The Ukraine war was going nuclear. US rates were going through the roof. Trump was winning the mid-terms and China was pointing its missiles on Taiwan. Most of these dark scenarios are not going to happen any time soon. In the equity market, already downbeat sentiment was being hammered by the earnings reality check. Until the summer, share prices ware falling but sales and earnings were still strong and rising. Not anymore. Profitability tanked and, in many cases, operating profits dived in negative territory for many popular software companies. This worked as a harsh wake-up call: the bear had their week, as written in the script of the mega bear market Season One “Falling valuation” was being replaced by Season 2 “Vanishing earnings”. 

As Rushir Sharma (Chair of Rockefeller International) nicely wrote in the Financial Times last week: “Economists see a recession coming, so maybe it’s not.” Another factor that may prevent earnings to collapse is management. Technology companies may have over-invested, but they are not complacent, and the reaction came faster and deeper. Amazon, Meta, and Sea Ltd. have expressed their commitment to profitability not only with words but with huge layoffs. If so, the earnings scare we had last months may end up being a blip.

Market drivers and dynamics are changing fast. It seems Armageddon has been delayed or may not happen at all and that we have a future after all.