Buffett’s letter continued the theme of an owner’s handbook for shareholders. 2022 operating earnings rose 12% over 2021, while per-share operating income increased by 15%. Cost pressures from rising inflation caused profit margins in 2022 to fall below 2021.

Stocks are focused on higher bond yields fed by better economic growth and stubbornly high inflation readings. Earnings from the retailers will be studied for discounting and inventory levels. This week’s PCE inflation report could add to the narrative of hotter inflation needing more Fed hikes.

Berkshire’s $299 billion very concentrated investment portfolio comprises 49 companies, with tech, energy, and financial stocks among the most significant exposure. No holdings were eliminated, eight decreased, three increased, and Berkshire made no new purchases.

Earnings improved but are below estimates at the end of the quarter. Still, stocks have focused more on macroeconomic factors like higher bond yields. This week’s CPI and retail sales reports will be crucial as markets try to divine the path of interest rates and the economy.

Earnings deteriorated again last week, but stocks have soared in 2023 as investors focused on the eventual recovery and the rising odds that the U.S. might avoid recession. Fed Chair Powell’s appearance on Tuesday takes on additional relevance in the wake of last week’s breathtaking jobs report.