Google’s disappointing quarter, the Anthropic IPO, a crypto heist and the Federal Reserve’s plans to say and do less.
Halloween on a Saturday and Daylight Saving Time adding an extra hour of sleep? It feels like this weekend is going to be a big one; as Beetlejuice would say, “It’s showtime!”
It was showtime for financial markets as they wrapped another month on the calendar. October brought yet another period of shifting market leadership as value and energy outperformed. Meanwhile, technology and communication services shares buckled thanks to valuation exhaustion and anxiety over whether AI monetization can ultimately justify the extraordinary level of spending required to support it.
This sell-off occurred even as Anthropic, creator of Claude, officially filed its IPO registration and excitement built for the company, which could price with a value as high as $2 trillion.
Notwithstanding that anticipated debut, markets were disappointed by a major miss reported by bellwether Alphabet (Google’s parent company) on both earnings and revenue. Most concerning, though, was the company’s reported negative free cash flow of $9.1 billion, debt that ballooned from $22 billion in 2025 to $125 billion in 2026, and $51 billion of quarterly capital expenditures (capex), with plans to reportedly double that amount in 2027.
If something wicked this way comes and these investments do not pay off into profits, cash flow and shareholder returns, markets gave us a little taste of how scary they could be: Alphabet’s stock fell more than 12% on the day and more than 16% for the month.
Disappointing results from Amazon and Intel compounded growing fears that the AI investment boon is running out of runway. But the most hair-raising news of the week was reports that North Korean hackers stole an astonishing $6.3 billion in assets from Binance, the world’s largest crypto exchange, which caused bitcoin and crypto to crater in today’s trading.
To be fair, Microsoft’s earnings report gave us a different experience, largely due to the big jump in Azure revenue by close to 50%. But Microsoft also signaled a slightly more subdued AI capex spend, which markets welcomed in some respects. All of this comes ahead of Tuesday’s U.S. midterm election, where there is considerable bipartisan anger over data centers and concerns about the need for regulation among voters.
Meanwhile, as expected, the Federal Reserve opted to leave rates unchanged in a range of 3.75% to 4.00% in October after hiking rates in September, the first increase in more than three years. While the recent acceleration in inflation should be more than enough to justify firmer policy near term, the majority of Fed officials seemingly support a more patient approach to any further rate adjustments, a notion reinforced in the October statement.
According to the latest communication, “The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee’s 2 percent goal.” In other words, while some additional policy firming is likely, a second-round near-term hike, let alone any additional increases after that, is far from a foregone conclusion. With that, some of the pressure has come off interest rates, which have retreated somewhat from their recent high levels.
It was noteworthy that, during the press conference following the rate announcement, Chair Kevin Warsh announced an adjustment to the Committee’s traditional schedule: There will be eight policy meetings next year per usual, however, one will focus solely on broad monetary policy strategy and will not include a vote on rates or have a statement release. In 2028, the chair expects two of the eight meetings will not include a vote on rates or a statement release.
In the 1981 non-fiction novel “Danse Macabre,” Stephen King wrote, “We make up horrors to help us cope with the real ones.” If you remember some of the best from his collection like “It” or “The Shining” or “Carrie,” King would address domestic abuse or psychological drama or suburban dread in ways that made us shake with fear and sleep with the lights on.
As we take in the news of the day (or the hour) about the risks and catastrophes we can expect from AI’s evolution, I encourage you to take a beat and remember that humanity has experienced major transformations before, with success, though certainly the road to get there has not been without hardship and challenge. But like King’s heroes, we will find a way forward. The plan we work on together, and its implementation, will be a major factor in keeping fear and worry at bay, so that the only frights you experience come from movies and Halloween celebrations.
With that, enjoy your Saturday night festivities, and remember that “all work and no play makes Jack a dull boy.”
Written by a human.