October 30, 2025 • 28 mins
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Good afternoon and welcome to The Deep Dive.
Thank you for joining us. We are really getting into one
of the most, well psychologically complex trading
days we've seen this year. Thursday, October 30, 2025.
That's right, this was the day US equities just pulled back
sharply from those record highs we just hit.
(00:20):
It signaled a pretty profound and honestly immediate shift in
market thinking. Yeah, it felt like a switch
flipped. It really did.
It was the day the market, whichyou know had been absolutely
soaring on this AI euphoria, suddenly slammed on the brakes.
It almost felt like it started fearing its own success.
It was fascinating, wasn't it? A real moment of contradiction.
We saw all that optimism turn deeply cautious almost within a
(00:43):
single trading session. So our mission today really is
to get past the simple headlinesand unpack the specific kind of
conflicting catalysts that all crashed together on Thursday.
Why did they shatter market conviction like that?
We're diving into why a record setting week suddenly pivoted
into a major risk off day. Exactly why the fear?
Absolutely. And when you look across the
(01:05):
stack of sources, you know, the analyst notes, the earnings
transcripts, you quickly realizethis wasn't just like simple
profit taking. No, no, far from.
It this was a convergence 3 hugegravitational forces all pushing
down on stocks at the same time,creating what we're calling a
market cost fracture. And we can really structure this
deep dive around those those 3 pillars of volatility.
(01:28):
First, you had the big macro anchor, that hawkish hangover
from the Federal Reserve. They actively pushed back
against the market, hoping for easy money.
Pillar One. Pillar 2, maybe the most
fundamental split. The whole Magnificent 7 story,
the Big tech narrative, It fractured right open fears about
AI spending costs versus actual AI monetization.
(01:49):
Cost versus the payoff. Got it.
And then third, kind of humming in the background, amplifying
everything, was a serious U.S. government data blackout because
of the shutdown. That just made every bit of
negative corporate news feel 10 times worse.
Right. Uncertainty on top of
uncertainty and the immediate numbers.
They really told the story, didn't they?
It was like a targeted strike ongrowth and tech.
(02:09):
The selling was incredibly discriminatory.
You saw it right there in the index performance.
Yeah, the Blue Chip Jones Industrial Average, it showed
surprising strength, really onlylost a modest 0.2%.
Held up relatively well. But the pain was absolutely
concentrated in those tech focused names.
The S&P 500 fell a solid 1%, butthe tech heavy NASDAQ composite
(02:33):
that really led the charge downward, dropping a pronounced
1.6%. Just a violent pullback from the
all time high. It's set what, the day before?
Really. The day before?
So this was clearly a tech centric anxiety session, no
question. OK, let's unpack this then,
starting with that gravitationalpull from the macro environment.
Because, you know, before we even dive into the sort of
(02:54):
terrifying earnings guidance from Meta and Microsoft later in
the day, the Fed had already kind of poisoned the well,
right? Set a negative tone.
Absolutely, that macro backdrop was key.
So help us dissect this hawkish hangover.
Well, the initial action itself,the rate cut that was fully
baked in the Federal Open MarketCommittee, the FOMC, they
delivered the expected 25 basis point cut that brought the
(03:17):
federal funds rate down to that 3.75% to 4% range.
Right market saw that coming over 90% certainty priced in.
Totally expected the trouble. The real shock started not with
the cut itself, but with the words that came with it.
Chair Jerome Powell's press conference.
OK, so the sources say Powell rattled markets here.
He pushed back hard against the assumption that, you know, the
(03:40):
rate cuts were just going to keep coming through the end of
the year. What exactly did he say that
caused such an immediate and aggressive recalibration in the
market? He was pretty emphatic.
He stated that an additional interest rate cut in December is
not a foregone conclusion. Far from it, that phrase, far
from it. That really landed heavily.
Not just hedging them. No, he was actively rejecting
(04:02):
the markets pricing of near certainty and he even mentioned
there was quote spirited debate and strongly differing views
about how to proceed inside the Fed meeting.
Interesting. So not a unified front.
Not at all. And that just threw ice cold
water on the idea that the Fed was ready to ease financial
conditions aggressively into year end.
You have to remember this statement landed in a market
(04:24):
that it just hit record highs, partly because it was betting on
exactly that. Looser policy, lower rates
coming soon. So he essentially just pulled
the rug out from under that whole easy money narrative that
was driving things. Pretty much, yeah.
And that immediately ripples through the bond market, right?
Tightening financial conditions even though they just delivered
a small cut. Precisely.
It's not just about the cost of borrowing today, it's about
(04:47):
expectations for the future costof borrowing.
And that's priced into the long end of the yield curve.
Powell's hawkish tone immediately sent the benchmark
10 year Treasury yield surging. It settled at 4.09% of the
close. Right.
Extending that move back above that critical 4% level we've
been watching. That 4% level is psychologically
(05:08):
huge. OK.
So for our listener who might bea bit newer to this, can you
quickly connect those dots for us?
Why is a 4.09 percent 10 year yield, which you know, sounds
like a modest tick up, Why does that feel like a sledgehammer
hitting the NASDAQ which is so dominated by high growth tech?
Yeah, it's a great question. The key concept is duration
(05:29):
risk. It really relates to how you
value these high growth stocks using the discounted cash flow
model or DCF. When analysts value a company
like, say, Meadow or Microsoft, they're making big bets on huge
profits way out in the future, 5-7, maybe 10 years down the
road. Right, the payoff is later.
Exactly. And those distant future profits
(05:52):
have to be discounted back to what they're worth today.
And the interest rate used for that discount calculation is
heavily influenced by the 10 year Treasury yield.
So when that yield goes up, especially crossing that 4%
threshold. This discount rate goes up too.
Significantly, which means the present value of those far off
hypothetical future cash flows. It shrinks dramatically.
(06:15):
Higher discount rates automatically squash the
multiples, the price to earningsratios that the market is
willing to pay for growth stocks.
It doesn't matter how well they did this quarter.
The future looks less valuable today, it just reduces the
appeal of anything that's long duration growth.
So this tightening of financial conditions, this gravitational
pull as you called it, set the negative mood music for the
(06:36):
whole day, made investors jumpy about any hint of future.
Risks exactly hypersensitive andyou saw that reinforced to the
currency market too, right? The dollar got stronger.
Yeah, classic sign. Money flowing back to perceived
safety in US assets because the odds of more rate cuts and
therefore a weaker dollar just went down.
Correct. the US Dollar index. The DXY measures the dollar
(06:57):
against other for major currencies.
It charged up to monthly highs advanced 0.3% to 99.54.
Tighter conditions at home thanks to a hawkish Fed increase
the cost of capital everywhere and just dampen the appetite for
riskier assets, especially thosehigh multiple stocks that really
need cheap money to justify their valuations.
