WEBVTT - Alphabet Surges, Microsoft Drops; Fed Rate Hike Expected

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<v Speaker 1>Good morning.

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<v Speaker 2>I'm Nathan Hager and I'm Karen Moscow. Here are the

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<v Speaker 2>stories we're following today.

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<v Speaker 3>We begin with the tale of two high tech behemoths.

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<v Speaker 3>Shares of Alphabet are surging nearly seven percent in early training.

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<v Speaker 3>The Google owner reported revenue that beat estimates thanks to

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<v Speaker 3>advertising on the company's flagship search business, which is fending

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<v Speaker 3>off competition from artificial intelligence. Mandeep Singh covers Alphabet for

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<v Speaker 3>Bloomberg Intelligence.

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<v Speaker 4>You know, it comes down to the core search business.

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<v Speaker 4>That is what drives the profit and free cash flow,

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<v Speaker 4>and I think it eliits some of the investor concerns

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<v Speaker 4>around chat, GPT, and you know what it could do

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

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<v Speaker 4>to grow revenue five percent, I think that just goes

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<v Speaker 4>to show how strong the mode is.

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<v Speaker 3>Bloomberg Intelligence senior analyst Mandeep Singh says Alphabet is also

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<v Speaker 3>making management moves. Chief financial Officer Ruth Parratt will fill

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<v Speaker 3>in a newly created role of president and chief investment

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<v Speaker 3>Officer starting in September.

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<v Speaker 2>Well, it's a different picture when it comes to earnings

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<v Speaker 2>at Microsoft. Nathan shares are down more than four percent

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<v Speaker 2>this morning. MAT's do any concerns about a slowdown in

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<v Speaker 2>its cloud business, and we get the details from Bloomberg's

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<v Speaker 2>John Tucker.

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<v Speaker 5>Microsoft investors may have their head in the cloud for now.

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<v Speaker 5>They latch down to the company forecast for a slowdown

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<v Speaker 5>in the cloud business that's been a growth engine for

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<v Speaker 5>the last decade. Revenue growth there slipped to twenty seven

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<v Speaker 5>percent from thirty one percent of the previous quarter. Microsoft

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<v Speaker 5>says that may go even lower, so that focus may

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<v Speaker 5>be obscuring the company's optimism over its artificial intelligence tools.

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<v Speaker 5>The CEO such An Adela, has unveiled an array of

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<v Speaker 5>new AI programs, and demand has been strong for Internet

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<v Speaker 5>based services that let customers use the open AI technologies.

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<v Speaker 5>Bloomberg Intelligence says, well, Microsoft is positioned to cash in

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<v Speaker 5>on new AI investments. It may take a few quarters,

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<v Speaker 5>you knoww York on John Tucker, Bloomberg Day Break.

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<v Speaker 3>All right, John, thanks for also watching shares of Snap

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<v Speaker 3>this morning. They're down nearly ninety teen percent. The social

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<v Speaker 3>media company gave a revenue outlook that was weaker than expected.

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<v Speaker 3>Analysts say improvements to Snap's digital advertising business are taking

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<v Speaker 3>longer than expected to pay off.

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<v Speaker 2>Well. Nathan, We also have a slew of earnings overseas,

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<v Speaker 2>including some prominent names in banking, and let's head to

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<v Speaker 2>London and get the latest of the Bloomberg's You and Potts,

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<v Speaker 2>You and good morning.

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

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<v Speaker 6>focus today. But before the earnings dropped, we got the

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<v Speaker 6>unexpected news that that West Group's CEO, Allison Rose, is

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<v Speaker 6>to step down. The one am announcement came after heavy

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<v Speaker 6>criticism over the closure of the bank accounts of a

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<v Speaker 6>prominent British ex politician. On the earnings front, Deutsche Bank

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<v Speaker 6>whether the trading slowed down better than expected, but expenses

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

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<v Speaker 6>boosted by rising interest rates, and it was a similar

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<v Speaker 6>story in Italy where UniCredit lifted its fully targets for

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

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<v Speaker 3>Daybreak, marry you and thank you. Staying with banks this morning,

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<v Speaker 3>we're watching shows of wealth. Els Fargo rise nearly three

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<v Speaker 3>percent in early trading. That's after the lender announced plans

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<v Speaker 3>to repurchase as much as thirty billion dollars in shares.

