1 00:00:02,520 --> 00:00:07,360 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:08,520 --> 00:00:12,440 Speaker 2: The Stock Mover's Report, your roundup of companies making moves 3 00:00:12,440 --> 00:00:16,600 Speaker 2: in the stock market, harnessing the power of Bloomberg Data. 4 00:00:17,120 --> 00:00:19,200 Speaker 1: Let's take a look. Now, it's some stocks making news 5 00:00:19,239 --> 00:00:21,960 Speaker 1: in the week ahead. I'm Nathan Hager, joined by Bloomberg 6 00:00:22,000 --> 00:00:25,639 Speaker 1: Markets Live Managing Editor Christine Akino. Getting us ready for 7 00:00:25,720 --> 00:00:30,760 Speaker 1: a really busy Tuesday when it comes to earnings. Christine, absolutely, 8 00:00:30,960 --> 00:00:33,560 Speaker 1: So we're going to start off at least this conversation 9 00:00:33,840 --> 00:00:38,680 Speaker 1: with McDonald's. It seems like, despite the lettuce, it's been 10 00:00:38,760 --> 00:00:41,640 Speaker 1: okay for fast food, has it? Or Am I wrong? 11 00:00:41,840 --> 00:00:44,319 Speaker 3: Well, I mean, it depends on what you're looking at. 12 00:00:44,320 --> 00:00:47,080 Speaker 3: Because we do have data on the Bloomberg terminal just 13 00:00:47,159 --> 00:00:51,560 Speaker 3: tracking consumer transactions and foot traffic, and that did show 14 00:00:51,680 --> 00:00:54,160 Speaker 3: a bit of a pullback from consumers for a lot 15 00:00:54,200 --> 00:00:57,400 Speaker 3: of these fast food restaurants, including McDonald's. And in fact, 16 00:00:57,520 --> 00:01:01,520 Speaker 3: that data was showing that McDonald's saw the first signs 17 00:01:01,560 --> 00:01:04,600 Speaker 3: of a consumer pullback during the peak of the cyclospora 18 00:01:04,720 --> 00:01:10,959 Speaker 3: outbreak and when customers were really you know, the awareness 19 00:01:11,080 --> 00:01:14,000 Speaker 3: and the fear over that outbreak was at its peak. 20 00:01:14,080 --> 00:01:17,160 Speaker 3: But the good news is that McDonald's is also the 21 00:01:17,200 --> 00:01:20,760 Speaker 3: first of the fast food restaurants to start showing tentative 22 00:01:20,800 --> 00:01:23,960 Speaker 3: signs of stabilization, So that's definitely going to be a 23 00:01:23,959 --> 00:01:26,760 Speaker 3: focal point in the earnings. I think whether that's something 24 00:01:26,880 --> 00:01:30,600 Speaker 3: that would hurt maybe not as soon as this quarter, 25 00:01:30,640 --> 00:01:32,720 Speaker 3: which is going to be the second quarter earnings that 26 00:01:32,720 --> 00:01:35,640 Speaker 3: they're going to be reporting, but perhaps something that gives 27 00:01:35,640 --> 00:01:38,400 Speaker 3: them a little bit of a negative outlook heading into 28 00:01:38,720 --> 00:01:39,360 Speaker 3: the next quarter. 29 00:01:39,680 --> 00:01:42,640 Speaker 1: Well to that point to an extent, I mean, even 30 00:01:42,840 --> 00:01:46,679 Speaker 1: before this reporting, I think the CEO of MCDONALD'SID said 31 00:01:46,680 --> 00:01:50,680 Speaker 1: they were expecting meaningful deceleration in the quarter that's about 32 00:01:50,720 --> 00:01:53,080 Speaker 1: to be reported. Where does that leave the bar for 33 00:01:53,240 --> 00:01:56,120 Speaker 1: McDonald's when it comes to maybe showing some outperformance. 