WEBVTT - Audible Gasps in Chamber, Republicans Dazed After Obamacare Vote: Dennis 0:00:04.760 --> 0:00:08.080 Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 0:00:08.119 --> 0:00:11.200 Along with my co host Lisa Abramowitz. Each day we 0:00:11.280 --> 0:00:14.480 bring you the most important, noteworthy, and useful interviews for 0:00:14.520 --> 0:00:16.560 you and your money, whether you at the grocery store 0:00:16.800 --> 0:00:19.960 or the trading floor. Find the Bloomberg p L Podcast 0:00:20.000 --> 0:00:29.560 on iTunes, SoundCloud and at Bloomberg dot com. Apparently, our 0:00:29.600 --> 0:00:33.960 political backdrop is a made for TV and big screen movie. 0:00:34.240 --> 0:00:38.120 Last night did not disappoint. Early morning hours, there was 0:00:38.159 --> 0:00:42.720 a vote on the skinny repeal of Obamacare. It failed 0:00:42.720 --> 0:00:46.280 with a dramatic thilmbs down from John McCain, who came 0:00:46.320 --> 0:00:50.400 back up from Arizona despite his new diagnosis of brain 0:00:50.479 --> 0:00:53.920 cancer to vote down and crush this bill. Here to 0:00:53.960 --> 0:00:56.920 discuss Zach trac Er, healthcare reporter for Bloomberg News in 0:00:56.920 --> 0:00:59.000 our Bloomberg eleven three oh studio, as well as Stephen 0:00:59.040 --> 0:01:02.520 Dennis Center order for Bloomberg News. Who is on Capitol 0:01:02.600 --> 0:01:06.000 Hill and who is at the proceedings last night or 0:01:06.040 --> 0:01:08.360 I should I say today? Early this morning? I'm amazed 0:01:08.360 --> 0:01:11.520 you're still up and uh and conscious at this point, Steve, 0:01:11.720 --> 0:01:14.200 can you give us a sense of what it was 0:01:14.319 --> 0:01:17.160 like on the floor in the moments leading up to 0:01:17.240 --> 0:01:20.880 the momentous John McCain thumbs down, as well as just 0:01:21.360 --> 0:01:25.199 afterwards as everyone tried to digest what this failure meant. Yeah, 0:01:25.240 --> 0:01:27.560 so it was a really insane night. Um talked to 0:01:27.640 --> 0:01:30.520 John McCain several times leading up to him walking into 0:01:30.560 --> 0:01:34.039 the chamber, and he had told us and other reporters 0:01:34.080 --> 0:01:36.680 about two hours earlier that he was prepared to vote 0:01:36.680 --> 0:01:39.360 no if he didn't get at these assurances from the 0:01:39.400 --> 0:01:43.400 House and he wasn't necessarily satisfied with Paul Ryan's answers, 0:01:43.840 --> 0:01:46.080 and he wanted to talk to his governor. And then 0:01:46.120 --> 0:01:47.720 I got him right before he went on the floor, 0:01:47.760 --> 0:01:49.480 and he said, you know, I'll let you know. He 0:01:49.560 --> 0:01:51.560 told another reporter of the show was about to go 0:01:51.640 --> 0:01:54.800 on or something or watch the show, and so we 0:01:54.840 --> 0:01:57.640 sprinted upstairs into the chamber to see what he was 0:01:57.640 --> 0:01:59.840 gonna do. And the first thing he did is walked 0:01:59.880 --> 0:02:02.920 up to Chuck Schumer. Chuck Schumer something, had a big 0:02:02.920 --> 0:02:05.200 smile on his face and put his arm around McCain. 