Global Chip Rebound; Amazon Gains as Apple Slides Post-Earnings

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0:32Bloomberg Audio Studios. Podcasts. Radio. News. Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we end the week with a market rally around the world. U.S. futures are building on yesterday's tech-led gains on Wall Street. The stock's Europe 600s hit an all-time high, but the real action was in Asia, where the Kospi Index in South Korea rebounded from a three-day sell-off to surge 18%. We get more from Bloomberg Markets reporter Mark Cudmore in Singapore. It's insane, isn't it? On Wednesday, it was down 21.3 % for the week. Then it had a 26 % rally between Wednesday's lows and Friday's highs.

1:15This is one of the world's largest stock markets. Through the GFC, we saw some wild moves. In the dot-com era, we saw some wild moves. This is pretty insane for one of the world's largest stock markets. Bloomberg's Mark Cudmore notes SK Hynix and Samsung Electronics each rose more than 22%. Well, Nathan, the gains in Korea follow a big rally for chip stocks here in the U.S. The Philadelphia Semiconductor Index, known as the SOX, climbed 8.2 percent yesterday, and Microsoft soared 16 percent for its best one-day performance in 18 years following strong earnings. And the high-tech earnings continue, Karen, with Amazon.

1:50Those shares are up nearly 12 percent in the pre-market. The company reported cloud computing revenue accelerated for a fifth straight quarter. Amazon's e-commerce operation still generates the biggest share of its revenue, but online sales gained 15 % to more than$70 billion. Poonam Goyle covers Amazon for Bloomberg Intelligence. It looks like broad-based strength across the board. The retail numbers were particularly good, and that was expected because we had the Prime Day shift moving in from 3Q to 2Q. So overall, really nice numbers here on the retail side. Consumers came to Amazon to shop Prime Day sales, And the shift to online just continues to appear more and more apparent as we move through a tough consumer spending cycle.

2:31And Poonam Goyal of Bloomberg Intelligence says Amazon raised its projection for 2026 capital expenditures to$220 billion from a previous estimate of$200 billion. Most of that, Amazon says, is going to AI. While Amazon is surging, Nathan, investors are taking a big bite out of Apple shares this morning. That stock is down more than 7%. The iPhone maker delivered a disappointing sales forecast. Apple's been struggling with shortages of computer processors and fast rising memory costs. As for the previous quarter, sales topped estimates climbing 16 % to more than$109 billion. Mark Gurman covers Apple for Bloomberg.

3:10My take is that the iPhone number looks great. My take is that the Mac number looks amazing. My take is that service is a little soft. And the China number missed the estimate we have here on the Bloomberg terminal. But at the same time, that is pretty nice growth on an annual basis where they were sort of, I guess, in the toilet in China a couple years ago and last year. But they've totally rebounded there. Bloomberg's Mark Gurman says the quarter served as a swan song of sorts for Tim Cook, Apple's leader since 2011. He's handing the reins to hardware head John Ternus on September 1st. We turn to the economy now.

3:44Now, a raft of U.S. economic data did little to dispel investor anxiety that is keeping yields near multi-year highs. And Bloomberg's John Tucker is here with more. John, good morning. Good morning, Karen. Yeah, the data included the Fed's preferred inflation measure, which eased. But that's pretty much in the rearview mirror. It was driven by a temporary drop in oil and gasoline that's already reversed. Now, the focus for the Treasury market remains the Fed's decision to hold rates steady despite stubborn inflation. The yield on the 30-year bond rose as much as four basis points yesterday before pairing its increase.

4:19Right now, hovering at 5.18 percent. The yield on the 10-year Treasury note, which pretty much underpins the cost of borrowing from mortgages to business loans, that remains close to the highest level since President Trump returned to the White House. With the average 30-year mortgage rate, that climbed to the highest in almost a year. Meantime, the Fed's 2 % inflation target that has now been exceeded each month since March of 2021. In New York, I'm John Tucker, Bloomberg Radio. Okay, John, thank you. In Asia, the Bank of Japan held its policy rate steady after officials took the rare step of wading back into the currency market just hours earlier with apparent help from the U.S.

4:59Treasury Secretary Scott Besson told Fox Business the yen should strengthen from current levels. Japanese yen seems very undervalued to me. The currency is very cheap. The economy is doing well. The prime minister is very popular and enacting very strong policies. And I think we're going to see the fundamentals come through at a point that the market will realize the yen is undervalued and should strengthen. Treasury Secretary Scott Besson in the end gained as much as 3.3 percent against the dollar in New York trading yesterday. Those gains continue this morning with the yen up about a half percent at 158.74 against the dollar.

5:36Now, Nathan, let's get to the Middle East and word of a potential breakthrough in Gaza. President Trump announced on social media that the U.S.-led Board of Peace has reached an agreement for Hamas to disarm. But Bloomberg Middle East correspondent Abir Abu Omar reports there are still questions surrounding this deal. We heard from Hamas officials overnight that essentially they will not disarm until Israel pulls out. We don't have a lot of clarity from the Israeli side on exactly how possible that is. History suggests to us if there is evidence that Israel is not going to be very prone to pulling out before Hamas actually disarms its weapons.

6:14Bloomberg's Abir Abou Omar reports Israel has yet to comment on the agreement. U.S. and Board of Peace officials say the details still have to be refined over the next couple of weeks. They laid out a timeline of 200 to 350 days to implement the agreement, but they say that could change. Meanwhile, in Iran, Karen, President Trump is facing a conundrum, whether to escalate that conflict or focus on restocking the U.S. military's depleted munitions. That choice came into focus this week as the U.S. hit dozens of targets tied to Iran's Islamic Revolutionary Guard Corps. The White House is not saying whether this points to a return to full-scale war.

6:48But crude oil is falling this morning at the end of a volatile week. Stephen Stapchinski covers the energy markets for Bloomberg. We're actually seeing a little bit more traffic and actually indications that the shuttle service, so the UAE ad knock had been able to send oil out of the Persian Gulf through the Strait of Hormuz into the Gulf of Oman and then basically do a ship-to-ship transfer where they transfer the oil onto another vessel. They've been picking that back up after several week pause when tension in the region kind of escalated at the beginning of July. And Bloomberg's Stephen Stepchinsky reports oil is still on track for its biggest monthly gain since March.

7:26With checking prices this morning, Brent is lower by almost a half percent at$88.63 per barrel. West Texas Intermediates down nine tenths percent at$82.87. Nathan Anthropik says its AI models hacked into three organizations during testing. This comes just days after OpenAI said its AI models went rogue and hacked into another company. Anthropic says it discovered the incidents after reviewing over 141 ,000 evaluation runs. The incidents highlight the vulnerabilities in AI security and controls and raise questions over how AI can be used safely. We have this programming note, Karen. Bloomberg Radio is introducing a new feature exclusively for Bloomberg.com subscribers and terminal clients.

8:07You can help shape our conversations by submitting questions for our analysts and experts to answer live on air. Just go to Bloomberg dot com slash radio for subscribers to send in questions and you may just hear them asked on air. That's Bloomberg dot com slash ask radio.

8:28Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. President Trump said he is open to the possibility of temporarily withdrawing Todd Blanche's nomination as attorney general amid opposition from two Republican senators. John Cornyn and Tom Tillis have sought additional assurances in writing that the DOJ will not revive an anti-weaponization fund created to resolve the president's lawsuit against the IRS. Senator Tillis. Somebody's telling them to not do what Blanche said they were going to do.

9:03whoever that person is is giving the president bad advice. The only reason why we wouldn't move forward with this language is because that same advisor wants to bring it back to life at some point. Senators Tillis and Cornyn met with Blanche last night. Fifteen years in prison is the sentence a Georgia judge handed down to Colin Gray, the father of the Appalachee High School shooter. Earlier this week, Colt Gray was sentenced to life without parole for the 2024 mass shooting that left four dead. said Colin Gray was sentenced of second-degree murder for giving his son the gun that was used in the shooting.

9:39Barrow County District Attorney Brad Smith. I own guns. I'm not against people owning guns. I own them myself. But when you see someone in distress, please take away their access to guns. DA Brad Smith. The death toll has climbed to at least 34 from Tuesday's 7.1 magnitude earthquake in southwestern Japan. It caused an explosion at a mall and flattened homes. Global news 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg. Karen. Thanks, Michael. Time now for our Bloomberg Sports Update. And for that, we bring in John Stashauer. Thanks, Karen.

10:17NFL teams locking up veteran players. Philadelphia with defensive tackle Jalen Carter, Cleveland and quarterback Denzel Ward. And now the New Orleans Saints have a new deal with whiteout Chris Olavi. Four years,$132 million. FIFA, the soccer governing body, is looking to sell stakes to private investors. UEFA, which runs European soccer, not happy, saying the World Cup is not for sale. They emerged from a meeting saying their 55 nations will boycott the 2030 World Cup. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. As markets move and headlines break, what matters most is context.

10:58A Bloomberg subscription gives you unmatched reporting, sharp analysis, and powerful tools that help you connect the dots. Visit Bloomberg.com slash podcast offer to learn more. Coast to coast on Bloomberg Radio, nationwide on Sirius XM, and around the world on Bloomberg.com and the Bloomberg Business app. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. We are coming to the end of a trading week of the big rebound in global chip stocks and two of the biggest names in mega cap tech moving in two different directions after earnings. Joining us this morning is Dan Ives, partner and senior managing director at Yorkville Ives.

11:38Great to speak with you this morning, Dan, as we're coming off a huge surge in South Korea's Kospi Index after three straight days of declines an 18 % jump. What do you make of the move in chips this week? Good morning. Yeah, great to be here. Look, I mean, you're just seeing sort of parabolic moves. But the reality is a lot of it is coming off tech earnings in terms of what we're seeing from hyperscalers. And then in terms of Korea, some of the things that you've seen with the levered GTFs and obviously, a lot of the sort of risk, risk on, risk off, I think that is going to continue to be volatile.

12:20It's really about U.S. tech earnings at the front and center. Well, let's talk about some of those tech earnings. Obviously, we just heard from Amazon a very positive reaction in the shares this morning after a fifth straight quarter of cloud growth and an increase in projections on how much they're going to spend on AI this year. We've seen some different reactions when it comes to those increases. How do you read Amazon's earnings, Dan? Look, I mean, it's really about hyperscalers. I mean, if you think about Alphabet, what we saw from Microsoft now in terms of Amazon, it's about the cloud growth.

12:56Because that's really the validation of the AI revolution that's playing out front and center. And I think as long as you're showing these numbers, the CapEx investors are fine and willing and understand why they're spending. And I think that's sort of the narrative from this earnings season we've seen across the hyperscalers worrying about monetization across tech, but now you're starting to see it. So why do you think we're seeing a different reaction when it comes to Amazon's boost to its capital spending forecast as well as Microsoft compared to what we saw last week from Alphabet? Yeah, look, I think if Alphabet reported results this week, it would be a different reaction.

13:42I think part of that was just investors were so nervous going into those numbers. And I think what you saw there was maybe a little bit too much of an increase from a CapEx perspective, but now it's a different narrative. Because when you look at Alphabet, you look at Amazon, you look at Microsoft, now you're seeing the clear narrative around hyperscalar growth. Well, what's the narrative for Apple then? Obviously, their revenue came in short of Wall Street estimates. Well, how does that set the table for John Ternus once he takes the reins from Tim Cook later this year? Got about a minute left.

14:18Well, for Ternus, the challenge is going to be supply. You have limited memory. And that's something that they talked about on the call. I think investors, from an Apple perspective, it's really more looking at iPhone 18, the AI strategy, services in terms of, you know, a little light, but ultimately what that's going to do. But there's no doubt. I mean, Cook called a once in a hundred year, you know, sort of flood, storm. The memory continues to be an issue. There's a scarcity of it. It's all going to AI. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond.

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15:33I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

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