alix: we are 30 minutes into the u.s. trading day on this wednesday, january 24. but top stories we are following. earnings season in full sling with netflix posting's biggest subscriber gain since the pandemic. tesla takes the stage tonight. the physical economy versus the financial economy. how does sentiment differ heading into the 2024 election? we will discuss with the ceo of snap-on, a maker of high-end tools and equipment. the 2024 media outlook activate ceo michael wolff joins us in our wall street week daily segment to break it down.

♪ katie: i'm katie greifeld in new york and welcome to bloomberg markets. let's start with a check on those markets. you have the s&p 500 higher by about half a percent. big tech doing better, of about .8%. all is pretty quiet in the bond market. probably helping the equity market. ten-year yields up 4% and staying there. vix, a 13 handle this time yesterday. we are now trading with that 12 handle. we will see how low vol can go. let's talk about netflix, soaring after his best quarter of subscriber growth since the early days of the pandemic. they added 13 million viewers and reach the deal yesterday with the w w ee to stream his flagship show raw on the platform -- wwe.

you think about what we learned last night. how many of the subscriber growth was fueled by the password crackdown? >> almost all of that came from the password sharing crackdown. it's definitely bringing results. we saw big numbers. subscriber gains came in 50% above consensus expectations. what is driving the momentum today is we will see this growth. we still have a huge amount of untapped potential when it comes to the password sharing monetization. you have the other lever that netflix can pull with its advertising tear. -- tier. katie: if i was looking for anything to be cautious, but i find it? >> you really can't find it.

we had a high quality earnings scorecard from netflix for four q. going forward into 2024 they have hit the jackpot when it comes to finding this winning formula. they have subscribers scaled, their revenue acceleration in progress. they are able to create good content. they are balancing content costs and guided to an operating margin expansion. we expect 23% for 2024. they are now saying 24%. it's a free cash flow story. we saw them with almost $7 billion in 2023. it is going to be a little choppy maybe in 2024. this is easily going to be $10 billion in free cash flow and a couple of years time. katie: really appreciate that roundup. let's keep the conversation going with kim forrest. she joins us now.

let's start with netflix. the stock is up 13%, really skyrocketing from the bell. does what we learned yesterday match up with reaction we are seeing in the stock today? kim: absolutely. they had a great quarter both on the top line and bottom line. that is super important. any tech company can spend a lot and not make a lot of profit. amazon, i'm talking to you at times. maybe google. all kidding aside, no, they had a great quarter. i am not a holder of netflix but i do like they are not chasing live tv and live sports specifically. wwe. we can say that is more scripted entertainment. probably that deal will be very good for netflix to bring in

more subscribers that are probably not already in their banks. they are making sure they are not overspending for more customers. i really like that is somebody who looks at stocks all day. katie: i will not get into the politics of whether wwe is a sport or not. that's a loaded subject. you write about this coming consolidation in streaming. is that an investable theme? kim: it's a scary theme. somebody is going to win but they will spend a lot of money. that money is probably going to be borrowed. they have to be right, right? we know over levered and a mistake don't go together. seriously, i think what most streaming people are looking at now are sports because of the lovely amount of people that follow them. sports are kind of tricky.

baseball used to be the top sport. it looks like football and maybe soccer are rising. you have to get everything right. by the way, you have to keep paying the sports leagues for the content. it's a very expensive endeavor. i think somebody may get it right. katie: you are also a horsewoman. i want to know when they will put dressage on tv. we get it with the olympics and that's not enough. let's talk about ai and the conversation of investable themes. it seems like the conversation was you wanted to be invested in the picks and shovels of ai. is that the logic you are following? kim: it is. i do think a company like openai where genitive ai master right now, they are not a public

company. how do you play this? the other thing is don't get married to genitive ai. they will be a lot of ai that is productivity enhancing. i can tell you this. each and every new program that will come out or app will be delivered over chips. that is why we are playing it this way. the arena to invest is huge. there is not just the chips themselves in the chip designing companies. there is also the software makers for the chip designers that is going to blow your mind. then there is even the people that make the really lower-level chemicals that go into these and the equipment that makes chips. the ai place are out -- plays are out there. you just have to look for them. katie: there's a lot of names to

