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Speaker 1: Good morning.

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Speaker 2: I'm Nathan Hager and I'm Karen Moscow. Here are the

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Speaker 2: stories we're following today.

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Speaker 3: We begin with the tale of two high tech behemoths.

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Speaker 3: Shares of Alphabet are surging nearly seven percent in early training.

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Speaker 3: The Google owner reported revenue that beat estimates thanks to

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Speaker 3: advertising on the company's flagship search business, which is fending

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Speaker 3: off competition from artificial intelligence. Mandeep Singh covers Alphabet for

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Speaker 3: Bloomberg Intelligence.

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Speaker 4: You know, it comes down to the core search business.

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Speaker 4: That is what drives the profit and free cash flow,

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Speaker 4: and I think it eliits some of the investor concerns

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Speaker 4: around chat, GPT, and you know what it could do

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Speaker 4: to search. I mean in this environment, if they're able

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Speaker 4: to grow revenue five percent, I think that just goes

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Speaker 4: to show how strong the mode is.

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Speaker 3: Bloomberg Intelligence senior analyst Mandeep Singh says Alphabet is also

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Speaker 3: making management moves. Chief financial Officer Ruth Parratt will fill

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Speaker 3: in a newly created role of president and chief investment

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Speaker 3: Officer starting in September.

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Speaker 2: Well, it's a different picture when it comes to earnings

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Speaker 2: at Microsoft. Nathan shares are down more than four percent

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Speaker 2: this morning. MAT's do any concerns about a slowdown in

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Speaker 2: its cloud business, and we get the details from Bloomberg's

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Speaker 2: John Tucker.

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Speaker 5: Microsoft investors may have their head in the cloud for now.

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Speaker 5: They latch down to the company forecast for a slowdown

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Speaker 5: in the cloud business that's been a growth engine for

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Speaker 5: the last decade. Revenue growth there slipped to twenty seven

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Speaker 5: percent from thirty one percent of the previous quarter. Microsoft

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Speaker 5: says that may go even lower, so that focus may

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Speaker 5: be obscuring the company's optimism over its artificial intelligence tools.

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Speaker 5: The CEO such An Adela, has unveiled an array of

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Speaker 5: new AI programs, and demand has been strong for Internet

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Speaker 5: based services that let customers use the open AI technologies.

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Speaker 5: Bloomberg Intelligence says, well, Microsoft is positioned to cash in

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Speaker 5: on new AI investments. It may take a few quarters,

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Speaker 5: you knoww York on John Tucker, Bloomberg Day Break.

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Speaker 3: All right, John, thanks for also watching shares of Snap

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Speaker 3: this morning. They're down nearly ninety teen percent. The social

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Speaker 3: media company gave a revenue outlook that was weaker than expected.

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Speaker 3: Analysts say improvements to Snap's digital advertising business are taking

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Speaker 3: longer than expected to pay off.

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Speaker 2: Well. Nathan, We also have a slew of earnings overseas,

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Speaker 2: including some prominent names in banking, and let's head to

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Speaker 2: London and get the latest of the Bloomberg's You and Potts,

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Speaker 2: You and good morning.

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Speaker 6: Good morning, Karen Nathan. Many of Europe's biggest banks in

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Speaker 6: focus today. But before the earnings dropped, we got the

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Speaker 6: unexpected news that that West Group's CEO, Allison Rose, is

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Speaker 6: to step down. The one am announcement came after heavy

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Speaker 6: criticism over the closure of the bank accounts of a

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Speaker 6: prominent British ex politician. On the earnings front, Deutsche Bank

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Speaker 6: whether the trading slowed down better than expected, but expenses

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Speaker 6: came in higher than anticipated. Spain's biggest bank, Santander, beat estimates,

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Speaker 6: boosted by rising interest rates, and it was a similar

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Speaker 6: story in Italy where UniCredit lifted its fully targets for

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Speaker 6: a second straight quarter. In London, I'm you in pots Bloomberg.