(07:17):
OK, shifting years slightly, butstill on the macro picture,
there was also that major US China summit happening around
the same time. It tried maybe to offer a
bullish counter narrative, but it sounds like it basically
failed. Yeah, it fizzled out as a market
catalyst. President Trump met with Chinese
leader Xi Jinping in Busan, South Korea.
And, you know, the headlines looked OK on paper.
(07:39):
Trump called the talks at 12, announced plans to cut some
tariffs. And China responded.
China agreed to ease up on rare earth exports, promised very
strong action on fentanyl chemicals.
I mean, these aren't trivial things, they're positive
developments. So why didn't that inject any
confidence? The market was clearly desperate
for some good news. Because the market had already
run up to those record highs earlier in the week,
(08:01):
anticipating some kind of grand bargain, expectations were just
massive. Priced in already.
Completely priced in the analystconsensus pretty quickly
dismissed the actual outcome. They called the results fine,
but fine isn't good enough giventhe expectations.
Another quote was small gesturesinstead of a grand bargain.
So not enough juice. Not nearly enough.
(08:24):
Since the market had already factored in this minor positive
development, it just failed completely to provide a fresh
bullish reason to buy. It couldn't offset the heavy
downward pull from the Fed's hawkish stance.
The market basically shrugged and went right back to trading
on the more powerful immediate negative.
Tighter money is coming, or at least not getting looser anytime
(08:44):
soon. OK.
So we've established the macro scene, the Fed, the bond market
already actively working againstgrowth stocks before we even get
to the corporate earnings. Now let's see what happened when
that corporate data hit this negative backdrop.
And this, this is where it gets really fascinating because that
monolithic AI trade, the one that drove the market for what,
2 years at least? It fractured right down the
(09:04):
middle. On Thursday, the market suddenly
started discriminating, like violently, between AI spending
and actual AI monetization. This was absolutely the end of
the just buy everything AI idea.Fundamentally, it became a show
me the money moment. Investors suddenly woke up to
the fact that building this nextgeneration of AI infrastructure,
(09:26):
it's an arms and it requires just astronomical amounts of
upfront capital expenditure, CapEx.
And the market was just no longer willing to write these
companies blank checks for that spending without a really
crystal clear timeline for the return on investment,
especially, you know, with the cost of capital going up thanks
to the Fed. OK, let's look at the spend
(09:46):
narrative first, The companies that got hammered by the fear
that AI is this massive margin crushing arms race.
We have to start with the heaviest weight on the S&P 500
meta platforms. I mean, that drop was truly
catastrophic. Meta was absolutely the
lightning rod for the whole sessions fear.
Its shares plunged a staggering 11.3% on Thursday.
Just wiped out billions in market gap.
(10:08):
And the crazy part is their actual reported results for Q3
weren't even bad, right? No, they were solid.
They met or beat most expectations.
The drop was purely about the future guidance, specifically
the capital they said they needed to build out their AI
vision. Investors were, and this is,
quote, perturbed by how much Facebook's parent company said
(10:29):
it's planning to spend in 2026. 2026 So the punishment wasn't
even for current performance or next year spending, but for
spending that won't even peak for over a year.
Doesn't an 11% plunge seem like a massive overreaction to a
multi year CapEx cycle? Well, it reflects panic over the
timeline on the sheer scale of it.
The fear isn't just the cost of the servers and the specialized
(10:50):
chips, which is huge, but it's also R&D hiring the right talent
to build competitive large language models.
It's the whole ecosystem. By signaling an increased CapEx
cycles stretching way out into 2026, Meta basically implied
that the payoff, the ROI for this massive spending is still
really far out on the horizon. And combine that distant payoff
with the rising discount rate wetalked about from the hawkish
(11:13):
Fed. Exactly.
The current valuation suddenly looks unsustainable to a lot of
people. It's the uncertainty of that
payoff timeline that really spooked the market and triggered
the sell off. And Microsoft followed suit,
although maybe less severely. Despite reporting stronger than
expected profit and revenue, MSFT shares still sank about 3%.
(11:34):
The concerns mirrored Meta exactly, didn't they?
They did largely. Microsoft's case was maybe a bit
more nuanced because you know, they already have a huge mature
monetization engine with Azure cloud.
But the fears were sort of twofold there.
First, maybe growth in Azure fell just slightly short of the
incredibly high expectations Wall Street had set, perhaps
signaling some short term softness in companies adopting
(11:56):
cloud services. OK, slight miss on Azure growth
and 2nd the spending signal again.
Exactly the same signal. Like Meta, Microsoft indicated
it expects to spend more on investments in 2026 than in
2025. Boom.
I just confirmed the markets worst fear.
This CapEx cycle isn't stabilizing, it's accelerating.
The drain on free cash flow is going to continue for longer
(12:18):
than people thought. Analysts are worried about
margins getting eaten up by thisconstant need to buy the latest
AI infrastructure like Nvidia's high end chips, which are
incredibly expensive and franklybecome obsolete pretty quickly
in this AI arms race. So the market realized it had
maybe underestimated the sheer cost of just staying competitive
at the cutting edge of AI. Massively underestimated the
(12:40):
cost of entry and, maybe more importantly, the cost of
maintenance. But crucially, the AI narrative
didn't completely collapse because we had a clear, powerful
counterpoint. A company that provided pride
that all the spending can actually pay off Alphabet.
This is the monetized narrative winner.
Alphabet was the absolute definitive counterpoint.
It show the essential differencebetween just spending for future
(13:03):
capabilities and actually delivering profits today.
Their shares rose robustly. The range was between 2.5 and
5.3%, hitting a new record high.They absolutely thrilled Wall
Street, as one report put it, bycrossing that landmark milestone
over $100 billion in quarterly revenue for the first time ever.
Wow. 100 billion. You know, just showed execution
(13:25):
at an immense scale. And the key driver for that
excitement, the part that relates directly to AI was their
cloud division, right, which should benefit from all the
CapEx we were just talking. About precisely Google Cloud
reported really strong revenue growth.
It's benefiting directly from quote surging enterprise demand
for AI powered infrastructure indata analytic services.
(13:45):
This is the pivot point for the whole markets thinking.
On Thursday, Alphabet delivered tangible record-breaking proof
of a high monetization happeningat scale right now.
It validated its own history of Capax, so while Meta and
Microsoft guidance triggered fears about an uncertain payoff
timeline way down the road. Alphabet showed the money was
(14:06):
already coming in. Exactly.
Alphabet showed the market wherethe money is actually flowing
right now. That divergent is the absolute
defining characteristic of October 30th.
The market is now aggressively, maybe ruthlessly, distinguishing
between those just building the AI future and those already
ringing the cash register from it.
