Global Market Brief: AI Capex Disconnect, Fed Calendar Shift, and Shell’s Earnings Surge

Thursday, October 29, 2026 | Daily briefing on Big Tech cash flow divergence, Fed calendar changes, Middle East energy shocks, and crypto liquidations.

Daily Summary

Our View: Last night, the market established a new dividing line that will serve as the primary axis for the period ahead: companies capable of funding their spending with their own cash are being rewarded, while those that cannot are being penalized. Alphabet and Microsoft reported on the same night; one burned $9.1 billion in cash and dropped 10%, while the other generated $19 billion in cash and rose 3%. It was cash flows,not revenues, that took center stage. The Samsung example provides a second warning: even record profits are no longer enough today; capital return and guidance clarity are required. Today brings a confluence of the European Central Bank rate decision, U.S. inflation and growth data, and Amazon’s earnings report—and Amazon will be subjected to this exact same cash flow test. In crypto, the 80,000 level was lost again for the third time this week; even if macro relief emerges, crypto fails to find direction as long as tech liquidation persists.

• Alphabet burned $9.1 billion in cash, and its stock fell 10%, erasing approximately $396 billion in market value. This marks the second consecutive quarter the company has turned negative, a first in its 22-year history as a public company, while search ad revenue missed expectations by $1.4 billion.
• Microsoft, meanwhile, generated $19 billion in free cash flow and rose 3%. The market rewarded those capable of funding their own capital expenditures. Both balance sheets were released on the same night,and the reactions were diametrically opposed.
• The Fed kept interest rates steady, but two members voted for a hike. The decision passed 10-2, with the economy assessed as growing at a “solid pace.” Warsh’s press conference was read as dovish; the 2-year yield fell 7 basis points, leaving the probability of a December hike at 78–80%.
• Warsh is altering the meeting calendar. Next year, one out of eight meetings, and two in 2028, will be set aside for “strategy” rather than policy decisions. This extends the gap between meetings to 12-13 weeks, increasing the significance of every decision.
• Samsung reported record profits, but its stock dropped 5-6%. Chip division profit surged 15-fold to 106.5 trillion won, slightly missing the 107.3 trillion won consensus, and the company postponed its capital return decision to January.
• The Bank of Canada raised interest rates for the first time in over three years and warned of further hikes. The European Central Bank announces its decision today, with rates widely expected to remain unchanged.
• Bitcoin dipped below 80,000, triggering $356 million in liquidations, $205 million of which were long positions. The sell-off began in Asia amid Samsung-driven technology weakness.
• Today: European Central Bank decision; U.S. third-quarter growth and September PCE inflation (headline consensus expects 0.3% month-over-month for core); earnings from Amazon, Intel, Caterpillar, Eli Lilly,and Starbucks.

Story of the Day

Cash flow becomes the new dividing line

On Wednesday evening, two major cloud giants simultaneously released earnings reports, and market reactions were exact opposites. Reuters’ morning note headline summarizes it well: In the AI alphabet, cash is king. Alphabet shares plunged 10% after hours, wiping out roughly $396 billion in market value. While revenue met expectations, net income and earnings per share missed the mark. The figure that truly spooked investors was the $9.1 billion negative free cash flow generated as capital expenditures expanded—and analysts suspect the upcoming quarter could look even worse. Conversely, Microsoft generated nearly $19 billion in free cash flow, lifting its stock 2.9–3% after hours as the market rewarded those capable of funding their own capex.

A closer look at Alphabet’s numbers reveals two distinct problems. First, the core business: total revenue came in at $127.6 billion, missing the $128.2 billion consensus, with advertising revenue missing estimates by $1.4 billion at $82 billion versus the $83.4 billion forecast. Chief Business Officer Philipp Schindler attributed the larger-than-expected slowdown in search ad growth to the increased use of AI mode—the conversational chatbot search interface—noting that the company is still experimenting with ads within this interface. Dave Wagner, portfolio manager at Aptus Capital Advisors, framed the contradiction clearly: in a market worried about AI cannibalizing the brand, investors need to see search accelerating, not slowing down. While the cloud story is carrying the weight, the stock will likely trade lower until concrete AI contributions materialize on the search side.

Second is cash: the company burned $5.9 billion last quarter to turn negative for the first time in its 22-year public history, making this the second consecutive negative quarter. Moreover, CFO Anat Ashkenazi stated that 2027 capex will increase significantly from this year’s $195–205 billion projection, though she declined to provide a specific figure. Jeremy Saltsburg, senior investment officer at Check Capital, highlighted the risk: a $300 billion figure could terrify the market, especially now that free cash flow has officially turned negative.

