FOMC and Earnings Reactions
Subscriber Data Oct29 2025
Seems to be a little something for everyone in yesterday’s market events. The FOMC as expected cut the Federal Funds Rate to a range of 3.75% to 4.00% continuing its path down. However Powell did say (which we do not believe for 1 second) that the December rate cut was “not a forgone conclusion.”
QT balance sheet run off concludes on December 1st, which means we will most likely return to the QE era in no time. The FOMC will continue to use maturing securities capital to buy T-Bills.
The bond market once again took the news and traders decided to take the uncertainty of future cuts and sell off the front end of the curve as the US Govt 2Y jumped about 12bp and we will continue to watch the 3.65% area:
Same thing with the US Govt 10Y and once again we have 4.09% back in focus:
So once again, we have an FOMC that is caught here worrying about sticky inflation, but worse, knows the employment situation is deteriorating and deteriorating rapidly. So to be honest, we take this initial market reaction in yields jumping with a grain of salt. We expect this rate jump to be reversed over the next few weeks as reality continues to set in, and that reality is rates need to fall further and unemployment is set to move higher.
We also know the internal plumbing in the short term funding markets is starting to see a little volatility, so keep an eye on SOFR and REPO rates and usage. Although we know there is still a ton of money floating around out there, however we suspect access to funding is becoming a bit more tough for a few participants out there.
Ok now onto what we believe will be the driving force for markets later today and that is the host of tech earnings after the bell and the upcoming earnings of Amazon and Apple.
If you missed our earnings outlook yesterday, you missed our technical calls and potential moves and how to structure trades accordingly. Anyway let’s start with the good news from Alphabet which easily beat posting a $2.87 EPS vs a $2.26 estimate. Good revenues across the board from services, advertising, subscriptions, cloud and YouTube. CapEx was $23.95bn which was +83% YoY!
The stock is trading higher in after market trading +6.2%, but lets watch how the stock trades during the day session, its starting out on a great tone but let’s see how the week finishes out for this one:
One look at the chart and well, this one is in unchartered waters, since the April low, GOOGL if it opens here tomorrow will be +106.7%!
Next up let’s look at Microsoft, it also beat posting a $3.72 EPS vs $3.67 expected. However investors are concerned with the CapEx number $34.9Bn +10.9Bn over last quarter or a massive 45.4%! The stock is -3.70% in after hours trade:
The chart structure looks awful now and is it about to put in a “Batman Mask” formation? The 2 peaks sure make it seem so:
Finally let’s look at META which took a massive $15.93bn tax charge which resulted in EPS coming in at $1.05 well below the $6.76 estimate. Thus the stock is getting pounded in after hours -7.47% to $695.50:
If this move holds and we get a weekly close under $700, this could start to weigh in the overall market tone:
In our post from the prior night we looked at the META $730/$700 put spread for $9.15. Depending on your goals and your set ups, some traders go all in on the full risk spectrum and only buy what they are willing to risk in total and thus tend to hold it for full value. If you are looking to hedge something like this you can always take 1/3rd the position off at some point during the day, you let the other 2/3rds run or you can buy a $700 call as an outright hedge. So many different options to choose form depending upon your risk tolerance and overall goals.
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