🔮 Big Tech Earnings: Brace for Market Shaking News!

Good Morning!

The tech earnings season is serving up more drama than a Netflix series. While Alphabet hit it out of the park with stellar YouTube and cloud numbers, Microsoft and Meta's revelations about soaring costs from AI investments sent shivers through the market. All eyes are now on Apple and Amazon's reports dropping today, with particular focus on their AI spending plans. The AI gold rush that propelled Wall Street to record heights is showing signs of strain. Meanwhile, European markets are buzzing with their own catalysts – major bank earnings and fresh inflation data that could signal earlier ECB rate cuts.

In today’s email:

• Earnings: All eyes on big tech earnings this week

• Bitcoin: Holding below $73k, when do we start new ATHs?

• RDDT: Stock up 42% on earnings!

• Gold: Sitting pretty at $2780/oz

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THE BIG IDEA

Markets face a complex cocktail of election uncertainty, tech earnings jitters, and mounting AI costs, while analysts warn against getting caught up in pre-election euphoria

The market's playing a high-stakes game of chess right now, and the pieces are getting more interesting by the day. While the S&P 500 has been riding high on AI fever and soft landing hopes, Citi's strategists are waving a yellow flag at the current "near-euphoric" sentiment. Their take? Don't get too excited about those Trump-win rallies – the party might not last as long as you think.

Speaking of parties, the tech sector's earnings bash is turning into quite the mixed bag. While Alphabet knocked it out of the park with YouTube and cloud revenues, Microsoft and Meta's revelations about ballooning AI costs have investors reaching for the antacids. AMD's 10% tumble on disappointing AI chip sales sent shockwaves through the sector, dragging down even the mighty Nvidia along with other chip makers.

The plot thickens with election implications – Citi sees both candidates as potential drags on equity fundamentals, though with different flavors

A Trump win might spark initial fireworks but could fizzle out, while a Harris victory might offer a "buy-the-dip" moment despite higher corporate tax concerns. Trump's deregulatory stance and lower corporate taxes paint a business-friendly picture, but his proposed import tariffs could throw a wrench in the works long-term.

Meanwhile, the broader market's got plenty on its plate: Apple and Amazon's upcoming earnings, the Fed's favorite inflation gauge dropping today, and central banks worldwide playing their cards close to the chest. The ECB's hinting at faster rate cuts as inflation cools, while the Bank of Japan's keeping steady despite U.S. economic risks. Next Tuesday's nail-biter of an election is just the cherry on top of this market sundae.

MARKETS AT A GLANCE

TOP NEWS

Shell defies market headwinds with robust Q3 earnings and ambitious share buyback program despite industry challenges

Despite the oil sector's rough waters, Shell's swimming against the current with impressive Q3 numbers. The energy giant clocked $6 billion in adjusted earnings, sailing past analyst expectations of $5.3 billion. They're sweetening the deal with a $3.5 billion share buyback program over the next quarter while maintaining their dividend at 34 cents per share.

Meta's Q3 shows strong core business, but Zuckerberg's ambitious AI plans spark investor concerns over mounting costs

Meta's betting big on its AI future, even as Reality Labs bleeds more red ink ($4.4B loss this quarter). While core ad revenue hit $40.6B, beating estimates, Zuckerberg's doubling down on AI infrastructure and metaverse dreams. The market's not loving the nearly $100B expense forecast for 2024, sending shares down 2.8%.

Reddit's unexpected profitability and AI licensing deals trigger massive stock surge while transforming its revenue model

Reddit's crushing it with a 42% stock surge after dropping some jaw-dropping Q3 numbers. Posted $29.9M in profit (vs expected $8.8M loss), while revenue shot up 68% to $348.4M. The secret sauce? AI licensing deals with OpenAI and Google, plus machine translation expanding their global reach. Wall Street's now eyeing $113M in 2025 profits, up from earlier $17.5M estimates.

CRYPTO

BlackRock's Bitcoin ETF hits record inflows while spot ETFs collectively near a historic milestone in Bitcoin ownership

BlackRock's Bitcoin ETF just had its best day ever, raking in a whopping $872M in net inflows. The broader U.S. spot Bitcoin ETF market added $893.21M total, pushing cumulative inflows to $24.18B. Bloomberg's analysts predict these ETFs could soon dethrone Satoshi Nakamoto as the largest Bitcoin holder, potentially crossing 1.1M BTC by November's end.

MicroStrategy unveils ambitious "21/21 Plan" to dramatically expand its Bitcoin holdings while raising yield targets

MicroStrategy's doubling down on its Bitcoin obsession with a jaw-dropping $42B capital raise plan over three years. Already sitting on 252,220 BTC worth $18B, Michael Saylor's crew wants more – splitting the raise between $21B equity and $21B debt. They're also targeting higher "BTC Yield" of 6-10%, up from 4-8%.

A PR firm, PR London Live, claims it will reveal the identity of Bitcoin creator Satoshi Nakamoto on October 31 in London

But skepticism is high due to numerous red flags. The firm’s website is littered with spelling errors, broken links, and unverified claims, while a low-profile Meetup group and AI-generated content further fuel doubts. Crypto community reactions suggest widespread disbelief, with many viewing the announcement as unlikely to deliver authentic answers.

NYSE Arca is seeking SEC approval for a Grayscale Digital Large Cap Fund ETF

Designed to offer institutional investors exposure to a broader mix of digital assets beyond Bitcoin and Ethereum, including Solana. Tracking the CoinDesk Large Cap Select Index, this $565 million fund would cater to demand for diversified crypto holdings, competing with ETFs from Hashdex, Franklin Templeton, and others. Approval could pivot on regulatory shifts following the U.S. presidential election, potentially opening doors to more inclusive crypto investment options.

GOLD

Gold Demand Trends Q3 2024

Gold demand surged 5% year-over-year in Q3 2024, reaching 1,313 tonnes and a record value exceeding $100 billion. Key drivers included renewed ETF inflows (+95t) and almost doubled OTC investment (+137t). Despite a 12% drop in jewelry demand, strong bar, coin, and central bank activity kept demand resilient. Prices averaged $2,474 per ounce, up 28% annually. Looking ahead, robust investment flows are expected to counterbalance softer consumer and central bank demand.

DAILY ECONOMIC CALENDAR (ET)

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