sort through. where are you finding the most opportunity within the chip sector? kim: we really like the software that develops chips. there are two companies that are doing that really well and they are large. one is cadence. we prefer synopsys. synopsis is a company that has a bunch of products that help chip designers get it right before a ghost to the fabricators. it's important to make sure the chips can be actually made as designed. they are buying a local public company, a smaller company here in pittsburgh as part of their plan to be able to do that. specifically for the chipmakers. they have been working with ansis for years now but it's interesting company. they help physical makers of things like boeing planes, jet

engines, even data tennis rackets and formula one cars to be better products, even before they get to the manufacturing. they have simulation and physics programs that help designers make sure the products will meet specifications and actually work. we love software like that. katie: there is plenty of opportunity in ai, can chips that doesn't have to do with nvidia. stick with us. let's take a look at what's right now moving in the markets. billy will help us do that. what is on your list? billy: let's look at some stocks that are listed here but are not based here. i'm talking about china -- the entire ecosystem coming after china announcing they will trim the reserve requirement ratio for banks, spurring potentially

liquidity to some of the stocks which obey halting which at one point was a $6 trillion round. katie: you have a board repaired that this balance comes after a pretty painful plunge. billy: you can say it is on pace for the best today streak since the summer of last year. when you look at 12 months or five years, whether it is a large cap etf ticker fx i or the golden dragon index, small victories today do not come anywhere near making up losses from years ago. katie: we are seeing a bounce in the adr's and not in at&t. billy: under pressure. underwhelming outlook for the year. guidance for revenue and earnings falling short. they are trying to tighten spending. the one bright spot is they are growing their mobile subscribers. a big push in the holiday season promoting the newest iphone and getting people to sign up for their phone service. projected 2020 for earnings, $2.25 for the year.

wall street was at $2.44. we get t-mobile tomorrow. we had verizon yesterday. big times are broadband providers. katie: even if you show up with good news if you project something that is less than stellar you will get punished. billy: you have watched markets. sure, the last quarter looked great but what matters are the quarters ahead, especially in your like 2024 where it still feels like they're trying to figure out and grow the bottom line. katie: tell me about intuitive. billy: intuitive surgical, a robot maker. da vinci 5 will be the next big product. they help hospitals do pretty much any type of surgery that you can imagine. that will be driving growth and paying 25 and 2026. and procedures and replacement seven expectations. a big focus on the year ahead. the stock did touch an record high today. katie: coming up, as investors

prepare for tesla's earnings calls, elon musk preparing some fun. more on tesla bingo, coming up. this is bloomberg. let's listen to what was told to tom mackenzie. >> we are working to that backlog while taking orders. you are dealing with an industry that is growing. we will double digit growth. we will ship out the backlog but keep looking orders. you will see the pattern for 2025. it will be a very significant year. ♪

katie: tesla set to report earnings after the bell as investors focus on the eeev makers profit margins and guidance for deliveries this year. for more on tesla i'm thrilled to say we are joined by bloomberg's ed ludlow. you ready small novel on twitter about tesla earnings. it was 263 words. you have 45 seconds. tell me what you are going to be watching for. ed: in terms of guidance, tesla has targeted since 2020 average annual growth on a compound basis of 50%. last year it built 1.8 million ev's. this relates to production, not deliveries. if they stick to that guidance for another year and they say again we confirm we are targeting 50% annual average growth on a compound basis, the expectation is they could build 2.5 million ev's this year. that would represent real growth year on year of about 35% to

30%. whenever what happened last year. elon start of the year by saying we could build 2 million this year, guys. they actually built 1.8 million. once you put the production to one side you ask, let's go back to the demand side. how will they do this year of this kind of big narrative playing out in the ev sector is for early adopters are gone and there is weakening demand, even if we still have growth in global sales. it will be less than we previously expected. where does tesla factor into that? katie: those are important questions. one of the more interesting things about tesla is this cult around tesla. what will retail investors be looking for in these numbers? ed: there is a difference in terms of what some of those retail investors look for on the call. really big development in the last 24 hours is the release of full self-driving beta version 12.