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<v Speaker 3>The Bank is also boosting its dividend well.

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<v Speaker 2>The earnings continue to roll in today, Nathan. With almost

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<v Speaker 2>fifty companies in the SNP five hundred reporting, Meta Platforms

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<v Speaker 2>is the big name to watch. We get results from

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<v Speaker 2>the owner of Facebook and Instagram and Threads after the

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<v Speaker 2>closing bill and Bloomberg Stown Buzzby has more.

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<v Speaker 7>The big focus for investors is whether the expected recovery

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<v Speaker 7>in Meta's digital advertising business, its main source of income,

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<v Speaker 7>actually took place. Also of note, any word on its

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<v Speaker 7>artificial intelligence initiatives, what kind of traction it's seeing on

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<v Speaker 7>its new Threads app aimed at taking on Twitter, also

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<v Speaker 7>at its Instagram reels, a competitor to TikTok. Forecast call

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<v Speaker 7>for adjusted earnings at two dollars ninety two cents a

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<v Speaker 7>share on revenues just topping thirty one billion dollars. Tom

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<v Speaker 7>Buzzby Bloomberg Daybreak.

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<v Speaker 3>Okay, Tom, thank you. Meta is also in the news

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<v Speaker 3>for another reason. We're learning Republicans on the House Judiciary

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<v Speaker 3>Committee or preparing a contempt citation against the CEO Mark

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<v Speaker 3>Zuckerberg Bloomberg Zeed Baxter has that story.

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<v Speaker 1>It involves a probe and the complaints that META has

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<v Speaker 1>censored conservative speech. Committee chair Jim Jordan has accused META

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<v Speaker 1>of working with a Biden administration. The recommendation asserts META

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<v Speaker 1>has largely ignored demands for internal documents covered by a

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<v Speaker 1>subpoena that was issued in February, and has only furnished

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<v Speaker 1>communications with the US government. META says it has operated

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<v Speaker 1>in good faith and seeking to comply with a sweeping

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<v Speaker 1>request for information. Jordan's schedule of vote for Thursday. The

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<v Speaker 1>full House would have to approve the citation. In San Francisco,

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<v Speaker 1>I'm at Baxter Bloomberg Daybreak.

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<v Speaker 8>Right, and thanks well.

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<v Speaker 2>Turning the economy Now, let's get today's big event for

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<v Speaker 2>the markets. A Federal Reserve issues its latest policy decision today.

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<v Speaker 2>The central Bank is expected to raise interest rates, but

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<v Speaker 2>will that be the end of this tightening cycle? Big

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<v Speaker 2>an analysis from Bloomberg Economics correspondent Michael McKee.

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<v Speaker 9>A divided Fed is expected to come together on the

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<v Speaker 9>need for US interest rates to go up another quarter

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<v Speaker 9>percentage point. What's not clear is how divided they will

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<v Speaker 9>be going forward. Some members, including Dallas FED President Lourie

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<v Speaker 9>Logan and Governor Michelle Bowman, wanted to raise rates at

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<v Speaker 9>their June meeting, which was the first pause in eleven meetings.

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<v Speaker 9>Their argument is monetary policy lags are shorter now the

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<v Speaker 9>weight of previous tightening has already hit the economy, but

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<v Speaker 9>inflation remains too high. FED officials did project in June

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<v Speaker 9>another two moves. Wall Street will be watching for any

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<v Speaker 9>indication they will carry through with that, and if so

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<v Speaker 9>when Michael McKee Bloomberg Daybreak.

