Issue #23 - Buffett’s Big Bet, Intel’s Revival & Inflation Shocks

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What’s in this issue;

In this issue, we dive into the market’s solid weekly gains fueled by growing hopes for Federal Reserve rate cuts and progress on the Russia-Ukraine front.

We explore the latest inflation data that’s reshaping expectations, and get the inside scoop on Warren Buffett’s bold UnitedHealth bet and the Trump administration’s surprising stake plan in Intel.

We also cover key economic updates from Japan’s growth to the looming global oil surplus and China’s slowing momentum.

Plus, stay ahead with our outlook on bond yields, oil prices, bitcoin’s rise, and a packed week of earnings and economic events, including the high-stakes Jackson Hole symposium.

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Weekly Movement - Heatmaps

Markets posted solid weekly gains on Friday, driven by rising expectations of Federal Reserve interest rate cuts and cautious optimism over progress in Russia-Ukraine developments.

Inflation data took center stage, with July’s core consumer price index running hotter than expected year-over-year and producer price index readings also coming in well above forecasts, both reflecting the inflationary effects of President Donald Trump’s tariffs.

Coupled with a weak July nonfarm payrolls report earlier this month, the data strengthened market confidence in a likely September rate cut.

Geopolitical news also shaped sentiment after Trump and Russian President Vladimir Putin met in Alaska on Friday, with Trump calling the talks “very productive” despite no resolution to a war entering its fourth year.

On the corporate front, Cisco headlined earnings among Dow components, while 13F filings revealed significant fund moves, including Berkshire Hathaway’s new stake in UnitedHealth. For the week, the S&P 500 rose 0.9%, the Nasdaq gained 0.8%, and the Dow jumped 1.7%.

What is Moving the Markets This Week

Trump Eyes Bold Stake in Intel to Boost US Chip Power

In a dramatic move to revive America’s semiconductor ambitions, the Trump administration is actively discussing taking a direct government stake in Intel, one of the nation’s largest and most troubled chipmakers.

The White House is considering channeling funds from the US Chips Act to help rescue Intel and supercharge construction of its long-delayed Ohio factory—a project once touted as the world’s biggest chipmaking hub.

The surprise intervention highlights the administration’s willingness to blur the boundaries between state and industry, aiming both to shore up domestic production and keep pace with global competitors.

While the size of the stake remains unclear, the plan has already sent Intel shares soaring, underlining the strategic importance of semiconductors in an era of AI and geopolitical rivalry with China

Buffett Bets Big on UnitedHealth, Spark Markets Back to Life

Warren Buffett’s Berkshire Hathaway has shaken up Wall Street by disclosing a massive $1.6 billion stake in UnitedHealth Group, the nation’s largest private health insurer.

This strategic investment, amounting to over 5 million shares, comes as UnitedHealth battles deep challenges, including plunging stock prices, federal investigations, and fallout from a major cyberattack.

Despite these headwinds, Buffett—and other respected investors like Michael Burry and David Tepper—see long-term potential in UnitedHealth’s robust cash generation and market leadership.

The surprise vote of confidence instantly propelled UnitedHealth shares up 12%, marking their best day in five years, and raised hopes that other defensive sectors could soon rebound.

For Buffett, this move signals a renewed focus on durable businesses trading at bargain prices, underscoring the value-investing ethos in today’s unpredictable market

Miners Advance, Defence Stocks Retreat in London Trading

Mining stocks bucked the market’s overall weakness, with Anglo American, Glencore, Antofagasta, and Rio Tinto all trading higher on hopes of further Chinese stimulus.

Bytes Technology Group surged nearly 8% after announcing a £25m share buyback, while Ocean Wilsons rose over 3% following a strong investment return.

Associated British Foods ended flat after its acquisition of Hovis Group, a deal that could attract regulatory scrutiny given bread’s status as a consumer staple.

On the downside, defence stocks fell as investors braced for the Trump-Putin summit, with Rolls-Royce and BAE Systems both losing ground.

Top Economic News This Week

Wholesale Inflation Surges, Rattling Rate Cut Hopes

The US producer price index (PPI) rocketed by 0.9% in July—more than four times the expected increase—signaling that inflation remains a stubborn threat to the economy.

This was the sharpest monthly jump since June 2022, driven by surging costs in services, especially trade margins, machinery wholesaling, and financial management fees.

