News & Insight • Weekly Newsletters

02 May 2025 | Charlie Todd | William Buckhurst

That Was The Week That Was

MACRO

• Non-farm payrolls in the US showed 177,000 new jobs added in April, higher than economists predicted. March payrolls were revised down slightly, and the overall message was that the job market is yet to be affected by Trump’s trade war.
• US economic data released before the non-farm payrolls was mixed. The advance reading for 1Q GDP growth showed the first contraction since 2022 as GDP fell 0.3% quarter on quarter. The decline in GDP was led by a big jump in imports which rose sharply ahead of ‘Liberation Day’ or tariff implementation.
• The April Conference Board Consumer Confidence index fell further to 86.0 vs 88.0 expected, reaching a 5 year low, with readings for Present Situation and Expectations also falling on the prior month. The report noted that “the three expectations components – business conditions, employment prospects and future income – all deteriorated sharply, reflecting pervasive pessimism about the future.”
• Signs of a possible thaw in trade tensions helped drive global markets higher after Beijing said it was “evaluating” recent overtures from Washington on starting trade talks.
• Eurozone inflation, although lower than other major regions, is still elevated at 2.2% in April – much lower oil prices and a stronger Euro have yet to fully feed through to inflation

COMPANY NEWS

Microsoft delivered a very strong quarter driven by AI demand and cloud growth.  Quarterly revenue of $70.1bn comfortably exceeded analysts’ expectations – and profits were significantly ahead. “Cloud and AI are the essential inputs for every business to expand output, reduce costs, and accelerate growth,” Microsoft’s CEO, Satya Nadella, said in a statement.

Meta (Facebook/Instagram) also beat expectations, posting $42.3bn in revenue for the quarter.

The impact of tariffs is more pronounced for companies selling physical goods. Amazon’s e-commerce business saw higher costs. It said it expects this quarter’s operating profit to be between $13bn and $17.5bn – whilst also mentioning returns from orders had increased due to consumer weakness. Its cloud business continues to be stellar – we mention below.

Similarly, after ok results, Apple guided to tariffs adding c.$900m to costs (impacts earnings 3-4%). Interesting to note that majority of US iPhones now come from India.

Eli Lilly shares fell 11% after reporting first quarter results that were above consensus estimates. Zepbound and Mounjaro sales were in line but guidance was cut. Shares also reacted to news that CVS Health’s drug division had negotiated a deal with Novo Nordisk.

German defence company, Rheinmetall, closed up 8.5% after reporting results that were ahead of consensus.

Sony shares rose over 3% on speculation that the company would spin off its semiconductor business, as well as its already announced plans to separately list its financial services division, later this was denied.

Visa shares traded higher after announcing a small beat to earnings coupled with a $30bn share buyback. The business continues to show extreme resilience.

Whitbread results continue to be impacted by the weakness of UK trading of Premier Inn, but offset by positive news of Germany turning to profit and an unexpected share buy back of 5.5% of the company.

Shell beat on a number of metrics, but mainly cash flow and buy backs. There was also a rumour on Bloomberg that they were looking at acquiring major rival BP.

Estee Lauder continues to trade poorly with travel sales still particularly weak. They announced redundances.

McDonalds shares remained surprisingly stable given a 3.5% fall in revenues to below consensus estimates.

AMAZON CLOUD

Fears around a deceleration in growth at Amazon Web Services (AWS), the largest cloud provider in the world, were put to rest this week. The quarterly results showed AWS revenue surging 19%, marking an acceleration over the prior year's 12% growth, defying the law of large numbers. Not only was revenue growth robust, but cloud computing operating margins expanded from 30.3% a year ago to 38.1%, with AWS's operating income surging an even more impressive 50%.

One of the more eye-opening quotations from the analyst call was CEO Andy Jassy making very positive sounds around the AI-specific part of AWS. He noted, "AWS's AI business is a multibillion-dollar revenue run rate business that continues to grow at a triple-digit year-over-year percentage and is growing more than three times faster at this stage of its evolution as AWS itself grew - and we felt like AWS grew pretty quickly."

BUFFETT RETIRES NOT OUT

It came as quite a surprise at the end of the 60^th Berkshire Hathaway annual general meeting on Saturday – nicknamed ‘Woodstock for capitalists’ – when CEO Warren Buffett casually announced that he would step down at the end of the year.

This was after announcing quarterly results where the company has sold $4.7bn of stocks – outweighing the $3.2bn they had bought – leaving the cash/cash equivalents at $348bn.

Greg Abel, first named as his successor in 2021, will take the helm. In truth, it shouldn’t have been unexpected - Buffett is 94 after all, and famously sustains himself on cherry Coke and hamburgers.

There will be enough time to tally the final numbers for - arguably - the greatest investor the world has ever known when he formally retires in December. But here’s a preview: from 1965 to the end of last year, Berkshire Hathaway’s market value has soared by more than 5,500,000%, delivering a compounded annual return of nearly 20%. Over the same period, the S&P 500 returned 39,000%. Just as Don Bradman fell four runs short of a fabled career average of 100, Buffett’s final innings promises to secure a place in the pantheon of legends – his  score already one for the ages.

THE WEEK IN HISTORY

1926: Britain’s first ever general strike in support of coal miners takes effect. King George V tried to stabilise the situation saying, "Try living on their wages before you judge them."

2009: Chrysler, one of the “Big Three” car makers in the US, filed for bankruptcy. But by just 2011, Chrysler was valued by new owners Fiat at about $4.8bn, sharply higher than the company's estimated value when it emerged from a US-funded bankruptcy. Chrysler arrived at the valuation to set pay for its top executives.