34 00:01:56,440 --> 00:01:59,480 Speaker 3: Yeah, I mean it certainly helps that perhaps that lowered 35 00:01:59,480 --> 00:02:02,960 Speaker 3: expectation heading into the earning season. But yeah, I think 36 00:02:03,120 --> 00:02:05,720 Speaker 3: we're going to hear a lot about the challenges that 37 00:02:05,600 --> 00:02:09,799 Speaker 3: the US consumer and consumers in general are facing at 38 00:02:09,840 --> 00:02:12,280 Speaker 3: the moment. I mean, don't forget that they are still 39 00:02:12,320 --> 00:02:16,000 Speaker 3: grappling with higher prices when it comes to goods and 40 00:02:16,040 --> 00:02:19,400 Speaker 3: services as a result of the oil price bikes that 41 00:02:19,440 --> 00:02:22,000 Speaker 3: we saw in first half of this year, and that 42 00:02:22,040 --> 00:02:25,000 Speaker 3: hasn't necessarily gone away. It's receded a little bit, but 43 00:02:25,639 --> 00:02:29,720 Speaker 3: definitely by no means disappearing from the radar. And so 44 00:02:30,040 --> 00:02:33,040 Speaker 3: something that really has affected just overall the appetite for 45 00:02:33,200 --> 00:02:38,079 Speaker 3: spending among consumers and something that is very clearly surfacing 46 00:02:38,160 --> 00:02:41,720 Speaker 3: in discretionary spending, which you know, demand for McDonald's is 47 00:02:41,800 --> 00:02:42,160 Speaker 3: one of. 48 00:02:42,120 --> 00:02:44,680 Speaker 1: Them, and not to be outdone, we're going to hear 49 00:02:44,760 --> 00:02:49,040 Speaker 1: as well from Caterpillar. Totally different category, but maybe a 50 00:02:49,080 --> 00:02:51,840 Speaker 1: similar issue when it comes to the overhang from what's 51 00:02:51,840 --> 00:02:52,840 Speaker 1: happening in the Middle East. 52 00:02:52,840 --> 00:02:56,680 Speaker 3: Potentially, yeah, potentially, Nathan, I mean, certainly something that they're 53 00:02:56,720 --> 00:03:01,600 Speaker 3: grappling with as a company would be higher costs for material, building, construction, 54 00:03:01,720 --> 00:03:04,720 Speaker 3: things like that. Right, very big space for Caterpillar. But actually, 55 00:03:04,919 --> 00:03:09,359 Speaker 3: very interestingly, one thing that investors are probably putting more 56 00:03:09,400 --> 00:03:12,800 Speaker 3: focus on is their role in the AI driven demand, 57 00:03:12,840 --> 00:03:16,760 Speaker 3: particularly the data center build out, because we did recently 58 00:03:17,440 --> 00:03:21,400 Speaker 3: see the Caterpillar shares seeing their worst performance on a 59 00:03:21,520 --> 00:03:24,200 Speaker 3: day to day basis since April twenty twenty five, and 60 00:03:24,200 --> 00:03:25,799 Speaker 3: that's because you know, there was a little bit of 61 00:03:25,840 --> 00:03:29,520 Speaker 3: a pullback in the AI sector when it comes to 62 00:03:29,680 --> 00:03:34,520 Speaker 3: chip makers, but just generally anxiety over demand for data 63 00:03:34,520 --> 00:03:37,800 Speaker 3: center how sustainable that is. And also we got a 64 00:03:37,880 --> 00:03:42,360 Speaker 3: downgrade from baird for Caterpillar stock. They cut their rating 65 00:03:42,400 --> 00:03:44,640 Speaker 3: on A stock to neutral from outperform, and a prior 66 00:03:44,680 --> 00:03:47,560 Speaker 3: starter was also lowered by twenty five percent. And analysts 67 00:03:47,600 --> 00:03:51,240 Speaker 3: were citing specifically the state of data centers and how 68 00:03:51,280 --> 00:03:54,520 Speaker 3: that's starting to see some regulatory pushback. And so if 69 00:03:54,520 --> 00:03:56,920 Speaker 3: we do see more and more local governments kind of 70 00:03:56,960 --> 00:03:59,480 Speaker 3: pushing back against the expansion of data centers, that's something 71 00:03:59,520 --> 00:04:01,360 Speaker 3: that will hurt Caterpillars order. 72 00:04:01,760 --> 00:04:05,080 Speaker 1: Obviously there's a lot of attention there on Caterpillars role 73 00:04:05,120 --> 00:04:07,040 Speaker 1: in the AI data center build up, But I mean, 74 00:04:07,120 --> 00:04:09,760 Speaker 1: I think about when it comes to Caterpillar, you know, 75 00:04:09,880 --> 00:04:13,800 Speaker 1: the farm equipment, the construction equipment for houses, are those 76 00:04:14,440 --> 00:04:18,159 Speaker 1: aspects of the business something that could potentially outweigh any 77 00:04:18,160 --> 00:04:19,799 Speaker 1: of the downgrades that you mentioned from Bairn. 