Risk appetite had no chance after two giant disappointments in tech earnings, soaring employment costs and rising global bond yields amid inflation fears. Inflation hit a 13-year high in the eurozone, the Fed’s preferred inflation indicator continues to hold its 30-year high of 3.6%, employment costs in the United States hit the highest pace in 19 years and energy prices remain high. Despite all the growing inflation fears, the growth outlook for next year remains strong and investors will continue to bank on the exceptionalism of US growth.

US stocks trimmed losses after investors viewed Apple and Amazon’s poor performance and supply chain constraints as a short-term problem and nothing to derail their dominance as a company most profitable smartphone and largest e-commerce company in the world.

Apple / Amazon

Profit season was buzzing, and then Apple and Amazon had to play ‘Grinch’. Despite a 47% year-over-year jump in iPhone sales, Apple missed quarterly sales for the first time since 2018 as supply issues cost them $ 6 billion. Everything is getting more and more expensive for Amazon as they face billions of dollars in additional costs this quarter. This will be difficult for Amazon as the pressure on labor and wages is expected to continue and the rise in transportation costs will last beyond the holiday season.

Wall Street knows that if Amazon and Apple are grappling with supply chain issues this holiday season, small businesses don’t stand a chance. Despite an initial drop of around 5%, investors know this is just a small incident for these tech giants.

FX

The bond market clearly shows that inflationary pressures are intensifying, which worries some investors and triggers a flight to the dollar. Yesterday, the euro recorded its best day in five months as ECB rate hike expectations moved from December 2022 to October 2022. Today’s European economic data clearly showed that inflation is on the rise. clearly above the ECB’s target and nothing in the earnings season suggests it is going to abate anytime soon. With euro zone inflation reaching 4.1%, a new 13-year high, growth prospects will have to be revised downwards.

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With over 20 years of trading experience, Ed Moya is a senior market analyst at OANDA, producing late-breaking cross-market analysis, covering geopolitical events, central bank policies and market reaction to company news. . His particular expertise spans a wide range of asset classes including currencies, commodities, fixed income, stocks and cryptocurrencies. During his career, Ed has worked with some of the leading currency brokers, research teams and information services on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently, he worked with TradeTheNews.com, where he provided market analysis on economic data and business news. Based in New York City, Ed is a regular guest on several major financial TV stations including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His opinions are endorsed by the world’s most renowned global news agencies including Reuters, Bloomberg and Associated Press, and he is regularly cited in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.