Meta Earnings Report | Bloomberg Markets: The Close 4/24/2024
All right. Big tech doing everything they can to boost the market, but the rest of the stocks doing their best to drag it down. Live from studio to who at bloomberg headquarters in New York, I'm Romaine Bostick and welcome to the horsetrading. I am carol again. And i'm katie greifeld in for Alix Steel. Thrilled to be here. It's nice to see you.
I know, I know. It's been a long time. A couple of months. Let's get to the closing bell and what's going on right now in the market, because it's interesting, even though we have the two problem children out of the way, Boeing and Tesla, you're not seeing much love for the big benchmark right now. The S&P 500 down to the tune of about 2/10 of a percent. It's slightly better if you take a look at big tech, but only slightly because you take a look at the Nasdaq 100. Right now, it's pretty much unchanged on the day. Of course, we are counting down to some
big earnings after the bell, which, of course, Romain, we'll get to. Let's take a look at the small cap index just for fun. This is your laggard today. The Russell 2000 currently off by about 7/10 of a percent. So those small companies not really
doing too hot today. And let's take a look at the bond market, that five year yield, it's actually a bit higher right now, about four basis points. Of course, we had an auction earlier today at 1 p.m., wasn't too well-received after yesterday's blockbuster so yields a bit higher. Ramon.
Yeah, yields a bit higher here on the day. But we go back to the equity markets and really kind of a tale of two markets, if you will, with big tech actually logging some pretty decent gains led by Tesla, Apple and Texas Instruments. In fact, one of the biggest boost to the market today is actually coming from those chip stocks, which as a group entered a technical correction last week. Now they're clawing back some of those losses this week, rallying almost 6% over three days. Richard Clode, a fund manager over at
Janus Henderson, he told Bloomberg earlier he actually sees early green shoots in that space, really appearing in a lot of those pockets of the chip industry that had gotten particularly hit hard. Texas Instruments having its best day going back to 2022. They gave a revenue forecast last night that did indicate that that slump in demand may be easing. And the Dutch chip equipment maker RSM International rally 11% after reporting strong quarterly order intake. But not everyone is on board with the latest rally in the tech space there.
UBS strategists say the sustained performance of the chip sector has now led to decade high premiums, and that prompted a downgrade of tech heavy markets in Taiwan and South Korea down to neutral. But here's the rub They upgraded the MSCI China index to overweight. Now, that's a rare boost in sentiment for that market this year amid signs that there is a pickup in consumption and the possibility that that hoard of household savings that Chinese households have been holding onto will finally start to flow back into the economy. That call part of a rotation that we've been seeing back into China stocks as allocations tick up for the second month in a row. Goldman Sachs strategist even more bullish, saying onshore Chinese shares have the potential to climb about 20%, partly on the back of support from the Chinese government. All right.
Well, the renewed optimism there and even here in the U.S. could get another boost later today. Katie, with the latest spate of earnings after the bell tonight, including from the social media giant Medha Mehta. $36 billion in advertising revenue is what they're expected to have generated last quarter. Are you ready? I am so ready. They asked me if I wanted to anchor today. I said with Romain, I'll let our
earnings absolutely. Take a look at this chart behind me. Metta has been dominant in the stock market this year. Coming off of that year of efficiency measures currently higher by almost 40% year to date. You take a look this purple line, this is actually the Nasdaq 100, the big tech benchmark. It's only higher by 4% so far in 2024. So you can see really, Metta has really
put in a lot of work. You compare that to some of its peers. This doesn't even feel fair. You're taking a look at snapshot. You take a look at Pinterest, you can see we're looking at double digit losses and then some for both of those social media companies.
So the stakes are very high heading into these meta earnings. And as you can see, there is a lot of daylight between Metta and everyone else. Absolutely. Here, let's kick things off to the close here on this Wednesday afternoon to look ahead to what happens after the bell, which shall be McFayden, senior analyst over at Motley Fool Asset Management. Our research helps us support a lot of the stock decisions that they make over there. And Shelby, I do want to start off with big tech, and particularly with Metta and whether you actually find some real value there, considering how far and fast that stock has gone over the last few months.
Absolutely. You know, when we look at a sort of fundamental perspective of what is the quality of the business, then yes, we can find value in the fact that Zach has absolutely showed up in what we call that say do ratio, where they say they're going to go ahead and make those cuts and drive that efficiency. And they're starting to do that. They're showing signs of being a mature company. Now, on valuation, we believe that it has clawed back a lot of what it lost in 2022. And so that was something that we capitalized on, was seeing what we felt was something in the business that they could get ahead of the pack. There was. That potential that they really ran ahead of the group with those early investments. And that is starting to show a bit.
It's imperfect, but it is showing. So that duration still a little bit frothy. But overall, though, when you say showing, I mean you actually seeing some of that benefit, I mean, because it's been kind of difficult to get a read as to where all this money has gone in terms of the money spent and whether that's actually translated into revenue growth or more importantly, profit growth. I mean, we know what stock is doing. We've seen the pictures of him looking cool for a once in his lifetime here. But does that actually contribute to the bottom line? Sure.
So. Well, I wouldn't necessarily lead with saying that it's been clear up front to the T every single investment. What I would say is they were much better positioned when it came time to show that they might actually have something to work with what investors were saying. So generative A.I. what's your plan? They didn't have to go and build out a new business unit. They had already started some of that investment. They did need to curtail some of that investment because some of it was leading down to patterns of nowhere.
But they did still have that sort of foundation that other companies have had to build out. So we saw that ASC metal launch this week. A little bit weak, maybe not as well as they expected it to go, but having that foundation definitely sets them ahead of some of the other peers that are not only trying to get a hold of chips, but trying to figure out quite what they want to do with them.