The bright spot lies in cloud: Google Cloud revenue more than doubled to $30.71 billion, beating expectations,while backlog reached $561 billion—with the company expecting to recognize over 55% of it as revenue within the next 24 months. Google Cloud CEO Thomas Kurian noted that sales of Tensor Processing Units (TPUs),which compete with Nvidia’s graphics processors, have become a meaningful contribution driver for the business unit. However, Ashkenazi warned that building up this inventory will create additional near-term pressure on free cash flow. Alphabet, Microsoft, Amazon, and Meta are projected to spend well over $700 billion combined in 2026 to expand data center, chip, and high-performance network capacity. Amazon and Intel report this evening, and Amazon will face this exact same cash flow test against expectations of $202.22 billion in revenue and 37.8% year-over-year growth in its cloud unit.

Samsung: Record profits are no longer enough

On the Asian front, a second lesson was delivered. Samsung Electronics announced that quarterly chip profits surged 15-fold to 106.5 trillion won, pushing group operating profit to 107.4 trillion won (roughly $80 billion)—up from 12.2 trillion won a year earlier. Despite this, the stock dropped 5% to 6.2% during the session due to two primary reasons. First, chip division profit fell just short of analyst expectations of 107.3 trillion won.Second, and more importantly, the company failed to announce a new capital return plan, postponing the decision to late January. Just a day prior, SK Hynix had announced it would return approximately $75 billion to shareholders this year, sending its stock soaring 11%. Sanjeev Rana, senior analyst at CLSA, explained the discrepancy: the market was expecting an additional buyback and dividend announcement, but postponing the decision to late January likely disappointed near-term expectations.

A third divergence emerged on the guidance front. While SK Hynix stated that memory chips are sold out through 2029 and that shortages will persist into 2030, Samsung offered a more cautious view. Although it noted that high-bandwidth memory (HBM) supply is exhausted for next year, it was more reserved regarding how long the supply deficit will last, projecting that the chip market will remain tight until 2028. Morningstar analyst Jing Jie Yu directly attributed Samsung’s drop to this outlook: Samsung’s pullback likely stemmed from its memory tightness timeline being perceived as marginally less optimistic compared to SK Hynix’s commentary a day earlier.

Nevertheless, Samsung is advancing on long-term contracting: it has signed agreements with 10 major customers, is in talks with 10 more, and aims for these agreements to account for 60-70% of its total production capacity by 2030. The company increased this year’s chip capex by 62% to 76.8 trillion won and anticipates another sharp increase next year. The overarching lesson is clear: record profits alone cannot carry a stock in this earnings season; investors are demanding capital return, guidance clarity, and cash generation.

The Fed: Dovish tone, hawkish votes, and a new calendar

The Federal Reserve kept its policy rate steady in the 3.75–4.00% range on Wednesday, but the decision was 10-2 as two members voted for a hike. The Committee assessed that the economy is growing at a “solid pace,” noted that inflation “remains elevated,” and stated it awaits “further accumulation of information” before taking additional steps.

Chair Kevin Warsh’s press conference was interpreted as dovish: he expressed confidence that inflation can be brought down to the 2% target without slowing growth or driving up unemployment—i.e., “without throwing sand in the gears”—and remarked that monetary policy is working, leaving the economy neither too hot nor too cold. The bond market reflected this: the 2-year yield fell by roughly 6-7 basis points by the end of the New York session to hit 4.6705%, and the rally on the long end carried over into Asian hours. The probability of a December rate hike remained pinned in the 78–80% band, though the futures market priced out roughly 10 basis points of tightening for next year.

The true surprise of the meeting was the calendar. Warsh announced that one of next year’s eight scheduled meetings, and two in 2028, will be designated as “strategy” meetings without policy decisions, aimed at evaluating major structural issues facing the institution. He indicated these will take place in autumn, with analysts pointing to October. The practical implications are significant: the gap between policy-making meetings expands to 12-13 weeks, elevating the importance of each policy decision, while the number of policy-determining meetings in 2028 drops to six.

This also complicates pricing for federal funds futures contracts, which are structured around meeting dates.Analysts at TD Securities noted that while they read the rescheduled calendar as dovish, dedicating these meetings to strategy rather than policy decisions could generate more extreme, inter-meeting market volatility going forward. Reuters’ commentary was sharper: the Fed can adjust rates between meetings, but that is typically a sign of extraordinary circumstances or policy error; limiting its options in such volatile times seems peculiar, though it aligns with Warsh’s anti-guidance, market-reliant approach. As one commentator put it, this marks the dawn of a new era of “forward silence.”

