Morning Forecast: Monday 4 May
Tokyo burned $34 billion defending the yen. Abel inherits $397 billion from Buffett.
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
✈️ Spirit Folds, Budget Era Ends: First major US carrier collapse in 25 years cancels 9,000 flights and ends ultra-low-cost model.
🎯 Abel’s Debut, $397B War Chest: Berkshire’s record $397.4 billion cash pile lands in Greg Abel’s hands as buybacks barely budge.
🤖 Cerebras Roadshow Targets $40B: Artificial intelligence (AI) chip rival to Nvidia begins marketing a raise of up to $4 billion.
🛢️ US Becomes Global Crude Backstop: Strait of Hormuz traffic down 90% leaves American exports propping up world supply at record pace.
🇯🇵 Tokyo’s $34B Yen Defense: Japan’s first foreign exchange (FX) action since 2024 sets the stage for a possible carry-trade unwind.
🛩️ Israel Lifts F-35 Fleet to 100: Tel Aviv approves new fighter squadrons worth up to $18 billion for US defense primes.
🇯🇵 Japan Funds First US Projects: State bank signs $2.2 billion in loans launching Tokyo’s $550 billion American investment pledge.
💣 Trump Rejects Iran Peace Plan: Tehran’s 14-point framework defers nuclear talks and draws a presidential rebuff keeping oil risk live.
🧠 One Big Thing
Greg Abel ran his first Berkshire Hathaway annual meeting with $397.4 billion in cash, equivalents and Treasuries, equal to roughly 38% of the firm's $1 trillion market cap. Operating earnings rose 18% but missed FactSet consensus, and only $234 million was repurchased after a near two-year buyback freeze. The "core four" of Apple, American Express, Moody's and Coca-Cola signals everything else may be trimmed, with Kraft Heinz already on the shelf and Apple down 75% from its 2023 share count. Buyback pace is the read-through: Berkshire has trailed the S&P by 30 percentage points since succession was announced, and any acceleration would suggest Abel sees value in his own book.
⚖️ Fear & Greed
📉 The Number That Matters
$397.4 BILLION
Berkshire’s $397.4 billion cash pile equals 38% of the firm’s $1 trillion market cap, meaning every Abel allocation now mechanically moves the needle. That $397.4 billion floor caps downside but flags how few names look cheap to him.
⚔️ Winners vs Losers
Winners
GBTG 0.00%↑: Global Business Travel Group surged after Long Lake Management agreed to acquire the corporate travel platform for $9.50 per share in an all-cash deal valued at roughly $6.3 billion, a 60.2% premium to Friday’s close, with American Express, Expedia, Qatar Investment Authority and BlackRock backing the transaction.
CELC 0.00%↑: Celcuity Inc. rallied after its Phase 3 VIKTORIA-1 trial of gedatolisib hit the primary endpoint in the PIK3CA mutant breast cancer cohort, with the company planning to submit a supplemental NDA and detailed data set for the ASCO Annual Meeting.
Losers
CCOI 0.00%↑: Cogent Communications Holdings tumbled after reporting Q1 2026 service revenue of $239.2 million that missed Street estimates, extending the punishing post-earnings pattern that has weighed on the stock since the 98% dividend cut and ongoing pressure from the Sprint integration and elevated debt load.
DVLT 0.00%↑: Datavault AI sank after pricing a $60 million registered direct offering of roughly 109.1 million shares at $0.55, a 25% discount to Friday’s close, with the heavily dilutive raise complicating its pending CyberCatch acquisition and Nasdaq minimum bid compliance issue.
📊 Market Snapshot
Cryptocurrencies:
Bitcoin (BTC): $78977 (▲ 0.52%)
Ethereum (ETH): $2341 (▲ 0.78%)
XRP: $1.40 (▲ 0.54%)
Equity Indices (Futures):
S&P 500: $7226 (▲ 0.09%)
NASDAQ 100: $27865 (▲ 0.11%)
FTSE 100: £10360 (▲ 0.06%)
Commodities & Bonds:
10-Year US Treasury Yield: 4.39% (▲ 0.50%)
Oil (WTI): $102 (▼ -0.17%)
Gold: $4572 (▼ -0.92%)
Silver: $73.90 (▼ -1.87%)
Data as of: UK (BST) 13:56 / US (EDT): 09:56 / Asia (Tokyo): 22:56
✅ 5 Things to Know
✈️ Spirit Goes Dark. Budget Travel Goes With It.