Well, you talk about parts of investment that kind of led to nowhere. Should we talk about the metaverse? You remember, of course, when Meta rebranded and made a huge splash. Now you really don't hear much about it. It's a company really leaning full force into A.I.. I mean, is that something when you're listening to the analyst calls? Of course, the call, the earnings call coming up this afternoon that you want to hear about. You know, I think in some ways it can be
a good sign that we don't hear as much about it because that it does mean that management has been upfront and stern about saying this is behind us now. Now, that doesn't mean that the bill doesn't come through. Right? So they did have to sort of bear the brunt of any of those share price declines and sort of any loss of confidence from investors. But in some ways, it means that they
have been able to go ahead and recoup what they did lose and move forward. So I think in some ways it is positive. I think it's something that's not as much brought up because what is lost is lost on those projects. And so the question is, have they committed to leaving that sort of, you know, a little bit less fruitful investment behind? And so far, that's been. Yes. And are they committed to being more efficient? And so far, that's been. Yes. So I think it only gets brought up if they revert to their old path.
And I always wonder, maybe they should have waited to change the name. But that's a different point. But what do you think about how the stock has performed as we showed up nearly 40% year to date, then you compare it to other social media companies. It's just we're we're having two different conversations. Should we still be thinking about media? Should investors be thinking about Metta as a social media company, or is this just another tech play? Well, what's interesting is that when we think about the social media companies, we're essentially thinking about advertising companies, right? It's something that doesn't seem so obvious at first. But when we think, how do they drive revenue on these free products and why is it that digital advertising in Consumer Reports, you know, consumer sentiment, how is that linked to how these social media companies are performing? It's because of the ad revenue.
And so what we're seeing is that the sort of universe and the conglomerate of platforms that Meta had developed, you know, earlier on, they are now able to leverage them across generations. They're able to go ahead and work with various brands and companies to really finely tune where they're sending their ads. I mean, it is becoming incredibly targeted. And so when you've had that sort of foundation just building up, it does set you apart from other social media companies. So they are looking more and more like an ad business. But that's what social media is meant to
be. Who can run the best ads? Absolutely. And of course, the majority of their business right now still in that ad space shall be great conversation. Shelby McFadden, senior analyst over at Motley Fool Asset Management, helping us kick off to the close and with better earnings on deck after the bell, a good excuse to talk about advertising revenue and the evolution of the ad business. The conversation coming up in just a bit with a legend in that space, Lord Laurie Saatchi. Plus, Speaker Johnson heading to Columbia University to move her remarks as process over the Israel-Hamas conflict sweep across college campuses. We'll have the latest.
And of course, we continue our eyes on the market here. In addition to Metta, a fresh slate of earnings from a lot of other big companies as well. That includes Ford, that includes IBM and it includes Chipotle. A full market coverage coming up here
right on the close on Bloomberg. And. Spring season is here. I think we're all asking the same
question just how much earnings growth we're expecting. Bloomberg is first to break the numbers. Iliad is coming out right now. We have talked to a number of shares of pinterest lucid group coming out with its earnings. All eyes right now on nvidia. A lot still to come with the smartest insights how much bigger could profit and revenue have been better than what the street was expecting? Bang in line with estimates. We will have full and instant analysis. Continuing coverage on Bloomberg Context changes everything. Well, tensions on the campus of Columbia University continuing today.
This after talks to resolve a standoff between pro-Palestinian demonstrators and officials at the university were extended after the midnight deadline passed. Republican House Speaker Mike Johnson is visiting the school today to deliver remarks and meet with Jewish students. Balance of Power cohost Joel Matthew joins us now with the latest. And Joe, what is Speaker Johnson trying to accomplish with this visit? Why is he there? It's a great question. I mean, his office says he's delivering a message here that anti-Semitism should not be accepted on college campuses, but he's going even further to call for Columbia's president to resign. And we've heard that same call from the Republican congressional delegation in the state of New York.
Democrats who have also visited the campus have been calling for disciplining students who are found guilty of anti-Semitic behavior. So there's a little bit of a line there. He is apparently going to take some questions. There will be a news conference remembering that this is a speaker of the House is trying to rebuild some goodwill with some conservative members of his Republican conference in the House following this big debate around funding for Ukraine and for Israel. That's also why this is top of mind. He just cleared $20 billion for Israel
that the president remains signed today. Okay. Well, good for him. He could have cleared that months ago. I am curious, this is a long way from Washington, Columbia University, right here in Manhattan, New York. It's a long way from Louisiana. There are protests going on around the country.
Why did he pick Columbia? Look, that's a great question. And it is really kind of the microcosm of this story. We're seeing University of Southern California, big protests, Yale, of course, But this really has become the spot here in New York.
He's going to be bringing a couple of members of the delegation with him. By the way, Congressman Despacito, Congresswoman Malliotakis will be with them, both Republicans from New York. But he's getting criticism here, Ramon, for showing up at all the heavy hand of the speaker of the House, showing up at a private institution, suggesting how they do their business. Will there be an answer from Washington? Is this about legislation? I don't have an answer for you on that. Beyond the fact that he is going to get
on the news tonight talking on this campus. So there's a lot of messaging going on here. I'm not sure anything about policy. Well, he's not, of course, the only
politician to visit Columbia. I know that you spoke to Representative Cathy Manning, who visited the campus on Monday. What did you learn there? Yes, she described a pretty scary scene. She, along with other members of the House, visited the campus Monday and Tuesday. They spoke with Jewish students who
described being intimidated, who talked about a hostile environment. Of course, they've gone to hybrid classes as a result of all of this. But one thing she pointed to was the great concern as you walk around that campus of the risers that are being erected right now for the soon to be held graduation ceremony, guys, that's May 15th. And there are great concerns about what's going to happen, what security is going to look like, not just on Columbia's campus, but campuses all over the country this spring. It's something to think about as we go through the next couple of weeks. All right.
