Speaker 1: Good morning.
Speaker 2: I'm Nathan Hager and I'm Karen Moscow. Here are the
Speaker 2: stories we're following today.
Speaker 3: We begin with the tale of two high tech behemoths.
Speaker 3: Shares of Alphabet are surging nearly seven percent in early training.
Speaker 3: The Google owner reported revenue that beat estimates thanks to
Speaker 3: advertising on the company's flagship search business, which is fending
Speaker 3: off competition from artificial intelligence. Mandeep Singh covers Alphabet for
Speaker 3: Bloomberg Intelligence.
Speaker 4: You know, it comes down to the core search business.
Speaker 4: That is what drives the profit and free cash flow,
Speaker 4: and I think it eliits some of the investor concerns
Speaker 4: around chat, GPT, and you know what it could do
Speaker 4: to search. I mean in this environment, if they're able
Speaker 4: to grow revenue five percent, I think that just goes
Speaker 4: to show how strong the mode is.
Speaker 3: Bloomberg Intelligence senior analyst Mandeep Singh says Alphabet is also
Speaker 3: making management moves. Chief financial Officer Ruth Parratt will fill
Speaker 3: in a newly created role of president and chief investment
Speaker 3: Officer starting in September.
Speaker 2: Well, it's a different picture when it comes to earnings
Speaker 2: at Microsoft. Nathan shares are down more than four percent
Speaker 2: this morning. MAT's do any concerns about a slowdown in
Speaker 2: its cloud business, and we get the details from Bloomberg's
Speaker 2: John Tucker.
Speaker 5: Microsoft investors may have their head in the cloud for now.
Speaker 5: They latch down to the company forecast for a slowdown
Speaker 5: in the cloud business that's been a growth engine for
Speaker 5: the last decade. Revenue growth there slipped to twenty seven
Speaker 5: percent from thirty one percent of the previous quarter. Microsoft
Speaker 5: says that may go even lower, so that focus may
Speaker 5: be obscuring the company's optimism over its artificial intelligence tools.
Speaker 5: The CEO such An Adela, has unveiled an array of
Speaker 5: new AI programs, and demand has been strong for Internet
Speaker 5: based services that let customers use the open AI technologies.
Speaker 5: Bloomberg Intelligence says, well, Microsoft is positioned to cash in
Speaker 5: on new AI investments. It may take a few quarters,
Speaker 5: you knoww York on John Tucker, Bloomberg Day Break.
Speaker 3: All right, John, thanks for also watching shares of Snap
Speaker 3: this morning. They're down nearly ninety teen percent. The social
Speaker 3: media company gave a revenue outlook that was weaker than expected.
Speaker 3: Analysts say improvements to Snap's digital advertising business are taking
Speaker 3: longer than expected to pay off.
Speaker 2: Well. Nathan, We also have a slew of earnings overseas,
Speaker 2: including some prominent names in banking, and let's head to
Speaker 2: London and get the latest of the Bloomberg's You and Potts,
Speaker 2: You and good morning.
Speaker 6: Good morning, Karen Nathan. Many of Europe's biggest banks in
Speaker 6: focus today. But before the earnings dropped, we got the
Speaker 6: unexpected news that that West Group's CEO, Allison Rose, is
Speaker 6: to step down. The one am announcement came after heavy
Speaker 6: criticism over the closure of the bank accounts of a
Speaker 6: prominent British ex politician. On the earnings front, Deutsche Bank
Speaker 6: whether the trading slowed down better than expected, but expenses
Speaker 6: came in higher than anticipated. Spain's biggest bank, Santander, beat estimates,
Speaker 6: boosted by rising interest rates, and it was a similar
Speaker 6: story in Italy where UniCredit lifted its fully targets for
Speaker 6: a second straight quarter. In London, I'm you in pots Bloomberg.
Speaker 3: Daybreak, marry you and thank you. Staying with banks this morning,
Speaker 3: we're watching shows of wealth. Els Fargo rise nearly three
Speaker 3: percent in early trading. That's after the lender announced plans
Speaker 3: to repurchase as much as thirty billion dollars in shares.
Speaker 3: The Bank is also boosting its dividend well.
Speaker 2: The earnings continue to roll in today, Nathan. With almost
Speaker 2: fifty companies in the SNP five hundred reporting, Meta Platforms
Speaker 2: is the big name to watch. We get results from
Speaker 2: the owner of Facebook and Instagram and Threads after the
Speaker 2: closing bill and Bloomberg Stown Buzzby has more.