this is the autonomous technology or software in beta phase. limited users have access. elon posted on x this is a needle moving moment in terms of updates. everyone is enthusiastic about it. when you think about this stock, the biggest point strike on the s&p 500 and 2024. when you look forward when it comes to the multiple or earnings expectations for this year, that software nai component is really big. wall street does not necessarily focus on that. they focus on the fund metals on making cars. katie: one, going to see a cyber truck in new york city? ed: we don't have the data. they folded it into the delivery numbers with sx and the semi. what is it the cyber truck will do from a production and delivery standpoint this year? the enthusiasm is superhigh. katie: i'm deathly interested in the cyber truck. ed, a busy day ahead. thank you for giving us your

time. kim forrest, before the break we were talking about chip memes, what you're excited about and you have some really interesting thoughts on how to actually invest in cyclical stocks. talk about the psychology of owning those sorts of names. kim: i think wall street has really encouraged people to move stuff in their portfolio. when i was a sell side analyst somebody told me we are not in the parking business. we are in the moving business. what brokers used two want to make you do is always be doing something to your portfolio. i don't know that's always best. cyclical stocks. we were told there is this regular cycle that happens and maybe let's not own chipmaking

stocks or even the makers of equipment for chipmaking. let's pick on that one until we know the cycle will start again. maybe at the peak of the cycle you would sell it. go to some other cyclical stock. here is the thing. you miss surprises. the big surprise of 2023 other than the recession that never happened but that ai did happen. it caught investors' imagination and everybody piled into well-known names. ai will play out like every other tech trend. it will be slower than anybody ever imagined but ultimately in five to seven years we will look back and say our lives are completely different because of all these ai stuff in our life. you have to be a patient investor. what i'm really talking about here is the surprises that come. if you have a good cyclical

company that has been growing year-over-year, or over the years, and ultimately what is happening is it's happening -- having higher lows, why not just keep it? what an idea. over time it will grow. i'm sure nobody was expecting the results that amsl got in this quarter. if it's a great company, keep it. you can build other linear stuff around it. have slower growth in your portfolio. i'm talking about concentrated positions between 20 and 40 stocks. katie: if we deconstruct the cycle we have been in the boom phase of the ai cycle. maybe we had a lull or a bust. what kind of timeframe d was back the cycles to play out in? kim: you can look to prior tech

excitement. we all laugh or cry about what happened in the.com cycle -- the dotcom cycle. that took 10 years to play out. i don't believe this is going to take quite that long for a lot of reasons. we have tons of data which is what ai needs. we have computers that are fast enough and we have people that are interested. those are three key elements that are going to drive this thing forward. i would say probably five to seven years is the first initial buildout of it. take those stocks you think are quality companies and ride them through this. katie: to the idea of the headlines crossing the terminal. microsoft rising 1.2% to surpass $3 trillion in market value. we think about this ai trend and how it's translating into microsoft with its investments

in this space. kim, when we think about the psychology it sounds like you are saying to buy and hold names. does that apply to pretty much every sector out there? kim: that is the way i have done it. you have to buy, hold, think, and look everyday. i mean every single day. what you're trying to do is make sure that the thesis why you hold that company still remains true, right? if it doesn't, pull the record. move on to something next. that is important. it is not buy, hold, and forget. it is reevaluate, reevaluate, reevaluate. katie: where are you reevaluating right now? kim: we have some consumer names because they are very speculative. also in communications. streaming, that kind of thing. consumers are fickle. katie: consumers are fickle.

when you talk about the consumer, those names, what industries are we talking about? food and beverage? retail? kim: retail and food and beverage are the ones i look at mostly for consumer discretionary. katie: really enjoyed this. hope to have you back soon. that is kim forrest. still ahead a look at the companies making the most buzz on social media. social climbers is of next. this is bloomberg. ♪

katie: time for social climbers, the stocks making waves on social media. we have ebay. the company announcing it will cut 9% of its workforce and reduce work for contractors citing expenses that are outpacing growth. shares actually bumping up a little bit on that. we have dupont, forecasting first-quarter sales below analysts' estimates. we have airbus. analysts adjusting estimates ahead of the european airplane manufacturer's earnings on

february 15. it will be fascinating to see that. you can follow the latest buzz on trem go on your bloomberg terminal. this is bloomberg. ♪ avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh

>> u.s. business activity expanded in january by the most in seven months led by stronger orders growth. let's get the lead from nick, he joins us now. great to have you with us. i was reading through your notes and it was fascinating the differentiation you drew between the physical -- fiscal economy and the -- physical economy and the financial economy. how do sentiment differ in each? nick: i feel great to be with you on your third day. thank you for wearing snap-on --

it felt right at home. as a manufacturing company we call directly on the end-users, the technicians. i was just with them in a place like wisconsin and louisville, kentucky and arkansas and tennessee over the next few weeks. you get a grassroots survey of that. what you can see over the last two years clearly that there's two economies in the air -- in america but the financial economy listens to the metrics and listens carefully to the fed and follow financial measures. these are the same people like so many new paul revere's saying recession is coming and are now talking about a soft landing. all through that period when you talk to people at the grassroots they kept saying boy i think things are pretty good.

we have business and a lot of confidence because we came through, we managed -- some of these people were in their factories before they could give the masks. we saw this kind of two-tiered economy. one of these is the financial economy follows the metrics. the grassroots economy follows the psychology. they were pumped during this period. that's changing a little bit now. katie: why is that? if you think about the economic metrics we have on hand? we have inflation coming down in a hot labor market. why is that sentiment starting to shift? nick: the annual -- national association of manufacturers survey tells the tale. small businesses and really what i'm talking about grassroots, small machine shops. things like repair shops. when you talk to those people

it's always been a balance between what they feel about the conference, what they see in their business and sometimes that is great. the bad news they are getting for breakfast. they are getting bad news for breakfast. things like now to wars, the middle east and ukraine and they seem not to be going that great. you see things like the red sea, you see things like the border. moving from that special immigration process that supports america may maybe uncontrolled migration. you see things like the election coming up where nobody knows what will happen and people are worried whoever gets elected will think they have a mandate and start doing precipitous actions that will talk about -- that will impact them like small businesses getting hit by regulation. even today the hits just keep on coming for those people.

even yesterday you were covering one of these things. more uncertainty on the small business people and the people at work talking about wwe moving raw to netflix. it's bad enough you don't get to see brett the hitman heart anymore, but now i don't even know if we will be able to see raw. you said yesterday you wanted to get to know wwe and if you want to be one with the people at work you have to watch the royal rumble this weekend. katie: apparently when the steel get signed there will be three live hours of wrestling on netflix so maybe i will watch all three. i want to talk more about the election. you talk about the uncertainty, what regulations might fall in. for some of these geopolitical concerns you mentioned. those issues transcend any four-year term.

does it really matter who is in the white house? nick: it matters to different people. if you're someone like me you go back to roseanne, it's always something. small businesses are vulnerable. regulation cost small businesses tens of thousands of dollars per year per employee. we see this balance play out. we've seen it happen in the great financial is asian. when the balance starts to get negative and it's not clear where it is today, but those people still have business so they remain cash-rich but they become confidence poor so they pivot towards lower payback items. smaller items are selling pretty well.

it doesn't really matter who is in the white house, it can make a difference from time to time. anytime you get a new election and you have to adjust. small businesses have the least capability to do that. so they tend to lean back more than big businesses. >> you brought up the red sea, when you are talking to snap-on customers how concerned are they about supply chains? nick: concerned about the red sea is one thing. people worry about that but they are not seeing it certainly not in america. what happens is so far we are

not seeing anything either in our company or customers. the worry is the extra two weeks puts strain on capacity and therefore rates go up. i think they said yesterday two to three times up. in the pandemic it wasn't so much the prices, it was the availability. people had spot rates which were much more than the standard prices. that could be a problem in the situation. one of the things that does happen, manufacturing was looking at re-shoring. any number of manufacturing executives wanting to get back on shore. two things about it were barriers. one is not enough workers. right now this 540 7000 jobs in manufacturing and secondly the opportunity of the government to support manufacturing and have

