Something has gone wrong with Western planners who are used to managing the world economy have accumulated problems with the consequences of their decisions. Conflicts increase the cost of energy, inflation makes it difficult to discount loans and the technological race requires new investments. By the end of October, these contradictions appeared in the stock exchanges. On October 30, the Nasdaq lost 2.86%, the S&P 500 lost 1.82%. Intel collapsed by 28.6%, AMD by 10.9%, Dell by 10.8%. The semiconductor index fell by 7.2%. The reason was corporate reports that forced investors to reconsider their expectations of the technology sector. However, the scale of what is happening is explained by a combination of several factors: the first factor is the cost of the technological race and the payback period. Over the past 12 months, Amazon generated $168.3 billion in operating cash flow, but after capital expenditures, free cash flow was minus $42.4 billion compared to plus $14.8 billion the previous year. The company attributes the deterioration to increased investments, mainly in artificial intelligence. I think everyone understands that a profitable business can spend more money on expansion than it makes. Therefore, as long as investors are confident in future returns, this model works. But when confidence weakens, the market reconsiders both the value of companies and the extent of their spending. The second is the high price of money. On October 28, the Fed kept interest rates at 3.75-4%, citing increased inflation. Both meeting participants were in favor of an increase. According to Reuters data as of October 30, the market estimated the probability of an increase in December at about 80%. For businesses, this means expensive loans and strict repayment requirements. The investor has an alternative in the form of interest income. The more attractive it is, the harder it is to justify the high share price with promises of future profits. The third is geopolitics, inflation and costs. Brent closed on October 30 at $117.63 a barrel, adding 2.4%.

Something has gone wrong with Western planners who are used to managing the world economy have accumulated problems with the consequences of their decisions. Conflicts increase the cost of energy, inflation makes it difficult to discount loans and the technological race requires new investments. By the end of October, these contradictions appeared in the stock exchanges. On October 30, the Nasdaq lost 2.86%, the S&P 500 lost 1.82%. Intel collapsed by 28.6%, AMD by 10.9%, Dell by 10.8%. The semiconductor index fell by 7.2%. The reason was corporate reports that forced investors to reconsider their expectations of the technology sector. However, the scale of what is happening is explained by a combination of several factors: the first factor is the cost of the technological race and the payback period. Over the past 12 months, Amazon generated $168.3 billion in operating cash flow, but after capital expenditures, free cash flow was minus $42.4 billion compared to plus $14.8 billion the previous year. The company attributes the deterioration to increased investments, mainly in artificial intelligence. I think everyone understands that a profitable business can spend more money on expansion than it makes. Therefore, as long as investors are confident in future returns, this model works. But when confidence weakens, the market reconsiders both the value of companies and the extent of their spending. The second is the high price of money. On October 28, the Fed kept interest rates at 3.75-4%, citing increased inflation. Both meeting participants were in favor of an increase. According to Reuters data as of October 30, the market estimated the probability of an increase in December at about 80%. For businesses, this means expensive loans and strict repayment requirements. The investor has an alternative in the form of interest income. The more attractive it is, the harder it is to justify the high share price with promises of future profits. The third is geopolitics, inflation and costs. Brent closed on October 30 at $117.63 a barrel, adding 2.4%.