At 2 p.m. Eastern on Wednesday, the chairman of the Federal Reserve explained his view of the American economy by pointing to the money being poured into it. Capital expenditures, Kevin Warsh told reporters, “are at a historically high share of GDP,” and “high-tech investment is leading the acceleration.” He said third-quarter growth was likely running above 3 percent and business investment was rising “at about a double-digit pace.” Two members of his committee voted to raise interest rates.

Two hours later, one of the companies doing that spending showed what the boom looks like from inside.

Alphabet reported third-quarter revenue of $127.6 billion, up 25 percent from a year earlier. Google Cloud revenue rose 103 percent to $30.7 billion. Operating income rose 30 percent to $40.6 billion, a margin of 31.8 percent. Sundar Pichai said the company was now on “a half-trillion dollar revenue run rate” and that growth in search queries was the fastest in five years.

Then there was the cash. Alphabet’s operations generated $42.3 billion in the quarter, and it spent $51.4 billion on property and equipment. Under the company’s own definition, operating cash minus capital spending, free cash flow was negative $9.07 billion. In the second quarter it was negative $5.9 billion. In the last three months of 2025, the company produced $24.6 billion of free cash flow. Over the latest twelve months, it produced $19.7 billion.

The shares fell more than 10 percent in extended trading, CNBC reported. The cash shortfall was far larger than the roughly $2.7 billion analysts had expected, and adjusted earnings of $2.67 a share missed the $3.02 consensus compiled by LSEG. Revenue was also slightly below estimates, making this the company’s first miss on both revenue and earnings in nearly four years.

### What fell and what did not

Net income fell to $26.2 billion from $35.0 billion a year earlier. That number does not describe the operating business. Alphabet recorded an $8.7 billion loss on equity securities, which it says reduced net income by $6.7 billion. In the same quarter last year it booked a $10.7 billion gain. Changes in the value of its stakes in other companies explain most of the swing in profit. The operating business grew.

The main point in the release is not that Google is weakening. Its business is growing, but property-and-equipment spending exceeded operating cash for a second quarter. Alphabet still held $265.1 billion of cash, cash equivalents and marketable securities at September 30. It also raised $28.7 billion from senior notes and $12.4 billion from common-share issuance during the quarter. The buildout is using external capital as well as operating cash. Alphabet kept its 2026 capital-spending forecast at $195 billion to $205 billion. “We continue to expect our capex to increase significantly in 2027, and will provide further details on our Q4 call,” finance chief Anat Ashkenazi told analysts.

### The comparison that moved the stock

Microsoft reported on the same afternoon. Azure revenue grew 48 percent. Capital spending, including finance leases, was $45.2 billion. Cash flow from operations was $58 billion, and free cash flow was a positive $18.6 billion, down 27 percent from a year earlier. Its shares rose about 4 percent after hours. Meta, which reported a week earlier, posted negative free cash flow of $2.12 billion.

All three companies are paying for the same buildout. Microsoft’s shareholders saw growth paid for with cash from operations. Alphabet’s saw growth alongside two quarters in which property-and-equipment spending exceeded operating cash.

### Why the Fed and the cash-flow statement belong in the same story

The Fed did not mention any company. But the spending Warsh described is the spending that appears as negative free cash flow in Mountain View. The committee upgraded its description of the expansion from “solid” to “strong.” Governor Lisa Cook and Cleveland Fed President Beth Hammack wanted a quarter-point increase.

The connection runs in a loop. If AI investment helps keep growth strong enough to keep rates high, it also raises financing costs for builders that choose debt or leases. Microsoft’s finance chief, Amy Hood, said her company would “access additional sources of funding when we believe it is attractive to do so.” Alphabet’s release shows that it already used debt and share issuance this quarter. Investors should ask how that capital, and any dilution, converts into future cash.

Our rule applies here. Revenue is not cash, operating income is not what owners keep, and a capital budget is a strategy rather than a result. Alphabet’s quarter is strong evidence that demand is real, since Cloud revenue doubled. It does not show that the spending will pay back. That evidence will come later, and the 2027 capital budget Ashkenazi promised for the next call will be the first test.

