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Weekly Newsletter
🏦 Key Points From FOMC Press Conference
💻 Big Tech Capex: Q3 Update
📊 Key Takeaways From This Week’s Earnings
🔓 Binance Hit By $6bn+ Hack
💊 Newer Drugs Drive Pharma Growth
QUOTE OF THE WEEK:
“You know, there's a lot to be anxious about in the world. I get it: geopolitics, rates, inflation, elections. So, but when you look at what's happening in the credit markets, bank loan market, high-yield market, investment-grade market, private credit, the banks, the card companies, you can't really find anybody who is saying that there are credit issues in the system. We just had a nice GDP print. The economy is strong. So I think the market is not differentiating well enough between forward-looking anxiety and what we're actually seeing in the core portfolios.” - Michael Arougheti, co-founder and CEO of Ares Management
KEY US ECONOMIC EVENTS NEXT WEEK:
MARKET CLOSE:
WEEKLY MARKET WRAP:
Good Afternoon. The Fed held rates steady on Oct. 28 but signaled more hikes may be needed. Microsoft, Alphabet, Meta, and Amazon posted strong revenue growth, but all four sold off on higher AI capex guidance and weaker free cash flow outlooks. Friday saw a sharp tech selloff, with Intel down the most. The Nasdaq gave back about 2% on the week, the S&P 0.6%, and the Dow 0.9%. The selling was concentrated in a few hyperscalers and Intel, and the S&P sits about 3% below its record. Underneath, leadership kept rotating: in October, the equal-weight S&P beat the cap-weighted index by 5.85 percentage points, the second-widest monthly gap since 1990. Energy and defensives led. Rates eased into the move, with the 10-year at 4.93% and the 30-year at 5.31%. The VIX closed at 19.4. Next week brings AMD earnings, the delayed September jobs report, and the midterms.
For the week:
CNN's Fear & Greed Index now stands at 26(Fear) out of 100, up 5 points from last week. Details here
The top five trending stocks on Reddit are Reddit, Google, NVIDIA, SPY, and Intel. Read More
Liquidity:
Banking Reserves + ON RRP: Banking reserves, the cash banks hold at the Fed, remain at approximately $2.895 trillion. ON RRP, where money market funds park spare cash overnight, remains immaterial. In August 2025, I estimated that funding stress begins when reserves fall to around $2.5 trillion. That leaves a cushion of roughly $395 billion, so banking-system liquidity remains ample.
Standing Repo Operations: The New York Fed’s standing repo operation (primarily reflecting SRF take-up) is $0. This is the Fed’s backstop for banks that need overnight cash. Zero usage means no bank needed emergency funding this week, so there is no sign of funding stress.
Here is a summary of this week’s key economic releases:
Target Rate Probabilities for December 9th FOMC Meeting:
CURATED INSIGHTS & ANALYSIS:
Big Tech Capex: What Changed In Q3:
Alphabet fell more than 10% after reporting, and Amazon fell 6 to 7%. The operating numbers explain only part of it. AWS grew 39.3%, its fastest in nearly five years. Amazon’s operating income rose 61%. Alphabet grew revenue 25%, though it missed on both revenue and earnings. Neither reported weakening demand.The two companies did opposite things and got the same result. Amazon spent $19bn more on capex than expected and has more than doubled its long-term debt in nine months. Alphabet spent $3.7bn less and holds $265bn of cash against $125bn of debt. Amazon’s trailing free cash flow is now a $42bn outflow; Alphabet’s quarter turned negative while its trailing figure stayed positive. Both were sold.
In July I argued that negative free cash flow is not value destruction, and that the test is return on invested capital against the cost of capital. That still holds. What changed is that part of the spending is now borrowed, in a market that began pricing AI credit separately in October.
Hyperscaler credit has widened, but not for CoreWeave’s reason. There, bondholders were pricing whether they get repaid. Here, the market is absorbing $228bn of new paper from four issuers and watching free cash flow shrink. When Meta chose an equity package over a bond sale, spreads tightened. In investment grade, the widening is mostly supply, not solvency.
Neither company faces a refinancing wall. What narrows is the margin for error if conversion runs slower than planned.
Earnings Tracker:
Q3 reporting is 60% done across the S&P 500, and the broad market is outgrowing the giants. The typical S&P 500 company grew GAAP net income 13.3%, with revenue up 12.3% and an 83% beat rate. The typical Russell 3000 company grew earnings 15.4%, faster than the large-cap median despite a lower beat rate of 74%.
Magnificent 7 blended earnings growth of 22.6% now trails the other 493 companies at 32.6%, the first time the group has lagged since Q4 2022.
The beats are frequent but thin. The blended growth rate has moved one point since quarter-end, from 29.2% to 30.2%, against a five-year pattern of six. An estimate that tripled in a year left little room for surprise. Pace against Q2 is flat for both the S&P 500 and the growth index.
Key Points from FOMC Press Conference:
The Fed held rates at 3¾–4%, choosing to gather more information before deciding whether further tightening is needed.
The economy strengthened further: first-half GDP was revised up to 2.4%, Q3 growth appears even stronger, consumer spending is running above 3%, and business investment is growing at a double-digit pace.