And just to show that this anxiety wasn't purely confined
(14:28):
to the mega cap tech giants, this sort of sector rotation and
nervousness spilled over. We got a pretty stark warning
sign from the consumer sector too, right?
Oh, we certainly did. A major consumer health warning
came via Chipotle Mexican Grill CMG.
Their shares crashed. It was an alarming 17 to 18%
drop. Whoa.
Why they trimmed their sales growth forecast and the reason
(14:50):
they gave was telling persistentmacroeconomic pressures and
specifically customers making fewer.
Visits, fewer visits. OK, that's direct.
That implies the average consumer, maybe the middle class
consumer, is starting to pull back on discretionary spending,
eating out less often. It's a direct red flag that
those tight financial conditions, the sticky
(15:11):
inflation, it's finally hitting People's Daily behavior.
But mirroring that split we saw in tech, we also had sectors
showing immense strength, proving that capital wasn't just
fleeing the market entirely, it was just rotating violently
towards perceived safety and immediate results.
Yeah, healthcare was a major bright spot.
It often acts as a defensive sector when uncertainty spikes.
Eli Lilly shares rose between 1.7 and 4%.
(15:35):
On the back of those blockbusterdrugs.
Exactly huge sales for their diabetes and obesity drugs
Manjaro and Zepp bound. These things are delivering
immediate massive and highly predictable revenue streams that
let Lilly lift its full year guidance confidently.
And we saw others too pre marketreporters like Bristol-Myers
Squibb Amylum. They also raise their revenue
(15:55):
guidance for the next year. So yeah, the market was sorting
winners and losers with extreme prejudice, punishing
uncertainty, rewarding immediate, profitable and
frankly defensive growth. OK.
It's really crucial now to connect that intense corporate
anxiety, that violent sector rotation we just laid out back
to the bigger macro uncertainty because that third pillar you
(16:16):
mentioned, the US government shutdown acted as this massive
volatility amplifier created what the source is called a data
blackout. Yeah, this is just a textbook
example of how a lack of information breeds fear and
volatility in markets. the US government shutdown hit its 30th
day. That meant financial
institutions, policymakers like the Fed, investors, everyone was
(16:36):
operating in a significant data vacuum.
In finance, volatility is often just a function of uncertainty,
and nothing increases uncertainty like the complete
absence of objective data of theofficial truth.
And the most critical casualty data wise on October 30th itself
was the scheduled release of thethird quarter GDP figures,
right, the big one. Indefinitely postponed that just
(16:58):
deep in this federal data blackout, which had already
delayed key reports, unemployment, on trade, on
retail sales. The consequence is really
profound. Investors are truly flying
blind. Flying blind?
You have no official objective data to confirm the economy's
actual trajectory. Is it slowing down like the Fed
wants? Is it speeding up?
Is it just stagnating? We don't know from the official
(17:19):
numbers and the Fed itself, the market's main focus is also
deprived its key inputs for making decisions.
And when you're flying blind, the risk premium just goes way
up. You demand more compensation for
taking risk, which usually meansselling 1st and asking questions
later. But what does this data void
practically do to analysts and traders day-to-day?
(17:40):
Well, it acts as that volatilityamplifier in two really critical
ways. First, it forces everyone to
rely much more heavily on subjective private sector data.
Since you can't get the officialgovernment, employment or retail
sales figures, you place an outsized weight on the corporate
guidance that is available. Ah.
OK. That explains why the guidance
(18:01):
from Meta and Microsoft, those forward-looking statements, had
such a punishing market moving impact.
Exactly. If you can't trust the
government's numbers because they don't exist right now, you
desperately cling to the earnings call transcripts of the
Big Tech leaders. You elevate their corporate
forecasts to the status of like de facto economic indicators.
Which is incredibly risky, right?
(18:21):
Because corporate guidance is designed to manage expectations
and serve corporate goals, not provide totally objective
economic truth. Precisely.
And that reliance introduces significant systemic risk.
When the market is forced to prioritize the narrative spun by
tech giants over objective macrodata, it kind of loses its
(18:42):
grounding. It's like if the official
thermometer is broken, you startguessing the economic
temperature based on how companies say they feel.
Just forces investors into a much more risk averse stance.
OK. That's the first way.
It amplifies risk. What's the second?
It makes the market hypersensitive to the few
reports that are still scheduledfor release, in this case the
ones coming out the next day Friday, since any single piece
(19:04):
of data is now treated as this immense indicator of the whole
economic picture. Right, because it's all you've
got. All you've got.
So this dynamic meant that the handful of reports scheduled for
Friday morning suddenly held massively magnified importance.
It set the stage for a potentially really volatile
section. The fog of uncertainty makes
(19:25):
every little piece of actionabledata potentially explosive.
It's like, you know, driving a car in really heavy fog.
You slow way down, you increase the distance between you and the
car ahead, and every single brake light you see feels like a
major emergency. So we ended the regular trading
session deep in the red, battered by the Fed, battered by
this AI cost fracture, just bracing for more volatility.
(19:48):
But then the extended session after hours delivered a pretty
powerful bullish rebuttal, didn't it?
Particularly from Amazon. But it was surprisingly kind of
muted or ignored by the market. That highlights a real
disconnect. Yeah, Amazon's report released
right after the closing bell should have been the perfect
counter narrative to those AI cost fears that it dominated the
entire day. They didn't just beat estimates,
(20:09):
he really demolished them, delivered a strong statement
about the health of the consumerand the accelerating demand for
cloud infrastructure. What were the number?
They beat on both top and bottomlines.
Net sales were up 13% year over year to a massive $180.2 billion
and EPS came in strong at $1.95 per share.
(20:29):
OK, strong headline numbers, butthe real story, the critical
data point that really should have calmed those AI spending
fears was the performance of Amazon Web Services.
AWS, right? If Meta scared the market with
cost, Amazon should have thrilled them with AWS profit.
AWS delivered unequivocally strong results.
Segment sales grew a significant20% year over year and it
(20:52):
generated $11.4 billion in operating income just from AWS.
20% growth, that's huge. It's.
Not just a high number, CEO AndyJazzy specifically confirmed
that this 20% rate represented Acrucial re acceleration of
growth. He said it was a pace not seen
since 2022. That's hard proof that strong
enterprise demand for AI and core cloud infrastructure is
(21:14):
robust and immediately profitable.
OK, that is a direct, tangible validation of the entire AI
monetization thesis that Alphabet hinted at earlier.
Amazon proved the demand for that infrastructure is
accelerating. It's profitable.
It's generating billions right now.
So why was the market so unimpressed?
Why didn't AMZN stock soar afterhours?