The picture across other central banks remains mixed. The Bank of Canada raised rates for the first time in over three years on Wednesday and warned of further increases. The ECB’s decision today is expected to keep rates on hold, with the central question being whether it will drop hints about a December rate hike and how it will address the bond turmoil in France. The Bank of Japan concludes its meeting tomorrow; Carol Kong, FX strategist at the Commonwealth Bank of Australia, outlined expectations: markets expect the bank to signal that it has achieved its underlying inflation target and lay the groundwork for a December rate hike—failing to deliver such a signal poses downside risks for the yen. Today also brings U.S. third-quarter growth and September personal consumption expenditures (PCE) inflation data, with core metrics expected to rise 0.3% month-over-month, up from 0.2% previously.

Market Roundup

Equities

Wall Street closed its third consecutive winning session on Wednesday: the S&P 500 rose 0.28% to 7,744, the Nasdaq 100 gained 0.55% to 29,813, the Dow added 0.19% to 52,475, and the Russell 2000 advanced 0.41% to 2,831. The VIX settled at 17.14.

Chip stocks once again drove the advance: AMD climbed 3.24% to $578.44, Micron advanced nearly 6%,Broadcom gained over 2%, ASML rose 1.67% to $1,662.85, and TSMC gained 0.60% to $439.51. Alphabet had climbed 1.34% intraday to $324.89 before post-earnings figures reversed the trend.

On the weak side, Meta dropped 1.24% to $612.49, extending its weekly loss to 12.19%—standing 21.5% below its 52-week high with a relative strength index (RSI) of 30.7 in oversold territory. SpaceX fell 2.25% to $145.23, bringing its weekly loss to 8.84%. After the bell, enterprise software firm ServiceNow crashed 18% on a lower-than-expected earnings report, while optical components maker Lumentum jumped 11% on news of acquisition talks by Marvell, whose shares dropped over 8%. Futures this morning point lower: Nasdaq 100 down 1.4%, S&P 500 down 0.5%, and the Dow up 0.3%.

Asia traded mixed on Thursday: the MSCI Asia-Pacific ex-Japan index fell 0.7%. South Korea’s KOSPIdropped 1.24% to 5,938, giving back a portion of the previous day’s 6.7% surge; Samsung fell 5-6% while SK Hynix rose 0.7-4.6%. Japan’s Nikkei gained 1.10% to 64,659 after oscillating between gains and losses throughout the session, with test equipment maker Advantest surging 8% after raising its annual forecast and stating that supply constraints will persist into 2027. China’s CSI 300 fell 0.8-1.2%, the Shanghai Composite dropped 0.82% to 3,651, and Hong Kong’s Hang Seng slipped 0.33%. Australia traded 0.46% higher.

European futures point 0.2% higher; on Wednesday, the DAX gained 0.44% to 25,704, while the CAC 40 closed flat. Shell reported third-quarter net income of $10.81 billion—its highest since 2022—driven by a record refining margin of $42 per barrel (up from $11.6 a year ago), prompting the company to raise its quarterly share buyback from $3 billion to $5 billion. Brazil’s Bovespa tumbled 2.68% to 171,006, bringing its weekly loss to 17.19%. Turkey’s BIST 100 hovered flat, up 0.13% at 11,165, with a weekly loss of 3.56% and an RSI deeply oversold at 28.7.

Foreign Exchange

The Dolar Index (DXY) held steady at 102.26, consolidating after pulling back from a two-week high during the New York session. The 2-year yield extended its post-Warsh decline, dipping to 4.6705% in Asian hours.

EUR/USD traded flat at 1.1142–1.1145 ahead of today’s ECB decision; the currency is down 5.1% against the dollar this year, with an RSI of 26.2 indicating deep oversold conditions. Positioning data is notable: weekly U.S. regulatory data shows speculators have amassed their largest short euro position in a decade, totaling $18.89 billion. Rushabh Amin, multi-asset portfolio manager at Allspring Global Investments, described the risk: emerging and mounting stagflation risks are colliding with fiscal strains in an already challenging growth environment; market pricing reflects a bit more than two and a half hikes through next September, and we are likely entering a winter of discontent. Amin added the core contradiction: current market pricing is on a collision course with globally elevated bond yields and widening periphery-core spreads; growth will almost certainly take a hit due to the recent rise in yields.

