Global Stocks Hit All-Time Highs; Broadcom Slides as Investors Seek AI Payoff

Bloomberg 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.
Global stocks are trading at a record as we close
out the trading week in the US. The S and
P five hundred enterst today's session at an all time high,
posting its first record close since late October. Bloomberg Markets
reporter Valerie Titel has more and what's leading the gains.
The equity market rally has been not really about the
tech trade, but more about value stocks over growth stocks.
Now, this has been a theme of the last month.
If we look over the last thirty trading days, the
Russell two thousand is up some six percent. Meanwhile the
SP five hundred and the Nasdaq are just up around
half of one percent. Yes, we did notch those record highs.
The new fresh record high the first one for the
SP five hundred since October.
But it's it's really been led by the.
Value stocks, and you have to start wondering whether this
is a trend that's going to start continuing into next year.
Do we continue to see some of the froth come
out of these AI valuations.
Bloomberg Markets reporter Valerie Titel notes the Russell two thousand
index of the smallest US stocks jumped one point two
percent yesterday to close it its own record high.
Well, Nathan, we're seeing weakness once again in an AI
related stock.
A day after Oracle.
Plunged almost eleven percent, shares a broadcommer down almost five
percent in early trading. The chipmaker's sales outlook for the
AI market failed to meet investors' lofty expectations. CEO howk
Ton said the company, which competes with Nvidia, has a
backlog of seventy three billion dollars in AI product orders,
disappointing some investors. He later clarified that figure as a minimum.
Bloomberg Intelligence senior analyst Kunjen Sabani says the market reaction
is surprising.
There seems to be an oral fatigue coming into the
AI space, but fundamentally, even we just look at Broadcom,
this was one of the most strongest AI semis report
this quarter. I mean, they beat the AI revenue numbers
for next quarter their fiscal one queue by almost one
point four billion, which is a twenty percent upside to
what the.
Street was Bloomberg Intelligences co John Sabani says Broadcom held
off on giving an annual AI revenue forecast.
Now, Karen, let's turn to the latest on the war
in Ukraine. President Trump says the US would be willing
to contribute assistance to Ukraine as part of a security
agreement to end the conflict. This comes as President Vladimir
Zelenski is proposing a referendum that would let Ukrainians vote
on whether to hand the Donbass region to Russia. We
get more from Bloomberg Senior europe correspondent Oliver Kruk.
This is a really interesting approach by Zelenski. I think
that it's sort of rooted in the fundamental idea that
Zelensky has adopted ever since that terrible meeting in the
White House back in February, which is basically, there are
no bad ideas out of Washington, DC. So something that
even appears intensely confrontational and something that could be collision
between the Ukrainians and the Americans, basically Zelenski tries to
use the momentum of that idea and put it in
a channel that is actually favorable and useful to him.
You saw that happen actually twice this week, once on
the question of holding elections within Ukraine, now talking about
the issue of Dombas. This is clever for two reasons
for Zelenski. The first, basically, it would prove that if
the Ukrainian people vote against it, and they say listen,
we are willing to endure this war, that Zelenski is
not the impediment to peace. It is the Ukrainian people
who have decided it. But also it puts on full
display that this is a democratic nation and that they
are going to the people to make the most difficult decisions.
Bloomberg's Oliver Crook says the US has dramatically scaled back
direct military aid for Ukraine under President Trump.
Well, the contingents between the US and Venezuela have hit
a new level this week, but the seizure of a
massive oil supertanker maybe just the beginning of a new
phase of pressure against Venezuelan and President Nicholas Maduro. President
Trump says the military campaign against alleged drug trafficking votes
from Venezuela has already been working.
If you look at the drug traffic. Drug traffic by
sea is down ninety two percent and nobody can figure
out who the eight percent is, because.
I have no idea.
Anybody getting involved in that right now is not doing well.
And we'll start that on land too.
It's going to be starting on land pretty soon.
President Trump spoke from the Oval Office. Sources down Bloomberg News.
The capture of the sanctioned oil vessel is meant to
deny Maduro an economic lifeline and force him to give
up power.
The Treasury Department has.
Already followed up the seizure with sanctions on six crude
oil tankers and for of Aduro's so called narco nephews.
