科技股下跌小盘股上涨，Alphabet财报引发AI支出审视

THE COUNTDOWN IS ON. EVERYTHING YOU NEED TO GET THE EDGE AT THE END OF THE MARKET DAY. THIS IS THE CLOSE. ROMAINE: THE INDEXES STAY SOFT. THE AVERAGE STOCK SAYS ROTATION. LIVE FROM BLOOMBERG HEADQUARTERS IN NEW YORK, I AM ROMAINE BOSTICK. CHRISTINA: AND I AM KRISTINE AQUINO. LOOK AT THE NASDAQ 100 INDEX. A LOT OF LOSSES TODAY. CONCERNS OVER HYPERSCALER EARNINGS. LET'S SEE WHAT WE GET AFTER THE BELL LATER TODAY. BUT LOOK WHO IS DOING WELL.

SMALL CAPS. THE RUSSELL 2000 IS UP. PERHAPS THAT ROTATION ONCE AGAIN GAINING TRACTION. WE HEARD FROM THE FEDERAL RESERVE YESTERDAY. IT IS ABOUT FOUR AND A HALF BASIS POINTS. THAT COULD MEAN MORE FED ACTION BY THE END OF THIS YEAR. AND OF COURSE A CHANGING OF THE GUARD. CHRISTINE LAGARDE STEPPING OUT EARLY FROM HER ROLE. ROMAINE: BACK IN THE U.S., COUNTING YOU DOWN TO THE CLOSE AND TODAY'S SELLOFF OF ALPHABET. A RECORD PLUNGE AFTER DISAPPOINTING RESULTS IN ITS ADVERTISING BUSINESS, PUTTING MORE SCRUTINY ON THE SPEND FOR ITS AI BUSINESS.

MEANWHILE, MICROSOFT INVESTORS SLIGHTLY MORE ENCOURAGED BY SAUDI AND A DELLA'S ABILITY TO KEEP HIS CLOUD BUSINESS SURGING WHILE AI AND CAPEX STAYED IN CHECK. THE LOCKSTEP ENTHUSIASM OVER AI IS A SLOWLY GIVING WAY TO GREATER DISCERNMENT OVER EVERY DOLLAR SPENT. CRACKS --

ANY TIME YOU GET EVEN A SMALL MIST OR A DISAPPOINTMENT -- THE FACT THAT THE BEATS HAVE NOT BEEN AS GREAT AS THE MARKET IS EXPECTING -- THAT IS USED AS ADDITIONAL FODDER TO SIT ON THE SIDELINES AND NOT TAKE ON TRADITIONAL EQUITY RISK AT THIS MOMENT. ROMAINE: PERHAPS FOLKS ARE NOT WILLING TO COME OFF OF THE SIDELINES. WAS IT A WIDER AI RESET? MICROSOFT'S REASSURANCE. INTEL ALSO GOING TO BE IN THE MIX TONIGHT. MAYBE MORE INSIGHT ON THE CHIPPED SIDE OF THE AI EQUATION.

BOTH COMPANIES EXPECTED TO POST RECORD OR NEAR RECORD REVENUE. BOTH COMPANIES SEEN THEIR STOCKS FURTHER FROM THEIR LAST RECORD HIGHS. AMAZON DOWN 13% FROM ITS AUGUST HIGH. INTEL DOWN 30 PLUS PERCENT FROM ITS RECORD SET BACK IN JUNE. BUT I WANT YOU TO LOOK PAST SOME OF THE BIG NAMES. TAKE A LOOK UNDER THE HOOD. HERE IS WHAT YOU WILL FIND. ALMOST FOUR OF EVERY FIVE S&P 500 STOCKS IS HIGHER. SEVEN OF THE 11 SECTORS ARE ADVANCING.

EQUAL WEIGHT AND SMALL CAPS OUTPERFORMING. THIS IS A ROTATION. IT IS A ROTATION PARTIALLY DRAWING SUPPORT FROM THE U.S. ECONOMY. WE LEARNED THIS MORNING AND ACCELERATED ITS GROWTH TO 3.4 PERCENT LAST QUARTER. CONSUMER SPENDING IS STILL STRONG. HERE TO HELP UNCAP THIS AND PUT IT BACK TOGETHER IS GINA CHANG OF ROCKEFELLER GLOBAL FAMILY OFFICE. I WANT TO START WITH THE MACRO PICTURE. 3.4% ANNUAL RATE OF GROWTH FOR U.S. GDP.

GREAT FOR A COUNTRY ARE SIZE, BUT IT SEEMS EVEN MORE IMPRESSIVE GIVEN THE HEAD LEAN -- THE HEADWINDS ALL YEAR LONG WITH REGARD TO ECONOMIC STABILITY. WHAT DO YOU MAKE OF THAT NUMBER?

ISN'T IT IRONIC THAT WE HAVE 3.4% ANNUALIZED GROWTH, AND YET CONSUMERS ARE NOT FEELING SO GOOD AND WE ARE TALKING ABOUT A ROTATION AND A BLUE SUITE? THAT MUST BE FRUSTRATING TO POLICYMAKERS IN WASHINGTON. IT SPEAKS TO THIS YEAR AS BEING A VERY MIXED YEAR. BUT THE GOOD NEWS IS BECAUSE OF THE STRENGTH IN THE ECONOMY, THE MARKET HAS BEEN VERY RESILIENT. YOU THINK ABOUT THE S&P 500 INDEX SINCE THE END OF JULY. AND HAS BEEN TRADING IN THE RANGE OF 3%.

WE ARE SEEING UNDERLYING ROTATIONS UNDER THE HOOD. THE INDEX LEVEL HAS BEEN HOLDING UP PRETTY WELL. ROMAINE: WHEN WE HAVE SEEN SKIERS IN THE MARKET, WE HAVE NOT SEEN A HUGE EXODUS OF MONEY. IT JUST GOES SOMEWHERE ELSE WITHIN THAT. WITH SMALLER CAPS AND NON-BIG TECH COMPANIES -- IF THOSE ARE THE WAY TO GO, ARE THE ECONOMIC CONDITIONS AND THE EARNINGS CONDITION SUPPORTIVE OF THAT?

YES INDEED. THREE THINGS DRIVE THE SMALLER CAP STOCKS. THERE IS THE VALUATION. THERE IS THE EARNINGS, THE ECONOMIC BACKDROP. IN THE INTEREST RATES. SMALL CAPS UNDERPERFORMED RECENTLY BECAUSE OF THE RAPID RISE IN NON-BOND YIELDS. BUT WE ARE SEEING SOME NORMALIZATION. WE ARE SEEING THE 10 YEAR YIELD, AFTER PEAKING INTRADAY AT 8.30 4%, IN THE FACE OF STRONGER-THAN-EXPECTED CPI, AND FINISHING LOWER THAN THE PREVIOUS SECTION -- SESSION, THAT SEEMS TO BE INDICATING IN THE NEAR TERM THAT BOND VALUES HAVE PEAKED.

THAT OFFERS US THE ABILITY TO SIMILAR LEE LOOK AT STOCKS. KRISTINE: WE HAVE SEEN ALMOST THE ENTIRE U.S. TREASURY YIELD CURVE ABOUT 5%, RIGHT? WE ARE SEEING A LITTLE BIT OF STABILIZATION AROUND THOSE LEVELS. DO YOU THINK THAT IS GOING TO BE ENOUGH TO KEEP WHAT WE ARE SEEING IN EQUITY MARKETS, THAT RESILIENCE, AND PERHAPS A FURTHER RALLY?

I THINK IT IS A MATTER OF TIMING. IN THE NEAR TERM, I THINK THE ECONOMY IS RESILIENT ENOUGH TO SUSTAIN THE GROWTH IN THE FACE OF ELEVATED INTEREST RATES. BUT WHEN YOU LOOK AT DIFFERENT SECTORS OF THE ECONOMY, SOME ARE STARTING TO WEAKEN FURTHER FROM HIGH INTEREST RATES. SO WE ARE LIKELY TO SEE FURTHER SOFTENING IN CONSTRUCTION MARKETS, HOUSING, THE DATA CENTER POWER GRID SPACE. RESIDENTIAL CONSTRUCTION SEEMS RECESSIONARY.

I THINK OVER TIME HIGHER RATES WILL PRESSURE PARTS OF THE ECONOMY. THAT IS WHY THE FED DECIDED TO HOLD. THEY ARE SAYING THE CAPITAL MARKETS, THE BOND MARKETS, DOING SOME TIGHTENING. KRISTINE: I KNOW YOUR RECOMMENDATION IS TO EXTEND BOND DURATION. THERE IS A CAUTIOUS STORY ABOUT AI EXPOSURE. ARE YOU SHIFTING FROM EQUITIES TO FIXED INCOME AT THIS POINT?

GIVEN THE LAST FEW YEARS, WE HAVE SEEN THE 10 YEAR MOVING FROM 2% TO OVER 5%. SO FINALLY WE ARE GETTING REASONABLY PRICED BOND YIELDS, IN LINE WITH THE NOMINAL GDP GROWTH RATE. I THINK IT IS TIME TO EXTEND THE DURATION. ROMAINE: THE AI BUILD, THESE NUMBERS -- THAT HAS BEEN A BIG TAILWIND FOR MARKETS AND FOR OUR ECONOMY. ARE WE PUTTING TOO MUCH INTO THAT IN TERMS OF PUTTING ALL OUR EGGS IN ONE BASKET? WE TALK ABOUT DIVERSIFICATION AND MARKETS.

WHEN DO WE SEE MORE DIVERSIFICATION WITH REGARDS TO THE ECONOMIC UNDERPINNINGS?

FOR NOW, AI REMAINS THE SINGULAR DRIVER FOR ECONOMIC GROWTH. UNLESS WE START TO SEE STRONG PAYOFFS FROM AI INVESTMENTS ON THE USER SIDE, WITH TREMENDOUS PRODUCTIVITY GAINS, TO KIND OF HAND THE BATON FROM AI INVESTMENT CAPEX INTO PRODUCTIVITY GAINS, THAT WILL TAKE SOME TIME. IN THE MEANTIME, WE ARE STILL RELIANT ON THE AI BUILD OUT, UNFORTUNATELY.

JIMMY CHANG, THE CIO OF ROCKEFELLER GLOBAL FAMILY OFFICE, KICKING US OFF TO THE CLOSE ON THIS THURSDAY AFTERNOON. WHEN WE COME BACK, WE WILL CHECK IN WITH THE CEO OF RAYMOND JAMES AND GET HIS TAKE NOT ONLY ON THE EARNINGS THAT JUST CAME OUT. HE HAS AN INTERESTING LENS INTO WHAT IS GOING ON IN THE M&A MARKET AS WELL. KRISTINE: AND WE HAVE EARNINGS, OF COURSE. WE WILL CHECK IN WITH THE GE CEO . AND HOW AI IS IMPACTING THE INDUSTRY.

ROMAINE: THE AMAZON EARNINGS ARE EXPECTED TO DROP AFTER THE BELL. WE WILL HAVE FULL COVERAGE OF THE LATEST HYPERSCALER TO GIVE US ITS TAKE ON THE AI BUILD OUT. ALL THAT AND MORE, RIGHT HERE ON THE CLOSE, RIGHT HERE ON BLOOMBERG. KRISTINE: SHARES ARE A LITTLE BIT ON THE BACK FOOT. THE TRADING PLATFORM IS DELIVERING IN-LINE REVENUE AND EARNINGS BEAT. THE DIVERSITY OVER GROWTH A THEME. LUMINARY STRONG DOUBLE-DIGIT GROWTH.

I AM PLEASED TO SAY WE ARE JOINED BY THE CEO LIVE IN THE STUDIO. CONGRATULATIONS ON A PRETTY ROBUST QUARTER HERE. WHAT WAS THE MAIN DRIVER? ARE YOU SEEING STRENGTH IN ALL ASSET CLASSES, AS YOU MENTIONED EARLIER?

VERY ROBUST. A VERY STRONG OCTOBER AS WELL. THE MARKET WENT THROUGH A BIT OF A TEST IN OCTOBER. WE SAW ACROSS THE BOARD GREAT GROWTH. BUT MOSTLY LED THROUGH OUR SIGNIFICANT RATES FRANCHISE. GLOBAL SWAPS IS A BIG BUSINESS FOR US. GLOBAL GOVERNMENT BONDS. OUR CREDIT BUSINESS CONTINUES TO DO EXCELLENT. THIS IS ABOUT AS INTERESTING A TIME IN THE MARKET AS I HAVE SEEN IN MY CAREER. IT IS A MOMENT WHERE THE MARKET KEEPS GROWING.

OBVIOUSLY, VOLATILITY IS HERE TO STAY AND TECHNOLOGY IS THIS ONE-WAY TRAIN THAT KEEPS ARRIVING INSIDE OF THESE MARKETS. IT IS AN INTERESTING MOMENT FOR US. KRISTINE: IT SEEMS LIKE A HALLMARK OF THE QUARTER AND IT DOES NOT SEEM LIKE THERE IS AN END TO THAT ANYTIME SOON. SO I THINK AS THE MARKET BECOMES MORE VOLATILE, I THINK THE NETWORK OF CLIENTS AND CUSTOMERS