Week 43 was defined by a continuation of the tech pullback, surging energy prices, and a high-stakes slate of megacap earnings that exposed a growing divide between top-line AI monetization and the massive capital expenditures required to fund it. Amidst stubbornly tight labor data, geopolitical tensions pushing oil higher, and an ongoing repricing of interest rate expectations, global markets remained volatile.
Rather than sitting on the sidelines, we are using this volatility to actively reposition our portfolio. While steady performers like IBM delivered strong quarterly results, sharp pullbacks across precious metals and Chinese technology names have created compelling valuation dislocations. Heading into Week 44, we are unlocking capital from our defensive and commodity holdings—utilizing December short put strategies to generate premium—and aggressively doubling down on our highest-conviction Chinese AI and robotics plays ahead of their November earnings catalysts.
Week 43 Recap
US Equities, Surging Oil, and the Tech Pullback
Equities remained under pressure during the trading week ending October 23rd. The S&P 500 closed Friday at 7,623.68, down 0.52% on the session and 0.5% for the week. Both the S&P 500 and the Nasdaq Composite (-0.7% on the week) logged their second consecutive weekly losses, whereas the Dow Jones Industrial Average managed to finish the week up 0.4%—notching its third straight weekly gain despite a sharp Friday pullback.
This divergence reflects a pronounced rotation out of high-multiple technology and semiconductor names into value and energy sectors. Two primary forces weighed on sentiment: mounting skepticism over the near-term free cash flow impact of hyperscaler AI spending, and a sharp spike in crude oil. Escalating Middle East tensions pushed Brent crude up 3.1% on Friday to settle above $116 per barrel—its highest level since 2022. In the bond market, a fierce safe-haven rally on Thursday briefly drove the 10-year US Treasury yield down to 4.96% as investors rotated out of tech equities, before Friday's oil-driven inflation concerns pushed the yield back to 5.00%.
Megacap Tech Earnings: Tesla, Meta, and IBM
Wednesday, October 21st delivered the first major wave of third-quarter tech results, underscoring that Wall Street is scrutinizing capital discipline just as closely as revenue growth:
- Tesla (TSLA): Tesla delivered a solid non-GAAP EPS beat of $0.48 (versus consensus estimates of $0.45) on flat revenue of $28.05 billion. GAAP gross margins rebounded to 19.6% (with automotive gross margin ex-credits rising to 18.1%), and free cash flow swung strongly positive to $1.53 billion. However, the cash flow beat was largely aided by lower-than-expected Q3 capital expenditures of $4.73 billion, alongside management trimming full-year capex guidance from over $25 billion back to roughly $20 billion. Underneath the surface, operating income fell 56% year-over-year to $718 million (a 2.6% operating margin) as AI and robotics R&D expenses surged 69%, causing the stock to slip modestly after the print.
- Meta Platforms (META): Operationally, Meta posted a blockbuster top-line quarter, with revenue surging 26% year-over-year to $64.60 billion. Excluding a one-time $9.89 billion legal settlement charge, normalized EPS reached $7.40, easily topping consensus expectations of $6.54 (GAAP EPS came in at $3.83). CEO Mark Zuckerberg highlighted rapid adoption of Meta's new "Muse" personal AI agent, which surpassed 10 million setups in six weeks, with shopping emerging as its top use case and average purchase sizes exceeding $200. Meta also announced a new non-voting Class C share dividend effective January 2027, acting as a 2-for-1 stock split. Despite the operational beat, Meta shares tumbled nearly 8% on Thursday as investors balked at Q3 capital expenditures of $34.91 billion—which pushed free cash flow into negative territory (-$2.12 billion)—and viewed the non-voting share structure as a currency to fund a massive $135–$145 billion annual capex bill.
- IBM (IBM): Within our own portfolio, IBM delivered a standout third quarter on Wednesday, reporting $17.10 billion in revenue (+5% YoY) and operating EPS of $2.95, beating consensus on both lines. Driven by accelerating software (+8%) and infrastructure (+4%) demand, management raised full-year free cash flow growth guidance to over $1 billion year-over-year, sending shares nearly 4% higher following the release.
Macro Data: Tight Labor and Resilient Global PMIs
The economic calendar reinforced the "higher for longer" interest rate backdrop. On Thursday, October 22nd, US weekly initial jobless claims fell to 194,000, beating consensus expectations of 200,000 and marking the lowest reading since mid-July. Combined with surging energy costs, this tight labor market has led futures markets to price in roughly an 80% probability of another Federal Reserve rate hike in December.
Internationally, Friday's S&P Global Flash PMIs for October confirmed that private-sector activity across Europe and the UK remains in expansionary territory above the 50.0 threshold, even as services momentum moderated in continental Europe:
- Eurozone Manufacturing PMI: Registered 52.4 (easing slightly from 52.9 in September).
- Germany Composite PMI: Came in at 52.8, supported by resilient manufacturing (54.2) even as services cooled.