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<v Speaker 3>And with that, look at other stories making news in

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<v Speaker 3>New York and around the world. Here's Bloomberg's Michael Barr.

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

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<v Speaker 10>Long Island have wrapped up their search at the home

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<v Speaker 10>of suspected serial killer Rex Human. He's charged in the

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<v Speaker 10>deaths of three women, their bodies found on Gilgo Beach

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<v Speaker 10>in the past decade. Suffolk County District Attorney Raymond Turney I.

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<v Speaker 11>Would say that we have obtained a massive amount of material,

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<v Speaker 11>which all of which has to be cataloged and analyzed,

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<v Speaker 11>and it's going to take quite some time.

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<v Speaker 10>Suffolk DA District attorney also says that a large number

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<v Speaker 10>of items, including about two hundred and eighty weapons, were

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<v Speaker 10>taken from the home. A microburst hammer to Brooklyn neighborhood,

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<v Speaker 10>leaving streets covered in broken tree branches. It had an

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<v Speaker 10>estimated wind speed of between sixty and seventy miles per hour.

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<v Speaker 10>It left homeowners shocked.

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<v Speaker 7>I've never seen anything like this in my life.

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<v Speaker 12>This is nuts.

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<v Speaker 7>It was very scary for a minute.

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<v Speaker 10>I'll say that surveillance video shows cars driving along in

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<v Speaker 10>moderate rain on Bay Ridge Parkway and Benson Erst when

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<v Speaker 10>seconds later a white out as seventy mile per hour

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

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

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<v Speaker 10>White House Press Secretary Karine Jean Pierre as the Biden

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<v Speaker 10>administration's border enforcement remains in full effect, citing the stay

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<v Speaker 10>currently in place.

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<v Speaker 12>The Department of Justice will appeal the decision and seek

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<v Speaker 12>and extend to extend the stay. And as we have

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<v Speaker 12>said multiple times, our border enforcement plan works is deterrence,

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<v Speaker 12>a diplomacy and enforcement. We have seen that plan working.

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<v Speaker 12>Unlawful border crossing have come down to the lowest that

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<v Speaker 12>we have seen in the past two years.

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<v Speaker 10>The requirements that have been in place since Title forty

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<v Speaker 10>two and in are that asylum seekers must try to

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<v Speaker 10>get asylum in a country through which they've passed first,

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<v Speaker 10>and anyone entering illegally cannot legally apply for asylum for

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<v Speaker 10>five years. Some big names joined picket lines for striking

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<v Speaker 10>SAG after members in Times Square Breaking bads Brian Cranston.

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<v Speaker 3>We are not in the same business model that we

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<v Speaker 3>were even ten years ago.

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<v Speaker 10>Actors are calling for fair pay, revenue sharing, health care,

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<v Speaker 10>retirement funding, and a protection and fair compensation. While the

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<v Speaker 10>sack strike is in about two weeks now, the riders

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<v Speaker 10>strike began nearly three months ago. Global News twenty four

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<v Speaker 10>hours a day, powered by more than twenty seven hundred

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<v Speaker 10>journalist analyst over one hundred twenty countries. I'm Michael Barrt.

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<v Speaker 10>This is Bloomberg, Nathan.

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<v Speaker 3>Thank you Michael, timing out for the Bloomberg Sports update.

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<v Speaker 3>Here's John stash Out.

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<v Speaker 10>Thanks Naythin.

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<v Speaker 13>Peter Alonzo had been mired in a deep slump, seemed

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<v Speaker 13>to come out of it last weekend in Boston with

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<v Speaker 13>five hits and at the stadium. Alonzo almost single handedly

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<v Speaker 13>powered the Mets the.

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<v Speaker 7>One drilled in the air to deep center Bayer going

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<v Speaker 7>back at the truck at the wall.

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<v Speaker 12>He can't get it.

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<v Speaker 4>It's gone. Hold on.

