From GDP Contraction to Buffett’s Exit: How the Markets Kept Calm and What’s Next- GCI Market Update: 4/28 – 5/5:
- Gold Crown Investing
- May 5
- 5 min read
The past week has been a fascinating and honestly surprising stretch across the U.S. economy, markets, and corporate world. Sure, on the surface it looked chaotic: we got hit with a GDP contraction, saw mixed signals from the labor market, watched Trump’s tariffs shift gears (again), and had some of the biggest names in business — like Microsoft, Ford, and Berkshire Hathaway — drop major updates.
But here’s the thing: despite all the noise, the markets held up pretty well.
GDP and Economic Context:
In the first quarter of 2025, U.S. GDP shrank by 0.3% making the country’s first economic contraction in 3 years. One key aspect behind this was a surge in imports as companies and consumers raced to stockpile goods ahead of announced tariffs. This may have boosted trade volume but that came at a consequence of widening the trade deficit (when a country imports more than they export), and this disrupted normal supply chain patterns, which dragged quarterly growth.
However, the labor market continued to show resilience.
The April jobs report revealed 177,000 new jobs, outpacing expectations.
A steady 4.2% unemployment rate.
The consumer and private sectors remain solid for now and while the headline job gains look solid, the underlying cuts from the DOGE (Department of Government Efficiency) initiative tell a different story: the public sector is quietly shrinking, with government agencies reducing staff to meet efficiency mandates. This matters because public-sector jobs often provide stability during private-sector downturns, so when those roles are cut, the economy loses an important cushion — magnifying the sense of strain across local communities that rely on government employment and services. (1)
Tariff Politics: Automakers & Hollywood
One of the biggest moves this week came from Trump offering selective tariff relief to U.S. automakers that many consider to be a quick economic band-aid and smart political move.
Key Points:
De – Stacking Policy: Automakers will no longer face stacked tariffs (like paying both steel and auto duties); they’ll pay only the highest applicable tariff with retroactive reimbursement. Meaning automakers can get money back for tariffs they already paid in the past, before the new rule was put in place. (2)
This softening of tariffs does not remove the major headwinds in place like the 25% vehicle and parts tariff, and 20% China fentanyl tariff. (2)
This will help automakers like Ford and GM offset part of the severe cost pressures they were bracing for, especially around imported parts and materials.
On top of this, Trump floated an even more startling trade threat:
Threats of a 100% tariff on foreign films under national emergency powers, citing national security concerns tied to foreign subsidies for movie production. (3)
While no formal action has been taken yet, just the threat rattled entertainment stocks like Netflix, Warner Bros. Discovery, and Disney — showing that the tariff battles are no longer confined to steel, autos, or agriculture, but are now bleeding into culture, media, and consumer sectors.
Stock Market & Investment Sentiment
Markets reacted hard this week to both the big-picture economic news and some major corporate updates.
Microsoft popped nearly 10% after smashing earnings, showing how much confidence investors still have in cloud and AI momentum. Automaker stocks like Ford and GM took a hit after pulling their guidance (the company is withdrawing its previously announced financial forecasts because there’s too much uncertainty to confidently predict future results), and entertainment names like Netflix and Disney got shaky after Trump’s threat of a 100% tariff on foreign films. (4)
One of the biggest symbolic moments, though, came from Berkshire Hathaway: Warren Buffett announced he’s stepping down as CEO at the end of the year, handing things over to Greg Abel. That’s a massive shift. Under Buffett’s leadership, Berkshire pulled off a mind-blowing 5,502,284% return since 1965 — compared to the S&P 500’s 39,054%.
His message this weekend really hit: stay cautious, hold onto cash, and don’t chase deals just to deploy capital. It’s a mindset that feels especially relevant right now in a market full of mixed signals. (5)
Quantum Computing
Analysts are turning bullish (positive) with Quantum Computing Inc., with some predicting the stock could nearly double from the current levels. The optimism comes despite recent struggles, as analysts point to the company’s potential to carve out space in a sector where demand is set to explode.
What makes quantum computing special is its ability to process complex calculations far beyond what today’s AI systems can handle. While AI is dominating headlines now, many see quantum as the next major shift — unlocking breakthroughs in materials science, cryptography, and logistics. Investors are watching closely, seeing quantum as a long-term play that could eventually reshape entire industries. (6)
What To Look For This Week:
Federal Reserve Meeting (May 6-7)
Major earnings reports (Disney, Uber, DoorDash, etc.) could signal how consumer spending is holding up.
March trade deficit report (May 6)
Fed governors speaking (May 9)
Amazon price increases (warned that prices will increase due to tariffs)
Written By: The Gold Crown Investing Team
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