Well, all right, Joe, Matthew, Don, our co-host of Balance of Power. A closer look there at some of the protests going on here in New York at Columbia University. I'd be remiss in not pointing out these protests also going on around the country. Coming up here, Bank of America affirming its positive view on Apple, calling it a top pick for 2024. We're going to get some analysis on just why. That's coming up next right here on the close on Bloomberg.
All right. Let's get a view from the sell side with our top calls, the big movers on the back of analysts recommendations. And we start with Molson Coors City downgrading to sell and cutting the price target to a street low, $56 a share. The analyst says early April industry data suggesting sales and volume trends for the company's beer brands have turned negative. That would actually follow a record year when the beer maker benefited from the marketing controversy around its competitors Bud Light brand. The share is nevertheless pretty much unchanged on the day.
Next up, let's take a look at Airbnb, an upgrade today to buy. Over at Mizuho analyst James Lee, a bit giddy about the potential launch of sponsored listings on the peer to peer travel platform. He says it could drive double digit even upside in the long term.
That's in addition to the share gains expected short term from the Summer Olympics in Paris. Though shares moving fractionally higher on the day. And finally, let's take a look at super microcomputer. A sector weight rating over at KeyBanc Capital, which starts coverage with an eye on the IT company benefiting from secular AI growth trends. Analyst Tom Blakeley says one of the factors holding him back from a buy equivalent view is because Supermicro has a bit of a lack of visibility right now into supply and demand metrics. Nevertheless, the phenomenal run you can see for the stock trading at 751, giving back just about a percent and a half on the day.
And those are some of our top calls that we do want to stay in the tech space, say in the sell side space as well. And take a look at Apple. They don't report earnings for another week here, but the shares have actually gotten a pretty decent boost over the last few days as investors gear up for that earnings report. Analysts over at Bank of America, they actually say Apple is a top pick for 2024 and expect strong revenue and margin growth when it reports Vamsi Mohan. Joining us right now. He's hardware analyst at Bank of America
and he has a buy rating on the shares. All right. Well, I want to kind of push forward to what the catalyst is, because there's been so much obsession over iPhone numbers and whether we're going to see this big drop based on the numbers we're getting out of China. But Apple's got a bunch of events coming up over the course of the year.
And I'm wondering how much those events, if at all, have already been priced into the stock. You know, thanks for having me. Good afternoon. Look, I really don't think any of it is really priced in. What we've seen so far is a fairly negative reaction in the stock on a relative basis, in absolute basis. And this has really come on the heels of some of the concerns both with, you know, Europe, DMA, you know, DOJ investigation, you've got the DOJ investigation against Google.
You've got so many things going on on top of the data points that you mentioned that were coming out of China as well. I would just like to remind everyone that Apple reported back in January and they knew what China was looking like, that amount of data. And from what we track, we actually see the China data points actually improving month over month as well. So we actually think that relative to guidance, Apple is going to beat its quarter. The guidance could be a little bit softer for the June quarter, but that's not really where we want to focus. What we want to focus on is this
upcoming notion of a much stronger cycle that's going to be driven really by generative AI at the edge for the iPhone as a device where you know that Apple has the best information of everyone on their phones. Why, why, why don't you think? WALMSLEY We have not heard much more of an articulation by Apple executives about that strategy. I mean, we've heard from every other major tech company. They talk about an ad nauseam, but you don't hear as much about it from Tim Cook and his and his executives. Yeah, absolutely. Look, I mean, I think that we've actually heard them say that they will say something about AI, which in itself is atypical. Right. Apple really does not talk about
products that are very close to launch ahead of time, like the vision for Pearl, for example, or even the next iPhone. Right. They don't. We know it's coming. But in some ways, the executives never really addressed the elephant in the room, which is the amount of money that's really being spent on developing and the number of years that are being spent on developing some of these incredible products.
Right. So some of these products have a four or five year cadence of development to bring out an iPhone every year, takes, you know, a significant amount of effort. So I think it's very much in line with their policy of not getting too ahead of their skis that don't like to kind of pre-announce what's coming. We will see a preview of it at the developer conference. I think that'll be our first view really into what they can do with a I. I think they'll hold back some information really for the September launch. That's kind of their playbook.
They want to keep the excitement going around the products. They want to keep the suspense about what's coming down the road, which gets users definitely much more excited about what's coming down the road than if you actually knew everything about all their intentions. Right. And we don't know really when you think about it from a product cadence perspective, what's next out there? We think silicon development, as far as our checks go, you know, that's a major, major deal for Apple, both on what they're doing on the hardware side for product hardware, replacing the modem and internalizing that to. Chips for servers and regular CPUs for servers. We think that's in the pipeline as well. So there's a lot that they don't talk
about. But at the same time, we know that this all in the works. I'm going to call them. Let's talk about the iPhone a little bit more, because what could be exciting is a cheaper iPhone, actually. Mark Gurman, writing recently in his power on newsletter that Apple needs a true low end iPhone to revive growth here. And you think about the upgrade cycle
and how expensive iPhones are and weakening demand. I mean, could you see that as a possibility? So we wouldn't count on that just yet. Right. Like, I think Apple has plenty of avenues for growth.
