♪ sonali: welcome to bloomberg markets. hopes for a sustained rally are hinging whether the mag seven can justify lofty valuations. let's get a check on the markets because so far, we are in the green with the s&p 500 and the nasdaq each up well over 1%, roughly at session highs on the day. the s&p up 1.2% on the day and the nasdaq is up about one point 5%. the dow jones industrial average is getting some love here, up about 0.6% and volatility is cooling down on the vix. let's look at yields because we have the two year yield back on the decline, under 4.93. we had the auction -- we have

the auction starting about 1:00 p.m. today with a lot hinging on appetite there of yields at this level. the 10 year yield is about 4.57 on the day. the dollar index stalling out after a significant rally this year and gold is on its second day of declines. it's roughly flat on the day but still risk on in these markets. let's take a look at some midday movers on the equity side with lots of earnings. spotify rose 14% year-over-year, $239 million, making it a profitable first quarter. they plan to raise prices again this year. spotify shares are up more than 16%. we are watching ge raising the full-year product guidance as it sees surging demand for jet engines and services. ge is up about .5% on the day but posting is best earnings for the first quarter despite shrinking business in fracking.

it's the best performance in 12 years but shares are taking a slight decline on the day. jetblue is also on the decline in revenue will fall more than analysts expect as excess flying capacity holds down fares in latin america which is a crucial region for them. gm raised its 2020 four guidance by $500 million as robust truck sales offset concerns around ev demand. speaking of ev's, tesla investors are awaiting earnings after the bell. the stock tumble has been nearly 19% over the past seven days and that's about doubts about its prison this business strategy. you on muska's expected to announce plans to scrap the rollout of a trooper model of a tesla and focus on developing a self driving vehicle. we will discuss the big earnings ahead with dam flax, a lot going on today. >> good to be with you as

always. i think we are seeing that tesla is facing pressure from a consumer clearly with higher rates and that impacts purchasing. if we think about the near term, what we are focused on is how this company can continue to innovate and transform and continue to strengthen the user experience and bring down costs to help drive affordability and as we think further out, there is potential for incremental revenue as they continue to offer services like full self drive and hopefully get better adoption of that overtime. that way you get additional revenue streams. we like it with a 12-24 month arise in appreciating the near term is difficult. sonali: after it sought more than a 40% decline through yesterday, we are sitting a little relief in the stock today.

what changes the narrative? do you worry there is more of a downturn ahead or do you buy at these levels? >> i think the stock is attractive at these levels. when we look at tesla and the broader technology and industrial technology space, we try to selectively identify companies that have differentiated intellectual property, those that can execute on their product cycles and continue to invest and innovate to drive future growth. i think what we will see from tesla is this continuation of transforming the driving experience, delighting their customers in new ways. i think even though competition is fierce, there are cyclical headwinds in the company will be able to emerge stronger from this period and if they can do that, they will create value for their customers. and their shareholders as well as we think about the next 1-2 years. sonali: when you think about stocks outside of tesla and the

magnificent seven, where you finding the most value given the correction we've seen more recently in valuations? >> we continue to like google. there is a lot of focus on the competitive dynamics in search in terms of what microsoft and chatgpt can do. we are seeing that google is transforming search yet again. i they are in fusing general artificial intelligence capabilities into more parts of search and youtube. we think their cloud business focused on enterprise customers is very much underappreciated. as you have this continued broadening of growth drivers, i think what we will see from google in this quarter and over the coming quarters is durable growth. you will see improvements in profitability and i think the perception around the value of this company and its strategic positioning and delivers value

to users and advertisers enterprise customers will change and i think it will be more positively viewed as we move through time. sonali: if you are thinking about cloud, what is the potential therefore amazon and what youth looking for in their report? >> they remain a pioneer in cloud at microsoft. they continue to see tremendous value from what aws offers. they are innovating and generative at the chip level by offering a variety of models and services. we see improving growth as the year progresses. there is still customer optimization of workloads going on but when we think about the growth drivers underneath amazon web services, they continue to broaden and i think the perception around the durability of this platform will continue to improve later this year into 2025. we continue to like the name there. sonali: there is a lot of

optimism and is not just from you, market has shown they are ready to get back in and investors are starting to nip at a lot of these stocks today even before they are reporting earnings. how do you feel about perhaps places that are a little overbought? are there any areas you wouldn't it into yet? >> we are watching a lot how these companies navigate the crosscurrents in the near term. we talked about amazon and we will see how microsoft does later this week. we are looking at names like qualcomm in the smartphone arena where demand remains difficult and china is a tough market that they are innovating in key areas like artificial intelligence for devices and the world of mobile. we are watching a lot of these developing's carefully. where we see opportunities are names like qualcomm or microsoft, motorola solutions which reports next week have been investing successfully in video and helping to strengthen