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Speaker 3: Daybreak, marry you and thank you. Staying with banks this morning,

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Speaker 3: we're watching shows of wealth. Els Fargo rise nearly three

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Speaker 3: percent in early trading. That's after the lender announced plans

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Speaker 3: to repurchase as much as thirty billion dollars in shares.

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Speaker 3: The Bank is also boosting its dividend well.

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Speaker 2: The earnings continue to roll in today, Nathan. With almost

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Speaker 2: fifty companies in the SNP five hundred reporting, Meta Platforms

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Speaker 2: is the big name to watch. We get results from

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Speaker 2: the owner of Facebook and Instagram and Threads after the

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Speaker 2: closing bill and Bloomberg Stown Buzzby has more.

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Speaker 7: The big focus for investors is whether the expected recovery

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Speaker 7: in Meta's digital advertising business, its main source of income,

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Speaker 7: actually took place. Also of note, any word on its

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Speaker 7: artificial intelligence initiatives, what kind of traction it's seeing on

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Speaker 7: its new Threads app aimed at taking on Twitter, also

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Speaker 7: at its Instagram reels, a competitor to TikTok. Forecast call

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Speaker 7: for adjusted earnings at two dollars ninety two cents a

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Speaker 7: share on revenues just topping thirty one billion dollars. Tom

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Speaker 7: Buzzby Bloomberg Daybreak.

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Speaker 3: Okay, Tom, thank you. Meta is also in the news

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Speaker 3: for another reason. We're learning Republicans on the House Judiciary

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Speaker 3: Committee or preparing a contempt citation against the CEO Mark

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Speaker 3: Zuckerberg Bloomberg Zeed Baxter has that story.

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Speaker 1: It involves a probe and the complaints that META has

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Speaker 1: censored conservative speech. Committee chair Jim Jordan has accused META

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Speaker 1: of working with a Biden administration. The recommendation asserts META

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Speaker 1: has largely ignored demands for internal documents covered by a

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Speaker 1: subpoena that was issued in February, and has only furnished

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Speaker 1: communications with the US government. META says it has operated

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Speaker 1: in good faith and seeking to comply with a sweeping

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Speaker 1: request for information. Jordan's schedule of vote for Thursday. The

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Speaker 1: full House would have to approve the citation. In San Francisco,

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Speaker 1: I'm at Baxter Bloomberg Daybreak.

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Speaker 8: Right, and thanks well.

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Speaker 2: Turning the economy Now, let's get today's big event for

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Speaker 2: the markets. A Federal Reserve issues its latest policy decision today.

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Speaker 2: The central Bank is expected to raise interest rates, but

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Speaker 2: will that be the end of this tightening cycle? Big

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Speaker 2: an analysis from Bloomberg Economics correspondent Michael McKee.

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Speaker 9: A divided Fed is expected to come together on the

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Speaker 9: need for US interest rates to go up another quarter

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Speaker 9: percentage point. What's not clear is how divided they will

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Speaker 9: be going forward. Some members, including Dallas FED President Lourie

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Speaker 9: Logan and Governor Michelle Bowman, wanted to raise rates at

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Speaker 9: their June meeting, which was the first pause in eleven meetings.

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Speaker 9: Their argument is monetary policy lags are shorter now the

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Speaker 9: weight of previous tightening has already hit the economy, but

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Speaker 9: inflation remains too high. FED officials did project in June

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Speaker 9: another two moves. Wall Street will be watching for any

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Speaker 9: indication they will carry through with that, and if so

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Speaker 9: when Michael McKee Bloomberg Daybreak.

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Speaker 3: And with that, look at other stories making news in

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Speaker 3: New York and around the world. Here's Bloomberg's Michael Barr.

