Finimize - 👀 The first Big Tech results are in

Microsoft and Alphabet announced their results | Investors had suspicious minds about HSBC |

Hi Reader, here's what you need to know for October 26th in 3:12 minutes.

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Today's big stories

  1. Microsoft and Alphabet reported quarterly results that were full of ups and downs
  2. Here's how you can profit from the yen’s downward slide – Read Now
  3. HSBC said all the right things, but it still couldn't please investors

Big Tech, Bigger Expectations

Big Tech, Bigger Expectations

What’s Going On Here?

Microsoft pulled off reported better-than-expected quarterly results late on Tuesday while Google-parent Alphabet fell short, but investors tarred them both with the same brush.

What Does This Mean?

Microsoft’s previous report disappointed analysts earlier this year, but the tech giant sure made amends to that last quarter: its darling cloud computing business made 20% more revenue versus the same time last year, while its business productivity segment – think Office 365 and LinkedIn – grew 9%. Layer on a better-than-expected performance from its PC segment, and both Microsoft’s revenue and profit tidily beat expectations. But since that cloud revenue actually grew slower than expected, hard-to-please analysts still sent the firm’s shares down 2%.

And while Alphabet managed to grow its cloud segment’s revenue by an impressive 38% last quarter, its all-important ad business – which spans across YouTube and Google and makes up the bulk of its revenue – grew a measly 3%, seemingly following in Snap’s ominous footsteps from last week. Alphabet, then, disappointed in both revenue and profit, so downcast investors duly sent its stock down 6%.

Why Should I Care?

For markets: Gimme five.
The rest of the Big Tech firms – Meta, Apple, and Amazon – are due to report results this week. And since the superstar fivesome make up nearly half of the tech-heavy Nasdaq, the group’s performance could dictate the direction of the index in the going forward. If Microsoft and Alphabet’s negative receptions are anything to go by, the index – which has dipped over 30% this year and lost about $6 trillion in value – could have even further to fall.

Zooming out: Show-ers, not growers.
Growth is harder to come by during a downturn, so eagle-eyed analysts will be expecting tech companies to cut costs and increase efficiencies. That could include cozying up to blockchain technology: see, while enthusiasts might get dizzy over its world-changing decentralization potential, companies seem focused on more vanilla uses. In fact, a Bloomberg survey of tech executives showed they’re most excited about blockchain’s ability to speed up transactions, improve supply chains, and cut costs. How seductive…

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Analyst Take

Japan’s Been Spending Billions To Slow The Yen’s Slide. It’s Not Working.

Japan’s Been Spending Billions To Slow The Yen’s Slide. It’s Not Working.

By Russell Burns, Analyst

Japan’s been doing something lately that it almost never does.

Over the past few days, it has intervened in the currency market, spending billions to buy up Japanese yen in an attempt to slow its rapid decline

It’s the second time Japan has done so in as many months, and it might not be the last.

So it’s worth considering why Japan’s doing this now and what the opportunity is.

That’s today’s Insight: how to profit from the weakness in Japan’s yen.

Read or listen to the Insight here

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Disclaimer

This content is for US investors only, if you are not a US investor please ignore this content. This content is a paid advertisement for Upexi (NASDAQ: UPXI) from Interactive Offers and Finimize. This is not Finimize editorial content. Finimize received a fixed fee for producing, hosting and promoting this content on behalf of Upexi, totalling $23,000. Other than the compensation received for this service, Finimize and its principals are not affiliated with either Interactive Offers or Upexi. Finimize and its principals have no ownership in Upexi. The content on this page should not be taken as advice, an endorsement, or a recommendation from Finimize and its principals to buy or sell any security. Finimize and its principals have not evaluated the accuracy of any claims made on this page. Finimize and its principals recommend that investors do their own independent research and consult with a qualified investment professional before buying or selling any security. Investing is inherently risky and capital is at risk. Past performance is not indicative of future results.

Punished For Good Behavior

Punished For Good Behavior

What’s Going On Here?

HSBC, Europe’s biggest bank, reported better-than-expected quarterly results on Tuesday.

What Does This Mean?

Higher interest rates might mean mortgage nightmares for the rest of us, but the recent hikes are like Christmas came early for the likes of HSBC. The firm’s net interest income – the money it makes from lending minus the interest it pays out on deposits – hit an imposing $8.6 billion last quarter, its best third quarter in over eight years. But there was some coal among the presents: the bank set aside $1.1 billion to cover costs in case borrowers default on debts – about a third more than analysts expected. But the firm’s bumper net interest income still carried the day, as pre-tax profit rose a cool 18% from the same time last year to hit $6.5 billion.

Why Should I Care?

For markets: Iffy investors.
HSBC’s shares fell 4% when the report went live, and a few factors could be to blame. First off, that hefty $1.1-billion rainy day fund will have investors all het up about potential trouble ahead. Secondly, it’s starting to seem likely that share buybacks won’t make a comeback until the second half of 2023 at the earliest. And completing the troubling trifecta, HSBC’s well-regarded CFO is leaving without much of an explanation, which could mean there’s trouble a-brew in the bank.

The bigger picture: Due east.
Despite investors’ caution, HSBC’s results should strengthen its hand against Ping An Insurance Group, a major shareholder that’s been calling for it to separate its Asian and western operations. HSBC’s resisted so far, adamant that its pivot toward Asia – where it made over 55% of pretax profit last quarter – is a smart bet. So far, the bank’s made eastward strides, shedding its western operations: its French and US arms have already gone under the hammer, and Canada’s could be the next.

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💬 Quote of the day

“Talent hits a target no one else can hit. Genius hits a target no one else can see.”

– Arthur Schopenhauer (a German philosopher)
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🥳 Coming Up This Week…

All events in UK time.

⬆️ How to Navigate Rising Interest Rates: 1pm, October 26th
🔥 How To Secure Your Financial Future Before 40: 5pm, October 26th
🏆 How To Spot Investment Opportunities In Gold: 12pm, October 27th
🥗 How Will The Global Food Crisis Impact Your Portfolio: 1pm, October 28th

👀 And After That…

🇨🇳 What You Need To Know About Investing In China: 5pm, October 31st
🎨 How To Buy And Sell NFTs: 6pm November 1st
🤑 Asset Allocation For Young Investors: 5pm, November 2nd
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😎 How To Build A Portfolio Ready For The Next Decade: 1pm, November 3rd
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🔧 Tools Value Investors Use For Turbulent Times: 6pm, November 10th
🌍 How To Build An Eco-Friendly Crypto Portfolio: 1pm, November 14th
3️⃣ Three Investment Themes You Need To Know Now: 5pm, November 16th
🚀 Modern Investor Summit: 12pm, December 6th-7th

🎯 On Our Radar

  1. Let’s twist again. A sequel to this nineties disaster flick is in the works.
  2. This is my jam. Instagram’s adding songs to profiles, noughties-style.
  3. Samhain season. Celebrate Halloween the old-school way.
  4. Farewell, Fido. Pooches with human names are all the rage.
  5. Grungy garms. The loose, louche Nirvana sweater is back.
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