Ahhh nothin’ like the sweet smell of max fuckery in the morning

Microsoft is poised for a massive gap up close to the $300 strike we indicated the highest amount of open interest.

Meanwhile Google had rallied 5.9% after earnings but retraced most of the move.

And for those of you playing the take a shot every time they mention AI during the call here’s the official count:

Google 55 vs Microsoft 47

Google covers the spread and the total goes over.

If you’re at home taking a shot of rumple every mention, you may have an alcohol problem and should find help but don’t put the bottle down quite yet because after we cover this financial engineering you’ll probably need another drink.

$770 Million in Financial Engineering

Earnings dropped and every media outlet ran a similar headline on Google; Cloud turned profitable, the search business (the real $$$) continued to print money selling advertisements because no one is using Bing no matter how much artificially intelligent it may be, and amazing yes please layoff a bunch of people and then use the savings to buy the stock back.

Business clown content farm CNBC definitely got the memo to pump retail up with this headline:

Tech the unstoppable force:

Sprinkle something like this mixed with the rest of meh had the algos immediately declaring Google a survivor of the economic downturn of 2023 and they turned on the buy-mode sending the stock straight up 5.9%.

But it didn’t last long and the majority of the move retraced with the stock basically flat prior to the open.

Why?

Google Cloud had been losing a casual billion or half billion with a few hundred million every quarter since 2019. It didn’t make a dollar of profit when the money printers were on full blast and SPACs were taking uber for dog walking startups public.

The chart is kind of insane to look at.

So somehow they managed to turn it around in the first quarter where economic growth has slowed and they’ve been distracted with a damage control campaign after the embarrassing Bard demo.

At this point the taunts from Satya have gotten so far into Sundar’s head he got the PR team to post his own pic that screams, “Hey guys look at me I wear pants and am a big boy wartime ceo too!!!”

We get it Sundar. Also need the @ for the executive to your right. Strictly business.

Okay back to Google cloud.

They didn’t turn profitable by growing the business, instead it was some Musk-esque dump bitcoin and slang environmental credits type of financial engineering that allowed them to “generate $191 million in operating profit”.

Let’s read the fine print:

Let’s translate:

We can make some of the server stuff last two additional years and some of the other network stuff last an extra year.

Then we spread the cost over those additional years.

Since the cost is spread out, depreciation goes down and net income goes up.

Boom.

Now that we’ve typed it out, Musk dumping bitcoin on hodlers and selling environmental credits is much cooler Sundar telling accounting that you’re extending the life of your cloud servers from 4 to 6 years.

That’s how a $480 million loss in Q4 2022 becomes a $191 million profit in Q1 2023.

Oh and they also shifted the reporting of some of the costs from Cloud to Services.

And finally this isn’t a total surprise, Google did the prudent thing and pre-announced the change in a press release on 4/20.

The media just failed to mention it. No big deal.

Definitely not rigged.

Other News:

First Republic Bank ($FRC) is not getting a bounce with the stock down 12.47% pre-market and at this rate it looks like the $5 put holders are going to make an absolute killing if they didn’t close at a loss on Monday.

Microsoft is saving the tech and crypto market with Bitcoin at $30,000 and every popular name up except for $AAPL, $GOOG and $TSLA. It makes sense to front-run earnings when $AMZN and $NVDA are directly comparable to $MSFT who’s acquisition of $ATVI (call of duty) got rejected by British regulators. The British have to beat us in a case for virtual war since they lost the revolutionary one. [ yahoo ]

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