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Good morning.
I'm Nathan Hager and I'm Karen Moscow. Here are the stories we're following today.
Karen.
The drop in futures, particularly the Nasdaq futures, follows disappointing results from Meta Platforms. Shares of the Facebook parent are down thirteen percent in early trading. Meta forecast weaker than expected sales in the current quarter while targeting higher capital expenditures. Here's CEO Mark Zuckerberg on the company conference call.
As we're scaling capex and energy expenses for AI, We'll continue focusing on operating the rest of our company efficiently but realistically. Even with shifting many of our existing resources to focus on AI, we'll still grow our investment envelope meaningfully before we make much revenue from some of these new products.
CEO Mark Zuckerberg says Meta will spend billions of dollars more than expected this year, fueled by investments in artificial intelligence.
Well, Nathan, the metamiss is sparking your sell off in some other high tech stocks this morning. Shares of Alphabet down about three percent. Microsoft is lower by almost two percent. Both companies report earnings this afternoon.
And IBM shares are plunging as well care and they're down more than eight percent. That company's we consulting unit sales is disappointing investors, overshadowing IBM's acquisition of software firm Hashikorp.
Well, Nathan, we also have a barrage of earnings overseas, particularly in the banking sector. Shares of barclayser up almost four percent. The British bank posted first quarter revenue that top analyst estimates. We spoke earlier with Chief executive Officer Csvan Kada Krishnan about the volatile rates market.
It is very early. Our numbers are in line with what we said. We've seen deposit growth, we've seen lending growth in mortgages and in credit, and so we're pleased with that. But it's one quarter in a longer journey of three.
Years in Barclays ceocs kind of. Krishnan says. Revenue tied to the company's investment banking businesses top estimates.
Elsewhere in European banks, Karen Deutsche Bank saw seven percent jump in earnings from fixed income trading in the first quarter. That was more than analysts expected and better than most of the bank's biggest US rivals. Chief financial Officer James von Moltke hailed strong momentum in Deutsche's investment bank.
We're very pleased with the results there, thirteen percent up year on year our fit business and also within that the financing business doing very well, so we see very strong momentum and client engagement there. We're also seeing resilience and growth across the other three businesses, and so it's nice to have a shining star, but seeing resilience on the more balance sheet sensitive businesses of our corporate bank and private bank is encouraging.
Deutsche Bank CFO James von Molka added that he sees optimism and growth coming back to Europe.
Well, Nathan, on this very busy morning, we also have a huge takeover to tell you about. BHP, the world's largest mining company, has proposed to takeover of Anglo American that values the smaller minor at almost thirty nine billion dollars. Bloomberg Commodities reporter Martin Ritchie says there's one primary reason for the tie up.
This is all about copper.
BHP is going to become the world's biggest copper miner, and that's because the miners are expecting a big wave of demand for copper, and we've seen over the past few years a number of quite big transactions and a lot of talk about how they want to gain exposure to copper. But this is the first really big deal in the sector.
Bloomberg's Martin Richie says BHP's bid for Anglo could prompt other giants to make a move back.
Here in the States, Karen, US chip making is getting another boost from the Biden administration. It is awarding Micron Technology up to thirteen point six billion dollars in grants and loans for new memory chip factories in the US. Micron has pledged about one hundred and twenty five billion into build four factories in New York State and a
fifth in Idaho. President Biden will be in Syracuse for today's announcement and checking Micron shares in the early trade, they are little changed to the upside.
Well, Nathan, Let's turn out to a case that could have major implications for the presidential race. Former President Donald Trump continues to insist that he is immune from criminal prosecution for trying to overturn the twenty twenty election. Now the Supreme Court will have arguments today on what exactly constitutes a presidential act. Bloomberg's Amy Morris has more from Washington.
Donald Trump argues the charges are all based on actions he took in his official capacity as president. Prosecutors say nothing that Trump did in trying to remain in power despite his loss was conduct of the office. The justices have to try to draw a line between these views. There's not much guidance. An official act of the presidency isn't a term rooted in the Constitution nor criminal statute.
And even if Donald Trump is entitled to some immunity for official acts, the federal government maintains there's no basis for his claim for immunity. Meanwhile, the clock is ticking, giving Special counsel Jack Smith only a narrow window to put the former president in front of a jury before voters go to the polls. November fifth, in Washington, Amy Moore as Bloomberg Radio.
All right, Amy, thanks for all the Supreme Court. Here's those arguments. Former President Trump will be back before a Manhattan jury hearing more testimony in the criminal hush money trial. Bloomberg Law host June Grosso has the latest one that from New York.
