Tech Giants Report Q4 2022 Financials: Apple Faces Challenges, Meta Sees Growth, Amazon Cuts Costs: Apple's revenue declined in China, Meta saw sales growth and announced share buybacks, Amazon focused on cost cutting and reported revenue growth, leading to stock price increases for both companies, but concerns remain about user growth and engagement for Meta and government bans for Apple in China.
Tech giants Apple, Meta, and Amazon reported varying financial results for Q4 2022. Apple faced challenges in the Chinese market, reporting a 13% revenue decline, while Meta saw a 25% sales increase and announced plans for share buybacks and dividends. Amazon, which focused on cost cutting, reported a 14% revenue growth, surpassing expenses. The positive financial reports led to significant stock price increases for Meta and Amazon, signaling investor approval of their respective strategies. Despite these positive results, concerns remain, particularly regarding user growth and engagement for Meta and the impact of government bans on Apple in China.
Bank of England Hesitant on Rate Cuts Due to Inflation and Geopolitical Risks: The Bank of England is considering rate cuts but is hesitant due to inflationary pressures and geopolitical risks. Some investors are betting on a full percentage point rate cut this year, but the central bank hasn't announced when cuts will come.
The Bank of England is considering rate cuts but is hesitant due to inflationary pressures and geopolitical risks. Andrew Bailey, the Bank of England governor, mentioned factors such as Middle East turmoil and rising living standards that could lead to inflation. The MPC saw its first member voting for rate cuts since the pandemic, but the central bank hasn't announced when cuts will come. Meanwhile, investors are betting on a full percentage point rate cut this year. Shares in New York Community Bancorp and Ozora have plummeted due to concerns over their exposure to commercial property and bad loans, respectively. The US administration is preparing a response to the death of US troops in Jordan, and Lloyd Austin, the defense secretary, stated that options for retaliation are available. Lewis Hamilton's announcement that he will leave Mercedes for Ferrari at the end of the 2024 season is a significant move in the world of Formula One. This high-profile transfer is a release option in Hamilton's contract and will start in 2025. Hamilton's brand continues to grow, and he is already considered a mega brand in the sports world.
Apple's iPhone sales and Genius Bar repairs drive revenue growth: Apple's earnings report showed strong iPhone sales and revenue from Genius Bar repairs, demonstrating the company's ability to grow despite a slowdown in China. Meta's earnings featured a first-ever dividend and stock buyback, signaling confidence in the company's future growth and a focus on returning value to shareholders.
Apple's earnings report showed that despite a slowdown in sales in China, the company is still able to achieve significant revenue growth through iPhone sales and Genius Bar repairs. Meanwhile, Meta's earnings report was notable for the company's first-ever dividend and a stock buyback. In the context of the tech industry, Apple's earnings demonstrate that the consumer demand for iPhones and Apple's services remains strong, even without significant growth in the Chinese market. The Genius Bar repairs also highlight the importance of consumer engagement and the potential revenue opportunities from after-sales services. On the other hand, Meta's moves to pay dividends and buy back stocks indicate a shift towards returning value to shareholders and confidence in the company's future growth prospects.
Meta Announces First-Ever Dividend, Signaling Shift in Focus: Meta introduces dividends, prioritizing shareholder value and cost efficiency amidst strong ad demand, contrasting recent tech sector expansion and innovation trends.
Meta, the social media giant, surprised investors by announcing its first-ever dividend, signaling a shift in focus towards shareholder value and cost efficiency. This move comes amidst a trend of companies, including Ryanair, issuing dividends to keep shareholders engaged. Meta, which derives a significant portion of its revenue from advertising, has seen strong demand from both consumers and businesses, leading to increased ad spend. This focus on cost efficiency and dividends contrasts with the recent emphasis on expansion and innovation in the tech sector, as seen in Meta's metaverse ambitions. Additionally, other tech giants like Amazon and Apple have also implemented cost-cutting measures and announced dividends. Amazon, in particular, faced challenges in its ecommerce and logistics sectors, leading to increased wages for delivery workers and outsourcing costs. Overall, the trend towards cost efficiency, dividends, and shareholder value is an interesting development in the tech industry, especially as companies navigate economic uncertainty and shifting consumer behaviors.