One of the key things that Apple does not want to do is really dilute its brand value. I mean, can Apple do a low and iPhone? Absolutely. What did dilute the brand value? I mean, where are we seeing Apple products getting sold and what are the price points of this? In every end market that you've seen, whether it be phone, whether it be in tablets, whether it be in Macs, the Vision Pro premium products, premium products that have excellent quality, maybe better feature functionality. The residual value of these products is significantly higher too, which is part of the reason that you can buy an iPhone and trade it back for a significant amount of value that discounts the next purchase. Right. So moving down is really not been what their strategy has so far. Right. Will they need to do that someday?
Yes. But is the market large enough today for them to address beyond iPhone other areas of growth? And what can those be? Right. So when you think about healthcare as an opportunity, they could monetize that on services. Advertising is an opportunity.
They can monetize that on services. Maybe they'll still do something on autonomous, right? So there's a lot of different things where they can go and drive growth over time. That doesn't necessarily mean that they need to dilute current brand value and go down down the road of like really cutting price on existing products or in introducing something that's very outside their brand.
So of course, Apple reporting next week. Before we get there, we do have IBM reporting after the bell. I know you cover them as well, just in about 45 seconds. What are you expecting to see? Yeah, I would say that, look, their focus is really on AI. It's on consulting. You've had other peers that have reported relatively soft numbers. It'd be great to get an update from them
on on sort of what they're seeing from a macroeconomic trend perspective. We actually think that the company is extremely well positioned and some of these areas has really been outgrowing and outperforming peers. So from from our standpoint, we actually like the setup very much so, because next year we're also going into a mainframe cycle. And from what we know in speaking with the company, we have visibility of about 12 billion in free cash flow this year growing into next year and then further increasing beyond that. So with those tailwinds, we really see a nice runway for for the shares. All right, Ramsey, great conversation. Really appreciate your time. Our thanks to Ramsay Mohan over at Bank
of America. This is Bloomberg. And. And. Just about 3:30 p.m. here in New York. This is the countdown to the close. I'm Romaine Bostick and I'm Katie Greifeld, and it's pretty quiet on the benchmarks even though Tesla up 12% not doing too much. Yeah, that was certainly a surprise that we got last night. It'll be interesting to see if we get
another surprise tonight as another big cap tech company is set to report, and that is MetroPCS. And that gives us an excuse to really talk about advertising, because let's face it, that's where they make most of their money. And that is an industry that relies heavily on those big tech companies like matter like tech talk, like SNAP to generate that revenue. Our next guest is a legend in this space, and it has seen it evolve over decades.
He co-founded one of the most prominent advertising firms in the world and, of course, also served in the government over there in the UK. Lord Maurice Saatchi of the House of Lords joins us now from West Sussex. He has a new book out called Oh, That aims to excite the reader with entertaining and thought provoking takes on how to expand your mind.
Lord Saatchi, great to have you here on the program. As I'm sure you know, this book and its title, which we shortened, by the way, is very provocative. But as you read through it, there's quite a bit in there about, I guess just not being a stick in the mud, just learning to kind of live life and more importantly, to embrace things as they come. Why did you write this book?
Well, I wrote this book because, as everyone knows, a physical orgasm is the most blissful human experience. The book makes the startling claim that there is another type of orgasm which has nothing to do with sex and is even more pleasurable, which is an orgasm of the mind. And that's what this book is about. I think what intrigued me about the
premise of the book, as well as the way you presented it, and anyone who buys this is, you know, just the whole setup of it is not what you would expect. Here. You are a legend in the advertising space, which to all intents and purposes is a thought business. It's a creative business. It's about getting to human psychology in a way that's going to benefit your clients here.
So how do you transfer that decades of experience there into what you're talking about in this book? Is there a direct link? Well, I don't know if there's a direct link other than the question of whether anything is true or is a lie. And I think what this what this book explores is that I present 21 popular lies. These are the things people say. They're well known and well-accepted. And then I present my version of the
truth. And then the reader is able to well consider contradictory views and determine for themselves what was true. I am sure I am curious. Lord Saatchi, sorry to interrupt because but before you get on that, because with regards to the sort of popular lies and you sort of use this idea of sort of blending truth, and I guess what most of us would call fiction. But one of the first things you have on there is the popular lie, is that the truth is good.
I don't get that. Why? Yes, because, well, the 21 popular lies, the first one, which is perhaps one of the most controversial, is that truth is good. Well, the difficulty with that is that the book almost makes the claim that there is no such thing as truth at all in that, for example, let let's try this. I am taking a piece of paper. You can see it. Yes. I'm going to drop the paper now. It's going to fall to the ground.
Tomorrow, the sun will rise. These are statements which we can make perhaps without finality, but with a certain degree of probability. However, when we consider the general world, let's talk about the political world. In the world of politics, when we express opinions or beliefs or offer explanations or descriptions or observations, then error, doubts and uncertainty come to the fore. And what this book, I hope will help people to do is that through the the contradictions between the truth and the lies presented in this book, one will follow what I believe is called the Socratic Dialogue, which is the method that is the most revered in the world for achieving self-knowledge wisdom. Truth. The truth for you. And that's what this book attempts to
do. And by the way, if you want me to try, go on for a minute. You can keep going on. I'm. I'm raptured by this. Okay. Well, I mean, here's why this might be
important. And obviously, all authors will say, oh, well, my book is terribly topical and very important. Everyone would say that. But I think there is. If I might make this claim, both in Britain and America, we have general elections this year, and in both countries we consider ourselves to be the ultimate expression of the most basic Western belief in democracy. One man, one vote. And yet I think you might agree, in both
countries, America and Britain, there is a general sense of disillusionment, disappointment with what our democratic system has provided for us. Yeah. So I am I am making my claim on behalf of this orgasm that an orgasm of the mind is the only escape route from this world of fake news and alternative facts, which is the world we live at a bold statement, and I do want to kind of tie that back, though, to your career in advertising. And forgive me if this sounds harsh or even critical of your business, but to a large degree, the advertising business is a business of lies. It's a business of at least trying to paint a truth that may be true to you or true to your clients. But to most of us, as we find out, as we get older and crankier, that it was all, you know, just a bunch of you know what? When you look at me, go ahead. I'll put it.