David Pecker, the former publisher of The National Inquirer, will be back on the witness stand today. On Tuesday, he told the jury about how he killed stories about Donald Trump's extramarital affairs to boost his twenty sixteen presidential campaign. Today, prosecutors will likely ask him about the hush money payments to Stormy Daniels. The judge is not yet ruled on the prosecution's motion to hold Trump in contempt for violating the gag order on commenting on witnesses in the case.
In New York, June Grosso Bloomberg Radio.
All right, June, thank you well. There is a new criminal case tied to the two twenty election. A grand juri in Arizona has issued felony counts against eighteen Republicans, including seven attorneys or aids to the Trump campaign, over their efforts to overturn President Biden's win in the state. The defendants include former Trump attorney Rudy Giuliani and ex
White House Chief of Staff Mark Meadows. Former President Trump is not facing charges in this case, but he is named as an unindicted co conspirator.
Meanwhile, Caring the Arizona House has voted to repeal that state's eighteen sixty four abortion law. Bloomberg Zed. Baxter has that story.
The almost complete ban on abortions only to save the mother's life could go into effect as early as June eighth if it isn't repealed. Republicans have narrow majorities in both chambers, but recent uproars have obviously changed some minds, and so in the House. The State Senate could take up the repeal vote next week. Two Republicans already say they are supporting it. Governor Katie Hobbs has been urging the repeal. This add to the heat of the issue
nationally politically. Ed Baxter, Bloomberg Radio.
All right, ed, thanks, and it's time now for a look at some of the other stories making news in New York and around the world. There's Michael Barr Michael, good morning.
Good morning, Karen, Police yourselves. That's from New York City Mayor Eric Adams to protesters on college campuses. Pro Palestinian demonstrators have been calling on universities to separate themselves from companies supporting Israel's war in Gaza. Police have been making arrests. Critics of the protests say Jewish students have become the victims of violent threats. Mayor Adams says that he's even seen some protesters express support for the militant group Hamas Fudemus.
Speech is something that is constitutionally protected, and you can be correct constitutionally, but it's in moral.
To see some of the terminologies that's been used. Mayor Adams told WABC, there is no room for hate in our city. Yesterday, House Speaker Mike Johnson visited Columbia and called on the university's president to resign, accusing Minot Schaffik of giving in to pro Palestinian protesters who have reportedly threatened Jewish students. Speaker Johnson told a booing crowd on the campus he supports free speech, but defends Jewish students and Israel.
This is dangerous. This is not free expression, This is not First Amendment. They are threatening, intimidating, saying that they will take violence upon Jewish students. We met with Jewish students who are in fear. They can't come on campus, they can't study for their final exams.
At the University of Southern California, police began detaining pro Palestinian student protesters without incident. The arrests occurred hours after police at the University of Texas and Austin aggressively took more than thirty demonstrators. This student says he thinks the police presence escalated the protests.
This is a vault way further than it has because of the speech. I've talked to a few kids here my crimes, Like I was like, oh, I didn't know you were like, you know, you know, supporting Kalstad, and they're like, no, I just saw all the arrests and think this is crazy.
The arrest came at the request of university officials and Texas Governor Greg Abbott. Representative Josh Gottheimer and other congressional members are seeking committee hearings on New York City's congestion pricing plan. The New Jersey Democrat is calling on a House committee to ask MTA Chief General Lieber to testify about the revenue expected to be collected from the new feed global news twenty four hours a day and whenever you want it with Bloomberg News. Now, I'm Michael Barr.
This is Bloomberg.
Karen Sor right, Michael Barr, thank you, and it's time now for the Bloomberg Sports Update with John stash Hour.
John, Good morning, Good morning care. In the NFL draft, you used to always take place in New York, then they begin moving around the country. It starts tonight in Detroit with the Chicago Bears on the clock. Unless everyone is wrong.
LT.
Caleb Williams, who.
Won the Heisman Trophy at USC Washington and New England had the second and third picks. Both also need a quarterback. Big question is will the Giants draft to QB, either with the sixth pick or after moving up, or will they take a wide receiver to help incumbent QB Daniel Jones. Jets pick tenth certainly need offensive help, maybe a tackle or if he's still there, Georgia tight end brock Bowers. There are mock drafts that don't have a single defensive
player going in the top ten. At Stadium, Aaron Judge at the plate first inning, and it apparently had struck out, but a buck was called. The at bat continued.
Judge back in the box.
The pitch get in the air deep right field.