Importance of resilience in tech sector: Tech giants Amazon, Apple, Microsoft, Alphabet, Meta, Facebook, and Intel demonstrated resilience in the face of economic uncertainty, investing in growth areas like cloud services and AI, and continuing to see strong consumer and business demand.
Key takeaway from the earnings reports of the Magnificent Seven tech companies this week is the importance of resilience in both the consumer and business sectors. Despite some concerns about high valuations and the shift towards cloud services and AI, these companies have demonstrated resilience in the face of economic uncertainty. Amazon, for instance, is investing heavily in its AWS business and AI capabilities, positioning itself as a major competitor to Microsoft in the cloud space. Meanwhile, companies like Apple and Meta continue to see strong consumer demand and business investment. These themes of resilience and growth are key reasons why investors continue to justify the high valuations of these tech companies.
Assessing the duration of current monetary policy stance: The Bank of England is evaluating how long they'll need to maintain their current monetary policy stance, considering ongoing inflationary pressures and global shocks like Middle East turmoil and wage pressures.
The Bank of England, under the leadership of Governor Andrew Bailey, is currently assessing the length of time they will need to maintain their current monetary policy stance, which includes keeping interest rates steady. Bailey has acknowledged that global shocks, such as turmoil in the Middle East and wage pressures, have presented hurdles on the path to potential rate cuts. He emphasized that services inflation, which is still at 6.4%, is above levels consistent with meeting the bank's targets. Additionally, wage growth, although it has come down, is still above levels that would hit the target. The governor noted that inflation has come down significantly due to the disinflation side of global shocks, but the Bank of England's role is to prevent this from becoming embedded domestically. Powell, the Federal Reserve chair, also expressed reservations about imminent rate cuts, while markets anticipate potential cuts in May or June. Overall, the Bank of England is focused on evaluating the duration of their current stance to address ongoing inflationary pressures.
Bank of England cautiously optimistic about UK economy: The Bank of England is holding off on committing to further interest rate cuts due to uncertainty and the need for more evidence of a sustained economic recovery, despite some signs of a pickup in activity and stronger than expected unemployment and household real incomes.
The Bank of England is cautiously optimistic about the UK economy, but is holding off on committing to further interest rate cuts due to uncertainty and the need for more evidence of a sustained economic recovery. The economy is currently experiencing subdued growth with some signs of a pickup in activity, but indicators such as unemployment and household real incomes have been stronger than expected. However, the Bank of England is hesitant to make a definitive statement on the economy's status, as global events and inflation remain potential threats. Overall, the Bank of England is proceeding with caution and will make decisions on interest rates meeting by meeting.
Exploring the Future of Technology: Risks, Regulation, and Ethics: Join industry leaders and regulators at Bloomberg Tech SF for insights on tech's impact on society, discussing risks, regulation, and ethical considerations.
The tech industry is facing a multitude of complex challenges and questions, from the risks and unintended consequences of new technologies, to the role of regulation and ethical considerations. These issues will be addressed at the Bloomberg Tech conference in San Francisco on May 9th. Keynote speakers include Evan Spiegel from Snap, Sarah Bond from Xbox, Brad Lightcap from OpenAI, and top researcher Dr. Fayfei Li from Stanford. Attendees will have the opportunity to learn from industry leaders and regulators, and engage in meaningful discussions on the future of technology. Join us at Bloomberg.com/techsf for more details and to secure your ticket. The conference promises to be an essential event for anyone interested in the tech industry and its impact on society.
Apple's China Slump, Meta Shines & Why The BOE May Lag The Fed
Recent Episodes from Bloomberg Daybreak: Europe Edition
The Fed's Big Cut, More Devices Explode & Global Shadow Fleet Exclusive
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) Federal Reserve Chair Jerome Powell led his colleagues to an outsize interest-rate cut designed to preserve the strength of the US economy as risks to the labor market mount, marking an end to their single-minded focus on quashing inflation.