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Speaker 10: Michael, thank you very much, Nathan. Authorities on New York's

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Speaker 10: Long Island have wrapped up their search at the home

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Speaker 10: of suspected serial killer Rex Human. He's charged in the

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Speaker 10: deaths of three women, their bodies found on Gilgo Beach

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Speaker 10: in the past decade. Suffolk County District Attorney Raymond Turney I.

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Speaker 11: Would say that we have obtained a massive amount of material,

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Speaker 11: which all of which has to be cataloged and analyzed,

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Speaker 11: and it's going to take quite some time.

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Speaker 10: Suffolk DA District attorney also says that a large number

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Speaker 10: of items, including about two hundred and eighty weapons, were

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Speaker 10: taken from the home. A microburst hammer to Brooklyn neighborhood,

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Speaker 10: leaving streets covered in broken tree branches. It had an

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Speaker 10: estimated wind speed of between sixty and seventy miles per hour.

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Speaker 10: It left homeowners shocked.

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Speaker 7: I've never seen anything like this in my life.

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Speaker 12: This is nuts.

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Speaker 7: It was very scary for a minute.

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Speaker 10: I'll say that surveillance video shows cars driving along in

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Speaker 10: moderate rain on Bay Ridge Parkway and Benson Erst when

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Speaker 10: seconds later a white out as seventy mile per hour

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Speaker 10: winds raged down the block. It's a win for immigration advocates.

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Speaker 10: A federal judge is blocking strict new rules for asylum seekers. However,

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Speaker 10: White House Press Secretary Karine Jean Pierre as the Biden

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Speaker 10: administration's border enforcement remains in full effect, citing the stay

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Speaker 10: currently in place.

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Speaker 12: The Department of Justice will appeal the decision and seek

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Speaker 12: and extend to extend the stay. And as we have

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Speaker 12: said multiple times, our border enforcement plan works is deterrence,

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Speaker 12: a diplomacy and enforcement. We have seen that plan working.

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Speaker 12: Unlawful border crossing have come down to the lowest that

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Speaker 12: we have seen in the past two years.

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Speaker 10: The requirements that have been in place since Title forty

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Speaker 10: two and in are that asylum seekers must try to

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Speaker 10: get asylum in a country through which they've passed first,

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Speaker 10: and anyone entering illegally cannot legally apply for asylum for

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Speaker 10: five years. Some big names joined picket lines for striking

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Speaker 10: SAG after members in Times Square Breaking bads Brian Cranston.

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Speaker 3: We are not in the same business model that we

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Speaker 3: were even ten years ago.

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Speaker 10: Actors are calling for fair pay, revenue sharing, health care,

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Speaker 10: retirement funding, and a protection and fair compensation. While the

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Speaker 10: sack strike is in about two weeks now, the riders

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Speaker 10: strike began nearly three months ago. Global News twenty four

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Speaker 10: hours a day, powered by more than twenty seven hundred

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Speaker 10: journalist analyst over one hundred twenty countries. I'm Michael Barrt.

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Speaker 10: This is Bloomberg, Nathan.

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Speaker 3: Thank you Michael, timing out for the Bloomberg Sports update.

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Speaker 3: Here's John stash Out.

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Speaker 10: Thanks Naythin.

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Speaker 13: Peter Alonzo had been mired in a deep slump, seemed

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Speaker 13: to come out of it last weekend in Boston with

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Speaker 13: five hits and at the stadium. Alonzo almost single handedly

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Speaker 13: powered the Mets the.

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Speaker 7: One drilled in the air to deep center Bayer going

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Speaker 7: back at the truck at the wall.

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Speaker 12: He can't get it.

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Speaker 4: It's gone. Hold on.

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Speaker 5: Peter Alonzo hits it off the screen in front of

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Speaker 5: the batter's.

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Speaker 14: Eye, right out at Monument Park.

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Speaker 7: It's straight away center field. Alonzo's second home run of the.

