Chipmaker is writing the demand for cuttingedge semiconductors. We set we had asset mark, a that is your business flash update. Romaine if you are looking to chinese asset company, up 23 . Buy a maximum security vault in singapore to store all your you also had iheart radio, which precious blue diamonds, you in dropped 3 . Luck. The freeport, considered asias fort knox, is looking for cloud strikes and some some recent ipos. Potential buyers looking to spend 74 million on ewald. Lets dive into our market action. Lets look at bitcoin. I thought this was interesting. They set this vault up in 2010. A roller coaster ride in the month of july. The whole idea was people with a lot of wealth and material earlier, bitcoin had been lower. I live on my own now possessions like gold, diamonds, ive got xfinity, in july, one point down double digits. Because i like to live life in the fast lane. Atis also up in a big way even cash, could have a freeport type of place to store that unlike my parents. You rambling about xfinity again . Stuff. One point up double digits on they were going to set this up youre so cute when you get excited. The day. Its best day in two weeks. Not entirely clear what is in major hubs and the idea was anyways. Ive got their app right here, people would come, but they i can troubleshoot. Behind this. Oncould be technical buying never made money on it. Melor i like how you told i can schedule a time for them to call me back, its great you have our number programmed in . The selling pressure. Ya i dont even know your phone anymore. To Pay Attention as if gold and the roller coaster ride will excuse me . what . Diamonds wasnt going to get my i dont know your phone number. Continue. Attention enough. Aw well. He doesnt know our phone number like is there is always a you have our fax number, obviously. This is a year today chart. Todays xfinity service. Simple. Easy. Awesome. For most of it, making small ill pass. Good economic bloombergs story gains, flatlining, then i head here, and they say banks were exiting the fiscal commodity of the facebook release of their business in 2014 and that libra currency, up about 250 on reduced the need for us to store the year. Our gold in a physical storage coming down 25 . It will be interesting to see space and that partly led to the how this resolves. Decline in the storage of these assets. It looks like it could bring caroline i like the mental image. More bearishness ahead. Goods delivered directly by plane and especially and an we have microsofts earnings released. Epsfiscal fourthquarter especially heavyduty elevator apparently takes the gold. Was a dollars . 71. Not everyone just has knocking it out of the park. Their gold storage in bitcoin. Up, hong kongng one dollar 14 was a number as the previous estimate. Is feeling economic pain from well get you more detail. Recent protests. Revenue higher than expected. That story ahead. This is bloomberg. 33. 72 billion. Intelligent cloud, this is what emily this is bloomberg everyone is focused on. 11. 39 billion. Delivering when the technology, coming up in the next hour, microsoft if is stock has gone up 33 . The revenue is up 12 . Gravity. The company beating expectations with a big lift from the cloud. Operating income up 20 . Plus, the congressman who says net income increasing 49 and mayebooks cryptocurrency 21 . This is a Company Worth more do more to endanger america than than 1 trillion and it is still 9 11. Able to deliver doubledigit growth. It will be adjusting to see what we will talk to happens. We are waiting on the forecast. Some of these numbers, particularly on the productivity and cloud side will be important. In a statement they say it was a record fiscal year. The partnerships with leading companies in every industry. They said they work every day with customers. They had a deal with at t. Deals with unilever and they managed to sell their cloud products. Recurring revenue is the future. Us is yana barton. Let me get your thoughts on microsoft. He mentioned how the stock has got up by more than one third this year. Is it because of its Growth Prospects . Tois it a stock who invents investors who are defensively minded like because of its slow growth and dividends. You hit it right on the head. Stock ifan inexpensive you look at the multiple onto the 19 basis. 2019 basis. It is an excess of 29. 4 times. They are delivering on growth. They have showcased a nice caroline microsoft is the pivot. Beat on the number, worlds most valuable public we traded company. It is expected that the cloud here in the u. S. , more than a total Addressable Market will trillion dollars in value. Exceed 400 million in three even more valuable after hours as is his revenue up 12 . Short years. The Beat Estimates on sales and profit. They post of the corner where they had 32 billion or so in 7. 