(2) Traders ramped up their bets on the pace of future US interest-rate cuts after the Federal Reserve reduced its benchmark by half a point and signalled more cuts coming this year.
(3) The Bank of England is likely to decide against cutting interest rates for a second straight meeting, maintaining a patient approach to reversing the most aggressive policy tightening in decades.
(4) Israeli Defense Minister Yoav Gallant declared what he called a “new phase” in the war with regional Islamist groups and said troops would be diverted to the Lebanese border, an indication that long-held fears of a wider conflict may soon be realized.
(5) The City of London thinks the UK could attract as much as £7.7 billion ($10.2 billion) more investment by 2030 if it did a better job of attracting foreign sovereign wealth.
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Exploding Pagers Blamed On Israel, Fed Cut Record Bets Risk & Baby Hedge Funds
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On today's podcast:
(1) Iran-backed Hezbollah accused Israel of orchestrating an attack that killed several people and left almost 3,000 wounded across Lebanon, increasing fears of an all-out war.
(2) Traders who are locked into record wagers tied to the Federal Reserve’s expected interest-rate cut Wednesday are risking sharp losses if officials opt for a standard-sized reduction.
(3) BlackRock Inc. and Microsoft Corp. are teaming up on one of the largest efforts to date to bankroll the build-out of data warehouses and energy infrastructure behind the boom in artificial intelligence.
(4) Steve Cohen has stepped away from the trading floor. While the billionaire hedge fund founder remains Point72 Asset Management’s co-chief investment officer along with Harry Schwefel, he’s no longer investing clients’ capital.
(5) The German Finance Ministry is sticking to a plan to sell off its entire stake in Commerzbank despite UniCredit's move to buy all the shares offered last week, according to people familiar with the matter.
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Rate Uncertainty Highest Since 2007, Amazon Ends WFH & Norway's Currency Slide
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On today's podcast:
(1) Not since the lead-up to the financial crisis have bond traders been so divided about the outcome of the next Federal Reserve decision.
(2) Donald Trump is poised to capitalize on the second attempt on his life in recent months, using the shocking development to try to snatch back the political momentum that Vice President Kamala Harris has enjoyed.
(3) Amazon.com Chief Executive Officer Andy Jassy is moving to streamline the world’s largest online retailer and cloud-computing company, cutting management layers and ordering employees to return to the office five days a week beginning in January.
(4) Intel Chief Executive Officer Pat Gelsinger has landed Amazon.com Inc.’s AWS as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker.
(5) Stavanger harbor bustled in the sun on a recent afternoon, the hoisting cranes, working ships and rigs under construction testament to the city’s status as Norway’s oil capital, and the main source of its wealth. Stavanger harbor bustled in the sun on a recent afternoon, the hoisting cranes, working ships and rigs under construction testament to the city’s status as Norway’s oil capital, and the main source of its wealth.
(6) Keir Starmer said he’s looking to his Italian counterpart Giorgia Meloni for lessons on tackling so-called irregular migration, as Britain’s prime minister grapples with an issue fueling a rise in Western democracies of right-wing parties that are not natural allies of his center-left Labour government.
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Second Trump Assassination Attempt Jolts Presidential Race
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On today's podcast:
(1) Former President Donald Trump is safe after his Secret Service detail opened fire at a man who was wielding an assault rifle at his West Palm Beach, Florida, golf course Sunday, in what the Federal Bureau of Investigation called an apparent assassination attempt.
(2) Back in January, Premier Li Qiang trumpeted China’s success in exceeding its 2023 growth goal without resorting to “massive stimulus.” Repeating the same feat this year now looks less likely.
(3) The Bank of England looks set to stick to its tentative interest-rate cutting when it meets this week, defying skepticism from a growing cohort of investors who see a need for more aggressive action.
