5 Things You Need to Know to Start Your Day

Good morning. Microsoft and Google’s cloud fortunes diverge, updates on chipmaking and Snapchat as well as China’s latest policy shift. Here [View in browser]( [Bloomberg]( Good morning. Microsoft and Google’s cloud fortunes diverge, updates on chipmaking and Snapchat as well as China’s latest policy shift. Here’s what’s moving markets. — [Sam Unsted]( Parting clouds Microsoft shares are rising and Alphabet’s stock is falling amid diverging trends in the two tech megacaps’ cloud businesses. Microsoft’s cloud arm outpaced expectations as it [delivered its best sales growth in six quarters](, with demand for AI products driving that strength. Google-owner Alphabet, meanwhile, saw a [weaker performance than anticipated]( in its cloud business, raising fears about its competitive position. Snaps and chips There was a slew of other big earnings reports overnight from the semiconductor, social media and payments industries. The outlook from chipmaker Texas Instruments [disappointed]( and pointed to continued sluggish demand. Snapchat-owner Snap [returned to sales growth]( in the third quarter following two periods of declines, though it cautioned on the digital advertising outlook. And payments network Visa’s profit [outpaced estimates]( and it announced a new $25 billion buyback plan. Policy shift Chinese authorities [made a series of policy moves]( to boost sentiment in the economy, with President Xi Jinping signaling that a slowdown in growth and lingering deflationary risks won’t be tolerated. The government increased its headline deficit and unveiled a sovereign debt package which marks a shift from its traditional growth model, while Xi also made an unprecedented visit to the central bank. The challenges China faces were on full display as developer Country Garden was [deemed to be in default]( on a dollar bond for the first time ever. Stocks dip Nasdaq 100 futures [are falling]( as declines for Alphabet and Texas Instruments look set to outweigh the gain for Microsoft, while S&P 500 futures are also lower. The dollar is stronger, Treasury yields are rising slightly, oil is little changed and there was a bounce for iron ore following the Chinese stimulus measures. In Europe, stocks have dipped, with a 55% drop for French payments firm [Worldline]( offsetting a gain for [Deutsche Bank](. Coming Up… Results are due before the market open from hotel group Hilton Worldwide and airplane maker Boeing. After the close, Facebook-parent Meta Platforms reports along with toymaker Mattel, fresh off a summer dominated by Barbie. MBA Mortgage Applications and new home sales data are scheduled, and Fed Chair Jerome Powell is due to deliver brief remarks introducing the Moynihan Prize in Washington later. What We’ve Been Reading This is what’s caught our eye over the past 24 hours. - [Diplomatic efforts continue]( on Israel-Hamas. - Trump ally Mark Johnson [nominated for speaker](. - Hurricane Otis reaches the [Mexican coast](. - How the culture wars [came to retail](. - Complications for Biden from [Venezuela’s primary](. - US money [boosts UK startups](. - Apple to revamp its [TV app](. And finally, here's what Joe’s interested in this morning Good morning. There are a few different things on my mind. 1) Something to pay attention to is EV or EV-related investment plans getting shelved. Today, [Honda says it's canceling a plan with GM]( to develop smaller, more affordable electric vehicles. The causes are ambiguous, but CEO Toshihiro Mibe said cost was one factor in the decision. And on Monday, [battery recycling company Li-Cycle]( said that it was halting construction of a plant in Rochester, in part due to rising costs. The company, which went public via SPAC in 2020, has seen its shares plunge. What's also notable is that the company was set to receive significant loan backing from the DOE. No money has been distributed yet, but it speaks to the challenge of turning public investment into competitive operations. 2) This morning, shares of Microsoft are up 3.6% and shares of Alphabet are down 6.6%. Two things stood out in the Alphabet earnings call. [If you read the Microsoft earnings report](, one of the first things you see is a line about shipping products to customers with AI built into them. On the other hand, if you read the Alphabet earnings call transcript, there's still a lot of questioning, on the part of investors, about how its AI investments will translate into increased dollars. Here is the first question and answer on the call, where Morgan Stanley's Brian Nowak asks if there are any examples of Bard or Google's Search Generative Experience actually translates into returns. As you can see there's not much concrete yet for investors from these endeavors. 3) Finally, there are encouraging signs from the US economy. Here's the [overview from the S&P Global Flash US Composite PMI yesterday](: "US companies signalled a marginal expansion in business activity during October, following broadly stagnant output seen in August and September. Manufacturers and service providers alike reported improved activity levels as the downturn in demand moderated. The rise in total output was the quickest for three months. Demand conditions at manufacturers improved for the first time since April, while service providers saw a slower drop in new orders. Meanwhile, inflationary pressures softened. Cost burdens rose at the slowest pace for three years, with firms moderating hikes in selling prices at the same time. The rate of charge inflation eased to the weakest since June 2020 and was slower than the long-run series average. Firms were reportedly keen to pass through any cost savings made to customers in a bid to drive sales." That's about as good as you'd hope to see. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart]( Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Five Things to Start Your Day: Americas Edition newsletter. 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