Deconstructing the Headlines - 05/03/10

There were several important events that occurred over the weekend, and here are my views on each of them:

• The Woodstock of Capitalism. Warren Buffett conducted Berkshire Hathaway's (BRK.A / BRK.B) Annual Meeting in Omaha, Neb., to tens of thousands of attendees. Quite frankly, though, I thought there was very little of interest that emanated from that meeting. Indeed, as the Oracle's popularity has risen over the past few years, these meetings have gotten increasingly less informative and productive. (Not surprisingly, Mr. Buffett defended Goldman Sachs GS), which should put a bid under the stock this morning.
• Greek Rescue Package Put in Place. As expected, the euro-zone countries and the IMF have come to Greece's rescue. I have recently argued that the spreading sovereign credit problems and the associated austerity measures are among the many nontraditional headwinds that will weigh on worldwide economic growth.
• Times Square Car Bomb. Fortunately the bomb was a dud, and, to date, there is no evidence of a Taliban or terrorist connection. Nevertheless, I have argued for months that market participants had gotten complacent on geopolitical risk, and I will stick by that view.
• The BP Oil Spill Grows More Menacing. Worse than Valdez? The spill looks like it is going to have a broader economic effect than previously assumed. As well, more onerous and costly regulation and limitations on offshore drilling raise the specter of higher oil prices.

China Tightens Further. For the third time this year, China has increased bank reserve requirements in an attempt to rein in inflation and speculation. This move was on my surprise list for 2010, as was the timing.