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<v Speaker 5>Peter Alonzo hits it off the screen in front of

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<v Speaker 5>the batter's.

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<v Speaker 14>Eye, right out at Monument Park.

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

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<v Speaker 13>Game on WCBS. At that point sixth inning, it was

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<v Speaker 13>Alonzo five and the Yankees nothing, as he had earlier

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<v Speaker 13>had an RBI single and a three run homer. The

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<v Speaker 13>next battle was Daniel Vogelbach he homer. Jeff McNeil drove

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<v Speaker 13>in the next three runs, all Mets nine to three.

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<v Speaker 13>Justin Verlanders six scorreless sittings for career win number two

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<v Speaker 13>forty nine Domingo Herman since that perfect game is zero

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<v Speaker 13>and two. Pitching matchup tonight. Jose Quintana Carlos Redon. Both

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<v Speaker 13>were offseason signings who were injured and have yet to

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<v Speaker 13>win for their new teams. Two athletes twenty six and

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<v Speaker 13>twenty five years old just signed five year contract extensions

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<v Speaker 13>worth a total of five hundred and sixty six million dollars.

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<v Speaker 13>Jaalen Brown gets a fully guaranteed three hundred and four

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<v Speaker 13>million from the Celtics, where he's not even considered the

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<v Speaker 13>best player on the team the Chargers. Justin Herbert, now

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<v Speaker 13>the fourth quarterback to be making over fifteen million a year.

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<v Speaker 13>The Saquon Barkley deal that was agreed to early yesterday

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<v Speaker 13>gives him the ten million dollar franchise tag number maybe

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<v Speaker 13>a million more with incentives. Pro Football Top reported that

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<v Speaker 13>before the agreement, Giants were looking into trading Parkley Lebron James'

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<v Speaker 13>son Brawni out of ICU in stable condition. The eighteen

0:09:58.200 --> 0:10:00.960
<v Speaker 13>year old suffered a cardiac arrest while working out at

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<v Speaker 13>USC where he'll soon be a freshman. Johns Stashan.

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<v Speaker 7>We're Bloomberg Sports.

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<v Speaker 14>From coast to coast, from New York to San Francisco,

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<v Speaker 14>Boston to Washington, DC, nationwide on SYRIASXAM, the Bloomberg Business app,

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<v Speaker 14>and Bloomberg dot Com. This is Bloomberg Daybreak.

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<v Speaker 3>Good morning. I'm Nathan Hager with the focus this morning

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<v Speaker 3>on big tech earnings. We have heard from Microsoft and

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<v Speaker 3>Google parent Alphabet. Both companies came in with beats on

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<v Speaker 3>the quarter and earnings and revenue, but it's a projected

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<v Speaker 3>slowdown in Microsoft's cloud business seems to be overshadowing a

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<v Speaker 3>lot of the excitement around artificial intelligence that has driven

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

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

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<v Speaker 3>when it comes to both these companies, it seems like

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<v Speaker 3>investors are focused more on the fundamentals rather than the

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<v Speaker 3>potential promise of rapid growth from AI down the line.

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<v Speaker 8>Yeah, exactly, Nathan.

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<v Speaker 15>So I mean, if we start with with Alphabet, I

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<v Speaker 15>think what's really telling in their numbers is that they

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<v Speaker 15>are still completely dominant when it comes to search advertising,

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<v Speaker 15>and Google Search is still the core of their business.

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<v Speaker 8>And there was a lot of noise in Silicon Valley

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<v Speaker 8>and also on Wall Street.

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<v Speaker 15>About how they may lose share of that online search

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<v Speaker 15>to the likes of Microsoft spaying because of AI applications.

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<v Speaker 8>But in the interim, while this is all very much like.