(4) Italy and the UK are poised to reaffirm their pledge to defend Ukraine as Prime Minister Keir Starmer travels to Rome to seek support for a proposal to let Kyiv use non-US long-range weapons against Russia.
(5) Widespread flooding in central and eastern Europe from days of unrelenting rain is playing havoc with rail transportation and causing more evacuations of residents as well as damage to homes and infrastructure.
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Daybreak Weekend: Fed Meeting, Eurozone Data, BOJ Decision
- In the US – a preview of next week’s Fed meeting and FedEx earnings.
- In the UK – a preview of Eurozone data.
- In Asia – a look at next week’s BOJ decision and TOKEN2049 Summit .
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ECB Uncertainty, Putin NATO Threat & OpenAI Launches 'Strawberry'
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On today's podcast:
(1) Clues on when the European Central Bank will next cut interest rates were in short supply on Thursday, with President Christine Lagarde and colleagues awaiting data on how drastically the economy is deteriorating — and how that will shift inflation.
(2) The US and UK governments are discussing allowing Ukraine to deploy British cruise missiles backed by US navigational data to conduct long-range strikes inside Russian territory, according to people familiar with the matter.
(3) The Bank of England's former Chief Economist -- Andy Haldane -- says the Chancellor's claim of a 22-billion pound 'black hole' in government finances is 'unnecessary, unhelpful' and a 'bad' idea.
(4) Republican Donald Trump ruled out appearing at another debate with Democrat Kamala Harris two days after he delivered an uneven performance at their first showdown of the election cycle.
(5) OpenAI is releasing a new artificial intelligence model known internally as “Strawberry” that can perform some human-like reasoning tasks, as it looks to stay at the top of a crowded market of rivals.
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Fed Rate Cut Bets Shrink, Trump Weighs Second Debate & The UK's Prison Problem
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On today's podcast:
(1) The bond market has ended its long flirtation with the Federal Reserve cutting interest rates by half a point this month as resilient inflation and labor market data reinforce a measured course of action.
(2) The European Central Bank is set to lower interest rates again, but will remain tight-lipped on the pace and extent of further action with inflation not yet fully defeated.
(3) Donald Trump said he is not inclined to have another debate with Kamala Harris after initially suggesting several additional matchups to supplement Tuesday’s forum.
(4) At least three top investment bankers from different securities firms have been detained by Chinese authorities since August, sending a chill through the industry.
(5) The early release of thousands of prisoners is a calculated move by the new government to relieve pressure on an aging system. Will it pay-off?
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Harris-Trump Fiery Debate, Yen Soars & Pensioner Benefit Cut Anger
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On today's podcast:
(1) Democrat Kamala Harris and Republican Donald Trump sparred through their first debate on ABC News, with the former president often on the defensive over abortion rights, the January 6 insurrection and on foreign policy. This podcast includes extracts from that ABC News debate.
(2) The Bank of Japan will continue to adjust policy going forward provided the economy performs in line with its projections, BOJ Board Member Junko Nakagawa said, in comments that bumped the yen to its highest level against the dollar since January.
(3) US banks scored a big break from regulators on new capital rules — only to ruin their own celebration with downbeat outlooks on lending.
(4) Keir Starmer received a warning shot from his own Labour Party over the difficult battles ahead as he tries to fix Britain’s public finances, after his government suffered a significant display of dissent over his decision to scrap winter fuel payments for most UK pensioners.
(5) Australian real estate listing provider REA Group Ltd. presented a £5.6 billion ($7.3 billion) takeover proposal for Rightmove Plc that was rejected by the UK’s biggest property portal by market value.
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Apple's AI-Ready iPhone, Goldman Trading Decline & Trump-Harris Showdown
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On today's podcast:
(1) Apple has introduced the latest version of its flagship device, the iPhone 16, betting it can entice consumers with modest hardware upgrades and AI technology that's still on the horizon.
(2) The biggest US banks would face a 9% increase in capital requirements — a dramatic retreat from the original plan — after regulators agreed to sweeping changes to a proposed package of rules, according to people familiar with the matter.