Sterling stood at 1.3322, while the yen traded at 157.86 ahead of tomorrow’s BOJ decision. The New Zealand dollar stabilized at 0.5616 after dropping as much as 1.7% intraday following the central bank’s surprise move on Wednesday. The Canadian dollar strengthened to 1.3994 following the rate hike. USD/TRYhit a new high at 49.83, with its RSI at a heavily overbought extreme of 97.8.

Commodities

Oil pulled back on Thursday: Brent dropped 0.7% to $114.47, and WTI fell 1.1% to $101.65, following Wednesday rallies of 1.3% and 3%, respectively. The downturn was driven by diplomacy: according to the Wall Street Journal, U.S. Vice President JD Vance sent a letter to Iran’s Security Council Chairman Mohsen Rezaei in an effort to revive peace negotiations. Yuki Takashima, economist at Nomura Securities, weighed the balance: selling pressure dominates on expectations that peace talks could restart, but losses remain capped.Factors limiting the downside include intensifying Houthi attacks and concerns that the U.S. may launch military strikes against Iran following the November 3 midterm elections. According to the WSJ, the U.S. has messaged Gulf states to prepare for an intense, short-duration military operation post-midterms. Qatari mediators presented Iran with a new draft agreement to end the war, but a senior Iranian official dismissed it as unacceptable ideas rather than a proposal. A Saudi-led coalition announced Thursday morning that it intercepted a ballistic missile launched toward the kingdom’s eastern region. On the supply side, U.S. crude inventories fell 1.9 million barrels for the week ending October 23 against expectations for a 15,000-barrel build, though gasoline inventories rose 3.9 million barrels. JPMorgan noted that with no verified attacks on Russian refinery infrastructure since the October 15 Ryazan refinery strike, Russian refinery throughput rose 350,000 barrels per day last week to 4 million barrels.

Precious metals continued to face selling pressure: gold dipped 0.22% to $4,042.70, silver fell 1% to $52.92 (extending its weekly loss to 7.84%), platinum dropped 2.18% to $1,514.10, and palladium declined 0.83% to $1,001, hovering near the $1,000 threshold. Palladium’s RSI sits at an oversold extreme of 23.2, down 53.9% from its 52-week high, while silver is oversold at 30.5, down 56.4% from its peak. Copper traded virtually flat at $6.64, remaining the most resilient in the commodity complex at just 2.81% below its peak. Natural gassurged 7.28% to $3.02, gaining 8.32% on the week.

Crypto

Bitcoin slipped from above $81,700 to $79,800 during the Asian session on Thursday, breaching the 80,000 threshold and reversing a two-legged recovery; it traded at $79,940 this morning. The sell-off originated in Asia, where Samsung’s 5%+ stock drop dragged the Korean stock exchange down over 2% and Nasdaq futures fell 1.4%, spilling weakness into crypto. Ether dropped 1.93% to $2,309.06, Solana fell 2.12% to $99.84 to slip below the $100 mark, XRP slid 2.51% to $1.2912, and Dogecoin fell 2.47% to 7.78 cents.

In derivatives, $356 million in positions were liquidated over the past 24 hours, with long positions accounting for $205 million ($94 million in bitcoin futures and $72 million in ether futures). On the macro front, the Fed’s hawkish undertones added secondary pressure: Warsh acknowledged progress on inflation but noted price pressures remain too high, leading ING to anticipate another rate hike in December. The risk for crypto is straightforward: a hawkish tone keeps real (inflation-adjusted) bond yields elevated, capping capital inflows into risk-sensitive, speculative assets. Rick Rieder, BlackRock’s chief investment officer of global fixed income,framed a cautious approach: investors should avoid making heroic directional calls on rates; real yields remain attractive, and high-quality fixed income markets offer notable income opportunities, favoring patience and a moderate duration stance as this unusually fragmented economy evolves.

In infrastructure, a notable news item highlighted AI’s impact on cybersecurity. Bitcoin Core publicly disclosed three security vulnerabilities discovered via AI scanning, one of which allowed a remote attacker to crash nodes running on Windows, macOS, or BSD. The flaw was flagged by a large language model scan on October 23, verified by developers the same day, patched on October 27, and detailed publicly on Wednesday.The mechanism: any computer connecting to a bitcoin node could flood it with data until memory was exhausted and the node crashed. Bitcoin Core is the software run by the vast majority of nodes. Until last week, Core developers kept medium-severity vulnerabilities confidential for up to a year to allow operators to upgrade before attackers learned where to look. That rule changed on October 22 for flaws deemed “easily discoverable,” as large language models have made finding them inexpensive; patches are now shipped to all supported versions as quickly as possible alongside a public advisory. A second vulnerability underscored the policy shift: the scan finding was reported on September 15, and another developer independently discovered the same flaw six days later. A third, low-severity flaw could allow a miner to flood re-organization files, though the attack would require roughly a month of total network block production on 64-bit machines, while completely crashing nodes on Windows and 32-bit systems without the ability to restart via standard warnings.

