Daybreak Weekend: Tesla Earnings, European Headwinds, Japanese Inflation

0:00So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. When you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, that isn't always easy.

0:38Risk can touch multiple parts of an organization at the same time, often in ways that aren't immediately obvious. It might involve property, liability, or cyber. It could stem from regulatory requirements or challenges tied to a specific industry or the scale of an operation. At that level, managing risk becomes an ongoing discipline, not a one-time decision. At the Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. That means working with companies to identify where they're exposed, decide what matters most, and put practical standards in place so risk is managed as part of day-to-day operations.

1:14And when losses do happen, the Hartford can pair that risk control work with insurance coverage grounded in underwriting, risk engineering, and claims experience developed over time. Learn more at thehartford.com slash risk mitigation. Everyone has been there. Your team's feedback is scattered across emails, chats, and sticky notes. It's a mess. But PDF Spaces and Adobe Acrobat gives you one collaborative workspace to streamline every file and comment. So if you need six departments to finally agree on a proposal, do that with Acrobat. Need to turn a mountain of feedback into one plan of action?

1:52Do that with Acrobat. Want to stop searching for files and finally get everyone on the same page? Do that. Do that. Do that with Acrobat. Learn more at adobe.com slash do that with Acrobat. This is Bloomberg Daybreak Weekend, our global look at the top stories in the coming week from our Daybreak anchors all around the world. Straight ahead on the program, we look to Kevin Warsh's bid to be the next chair of the Federal Reserve, plus a preview of earnings from Tesla. I'm Nathan Hager in Washington. I'm Caroline Hepker in London, where we're looking ahead to first quarter European earnings amidst broader headwinds.

2:30I'm Doug Krishner looking at how the war in Iran is impacting Japanese inflation.

2:40that's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 1130 New York Bloomberg 99.1 Washington DC Bloomberg 92.9 Boston DAB Digital Radio London Sirius XM 121 and around the world on Bloomberg Radio.com and the Bloomberg Business App good day to you I'm Nathan Hager. We begin today's program with the Federal Reserve. On Tuesday, former Fed Governor Kevin Warsh is set to testify before the Senate Banking Committee in his bid to succeed Jay Powell as chair of the world's most powerful central bank. For more on what to expect, we're joined by Stuart Paul, U.S. economist with Bloomberg Economics.

3:21Of course, Stuart, as you know, this hearing is coming amid the backdrop of ongoing investigations into the current Fed Chair Jay Powell and Governor Lisa Cook. So what can we expect? Fireworks on Capitol Hill? That's a pretty sure bet. I do expect to see fireworks during the Senate Banking Committee hearing this Tuesday. Not only are we likely to see some pushback from Democrats, but even one very important Republican on the committee, and that's Senator Tom Tillis from North Carolina, has expressed concerns about the DOJ probe into the Fed chipping away at the Fed's independence. And so he pledged to halt Kevin Warsh's advancement through the nomination process until the DOJ probe is resolved.

4:02So as much as we're going to see some pushback from Democrats, I think that this entire conversation about the DOJ probe and about the Fed's independence is going to be something that we hear from both sides of the aisle. And until the DOJ probe is resolved, the best bet is that the nomination just sort of stays in committee, stalling out. And that could last for several weeks, if not months at this point. Well, if that were to play out that way, what would that mean for the Federal Reserve itself? Does it just go without a chair? Does Jay Powell stay on longer? Yeah. So Chairman Powell has three important roles, really.

4:42The first is as chairman of the Federal Open Market Committee, which is the main monetary policy and interest rate setting organ of the Federal Reserve system. The second role that he has is as chairman of the Federal Reserve Board. And that's really what we're talking about, that role, when we talk about Kevin Warsh's nomination. And he's also a governor of the Federal Reserve System. And so in the event that Kevin Warsh is not confirmed or his confirmation is really delayed, Chairman Powell just stays in his role as all three, as a governor, as chairman of the board, and as chairman of the FOMC.

