>> equities adrift at the start of one of the more consequential weeks for financial markets. this is "bloomberg markets." i is not often you get a clear look at infection point in financial markets but today is going to be one of those weeks, when the macro and the micro collide. more than 100 s&p companies scheduled to report this week, amid the backdrop of the first

fed policy decision of the new year. the barrage of catalysts coming on the heels of a 20% rally in the s&p that is posted to record levels in overbought territory. a bit of a breather as investors sued for signals of economic health and more importantly, market direction. so if i technology is the biggest gainer in the russell 1000 after its earnings report showed the company reaching profitability for the first time ever, taking it closer to turning the former anti-bank into a top 10 financial institution. the second-biggest volume maker today with the ev maker dropping 28 -- jumping 28%, a claw back of the start of the year. amazon walking away from a merger deal after antitrust reglet is made clear they have no it -- antitrust regulators made clear they have no intention of letting it go through. 34% of the workforce to lose

their jobs. a bit of a down note here -- apple shares down a fourth straight day heading into earnings report after the bell. .7% on the day here, but the trendline has been in force for quite some time. to say that this we could be the most consequential in months might be the understatement of the day. in addition to the two ivan dave fed meeting on tuesday-- two-day fed meeting on tuesday, we have a slew of labor market data including adp on wednesday, jobless claims thursday, and the u.s. government official monthly employment report on friday. if that's not enough, how about earnings reports from 108 of the 500 s&p companies, including five of the six biggest weightings? let's start the shawn donnan out and bring in bloomberg intelligence senior intelligence analyst mandeep singh and anurag rana.

there is going to be a lot of focus on the highest-rated member of the s&p, microsoft. what are the expectations going into the earnings report? >> just talking about microsoft, we are looking at an acceleration in revenue growth rate, cloud growth rate. i think it is going to be a fun quarter for microsoft because not only do they have to like about how much contribution from ai was there, but also they have to give guidance that is going to be much faster than what the street is. expectations are very high for microsoft. we do expect overall revenue growth to improve this year. having said that, this is one of the quarters where i have seen expectations high for the company. romaine: expectations are coming in high, and i'm curious, mandeep, when we talk about microsoft's peers, particularly alphabet, obviously not the same business, but do you think we're going to get help in this market from alphabet this week? mandeep: the big number for

alphabet is there cloud business. the last quarter we saw a deceleration in cloud growth. youtube did find. you could say that search is the one under pressure because of chatgpt and whatnot, but it is really the cloud business where we saw noticeable deceleration in growth. if that was a one-time thing, we will find out. but clearly with microsoft, what we have seen is cloud growth has been aided by the deployment of ai workloads. we have yet to see that with the likes of amazon and google. this quarter will be key for them. romaine: met as well coming off the year of efficiency. what will be the story, more cost cuts? mandeep: more cost cuts, and there topline has been driven by added pressure. they are showing you more ads on the feeds. if you log into instagram, they are showing you more ads. if they keep doing that, clearly

there is a ceiling to it. that is where ad pricing has to be done. all eyes will be on how quickly ad pricing will recover. the chinese advertisers, two of the biggest advertisers on meta's platforms last quarter, it will be interesting to see their contribution. romaine: anurag, i will give you the last word, on a company everybody's focused on, apple. i'm not quite sure what the story ends up being with this company. it always seems to defiance vacations despite the fact that every to become into it with a lot of down opinions. anurag: no, i think there is going to be some pressure on china, and there is going to be a lot of discussion of what happens in the app store fees. from the fundamental point of view it is not rosy for apple. at the same time, you are walking in with low expectations. on the fundamental side, sales

growth is going to slow down. but at the same time, expectations will grow. romaine: two of the best year at bloomberg intelligence. a look ahead to a busy week for big tech earnings. it is also a big week for the macro with the federal reserve said to make its latest policy decisions on wednesday. in the first jobs report of 2024 dropping on friday. joining us now, portfolio manager for invesco fixed income to talk about how that could potentially adjust expectations we have had over the past few weeks and months. do you think this could be that inflection point? >> we really are hoping that it is the inflection point, because that march that has been preston at the front end is pricing in five-plus cuts for this year. we think it is a little bit rich. we would probably look to play in the front end, but given, like you said, the catalyst we had for this week, if we do see a little bit of rate pricing and

yields getting pressured higher, we will look to the market here. romaine: this gets us to the question as to whether there is indeed a mismatch into what is being priced in the market and the communication we've been getting from the fed, and for that matter, the economic data. you talk about five, even six rate cuts priced into this market. hard to see that scenario playing out unless the economy really takes a turn for the worse. noelle: yeah, we really don't see it happening, but we do think that the fed is starting to look towards cuts, and that is important. so it does make sense to have some risk on here. it does make sense to get into the treasury market maybe a little bit in the 10-year. so that is kind of what we are hoping for this week, a little bit of the repricing, watching the fed on wednesday for anything that commits to a cut. but they don't need to.