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<v Speaker 15>Something that will come potentially in the future, that could

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<v Speaker 15>they could be at risk. Firstly, Google is also still

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<v Speaker 15>investing in their own artificial intelligence products. And also when

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<v Speaker 15>it comes to where advertisers are looking to spend, there's

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<v Speaker 15>really no better reternal investment for them than the classic

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<v Speaker 15>Google search, which is where people are putting that money.

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<v Speaker 3>Is that part of what's behind some of the disappointment

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<v Speaker 3>we're seeing in the share price for Microsoft. There had

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<v Speaker 3>been this big increase in prices for some of the

0:12:11.920 --> 0:12:14.520
<v Speaker 3>AI products it was putting out there, and now we're

0:12:14.559 --> 0:12:17.839
<v Speaker 3>getting this sort of tep it out look, a disappointing

0:12:17.840 --> 0:12:20.719
<v Speaker 3>outlook when it comes to the cloud business that has

0:12:20.760 --> 0:12:23.240
<v Speaker 3>been so much of a driver of growth for all

0:12:23.280 --> 0:12:24.360
<v Speaker 3>these big tech names.

0:12:25.559 --> 0:12:28.040
<v Speaker 15>Yes, so the cloud business is still where a lot

0:12:28.080 --> 0:12:31.040
<v Speaker 15>of the energy for Microsoft is going. And when they

0:12:31.080 --> 0:12:34.520
<v Speaker 15>originally made that initial investment in open Ai, their cloud

0:12:34.520 --> 0:12:37.000
<v Speaker 15>business was a core part of that. They wanted to

0:12:37.040 --> 0:12:41.640
<v Speaker 15>see how AI could be integrated into the suite of

0:12:41.800 --> 0:12:42.920
<v Speaker 15>tools on Azure.

0:12:43.280 --> 0:12:44.920
<v Speaker 8>But the thing is is that.

0:12:44.840 --> 0:12:47.600
<v Speaker 15>Is something that Microsoft is very much billing as a

0:12:47.679 --> 0:12:52.240
<v Speaker 15>longer term strategy. And our people of Bloomberg Intelligence also

0:12:52.280 --> 0:12:57.240
<v Speaker 15>believed that Microsoft is currently better positioned than other cloud providers,

0:12:57.840 --> 0:13:01.080
<v Speaker 15>than Google, than Amazon when it comes to monetizing new

0:13:01.120 --> 0:13:04.560
<v Speaker 15>AI investments because they're really the initial players here. But

0:13:04.920 --> 0:13:08.600
<v Speaker 15>the problem is is in the interim they're making a

0:13:08.600 --> 0:13:14.160
<v Speaker 15>bet for something that may not come to bear out

0:13:14.160 --> 0:13:17.600
<v Speaker 15>in their earnings for another couple of quarters. So right now,

0:13:17.760 --> 0:13:21.280
<v Speaker 15>the sentiment around Microsoft is much more muted than Google.

0:13:21.320 --> 0:13:23.280
<v Speaker 15>That can turn around and say when it comes to

0:13:23.360 --> 0:13:27.280
<v Speaker 15>search advertising, when it comes to even YouTube advertising, that recovered,

0:13:28.080 --> 0:13:29.560
<v Speaker 15>we're still the dominant player.

0:13:30.280 --> 0:13:33.319
<v Speaker 3>Well, if we are seeing cloud growth slow for Microsoft,

0:13:33.360 --> 0:13:35.440
<v Speaker 3>at least in the interim, what does that say about

0:13:35.480 --> 0:13:37.480
<v Speaker 3>the potential demand picture for AI.

0:13:39.200 --> 0:13:39.920
<v Speaker 8>I think it's.

0:13:39.760 --> 0:13:42.640
<v Speaker 15>Difficult to say. At the moment, I'm not entirely sure.