0:02:05.960 --> 0:02:09.520 And then McCain goes over to John Coryn, the Republican whip, 0:02:09.720 --> 0:02:12.760 who suddenly is a very agitated, upset turns around because 0:02:12.760 --> 0:02:16.560 the thumbs down to another senator, and I spurnt it 0:02:16.560 --> 0:02:19.200 out of the chamber because it looked like this thing 0:02:19.280 --> 0:02:20.959 was going to go down and McCain was going to 0:02:21.120 --> 0:02:24.760 vote no. And over the course of the next hour 0:02:25.040 --> 0:02:27.560 there was an, you know, just a massive effort to 0:02:27.600 --> 0:02:30.520 try to get John McCain or Lisa mccowsky to change 0:02:30.560 --> 0:02:34.160 their minds. And Mike Pence came over and talked to 0:02:34.240 --> 0:02:36.600 him for about half an hour, talked to him off 0:02:36.600 --> 0:02:38.239 the floor. It looks like there may have been a 0:02:38.280 --> 0:02:42.880 phone call with the president. Other senators one after another 0:02:43.000 --> 0:02:45.560 came and tried to talk McCain out of it. In 0:02:45.600 --> 0:02:48.400 the meantime, Lisa mccowski and Susan Collins are sort of 0:02:48.480 --> 0:02:51.960 on each of his shoulders and sort of protecting him, 0:02:52.080 --> 0:02:57.639 and McCain ultimately stood fast and Lisa mccowski stood fast, 0:02:57.800 --> 0:03:03.239 and Collins voted no for first Denmarkowski and uh McCain's 0:03:03.240 --> 0:03:05.440 sort of for effect came in and was the third 0:03:05.520 --> 0:03:09.600 no vote um and there was audible guests inside the chamber, 0:03:10.520 --> 0:03:13.959 especially from the Democratic side, and you know, just a 0:03:15.840 --> 0:03:18.560 crazy scene that sort of a madhouse in the in 0:03:18.600 --> 0:03:22.880 the Capital afterwards with a Republican the days mad uncertain 0:03:22.919 --> 0:03:27.200 what to do, and Democrats also because they certainly weren't 0:03:27.240 --> 0:03:30.480 expecting this. Zach Tracer, I wonder if you could come 0:03:30.480 --> 0:03:32.960 in and tell us what does this mean now for 0:03:33.240 --> 0:03:37.200 Americans who have been using insurance that is available through 0:03:37.200 --> 0:03:41.760 the Affordable Care Act, well, Obamacare, it survived another sort 0:03:41.760 --> 0:03:44.600 of near death experience. UM. It remains to be seen 0:03:44.880 --> 0:03:46.800 what this means. You know, for the next few years, 0:03:47.360 --> 0:03:49.480 we're still going to be relying on, you know, a 0:03:49.520 --> 0:03:52.760 Trump administration that's declared this law dead. That's you know, 0:03:53.200 --> 0:03:56.680 Donald Trump tweeting let it fail, um, you know. So, 0:03:56.680 --> 0:03:59.000 so we're gonna be relying on those folks too, you know, 0:03:59.080 --> 0:04:02.160 run open enrollment starts in November to make sure this 0:04:02.240 --> 0:04:05.480 market works going into UM. So you know, it's still 0:04:05.520 --> 0:04:08.960 a lot of open questions about what the administration will do. UM. 0:04:08.960 --> 0:04:10.920 But for the time being, you know, this this is 0:04:10.960 --> 0:04:13.640 the law of the land. Uh, Steve, I want to 0:04:13.680 --> 0:04:17.200 get your sense on what's next for the Republicans that 0:04:17.320 --> 0:04:21.880 already have been some calls for Senate Majority Leader McConnell 0:04:22.000 --> 0:04:27.800 to step down or give over the proceedings to somebody else. 0:04:27.880 --> 0:04:30.400 With respect to healthcare. But this is a huge blow 0:04:30.800 --> 0:04:33.160 politically because this is the one thing that they wanted 0:04:33.200 --> 0:04:36.320 to get done. Um, certainly in the first year. Uh, 0:04:36.560 --> 0:04:40.400 you know, initially, what's the next up there? Yeah, I 0:04:40.400 --> 0:04:43.880 think that there's really a choice now for the president. 