Spirit Airlines became the first major US carrier to fold in nearly 25 years when its operations halted at 3 a.m. Eastern on Saturday, ending a 34-year run. About 9,000 flights covering 1.8 million seats through May were cancelled, and roughly 14,000 employees lost their jobs, including 2,000 ALPA pilots and 5,500 flight attendants. CEO Dave Davis said the airline needed “hundreds of millions” more in liquidity it could not raise. Talks with the Trump administration over a $500 million rescue, which would have given the government warrants for around 90% of equity, collapsed late Friday after creditors including Citadel and Ares refused to be subordinated. (CNBC)
This is the first full death of the US ultra-low-cost model. Federal Judge William Young’s 2024 ruling blocking the JetBlue merger documented Spirit’s ability to drag rival fares down by 7-11% on entry, and CBS analysis found that fares jumped about 23% on routes Spirit later abandoned. Jet fuel approached $4.51 a gallon by late April, more than double Spirit’s $2.20 plan assumption when it exited bankruptcy in March. The carrier had already lost more than $2.5 billion since 2020 and was operating in its second bankruptcy in eight months. SAVE/FLYYQ ended Friday down 75%, JetBlue (JBLU) jumped 4.4%, and Frontier (ULCC) ran up 8-13% intraday. (CBS News)
By Saturday evening, United had absorbed roughly 14,000 stranded Spirit customers and Southwest more than 20,000, with rescue fares typically capped near $200 one-way. JetBlue announced a meaningful Fort Lauderdale expansion including new Cali, Colombia and Nashville service; Frontier opened rescue fares of up to 50% off; Allegiant froze prices on overlapping routes. AerCap, whose $75.6 million in lease termination claims triggered the August 2025 default, and CSDS Asset Management, the buyer of 20 A320s for $533.5 million in February, are now first in line for the asset auctions.
Sensei’s Insight: The cleanest near-term winners are Frontier on the Caribbean and ULCC routes, JetBlue at Fort Lauderdale, and Allegiant on leisure. The losers are flyers in Spirit’s old hub markets, where fares could move 15% to 23% higher within three to six months. The death of the US ultra-low-cost model is now confirmed.
🎯 Abel Takes the Mic. Cash Hits a Record $397B.
Greg Abel ran his first Berkshire Hathaway annual meeting on Saturday, with Warren Buffett seated in the front row of the Omaha arena as a “60” jersey was raised to the rafters. Cash, equivalents and Treasuries ended Q1 at a record $397.4 billion, up from $373.3 billion at year-end and now equal to roughly 38% of Berkshire’s $1 trillion market cap. First-quarter operating earnings rose 18% to $11.35 billion, missing the $11.56 billion FactSet consensus. Buybacks officially resumed in March after a near two-year freeze, but only $234.2 million was repurchased during the quarter. Berkshire was a net seller of equities for the 14th straight quarter. (CNBC)
The continuity messaging covered a quieter shift in capital allocation. Abel laid out a “core four” of Apple, American Express, Moody’s and Coca-Cola as the permanent foundation, with everything else fair game for trimming. Apple is already down 75% from its 2023 share count. Kraft Heinz is publicly on the sale block under a recent shelf filing covering up to 325 million shares. The new $4 billion Alphabet stake got an explicit endorsement, the first modern tech name beyond Apple to be blessed in size. Buffett told CNBC’s Becky Quick that markets feel like “a church with a casino attached,” singling out one-day options as gambling rather than investing. (Bloomberg)
For BRK.B holders the cash floor caps downside but the limp buyback caps near-term upside. The stock closed Friday at $473.01, year-to-date down 5.9% against the S&P’s plus 5.6%. Berkshire has now lagged the index by more than 30 percentage points since Buffett’s step-down announcement last May. Apple investors should expect further trimming, Kraft Heinz holders should brace for a potential block sale, and Sirius XM accumulation continues. Berkshire still owns zero crypto.