i think it is in powell's best interest to be neutral and wait for the day-to-day hit in february and march. romaine: given repricing is -- given where pricing is right now and folks are looking to add to the long positions, if we don't get a significant amount of rate cuts this year -- i don't know, hypothetically let's say the fed fed cuts twice instead of the five- or six-year -- does that change the risk reward out of lung treasuries?-- long treasuries? noelle: in the fixed-income world i don't think it changes much. valuations are rich, but i think it will be a year of coupon flipping and volatility will be muted compared to other years. it makes sense to at least beat risk-neutral. add some if we do get a backup in yields. that is the way we are going to be thinking about the next several months. romaine: does treasury supply matter? we are expected to get a funding

announcement this week and most likely it will be higher and most likely treasuries will have to pay a little but want to get investors on board with each of these new sales. noelle: right, i think there is potential for that to be another catalyst this week. you could get a better entry point into the 10-year. it is going to be interesting to see the technical bid out there. it is going to be telling for the months to come, especially as we get some of the data points to come through as we look to the march meeting. romaine: well, let's get to the other big data point that will come after the fed meeting, and it is the latest monthly jobs report. you have seen the jobs data we've gotten to this point. it seems to sing the same old song, a relatively healthy labor market, and more potently, relatively healthy wage growth. noelle: we think the trend will lower but it also be relatively healthy. even the data last week had affirmed the soft-landing

scenario. we get more of the same if we get some healthiness with the jobs number. a neutral fed this weekend not much technical reaction from the treasury refunding announcement. i think that puts a lot of weight on the inflation data in the coming weeks. that is what we are going to be watching to make sure that it continues to be in line with our view. definitely adding pressure on yields higher. after this week, it is a pivotal way, but i would focus on what the week is going to be on the data. that is what the fed will reiterate at this week's meeting. romaine: it brings us to the conundrum that the fed is trying to wrap its head around, that you still have the strength in the economy, but at the same time you are seeing disinflationary trends across the board. i wonder if those two are incompatible with each other. noelle: the disinflationary trends, the fed still has a

mandate, so i think they will try to balance being too restrictive with -- that is very much pricing comes in. that is why i think there is going to be an opportunity to enter into rates because oeither the data or the fed is going to provide it because march will get priced out. we will price out at least another cut. calling for 4 this year. i think there is going to be some opportunities to enter into the trade over the coming months with that data. romaine: all right, noelle, great to catch up with you. portfolio manager for fixed income at invesco, hoping to kick off today's show. a lot more coming up including a look at housing market. pulte about your report earnings after the bell come our stock of the hour. coming up in just a second on this is bloomberg. ♪

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romaine: welcome back to "bloomberg markets." i'm romaine bostick. i told you it was going to be really consequential week for economic data, and that includes housing data as well. we are expecting to get an update on home sales prices tomorrow, and we are also expecting to get an update from pulte. they report tomorrow morning, and new-home orders are expected to increase 43% from a year earlier, as the u.s. housing market continues to grapple with excess demand. pulte expects between 9000 homes for 29,500 previously -- expects 29,000 homes, from 29,500 previously. our next guest has a neutral rating on pulte right now. would be remiss in not pointing out that the new home builders

have been the superstore of the last year or so, despite all the stress in the existing home market. new homebuilders have held up pretty well. is that going to continue in this report tomorrow? >> thanks for having me on. we from an earnings perspective are in line with consensus. but we do think that gross margins are going to be a little bit weaker, as well as order to growth being 30% versus the 43% out there. we feel like at the beginning of the quarter when mortgage rates were near 8%, and may have been a little bit more of a hindrance on demand than what people expect. we also when we heard this last week that there is pretty aggressive levels of mortgage-rate buydowns, which are gross margin negative, as well as price cuts in order to drive volume. the stocks have had a great run last year, specially in december, but feel like we have priced and a lot of good news especially on larger names like pulte. romaine: i'm curious, you are

speaking to hear more about whether it is discounts or buyer incentives, what the add-ons these countries have to do to get people in the door. that is going to continue? jay: seems like it will. mortgage rates -- are called has been for rates to stay where they are, around the 7% level. builders still have to buy in hte low sixes, high fives. that is the sweet spot where consumers get activated. and other discounts, closing-cost incentive, etc., it seems like that is going to have these near-term going after continue to get buyers off the sidelines at a 7% mortgage rate. romaine: i'm curious about the competition between the new-home sales market and existing home sales. it appeared that a lot of homebuilders benefited from the idea that for a lot of folks it was too unaffordable and onerous to buy an existing home, and that for some folks they found more affordability on a relative basis in the new-home market

here. what is the correlation between the two? does it still matter. jay: absolutely, and one of the important things the homebuilders can do that the existing home market can't is built smaller plans, put less space into the home, find ways to do more with less in terms of the amount of space that people have, so they can help with affordability on that front. rate buydowns also help. i think the sheer lack of existing homes out there and a lot of the markets that we monitor gives a natural advantage to the homebuilders who with cycle times coming down and build times speeding up can have product on the market available to sell, whereas with the existing home market the are seeing heavy stuck-in effect because of rates being read they are. people do want to list their home if they cannot find some meals to buy. romaine: absolutely.