Well, President Trump's warning to Venezuela came karen as he
handed a big win to the tech industry. The President
signed an executive order to go after state level regulation
of artificial intelligence. President Trump says the industry shouldn't have
to navigate a patchwork of AI rules.
You have to have a central source of approval when
they need approval, So things have to come to one source.
They can't go to California, New York, and various other places.
President Trump's order directs the Attorney General to set up
an AI Litigation Tax Force to sue states if they
have laws that are inconsistent with White House policy. It
also orders the Commerce Department to publish an evaluation of
onerous state laws within ninety days.
Let's turn to the economy now, Nathan. The Federal Reserve
Board of Governors has unanimously reappointed eleven of the Central
banks regional presidents to new five year terms. The reappointments
resolve for now a key question surrounding the future makeup
of the Central Banks policy making committee.
In Europe, Care and the UK economy disappointed again, contracting
in October for the fourth straight month without growth growth
domestic product fell one tenth of one percent. The UK's
GDP has only grown in one of the last seven months.
Well. Staying in Europe, Nathan shares a UBS trading at
a seventeen year high. A group of influential lawmakers proposed
watering down the capital demands that Switzerland wants to impose
on the bank and shares of UBS They're up more
than four percent.
And shares of Lululemon back here in the US, Karen
are up more than nine and a half percent. The
pricey yoga wear brand raised its full year outlook. Lululemon
also says CEO Calvin McDonald is stepping down as the
company looks to reignite growth amid pressure from competition and
Lululemon's founder.
Shares of Costco Nathan They rose more than one percent
in late trading. The country's biggest warehouse club operator posted
profit that beat analyst estimates. Analysts say it's a sign
that price sensitive shoppers are continuing to search for value and.
One more company to keep an eye on Karen. That
would be Uber. The ride share giant, says it expects
to offer Robotaxi in more than ten markets by the
end of the year. Uber is looking to become a
dominant force in an industry that it estimates will eventually
be worth at least one trillion dollars.
We spoke with Uber CEO Derek Kasershahi.
The technology is absolutely getting there. These are the robot
driver doesn't get tired, doesn't get distracted, and we very
much look forward to working with various authorities to introduce
raw chair into the markets. We're now live in four
markets now as we speak, in the US and in
the Middle East.
Ouber CEO Derek Kasershah. He says possible new.
Locations for Arlbo taxi services include Hong Kong and Japan.
For the full conversation, head to the Bloomberg Podcast channel
on YouTube.
And it's time 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. Senators rejected a Democratic
bill to extend the Affordable Care Act subsidies for three
years and a Republican alternative that would have created new
health savings accounts. Millions of Americans will likely see a
steep rise in costs. At the beginning of the year,
Senate Democratic leader Chuck Schumer.
Senate Republicans just shove the American people off the side
of a cliff with no parachute and with an anchor
tied to their feet.
President Trump struck a bipartisan tone and teased a plan
to work on healthcare with subsidies set to expire on
January first.
I look forward to working with each and every one
of you in the coming year to make our nation stronger, safer, wealthier, healthier,
and I really believe we can work on healthcare.
Together and come up with something that's going to.
Be much better, much less expensive for the people, less expensive.
For our nation.
President Trump made his comments while hosting lawmakers at the
White House for the annual congressional ball ahead of Christmas.
Indiana Republican senators voted down a new congressional map created
to give the GOP and advantage in the upcoming twenty
twenty sixth election. Twenty one GOP senators joined ten Democrats
in voting against the map Thursday. Senate President pro Tem
Roderick Bray says while he wants a Republican majority in Congress,
this is not the way to do.
It, friends of opinion on how we get there, as
I have explained before, because there are some concerns that
going this route is not the best way to get
more conservative representation in Washington, d C. From the state
of Indiana.
President Trump has been urging Republicans to redraw their maps
to help the GOP maintain control of the House. The
Utah man charged with killing conservative activist Charlie Kirk has
made his first in person court appearance. Tyler Robinson's attorneys
are pushing to further limit media access, saying it could
interfere with his right to a fair trial. Global news
twenty four hours a day and whenever you want it
with the Bloomberg News Now Michael barn this is Bloomberg camt.
Thanks Michael all time now for our Bloomberg Sports update,
and for that we bring in John stash Hour.