5:18In the event that we do see Kevin Warsh advance through the confirmation process, he will become chairman of the board and it will be really up to current Chairman Powell to decide what he wants to do with his governorship and then what that means for the leadership of the Federal Open Markets Committee. So right now we're thinking about rather a narrow slice of Chairman Powell's responsibilities that are going to be sort of in flux until the next chairman of the board is confirmed. It's just mostly going to be the status quo with Chairman Powell presiding over the board as a sort of pro tem or emeritus chair and also Chairman Powell presiding over the FOMC, the interest rate setting body, effectively as a governor and as chairman of that body.

6:09Now, of course, in the lead up to this hearing, Stuart, President Trump has talked about, you know, testing that independence, possibly firing Chairman Powell if he doesn't leave the board, as he puts it, on time. Can the president do that? You know, I don't think that Chairman Powell is really subject to much risk of being fired by President Trump. President Trump has very little scope for removing Chairman Powell for cause, and that is what's required by statute. In fact, the DOJ probe into expenses at the Federal Reserve is basically an attempt to lay groundwork for removing him for cause. But it doesn't seem as though there's much of a path to pursue in that direction.

6:56And in the event that the DOJ probe continues, the Senate looks as though they would be very wary of advancing any successor Fed chairman's nomination through the process. So even if the president were to attempt to fire Chairman Powell, it seems as though any successor chairman would really face a lot of pushback in the Senate, which would limit the president's ability to lower interest rates as he is currently expecting the next Fed chairman to do. Yeah, I mean, that is really the pressure that the president has put, not just on Chairman Powell, but arguably on Kevin Warshere as he heads into this hearing.

7:39Now, if he does make it past the confirmation process, even after all these drama points that we've been talking about, will he even have the votes on the Fed Open Market Committee to deliver the cuts that the president wants? Probably not. The committee is rather hawkish, especially this year. And there are a lot of committee members who are worried that the public is starting to raise their inflation expectations. And as inflation expectations become unanchored, so too does actual inflation. People expect prices to rise in the future, so they rush out and buy things today and beget the very inflation that they fear.

8:17The Fed is very focused right now on pushing back against rising inflation expectations. And so they're sending messages to the public. They're sending messages to markets that they want to keep their foot on the brakes. They do not want to swiftly cut rates as the president would prefer. So even if we do see a Chairman Walsh, which I think is a long shot in the near term, even if we were to see a Chairman Walsh, I think it would be very difficult for him to achieve the sort of interest rate cuts that the president wants right now. Wow. All right. Well, thank you for this, Stuart. Great having you on with us.

8:52That's Stuart Paul, U.S. economist at Bloomberg Economics. Let's take a look now at some stocks making news in the week ahead. I'm Nathan Hager, joined by Bloomberg News senior equities reporter Bailey Lipschultz. It says the earnings parade continues moving from banks to tech, really, in the coming week, Bailey. We hear from Tesla on Wednesday. We've heard a lot from Tesla already, the disappointment in the delivery numbers. I think I saw a story that a bunch of the cyber trucks that have been sold already have been bought by SpaceX. What does that mean for Tesla this week? Well, the big thing to keep in mind, that was a fascinating story from Dana Hull.

9:30So to your point, which kind of called out that the majority of these are Cybertrucks are really being not only bought by SpaceX, but other companies. I think she also called out the Boring Company and Neuralink. So Musk Inc. continuing to evolve. But the big thing to keep in mind when we do get earnings from Tesla is the fact that at least according to the sell side and most bulls, this is no longer really a car company. This is a robotics company. This is a driverless technology company. So the big thing will be any updates on the state of Robotaxi, any updates on Optimus. Because if you think about it for a while, Tesla auto sales have been declining.

