Powell Goes, Buffet Steps Down – a New Season Begins

Market Recap: 27 May – 1 June 2026

Review of Financial Markets

US Stock Market

The markets continued on a positive note, but the S&P500 closed Friday with a topping tail. Still, for the week, the S&P500 and the NASDAQ 100 were up by 0.9% and 1.5%, respectively. The small cap index (Russell 2000) was up by 0.8%. Trading volumes were average.

Commodities

Gold and Silver continue consolidating around current levels. The price of gold and silver fell 2% and 0.5% for the week, respectively.

WTI crude oil swung in the range ~94-110$ per barrel and closed the week at 102.5$ per barrel, as the Strait of Hormuz fails to re-open and US-Iran negotiations remain inconclusive.

Bitcoin remains around 78 k$ and may trade in the range 72-84 k$ in the near future, unless overall liquidity starts to tighten, triggering crypto sales.

US Dollar, Money Supply

The relative strength of the US dollar (DXY) fell slightly to 98.2. The EUR/USD is around 1.172$, the GBP/USD is at 1.358$, and the USD/JPY is at 157.09 JPY.

US M2 money supply in March was 22.69T$, still on a growth trend, showing a continuous expansion in the money supply since December 2023. If the money supply starts to contract, it will be a confirmation of the credit cycle reaching a turning point.

The national financial conditions index (NFCI) released on the 20th of April 2026 showed a 4% loosening in financial conditions relative to the previous week. Financial conditions remain loose as traders price in a quick resolution of the middle-east conflict. Note that this indicator is delayed by two weeks.

Bonds and Options

US bond yields rose on all maturities. Yields now sit at 3.880% for the 2-year and 4.372 for the 10-year. Long-term growth and inflation expectations are at 4.961% (30-year US bonds). The yield curve has uninverted since a year ago – a typical sign of an impending recession.

The VIX remained low during the whole week closed around 17, which may be an under-pricing of future volatility and excessive optimism. If options sellers believe there is the risk of a bigger correction, then this is not the moment to sell puts – the time will come! However, if you see any very specific opportunities plus a juicy option premium, go ahead!

Weekly Commentary

This week we had the FOMC meeting and the final press conference by Jerome Powell.

The Fed decided it was best to keep interest rates steady as it waits for clarity on how long the conflict will last – and how bad the fallout becomes. Hopes of any imminent rate cuts were dashed when it was revealed March’s inflation figure had shot up to 3.3%, the highest it has been since May 2024, but the Federal Reserve’s statement suggested it would cut rates when it next meets.

Though this is expected to be Powell’s last meeting as chair, his term as a Fed governor does not expire until 2028. He said he will stay on at the bank until a Trump administration probe into him and the bank is “well and truly over”. US attorney for the District of Columbia Jeanine Pirro said the investigation would be closed, but Powell said he believed she would “not hesitate to restart the investigation”. “I’ve said that I will not leave the board until this investigation is well and truly over with transparency and finality, and I stand by that,” he added.

Powell warned the Trump administration’s “legal assaults” are much more serious than simply verbally criticizing the Federal Reserve. The outgoing chair said legal actions by the Trump administration are “battering the institution and putting at risk the thing that really matters to the public”. “Which is the ability to conduct monetary policy without taking into consideration political factors,” he said.

The successor of Jerome Powell is Kevin Warsh. In his first stint at the Federal Reserve, Kevin Warsh came to a central bank that was about to be asked to save the world. He returns now under very different circumstances, asked to serve a notoriously fickle president who will place significant but very different demands on him. Warsh indeed is a Fed veteran, serving during the critical period of 2006 to 2011 that led up to and ultimately through the global financial crisis and the central bank’s efforts to stabilize the economy. Appointed by President George W. Bush, Warsh was one of the youngest members ever to serve on the board of governors.

While at the FED, Warsh played an important role in the design and implementation of emergency lending programs aimed at stabilizing credit markets. Warsh also played a key role in helping devise the myriad programs aimed at rescuing the economy. One of those programs, developed separately at the Treasury Department, became known as the Troubled Asset Relief Program, developed by Neel Kashkari, who is now the Minneapolis Fed president.

However, Warsh emerged from the era as a Fed critic. He warned that large-scale asset purchases and near-zero benchmark interest rates ran the risk of distorting markets and undermining long-term price stability. While supporting the earlier efforts, Warsh voted against the second round of Fed bond buying, a program known as quantitative easing.

Warsh is widely expected to be more amenable to rate cuts given Trump’s push for looser monetary policy, but he will face a Fed that is reluctant to cut rates in the face of another massive war-driven supply shock.

Another weekly highlight goes to the first Berkshire Hathaway annual shareholder meeting after Warren Buffet stepping down. Warren Buffett, 95, officially stepped down as CEO of Berkshire Hathaway on December 31, 2025, after 60 years at the helm. Greg Abel, who oversaw non-insurance operations, succeeded him as CEO on Jan. 1, 2026. Buffett remains chairman and continues to work, advising on investments while ending his, “partial” retirement

“Sadly we miss Warren and Charlie and that show which was fun, but it’s a business meeting for a lot of us and hearing what the businesses are doing is what it’s all about,” investor Chris Bloomstran, who is president of Semper Augustus Investments Group said.

Abel opened the meeting that way with a detailed discussion of how Berkshire’s biggest businesses are performing. He gave a granular explanation about the performance of Berkshire’s insurers, its railroad and its utilities. And he emphasized the way Berkshire is using artificial intelligence “to solve problems at our companies.” But also many people travel to Omaha primarily to meet up with like-minded value investors, who practice the approach that Buffett employed, and attend some of the investment conferences and meetings that are scheduled around Berkshire’s shareholder meeting.

The cease-fire in the Middle East continues, but so does the closure of the Strait of Hormuz. Worse still, negotiations are not progressing.

Iran’s Islamic Revolutionary Guard Corps says it set a 30-day deadline for the US military to end its blockade of ports, adding President Trump “must choose between an impossible military operation or a bad deal”. Trump says he’ll review the plan Iran sent via Pakistan but does not think he can make a deal. The comments come after Iran sent a 14-point plan to the US calling for guarantees of non-aggression, the lifting of a naval blockade, and an end to the war “on all fronts“, including in Lebanon. The impasse is further complicated by technical obstacles to reopening the Strait of Hormuz, including the presence of Iranian sea mines, and a growing rift with NATO allies following Trump’s decision to withdraw 5,000 US troops from Germany.

The wrap up for the week is that no significant geopolitical developments have occurred that justify the stock market optimism. Risking to sound like a broken clock, the recommendation is to be careful and a bit conservative. The higher energy costs will eventually trickle down to basic goods and food, and that will be a real impact on everyone’s daily lives. In the past, such energy shocks have been catalysts for recessions. Additionally, over the next quarters discretionary spending may fall on many sectors, including services, and the overall economy may suffer.

Repeating last week’s closing sentence: in this market, we must search intensively and carefully for any opportunities, and keep some powder dry for rainy days.

We don’t predict markets — we track liquidity, risk, and the forces shaping the cycle.

Good luck, stay prepared.