both of those. representing with the speaker talking about the idea that manufacturers are starting to think this idea of on shoring is more focused maybe just on ships and general manufacturers we feel like chopped liver. generally they in washington are doing things like interest like the tax trifecta. and capital projects. there's no movement on it. i told the speaker it's losing the window because people are saying we face a government even the government headed by him who's willing to sacrifice the interest of manufacturing on shoring, putting american jobs on the altar of other causes. the second point is and i think this is very important. it's hard to recruit people to manufacturing. people view them as a

consolation prize. they have survey say 90% of people say only 30% want their kids to be in manufacturing. it is not. if you go back, you will see boy when many people were sheltering in place, manufacturers and truck drivers and warehouse workers and car mechanics and truck mechanics were at their post keeping our society from disintegrating. they proved in that time they are the essential workers of our time and we were all witnesses so at the government needs to do and what we need to do here is build up the education to match the skills people are learning in schools for what's needed and that's the technical careers. talk about those jobs as though they are really important. katie: up against the clock really enjoyed this conversation.

that is the ceo of snap on. i want to get a quick check of the markets prayed abigail doolittle standing by braided abigail: a pretty robust rally. a fifth day in the row for the s&p 500. big tech up more than 1%. the s&p 500 not so shabby and above average volume. the s&p 500 up about 6/10 of 1%, five up days in a row. the best winning streak since the middle of december. over the last five days let's break it down from a sector standpoint. it's really standing out with technology up nearly 7% in five days. it's just incredible considering you have yields higher which should scare tech investors as liquidity potentially comes out of the system. munication services and other mega cap tech sector being helped out by netflix up 6.1%. to the downside making it more risk on. you have the utility sector and

defensive sector down 2.5% not doing as well because dividends don't look as well against the backdrop of rising yield. you've a small decline for staples. netflix kicked to this offer big tech in a positive way and an interesting trend and at some point something has to give. looking at the s&p 500 in blue looking at the annual earnings estimate and you can see earnings keep going down as companies are putting up disappointing outlooks. dupont announced a downside to their earnings but stocks keep climbing. at some point that disconnect will likely reconnect and will be interesting to see how that happens first stocks and earnings. katie: how those lines, together will be interesting to watch prayed coming up, netflix posts its best support -- subscriber gain since the early days of the pandemic. we will discuss with michael wolff who joins us in the wall street week daily with david westin.

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katie: time for our daily wall street week segment. joining us is michael wolff as well as david westin. activate is a consulting firm specializing in dutch -- abigail: quite an interesting time. david: especially for netflix at the moment. they did awfully well with subscribers and revenue. it looks right now they are going a different direction on streaming. a more successful than some of

the alternatives like disney or discovery warner bros.. michael: they amazed everyone by having 12% growth not only in revenue but also the same in terms of subscribers. what's different is they are moving more and more of their subscribers to a tier that includes ads. they are sort of standard packages around $15.50. now they are down to $6.99. their average revenue per subscriber is going up. then they are doing a number of other things. they are increasing the amount they are spending on streaming and they have shows like night agent and queen charlotte. they are adding games, sports, they just completed their wwe deal for raw that begins next year at january of 2025. new scribes are coming from that ad supported tier and others

will follow. katie: they are also cracking down on password sharing. 13.1 million subscribers that they added in the latest data and it seems like most of that came from password sharing. is that a playbook some other big streamers will follow? michael: we don't know if it came from limiting password sharing. a lot of it is because they are lowering the price and as they get and acquire new customer. 40% of the customers of come from this new ad supported hybrid tier. >> are we going to replicate streaming what we saw in table? we start saying we will have advertising support it starts to feel like basic cable used to be. can i get out of it faster? michael: you bought a bundle. whether you watched it or not. and of course it's what drove the success of espn and other networks. we are about to see a great tree

bundling of the streaming services so right now, max and netflix are getting bundled together by verizon. verizon is launching a new service that's $10 a month for those two and we should right now we are seeing in company bundles so paramount has paramount plus and showtime. disney is offering hulu and disney plus and then also espn plus in that same package. it's going to be a number of years away before we see the profitability, that we saw in cable. katie: i can understand why the streamers would want to bundle and re-bundle. how much exhaustion is there with the audience? michael: as long as they keep putting on new shows and putting back older shows. netflix has the new shows i mentioned but there have been bringing back shows like suits and others like that so people

