To The Moon

Week ahead: 26 October 2026 — Central banks, the Fed and Amazon’s AI spending

Economic Calendar (26Oct2026)

Five major central banks announce rates this week, alongside the UK Budget. The Fed decides before key US inflation reports. Europe has ended summer time; the US changes on 1 November. For Asian readers, US events arrive one hour earlier than usual.

1. Fed decision — Wednesday 28 October, 2:00 pm ET (Chair Warsh’s press conference: 2:30 pm). Rates are 3.75–4.00%, following September’s first increase in three years. A hold is expected: 94 of 100 Reuters-polled economists predict no change; CME futures suggest a 10% chance of an increase. No updated rate forecasts (“dot plot”) are due. Watch the response to September’s 3.7% consumer inflation and signals of a December increase, as Pimco and others expect. With midterms six days away, the message may be cautious. Reuters poll and pricing via Newsquawk week ahead, 23 October

2. US growth and inflation — Thursday 29 October, 8:30 am ET. Released after the Fed decision, these could shift December expectations. Third-quarter GDP growth is forecast at 3.0–3.2% annualised, versus 2.2% previously; the Atlanta Fed estimates 3.5%. AI investment is a key factor. September personal consumption expenditures (PCE) inflation is forecast at 0.5% monthly and 3.6–3.7% annually. Core PCE, excluding food and energy, is forecast at 0.3% monthly and 3.1% annually, up from 3.0%. Producer prices rose 1.3% in a month, the largest increase since 2022. Faster core inflation could support a December rate increase. Weekly jobless claims arrive alongside: about 200,000 expected, versus 194,000 previously. MarketWatch calendar, Newsquawk

3. Other central banks and the UK Budget. The Bank of Canada decides Wednesday; markets suggest an 80% chance of a 0.25-percentage-point increase. Governor Macklem has warned about lasting energy-price pressures. New Zealand is expected to raise rates by 0.25 percentage points to 3.00%, though weak third-quarter consumer inflation makes this uncertain. The European Central Bank is expected to hold Thursday; watch its guidance and French government-bond yields. Japan decides Friday. Wednesday’s UK Autumn Budget could affect government bonds and banks. The theme is tighter policy: currencies may react to which bank most strongly supports higher rates. Newsquawk

Also watch: China’s Fifth Plenum opens Monday; Friday’s early October business surveys (PMIs) will be reviewed through the weekend. Israel’s Knesset election is Tuesday; Australian CPI is Wednesday. Newsquawk

Earnings Calendar (26Oct2026)

Major earnings this week (Kimi compiled public calendars; Benson must confirm dates against his earnings calendar):

· Wednesday: Microsoft and Alphabet after the close

· Thursday: Amazon (AMZN) after the close — this week’s deep dive; Shell before the open

· The shared question: is heavy AI spending generating sufficient returns?

Amazon reports Thursday 29 October after the close; its call is at 5:00 pm ET. Figures come from the Yahoo Finance plugin and public sources. Profits are strong, but data-centre spending has sharply reduced free cash flow—cash left after capital investment.

Valuation and sentiment. Amazon closed Friday at US$248.00, up about 10.6% over twelve months, with a market value near US$2.7 trillion. Barchart reports roughly 20% over its 52-week window; the difference needs checking. The 52-week price range was US$196–US$287, showing large swings.

· The price-to-earnings (P/E) ratio is about 20 times reported earnings and 24 times expected earnings. The higher forecast ratio implies lower earnings per share, as AI costs and depreciation—the cost of ageing assets—affect profit.

· Among 56–58 analysts, the consensus is “strong buy”, with targets near US$329–332. The cited 27–34% upside needs checking against the US$248 share price, especially the lower end. Targets assume AI investment succeeds; they are forecasts, not guarantees. Yahoo Finance plugin data; Barchart via Yahoo Finance, 13 October

Demand — cloud, advertising and retail.

· Cloud: Amazon Web Services (AWS) Q2 revenue rose 37% annually to US$42.2 billion; outstanding orders approached US$500 billion. Deutsche Bank forecasts 41% growth this quarter. Management expects capacity below 2026 demand. The question is the cost of meeting demand. CNBC via BloFin preview

· Advertising and retail: Advertising revenue rose 26% to US$19.8 billion last quarter. North American retail’s profit margin was 7.9%, helped by US$640 million in one-off tariff refunds. Rising fuel costs could squeeze margins. These businesses help fund cloud investment. Amazon Q2 2026 via BloFin

Revenue and profit — the four-year picture (December fiscal year):

Revenue grew about 12% annually, and losses became US$77.7 billion in profit. But the roughly 17% net margin over twelve months includes one-off gains. Q2 pre-tax “other income” was US$53.4 billion, mainly from higher Anthropic investment values; earlier gains were US$16.8 billion in Q1 and US$9.5 billion in Q3 2025. The 13.7% operating margin better reflects the business. Separate operating profit from investment revaluations. Yahoo Finance plugin data; BloFin

Balance sheet. At end-2025: assets US$818.0 billion, liabilities US$407.0 billion, equity US$411.1 billion and debt US$153.0 billion. Debt-to-equity is about 0.37 times, or 0.46 times including leases; the lease-inclusive US$252 billion figure needs checking. Credit quality is comfortably investment-grade. Unlike some AI projects using separate financing companies (SPVs), Amazon can fund investment from its own cash. Cash flow, rather than financial strength, is the concern. [Yahoo Finance plugin data]

Cash flow — the heart of this week’s story.

· Operating cash rose from US$46.8 billion in 2022 to US$84.9 billion in 2023, US$115.9 billion in 2024 and US$139.5 billion in 2025.

· Spending on long-term assets (capital expenditure) was US$63.6 billion, US$52.7 billion, US$83.0 billion and US$131.8 billion, respectively. About US$220 billion is indicated for 2026.

· Free cash flow was −US$16.9 billion, US$32.2 billion, US$32.9 billion and US$7.7 billion, respectively. At a US$2.7 trillion market value, Amazon trades above 300 times free cash flow, or about 19 times operating cash flow.

· Profit is not available cash. Heavy data-centre investment could pay off through AI growth; weak returns would leave little cash supporting about 20 times trailing earnings. Watch Thursday’s spending guidance. A report last week said Amazon was moving US$8 billion of Nvidia chips into a lease-back SPV, a separate financing company. Yahoo Finance plugin data; Seeking Alpha preview, 20 October

Recent news (compiled by Kimi).

· Q2 (July): US$200.6B revenue beat forecasts; AWS +37%. Reported EPS was US$5.75, including US$3.78 from Anthropic value gains. Adjusted EPS of US$1.97 also beat. Shares rose ~15% next day.

· September: a US$1B+ multi-year Synopsys deal to develop custom chips faster and reduce Nvidia costs.

· August: the FTC and 22 states sued over ad auctions; Amazon called it “misguided”. Amazon Leo satellite internet missed its mid-2026 service target. BloFin, Barchart via Yahoo

What to watch Thursday. Analysts expect EPS of US$2.01–2.02 and revenue of US$202.1 billion, up 12.2%. Company guidance is US$197–202 billion in sales and US$22.5–26.5 billion in operating income; revenue forecasts sit slightly above the range. Watch: (1) “other income”—Anthropic value changes can distort EPS, especially without a new funding valuation; (2) AWS growth against 37%; (3) 2026 capital spending; and (4) Q4 guidance, often more important for shares than current results. Options suggest a 5% move; three of four recent reports produced moves above 5%. This is an educational case study, not financial advice. Do your own due diligence. Zacks via BloFin

Market Outlook of S&P500 (26Oct2026)

Technicals as of Friday 23 October close (Yahoo Finance data):

· Close 7,623.68 — down ~0.5% on the week, ~2.5% below the record 7,818.9 set earlier this month, still +11.4% year to date.

· Below the 50-day average (7,700) and 20-day exponential average (7,713), but above the 200-day average (7,291). Short-term strength has faded; the longer-term uptrend holds. The index is roughly 330 points above its 200-day average.

· MACD: −3.1, below its +12.6 signal line. This price-trend indicator suggests weakening momentum.

· Chaikin Money Flow: −0.02. This price-and-volume indicator suggests modest, not heavy, selling.

· Relative Strength Index (RSI): 42. Momentum is weak, but not yet “oversold”—a level suggesting unusually heavy selling.

· The long-term trend stays positive, but momentum and volume favour sellers short term.

Sentiment. CNN’s Fear & Greed Index fell from 46 to 18 on Friday 16 October, when the S&P fell 1.09% and the Nasdaq had its worst week since June. It was 31 mid-week and about 21 on Thursday 22 October; that finhacker.cz mirror reading needs CNN confirmation. The draft reports no extreme-greed days this year despite record highs. Investing News Network, 20 October, finhacker.cz

Weekly outlook: NEUTRAL, leaning cautious. Positives: the long-term uptrend holds, and sentiment is fearful just 2.5% below record highs. A quiet Fed decision and strong major-company earnings could lift prices as investors unwind protection. Risks: weaker momentum, prices below a falling 50-day average, Brent near US$110, reduced Hormuz shipping and inflation that could bring higher rates. Five central-bank decisions and three major earnings reports create unusual uncertainty. Focus on position sizes and Thursday’s data, rather than predicting outcomes.

News and my thoughts from the past week (26Oct2026)

1. Major-company job cuts — American Express: 5%, about 3,500 employees; Barclays: 5,000 as AI improves efficiency; eBay: about 9%; Netflix: 6% globally, about 1,000 (WSJ via X user Zerohedge). Comcast plans significant cuts before its NBCUniversal spinoff (Bloomberg, 21 Oct). Perspective: cost savings are visible; extra AI revenue remains uncertain.

2. Morgan Stanley cuts its AMD chip forecast — Its 2026–2030 graphics-chip (GPU) forecast fell 43%, from 14.1 million to 8.0 million units: 5.9 million fewer (Morgan Stanley chart, 14 October). Perspective: weaker demand echoes the revenue and spending concerns in items 3 and 5.

3. AI revenue: expectations versus results — Rand Group Research compares combined OpenAI and Anthropic annual recurring revenue (ARR) projections of about US$2,000 billion with a reported path near US$577 billion. Perspective: separate forecasts from delivered revenue and check comparable measures.

4. Riskier data-centre debt — US financing issuance rose from US$36 billion in 2025 to US$80 billion in 2026 year to date. The below-investment-grade (“junk”) share rose from 24% to 46% (Forbes, 16 Oct, citing Barclays). Perspective: higher credit risk makes borrowing costs and debt renewal important.

5. AI spending barely grows — Ramp’s business data shows spending on AI tokens—units of usage—rose 1.05% in August and 0.22% in September (Ramp AI Index). Perspective: two nearly flat months warrant comparison with broader demand.

6. Gundlach cautious on AI — The investor who anticipated the 2007 housing downturn wants almost no AI-stock exposure (Eric Esposito). Perspective: his view reinforces item 4’s financing concerns, but is opinion, not proof of a downturn.

7. Dollar reserve share falls — Its global share is below 50% as gold’s share rises (IMF/Bloomberg data through 2025). Perspective: a long-term shift for gold demand and diversification, not a short-term trading signal.

8. Indonesian stocks at their lowest since 2020 — The Jakarta Composite reversed its 2021–2026 gains, returning towards 5,000 (Bloomberg). Perspective: regional equity investments carry risks.

9. US pending home sales at a record low — The index fell 7.3% monthly to its lowest recorded level (NAR via Bloomberg). Perspective: mortgage rates above 7% constrain housing, reinforcing inflation’s importance.

10. Cybersecurity risks — Reports covered an urgent CISA PHP patch alert, a new PyTorch supply-chain flaw, a critical GitLab flaw rated 10.0, a Node.js Brotli flaw allowing remote code execution, the Railway breach and Microsoft’s report on Storm-0940’s AI-assisted intrusions (X collage, 20–24 Oct). Perspective: security investment and stronger AI oversight remain important.

My Investing Muse (26Oct2026)

Waiting for the AI bank run

An “AI bank run” is a possible risk, not a reported event [scenario]. In a bank run, withdrawals outpace repayment. Here, lenders and investors could withdraw funding faster than AI projects can replace it or renew debt. The risk is in credit markets, not bank queues. Rising lower-rated data-centre financing makes this scenario relevant.

Cybersecurity and AI oversight. [fact] Last week brought an urgent CISA patch alert, a PyTorch supply-chain flaw and a critical GitLab bug. Claims that OpenAI lacks resources to address concerns are unverified. Can oversight keep pace with more autonomous AI? Sam Altman ruled out a 2026 IPO in September [fact]; a listing remains a future possibility. Listings require disclosure, while regulators separately oversee AI safety. Both matter.

