Digital Nightmare – invest.ch

We are Monday morning. This is the only certainty we can have at the end of July. The week ended lower in New York as Europe clung to the curtains and held on. On Friday, social media and digital advertising took their toll, suddenly marketing spending seemed to melt like snow in the sun and SNAP leads the way with messy numbers for the second straight quarter and comments that make you want to buy a plane ticket to get in control of a baseball bat. . But this nightmarish trimester has other implications as well.

Audio dated July 25, 2022


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Infection

Since the advent of COVID, we have learned a lot about the concept of contagion. Except that we talked about the virus there and that when we talk about finances, it’s not enough to just wash your hands with apricot 8 times a day and wear a mask. When it comes to finances, we might start to think that when a half-rotten box like SNAP gets screwed up because of its results – 40% written off on Friday night anyway – it’s that the harm could go deeper, understand that advertising social media is becoming a little less of an Eldorado for influencers who go to Dubai, and that companies that throw tons of dollars online to run “business” are starting to ask themselves if it’s all worth it and if they’re throwing ads all over the place on Facebook, Instagram , Snapchat and Twitter really make sense and are profitable. Especially as the coming months could get a little more challenging – and that’s even if Mrs. Yellen says everything is fine and that we don’t have a recession because employment is all right – yes, because it’s been another two weeks since ” big tech” began to shorten their sails to “protect themselves against the difficult months ahead.” And we can generally say that when Microsoft, Google, Apple, Amazon and others start to smell burned, they can’t ALL be wrong…

However, the SNAP bloodbath may be a harbinger of other developments and call into question the very sustainability of the recovery we are currently in. The S&P 500 tried last week to break 4,000 points on the rise, but Friday night’s close made everyone agree to do so, and early in the week of FOMC meetings it won’t be easy to find the energy to go there right away. So, we need to start the week knowing the reason why we need to save and remembering that there are many questions that will be answered over the next 5 days.

Big problems await big technologies?

In addition to the fact that social media advertising is more than before. Aside from being one of the biggest stories in the world of finance is the fact that Elon Musk had an affair with the wife of Google boss Sergey Brin and that is why they got divorced. So we may wonder how Elon Musk manages his days. Knowing this, in addition to managing Tesla, Starlink, its rockets and its intentions to go to Mars. But on top of that, he seems obsessed with having a baby every three months, no matter the mother, he can’t seem to resist anything in a skirt. On top of that we will have quarterly numbers of fat, fat people and that GAFAM publications will be the most important, apart from the rest of the S&P members coming out with Visa, Pfizer, Roku, Exxon, Chevron, McDO and Coke, just to name a few. And given the cautious statements of a significant number of these companies, there is reason to be concerned about the quality of the numbers that will be announced, as well as the recommendations that will be communicated.

And that is not all. That’s not all, because in addition to the numbers that will be released, we feel that many analysts are beginning to wonder if this publication season, which is in full swing, is also the beginning of a change in attitudes in the technology industry and that maybe , the golden years in the industry are over, that the guys who made millions a year to work from home in pajamas, maybe it’s not so trendy anymore. Which could challenge the techno ecosystem in the coming months. And then all of these microeconomic considerations need to be aligned with the statements that the Fed will make after its two-day meeting starting tomorrow.

Powell on eggs at 75 BP

Thus, on Wednesday evening, the Fed will announce a key rate increase by 75 basis points. In any case, this is what 99.99% of the market expects. Except that the problem is not just the amplitude of the increase, which will be announced on Wednesday evening. But also, and above all, how the latter will be expressed, and what we can understand about the Fed’s intentions for the coming months. Not to mention that any clear and precise information about the future of inflation from Jerome Powell’s point of view would be helpful.

Suffice it to say that we are in an “all-peril week” and that if we manage to get out of this week more or less unscathed, she should be in the “Hall of Fame” of finance. Not to mention, many of us will be using these next 120 hours to figure out if we are really in the middle of a new bull market birth or if it was just the Xth bounce in a bear market and that is for a really “price” market. . we have a recession ahead of us, we have to FIRST GET TO 3000 before we get to 5000.

In Asia

This morning in Asia, we are already in “growth fear” mode and fear of everything else. I must say that already for all the reasons that I just mentioned, there is already a reason to be cowardly, but in addition, if you add the fact that there are always more concerns about European debt, then the Italian 10-year-old still has a bad face, and if you compare it with the yield of a German 10-year-old, then there is enough here to lose control. Thus, the week almost everywhere begins with a decline of 0.8%, US futures are also in the red by 0.10%.

There is also Bitcoin coming back from $23,000 where it was 7-8 hours ago to $21,800. I don’t know if there is any connection, but this morning I came across an article that talks about the “disappearance and reappearance in Dubai” of two co-founders of the Three Arrows Foundation. The last one has been missing since the authorities were looking for answers to the bankruptcy of a fund still leaving over $2.8 billion to creditors, and these two guys reappeared in Dubai and were interviewed to explain that – OF COURSE, it’s not their fault and that they wanted to start over in Dubai because the rules were more lenient than in Singapore. The interview is simply unreal. Between two guys who explain that they didn’t use the 50 million to illegally buy a yacht and that everything was documented in the foundation’s documents, and one of the founders, who ends the interview by saying: “We think it’s in the general interest if we can maintain our physical integrity and behave with restraint.”

And don’t pay what you owe by the way. When you see how these guys are doing and when you see what has already happened in this area in the past, you understand that you definitely do not learn anything and forget everything. Meanwhile, oil is around $94 and gold is trading at $1,724.

No or almost no news of the day

It is quite impressive that at the dawn of this week, which promises to be complex, confusing and completely crazy, there is almost no big news. We will just see that the Chinese are in the process of laying off everyone in the management of Evergrande, but at the same time, for 8 months now, no one gives a damn about the future of Evergrande – for a while it was THE GREATEST CARE OF THE WONDERFUL WORLD OF FINANCE, and then suddenly we discovered that inflation is out of control no more and we forgot about it, so this morning: no one cares.

It should also be noted that two or three voices are beginning to be heard in the States saying that the risk of a housing market crash is almost as high as in 2008 during the mortgage crisis, except that this time it is due to that mortgage rates are skyrocketing. But no one cares there either. At the moment. How nobody cared about the possibility when Michael Barry screamed to death six months before Lehman had a stroke. In short, there is no news since the morning.

Numbers of the day

As for the quarterly figures, it is still light today. We will have results from Philips, NXP or even Whirlpool and Logitech. Not so much that you roll around on the floor in anguish, but you will have to conserve your energy, because the week promises to be long. In terms of economics, we will have an IFO in Germany, which, along with Russian gas stories, is likely to be quite hot, as well as China’s trade balance and Chicago Fed national activity. as well as a report on Biden’s post-COVID health status.

For now, we’re sitting in our chairs waiting for it to really kick off, but one thing’s for sure: it’s going to be a sports week. So remember to go to bed early and drink enough water. I wish you a great start to the week and see you tomorrow morning, same time, same place.

Thomas Veye
invest.ch

“Many failures in life are people who didn’t realize how close they were to success when they gave up. -Thomas A. Edison