Just before 9 a.m. on Wednesday, between the towns of Mora and Orgaz in Spain’s Toledo province, a Renfe AVE high-speed train ran into the back of an Iryo train stopped at a red signal. The collision derailed the front of the Renfe train and two tail carriages of the Iryo train among olive groves near Urda, roughly 118 kilometres south of Madrid by rail. More than 500 passengers were aboard the two trains.

At least 68 people were killed. Spanish authorities said 58 were receiving hospital treatment. Rescue teams worked through the night, and officials said the toll could rise as carriages are removed. It is Spain’s deadliest rail disaster since 2013, according to Reuters. Services between Madrid and Andalusia were suspended.

### The minister’s account

Transport Minister Óscar Puente gave the first official sequence of events. He said a computer communications failure automatically halted at least six trains in the area. “In the event of a system failure, the control centre takes over,” he said. The control centre, run by the infrastructure manager Adif, then allowed trains to move again without speed restrictions. Puente called that decision “inexplicable” and said the Renfe train was restarted despite the red signal ahead.

This is the government’s preliminary account, not the result of an investigation. Iryo, the private operator whose train was hit, said only that it was “struck from behind” by a Renfe train “due to causes that are still unknown.” The newspaper El Español reported that the line’s LZB automatic protection system was down because of a computer error, that the newer ERTMS system is still in testing, and that the backup ASFA system did not intervene. Officials have not confirmed that account.

### Twice on one line in nine months

In January, a high-speed crash near Adamuz, in Córdoba province, killed 46 people on the same corridor. Until this year, Spain’s high-speed network, which the AP says is second only to China’s in track length, had not had a fatal crash in more than three decades of service.

Prime Minister Pedro Sánchez visited the site and declared three days of official mourning, from Oct. 29 to Oct. 31. “It is not acceptable for a country like Spain to suffer two high-speed accidents in the same year,” he said, adding that if negligence or safety failures are found, the government will respond “with total forcefulness.”

### The election

Spain votes on Nov. 29. The crash happened on the day the official candidate lists were published. The Socialists, the People’s Party, Podemos and Frente Amplio suspended their campaign events. People’s Party leader Alberto Núñez Feijóo called for an independent review of the whole rail network. Frente Amplio demanded that officials accept political responsibility. Vox leader Santiago Abascal held his rallies anyway, said mourning would not be used to “muzzle” his party and blamed the government before any cause had been established. Politico Europe reported that Sánchez had been gaining on Feijóo before the crash.

The next findings that matter are technical: who gave the restart order, what the operator’s screen showed, and why no automatic system stopped a train heading toward a red signal.

Israel began counting its double-envelope ballots early Thursday. These are votes cast away from home polling stations by soldiers, diplomats, police and displaced residents. There are more than 500,000 of them, and the public broadcaster said the count should finish by Thursday evening. With nearly all regular ballots counted, every update pointed to the same conclusion: no bloc can form a government without breaking a promise it made to voters.

With all regular ballots counted, Channel 12 projected 53 seats for Prime Minister Benjamin Netanyahu’s bloc, 48 for the Zionist opposition led by Gadi Eisenkot and 19 for the predominantly Arab Joint List and Ra’am. The Knesset has 120 seats, so a majority is 61. Likud leads the individual parties with 27 seats, and Eisenkot’s Yashar has 21. Turnout was 77.7 percent, the highest since 1999, according to the Central Elections Committee.

The exit polls were wrong in ways that matter. Their average gave the Together list about 13 seats, while the count gives it about 11. They gave the Joint List 10, and it is on track for 12. Arab-led lists are heading for their largest combined representation ever.

Both leaders spent Wednesday saying they would not change course. Hebrew media reported that Netanyahu called Itamar Ben Gvir and Bezalel Smotrich and told them, “We are together and we are staying together,” according to the pro-government Channel 14. Commentators were openly discussing a unity government in which he would drop those partners for Eisenkot.

Eisenkot called the result a vote of no confidence. “This is the will of the people, who expressed no confidence in the government of October 7 and draft evasion,” he wrote on X, promising “a Zionist government committed to military conscription.” He made that promise even though his bloc fell further short of a majority as the count went on.

