>> welcome. joe biden has made it official, he is running for reelection next year. the president made his long-awaited announcement in a video today, asking voters to let him quote finish the job. he will face a republican field dominated by his predecessor. economic uncertainty will cloud his case for second term. russia is threatening to pull out of the u.n. for a green deal that was created to protect ukrainian shipments. they are accusing kyiv of launching an attack on flaxseed with unmanned boats.

russia claims weaponized craft were launched from a ukrainian port that is central to the grain deal. ukraine because the accusations deceptive. a japanese company lost contact with a small robotic spacecraft it was sending to the moon. the lander dropped out of lunar over -- orbit moments before it touched down. it cannot confirm whether the craft landed successfully. if it did, it would be the first private business to pull off a lunar landing. russia, the u.s. and china have successfully landed on the moon. singer, actor and civil rights activist harry belafonte has died. a spokesman says he died at his home in new york city of congestive heart failure. his recording of the banana boat song propelled his career in the 1950's. he was at martin luther king jr.'s side for his i have a dream speech in washington in

1963, he was 96. global news, 24 hours a day, on air powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. jon: welcome to bloomberg markets. kriti: we are seeing a selloff when it comes to the s&p 500, i am told we are near session lows , all sector groups are lower, all 11. that tells you the breath we want to see on the upside, we are seeing it on the downside. the level is down viable -- down by about 1.3 percent, yields lower by nine basis points. money coming out of his pocket

into the bond market for macro investors, it is interesting to see this is a cautious narrative even when we have earnings numbers coming in all right. defensive trade seems to be higher by about 5/10 of 1%. crude is tracking it, trading at a 76 handle. jon: we will dig into specific stocks stories over the course of this half-hour, earnings we have seen, numbers we will see after the bell tonight. in terms of companies we are watching in positive territory, moody's has well received quarterly results, a key holding within the berkshire pathway family. and in technology, which is a key theme after the bell as well. spotify is holding gains come up about .5%. there is still the gloom when it comes to the banking sector and after all of the worries tied to

turmoil, watching first republic again, which has been in and out of trading holds. it has resumed trading again, a decline of 34%, 33%. we wash the deposit picture outlined overnight, the earnings call not delivering for some analysts. bloomberg reporting right now on possible key moves coming to shore up the balance sheet. you have to wonder whether or not this is going to influence the fed's thinking when it comes to rate hikes going forward. kriti: we will give you live updates on bloomberg television and radio. it is still all about earnings today. as corporate america's earnings hold up, does that mean we are in the clear? the chief u.s. equity strategist at goldman sachs weight in, take a listen -- weighed in. >> you had some positive surprises, they are less

dramatic than in the past several quarters. same thing on the bottom line. they are slightly ahead of expectations, but by a lesser amount, a narrower gap than they have typically been the last eight quarters or so. i think it is a modest earnings season, in terms of development. kriti: earnings beats, but not when we celebrate, because historically, not as strong of a pizzas as it has been. a great example is the american bellwether stock, shares dropping as the package volumes take a hit. shares down about nine percent. average wall street price target at $196 a share. we are still at 170 seven dollars, so there is some upside. it does not look like it when you look at the trade. let us bring in a logistics analyst from bloomberg intelligence for more. you compare ups and fedex, both economic bellwethers taking very different strategies to deal with the inflation story. where did ups go wrong?

>> honestly, i do not know if ups went wrong. the earnings came in mostly in line with expectations, a big boost below the line. maybe the core was weaker. but weighing on the stock, in our view, is the outlook. a couple months ago in january, they gave their initial 2023 outlook. now, they expect, the lower end of the ranges they provided. revenue right now is about $1 billion below the current expectations, when looking at consensus estimates. it needs to get in line with where management thinks the business is heading, that is being driven by weaker economic trends. not only are they seeing high inventory levels, we talk about a lot, or the fact that consumers are switching from goods to buy them more services, you also have a slow opening of

china that is impacting demand out of asia. you have all these issues that are weighing on demand that might, at the end of the day, based on management's best guess, is bringing volume down 3% to 4%. on top of that, you have a teamsters contract coming at the end of july and a lot of shippers are moving away from ups in the short-term to hedge against any disruptions ups might have, due to a strike, assuming they may not be able to agree on a new contract. that scenario, in our view, is a low probability. we think they will be able to get a deal done. jon: we are also watching a key transportation name here in canada, the market response to those results has been somewhat muted. is there a bigger take away for everybody trying to figure out where the economy is going and how the transportation plays fit into the picture?

