WEBVTT - Hawks and Doves Clash Clouds Outlook for Rates 0:00:01.360 --> 0:00:05.680 This is Bloomberg Business Wait inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.239 --> 0:00:24.159 The FMC began it's today FED meeting. Of course, we 0:00:24.200 --> 0:00:27.520 get the decision tomorrow. So let's see what doctor Stephen 0:00:27.600 --> 0:00:29.880 Skanky has to say. He's back with US Chief Economic 0:00:29.920 --> 0:00:31.960 Advisor at Keele Point. He's a former US Treasury in 0:00:32.000 --> 0:00:35.320 White House National Security Council member. He's on Zoom in Washington, 0:00:35.400 --> 0:00:39.440 DC and Steve Matthews writing about the FED and the 0:00:39.440 --> 0:00:42.960 clash of FED hawks and doves deepening Steve, of course 0:00:43.000 --> 0:00:46.760 his Bloomberg News economics reporter, Steve Matthews in our DC bureau. 0:00:47.360 --> 0:00:52.560 And let's just set the backdrop, doctor Skanky. Let me 0:00:52.600 --> 0:00:55.720 start with you. What are you anticipating or what's important 0:00:55.720 --> 0:00:57.600 about the FED meeting to mar because we pretty much 0:00:57.600 --> 0:01:00.800 expect we're going to get another quarter point rate hike 0:01:01.720 --> 0:01:02.480 unanimous or not. 0:01:04.959 --> 0:01:08.039 Yeah, I think that's right, Carol, And it is great 0:01:08.040 --> 0:01:12.360 to have you back, Tim, and congratulations, thank you, you know, 0:01:13.080 --> 0:01:13.840 on your family. 0:01:14.560 --> 0:01:17.160 He's helping out the economy. He's helping out the economy. 0:01:18.080 --> 0:01:21.960 That's wonderful. That's exactly what we need. And you know, 0:01:22.120 --> 0:01:27.360 build up that later force potential down the way, all. 0:01:27.240 --> 0:01:28.440 At the service of the economy. 0:01:28.480 --> 0:01:28.840 Thank you. 0:01:28.880 --> 0:01:30.920 Also, truly, though, Carrol, you make a funny point on 0:01:31.000 --> 0:01:32.880 supporting a local economy. I mean, I really saw the 0:01:32.880 --> 0:01:35.840 balance of spending shift from being in midtown right to 0:01:36.080 --> 0:01:38.039 being in low local neighborhood where it's like, you know, 0:01:38.160 --> 0:01:41.119 Tuesday through Friday is like a weekend during the week. 0:01:41.160 --> 0:01:42.760 I bet right. Because of all this the stuff you 0:01:42.760 --> 0:01:46.600 guys were all right, So doctor Skanky, Steve Skanky, what 0:01:46.640 --> 0:01:49.720 do you expect the Fed? What's important about tomorrow's decision? 0:01:49.800 --> 0:01:55.000 Well, I think the twenty five basis point increase, which 0:01:55.080 --> 0:01:57.480 which takes it to a twenty two year high on 0:01:57.560 --> 0:02:02.280 the FED funds rate, is baked in, and I think 0:02:02.280 --> 0:02:06.480 it's also probably highly likely that they're going to continue 0:02:06.480 --> 0:02:10.080 to indicate a bias toward further increases. This is the 0:02:10.160 --> 0:02:16.600 hawkish view coming out absence significant improvement on inflation. And 0:02:16.639 --> 0:02:18.639 the thing is they can do that. I mean, they 0:02:18.680 --> 0:02:23.360 truly are emboldened. The hawks in particular are inbolded by 0:02:23.360 --> 0:02:26.040 the fact that we stick out a robust labor market. 0:02:26.520 --> 0:02:30.080 We still have about a two to one ratio of 0:02:30.200 --> 0:02:35.720 vacancies to unemployed. There's a positive earnings outlook. Over the 0:02:35.720 --> 0:02:43.160 next twelve months, the earnings decline typically in this this 0:02:43.240 --> 0:02:46.919 sort of environment would be earnings growth would be down 0:02:46.960 --> 0:02:52.160 eighteen percent. It's down about six strong consumer balance sheet. 0:02:52.760 --> 0:02:56.880 You probably saw that the consumer net worth is bounced 0:02:56.919 --> 0:02:59.840 back up to one hundred and fifty two trillion, which 0:02:59.880 --> 0:03:03.480 is what it was at its eye, and the S 0:03:03.520 --> 0:03:06.519 and B is up eighteen percent year to date. What 0:03:06.840 --> 0:03:10.680 has the FED got to lose by not getting head 0:03:10.720 --> 0:03:14.040 faked again on declining inflation? 