US election. [fact] Election Day is 3 November. Results start that night; close races may take longer. By 20 October, 12.6 million votes were cast, including 8.35 million mail ballots (Axios); a record is unverified. Campaigning continues for undecided voters. [forecast] The economy, outlook and war are key issues, seemingly most challenging for incumbents. The next Congress will shape 2027 fiscal, energy and technology-policy expectations.

Gulf shipping and energy. [fact] Iranian attacks continue in and near Hormuz, with at least ten vessel attacks recently. Houthi strikes on Saudi Arabia are related but separate. Hormuz disruption directly affects oil supply; the Houthi campaign has different regional effects. Both can raise energy and shipping costs, inflation and rates, affecting asset values.

Weather and earthquakes. [fact] Typhoon Champi affected Taiwan and is heading towards Japan; Japan’s weather agency classed it as a severe tropical storm on 24 October. No unverified casualty count is included. [forecast] US risks include south-east coastal storms and west-coast atmospheric rivers—concentrated moisture bringing heavy rain. These affect insurers, farming and energy demand, but forecasts are not investment signals. Tibet’s 22 October Nagqu earthquake is confirmed; assessments continue. It is included for completeness, not market impact.

Markets and AI funding. [fact] From 16 to 23 October, the S&P 500 fell 0.47% and Nasdaq 0.71% amid AI-financing concerns (Yahoo Finance closes). This does not prove widespread forced selling. Transformer, power and water shortages, plus local opposition, can delay data centres, raise costs and postpone revenue despite demand. Some major listings reportedly stalled financially; cheaper Chinese models add competition. Investors need evidence of results and a route to profit. Anthropic records some partner revenue gross; OpenAI reports its net share. Compare revenue, cash losses, commitments and profitability consistently. Some overdue car, mortgage and card payments show stress, but the New York Fed’s overall Q2 measures improved slightly.

Job cuts. [fact] Reported cuts: American Express about 3,500; Barclays 5,000; eBay roughly 9%; Netflix about 1,000. Comcast plans significant cuts before its NBCUniversal spinoff. Cost savings are visible; extra revenue from AI efficiencies remains a forecast.

European disruption. [fact] The US Embassy confirmed violence, looting and local curfews in parts of France; Italy deployed military personnel. Riots in more than twenty countries are unverified, as are possible protests next week, including Germany. Lasting disruption could hurt retail, travel and insurance earnings and raise pressure for security spending, subsidies and tariffs.

Closing view. I favour hedging risk, taking some profits and avoiding borrowing to invest. [forecast] My concern is concentrated AI exposure and oil-driven inflation, not equities broadly. Normal Gulf shipping, better credit conditions or AI revenue turning into cash would reduce my caution. Protection costs money: hedges can reduce gains, and profit-taking may trigger taxes. Position size matters more than forecast confidence.

Stay informed and keep potential losses affordable. I wish everyone a safe investing week.

Financial Strategy and Outlook

Keep your long-term plan: spend within your means, invest only what you can afford to lose and avoid borrowing, especially as rates and price swings rise. Keep a watchlist, seek quality at fair prices and spread investments across sectors and countries. Control position sizes, review and rebalance regularly; do not let weekly headlines dictate strategy.

Wishing everyone a successful week ahead.

Disclaimer: For information and education only—not financial advice or a recommendation to buy or sell securities. Third-party figures are believed reliable but not guaranteed. Do your own due diligence and consult a licensed adviser where appropriate.

Low-confidence claims — publication checks

From Claude’s supplied review, not a fresh fact-check. Low confidence means disputed evidence or weak sources, not necessarily a false claim.

· RBNZ rate forecast — Low confidence. A 0.25-percentage-point rise to 3.00% is disputed; Westpac expects an October pause. Check the meeting date, current rate and dated forecasts.

· September US inflation of 3.7% — Low confidence. The review did not confirm the exact CPI figure. Check the official BLS release and whether it is monthly or annual.

· Fear & Greed Index near 21 on 22 October — Low confidence. The finhacker.cz mirror lacks CNN confirmation. Verify CNN’s dated reading or omit the value.

· Job cuts — Low sourcing confidence. Amex ~3,500; Barclays 5,000; eBay ~9%; Netflix ~1,000 came through “WSJ via X user Zerohedge”. Confirm with company statements or original WSJ/Bloomberg reports, and check both repeated passages.

@TigerStars

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