I'll put it as strongly as I can here. Here is supposed to be something which is a statement of truth, and it's in the form of a syllogism. Here it is. I'll give it to
you. This pruning roses is good. I prune roses. I am good. But that fails because the premise pruning roses is good is open to objection by people who prefer leggy straggly roses with few blooms. So even there in that example, which could as well be an example from the political world or the business world or any well, that even in that absolutely most simple, straightforward example, it is possible to argue that the statement is not true. Now, whether in the natural sciences, I
don't know whether many scientists are watching this program. But even in the natural sciences, they the scientists, I think, would agree with me that even though something appears to be totally proven, such as tomorrow, the sun will rise. Even that statement cannot itself be proved beyond doubt. So when it comes to making political statement, your hope of being able to determine the difference between the truth and the law is enormous. So, for example, should I give you one of the one of the examples from the book, which I think might be relevant to your viewers? One of the one of the popular lies is that big companies are wonderful. Right. Well, the book takes exception to that and argues that big companies might be even worse than big government. Now, this is a this is a very major
statement indeed. But the book goes on to explain that what has happened is in terms of free markets and free market competition, which all your viewers watching now believe in, that what has happened to free markets is something which has made believers in free markets feel very uncomfortable, which is that there's been an unintended consequence of globalization, which is the creation of giant cartels, of giant global companies, and that the tech companies I'm talking about all companies, Right. And that that has meant that there is a huge imbalance of power between the giant global corporation and the individual customer. Right. And this is this is not at all what was intended by the concept of the free market. It's not at all what believers in the free market would like to see. But nevertheless, that is what's happened. And Mrs.
Thatcher, heroic figure in my life would be very disappointed to see that the end result of competition right is the end of competition, that this and that, for example, even more like that. Karl Marx might have been right because he said he predicted that after years of internecine warfare amongst capitalists, there would be fewer and fewer capitalists controlling vast and vaster empires. And that if not in that kind of where we are right now, though, I mean, this is I mean, this is probably one of the more fascinating parts of the book, aside from some of the other Socratic stuff that you started off with. And I wish we had more time to talk.
I mean, we could talk for an hour here, but I've got producers and directors waving at me saying that, you know, we should have gone to commercial like 10 minutes ago. So, Lord, I've got I'm just going to leave it there for right now. We're going to catch up again. You're in New York soon. I love promoting this book. Lord Maurice Saatchi of the House of Lords, a legend in the advertising space. And he's got a new book out.
Oh, that is currently on sale. We'll be back. This is Bloomberg. All right. Time now for our Stock of the Hour. And we've got multiples for you with a fresh slate of earnings results expected after the bell Metal, Chipotle, IBM, Whirlpool, Ford and quite a few others expected to cross the wire in just about 15 minutes time Abigail Doolittle. Joining us right now for a walk through of what to expect. What do you want to start, Abigail? Well, let's focus in on tech because, of course, we have Tesla out of the way out of the woods, up sharply after a horrible quarter. But that optimism around the cheap eve.
But of course, after the bell today, we have media growth is the name of the game. They're looking for 63% growth for the bottom line. That's a real growth from back in the day for technology, $4.44 per share, 26% growth for the top line, $36.1 billion
in revenue. That is what's estimated right now. So it looks like the year of efficiency, which I think was last year, maybe was 20. I don't know. It's what it was. Yeah, it feels like it was forever going to remember that I am going to tell your grandkids about the era of efficiency. Yeah. No, I probably will not be. Well, first I have to have children, but it or Yes.
Or in any case, the year of efficiency has paid off to some degree. Plus A.I. Algos are really helping. But the thing that I meta is a real high bar. A lot of pressure up 133% over the last year. So they really have to deliver. And then Microsoft and Google tomorrow,
double digit growth for Microsoft on both top and bottom line. Azure, their cloud products 80% better sequentially. So that's really pretty good. And then we'll also be looking for the air influence there. And then Google 5% top excuse me, a decline of 5% on the top line and then 28% growth on the bottom.
So margins doing pretty well. Their core search, it's interesting, we kind of forget about that because we're hearing about A.I. Cloud, that's estimated at 11%. But some are saying that the cloud could
be strong, too, for Alphabet. Yeah, absolutely. Here. And it was interesting we had a good analyst on yesterday was talking about Microsoft and she just kept banging the drum on Azure. On Azure. Was she talking about that? Yeah, which is kind of interesting that because I feel like a lot of people have kind of forgotten about the. Yes. On to the shiny objects Abigail today
and with a closer look here at what to expect some of the big tech earnings tonight and tomorrow as well we will have full coverage of course of matter earnings when it crosses the wire after the bell tonight as we continue the countdown to these closing bells. Katie Greifeld, when you take a look at the broader market going on right now, not a whole lot. Probably the biggest, most exciting action right now is on the transport space. The most exciting moment will be the after hours trade. Of course, when we get through some of these earnings, probably much more exciting than what we're seeing right now. All right, Stick with us. Katie Greifeld, I think, is going to stick with us after that last interview.
