Morning Forecast: Monday 18 May
Berkshire is sitting on $397 billion in cash. The S&P is at record highs. Draw your own conclusion.
This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).
👀 Today’s Stories at a Glance
🎯 Abel ditches Visa, buys Delta: First full Berkshire reshuffle since taking over, adds airline, exits payments, sits on $397 billion cash.
🌽 China’s $17B farm floor: Beijing locks in three years of US agricultural buying, still below 2024 actuals despite the headline framing.
💸 Carry trade roars back: Crude above $111 forces emerging-market hikes while yen and franc funding rates stay near zero.
🛢️ Trump warns Iran clock ticking: Hormuz talks stall as Brent climbs to $110, US-Israel readying possible strikes within days.
🔌 China data centres trade power: Guangdong sites enter the spot market as virtual power plants, chasing cheap midday solar across the grid.
📈 Cerebras pops 68% in debut: Year’s largest tech listing closes near a $95 billion cap, with 86% of revenue from Emirati customers.
🔬 Applied Materials sees eight quarters: Chip-equipment giant lifts 2026 growth call past 30% as top customers share extended visibility forecasts.
🤖 Arm faces antitrust pressure: Three regulators on three continents now circle the chip designer’s licensing model after its own processor launch.
🧠 One Big Thing
Berkshire's $397 billion cash pile is the loudest call in the edition. Greg Abel just ran his first full reshuffle since taking over, and the answer was to sell payments, trim Chevron 35%, and park a record share of the book in Treasury bills. He did this with the S&P at all-time highs. Every other story today (the carry trade hunting yield in Brazil, Cerebras pricing at 130 times sales, Applied Materials guiding eight quarters out) assumes the bull case holds. Abel is the one investor in the building betting it doesn't. When the most disciplined allocator in the market goes to cash at the top, the signal is the position, not the trades around it.
⚖️ Fear & Greed
📉 The Number That Matters
$397.4 BILLION
Berkshire’s idle pile reached $397.4 billion in Q3, the largest cash position any public company has ever held; $397.4 billion sitting out while the S&P 500 prints record highs is Abel’s clearest valuation call.
⚔️ Winners vs Losers
Winners
RAMP 0.00%↑: LiveRamp Holdings, Inc. surged after Publicis Groupe agreed to acquire the data and AI company for $2.5 billion in all cash at $38.50 per share, a roughly 30% premium, announced alongside stronger-than-expected Q4 fiscal 2026 results.
HIVE 0.00%↑: HIVE Digital Technologies Ltd jumped after its subsidiary BUZZ HPC unveiled plans for a C$3.5 billion AI gigafactory in the Greater Toronto Area with roughly 320 megawatts of capacity and support for over 100,000 GPUs, with operations targeted for the second half of 2027.
D 0.00%↑: Dominion Energy, Inc. rallied after NextEra Energy agreed to acquire the company in a $66.8 billion all-stock deal valued at around $76 per share, creating what would be the largest regulated electric utility in the United States and a major beneficiary of AI data center power demand in Virginia.
CMPS 0.00%↑: COMPASS Pathways Plc extended last week’s rally as the psychedelic drugmaker continued to ride momentum from its Q1 earnings beat, the FDA’s Commissioner’s National Priority Review Voucher for COMP360, and a string of analyst price target hikes ahead of the RBC Capital Markets Global Healthcare Conference this week.
TE 0.00%↑: T1 Energy Inc. extended gains following last week’s Q1 earnings beat and record adjusted EBITDA, though no specific catalyst was identified for today’s pre-market move.
Losers
REGN 0.00%↑: Regeneron Pharmaceuticals, Inc. tumbled after its Phase 3 trial of fianlimab plus cemiplimab in first-line metastatic melanoma failed to meet its primary endpoint of statistically significant improvement in progression-free survival versus Merck's Keytruda.
