--- title: "Investors reward Microsoft’s cash flow and punish Alphabet’s borrowing." url: https://causamarkets.com/edition/2026-10-29/ publisher: Causa edition: 6 published: 2026-10-29T06:00:00Z updated: 2026-10-29T06:00:00Z license: CC BY 4.0 --- # Investors reward Microsoft’s cash flow and punish Alphabet’s borrowing. Causa, Edition 006. Thursday 29 October 2026. Before the US open, 06:00 GMT, with Wednesday’s closes. The Fed held at 3.75% to 4% with two officials voting to hike, and the 10-year yield closed above 5%. After the bell, Microsoft rose on 48% Azure growth and $18.6 billion of free cash flow, while Alphabet fell about 9% on a profit miss and a second quarter of negative free cash flow. ## What moved markets on Wednesday 28 October 2026, and why Stocks edged higher on Wednesday after the Fed decision. The S&P 500 rose 0.28% to 7,743.98, the Nasdaq Composite added 0.27% to 26,549.85 and the Dow gained 0.19% to 52,475.10, while the 10-year Treasury yield rose 5.2 basis points to 5.044%. (Sources: [Capp Notes](https://cappnotes.substack.com/p/closing-look-wednesday-october-28)) The Fed kept its target range at 3.75% to 4% by 10 votes to 2, with Lisa Cook and Beth Hammack preferring a quarter-point hike. The statement said inflation remains elevated and did not mention energy prices. Traders kept about an 85% chance of a December hike. (Sources: [Board of Governors of the Federal Reserve System](https://www.federalreserve.gov/newsevents/pressreleases/monetary20261028a.htm), [Yahoo Finance](https://ca.finance.yahoo.com/news/live/fed-meeting-live-updates-interest-rates-held-steady-in-split-vote-warsh-says-politics-played-no-role-ahead-of-midterm-elections-191946928.html)) After the close, Microsoft rose about 3% on 48% Azure growth and $18.6 billion of free cash flow. Alphabet fell about 9%: Google Cloud revenue more than doubled to $30.7 billion, but revenue and earnings missed estimates and free cash flow was negative $9.1 billion. (Sources: [Capp Notes](https://cappnotes.substack.com/p/closing-look-wednesday-october-28), [The Motley Fool](https://www.fool.com/investing/2026/10/28/microsoft-and-alphabet-just-reported-earnings-putting-the-ai-boom-to-the-test/), [Mitrade](https://www.mitrade.com/insights/shares-analysis/us-stocks/microsoft-alphabet-fcf-test-20261029J1121)) No call was decided at Wednesday’s close. F-003 on Bitcoin is decided at today’s close, and F-014 on the Nasdaq runs to Friday, when Alphabet’s results will be in the price. (Sources: [Capp Notes](https://cappnotes.substack.com/p/closing-look-wednesday-october-28)) ## The Board | Market | Level | Move | Why | | --- | --- | --- | --- | | Alphabet, after hours | $291.85 | −9.33% | Investors reward Microsoft’s cash flow and punish Alphabet’s borrowing | | Nasdaq Composite | 26,550 | +0.27% | F-014 line: 26,000 by Friday. | | S&P 500 | 7,744 | +0.28% | F-008 needs a close above 7,757.17 with Brent above $112, about 0.2% away. | | Dow Jones | 52,475 | +0.19% | | | US 10-year yield | 5.04% | +5 bp | Two votes for a hike keep December live and lift the 10-year above 5% | | Brent crude | $115.32 | +1.26% | December contract, settlement. Expires Friday. | | US crude | $102.78 | +2.88% | | | Gold | $4,052 | −0.53% | December contract, settlement. | | Bitcoin | $81,255 | +0.78% | F-003 is decided today: it fails above 84,000 with Brent above $108. | ## Cause Files ### [Investors reward Microsoft’s cash flow and punish Alphabet’s borrowing](https://causamarkets.com/cause/investors-reward-cash-punish-borrowing/) Alphabet −9.3% to $291.85. Evidence grade B. Microsoft and Alphabet both reported fast cloud growth, but only Microsoft paid for its spending from cash. Alphabet fell about 9% after hours on a profit miss, a second quarter of negative free cash flow and heavy borrowing. Wrong if: Our read is that investors are marking Alphabet down for funding AI with borrowing rather than cash. If Alphabet closes above $321.89, its close before the results, by 6 November, the market has looked past the cash shortfall and this file is wrong. (F-016, deadline 6 November 2026) ### [Two votes for a hike keep December live and lift the 10-year above 5%](https://causamarkets.com/cause/fed-holds-two-vote-to-hike/) US 10-year Treasury yield +5.2 bp to 5.044%. Evidence grade B. The Fed held at 3.75% to 4%, but two officials voted to raise rates and the statement said inflation remains elevated. Traders kept about an 85% chance of a December hike, and the 10-year yield closed above 5%. Wrong if: Our read is that the two dissents make a December hike the base case. If the Fed leaves its target range at 3.75% to 4% at its 9 December meeting, this file is wrong. (F-017, deadline 9 December 2026) ## What we are watching - Thursday 29 October, after the close, Amazon results: The third test of AI spending this week, judged on cloud growth and on whether free cash flow survives the build. - Thursday 29 October, at the close, F-003 deadline: The Bitcoin call fails on a close above 84,000 with Brent above $108; Bitcoin was near 81,255 on Wednesday. - Friday 30 October, December Brent expires; F-002, F-005 and F-014 deadlines: Our Brent calls move to the January contract, with each line adjusted by the gap between the two contracts at expiry. - Tuesday 3 November, US midterm elections: Warsh said politics played no role in this week’s decision, which came six days before the vote.