Finimize - ☕️ Coffee's 45-year high

What’s going on here?

Warren Buffett pledged his undying love for Apple at Berkshire Hathaway’s annual meeting on Saturday – despite selling over a tenth of Berkshire’s stake in the firm.

What does this mean?

Berkshire Hathaway has long indulged in big bites of Apple, but the conglomerate’s loyalty seemed to waver as it cut around 13% of its stake in the tech firm last quarter. The sale pumped up Berkshire’s cash reserves big time, pushing them up to $189 billion by the end of March. Buffett insisted there was no love lost, though, chalking it up to a simple tax-focused decision. He went so far as to say Apple was “even better” than other “wonderful” businesses in Berkshire’s portfolio, including American Express and Coca-Cola. At the same time, he maintained that he expects Apple to be the highlight of its holdings for years to come.

Why should I care?

Zooming out: Willing and Abel.

Mind you, investors aren’t just interested in Berkshire’s holdings. With Buffett blowing out 94 birthday candles this year, and after the passing of his long-time partner Charlie Munger, onlookers are curious about the next leader of the world-famous company. The honor looks likely to land on Greg Abel’s shoulders. Buffett has complimented Abel’s business acumen and capital management skills, appointing him as Berkshire’s heir apparent back in 2021. If he does indeed secure the plaque, investors might not need to brace for much change: Abel seemingly shares Buffett’s golden rule of betting on the US.

The bigger picture: Bills, bills, bills.

Buffett’s stocks may as well be playing second fiddle nowadays. The Oracle of Omaha has parked a ton of cash in Treasury bills – potentially up to $200 billion. And with stateside interest rates sitting near their highest point for a decade, that earned him $1.9 billion in interest alone last quarter. You can’t blame Buffett for knighting cash as king again.

What’s going on here?

A wholesale price index of the world’s second-most popular coffee beans reached its highest point in 45 years.

What does this mean?

Cocoa prices reached a record high this year, striking fear into the hearts of chocoholics. And now, it might be panic stations for those who prefer a double espresso to a hot chocolate. A new report by the International Coffee Organization showed that a wholesale price index for robusta beans rose by 17% in April from the month before, reaching $1.94 a pound – the highest since 1979. This isn’t a niche bag of beans, either: robusta beans are among the world’s most popular, making up around 40% of global coffee consumption. The variety is usually a well-priced option, see, but it’s in short supply after hot and dry weather ravaged crops in Vietnam, which just so happens to be the world’s biggest producer of robusta beans.

Why should I care?

Zooming in: This is bigger than your cortado.

“El Niño” is a major force behind this year’s crop failures. The powerful climate event results in wetter conditions in the southern part of the US, but creates drier and hotter weather in much of the rest of the world. And this isn’t just make or break for worn-out workers’ morning coffee runs: besides ruining crops, stalling supply chains, and driving up commodity prices, the event can dent economic growth in emerging economies, strain power grids, and exacerbate public health crises.

The bigger picture: Central banks are about to be decaffeinated and irritated.

Commodities have been doing a public service for the last couple of years. Their prices fell by around 40% between mid-2022 and mid-2023, and that brought global inflation down by two percentage points according to the World Bank. But now that their prices have plateaued, inflation no longer has a weight dragging it down – and that’s making it harder for central banks to cut interest rates.