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00:00And right now we are two minutes away from the end of the trading day.
00:03Romain Bostic here with Isabel Lee.
00:05Katie Greifeld out on the day.
00:07We're taking you through to that closing bell.
00:09It's a global simulcast.
00:10Carol Masser and Tim Stenevic join us.
00:12Welcome to our audiences across all of our Bloomberg platforms, television, radio,
00:16our partnership with YouTube.
00:17A slew of catalysts battling this market around today.
00:21Carol Masser, take your pick here.
00:23But for right now, we're red pretty much across the screen.
00:25Yeah, we are.
00:26Definitely more of a risk-off trade.
00:28It was a little bit more evenly spaced earlier in the session.
00:31But, yeah, we know what's going on.
00:32The market is so reactionary to any news on putting an end to the U.S. war with Iran
00:39and keeping hoping that there's going to be these peace talks.
00:42But, again, we just got moments to go.
00:44And you saw markets, the equity markets go down.
00:46You saw treasuries go down.
00:47You saw yields shoot up a few basis points.
00:49And you saw oil, at least Brent, the international benchmark,
00:53hit $100 a bill for the first time going back to April 13th.
00:57I was just saying to Carol that there's not a lot of time between right now
01:01and the end of what is supposed to be a ceasefire tomorrow.
01:04The president has also said that that will not be extended.
01:07So it's sort of unclear what happens in the next 24 to, you know,
01:1130 hours when it comes to this conflict.
01:13Take your pick.
01:14And I was going to pick oil, but Tim stole it for me.
01:16Yes, it's above $100 a barrel.
01:18We have Commerce Bank earlier today saying that it will be above $80 a barrel by the end of this
01:22year.
01:22But I think that's not even considering all of the developments we're seeing.
01:26So oil, I think, is one of the important stories that we should be watching.
01:30Absolutely.
01:31And just a reminder, we are expected to get some earnings after the bell.
01:34Probably the most consequential for markets is going to be from United Airlines.
01:38We're also going to get interactive brokers, intuitive, surgical, EQT, and Capital One.
01:44Right across the screen here in the United States of America,
01:47with the Dow Jones Industrial Average down almost 300 points or about six-tenths of one percent.
01:52The S&P losing a similar percentage on the day.
01:55The Nasdaq Composite down about six-tenths of a percent as well.
01:58And the Russell 2000 lower by about 28 points or about one percent even.
02:03All right, back to the S&P 500.
02:05I go, and as I said, more of a risk-off trade.
02:08You've got 337 names to the downside.
02:12Isabel, 166 to the upside.
02:14If you look at the IMOP, we're seeing, it's loading for me, but there it is on the screen.
02:19Completely red on the screen, except one tiny sliver of green there.
02:23But everything else is really looking like a down day today.
02:26The biggest losers, communication services, communication discretionary, and industrials.
02:31United Airlines out with their earnings right now here at Just DPS.
02:34Looks like a beat, $1.19.
02:36The street was looking for $1.09.
02:38Operating revenue, $14.6 billion, slightly higher than what the street was looking for
02:43on average, of roughly about $14.5 billion.
02:47We should point out that available seat miles looks actually a little bit light, 77.7.
02:54The street was looking for 77.9.
02:56And passenger miles at about 63.39.
03:00The street was looking for about 62.66.
03:02The company also saying that it does plan to cut five points of capacity for the rest
03:07of the year.
03:08Sees capacity in Q3 and Q4, Carol, to be flat to up by about 2% year over year.
03:15All right.
03:15And right now, we see the stock down about 1.8%.
03:19I'm going to let Tim take it.
03:21Yeah, I'm looking right now just at what's happening with United down 1.8%.
03:24I'm looking at the press release.
03:26The company saying oil prices remain volatile and elevated versus the start of the year.
03:29United has already begun adjusting its schedule for the rest of 2026 to account for higher
03:34fuel prices with an expected, as Romain mentioned, five-point capacity reduction versus the original
03:39plan.
03:39As a result, the company expects capacity in the third and fourth quarters to be flat,
03:43up approximately 2% year over year.
03:46We've got to get to that redhead, Tim, that's crossing the wire right now.
03:48Full year adjusted EPS.
03:50Here's your guidance.
03:51The company says expect $7 to $11 a share.
03:54It had previously had a range of 12 to 14.
03:57So a material drop in its EPS guidance.
04:00The street was looking for $9.08 here.
04:03So the low end of that range of seven comes in below that.
04:06The company also said that its fuel expense in the quarter that just passed, that was $340
04:11million up, excuse me, $340 million, Isabel, year over year.
04:16Another thing I'm looking at, which Bloomberg reported earlier today, is how Trump is opposing
04:20a merger between American Airlines and United Airlines, saying he doesn't like having them
04:25merge.
04:25I feel like this is also a story we need to be looking out for, which is the acquisition
04:29or the merger of all of these airlines, whether it will even pass the regulators, Romain.
04:35Yeah, certainly something.
04:36There's a lot going on in the airline industry.
04:39United Airlines just going back there, down still about 1.8% here in the aftermarket.
04:44Company also commenting on fiscal year adjusted CapEx below $8 billion, below $8 billion.
04:51The estimate on the street is $7.71 billion.
04:54But again, it's that outlook.
04:56Fiscal year adjusted EPS, $7 to $11, had seen 12 to 14.
05:00Street estimate was $9.08.
05:02So streets seem to have gotten a good, kind of good read on it.
05:05Well, it shouldn't have come at too big of a surprise.
05:07I think Delta decided not to update its full year outlook.
05:10It cited uncertainty tied to fuel costs, geopolitical tensions.
05:13Look what happened this morning with Alaska Airlines Group.
05:15They pulled guidance for 2026 altogether.
05:17So, you know, United coming out and saying, OK, it's not going to be what we thought it
05:23will be, but at least we're giving you numbers here.
05:25Yeah, and it's kind of interesting, too.
05:26We're going to have to wait until tomorrow for their earnings call here to get a little
05:29bit more color out of the executives as to exactly sort of what they are looking ahead
05:34to here.
05:35I think we kind of have already managed to sort of look a little bit around the corner,
05:40if you will, given the prolonged nature of what's happening in Iran, the impact on fuel
05:45prices.
05:45And I think what a lot of people, Carol and Tim, are very sort of concerned about right
05:49now, the idea of how that feeds through into consumer spending and whether it tamps it
05:53down.
05:54We had a retail sales report this morning that showed, at least for the month of March,
05:57there wasn't a material impact just yet.
05:59Yeah, exactly.
06:00It's an interesting point.
06:01I'm just looking at some of the other airlines.
06:03I pulled up American Airlines in the after hours.
06:06Not really much of a movement there.
06:08We are seeing JetBlue under some pressure in the aftermarket, down about 2%.
06:13So just trying to see if there's any carryover, because we continue to see United down about
06:171.8% here, guys.
06:19Some other headlines that we're getting.
06:20United cease to take delivery of over 250 aircraft by April of 2028.
06:24The company, though, cutting that fiscal year adjusted earnings per share forecast.
06:28First quarter fuel expense increases $340 million year over year.
06:32Fiscal year adjusted earnings per share comes to $7 to $11, saw between $12 and $14.
06:37The estimate was for $9.08.
06:41Still shares down about 1.8%.
06:43I'm looking at our following story here at Bloomberg Terminal, and the guidance, as we
06:46know, came in stronger than expected.
06:48But it said demands remain strong, particularly among higher-paying customers, echoing comments
06:53from Delta and Alaska.
06:55Again, this is the K-shaped economy that everyone is talking about.
06:57If you're lower income, you're struggling.
06:59But if you're in the higher income realm, life is pretty good.
07:02Well, let's talk a little bit more about that economy.
07:04Credit card company Capital One reporting earnings right now for the most recent quarter.
07:09Adjusted EPS did rise to about 4.42 a share versus what it was a year ago at 4.06.
07:17Revenue was actually up 52%.
07:19Of course, some of that aided by some of the structural changes in the company here.
07:23But the company's net interest margin did miss estimates, 7.87%.
07:27The street, on average, was looking for about 8.2% here.
07:31And the provision for credit losses was higher than expected, 4.07 billion.
07:35The street was looking for about 3.81 billion, Tim.
07:39And you see the shares slightly lower by about 2%.
07:41It's that last headline, Romain, that got my attention.
07:44The first quarter provision for credit losses coming in above estimates.
07:49Romain, I mean, is the message that they're sending, we're sort of planning for a consumer
07:55that could be a little weaker than we thought?
07:58Well, yeah.
07:58And it goes back to that retail sales report, too.
08:00It was strong overall.
08:01There was a lot of spending on items.
08:03But, of course, one of the key metrics in there was how much people actually spent on gasoline
08:07in the most recent quarter.
08:08And eventually, that gets to the idea here of sort of if you're spending more on an essential
08:13like that, of course, it means the discretionary items, whether it's travel on a United Airlines
08:17or buying clothes and other things, maybe that gets stripped.
08:20Yeah, right?
08:21You have to make choices.
08:22You know, it squeezes out other buying.
08:23And then, you know, you start to see certainly an impact, you know, ultimately expected to play
08:28out in terms of economic growth.
08:29I mean, this is the thing that we keep talking about here, Isabel, is that the longer this situation
08:33goes on, uncertainty goes on, higher costs, higher energy costs that really affect so many
08:40different Americans.
08:41I mean, eventually, the longer it goes on, it's going to potentially play out in retail
08:45spending and overall economic growth.
08:47And the longer it goes on, we're going to see a deeper global energy crunch.
08:50I mean, the flows through the vital Strait of Hormuz is essentially at a standstill right now.
08:54And that's just one of the unresolved issues.
08:56I mean, we also have Islamic Republic's nuclear capabilities and the Israel's military operation
09:01in Lebanon and the list goes on.
09:03So I guess the question that I have, then I'll go back to this, is as we parse earnings
09:07romaine, is the real backdrop of what the market is grappling with.
09:12It's certainly, yes, it has to do with the micro and what these companies are saying.
09:15But it also has to do with what's happening in the Middle East.
09:18How long energy prices are going to be elevated?
09:20To what extent that affects the consumer?
09:22To what extent that is the flow through?
09:24I mean, we had Sam Dart from Goldman Sachs on earlier saying that she thinks, you know,
09:29manufacturing is going to be the next shoe to drop when it comes to the flow
09:31through on energy because of the chemical price increases that we're going to see.
09:35And it's kind of an elongated nature.
09:36We always talk about kind of the lagged effects of, say, like monetary policy.
09:40But a lot of the strategists we've talked to also talk about the lagged effects of this
09:44elevation that we've seen in energy and commodity prices.
09:47And it's not going to show up in those first quarter numbers.
09:49But when you get to the Q2 earnings season and Q3 and beyond, maybe you start to see a
09:54more material impact on the bottom line.
09:56All right.
09:56Just to remind everybody, you've got United Airlines stock down about 1.2 percent in the
10:00aftermarket.
10:01Capital One also out with results.
10:03And they're down about 4.5 percent here in the aftertrade.
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