11AM Hour: Shell CEO & JLL CEO on Earnings, The Fed's Hawkish Hold & Big Tech's Earnings Split 7/30/26

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Carl Quintanilla (1:02)

Good Thursday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Seema Modi here at Post 9 of the New York Stock Exchange. Sara Eisen has the day off. Big tech earnings in focus. Meta and Microsoft going in opposite directions today after reporting results last night. We're going to discuss how investors might navigate the tech trade this earnings season. We'll break down what to expect from Apple and Amazon tonight.

SPEAKER_7 (1:22)

Then the CEO of Shell joining us after the company recorded its best quarterly profit in four years. We'll discuss how the Iran War is impacting oil, gas and their business.

Carl Quintanilla (1:31)

And the Fed's hawkish hold. Former Philly Fed President Harker is with us with his reaction to the rate decision and the news conference yesterday. Speaking of which, you wouldn't know it, but most sectors are red right now. The only things that are working are some consumer discretionary and then IT up almost four and a half percent is carrying a lot of water. That 10-year at 467 is interesting, but the long bonds still near 522 or so, which is awfully close to the highs after that unprecedented reaction to the Fed Presser yesterday. The market saying too Warsh either put up or shut up if you're going to bring us back to target.

SPEAKER_7 (2:09)

Right. The lack of detail perhaps some would say also leading to some confusion on where yields go from here and when that rate hike perhaps comes. We'll start with big tech though, earnings, the NASDAQ up more than 2 percent. Let's bring in tech portfolio manager at Janus Henderson, Richard Clode. Richard, it's great to have you on. You say the market is laser focused on hyperscalers justifying their AI CapEx spend. So if we do get a bigger CapEx budget from Amazon, but they are able to detail the return on investment, you're saying the market responds positively?

Richard Clode (2:40)

Yeah, I think there's two parts to that. I mean, you want to see the accelerating growth and obviously that's what Microsoft gave last night and Meta didn't do to some degree. But you've also got to put some guardrails around the CapEx and then ultimately how to finance it just given where those yields are and what's happened to Curves recently.

So that's where Microsoft really knocked it out of the park because you get the accelerating growth, you get the margins improving, you're going to be free cash flow positive next year and you didn't have to increase CapEx to ultimately deliver that faster growth. That's again the polar opposite to what Meta delivered, hence the very diverging stock reactions today.

SPEAKER_7 (3:13)

You know memory costs have been cited time and time again by the hyperscalers and I also think about some of the software names like IBM that hit them as well. How do you think that comes up in tonight's releases from Amazon but also Apple?

Richard Clode (3:26)

Yeah, so on the hyperscaler CapEx side, Microsoft were at pains to point out that actually they weren't seeing that sort of incremental and obviously that will play more into next year. But then for Apple that is a headwind. We saw with Samsung's earnings today, they're losing money on smartphones. They had a 7% operating margin just lost quarter and double digit only a year ago. So they are going to feel that.

Tim Cook was saying this is a 100 year flood in terms of what's happening with memory. They've taken up the pricing of all their other products but not the iPhone. So they're going to have to take that until they launch the iPhone 18 in September. So I think that the laser focus for Apple is going to be on those margins. To what extent can the brand and pricing power of Apple manage to keep their head above water there?