📊 Market Snapshot
Cryptocurrencies:
Bitcoin (BTC): $77,258 (▼ -0.22%)
Ethereum (ETH): $2,134 (▲ 0.19%)
XRP: $1.39 (▼ -0.75%)
Equity Indices (Futures):
S&P 500: $7,391 (▼ -0.06%)
NASDAQ 100: $29,241 (▲ 0.03%)
FTSE 100: £10,243 (▲ 0.52%)
Commodities & Bonds:
10-Year US Treasury Yield: 4.59% (▼ -0.22%)
Oil (WTI): $101 (▼ -0.23%)
Gold: $4,551 (▲ 0.24%)
Silver: $76.42 (▲ 0.70%)
Data as of: UK (BST) 12:56 / US (EDT): 07:56 / Asia (Tokyo): 20:56
✅ 5 Things to Know
🎯 Abel’s First Filing: Delta In, Visa Out, $397B in Cash
Greg Abel’s first full-quarter portfolio reshuffle landed late Friday when Berkshire Hathaway filed its 13F. The headline trade was a brand-new $2.65 billion stake in Delta Air Lines, worth 39.8 million shares and 6.1% of the airline. Berkshire also tripled its Alphabet position to roughly $16.6 billion and fully exited Amazon, UnitedHealth, Visa and Mastercard, alongside eleven smaller disposals. The number of positions dropped from 42 to 29, with cash and Treasury bills hitting a record $397.4 billion. Delta jumped 3.2% in late trading; Macy’s, a small new position, popped 6%. (CNBC)
The interpretation matters more than the tickers. Some of the exits look like housekeeping after Todd Combs left for JPMorgan in December: Amazon, Domino’s and Constellation Brands were all positions long attributed to him. The additions are pure Abel. Buffett famously unwound the airlines in April 2020 and called the call “wrong” in hindsight. Returning to the sector via a single concentrated 6.1% stake in Delta is a bet that premium-cabin and loyalty-card revenue have decoupled airline economics from jet fuel. The Visa-and-Mastercard dual exit after 15 years is the loudest “we don’t love payment networks anymore” statement Berkshire has ever made. (Reuters)
Sensei’s Insight: The cash pile is louder than the buys. Holding $397 billion with the S&P at record highs is Abel telling investors he thinks equities and energy are fully priced. The Delta trade isn’t the signal worth trading. The 35% Chevron cut and the cleaned-up book is.
🌽 China’s $17B Farm Floor Caps the Beijing Summit
The White House yesterday published the headline number markets had been waiting on since the Trump-Xi summit. China will buy at least $17 billion a year of US agricultural products in 2026 (prorated), 2027 and 2028, on top of the 25-million-tonne annual soybean commitment locked in last October at Busan. Beijing also renewed registrations for 425 US beef plants, approved 77 new ones, resumed poultry imports from US states certified free of avian flu, and signed off on an initial 200-aircraft Boeing order. Xi has accepted an invitation to visit Washington in the fall. (Bloomberg)
The number is recovery, not expansion. US farm exports to China hit a $40.9 billion record in 2022 and were $24 billion as recently as 2024. Even adding the new floor to the soybean commitment gets the total to $27-29 billion, still below 2024 actuals. The structure leaves room for slippage too: dollar-denominated targets let China ship less tonnage as commodity prices rise and still claim compliance, and China hit only 57-60% of its Phase One commitments in 2020-21. Markets pre-empted the announcement: cotton hit limit down Friday, soybeans fell to a three-week low at $11.78, and corn dropped to a four-week low. (Reuters)
Sensei’s Insight: Watch how grain futures, ADM, Bunge and Boeing trade today against the absence of per-product breakdowns or signed contracts. Beijing summits have a long history of headline numbers that never appear in shipping data, and the market knows it. The cleaner read on whether this is real arrives with USDA export sales reports in two weeks.