The core PPI, which strips out food and energy, also spiked 0.9%, well above forecasts. On an annual basis, headline PPI climbed 3.3%, challenging the Federal Reserve’s 2% comfort zone and fueling speculation that companies may soon pass higher costs on to consumers.

Markets responded swiftly: stock futures fell and Treasury yields climbed, dampening optimism about imminent Fed rate cuts.

The report comes amid a wave of changes at the Bureau of Labor Statistics, including staff layoffs and leadership turnover, further heightening uncertainty about the inflation outlook

Japan’s GDP Surges Beyond Expectations in Q2 2025 Despite Tariffs

Japan’s economy grew 0.3% quarter-over-quarter in the second quarter of 2025, beating market expectations of just 0.1%.

This marked the fifth straight quarterly expansion and was driven by strong private consumption, a 1.3% surge in business investment, and a surprising rebound in exports, which added 0.3 percentage points to growth.

Exporters rushed shipments ahead of newly imposed U.S. tariffs, while automakers countered rising duties by cutting prices to maintain domestic production. On an annualised basis, Japan’s GDP expanded 1.0%, providing encouraging momentum despite the looming challenges from the U.S. trade policies.

The government also finalised a trade deal with the U.S. in July, lowering tariffs to 15% from previously proposed higher rates, which should help cushion future economic shocks.

The upbeat data gives the Bank of Japan more reason to consider resuming interest rate hikes later this year amid ongoing global uncertainties and cost pressures.

Markets responded positively, with the Nikkei index rising and the yen strengthening against the US dollar.

IEA Warns of Record Oil Supply Surplus Heading Into 2026

Global oil markets are set to face an unprecedented supply glut in 2026 as demand growth slows dramatically and production surges. The International Energy Agency (IEA) forecasts oil inventories will climb by nearly 3 million barrels per day next year, exceeding even the massive stockpiles accumulated during the 2020 pandemic.

While global oil demand growth for 2025 and 2026 is expected to be less than half the rate seen in 2023, supply is ramping up sharply. The OPEC+ alliance, led by Saudi Arabia, has accelerated the restart of paused production, and non-OPEC+ supply growth—driven by the US, Guyana, Canada, and Brazil—is also rising.

This burgeoning surplus has contributed to a roughly 12% drop in crude prices this year, hovering near $66 a barrel in London. The IEA cautions that significant market adjustments will be necessary to restore balance amid mounting inventories and geopolitical uncertainties including sanctions on Russia and Iran.

The situation reflects the complex interplay of trade tensions, economic growth concerns, and energy transition dynamics shaping the oil landscape.

Track Inflation Across Europe & US

China’s Economic Momentum Slows in July

China’s July economic data indicated a slowdown, with industrial production up just 5.7% year-on-year, retail sales increasing 3.7%, and fixed asset investment easing to 1.6%.

All three readings missed forecasts, pointing to weaker momentum in domestic demand. Flooding, extreme heat, and ongoing trade uncertainty were cited as drags on performance.

Analysts suggested the soft data could push Beijing toward introducing new stimulus measures, particularly as the tariff truce with the US was recently extended.

Things I’m Paying Attention To

Bond Yields

In the UK, government bond yields have risen slightly in August 2025. The yield on the 10-year gilt increased to around 4.70%, marking a small increase from recent sessions and standing about 0.77 percentage points higher than a year ago.

Similarly, the 20-year bond yield rose to approximately 5.41%, also showing a steady uptick over the month.

These yields are near multi-year highs, reflecting market responses to economic conditions including inflation and growth concerns.

For investors, the recent rise in UK bond yields carries important implications:

Attractiveness of Returns: With 10-year gilt yields around 4.6% and 30-year yields above 5%, UK government bonds are offering historically attractive returns relative to recent years. These yields exceed the returns available on cash deposits and many equity dividend yields, making gilts appealing for income-focused investors seeking safer options.

Income Opportunity Versus Risk: Higher yields translate into higher coupon payments for those buying bonds now or holding until maturity. This presents a good income opportunity, especially when inflation is below the yield level, potentially providing positive real returns. However, the rise in yields also reflects increased perceived risk, including concerns over UK fiscal stability and economic growth. Investors must weigh these factors carefully.

Fiscal and Political Context: The UK government’s tighter fiscal stance and higher borrowing costs mean bond markets are sensitive to political and economic developments. Any signs of weakening fiscal discipline or economic slowdown could push yields higher, impacting bond valuations.