Sensei’s Insight: With $397 billion in cash, every Abel decision about deployment is mechanically a needle-mover. The signal worth watching is how aggressively Berkshire repurchases its own stock if BRK.B drifts further below intrinsic value. The “core four” framework is the cleanest signal yet that Abel is preparing to rationalise the rest of the book.
🤖 Cerebras Aims at $40B. Roadshow Starts Today
Cerebras Systems begins its formal IPO roadshow today, targeting a $40 billion valuation and a raise of up to $4 billion. Bloomberg reported Friday evening that the underwriting banks, led by Morgan Stanley with Citigroup, Barclays and UBS alongside, have already received indications of interest above $10 billion. Pricing could land in mid-May. The valuation is roughly five times the $8.1 billion Series G in September 2025 and 74% above the $23 billion Series H closed in February, with Tiger Global, AMD, Benchmark, Coatue and Fidelity all participating. Cerebras will list on the Nasdaq Global Select Market under ticker CBRS and builds a single wafer-scale chip about 57 times the size of an Nvidia H100. (Bloomberg)
This is the first major AI hardware IPO of 2026 and a real-time test of whether public markets will pay private-market multiples for AI infrastructure. The OpenAI relationship is doing most of the heavy lifting: a $10-20 billion master agreement signed late last year covers up to 2 gigawatts of inference capacity through 2030, with a $1 billion OpenAI loan and warrants attached. Customer concentration remains the cleanest risk: the UAE’s MBZUAI accounts for 62% of 2025 revenue and G42 another 24%. Revenue hit $510 million in 2025, up 76% year-on-year, with $24.6 billion in remaining performance obligations. (CNBC)
Sensei’s Insight: Cerebras prices into the same window as Nvidia’s May 20 earnings, making AI sentiment the swing variable. A clean debut pressures the only-NVDA narrative and revives the broader AI IPO calendar; a weak one reinforces the Nvidia moat. UAE concentration remains the structural overhang once the OpenAI honeymoon ends.
🛢️ America Is Now the World’s Oil Lifeline.
With the Strait of Hormuz effectively shut since early March and the US naval blockade of Iranian ports holding since April 13, the United States has become the world’s residual crude supplier. More than 250 million barrels of US crude have shipped overseas in the past nine weeks, the country has overtaken Saudi Arabia as the largest crude exporter, and Port Corpus Christi posted its busiest quarter on record. April crude exports surged to roughly 5.2 million barrels a day, up more than 30% from pre-war February. The UK Royal Navy reported on Saturday that traffic through Hormuz has fallen more than 90% since the conflict began. (Bloomberg)
The cushion is tighter than the headline numbers suggest. US crude production is down roughly 100,000 barrels a day since the war began, the Strategic Petroleum Reserve has flipped from refill mode to drawdown, and Goldman Sachs estimates Persian Gulf output has collapsed to 11.9 million barrels a day from 26.4 million pre-war. The UAE formally exited OPEC effective May 1, and OPEC+ approved another 188,000 barrels a day of output increase yesterday. WTI closed Friday at $101.94, off the $111 four-year intraday high; Brent at $108.17. Energy is the best-performing S&P sector this year, with the USO crude ETF up 94% and tanker names like Frontline and Nordic American both up over 60%. (CNBC)
Goldman now sees Q4 Brent at $90, while Citi’s base case is $80 in Q4 if Hormuz reopens late this month and its bull case is $150 in a sustained-disruption scenario. JPMorgan’s Natasha Kaneva warned that if the strait stays disrupted past mid-May, Brent could climb to “$120 to $130, with $150 not out of question.” VLCC Mideast-China day rates topped $423,000, a record.
Sensei’s Insight: Goldman has pushed its first-Fed-cut call from June to September. With pump prices above $4.40 a gallon and CPI back at 3.3%, the rate-cut path narrows again. Watch for whispers about US crude export restrictions if Hormuz stays shut past mid-May. That has gone from theoretical to a real tail risk.
🇯🇵 Tokyo Spent $34B. The Yen Trade Just Got Riskier.
