voting machine is broken anyway.

Happy investing!
Josh

The information is provided for educational purposes only and does not constitute financial advice or recommendation and should not be considered as such. Do your own research.