10:14And as much as we want to call out the fact that the stock right now is down more than 10 % near to date, it's still a company that's driven by one man and one man only. And that's Elon Musk and his vision for Grand Plan. So any updates and commentary that can kind of allay any of the uncertainty over the costs to build out some of their technologies will certainly be top of mind. Well, we do know that on Thursday, Intel is going to be reporting earnings as well. This company is in the middle of a turnaround. It's in the middle of a lot of investment as well from the government and other sources.

10:47So what can we expect from their earnings? Yeah, it'll be a key story. And Intel, ironically, is a partner with TerraFab. So something sticking kind of on theme. This has been one of the big winners so far this year. You're looking at a stock price, at least right now, up more than 80%. And the big topic of discussion with the results and with any kind of commentary from management, as you mentioned, will be on that recovery, on that turnaround story. How much demand are they seeing for server CPUs? Are they seeing any type of issues or knock-on effects from supply chain and pricing? Obviously, we've been kind of tracking what the fallout is for PC demands and over on the memory side of things as it relates to the SanDisk or a Micron.

11:28So that'll be certainly something top of mind. And obviously, the big question will still be on what do margins look like? What do shipments look like? But this has been a pretty much red hot stock so far this year. And if you really look at it on a 18-month basis as well, pretty sharp return. Yeah, to your point, Bailey, the stock is up double digits and then some so far this year. So what kind of volatility could we expect around the earnings given the outperformance that it's been seeing so far? Yeah, that'll obviously be a big question for the investment community, as we call it on the desk, price to perfection potentially.

12:04This is the company that when we look at what the options are implying, that move would be more than 9%. So that would be a pretty sharp move in either direction. And when you keep in mind, this is a company that has been volatile after earnings. If you go back to the start of 2024, there have been 26 % declines, 12 % declines, 17 % declines, a lot of red on the screen on earnings days. Again, the big thing to keep in mind, this is a turnaround story. But I certainly think that if you pull the investors in this company, what we can see typically is when a company has a move like Intel has over the last few weeks and months is that the sell side expectation.

12:44So whether we call it a meet or a beat is not quite what the whisper number, what the buy side investors are looking for. So that can lead to initial headline beats that we see stocks move in the other direction. And then we kind of have to unpack, well, sure, the analysts at the likes of a Morgan Stanley or Wells Fargo or what have you penciled in this for the estimates. But the investors who have been piling into the stock were actually expecting a market increase. So certainly something to keep in mind. and the immediate aftermath and certainly what it could mean for the longer term in terms of competition.

13:19And along with Intel on Thursday, we're going to get results from American Express as well. Maybe a little more color on the consumer after what we heard from the big banks this past week. Yeah, it'll be interesting to see what they say. Obviously, we've kind of talked ad nauseum across the newsroom about the divide and bifurcation of the credit card market. When you look at American Express, certainly catering to either a more kind of income oriented consumer or simply people who want to have the platinum cards and are willing to pay the hefty annual fee for some of those perks. One of the things that has been interestingly flagged across some of the analyst notes and even with news that they recently struck a deal to acquire a company called HyperCard is this push potentially into AI expense management, AI offerings.

14:06They earlier this month introduced their Amex Agentic Commerce Developer Kit. So really trying to focus on how they can kind of thread that needle of being a payments company, being a credit card company, and also cutting costs and powering growth from the commerce side of things, utilizing things like AI. Obviously, that was such a big buzzword for the last year and really few years. So certainly seeing how the company can lean on some of those AI tools and what that ultimately could mean for the bottom line. Thank you for this, Bailey. Great having you on with us. That's Bailey Lipschultz, senior equities reporter for Bloomberg News.

14:41And coming up on Bloomberg Daybreak Weekend, we'll look to first quarter European earnings amidst broader headwinds. I'm Nathan Hager, and this is Bloomberg.