9 , ipos forecast revenue sales. A long way to go. For the full year and guidance not a zerosum game because the market is expanding and they are that beat the average estimate. Executing. Romaine a lot of people are chewy up eight tents of a percent. Numberssome of their trying to chase the stock rally or whatever might be left. Dealing withime, earlier, but they say the online pet supply retailer ipo in june concerns about the economy. Is still seeing sales into the when you are thinking about Current Quarter and ahead. Caroline, right now, quality stocks and companies in this environment, is it the microsofts that investors time for asia ahead. We will talk about the impact or arebe turning to from the recent hong kong protest that is spreading to some of the retail sector. There other companies that big spending investors can look to . Yana its a little bit of everything. Travelers stay home. We have all been watching these images from afar of what is now is notnow is not the time ye going on in hong kong. Market. You buy stock. A lot of companies that have i assume that must be having an done well to date and those that have lagged. Economic pack. Protests seeing these one area in the market that i would highlight to investors looking for new places to be is within health care. Sunday. 40 people arrested, tens of it has been the worst performer today. Thousands taking to the streets. We saw violence throughout the it has underperformed city. Informationtechnology by 23 . When you have all of these protesters on the streets, that not all industries within health care are lighting. You had Life Sciences doing means shops cant open. Fromy well, benefiting mentioned a few of the ,ectors, swatch group came out secular growth and innovation stories coming through and solving real issues. We are starting to see the you have the pharmaceutical impact of these protests. Stays space left for dead. We have lvmh carrying reporting , first halfnd half theres a lot of innovation not recognized by the market. Its a sector that is trading at 11 discount to the market. Earnings next week. We take a look at how that affects their sales when it for someone looking for a little bit of defensiveness with an comes to be impact in hong kong. Taylor it is not just local opportunity of multiple appreciation can find both their. People on the street who go and there . See the stores prevented disrupted, but also preventing tourists. What has been the impact . When you are talking about we are now expecting mainland where the market is putting their money to work, is there a lot of cash on the sidelines . Chinese people to come to hong many thought they missed it. Kong less. Romaine i agree. That would be around 350,000 people less according to they have stopped picking. Estimates by hsbc. One area they are moving into, take out the mainland chinese there have been flows into people, taiwan and the rest of metals. Flights have it started out with what i thought yesterday was a rotation from gold into silver. Fallen by 5 in the month of that is happening. It also looks like a rotation june. We continue to see these hits on out of equities. The goldsilver ratio and the tourism, especially as we have seen protesters target tourists russell 3000 silver ratio have broken down. Going to mainland Chinese People to voice their issues in hong ray dalio alluded to this. Kong. Caroline we were just talking a paradigm shift. He said it would happen sometime about how singapore has the so called for knox where you can in the future. It looks like it is coming store if you want to be a quicker than we thought. Traitor of commodities. Could singapore be benefiting just as an asset from hong kongs demise . Diversification, as central , you see morea qe can we see an exit from hong kong . Shery sources tell bloomberg negative yield in debt. That singapore has received so it takes the risk off of metals, much interest since the hong which yield zero and you have to kong protest started, especially from mainland Chinese People who find that. Want to keep their money in hong negative debt is also a funding. Kong. He had a private bank inquiring it bounces the Playing Field and makes the metals more attractive. About singapore for their scarlet gold at 1447. Clients. Sources tell bloomberg that the silver doing even better. Monetary authority of singapore has instructed financial. 5 at 16. 37. Institutions in the city state not to deprecate hong kong publicly, because they do not want that image that they are benefiting from all of these just to recap some of the big earnings we got. Problems in hong kong. Romaine when we had the protest microsoft reporting fourthquarter results. As fiscal fourthquarter revenue in 2014, did we see a significant drop off in the type beating the highest analyst at estimate. Of Business Activity and if so, when did it pick back up . Shery it was quite bad. Almost a billion dollars less. That lasted for months. Eps, 1. 37 was the it started around september 2014. Print. The umbrella movement. 1. 22. S were looking for the occupy hong kong movement. When i arrived, it was so hot its a beat. Out there. The only people doing well where those selling water to protesters. All of the shops had to stay closed. We started to see some impact of romaine there are also earnings out unclouded strike, the Cybersecurity Software company that went public last month. That around the Fourth Quarter they came and nine on their of 2014 and the government of First Quarter numbers. On their forecast, they seem to hong kong saying that they saw be about the line. The biggest impact around fiscal year revenue coming in. Retail, tourism, transport industries. The average of right now, hong kong has not been doing great. Analysts estimates. Have seen the hong kong economy decelerating before the protest coming in better than expected. Growing at less than 1 every quarter. Of . 