(21:36):
That's the disconnect that really defined the end of the
trading day and into the night. Despite this incredibly powerful
validation of the AI investment cycle confirming really strong
fundamentals, AMC and shares were actually muted in after
hours trading. They were down slightly like
-0.22% last I checked. It really suggests that the
pervasive negative sentiment, that combination of the hawkish
(21:58):
Fed and the really deep seated AI cost fear was just too
strong, too entrenched to be immediately overcome by even
stellar stock specific fundamentals from a giant like
Amazon. Investors were prioritizing the
systemic risk, the macro risk from the Fed and rising rates
over the success of any single company, even 1 firing on all
cylinders like Amazon. The macro fear was just
overpowering the micro reality. Meanwhile, Apple, the final
(22:22):
Magnificent 7 member to report, also came out after the bell.
The full analysis wasn't out yet, but the initial market
reaction look more positive, suggesting maybe less drastic
guidance than Meta gave. Yeah, Apple was trading
positively in after hours of about 0.77%.
Investors were obviously watching intently, scrutinizing
(22:43):
a few key things, you know, early sales data for the new
flagship iPhone 17 cycle, the continued reliable growth of its
super high margin services business, which is expected to
cross $100 billion in annual revenue soon.
That offers predictable cash flows the market loves right
now. Predictability is king.
Absolutely. And critically, investors were
(23:04):
laser focused on any commentary,any hint about Apple's own AI
spending plans, especially afterthe Meta and Microsoft route.
Apple's traditionally more secretive about its next Gen.
CapEx plan, so the market was holding its breath, but the
initial read suggested they hadn't delivered the same kind
of CapEx spending shot guidance that Meta did.
OK. So even with Alphabet confirming
monetization, Amazon confirming accelerating and profitable
(23:27):
infrastructure demand, and Appleseemingly avoiding a spending
scare, the overall futures market sentiment was still
overwhelmingly bearish heading into Friday's session.
Absolutely. The NASDAQ 100 futures were
pointing sharply lower, down about 1.03% for Friday's open.
It just confirms that the negative narrative, the Fed
hawkishness, the deep seated AI cost fears was still dominating
(23:51):
everything else the market position defensively.
Basically assuming that rotationout of tech and growth would
just continue until the next piece of objective data could
maybe provide some relief. And that relief or potentially
further pain depended entirely on that high stakes 8:30 AM
Eastern data dump on Friday morning, the shutdown showdown,
as you called it, because of thedata blackout, these few
(24:12):
remaining reports held extreme magnified importance.
They were suddenly the primary determinants of the markets
direction. They would effectively decide
whether Powell's hawkish warningfrom Wednesday was justified or
maybe overblown. We're talking about two really
critical inflation sensitive reports that the Fed watches
like a hawk. OK, what were they?
First, the core PCE price index.That's the personal consumption
(24:36):
expenditures price index, excluding food and energy.
It's the FED's preferred inflation gauge because it
adjusts for how consumers changetheir buying habits when prices
change. It gives arguably a cleaner read
on underlying price pressures than the more commonly cited
CPI. OK.
Core PCE and the second one, wage inflation data.
Yes, the Employment Cost Index, or ECI economists really like
(25:00):
this one. They consider the cleanest read
on wage inflation because it controls for compositional
shifts in the workforce. It's not distorted if, say, lots
of lower wage workers get hired or fired.
It tracks the cost of Labor morepurely.
These two metrics speak directlyto the pressures that could
force the Fed to keep policy tight.
So why did this matter so intensely right at this moment?
(25:21):
Because Chair Powell had just given that hawkish warning two
days before, implying maybe inflation or labor conditions
weren't cooling as fast as the market hoped.
A hot print, meaning higher thanexpected on either the core PCE
or the ECI, showing sticky priceinflation or maybe accelerating
wages would definitively validate Powell's caution and
(25:42):
validate the dissenters within the FOMC he mentioned.
And the market impact of hot numbers?
It would likely extinguish any remaining hope whatsoever for
December rate cut that would almost guarantee a highly
volatile session, probably send bond yields sharply higher
again, and potentially trigger areally severe equity sell off,
especially in tech and growth. The markets immediate path hung
entirely on whether those few unpostponed government reports
(26:05):
confirm the systemic risk Powellhad hinted at just 48 hours
earlier. So wrapping this up, what does
this all mean for you, the listener?
Thursday, October 30, 2025. It wasn't just another down day
on Wall Street. It felt like a profound shift
really, driven by those 3 interlocking forces.
We dissected a fed determined totemper expectations and raise
(26:26):
the cost of capital. A massive sudden divergent in
the AI narrative between spending and earning, and that
macroeconomic data void from theshutdown that just amplified all
the bad news. The big lesson here seems to be
that the cost of success, especially in an AI, is finally
being recognized by the market. Yeah.
The crucial take away I think isthe aggressive distinguishing
the the market is now making. It is actively punishing
(26:48):
companies that are perceived to be merely spending massively on
future AI capabilities, fearing that uncertain distant payoff
timeline. That's a clear message from the
reaction to Meta and Microsoft'sforward guidance.
And conversely, it is overwhelmingly rewarding those
companies that are already monetizing that AI
infrastructure at scale right now, like Alphabet, like
(27:11):
Amazon's AWS. The focus is just decisively
shifted from hype and future potential to tangible return on
investment ROI delivered in the present.
The market seems to have rediscovered the fundamental
importance of actual cash flow, of disciplined spending,
especially when the cost of capital itself is rising.
It really felt like a day where that buy first, figure out the
(27:33):
profits later thesis finally collapsed under its own weight,
at least for now. And that brings us to the
provocative thought for you, thelistener to maybe Mull over as
you look towards the next quarter or beyond That data
blackout we discussed, it forcedthe entire global investment
community to rely almost entirely on subjective corporate
guidance for its economic conviction.
We saw how punishing that was for companies that lacked a
(27:54):
clear profitable monetization story already in place.
So if the economic trajectory isnow being dictated more by the
Q&A transcripts of tech giants Meta, Microsoft, Amazon, rather
than objective official government statistics, simply
because those statistics aren't being released, what does that
actually mean for global financial stability?
(28:15):
How long can markets really tolerate flying blind, relying
on corporate narratives instead of objective data, before that
uncertainty itself fully caps the potential for reaching new
record highs? It raises a really fundamental
question, doesn't it? About what day do we trust most
when the economy starts hitting the brakes?
Good afternoon and welcome to The Deep Dive.
Thank you for joining us. We are really getting into one
of the most, well psychologically complex trading
days we've seen this year. Thursday, October 30, 2025.
That's right, this was the day US equities just pulled back
sharply from those record highs we just hit.
(00:20):
It signaled a pretty profound and honestly immediate shift in
market thinking. Yeah, it felt like a switch
flipped. It really did.
It was the day the market, whichyou know had been absolutely
soaring on this AI euphoria, suddenly slammed on the brakes.