The arithmetic is simple. Netanyahu needs eight more seats, and Eisenkot needs 13. The Arab-led lists hold enough seats to give Eisenkot’s bloc a majority, but both main camps campaigned on not depending on them. A Likud–Yashar arrangement would reach 61 easily, but both men have said they would not join each other. The remaining ballots may move a seat between parties. They will not settle the coalition question.

There are two timetables in the Gulf this week.

The first comes from mediators. According to an official briefed on the talks and cited by Reuters, Qatar gave Iran a new draft on Sunday to end the eight-month war with the United States and Israel. It sets out seven days of confidence-building steps that each side must take in turn, backed by several guarantor countries. The official said Tehran was expected to reply by the end of the week. Al Arabiya reported on Thursday that Iran wants the implementation period shortened to four days and that mediators are discussing a meeting in Turkey before Nov. 4.

The Guardian described the outline Gulf governments are pursuing. It would reopen the Strait of Hormuz within four days of sanctions being lifted, require the Houthis to withdraw substantial forces inside Yemen and ease the naval blockade. The paper reported that Washington knows about the talks but is holding out for a further concession, which European officials suggest could mean Iran readmitting UN weapons inspectors. Iran has refused.

The second timetable comes from Washington. The Wall Street Journal reported, citing people briefed on the conversations, that the United States has told several Gulf countries to prepare for a “short, intense military campaign” against Iran after the Nov. 3 midterm elections. The paper said a Patriot missile defence battery is moving from Texas to the region and that munitions are being restocked. That is reporting about preparations, not an order, and it should be read that way.

The two timetables overlap almost exactly. A seven-day plan that began early next week would still be running on Election Day. A four-day plan might be finished before it.

The public statements do not leave much room. A senior Iranian official said Qatar had offered only “unacceptable ideas and not an offer” and that Tehran’s position on the nuclear issue had not changed. Foreign Minister Abbas Araghchi said the same day that Iran’s own seven-day proposal could be implemented “in less than a week.”

The region is also pushing harder. On Monday, Saudi Defence Minister Prince Khalid bin Salman, Pakistan’s army chief Asim Munir and Turkish intelligence chief Ibrahim Kalin met Iran’s president in Tehran. It was the first high-level contact between Iran and the Mecca defence pact states since the war began on Feb. 28. Oman’s foreign minister has proposed a Gulf–Iran non-aggression pact in which the United States would no longer be the region’s main security provider. On Tuesday, Saudi air defences intercepted two Houthi ballistic missiles fired toward Riyadh.

None of this is a deal. It is a draft, a counter-draft and a calendar. The next date to watch is the Iranian reply due this week, before the date that may matter more in Washington.

Six days before the Nov. 3 midterms, more than 39 million Americans had voted early, according to the University of Florida’s Election Lab and the Associated Press. The Washington Post reported that 5.6 million of them were in Texas, compared with about 4.2 million at the same point in 2022, a level more typical of a presidential year.

That is a turnout number. It does not tell you who is winning.

In states that report early ballots by party registration, the split is 44 percent Democratic and 31 percent Republican, NPR’s Domenico Montanaro reported. He noted that Democrats also won the early vote in 2022, the year they lost the House, because Republicans now vote heavily in person on Election Day. He added that early voting in Texas, though large, is still behind 2018, when Beto O’Rourke drew big crowds and then lost to Ted Cruz by three points.

A registered Democrat’s ballot is not necessarily a Democratic vote, and an early lead is not a margin. Until polls close, the honest summary is that participation is high and its direction is unknown.

The structural numbers are tighter. Republicans hold 218 House seats plus an independent who usually votes with them, and Democrats hold 214, with two vacancies. CBS News’ Battleground Tracker estimates Democrats will win 229 seats, but its range runs from 215, which would leave Republicans a narrow majority, to 237. Republicans hold the Senate 53–47. CBS lists ten races as decisive: seven Republican-held seats in Maine, North Carolina, Ohio, Kansas, Iowa, Texas and Alaska, and three Democratic-held seats in New Hampshire, Michigan and Georgia.

