Happy Halloween readers. I'm Phil Rosen, reporting from Wall Street. I would've opened with a spooky quip but I bet your portfolio is scary enough, especially if you're an investor in any of the big tech names that tanked after earnings last week.
For today's newsletter, I caught up with some finance pros over the weekend to get a sense of what we can learn from last week's earnings disappointments.
And by the way, get ready to bid adieu to your shares of Twitter, as the New York Stock Exchange will delist it on November 8 as Elon Musk takes the company private ("the bird is freed").
Alright goblins and ghouls, let's dive in.
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1. Tech earnings were a huge disappointment and analysts don't see much relief on the horizon. Alphabet, for example, reported a 27% decline in profits, and Meta reported a more than 50% tumble.
But there was weakness among others like Microsoft — which saw its slowest revenue growth in five years — and Amazon, which gave bleak forecasts for what it expects for sales this holiday season.
Big Tech saw unsustainable growth coming out of the pandemic and now it's finally catching up, the New York Stock Exchange's senior strategist, Michael Reinking, told me, adding that he anticipates a looming "valuation reset" for these mega-cap stocks.
Ahead of the weekend, Gil Luria, a technology strategist at DA Davidson, told me that despite the earnings drag, names like Meta, Alphabet, and Microsoft have signaled they'll continue massive spending.
"The common thread between the mega cap tech earnings reports this week is the companies' unwillingness to cut costs aggressively ahead of an economic slowdown, in spite of investor expectations," he said.
Meta in particular turned heads on Wall Street. JPMorgan analysts said the heaps of cash Zuck's throwing into the metaverse hasn't actually clarified what that business or product will actually look like.
And notably, Amazon, for its part, projected the company is about to see its slowest fourth-quarter growth ever — which signals trouble for the holiday shopping season.
"We are seeing signs all around that, again, people's budgets are tight, inflation is still high, energy costs are an additional layer on top of that caused by other issues," Amazon CFO Brian Olsavsky told reporters last week. "We are preparing for what could be a slower growth period, like most companies."
What was your biggest takeaway from last week's Big Tech earnings?
Let me know on Twitter (@philrosenn) or email me (prosen@insider.com).
In other news:
2. US stock futures fall early Monday, as investors await another interest rate decision from the Fed this week. Meanwhile, wheat prices surged after Russia pulled out of its grain export deal with Ukraine. Here are the latest market moves.
3. Earnings on deck: Berkshire Hathaway, Stryker Corp., and Panasonic Corp., all reporting.
4. The "ultimate buy-and-hold" investment fund hasn't changed its strategy since 1935. In 2022, the Voya Corporate Leaders Trust Fund has been crushing 94% of its competitors. Here are its top 10 holdings — and how it stays winning in a bear market.
5. Elon Musk, Paul Krugman, and Jeremy Siegel have warned that the Fed could tank the US economy. Bill Gross and David Rosenberg have also cautioned the central bank against raising rates too much. Check out what seven experts have said about the danger of an overzealous Fed.
6. The Fed won't pivot from its rate hikes until the end of 2023 because the economy isn't slowing down as expected, according to a top JPMorgan strategist. Inflation is proving stubborn, which means policymakers will push ahead with rate hikes well into next year. Meanwhile, a recent survey found three-quarters of economists expect the Fed to go too far.
7. Investors dumped Chinese bonds for an eighth consecutive month. That's good for the longest streak on record. A weakening yuan and aggressive Fed have combined to make yuan-denominated debt less attractive. The share of government notes owned by foreign investors dipped to 9.4% at the end of September from 9.8% in the prior month.
8. This real estate investor bought his first property at age 24 and now owns 11 rental units. He's 27 now, and he shared his top advice for new investors including how to negotiate, where to buy, and how he always asks for a 30% discount on what the seller is asking.
9. Even though tech stocks have become dramatically cheaper and some have hit all-time lows, it's still not time to buy. People who've bought the dip in Big Tech have reaped lofty rewards in the past, but experts are warning that last week's steep losses don't signal a buy-the-dip moment — here's why.
10. The dollar has appreciated dramatically this year, climbing nearly 16% against rivals in 2022. Amazon warned that the greenback's climb is weighing on its business. On the company's earnings call, its CFO said the surging dollar has cost Amazon more than $900 million more than expected.
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Curated by Phil Rosen in New York. Feedback or tips? Tweet @philrosenn or email prosen@insider.com
Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.