It almost felt like it started fearing its own success.
It was fascinating, wasn't it? A real moment of contradiction.
We saw all that optimism turn deeply cautious almost within a
(00:43):
single trading session. So our mission today really is
to get past the simple headlinesand unpack the specific kind of
conflicting catalysts that all crashed together on Thursday.
Why did they shatter market conviction like that?
We're diving into why a record setting week suddenly pivoted
into a major risk off day. Exactly why the fear?
Absolutely. And when you look across the
(01:05):
stack of sources, you know, the analyst notes, the earnings
transcripts, you quickly realizethis wasn't just like simple
profit taking. No, no, far from.
It this was a convergence 3 hugegravitational forces all pushing
down on stocks at the same time,creating what we're calling a
market cost fracture. And we can really structure this
deep dive around those those 3 pillars of volatility.
(01:28):
First, you had the big macro anchor, that hawkish hangover
from the Federal Reserve. They actively pushed back
against the market, hoping for easy money.
Pillar One. Pillar 2, maybe the most
fundamental split. The whole Magnificent 7 story,
the Big tech narrative, It fractured right open fears about
AI spending costs versus actual AI monetization.
(01:49):
Cost versus the payoff. Got it.
And then third, kind of humming in the background, amplifying
everything, was a serious U.S. government data blackout because
of the shutdown. That just made every bit of
negative corporate news feel 10 times worse.
Right. Uncertainty on top of
uncertainty and the immediate numbers.
They really told the story, didn't they?
It was like a targeted strike ongrowth and tech.
(02:09):
The selling was incredibly discriminatory.
You saw it right there in the index performance.
Yeah, the Blue Chip Jones Industrial Average, it showed
surprising strength, really onlylost a modest 0.2%.
Held up relatively well. But the pain was absolutely
concentrated in those tech focused names.
The S&P 500 fell a solid 1%, butthe tech heavy NASDAQ composite
(02:33):
that really led the charge downward, dropping a pronounced
1.6%. Just a violent pullback from the
all time high. It's set what, the day before?
Really. The day before?
So this was clearly a tech centric anxiety session, no
question. OK, let's unpack this then,
starting with that gravitationalpull from the macro environment.
Because, you know, before we even dive into the sort of
(02:54):
terrifying earnings guidance from Meta and Microsoft later in
the day, the Fed had already kind of poisoned the well,
right? Set a negative tone.
Absolutely, that macro backdrop was key.
So help us dissect this hawkish hangover.
Well, the initial action itself,the rate cut that was fully
baked in the Federal Open MarketCommittee, the FOMC, they
delivered the expected 25 basis point cut that brought the
(03:17):
federal funds rate down to that 3.75% to 4% range.
Right market saw that coming over 90% certainty priced in.
Totally expected the trouble. The real shock started not with
the cut itself, but with the words that came with it.
Chair Jerome Powell's press conference.
OK, so the sources say Powell rattled markets here.
He pushed back hard against the assumption that, you know, the
(03:40):
rate cuts were just going to keep coming through the end of
the year. What exactly did he say that
caused such an immediate and aggressive recalibration in the
market? He was pretty emphatic.
He stated that an additional interest rate cut in December is
not a foregone conclusion. Far from it, that phrase, far
from it. That really landed heavily.
Not just hedging them. No, he was actively rejecting
(04:02):
the markets pricing of near certainty and he even mentioned
there was quote spirited debate and strongly differing views
about how to proceed inside the Fed meeting.
Interesting. So not a unified front.
Not at all. And that just threw ice cold
water on the idea that the Fed was ready to ease financial
conditions aggressively into year end.
You have to remember this statement landed in a market
(04:24):
that it just hit record highs, partly because it was betting on
exactly that. Looser policy, lower rates
coming soon. So he essentially just pulled
the rug out from under that whole easy money narrative that
was driving things. Pretty much, yeah.
And that immediately ripples through the bond market, right?
Tightening financial conditions even though they just delivered
a small cut. Precisely.
It's not just about the cost of borrowing today, it's about
(04:47):
expectations for the future costof borrowing.
And that's priced into the long end of the yield curve.
Powell's hawkish tone immediately sent the benchmark
10 year Treasury yield surging. It settled at 4.09% of the
close. Right.
Extending that move back above that critical 4% level we've
been watching. That 4% level is psychologically
(05:08):
huge. OK.
So for our listener who might bea bit newer to this, can you
quickly connect those dots for us?
Why is a 4.09 percent 10 year yield, which you know, sounds
like a modest tick up, Why does that feel like a sledgehammer
hitting the NASDAQ which is so dominated by high growth tech?
Yeah, it's a great question. The key concept is duration
(05:29):
risk. It really relates to how you
value these high growth stocks using the discounted cash flow
model or DCF. When analysts value a company
like, say, Meadow or Microsoft, they're making big bets on huge
profits way out in the future, 5-7, maybe 10 years down the
road. Right, the payoff is later.
Exactly. And those distant future profits
(05:52):
have to be discounted back to what they're worth today.
And the interest rate used for that discount calculation is
heavily influenced by the 10 year Treasury yield.
So when that yield goes up, especially crossing that 4%
threshold. This discount rate goes up too.
Significantly, which means the present value of those far off
hypothetical future cash flows. It shrinks dramatically.
(06:15):
Higher discount rates automatically squash the
multiples, the price to earningsratios that the market is
willing to pay for growth stocks.
It doesn't matter how well they did this quarter.
The future looks less valuable today, it just reduces the
appeal of anything that's long duration growth.
So this tightening of financial conditions, this gravitational
pull as you called it, set the negative mood music for the
(06:36):
whole day, made investors jumpy about any hint of future.
Risks exactly hypersensitive andyou saw that reinforced to the
currency market too, right? The dollar got stronger.
Yeah, classic sign. Money flowing back to perceived
safety in US assets because the odds of more rate cuts and
therefore a weaker dollar just went down.
Correct. the US Dollar index. The DXY measures the dollar
(06:57):
against other for major currencies.
It charged up to monthly highs advanced 0.3% to 99.54.
Tighter conditions at home thanks to a hawkish Fed increase
the cost of capital everywhere and just dampen the appetite for
riskier assets, especially thosehigh multiple stocks that really
need cheap money to justify their valuations.
(07:17):
OK, shifting years slightly, butstill on the macro picture,
there was also that major US China summit happening around
the same time. It tried maybe to offer a
bullish counter narrative, but it sounds like it basically
failed. Yeah, it fizzled out as a market
catalyst. President Trump met with Chinese
leader Xi Jinping in Busan, South Korea.
And, you know, the headlines looked OK on paper.
(07:39):
Trump called the talks at 12, announced plans to cut some
tariffs. And China responded.
