Facebook Owner Meta Surges, Is Fed Done?

Good morning.

I'm Nathan Hager and I'm Karen Moscow. Here are the stories we're following today.

The Dow comes into today with gains for thirteen straight sessions, and that is its longest winning streak since nineteen eighty seven. Optimism around the FED and earnings are fueling the rally. Today, we're seeing another tech company on the rise. Shares of meta platforms are up eight percent. The Facebook, Instagram, and thread zoner posted strong sales and gave a rosy outlook on the earnings call. CEO Mark Zuckerberg discussed the push to grow his latest social media platform.

I feel like we're getting to a good place on that with Threads. There's still a lot of basic functionality to build. Once we get to the point where it's at hundreds of millions of people, assuming we can get there, then we'll worry about monetization. But I mean, that's basically the playbook that we're focused on.

Meta CEO Mark Zuckerberg says for now, Threads is ad free. He won't add advertising until it's on a path to one billion users. That's a milestone Twitter never accomplished.

Well, the other major story that we're following this morning, Nathan Centers on the FED, the Central Bank raised interest rates by a quarter percentage point, taking rates to the highest level in twenty two years.

Now.

Chair J Powell says the FED has a tough balancing act.

It's really a question of how do you balance the two risks, the risk of doing too much or doing too little. And you know, I would say that, you know, we're coming to a place where where there really are risks on both sides. It's hard to say exactly whether whether they're in balance or not. But as our stances become more restrictive and inflation moderates, we do increasingly face that risk.

And yesterday's rate increase was the eleventh hike in the last sixteen months.

So now, Karen, the Fed's either done or very close to it. That's the takeaway from former New York Fed President and Bloomberg opinion columnist Bill Dudley.

Chair Palm made very clear in the press conference that he doesn't see the need to go that much further.

You know, the very fact that it's sort.

Of meeting by meeting now tells you that.

He thinks that, you know, maybe there's one more rate hike, maybe there's no more rate hikes as we go.

But higher rates could be here for a while. Former New York Fed chief current Bloomberg Opinion columnist Bill Dudley still thinks the Fed stays tighter for longer until inflation comes down to two percent.

Well.

Interest rates are also in focus overseas.

Nathan Economists expect the European Central Bank to tighten policy again today, and Bloomberg's Maria TODAYO is covering the ECB decision from Frankfurt.

Now, the European Center Bank is expected to increase rates by twenty five basis points taken at deposit rate to three points seventy five percent, as it continues its most aggressive hiking cycle to date in an effort to tame inflation. Now, beyond the monetary policy decision itself, the focus will be on the press conference and any hints we may get from the head of the UCB, Christin Laguard in terms

Okay, Maria, thank you staying in Europe. We have another onslaught of earnings out today and the results are lifting stocks from England to Italy. Let's get the leadst from Bloomberg's Ewan Parts in London.

Good morning, Nathan and Karen. It's the busiest day of the busiest week for European earnings. Eighty three companies on the stocks eight hundred reporting today. Barclay Shares one of the big losers here in London. That's after it cut its guidance for net interest margin at its retail bank, signaling the boost from rising rates is coming to an end. Francis's biggest bank, BNP Parabar, though beating estimates after tightly

Daybreak you and thank you well.

Back here in the US, there are new questions about the health of Senate Majority leader Mitch McConnell. That's after he throwze mid sentence during a news conference on Capitol Hill yesterday. And Bloomberg's Amy Morris supports from our ninety nine to one newsroom in Washington.

Senator McConnell abruptly stopped speaking froze in place for about twenty seconds before being led away by Senator John Barresso of Wyoming, who also happens to be a physician. Hours later, McConnell left his office saying President Biden called a check on him.

President check on me. I told him I got.