Speaker 7: The big focus for investors is whether the expected recovery
Speaker 7: in Meta's digital advertising business, its main source of income,
Speaker 7: actually took place. Also of note, any word on its
Speaker 7: artificial intelligence initiatives, what kind of traction it's seeing on
Speaker 7: its new Threads app aimed at taking on Twitter, also
Speaker 7: at its Instagram reels, a competitor to TikTok. Forecast call
Speaker 7: for adjusted earnings at two dollars ninety two cents a
Speaker 7: share on revenues just topping thirty one billion dollars. Tom
Speaker 7: Buzzby Bloomberg Daybreak.
Speaker 3: Okay, Tom, thank you. Meta is also in the news
Speaker 3: for another reason. We're learning Republicans on the House Judiciary
Speaker 3: Committee or preparing a contempt citation against the CEO Mark
Speaker 3: Zuckerberg Bloomberg Zeed Baxter has that story.
Speaker 1: It involves a probe and the complaints that META has
Speaker 1: censored conservative speech. Committee chair Jim Jordan has accused META
Speaker 1: of working with a Biden administration. The recommendation asserts META
Speaker 1: has largely ignored demands for internal documents covered by a
Speaker 1: subpoena that was issued in February, and has only furnished
Speaker 1: communications with the US government. META says it has operated
Speaker 1: in good faith and seeking to comply with a sweeping
Speaker 1: request for information. Jordan's schedule of vote for Thursday. The
Speaker 1: full House would have to approve the citation. In San Francisco,
Speaker 1: I'm at Baxter Bloomberg Daybreak.
Speaker 8: Right, and thanks well.
Speaker 2: Turning the economy Now, let's get today's big event for
Speaker 2: the markets. A Federal Reserve issues its latest policy decision today.
Speaker 2: The central Bank is expected to raise interest rates, but
Speaker 2: will that be the end of this tightening cycle? Big
Speaker 2: an analysis from Bloomberg Economics correspondent Michael McKee.
Speaker 9: A divided Fed is expected to come together on the
Speaker 9: need for US interest rates to go up another quarter
Speaker 9: percentage point. What's not clear is how divided they will
Speaker 9: be going forward. Some members, including Dallas FED President Lourie
Speaker 9: Logan and Governor Michelle Bowman, wanted to raise rates at
Speaker 9: their June meeting, which was the first pause in eleven meetings.
Speaker 9: Their argument is monetary policy lags are shorter now the
Speaker 9: weight of previous tightening has already hit the economy, but
Speaker 9: inflation remains too high. FED officials did project in June
Speaker 9: another two moves. Wall Street will be watching for any
Speaker 9: indication they will carry through with that, and if so
Speaker 9: when Michael McKee Bloomberg Daybreak.
Speaker 3: And with that, look at other stories making news in
Speaker 3: New York and around the world. Here's Bloomberg's Michael Barr.
Speaker 10: Michael, thank you very much, Nathan. Authorities on New York's
Speaker 10: Long Island have wrapped up their search at the home
Speaker 10: of suspected serial killer Rex Human. He's charged in the
Speaker 10: deaths of three women, their bodies found on Gilgo Beach
Speaker 10: in the past decade. Suffolk County District Attorney Raymond Turney I.
Speaker 11: Would say that we have obtained a massive amount of material,
Speaker 11: which all of which has to be cataloged and analyzed,
Speaker 11: and it's going to take quite some time.
Speaker 10: Suffolk DA District attorney also says that a large number
Speaker 10: of items, including about two hundred and eighty weapons, were
Speaker 10: taken from the home. A microburst hammer to Brooklyn neighborhood,
Speaker 10: leaving streets covered in broken tree branches. It had an
Speaker 10: estimated wind speed of between sixty and seventy miles per hour.
Speaker 10: It left homeowners shocked.
Speaker 7: I've never seen anything like this in my life.
Speaker 12: This is nuts.
Speaker 7: It was very scary for a minute.
Speaker 10: I'll say that surveillance video shows cars driving along in
Speaker 10: moderate rain on Bay Ridge Parkway and Benson Erst when
Speaker 10: seconds later a white out as seventy mile per hour
Speaker 10: winds raged down the block. It's a win for immigration advocates.
Speaker 10: A federal judge is blocking strict new rules for asylum seekers. However,
Speaker 10: White House Press Secretary Karine Jean Pierre as the Biden
Speaker 10: administration's border enforcement remains in full effect, citing the stay
Speaker 10: currently in place.
Speaker 12: The Department of Justice will appeal the decision and seek
Speaker 12: and extend to extend the stay. And as we have
Speaker 12: said multiple times, our border enforcement plan works is deterrence,
Speaker 12: a diplomacy and enforcement. We have seen that plan working.
Speaker 12: Unlawful border crossing have come down to the lowest that
Speaker 12: we have seen in the past two years.
Speaker 10: The requirements that have been in place since Title forty
Speaker 10: two and in are that asylum seekers must try to
Speaker 10: get asylum in a country through which they've passed first,
Speaker 10: and anyone entering illegally cannot legally apply for asylum for
Speaker 10: five years. Some big names joined picket lines for striking
Speaker 10: SAG after members in Times Square Breaking bads Brian Cranston.