- UK Manufacturing PMI: Accelerated to a five-month high of 52.8 (up from 51.9 in September), driven by the fastest factory output growth in over two years.
Precious Metals and China Tech: Volatility Creates Opportunity
Precious metals faced heavy selling pressure in Week 43 as rising oil prices, hawkish December Fed expectations, and equity margin calls triggered liquidations. Gold broke below the psychological $4,000 level on Friday to close near $3,999.90 per ounce—down roughly 4.1% on the week—while silver dropped 5.4% on the week to $54.05 per ounce. Despite the short-term technical washout, major miners continue to generate substantial cash flow at these elevated historical spot prices, making option-selling strategies highly attractive amid elevated implied volatility.
Meanwhile, Chinese technology stocks experienced a sharp mid-week selloff before staging a relief rally on Friday. Earlier in the week, Tencent (0700.HK / TCEHY) briefly dropped 4% to a 52-week low below HK$400 as global "AI capex anxiety" spilled over into Hong Kong markets following reports that Tencent, Alibaba, and ByteDance have placed over $35 billion in combined AI processor orders and overseas compute leases. However, sentiment stabilized by Friday, with the Hang Seng TECH Index rebounding 2.05% and UBTECH Robotics surging 6.73%. With Chinese tech giants trading at a fraction of US hyperscaler multiples, we view this capex-driven pullback as a textbook contrarian buying opportunity ahead of November earnings.
Week 44 Outlook
Week 44 (October 26th to October 30th) is the busiest week of the third-quarter reporting season, with 179 S&P 500 companies scheduled to report alongside a pivotal Federal Reserve policy meeting and top-tier US inflation data.
Key Events
- Wednesday, October 28th (FOMC Decision & Cloud Giants): At 2:00 p.m. ET, the Federal Reserve will announce its October interest rate decision, followed by the press conference at 2:30 p.m. ET. While the Fed is widely expected to hold rates steady at this meeting, markets will dissect every word for confirmation of a December rate hike. Immediately after the closing bell, Alphabet (GOOGL) and Microsoft (MSFT) will report Q3 earnings. After Meta's post-earnings selloff, all eyes will be on Google Cloud and Azure growth rates versus their respective capital expenditure trajectories.
- Thursday, October 29th (GDP, PCE Inflation & Amazon/Intel): At 8:30 a.m. ET, the Bureau of Economic Analysis will release the Q3 GDP Advance Estimate alongside the September Personal Income and Outlays report, featuring the Fed's preferred PCE inflation gauge. A hot PCE print paired with resilient GDP growth would lock in hawkish rate expectations. After the market close, Amazon (AMZN) and Intel (INTC) will report Q3 results, with investors focused on AWS margin expansion and semiconductor demand.
- Looking Ahead: The US megacap reporting cycle will wrap up on Monday, November 2nd, when Apple (AAPL) releases its fiscal Q4 results—marking new CEO John Ternus's first earnings call—just before our core Chinese holdings take center stage in mid-November.
Positioning Into Week 44: Active Reallocation & Doubling Down
Let's be candid about where our portfolio stands: recent market chop has weighed on parts of our book, and short-term performance has lagged the broader index. However, as fundamentals-driven investors, day-to-day index noise does not deter us—in fact, sharp sector retreats are exactly what create asymmetric entry points.
Because we are currently fully invested, we are executing a major portfolio rotation heading into Week 44. Our goal is to harvest gains and unlock liquidity from our defensive, commodity—using options to maintain synthetic exposure while collecting cash premiums—and redeploy that capital aggressively into depressed Chinese AI and robotics leaders ahead of their November earnings reports.
Planned Portfolio Transactions for Week 44:
- IBM (IBM) — Switch Equity to December 2026 Short Puts: Following IBM's strong Q3 earnings beat and post-earnings pop, we are selling our outright common stock position to lock in gains and free up capital, replacing it by writing December 2026 short puts.
- Silver Miners ETF (SLVP) — Switch Equity to December 2026 Short Puts: Rather than tying up cash in outright ETF shares during precious metal volatility, we are selling our SLVP shares and writing December 2026 short puts—unlocking liquidity while getting paid handsome option premiums to define lower entry levels.
- Brazil ETF (EWZ) — Futures point at a sharp decline after elections, we'll go heavy on short puts.
- Gold ETF (GLD) — Write December 2026 Short Puts: With gold pulling back to test the $4,000/oz support level, we are writing December 2026 short puts on GLD. This generates immediate cash premium and utilizes our margin capacity constructively at attractive strike levels.
- Doubling Down on China Tech & Robotics (BABA, Tencent, UBTECH). (Removing BIDU from watchlist): Using the capital unlocked from our equity sales and option premiums, we are roughly doubling our existing positions in Alibaba (BABA), Tencent, and UBTECH Robotics.
While the market frets over near-term AI capital expenditures, China's premier tech and robotics franchises are trading at trough valuations just weeks before their Q3 earnings catalysts hit the tape in November. We are putting our capital to work where the risk-reward is most skewed in our favor.