(3) Goldman Sachs is signaling a note of caution to investors after posting some of the biggest stock advances among its peers this year.
(4) HSBC is weighing combining its commercial and investment bank divisions as part of new Chief Executive Officer Georges Elhedery's push to eliminate overlapping roles across the company and shed expenses.
(5) For Wall Street, the faceoff between Vice President Kamala Harris and former President and Republican nominee Donald Trump may add another layer of volatility at a time when uncertainty around the labor market, interest rates and geopolitics is fraying investor nerves.
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Growth Worries Hit Stocks, Trump's '100% Tariff' & UK Boardrooms' £8 Billion Warning
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) Worse-than-expected economic data is fuelling concerns of a broader global economic slowdown as concern shifts from inflation to growth.While the Fed has all but committed to reducing rates from their highest in more than two decades this month, investors have been scrutinizing economic data for clues as to the scope and pace of the reductions.
(2) China's core inflation cooled to the weakest in more than three years, fueling calls for greater efforts to boost households spending as weak demand puts the annual growth target under pressure."You leave the dollar and you're not doing business with the United States because we are going to put a 100% tariff on your goods," the Republican presidential nominee said at a rally in the battleground state of Wisconsin.
(3) Donald Trump pledged on Saturday to make it too costly for countries to shift away from using the US dollar, adding a new pillar to his tariff platform.
(4) Millions of UK pensioners are in line for an extra £500 next year, a boost the new Labour government hopes will contain a row that's raging over cuts to winter fuel subsidies for the elderly.
(5) British supermarket chain Asda is set to face a crucial stage in its equal pay fight with workers in what could form the tip of an £8 billion iceberg of claims against the biggest UK retailers.
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Related Episodes
Boeing call and megacap earnings ahead
Show Notes
Seeking Alpha Earnings Calendar
Catalyst Watch
These are the top 10 ETFs with the most bullish sentiment - Barclays
Episode transcripts seekingalpha.com/wsb
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Apple’s $113 Billion Problem & The BOE’s Quick Pivot
Your morning briefing, the business news you need in just 15 minutes.
On today's podcast:
(1) Regulators on both sides of the Atlantic are training their eyes on Apple Inc., unnerving investors with fears over fines and threatening its market dominance. Shares of the company slid 4.1% Thursday, erasing about $113 billion in market value and taking their year-to-date loss back to 11%.
(2) The Bank of England has laid the groundwork for a shift to rate cuts after one of the sharpest turnarounds in guidance in recent memory, with data releases, investor bets and the UK's political calendar pointing to June for the first move.
(3) Chinese authorities are examining the role of PWC in Evergrande's accounting practices after the developer was accused of a $78 billion fraud, ramping up pressure on the global accounting giant that audited a slew of developers before the sector's meltdown.
(4) Carles Puigdemont, the Catalan separatist who led a failed attempt to break away from Spain, is bidding to make a return as regional president.
(5) A top Israeli official said his country's military is ultimately going to invade the southern Gaza city of Rafah and defeat Hamas "even if the entire world turns on Israel, including the United States."
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Meta & Amazon Surge; Apple Falls on China Concerns
On today's podcast:
1) Meta Platforms Inc. and Amazon.com Inc. spent 2023 cutting costs and re-focusing their businesses. It was a strategy that upended the lives of tech workers in Seattle and Silicon Valley, but appears to have paid off handsomely for investors who are likely to continue reaping benefits.
2) Apple Inc.’s latest quarterly results triggered investor fears that the company is losing clout in China, a long-prized market that generates roughly a fifth of its sales.
3) A monthly US jobs report due Friday will probably show a slower pace of hiring in 2023 following annual revisions, according to Bloomberg Economics.
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Tech trade tide turning?
Show Notes
Goldman picks top capex and R&D stocks
Tesla skids to a new 52-week low with earnings on tap for Tuesday
Verizon gains as Q1 earnings top estimates
Episode transcripts seekingalpha.com/wsb
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