China agreed to ease up on rare earth exports, promised very
strong action on fentanyl chemicals.
I mean, these aren't trivial things, they're positive
developments. So why didn't that inject any
confidence? The market was clearly desperate
for some good news. Because the market had already
run up to those record highs earlier in the week,
(08:01):
anticipating some kind of grand bargain, expectations were just
massive. Priced in already.
Completely priced in the analystconsensus pretty quickly
dismissed the actual outcome. They called the results fine,
but fine isn't good enough giventhe expectations.
Another quote was small gesturesinstead of a grand bargain.
So not enough juice. Not nearly enough.
(08:24):
Since the market had already factored in this minor positive
development, it just failed completely to provide a fresh
bullish reason to buy. It couldn't offset the heavy
downward pull from the Fed's hawkish stance.
The market basically shrugged and went right back to trading
on the more powerful immediate negative.
Tighter money is coming, or at least not getting looser anytime
(08:44):
soon. OK.
So we've established the macro scene, the Fed, the bond market
already actively working againstgrowth stocks before we even get
to the corporate earnings. Now let's see what happened when
that corporate data hit this negative backdrop.
And this, this is where it gets really fascinating because that
monolithic AI trade, the one that drove the market for what,
2 years at least? It fractured right down the
(09:04):
middle. On Thursday, the market suddenly
started discriminating, like violently, between AI spending
and actual AI monetization. This was absolutely the end of
the just buy everything AI idea.Fundamentally, it became a show
me the money moment. Investors suddenly woke up to
the fact that building this nextgeneration of AI infrastructure,
(09:26):
it's an arms and it requires just astronomical amounts of
upfront capital expenditure, CapEx.
And the market was just no longer willing to write these
companies blank checks for that spending without a really
crystal clear timeline for the return on investment,
especially, you know, with the cost of capital going up thanks
to the Fed. OK, let's look at the spend
(09:46):
narrative first, The companies that got hammered by the fear
that AI is this massive margin crushing arms race.
We have to start with the heaviest weight on the S&P 500
meta platforms. I mean, that drop was truly
catastrophic. Meta was absolutely the
lightning rod for the whole sessions fear.
Its shares plunged a staggering 11.3% on Thursday.
Just wiped out billions in market gap.
(10:08):
And the crazy part is their actual reported results for Q3
weren't even bad, right? No, they were solid.
They met or beat most expectations.
The drop was purely about the future guidance, specifically
the capital they said they needed to build out their AI
vision. Investors were, and this is,
quote, perturbed by how much Facebook's parent company said
(10:29):
it's planning to spend in 2026. 2026 So the punishment wasn't
even for current performance or next year spending, but for
spending that won't even peak for over a year.
Doesn't an 11% plunge seem like a massive overreaction to a
multi year CapEx cycle? Well, it reflects panic over the
timeline on the sheer scale of it.
The fear isn't just the cost of the servers and the specialized
(10:50):
chips, which is huge, but it's also R&D hiring the right talent
to build competitive large language models.
It's the whole ecosystem. By signaling an increased CapEx
cycles stretching way out into 2026, Meta basically implied
that the payoff, the ROI for this massive spending is still
really far out on the horizon. And combine that distant payoff
with the rising discount rate wetalked about from the hawkish
(11:13):
Fed. Exactly.
The current valuation suddenly looks unsustainable to a lot of
people. It's the uncertainty of that
payoff timeline that really spooked the market and triggered
the sell off. And Microsoft followed suit,
although maybe less severely. Despite reporting stronger than
expected profit and revenue, MSFT shares still sank about 3%.
(11:34):
The concerns mirrored Meta exactly, didn't they?
They did largely. Microsoft's case was maybe a bit
more nuanced because you know, they already have a huge mature
monetization engine with Azure cloud.
But the fears were sort of twofold there.
First, maybe growth in Azure fell just slightly short of the
incredibly high expectations Wall Street had set, perhaps
signaling some short term softness in companies adopting
(11:56):
cloud services. OK, slight miss on Azure growth
and 2nd the spending signal again.
Exactly the same signal. Like Meta, Microsoft indicated
it expects to spend more on investments in 2026 than in
2025. Boom.
I just confirmed the markets worst fear.
This CapEx cycle isn't stabilizing, it's accelerating.
The drain on free cash flow is going to continue for longer
(12:18):
than people thought. Analysts are worried about
margins getting eaten up by thisconstant need to buy the latest
AI infrastructure like Nvidia's high end chips, which are
incredibly expensive and franklybecome obsolete pretty quickly
in this AI arms race. So the market realized it had
maybe underestimated the sheer cost of just staying competitive
at the cutting edge of AI. Massively underestimated the
(12:40):
cost of entry and, maybe more importantly, the cost of
maintenance. But crucially, the AI narrative
didn't completely collapse because we had a clear, powerful
counterpoint. A company that provided pride
that all the spending can actually pay off Alphabet.
This is the monetized narrative winner.
Alphabet was the absolute definitive counterpoint.
It show the essential differencebetween just spending for future
(13:03):
capabilities and actually delivering profits today.
Their shares rose robustly. The range was between 2.5 and
5.3%, hitting a new record high.They absolutely thrilled Wall
Street, as one report put it, bycrossing that landmark milestone
over $100 billion in quarterly revenue for the first time ever.
Wow. 100 billion. You know, just showed execution
(13:25):
at an immense scale. And the key driver for that
excitement, the part that relates directly to AI was their
cloud division, right, which should benefit from all the
CapEx we were just talking. About precisely Google Cloud
reported really strong revenue growth.
It's benefiting directly from quote surging enterprise demand
for AI powered infrastructure indata analytic services.
(13:45):
This is the pivot point for the whole markets thinking.
On Thursday, Alphabet delivered tangible record-breaking proof
of a high monetization happeningat scale right now.
It validated its own history of Capax, so while Meta and
Microsoft guidance triggered fears about an uncertain payoff
timeline way down the road. Alphabet showed the money was
(14:06):
already coming in. Exactly.
Alphabet showed the market wherethe money is actually flowing
right now. That divergent is the absolute
defining characteristic of October 30th.
The market is now aggressively, maybe ruthlessly, distinguishing
between those just building the AI future and those already
ringing the cash register from it.
And just to show that this anxiety wasn't purely confined
(14:28):
to the mega cap tech giants, this sort of sector rotation and
nervousness spilled over. We got a pretty stark warning
sign from the consumer sector too, right?
Oh, we certainly did. A major consumer health warning
came via Chipotle Mexican Grill CMG.
Their shares crashed. It was an alarming 17 to 18%
drop. Whoa.
Why they trimmed their sales growth forecast and the reason
(14:50):
they gave was telling persistentmacroeconomic pressures and
specifically customers making fewer.
Visits, fewer visits. OK, that's direct.
