Bloomberg Daybreak: US Edition

Bloomberg Daybreak Weekend with Host Nathan Hager take a look at some of the stories we'll be tracking in the coming week

• In the US – a look at how earnings are impacting global markets
• In the UK – we preview the Bank of England rate decision
• In Asia – looking ahead to the RBA Decision and Chinese economic data

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On today's podcast:

1) The mood in US stock markets has been lifted again by strong earnings from Apple and Amazon to round up the week of mega-cap results. Futures for both the S&P 500 and Nasdaq 100 were higher after both indexes sunk on Thursday. Apple forecast a major surge in sales for the holiday season to provide assurance to investors that the iPhone remains a growth driver, while Amazon’s cloud division notched its best quarterly growth in almost three years. That’s smoothed out the setback in the big tech and AI narrative from the mixed reception to results from Meta Platforms, Microsoft and Alphabet.

2) Nvidia CEO Jensen Huang still hopes to sell chips from the company’s Blackwell lineup to customers in China, though he has no current plans to do so, he told reporters Friday. Blackwell is Nvidia’s latest generation of artificial intelligence semiconductors, figuring prominently as a potential bargaining chip in trade talks between the US and China. Licensing the sale of those products did not figure in the discussion between President Trump and his Chinese counterpart Xi Jinping this week, with the US leader saying Nvidia and the Chinese government will have to keep talking about the $5 trillion company’s access to the Asian nation’s market.

3) President Trump called on Senate Republicans to vote to get rid of the filibuster in the upper chamber, amid a government shutdown that has lasted nearly a month. Because of the filibuster rule in the US Senate, most legislation needs 60 votes to pass. While a majority of lawmakers could revise those rules, both parties have largely resisted doing so to preserve their ability to shape legislation when outside of the majority. During the recent funding showdown, Democrats have refused to support a Republican bill offering stopgap funding unless the GOP agrees to extend healthcare subsidies.

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Apple's fourth-quarter revenue edged past analysts’ estimates despite a surprise sales decline in China, where it’s been struggling to stage a comeback. Total sales rose 7.9% to $102.5 billion in the period, which ended Sept. 27, the company said in a statement Thursday. That slightly beat the $102.2 billion average estimate. The company benefited from stronger-than-expected services growth, helping offset the China slowdown. The Mac and wearables division also performed better than anticipated. Apple shares gained more than 3% in late trading after the results were released. They had been up 8.4% this year through the close.

For more, Bloomberg Businessweek Daily spoke with Jay Goldberg, Senior Analyst, Semiconductors & Electronics with Seaport Research Partners and Mark Gurman, Bloomberg News Managing Editor for Global Consumer Tech.

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Amazon's cloud unit posted the strongest growth rate in almost three years, reassuring investors concerned that the largest seller of rented computing power was losing ground to rivals. Amazon Web Services posted revenue of $33 billion, an increase of 20% from the prior year and the biggest year-over-year rise since the end of 2022. Analysts, on average, estimated 18% growth. The shares jumped about 10% in extended trading after closing at $222.86 on Thursday. The stock has lagged behind that of its industry peers this year, with investors worrying that the company has yet to benefit enough from its AI products. Microsoft Corp. and Alphabet Inc.’s Google have both generated faster growth in their cloud computing businesses than AWS.

For reaction, Bloomberg Businessweek Daily spoke with Bloomberg Intelligence Senior Analyst for E-Commerce and Athleisure Poonam Goyal, Ed Ludlow, host of Bloomberg Tech Ed Ludlow, and Eric Clark, Chief Investment Officer at Accuvest Global Advisors.

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On today's podcast:

1) President Trump and Chinese President Xi Jinping agreed to extend a tariff truce, roll back export controls and reduce other trade barriers in a landmark summit on Thursday, potentially stabilizing relations between the world’s biggest economies after months of turmoil. 
In the first sitdown between leaders since Trump’s return to the White House, the pair agreed China would pause sweeping controls on rare-earth magnets in exchange for what Beijing said was a US agreement to roll back an expansion of restrictions on Chinese companies. The US will also halve fentanyl-related tariffs on Chinese goods, while Beijing resumes purchases of soybeans and other agricultural products. 

The US is also extending a pause on some of its so-called reciprocal tariffs on China “for an additional year,” the Commerce Ministry in Beijing said in a statement, adding that China “will properly resolve issues related to TikTok with the US side.” Trump said he would visit China next April, with Xi planning to head to the US afterward. Despite speculation that Trump might make additional concessions — including the US opening access to Nvidia Corp.’s most advanced Blackwell line or changing its policy toward Taiwan — the president indicated that those issues hadn’t been part of the discussions. Trump and Xi did discuss access to some of the chipmaker’s other products, however, with the US president saying he planned to speak with Nvidia CEO Jensen Huang.

2) The largest technology companies are betting on an AI future powered by gigantic complexes of data centers filled with humming servers. Now that the staggering cost of this push is coming into sharper focus, it’s testing nerves on Wall Street. Three bellwethers from different corners of the technology world – Alphabet Inc., Meta Platforms Inc. and Microsoft Corp. — together racked up some $78 billion in capital expenditures last quarter. That’s up 89% from a year earlier. Most of that cash was destined for data center construction and graphics processing units and other gear to fill them. Each increased their forecasts for future outlays. That was enough to rattle investors conditioned to expect enormous spending. 

3) Treasuries fell the most in nearly five months after Federal Reserve Chair Jerome Powell cast doubt on a December interest-rate cut, even as a sagging labor market prompted policymakers to bring down borrowing costs Wednesday. While the central bank delivered a widely expected reduction in the benchmark lending rate to 3.75%-4%, Powell’s hawkish outlook ruffled the $30 trillion US bond market. At his afternoon press conference, Powell said a further reduction in rates at the December meeting “is not a foregone conclusion,” sending yields across tenors up by the most since June. 

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Microsoft Corp. reported a steeper climb in spending than Wall Street expected, fueling anxieties about the high costs of providing AI infrastructure. First-quarter capital expenditures including leases, an indication of data center spending, came in at $34.9 billion, up from $24 billion in the preceding quarter, the company said Wednesday. Microsoft continues “to increase our investments in AI across both capital and talent to meet the massive opportunity ahead,” Chief Executive Officer Satya Nadella said in a statement. Total revenue increased 18% to $77.7 billion in the fiscal first quarter, while profit was $3.72 a share. Analysts on average estimated sales of $75.6 billion and per-share earnings of $3.68. The Azure cloud-computing unit posted a 39% revenue gain in the quarter when adjusting for currency fluctuations, beating the Wall Street estimate of 37%. Investor expectations for Microsoft were high heading into earnings, with all but one analyst tracked by Bloomberg rating the stock a buy.

Meta Platforms said it expects total expenses to significantly increase in 2026, and will continue to invest at historic levels in artificial intelligence. The company also reported third-quarter net income of $2.71 billion, which included a one-time, non-cash income tax charge of $15.9 billion due to the implementation of the tax bill signed into law in July, Meta said in the statement. Without the accounting charge, Meta said net income would have increased 19% to $18.6 billion.
Looking beyond the third-quarter, the company said it expects a “significant reduction” in US federal cash tax payments for 2025 and years to come due to the new law. Meta reported third-quarter sales of $51.2 billion, which beat analysts’ average estimate of $49.6 billion.

For analysis of the tech earnings, Bloomberg Businessweek Daily spoke with Bloomberg Intelligence Senior Technology Analyst Anurag Rana and Ivan Feinseth, Research Director and Chief Investment Officer with Tigress Financial Partners.

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Bloomberg's Tom Keene, Jonathan Ferro and Lisa Abramowicz discuss remarks from Fed Chair Jay Powell following the Federal Reserve's latest policy decision on a special edition of Bloomberg Surveillance.

Treasuries extended losses after Federal Reserve Chair Jerome Powell said a December interest-rate cut was not set in stone, even after delivering a widely expected quarter-point reduction to prop up the labor market. The central bank reduced its benchmark lending rate to 3.75%-4% in its second straight cut — though two officials dissented.

“A further reduction in the policy rate at the December meeting is not a foregone conclusion, far from it,” Powell said in the opening comments of his press conference. In their post-meeting statement, Fed policymakers on Wednesday repeated their assessment that “job gains have slowed” and said “risks to employment rose in recent months.”

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On today's podcast:
1) President Trump said the US has a “special bond” with South Korea as he addressed a meeting of corporate leaders at the Asia-Pacific Economic Cooperation summit on Wednesday in Gyeongju. Trump’s visit to the conference comes as he’s looking to work through a series of outstanding issues in his trade deal with South Korea, and prepares for a high-stakes meeting on Thursday with Chinese President Xi Jinping. Meanwhile, Trump said he expects to lower tariffs the US has imposed on Chinese goods over the fentanyl crisis and speak with China’s Xi Jinping about Nvidia Corp.’s flagship Blackwell artificial intelligence chip, as leaders of the world’s biggest economies seek to ease tensions in a meeting on Thursday. Nvidia shares rallied in premarket trading on Wednesday, putting the stock on track to breach $5 trillion in market capitalization, making the semiconductor giant the first public company in history to hit the milestone.
2) Hurricane Melissa made landfall in Cuba less than a day after it became the strongest recorded storm to strike Jamaica, where it left hundreds of thousands without power and forced hospitals to evacuate. Melissa crossed the coast in eastern Cuba as an “extremely dangerous” storm, the US National Hurricane Center said in a statement at about 3:10 a.m. Eastern Time on Wednesday. As much as 25 inches (63 centimeters) of rain and storm surges up to 12 feet (3.7 meters) above normal are expected.
3) Vice President JD Vance said Tuesday he expects the Trump administration to pay military personnel on Friday, even as the government shutdown shows no end in sight. The administration circumvented Congress and moved about $8 billion in research and development funds to cover the military’s payroll on Oct. 15. But Republicans have cautioned that they could not guarantee paychecks for troops if the shutdown persisted.

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On today's podcast:
1) President Trump hailed the US’s alliance with Japan, reaffirming ties with a longstanding partner and praising new Prime Minister Sanae Takaichi on her plans to ratchet up defense spending as the pair met in Tokyo. Trump also offered optimism that the two sides had overcome their trade disputes. The pair later signed documents on trade and critical minerals intended to formalize some elements of a trade deal brokered under Takaichi’s predecessor, which includes a nebulous pledge for Japan to fund $550 billion in US projects. But documents from the White House on Tuesday suggested that the agreements remained ill-defined. The trade document simply “noted with satisfaction swift and continued efforts by both countries, and confirmed their strong commitment to implementing” their trade deal.
2) Jamaican officials urged residents to brace for Hurricane Melissa as it tracked toward the island at Category 5 strength, packing intense rains and winds and threatening to cause widespread destruction. The storm’s winds are likely to cause “total structural failure,” the center said. That’s especially true for higher-elevation areas exposed to the brunt of the storm, where wind speeds could register as much as 30% stronger. If it maintains its strength, Melissa would be the first confirmed Category 5 storm — the highest on the Saffir-Simpson scale — to hit Jamaica.
3) The Federal Reserve is expected to deliver a second straight interest-rate cut this week to support a wobbly job market. Any push to extend the easing cycle past October, however, may face renewed opposition from a group of officials who remain anxious over inflation. While the Fed’s dovish faction is, for now, winning the debate and securing lower rates, their rival camp of policymakers worry the cutting will go too far. Fresh data on consumer prices released Friday showed underlying inflation in the US rose in September at its slowest pace in three months. While that reaffirms the Fed’s plan to cut rates next week, the overall flat-lining of progress on cooling prices doesn’t bolster arguments for multiple additional cuts.

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On today's podcast:
1) Top trade negotiators for the US and China said they came to terms on a range of contentious points, setting the table for leaders Donald Trump and Xi Jinping to finalize a deal and ease trade tensions that have rattled global markets. After two days of talks in Malaysia wrapped up Sunday, a Chinese official said the two sides reached a preliminary consensus on topics including export controls, fentanyl and shipping levies. US Treasury Secretary Scott Bessent, speaking later in an interview with CBS News, said Trump’s threat of 100% tariffs on Chinese goods “is effectively off the table” and he expected the Asian nation to make “substantial” soybean purchases as well as offer a deferral on sweeping rare earth controls.
2) President Trump said he didn’t anticipate meeting with Canada “for a while” as he continued to stew over a TV advertisement by the province of Ontario that criticized his tariff regime. Trump in recent days has said he was increasing the tariff on goods from Canada by 10% over the ad, which features excerpts of former US President Ronald Reagan criticizing tariffs. Ontario Premier Doug Ford had said he would stop airing the ad after the weekend, but Trump has expressed frustration that the Canadian leader didn’t move to immediately pull the commercial, which has aired during US broadcasts of the World Series.
3) As the US government shutdown stumbles toward the one-month mark, the effects of the standoff between Republicans and Democrats are being felt further away from the Capitol, as flights back up and food aid dwindles. US Transportation Secretary Sean Duffy warned that travelers will face more flight delays and cancellations in the coming weeks as the continuing shutdown exacerbates the air-traffic controller staffing crunch.

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