0:04:44.320 --> 0:04:46.839 You know a Zach was saying, you know, the president 0:04:46.880 --> 0:04:49.440 has to make a choice now. Does he want to 0:04:50.080 --> 0:04:53.960 maybe pivot? You know, there's all these talks. Maybe at 0:04:53.960 --> 0:04:56.640 some point Trump will pivot. Uh, he can do what 0:04:56.720 --> 0:04:59.120 he did last night and just talk about letting the 0:04:59.200 --> 0:05:01.479 law the law of al maybe trying to sabotage it 0:05:01.520 --> 0:05:04.600 and try to bring the Democrats to the table with threats. 0:05:05.040 --> 0:05:07.680 I don't think that's gonna work. Um, there are things 0:05:07.720 --> 0:05:11.839 you can do with Democrats. Mr McConnell didn't sound particularly 0:05:11.880 --> 0:05:15.599 interested in and uh, you know, he said that he 0:05:15.640 --> 0:05:17.360 didn't think there was gonna be a lot of interests 0:05:17.360 --> 0:05:21.680 among Republicans and bailing out insurance companies, which is sort 0:05:21.720 --> 0:05:24.839 of might be code for just giving more money to 0:05:24.880 --> 0:05:28.040 the system for things like cost sharing subsidies. But Zach, 0:05:28.080 --> 0:05:30.520 I want to bring you in here. So if Congress 0:05:30.560 --> 0:05:36.560 does nothing, what would happen to Obamacare and its current form. Well, 0:05:36.600 --> 0:05:39.279 the big question that we're watching UM, as Steve pointed out, 0:05:39.360 --> 0:05:42.480 is what happens with these cost sharing subsidies. These need 0:05:42.520 --> 0:05:45.320 to be paid each month. There's a big legal dispute 0:05:45.360 --> 0:05:48.200 going on over whether there whether it's legal for them 0:05:48.200 --> 0:05:51.880 to be paid UM. And essentially this legal dispute gives 0:05:51.880 --> 0:05:56.039 the Trump administration UM some ability to decide to stop 0:05:56.120 --> 0:05:58.599 paying them at any time. So there's this big, big 0:05:58.640 --> 0:06:01.760 threat hanging over the Affordable Care Act. And if these 0:06:01.760 --> 0:06:04.320 were pulled UM, insurers have said either that they would 0:06:04.360 --> 0:06:07.279 pull out of markets, UM, they would raise premium something like. 0:06:08.040 --> 0:06:10.080 I mean this is you know, sort of the nuclear 0:06:10.080 --> 0:06:14.599 option that they do have going forward. Stephen, maybe you 0:06:14.640 --> 0:06:17.240 could shed a little light on this. This seems to 0:06:17.279 --> 0:06:20.560 be this desire for in fighting, right there's in fighting 0:06:20.560 --> 0:06:24.039 with the Republicans in Congress, there's infighting inside the White House, 0:06:24.080 --> 0:06:28.400 there's infighting when it comes to this healthcare initiative. What 0:06:28.640 --> 0:06:31.480 is cause is that you've been covering this? Do you 0:06:31.720 --> 0:06:36.760 have a sense of what is deeply responsible for this? Well, 0:06:36.800 --> 0:06:40.000 there's a lot of different reasons, right, UM for when 0:06:40.000 --> 0:06:42.680 you lose a bill like this. It's not just one reason. 