tv Whatd You Miss Bloomberg July 22, 2021 4:30pm-5:00pm EDT
caroline: welcome to bloomberg world headquarters in new york. let's take a look at where the markets went. the s&p 500 hanging onto the gains. cyclicals come out of favor. romaine: the question remains, "what'd you miss?" caroline: all week we focused on inflation fears, but today we are looking at what the earnings numbers are telling us. twitter reported second-quarter sales smashed out of the park, gaining on analyst estimates and
exceeding expectations. intel boosting its forecast on earnings-per-share adjusted revenue, though they are coming under pressure over concerns from jump ship demand caused by the pandemic. is it there for real? short-lived for the actual chipmakers? romaine, what about the social media side? romaine: we will talk about that a little bit later in the show. first, intel. we have to mention here that those shares are down and had gotten a nice pop and they came out with earnings. intel of course, you're talking about the biggest chipmaker out there but the problem is that it is a narrow business that focuses a lot of attention on the data center and it has been losing a lot of its market share and that seems to be the concern, despite the company saying that they see double-digit percentage growth, it still isn't enough to keep up with the competitors.
twitter on your screen, getting a bid to. a lot going on in the afternoon -- after hours. so it's a good thing we are here. our cross asset reporter is here with us. it was a pretty mixed day in the market. some of it had to do with a mix of economic data and corporate earnings. >> absolutely. you have bearish positions in dollars and in the put call ratio for the options market. stocks keep grinding higher and higher. there was a great story today about retail buyers getting in on the debt and -- debt and lifting the stock market. to think that they are the ones partially behind the rally that doesn't seem to stop, it's not the same momentum but the fact that you are seeing stocks kind of in the green grinding higher, that is an interesting sign.
caroline: but less than 200, the mighty big tech companies are the ones who managed to pull out on high. how many companies are there being thank for their earnings? looks like intel is not going to have that. >> it is of course still taking a backseat from the delta variant. 80% of earnings so far have beat analysts estimates. that's a good statistic and yet you are not seeing the kind of momentum, like you said. it's early. romaine: i feel like that statistic was relevant a few years ago but with so many distortions out there now, gamed by the analysts in the companies . i'm curious, not to dismiss, it
is a valid oink, but when we talk about what investors want, beating the negative earnings reaction, a lot of it is they want to see what the forecast is for the commentary with more on margins. i'm wondering, is the expectation that we will get that? because so far it seems we have gotten that but it hasn't led to any kind of monster gains. >> it's a high bar to impress investors now. great point that we are coming off some big quarters here. major cyclical out performers over the last two months, consumer staples and utilities were the leaders and they were doing pretty well, outperforming by an interesting margin. so, where do you go for that kind of relative value basis when all of these different sectors, which i believe going through the list have hit 11,
where do you go when they have all had their time in the sun? you make a great point, it's a high bar for those investors and companies to reach in. caroline: where you go is domino's pizza and ship outlay, right? romaine: do you have a pair of these crocs? caroline: it's all the rage. romaine: i remember years ago, this company, where is it going, thinking they were the rage, but record high after record high, earnings and revenues at records, everyone is wearing these things. it's not just dads. what's going on? >> i will admit i have never tried croc, but based on the stock share value i'm wondering if i'm missing the worst kept secret in all of footwear. maybe i will have to try it, i don't have an explanation. romaine: i'll test them out next on. i'll take a bullet for the team. >> bring me a pair. caroline: expense a pair of
romaine: all right, welcome back. today we are focused on business sentiment and of course the earnings numbers behind them. caroline, after the bell we got numbers from twitter and snapped with a real peak here into not only how folks are using the web but also how advertisers are getting to a lot of these users. caroline: increasing on both
fronts, particularly with the likes of snap and people are starting to double down not only on using these, but flashing their cash as ad spending shows up higher. of course we had mandy telling us how much there was fierce competition to get in front of the eyeballs of 18 to 30-year-olds and you only do it through these social platform or's -- social platforms. is this going to be sustainable? the desire for advertisers to go spend on these areas of social media, is it continuing to push higher for e-commerce players as we start going out and don't only buy online? >> absolutely. one thing that we don't see going backward as a share of retail transactions occurring online. the pandemic really accelerated that two years forward in the u.s., it just gives advertisers that much more reason to reach
people online in the place where they are converting. the growth rates this quarter i would say are sort of not sustainable because q2 2020 was the trough of the digital ad market last year. this is going to be the easiest calm that most of these platforms have. i do expect growth to moderate impaired to this most recent quarter. but in terms of the investment itself, no, we don't think it will go backward in any way. romaine: this is a real transformation and we have been talking about it as opposed to what would be advertised on television or traditional newspapers or periodicals here. the sense here that advertisers understand the users they want to target are on snap, pinterest, facebook to a certain extent and even twitter, is the general idea that the majority of the ad spend to be on those platforms? not just a small share? >> well,
i don't know if it would necessarily be a majority. one of the fastest growing places we see for ad spending right now is on retail properties that directly on the places that are being transacted, like amazon. and these streaming players are becoming really. more people are spending tv time with streaming as opposed to traditional but a significant amount is going to continue to be on these social platforms because of the amount of information they have on their users are, the information they are in and what they will click and convert on. targeting is becoming harder in lots of places, with cookie deprecation, like what apple has done for privacy, and social companies have a lot of valuable information for the logged in user base.
joe: -- caroline: talk to us about how that becomes what consumers talk about and even what they don't realize and practice that they really want? >> for sure, it's a great question and who is going to be in the worst spot? whoever has the least amount of information about the users of a given platform. so, when we are talking about social platforms with logged in users, perhaps going forward you don't know what they are doing all across the web because that information is being pulled back and getting harder to collect, even for facebook, but you still have a lot of that information that you can use that is valuable and having it at gail makes it more valuable to advertisers who look for scale when they do targeting, but other publishers have valuable information here. i mentioned retailers, retail
media growing in importance because of the commercial value of that specific info where amazon, walmart, or target knows how you shop, how you search for products, what makes you click through to buy a product and how often you are restocking those items, for example. i mentioned players as well that are typically logged in services that have information about the household who subscribed that is also valuable for them to facilitate targeting. talking about other more typical news, light -- lifestyle publishers, they are working hard to understand the insights on their audience where they have is together yet, but they are working to come up with their own segment that will be attractive to advertisers or perhaps introduce more contextual offerings as well. basically everyone is trying to find a way for the personalization to get going. romaine: you still see some of
the more traditional advertisements, 15 second and 32nd ads that are clearly ads, but a lot of those sites, you are starting to see the lines blurring. influencers on instagram and to a certain extent even what you scroll through on tiktok. you start watching something and you don't realize it is an ad until you are most of the way through it and you feel suckered and then you go buy it anyways because why not. >> for sure, the watchword on these is authenticity, which is ironic, in the case that you just mentioned, you are going for authenticity to try to fool someone into thinking it's not an ad. what's become very popular among the younger generations, it's popular to target millennials or gen z consumers. they follow a lot of influencers. many of them say that they purchase based on formats like that. generally speaking, digital has
really popularized what we call native ad formats, meaning an ad that isn't obtrusive. something that follows the look and feel of the site or the app you are in so that it isn't interrupting, annoying, doesn't ou out of the experience and consumers tend to say that they find those types of ads less annoying. caroline: paint the picture for us into thousand 20. if you are an e-commerce player who wants to make your mark, do you think you will still be using twitter to a certain extent? is it more that you're going to be looking at instagram or tiktok? do you have to spread across all ? you can't have a winner takes all mentality? >> you do have to be spread across a lot of platforms, it's not winner take all. no one of these platforms has everyone in your target
demographic, even facebook, the most widespread. you do have to look across more than one. you know, one thing i would mention, twitter mentioned today that they saw a strong resurgence of brand advertising. historically they have been stronger on the brand side as opposed to the direct response performance side and i know they have been putting a lot of work into those products to help grow them, but typically i do expect advertisers to continue to focus more on platforms like facebook, snap, amazon, or google search when it comes to their really lower funnel goals and looking perhaps more to twitter or youtube, ctv for the upper funnel brand awareness goals. romaine: nicole, great to have you here, talking about what's going on in the digital ad market. there is a lot of news out there about the digital chip shortage.
caroline: so, today we are focused on earnings and business sentiment and after the bell, yesterday, we got numbers from texas instruments, a company at the center of the global chip shortage. the gap between ordering and delivering a chip is still growing. romaine: this is the industry data, industrywide right now you will wait 19.3 weeks if you order a chip today. that's how long it will take.
and this isn't just for data centers and stuff. this is for cars, refrigerators, headphones. all these little things that we use now has a chip and you have to wait a long time for it. 19 weeks, trying to order something to sell for the holiday season, you had better get going. caroline: they are so worried, everyone has been stuck diving them. i was looking at a mercedes, it costs more on the secondhand market now then brand-new. romaine: let's bring in willy shih from the harvard business school. we have been talking a lot about these shortages here and how it has affected so many industries, so i guess the real question now is is there anything on the horizon that would mitigate or end these shortages other than time itself? willy: well, i think there has been a lot of real -- reallocation of production.
talking about giving priority to the automotive market. of course the reason they do that -- of course if they do that, they take the capacity away from someone else. we will start to see some progress that there will be -- it will take some time. as you said, the lead times are still out there and people are stock piling as well, probably making the situation a little worse. they are buying in these chips and not using them directly. all of that stuff takes capacity. caroline: how much does that affect the future of these chip companies trying to make investment decisions now, but trying to realize how real the demand is from the end consumer? willy: well, that's the big question. for example i was at global foundries on monday because they had announced that their expansion for a new path with intel, talking about adding new capacity at texas instruments,
who just purchased a micron lab in utah to increase capacity. what everyone has is that as they add to capacity, demand will continue to increase because of electrification and use of more chips in everything, chips and cars and consumer devices. they are betting that as the capacity comes down stream, which could take a year to two years, that they will keep up. the question is how many chips are being stockpiled? these things also age, right? so you've got to use them. it's a tricky balance and everyone is trying to figure it out. romaine: at now all these companies are jockeying to be the lead on that. with regards to domestic manufacturing in the u.s. and what it could be down the road, is this a situation where we will just talking about intel
and texas instruments? or are there owing to be more players than this? >> first of all, it's important to understand that texas instruments is very different from intel. going pretty well, they have analog devices, another big player. you have some of these companies like corbo and skyworks who were major players in the market. on the logic side with the controversy, that is where the u.s. innovation and competition act was looking to fund more competition there. we have intel there, building in arizona. we have a samsung in austin, texas, with global foundries. those of the bid -- the big
players in the u.s. and in that area, are we going to get leading-edge capacity? putting it in a little bit behind, taiwan and samsung will be the hang -- the same with intel scrambling to catch up. caroline: how much pushback is there when you get a company like this where they say they are going to treat one sector differently from the rest? we are talking to the whirlpool ceo later -- we were talking to the whirlpool ceo who said that it was driving up cheapest ones the most and if there are chip or plastic costs changes it will hit the price point harder. how do companies make a decision like that? willy: well it's hard, right? people there a few years ago
said they knew what the size was and that they supplied all the competitors and had an idea of what the market would look like and all the competitors came in with their forecasts and they said they all forecast that they would each get 100 cent market share and we know that isn't going to happen. so now you have to go back to your customer and say -- i'm not going to give you all you want, ok? behind the scenes they are saying i'm going to give you what i think you are going to use. that's how they allocate capacity. if they are a big customer like apple, you are going to get what you ask for. if you are a smaller customer, it's a tough, tough talents. they have got to balance these things, telling the customer i can't give you what you want. by the way, sometimes the customers, especially in the auto sector and in the i.t. sector, when they don't need it they say sorry, don't want to
anymore. what you are seeing now is a lot of these companies saying that if you want the capacity, i need you to prepay and put the money up front says he will take the chips. caroline: willy shih, always great to have you. that's all for "what'd you miss? " romaine: have a great evening. this is bloomberg. ♪
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