lee: the reality is pretty much every company within the freight landscape are dealing with normalizing freight rates and demand. we are seeing less demand on a year-over-year basis, less rates on a year-over-year basis, which is hurting everybody across the supply chain. canadian national had a pretty good quarter, they beat expectations. operations are performing much better, operating a much more fluid, safer network. they did have help from easier weather comparisons, this winter was milder in western canada, which is a tough operating environment. when temperatures get below a certain level, they can only run trains a certain length and they have to make sure the speeds are lower than they normally would like them to be. that usually impacts operations.

this year, they did not have those conditions to deal with. jon: helpful context on those stories, much appreciated. we are covering a whole host of earnings stories, including pepsico. it's stock at a record high after raising sales and profit outlook for the year, thanks to price hikes and a resilient consumer. the average price target on wall street sits around $192 a share, not too far from where the stock is right now. we have more on pepsico, he covers the beverage industry for bloomberg intelligence. a rough ride for transport stocks today. on the other, you have pepsico with presumably some pricing power. ken: coming off of coca-cola's strong results yesterday, it was a one-two punch in the positive for the consumer product space. the quarter was strong. not only did sales and earnings be double-digit, but i think a

high-quality quarter. i say that for three reasons. the first is broad-based, all four of pepsico's key pillars performed double-digit sales wise positive. the second's operating margins expanded. that's is a lot in this environment, where consumers are pulling back a little bit. and pepsico's case, maybe third-party scanning data, we are not seeing then give up market share despite price increases they are imposing. the third, it was a quarter of another good product innovation. across the board, all of the divisions adding flavors, packages for convenience, they came out with a new lemon line drink to try to grab a share of that category. they are investing for the future. a good quarter, but also a good one if you are looking for full-year growth.

kriti: when we talk about margins, pepsico has been the leader in terms of low margins. they had a great manufacturing and distributing ability the coca-cola in the peers do not. how does improve on margins from here? ken: the supply chain -- for most industries -- pepsico was no different. they have a direct store delivery system that requires a lot of coordination to bring big data in to help streamline and optimize routing. they are investing in productivity in manufacturing, they have a big manufacturing footprint. it is all of those things. at the end of the day, it is a people business and how you manage them in a big complex organization matters. sickos track record -- pepsico's track record gives us the idea that can support margins in this environment. kriti: that is with the cfo

shared with us earlier, saying productivity helped the margin story. those shares higher by about 2% on the day. another major stock, shares of 3m lower on the day, cutting another 6000 jobs as the manufacturer tries to pull back on costs. layoffs are awarded by investors and industrials is a different story, shares trading $104 a share, 9% below average analyst price target. not great news at the moment. joining us is brooke sutherland. we are in the midst of what is supposed to be multiple efforts of a turnaround story. what is going wrong here? brooke: that is where the frustration is, this is far from the first run of job cuts we heard from 3m under the ceo. the series of restructuring initiatives they've announced, they talked about reorganizing the business model, streamlining

the management structure. we are not seeing the payoff in the margins. it seems like there is always some excuse for why that is not happening, and they are not a legitimate reasons, whether that be covid, the trade war, stronger u.s. dollar, whatever is happening in china. you do not see the payoff of all these initiatives at 3m, that is why you see investors treating the latest push with a little bit of skepticism. jon: he sort of painted a picture about this in a piece you wrote earlier this year, to your point about co struggles, we were talking about during a believe his tenure, the worst performance in the dow jones industrial average. it may be raises the question of , in a time where there is a lot of job cuts we are hearing about, whether cost-cutting or job cutting gets you the result or turnaround that you were hoping for? brooke: i think one thing that will be interesting is in the manufacturing sector, i view 3m as an isolated story. i think we will not see

widespread layoffs on the industrial side, even if we get to a deeper downturn. you've heard from so many companies about the challenges of hiring the workers they need, this is been a long-standing complaint by manufacturers. it got tougher during the pandemic, as you so much more increased competition from warehouse operators, delivery services like ups and fedex, and companies that can offer more flexibility. cannot do that in a factory setting and i think companies are grappling with the challenges in the labor market that might lead them to think twice about taking deep cuts, if we do see a broader -- kriti: we thank you, as always. coming up, more stocks coverage. alphabet reporting after the bell, potentially giving us more insight on their push into ai. stick with us, this is bloomberg. ♪

jon: this is bloomberg markets, time for the stock of the hour. alphabet is one of the big tech heavyweights with earnings after the bell, the stock is lower today but up close to 20% this year, rallying alongside other tech names. the ad business has been challenged, so we are watching for an update. investors want to know details about how the company is positioned to battle microsoft and its partner open ai in the area of artificial intelligence. people are watching closely. kriti: i feel like we are in an era or just off the arrow where if even mentioned the word ai or the phrase ai, all of the sudden your stock will take off. we will see if it happens after the bell.

