01.05.25 - New wave of “FOMO”
Microsoft and Meta both reported stronger-than-expected earnings after the market closed yesterday, providing a continued boost to market sentiment. Microsoft posted revenue of USD 61.9 billion for the quarter, up 17% year-over-year, driven by strong growth in its cloud segment. Meta reported USD 36.5 billion in revenue, a 27% increase year-over-year, and issued an upbeat outlook, helping offset concerns over rising capital expenditures.
On the macro side, latest US labor market data show the first signs of potential softening. The ADP Employment Change report showed private sector job additions of 62’000 in April, slightly below expectations of 115’000 and down from the downwardly revised 147’000 in March.
Weekly jobless claims rose to 241’000, up from 223’000 the prior week, more than the expected 225’000.
Markets: US Futures with a strong bounce, most European markest closed with Labor Day. Cryptos gain with risk on sentiment. Gold down 2% while US dollar regains some ground.
My view: The market is showing clear signs of “FOMO”, fear of missing out, especially evident in the strong post-earnings reaction of Microsoft and Meta. Both companies exceeded expectations, lifting Nasdaq Futures by nearly 2% overnight. Microsoft surged by 10%, pulling sentiment higher and fueling hopes among some investors that markets could “go to the moon.”
However, it's important to remember that Q1 earnings are backward-looking. The first tariff concerns emerged in March, with formal announcements coming in early April. The true impact of these trade disruptions will likely become clearer in Q2 results.
On the macro side, early signs of weakness are emerging. Recent consumer data and labor market indicators, including this week’s ADP employment and jobless claims, suggest a potential cooling in momentum.
Recent earnings from McDonald's highlight a cautious consumer environment. The company reported a decline in US same-store sales, marking its first drop since the early stages of the Covid pandemic.
From this point of view, it warrants a more cautious stance.
In such a wave of FOMO, the market rally may continue in the short term. With uncertainties remaining, volatility remains high, and in my view, downside risks are far from off the table.
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