That implies the average consumer, maybe the middle class
consumer, is starting to pull back on discretionary spending,
eating out less often. It's a direct red flag that
those tight financial conditions, the sticky
(15:11):
inflation, it's finally hitting People's Daily behavior.
But mirroring that split we saw in tech, we also had sectors
showing immense strength, proving that capital wasn't just
fleeing the market entirely, it was just rotating violently
towards perceived safety and immediate results.
Yeah, healthcare was a major bright spot.
It often acts as a defensive sector when uncertainty spikes.
Eli Lilly shares rose between 1.7 and 4%.
(15:35):
On the back of those blockbusterdrugs.
Exactly huge sales for their diabetes and obesity drugs
Manjaro and Zepp bound. These things are delivering
immediate massive and highly predictable revenue streams that
let Lilly lift its full year guidance confidently.
And we saw others too pre marketreporters like Bristol-Myers
Squibb Amylum. They also raise their revenue
(15:55):
guidance for the next year. So yeah, the market was sorting
winners and losers with extreme prejudice, punishing
uncertainty, rewarding immediate, profitable and
frankly defensive growth. OK.
It's really crucial now to connect that intense corporate
anxiety, that violent sector rotation we just laid out back
to the bigger macro uncertainty because that third pillar you
(16:16):
mentioned, the US government shutdown acted as this massive
volatility amplifier created what the source is called a data
blackout. Yeah, this is just a textbook
example of how a lack of information breeds fear and
volatility in markets. the US government shutdown hit its 30th
day. That meant financial
institutions, policymakers like the Fed, investors, everyone was
(16:36):
operating in a significant data vacuum.
In finance, volatility is often just a function of uncertainty,
and nothing increases uncertainty like the complete
absence of objective data of theofficial truth.
And the most critical casualty data wise on October 30th itself
was the scheduled release of thethird quarter GDP figures,
right, the big one. Indefinitely postponed that just
(16:58):
deep in this federal data blackout, which had already
delayed key reports, unemployment, on trade, on
retail sales. The consequence is really
profound. Investors are truly flying
blind. Flying blind?
You have no official objective data to confirm the economy's
actual trajectory. Is it slowing down like the Fed
wants? Is it speeding up?
Is it just stagnating? We don't know from the official
(17:19):
numbers and the Fed itself, the market's main focus is also
deprived its key inputs for making decisions.
And when you're flying blind, the risk premium just goes way
up. You demand more compensation for
taking risk, which usually meansselling 1st and asking questions
later. But what does this data void
practically do to analysts and traders day-to-day?
(17:40):
Well, it acts as that volatilityamplifier in two really critical
ways. First, it forces everyone to
rely much more heavily on subjective private sector data.
Since you can't get the officialgovernment, employment or retail
sales figures, you place an outsized weight on the corporate
guidance that is available. Ah.
OK. That explains why the guidance
(18:01):
from Meta and Microsoft, those forward-looking statements, had
such a punishing market moving impact.
Exactly. If you can't trust the
government's numbers because they don't exist right now, you
desperately cling to the earnings call transcripts of the
Big Tech leaders. You elevate their corporate
forecasts to the status of like de facto economic indicators.
Which is incredibly risky, right?
(18:21):
Because corporate guidance is designed to manage expectations
and serve corporate goals, not provide totally objective
economic truth. Precisely.
And that reliance introduces significant systemic risk.
When the market is forced to prioritize the narrative spun by
tech giants over objective macrodata, it kind of loses its
(18:42):
grounding. It's like if the official
thermometer is broken, you startguessing the economic
temperature based on how companies say they feel.
Just forces investors into a much more risk averse stance.
OK. That's the first way.
It amplifies risk. What's the second?
It makes the market hypersensitive to the few
reports that are still scheduledfor release, in this case the
ones coming out the next day Friday, since any single piece
(19:04):
of data is now treated as this immense indicator of the whole
economic picture. Right, because it's all you've
got. All you've got.
So this dynamic meant that the handful of reports scheduled for
Friday morning suddenly held massively magnified importance.
It set the stage for a potentially really volatile
section. The fog of uncertainty makes
(19:25):
every little piece of actionabledata potentially explosive.
It's like, you know, driving a car in really heavy fog.
You slow way down, you increase the distance between you and the
car ahead, and every single brake light you see feels like a
major emergency. So we ended the regular trading
session deep in the red, battered by the Fed, battered by
this AI cost fracture, just bracing for more volatility.
(19:48):
But then the extended session after hours delivered a pretty
powerful bullish rebuttal, didn't it?
Particularly from Amazon. But it was surprisingly kind of
muted or ignored by the market. That highlights a real
disconnect. Yeah, Amazon's report released
right after the closing bell should have been the perfect
counter narrative to those AI cost fears that it dominated the
entire day. They didn't just beat estimates,
(20:09):
he really demolished them, delivered a strong statement
about the health of the consumerand the accelerating demand for
cloud infrastructure. What were the number?
They beat on both top and bottomlines.
Net sales were up 13% year over year to a massive $180.2 billion
and EPS came in strong at $1.95 per share.
(20:29):
OK, strong headline numbers, butthe real story, the critical
data point that really should have calmed those AI spending
fears was the performance of Amazon Web Services.
AWS, right? If Meta scared the market with
cost, Amazon should have thrilled them with AWS profit.
AWS delivered unequivocally strong results.
Segment sales grew a significant20% year over year and it
(20:52):
generated $11.4 billion in operating income just from AWS.
20% growth, that's huge. It's.
Not just a high number, CEO AndyJazzy specifically confirmed
that this 20% rate represented Acrucial re acceleration of
growth. He said it was a pace not seen
since 2022. That's hard proof that strong
enterprise demand for AI and core cloud infrastructure is
(21:14):
robust and immediately profitable.
OK, that is a direct, tangible validation of the entire AI
monetization thesis that Alphabet hinted at earlier.
Amazon proved the demand for that infrastructure is
accelerating. It's profitable.
It's generating billions right now.
So why was the market so unimpressed?
Why didn't AMZN stock soar afterhours?
(21:36):
That's the disconnect that really defined the end of the
trading day and into the night. Despite this incredibly powerful
validation of the AI investment cycle confirming really strong
fundamentals, AMC and shares were actually muted in after
hours trading. They were down slightly like
-0.22% last I checked. It really suggests that the
pervasive negative sentiment, that combination of the hawkish
(21:58):
Fed and the really deep seated AI cost fear was just too
strong, too entrenched to be immediately overcome by even
stellar stock specific fundamentals from a giant like
Amazon. Investors were prioritizing the
systemic risk, the macro risk from the Fed and rising rates
over the success of any single company, even 1 firing on all
cylinders like Amazon. The macro fear was just
overpowering the micro reality. Meanwhile, Apple, the final
(22:22):
Magnificent 7 member to report, also came out after the bell.