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Speaker 13: Game on WCBS. At that point sixth inning, it was

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Speaker 13: Alonzo five and the Yankees nothing, as he had earlier

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Speaker 13: had an RBI single and a three run homer. The

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Speaker 13: next battle was Daniel Vogelbach he homer. Jeff McNeil drove

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Speaker 13: in the next three runs, all Mets nine to three.

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Speaker 13: Justin Verlanders six scorreless sittings for career win number two

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Speaker 13: forty nine Domingo Herman since that perfect game is zero

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Speaker 13: and two. Pitching matchup tonight. Jose Quintana Carlos Redon. Both

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Speaker 13: were offseason signings who were injured and have yet to

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Speaker 13: win for their new teams. Two athletes twenty six and

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Speaker 13: twenty five years old just signed five year contract extensions

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Speaker 13: worth a total of five hundred and sixty six million dollars.

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Speaker 13: Jaalen Brown gets a fully guaranteed three hundred and four

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Speaker 13: million from the Celtics, where he's not even considered the

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Speaker 13: best player on the team the Chargers. Justin Herbert, now

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Speaker 13: the fourth quarterback to be making over fifteen million a year.

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Speaker 13: The Saquon Barkley deal that was agreed to early yesterday

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Speaker 13: gives him the ten million dollar franchise tag number maybe

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Speaker 13: a million more with incentives. Pro Football Top reported that

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Speaker 13: before the agreement, Giants were looking into trading Parkley Lebron James'

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Speaker 13: son Brawni out of ICU in stable condition. The eighteen

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Speaker 13: year old suffered a cardiac arrest while working out at

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Speaker 13: USC where he'll soon be a freshman. Johns Stashan.

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Speaker 7: We're Bloomberg Sports.

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Speaker 14: From coast to coast, from New York to San Francisco,

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Speaker 14: Boston to Washington, DC, nationwide on SYRIASXAM, the Bloomberg Business app,

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Speaker 14: and Bloomberg dot Com. This is Bloomberg Daybreak.

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Speaker 3: Good morning. I'm Nathan Hager with the focus this morning

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Speaker 3: on big tech earnings. We have heard from Microsoft and

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Speaker 3: Google parent Alphabet. Both companies came in with beats on

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Speaker 3: the quarter and earnings and revenue, but it's a projected

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Speaker 3: slowdown in Microsoft's cloud business seems to be overshadowing a

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Speaker 3: lot of the excitement around artificial intelligence that has driven

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Speaker 3: the market rally this year. So let's dive into these results.

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Speaker 3: Now we're joined by Bloomberg technology reporter Aggie cantrill I. Guess, Aggie,

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Speaker 3: when it comes to both these companies, it seems like

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Speaker 3: investors are focused more on the fundamentals rather than the

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Speaker 3: potential promise of rapid growth from AI down the line.

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Speaker 8: Yeah, exactly, Nathan.

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Speaker 15: So I mean, if we start with with Alphabet, I

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Speaker 15: think what's really telling in their numbers is that they

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Speaker 15: are still completely dominant when it comes to search advertising,

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Speaker 15: and Google Search is still the core of their business.

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Speaker 8: And there was a lot of noise in Silicon Valley

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Speaker 8: and also on Wall Street.

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Speaker 15: About how they may lose share of that online search

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Speaker 15: to the likes of Microsoft spaying because of AI applications.

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Speaker 8: But in the interim, while this is all very much like.

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Speaker 15: Something that will come potentially in the future, that could

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Speaker 15: they could be at risk. Firstly, Google is also still

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Speaker 15: investing in their own artificial intelligence products. And also when

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Speaker 15: it comes to where advertisers are looking to spend, there's

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Speaker 15: really no better reternal investment for them than the classic

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Speaker 15: Google search, which is where people are putting that money.

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Speaker 3: Is that part of what's behind some of the disappointment

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Speaker 3: we're seeing in the share price for Microsoft. There had

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Speaker 3: been this big increase in prices for some of the

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Speaker 3: AI products it was putting out there, and now we're

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Speaker 3: getting this sort of tep it out look, a disappointing

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Speaker 3: outlook when it comes to the cloud business that has

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Speaker 3: been so much of a driver of growth for all

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Speaker 3: these big tech names.