In Michigan, a Mitchell Research poll for CBS Detroit and other stations put Democrat Abdul El-Sayed ahead of Republican Mike Rogers 51 percent to 44 among likely voters. The margin of error was 3.9 points.

On Wednesday, President Trump campaigned in Ohio for Sen. Jon Husted and gubernatorial candidate Vivek Ramaswamy, telling supporters to “pretend I’m on the ballot.” Barack Obama held a rally in Georgia at the same time.

Our advice to readers for the next six days: treat every early-vote chart as a measure of who showed up, not how they voted.

The Federal Open Market Committee voted 10–2 on Wednesday to keep the federal funds rate in a range of 3.75 to 4 percent, where it has been since a quarter-point increase in September. The two dissenters, Governor Lisa Cook and Cleveland Fed President Beth Hammack, both wanted another quarter-point increase. Hammack also dissented in favor of a hike in July. Cook is the governor President Trump is trying to remove.

The statement changed in three ways. It described economic activity as expanding “at a strong pace,” up from “solid” in September. It said “inflation remains elevated.” And it added a line that Reuters noted resembles the forward guidance Warsh has said he dislikes: “The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee’s 2 percent goal.” The statement ended with a one-sentence promise: “The Committee will deliver price stability.”

This is a pause, not a conclusion. The statement does not commit to another increase, but it does not describe rates as high enough either.

At his news conference, Warsh, five months into the job, made the case for strength. First-half GDP growth was revised up to 2.4 percent from 1.8 percent. He said third-quarter growth was “likely running above 3 percent” and business investment was rising at about a double-digit pace. He described his approach as looking out the window, which he calls “interrogating reality.”

Then he changed the calendar. The Fed will keep eight meetings a year, but in 2027 one of them will focus “exclusively on broad monetary policy strategy, with neither a vote on the federal funds rate nor a policy statement anticipated.” In 2028 he expects two strategy meetings and six policy meetings. He called the schedule “an institutional choice” that affects “the quality of our deliberations.”

The argument has merit. A committee that votes every six weeks has little time to rethink its framework. The cost is that in the years when inflation has been hardest to read, the Fed will have fewer scheduled chances to act on it. Emergency meetings are still possible but rarely used.

The Board kept interest on reserve balances at 3.90 percent, effective Thursday. Markets rose modestly after the decision.

Microsoft had the best night of any big spender on Wednesday. Azure revenue grew 48 percent. Guidance for the current quarter is 49 to 50 percent growth in constant currency. Free cash flow was $18.6 billion. That was down 27 percent from a year earlier but still positive, which is more than Alphabet or Meta can say this season. The stock rose.

The most important number was in a single sentence from the finance chief. About 75 percent of Microsoft’s capital spending now goes to short-lived assets, mainly CPUs and GPUs. That compares with about two-thirds over the previous three quarters and about half a year ago.

This is a sensible choice, and it carries an obvious risk.

It is sensible because chips turn into revenue quickly and buildings do not. When Amy Hood says “we still have demand that exceeds supply,” the quickest response is to fill existing halls with more silicon. Microsoft also rents capacity from GPU-as-a-service providers, and some of those deliveries slipped this quarter. That is why capital spending of $45.2 billion, including finance leases, came in about $5 billion below what analysts expected. Hood says spending will speed up in the second half of the fiscal year and that calendar-year spending should be about $170 billion.

The risk is that a data center lasts decades while the chips inside it last a few years. A capital budget that is 75 percent chips has to be largely spent again every few years. That turns it from a single construction project into a recurring cost that never ends.

The contract book offers a partial answer. Commercial remaining performance obligations, meaning contracted revenue not yet recognized, rose 73 percent to $677 billion. Microsoft gives their weighted average duration as 2.3 years. In plain terms, the contracts last about as long as the chips. If that holds, the arrangement works. If customers renew at lower prices once rivals’ capacity is built, Microsoft will own a large fleet of aging hardware.

Hood also left room for outside money. Microsoft expects to stay free-cash-flow positive this fiscal year, but it “will access additional sources of funding when we believe it is attractive to do so.” She mentioned leasing and the debt markets, which Microsoft has not yet used for this. A company with Microsoft’s credit rating does not mention borrowing by accident.