is that what we are going to expect the minute they address the artificial intelligence story? james: certainly that is one news a lot of investors are anticipating at this point in time, what is the latest update on the chatbots? i did a check on this important topic and when we talk to search partners, what they told us is that the search market share right now has not changed all that much. the reason being that commercial use cases for generative ai is still very limited at this point in time. consumer behavior for purchasing stuff online has not changed. we also found out in other words that the technology is developing quickly because of the search engine google has. it can get about 20 times more pages than its peers at a faster speed and could potentially

understand the context and content of the webpages because of google's algorithm. i think over the longer term, google has a lot of opportunity in terms of catching up. jon: there is the longer-term story, which people are very interested in. the short-term story is what is happening in the ad business with the traditional search business, with the brands that work with alphabet property like you two. what are you watching for? james: no doubt that will be a focal point. alphabet -- macro uncertainty is slowing down advertising across the board. the latest agency check is a mix at this point in time. not a lot of good news there. in terms of cloud computing specifically, i think things are slowing down. we recently did a survey with about 300 fortune 1000 cios

looking at sales channel indicators. cell cycle number one has been extended by an average of 50%. at the same time, we see an increase in price concession due to softer demand. i think it will be softer and investor anticipating going forward is potential rationalization -- kriti: speaking of cost structure, reno know alphabet and big tech peers have laid off a lot of for the idea of more cost efficiency. do you think that will show up in their bottom line or are we waiting on that front? james: good question. there are a couple things we are expecting. the company announced a headcount reduction of about 12,000 people early in the quarter. so we will get an additional update on that. number two, the process of consolidating the real estate footprint. about $4 billion a year and

operating leases, it could potentially take out a good chunk of that amount. number three, if i look at the financial statement, r&d makes up about 15% of revenue. certainly, there is a lot of opportunity to cut costs. early estimates they could cut the cost about $8 billion in 2024, picking up about two points and margins. jon: helpful context, we will be watching what they are saying about the future of the bottom line performance. james lee with a preview of what to be watching with alphabet numbers later today. coming up, a check on what is happening with first republic. the sizable selloff we've seen in today's session, shares currently down 43%. this is bloomberg. ♪

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kriti: this is bloomberg first republic shares a sliding in the session, this comes after an earnings report and bloomberg report that it may sell up to $100 billion in assets. we are all over the story. which assets, what are they doing? sonali: this has been a couple of weeks where we were wondering and behind the scenes, first republic, their advisors and other banks have been looking for a plan to get them through the worst of the storm. it did not announce one yesterday. now, there is discussion under the surface for a $50 billion to $100 billion of mortgage and securities. a sale like this does not come without sweetener. potential buyers, the ideas they would receive a preferred equity or something that would make it more attractive to buy a

business this large. the u.s. government may need to facilitate some negotiations, typically the fbi see -- the fbi see once oversight when a bank is selling assets of this size. but they have not fallen into receivership, they are trying to avoid receivership, trying to keep the bank alive. though it might be in a smaller form than what it had been in the past. jon: we should mention, it was a confusing conference call for the analysts today who were seeking some specifics from the company outside of what they disclosed for the quarter. sonali: they had shown a deposit base of over $100 billion that was well short of the loan book of more than 170 million dollars, so certainly the situation is elf was concerning. you see it in the stock price and preferreds, this is a bank that is trading at about 12% of its book value. so a lot of concerns about the

direction of travel. kriti: certainly something to keep and i on -- an eye on. the s&p 500 down 1.4 percent, looking at a 10 year yield of 3.30 eight. more markets ahead, this is bloomberg. ♪

romaine: consensus that the recession might near, s&p 500 having its worst day so far in about four weeks. taking you off to the close, a day were we got quite a bit of data. even softer data when it comes to the manufacturing sector, we talked about the mixed bag, take a look at the resiliency we see in the housing space. it is anyone's guess where we can go next.