Oil prices surge to two-week winning streak as Iran supply fears grip markets
On the heels of strong fourth-quarter earnings reports, Microsoft (NASDAQ:MSFT) is opening down 8%, while Meta (NASDAQ:META) is trading up 10%. Microsoft topped expectations for earnings and revenues. However, there is some concern about its total cloud revenue. They reported cloud revenue of 26% versus expectations of 28-29%.
That said, their leading cloud computing product, Azure, grew by 39%, a testament to the strong AI-driven growth. We are also hearing that investors are growing concerned that Microsoft’s elevated capital expenditures (CapEx) on data centers and AI infrastructure could weigh on profit margins.
Interestingly, three months ago, after reporting third-quarter earnings, Meta’s stock fell sharply despite beating on earnings and revenues. Like Microsoft today, there were concerns about their higher-than-expected CapEx forecast. In Wednesday’s fourth-quarter report, they stated that operating costs climbed sharply as AI infrastructure investments accelerated.
The company also dramatically increased its 2026 CapEx forecast ($115–$135 billion) and raised its total expense guidance. Unlike Microsoft, investors seem to love the news.
Meta and Microsoft both crushed it on the earnings front, but had completely different stock price results in part due to CapEx spending. This confusing take on CapEx spending will likely be a theme through this quarter’s remaining earnings reports and for the foreseeable future.
What To Watch Today
Earnings
Economy
The Silver Myth
The Tweet below is one of many social media claims that the price of silver trading in the US on the COMEX exchange is well below asian prices. To wit, the tweet below shows a 15% premium for physical silver in China relative to the US futures market. The problem with the tweet and the myth that demand is much stronger in China, leading to a premium, is that it doesn’t account for China’s value-added tax (VAT). For more details, we share a piece from Andreas Steno Larsen:
In short, Silver is treated as an industrial metal (in contrast to Gold and Platinum) by the Chinese tax authorities, which means that Silver is a “duty paid” instrument on exchange (the standard is to price in the VAT of 13% and then allow the physical buyer to either claim it or not depending on their VAT status). This is governed by the article 36, 53 in the SHFE delivery rules.
So the bottom line is that the more speculators and small participants we see in the market, the more likely it is that we trade at 13% premias or above in Shanghai versus the West. The current premium is VAT-based, and a STRONG sign that small speculators are ALL IN on the trade.
Tweet of the Day