14:55Support for the show comes from Public. Public is an investing platform that offers access to stocks, options, bonds, and crypto. And they've also integrated AI with tools that can assist investors in building customized portfolios. One of these tools is called Generated Assets. It allows you to turn your ideas into investable indexes. So let's say you're interested in something specific like biotech companies with high R &D spend, small cap stocks with improving operating margins, or the S &P 500 minus high debt companies. Chances are there isn't an ETF that fits your exact criteria. But on public, you just type in a prompt and their AI screens thousands of stocks and build a one-of-a-kind index.

15:35You can even backtest it against the S &P 500. Then you can invest in a few clicks. Go to public.com slash market and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash market. Add paid for by public holdings. Brokered services by public investing member FINRA SIPC. Advisory services by public advisors. SEC registered advisor. Crypto services by zero hash. Sample prompts are for illustrative purposes only, not investment advice. All investing involves risk of loss. See complete disclosures at public.com slash disclosures. Small businesses are the pulse of every community.

16:10They bring people together, create opportunities, and drive growth. With a widespread presence in communities across the country, Chase for Business supports small business owners at a local level. That makes it possible for you to connect, learn from each other, and grow together. There's a real commitment to seeing small businesses succeed. The Chase for Business team has knowledge and expertise that span a wide range of financial areas. They can help you make more informed decisions as you navigate the complexities of running your business. They'll help your business grow with individual guidance and convenient digital tools all in one place.

16:44With that guidance and your determination, you can take your business farther and help build a brighter future for your community. Learn more at chase.com slash business. Chase for business. Make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JPMorgan Chase Bank N.A. Member FDIC. Copyright 2026. JPMorgan Chase and Company. Deadlines move, plans change, and sometimes opportunities pop up out of nowhere. When you need branded gear fast, 4imprint is ready to deliver. 4imprint offers hundreds of promotional products in their 24-hour category.

17:22Everything from custom apparel, bags, and drinkware to writing tools, trade show staples, and high-tech gear. At 4imprint, they're focused on getting the details right, printing your logo with precision, packing your order with care, and shipping it out fast. And it's backed by their 360-degree guarantee. That's 4imprint's promise your order will show up right on time, just the way you planned it. That's what it means to be 4imprint certain. So, if you're prepping for a last-minute event or jumping on a big opportunity, you don't have to settle or scramble. With 4imprint, fast, reliable service and peace of mind are built right in.

17:58Check out their full 24-hour selection at 4imprint.com. 4imprint. 4certain. This is Bloomberg Daybreak Weekend. our global look ahead at the top stories for investors in the coming week. I'm Nathan Hager in Washington. Up later in our program, we'll look at how the war in Iran has affected inflation in Japan. But first, in the coming days, Europe's biggest companies share details about their recent performance with the market. The disclosures come at a pivotal time as war and inflation threaten to undermine the profit outlook for 2026. For more, let's go to London and bring in Bloomberg Daybreak Europe anchor Caroline Hepker.

18:35Nathan, the war in Iran is a key topic for public and private companies operating across a broad range of sectors. For one, it is pushing up inflation. The latest data for the Eurozone shows headline inflation rose by 2.6 % year on year in March. That was more than economists had expected. It's up from 1.9 % in February, driven by pump prices. But uncertainty around the path of energy prices also does remain extremely high. As companies prepare to report first quarter earnings in Europe, there may well be other themes that emerge on consumer sentiment, AI disruption and concerns about excesses in private credit.

19:19Despite recent volatility in markets, the CEO of the London Stock Exchange, Julia Hoggart, has told Bloomberg she's optimistic about prospects here in the UK. Look, the simple reality is we have the biggest pipeline we've had since 2005. So this reform agenda is bearing fruit. Our lawyers and our bankers are very busy right now in preparing transactions. And those transactions are coming in not just from the UK, but around the world. But there is always more you can do. You have to think of the exchange product in the same way that any company thinks of any product. Does it serve the needs of its clients?

19:54And so a lot of what we're focused on right now is we've had massive reform to enhance retail participation. in the UK, because actually there were quite a lot of European regulations that made it quite hard for retail to access regulated markets, unlike him. And therefore, we have reversed those in the UK, and now we're working on the cultural engagement campaigns in the UK for retail to increase their participation, and for our pension funds as well to increase their participation, not only with public companies, but with private companies. And that is where the majority of the focus is, because the reform agenda has been so swift and so profound in the UK that most of our checklist we've actually checked off.

20:30That was the London Stock Exchange CEO Julia Hoggart. So how are firms navigating the current environment and which earnings stories should we be looking at in the coming days? Joining me now is Bloomberg's senior strategist for equity markets, Michael Masika, and our private equity reporter, Sweater Gopinath. Welcome to both of you. Michael, I want to start with you thinking about the public markets and whether there's any evidence that the Middle East tensions are already affecting performance? Well, it is already starting to impact companies, especially in Europe and especially in the consumer sector.

21:10We had earnings report from luxury companies LVMH, Hermes, as well as a beverage company, Pernod Ricard. The three of them had very underwhelming results, and most of it was blamed on the war. For luxury companies, it's a tricky one. Those companies, they don't have a very big customer base in there. Like in terms of sales, it's between 5 % and 10%, depending on the companies. Richemont is the one with the highest one, with about 10%. but those customers are very affluent and they travel a lot and they buy luxury goods everywhere in the world when they travel, which they haven't been able to. So the reality for those companies is we've been waiting for a recovery in the luxury sector, in the consumer sector for a while now, and that recovery is becoming completely elusive.

22:02Okay, so that important sector then in Europe looking a little bit tricky. What are the big names then we should be looking out for in the next few days that are going to report that we can think about? So, lots of consumer stocks are going to come, but I will talk about one specific sector which is different is the tech sector. The reason is that next week we have SAP. SAP, one of the biggest companies in Europe and in the software and services sector, a sector that was massively impacted by AI potential disruption. I say potential because at the moment we don't see any evidence of that disruption, but the sector was battered.

22:39The whole sector was battered in the US and in Europe and SAP in particular. So it will be interesting to see what they are going to say and what will be their forward guidance. I did see a story that you put out a few days ago that was looking overall at European businesses, that actually there is a view that analysts are still being much too optimistic about the earnings potential of European businesses for the whole of this year. I mean, things are very uncertain, though, aren't they? So how do you think about that? That's right. So you have like very lofty expectations, but that's valid for pretty much the whole world.

23:19I mean, in the US, we're talking 15 % earning growth this year. In Europe, it's double digit as well, like 10, 11%. These earning expectations were set up like at the end of last year, kind of, and they haven't come down. They haven't come down because analysts still expect fiscal stimulus in Europe to kick in aggressively this year. They expect growth to improve. But the problem is the war is changing all that. I mean, first of all, you have input costs that are rising. Second, interest rates might be rising as well. Growth might be impacted. Already we're seeing economic surprises in Europe plunging into negative territory.

24:03And on top of that, the stimulus is coming, yes, or it has started already. But if governments need to start, you know, reallocating resources to different areas because of the war and because oil prices are now$100 a barrel, that's going to delay all of that. So earnings growth might be like also very, very high. The expectations might be very high, too high. Too high, yeah. Yeah, indeed. We've seen some European countries already, you know, trying to offer some help for consumers and businesses. Outside of the war, what do you think is the biggest macro risk facing companies? So interest rates is a big one.

24:49I mean, we came from last year expecting a European Central Bank on hold, a Fed that was going to reduce rates at least three or four times this year. Same for the Bank of England. And now we have completely flipped. The Fed is likely to stay on hold or cut once. The ECB is likely to raise interest rates two to three times. And the BOE as well. I mean, you've seen in England, especially, rates are already very high. So it's going to impact borrowing for the government. It's going to impact companies, how to finance their growth and their activity. And that's a big risk for the market. Okay, that's interesting.