on the new-home side, what about the cost to homebuilders themselves? that was a big part of the story. i know some prices have come down a bit, but they seem to be elevated at least relative to where we are prior to the pandemic. jay: that's right come they've seen some savings on the labor side. now that multifamily, the bulk of multifamily construction, there seems to be some labor coming back into the single-family market. lumber prices have worked in favor of the builders. but at the same time you have seen prices moving up. horton said something in the range of the mid to high single digits. we have seen prices for other goods,. it's a flattish to slightly favorable from a cost comparison, but it is much more extensive to build these homes than it was with higher land prices than it was a few years ago. romaine: and they gets us to the idea of the stocks themselves. some of these stocks have had a pretty good run, i guess

everyone wants to know how much is left in the tank to the upside, given how much has been priced in. jay: you know, we are going to start this spring selling season and a couple weeks when the super bowl kicks off. we will see what rates have done then. we continue along at the 7%-ish rate environment, especially with the move they have had, i'm not sure there's much left upsidewise. we do believe that there is going to be more single-family construction in 2024 than there was in 2023. bldr is a way to play that theme. we think product names might do a little bit better than the builders. if we get mortgage rates coming back down towards a six or especially five handle, that may give the group of more upside than what we are expecting. romaine: all right, jay, great to catch up.

sooner vice president of equity research at by bush. a look at earnings including pulte tomorrow morning and a couple others later in the week. coming up on the program, we will stick with real estate and talk about black homeownership and how that rate is at risk in the current market. that conversation coming up next. this is bloomberg. ♪

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romaine: welcome back to "bloomberg markets." romaine bostick here with a look at the markets and a look at the housing market. the black homeownership rate in the u.s. saw its largest jump on record in the early days of the pandemic. but now those soaring borrowing costs and home prices threatening to erode those gains and, newcomers of his particular advantage in this market. let's start talking about the

gains that were made during the pandemic. we are talking about several percentage-point jump up to a 46% homeownership rate, the highest we have seen in 10 years. that is under threat right now, and i'm having a hard time understanding why. what is different for black homeowners versus the rest of the market? >> right, so since 2004, the black homeownership rate has been on a steady decline, but during the pandemic there were several factors that kind of turn that around for black homebuyers. people were sitting at home, they weren't going out as much, and they were receiving government benefits and those stimulus checks that allowed them to save up more money for down payments. also you had other factors such as the federal student loans being on pause, which allowed more black homebuyers to enter the market. that is why we saw that rate shoot up in 2020. romaine: i'm curious about the geographic components of this issue, the idea that you have large concentrations of black homeowners or would be

homeowners in urban areas that also happen to be some of the cities that had the biggest increases in housing prices and one of the biggest drops in home affordability the last few years. jarrell: right, so in this story specifically, i looked at atlanta, which two to three years ago was considered one of the more affordable places to live in the entirety of the u.s. it also has a large black population. but we saw home prices there shoot up 54% since 2019, which is even higher than the national average, which is putting a real strange on potential black homebuyers. i spoke to two different families, both of which were approved for mortgage loans, which were much lower than the average price for a home in atlanta and what will be considered affordable for someone making median income. this is an issue for black americans across the nation, because we know that black americans are denied mortgage loans at higher rates, and when they are approved, they are

approved for loans that are smaller than their kind of parts'-- their counterparts'. romaine: you story ended with a woman at sovereign realty who is trying to find a solution for this. what is she doing? jarrell: what she is working on, she is trying to work with homebuilders to build more homes because the u.s. has a shortage, a home shortage in general, but shortage of affordable homes. programs like these are hard to scale up. a lot of new homes built are being built at prices, higher price points, so they are not affordable. it's a difficult issue to address. romaine: jarrell dillard, great story on the bloomberg terminal about the housing market, and a focus specifically on black homeownership in the u.s. as we turn to the markets on "bloomberg markets," s&p 500 looking to extend to another record high. gains on the day are modest, about .1% today.

record high after record high after record high, with a huge slate of kabbalists this week. it will be interesting to see what direction the market goes next. 108 s&p 500 companies reporting. we will have full market coverage on bloomberg as we do at all times. stick with us. we will be back shortly. this is bloomberg. ♪ hey, doc, if you had to choose, would you give yourself a root canal or run payroll? oh, run payroll. paying my team with gusto takes just a few clicks. they automatically file my taxes for me too. can i run payroll too? choose payroll without the pain.

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