0:13:42.800 --> 0:13:45.960
<v Speaker 15>When it comes to for instance, they seem to be

0:13:46.000 --> 0:13:50.240
<v Speaker 15>pretty positive about the longer term outlook at Microsoft. But

0:13:50.400 --> 0:13:54.760
<v Speaker 15>also when you're talking about AI, especially for enterprise applications,

0:13:54.880 --> 0:13:57.079
<v Speaker 15>so much of that is also part of a broader

0:13:57.120 --> 0:14:01.320
<v Speaker 15>market sentiment. I also, for instance, in Germany cover SAP,

0:14:01.600 --> 0:14:04.920
<v Speaker 15>which is also very conscious that right now we're trying

0:14:04.920 --> 0:14:07.000
<v Speaker 15>to get people to move to the cloud, to leave

0:14:07.040 --> 0:14:09.480
<v Speaker 15>on premise systems and go to the cloud because that's

0:14:09.520 --> 0:14:12.040
<v Speaker 15>where they see the future of their system. And just

0:14:12.080 --> 0:14:14.760
<v Speaker 15>as with Microsoft, the problem is is trying to get

0:14:14.960 --> 0:14:19.040
<v Speaker 15>enterprise customers to buy into big cloud contracts at the

0:14:19.120 --> 0:14:24.120
<v Speaker 15>moment when there's not a huge amount of visibility about

0:14:24.160 --> 0:14:27.760
<v Speaker 15>how the economy is developing. We're talking about rape decisions

0:14:27.760 --> 0:14:30.240
<v Speaker 15>from the FED and the ECB today as well. All

0:14:30.280 --> 0:14:33.480
<v Speaker 15>of that plays in to these sort of customers that

0:14:33.560 --> 0:14:37.000
<v Speaker 15>are very enterprise focused, and these deals need to take

0:14:37.040 --> 0:14:39.680
<v Speaker 15>a longer time for them to convince these enterprise customers

0:14:39.720 --> 0:14:41.960
<v Speaker 15>to come on board. And so yes, there does seem

0:14:41.960 --> 0:14:44.640
<v Speaker 15>to be a lot of potential for their AI to

0:14:44.720 --> 0:14:47.320
<v Speaker 15>bring on new customers, but I think in the current

0:14:47.360 --> 0:14:50.360
<v Speaker 15>market environment, the macro market environment, there's.

0:14:50.200 --> 0:14:52.320
<v Speaker 8>Still a lot more convincing that needs to be done.

0:14:52.600 --> 0:14:54.880
<v Speaker 3>Just about thirty seconds left here, Aggie, we're waiting for

0:14:54.960 --> 0:14:57.880
<v Speaker 3>results from Meta Platforms later on this afternoon. Is AI

0:14:57.960 --> 0:15:00.480
<v Speaker 3>going to be the big focus there as well?

0:15:00.680 --> 0:15:02.560
<v Speaker 15>Yes, AI is going to be a big part of

0:15:02.720 --> 0:15:05.680
<v Speaker 15>Meta's conversation as well. Of course, they recently announced their

0:15:05.720 --> 0:15:09.280
<v Speaker 15>own suite there, and I'm expecting that analysts will meant

0:15:09.320 --> 0:15:11.400
<v Speaker 15>to know a lot more about that from them. I'm

0:15:11.440 --> 0:15:14.440
<v Speaker 15>also curious to see how their advertising spend does well,

0:15:14.760 --> 0:15:19.120
<v Speaker 15>because we saw, for instance, contradictory to Google managing to

0:15:19.160 --> 0:15:22.000
<v Speaker 15>recover a lot of its ads spend. Snap for instance,

0:15:22.240 --> 0:15:25.040
<v Speaker 15>had projected revenue in this current quarter that was much

0:15:25.120 --> 0:15:28.160
<v Speaker 15>lower or at the lower end of what analysts were estimating.

0:15:28.440 --> 0:15:31.480
<v Speaker 15>So I'm keen to seeing where the AdSpend goes for

0:15:31.560 --> 0:15:32.280
<v Speaker 15>Meta as well.

0:15:34.160 --> 0:15:37.240
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