What’s going on here?

Microsoft and Meta both beat expectations in their latest results, but Microsoft made it look easy – proving that some of the seven are more “magnificent” than others.

What does this mean?

Microsoft, the third-biggest of the Magnificent Seven, grew 16% compared to the same time last year, with $65.6 billion in revenue – much of it driven by its cloud division. Meta grew revenues by an impressive 19%, while raking in $40.6 billion in revenue. But the social media maven also hinted that its popularity had taken a hit, with weaker-than-forecast user growth. Still, Meta shouldn’t feel too sorry for itself: its shares have had a solid run this year, rising 67% compared to Microsoft’s 15%. And, that’s a stellar showing, even if it does mean that it will have to work even harder to wow its shareholders in the future.

Why should I care?

Zooming in: A well-run race.

AI is investors’ new darling, so they’re keeping Microsoft’s Azure cloud division – which fuels a hefty 60% of its revenue – in sharp focus. But they’re also keeping close tabs on CoPilot AI, which has been integrated into Microsoft’s software suite with power from the firm’s slice of OpenAI. Innovation doesn’t come cheap, which explains why Microsoft spent a billion more on investments this quarter than last. And not for nothing: its investments in data center capacity have been accompanied by Azure market share gains.

The bigger picture: Anything you can do…

Meta isn’t exactly sitting around twiddling its thumbs. The Facebook parent is spending big, working on an AI-powered search engine that’d make it less reliant on Alphabet’s Google and Microsoft’s Bing. The move shows where the tech industry is heading, as the big fish dive deeper into AI and advanced search. And Meta’s push into that world will be one to watch as the giants sprint to change the game of accessing information online.

What’s going on here?

The UK government dropped its new budget plan on Wednesday, announcing its biggest tax hikes since the 1990s in an attempt to spark economic growth.

What does this mean?

The UK is a big cheese in the world economy, thanks to its trade links and London’s status as a financial hub. So investors’ eyes were peeled as the government announced its plans for £70 billion ($91 billion) in new spending, aimed at things like education, housing, infrastructure, and healthcare. That’ll be financed by a £40 billion ($52 billion) increase in taxes and the rest from increased borrowing. And the plan goes like this: increases in capital gains tax, inheritance tax, social security, and the usual targets from folks’ shopping baskets – liquor and smokes.

Why should I care?

For you personally: Government borrowing matters.

In most developed countries, deficits are heading higher. Makes sense: outgoings have been greater than what’s being raked in, leading to ever-ballooning debt. Those higher deficits increase the cost of borrowing for governments as investors demand more interest to lend them money. That’s important: the cost of your borrowing – mortgages, loans, and credit cards – is linked to what the government’s being charged. That’s one reason why mortgage rates in the US hit their highest level since July this week, reflecting investors’ concerns that Washington’s spending will increase, regardless of who wins the election.

Zooming in: Playing the long game.

Higher taxes mean extra costs for companies and less cash for investment and hiring – which doesn’t sound great for economic growth. But the UK government is banking on being on firmer ground by 2029 when the next election is likely to happen. (Remember, the economy’s a driver of folks’ votes.) And if taxes come up short – as some experts have feared – and spending continues as planned, well, that’s a potentially worse outcome for the economy and for UK government bond investors.