their offering in public safety and create value for first responders to help communities. we try to remain selective and try to balance what remains a difficult environment. we've seen better growth, better free cash flow generation for some of these companies later this year into year. sonali: you think about economic data that's starting to come out and although the economies remain strong through this right taking cycle, you had a pullback in business activity. how does data like that start to change your mind or impact your thinking around where you can see signs of weakness in this market? we follow the data very closely. we follow specific company fundamental data very closely as well. we are going to look as this earnings season unfolds and many companies have seen impact from

the slowing economy. we will look where they are able to improve and lower costs in some cases while still investing in r&d and capital expenditures to capture future growth. as i think about the next several weeks into the summer and the back half, our focus will be on the innovation and the ability to protect and in some cases set the company's upper better earnings later this year into next year. a company like cisco systems which we like is seeing near-term pressure but i think they are making a lot of thoughtful investments and we will see if they can execute on their next acquisition. that's one example where they are navigating the near term and it sets up nicely over the next 12-18 months. sonali: we appreciate your time especially on a busy earnings day. this hour, we have headlines from jamie dimon jpmorgan chase

at the economic club of new york. he says he is in the cautious camp when it comes to a possible soft landing. he said even if the u.s. were to dip into a recession, the consumer is in good shape. on the banking front, he threw support behind mergers of smaller banks. we will continue to monitor his comments this hour. coming up, lockheed martin reiterates its outlook with an order backlog topping $150 billion. it's our stock of the hour and that's up next. this is bloomberg. ♪ every second counts. 120 seconds to add the finishing touches. 900 seconds to arrange the displays. if you're short on time for marketing constant contact's powerful tools can help. you can automate email and sms messages so customers get the right message at the right time. because all it takes is 30 seconds to make someone's day. get started today at constantcontact.com. helping the small stand tall.

how am i going to find a doctor when i'm hallucinating? what about zocdoc? so many options. yeah, and dr. xichun even takes your sketchy insurance. xi-chun, xi-chun, xi-chun! you've got more options than you know. book now.

♪ ♪

sonali: this is bloomberg markets and it's time for the stock of the hour. lockheed martin first quarter operating income beat expectations as a delivered more fighter jets and missile systems. all four businesses increased sales in the quarter, boosting overall revenue by 14%. romaine bostick spoke with a company's executives and he joins us now. if you think about what's performing inside of lockheed martin, how do you think about how investors are latching on to performance? we were talking about how these contracts are long-term. romaine:

they have for big business units and one showing the most growth is the missiles business. that was up about 25% year-over-year. they don't want to go into specifics given what they sell and their contracts which are classified but it's clear that the weapons we've been shipping to ukraine, to israel and other parts of the world have in a big room for a lot of the defense contractors including lucky. in the most recent year, the defense department's total procurement budget actually went up 30%. lockheed is the number two vendor, only seconds to rtx at the end of last year but since then, two major bills of come out of congress including the foreign aid bill passed this weekend and that provides a win under lockheed sales. sonali: some of those are after the quarter. they reported that the bill just passed. how do you think about lockheed martin's guidance financially given those goons. romaine: they gave guidance last time and the shares fell but

they are standing by that. they are seeing 68 or $70 billion on a full year revenue. they are about 26 percent on an eps basis. i sat down with the cv -- the cfo as well as the coo and they said they are comfortable with those numbers. they think the cyclical issues, the macro issues and the defense department procurement issues favor them meeting those targets. lockheed is kind of notorious for guiding a little bit lower in the first quarter and as you get deeper into the year, that's when they start to bump the numbers up. sonali: the stock is only up about 2% on the year. what's going on with lockheed and the pentagon at the moment? the pentagon withheld money for final payments for 21 new f-35 jets? romaine: they are supposed to deliver as many as 148 of these in the first 21 were coming through and they put it on hold

and this has to do with a software issue. effectively, it's buggy and has not worked the way it wanted in the pentagon since it back and said to fix it. delivery of those will take longer but there are cost penalties. the profitability that lucky would have gotten with those individual jets has gotten slightly less based on the clawbacks investors are concerned about this. the cfo is clear about this and said this is more an issue of revenue timing rather than lost revenue. the idea this pushes out further but at the end of the day, there is still the oem for these planes, no one else is making these things and that's the advantage they have. sonali: thank you for your reporting. we will dive into those tesla earnings at the close today. ross gerber will be one of our gas. coming up next, we will talk about leon cooperman, the

billionaire who accidentally funded and accused predatory lender. details are up next and we will bring you that story. stick with us. this is bloomberg. ♪ - super excited to open up my diploma from southern new hampshire university. ♪ ♪ - i'm nervous, i'm excited. ♪ ♪ - [man] okay, let's see it. let's see it. - oh my gosh. - jesus suarez, i did it and it's here. (group cheers) ♪ ♪ - [narrator] next term starts soon. visit snhu.edu. visit snhu.edu.