Let's hope so. Sarah Malik going to be joining us in just a second. Chief investment officer at Nuveen. This is the close on Bloomberg. This is the countdown to the close Romaine Bostick alongside Katie greifeld filling in today for Alix Steel. About 10 minutes until we get to those closing bells, katie And a bit of a turnaround from what we saw the last couple of trading sessions. Yeah, a little bit.
I mean, you take a look at the S&P 500 right now. It's not down, but it's unchanged. Of course, coming off of three straight weeks of losses into this week, a consequential week. We don't have much to show for it yet, even though, of course, we did have Boeing and we had Tesla. But the real biggies start tonight.
Yeah, Metal platforms. Are you still using metal? I do have you move. I use the messenger. I mean, I know you were an X person and you still on X Still on X. I wish that was a company. Yes.
Do you? I really do. I would love to take a peek at those financials, but you can see big tech. Even with Tesla out of the way, up about 4/10 of a percent. That obviously is the index to watch. All right. We're going to talk a little bit during the break about Katie Greifeld, social media choices. In the meantime, let's get back to the
markets as we count down to the close with Sarah Malik, chief investment officer over at Nuveen and Sarah, which first of all, pleased to have you in person here in Studio two in New York. But let's start off with the earnings, because this is a big week for earnings, as you might have heard here. We got a little bit of a boost yesterday from Tesla. We get Metro tonight, of course, Google and Microsoft later this week here at the expect have what we've seen so far, has it lived up to expectations? Well, it's great to see you. I mean, this market kicked off this week
with a relief rally going into the biggest week of earnings. And today it's turned into hesitation. It's the biggest week for Megacap. Tech expectations are for about 38% earnings growth year over year. That's a high hurdle, just starting with Metta, which has been the second best performing mega-cap tech stock year to date.
Behind in video, it's a high hurdle they guided to faster revenue growth this year. Last quarter, whispers are four 30% revenue growth. They need to meet that or exceed that. I think for the stock to continue to move higher from here. I'm curious if we don't see those growth numbers. I mean, there's been a lot of talk about your efficiency, improving margins, improving the bottom line if the growth numbers don't live up to expectations, but let's say they beat on some of those profitability metrics, will that be enough to save us given what the stock's in year to date? I'm not sure that it has. It will be enough. Definitely. It has been an efficiency story for
them, but now people want to see that growth in there from reels for monetization, also from advertising. I think they need to have that there for the stock because it's just got a lot in the stock already. It's been such a great stock this year and last year, like you said, there's a lot of good news in the stock already up almost 40% this year and that's after the year of efficiency. I don't know what this year is going to be, but how are you think about valuation because you could look at the stock price and say, well, again, a lot of good news. But then you take a look at the valuation. It's trading, I think, 23 times earnings or something.
And there's a lot of other companies, a lot of other of their peers trading well beyond that. Yeah, I mean, valuation is not super expensive for matter, but it is a fairly consensus stock at this point with a lot of people crowding into it. I think, you know, from our point of view, Amazon looks more attractive to us. That's a company there with us and also the investments that they made during the pandemic and their logistics. We think Amazon has a little more juice
from here going forward. All right. So Amazon, of course, one to watch. And I mean, outside of big tech, you take a look at just the broader indexes and we're coming off, like I said, I mean, three weeks of losses. When you think about what's been driving the sell off, do you think that anything fundamentally has changed or is this really rate driven at this point? I think it's been rate driven. And also the battle of the bull versus the bears is around two factors, and that's what's the economy doing and what's inflation doing. We're going to get two data points this week on both of those tomorrow, GDP, which should moderate a bit from where it's been recently, but still very strong at two and a half percent. So I think that's going to be fine.
But at the end of the week, we're getting PC data. That's where we might run into a hiccup, you know, about a little over 2.7%. If we hit 3%, I think that's going to be negative for the markets. We're watching areas such as financial services, which should be pretty strong because it's based on the rally from March that we saw in the markets. Also, health care is is going to be hot in PC. And finally, goods prices with electronics coming in with prices up this quarter to date, I think all of that likely leads to beat numbers.
And that might be finally what takes a little steam out of the earnings based rally that we've seen. So then that feeds into obviously inflation expectations and more importantly, Fed rate expectations. But those expectations, at least in the market, are basically at zero now, at least, you know, about as statistically close as you can get. I mean, I don't I don't know what more the Fed and more importantly the economic data can show that would suggest that the Fed really doesn't have the argument to make for rate cuts this year. Yeah, we've been pretty consistent. Our global investment committee never
went above three rate cuts for this year. And I would at this point take the under on that. I think the market got overoptimistic when it went to seven rate cuts at the beginning of this year. And now I think we're down to maybe two
rate cuts even less than that. The Fed tends to do less during an election year, not more. So as that election approaches, I think at the Fed is less likely to do anything.
So maybe you get a rate cut around fall and then one more in December. But if inflation sticky and I think when all is said and done PCE this year inflation it'll still be above 2%. The Fed may not feel the need to do anything. They'll just going to be patient. There's no need for them to preemptively cut rates if inflation is not down to the levels that they think it should be. Is there, though, I mean, everything that you just said and you put that against the backdrop of where you allocate money, is there a case to be made in this environment for cyclical stocks, rate sensitive stocks, those basically the more economically driven stocks out there, as long as the economy remains strong, which it has because of employment and the consumer, it can start to broaden out. So there is a case to be made for some of these lagging stocks like energy and materials, which had some of the worst earnings expectations coming into this quarter. I think those companies can start to
perform well also outside of equities, fixed income, where you can get lock in some strong yields in segments of fixed income and then alternative such as infrastructure stocks, where they tend to be less cyclical than the economy. So for those who are worried that we will eventually see this recession, you can look at these less cyclical areas like infrastructure. Let's talk about fixed income a little bit more.