78 00:04:20,040 --> 00:04:24,120 Speaker 3: I look, I think that's something that could help off 79 00:04:24,200 --> 00:04:27,880 Speaker 3: set We do see some surprises on that front. But 80 00:04:28,279 --> 00:04:31,040 Speaker 3: you know, more and more a lot of companies, including Caterpillar, 81 00:04:31,120 --> 00:04:35,560 Speaker 3: have really kind of leaned into this AI driven demand 82 00:04:35,640 --> 00:04:38,480 Speaker 3: and all aspects related to that, right, and so it 83 00:04:38,800 --> 00:04:42,120 Speaker 3: seems these days for any companies reporting that are in 84 00:04:42,200 --> 00:04:46,360 Speaker 3: any way related or connected to that story, if there's 85 00:04:46,440 --> 00:04:49,640 Speaker 3: any kind of hint of negativity on that front, that 86 00:04:49,720 --> 00:04:53,520 Speaker 3: tends to outweigh any positive sentiment that comes from other 87 00:04:53,640 --> 00:04:56,599 Speaker 3: aspects of the earnings. I one thing to do look 88 00:04:56,640 --> 00:04:59,720 Speaker 3: out for is probably its power and energy unit that 89 00:04:59,880 --> 00:05:03,160 Speaker 3: is still expected to post twenty three percent organic sales growth, 90 00:05:03,960 --> 00:05:06,760 Speaker 3: and that's something that could be a silver lining if 91 00:05:06,760 --> 00:05:08,679 Speaker 3: we do get a little bit more of a subdued 92 00:05:08,720 --> 00:05:11,160 Speaker 3: outlook when it comes to data center related demand. 93 00:05:11,279 --> 00:05:13,279 Speaker 1: Well, another one of those companies that I think you 94 00:05:13,320 --> 00:05:16,279 Speaker 1: can say is really directly related to the AI trade 95 00:05:16,360 --> 00:05:19,480 Speaker 1: is also reporting on Tuesday. What are we expecting from 96 00:05:19,920 --> 00:05:22,360 Speaker 1: advanced micro devices? The chip maker? 97 00:05:22,520 --> 00:05:24,840 Speaker 3: That's right maker. I mean, yeah, that is very much 98 00:05:24,880 --> 00:05:28,719 Speaker 3: front and center when it comes to the AI trade 99 00:05:28,960 --> 00:05:31,560 Speaker 3: narrative here. Look, I think the expectation is still very 100 00:05:31,600 --> 00:05:34,880 Speaker 3: much for a solid parter. There's been robust demand for 101 00:05:35,120 --> 00:05:39,000 Speaker 3: its server CPUs, and that gives a company a lot 102 00:05:39,000 --> 00:05:41,960 Speaker 3: of pricing power really because we have seen prices for 103 00:05:42,560 --> 00:05:46,520 Speaker 3: related equipment in that space ramping higher just because there's 104 00:05:46,560 --> 00:05:49,080 Speaker 3: so much demand in the space, and so you know, 105 00:05:49,240 --> 00:05:51,480 Speaker 3: is that going to be sustainable. That something that investors 106 00:05:51,680 --> 00:05:54,680 Speaker 3: are going to be looking forward to. We did also 107 00:05:54,720 --> 00:05:57,520 Speaker 3: see AMD unveil new products right They have a new 108 00:05:57,560 --> 00:06:01,560 Speaker 3: generation of microprocessors, a new server rack, and so that's 109 00:06:01,560 --> 00:06:03,839 Speaker 3: something that investors will be watching for. They're going to 110 00:06:03,880 --> 00:06:07,760 Speaker 3: one see some evidence that the company is going to 111 00:06:07,760 --> 00:06:09,680 Speaker 3: be on track for a successful ramp up in the 112 00:06:09,680 --> 00:06:10,560 Speaker 3: second half of the year. 113 00:06:12,440 --> 00:06:16,680 Speaker 2: The Stockmovers Report from Bloomberg Radio. 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