Story #2: Shell reports highest profit since 2022 on record refining margins

The clearest financial illustration of how war impacts energy corporations arrived Thursday morning. Shell reported third-quarter net income of $10.81 billion—its highest figure since 2022, beating the $10.33 billion consensus and nearly doubling the $5.43 billion recorded a year ago.

The core of the story lies in refining margins: the company reported a record $42 per barrel margin, compared to $11.6 a year ago and $24 in the previous quarter—more than tripling year-over-year. The driver is directly tied to the conflict: the U.S.-Israel war against Iran, now entering its ninth month, has disrupted global energy supplies and driven prices higher, pushing the margin for converting crude oil into refined fuels like diesel to historic highs. Shell beat expectations across all business segments: integrated gas generated $3.04 billion (vs. $2.93 billion expected), and upstream operations produced $3.19 billion (vs. $3.10 billion expected). The company also increased its quarterly share buyback program from $3 billion to $5 billion.

For investors, this landscape highlights two takeaways. First, the energy sector is the clearest winner of this conflict, and these gains are anchored in cash flow rather than speculation; Exxon and Chevron trade within 1.5–2% of their 52-week highs with strong RSIs of 67. Second, and more importantly, record refining margins point to a structural bottleneck independent of crude oil prices: the problem is not merely that crude is expensive, but that capacity to convert it into usable fuel is falling short. This is precisely the source of the diesel shortages we have monitored for weeks, explaining why inflationary pressures on the energy front have not eased even when crude prices pull back. Shell’s numbers also carry a warning: a $42 margin is unsustainable, and these profits are expected to normalize rapidly once the war ends, meaning current energy equity valuations should not be read through the lens of permanent peak earnings.

Levels to Watch

• Amazon earnings (Tonight): Consensus expects $202.22 billion in revenue and 37.8% growth in the cloud unit. The core test will be determining which side of the Alphabet-Microsoft divide it lands on—specifically regarding free cash flow.
• U.S. Core PCE Inflation (Today): Month-over-month consensus expects 0.3%, up from 0.2% prior. A hot reading would wipe out the dovish sentiment fostered by Warsh and drive December rate pricing higher.
• Bitcoin ($80,000): Lost for the third time this week. Until the $82,500 resistance is cleared, recoveries remain corrective; support below lies in the $77,000–$77,765 zone.
• Alphabet 2027 Capex: The company provided no precise figure but signaled an increase. As Check Capital warned, a figure approaching $300 billion could frighten the market given that free cash flow has turned negative.
• EUR/USD (1.1142): RSI at 26.2 indicates oversold conditions alongside record ten-year short positioning by speculators ($18.89 billion). This crowded positioning carries the risk of a violent squeeze on any positive surprise.
• Brent Crude ($114.47): Vance’s letter pressured prices lower, but expectations for post-midterm military action remain intact. Shell’s record $42 refining margin proves the true bottleneck resides in refining capacity rather than crude itself.

Weekly Calendar

Date	Day	Event / Release
Oct 29	Thursday	ECB Rate Decision (expected unchanged); Eurozone October consumer and business confidence; U.S. Q3 growth and September PCE inflation (core MoM expected 0.3%); earnings from Amazon, Intel, Caterpillar, Bristol-Myers, Eli Lilly, Merck, and Starbucks
Oct 30	Friday	Bank of Japan Decision (expected unchanged; anticipated to lay groundwork for December hike); Deribit monthly crypto options expiry; October month-end
Next Week	—	Reserve Bank of Australia expected to deliver its fifth rate hike
Nov 3	Tuesday	U.S. Midterm Elections; reports indicate U.S. messaged Gulf states to prepare for intense, short-duration military operations post-election
Nov 11	Wednesday	MSCI index rebalancing announcements (Strategy and Metaplanet under risk)
Jan 2027	—	Samsung to announce capital return policy (total range for the year previously indicated at 90–110 trillion won)
Autumn 2027	—	Fed’s first “strategy” meeting; no policy decisions will be made, with analysts pointing to October