0:03:14.480 --> 0:03:16.040 Okay, so sure they're going to be. 0:03:16.000 --> 0:03:22.120 Hawkysh there's no percentage for them to look like their sophety. 0:03:22.280 --> 0:03:24.080 Well, let's talk about that divide. And for that we 0:03:24.120 --> 0:03:27.400 turned to Bloomberg News economics reporter Steve Matthews. From Steven 0:03:27.480 --> 0:03:30.920 to Steve, he's in our DC bureau. Steve, you wrote 0:03:30.960 --> 0:03:34.840 about the cracks inside the FED deepening. Right now, what 0:03:34.880 --> 0:03:35.880 are the doves saying? 0:03:37.200 --> 0:03:37.240 So? 0:03:38.040 --> 0:03:42.120 I think the big picture here is everyone was hawkish 0:03:42.160 --> 0:03:45.440 over really the last year and really last year in 0:03:45.520 --> 0:03:50.720 three months because we had high inflation, we had low unemployment, 0:03:51.480 --> 0:03:54.960 and so there was great unity around the FOMC table. 0:03:55.400 --> 0:03:59.280 And now as we're reaching the end of the hiking cycle, 0:03:59.720 --> 0:04:02.520 which you know, a lot of Wall Street believes that 0:04:02.600 --> 0:04:06.080 tomorrow's hike is going to be the very last one, 0:04:07.200 --> 0:04:10.240 you're starting to see a split. On the side of 0:04:10.280 --> 0:04:16.480 the hawks, people like Chris Waller, the governor, and Jim Bullard, 0:04:16.520 --> 0:04:21.880 who's retiring, Loretta Mester of Cleveland. They are saying, you know, 0:04:22.520 --> 0:04:25.880 we want to avoid the nineteen seventies inflation again, and 0:04:25.960 --> 0:04:28.840 we're going to do whatever's necessary, and we'd rather err 0:04:28.839 --> 0:04:31.200 on the side of doing too much, and we have 0:04:31.360 --> 0:04:34.240 too hot of a labor market, and until that starts 0:04:34.279 --> 0:04:37.960 to show some cracks, we're going to have too much inflation. 0:04:38.279 --> 0:04:42.000 On the side of the doves, people like Raphael Bostick 0:04:42.520 --> 0:04:47.000 and Austin Goules. Bostick from the Atlanta Fed, Gulesby from 0:04:47.040 --> 0:04:51.800 the Chicago Fed are saying, basically, let's not overdo it. 0:04:52.640 --> 0:04:56.080 And you know what, the problem with the inflation over 0:04:56.160 --> 0:04:58.320 the last two years is not that we've had too 0:04:58.360 --> 0:05:02.400 much demand. It that, you know, we've had a pandemic 0:05:02.520 --> 0:05:05.000 and the pandemic has changed the economy, and you've had 0:05:05.040 --> 0:05:10.120 all supply disruptions and all these you know, disruptive changes, 0:05:10.279 --> 0:05:13.520 and that's what inflation is about. So we don't really 0:05:13.600 --> 0:05:15.600 need necessarily have to overdo it. 0:05:15.480 --> 0:05:17.480 It feels like Goldilocks and the three Feds, to be 0:05:17.560 --> 0:05:20.160 quite honest with you, I mean, what's great is too 0:05:20.279 --> 0:05:22.440 I don't know if you guys read the editorial by 0:05:22.720 --> 0:05:25.720 Bloomberg editors. It's a Bloomberg opinion piece, but they remind 0:05:25.800 --> 0:05:27.880 us that if you look at the so called core CPO, 0:05:28.040 --> 0:05:30.279 still four point eight percent higher in June than a 0:05:30.360 --> 0:05:34.560 year ago. Right, And so if you know, Steve Skanky, 0:05:34.800 --> 0:05:39.080 if the FED is truly committed to two percent, and 0:05:39.120 --> 0:05:41.280 this opinion piece says, the FED shouldn't settle for above 0:05:41.320 --> 0:05:45.000 target inflation. If two percent is the real target, then 0:05:45.040 --> 0:05:46.800 we have to be careful, or the FED has to 0:05:46.800 --> 0:05:52.720 be careful about pulling off the brakes right too early 0:05:53.600 --> 0:05:56.359 and then inflation rearing its ugly head again, Housing starting 0:05:56.440 --> 0:06:00.200 to come back again, wage pressures, wage inflation still an issue. 