Tech earnings enthusiasm fails last

00:00:00: Strong technology earnings are struggling to translate into lasting market enthusiasm as elevated oil prices, geopolitical tensions and uncertainties and widening European sovereign yields spreads continue to cloud sentiment.

00:00:14: Investors are now facing a delicate balance between technologies rebound potential selective defensive exposure attractive treasury yields across the globe and goals longer term appeal as markets of next week's earnings round.

00:00:31: So welcome to Swiss Coats.

00:00:32: daily market talk is Thursday, the twenty second of October.

00:00:37: I'm Ipeco Skardishkoja.

00:00:39: in todays episode we will be covering a large range of market news and asset classes but before So technology earnings are coming in rather good but the reaction fails to match that enthusiasm.

00:01:04: SpaceX jumped seven point eighty percent yesterday on a nearly tenfold increase in its AI revenue.

00:01:10: Tesla rarely, three point forty percent on potential SpaceX-Tesla merger talk and think that investors do see value in merging Tesla with an AI company which also belongs to Elon Musk.

00:01:22: As Philadelphia's My Conductor Index recovered nearly two per cent yesterday trading session while NASDAQ hundred rebounded more than one person as a result of strong results.

00:01:34: After the bell meta continued with good news, it beat expectations printed in much smaller cash burn and latest quarter negative two point twelve billion US dollars off negative free cash flow versus eight-and-a half billion us dollars worth of a cash burn expected by analysts And company increased low ant office spending range from one hundred thirty to one hundred forty five billion U.S.

00:01:57: dollars.

00:01:58: one hundred and forty-five billion US dollars for this year.

00:02:03: I thought it was a smart move to manage investors' nerves because on the one hand, The company wants to spend more on AI Because cutting spending would have terrible consequences on sentiment when the companies so deeply involved in its AI ambitions right now but On the other hand It doesn't plan to spend More than is said it's worth earlier This year.

00:02:23: Now we don't exactly know how much of that Spending That AI spending is turning into revenue as Meta doesn't rent out compute capacity like Microsoft, Azure or Amazon Web Services do but the numbers show that.

00:02:37: The number of Metas advertisements grew slower than before As the company was able to charge fourteen percent more for each ad and That suggests that AI tools help metta target better And ask a higher fee from its customers for doing so.

00:02:55: So knee drive market reaction to Metas earnings yesterday And by the way, I find that they met her so ironic as a company is now transitioning into something completely different than meta.

00:03:05: The kneejerk reaction was positive.

00:03:08: The share price rose more than seven percent in the after hours trading, just following earnings announcement before retreating however to settle around two percent after-hours gain and the prices pretty much downed yesterday's closing levels pre market.

00:03:24: so Meta's bead looks like it will lead a neutral market at end of today but at least is not leading to negative one Elsewhere.

00:03:32: Tesla dropped more than three percent in the outflow restraining yesterday after announcing its own earnings and after cutting it's spending forecast.

00:03:40: Here investors just stopped caring about car sales of this company, they are focused on humanoid robots and I guess everyone saw their flying Tesla last week!

00:03:50: That won't bring a much cash in the foreseeable future at least but it does make Tesla shiny & busy.

00:03:56: stop to hold for some.

00:03:59: Then if you continue this earnings avalanche, will IBM jump towards seven percent in the after-hours trading yesterday as well?

00:04:07: After beating expectations on AI related revenue.

00:04:13: But here is where GAINS faded quite quickly to negative territory by the end of the after hours trading.

00:04:19: This has just one more report confirming that the AI demand remains robust We know it and suggesting that the rest of the earnings for AI related names AI enablers will be strong.

00:04:29: As such, we could well be off to another strong-earning season for the technology companies.

00:04:35: That's good news for the technologies and the rest of the indices because technology has been shouldering the rally on its own shoulders.

00:04:42: but less good news however is that even though the strong results trigger a positive knee jerk reaction in market either gains are rapidly given back or they fail snowball into bigger and lasting enthusiasm.

00:04:55: Because look, Nasdaq futures are down this morning at the time I'm talking here and they're leading losses among major indices despite strong results suggesting that even strong earnings from big technology companies may no longer help investors overlook troubles elsewhere.

00:05:11: What troubles?