Potential Rate Cuts: The Bank of England is expected to cut rates moderately later in 2025, which could stabilise or reduce yields, benefiting bond prices. Investors positioning now could benefit from such future moves.

Oil Prices and Petrol Costs

Oil prices have experienced some easing from previous peaks. Analysts expect Brent crude oil prices to fluctuate within a range, with some predicting a decline towards $60-80 per barrel in coming months. This decline is contributing to a moderation in petrol costs, providing some relief to consumers at the pump amid broader energy market volatility. However, supply constraints and geopolitical factors continue to influence prices, especially in Europe.

For consumers, easing oil prices translate to lower petrol and diesel costs, which can relieve inflationary pressures on fuel and transportation. However, the lower prices may impact oil producers’ investment and drilling activity, especially in higher-cost production regions.

The latest outlook on oil prices, particularly Brent crude, indicates a downward trend ahead for the remainder of 2025 and into 2026. According to the U.S. Energy Information Administration (EIA), Brent crude oil prices are forecast to average about $67.22 per barrel for 2025, a slight revision down from earlier estimates. The price is expected to decline further to around $58 per barrel in the fourth quarter of 2025 and dip close to $50 per barrel in early 2026. This is the first time prices are expected to be this low since 2020.

This downward pressure is mainly attributed to an anticipated significant build-up in global oil inventories, driven by accelerated production increases from OPEC+ countries and higher U.S. crude oil output, which is forecast to reach record levels by the end of 2025. The global supply growth is projected to outpace demand, leading to surplus stocks.

The EIA report also notes that lower oil prices early next year could prompt OPEC+ and some non-OPEC producers to implement supply cuts, helping to moderate inventory increases later in 2026.

From a market perspective, Brent crude has already seen a decline from about $71 per barrel in mid-2025 to around $66 recently, with technical indicators suggesting potential further declines below $60 barring any major geopolitical disruptions or production changes.

Hot Take 🔥 (Opinion Piece) Overall Thoughts 💭

Bitcoin’s Adoption: From Risky Bet to Mainstream Portfolio Staple

Bitcoin’s journey from speculative asset to global financial powerhouse has accelerated dramatically. Despite being just 16 years old, it now boasts a staggering $2.4 trillion market cap, making it the world’s 8th largest currency—nestled between the Hong Kong and Taiwan dollars.

US Regulatory Shifts Invite Investors

Recent regulatory changes in the US have made bitcoin more accessible and attractive. Banks can now securely hold digital assets for clients thanks to a regulatory rollback, and new executive orders signal strong government support for bitcoin.

Several pro-crypto laws have passed, and more are in the pipeline. This regulatory tailwind means major compliance roadblocks have fallen, opening the door for institutional investors to get involved.

Bitcoin ETFs Break Records

The launch of bitcoin ETFs has supercharged adoption. BlackRock’s IBIT, the youngest ETF among the largest, reached $80 billion in assets under management in just over a year—a feat five times faster than previous record-holders.

By mid-August, it had soared past $91 billion. Collectively, US-listed bitcoin ETFs now hold $154 billion, just shy of gold ETFs at $179 billion. Over 1,600 institutions already own these ETFs, proving institutional appetite is strong and growing.

Why Investors Are Interested

ETFs make owning bitcoin easy, liquid, and secure, removing much of the friction and risk associated with self-custody.

Institutional investors, like Harvard’s endowment, are treating bitcoin more like gold—as a hedge against inflation and currency risk.

The Custody Risk: Not All Sunshine

However, there’s a catch. Most spot bitcoin ETFs rely on a single custodian, Coinbase, which holds about 81% of ETF bitcoin assets. If something went wrong with Coinbase—say, a cyberattack—the impact could ripple through the market.

While steps like segregated trust accounts, offline cold storage, and regular audits reduce risk, this concentration remains a vulnerability.

Takeaways for Investors

Bitcoin is gaining mainstream acceptance and legitimacy.

Diversification matters: Spreading your holdings across different ETFs (with different custodians) can reduce risk.

Keep allocation modest: A 1–3% position, like that of Harvard’s endowment, offers potential upside while limiting downside.

Bitcoin now sits shoulder-to-shoulder with gold as a portfolio hedge. If you’re worried about inflation or currency shifts, a small, thoughtfully sized bitcoin position—especially via an ETF—might make sense.