Sandbag, sandbag, referring to President Biden's recent fall when he stumbled over a sand bag on a stage. McConnell did not answer questions about whether he'd seen a doctor. This comes just months after the eighty one year old McConnell's suffered a concussion and broken rib in a fall at a fundraiser in Washington. He was discharged from the hospital on March twenty fifth, but did not return to the Senate until mid April. In Washington, I Amy Morris Bloomberg Daybreak.

Thanks for that on the Senate Minority Leader Amy Meantime, a heat wave continues to engulf large swaths of the US, and now the nation's largest electrical grid is declaring an emergency alert for today. Bloomberg's John Tucker has.

The latest PJM Interconnection has declared a Level one emergency for the thirteen state Eastern US grid, calling on all power plants to operate at full capacity. The alert means it's concerned about being able to maintain adequate power reserves today as consumers and businesses turn up air conditioners amid the scorching heat. They also told consumers enrolled in demand response programs to be ready to cut back on their

Break, and now it's time to take a look at some of the other stories making news in New York and around the world with Bloomberg's Michael Barr.

Good morning, Michael, Good morning, Nathan. The investigation has begun into a collapse in crane at a New York City construction site. Yesterday's collapse in Manhattan send workers and residents scrambling for cover at tenth Avenue and forty first Street. The crane had been pouring concrete forty five stories up when a fire broke out, sending the boom cracking into another building before falling to the street. New York City Fire First Deputy Commissioner James Pfeiffer and.

As the fire heats the cable, the cable weakens to a point where the loses its strength and that's where the collapse occurs.

Eleven people were injured, but fortunately no one was killed. What's next now that the plea deal in Hunter Biden's criminal case unraveled. During a court hearing in Delaware, a federal judge raised concerns about the terms of the agreement. President Biden's son was charged with two misdemeanor counts of willful failure to pay federal income tax. He was also set to accept the plea deal that included a third charge of possession of a handgun by a drug user.

I think this was an independent investigation that was overseen by the Department of Justice. As we've been very clear they are independent.

We give them the.

Space to do to do their work.

We believe in the rule of law.

Hunter Biden had been expected to plead guilty after making an agreement with the prosecutors, who were planning to recommend two years of probation. Donald Trump says he wants to see President Joe Biden impeached Bloomberg's head backs to.

Reports, Trump is following the lead of several others, including Ron DeSantis saying earlier this week that the business dealings of Hunter Biden and possible involvement with the President are

Cheats cost New Jersey more than one hundred and seventeen million dollars last year, according to the Turnplank Authority and Laware River Joint Toll Bridge Commission. It's a chronic problem that officials say has become even worse since the pandemic. Global News twenty four hours a day, powered by more than twenty seven hundred journalist nailysts in over one hundred and twenty countries. How Michaelabar, this is Bloomberg.

Nathan, Thank you, Michael. Time now for the Bloomberg Sports Update. Here's John Stashout.

Thanks day.

Thank Carlos Redon was the Yankees prize free agent signing of the offseason. Got a six year deal, but then missed the first half of the season and.

Then struggled on the road.

Came into the Subway Series finale at the Stadium oh to three with a seventy ra but Radon pitched into the sixth. Then he gave up to just one run four hits. Yankees beat the Mets three to one. Redon's manager is Aaron Boom.

It's been a long road for him, you know, I remember sitting up here when we signed him and how meaningful it was to him. And then to have you know, a couple setbacks there in spring training that slowed him, you know, definitely wore on him and ate at him, and he you know, he hated not being.

Out there with us.

Jose Kintana Gredonno left who signed in the offseason, was then injured, took the loss. He's now zero and two for the Mets, who hosts Washington tonight. The Yankees are in Baltimore tomorrow. Sounds as if Aaron Judge is gonna make his return from the injured tow. He's been out since early June, and obviously he has been sorely missed. Also, sounds like the Angels are not going to trade sho

Bloomberg Sports.

From coast to coast, from New York to San Francisco, Boston to Washington, DC, nationwide on Syrias Exam, the Bloomberg Business app, and Bloomberg dot Com.