Labor conditions remain very strong, with unemployment lower than a year ago, faster payroll growth, and jobless claims near generational lows.
Inflation remains the main concern after nearly six years above target; the Chair said there has been essentially no progress yet toward 2%.
Financial conditions have tightened since the September hike, particularly for some businesses and households, but the Chair still would not characterize them as “tight.”
The Fed held because the next six weeks are “information-rich,” not because it believes policy is already restrictive enough.
The Chair said the September hike is beginning to work: inflation compensation and longer-term inflation expectations have moved in the right direction.
Most officials do not view the economy as overheating despite stronger growth, partly because productivity growth has also improved.
AI investment remains a major growth driver, but capex strength is broadening beyond technology; the Chair also argued that higher rates are beginning to influence AI-related financing and investment decisions.
The Fed remains willing to tighten further if needed, but the Chair refused to signal whether another hike will come in December.
Bottom line: strong growth and a healthy labor market leave the Fed focused almost entirely on inflation, but officials want more evidence before deciding on the next hike.
Key takeaways from this week’s earnings:
AI spending is now larger than the cash it produces
Amazon, Alphabet, and Microsoft together expect about $590 billion of capital spending this year. All three said demand still exceeds supply: Azure grew 48%, Google Cloud 103% and AWS 39%. But Alphabet’s free cash flow was negative $9.1 billion for a second straight quarter, and its shares fell 13%. Investors are now weighing the cash cost, not just the growth.
The memory shortage is hitting PCs
Intel expects the PC market to shrink 12% this year and 10% next year as memory prices push PC costs up. Its weak forecast sent the shares down 29%. Microsoft’s Windows sales to PC makers fell 27%, with inventories still high. Amazon and Microsoft both cited higher memory costs in their data-center spending. AI’s demand for memory is raising costs for everyone else.
The Middle East conflict is lifting oil company profits
Exxon said the conflict left markets short of crude, diesel, and gasoline, pushing prices higher. Chevron’s refineries ran at a record level, and it said 5–10% of global petrochemical capacity is offline. Both beat estimates, and Exxon raised its dividend. Higher energy prices are a cost for most companies but a gain for producers.
Consumers are still spending, but looking for value
Visa’s payments volume grew 9% this year, and Mastercard said consumers continue to spend, with wealthier cardholders growing fastest. Coca-Cola grew volume 5% but said restaurant traffic is under pressure and shoppers want value at every income level. Spending is holding up, but people are being more careful about where it goes.
Newer drugs are carrying pharma growth
Eli Lilly’s revenue grew 39% even as U.S. prices for its drugs fell about 10%, driven by higher volume of its obesity and diabetes medicines. AbbVie’s Skyrizi and Rinvoq grew 23–24%. Merck is building newer products ahead of Keytruda’s patent expiry. Volume from newer medicines is outweighing lower prices and older products.
Big tech is building its own AI agents
AI agents now open more than one-third of all code changes on Microsoft’s GitHub. Amazon said 400 million customers used its Alexa shopping assistant in the past year, and outside AI agents are not yet a meaningful threat to its ad business. Alphabet’s Gemini app has reached 1 billion users. The largest platforms appear to be keeping shoppers on their own agents for now.
FRONT PAGES:
Binance Hit by $6.3B Hack, Largest in History: Binance was targeted in a $6.3 billion crypto heist overnight Wednesday, now the largest digital-currency theft on record. The exchange briefly suspended withdrawals before confirming it would make customers whole from its SAFU reserve. Bitcoin fell to roughly $77,000 on the news, and Tether and Circle moved to lock down the affected stablecoin flows. Investigators are tracing the attack to a sophisticated multi-chain exploit.
Anthropic S-1 Reveals $120B SpaceX Compute Deal: Anthropic filed its 318-page S-1 on Monday, disclosing cumulative committed compute spending of $542-567 billion through decade’s end. The filing includes a $120.5 billion deal with SpaceX for Nvidia GPU capacity through 2029, a $417 billion December 2025 compute contract with multiple providers, and $125 billion of planned data-center lease payments. Anthropic now accounts for 34.5% of SpaceX’s Q3 revenue, making it SpaceX’s largest customer.
Big Tech Signals AI Capex Plateau: Alphabet and Microsoft held full-year AI capex forecasts unchanged on their Q3 updates, missing market expectations for another spending increase. The pause triggered broader AI-stock weakness; the Nasdaq posted its largest one-day drop since June, and roughly $2 trillion of AI-exposed market cap has come off in October. The signal reinforces investor concern over the sustainability of the $730 billion aggregate hyperscaler capex trajectory.
Nvidia Weighs Backing Nscale Debt for Anthropic Deal: Nvidia is in talks to serve as credit backstop for Nscale’s debt tied to last week’s $45 billion Anthropic cloud deal, with the first use case being an AI data center in West Virginia. The arrangement would extend Nvidia’s role beyond chip supplier and equity investor to include debt guarantor, deepening the vendor-financing loop that is becoming common across the AI infrastructure stack.