I mean, are you talking about treasuries or you're talking about corporate bonds? They're really getting sector specific. One of our favorite areas of fixed income is municipal bonds. The fundamentals remain very strong because of how strong the economy in the states have been. Their rainy day funds are high, their savings rates are high. And in high yield municipal bonds, you can capture yields in the high single digits. But this is, you know, a once in a
multiyear, even multi-decade opportunity for municipal bonds. Also, during tax season, munis tend to sell off a little bit. So that is a nice time to enter into that segment. That's really I mean, that's a big call once in a decade or something.
I mean, what have the flows look like into municipal bonds? Is that a known opportunity at this? You know, it's interesting. Year to date, the flows have been positive into municipal bonds. So people are starting to recognize that this is a good buying opportunity for that asset class. Sarah, always wonderful to talk to you and great to have you here in person in New York. Sarah Mallet, Chief Investment officer over at Nuveen, helping us count down to those closing bells. We're just about 3 minutes to go until those bells. And of course, not a lot in terms of the
price action, but that could change in a big way once those earnings start to hit. I'll say it again, the after hour session is going to be more interesting than the actual normal market hours. I mean, we did get some action when it comes from Tesla, a double digit gain on the day. Boeing was interesting, too. You're not seeing it in the benchmarks. Yeah, certainly. I guess that speaks to Tesla's diminished role of Tesla's diminished role here. And I thought was interesting, too. I mean, what did you make of just how severe that uptick was? Because there were no details. I mean, basically like, look, yeah,
we're going to make a pivot. We'll be fine. I guess, if you believe Eli, maybe. But you had Ross Gerber on yesterday, right? Thank you. I was I was kind of surprised. He seemed a little less enthusiastic. He still is sold back in Tesla, but he seemed a little less enthusiastic. Maybe a little change of heart there. All right.
Well, stick with us here. A Ford metal Chipotle, whirlpool, just some of the names on tap to report earnings after we get to those bells as we take you to the bell and beyond, Beyond the Bell Bloomberg's comprehensive cross-platform. Coverage of the U.S. market. Close starts right now. And right now, we are 2 minutes away from the end of the trading day Romaine Bostick alongside Katie Greifeld. We're counting down to the closing bell.
And here to help take us Beyond the Bell, it's a global simulcast with Tim Stanwick and Carol Massar. Welcome to our audiences across all of our bloomberg platforms here on another busy earning day. But unlike yesterday, Carol, unlike Monday, the price action in the market decidedly different. It feels so tortured today. I feel like the back and forth that we're seeing in the equity averages.
Right. Little change at this point, not the conviction that you that we saw certainly earlier in the week. And I think that's a good point. Does some of the earnings does matter
platforms change that potentially? I guess we'll have to wait and see and we'll find out in a few minutes. I did think at least earlier in the session, Tesla and the rebound that we saw in Tesla stock today after yesterday's report, which by the way, wasn't good, would set the tone for today's trade. But that certainly hasn't happened. And, you know, make no mistake, everyone's just sitting back waiting for media platforms to report in a couple of minutes. Yeah, that's the thing that even though there were some single stock specific stories coming off of earnings that definitely saw some movement there, you really had to look under the hood to find the action. Of course, all of this is going to change in a couple of minutes when we get those earnings finally. But a quiet day, definitely a wait and see sort of day. Yeah, definitely a wait and see kind of
day. And it gets to the question here as to what the market is really looking for is are they looking for better earnings growth, Are they looking for better profitability or is this still about the Fed and economic and. Well, that's a really good point, Liz and Saunders over at Charles Schwab, we just talked to her and she says it's not really about the speculation of what the Fed will do, how many rate cuts.
It's really about yields. What we are seeing in reality along the treasury curve that's really in the driver's seat impacting the equity trade. All right. We've got the closing bell here in New York.
Let's get you through the numbers real quick before those earnings hit. The Dow Jones Industrial Average relatively unchanged on the day. It takes a while for these numbers to settle, but right now we're down about 30 something points on the day or about a 10th of a percent. The S&P 500 higher by about two points, a fraction of a fraction of a percent, while the Nasdaq composite higher by 16 points or a 10th of a percent. I do want to point out two big downdrafts that we saw today, the Russell 2000 down 4/10 of a percent, but a huge drop in the Dow transports down more than two. And that was on the back of some bad
earnings out of Old Dominion Freight. All right. Some good perspective there. Hey, in terms of the S&P 500, just digging into it broadly, 279 names to the upside in today's trade, Katy, 222 to the downside, too unchanged. And you take a look at the sector level, taking it a step further, of the 11 sectors, you had seven in the green, you had four in the red. You look at what did well today. It was consumer staples, that sector up about 9/10 of a percent.
You had utilities, consumer discretionary also rallying as well. You take a look at what was left out of the action and to the downside, you had industrials leading losses down about 8/10 of a percent. Health care and financials, too, not having too great of a day, but small moves overall Carol. All right. Get to some of the individual gainers and Tesla atop that list of the Nasdaq 100 and the S&P number one, that one gaining about 12% in today's session. We know what it was all about, guys, even though the quarter wasn't so great, The big excitement about Tesla saying, yes, we're going to accelerate the launch of less expensive cars and that certainly got everybody excited. So again, Tesla shares up about 12% in today's session.