0:06:02.320 --> 0:06:04.560 Well, that's right, but when we look at the June 0:06:04.640 --> 0:06:07.800 CPI number of core prices were up only zero point 0:06:07.839 --> 0:06:10.640 one six month over a month, which is equivalent to 0:06:11.720 --> 0:06:15.520 slightly less than two percent on an annualized basis, And 0:06:15.600 --> 0:06:20.200 I'd be the first to caution against trying to extrapolate 0:06:20.240 --> 0:06:23.440 too much from a one month move, but it's an 0:06:23.440 --> 0:06:29.120 indication that they can actually achieve their goal, and as 0:06:29.160 --> 0:06:33.000 I said, there's no gain for them to back off 0:06:33.040 --> 0:06:37.400 from it at this point, and given how well other 0:06:37.560 --> 0:06:42.320 things are doing, I think they will air on the 0:06:42.400 --> 0:06:46.400 side of certainly hawkish rhetoric now. I also happen to 0:06:46.440 --> 0:06:50.159 think that the twenty five BIPs announced tomorrow will be 0:06:50.240 --> 0:06:54.280 their last, but I don't think that they're going to 0:06:54.360 --> 0:06:57.440 say that it's their last. They want to keep the 0:06:57.560 --> 0:07:02.479 attention focused on their mandate and their plan to bring 0:07:02.520 --> 0:07:07.240 it down, and so I think that's why. Notwithstanding and 0:07:07.279 --> 0:07:11.760 I don't disagree with Steve Matthew's observations about the split, 0:07:11.840 --> 0:07:14.400 we even saw a little bit of that with the 0:07:14.440 --> 0:07:18.480 San Francisco FED president in pointing out how much the 0:07:18.560 --> 0:07:22.200 Fed had done already when you add the quantitative tightening 0:07:22.240 --> 0:07:30.360 on top of the interest rate increases. But they don't 0:07:30.360 --> 0:07:32.840 want to look like they're giving up on it yet, 0:07:33.600 --> 0:07:35.040 even though I don't think we're going to see any 0:07:35.080 --> 0:07:36.400 more interest rate increases. 0:07:36.680 --> 0:07:39.360 So Steve Matt oh sorry, ah, no, no, no, go ahead, 0:07:39.400 --> 0:07:39.800 just quickly. 0:07:39.880 --> 0:07:40.240 Yeah. 0:07:40.560 --> 0:07:42.720 The other thing that's out there is over the last 0:07:42.720 --> 0:07:46.920 felve months we've had M two money supply down four percent. 0:07:47.040 --> 0:07:52.200 We haven't seen that since the nineteen thirties now, and 0:07:52.360 --> 0:07:56.640 we know that that has on average an eighteen percent lag. 0:07:58.520 --> 0:08:02.679 There's in the economics profession, there's a lot of folks 0:08:02.680 --> 0:08:06.360 that say, oh, money supply doesn't matter anymore. But I 0:08:06.400 --> 0:08:09.040 don't think it's a coincidence that after we raise the 0:08:09.080 --> 0:08:13.960 money supply thirty four percent in the immediate post pandemic period, 0:08:14.600 --> 0:08:20.440 that we got inflation at nine percent, you know, fifteen 0:08:20.440 --> 0:08:24.000 months ago. Yeah, and when you look at when this 0:08:26.080 --> 0:08:32.080 basically started, about March or April of next year, is 0:08:32.080 --> 0:08:35.440 is when we would expect when we could expect that 0:08:35.559 --> 0:08:36.960 to start to bite. 0:08:37.200 --> 0:08:40.560 Right, Hey, hang on a six, Steve, just twenty five seconds. 0:08:40.559 --> 0:08:44.280 I say for you, unemployment doesn't it have to go 0:08:44.440 --> 0:08:46.520 up though for inflation to come down very quickly. 0:08:48.040 --> 0:08:51.360 There's a debate about that. You know, certainly the center 0:08:51.600 --> 0:08:54.360 of the committee, including Chair Pale, believes it does have 0:08:54.440 --> 0:08:57.600 to go up, that it's that we've overshot full employment 0:08:58.040 --> 0:08:59.960 and we need to get at least back to maybe 0:09:00.160 --> 0:09:03.640 four percent unemployment. Right, but you know, there are certainly 0:09:03.720 --> 0:09:06.320 people on the committee who say, you know, the Phillips 0:09:06.360 --> 0:09:11.680 curve relationship between unemployment and inflation is dad. We'll have 0:09:11.760 --> 0:09:12.200 to see. 0:09:12.280 --> 0:09:15.559 All right, Well, great story to Steve Matthews, economics reporter 0:09:15.559 --> 0:09:18.559 at Bloomberg News, doctor Steve Skanky, chief economic advisor at 0:09:18.640 --> 0:09:21.720 kel Point, and you are listening and watching Bloomberg Radio. 