00:00We are looking ahead to tech earnings. We're still dealing with a very volatile AI story and I don't know
00:05if tech earnings are going to calm down our thinking on that front. What's ahead for you this trading day?
00:11Yes, I think looking forward, I think the key thing is these alphabet earnings after hours. It really kind of
00:15kicks off things for hyperscalers before things get a little bit busier next week.
00:19I think my colleague Anthony Stephens flagged that one day vol on hyperscaler earnings day is higher than it is
00:24on FOMC day. So this is a big deal for us to look out for.
00:27In terms of Google's earnings specifically, a lot of focus is going to be on the CapEx space.
00:32So we saw last month, you know, that $80 billion equity raise sent the shares lower.
00:36So obviously there's a high sensitivity to what we're hearing on CapEx and, you know, a lot of focus is
00:42also, you know, on how much they kind of thread the needle.
00:45We don't want to see too high a CapEx as, you know, it could be fears of overbuilding and then
00:49an undershoot could potentially be, you know, more of a detrimental story to the broader AI infrastructure story.
00:54At the same time, also need to see some evidence of monetization, you know, some signals on that haven't been
00:59relatively positive.
01:00We've seen delays to Gemini, we've seen top talent leaving. So those are the key things to watch.
01:04More broadly, I think the trade is, you know, if we do see a well-received report, what happens with
01:09tech as a whole, you know, heading into the second half?
01:11The, you know, the chart, I just kept seeing time and time again, was the ratio of, you know, semiconductors
01:17to hyperscalers, you know, do we see a bit of further rotation into that if we see a hyperscaler positive
01:23B, then also what happens with, you know, value into growth?
01:26UK inflation at a, what, 15-month low right now on the back of the data that came out at
01:317am.
01:33You've got that story, you've got the story of a Prime Minister who's clearly determined to drive prices lower, and
01:38yet the markets are pricing in 40 basis points of heights by the BOE.
01:41Does that need to be rethought?
01:42Yeah, so I think in terms of, you know, the inflation report we saw this morning, you know, that was
01:46a third consecutive downside surprise.
01:48It's about 50 basis points below where the Bank of England ultimately expect it to be.
01:52But obviously since then, we've seen the MOU between the US and Iran break down.
01:57You know, as I walked on the set, energy prices are just continuing to ratchet higher.
02:00But ultimately, I think, you know, today's data gives you a lower starting point for, you know, when those energy
02:04prices keep going higher and higher.
02:07Bloomberg Economics thinks we probably get to about 3% on inflation, which for the Bank of England is relatively
02:12low.
02:12Good news, like 3.5% to 4%.
02:14That's kind of their danger zone for where they see inflation.
02:17So to me, it does look a little bit stretched, particularly given the fact that, you know, even at the
02:21peak of the crisis,
02:22the Bank of England were pretty reticent to be delivering rate hikes.
02:27We're early in the earnings season, but so far so good.
02:29Are European earnings good enough, expected to be good enough to offset higher oil prices?
02:34I mean, that definitely appears to be the case for now.
02:36You know, every time I walk in the office, I see energy prices higher.
02:39We've seen continued attacks overnight between U.S.-Iran and Eurostox, you know, 50 future is just resilient.
02:45So, you know, it's a case of earnings are strong enough.
02:48They're expected to remain strong enough.
02:49In terms of the key sectors, it looks like energy, financials, and to a lesser extent, consumer staples.
02:54They're providing an offset.
02:56If we see negative tech today, then that's also a positive for the European equity complex.
03:00Adam Linton from Bloomberg Markets Live team.
03:03Adam, thank you.
03:03You can get up-to-date analysis and insight from Adam and the rest of the team.
03:06Just go to MLiveGo on your terminal.
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