are looking at both and they are not exhausted. more today the majority of the world has shifted and more and more television, more and more videos consumed on streaming services than on television. david: you remember when bob iger bought the fox library. he had an advantage because they had such a huge library. they seem to be struggling a little bit right now? michael: originally when the services launched it was a library that brought people there and the original spread it's now flipped in other ways. they have to keep producing originals. people want to go back and see some of the older shows but it's the originals driving people. as much as these other companies apart from netflix says they are going to cut back on spending on programming they do not have a choice compared to netflix and amazon prime they need all of those new shows in order to not

only get you there but also to keep you there. >> i want to talk about live sports parade we have the netflix wwe deal yesterday. a lot of people taken by surprise especially by the price tag. you think about the live sports audience and people watching traditional tv and you think about the hysteria over the dolphins chiefs game earlier this month on peacock. i dad was texting me frustrated with actually logging on. how messy is the process of putting live sports onto streaming actually going to be? michael: you have to expect with each of the services is going to have live sports one way or another. the real messiness is from the perspective of the consumer because how will they know where to find everything? i think that's it. some of these technical details will get ironed out. the bigger issue is i as a sports fan are not going to necessarily know where to go and

the sportscasters will be different. we are moving into a world where sports will be fragmented. david: ken disney, paramount copy from netflix and look at their success? michael: each of them will go a different way. in the case of disney they will become -- they are already highly reliant on established brands and programming. if you look at their upcoming first of all wish and marvels did not do well at the box office. there are a lot of people who think we are getting to the end of the marvel franchises. i don't believe so. what they are going to copy is they are already going to add supported tears and they will continue to produce programming. i don't care what they say, they do not have a choice. katie: i've never seen a marvel movie. never grab me. let's switch gears pretty dramatically because i want to talk about the metaverse. i was looking for your notes,

you wrote there are 300 million active users in major virtual world platforms. that number shocked me. can you define what it is, where are those 300 people? michael: these immersive worlds like roadblocks or minecraft or fortnite. some of these people are spending enormous amounts. the difference being games versus metaverse is they can build themselves inside of these games. you can go and not play the game but you can also meet your friends and new people. there's real economy's. as much as metaverse was very hot last year. now people have said ai is killing the metaverse. it's the opposite. ai makes it easier for you to have a place in the metaverse for you to create an avatar of you that's photorealistic to find your friends. it may not be on the tip of

everyone's tongues today and the hype cycle is pretty much over. when you look at the technology hype cycles it's usually at the bottom where real investment can take place. david: we tend to think about gaming, what about more concrete applications? michael: when we talk about spatial computing the apple headset and others we will see that will have real enterprise applications. for example the hollow lens from microsoft is something where you put it on and you are there to repair the aircraft engine. you are there working inside of a machine. we will see more and more of that. there are industrial metaverse's. worlds where people will use that in order to practice operating on a patient or repairing a car. katie: hope to see you again soon.

that's michael wolff. of course our own david westin. this is bloomberg. ♪

katie: let's take a look at some of the stocks hitting 52 week highs today. microsoft is seeing its evaluation hit a historic $3 trillion briefly surpassing apple. meta as well also getting a 52-week high repairing -- propelling its market value to one trillion for the first time since 2021. beating forth -- shall i announcing point-of-sale financing businesses. finally we have the scottish based asset manager hitting the 52-week high after announcing plans to cut 500 roles for about

10% of its workforce. we have crowd strike president joining us with lumbar technology with caroline hyde and ed ludlow. this is bloomberg. ♪ ve to worry about things like changing tax rates or filing returns. avalarahhh ahhh

>> from the heart of where innovation, money and power collide in silicon valley and beyond this is bloomberg technology with caroline hyde and ed ludlow. caroline: at bloomberg world headquarters in new york. ed: this is bloomberg technology. caroline: coming up, full earnings coverage. netflix soars after hosting its biggest subscriber growth since the pandemic. details ahead.