00:05:12: Well we have a few of them on the wire.

00:05:14: First, create oil fluctuates on Middle East and Ukraine tensions.

00:05:18: The supply of oil is still a big issue in Big Headache.

00:05:22: Some news help up in host time to time but most news are pointing at the continuation of wars and supply disruptions.

00:05:29: WTI trades a few cents below the one hundred dollar per barrel level this morning keeping fear higher prospects while live long risk investors.

00:05:38: Then too, the spread between French and German tenure yield spiked to nearly one hundred sixty basis points yesterday above peak levels of the sovereign debt crisis back in two thousand eleven two thousand twelve.

00:05:52: And the yields spread with Italian Spanish Portuguese versus German bonds is widening as tensions and protests are spreading to other and highly indebted European countries.

00:06:04: Credit stress across AI is mounting too with five-year CDS levels spiking for both small and big players.

00:06:13: Those are the main worries today.

00:06:15: Western Digital will be announcing its earnings, after that most of technology's earnings this week will be over leaving investors some time to digest news before next round including Microsoft Google Amazon and sand, this hits the ground next week.

00:06:32: Now looking at the latest market news as I was saying US and European futures are pointing a negative start to today's trading session with technology having indices leading losses here.

00:06:43: Cosby Nikkei and Huntsang Indices are down by two-to three-and-a half percent each At The Time i'm talking Here With Alibaba Leading Losses On News That Government Called For Quality Control.

00:06:55: that Will Obviously Lead To Higher Compliance Costs company, and also renewed regulatory pressure that they're dealing with.

00:07:03: And they hate dealing what since years now.

00:07:06: so it's a sour reminder that the Chinese government is never too far away.

00:07:11: happily doesn't interfere.

00:07:17: Government risks are still there when you invest in technology companies and that is not great news.

00:07:22: Now bro, the rotation out of technology will likely continue into coming hours.

00:07:27: yet elevated energy prices are rising.

00:07:30: yields could cap gains in non-technology sectors depending on how sensitive they are to interest rate changes.

00:07:37: In this context all technologies have their biggest rebound potential as AI remains a major Boosts, earnings and investors are more eager today to throw their money at highly buzzy projects than borrowing ones.

00:07:53: But the cost of delivering that robust growth is being increasingly questioned as companies involved in the AI build out are increasingly relying on debt to continue growing.

00:08:04: The interest rates and the bargain costs are rising And that rings alarm bell louder by day.

00:08:10: That second, defensive and value names could be an interesting place to hide for investors who are looking to navigate through the earning season.

00:08:18: And reduce their risk.

00:08:20: but there a careful geographical selection is necessary.

00:08:24: because of French Carrefour For example which was generally considered as a defensive stock Because people simply continue buying food and household essentials even when economy slows down things that aren't looking bad While carrefour warned at social rest will drag on his earnings this year and cut its profit outlook yesterday.

00:08:44: Result is shares tanked as much as fifteen percent in yesterday's trading session, only a huge move for defensive stock.

00:08:53: mind you that was the biggest fall since two thousand seventeen.

00:08:57: then US longer maturity inflation protected treasuries are probably interesting with however keeping in mind at volatility.

00:09:04: here we'll remain high price insensitive buyers, big buyers like central banks governments pension and other investment funds to price sensitive.

00:09:18: investors including private investors but also hedge funds which are very sensitive to prices and which move their capital quite fast.

00:09:27: And last, but not least gold keeps pushing lower as higher US Treasury yields today have started attracting capital there.

00:09:34: while gold doesn't look appetizing in the short run accumulating the yellow metal S prices job could be interesting for longer term investors.

00:09:44: structurally a higher inflation persistent geopolitical Certainties for a few more years, an institutional flight away from the US Treasury is due to exploding debt and deteriorating relations.

00:09:56: Support the positive outlook.

00:10:01: So this is all for today.

00:10:02: I'm Yipega Skardishke and thank you for joining me, And Thank You For All Your Beautiful And Supportive Comments!

00:10:08: I hope This Episode Of Market Talk Has Been Helpful And It Has Been Insightful To You so Please Do Not Hesitate To Leave Your Comments, Your Reactions & Your Questions Below.

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00:10:38: So I will meet again tomorrow.

00:10:41: Until then Good day trading.

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