💸 Carry Trade Rebounds as Oil Rewrites EM Rate Math
The emerging-market carry trade, left for dead two months ago, is suddenly back among the best-performing strategies in global markets. The standard index tracking the strategy is up around 2.6% from its March low and 1.2% since the war began in late February, with traders funding in yen and Swiss francs to buy currencies like the Brazilian real and South African rand. Brent crude, up roughly 50% since the conflict started and trading above $111 a barrel, is doing the work: it has pushed the average 12-month interest-rate swap across 14 emerging-market economies to 5.7%, from 5% before the fighting began. (Bloomberg)
The rebound matters for retail because it reorders where global capital is finding yield. South Africa is the cleanest case: two months ago traders were pricing in rate cuts; markets now anticipate three quarter-point hikes from the South African central bank this year as oil-driven inflation builds. Brazil and Colombia top the forward-implied yield rankings, and the Swiss-franc-into-real trade has returned 6.65% since late February. The catch is selectivity. Bank of America and Barclays both dropped their bullish bets on the Turkish lira, signalling that oil-importing emerging markets with weaker external balances are being cut loose. Indonesia and Egypt’s central bank decisions this week, plus inflation prints from Malaysia, Poland and South Africa, will test the higher-for-longer thesis.
The closest historical playbook is the 2003-2008 commodity supercycle, when oil-driven EM rate divergence delivered Brazilian equities a multi-year run past developed markets. EWZ, the iShares Brazil ETF heavily weighted toward state oil giant Petrobras and miner Vale, is up roughly 17% year-to-date. The wild card sits in Washington. Under new Fed Chair Kevin Warsh, sworn in last week, markets have moved from pricing 2026 rate cuts to seeing a hike as almost certain, with Brent’s grip on US inflation overriding political pressure for easing.
Sensei’s Insight: Higher oil was supposed to kill the carry trade. It's done the opposite. Crude above $111 has forced emerging-market central banks to hike while Japan and Switzerland keep funding rates near zero, and that gap is what the trade earns. The Turkey exit shows the catch: only oil exporters with credible central banks are getting the bid.
🛢️ Trump’s “Clock Is Ticking” as Hormuz Talks Stall
Trump posted on Truth Social yesterday that for Iran “the Clock is Ticking, and they better get moving, FAST, or there won’t be anything left of them.” Hours earlier, a drone strike caused a fire at a generator outside the perimeter of the UAE’s Barakah nuclear power plant; the foreign minister told the IAEA there was no impact on radiological safety. Bloomberg reported that Washington and Tehran “seemed far apart” on a deal to end the war and reopen the strait. Trump met Saturday with Vance, Witkoff, Rubio and CIA Director Ratcliffe at his Virginia golf club and spoke with Netanyahu yesterday. Brent climbed to $110.47 in Sunday-night trading. (Bloomberg)
The market has been pricing a deal that keeps slipping. Hormuz handled roughly 20 million barrels of oil a day before February’s strikes and now passes about 3.8 million. Jet fuel is up 120% since the war began. Q3 inventory draw is running at four million barrels a day, the fastest pace outside a pandemic. The framework on the table is a one-page, 14-point MOU mediated by Pakistan, but US conditions include shipping Iran’s enriched uranium to American territory and releasing less than a quarter of Tehran’s frozen assets. The New York Times reported Friday that the US and Israel are intensifying preparations for renewed strikes “possibly starting as soon as next week.” (Axios)
Sensei’s Insight: Every weekend Iran doesn’t sign, the calendar narrows on Trump’s midterm math and widens on Brent. Refiners, defense and tanker rates still hold the bid; airlines and consumer discretionary keep eating the bill. The asymmetric trade nobody is hedged for is what happens when a deal lands: a same-day 10% collapse in oil and energy equities is the live tail risk.
🔌 China Turns Data Centres Into Flexible Power Plants
Three major data centre clusters in Guangdong became the first in China to trade directly in the electricity spot market last Wednesday, acting as “virtual power plants.” China Unicom’s Shaoguan site and China Mobile’s Guangzhou and Zhanjiang facilities are now plugged into the Yuenengtou platform run by a China Southern Power Grid subsidiary. The mechanism is straightforward: an AI scheduler watches real-time spot prices and pushes non-urgent compute jobs into cheaper hours, mostly midday when solar floods the grid, then dials back during expensive evening peaks. China Electric Power News reported the trade Saturday; Bloomberg picked it up the same day. (Bloomberg)
This is the operational layer of a much larger reform. Under NDRC Document 136, all new Chinese renewable projects starting after June 1, 2025 must sell through market transactions rather than fixed feed-in tariffs, and 29 provincial grids now run spot markets. Wood Mackenzie expects Chinese data centre power demand to hit 479 TWh by 2030, roughly the size of France’s national load. US hyperscalers are doing the opposite: Microsoft, Amazon, Meta and Google are locking in decade-long fixed-price nuclear contracts to escape grid volatility. Chinese operators are leaning into spot prices to chase cheap renewables, helped by transformer lead times of 48 weeks versus 143 weeks in the US. (Wood Mackenzie)
Sensei’s Insight: The US is building data centres around the grid it has. China is rebuilding the grid around the data centres it wants. If flexible-load economics let Chinese AI compute scale faster and cheaper, the assumption underwriting US hyperscaler capex (that grid bottlenecks contain everyone equally) starts to break. GDS and VNET are the listed proxies.
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📈 Cerebras Pops 68% in Year’s Biggest IPO
AI chipmaker Cerebras Systems priced its IPO at $185 last Wednesday, above an already twice-raised range, and raised $5.55 billion. Shares opened at $350 Thursday, touched $385, and closed at $311.07 in the year’s biggest tech listing. The fully-diluted market cap landed near $95 billion, and the deal was oversubscribed more than 20x, the cleanest test yet of public-market appetite for an Nvidia challenger. Friday gave some back as the broader tech tape sold off on rising Treasury yields and Hormuz fears. The concerns under the hype: shares trade above 130 times sales, 62% of 2025 revenue came from a single UAE customer (MBZUAI), and 86% from just two UAE-linked clients. CEO Andrew Feldman acknowledged the concentration on CNBC, calling it “one of the characteristics of this market.” Read-through to NVDA, AMD, AVGO and the rest of the IPO pipeline (SpaceX, OpenAI, Anthropic) starts today. (CNBC)
🔬 Applied Materials Lifts AI Capex Visibility to Eight Quarters
The world’s biggest chip-equipment maker reported record fiscal Q2 revenue of $7.91 billion on Thursday, with adjusted EPS of $2.86 beating the $2.66 consensus and gross margins of 50%, the highest in over 25 years. Management lifted its semiconductor equipment growth call for calendar 2026 to more than 30%, and said advanced packaging revenue should rise above 50%. Q3 guidance came in at $8.95 billion plus or minus $500 million, well above the Street. The signal worth flagging: CFO Brice Hill said top customers (TSMC, SK Hynix, Micron, Samsung) are now sharing eight-quarter rolling forecasts, an unusually long visibility window that reads as the cleanest tell yet that AI capex commitments run firmly past 2026. Deutsche Bank, B. Riley and Wolfe Research all raised price targets to $550. China remained 24% of revenue, the standing export-controls risk. (Reuters)
🤖 FTC opens antitrust probe into Arm
The Federal Trade Commission has opened a formal antitrust investigation into Arm Holdings, focused on whether the chip designer is refusing or degrading licences to customers it now competes with directly. The probe follows Arm’s March launch of its own AGI CPU, the first finished silicon it has sold in 35 years, putting it head-to-head with licensees including Apple, Qualcomm, Nvidia and Microsoft. The EU and South Korea are already running parallel investigations after Qualcomm complaints, meaning three regulators on three continents now have an opening to cap the licensing economics behind Arm’s 50-times forward earnings multiple. Arm shares fell 8.46% before news of the probe broke late last week, with SoftBank’s roughly 90% stake reportedly backing $8.5 billion in margin loans. (Bloomberg)
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This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).