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Speaker 15: Yes, so the cloud business is still where a lot

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Speaker 15: of the energy for Microsoft is going. And when they

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Speaker 15: originally made that initial investment in open Ai, their cloud

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Speaker 15: business was a core part of that. They wanted to

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Speaker 15: see how AI could be integrated into the suite of

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Speaker 15: tools on Azure.

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Speaker 8: But the thing is is that.

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Speaker 15: Is something that Microsoft is very much billing as a

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Speaker 15: longer term strategy. And our people of Bloomberg Intelligence also

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Speaker 15: believed that Microsoft is currently better positioned than other cloud providers,

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Speaker 15: than Google, than Amazon when it comes to monetizing new

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Speaker 15: AI investments because they're really the initial players here. But

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Speaker 15: the problem is is in the interim they're making a

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Speaker 15: bet for something that may not come to bear out

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Speaker 15: in their earnings for another couple of quarters. So right now,

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Speaker 15: the sentiment around Microsoft is much more muted than Google.

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Speaker 15: That can turn around and say when it comes to

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Speaker 15: search advertising, when it comes to even YouTube advertising, that recovered,

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Speaker 15: we're still the dominant player.

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Speaker 3: Well, if we are seeing cloud growth slow for Microsoft,

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Speaker 3: at least in the interim, what does that say about

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Speaker 3: the potential demand picture for AI.

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Speaker 8: I think it's.

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Speaker 15: Difficult to say. At the moment, I'm not entirely sure.

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Speaker 15: When it comes to for instance, they seem to be

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Speaker 15: pretty positive about the longer term outlook at Microsoft. But

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Speaker 15: also when you're talking about AI, especially for enterprise applications,

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Speaker 15: so much of that is also part of a broader

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Speaker 15: market sentiment. I also, for instance, in Germany cover SAP,

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Speaker 15: which is also very conscious that right now we're trying

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Speaker 15: to get people to move to the cloud, to leave

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Speaker 15: on premise systems and go to the cloud because that's

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Speaker 15: where they see the future of their system. And just

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Speaker 15: as with Microsoft, the problem is is trying to get

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Speaker 15: enterprise customers to buy into big cloud contracts at the

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Speaker 15: moment when there's not a huge amount of visibility about

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Speaker 15: how the economy is developing. We're talking about rape decisions

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Speaker 15: from the FED and the ECB today as well. All

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Speaker 15: of that plays in to these sort of customers that

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Speaker 15: are very enterprise focused, and these deals need to take

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Speaker 15: a longer time for them to convince these enterprise customers

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Speaker 15: to come on board. And so yes, there does seem

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Speaker 15: to be a lot of potential for their AI to

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Speaker 15: bring on new customers, but I think in the current

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Speaker 15: market environment, the macro market environment, there's.

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Speaker 8: Still a lot more convincing that needs to be done.

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Speaker 3: Just about thirty seconds left here, Aggie, we're waiting for

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Speaker 3: results from Meta Platforms later on this afternoon. Is AI

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Speaker 3: going to be the big focus there as well?

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Speaker 15: Yes, AI is going to be a big part of

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Speaker 15: Meta's conversation as well. Of course, they recently announced their

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Speaker 15: own suite there, and I'm expecting that analysts will meant

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Speaker 15: to know a lot more about that from them. I'm

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Speaker 15: also curious to see how their advertising spend does well,

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Speaker 15: because we saw, for instance, contradictory to Google managing to

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Speaker 15: recover a lot of its ads spend. Snap for instance,

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Speaker 15: had projected revenue in this current quarter that was much

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Speaker 15: lower or at the lower end of what analysts were estimating.

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Speaker 15: So I'm keen to seeing where the AdSpend goes for

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Speaker 15: Meta as well.

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