Speaker 3: We are not in the same business model that we
Speaker 3: were even ten years ago.
Speaker 10: Actors are calling for fair pay, revenue sharing, health care,
Speaker 10: retirement funding, and a protection and fair compensation. While the
Speaker 10: sack strike is in about two weeks now, the riders
Speaker 10: strike began nearly three months ago. Global News twenty four
Speaker 10: hours a day, powered by more than twenty seven hundred
Speaker 10: journalist analyst over one hundred twenty countries. I'm Michael Barrt.
Speaker 10: This is Bloomberg, Nathan.
Speaker 3: Thank you Michael, timing out for the Bloomberg Sports update.
Speaker 3: Here's John stash Out.
Speaker 10: Thanks Naythin.
Speaker 13: Peter Alonzo had been mired in a deep slump, seemed
Speaker 13: to come out of it last weekend in Boston with
Speaker 13: five hits and at the stadium. Alonzo almost single handedly
Speaker 13: powered the Mets the.
Speaker 7: One drilled in the air to deep center Bayer going
Speaker 7: back at the truck at the wall.
Speaker 12: He can't get it.
Speaker 4: It's gone. Hold on.
Speaker 5: Peter Alonzo hits it off the screen in front of
Speaker 5: the batter's.
Speaker 14: Eye, right out at Monument Park.
Speaker 7: It's straight away center field. Alonzo's second home run of the.
Speaker 13: Game on WCBS. At that point sixth inning, it was
Speaker 13: Alonzo five and the Yankees nothing, as he had earlier
Speaker 13: had an RBI single and a three run homer. The
Speaker 13: next battle was Daniel Vogelbach he homer. Jeff McNeil drove
Speaker 13: in the next three runs, all Mets nine to three.
Speaker 13: Justin Verlanders six scorreless sittings for career win number two
Speaker 13: forty nine Domingo Herman since that perfect game is zero
Speaker 13: and two. Pitching matchup tonight. Jose Quintana Carlos Redon. Both
Speaker 13: were offseason signings who were injured and have yet to
Speaker 13: win for their new teams. Two athletes twenty six and
Speaker 13: twenty five years old just signed five year contract extensions
Speaker 13: worth a total of five hundred and sixty six million dollars.
Speaker 13: Jaalen Brown gets a fully guaranteed three hundred and four
Speaker 13: million from the Celtics, where he's not even considered the
Speaker 13: best player on the team the Chargers. Justin Herbert, now
Speaker 13: the fourth quarterback to be making over fifteen million a year.
Speaker 13: The Saquon Barkley deal that was agreed to early yesterday
Speaker 13: gives him the ten million dollar franchise tag number maybe
Speaker 13: a million more with incentives. Pro Football Top reported that
Speaker 13: before the agreement, Giants were looking into trading Parkley Lebron James'
Speaker 13: son Brawni out of ICU in stable condition. The eighteen
Speaker 13: year old suffered a cardiac arrest while working out at
Speaker 13: USC where he'll soon be a freshman. Johns Stashan.
Speaker 7: We're Bloomberg Sports.
Speaker 14: From coast to coast, from New York to San Francisco,
Speaker 14: Boston to Washington, DC, nationwide on SYRIASXAM, the Bloomberg Business app,
Speaker 14: and Bloomberg dot Com. This is Bloomberg Daybreak.
Speaker 3: Good morning. I'm Nathan Hager with the focus this morning
Speaker 3: on big tech earnings. We have heard from Microsoft and
Speaker 3: Google parent Alphabet. Both companies came in with beats on
Speaker 3: the quarter and earnings and revenue, but it's a projected
Speaker 3: slowdown in Microsoft's cloud business seems to be overshadowing a
Speaker 3: lot of the excitement around artificial intelligence that has driven
Speaker 3: the market rally this year. So let's dive into these results.
Speaker 3: Now we're joined by Bloomberg technology reporter Aggie cantrill I. Guess, Aggie,
Speaker 3: when it comes to both these companies, it seems like
Speaker 3: investors are focused more on the fundamentals rather than the
Speaker 3: potential promise of rapid growth from AI down the line.
Speaker 8: Yeah, exactly, Nathan.
Speaker 15: So I mean, if we start with with Alphabet, I
Speaker 15: think what's really telling in their numbers is that they
Speaker 15: are still completely dominant when it comes to search advertising,
Speaker 15: and Google Search is still the core of their business.
Speaker 8: And there was a lot of noise in Silicon Valley
Speaker 8: and also on Wall Street.
Speaker 15: About how they may lose share of that online search
Speaker 15: to the likes of Microsoft spaying because of AI applications.