0:09:22.360 --> 0:09:25.959 You're listening to the Bloomberg Business Week podcast. Catch us 0:09:25.960 --> 0:09:29.320 live weekday afternoons from three to six Eastern Listen on 0:09:29.360 --> 0:09:33.400 Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app, 0:09:33.679 --> 0:09:35.959 or watch us live on YouTube. 0:09:36.640 --> 0:09:38.720 All right, we want to go back though to Microsoft. 0:09:38.760 --> 0:09:41.800 We just talked about their earnings coming out. As remain 0:09:41.880 --> 0:09:44.079 reminded me the guidance on the earnings call, that's pretty 0:09:44.080 --> 0:09:47.120 typical for the company. The stock now call it pretty 0:09:47.160 --> 0:09:49.440 much flat in the aftermarket, but we've seen it bouncing 0:09:49.480 --> 0:09:51.760 around in a big way with us right now to 0:09:51.800 --> 0:09:54.480 talk about it is CFR a Research senior equity analyst. 0:09:54.559 --> 0:09:56.959 Angelo's you know on zoom in New York City. And 0:09:57.000 --> 0:10:00.520 then Bloomberg Intelligence Senior Tech Analyst Ana Agrana Our Bloomberg 0:10:00.559 --> 0:10:03.760 Interactive Brokers Studio Anraag. I want to go straight to 0:10:03.840 --> 0:10:06.040 you first. I was listening kind of glued to surveillance 0:10:06.080 --> 0:10:08.120 this morning. What do you make of Microsoft? 0:10:08.320 --> 0:10:11.160 I think everything is slightly above what people were expecting. 0:10:11.200 --> 0:10:12.880 But the big question is what is going to be 0:10:12.920 --> 0:10:15.960 the cloud guidance for next quarter? And you know, does 0:10:16.000 --> 0:10:18.320 it mark the I would say, the bottom in the 0:10:18.360 --> 0:10:21.600 declining root of cloud? Or are we going to look 0:10:21.600 --> 0:10:23.800 at another quarter or so of declining growth and then 0:10:23.880 --> 0:10:25.959 we see a U turn because of all the AI 0:10:26.040 --> 0:10:27.400 workloads that are going to come up. 0:10:27.480 --> 0:10:29.240 Remind us what's going on with cloud in terms of 0:10:29.440 --> 0:10:31.120 is it business spending just pulling back or what? 0:10:31.360 --> 0:10:33.000 Yeah, it is? That is what it is. A law 0:10:33.080 --> 0:10:37.120 of larger numbers added with very pessimistic corporate tite spending 0:10:37.480 --> 0:10:40.000 last year. As you grow forty six percent this year, 0:10:40.080 --> 0:10:42.120 now it seems you know, it is around the twenty 0:10:42.160 --> 0:10:45.120 seven percent mark. The question is the next quarter is 0:10:45.160 --> 0:10:46.839 it going to be twenty eight or is it going 0:10:46.840 --> 0:10:48.839 to be twenty five and below? So that's where we 0:10:49.360 --> 0:10:50.199 are at this point. 0:10:50.320 --> 0:10:52.640 I just give us an idea hon rog of what 0:10:52.679 --> 0:10:55.640 happens with with Microsoft and AI and what that looks 0:10:55.679 --> 0:10:58.319 like from a user perspective. I mean, we've all been 0:10:58.360 --> 0:11:00.640 there and I think played with Chatchip. We see the 0:11:00.679 --> 0:11:03.959 way when we're typing email on Gmail, it does autocomplete. 0:11:04.080 --> 0:11:08.920 But when you power services and software for so many 0:11:09.000 --> 0:11:11.920 Fortune five hundred companies, how do you integrate AI seamlessly 0:11:11.920 --> 0:11:12.920 into those products? 0:11:13.080 --> 0:11:15.760 So first and foremost, when you look at anything generative AI, 0:11:15.880 --> 0:11:18.559 Microsoft is the number one choice for a lot of 0:11:18.600 --> 0:11:20.640 the software venders. I mean when you look at the 0:11:20.960 --> 0:11:23.800 when you want to play AI in generative AI. You know, 0:11:23.800 --> 0:11:25.440 when you want a hard when you want the chip, 0:11:25.440 --> 0:11:27.280 you're going to go to Nvidia. But when you come 0:11:27.320 --> 0:11:31.080 to software, Microsoft has a lead in terms of intellectual capacity. 