I do not think Microsoft is making a mistake. I think it is making the most honest bet in the industry: it is buying what produces revenue this year and stating the mix openly. Readers should understand what that bet is. Its AI business is not built like a cathedral. It works more like a treadmill, and the company has to keep paying for it.

Jafar Panahi found out about his new prison sentence from his bank. His lawyer, Mostafa Nili, told the reformist outlet Emtedad that they noticed last week that the director’s accounts had been frozen. They went to the sentence-enforcement office of Tehran’s Culture and Media Prosecutor and learned that Branch 26 of the Revolutionary Court had already ruled.

The sentence is five years and one month in prison, confiscation of his “movable and immovable assets,” a two-year travel ban and a two-year ban on using social media. According to Nili, it was issued in absentia “without scheduling a court hearing.” The charges have not been made public.

The court’s reason for proceeding without him was that, according to the case file, Panahi was abroad and could not be reached. Nili says that is false. Panahi returned to Iran on March 30, after a long overseas tour promoting *It Was Just an Accident*, the film that won the Palme d’Or at Cannes in 2025 and earned an Oscar nomination. In August he appeared in person before an investigating court in a separate case. His lawyer says he faces three open proceedings.

He came home knowing the risk. In December 2025 he was convicted in absentia of “propaganda activities against the system” and given a one-year sentence, later upheld on appeal. In January he told Democracy Now! in New York: “I will return to Iran in any possible way, under any circumstances, because it is there that I know I have to exist.” He returned after the U.S. and Israeli strikes on Iran had begun.

Panahi has spent much of his career filming under bans, in cars, in his apartment and across borders he was forbidden to cross. His work has repeatedly faced an Iranian state that would rather he did not exist in public. This sentence goes further. It treats a man living in Tehran as if he were not there, then uses that claimed absence to take his property.

Reports on Wednesday did not indicate that he had been taken into custody. The usual response will follow: festivals will issue statements, guilds will sign letters, and his films will play to sympathetic audiences in cities he cannot visit. Those gestures matter less than one question. Will anyone ask Tehran, in a setting where the answer costs something, why its court says a man is abroad when its own investigators questioned him in August?

By Wednesday afternoon, almost every major Spanish party had cancelled its events. The Socialists, the People’s Party, Podemos and Frente Amplio all expressed condolences and stopped campaigning. Only Vox held its rallies, and Santiago Abascal blamed the government before investigators had established a single fact.

As a mark of respect for the dead, the pause was right. As a political norm, it is wrong. If it extends beyond the three official days of mourning, it becomes an evasion.

This was not an earthquake. The transport minister’s preliminary account says a computer failure stopped six trains on a public network before a control centre run by a public company let one move again without speed limits while a red signal stood ahead. The investigation must determine the cause. Sixty-eight people died. Nine months earlier, 46 people died on the same corridor. The country votes on Nov. 29. What happened on that track is not a distraction from the election. Few questions in this election could be more central.

The habit of suspending campaigns after a disaster rests on the idea that politics would cheapen grief. I understand the instinct. But it leaves the field to whoever is willing to break the truce, and on Wednesday that was the one party least interested in the technical answer. Abascal was not right to hold his rally. He was simply the only one talking, so the only argument voters heard was the crudest one.

The better course is not to resume rallies as if nothing happened. It is to resume with nothing else on the agenda. The government should publish the restart order and the signal logs as soon as investigators allow, and say plainly what the safety systems were doing that morning. El Español reports that the LZB protection system was down, the newer ERTMS was still being tested and the backup ASFA did not stop the train. If that is wrong, the government should say so with evidence. If it is right, ministers should explain why a high-speed line was carrying passengers that morning with its automatic protection out of service.

Feijóo has called for an independent review of the network. He should say what he would fund, cancel or delay to pay for it. Sánchez has promised to go “to the end.” He should say where the end is: a dismissed controller, a dismissed Adif chief, or a minister.

When grief turns into silence, the dead become a reason not to ask hard questions. Sixty-eight people boarded trains on Wednesday expecting a system to stop them if something went wrong. The fitting tribute is a campaign that makes every candidate explain why it did not.