No more quarterly reports? The SEC's proposal

1️⃣ The stock market looks like the protagonist of your favorite action movie 

The S&P 500 closed the week at a new all-time high, reaching 7,398 points, appreciating by 2.3% during the week. And it wasn't the only one; the Nasdaq also broke highs, reaching 26,247 and appreciating by 4.5%.

Despite geopolitical conflicts and doubts about interest rates, technological optimism (yes, AI again) and better-than-expected earnings reports have kept the music playing at the party. And, of course, the positive jobs report was the surprise factor of the week.

Investing in the US stock market lately feels like betting on the protagonist of an action movie: you know they are going to get shot, beaten to a pulp, but in the end, they survive and win. 

It's clear that investors are ignoring macroeconomic risks to focus on corporate growth. The market is in "buy every dip" mode, which has kept valuations at demanding levels despite those potential risks. 

💡 What you should know: If you were one of those people who didn't let fear and uncertainty overcome you a few months ago when many were saying "it's the end," congratulations, this is a victory. From personal experience, this happens at least once a year. 

2️⃣ Unemployment remains... "stable"

The Department of Labor released the data that no one expected: the economy added 115,000 jobs in April. A figure that, although lower than previous months, was music to investors' ears.

The unemployment rate remained stable at 4.3%. It's a scenario that is neither too cold nor too hot, and it is excellent news for those hoping for a cut in interest rates. 

The economy is a lot like a car. If it goes too fast, the engine can overheat and force us to step hard on the brake. If it goes too slow, we don't reach our destination on time.

This week's 115,000 jobs are like that ideal constant speed, which gives the Federal Reserve the chance to step on the gas a little bit or slow down further, which is why it's investors' favorite scenario.

💡 What you should know: The job market is cooling down in a controlled manner. This reduces pressure on wage inflation, which gives hope that interest rates will remain stable or even finish coming down. 

3️⃣ Microsoft showed signs of life

This news wasn't from this week, but we owed it to you since the last newsletter.

Microsoft showed signs of life, but the stock still fell almost 4%. Just like the other 3 super spenders (Alphabet, Amazon, and Meta), they are also going to spend more than initially expected: ~$190 billion.

Significantly more than the $105 billion-$120 billion analysts expected, and more than the $156 billion we projected in the last report.

They gave a pretty good justification, but not good enough to satisfy the market's anxiety regarding Microsoft's relevance in the AI race.

In this video, we are going to share our opinion on Microsoft after its report, and we will try to determine if the company remains a good bet for the future. 👇

4️⃣ Michael Burry and the Déjà vu of 1999

The man who became famous for predicting the 2008 crisis returned with a series of comments stating that the current market feels like "the final months of the 1999-2000 bubble." 

Burry argues that stocks no longer react to economic data, but rise simply because "they have to rise." 

He criticized the investment thesis based solely on two letters: "AI," comparing it to the dot-com frenzy of the late '90s. Could he have a point? (No pun intended). 

He is the typical party guest who reminds you that a beer hangover hits hard, but you are only on your second drink... of rum. 

💡 What you should know: When Burry speaks, the market listens, but it doesn't always pay attention to him. Just as Burry became famous for his 2008 prediction, he is also famous for having made many predictions that have not come true. The dilemma for many is: what if he is right and I did nothing? vs. what if I do something and he isn't right?

5️⃣ No more quarterly reports? The SEC's proposal 

The SEC (the Wall Street police) proposed an amendment that would allow public companies to stop filing their three quarterly reports (10-Q) and switch to a semi-annual reporting model (10-S).

The SEC argues that this would reduce costs for companies and allow them to focus on long-term growth instead of obsessing over results every 90 days. They also believe it would reduce the obsession with short-term trading.

Analysts, of course, are terrified, to say the least; fewer reports mean less data, possibly less transparency for the investor, and more unpleasant surprises hidden in the balance sheet.

💡 What you should know: If approved, this would drastically change the transparency of the US market. Companies would have "more freedom," institutional investors (smart money) would gain a massive advantage because their resources would be more efficient, and individual investors (like you and us) would have less visibility.