On Tuesday the US goes to the midterms. The White House wanted to go into the election with lower oil prices and higher stocks, but got neither. Brent rose 13.6% in October. The Nasdaq 100 lost 2.0% on the week and was at one point more than 10% below its ATH, before the index closed 9.5% below.
1The revenue came, the cash flow did notThe previous hypothesis was that the Nasdaq 100 could turn if Microsoft, Alphabet and Amazon showed that the AI investments are producing revenue. They did: Azure grew 48%, Google Cloud doubled and AWS grew at its fastest pace since 2021.
But the market had shifted its focus, from revenue to cash flow. It rewarded only Microsoft, which invested less than analysts had thought and brought in more than it spent. Alphabet fell 12.6% on Thursday as revenue from Google searches grew more slowly than expected, cash flow turned negative and investments are set to rise sharply next year. Amazon invested 77 billion dollars in the quarter, almost 19 billion more than forecast. Intel plunged 28.6% on a weak outlook for sales and margins. October was the Nasdaq’s worst month since March 2025.
The same evening Amazon reported, hackers stole 6.3 billion dollars from the crypto exchange Binance, the largest crypto heist on record. The FBI points to North Korea. Bitcoin fell 5.6% on the week, but most observers do not expect contagion: the bitcoin network itself was not hacked, and Binance is covering the loss from its own funds.
2The Fed held, inflation roseThe Fed left rates unchanged, but two members wanted to hike. “We will deliver price stability. No ifs, ands, or buts,” said Warsh. The next day PCE inflation rose to 3.6% and GDP grew at an annualized 3.4%. Even so, the 10-year yield fell to 4.94%, as money rotated from tech stocks into Treasuries, according to Bloomberg.
Gold fell 3% to below 3,900 dollars, and silver almost 9%. My reading is the same as last week: when stocks fall, whatever can be sold quickly gets sold.
3The Gulf waits for the electionThe attacks on ships in Hormuz continued, and October was the month with the most attacks of the war. Meanwhile Iran is negotiating in Doha. According to the WSJ, the Gulf states have been asked to prepare for a short, intense American campaign after the election, and Trump says there is no hurry for a deal.
The week ahead- Monday: Vanto’s November competition starts and runs all week. Apple reports in the evening.
- Tuesday: the election. The first polls close at midnight CET, and the results in several races may take days. AMD also reports.
- Wednesday: the first trading day with the election result.
- Friday 14:30 CET: the jobs report, with a forecast of around 60,000 new jobs.
The Nasdaq 100 bottomed on Friday at 28,081, between the 200-day average around 28,000 and the 10% level around 28,200. Analysts disagree on whether the zone will hold. History argues for it: the S&P 500 has risen in the year after every midterm since 1950. Against it are oil, a likely rate hike in December and the fact that several AI companies are investing more than they bring in.
My hypothesis: the election, Apple and the jobs report will decide the week. If the 28,000–28,200 zone holds, the decline stops at a correction. If the index closes below it, the risk of a bear market increases, and if there are strikes on Iran after the election, oil can take the next step up.