Just remember: as with any asset, balance is key.

Looking Forward: What We Anticipate Next Week

All eyes on Wall Street this week will turn to the highly anticipated Jackson Hole Economic Policy Symposium, running from August 21 to 23. The annual gathering, hosted in Wyoming, brings together some of the world’s most influential central bankers, economists, and policymakers.

This year’s theme, “Labor Markets in Transition Demographics, Productivity, and Macroeconomic Policy,” comes at a critical moment, as the Federal Reserve grapples with cooling job growth and sticky inflation. Investors will be listening closely for any hints about the Fed’s next move.

Beyond Jackson Hole, markets face a packed earnings calendar, with retail heavyweights Walmart and Home Depot set to report, alongside Target and Lowe’s—results that will offer a real-time snapshot of American consumer health.

On the data front, investors will parse the Fed’s July meeting minutes midweek and the latest S&P flash PMI readings on Thursday for fresh insights into the state of growth and demand.

Meanwhile, geopolitics will remain in sharp focus as Ukraine’s President Volodymyr Zelenskyy is scheduled to meet U.S. President Donald Trump on Monday, a development likely to capture global headlines against the backdrop of the ongoing war with Russia.

Monday 18th August

Earnings Spotlight:

• Palo Alto Networks (PANW)

• Fabrinet (FN)

• Agora (API)

• Blink Charging (BLNK)

Tuesday 19th August

Economic Data:

• Canada Inflation Rate YoY

• Forecast: 3.6% (Prev. 3.85%)

• Cooling inflation raises rate-cut expectations for BoC.

• US Housing Starts

• Forecast: 1.29m (Prev. 1.32m)

• Slowing builds = potential stress in real estate demand.

Earnings Spotlight:

• Home Depot (HD)

• Medtronic (MDT)

• Keysight Technologies (KEYS)

Wednesday 20th August

Economic Data:

• UK Inflation Rate YoY

• Forecast: 4% (Prev. 3.6%)

• Reacceleration complicates BoE’s policy outlook.

• US FOMC Minutes

• Tone could reveal Fed’s stance on lingering inflation pressures.

Earnings Spotlight:

• Lowe’s (LOW)

• Analog Devices (ADI)

• Target (TGT)

• Baidu (BIDU)

Thursday 21st August

Economic Data:

• US Initial Jobless Claims

• Previous: 224k

• Any drop challenges softening labor narrative and delays Fed easing.

Earnings Spotlight:

• Walmart (WMT)

• Intuit (INTU)

• Workday (WDAY)

• Zoom Communications (ZM)

Friday 22nd August

Economic Data:

• UK Retail Sales YoY

• Forecast: 1.8% (Prev. 1.7%)

• Suggests resilient consumer spending despite rate pressures.

Earnings Spotlight:

• Buckle (BKE)

• Prosafe (PRSEF)

ICYMI

Global conflicts and crises: The Gaza war continues with significant casualties, including killed Palestinians seeking aid, famine deaths due to blockade, and a hostage crisis. Israel plans a full military occupation of Gaza to eliminate Hamas. In the Russia-Ukraine conflict, Ukrainian drone strikes on Russian territory caused deaths and damage, including an oil refinery fire in Sochi. Fighting persists in the Congo with rebel and militia clashes.

Disasters: A boat capsized off Yemen killing dozens of Ethiopian migrants. Russia’s Kamchatka Peninsula experienced a historic volcanic eruption shortly after a strong earthquake. Flash floods in India’s Uttarakhand killed several and left many missing. Other plane crashes and hazardous accidents also occurred globally.

Politics and Law: US President Donald Trump reportedly fired the Bureau of Labor Statistics commissioner after a report on slowing job growth. Brazil’s Supreme Court placed former president Bolsonaro under house arrest amid a coup plot trial. New UK law from September 2025 introduces a corporate offence for failure to prevent fraud for large employers.

Sports: Brazil's women’s team won the 2025 Copa América Femenina in a thrilling final against Colombia, with Marta named MVP.

Business: Over 10,000 European hotel owners filed a lawsuit against Booking.com alleging anti-competitive pricing practices over 20 years.

Positive news highlights: Crime has plummeted in the US, conservation efforts in England showed progress for struggling species, and levitating trains are being considered for a comeback.

Sources: Sky, GOV.UK & BBC

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