72. Or a loss this is expected to have an impact later on. Caroline great perspective. That is it for the closing for more on her stories, dont bell. Mix bloomberg daybreak asia. Taylor riggs is stepping in for what you missed. Tomorrow, the new fed president this is bloomberg. And governor kuroda speak. Taylor i am taking a look at economic data, preliminary numbers for sentiment for july come out 10 00 a. M. Eastern. Romaine dont miss this, blackrock reporting earnings before the bell. Caroline that is all for whatd you miss . Taylor Bloomberg Technology is next in the u. S. Romaine have a great evening. This is bloomberg. Hey im bill slowsky jr. , i am caroline hyde. Taylor i am taylor riggs. Romaine i romaine bostick. The u. S. Stock market managed to rally toward the end of trade today. We close at almost 3004 s p 500. Microsoft results getting a boost from subsumption based products. The fed. About that was one take away for this bank season. Turns upjohn williams the feds dovish tone. J. P. Morgan Asset Management at with a major call, looking for 10 year treasury yields. Earnings coming in right now. Microsoft, first out of the gate. All are beating and cross of the major metrics. Their fiscal fourthquarter eps and revenue, above estimates. Intelligent cloud revenue up 19 . Productivity up 14 . All those numbers beating analyst estimates. Cloud strike, just went public last month. Getting aity firm forecast well above analyst estimates for fiscal fouryear revenue and their loss per share, which is better than what sam analysts are projecting. Taylor argued we were the most important companies. A Software Analyst at Bloomberg Intelligence. We have had some minutes to digest the information. What are the Key Takeaways . Pristine across the board except for consumer pcs. That has been the same for a while. That is typically the trend. Consumers are buying many pcs. All the numbers are good. The key thing will be guidance. It will be forwardlooking. Not backward moving. Caroline one of the keywords we are wanting to avoid or hear from. Germany,ding us in that companies sounding the alarm on china. That takes you to Investor Confidence across the board. Thats the biggest question about whether microsoft will talk about a macro slowdown. Big for the tech space. Space, value has been very high for almost all major players. As well. Has been good microsoft growing 14 , unusual for a company this size. If the next year is not right, that could put a dent in it. Romaine how much does cap x matter to microsoft . Than whatme in later analysts were expecting. Is this a big factor . No. They move it up and down depending on the demand. Dont put that much credibility to those companies. We know they are the leader of amazon web services. How did they differentiate themselves and grow that . Microsoft has a wide variety of cloud products. Cloud infrastructure products. Thats the only place where they compete directly with amazon. A number two player in that area. Overall cloud experience is strong from microsoft. We think they are in a better position than almost any company. They have a good footprint on Legacy Enterprises and public cloud. A good mix of both of them. Public cloud is where the Big Investments with ibm is. Thank you so much. Coming up, a big mess from Morgan Stanley amid a big wink week of bank earnings. We will have a rap on all the weeks results. This is bloomberg. Romaine more earnings. Truly went public last month. Net sales of 1. 1 billion. Slightly above estimates. Basis,oss on an adjusted 15. 8 million. That is slightly less than what analysts were looking for at 15. 9. Pretty much in line with what the street was expecting. Still waiting for forecast numbers, which is really what the street will be looking for. They did preannounce some of these numbers when they went public. Taylor we are also looking at another big story. Banks and rates. Morgan stanley wrapped up the round up today. The ceo said the bank is focused on expense control going into a. Of uncertainty. A a period of uncertainty and period of rate cuts instead of hikes. We are joined now by our bloomberg columnist. In times of stress, you need to act more quickly. Perhaps this is leading some traders to look at 50 basis points instead of 25. The timing is suspect because of the feds back out. Is about to start. Sometimes, when they have something in mind, they are extra forceful in the days before that. Between Richard Clarida and john williams, two of the big three, in terms of fed speakers, they are saying we need to act preemptively and aggressively. You are close to the zero bound, you need to go hard and fast. It is starting to get people concerned that it will be 50 basis point cut. Caroline we have been hearing of the need for shock and awe that we might see from the 50 basis point cut. We asked someone earlier how much they see yields on the u. S. 10 year going. All the way down to zero. I think thats where we are headed over the next couple of years. We have had the recovery. It is coming to an end. Now the Central Banks are falling into line and cutting rates. We saw overnight with the bank of korea. We have seen it in the bank of indonesia. You will see it at the end of the month with the fed. You may see it from the ecb sooner than people expect. We think at this point in the cycle, you need shock and awe. That is the journey we are on until Something Different happens. Caroline how much do we think the market is thinking that is where we are going. Richard clarida said there is only a limit where u. S. Bonds can diverge from global yields. Know they are red zero or negative right now. You have to ask why the fed is cutting rates. They are trying to stoke inflation. 