sonali: this is bloomberg markets. it's time for the wall street beat and today we are looking at how legendary investor leon cooperman inadvertently funded and a legend predatory lender. we will talk about a story that is one of the most read on the terminal, the business of merchant cash advances is kind of like a payday loan for small businesses but it's gotten and snared in this booming world of private credit. what is the length? >> merchan cash advances are very high interest, very quick money that if you are a pizza

parlor or nail salon, you can get this money quickly. the business has got problems with it. sometimes the loans end up being illegal and they can hurt small businesses rather than help them. where private credit comes in is there is a boom right now and private credit on wall street and everyone wants to invest in it and people think i'm probably investing in high-yield loans or auto loans at private credit is also investing in cash advances by providing credit alliances that allow these firms to make their loans to small businesses. sonali: private credit sometimes works out fine but in this particular instance, how did leon cooperman get involved with this business that has collected more than $1 billion of illegal interest over the last decade? >> that is the allegation from the new york attorney general which suited cash advanced firm called delta bridge. we found abbott about the connection because the lawsuit names the private credit fund

that provided a credit line to this business delta bridge that the attorney general says is a predatory lender that gets involved in bad stuff. behind the private credit fund is wealthy investors like leon cooperman who put some of his charitable foundation money into these funds. sonali: how did this happen? this was indirectly funding this cash advance program but how did cooperman react when he found out this was happening? >> to be clear, cooperman says i don't know what these private credit funds are investing in, i'm just one of many investors which is true but it shows how these private credit funds are investing and stuff that you might be surprised like payday lenders, merchan cash advance companies being sued by the attorney general and things like that. sonali: another way the industry

is incredibly opaque and impacting main street. thank you for your time and your reporting. we want to take and i on the u.s. business activity in the u.s. has expanded in april at the slowest pace in four months. this could help reinforce the case for the federal reserve rate cuts this year. michael mckee is here to discuss. we are also minutes away from the bond auction. mike: and the numbers today may affect the auction. we got worse than expected numbers out of the s&p ppi, the man yuri -- the manufacturing number is 49.9. services is that 50.9 which is a decline. we had better-than-expected new-home sales up 8.8% but that doesn't seem to be what the market is focused on at the moment area one of the reasons that they are concerned about what happened with the s&p numbers is economist have been marking up their growth forecast

for the first part of this year but marking them down for the latter part of the year. the forecast sees 2025 falling to around 2% or a little less. and much higher right now. the auction is what will be interesting because we saw a big collapse in the two year note yield after the s&p numbers came out. the one issue yield went with it so right now, we're sitting at 4.9% when issued so we could -- bond experts were thinking we might either hit the screws are get a stop through but now a stop through maybe all but guaranteed and it's hard to see a tail over 10 basis points. if we got one, people would look funny added. sonali: how do you think about this relative to other auctions? it's an interesting day to have an auction. it's a record auction but we have the treasury funding

announcement coming up soon. the u.s. has significant financing needs. what is the context? mike: this is the last auction of the quarter where they raise all of the amounts they are selling and its $69 billion which is a record and we've got a five tomorrow and a seven thursday. we will see what kind of update they get because treasury has to come up next weekend tell us what they will ask for in the next quarter. they did say they wouldn't be raising auction sizes in the next quarter but we will be interested to see what the treasurer general account is as well. sonali: what about the numbers this morning? we are seeing early signs of weakening. mike: this really caught investors intention because the s&p pmi's have been running hotter than the ism numbers. for it to go down was a real surprise. new-home sales went up.

it's the start of the home selling seasons of builders are probably trying to make their inventories rise so they have something to sell when the weather turns nice. it still suggests there is some strength in the economy even with higher mortgage rates. sonali: something to sell when those rates finally turn, thank you for keeping your eye on the bond market. the treasury is going back to the bank which is the american household. that does it for bloomberg markets. we are watching a market that's higher on the day. we will be watching tesla after the bell. we have the s&p 500 up more than 1% and the nasdaq 100 0.4% in the two-year yields are getting a nice drop lower in yield. we will keep an eye on the bond market as well. that does it for bloomberg markets. this is bloomberg. ♪

(♪♪) at enterprise mobility, we never stop looking for new mobility solutions. because sometimes the best road forward, is the one you didn't expect. (♪♪) i don't want you to move. i'm gonna miss you so much. you realize we'll have internet waiting for us at the new place, right? oh, we know. we just like making a scene. transferring your services has never been easier. get connected on the day of your move with the xfinity app. can i sleep over at your new place? can katie sleep over tonight? sure, honey! this generation is so dramatic! move with xfinity.

>> from the world of politics to the world of business. this is balance of power. ♪ >> live from washington dc. lisa: joe: