Stocks Fall Amid Tech Earnings; Oil Climbs as MidEast Tensions Rise

It's 5 a.m. in New York City, 10 a.m. in London. Good morning. I'm Vonnie Quinn with your Bloomberg release. Let's get you set up for the day. Market sentiment soaring, treasuries gaining. Along with the yen and Swiss francs. Mehta goes full steam ahead on investment plans. Tesla, though pulling back its memory maker Western Digital, on Dec after the close and friends now hovering around $112 a barrel, as did the attacks in Saudi Arabia and IRGC tanker strikes heightened supply concerns, sentiment souring then in the Asia session. Lots of details. Let's get them now from Winnie Sue in Hong Kong. Winnie. Yeah good morning Vonnie. Well, a very interesting day in Asia today because we saw this very big selloff with the MSCI Asia here down about 1.7% to its lowest level since July. As you mentioned, a couple of different factors. You have Tesla cutting its capital expenditure. To some concerns around slower demand, slower growth. That plus the higher oil prices and weaker than expected earnings forecasts for Lam Research. So that's all weighing on sentiment. You have tech heavy gauges in the region leading losses with the coffee index down by more than 3%. Also in South Korea we have Bank of Korea, uh keeping rates steady although hinting on further tightening to come. So you saw the South Korean one actually strengthening by about 4/10 of a percent. Now before we take a look at Chinese assets, because really being underperforming broader Asian markets today with the CSI 300 in that bear territory plus tech index down by about 5%, having its worst day since April last year. Now, it is also close to erasing all gains since that big stimulus back in 2024. We see, uh, e-commerce stocks, including Alibaba, leading losses today after authorities urged these companies to tighten their product. Product quality control? Yeah, certainly markets do not like to see the Chinese authorities start to call in executives. We've seen it before, Winnie. Thank you so much, Winnie. Sue. There in Hong Kong. The sentiment is also negative in Europe this morning even after those mixed results yesterday. So obviously a beating on the top and bottom lines, Tesla beating on the bottom lines and almost meeting estimates on the top line. But there was plenty in there that maybe gave investors some food for thought. And the Lam Research earnings as well. Also sending the eye trade into negative territory. So as you see the stocks Europe is down more than 1%, France and Germany obviously performing much worse than some of the other countries across Europe. But basically most of the groups are lower, led by tech and miners of all things. Look at the French ten year yields. This also is not helping. You have it at 513. It was almost at five yesterday. So that is a massive increase this morning. And obviously where that goes so follows the bond spread. And we're showing you the British pound right here as well. Up about a 10th of a percent versus the US dollar. Is the dollar weaker today. And for that we can look to the next board because oil continues to climb as it seems to get closer and closer that these threats of more strikes on Iran come. So the president obviously talking about after the midterms, but we're also seeing the IRGC now start to hit tankers once again. And of course, that deadly strike in Saudi yesterday. Brent, well above 112. New York crude has been flirting with $100 a barrel all morning. It did top that of course in recent days. But just for a second. Right now it seems to be holding in at those levels. And then look at the safety trade yen stronger by 7/10 of 1%. It's almost through 157. We're seeing the same movement in the Swiss franc. We're also seeing the same movement in treasuries. We'll get to those in a moment. But let's look at U.S. futures. As you might imagine, lower Nasdaq futures lower by almost 2%. This continues to worsen in the morning session. We'll see if it holds, though. Obviously we're well away from the open and there's plenty of good news in those earnings that we got as well. And let's take a look at yields. We'll be speaking with George Goncalves a little later on on this safety trade. And also just generally sentiment around treasuries before the FOMC next week. But as you can see the 30 year yield down several basis points. The two year yield are holding up. So we've had a bit of flattening in the last 24 hours. Let's get to some individual pre market movers now with Olivia Olivia. Good morning Vonnie. We're kicking off today with metal platforms which is down about 2%. Metal had a really solid set of third quarter results and lifted their fourth quarter guidance ahead of estimates. They also lifted the lower end of their CapEx guidance to roughly $135 billion. That's up from 130. But investors really seem to be focusing here on, okay, you're spending all this money, where's the results? Where's the gains? They really want to see return on some of this capital investment. Now that seems to be weighing on meta in pre-market trading. IBM one of the most interesting stocks to me today. This is a near 10% reversal after their earnings, which seemed very positive. On the surface, they were up 5%. They're now down more than 5.5%. And that seems to be on the fact that the net sales gains that they had are just recouping some of the sales that they had lost earlier. Um, Texas Instruments, another one that's done a bit of a flip was higher and is now negative. Further, we also had Tesla results. Obviously, they've cut their CapEx spend there. After disappointing in the third quarter. They spent less than expected. They now, um, expect to spend maybe only 20 billion versus 25 billion earlier. But rather it seems investors are maybe disappointed by the fact there was not much mention of space. And I've heard a couple of investors say that must just seem to board in the earnings call. So that's not great news for Tesla down at more than 5%. Finally there's one bright spot in the market that's x x. They are a freight company. And they managed to buck a near 60% rise in fuel prices to have a solid set of results, said analysts appraising this morning. Up more than 2%. CSX. All right Olivia, thank you so much. That is Olivia love. You should be back later in the hour. Also coming up this hour. Jorge Goncalves of mUFG. Let's get straight now to hold office in Singapore for more on these markets. Paul, are investors just exhausted? It seems like there was nothing wrong with those results yesterday. Even pulling back CapEx spending you would have thought would cheer some investors, right, who had been, you know, worried about too much CapEx spending. And yet we're seeing this decidedly negative sentiment in the Asia session. Yes. Good morning. Funny. Um, well, and that's exactly it. It looked on the surface like reasonably good earnings, uh, as we were hearing from Olivia, you know, particularly at the market, uh, at the end of the US session, um, was in positive territory, but everything has gone rather nastily pear shaped today. It feels a little bit like, you know, we're getting towards the end of the, uh, calendar year. Um, we've had a good run up in equities overall. Um, maybe there's some signs that people are taking chips off the table getting, you know, uh, taking the profits, booking them now. Um, not wanting to take any more risk because there is a lot of risk out there. There's not just the risks associated with the eye trade and whether that can hold up. Um, the war risks are very real. The election risks in the US, uh, and around the rest of the world, actually, uh, are also quite telling. Uh, so there's a lot of reasons for investors to turn cautious. And that's kind of what it feels like when you see those flows into, uh, U.S. government bonds out of European government bonds into the yen and the Swiss franc, you know, suddenly performing as a haven again, uh, which is something that we we haven't seen all that much this year. So, um, exhausted? No. Frustrated or worried or anxious. Whatever way you want to put it. It certainly feels like, um, there's a reason for people to, to, to to, uh, retrench some of it from some of the key trades of this year. And that's just it. We haven't seen those traditional safe havens do so well. And suddenly we are. Which is actually quite chilling. We also have the VIX up at 18.5. I mean that's not especially elevated right. But it is elevated given yesterday's levels. Is there also the idea that you know the fed might be behind the ball here and that we might see inflation starting to bite again? Or is that sort of at the back of the market's mind today. So interestingly enough, you know earlier in the year that was a very big preoccupation with financial markets and with the Treasury market in particular. You know, when we saw oil prices rising, we saw a selloff in long term government bonds. Now we've got the long bonds yields at a one month low in the US Treasury market, which does speak to that idea. Um, as you were saying about the haven demand being back on the table. Um, it's the it's the old cliche of, you know, when, uh, the see goes out, you find out who's swimming naked, when you see goes out, you find out which of the real havens where you absolutely want to park your money in times of need. And suddenly U.S. treasuries feel appealing again, particularly with the much higher yields that they're offering these at the moment. On the flip side of that, the gold, for example, you know, not falling particularly strongly, not something that people are favoring right now as that kind of a hedge. Um, uh, and I do think, you know, the it's very telling that the yen suddenly is perking up Japanese government bonds like U.S. treasuries, offering a more favorable yield, offering a steeper yield curve as well, offering therefore, something of a of a harbor, uh, away from the turbulence that we're seeing in the Middle East, in Europe at the moment. Yes. And as you say, in Europe, with the bond spread at 173 basis points this morning, and of course, also the China consumer weakening Hermes was saying that this morning and China is now in a bear market. Paul, we'll have lots to discuss in the coming days. I'm sure that is Bloomberg's Paul Dobson. So let's get to those earnings and meta results showing I is starting to pay off with stronger revenue, a higher CapEx plan and growing attraction for its muse products. Bloomberg equity strategist Ruel Amen joins us now. So we're lower pre market rule. But let's ignore the market moves just for the moment right. Because it was a lot to digest yesterday including a whole new, you know equity structure and so on. What were the key points out of these earnings. What is meta turning into. Yeah. So I think net net it was a very good print for meta. Uh, they announced a couple of key positive catalysts before earnings, specifically the news launch. And of course, the announcement that they are working on a model that could potentially rival some of the frontier models that OpenAI and anthropic. So there's a lot of optimism baked into the print. Uh, meta stock has held up a lot better than than some of its counterparts in the space. And I think there's some really positive commentary around engagement trends and its core family of apps. So Facebook, Instagram, WhatsApp engagement trends in those apps remains very strong. But the big takeaway for investors, which is the growth driver of the stock, is of course, muse. They announced, you know, 10 million downloads and that, you know they trying to make muse the consumer a genetic eye tool of choice. I think what Mark said on the call around are poo or average revenue per user for muse potentially being a lot higher than Facebook. WhatsApp and Instagram is a huge boon for the stock because if that is the case and if they can monetize at scale with the 1 billion user base, then you know there's going to be an inflection in the multiple that investors pay for the stock. Turning to Tesla. Well, it seems that investors actually want Tesla to spend more. Why are they looking at the fact that Tesla is reining in spending patterns a little? Yeah. So the CapEx announcement obviously was was a little bit short of what investors were hoping for. But I think with Tesla specifically, you know, what didn't help of you know, what didn't help was the SpaceX announcement the day before, because that took a lot of the wind out of the out of the print. I think it was a good, good set of numbers overall that obviously making a lot of progress in terms of FSD, which is now in 75% of new vehicles in North America. Autonomy has been a huge focal point for investors. Gross margins were good across divisions. Another focal point, but we did see a bit of a selloff in the stock during the earnings call when there were some question marks around operating expenses, uh, which I don't think management did the best job of explaining to investors. And obviously today we're seeing a bit of a sell off in long duration growth in tech stocks given the oil spikes. So there's a lot to digest. But net net, I think the print was okay. Um, but it was overshadowed by the SpaceX merger the day before. Yeah, exactly. And general sentiment might be impacting market moves today as well. So we should keep that in mind. Um, and thank you so much for joining. Now let's get to oil prices above $112 barrel on Brent as the Middle East situation escalates. Let's get to our Middle East North Africa managing editor owner and in Dubai. So owner is the markets worried about attacks that are ongoing right now, or are they anticipating that the US is going to get involved somehow post midterms, and that there will be strikes between the US and Iran once again? A bit of both. Uh, Vonnie, clearly there are attacks, uh, in and around the Strait of Hormuz, uh, both as claimed by the IRGC as well as, uh, some of the reports confirming at least some of those attacks taking place by the UK Navy. Uh, but possibly more importantly, we have seen increasing reports that the US, uh, is either, uh, pulling out some of the, uh, non-emergency or, uh, non-critical personnel out of the US, uh, out of the region, including from Saudi Arabia as well as other, uh, areas in the Middle East. Uh, or is about to do so, uh, in areas, uh, where such deployments have yet to take place, and these are all coming on top of reports that suggest the US and Israel are drawing up fresh plans for renewed strikes on Iran following the US midterm elections early next month. So clearly, the conflict is coming to a head, uh, with with, uh, rising signs that a resumption of the war between the US and Iran might be imminent. Yeah. And it's very concerning. Owner in terms of oil is, you know, we can just talk about it, you know, the the aspect of it that has to do with financial markets, I guess, as opposed to civilian infrastructure and so on. What is going through the strait right now and what's been put in place such that if war does start, I'll begin in earnest that there will still be oil getting to global markets. Well, once there is a full out war, as we have seen early in this conflict, it is pretty difficult to get out anything, at least, uh, through the Strait of Hormuz. Uh, now, following the collapse of the June Memorandum of understanding between the US and Iran, we've seen a gradual pickup in, uh, volumes going through, uh, the Strait, at least according to one, uh, uh, company that's tracking those flows, uh, kept there. Uh, there has been a surge, uh, in the past week or so, uh, to about 24.5 million barrels a day of oil and condensate is going through the Strait of Hormuz. That's a very significant amount, probably, uh, so well below what used to go, uh, or come out of the region, uh, as a whole before the war began, but still, uh, very big. Uh, what is likely to happen in case of a resumption of the war is that we probably will see, uh, producers, uh, especially Saudi Arabia, trying to use, uh, uh, transit, uh, routes that bypass the Strait of Hormuz, such as the East-West pipeline that they relied heavily on, uh, during earlier, uh, periods during this conflict, uh, using the Red sea as a, as a main outlet. The problem there, though, is that unlike back in, uh, April or March. Now there is an increasing threat from the Houthis, which is an Iran backed group operating in Yemen. Uh, on on shipping through the, uh, Red sea because of their increasing grip over the bombardment of strait, which is another important chokepoint in the region not too far away from the Strait of Hormuz. Well, with all that said, it's no wonder oil is elevated. Thank you so much. That is owner aunt in Dubai. Now, two other top stories trending on the terminal this morning. Cell phones market value house from its peak in June. Higher borrowing costs fueling investor concerns over the sustainability of SoftBank's massive AI investments. It's the worst performers so far this month, down more than 30%. Norway's $2.3 trillion sovereign wealth fund lost half a percent in the third quarter, as higher rates hit its fixed income investments. The loss on fixed income investments highlights the bind for the fund, whose mandate requires it to hold 70% of its bonds, investments in sovereign debt and Hermes slumps after a salesman. Snow sales rose last quarter in the Asia Pacific region, which includes China but excludes Japan. Analysts have raised concerns about the company's ability to preserve its ultra exclusive status, pointing to easier availability of its coveted Birkin's and Kelly handbags. Coming up parties, cutting thousands of jobs as airlines harder into AI. This is Bloomberg. This is Bloomberg from Vonnie Quinn in New York's Barclays Eye with mixed results this morning. The British bank also though announcing plans to got 5000 jobs as it sees progress with eye integration. Bloomberg's Charlie Wells joins us now from London. So Charlie Banks have rounds of layoffs all the time. But this seems a lot more people than in the typical round is it. Can you give us some context? you have on it. So look, this does represent some 5% of the Barclays workforce. So that really is a significant number. And really it's getting a lot of attention today because of the focus that Barclays has had on costs. Right. So in previous earnings reports this year analysts had been concerned about Barclays ability to control costs. So this helps to bring that into focus and show that Barclays really is trying to keep those costs under control. But it also indicates that the company really wants to invest in technology. So executives talking about how they want to use AI, how they want to deploy it, and the nature of the jobs that would be caught here. These would be the sort of functional and operational roles that a lot of experts have said could be replaced by investment. So this really seems in line with that. But what is striking and what I think we should really focus on here and through the rest of earnings season is how so? Yes. Even Christian on the CEO of Barclays talks about AI at the bank because this was not a blanket. AI is going to replace everyone. Comment. It was basically that I would be the icing on the cake, but not the cake. So again, some very delicate positioning there as management tries to talk about investment but not go overboard. Yes. And try to use a lot softer language I guess, than in the past. Perhaps they've learned a little bit. What does this portend for other banks out of Britain and Europe in general? Not just the eye impact, but also just results generally. Charlie. Well, I think the question is about the pattern, right? Because what we're seeing from Barclays today is a pattern similar to what we saw with the large Wall Street banks, where we saw weakness on the fixed income front, but we saw strength coming from equities trading. That is a pattern that was similar at a lot of these Wall Street majors. I think thinking about Barclays and what stood out here was the to the degree of the decline in fixed income, down some 19% compared to the year before. That was the steepest decline of the global Wall Street banks so far. So watching that, but also thinking about some of the idiosyncratic elements here, particularly in the UK, because we are just a few days away from that UK budget where it's expected. Although not certain that the Chancellor, the Chancellor of the Exchequer could raise the bank surcharge to 8% now, that could eat into some of the profitability of a number of these UK banks. So that, again, is something to watch. We've got the pattern, but also some of the policy differences that could set the UK banks apart, not just from Wall Street but also from Europe. All right, Charlie, you're going to have to come back and tell us more when the other banks report. That is Bloomberg's Charlie Wells. Coming up a look at your front page news. This is Bloomberg. It's not the prettiest of pictures this morning despite not bad results from the likes of Meta and Tesla. Today we have smells futures down 1.9% a brutal selloff in Asia sending China into a bear market. Continued protests in France to the point where some have been banned. On Thursday around tourist areas. So you also have the situation deteriorating in the Middle East, Brent crude above 112 and a flight to safety, a stronger yen today and the ten year yield down to 507. Coming up we'll speak with George Goncalves. It's 5:30 a.m. in New York City. 10:30 a.m. in London. Good morning. I'm Vonnie Quinn with your Bloomberg brief. Let's get you set up for the day. Market sentiment souring, treasuries gaining along with the yen and Swiss francs. Mehta going full steam ahead on investment plans. Tesla, though pulling back memory maker Western Digital, will tell us more after the close. And Brent hovering around 112 a barrel as deadly attacks on Saudi Arabia and IRGC tanker strikes heightened supply concerns. Let's take a look at those numbers then. Because Brent above 112 now we're off our highs. But nonetheless WTI very close to that $100 a barrel mark a very significant psychological level. and then you can see the safety trade today. So the yen stronger by almost 8/10 of 1%. We have sunk through 157 right now. That'll be music to the ears of Japanese officials, even if it's not for the best of reasons. Now let's take a look at futures, because it looks like we were fine. Mita Rose after results came out in the post market. Tesla rose. Then it dropped a little bit. Spending plans and perhaps also merger plans weighing on sentiment. But then suddenly in Asia, sentiment started to turn. Lam research as well didn't tell. It released weaker guidance than anticipated. And that sort of started the ball rolling. And suddenly we have China in a bear market. We have authorities in China asking executives from e-commerce firms to come in and visit them again. Never a good sign. And we have a selloff today. And take a look at yields, because this particular selloff is differentiated by the fact that we also have a big flight to safety. Look at that 30 year yield back down to 537. The ten year yield at 507. We have a stronger yen, a stronger Swiss franc, interestingly less strong gold and less strong Bitcoin. So for once, those two are not playing any role in the safe haven trade. But you're going to see a weaker dollar today thanks to all of that. All right. Let's get to some of the details of some of these movers with Olivia Olivia. Good morning Vonnie. We're kicking off with Metta, as you mentioned, what seems to be a really solid set of results. Good third quarter raised guidance for the fourth quarter are ahead of expectations. They also lifted the lower end of their CapEx spend to 135 billion, from 130 billion. But investors may be really focusing here on where this capital expenditure is going. Looking for the gains of it. Looking to see how much I might improve. There was a couple reports doing the rounds a few weeks ago that downloads of muse had already sort of fallen off from the initial spike. So a lot of questions around where this expenditure is going for meta. There's also the broader macro environment and potentially investors just taking some chips off the table as we enter the last quarter of the year. But meta down 1.6% today. Tesla, the other stock that we're focusing on today it's getting harder. Hit ten matter. It's down more than 5% in pre-market trading. Meta did lower its CapEx guidance for the year after missing on the third quarter spending. However, as you said, focus here really seems to be on what happened after the earnings report. The earnings call was what investors seem to be focused on. There was little mention of space. A couple of investors have told me much, just seemed bored on the call, and they didn't really seem to not like the way that management handled questions around Optimus and which is the robot. And I'll probably get toasted for that because it's more than just a robot. But they didn't like Optimus, and they didn't really like some of the questions about the Terra Fab expenditure. So it seems that the call is more what's dragging Tesla than the results themselves. Finally, one bright spot is CSX, the shipping conglomerate. Despite a 60% rise in fuel costs. They managed to still produce a really solid set of results rising across rail and multiple other transport routes. So a good set of results from CSX and I think it is a robot. A humanoid robot that is. Olivia. Olivia. Excuse me. Joining us now, George Kinkel, this head of U.S. macro strategy at UFC. George, just on today's particular trade, we're seeing a flight to safety. In some ways, the Treasury Secretary, I'm sure, will be quite happy to see the long end decline. But if it's for the wrong reasons, will it concern him? So, look, I mean, um, we've been wrestling with, uh, a topping process in the rates market, so for, for either positive reasons or negative reasons, I think, you know, lower rates will be welcome. Uh, but clearly, uh, you know, there's, there's been, you know, kind of, a debate going on in the marketplace. Have treasuries lost? Lost their flight to quality status? At a minimum, this proves that they still, you know, kind of serve that function. How much more juice could there be in this? George? I mean, I know it's impossible to predict, right? We don't know what markets are going to do today. Never mind, you know, in the future. But could there be more juice to this? Would the would the economy quite happily take lower rates? So yeah. So the tricky part is, I mean, um, the, the time of the year that we're in right now, uh, and just sort of the volatility that we've had in the bond market has, you know, it's made many bond investors more kind of cautious. I'm going to kind of reload and put on positions. Um, I think it's this is these are the moments when, you know, when rates are still relatively high versus history, that the bonds offer value. Uh, so we do think that there is more scope to go. We think that, you know, the fed is not going to be able to hike as much as what's priced in, you know, the uncertainties around the midterm elections. Uh, you know, clearly, uh, there's a lot of sort of, um, hurdles to kind of get through between now and next year. And, George, obviously, you know, you're not the currency guy in the main, but you're in Tokyo right now, obviously with the yen through 157. That must be a nice and gift to policymakers. But again, maybe not for the right reasons. Can they count on us holding? Yeah. So, I mean, look, um, there's again, I think similar to what we're seeing in treasuries. Uh, there's a there's clearly a linkage between what's happening with, uh, with the dollar yen. And, you know, again, also proving the concept that, you know, hard currencies or the idea of hard currencies, maybe we're we're thought of as an idea of the past. But in the, in historically speaking, whenever we've had risk off environments, you know, Dorian usually would rally. So I think this is again consistent with that theme. George, if we do see this continue, and this is all extremely hypothetical, I mean, it may not even last the morning, never mind the whole session or into the next few sessions. But if it were to, let's just hypothesize, what would that do to the Fed's calculation about what's going on in the economy? Yeah. So we think, look, the um, the dollar in general, um, a kind of change in direction there. Uh, you know, does that necessarily mean that we're going to import inflation? Maybe, but it's more about what happens to the long end of the curve if, if long term rates were to continue to decline, that does take some sort of pressure off of the fed. Uh, and uh, we think that there's no really no need for the fed to be hiking. We've been pretty vocal about it. And of course, the fed ended up liking. Anyhow, um, we think that, um, if we get some sort of reprieve on inflation, um, and weakness in risk assets, let's not forget that that's the stock market that's been driving overall economic activity, both through, uh, encouraging CapEx. And if we get any sort of, uh, of rethinking about what that means if sentiment shifts in the equity market. It's going to slow down the U.S. economy, which then means less, less need for hiking. It's the weighing scales, though, isn't it, George? Because on the one hand, you might have you no longer and yields coming down. And maybe that helps the fed in some way. At the same time you have oil rising for the very same reasons. Brent above 112 now and further out as much higher than it has been as well. So that's going to be an extra pressure on the inflationary side of things. It could be a very different conversation at next week's fed meeting. Goodness. It could be. But I think this this this is actually a really good question because we've been debating all year long about demand destruction that these higher energy prices have not really impacted the consumer. But if we get another sort of increase in oil energy prices in general, I think at this stage of the year where we are in the cycle, uh, you know, and consumers really, uh, under pressure from affordability issues. I think now it actually leads to demand disruption, which actually hurts growth. And I think the fed would pivot pretty quickly. George I mean, could this be the one, could this be the beginning of a major, major sell off? And in that case, would a lot of people have to change their minds about how healthy the US consumer actually is? How much the wealth effect is really sort of, uh, papering over some cracks in the economy. How strong the employment situation is and so on. No, look, I think, uh, it's always hard to tell. Inflection, the major inflection points. This is a process. This could be a process that's beginning. Uh, which is why it's been, you know, last week's move of the Treasury market after a hot inflation, the sort of earnings that are relatively good, but yet, uh, risk markets are not holding their gains. That's typically what happens at the start of at least a kind of a correction where it goes beyond that. We'll see. But I think this is something to be watching very closely for sure. Yeah. And then of course, I don't want to, you know, push you into making any prognostications because, again, it could all literally be reversed within a couple of hours. That's markets for you George. Thank you so much for joining us from Tokyo today, George Goncalves of mUFG. Now two other top stories trending on the terminal this morning. Nvidia CEO Jensen Wong saying he told UK based Nio Cloud Company in scale to move faster to bring its data online and scale has been dealing with delays, equipment failures and power constraints at some of its sites. It's also seeing investor pushback over its $30 billion IPO valuation targets. Barclays is cutting 5000 jobs, or about 5% of total headcount. The move is part of efforts to reduce costs as it pushes into artificial intelligence. The bank reported third quarter earnings that missed several key estimates. Barclays joins HSBC and Standard Chartered in announcing job cuts due to AI and Hermes slumping after a sales mess, and reported no sales growth last quarter in the Asia Pacific region, which includes China but excludes Japan. Analysts have raised concerns about Amazon's ability to preserve its ultra exclusive status, pointing to easier availability of its coveted Birkin and Kelly handbags. Coming up, us pulling out diplomats from Saudi Arabia as regional hostilities worsen. This is Bloomberg. This is Bloomberg brief. You're looking live at the principal room coming up on surveillance. Tom Dorsey, CFO of Southwest Airlines. That interview at 8:30 a.m., New York time. This is Bloomberg. This is Bloomberg Brief on Vonnie Quinn in New York. Oil's surging this morning as tensions worsen in the Middle East. The U.S. ordering some diplomats to leave Saudi Arabia because of attacks from the Iran backed. Who these. Joining us now is Mika Zollner of Bloomberg government. There are also reports, Mika, that plans have been drawn up with Israel for more strikes post midterms. What more do we know about how the administration is actually calculating what it will do next? Yeah, I mean, we're seeing strong escalating tensions. Um, you know, this shows it right now with, uh, the diplomats being pulled out of the Saudi Arabia region. And this just shows more hostilities from Iran, uh, as the Trump administration continues to struggle to really end this war that was essentially supposed to end in May. Um, as we all remember, this was only supposed to be a five week period. And now this has become a huge, uh, issue both on the geopolitical scale, uh, globally, uh, but also domestically, uh, two weeks ahead of a major U.S. elections. So, um, I think that we're going to see more continue. Um, I've talked to, uh, inside officials, you know, close to the white House who, um, have acknowledged that right now that there is, you know, really, um, you know, there's a lot of concern whether or not on how exactly to end this war. Uh, you know, that has now escalated and is expanding throughout the Middle East. So, uh, we're going to continue to see, uh, more from the administration. But, um, I will, you know, keep an eye on things. Yeah. How much is it really on the ballot? Mika? Our voters, when Trump goes out to stump, I mean, for example, is going out to South Carolina to some for Darlene Graham. Next, are voters concerned about the war? The president keeps having to talk about it because he keeps getting asked about it. So he says, okay, we're not doing anything until after the midterms. But I mean, really, he's basically saying, you know, we may do something in two weeks time. I would say the biggest concern related to the war when it comes to voters is the gas prices that have trickled down due to the activity that's going on in the Middle East. So we're seeing that really trickle down, uh, and impact the economy here. So affordability cost of living concerns are still extremely high. I would say is the number one issue that both parties are focused on. But the fact that the president has to go stump and campaign in reliably red, traditionally more Republican leaning states and districts is a huge telling sign that not just the president, but the party really thinks that it is in huge trouble ahead of the midterms, especially for House Republicans, which the president has essentially, uh, almost abandoned at this point on the campaign trail, has focused more on statewide races such as governors races and the Senate, which Republicans think are more likely that they can win. Yeah. I mean, what is the feeling at the moment? Again, less than two weeks out now, it's come up awfully fast. Is the Republican Party a little bit more optimistic than perhaps a couple of weeks ago? Uh, I would say no. Based off the conversations that I've had, um, you know, the political environment right now is just naturally in favor of the Democrats, given that it's a midterm year. But that also, along with the fact of the cost of living concerns and inflation remaining high. Sky high for voters. Uh, you know, voters really struggling with the cost of everything. Um, and that's really played a role in both campaigns. And Democrats are just hitting, uh, the president very hard on that, uh, assigning affordability to essentially everything from, uh, grocery cost to health care. So that's a huge issue. Uh, that's on addition to the president's own approval rating sliding very heavily. Mika, thank you so much. That is Mika Zollner of Bloomberg Government. Mixed results from the Mike Evans Report and media telling investors its massive eye budget is starting to pay off. It raised spending plans. Tesla. Well, it beat on the bottom line, but weaker profits and a cut to its eye spending outlook. Let's bring in Bloomberg equity strategist Ruth Almond in London. The results were in terrible Ruhle. What was it that caused investors to be nervous, particularly in Tesla's case, because we did see a post-market selloff even unrelated to today's selloff. Yeah. Ivan. Yeah you're right. So the stock did initially trade higher following the print but start to sell off on the conference call. There was some concern from analysts around elevated operating expenses. When I look at the print net. It did look like a solid quarter for the company. They're making a lot of progress on autonomy. They mentioned that FSD has been rolled out across 75% of, uh, you know, new vehicles in the US. So there's a lot of positives to take away from the print. Um, and of course, today it's been caught up in the broader selloff in tech given the spike in oil. But I think, you know, Tesla uh, there's a lot of positives from that, from the take uh, from the print. What about meta? I mean, let's ignore the price action today. But essentially meta said it's all working out. That happened rather fast, right? Given that meta wasn't sure if it could even train, uh, a large language model. Not even that long ago. Yeah, exactly. So in matters case, the company announced some of these catalysts before earnings. Um, it had rallied, um, you know, earlier this this year and it has held up better than some of the AI stocks. They obviously had launched muse, uh, earlier this year. And mentioning that some of the models are potentially going to rival the frontier models that OpenAI and anthropic. Um, there's a lot of positives from the earnings call as well. I think Mark Zuckerberg mentioned that muse potentially could generate more revenue per user than its existing, uh, core, uh, family of apps, which would potentially be a huge growth driver for the stock if that does materialize. So yeah, meta print is really good. But again, being caught up in this, uh, broader selloff today. Well, just a brief word on that. Well, what is causing this? I mean, we saw a lot of research give a weaker outlook, but then things really took off in Asia. And it's not all AI related, but it does seem to be impacting the AI trade. Yes, I am research. I think, you know, a mixture of idiosyncratic issues that you get the earnings that definitely disappoint investors. But I think this morning we're obviously seeing a spike in oil. Brent is trading at the highest level since May. You know inflation concerns are coming back to the fore. And that just naturally and mechanically affects longer duration growth in tech stocks. And that's why we're seeing a selloff in the Nasdaq I think the futures is down 1.8%. Potentially gonna break its 50 or 100 day moving average. So broader selloff and broader weakness in tech on the geopolitics today Ruhle thank you so much that as well Amen. And let's continue with that thought because airline earnings are also continuing to roll in. And they're being affected by these oil prices too. We're going to hear from American Airlines before the bell. Joining us now is Bloomberg's managing editor of space and aviation Benedikt Kamel in Berlin. Benedikt what has earnings season told us so far when it comes to the transports and airlines in particular? Well, it's been fairly mixed to be honest. We've heard from most of the major airlines in the US so far. Delta opened up the season about ten days ago and then United Southwest. We heard from yesterday and to be honest, so far it's not been great. Uh, Delta had to cut. Uh, southwest had to cut, you know, had sort of scraped through, but also sort of missed, uh, the estimates. Um, and the big picture we just heard from Rahul is the, uh, the geopolitical, uh, tensions that are really heavily weighing on, uh, the oil price. And as a result of the fuel price for airlines, that's really what's affecting the industry across the board. Wherever you look, be it Asia, be at the Middle East, obviously Europe and the US, a massive high, a few fuel bills that are somewhat sabotaging what is happening in the cabin. And that is people are still flying and they're flying, uh, more expensive seats. They are upgrading the premium, but all those gains are being held back and are effectively being eaten up by these fuel bills. So the question really is how much longer might that carry on? Is it something that we'll see happening into next year? Those are some of the things that we'll be looking out for when American reports in about an hour. Well, it's some sort of illustration of how the eye trade is, in one sense, helping everything else. Right? Because if you were to see the eye trade really fall off, then, you know, necessarily that would impact airlines too. And those people that are buying the seats and so on. Bennie, how many of these airlines will change their strategy after this whole episode is over and maybe, you know, start to hedge more or just manage their oil inventories better? I mean, hedging has basically disappeared in the US among the airlines. It's still something that happens over here. Um, but we heard from, uh, executives, including Michael O'Leary, who runs Ryanair over here. And he gave a very bleak outlook into next year in terms of, uh, what passengers should expect. He said, expect the highest increase in fares next year in history. Um, so that's, uh, maybe a little bit of that is, uh, trying to scare people into buying tickets sooner rather than later. But his point is, we are not hedged properly into next year. Um, and it's going to get ugly. Um, so how that plays out in the US, we don't know at this point. We haven't had a massive cost cuts at this point. In fact, airlines are still investing in the cabin. Um, we heard from Delta a couple of days ago that they are continuing to invest in the product, and it'll be interesting to see how some of the weaker players that are still catching up. And amongst those I would I would count American airlines that do have some room to catch up here. Do they have the means, uh, to invest in the product in the cabin to participate in this premium push? Because they don't have the resources necessarily, but they have to keep up. And that's sort of the tension that the industry finds itself in. Well, we get those results in a few minutes. And many thank you so much for giving us all the context we need. That is Bloomberg's Benedict. Come and Nadu also tuned in to surveillance at 830 for an interview with southwest CFO Tom Dorsey. Coming up, we'll set you up for your trading day. This is Bloomberg. This is Bloomberg Brief on Vonnie Quinn in New York. And let's look at what's ahead today. Earnings season continuing with Lockheed Martin and American before the bell. Also Comcast Spotify and Blackstone. And then at 830 we get this week's batch of initial job listings. But let's look at the macro environment as we head into your trading session on Thursday. Because after Meadows and Tesla's results yesterday, you might have expected this particular picture. Nasdaq 100 down 1.8%. Starting off in Asia. Sentiment really began to sour. And there was a flight to the Haven. All around the world, the traditional havens, the yen. The ten year yields down five and a half five basis points. The Swiss franc Brent crude above £1.