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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Good morning.

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Speaker 3: I'm Nathan Hager and I'm Karen Moscow. Here are the

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Speaker 3: stories we're following today.

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Speaker 2: Karen, we begin with retaliation in the Middle East.

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Speaker 4: The US has hit dozens of Iranian targets in a

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Speaker 4: two hour operation following Iron's surprise ballistic missile attack on

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Speaker 4: a US basin Jordan this week. President Trump had warned

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Speaker 4: the US would be hitting Iran quote very hard. Israeli

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Speaker 4: Prime Minister Benjamin Netanyah, who says he stands behind the president.

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Speaker 5: We're partners, we're allies. He's the senior partner. It's the

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Speaker 5: United States of America. Let's not forget. And I'm a

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Speaker 5: junior partner. But I'm the Prime Minister of Israel, and

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Speaker 5: when I have to stand up for the interests of

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Speaker 5: my country and the security of my country, I do so.

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Speaker 4: Israeli Prime Minister Benjamin Netanyah, who's spoke in an interview

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Speaker 4: with ABC News. We get the very latest from Bloomberg

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Speaker 4: Middle East correspondent to Birabu Omar in Dubai.

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Speaker 6: The US military did strike military targets, it stopped short

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Speaker 6: of targeting bridges, civilian infrastructure. So for the time being,

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Speaker 6: we're still seeing measured attacks on both fronts by Iran

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Speaker 6: and by the United States, but definitely not a positive

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Speaker 6: sign because we're seeing an escalation. That ceasefire that was

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Speaker 6: signed with a temporary ceasefire that was signed in Switzerland

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Speaker 6: seems to be a think of the past now.

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Speaker 4: Sein Bloomberg Sabier Albert Omar reports two liquefied natural gas

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Speaker 4: tankers were hit with drones off Egypt's Mediterranean coast around

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Speaker 4: the same time as the US attacks.

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Speaker 2: There has been no claim of responsibility well, Nathan.

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Speaker 3: As the war takes a toll on the US weapons stockpile,

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Speaker 3: the Defense Department announced two massive contracts worth about one

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Speaker 3: hundred and thirty five billion dollars to major US defense companies.

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Speaker 3: The Army reported a fifty nine billion dollar agreement with

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Speaker 3: Lockheed Martin to bolster production of Patriot interceptors. At the

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Speaker 3: same time, the Pentagon on veil contracts worth as much

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Speaker 3: as seventy six billion dollars for General Dynamics and Hunting

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Speaker 3: Engel's industries to expand construction of the US's top nuclear submarines.

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Speaker 4: It'sjern of the economy now Karen Bond investors are sending

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Speaker 4: a message following the Federal Reserves decision to keep interest

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Speaker 4: rates unchanged and the news conference from.

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Speaker 2: FED share Kevin Walsh.

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Speaker 4: We get the latest from Bloomberg's John Tucker, John and Nate.

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Speaker 7: It's not a good message. The market's questioning Worsh's credibility.

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Speaker 7: Investors sent the long bond yield to a nineteen year high,

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Speaker 7: stocks tumbled, the Dow falling over one thousand points. It's

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Speaker 7: because the worst FED didn't move even as Worsh acknowledged

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Speaker 7: an inflation problem.

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Speaker 8: Inflation remains elevated relative to the committee's two percent goal.

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Speaker 2: The committee remains resolute.

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Speaker 8: You've heard this before, but we will deliver price stability.

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Speaker 7: If there is an inflation problem. Towards the slocket Apollel

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Speaker 7: management is like a lot of investors asking this question.

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Speaker 2: Well, what are we waiting for?

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Speaker 4: We didn't get the answer for what executed are we

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Speaker 4: waiting for?

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Speaker 9: Which was, of course, was a certain way to try

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Speaker 9: to get some forward guidance.

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Speaker 7: Doesn't help Ors's credibility that three members of the Fed's

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Speaker 7: Open Market Committee dissented. If Worsh can take away any solace,

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Speaker 7: maybe it's from the fact that he hasn't been skewered

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Speaker 7: yet by President Trump. Inflation, by the way, has been

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Speaker 7: running above the FEDS target for five straight years. In

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Speaker 7: the New York Home John Tucker, Bloomberg Radio.