Texas Instruments, another standout performer, had to do with earnings up 5.6%. Top name the Nasdaq 100, its biggest gain in about four years. Companies revenue forecasts indicated a slump in demand may be easing, giving a lift earlier in the session to the overall chip sector. And really quickly, a name that popped up among the biggest gainers in both the Nasdaq 100 and the S&P 500 Costar group. This one was up just shy of 9%, just off its highs of the days.
And this one again up the most in more than a year and a half. It's an online real estate service company. Reported first quarter results beat expectations and also raising the low end of its full year revenue forecast. So really some outperformance in those names. Okay. Let's talk about some of the decliners very briefly before we do get earnings from Matt. I want to start with a name that
remained just mentioned, down 11%. Old Dominion Freight, worst single day in at nearly two years. Shares falling after the company's first quarter. Revenue only slightly lagged, the
average analyst estimates, but certainly sent some shockwaves throughout the sector today. Also, shares of Boeing falling, reaching a new 52 week low. The shares were up pre-market after the company reported earnings. First quarter adjusted cash burn of $3.93 billion was smaller than the estimated $4.4 billion, though it did
move lower in the day as the day went on. And then just before 2 p.m., Moody's ratings downgraded Boeing's credit score to one notch from junk as quality control issues weigh on the company's free cash flow. And I did also just want to take a look
at what metal platform shares did today. Stock up nearly 40% so far this year, but finished they're down by about half a percentage point, underperforming the broader indices. The company's expect to report revenue growth of 26% for the first quarter. And then the company is also expected to
report revenue of 36.12 billion. The vast majority, of course, of that being advertising revenue at $35.57 billion. Let's check in on yields here. This was a busy week for auctions. And while not all of them went well, the overall net effect of it is modest changes that were seen across across the Treasury curve. You did see modest losses on the longer end of the curve that pushed yields higher on the ten, the 20 and the 30 year yield by roughly about 4 to 5 basis points. Year to year yield, though, down ever so
slightly by just about a point. Yeah. So, you know, I think what we should do is just talk a little bit about meta at this point because we are waiting. Obviously that's the big one in the after hours. And we were talking to our Mandeep Singh, just kind of the role of AI in helping this company among its platforms. Really an ad targeting because I said to him, is I really, really moving the needle financially on the balance sheet and said, Yeah, it is and it is specifically when it comes to ad targeting. And so these are things to watch for as
this company gets ready to report. Well, think about all the negative sentiment around the stock three or four years ago when Apple made those IDFA changes. The idea that it wasn't going to let apps have the data that it previously had mattered. Platforms was able to pivot and adjust by using AI to better target those ads and better target content to its users to get people to use the app more and spend more time on it. Well, I'm glad you brought that up because I remember all the agita over that here.
It was a all and all you got to do is really you go into the Bloomberg terminal and you look at that trajectory of revenue growth. Now, they did have a few bumps at the end of was it late 2022 where they had a couple of those down quarters with a negative sign in front of it. But all told, the amount of revenue that they're generating, $40 billion in the most recent quarter in the fourth quarter, I should say. And the numbers that we're about to get today, if you believe analyst estimates are going to come in around 36 billion, that's well above $10 billion above where we were just a couple of years ago. Yeah, it's quite a turnaround story. And remember, last quarter they
initiated that dividend, which really speaks to this is a mature company. Now that they feel comfortable enough that they actually are starting to give that cash back to shareholders. I mean, those are some of the stories that I'm interested in because I really took that as a signal. It's also a company that's up by 194% last year and then again up about 40 this year. They're crossing. Romain, you want to kick it off? Absolutely. Metal platforms crossing the wire right now.
Let's walk you through the numbers here for the first quarter here. The company seen adjusted revenue coming in at about $35.6 billion. That's slightly above street estimates of 35.6 EPS coming in at $4.71 a share.
The street on average was looking for $4.30. Here's your guidance for the second quarter, the company sees revenue of 36.5 billion to 39 billion. Now the top end of that range of 39 billion is just ever so slightly higher than the average of street estimates, which was 38.2 billion. You see the share reaction there down about 9% here. But there's a lot more in this release,
Guys, Jump in when you see it. Yeah, Perhaps that's why shares are lower is because when it comes to the second quarter revenue expectation, it is, you know, just slightly above the tie at the top end. The consensus. I do want to note that the family of apps revenue for the first quarter did come in significantly quite a bit above estimates, about $500 million above estimates at $36 billion versus estimates of 35.53. And then there was the operating loss
from first quarter Reality Labs, which came in below estimates. It was expected to lose four and a half billion dollars. It only lost $3.85 billion. But even still, I mean, you take a look
at expensive, even with that, more narrow than expected loss when it came to reality labs, full year, total expenses between 96 billion to 99 billion previously that had been seen between 94 billion to $99 billion. So, Carol, yeah, I could add math, but that is a bigger range and a higher range and that's a commentary that certainly, like you are catching my attention. So it says, as you said, full year 2024, total expenses range of 96 to 99, up from 94 to 99 due to higher infrastructure and legal costs. They also say we anticipate our full
year 2024 cap ex will be in the range of 35 to 40 increase from a prior range of 30 to 37 billion as they continue to accelerate their infrastructure investments to support artificial intelligence roadmap at the company. So again, spending more expenses or more, I think that's got to be catching attention by investors and they say that's going to extend well beyond 2024. Hey, you guys, I keep checking out media platforms. I'm looking at Ford right now. The company sees first quarter adjusted
earnings per share above estimates at $
2024-04-29 21:44
