Happy Monday 👋

It’s Halloween week, and tech stock surely spooked us pretty bad. But as the calendar turns from October to November, we expect earnings reports coming in from some of the leading companies in the world.

Some of the earnings to look forward to are from Apple, AMD, Shopify, and Pfizer. By the way, these are not all; The Candyman also has earnings reports from Starbucks, McDonalds, Qualcomm, Pinterest, and AirBnB.

We all have seen US consumer data, lower inflation, and a comparatively stronger economic outlook on the back of impressive consumer spending. If so, we should expect revenues for consumer brands like Apple, Airbnb, McDonald’s, and Starbucks to grow. But as we saw with Google’s earnings, the stock market is a tricky place to be in - you never truly know what ticks!

Cents & Sense Perspective💪

Inflation Slows Down, But Here’s Why You Shouldn’t Celebrate Just Yet!

It was the year 2007 when I first read about inflation in my A-Levels Economics. I was so confused about the concept of money losing its value over time that I spent hours on that syllabus.

I did very well in my A-Levels Economics, obviously.

Inflation has always been a topic of significant interest and concern for governments. It has a “fear” value associated with it. Despite our best strategies and interventions, fully managing inflation remains a tough task. This difficulty arises because our modern economy is intricate, with numerous elements and variables that can influence the direction and magnitude of inflation.

The next best option is to try to understand what the numbers say. The latest data from the Bureau of Economic Analysis (BEA) provides insights into the current state of inflation and the effectiveness of the Federal Reserve’s monetary policies.

The data suggests potential for further disinflation in the U.S. economy. However, with the recent gross domestic product estimate indicating a 4.9% economic growth in the third quarter, it underscores the challenges ahead. I wrote more about it here.

This might necessitate the Federal Reserve to maintain higher interest rates for an extended period.

While the Federal Reserve’s policies appear to moderate inflation, the robust consumer spending and other economic indicators suggest a complex road ahead.

It remains to be seen how these dynamics will play out in the coming months.

In case you are interested, these are my insights from the report.

Tech Earnings were up, stocks were down. Why!

The Nasdaq Composite, a tech-centric index, experienced a significant drop of 4.1% over two days, marking its worst performance for the year. Overall, the index has seen a 12% decline since July.

I still see the performance as okay-ish, and I think the market has been far too negative, especially for Alphabet. But here is the summary of what happened:

• Alphabet (GOOGL) and Meta Platforms (META) were under the spotlight after their earnings reports. Both surpassed expectations, but there were renewed concerns about their cloud and advertising expenditures.

• Amazon's CEO, Andy Jassy, provided a glimmer of hope with positive remarks about the future of artificial intelligence. However, the overarching sentiment was clear: the enthusiasm for Big Tech among investors is diminishing.

Cloud Computing Insights

• Alphabet faced a decline in its stock, with Google Cloud's performance being a significant concern. The revenue growth for Google Cloud was less than anticipated, and it failed to meet Wall Street estimates.

• Microsoft's Azure, on the other hand, outperformed expectations, showing robust growth and outpacing Google Cloud.

• Amazon Web Services (AWS), while still a leader, is growing slower than its competitors.

Advertising Trends

• Alphabet and Meta reported strong growth in online advertising. However, geopolitical events, such as the Hamas attack on Israel, impacted ad spending, leading to a softer start to the fourth quarter.

• Amazon emerged as a significant player in the advertising sector, with its ad sales witnessing a substantial increase.

Artificial Intelligence (AI) Developments

• For tech giants like Microsoft, Meta, Alphabet, and Amazon, AI presents both opportunities and challenges. The high costs associated with AI development, especially hiring skilled coders, are a concern.

• Meta announced plans for increased capital spending and hiring in 2024, emphasizing the importance of AI in their future strategy.

• IBM introduced WatsonX to assist companies with AI initiatives, and the early signs are promising, with significant bookings for AI-related projects.

Headlines you might like 👀

• Meta says users and businesses have 600 million chats on its platforms every day (Tech Crunch)

• Tesla Started a Price War; Every EV Stock Is Paying the Price (Barron’s)

• Here’s how a government shutdown in November would likely impact stocks (Market Watch)

• Ford misses on earnings, as warranty costs move carmaker back near the penalty box (CNBC)

• Meta Reports Better-Than-Expected Earnings. Why the Stock Is Falling (Barron’s)

I’m Armaghan Tanveer, a numbers guy by profession and a romantic by heart. I have just started documenting my life (as a part-time content creator while managing my day job and family). I would love to have you as a part of my journey; you can follow me on my journey here.

DISCLAIMER: We are not investment advisors; this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your research.