Wall Street Blocks Tokenization Push: At least 33 US-listed companies, including JPMorgan, Walmart, Microsoft, Wells Fargo, Goldman Sachs, and Eli Lilly, filed objections to an OKX-ICE joint venture seeking to launch tokenized trading of their shares. The venture, backed by NYSE parent Intercontinental Exchange, had received SEC approval to tokenize 63 US stocks. Issuer objections cite governance, dividend, and voting-rights concerns.
EARNINGS UPDATE:
Alphabet. EPS $2.12 versus $3.02, hurt by an $8.7B loss on its stock holdings; it would still have missed without it. Revenue $127.6B, up 25% and in line. Google Cloud revenue more than doubled, up 103%. Capital spending of $51.4B pushed free cash flow to-$9.1B. Shares fell about 13%.
Microsoft. EPS $4.89 versus $4.72; revenue $92.3B versus $90.6B. Azure cloud revenue grew 48%, and it said demand still exceeds supply. It expects about $170B of capital spending this calendar year. Windows sales to PC makers fell 27%. Shares were flat.
Amazon. EPS $1.89 versus $1.97, a miss; revenue $201.9B, in line. Operating income rose 61% to a record $28.1B. AWS grew 39%, its fastest in nearly five years, with a $578B backlog. It expects about $220B of capital spending this year. Shares fell about 1%.
Eli Lilly. EPS $7.48 versus $5.71, even after $4.57 of charges for acquired research; revenue $24.4B, up 39%, versus $22.6B. About $900M of revenue came from one-time items. U.S. prices fell about 10%, more than offset by higher volume of Mounjaro and Zepbound. Shares rose about 7%, then another 3%.
Visa. EPS $3.48 versus $3.44; revenue $12.1B, up 13% and in line. Payments volume grew 9% for the year. It is assuming consumer spending stays resilient. Shares were flat.
Exxon Mobil. EPS $4.23 versus $4.12; revenue $113.2B versus $104.9B. It said Middle East disruptions left fuel markets short of supply. It raised its dividend 4% and plans $20B of buybacks in 2027. Shares rose about 2%.
Mastercard. EPS $5.31 versus $5.17; revenue $9.8B, up 14%, versus $9.7B. It said consumers continue to spend, and spending by wealthier cardholders is growing twice as fast as overall credit. Shares rose about 4%.
AbbVie. EPS $3.82 versus $3.73; revenue $17.4B, up over 10%, slightly above estimates. Skyrizi grew 23% and Rinvoq 24%. It raised its full-year revenue outlook and its dividend. Shares rose about 1%.
Chevron. EPS $5.28 versus $4.87; revenue $67.8B versus $61.8B. Its refineries ran a record amount of crude. It said margins should stay elevated at least through year-end. Shares rose about 2%.
Intel. EPS $0.52 versus $0.41; revenue $16.5B, in line. Its fourth-quarter revenue forecast of $15–16B was well below the roughly $17B expected. It blamed a PC slowdown caused by high memory prices and a factory accident in Israel. Shares fell about 29%, their worst day since 1974.
Coca-Cola. EPS $0.91 versus $0.88; revenue $13.4B versus $12.9B. Volume grew 5% and organic revenue 7%. It said restaurant traffic is under pressure and shoppers want value at every income level. Shares fell about 2%.
Merck. EPS $2.49 versus $2.09; revenue $18.1B, up 5%, versus $17.3B. Keytruda sales rose 6% to $8.6B as newer drugs added to growth. Shares rose about 4%.
EARNINGS PREVIEW:
Date | Symbol | Name | Time |
2-Nov | AAPL | Apple Inc | After Close |
2-Nov | PLTR | Palantir Technologies | After Close |
3-Nov | AMD | Advanced Micro Devices | After Close |
3-Nov | AMGN | Amgen Inc | After Close |
3-Nov | ANET | Arista Networks | After Close |
3-Nov | SHOP | Shopify Inc | Before Open |
4-Nov | ARM | Arm Holdings | After Close |
4-Nov | MCD | McDonald's Corp | Before Open |
4-Nov | NVO | Novo Nordisk | Before Open |
4-Nov | QCOM | Qualcomm Inc | After Close |
5-Nov | TM | Toyota Motor Corp | Before Open |
5-Nov | COP | ConocoPhillips | Before Open |
VIDEO’s OF THE WEEK:
The ice cream shop that makes money when it's cold
28 Wishes sells ice cream in Los Angeles. Below 70°F, sales fall about 20%. The weather is out of their hands. Rent isn't.
So the owners started putting about $20 a day into Kalshi weather markets, taking the cold side. The days that keep customers away now pay something back.
This is hedging. Big companies have done it for decades, buying protection against bad weather, fuel spikes and rising rates. It used to take a broker, a trading desk, and an order size no corner shop could meet.
Kalshi opens it up. Contracts on weather, fuel prices, inflation, tariffs and regulation, starting at a few dollars. Take a position on the outcome that would hurt you. If it hits, the payout softens it. If it doesn't, the contract expires and the good month was the point.
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This newsletter's content is for informational and educational purposes only and should not be considered trading or investment recommendations. All the opinions in this newsletter are personal and do not belong to any organization.