This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. It is a big beat for a big name in tech. We are watching shares of Meta Platforms surge in the pre market after revenues and the sales forecast for the current quarter came in better than expected. Is Mark Zuckerberg's year of efficiency starting to pay off at the Facebook parent company? Let's get reaction from someone who has been very bullish on the broader tech story for quite some time.

Yeah, Nathan, this is not just a vish. This is actually digital advertising that's starting to ramp back up to double digit growth. They should have had Rocky two movie playing in the background during that conference call, because this is a Rocky bout bolet. Comeback for Zuckerberg and Facebook just a huge not just for FASA but also for big tech in terms of digital advertising. Comeback a huge print.

Yeah, we know how meta platforms has been pretty beaten down in the last several quarters.

Here.

Where do you see the momentum going when it comes to digital advertising, particularly after what we saw from Alphabet, the parent company of Google, and the better than expected results on digital advertising. There is it going to be sustained?

I think right now there's an inflection point. You're seeing an uptick digital advertising. We're seeing an uptick in cloud. That's a green light for tech because that really shows the best barometers Meta and Google seeing an uptick, and

Well, tell me a little bit more about how Meta could use AI going forward here. Is it going to be about development that Meta can do in the artificial intelligence space or is it going to be about how Meta uses AI as it already is.

It's really the latter. It's about how they're going to focus more for advertisers, more targeting, more ability for the consumer to get ultimately personalized messages, personalized data. That's how they're ultimately going to look at this In terms of monetization of AI. This is going to happen soon. They expected the ironic thing. They're spending more on AI than Meta first, and I think that name change or maybe became well too soon.

Yeah, I was going to get to that.

Does this mean that the focus for Meta and for investors in Meta is going to be more on sort of those legacy for lack of a better word, products that the meta has, the facebooks, the instagrams that now threads as opposed to the metaverse. Bet that Even on the call, Mark Zuckerberg was saying he still thinks it's going to be the right bet.

Yeah, the hearts and lungs of this story are Facebook, are Instagram. That's the core. That's what's happening with engagements, that's the advertising uptick. And when you could AI, it's about monetizement installed these metaverse. They'll talk the game, but realistically that is now put in the back of that closet the doors shut. It's next to that piece of paper you haven't seen in ten years.

Is Threads still going to be a thing a year from now?

Dan, I think Threads is really gonna significantly decline from gonna get you're already seeing it. I think it sounded great for forty eight hours. I don't view it as a Twitter killer. It's additive for them, there is no risk. But ultimately I think this is gonna be an ever psychle uphill battle to have success on Threads. I think many are seeing that over the last week.

Only got about a minute left here, But in the time we have left, I got to ask you about Microsoft. That's been kind of the outlier so far in tech, with the shares falling nearly four percent yesterday on the disappointing as your cloud business. Is Microsoft still a buye for you.

I think that stock going down was a gift because if you look at the cloud story of Microsoft, it is just start and that's a typical playbook for Nadella. Be conservative, out of the gate. Bears will take it down. You look where it is in the next month, three months, and I think this is a three and a half trillion dollars mark ap No one is weeding more AI than Cloud.

Is.

Bloomberg Daybreak Today your morning brief on the stories making news from Wall Street to Washington and beyond.

Look for us on your podcast feed at six am Eastern each morning, on Apple, Spotify, and anywhere else you get your podcasts.

You can also listen live each morning starting at five am Wall Street time on Bloomberg eleven three to zero in New York, Bloomberg ninety nine one in Washington, Bloomberg one oh sixty one in Boston, and Bloomberg ninety sixty in San Francisco.

Our flagship New York station is also available on your Amazon Alexa devices.

Just say Alexa play Bloomberg eleven thirty.

Plus listen coast to coast on the Bloomberg Business app serious XM Channel one nineteen, The iHeartRadio app and on Bloomberg dot Com.

I'm Nathan Hager and I'm Karen Moscow.

Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak