Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy. Bond markets are massive, murky, and let's be real, lots of firms throw a couple flashy funds your way and call it a day. But not Vanguard. At Vanguard, institutional quality isn't a tagline. It's a commitment to your clients. We're talking top-grade products across the board of over 80 bond funds, actively managed by a 200-person global squad of sector specialists, analysts, and traders. These folks live and breathe fixed income. So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at vanguard.com slash audio. That's vanguard.com slash audio. All investing and subject to risk, Vanguard Marketing Corporation Distributor. I'm Francine Lacroix, an award-winning journalist, and I've got a new podcast, Leaders with Francine Lacroix from Bloomberg Podcasts. I've interviewed everyone from heads of state to fashion icons about the news of the moment. But I've always been curious, who are these people as leaders? I don't think there's one right way to be a leader. Make decisions. A poor decision is always better than no decision. Listen to new episodes every other Monday. Follow Leaders with Francine Lacroix wherever you get your podcasts. Bloomberg Audio Studios. Podcasts. Radio. News. This is the Bloomberg Daybaker Podcast. Good morning. It's Thursday the 30th of April. I'm Caroline Hepker in London. And I'm Stephen Carroll in Brussels. Coming up today, oil prices rise over $125 a barrel, their highest since the Iran war began on fears the US may resume its attacks against Tehran. The Federal Reserve leaves interest rates on hold as Jerome Powell says he plans to remain as a Fed governor. Plus 71 seconds that split the winners from the losers. A rapid deluge of big tech earnings reveals whose AI bets are paying off and whose aren't. Let's start with a roundup of our top stories. Oil prices have surged to their highest level in more than four years this morning and they're continuing to climb. Brent crude rose above $126 a barrel at one point. It's now trading just over $123, up nearly 5% on the day. Brent crude is now on track for a ninth consecutive day of gains amid fears that the United States could return to military strikes against Iran. The sharp increase in prices follows a report by Axios that US President Donald Trump is set to receive a briefing on new military options. According to the report, Trump is scheduled to meet today with the official who coordinates American military operations in the Middle East, Admiral Brad Cooper, head of US Central Command. Stuart Livingston-Wallace heads Bloomberg's coverage across the Middle East. There's been sort of a series of reports that the Pentagon is planning a series of either very precise strikes or it's going to be a sort of a furious attack, basically to try and push Iran to get to the negotiating table, or at least rather to make serious concessions that the US can sort of move forward and again, lifting this blockade. This blockade has now become the central focus, I think, of all parties, and I would argue the entire world, because it's having these ripple effects across every industry. Stuart Livingston Wallace speaking there as the US military asked for hypersonic missiles to be sent to the Middle East, which Woodmark the first time the country has deployed those weapons in Iran. Officials remain defiant. State television says Mohsen Rezi, a military advisor to the Supreme Leader, has warned the country will respond if the US blockade continues. The United States is reviewing its troop levels in Germany, escalating tensions with a key NATO ally. President Trump posted on social media that he will take a decision soon on the roughly 35,000 soldiers stationed on German soil. Bloomberg's James Walcott has the story. There were already cracks in the transatlantic relationship. The US trade war and comments about Greenland have worried Europe's leaders. But the Iran war and its economic fallout is sparking increasingly blunt criticisms from the likes of Friedrich Merz earlier this week. An entire nation is being humiliated by the Iranian leadership, especially by the so-called Revolutionary Guards. Donald Trump responded on social media, saying Germany's leader doesn't know what he's talking about and is doing poorly economically. He later posted he was reviewing the number of troops in Germany, home to half of all US forces stationed in Europe. In London, James Walcock, Bloomberg Radio. Federal Reserve officials left interest rates unchanged in their last meeting with Jerome Powell as chair. Policymakers were almost unanimous in agreeing to hold interest rates steady, but a deep split emerged over where rates might go from here amid increased uncertainty caused by the conflict in the Middle East. John Powell says he will stay at the central bank after his term as chair ends, but didn't say for how long. After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined. I plan to keep a low profile as a governor. There's only ever one chair of the Federal Reserve Board. when Kevin Warsh is confirmed and sworn in, he will be that chair. Once sworn in as board chair, his new colleagues will elect him to chair the FOMC as well. While Powell's term as Fed chair ends on the 15th of May, his seat on the Board of Governors doesn't expire until 2028. Kevin Warsh, President Trump's Fed nominee, won the backing of the Senate Banking Committee on a 13-11 party line vote. With oil prices and inflationary risks sharply in focus, the Bank of England and the European Central Bank will today deliver their rate decisions. Both central banks are expected to keep rates on hold, but it will be policymakers' language that markets and economists will be passing for guidance on the path ahead. For more, here's Bloomberg's Chris Pitt. In the UK, officials are balancing the risk of a prolonged energy price shock against a subdued domestic economic backdrop With the British economy heavily exposed to rising oil and gas prices updated forecasts could highlight a growing risk of a technical recession That's despite strong GDP figures just before the conflict. Meanwhile in the Eurozone, soaring energy costs are pushing inflation well above target. ECB President Christine Lagarde said last week that the double uncertainty around the duration of the shock and the extent to pass through argues for more data, signalling that the central bank is in no rush to act. In London, Chris Pitt, Bloomberg Radio. America's tech giants announced $725 billion in AI infrastructure spending this year in an earnings frenzy. Amazon, Alphabet, Microsoft and Meta all reported earnings within 71 seconds of one another. The companies all reported beats in sales and revenue, but Amazon CEO Andy Jassy noted investors are more focused on how much is being spent on AI. I think it's no secret that you've got, you know, the AI labs are spending an incredible amount of money on compute at this point. and you can compute both on the AI side as well as on the core side. And the models that they're building... Andy Jassy speaking there. Amazon and Alphabet gained in late trading as investors judged the capital spending was generating tangible results. But Meta had a harder time making its case with shares falling 7% as the market digested its plans to funnel $145 billion into the AI race. now france's biggest banks are reporting earnings this morning bnp paribas saw its profits jump 9 to 3.2 billion euros beating expectations like many of its competitors the bank's results were boosted by strong performance in equities trading during the market volatility of recent months société general also beat estimates with its profits of 1.7 billion euros in the first quarter But a different picture from Credit Agricole, which saw profits and revenue come in slightly lower than expectations. Market volatility was not a benefit to Credit Agricole. More difficulties there. Standard Chartered, meanwhile, has brushed off concerns about the impact of the conflict in the Middle East as it reported record earnings driven by its wealth business. The London headquartered bank reported pre-tax profit of $2.5 billion in the first three months of the year, some $400 million higher than estimates. The Saturday Charter did announce a charge of $190 million linked to the Iran war, but the CEO Bill Winters pointed to the bank's risk management as giving confidence for the future. And lastly, Saudi Arabia's public investment fund is planning to end its financial support for LiveGolf. After this season, Bloomberg understands the league will reveal its next steps later today. Our reporter Tiwa Adebayo has the story. It's known as the breakaway league that fractured professional golf and fundamentally altered the sports economics. Live Golf built a reputation by luring stars away from the PGA Tour with giant contracts. The competition ended up costing its backers, the Saudi Public Investment Fund, an estimated $5 billion in just four years, yet still struggled with low attendance and poor television viewership. Now, after a year of financial struggles, the PIF is cutting Liv's funding, leaving questions about the brand's financial future and its players in professional limbo. An announcement scheduled for later today is expected to detail its next steps. In London, Tiwa Adebayo, Bloomberg Radio. And those are our top stories for you this morning. So, in terms of the markets right now, we're watching oil prices closely with Brent crude surging as much as 7% higher. Right now, we're trading at $123.13, a ninth day of gains for oil. European stock futures have plunged 1% this morning. NASDAQ futures down a quarter of 1%. MSCI Asia Pacific Index dropping 1.4%. Bonds have been sliding on the surge in oil prices, but also the more hawkish Fed, which was more divided. Eight to four vote split yesterday. This ahead of the Bank of England and ECB today. Ten-year Japanese JGB is rising to the highest since 1997. And later on, we'll get more big tech earnings from Apple. In a moment, we'll bring you more on the oil price spike. plus dig into what we learned from that deluge of tech earnings from Wall Street after the close of trading yesterday. But another story that we've been reading this morning, who's been watching watches get even smaller? Roberta Nass has been writing about the trend being seen among the big luxury watchmakers for Bloomberg Pursuits. She notes that this is being led by celebrities like Bad Bunny and Serena Williams, who've been spotted sporting smaller timepieces. So to give you a scale, we're talking about a standard being 42 millimetres and above. That is now shrinking to somewhere between 38 and even under 34 millimetres. So that is, I suppose, in grand scheme of things, not a huge change, but it does seem like the era of giant watches has come to an end. Yeah, absolutely teeny tiny watches. You have to have really good eyesight to be able to see the time maybe that's not what it's all about ribbon wristbands uh chanel's got a lovely one jacob elody i saw that he wore one at a particular showbiz event but yes also i do think it's interesting that um the kind of gender labels men and male or female watches that doesn't really exist anymore all colors all materials are kind of available for everyone which i think is also nice yeah indeed another part of this as well that's driving it is um people rooting through their grandmother's jewellery boxes and finding watches that were fashionable for perhaps their elder relatives, which are now coming back into fashion, proving that everything is cyclical and perhaps an argument that you should never throw anything out Caroline Yeah exactly Yeah that definitely one for my wardrobe Lovely So we put a link to that one in our show notes for you all about the latest watch trends Okay, let's bring you up to date, though, with also what's happening on the oil markets where prices have hit their highest since the start of the Iran war. Our EMEA News Director, Will Kennedy, joins us now for more. What's driving the latest spike in oil prices, Will? simply put traders are concerned that we're going to see a return to military action in iran the president according to axios reporting is going to get briefed on military options and as long as that's on the table as long as that remains a prospect it's very hard to foresee any reopening of the strait of hormuz and we will be several months into one of the world's most important energy waterways, energy checkpoints being closed. And that's, for good reasons, making traders concerned. Can we talk a bit about the dynamics in the market pricing as well? Because the surge in Brent crude to this level of over $126 a barrel is for the June contract, which expires today. What are we seeing in terms of contracts for later deliveries? And I suppose, what does that tell us about traders' expectations? Yes, that contract has got very high very quickly on quite thin trading because it is expiring today. So, there are presumably some people out there who need to cover themselves on that contract. There's more liquidity in the subsequent contract, which will start trading tomorrow. And there we're trading at about $113. So, you will see prices of the front month, the future's closest delivery, trading a little lower tomorrow. But I don't think we should over-interpret that. Prices are going higher. If we look at New York prices, WTI, we have gone in the last 10 days or so up more than $20. And I think that has shows a real shift in sentiment from a position where many oil traders expected a resolution, the strait of Hormuz to reopen, energy markets to begin the process of getting back to normal. That looks very uncertain right now. And there are much more dark scenarios that energy traders having to take it into account. So, yes, that headline number is probably a little exaggerated as to where the wider market is. But let's not be in doubt, oil prices are moving higher. Okay. In terms of the figures that we also had out yesterday, maybe you can help us understand. US crude exports hit a record high last week as buyers are on the hunt for oil. how much can u.s supplies actually help to address the shortage from the gulf and we've heard we've heard that idea from president trump lots of times you know buy u.s energy yes and the u.s is able to export but it's not able to export at luminous volumes and we should we should make clear that as it exports it's also importing oil from venezuela and other parts of south america for example and it's all to do with different grades of oil how heavy it is what refiners need that said i'd make two points one asian refiners in particular who were very dependent on middle eastern crude are using u.s crudes to fill in some of that gap and two there is no doubt that the energy crisis more broadly if we want to call it energy crisis isn't hitting the u.s quite as hard as it's hitting other regions. And that is because it does have a very strong supply of fossil fuels. And we see that the benchmark price in the USWTI is significantly lower than the Brent price by about $10 or so. So, that tells you that the shortages are not so acute in the United States and it does have the capacity to export some oil. Okay. Will, thank you very much. Will Kennedy there at EMEA News Director. Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy. Bond markets are massive, murky, and let's be real, lots of firms throw a couple flashy funds your way and call it a day. But not Vanguard. At Vanguard, institutional quality isn't a tagline. It's a commitment to your clients. We're talking top-grade products across the board of over 80 bond funds, actively managed by a 200-person global squad of sector specialists, analysts, and traders. These folks live and breathe fixed income. So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at vanguard.com slash audio. That's vanguard.com slash audio. All investing and subject to risk, Vanguard Marketing Corporation Distributor. This is Tom Keen inviting you to join us for the Bloomberg Surveillance Podcast. It's about making you smarter every business day. I'm Paul Sweeney. We bring you complete coverage of the U.S. market open. We cover stocks, bonds, commodities, even crypto, all the information you need to excel. And I'm Alexis Christophorus. Bloomberg Surveillance also brings you the analysis behind the headlines. We do that through conversations with the smartest names in economics, finance, investment, and international relations. We do all this live each and every weekday that bring you the best analysis in our daily podcast. Search for Bloomberg Surveillance on Apple, Spotify, YouTube, or anywhere else you listen. On the East Coast, listen at lunch. And on the West Coast, listen as soon as you wake up. That's the Bloomberg Surveillance Podcast with Tom Keen, Paul Sweeney, and me, Alexis Christophorus. Subscribe today wherever you get your podcasts. Bloomberg Surveillance, essential listening each and every business day. What separates good leaders from transformational ones? I'm Jessica Chen, and in Season 2 of Leading by Example, we'll sit down with executives like Grace Chen of Birdie Gray to find out. It important to understand where you spike but also really acknowledge where you don and find people who can fill those gaps Listen to Leading by Example executives making an impact on the iHeartRadio app Apple Podcasts, or wherever you get your podcasts. Stay with us. More from Bloomberg Daybreak Europe coming up after this. Now, four of the world's biggest companies reported earnings last night, providing different pictures on how the tech sector is doing when it comes to artificial intelligence. Shares in Alphabet jumped in after hours trading as Google is seeing a clear payoff for its AI spending, while Metastock fell on perceptions that it's lagging behind. Our senior equity strategist Neil Campling joins us now for more. Was there a big picture that emerged from these results when it comes to AI spending and the returns that that is providing for these big tech companies? The simple answer is to look at the revenue growth of these mega cap tech companies to see whether that metric is justifying this incredible surge in the capex spend. Put simply, Google had an acceleration in the cloud growth, which grew 60% year on year in the quarter, and the cloud backlog grew 100%. In contrast, Meta's sales grew 33%, Amazon's AWS grew 28%, and Microsoft's cloud business, Azure, grew 38%. So Google is clearly enjoying the highest growth and in a way already seeing a bigger payback from, as you mentioned, that massive AI investment cycle that we're seeing, which is likely to top more than $700 billion for these hyperscalers this year. But for Alphabet, you know, as you say, the best quarter yet for its consumer AI services, are there any clouds on the horizon looking ahead? Well, Google's cloud may be pouring rain on some of the other hyperscalers, perhaps, because it really has a what we call a full vertical integrated AI stack. it helps drive the business of other services including core search that we all use every day and perhaps a key debate before was whether they could actually integrate everything together but actually what they have is they have the chip layer they have the semiconductors they have the infrastructure layer and they have the application layer so it's all working seamlessly together and I think really is making a difference. And the technology is doing so well that actually they announced last night they're going to start selling some of their custom-made chips to other companies, which is quite an advance, if you like, of their technology development. Yes, isn't that interesting? Meta wasn't able to convince investors quite as well about the merits of their AI spending spree. Why not? I think one of the issues that Matter had actually in the quarter was they had a lower print in terms of the number of people, the daily active users who are using the service. So if you're pumping billions and billions of dollars into the AI, then some of these key metrics, it's just not coming through. And then to make matters worse, they then talked about raising the CapEx numbers even higher for this year. So a bigger 10% increase on the capex when they're not seeing any returns on the top line is really weighing on investor expectations and is going to be a clearly a kind of a wait and see to see whether they can actually deliver the kind of growth that other companies are enjoying. I mean, just in simple terms, Google grew at twice the rate of meta in this last quarter announced last night. This is Bloomberg Daybreak Europe, your morning brief on the stories making news from London to Wall Street and beyond. Look for us on your podcast feed every morning on Apple, Spotify and anywhere else you get your podcasts. You can also listen live each morning on London DAB Radio, the Bloomberg Business App and Bloomberg.com. Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa, play Bloomberg 1130. I'm Caroline Hepker. And I'm Stephen Carroll. Join us again tomorrow morning for all the news you need to start your day, right here on Bloomberg Daybreak Europe. AI to entertainment and from startups to the magnificent seven. We highlight the latest stories of the people and companies pushing the tech sector to new frontiers and the politics that shape global tech markets. We do this all every weekday, then bring you the most important conversations and analysis in our podcast. Search for Bloomberg Tech on YouTube, Apple, Spotify, or anywhere else you listen. Join us every afternoon on your commute home and stay ahead of the tech news cycle. That's the Bloomberg Tech Podcast. I'm Caroline Hyde in New York. And I'm Ed Ludlow in San Francisco. Subscribe today, wherever you get your podcasts. What separates good leaders from transformational ones? I'm Jessica Chen, and in season two of Leading by Example, we'll sit down with executives like Grace Chen of Birdie Gray to find out. It's important to understand where you spike, but also really acknowledge where you don't. and find people who can fill those gaps. Listen to Leading by Example, executives making an impact on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.