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Speaker 4: Let's turn two the equity markets now, Futures are higher

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Speaker 4: following a pair of big tech earnings start With Microsoft,

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Speaker 4: those shares are up more than seven percent in early trading.

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Speaker 4: The company's cloud unit grew forty three percent, its fastest

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Speaker 4: clip in four years, and that pace is accelerating. Analysts

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Speaker 4: say that suggests Microsoft's AI and computing services are making

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Speaker 4: inroads with customers. On the earnings call, Ceosachia Nadella told

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Speaker 4: analysts the company.

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Speaker 2: Is quickly increasing its data center capacity.

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Speaker 10: But also bringing capacity online faster than ever. Over the

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Speaker 10: last fiscal year, we've reduced doctor lifetimes for new GPUs

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Speaker 10: in our largest regions by nearly fifty percent. All up,

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Speaker 10: we add in a none of the gigawatt of capacity

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Speaker 10: this quota and remain on track to roughly double our

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Speaker 10: overall capacity in just two years.

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Speaker 4: And Ceosatynadela also indicated Microsoft would hold the line on

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Speaker 4: new capital spending this year well.

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Speaker 3: On the flip side Nathan shares a Meta They're down

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Speaker 3: almost nine percent. The Facebook and Instagram owner gave a

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Speaker 3: disappointing quarterly revenue forecast, and that's stepping up pressure on

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Speaker 3: CEO Mark Zuckerberg to ease investor concerns that the company

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Speaker 3: is not swiftly benefiting from its massive outlay on artificial intelligence.

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Speaker 3: Zuckerberg spoke on the company conference call.

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Speaker 11: Our investments at AI are accelerating every major part of

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Speaker 11: our core business. They're improving the experience for people using

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Speaker 11: our apps, driving better performance for advertisers, and helping our

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Speaker 11: teams build new experiences and ship faster. Second, we are

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Speaker 11: developing new personal agents that will be the foundation for

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Speaker 11: our next wave of products and revenue lines in the

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Speaker 11: months and years ahead.

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Speaker 3: Mark Zuckerberg and Meta reported its lowest free cash flow

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Speaker 3: in years, assign a ballooning expenses for AI bets, which

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Speaker 3: could amount to one hundred and forty five billion dollars

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Speaker 3: this year.

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Speaker 4: We also got some earnings in Asia Karen, including a

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Speaker 4: blowout quarter for Samsung Electronics. South Korea's largest company posted

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Speaker 4: a two hundred and fiftyfold surge in chip profits. Samsung

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Speaker 4: now expects memory shortages to worsen next year, reflecting the

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Speaker 4: relentless pace of the global AI infrastructure build out. We

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Speaker 4: get more from Bloomberg's Soul Bureau chief Cat Barton.

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Speaker 9: It was an absolutely historic quarter for them, record profits

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Speaker 9: for their semiconductive division. Obviously, their mobile phones and their

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Speaker 9: other electronics didn't.

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Speaker 3: Do quite so well.

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Speaker 9: They actually tipped into a loss, but the semiconductors are

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Speaker 9: doing so outlandishly well that it's carrying the whole company

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Speaker 9: at this stage.

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Speaker 2: That's Bloomberg's Cat Barton.

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Speaker 4: And despite the blowout, Samsung shares fell almost three percent.

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Speaker 3: Nathan, the big tank earnings continue today. Both Apple and

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Speaker 3: Amazon report after the closing bill, and we get a

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Speaker 3: preview with Bloomberg's Tom Busby.

