Breakfast | The threat of movie tariffs looms, Apple falls over 3% leading the decline in film stocks! Berkshire Hathaway once dropped over 7%

Market Overview

Tariff threats have resurfaced, leading to a decline in U.S. stocks, with the S&P 500 index ending a nine-day winning streak.

Under the impact of the film industry tariff threats, Netflix fell nearly 2%, Disney dropped 0.4%, and Apple closed down over 3%.

The seven tech giants had mixed results, with Tesla down 2.4%, Amazon down 1.91%, Nvidia down 0.59%, Meta up 0.38%, Google C up 0.14%, and Microsoft up 0.20%.

Among chip stocks, AMD closed up 1.81%, while TSMC ADR fell over 1%.

Palantir closed down 0.41%, and after announcing an upward revision of its full-year earnings forecast, it saw a post-market drop of over 9%.

Berkshire Hathaway Class A shares fell over 5%, as the Berkshire board approved Abel to succeed Buffett as CEO starting January 1 next year.

Key Focus This Week

The Federal Reserve and the Bank of England will announce their interest rate decisions, Musk's Grok 3.5 large model will debut, and Auntie in Shanghai plans to list on the Hong Kong stock market on May 8.

In terms of data, focus on China's CPI and PPI inflation, foreign reserves, imports and exports, and financial data. In terms of earnings reports, pay attention to AMD, ARM, and SMIC.

White House Says No Final Decision on Film Tariffs Yet

On May 4 local time, U.S. President Trump posted on social media that he has authorized the U.S. Department of Commerce and the U.S. Trade Representative to immediately initiate procedures to impose a 100% tariff on all films produced abroad and entering the U.S., hoping to "have American-made films again." Trump stated that the U.S. film industry is rapidly declining, and Hollywood is being "destroyed" by the trend of American filmmakers and film companies working overseas, which poses a "national security threat" to the U.S.

On May 5, White House spokesperson Kush DeSai stated that although no final decision has been made, the government is exploring all options to fulfill Trump's directive.

U.S. Treasury Secretary Becerra Promotes Bets on America: Tax Cuts and Other Trump Policies Will Attract Investment

Becerra stated that the trade, tax cuts, and deregulation aspects of the Trump administration's economic agenda are not independent policies but rather "interlocking components of an engine" aimed at promoting long-term investment in the U.S. and making America more attractive to investors; the U.S. market has "anti-fragile" characteristics, rebounding after past financial crises; "by this time next year," U.S. GDP growth could approach 3%.

Buffett to Step Down as CEO Amid Underwhelming Performance, Berkshire Shares Dropped Nearly 7% Intraday

• The earnings report showed that Berkshire's first-quarter operating profit was $9.64 billion, down from $11.2 billion in the same period last year, a 14% year-on-year decline, falling short of analyst expectations. The company warned that tariffs could further impact its profits.
• At the 2025 Berkshire shareholder meeting, Buffett stated that he should hand over the CEO position to Abel by the end of the year and will not sell any Berkshire shares; "trade should not be a weapon," and trade and tariffs can be a form of warfare; the recent fluctuations in U.S. stocks are not significant; he is concerned about U.S. fiscal policy, as irresponsible government actions could lead to "frightening" currency values; there may be investment opportunities in the next five years; the luckiest days are those born in the U.S.; he plans to continue holding shares in Japanese trading companies for fifty to sixty years
• The Berkshire board approved on Sunday that Abel will succeed Buffett as CEO on January 1 next year, while Buffett will continue to serve as chairman. Buffett announced the handover as the company's stock price just hit a record high last Friday, marking a peak moment for his departure. Analysts believe that there will not be significant changes in operations, and under Abel's leadership, the corporate culture and strategy of Berkshire will remain unchanged. Wall Street mogul Bill Ackman expects that Berkshire may increase cash returns to shareholders next, expressing confidence in Abel's ability to manage Berkshire.

Xiaomi's "Smart Driving" renamed to "Assisted Driving"

Recently, reporters from China Fund learned during interviews that executives from car companies have shifted their discussions on "Smart Driving" from high-profile promotion at the beginning of the year to a more ideal approach currently, and revealed that it is no longer appropriate to say "Smart Driving," but rather to change it to Assisted Driving or Intelligent Assisted Driving.

New Taiwan Dollar rises 5% against the US Dollar, marking the largest intraday increase since 1988

Media reports state that Taiwan's Financial Supervisory Commission has requested the largest life insurance companies to discuss the impact of the rapid appreciation of the New Taiwan Dollar on their operations, as these insurance giants are collectively hedging their dollar exposure. Currently, regulatory authorities find it difficult to intervene significantly in the foreign exchange market, but Taiwan's "Central Bank" Governor Yang Jinlong reiterated that they will intervene if exchange rate fluctuations threaten market stability. Taiwan also stated that the tariff negotiations with the US did not touch upon exchange rate issues.

Hong Kong sells a record HKD 60.5 billion to defend the peg

The Hong Kong Monetary Authority sold HKD 60.543 billion in the market as the Hong Kong dollar exchange rate hit the strong-side Convertibility Undertaking. Last Friday and this Monday, the Hong Kong Monetary Authority cumulatively sold HKD 116.6 billion.

US April ISM Services Index unexpectedly rises to 51.6, price index hits a two-year high

After a sharp decline in March, the activity of US service sector companies saw some recovery in April. The pace of job shrinkage slowed, new orders reached the highest level this year, the business activity index fell to the lowest since June last year, the import index recorded the largest decline since June, and the inventory index climbed to the highest since October last year