Butler looking back at the wall.
It is got a home run, Howard.
Judge back in the batter's box.
Extended life then he parks it into the port right field.
On wfan later home run for Anthony Rizzo and Juan Soto. Yankees beat the A seven to three. Four game series ends tonight. The Mets road trip ended with an eight to two win at San Francisco. Francisco Lindor off to the miserable start, busted out pair of two run homers, upset in Boston. With the Celtics lost only four times all season, the Miami Heat, playing without the injured Jimmy Butler, drained in twenty three to three pointers and won one
eleven one oh one, tying the series at one. Oklahoma City, who won Game one from New Orleans by two points, won Game two by thirty two. Nixon Sixers play Game three tonight in Philadelphia. The Nets formally introduced a new coach, Jordi Fernandez, has been assistant in Sacramento Stanley Cup playoffs. Three wins by road teams Boston four to two in Toronto, LA, five to four in overtime at Edmonton, and Vegas three to one at Dallas. The Stars top seeds in the West,
but now trailing their series too nothing. John Stanshewer, Bloomberg Sports Karen and Ncoln.
Coast to coast on Bloomberg Radio, nationwide on Sirius XM, and around the world on Bloomberg dot com and the Bloomberg Business app. This is Bloomberg Daybreak. Good morning.
I'm Nathan Hager, Ametta miss is dragging tech stocks law or this morning. The Facebook and Instagram parent company did come in with a slight beat on revenue in the first quarter, but it's the outlook for sales in the current quarter and promise of big spending for the rest of this year that is raising new questions and perhaps some investor concerns about CEO Mark Zuckerberg's plans beyond the social network.
For more.
We're joined by Bloomberg's Alex web Alex good morning, not so good a morning if you are a meta investor. It does seem like this idea of spending up to forty billion dollars on campex for the rest of this year is really spooked investors.
Sorry, excuse me, yes, absolutely, Look, there are two pieces of this, maybe three pieces that it's spent in the past year or so, telling investors that they are now on efficiently run company, they care about costs. The sort of growth at any expense is not their priority anymore.
They're really looking at shareholder value. Then, not only are we seeing actually a slight change of tack on that they're pushing some earnings out in order to invest in artificial intelligence and AI infrastructure, but there's also on top of that a slight softening in revenue. The current quarter are in coming in a little bit below what the market had been expecting. So the signal they're giving the market is that actually were a slightly longer duration stock
than you thought we were. In the current interest rate environment and in appetite for risk, that is not something that investors have a huge amount of appetite for, or at least not the same appetite that they might have had a few years ago.
Certainly seeing that in terms of the action in the stock this morning, I mean, what do you make of Mark Zuckerberg's patients or call for patients this time around on AI investment? Of course, there's been so much focus on AI monetization as we head through this tech earnings quarter.
I mean, there are a few different ways of looking at this. Is that the nature of the messaging, which is that it was pretty abrupt, right nobody had. Well, clearly the market hadn't seen this coming. He could have done a better job, perhaps from a communications perspective, warming the market up to this idea. There might be a little bit more expense than previously anticipated. Then there's also just the general corporate strategy piece, and it's very temptate.
It's very tempting, presumably if you're running meta to look at the fact that you've got something like fifty billion dollars in free cash flow and say, well, I should spend that on growing now. That is what Facebook has been able to do for much of its existence, including as a public company over the past decade or so. We are now in a different sort of environment than the one in which Zuckerberg grew up in as a CEO.
That is perhaps an adaptation that he perhaps isn't making as readily as some of his peers, or indeed some of his investors would like.
Is there room in the ad business, the ad environment, for the ambitions that Mark Zuckerberg is laying out for this kind of capex?
The ad market is clearly recovering. As when you know, when the economy recovers, marketing spends tend to increase. We have seen that with Facebook that they are growing at the fastest clip in you know, two or three years. Nonetheless, one of the big questions, big extant questions with AI is kind of how do you monetize it if you have an ad tech business. One of the things with say Google Search or with Facebook is you're not spear fishing right you go in, You just kind of you
are fed lots of different content. Even in Google Search, you search for something and you might go all the way to the bottom of page or several pages deep to find the thing that you want. With AI, you're asking a very specific question and expecting to get a very specific answer. The business models for how then to monetize that are still really being worked out, So there
is a lot of expense happening here. It might drive user engagement, we have yet to see entirely what the consumer facing business model is.
This is Bloomberg Daybreak Today, your morning brief on the stories making news from Wall Street to Washington and beyond.
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