0:11:31.080 --> 0:11:34.600 What they have shown no matter compared to everybody else. 0:11:34.880 --> 0:11:37.079 Now they have to show that they can add revenue 0:11:37.120 --> 0:11:39.400 to it, they can add more cloud usage to it, 0:11:39.480 --> 0:11:42.840 et cetera. In the long run, what you mentioned, companies 0:11:42.840 --> 0:11:46.319 are going to use this technology to power their internal productivity. 0:11:46.840 --> 0:11:49.360 But again that could take a while. So we really 0:11:49.400 --> 0:11:51.880 are looking today to see whether we are seeing an 0:11:51.920 --> 0:11:55.520 increase in workloads on their cloud portfolio. Or are we 0:11:55.640 --> 0:11:58.840 looking at corporate spending going down and offsetting any of 0:11:58.880 --> 0:11:59.719 those positives? 0:12:00.080 --> 0:12:02.199 Right, Angela's you know, come on in on the conversation. 0:12:02.280 --> 0:12:04.920 In terms of what we saw from Microsoft. 0:12:05.640 --> 0:12:08.520 Yeah, no, I think as far as Microsoft is concerned, 0:12:08.520 --> 0:12:10.760 it was pretty much in line with expectations. I mean, 0:12:11.360 --> 0:12:14.320 of course, you know, what we're all kind of interested 0:12:14.400 --> 0:12:17.680 about is kind of how AI is progressing right here 0:12:17.720 --> 0:12:19.920 with with the company. I mean, clearly when you kind 0:12:19.920 --> 0:12:21.800 of think of, you know, the super seven that are 0:12:21.840 --> 0:12:24.600 out there in terms of the biggest bell weathers, you know, 0:12:24.640 --> 0:12:27.319 we think the best ways to play the AI story 0:12:27.440 --> 0:12:29.440 right now continue to be in video as well as 0:12:29.640 --> 0:12:31.480 as Microsoft because those are the ones that have been 0:12:31.520 --> 0:12:35.120 able to kind of really show the ability to monetize 0:12:35.160 --> 0:12:37.480 more kind of you know, near term in nature. So 0:12:38.040 --> 0:12:40.000 you know, clearly it's all going to be about, you know, 0:12:40.160 --> 0:12:43.760 the story that Microsoft tells on the earnings call here today. 0:12:43.800 --> 0:12:46.400 But that being set, I mean, our view here as 0:12:46.400 --> 0:12:48.640 far as my Microsoft is concerned, is they've got so 0:12:48.679 --> 0:12:51.520 many drivers as far as the AI story is concerned. 0:12:51.679 --> 0:12:55.080 Their tentacles aren so many different things that you know, 0:12:55.120 --> 0:12:57.840 if you see any type of significant pullback here after hours, 0:12:57.920 --> 0:12:59.560 you definitely want to be a buyer of the shares. 0:12:59.679 --> 0:13:02.560 Angel Who should we be concerned about in terms of 0:13:02.600 --> 0:13:05.560 losing not market share, but not being on AI bandwagon. 0:13:05.600 --> 0:13:07.880 I mean, I hear of Microsoft Azure. I wonder, okay, well, 0:13:07.920 --> 0:13:11.160 who's the biggest cloud player? We know, Amazon's Amazon Web 0:13:11.200 --> 0:13:14.199 Services is do they have what it takes to compete 0:13:14.240 --> 0:13:15.000 when it comes to AI? 0:13:15.880 --> 0:13:19.000 Yeah, listen, and I don't personally cover Amazon, but I 0:13:19.040 --> 0:13:20.760 will tell you this. I mean, we do think that 0:13:20.840 --> 0:13:24.120 you know, Microsoft as well as Alphabet, has a distinct advantage, 0:13:24.760 --> 0:13:27.120 you know, given kind of you know, their exposure within 0:13:27.200 --> 0:13:29.760 the enterprise space and some of the tools that they're 0:13:29.840 --> 0:13:32.439 kind of rolling out on the AI side, I think 0:13:32.679 --> 0:13:36.760 relative to maybe you know, what AWS has to offer 0:13:36.800 --> 0:13:39.840 out there, and just given the size of AWS relative 0:13:39.920 --> 0:13:42.720 to the others, specifically on Alphabet side of things, we 0:13:42.800 --> 0:13:46.320 do think the other two in terms of Alphabet and Microsoft, 0:13:46.360 --> 0:13:48.520 are likely going to be shared takers here over the 0:13:48.520 --> 0:13:50.720 next twelve months at least. I'm a cloud side of things. 0:13:50.760 --> 0:13:53.600 Anreg you mentioned about, you know, the cloud growth that 0:13:53.640 --> 0:13:56.720 we're seeing, and they're talking about a twenty six percent number, 0:13:56.920 --> 0:13:58.840 the number that we got a year ago. Was that 0:13:58.960 --> 0:14:01.599 just off the charts, So that's not a fair comparison 0:14:01.720 --> 0:14:03.120 or no. 0:14:02.480 --> 0:14:04.480 No, no, they have been growing much faster than the 0:14:04.559 --> 0:14:07.520 year before, and that's and that's also a function of 0:14:08.120 --> 0:14:12.760 Microsoft's cloud portfolio is much smaller than Amazon's, so it's 0:14:12.880 --> 0:14:15.560 just a matter of them catching up increasing, you know, 0:14:15.600 --> 0:14:17.920 moving a lot more of the on premise workloads onto 0:14:17.960 --> 0:14:21.760 their portfolio. So it's the growth story for Microsoft Cloud 0:14:21.800 --> 0:14:24.560 has been there. Last year we saw an unusual slow 0:14:24.600 --> 0:14:26.800 down or the last twelve months. The question is how 0:14:26.800 --> 0:14:28.840 long is this slowdown going to last? You know, in 0:14:28.880 --> 0:14:30.680 our view, it's going to be either this quarter or 0:14:30.760 --> 0:14:32.520 next and then we should start see a U turn. 0:14:32.600 --> 0:14:34.560 What I don't get is, I mean everything's in the cloud. 0:14:34.600 --> 0:14:36.560 I throw more stuff in the cloud. Everybody throws more 0:14:36.600 --> 0:14:39.000 stuff in the cloud. So when we see a little 0:14:39.000 --> 0:14:39.760 bit so help me. 0:14:40.160 --> 0:14:42.280 So the consumer side, I get it. All my pictures 0:14:42.280 --> 0:14:43.520 are in cloud, right, But when you. 0:14:43.440 --> 0:14:45.240 Look at corporate, it like another expansion. 0:14:46.800 --> 0:14:50.080 When you look at corporatite spending less than twenty percent 0:14:50.080 --> 0:14:52.280 of the workloads, less than thirty percent of the workloads, 0:14:52.320 --> 0:14:56.000 depending on how you you know, define it, the majority 0:14:56.040 --> 0:14:59.080 of corporatite spending is on premise. So we have a 0:14:59.640 --> 0:15:00.840 decade of growth over. 0:15:00.720 --> 0:15:03.240 Here, which is does it stay on premise for security reasons? 0:15:03.280 --> 0:15:04.120 Does it stay on premise? 0:15:04.160 --> 0:15:04.200 No? 0:15:04.360 --> 0:15:07.320 No, No, it's just it's just lethargy. It's just legacy. 0:15:07.360 --> 0:15:10.440 I you spend twenty thirty billion dollars off you know, 0:15:10.480 --> 0:15:12.480 I'm just saying, let's say a big bank over the 0:15:12.520 --> 0:15:15.120 years just to develop a lot of these applications in house, 0:15:15.280 --> 0:15:16.840 it's just going to take time for that to move. 0:15:17.040 --> 0:15:19.680 Hey, Angela, what's the number one question or come on 0:15:19.760 --> 0:15:20.600 in on the conversation. 0:15:22.200 --> 0:15:24.360 Yeah, No, I mean as far as kind of what 0:15:24.400 --> 0:15:27.840 we're looking for, at least for Microsoft here, it's really 0:15:27.960 --> 0:15:31.240 kind of, you know, to the extent to what extent 0:15:31.240 --> 0:15:33.480 are they going to be able to monetize you know, 0:15:33.520 --> 0:15:36.160 the AI revenue here in the September quarter as well 0:15:36.160 --> 0:15:38.680 as December quarter if you're kind of you know, more 0:15:38.720 --> 0:15:41.840 near term oriented in nature, and you know, our view 0:15:41.840 --> 0:15:44.680 again is when you kind of look at the some 0:15:44.840 --> 0:15:47.920 of the commentary they provided in terms of co pilot 0:15:48.040 --> 0:15:49.560 last week, in terms of it, you know, coming in 0:15:49.640 --> 0:15:52.320 at a price point about thirty dollars per seed, as 0:15:52.320 --> 0:15:55.200 well as kind of again those cloud opportunities kind of 0:15:55.800 --> 0:15:58.360 you know, even potential to the search extension potential that 0:15:58.400 --> 0:16:00.760 they've got on that side of things as well. We 0:16:00.800 --> 0:16:03.680 do expect revenue to accelerate here in the September quarter 0:16:03.720 --> 0:16:06.600 and therefore and you know also in the December quarter. 0:16:06.840 --> 0:16:09.520 If you don't see that, I think really you know, 0:16:09.600 --> 0:16:13.240 that's where the stock could really take a hit. And 0:16:13.320 --> 0:16:15.640 you know, so that's what we're really kind of looking 0:16:15.640 --> 0:16:18.200 for as far as you know, what to expect and 0:16:18.280 --> 0:16:20.520 how to kind of look at the stock here going 0:16:20.960 --> 0:16:22.200 you know, through this their news. 0:16:22.480 --> 0:16:24.840 Yeah, I mean before I mean at the close, the 0:16:24.840 --> 0:16:27.120 stock was up forty six percent so far this year. 0:16:27.200 --> 0:16:30.160 Right now we're seeing shares of Microsoft just trending a 0:16:30.200 --> 0:16:32.520 little bit lower in the aftermarket, down about one point 0:16:32.560 --> 0:16:35.080 five percent. All right, guys, thank you so much, So 0:16:35.160 --> 0:16:39.480 appreciate it. Angelo Zino, Senior Equity analyst evert CFR Research, 0:16:40.160 --> 0:16:42.440 joining us in New York City and Agrana right here 0:16:42.440 --> 0:16:45.800 in our studio. He is senior technology analyst of Bloomberg Intelligence. 0:16:47.680 --> 0:16:51.240 You're listening to the Bloomberg Business Week podcast. Catch us 0:16:51.280 --> 0:16:55.400 live weekday afternoons from three to six Eastern on Bloomberg Radio, 0:16:55.480 --> 0:16:58.800 the Bloomberg Business app, and YouTube. You can also listen 0:16:58.880 --> 0:17:02.000 live on Amazon Alexa from our flagship New York station 0:17:02.320 --> 0:17:05.240 Jo Say Alexa playing Bloomberg eleven thirty. 0:17:07.359 --> 0:17:10.120 So we're gonna shift a little bit from earnings, you know, Tim, 0:17:10.160 --> 0:17:12.359 We've been talking a lot about the current cur cover 0:17:12.640 --> 0:17:16.280 of Bloomberg Business Week. It's all about WW weight Watchers 0:17:16.359 --> 0:17:18.840 and their new strategy where they are really banking big 0:17:18.880 --> 0:17:21.520 time on this kind of new class of weight loss 0:17:21.560 --> 0:17:24.959 drugs that we're talking about ZEBEK and WEGOV wegovy Am 0:17:24.960 --> 0:17:27.679 I saying it right, I was going to ask you, Yeah, 0:17:27.720 --> 0:17:30.679 And so we wanted to take a little bit of 0:17:30.720 --> 0:17:33.840 a bigger look at what's going on with obesity because 0:17:33.880 --> 0:17:38.080 we have definitely seen the economic worldwide economic impact of 0:17:38.119 --> 0:17:41.040 obesity and excess body weight expected to more than double 0:17:41.080 --> 0:17:43.640 to four point two seven trillion and twenty thirty five 0:17:43.680 --> 0:17:46.200 from twenty twenty levels. I mean, there is a big 0:17:46.240 --> 0:17:50.520 cost healthcare wise, productivity wise, and just you know, health 0:17:50.520 --> 0:17:51.600 wise for individuals. 0:17:51.800 --> 0:17:54.280 Fortunately, this afternoon, we've got doctor Angela Fitch with us, 0:17:54.280 --> 0:17:56.359 the co founder and chief medical officer at the Boston 0:17:56.440 --> 0:18:00.000 based healthcare practice known well President of the Obesity Medicine 0:18:00.080 --> 0:18:03.840 Association OMA. It's a network and networking group for healthcare providers. 0:18:03.880 --> 0:18:06.720 Doctor Fitch is an assistant professor of medicine at Harvard. 0:18:07.119 --> 0:18:09.679 Joined us via zoom from Boston. It's good to have 0:18:09.720 --> 0:18:12.480 you with us. Doctor, Thank you so much for joining us. 0:18:12.840 --> 0:18:15.040 So talk a little bit about Carol laid this out 0:18:15.080 --> 0:18:17.720 for us, but obesity not just a problem for health 0:18:17.720 --> 0:18:20.200 and the problem for healthcare. Lay out the problem why 0:18:20.240 --> 0:18:22.000 it's just such a problem for society and not just 0:18:22.040 --> 0:18:22.920 America right now. 0:18:24.359 --> 0:18:26.919 Yes, I think Carol did an amazing job of highlighting that. 0:18:27.040 --> 0:18:29.720 Not only that, you know, so many people are focusing 0:18:29.760 --> 0:18:32.199 on the cost of medication right now, but there's a 0:18:32.359 --> 0:18:35.800 huge cost to not treating obesity as well. The WHO 0:18:36.080 --> 0:18:38.840 a few months ago published the World Health Organization published 0:18:38.880 --> 0:18:43.280 a announcement saying that we are spending as much on 0:18:43.400 --> 0:18:47.239 obesity as we did on COVID every year. So, in 0:18:47.240 --> 0:18:49.680 other words, the COVID pandemic, the cost of the COVID 0:18:49.720 --> 0:18:52.439 pandemic across the world is what is also spent on 0:18:52.480 --> 0:18:55.200 the disease of obesity. So it's not trivial. And now 0:18:55.200 --> 0:18:58.400 that we finally have effective treatment for it, we really 0:18:58.480 --> 0:19:00.639 need to find a way to work together. They're at 0:19:00.720 --> 0:19:03.679 all levels to try to help people get access to 0:19:03.720 --> 0:19:04.120 this care. 0:19:04.200 --> 0:19:06.080 What do you think of these weight loss drugs? O Zebek? 0:19:06.200 --> 0:19:08.680 I know people individuals who are taking them. Some are 0:19:08.680 --> 0:19:11.880 diabetics and it's a game changer in terms of their 0:19:12.000 --> 0:19:15.040 levels really kind of evening out and they're losing weight. 0:19:15.119 --> 0:19:17.399 And then we know the celebrity stories and all these 0:19:17.400 --> 0:19:19.080 people who are taking it to just lose a lot 0:19:19.080 --> 0:19:21.119 of weight. But what do you think of this class 0:19:21.119 --> 0:19:21.680 of drugs? 0:19:22.840 --> 0:19:25.960 So in our OBC treatment space, you know the five 0:19:25.960 --> 0:19:28.680 thousand clinicians that are members of our OBSCD Medicine Association 0:19:28.760 --> 0:19:30.800 that I'm the president of right now and honored to be. 0:19:30.880 --> 0:19:33.439 So you know, all of us are very excited about 0:19:33.600 --> 0:19:36.800 today and the future of weight management. And we like 0:19:36.840 --> 0:19:40.200 to talk about these drugs as antiobesit pharmacotherapy too, right 0:19:40.280 --> 0:19:42.840 because they're not just about weight loss. We're talking about 0:19:42.880 --> 0:19:45.840 treating a disease of obesity, which isn't just focused on 0:19:45.880 --> 0:19:48.320 a number on the scale. There's many reasons why people 0:19:48.400 --> 0:19:50.440 want to lose weight, to be able to be more mobile, 0:19:50.680 --> 0:19:53.639 to be able to do better at their jobs. For 0:19:53.720 --> 0:19:56.320 some people their livelihood depends on it. So again it's 0:19:56.359 --> 0:20:00.000 a very important thing to consider them as antiobesc pharmace 0:20:00.040 --> 0:20:02.120 what there be, and that is really the week gov 0:20:02.359 --> 0:20:04.960 right because we govy is approved for weight management, while 0:20:04.960 --> 0:20:08.040 ozembic is a proved for diabetes treatment. And so again 0:20:08.080 --> 0:20:10.080 we do want to focus on the right language. You know, 0:20:10.160 --> 0:20:13.120 as we talk about these treatment strategies, Well, this. 0:20:13.160 --> 0:20:15.600 Is just one strategy when it comes to treatment strategies. 0:20:15.600 --> 0:20:17.439 What are other treatment But it's one that's getting a 0:20:17.480 --> 0:20:19.520 lot of attention right now for a lot of reasons. 0:20:19.720 --> 0:20:22.880 What are the other strategies that people should be focused on. 0:20:23.680 --> 0:20:24.360 Well, again, this. 0:20:24.400 --> 0:20:26.960 Is all part of a comprehensive care pathway, right for 0:20:27.040 --> 0:20:31.320 any chronic disease, whether that's diabetes, hypertension, heart disease. You know, 0:20:31.359 --> 0:20:34.200