The full analysis wasn't out yet, but the initial market
reaction look more positive, suggesting maybe less drastic
guidance than Meta gave. Yeah, Apple was trading
positively in after hours of about 0.77%.
Investors were obviously watching intently, scrutinizing
(22:43):
a few key things, you know, early sales data for the new
flagship iPhone 17 cycle, the continued reliable growth of its
super high margin services business, which is expected to
cross $100 billion in annual revenue soon.
That offers predictable cash flows the market loves right
now. Predictability is king.
Absolutely. And critically, investors were
(23:04):
laser focused on any commentary,any hint about Apple's own AI
spending plans, especially afterthe Meta and Microsoft route.
Apple's traditionally more secretive about its next Gen.
CapEx plan, so the market was holding its breath, but the
initial read suggested they hadn't delivered the same kind
of CapEx spending shot guidance that Meta did.
OK. So even with Alphabet confirming
monetization, Amazon confirming accelerating and profitable
(23:27):
infrastructure demand, and Appleseemingly avoiding a spending
scare, the overall futures market sentiment was still
overwhelmingly bearish heading into Friday's session.
Absolutely. The NASDAQ 100 futures were
pointing sharply lower, down about 1.03% for Friday's open.
It just confirms that the negative narrative, the Fed
hawkishness, the deep seated AI cost fears was still dominating
(23:51):
everything else the market position defensively.
Basically assuming that rotationout of tech and growth would
just continue until the next piece of objective data could
maybe provide some relief. And that relief or potentially
further pain depended entirely on that high stakes 8:30 AM
Eastern data dump on Friday morning, the shutdown showdown,
as you called it, because of thedata blackout, these few
(24:12):
remaining reports held extreme magnified importance.
They were suddenly the primary determinants of the markets
direction. They would effectively decide
whether Powell's hawkish warningfrom Wednesday was justified or
maybe overblown. We're talking about two really
critical inflation sensitive reports that the Fed watches
like a hawk. OK, what were they?
First, the core PCE price index.That's the personal consumption
(24:36):
expenditures price index, excluding food and energy.
It's the FED's preferred inflation gauge because it
adjusts for how consumers changetheir buying habits when prices
change. It gives arguably a cleaner read
on underlying price pressures than the more commonly cited
CPI. OK.
Core PCE and the second one, wage inflation data.
Yes, the Employment Cost Index, or ECI economists really like
(25:00):
this one. They consider the cleanest read
on wage inflation because it controls for compositional
shifts in the workforce. It's not distorted if, say, lots
of lower wage workers get hired or fired.
It tracks the cost of Labor morepurely.
These two metrics speak directlyto the pressures that could
force the Fed to keep policy tight.
So why did this matter so intensely right at this moment?
(25:21):
Because Chair Powell had just given that hawkish warning two
days before, implying maybe inflation or labor conditions
weren't cooling as fast as the market hoped.
A hot print, meaning higher thanexpected on either the core PCE
or the ECI, showing sticky priceinflation or maybe accelerating
wages would definitively validate Powell's caution and
(25:42):
validate the dissenters within the FOMC he mentioned.
And the market impact of hot numbers?
It would likely extinguish any remaining hope whatsoever for
December rate cut that would almost guarantee a highly
volatile session, probably send bond yields sharply higher
again, and potentially trigger areally severe equity sell off,
especially in tech and growth. The markets immediate path hung
entirely on whether those few unpostponed government reports
(26:05):
confirm the systemic risk Powellhad hinted at just 48 hours
earlier. So wrapping this up, what does
this all mean for you, the listener?
Thursday, October 30, 2025. It wasn't just another down day
on Wall Street. It felt like a profound shift
really, driven by those 3 interlocking forces.
We dissected a fed determined totemper expectations and raise
(26:26):
the cost of capital. A massive sudden divergent in
the AI narrative between spending and earning, and that
macroeconomic data void from theshutdown that just amplified all
the bad news. The big lesson here seems to be
that the cost of success, especially in an AI, is finally
being recognized by the market. Yeah.
The crucial take away I think isthe aggressive distinguishing
the the market is now making. It is actively punishing
(26:48):
companies that are perceived to be merely spending massively on
future AI capabilities, fearing that uncertain distant payoff
timeline. That's a clear message from the
reaction to Meta and Microsoft'sforward guidance.
And conversely, it is overwhelmingly rewarding those
companies that are already monetizing that AI
infrastructure at scale right now, like Alphabet, like
(27:11):
Amazon's AWS. The focus is just decisively
shifted from hype and future potential to tangible return on
investment ROI delivered in the present.
The market seems to have rediscovered the fundamental
importance of actual cash flow, of disciplined spending,
especially when the cost of capital itself is rising.
It really felt like a day where that buy first, figure out the
(27:33):
profits later thesis finally collapsed under its own weight,
at least for now. And that brings us to the
provocative thought for you, thelistener to maybe Mull over as
you look towards the next quarter or beyond That data
blackout we discussed, it forcedthe entire global investment
community to rely almost entirely on subjective corporate
guidance for its economic conviction.
We saw how punishing that was for companies that lacked a
(27:54):
clear profitable monetization story already in place.
So if the economic trajectory isnow being dictated more by the
Q&A transcripts of tech giants Meta, Microsoft, Amazon, rather
than objective official government statistics, simply
because those statistics aren't being released, what does that
actually mean for global financial stability?
(28:15):
How long can markets really tolerate flying blind, relying
on corporate narratives instead of objective data, before that
uncertainty itself fully caps the potential for reaching new
record highs? It raises a really fundamental
question, doesn't it? About what day do we trust most
when the economy starts hitting the brakes?
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Medal of Honor: Stories of Courage
Rewarded for bravery that goes above and beyond the call of duty, the Medal of Honor is the United States’ top military decoration. The stories we tell are about the heroes who have distinguished themselves by acts of heroism and courage that have saved lives. From Judith Resnik, the second woman in space, to Daniel Daly, one of only 19 people to have received the Medal of Honor twice, these are stories about those who have done the improbable and unexpected, who have sacrificed something in the name of something much bigger than themselves. Every Wednesday on Medal of Honor, uncover what their experiences tell us about the nature of sacrifice, why people put their lives in danger for others, and what happens after you’ve become a hero. Special thanks to series creator Dan McGinn, to the Congressional Medal of Honor Society and Adam Plumpton. Medal of Honor begins on May 28. Subscribe to Pushkin+ to hear ad-free episodes one week early. Find Pushkin+ on the Medal of Honor show page in Apple or at Pushkin.fm. Subscribe on Apple: apple.co/pushkin Subscribe on Pushkin: pushkin.fm/plus
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com