Japan ran its first FX intervention since July 2024 on Thursday, with the Ministry of Finance estimated to have sold around $34.5 billion of dollars to defend the yen. USD/JPY hit 160.73 intraday before collapsing 2.3% to 155.57, the biggest one-day dollar drop against yen since December 2022. Vice Finance Minister Atsushi Mimura called the action “our final evacuation warning.” Finance Minister Satsuki Katayama, speaking from the Asian Development Bank meeting in Samarkand on Saturday, declined to formally confirm the intervention but pointedly noted that the Golden Week holiday window is “still in its early stages.” (CNBC)
The intervention reads as the start of a campaign, not a one-off. Past episodes (October 2022, July 2024) only worked when paired with narrower US-Japan rate differentials, and the gap is still about 3 percentage points. The Bank of Japan’s policy board split 6-3 at its April 28 meeting, with three members voting to hike to 1%. Markets now price a 60-66% chance of a June hike. CFTC speculative net yen shorts had reached the highest level since July 2024 going into Thursday’s action. The Nikkei 225 closed Friday at 59,513, near psychological 60,000 resistance. (Japan Times)
Sensei’s Insight: Carry-trade unwind risk is the read-through that retail should track. A repeat of the August 2024 yen-driven liquidity event hits emerging-market FX, high-multiple growth stocks, and unhedged Japan ETFs. The five Berkshire-owned Japanese trading houses (Mitsui, Mitsubishi, Itochu, Sumitomo, Marubeni) are the cleanest yen-sensitive proxy for retail investors.
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🛩️ Israel Doubles Down on Lockheed and Boeing
Israel’s Ministerial Committee on Procurement approved over the weekend the purchase of two new fighter squadrons, taking its F-35 fleet from 75 to 100 jets and its F-15IA order from 25 to 50. The combined value is described as “tens of billions of shekels,” likely $10-18 billion, sitting inside a broader 350 billion shekel ($119 billion) decade-long buildup. Boeing is adding a second F-15 assembly line in St. Louis to handle demand. The supply chain runs through RTX (Pratt F135 engines for the F-35), GE Aerospace (F110 engines for the F-15IA), Northrop Grumman (F-35 fuselages and AESA radar), and Israel’s Elbit Systems, already up 51% this year on EW and helmet-display content. PM Netanyahu said the new aircraft mean Israeli pilots can “reach anywhere in Iran’s skies.” (CNBC)
🇯🇵 Japan Writes the First Cheques on the $550B Trade Deal
Japan’s state-backed JBIC signed $2.2 billion in first-tranche loan agreements Friday with MUFG, SMFG and Mizuho to finance the first three US projects under Japan’s $550 billion strategic investment commitment. The trio: a $33 billion 9.2-gigawatt natural-gas plant in Ohio operated by SoftBank’s SB Energy with Hitachi and Toshiba supplying turbines, dedicated to powering AI data centres; a $2.1 billion deepwater crude export terminal off Texas with Mitsui O.S.K. Lines and Nippon Steel involved; and a $600 million synthetic diamond plant in Georgia by De Beers’ Element Six. Combined with March’s $73 billion second tranche, roughly $109 billion of the $550 billion target has now been pledged. Trade Minister Akazawa has previously said only 1-2% will be cash equity, the rest bonds, loans and guarantees. (Bloomberg)
💣 Trump Cools on Iran’s 14-Point Counter-Proposal
Iran transmitted a 14-point peace proposal through Pakistani mediators last Thursday, including a 30-day window to end the war, lifting of the US naval blockade, the release of frozen assets, and a “new mechanism” for the Strait of Hormuz rather than full reopening. Critically, Tehran’s plan defers nuclear-program discussions to a later phase, the central US objection. Trump on Saturday said he could not “imagine that it would be acceptable” given Iran “has not yet paid a big enough price.” Friday’s oil moves were the partial relief reaction (WTI down 2.98%, Brent down 5.12%), but the framework’s near-rejection means Goldman’s $90 Q4 Brent and Citi’s $150 bull case are both still live. The original two-week ceasefire expires tomorrow. (Al Jazeera)
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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).