To The Moon

Every holiday, there is a big shift in the market.It was supposed to be a time to play and relax, but when I opened my account, the information exploded:

• The Federal Reserve announced a 50 basis point rate hike. Chairman Powell said raising rates by 75 basis points was not "actively under consideration" by the FOMC.
• The $47.5 billion monthly reduction, which will start on June 1, was below market expectations of $95 billion a month.
• E-commerce stocks are weak. After issuing weaker-than-expected revenue guidance, Etsy and eBay fell 15% and 8% respectively, while Shopify fell more than 17%.
• The yield on the 10-year Note surged to 3.09 percent, its highest level since 2018
• Weekly jobless claims came in slightly higher than expected on Thursday. Worker productivity fell 7.5% in the first quarter, the biggest drop since 1947. Labor costs, as measured by productivity, surged 11.6 percent, bringing the increase over the past four quarters to 7.2 percent, the fastest pace in about 40 years.
• Weekly jobless claims rose to 200,000, well above Wall Street estimates.
• Pinduoduo JINGdong and other 88 home concept stocks were included in the pre-delisting list.

The Nasdaq fell 5%, its worst decline in nearly two years.The most prominent stock in Thursday's sell-off was heavyweight FANNG. FANNG, which had been the market's bottom stock for the previous four months, collapsed. Apple fell 5.5% and Amazon dropped 7.56%. Even the normally staid Microsoft fell 4.36%.

If not for the sharp declines in those stocks, the S&P would have lost at most 2%.

It's not quite clear why capital has chosen to flee after interest rates rise, but it certainly says one thing: elephants are no longer dancing.

The old saying that elephants Dance comes from IBM CEO Lou Gerstner's autobiography, Who Says Elephants Can't Dance? The book tells the story of how Gerstner rescued IBM, which had been squeezed out of the PC market by Microsoft and Intel, and revived it under Gerstner.

FANNG has been a symbol of the U.S. stock market for the past few years, as well as a symbol of Internet globalization and economic prosperity, but what did their earnings look like this quarter?

• Tesla: Revenue was $18.756 billion, up 81 percent year-over-year and beating analyst expectations of $17.84 billion, including total automotive revenue of $16.861 billion, up 87 percent from $9.02 billion a year ago
• Netflix: Q1 actually fell by 200,000 worldwide, the first decrease in 11 years
• Amazon: Net sales of $116.444 billion, but up just 7% year-over-year, amazon's slowest growth since 2001; The net loss of $3.8bn was the first quarterly loss since 2015. Rivian's losses on its investments totalled $7.6bn, pushing Amazon's overall profits into negative territory
• FB: Revenue was $27.91 billion in the first quarter, up just 7% from a year ago, the first single-digit increase in FB's 10-year history as a public company. Net profit was $7.465 billion, down 21% from the same period last year.
• Apple: $97.27 billion in revenue, up 8.59%; Earnings of $1.52 a share beat consensus estimates of $1.43. But headwinds are expected to have a sales impact of $4 billion to $8 billion
• Google: Revenue of $68.011 billion, up 23%; Net profit was $16.436 billion, down 8.3% year on year. Revenue growth in Europe, which also includes the Middle East and Africa, slowed to 19 percent from 33 percent a year earlier
• Microsoft: Microsoft reported revenue of $49.36 billion in the third quarter of fiscal 2022, up 18% from a year earlier. Profit was $16.7 billion, up 8% from a year earlier. Azure cloud services maintained a high 46% year-over-year growth

Half of FANNG was destroyed by inflation and other adverse factors.

Of these companies, I have no doubt about the resilience of Tesla, Amazon, Apple and Microsoft. There was a time when these giants were safe to buy; now the rush for the exits is poignant.

I have to say that the harsh macro environment has really changed things.

But the good news for stocks right now is that bulls can buy the cheapest U.S. stocks this year.