Today
The market mood has shifted considerably since the week began. Oil prices and Treasury yields are on track to finish the week lower, while the Nasdaq is heading for a slight gain, with Nasdaq futures higher again this morning. Quite the turnaround after Brent approached $110 a barrel earlier in the week on concerns about energy supply disruptions, while Treasury yields surged as higher oil prices added to inflation worries. Stocks also fell as investors digested calls from several leading AI executives to rein in the pace of development over safety concerns. Since then, oil and yields have retreated, taking some pressure off stocks. Speaking of stocks, it’s the end of an era for one of the greatest investors of all time. Warren Buffett announced in a letter to shareholders this morning that he is stepping down as Chairman of Berkshire Hathaway, with his son Howard, or Howie, succeeding him immediately. Buffett will remain on the board as Chairman Emeritus, while Greg Abel continues to run Berkshire as CEO. Buffett called serving as Chairman “the privilege of a lifetime” and said he never took shareholders’ trust for granted, while acknowledging that “Father Time always wins.” At 96, Buffett’s decision is unlikely to come as a surprise, although with Buffett, you never quite knew. Succession at Berkshire was never going to be a last-minute thing, as long-term thinking has always been at the core of Buffettology. At a sprightly 71, Howie has been preparing for the role for decades. A Berkshire director since 1993, he says he feels ready after years of his father’s influence and “a lot of teaching.” That’s quite an understatement.
Yesterday’s post-Fed moves are already seeing some pushback. Gold is rebounding as oil prices and Treasury yields retreat, reversing some of the pressure that followed Wednesday’s Fed rate hike. Bullion rose above $4,380 an ounce at one point, snapping a three-day decline, while silver gained more than 4%. Treasury yields had jumped after the Fed raised rates for the first time since 2023, with Chair Kevin Warsh’s inflation comments pushing markets toward expecting at least one more hike this year and potentially two in 2027. Some of that increase in yields is now reversing as oil prices slide on signs that Middle East supply disruptions could ease, taking some pressure off the inflation outlook. Lower yields and softer oil have provided some relief for gold, although higher-for-longer rates and a firm U.S. dollar remain near-term headwinds. Longer term, gold continues to find support from concerns over fiscal deficits and rising government debt, along with expectations that the Fed eventually returns to easing. Investor appetite has also held up through the recent volatility, with gold ETFs recording eight consecutive days of inflows.
With U.S. government borrowing continuing to climb, who buys all that debt remains an important part of the longer-term interest-rate story. One historically large buyer has been steadily stepping back. China’s holdings of U.S. Treasuries fell to $618 bln in July, their lowest since 2008, down from more than $1.3 tln at their 2013 peak, as Beijing continues to diversify its reserves into gold, U.S. agency bonds and other assets. The shift accelerated after the U.S. froze Russia’s foreign reserves in 2022, although official figures likely understate China’s exposure because some holdings sit with overseas custodians. The bigger implication is less about China suddenly dumping Treasuries and more about the gradual erosion of a historically important source of demand for U.S. government debt. Combined with large U.S. fiscal deficits and potentially less Japanese demand as domestic yields rise, the shift could reduce an important source of structural demand for Treasuries and add to upward pressure on longer term yields. That said, the depth and liquidity of the Treasury market and the U.S. dollar’s reserve currency role remain important offsets.
Higher interest rates aren’t just a public-markets story. They matter for private equity too, where debt is often an important part of financing acquisitions. As borrowing costs rise, portfolio companies can face higher interest expenses while prospective buyers may find deals more expensive to finance, potentially slowing the pace of exits and distributions. The industry was already working through a backlog, with about $349 billion of U.S. private equity assets sitting in funds more than 10 years old at the end of 2025, according to the WSJ. Higher rates could keep some of that capital tied up for longer and put more pressure on highly leveraged companies or deals struck when financing was much cheaper. The effects won’t be uniform across the industry, however, given differences in leverage, underlying businesses and manager strategies. If rates remain elevated, the more likely implication is a longer adjustment period for dealmaking and exits, with financing costs and the ability to create value beyond leverage taking on greater importance.
The AI safety debate has found an unlikely new venue, a royal estate in Scotland. King Charles gathered some of the industry’s biggest names there on Thursday, including Nvidia CEO Jensen Huang, Google DeepMind co-founder Demis Hassabis and executives from OpenAI and Anthropic. The Palace’s views on AI may not move markets or make policy, but the guest list was notable given the public debate this week over how quickly the technology should advance. Anthropic CEO Dario Amodei helped ignite the discussion over the weekend by calling for a slowdown in the development of the most advanced AI models, a position supported by OpenAI CEO Sam Altman and Hassabis but rejected by Huang. At the gathering, Huang said companies need to test their systems rigorously and hold products back when they are not safe enough, while Hassabis reiterated concerns about autonomous systems misbehaving and bad actors using AI for harm. King Charles focused the discussion on how AI’s benefits can be pursued safely and how countries can cooperate as the technology develops. Another sign that the debate over AI’s pace and guardrails is moving beyond the tech industry.
Before the beginning? The Big Bang theory is often described as the moment the universe, and time itself, began. Turns out, it may not be that simple. A survey of more than 1,600 physicists found that 68% don’t think the Big Bang necessarily marked the beginning of time. So what exactly does that mean? The Coles Notes explanation is that the Big Bang describes how the universe expanded from a very hot, dense state roughly 13.8 billion years ago, but it doesn’t necessarily tell us what came before it, whether “before” even existed, or what ultimately caused the universe to exist. For the science-loving crowd (you know who you are), the survey went considerably deeper. Physicists were also asked about cosmic inflation (not to be confused with price inflation, although both involve rapid expansion), dark matter and quantum gravity, with plenty of disagreement there too. Just over half picked cosmic inflation, the theory that the universe expanded at an incredible rate in its earliest moments, as the best explanation for what happened. Views on dark matter and quantum gravity were even more divided. The point isn’t that physicists are lost. It’s that some of the biggest questions are still open. We’ve figured out a lot about how the universe works, just not how the whole thing got started. Deep thoughts for a Friday. We’ll save the Jays talk for Monday, depending on how the weekend goes.
Diversion: Just stretching… 