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Speaker 12: Apple is expected to order another blowout quarter for sales

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Speaker 12: of iPhones and other gadgets, despite raising prices because of

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Speaker 12: a memory chip shortage. Services like Apple Music and iCloud

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Speaker 12: also expected to see gains. At Amazon, the big focus

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Speaker 12: is the Amazon Web Services cloud computing unit, but investors

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Speaker 12: will want an update on the billions being spent on

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Speaker 12: artificial intelligence and how it's AI development compares with Alphabet, Microsoft,

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Speaker 12: Meta and others. At Apple, Bloomberg consensus calls for revenue

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Speaker 12: of one hundred eight point eighty five billion dollars on

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Speaker 12: Ernix per share of a dollar eighty nine. At Amazon,

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Speaker 12: Bloomberg consensus calls for revenue of just over one hundred

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Speaker 12: and ninety seven billion dollars on Ernix per share of

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Speaker 12: a dollar eighty three. Tom Busby, Bloomberg Radio.

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Speaker 4: Okay, Tom, thanks, Let's turn to what's happening in Washington,

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Speaker 4: DC now on Capitol Hill. The Senate committee that's considering

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Speaker 4: Todd Blanche to be the next Attorney General abruptly called

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Speaker 4: off its confirmation vote last night. Two Republican senators are

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Speaker 4: still holding out support. One of them is Tom Tillis

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Speaker 4: of North Carolina. He says he wants Blanche to meet

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Speaker 4: with Jeffrey Epstein's victims.

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Speaker 13: For mister Blanche was willing to say that he would

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Speaker 13: meet with them and counsel. I understand the restriction of

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Speaker 13: the council has to be president. I expect that meeting

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Speaker 13: to occur before I'm willing to vote out of this committee,

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Speaker 13: and I'm trying to get to yes. But this is

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Speaker 13: a very important part of getting to yes.

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Speaker 4: Senator Tom Tillis spoke during last night's hearing on Blanche's nomination.

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Speaker 4: The other hold out, Republican John Cornyn, says he wants

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Speaker 4: changes to President Trump's settlement with the IRS over the

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Speaker 4: twenty nineteen league of his tax returns. Cornan wants to

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Speaker 4: ensure any bans on investigations into the President or his

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Speaker 4: businesses only apply to the Tax Agency and not the

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Speaker 4: Justice Department.

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Speaker 3: Well elsewhere on Capitol Hill, Nathan doctor Anthony Fauci declined

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Speaker 3: to testify in a Senate hearing on his role in

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Speaker 3: the US response to COVID nineteen and booking his Fifth

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Speaker 3: Amendment rights and Bloomer's. Amy Morris has details on the

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Speaker 3: volatile hearing from Washington.

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Speaker 2: I said said quietly, you are not recognized. Another word

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Speaker 2: and you're gone.

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Speaker 14: Republican Senator Rand Paul threatning to have Fauti's attorney removed,

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Speaker 14: which he eventually did, for trying to speak during the

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Speaker 14: hearing when he was not recognized. Fauci, in his opening remarks,

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Speaker 14: said the hearing was designed to push him into saying

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Speaker 14: something incriminating.

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Speaker 15: The only conclusion I can reach is that the sole

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Speaker 15: reason he is calling me before this committee is to

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Speaker 15: get me to say something anything that could vindicate his

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Speaker 15: repeated public pledges that I end up in his words

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Speaker 15: behind bars.

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Speaker 14: Senator Paul denied Fauci's assertion of privilege and said there

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Speaker 14: would be repercussions for not answering the questions. In Washington,

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Speaker 14: Amy Morris, Bloomberg Radio.

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Speaker 4: Amy, thanks and this programming no Bloomberg Radio is introducing

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Speaker 4: a new feature exclusively for subscribers at Bloomberg dot com

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Speaker 4: and our terminal clients. You can help shape our conversations

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Speaker 4: by submitting questions for our analysts and experts to answer

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Speaker 4: live on air. Subscribers can go to Bloomberg dot com

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Speaker 4: slash Ask Radio to send in those questions, and you

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Speaker 4: may just hear the mask on air. That's Bloomberg dot

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Speaker 4: Com slash Ask Radio.

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Speaker 3: Time now for look at some of their stories making

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Speaker 3: news in New York and around the world, and for

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Speaker 3: that were joined by Bloomberg's Michael Barr Michael, Good Morning,

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Speaker 3: Good Morning Karen.

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Speaker 16: In Massachusetts, Patrick Clancy took the witness stand to testify

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Speaker 16: in the murdered trial of his former wife, Lindsay. She

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Speaker 16: is accused of killing the couple's three young children in

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Speaker 16: their Duxbury home. In twenty twenty three, Patrick Clancy admitted

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Speaker 16: his wife struggled with depression before the murders.

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Speaker 11: Lindsay's mental health started to deteriorate.

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Speaker 5: And when you say that, sir, what is it that you,

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Speaker 5: as her husband, observed.

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Speaker 2: Just increased stress and anxiety.

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Speaker 16: Lindsay Clancy's lawyer says that she had killed her children

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Speaker 16: because she was suffering from severe postpartumental illness. Prosecutors say

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Speaker 16: she planned the killings. Hope is dwindling for any rescue

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Speaker 16: in southwestern Japan after Tuesday seven point one magnitude earthquake.

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Speaker 16: Reports say the death toll for now is New York

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Speaker 16: Governor Kathy Hockel says she's committed to getting it right

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Speaker 16: when it comes to the future of data centers in

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Speaker 16: the state and the nation. Hockel held a roundtable event

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Speaker 16: in Monroe County, joined by business and local leaders and

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Speaker 16: residents voicing concerns over protecting the environment and the energy grid.

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Speaker 2: Every part of the state is a different perspective.

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Speaker 16: In the capital region, we heard from business leaders and

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Speaker 16: local officials, environmental advocates, and.

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Speaker 2: Organized labor Long Island. The focus was on water.

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Speaker 3: Water is a more limited resource around Long Island, New.

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Speaker 16: York, wants to block building large data centers for up

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Speaker 16: to a one year. Global news twenty four hours a

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Speaker 16: day and whenever you want it with Bloomberg News Now

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Speaker 16: Now Michael barn this is Bloomberg, Karen.

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Speaker 3: Thanks Michael, all time now for our Bloomberg Sports update,

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Speaker 3: and for that we bring in John stash Hour.

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Speaker 16: Thanks Karin.

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Speaker 17: The baseball trade deadline comes on Monday, and then they

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Speaker 17: may keep hearing about is Detroit Tigers ace pitcher Tarrek Scouobell,

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Speaker 17: two time winner of the Cy Young Award. He started

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Speaker 17: yesterday in a Tiger game against Baltimore got a standing

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Speaker 17: ovation from Detroit fans because he may well get traded

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Speaker 17: before the deadline. San Jose Sharks have locked up their

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Speaker 17: twenty year old star Maclin Celebrini with a five year

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Speaker 17: extension with ninety four million dollars. That's your Bloomberg Sports update.

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Speaker 3: Stay with us. More from Bloomberg day Break coming up

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Speaker 3: after this.

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Speaker 1: Coast to coast on Bloomberg Radio, nationwide on Sirius XM,

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Speaker 1: and around the world on Bloomberg dot Com and the

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Speaker 1: Bloomberg Business app. This is Bloomberg Daybreak.

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Speaker 4: Good morning, I'm Nathan Hager. It is a tale of

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Speaker 4: two markets this morning. After a couple big tech names

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Speaker 4: reported earnings. Microsoft is soaring, Meta platforms sinking, and long

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Speaker 4: bonds are near their highest levels in nineteen years after

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Speaker 4: the Fed decided to keep interest rates on hold. Here

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Speaker 4: to help us make sense of what's happening in this

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Speaker 4: market this morning is Bloomberg Managing Editor Dan Curtis. Dan,

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Speaker 4: let's start off with Microsoft. Is it all about the

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Speaker 4: spending reining in? Apparently the spending for Microsoft? Good morning,

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Speaker 4: Good morning, that's right, So it's not.

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Speaker 8: It's the shares are up eight percent in the pre market,

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Speaker 8: and the company is raining and spending. But on a

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Speaker 8: very important note, is also monetizing on the spending that

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Speaker 8: it's putting out. So, just to put some numbers into context,

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Speaker 8: Microsoft's operating expenditures rose ten percent for a year on

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Speaker 8: year for the last quarter, and its free cash flow

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Speaker 8: was still twenty billion dollars. So the companies spent forty

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Speaker 8: one billion dollars in capex and Wall Street was expecting

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Speaker 8: a bit more than that. So again Microsoft spending a

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Speaker 8: bit less than Wall Street was estimating, but still beating

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Speaker 8: on the revenue.

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Speaker 2: A Zora growth, which is key to reading.

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Speaker 8: In on its AI performance, was up forty three percent

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Speaker 8: on the quarter, while of the best quarters in years,

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Speaker 8: and the annual revenue for that segment topped one hundred

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Speaker 8: billion dollars for the first time ever. The unit is

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Speaker 8: seeing efficiency gains, capacity delivery with demand still exceeding supply,

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Speaker 8: so a very strong story from the AIS side. There

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Speaker 8: also Copilot, another AI tool, paid seats for that more

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Speaker 8: than doubled sequentially to over thirty million, and user satisfaction

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Speaker 8: scores also doubled, so it's starting to see its AI.

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Speaker 8: It's AI strategy paying off here with capital expenditures that

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Speaker 8: are coming in lower than expected, and for the full year,

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Speaker 8: it's seeing capex of one hundred and seventy five billion dollars.

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Speaker 8: That's less than one hundred and ninety billion dollars of

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Speaker 8: the previous forecast. So again, this company is starting to

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Speaker 8: see revenue, starting to see monetization, and it's not spending

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Speaker 8: as much as Wall Street was expecting.

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Speaker 4: Is it an opposite side of the coin then, and

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Speaker 4: when it comes to what we got from Meta.

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Speaker 8: Yeah, basically, I mean those shares are down nine percent

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Speaker 8: in the pre market. The company reported its lowest free

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Speaker 8: cash flow in years, just around two billion dollars on

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Speaker 8: the ballooning expenses of its AI bets. Third quarter revenue

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Speaker 8: is seen coming in at sixty one to sixty four

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Speaker 8: billion dollars. The midpoint of that is softer than estimate,

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Speaker 8: raising the capex outlook and the revenue is not quite

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Speaker 8: what Wall Street was looking for. The twenty twenty six

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Speaker 8: full year expenses were raised to one hundred and sixty

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Speaker 8: five billion to one hundred and sixty nine billion dollar range,

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Speaker 8: not just capex but also higher costs due to legal proceedings. Now,

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Speaker 8: zu Zuckerberg is looking towards the future where AI agents

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Speaker 8: carry out tasks twenty four to seven for customers. The

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Speaker 8: build is expensive and the revenue isn't supporting the company yet.

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Speaker 8: He's also been exploring a new cloud business to run

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Speaker 8: out compute. He said, quote there's just nowhere near enough

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Speaker 8: compute for all of the demand. That said, it looks

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Speaker 8: like Meta doesn't need all that demand, So that could

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Speaker 8: also be a little bit of pressure for investors saying, well,

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Speaker 8: if there's a demand for compute, why aren't you using

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Speaker 8: it and why are you renting it out?

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Speaker 4: Just thirty seconds left here, Dan, But after the Fed

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Speaker 4: decided to keep interest rates on hold, it seems like

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Speaker 4: bond investors are disagreeing this morning.

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Speaker 2: That's right.

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Speaker 8: So we have the thirty year yield at the highest

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Speaker 8: level in decades, and a large portion of that's coming

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Speaker 8: from the tips rate. So the premi over kind of

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Speaker 8: the inflation outlook. So there's a lot of question marks

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Speaker 8: as to how much conviction Warsh has to fighting inflation.

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Speaker 8: As you said, the Fed has held three members assented

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Speaker 8: in favor of a hike, and Warsh said that the

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Speaker 8: bond market had done some of the Fed's work with

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Speaker 8: the tightening there. So markets walked away with that one,

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Speaker 8: you know, on the FED decision itself, Markets and moved

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Speaker 8: much during the conference was what really sparked move.

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Speaker 2: And I'm Nathan Hager.

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Speaker 4: Join us again tomorrow morning for all the news you

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