29 Sept 2025
Markets continue to be influenced by recent PPI data, with many stocks and sectors showing declines, while significant investment shifts by prominent figures like Warren Buffett and ongoing governmental policy discussions are creating specific market movements. Macroeconomic data, including industrial production figures, reveal producers are facing considerable challenges due to weak demand and tariffs, suggesting that current economic trends may not be transient.
Markets are currently under the influence of recent PPI data, causing many stocks and sectors to open in the red. The healthcare sector, however, is performing well due to investment news from Warren Buffett.
Warren Buffett's Berkshire Hathaway has shifted its portfolio, selling Apple shares for the first time since Q3 last year and purchasing UnitedHealth Group (UNH) shares, which boosted UNH's stock. Buffett is also increasing his cash holdings, suggesting a potential view that remaining liquid is a better strategy than buying and investing in certain stocks given current economic conditions and a possibly range-bound market.
The Utilities and Financials sectors are currently the worst performers in the market today, with their closing status at the end of the week yet to be determined.
The Trump administration is reportedly considering using CHIPS Act funds to acquire shares in Intel, a move that aligns with traditional policies and could be extended to other companies. Negotiations are in early stages, with Intel already being the largest recipient of CHIPS Act funding, having received approximately $8 billion for commercial semiconductor production, up to $3 billion for Pentagon security programs, and potentially $11 billion in additional loans. This news, announced before market opening, led to a significant 5% increase in Intel's stock.
Remarks by Mr. Sarami indicate that tariffs on treasuries will likely be determined next week, followed by steel tariffs the week after. The exact nature of these changes remains unclear, especially since steel already faces a 50% tariff.
Federal Reserve member Goolsbee prefers to observe at least one more inflation report to confirm that inflationary pressures are not persistent or increasing. Services inflation remains high, as noted in the CPI report. He advises against overreacting to single-month data and emphasizes the need to differentiate between transient and persistent price increases to determine appropriate policy responses. Further inflation reports are expected next month to provide clearer insights.
Recent industrial production data came in 0.1% lower than predictions, registering in the negative range, though previous data was revised. This decline is attributed to weak production, which is under pressure from weak demand and the impact of trade policy tariffs. Factory production and utility services saw a 0.1% decrease, contrasting with a 0.4% increase in the previous month. Factory production constitutes three-quarters of total industrial production.
Initial surges in orders, such as aircraft production, occurred at the beginning of the year due to fears of impending tariffs. However, producers are now grappling with significant challenges, including rising commodity costs, higher raw material prices, and tariffs. The data for July shows a decrease in non-durable goods production (e.g., textiles, apparel, oil) while durable goods production (e.g., motor vehicles, aerospace equipment) has seen an increase. Overall, consumer goods production increased at a slower rate, and construction supplies and business equipment experienced declines.
The impact of tariffs is increasingly evident in producer inflation and industrial production data, indicating producers are under pressure. The duration of this pressure and whether it will be passed on to consumers remains uncertain. Given the current data, this trend is unlikely to be temporary, potentially lasting 3 to 4 months, affecting consumers, producers, and inflation.
A meeting between Trump and Putin regarding a ceasefire and peace conditions is expected today. The outcome could influence assets like gold, with market impacts likely becoming visible by Monday following Sunday's developments.
It remains to be seen whether this data will continue the same trend in the coming month or if other data will impact it, but given the conditions in the data released this week, it is unlikely that this trend will be temporary.
| Key Area | Observation | Implication |
|---|---|---|
| Market Status | Many sectors are red, affected by recent PPI data. | Market sentiment remains cautious, awaiting further economic indicators. |
| Warren Buffett's Strategy | Sold Apple, bought UnitedHealth Group (UNH), increasing cash holdings. | Suggests a defensive stance and potential expectation of a range-bound or uncertain market. |
| CHIPS Act & Intel | Trump administration considering using CHIPS Act funds to buy Intel shares; Intel stock rose 5%. | Highlights strategic national interest in semiconductor industry and government support for key domestic firms. |
| Industrial Production | Data below expectations, weak production due to demand and tariffs. | Producers face significant challenges, and tariff impacts are becoming more visible in economic data. |
| Inflation Outlook (Fed) | Fed member Goolsbee wants more data; services inflation remains high. | The Federal Reserve is maintaining a cautious, data-dependent approach to monetary policy, avoiding premature reactions. |