Thank Darren good One. On Thursday night football in the
NFC South Tampa Bay and needing the wind to stay
in first place on the Bucks led the Falcons by
two touchdowns on the fourth quarter, back came Atlanta on
a Zane Gonzalez forty three yard field goal. At the end,
the Falcons won twenty nine to twenty eight. The Falcons
tight end Kyle Pitts had one hundred and sixty six
yards and three touchdowns. DJ Watt the Steelers pass rusher
hospitalized during this week. He has long discomfort, but they
say he still may play with a Monday night game
against Miami. That's your Bloomberg Sports update.
Stay with us.
More from Bloomberg Day Break coming up after.
This Coast to coast on Bloomberg Radio, nationwide on Sirius XM,
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Bloomberg Business app. This is Bloomberg Daybreak.
Good morning, I'm Nathan Hager.
Stocks look set to end the week near record territory,
but the AI trade may still be looking a bit
shaky after the latest results from Broadcom. The chip maker
came out with pretty strong earnings, but CEO hawk Ton
says it's tough to know what the future holds.
It's hard for me to pinpoint one twenty six is
going to look like precisely, so I'd rather not give
you guys any guidance.
And that's why we don't give you guys it, but.
We do give it.
Pull to one.
That was Broadcom CEO Hocton on the earnings call following
the third quarter results, and we're joined now by Bloomberg
Markets reporter Valerie Titel. And Valerie, it seems like the
AI order backlog in particular seemed to be a big
disappointment in particular for investors this morning.
Yeah, good morning, Nathan.
In broadcoms in case, it was an order backlog that
did disappoint investors as well as what you mentioned that
they failed to give a revenue forecast for twenty twenty
six when it comes to their revenue, sorry, their order backlog.
They said they only had seventy three billion in backlog
over the next six quarters. The CEO on the conference
call went to clarify later that that is a minimum
that they see, but still it's highlighting concerns, especially around
Broadcom about tightening profit margins, which has been a key
concern for this AI chip maker. Broadcom competes with the
likes of Nvidia for selling the most advanced AI chips
in that space. So again, some jitters in the tech
trade today, and we did see.
It yesterday as well.
Yeah, I mean, but this stock has rallied one hundred
and seventy percent this year. Is this a situation where
this might have been kind of priced to perfection when
it comes to Broadcom, You.
Know, that can be the case, But I think you
can argue that for a lot of these AI tech
stocks who are trying to guide the market on what
twenty twenty six could look like, there has been a
lot priced into many of these names, and generally there's
been a lot priced in to.
The tech sector.
You could see that as one of the reasons why
we've seen this last leg of the rally really not
be led by these megacap tech names. You know, Previously,
when we were notching all these record highs in the
S and P five hundred, tech was the main reason
behind it, and it seems like in the month of
November we've been able to notch a fresh record high
now without big tech behind it. Yesterday, take a look
at the Russell two thousand was up one point two
percent by the end of Wall Street closed, the NASDAC
was down around four tenths of one percent, and we
still notched a record high in the broad S and
P five hundred. This rotation has really been a key
art of December's price action. Nathan, take a look over
the last thirty trading days. The Russell two thousand is
up close to six percent NASDAC and the S and
P are up around five tenths of one percent, So
the sector rocitation is still continuing even in the futures
trade this morning.
What does it seem like is driving this rotation?
Is it skepticism around artificial intelligence or is it some
other f factor at play here?
Well, I just I want to add in it is December.
December is a weird month when it comes to positioning
and those wanting to cut losses or sorry, cut their
winners as soon as they start to see losses in them.
So perhaps this is just a reallocation going on in December,
and it's maybe caused a lot of those portfolio managers
to be in some pain on their calls on these sectors.
And so when people take profit, sometimes you see this
kind of price action headed into your end. But the
thing that makes me nervous, Nathan, is that next week
is a unusual third week of December because we have
so much data and three big central banks also making decisions.
We have the delayed non farm payroll release and the
delayed CPI which essentially are going to be treated by
the market as double reports. So we have a heck
of a lot of data before we close up twenty
twenty five. And perhaps you have portfolio managers out there
wanting to take profit on some of their winning trades,
and that would have been some of these big megacap
tech stocks of recent weeks.
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