0 is a bold call. I think the low of all time is 1. 32 . It would have to go down far. It is hard to wrap your mind around what it would takei thine u. S. For that to happen. There is a lower for longer feeling out there. Everyone is getting ahead of themselves to see how far they can go down. Romaine we will bring in Allison Williams. She joins us from princeton. Have gotten a few of the biggest banks out there. One interesting thing is the idea that the consumer side of these businesses had time pretty well or better than some of the trading and Wealth Management sides to the business. Rateyou look at the environment and see what the ceos are saying, what do you make of that . And do you see it continuing . A it does seem like there is shift of the health of the consumer business. The u. S. Economy remains healthy. The key risk is that a lot of the Global Concerns leak into the economy. That is the key controversy and the thing we are watching. In terms of the Capital Markets, we saw declines in activity. Declines in trading and banking revenue was a negative in terms of the Capital Markets that invest in baking businesses. Asset prices did support the wealth businesses. We will see that with some of the Asset Managers over the next couple of weeks. The Interest Rate environment has worsened a lot. We have probably had expectations coming down for Net Interest Income for the end of the year. Take wells fargo same banks are coming in at the higher end. We have citigroup saying they are going to focus on tactical cost cuts. Thats an offsetting positive. Taylor how prepared are these things for the rate curtsy echo cuts . You have banks pricing in rate cuts. How sticky are the expense levers where in Something Like three fed rate cuts, they can reduce thee pipe and expenses fast enough . Alison one thing is Technology Spending is an area where banks are not willing to reduce. Even if the environment becomes more uncertain and we heard that from j. P. Morgan and goldman sachs. We hold it from wells fargo where they said they will have higher risk costs. Morgan stanley basically said they are going to continue with their current cost program. They dont think things are so drastic that they need to implement more measures. There are a couple of banks in the Fourth Quarter, when things were difficult that said we need to take some more aggressive measures. One of those is citigroup. Another would be a global peer at ubs saying the same thing. Well see the benefit of that in the second half. Broadly, i would say they have bigger cost programs and they continue to execute on those. Caroline Allison Williams with Bloomberg Intelligence. We thank you for bloomberg opinion. A quick check on the headlines. Toys r us will open to stores in the holiday season. One will be in houston. Beall goes well, that could 10 stores by the end of next year. The company had more than 700 stores in the u. S. In 2017. Philip morris has its biggest gain in many years. Smokeless tobacco devices have been getting market share. Expect to sees semiconductors and their projected quarterly revenue. Way is involved. Romaine another story on the radar. Dark days for white meat. Demand for chicken thighs is taking off. Is this the end of the reign of consumer tastes tend to chain. Change. I guess people are finally realizing what people are with taste have known for years is that dark meat is the best part. Taylor our consensus estimate was dark meat is just now taking off. We have all been eating dark meat forever. I did like the story. I caroline thought was interesting as you to talk technology. Apparently automation favors dark meat. Robots find it easier. Romaine i dont need to know that stuff. The other part of the story is dark meat. Its a topsyturvy world. Taylor all those robots are deboning that dark meat. Taylor im going to get us to break. Coming up, home sales in the u. S. Are sinking on a strong dollar and trade wars. We will have more, next. This is bloomberg. Were the slowskys. We like drip coffee, layovers and waiting on hold. What we dont like is relying on fancy technology for help. Snail mail we were invited to a y2k party. Uh, didnt that happen, like, 20 years ago . Oh, look, karolyn, weve got a mathematician on our hands check it out now you can schedule a callback or reschedule an appointment, even on nights and weekends. Todays xfinity service. Simple. Easy. Awesome. Id rather not. Mark President Trump a u. S. Warship has shut down and destroyed in iranian grown in the strait of hormuz. The president says the drone was threatening the safety of a ship and its crew. Earlier, iran set its revolutionary guard seized a foreign oil tanker and its crew for smuggling fuel out of the country. Hours later, they released video showing the vessel to be a United Arab Emirates based ship. Was onnt trump says he pleased that the audience at his rally in North Carolina chanted send her back as he criticized congresswoman elana omar. Trump recited a list of grievances and some in the audience began chanting. The president was asked about it at the white house. It, but itee with was quite a chant. It,lt a little badly about it started up rather fast, as you probably noticed. Omar firedesswoman back, speaking to reporters outside her office, calling the president s rhetoric fascist. States,in the united this agreement disagreement is welcome, debate is welcome and in the peoples house, all of our voices are uplifted and heard. You see her, you see me, you see everyone in this country. They are not only my neighbors, my friends, my sisters and brothers, they are also my constituents and my fellow citizens. Mark congresswoman omar added of the chance, this is what the president and his supporters have turned our country into. Eu Economic Affairs commissioner says policymakers need to think about how to respond to the global slowdown. He spoke with bloomberg at the g7 meeting in france. Is one thing, but we also need to reflect fiscal policy. It is high time that we built the right policies, because we see a slowdown in the economy everywhere and also the need to address various risks that could come together. In his comments, he expressed concern about facebooks digital currency, saying it needs to be fully regulated. Global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. I am mark crumpton. This is numbered. This is bloomberg. Romaine boeing says it will take a 5 billion charge regarding the grounding of the boeing 737. There are additional costs of costs to beillion, taken for the second quarter. This was largely expected, but now we have a number. The north American Burger chain red robin is rallying after hours. That after a formal offer from vintage capital buying for 40 per share. We knew that this was potentially coming back in june. On the 13th, they said they would be willing to take this did, it will be its thirdlargest shareholder. U. S. Home sales to foreigners tradenking, increasing tensions. Economists are pointing to concerns ranging from ryan rising prices to foreign cars and sees rising against the dollar. We are joined by the managing director at first, how much of this is just slowing global Macro Economic trends and how much is this distinctly related to politics here in the u. S. . Its a great question. When you look at the mindset of a foreign investor, they are coming here for Exchange Rate way, return on investment, given the recent boom in the real estate market, and stability. When you come from another country, you are bringing capital. Bring investors, to to shield from assets and concerns you may have with other countries. The issue we are seeing the most is our country is not seen as as stable as it once was. In our firm, our policy is a we try to meet with every Foreign National client we can. Historically, the conversation has been about taxes. People want to know how they can avoid taxes. Is, the whole conversation whats going on with trump and the white house, and what they are concerned with is, are we at the bottom of the market, is this the best time to buy, can i get the best discount . Romaine i could understand on an absolute basis how you would look at the u. S. And say things are bad, but on a relative basis, if you are shopping around for a place to park your money, how does the u. S. Hold up . We have seen a global slowdown in foreign investment. London slowed down tremendously. Where we compare is that is makinginstability us be viewed as not as stable. Even taking london into consideration with exit. The problem is capital is not necessarily going to other countries, it is slowed down in general, but if money were to come off the sidelines, i dont think the u. S. Market is going to be on the top of the list. Take a look at the stats. 86 debate decline here today. Looking at that state that stat, which came from the realtors association, the numbers are down traumatically, but you have 13 billion coming in. In china, is it largely trump, is it the trade tensions and therefore association with that or Something Else . It is twofold. Every other day in the paper, hearing trade war with china is not good for consumer confidence. Number two is the capital restrictions of not being able to take out more than 50,000 per year as a country. That has always been in place, but it has only started to be implemented in 2017. Consumer confidence in china has deteriorated and they are having trouble getting money out of the country. One country that comes to mind is russia. Given the high end sanctions we have been placing on Russian Oligarch money, trying to find a place to leave their country, does that come in anywhere . Slowdownis the biggest , 50 6 decline. Russia would definitely be up there. I dont know the exact statistic, that i have seen a tremendous slowdown coming from russia. Very interesting. All things real estate, thank you so much. Coming up, the postipo test. More on the companys first result since going public in the. This is bloomberg. Caroline time for a look at what is trending. Flatten newposal to rules on private equity is said to be an economic patriotism plan. Bloomberg. Com has a story on President Trumps new helicopter. The new marine one left scorched marks on the white house lawn. Lockheed martin is working to fix what they call a high risk problem. The first of a new fleet of helicopters is supposed to go into service by september 2020. Elon musk once to connect human brain to a computer. A new company will seek fda approval to start trials next year. Eight millimeter holes will be drilled into peoples skulls and wires will be inserted to allow people to connect to their phones via the tooth. You can follow these stories on your terminal and at tictoc on twitter. Thanks, chu b, the pet supply Company Controlled by their firstorted earnings as a public company, providing forecasts for sales for the Current Quarter and year that did top analyst estimates. Withto talk more about it us is Bloomberg IntelligenceSenior Analyst for consumer discretionarys. Lets start with the discretionary thing. Is this a discretionary or a stable stock . Much of their product is discretionary, but they have a huge stable version. Is a moatet medicine that when you start going there, you will keep going there. The numbers came in line as we were expected. They just gave this number 17 days ago. This is about continuing to grow and take market share, arguably from market share. How will they compete with amazon to keep up the doubledigit growth rate . Their main focus is on personalization and service. Many people when their pet has passed away have sent flowers, there is a lot of high touch in that sense. Are on a of customers subscription asis. That breeds some loyalty and a buffer. If you think about amazon and chewy in a broader scope, it is likely they are taking share from small specialty places. I see so many of these boxes in my apartment building. Clearly, people depend on them. They talk about 11. 3 million active members. Are we getting enough outlook . In terms of forecast he didnt give any forecast. They havent given us too much information just yet, but with this type of company, people tend to look at the top line growth, and that is what they gave out 42 for the year. Question is, can they consistently do that and maintain at least some of their growth margin . Romaine how do you become profitable like this . Former pet owner, i would certainly splurge on things, but i was also very price conscience. If you have a certain brand you like, there might be another store that sells it for cheaper and you would go there. I think in a lot of these companies, where they have multiple brands across category, they have a value and a premium brand. Once they get you in the habit of having a brand, maybe you would go value on Something Else, but then you would be premium on another category. By having that variety, they are able to have a portfolio approach to how they make a profit. Taylor we will make sure to have you back. Romaine am i the only pet owner on this panel . Taylor i had a cat and im going to get a new one. Caroline he said former. Are you going to get a new one . Romaine of course. I told my son we would get one. Caroline so its just me, the heartless one without an animal. Taylor as a reminder, chewy ceo will be on daybreak tomorrow at 8 30 eastern. Make sure to tune in. I heart media is returning to the public market, but not in the usual way. The Company Announced last month after exiting a yearlong bankruptcy that it was approved for a direct listing on the nasdaq. Bloomberg spoke to the ceo earlier today about why the company chose to forgo and ipo. Time with investors and analysts and thought we could get the attention we needed without having to sell stock today. Mostlyadnt been owned by mutual funds, hedge funds and so on. Is this an exit for some of those investors . I cant speak for them. I think we have got a Great Company with a great future ahead. Where the number one audio company. We Just Announced earnings. We had 2. 5 up on revenue. 3. 8 , you saw the operating leverage in play in terms of converting that. There is in the community a little trepidation about radio advertising revenue. What could that region 2019 and beyond . What is great about us is not only do we play in the radio revenue bucket, and we outperformed the radio marketplace, 200 basis points, First Quarter this year, we are over 300 basis points outperformance of that, but we also play in podcasts, we are the number one commercial podcaster, expected to be 400 million this year, may be doubling for next year. We are in digital with our streaming digital services. We are in events with sponsorship, and we have got the new smart audio analytics and attribution tools, which allow us to play in the digital pool as well. Finally, what you are finding is with the decline of tv, radio has been rock solid in terms of reach. It is about 40 of