Last week everything – or almost everything – revolved around the four giants of the US tech sector: Apple, Amazon, Facebook and Alphabet (parent company of Google). First of all, on Wednesday, the respective chief executives of these titans sat in the spotlight as they responded to accusations from Congress highlighting their alleged dominant positions and the potential misuses thereof.

This virtual hearing in the end sounded more like a list of grievances being read out than an attempt to build a constructive dialogue between government and the corporate world. Many documents were submitted as pieces of evidence criticising these groups’ practices, from both Democrats and Republicans. Yet this hearing is nothing more than the first episode in what is likely to be a long-lasting saga, simply because this congressional committee does not have the power to ‘bust’ monopolies, only to make recommendations for updating US antitrust law.

The following day, the same four groups released their second-quarter results. The numbers were quite simply awe-inspiring. The contrast is striking. As the pandemic spreads wildly, a global recession looms and record numbers of people line up at US unemployment offices, the growth record remains absolutely untouched. Amazon – to name but one – saw its top line surge by 40% in the second quarter, which some might say is understandable, because the widespread lockdown measures automatically boost the digital economy and the services on offer from those tech giants. But it’s still impressive.

On the macroeconomic front, it’s all gloom and doom. US GDP shrank by 10% in the second quarter. Such a huge decline has not been seen since the end of the Second World War. In Europe, the data has barely been more encouraging, with the Eurozone economy contracting by 12% relative to the first three months of the year. The countries hit hardest were Spain (-18%), France (-14%) and Italy (-12%).

If the European equities bear the hallmarks of the underlying angst, considering that the Eurostoxx 50 index is down 15% year to date, US markets are soaring ahead. But beware, the ‘Fantastic Four’ today account for 20% of the S&P 500 by value, and that is capping further upside. For how long the US will continue outperforming is anybody’s guess…
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