>> we are 30 minutes into the u.s. trading day on this monday, april 29. here are our top stories, another big earnings week with amazon, apple, amd, scheduled to take the stage. will they be able to keep the party going following the best week of the year for the s&p 500? in the surprise trip to china by elon musk. tesla has received in principal approval to deploy driver assistance systems in china. shares are soaring. the lambeau 800 horsepower hybrid revealed a new version last week, the second plug-in from the italian carmaker. what does the man look like? we discuss that with the ceo --

demand look like? we discussed that with the ceo. i'm katie greifeld, in new york. welcome to bloomberg markets. it's not exactly the big riproaring rally that we saw last week at the end of the week, but take a look at the s&p 500 and it's green right now, currently up .3%. the nasdaq 100 with mild gains, i would call them, up .2 percent. a different story if you take a look at the philadelphia semiconductor index, up .4%. in video this morning is down, so maybe that is weighing on the broader index right now, and we will of course get into some semiconductor earnings this week. before we get there, let's start with tesla. it's going heiner -- higher after elon musk paid a trip to china. receiving tentative clearance for driver assistance software

in the world's biggest auto market. crank joins us now with the details. how much work is tentative doing in that sentence for approval? >> we know that there are some conditions that tesla is going to need to meet to bring this to market and that they were able to check some of those boxes while musk paid beijing a visit on sunday. what we don't know is what boxes are still left to be unticked. they are partnering with baidu. they are needed for mapping systems in china. we also know that they have gotten the ok for how to handle data security and the private information of their customers. it still remains to be seen just how quickly tesla can bring this to market. notably, this is a company that

has sworn off the need for mapping and navigation. or how it integrates the baidu offering into what it has marketed from full self-driving, that remains to be seen. katie: clearly not holding back the stock this morning, tesla shares are up. let's talk about the fact that he visited china at all. i thought that this was injured -- interesting, he was supposed to visit india but somehow didn't do that, going to china instead, greg. craig: it's a clear and rational move on his part. he doesn't always act rationally, but he did this time in the case that china is to a large extent where tesla's bread is buttered. their second-biggest market, one where revenue has been slipping of late. so, they really could use the incremental boost of charging a

bit more for some of these driver assistance features. they have charged $8,000 for this in the u.s., or $99 a month if you want to subscribe. if they were able to get anywhere near that sort of incremental revenue at a decent take rate, it would offset their price cutting they've done in the last 18 months. katie: really appreciate the reporting and insight on this move from elon musk. that was craig trudell. joining us now i'm pleased to say we have joanne feeney, partner and portfolio manager. i want to go straight to a line in the notes that you sent over. focus on stocks, not the market, from here. what you mean by that? joanne: it's always that parlor game. our view is always to focus on

individual stocks where you can pick and choose and be more judicious and how you allocate resources to mix together growth oriented stocks like microsoft or google along with income oriented stocks to provide cushioning for clients so that the dividend cash flow is something that they can live on should the market fall. we like that control. we think that at this time, given how much folks are waiting on the fed with interest rates, given how large the market vulnerability is to the top five or seven names, we think that stock selection is far more likely to do well for clients here. katie: i'm so glad you brought up dividends, i'm kind of asked -- obsessed with all the tech companies coming out with dividends. except for amazon. tell me what you think about the fact that amazon and alpha are coming out and paying dividends. there's a lot of poetic symbolism there, but what does

it mean in terms of how investors view these companies? joanne: clearly, they wanted to avoid paying dividends because they were afraid of the signal it might send like -- you don't have enough to do with your cash in terms of spurning share buybacks or growth m&a? the commitment is just that, commitment saying that we believe we will have the cash flow to be able to support this dividend, or it might be higher, in perpetuity. that is an important signal to the ability to generate that cash across the cycle and it allows for new investors to enter the stock. there are definitely funds out there that cannot own a stock unless it pays a dividend, no matter how small, so it broadens the potential investor base. katie: when we see these big index funds rebalancing, it's exciting to see the makeup under the hood and if there will be more tech than there was

previously. going back to your first point, that you are looking at stocks, that this is a market where you're looking at stocks rather than the big benchmarks, what are the big characteristics you are trying to check when going through that selection? joanne: it will depend on the particular strategy for the type of client. someone more growth oriented. some clients like income. ultimately the composition will depend on how we are able to customize according to what the client needs. for example, in this environment , in our standard balance strategy we are looking to mix together growth oriented companies but more conservative and mature ones. by that i mean microsoft or even google. companies that have solid balance sheets, lots of cash, generating lots of cash. we also want to generate income for these clients. they are someways living out the income generated by the polio,

meaning that they need to style sock to get the cash they need. we might need something like a raytheon, philip orascom or general mills. financials you have some that are very attractive. he and energy you have chevron or pipeline company. these can boost dividends while allowing portfolios to still own solid growth, like alphabet. manus: having -- katie: having a dividend puts a buffer in a down market. but thinking about it, the fact that you are focusing on stocks here, does that imply that you expect a macro fed rates to be less of a driver going forward? katie: i think that now -- joanne: i think that now that investor expectations have come down to reality, the notion that we might have six or seven or

eight cuts at the beginning of the year, we never prescribed to that, we had pushed hard back on that because we view the inflation problem is more persistent than most people realized and we recognized the fed was going to stick to its guns, bringing inflation back down to its 2% target. that alters the math of the stocks once you hold a quote folio. if you cannot count on rates going down this year, boosting the equity market, you've got to look at the company level to find the ones with secular growth opportunities or the stability and cash flow for dividends. if you take that massive amount of rate cuts out of the equation. katie: sit tight, we will get into more of those next. before that let's look at what's moving underneath the markets right now. let's start with pizza, what is going on with domino's? >> domino's pizza, seeing a lot

of demand when you look at these u.s. comp sales, beating expectations across income groups, talking up their ability to drive sales through the rewards program and the supply chain. one of the other things that stood out to me was their advertising on uber eats and how it drives pizza pete -- people to order pizza. it's not nai name, it's a pizza name. katie: it's amazing when you have those secret huge gainers. domino's, one of them. tell me about phillips. >> phillips is a dutch medical device maker, up 30% in the u.s., on pace for the best day ever. this after a sleep apnea settlement of $1.1 billion. we had seen $4.5 billion in the big thing with the settlement around the sleep apnea devices that is one point one billion versus 4 billion, pretty positive and less than analysts were expecting work that

analysts were worried about. the third and final settlement they needed. a company with a number of lawsuits overhanging the stock. that is why you are seeing this year up 33% in the u.s. katie: that's one thing i can follow, one number is bigger than the other. let's end on a down note. so if i, interesting -- sofi. >> it had been modestly better, but the second quarter revenue number was short of what analysts had looked for and it down 9.5% and had been choppy going. how can you drive wallet share and expand the business offerings? the two words that stood out to me, transitional year. if you call it that, that is when you see the stock get hit. katie: no one wants to hear that, making a bad year worse for sofi.

we will hear more from their ceo next hour. coming up, paramount shares spike as sky dance sweetens its best and final offer for the media giant. details, next. this is bloomberg. ♪

katie: pyramid shares on the -- paramount shares on the rise as sky dance is reported to be offering concessions to purchase the media giant. let's talk through some of the reported details. allison proposing purchasing a block of fairmount shares at a premium. redstone agreeing to allow nonvoting shareholders have a say on transactions being approved. is that sweet enough for the shareholders still on the fence? >> the shares are obviously reacting positively. it's a key week for paramount. the exclusivity deal with sky dance comes to a close on may 3, friday, so they are trying to get a deal where then. these are the maneuvers to do

that. redstone being open to the majority of the minority board is definitely, it would assuage a lot of investors and i think that's why we are seeing this positive reaction in the share price this morning. katie: it's so interesting trying to follow this story, like every incremental piece of news moves the stock around. last week we learned that bob bakish is expected to be replaced on an interim basis by management committee as soon as today. what did you make of that? >> he's been the ceo of paramount for a while, instrumental in taking the company forward. in a lot of ways navigating a challenging landscape. he has butted heads with redstone on a lot of issues. in the past before the m&a came up, they had a lot of disagreements over the future of showtime and paramount plus. after the sky dance deal, the

negotiations, he has resisted the deal. there's been a lot of backlash from him leading to a tense relationship between him and sherry redstone. he's a big hurdle in getting the deal done. katie: you and i were talking before the break, just quickly, here, paramount reports after the bell, but at this point it feels like an afterthought. >> yeah, no one is really paying attention to that. that said, though, they will have pretty decent earnings today and a lot of that is advertising. their tv advertising that has been under pressure across the industry will do well for them this quarter because of the super bowl. that will give them an almost 15% jump tv advertising revenue. but as you just pointed out, it's about everything other than earnings at this point. [laughter] katie: it will still be fun to follow, those paramount earnings, after the bell.

thank you so much. we are back now with julian feeney of advisors capital management. let's talk single stocks. it's interesting, there is a lot of focus on the consumer and if companies have pricing power at how high elation is. looking through your notes, i see some actual retailers on there. target. on the food side, mcdonald's. how do they typically fare in an environment like this one? joanne: i think that we have to recognize that consumer spending is likely to slow down this year. last year we had an increase in inflation adjusted personal income with a growth of 4%. we had the wealth from house prices and stock market appreciation contributing 8%, pushing higher, feeding into higher consumer spending, even adjusted for inflation. we probably should not expect the same kind of impetus this

year. accumulated savings through the course of the pandemic are being worked down and we ought to be more cautious about how we position consumer spending. whether it is targets, t.j. maxx, or mcdonald's, these companies tend to be more resilient in the face of slower spending from the consumer, a cyclical slowdown. we don't see more recession on the horizon but we do see the consumer being more judicious and how they spend their money and allocate their income. those companies tend to hold up on bargains. they are relatively cheap for the quality of product they offer. we continue to like them, they are going for a long time in the consumer space for the next year or so. katie: the narrative that we often hear about is that ok, you have high end luxury and then you have the extreme other end of the spectrum, some of these discount low income sort of

places. in the middle really falls out as a result. when you think about these names, like mcdonald's, t.j. maxx, do they fit into this narrative? joanne: with consumer narratives we are seeing a lot more people getting jobs, so even the lower end of the discount -- income resolution is doing well, supporting spending. yeah, what you look at the breakdown like you described, mcdonald's, t.j. maxx, target, it all fit into the upper middle class. those at the higher end, in the middle of the income spectrum, finding their budgets really constrained by the inflection surge and price rise of the last few years. they are turning to target and t.j. maxx. at the luxury end, those that benefit from stock appreciation are at the higher end and contributing to spend, but we should also expect those guys to try to find more bargains.

it's important to recognize that the consumer is not one monolithic thing. katie: good reminder. let's talk about scarcity, here. one of the hottest places in the stock market at the industry level has been the homebuilders. you have structural under supply of housing in the u.s. market. with rates this high, demand for housing has been really interesting. it feels like a frozen housing market. when it comes to the homebuilders and the strength we have seen there, cannot continue? joanne: as we look at the housing space, we have to recognize that there are three different markets. existing homes are in short supply. people with a 3% to 4% mortgage don't want to move. these houses are just not coming on the market. everyone has anecdotes about this. they hear about a house going on the market and it gets 18

different offers and the selling price is well above the list price. the second market is new homes. that is where the demand has to be filled. so, we prefer a company like lennar. it's entry-level, one step up house builder with young people finally getting out of apartments and trying to get their first houses. they have been in the sweet spot. the stock has done as well or better than microsoft in the last year. obviously it's not as much on long-term growth, so you won't see trading in the high multiples like microsoft, but it has been a good position to own and it has a lot more years to run. in the middle of those are the home-improvement companies. home depot, lowes, or even williams-sonoma. what do you do if you can't move or want to fix up your house? even if you get a new house, you have to fill it up with fissions

and furniture. williams-sonoma has been a good indirect way to play the housing market. katie: that's a good place to leave it, there is still juice left for home. thank you so much. still ahead, we look at the companies making the most social buzz today, up next. this is bloomberg. ♪

katie: all right, time now for social climbers. a look at stocks making waves on social media this morning. first up, amc with preliminary revenue that beat analyst estimates. despite that, the ceo of the entertainment giant highlighted challenges for the year, including a softer pox office thanks to writers and actors strikes last year. lululemon getting squeezed by what one analyst is calling a

silhouette shift happening when young teens and young adults look into wider leg bottoms and tighter shorter tops. the shift may result in shoppers spending more on apparel than athletes are. -- athleisure. given the recent boeing delays, we've heard more on that story in the last couple of months. you can follow the latest buzz on trengo in your bloomberg terminal. next, we get a peek under the hood of the first lamborghini electrified hybrid suv. this is bloomberg. ♪

katie: we now welcome in our tv and radio audiences for this conversation about lamborghini, debuting its first electrified suv. joining us now i'm thrilled to say that we have stephan winkelmann, lamborghini ceo. this is your second plug-in at lamborghini. interesting, it comes at a time when we have seen consumer demand for evs cool off. when it comes to hybrids, does demand picture look the same or is there are strength there? stephan: i can speak for lamborghini, the plug-in hybrids are digested, people except what we tell them, and we know that

it's not only the market, but a true product. we always say the products that are coming next have two things. they will be more performing and this is, even though they have a hybrid system, they will have less co2 emissions. things are going very well and in all that we have put -- now that we have presented, it is something that is astonishing and modest. -- modern. katie: delivers -- deliveries don't start until early 2025, but give us a peek? stephan: today we are sold out on the actual one. we opened up the system for the new one last week. we already had preorders. they will now be translated into the system. i can tell you already now that we are almost at the end of

2025. we have a bank of one year after one week. katie: have to imagine that feels good, a lot of automakers would envy that position. you have two plug-in models right now. when you think about fully electric cars, is that something that lamborghini would ever do? katie: our first two model -- stephan: we have two models and now the third one will be presented in the second half of the year. it will be then the closing of the first step of our strategy, hybridized. by the end of this decade we are looking for a fourth model. katie: interesting. stephan: yes, it is interesting, but we also see that things change and see that we don't need to decide a lot in the three months. we have today for the future.

we have more time to decide what to do next, stay hybrid or well electric. katie: a few things i want to get into there, so let's talk about the fourth model. what could that look like? are we talking about another suv or a four-door sedan? stephan: looking into the lineup of a super sports car company, you have the pure super sports cars and for us we have also the first suv in the 80's, lm 002. it came naturally. what's missing in a lineup like ours, because of our dna, was a coop, two plus two, but with a modern interpretation that has more ground clearance. in a four seater, something that we are forward to and i think it will be successful. katie: definitely going to stay

tuned there, that sounds really interesting. let's talk more about the timeline for fully electric. when it comes to the hybrids, you have taken a very deliberate approach. some would call it slow relative to your competitors, but i can't imagine what the ev landscape looks like by the end of the decade. why move so slowly here? stephan: we always say we want to be the best when we arrived, not the first. when it comes to design performance, we want to be the best. this type of technology, it's about acceptance and for us, we are not selling mobility, we are selling dreams. it's important to keep having people really dreaming about our type of cars. we continue to work for the others stop. in terms of the fully electric cars, there will be a time and place where they will be more expected. also for our type of customers. not for the super sports cars. there we have more time.

but for the daily users. infrastructure. also, let's say the technology will help us in five to six years with new generations of buyers stepping in who are more into sustainable products. katie: i told you a little bit before the interview that it will be a while before i can afford a lamborghini, but we will see, there, in that new generation of buyers. on that point, let's talk about pricing power. you can obviously demand high price tags for your cars. where are we in the cycle when it comes to pricing power? stephan: for us it is important to always sell less than demand. our order bank is two years on all products. when you buy in on these type of cars, you accept that you have to wait. it's good because you are on the other silent when we speak about residual values. they have to be very high.

a lamborghini today is usually above msrp, even if it's a used car, because you don't want to wait. it's a good moment and we want to keep it like this. we are in an environment of 30,000 to 40,000 cars. they all move in the same direction. some have more success. the others, less. we are in the best shape ever. our purchasing power is good and we are in the best year. in terms of profit, the best turnover, delivering more than 10,000 cars. and we had a profit of 723 million. we are really proud and happy about that. katie: 2020 three, record year for lamborghini on a number of different metrics. in january, this year, late january, you said that you are sold out of cars until 2026. is that still the case? stephan: yes, still the case,

and even more. on the top-of-the-line, the b12 plug-in hybrid is the last thing , three years, from the end of 2026. katie: 2026. : are you noticing regional demand? stephan: u.s. is our top market, then the german market. then china, the u.k., japan, and markets like korea, the middle east, and italy. and then canada. if you look at it, we are well-balanced in different regions of the world and this is keeping us on the safe side when there are local crisis. katie: you are -- you mentioned china and i wanted to go there. there's a lot of anxiety over chinese demand when it comes to pretty much every industry out there.

taking a look at lambo in china, does your market rise above the demand fears we are seeing in the other industries? stephan: luxury is under heavy pressure and the chinese market is fueled by precious metal. we are not participating, so we are less exposed than others to the chinese market, with less than 10% of our sales in china. we want to keep it this way. even if china is the biggest market in terms of automotive, it's a small market in terms of luxury cars. katie: stephan, so enjoyed this conversation. really thrilled we could make it work. our thanks, of course, to stephan winkelmann, ceo of lamborghini. we are one hour or so into the u.s. trading day. let's check up with natalia. natalia: stocks are moving higher after posting their best

week in 2024. we have risk on sentiment across the board here today supported by a slight move down and treasuries, the 10-year yield dropping by 4.6%. crude is moving lower as well. the biggest move, course, is across the currency market. the japanese yen, more specifically, rebounding after dropping to its lowest level in 34 years, positioning from cftc showing asset managers are the most short in japanese yen on record. we are somewhere halfway through the earnings season. bloomberg intelligence data shows 81% of the s&p 500 companies outperformed in the earnings. however, the stock reaction is so muted. this chart shows the average one-day outperformance of a stock versus the s&p 500. this is the most muted reaction since 2020.

it is kind of a quiet day when it comes to earnings announcements, but we are watching a few stock movers. tesla is up by almost 10%. they were the winners of tentative approval for their driving system in china. we saw sofi, down by 9%, because the second quarter guidance fell short of estimates. we also watched what hedge funds are doing. last week was an interesting week for them buying and selling. we saw that hedge funds kept buying u.s. stocks for a second straight week at the largest and fastest pace in five months. tech stocks, that is where we saw the biggest activity. they are now bought at the highest and fastest pace since december of 2022 and of course

we saw a lot of buying in different subsets. semi conductors that is where we saw the biggest activity in the sectors purchased by hedge funds like health care in real estate. these staples, this sector was the most net short. katie: natalia, thank you so much, really appreciate it. coming up, making museums hit to gen z. we speak to tony james at the mesh follow seema varna board of trustees co-chair, next. this is bloomberg. ♪

katie: time now for our daily

wall street week conversation, one week away from one of the biggest events for fashion, celebrities, and pop culture, we are talking about the met gala. tony james, board of stress -- board of trustees co-chair, sat down with david westin to talk about how the museum has changed since pandemic. tony: tony was very hard on the met. lost revenue over two years. that's hard to recover from. a lot of the art scenes in new york depend on tourism. our attendance from locals are all the way back. attendance from tourists are only in the 70's. particularly asian tourists, that's where we are really short. it's a bit of a struggle. we had to find new revenue sources and be careful about costs. as we have discussed in the past, arts are what make new york the gateway city that it is, and it's really important.

if you do look at the people who come to the metropolitan museum, how have they changed? the demographics, age, ethnicity, race, pre-pandemic into today? i'm not sure that there is -- tony: i'm not sure that there is a big shift other than becoming more local, but that said, we need to be more appealing to the local community and connect. not just pandemic, but all the horror around george floyd and whatnot, we said we had to do a better job connecting to more diverse audiences, younger audiences, and audiences outside of manhattan. we made a concerted effort to do that. there are a lot of people like me in new york, moving out of new york city, concerned about taxes or cost-of-living. what has made new york the city that it is is the young influx of educated, motivated people who want to work in tech and

finance, other high intellectual content jobs. we are trying to make the met a fun and cool place to go for young people and it has been reflected in our demographics, which have got me younger. katie: on the revenue side you said you were hit like our alts -- all arts institutions were. how have you come back to it? smi when, payment was not required. tony: the met has a particular issue i will come back to look conceptually 30% of revenue comes from people paying to go in, buying food, stuff in the store. let's call that revenue. members as well who pay dues. 30% of our revenues come from spinoff off from the endowment. we spend about 4.5% of the endowment each year. but that's very restrictive. people give this money but it can only be used to purchase renaissance art or fund digs in

egypt, all kinds of strange things. the remaining 40% comes from contributions of different sorts and benefits. charitable giving. the problem the met has, a good problem, or a great thing bending and how you look at it, city land is what we sit on, given 150 years ago. the deal was city residents can pay what you wish as you come in. so, the average city resident pays less than $10 to come in to one of the sleazy m's in the world. they could spend days or weeks there. a tourist pays $28. when you lose your tourism, you lose a lot of the paying people, honestly. that has been a challenge. katie: what -- david: what about the charitable donation side? tony: very little from

corporations. ours is almost all individual giving, with a little bit from the city as well. david: has the profile of the tipple get -- typical giver changed over time? tony: well, yes and no. the profile of the cash giver has gotten much more diverse, for sure. you think about things like the met gala, the celebrities there and the diversity of that crowd, but actually 15% of at any one time. we want great art, not just more are. more art just adds more documentation, more maintenance. you think about -- we are building a new modern contemporary wing.

a really exciting project for the city. $600 million. you could spend $2 million on one sculpture, if you had to buy it. we depend on collectors, usually at the end of their lives, giving us parts of their collections. that set of givers, that hasn't changed very much, that still not very diverse. it's old, predominately white, very wealthy, almost definitionally. but the people that come in and give cash, go to benefits, that's new, young, we make every effort to make that younger, more exciting, hipper. we are trying to be current. we don't want this to be your grandmother's attic. katie: and that was tony james, metropolitan museum of art board of trustees co-chair. david, a great conversation there.

a lot to dig into. let's server you started, pandemic. $100 million in two years that they lost, that had to be painful. david: that is actually when they brought in tony james is co-chair, when they were struggling financially. they really turned it around through a series of different things. one of the things i learned from that, that met gala, we all follow that, i hadn't thought of it as a way to be younger and cooler. it's a branding exercise where they are trying to reach out to a broader audience. katie: speaking personally, i love the met gala, i always tune in to see what everybody is wearing. sounds a it how do you appear to -- appeal to gen z and the younger generation. seems like they have had success? david: they have a date night on friday nights and have experience -- experimented with concerts on the roof. they have a dance thing where everyone wears airpods.

you cannot hear the music except when you are dancing. they turned it over to a dance floor sometimes. katie: and such a cool location. david: i should say. katie: edge of central park? i would love to see that a bit more. when it comes to the met, or carnegie hall, trying to stay relevant and successful, how do strategies differ? david: well, obviously different in terms of art that you look at verses art that you are going to listen to, but also because at carnegie there's been a lot more with collaboration more than at the art museum. the thing they are similar about his believing and taking big risks, thinking you can't get there unless you take risks. by the way, that is a part of the struggle a lot of arts organizations right now. operas, symphonies, trying to get past the canon, which she says are, at one point he said

they are old white men. katie: really enjoyed that conversation. who else is coming up on wall street? david: we have a professor of economics from harvard and we are going to ask about the ports that some people around donald trump are planning to take away the independence of the fed if they get into office, so we will be discussing that tomorrow. katie: bombshell reporting there from "the wall street journal." looking forward to that reaction there. thank you, david. this is bloomberg. ♪

katie: all right, let's take a look at stocks hitting highs on this monday morning. royal caribbean hitting a 52-week high after deutsche bank raises its price target on the cruising giant. domino's, hitting highs after

the pizza chain saw stronger-than-expected sales growth, good for a 6.3% rally on the heels of earnings. santander, a sad story, hitting a high earlier, but then the enthusiasm, as you can see, faded a bit, currently down 2%. if you broaden out, it's a quiet day for the overall market. the s&p 500 is higher, but not by much, talking about .3%. a big week for the equity market , the benchmark best performance of 2024 seemingly out of nowhere . that's what it felt like to me. more earnings this week with the fed on wednesday. it will be fun to see how those lines wiggle around. coming up, we have anthony noto joining us next on "bloomberg technology." that does it work "bloomberg markets."

i'm katie greifeld. this is bloomberg.

and they're all coming? those who are still with us, yes. grandpa! what's this? your wings.

light 'em up! gentlemen, it's a beautiful... ...day to fly.

>> from the heart of where innovation, money, and power collide in silicon valley, this is "bloomberg technology," with caroline hyde and ed ludlow. catherine: i'm caroline hyde at bloomberg's world headquarters in new york. ed: i'm ed ludlow. catherine: coming, tesla gets tentative approval for a driving system in china. ed: paramount expected to oust its ceo ahead of earnings. catherine: sofi shares drop after q2 guidance fails.