tv Whatd You Miss Bloomberg July 21, 2020 4:00pm-5:00pm EDT
of 2021, that would be a negative catalyst. there are other have -- health-related things to talk about. we know there's a surge of new cases in the u.s. and that continues to be a problem. caroline: as we ring the bell, we see nervousness around the market as we close. the volume is much higher on the nasdaq up 24% compared to the 20 day average, but we closed down 8/10 of 1%, whether profit-taking from yesterday's run-up in the lofty stay-at-home name that have done well amazons, zooms. it is noticeable comedy at performance of these small caps. taylor: we were talking to jack, a catalyst, to move this market out of the range bound. morning, en said
between an unfilled gap 3259. that gap needs to be filled with some bullish moments. as you know, we are well above 250 100 day moving average. as you said, those small-cap stocks, big performers. really beaten up so far. finally getting -- we are out with earnings as well. one that you and i have been. second-quarter revenue seems to eat --gnificant significant beat. revenue coming in at about three and one quarter billion dollars.
the forward guidance looks strong. that might be why shares are up. and to why the forward guidance looks higher, what divisions within that is this are showing strength. -- that busyness are showing strength. caroline: the company's conservative forecast could add to the fact that it is likely to beat overall. worried about the global auto sector, industrial gear shipments. the is a notable beat for second and third quarter. maxim last week saying they will be teaming up to take on the likes of texas instruments. revenue for the third quarter looking pretty strong for that business. let's get the take from gp morgan asset management strategist jack manley.
maybe it was time to see many of these companies beat, but it is all about the forecast for the third quarter. texas instruments is one of those sectors that perhaps has not been eaten up -- not been beaten up as much by the stay-at-home moves as others. if you are looking perhaps not just within the united states in asia asternally well. jack: earnings, probably the most important thing we are getting this quarter. unique in quarter is that the first quarter did not give us a whole lot of guidance. we were kind of left blind out there. we have always said that rockets more than anything hate uncertainty. clarity is required for a market
to perform well. moving into the second quarter earnings season, actually getting some guidance out of these companies, i think is enormously important. it should help to shore up guidance and accurately price these things. i think we will also and up seeing, the technology and adjacent names will be able to weather the storm in some capacity and perhaps on a relative basis beat out what you are seeing in other set your in an that is resilient otherwise turbulent world. at jp: your colleagues morgan are looking at an additional $65 million of fallen angels the rest of the year. how were you looking at downgrades from investment grade
the lowyield, given yield environment? jack: we knew that there was already this risk of so-called fallen angels. corporate leverage was one of the hottest topics of most of our discussions over the last couple of years. the fact that this persistently low interest rate environment allowed for some of these so-called zombie companies to pop up, companies that were able really through debt, not establish any profit. these were the companies that were proportionally at a disadvantage when it came to downgrades. what has happened recently with issues,ash flow shutdowns, has exacerbated this issue. the fed has come in with an
extraordinary amount of buyer power. a number of different facets of the financial market including those so-called fallen angels. i think there is some implicit support for that market. dipping your toes into credit a little bit could be warranted. spreads blowout as wide as they were during the heat of the covid crisis in march or april. i think there is a limit to the upside that investors can look for in credit markets. jp asset management global market strategist, jack manley, thank you very much. as we look towards "what'd you miss?" we will be discussing all things to do with europe's unprecedented stimulus push. this is bloomberg. ♪
♪ caroline: from bloomberg's world headquarters in new york, i am caroline hyde. what you missed was a faded to the close. technology stocks, today's under performer. meanwhile, a massive stimulus deal. eu leaders agree on an unprecedented 750 billion euro infusion. school is out for the summer, but for how much longer. we speak with the ceo of the national academy foundation on handling virtual education and
the impact of the coronavirus. taylor: we are awaiting snap. spending.ck in ad again,k that snapchat, and wall street, second-quarter daily active users lagging estimates. revenue beating estimates. we want to continue to look at engagement. some of these strong shelter-in-place orders. act of dailymaybe users are lagging. how do you turn that into some of the monetization opportunities and that revenue opportunity? users, 238 million. analysts were looking for about 239 million users. caroline: it is like netflix, a stock that has run up so hard. if you are not going to smash it
out of the park, you are going to be hit in terms of your share price. a slight mists on daily act of users. there is still that cloud hanging over snap, off by some nine percentage points. even though second-quarter revenue lived up to ktok, theons, within ti discussion is whether it will not be so prevalent within the u.s. texas instruments managed to beat in terms of expectations. helping the share price of intel as well. third quarter revenue better than anticipated. 3.25 to $3.5 billion, well ahead of what the market was looking for. second-quarter revenue also beat. taylor: in the middle of earnings season, we also got
that massive stimulus bill coming from europe. look at euro-dollar here. yesterday, we were talking about some euro strength, the highest relative since january 2019. your continuing to see some further euro strength here on that package that has been half grants, half low interest rate loans. after all these days of tough talk, european union leaders have agreed on that stimulus package. i do want to bring in some of the leaders on that. listen to what they had to say. >> the stakes could not be higher. >> the differences remain very great, so i cannot predict whether we will reach an agreement. >> i would say less than 50% but let's be helpful. dutch man is the real responsible man.
