Market Briefing For Thursday, October 26

A French payment payer, plunging. That was a big financial story today and of course then the META results after the Close, which beat expectations. The shares were up and then some profit-taking but holding gains.FreepikIt matters as a key component of the modern version of the ‘nifty 50’ (FANG or ‘Mag. Seven). Meta did talk about the regulatory landscape, advertising contraction risks as well as growth ‘for now’, but I really don’t see much upside for the moment.Some of these big-cap swings are just sideshows. Microsoft (MSFT) makes up 7% of the S&P and we still got a heavy day for all the reasons you know (including a war that is building, and hopefully behind-the-scenes security deals you’re not hearing much about which I’ll touch upon later). Then Alphabet (GOOGL) drops given a bit of a sluggish ‘cloud’ operation compared to Microsoft’s. Both are doing fine, and where the focus might belong is within stocks that aren’t so expensive but are in innovative or disruptive areas (which won’t be clear at least until 2024).(Worldline was the EU player hit hard, so Block, PayPal and Square got hit too. And this is where the sensitivity to rates and shrinking spending arrives. I suspect the segments continue lower for now, but the stress shifts next year.)Throw in the Middle East, and you could argue contracting promotional spend levels by all of these major online players, more reticence by consumers and dearth of international travel (opposite of this Summer) as/if tensions prevail.POTUS today talked to Saudi’s MBS, who we don’t trust, but there’s at least a possibility that’s interesting. Notice Saudi Arabia did not endorse Hamas (well just because that’s an Iranian crowd they might not). Or a bid to counter Iran’s aggressive plans against Israel and the U.S. in the Middle East, which would of course again risk the Saudi position (which drone attacks on their oil field storage facilities already showed as tenuous), might still be very much alive.That positive signs for a regional peace deal among the oft-noted countries in the Gulf region, Israel and the U.S. shouldn’t be ignored. Grasping at straws, perhaps, but this could be seen as a crucial step towards regional stability, a possible resolution to long-standing conflicts, and strategic feat for Iran.Diplomatic efforts might still be underway to bring together these countries to form a united front against Iran’s expansionist policies. Today’s Biden / MBS talk might play a key role in facilitating these talks. Maybe wishful thinking, but a successful peace deal would not only bring about peace and security in the region but also create new economic opportunities for the countries involved. And it would be exactly the opposite of what Iran/Hamas hoped to achieve. Market ‘X’-ray: Eventually investors will look for solid Quarters outside of the obvious mega-cap names. Half the people in the world (really) are ensnared (I didn’t say embracing) by social media platforms, so yes these companies do have a lock on global marketing (which creates resistance by regulators), and that now-and-then creates efforts to suffocate that kind of growth.Enter AI to help build content and make the entire endeavor persist.. but this is expensive. META is spending 2 or 3 times what they probably should on all kinds of R&D, and it’s still half of what Apple (AAPL) spends (more secretively). All these companies need to incorporate AI more extensively, and that’s what we will be watching (including potential acquisitions in the year or so ahead).Near-term ‘visibility’ is cloudy to say the least. Heavy, I think. Expanding war in the offing, any proposal that might ‘link’ the very countries Iran tries splitting apart (that is likely what the timing of the Hamas attack was about) might be a longer-term plus, but fear of that might accelerate Iran’s proxy warmongering. Israel needs to play this very smart, the USA too. Stop the victim-blaming and focus on the instigator of this mess.. Iran. Also: protect U.S. Southern Border. Negativity is sufficiently thick to allow a sharp rally if / when shorts get caught in a trap, but that doesn’t have to be yet, given geopolitics. Hence: visibility.Flash: reports of a UAW / Ford deal finally reached, subject to ratificationOne of these days we’ll get a drop in rates, although the catalyst to trigger a Fed policy reversal can’t be identified as such, other than Chairman Powell in-essence implied it earlier today in remarks talking about ‘helping America’. It’s not his realm directly (fiscal policy), but he can’t do much about the heavy level of debt-service, which has been and remains an unsustainable situation.This is really such a complicated situation, around the heaviest seasonal time of year when money managers normally shift into more of an accumulation or buying mode, but obviously geopolitics is holding that back, not just the Fed. Bottom-line: Nothing changes the softish landing case, geopolitics is variable of course. But most stocks already reflect a ‘harder’ landing outcome, thus it’s almost irrelevant whether the environment of monetary policy is easier or not.I think it’s a distinction to say defensive areas will outperform, but I’ve already said the time to be defensive was a year or more ago, and now what I termed the ‘pre-crashed’ stocks probably should be gradually accumulated on held. If one is buying, of course only where able to pick-and-choose during purges, of course also preferably those with finances able to survive current turmoil.More By This Author: Market Briefing For Wednesday, Oct. 25Market Briefing For Tuesday, Oct. 24Market Briefing For Monday, Oct. 23rd