Speaker 8: But in the interim, while this is all very much like.
Speaker 15: Something that will come potentially in the future, that could
Speaker 15: they could be at risk. Firstly, Google is also still
Speaker 15: investing in their own artificial intelligence products. And also when
Speaker 15: it comes to where advertisers are looking to spend, there's
Speaker 15: really no better reternal investment for them than the classic
Speaker 15: Google search, which is where people are putting that money.
Speaker 3: Is that part of what's behind some of the disappointment
Speaker 3: we're seeing in the share price for Microsoft. There had
Speaker 3: been this big increase in prices for some of the
Speaker 3: AI products it was putting out there, and now we're
Speaker 3: getting this sort of tep it out look, a disappointing
Speaker 3: outlook when it comes to the cloud business that has
Speaker 3: been so much of a driver of growth for all
Speaker 3: these big tech names.
Speaker 15: Yes, so the cloud business is still where a lot
Speaker 15: of the energy for Microsoft is going. And when they
Speaker 15: originally made that initial investment in open Ai, their cloud
Speaker 15: business was a core part of that. They wanted to
Speaker 15: see how AI could be integrated into the suite of
Speaker 15: tools on Azure.
Speaker 8: But the thing is is that.
Speaker 15: Is something that Microsoft is very much billing as a
Speaker 15: longer term strategy. And our people of Bloomberg Intelligence also
Speaker 15: believed that Microsoft is currently better positioned than other cloud providers,
Speaker 15: than Google, than Amazon when it comes to monetizing new
Speaker 15: AI investments because they're really the initial players here. But
Speaker 15: the problem is is in the interim they're making a
Speaker 15: bet for something that may not come to bear out
Speaker 15: in their earnings for another couple of quarters. So right now,
Speaker 15: the sentiment around Microsoft is much more muted than Google.
Speaker 15: That can turn around and say when it comes to
Speaker 15: search advertising, when it comes to even YouTube advertising, that recovered,
Speaker 15: we're still the dominant player.
Speaker 3: Well, if we are seeing cloud growth slow for Microsoft,
Speaker 3: at least in the interim, what does that say about
Speaker 3: the potential demand picture for AI.
Speaker 8: I think it's.
Speaker 15: Difficult to say. At the moment, I'm not entirely sure.
Speaker 15: When it comes to for instance, they seem to be
Speaker 15: pretty positive about the longer term outlook at Microsoft. But
Speaker 15: also when you're talking about AI, especially for enterprise applications,
Speaker 15: so much of that is also part of a broader
Speaker 15: market sentiment. I also, for instance, in Germany cover SAP,
Speaker 15: which is also very conscious that right now we're trying
Speaker 15: to get people to move to the cloud, to leave
Speaker 15: on premise systems and go to the cloud because that's
Speaker 15: where they see the future of their system. And just
Speaker 15: as with Microsoft, the problem is is trying to get
Speaker 15: enterprise customers to buy into big cloud contracts at the
Speaker 15: moment when there's not a huge amount of visibility about
Speaker 15: how the economy is developing. We're talking about rape decisions
Speaker 15: from the FED and the ECB today as well. All
Speaker 15: of that plays in to these sort of customers that
Speaker 15: are very enterprise focused, and these deals need to take
Speaker 15: a longer time for them to convince these enterprise customers
Speaker 15: to come on board. And so yes, there does seem
Speaker 15: to be a lot of potential for their AI to
Speaker 15: bring on new customers, but I think in the current
Speaker 15: market environment, the macro market environment, there's.
Speaker 8: Still a lot more convincing that needs to be done.
Speaker 3: Just about thirty seconds left here, Aggie, we're waiting for
Speaker 3: results from Meta Platforms later on this afternoon. Is AI
Speaker 3: going to be the big focus there as well?
Speaker 15: Yes, AI is going to be a big part of
Speaker 15: Meta's conversation as well. Of course, they recently announced their
Speaker 15: own suite there, and I'm expecting that analysts will meant
Speaker 15: to know a lot more about that from them. I'm
Speaker 15: also curious to see how their advertising spend does well,
Speaker 15: because we saw, for instance, contradictory to Google managing to
Speaker 15: recover a lot of its ads spend. Snap for instance,
Speaker 15: had projected revenue in this current quarter that was much
Speaker 15: lower or at the lower end of what analysts were estimating.
Speaker 15: So I'm keen to seeing where the AdSpend goes for
Speaker 15: Meta as well.
Speaker 16: This is Bloomberg Daybreak Today, Your morning brief on the
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Speaker 7: I'm Nathan Hager and.
Speaker 2: I'm Karen Moscow. Join us again tomorrow morning for all
Speaker 2: the news you need to start your day right here
Speaker 2: on Bloomberg Daybreak