>> the majority of the member states trying to come closer to four countries but they need to also make an effort. >> we need to come up with a response to arguably this biggest crisis of the european union. historicaltaken steps we can all be proud of. signal to a strong europe, to europeans, and to the rest of the world. taylor: for more, i want to .ring in tina fordham great to have you. talk to me little bit about what you see is the big win for this deal. is it the fact that you are able to get 27 member countries together and agree to something. tina: it is rare that you will of support the
words of politicians who are very prone to congratulate themselves. in this case, let's give credit where credit is due. this agreement is a genuinely historic rate through at both the political level, as we have said with the agreement of member states, and at the eu integration level. which has really been the stumbling block for investors to believe in the durability of the eu has a long-term prospect. caroline: do you see this as needing full solidarity? do you think the existential crisis question is behind us? tina: it is easy to poke holes in this deal. it is less than the member states wanted. it does not put pressure on hungary and poland for their problems with the rule of law.
but it does send a very important signal, first of all to the citizens of eu member .tates italy and spain, who had been hit hard by the crisis, were becoming euro spectra -- euro skeptics not because they wanted less europe, but they wanted more europe. and we can see what happened to bond spreads today. it is not quite euro bonds. but i think any german economist you would talked to the past five years would have told you that this sort of agreement was impossible. the skeptics have been proven wrong. i have thought it was possible because the political winds are turning. taylor: is the composition loans --rants and
should we see more grants since this is a pandemic and no one's fault? tina: it is a really important point. first of all, it is a huge number. it did come down on the side of grants. ofember the degree conditionality and austerity members that were imposed on the southern member states really also brought us closer to the populist fears that had preoccupied many politicians and markets for a long time. i think the dutch prime minister got some of what he wanted by bringing that number down. the dutch have an election coming up soon.
the italians and spanish get what they want given that they don't have to go to the dreaded european stability mechanism, which is regarded as quite onerous. a rejection of those austerity measures that were so unpopular with citizens. caroline: europe took it to the wire, four long days of negotiations. we now turn our attention to the wire that the u.s. will be treading as well. hopes that congress can pass further support for the u.s. economy. how many calls are you fielding in how much do you expect terms of fiscal support on this side of the atlantic? tina: you put your finger on this very important dichotomy at the moment. as an american based in europe for the past 20 years, i spend a lot of time kind of interpreting for investors the idiosyncrasies
of u.s. politics for non-americans and the other way around. thepe has defied stereotype. return to economic , weth and a way out of this can see a second spike where countries have reopened. i was in italy last week. the united states is really facing a perfect storm. yes, i think there will have to be a further round of stimulus. is political debate completely different. that some might be used to being on unemployment and it is a disincentive to going back to work. bear in mind, my focus is political risk, things that can impact election outcomes,
environments. the u.s. and europe have both turned on the tap, the big bazookas. i think in the united states, the core coronavirus response colliding with elections coming divisions about the best way to deploy these measures. taylor: thank you to tina fordham, avon hearst partner and head of global strategy. we go back into the earnings world. it is what united airlines is calling the most difficult financial quarter in their history, a net loss of $1.6 billion, adjusted net loss of $2.6 billion. adjusted operating revenues down year-over-year. more importantly, on the
humanitarian perspective, employees took a voluntary separation. daily cash burn in the second quarter was $40 million per day. the cash burn has been a real focus here of analysts. second quarter operating revenue up about 87% year-over-year to $1.5 billion. $9.31 persing about share, a little bit wider than what analysts had estimated. united airlines posting a bleak picture. ofthe tech sector, concerns certain environments. increased their daily active users 17%,
increased revenue 70%, but the net loss widened. shares up so far this year. fallen 6.5%, shares have as much as 12%. pinterest, at one point, down by 5%, now off by 3.5%. coming up, we discussed politics a little bit more. two controversial trumpet ministration nominees to the federal reserve board of governors got approval. this is bloomberg. ♪
taylor: president trump's and the street -- president trump's administration is moving closer to filling two board seats. tolton was an advisor trump's campaign and waller serves as an advisor to the st. louis fed and is well-known known for his position against raising rates. again, the senate banking committee, what is the next hurdle? >> next, it is onto the floor of the senate, once mitch mcconnell can find some time to do all the processing and get a vote of the full senate. both of these candidates have to get 50 senators to back them because of course if there is a tie, vice president pence would break it in their favor.
that means they can only afford three defections. chris waller is going to sail through this. he is a pretty well respected economist, something of a maverick. but his views have proved to be quite prescient. he was against raising interest rates quite a while ago, said they should not worry about it. that has proved largely correct. he has been, unorthodox, but he has backed that up with research and arguments. judy shelton come on the other a fight on our hands, or the administration may have a fight on their hands in the senate. mitt romney from utah has already said that he has concerns about her nomination. we are not really sure yet how it may turn out.
caroline: a reminder, she is pretty unorthodox, pretty controversial. chris: she is highly -- caroline: we have some technological issues with chris. can you hear me? we will have to discuss a little bit later. he was going on to really discuss how shelton perhaps -- previously a supporter in return to the gold standard, and now many are worrying about her independence from the trump administration if she were to join the federal reserve. let's get a check on the latest headlines. boeing's comeback for 747 max. the agency is satisfied that boeing has completed the software and hardware updates. theof the few black ceos in yesterdays quit after
year on the job. resigning suddenly after allegations of inappropriate behavior. isestry's board investigating allegations that he had posed as a photographer years ago in order to lure women into a relationship. bloomberg,een by robinhood said its efforts would be best spent strengthening corporate businesses in the u.s.. that is your business flash update. let's get back to some of these s.y earning united airlines, one of them. taylor: and the press release in the first sentence but this better than i think any of us could say, saying this has been the most fickle financial quarter in our history will posting an 87% decline in
caroline: the debate on whether to reopen schools in the fall continues to rage on. down, a as schools shut not-for-profit developed a national network of career academies with a presence in some of the hardest hit states like new york, florida, texas. we are joined by the ceo. talked with about national really foundation and you build schools within schools. when schools had to work from home has many did, and now are
shut for the summer, how are you , andg a pivot to online how do you help those which are not as well serviced and wi-fi, coming of it he? -- connectivity? day, ahe end of the school cannot do anything alone. and that was before covid. we decided we needed to open up. so we pushed everything we had online to everyone. our design is built around the notion of a public-private partnership. schools work with companies to help young people get exposure and experience in the work place. those companies stepped up around the issue of devices, hotspots, methodologies to make sure we can get an even distribution of content and opportunity to our young people.
-- stepped up,ep offering hotspots, putting them on buses to take them out to those rural areas that did not have adequate conductivity. at the end of the day, it is about innovating, finding solutions in this moment, not letting our young people fall behind. you sound really optimistic in finding the silver linings and what are some really dark clouds when it comes to not only a global pandemic but also a global moment of reckoning when it comes to inequality. how do you find your students responding to this and making sure inequality does not accentuate when others perhaps otherset the learning are able to afford?
>> i get to listen to and see our young people, amazing and ability -- amazing adaptability and willingness to approach this new world we are facing with optimism for our future. i think what is really important for nonprofits, governments, structure a do is partnership around young people and make sure some of these new innovating companies are operating in partnership with the young people, not just creating a product they hope someone will buy. i am hopeful because i see people carrying desperately around addressing some of the issues around social justice, covid, wes moment of really are feeling separate.
i am worried the most about people not coming together and addressing the challenges of their community together. taylor: the debate has really raged on about whether to open up schools or not. i'm curious about what your thoughts or gap that has been created from this pandemic if schools do not reopen, the lack of technology, the lack of a strong leader at home that can oversee some of the homework. >> absolutely. i think it is so important that nobody believes there is a one-size-fits-all. every community is different. around theat leaders country that partner with us. d.c. before covid, during covid, after covid.
they are building plans based on the knowledge of their local communities. they want to make sure that their teachers, employees, and students are safe. i think there is an important moment here for us to acknowledge that local leadership knows best with a situation they are in. but, to push them in a time when there is too much uncertainty or parents are afraid or teachers spread i thinkut is a mistake. i think we need to partner with those closest to the ground, look at the numbers, and follow the science. founded years ago, and stanley, who used to be head of ofi, came to this idea people needed to be fit for the
financial world. how positive an era is it right now for people still giving back? you have talked about the partners on the ground able to have buses to provide wi-fi for some students? >> in this moment, i think it is on us to make the case that investment in what we do will affect the outcomes that they care about desperately both for their shareholders and employees , and for the country at large. i think it is a challenging time , without question, to bring resources, but i think the way to do that is to have clarity of impact and to be able to show the through-line from the young people today and the opportunities for them in the economy of the future. i think our biggest argument now that we are pushing hard is, if you wait for universities and
colleges to address internships career preparedness, it is too late. we need to reach into our secondary system and connect young people sooner for the opportunities of the future. taylor: very well said. i want to get over to the first word news and an update on what else is going on in the world. mark: president trump's threat to send law enforcement to patrol new york is probably not serious, but if he did follow through, the city would take legal action. that is according to governor -- orting to mayor bill de blasio. oregon, raising the prospect of a constitutional crisis. mayor de blasio told reporters, "this president blasters and
bluffs and says he will do things and they don't happen on a regular basis." >> what happened in portland has been a tragedy. backfired, made things worse, created a huge amount of pain and anger in that community. the federal government coming into a situation and making it worse. on top of it, appearing to violate constitutional rights. arresting people without identifying who the arresting entity is. using unmarked vehicles in a way that is confusing people. it is a very disturbing reality in portland. mark: oregon governor kate brown said this is a democracy, not a dictatorship. mayor lori lightfoot is pushing back against the president's threat. said, "i will do everything in my power to stop
you. twice in recent days, the president has said he wants more law enforcement officers sent to cities such as chicago, philadelphia, and new york. the justice department is accusing chinese hackers of stealing hundreds of millions of dollars of trade secrets from companies around the world and more recently targeting firms developing a vaccine for the coronavirus. prosecutors say the hackers stole information that they knew would be of interest to the chinese government. targeted 11ly nations including the u.k. and germany. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. ♪
caroline: let's have a quick check on what is happening in terms of the earnings. to get you back up to speed, snap is pulling down some other key players within the social media space because it did not live up to the rather lofty expectations when it came to daily active users. ease the investor base. down 5% on snap, was down as much as 12% at one moment. we do see a lack of clarity coming from the business. taylor: i would argue some of the biggest breakthrough we get here is with facebook. some of the other shares falling. all over this, bloomberg
intelligence senior analyst, jitendra waral. here, take a look at snap is this a lack of advertising? where the eyeballs good but you were not able to monetize it? jitendra: it is actually the opposite. revenue numbers, they came in at her. all the engagement that they saw in the q1 results, kind of sustained through the quarter. that was the good news. the surprise here, the user numbers fell short. this covid-19e related boost in content engagement, we saw that in traffic data across different third-party services as well. sort of signaling that the content boost has probably
topped out. what is interesting over here is the advertising demand coming from these offsets, from e-commerce, from games, apps, that has held up well. the stock has tripled really since its bottom in march. what the engagement numbers are actually showing us is the engagement is strong, especially among older age groups. that core metrics are still there, the expectations were high, the stock has run up a lot. but definitely the content boost we have seen because of covid, it seems like it is topping out. caroline: what does that all speak to in terms of the people who commit money to this business? it is interesting that average peigel's evan s
remarks, saying they are in a unique incision of strength. are they in a unique position of strength? will they benefit from july in particular? jitendra: some aspects. ofp, they have struck a lot partnerships with disney, espn, nbc, nfl. same thing with the augmented reality features. they have some aspects with their audience that has been very resilient to attacks on facebook and instagram. we think the longer-term story is still intact, still strong. it is this near-term volatility snap as much hurt because it is a smaller player. july,neficiary aspect in i am not sure it will be that
big. one thing to watch out for is tiktok. banned in the u.s., that could be a positive given the overlap of the user base that these two platforms have. tiktok skews a little younger but since snap is probably the closest, it could benefit from them. i think the near-term volatility will remain. the content used has topped out. as far as revenue growth, longer-term. taylor: i keep hearing that snap is one of the biggest beneficiaries of tiktok. coming into this report, i was hearing analysts say that one of the biggest beneficiaries from the facebook advertising boycotts would be snap.
when do we start to see that? have we seen some of that demand pulled forward yet, or does that demand just hit later on in 2020? jitendra: no, we have not really seen that impact yet. most of these partnerships, we have not really started to contribute have any to revenues. if you look at the average revenue per user for snap, twitter is twice as much, facebook is three times as much, even more. they have room to grow in terms of monetizing their user base more. have 180 reality, they million daily active users. that is a very big number. they have partnerships to sell that unique access. this company, the revenue base
is small, so the macro impact is less for snap versus the likes of facebook, google. you will see new features and partnerships help them longer-term, probably next year onwards. this year, it will be more of a seesaw between legacy businesses like automotive, financial services. advertising dollars slowing but e-commerce still being strong. yearwill be a seesaw this for advertising in general but longer-term, partnerships, ar, snap games, things like that will drive them. caroline: we hope we can lure you on what we have some of the bigger companies such as amazon as well. ofrlet fu went in search
some potential problems. scarlett: the biggest knock against big tech, outsized gains live -- leave little room for misses. rotation into other sectors. here is what could remove some of the shine from the five biggest tech names. for apple, the delay of the iphone 12. amazon revenue likely grew more than 25% but it is also spending a lot. how much can it spend to keep its delivery network running smoothly. microsoft is benefiting from a shift to the cloud, but is it giving up some revenue now for allowing deferred payments on some contract. and, advertising budgets could disappear. alphabet tends to rely on small businesses, particularly in the hard-hit travel sector. it does not take a lot to knock you down a peg. caroline: let's get a quick
check on the latest business flash headlines. -- theyof employees want to be released from an agreement so they can tell their stories of alleged racial discrimination. morgan stanley is not commenting. deutsche bank says second slightlyarnings will exceed expectations. they pointed out that key measure of the capital strength unexpectedly increased, so it is improving. earlier this month, deutsche bank ceo said the company is on track or ahead of plans for the biggest overhaul in decades. deep cuts being planned for new york city's subway service. the parent agency faces a deficit, according to the new york times. ridership has fallen 90% since the start of the pandemic. officials are hoping for federal assistance. taylor: coming up, we are going
theline: almost end of show. what does that mean? time for our joe weisenthal fix. joe, it felt like a day on optimism of stimulus but we sort of fizzled into the close. joe: it was not like a particularly strong move. but, up until today, the euro has been on quite a tear, especially against the dollar. the news we got out of europe today i think sort of confirms why. they have approved this new package, 750 billion euros. is importantmount but what is also important is the qualitative fact, a level of
burden sharing that we have not really seen before from the eu. the aaa rating will be used to borrow substantial sums of money. taylor: in the last few minutes, we are getting some headlines about u.s. stimulus, nancy pelosi coming out and saying $1 trillion is not even close enough for the next stimulus. what are your thoughts on getting this done by this week? is that possible? and how do you get that over $1 trillion? joe: there is no way you get this done by this week. the unemployment insurance expansion, last check, will go out on the 25th. we know how fast d.c. moves, so even if you are saying they want to have it in two weeks that incrediblyan ambitious timetable. there is obviously quite a big
gap just within the gop caucus itself. so there is a long way to go on thete -- on a bill that absence of which will mean lost income right away. is there a perspective that you can feel -- not that anyone is talking to anyone particularly on the streets -- but how worried are people about the next paycheck? these are astounding statistics that about a third of all people don't know if they can make the next month's rent. joe: if you look at online forums were a lot of people talk about the unemployment check, something to remember is that part of the issue is not just the money itself but these state unemployment systems were not particularly well-equipped to handle this. a lot of people got their money very late. if there is a delay, a gap in payments, there could be further
delays because of the technology used. there is quite a bit of anxiety already and we have not even seen the program run out yet. taylor: what is the tone on the ground in texas? i know you are coming back to join us in new york soon. joe: a lot of disappointment but also chaos, disputes. some parts of the population are certainly in denial about how bad it is. it is still quite a big mess. caroline: one way of putting it. joe weisenthal, thank you very much indeed. all eyes on the nasdaq as we head toward the day of trading tomorrow, one in which we will digest the numbers out of snap, texas instruments. tesla will report later in the week. up 275% i think this year. priced for perfection. caroline: we will see if those
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♪ emily: welcome to "bloomberg technology." today is the day president trump has said he will resume his daily briefings to the public at the pandemic continues and cases continue to surgeon across -- continue to surge across the country. potentially any minute now, the briefing is scheduled to start at 5:00 p.m. eastern. but as we