0:06:42.720 --> 0:06:45.880 There's there's many different reasons said to have the sort 0:06:45.920 --> 0:06:48.640 of this kind of catastrophe. I think one of them 0:06:48.680 --> 0:06:52.760 has to be the Trump White Houses incomplete chaos. I mean, 0:06:52.800 --> 0:06:57.039 the there's been basically this complete utter meltdown in the 0:06:57.120 --> 0:07:02.880 last few days with Scaramucci in his profanity lace tirade 0:07:02.920 --> 0:07:05.960 to the New Yorker about Ryan's previous This is not 0:07:06.040 --> 0:07:08.599 what you This is not the sign of a well 0:07:08.640 --> 0:07:12.520 functioning White House trying to pass its number one legislative 0:07:12.520 --> 0:07:15.040 priority on the Senate floor. But hang on, but Stephen, 0:07:15.080 --> 0:07:18.320 but is it? But is it the characteristic of, let's say, 0:07:18.520 --> 0:07:21.840 an administration that wants to do away with the old 0:07:22.000 --> 0:07:25.640 levers of power and to create the very kind of 0:07:25.680 --> 0:07:28.440 conditions that you're describing because they don't trust the old 0:07:28.480 --> 0:07:31.280 way of doing business. I guess though, But I mean, 0:07:31.680 --> 0:07:34.480 you know, there's a math problem here. The math problem 0:07:34.640 --> 0:07:38.160 is that they have fifty two Republican senators. They don't 0:07:38.160 --> 0:07:40.920 have sixty, they don't have seventy, they don't have fifty five. 0:07:41.480 --> 0:07:43.920 They have fifty two, and two of them are Lisa 0:07:44.000 --> 0:07:48.160 Murkowski and Susan Collins, who owe nothing to Donald Trump. Uh. 0:07:48.320 --> 0:07:51.360 Lisa Murkowski gets elected with independence and Democrats in Alaska. 0:07:51.760 --> 0:07:54.080 She you know, she is based. She doesn't face a 0:07:54.120 --> 0:07:59.160 reelection until two and John McCain has brain Cancer's John McCain. 0:07:59.320 --> 0:08:02.320 He can do what wants the you know, the one 0:08:02.360 --> 0:08:06.679 punishment was rand Paul preventing him from doing his defense 0:08:06.680 --> 0:08:10.600 bill today. But you know, I think John McCain ultimately 0:08:10.720 --> 0:08:14.760 is the one person who could probably uh safely kill 0:08:14.880 --> 0:08:17.920 this bill and not really have to worry about some 0:08:17.920 --> 0:08:21.440 some massive repercussions. And if they were to try to 0:08:21.760 --> 0:08:25.280 do threats against these senators. There was a clumsy threat 0:08:25.320 --> 0:08:29.400 against Murkowski. I don't see how that does anything but 0:08:29.520 --> 0:08:32.760 backfire when you only have a margin of two makes sense, 0:08:32.800 --> 0:08:34.360 you know how to do the math for us. Thanks 0:08:34.440 --> 0:08:37.800 very much, Bloomberg. Stephen Dennis, our congressional reporter. Our thanks 0:08:37.840 --> 0:08:41.800 also to Zach Tracer, our healthcare reporter. We've got much 0:08:41.840 --> 0:08:58.120 more coming up. This is Bloomberg. We have been talking 0:08:58.120 --> 0:09:01.720 about the FDS surprise decision and to cut the amount 0:09:01.720 --> 0:09:04.800 of nicotine and cigarettes to non addictive levels, or that 0:09:04.880 --> 0:09:06.880 the least is the plan. I want to bring an 0:09:06.880 --> 0:09:09.920 Anna Edney. She's our healthcare reporter here at Bloomberg News. 0:09:10.040 --> 0:09:12.319 And Anna, before we get into the details of this 0:09:12.400 --> 0:09:14.440 and talk a little bit about the response with shares 0:09:14.800 --> 0:09:18.440 of Philip Morris and Ultria plummeting. I want to just ask, 0:09:18.640 --> 0:09:21.000 do you have any idea what precipitated this announcement by 0:09:21.000 --> 0:09:24.920 the f D A. Well, it's something they have been 0:09:25.160 --> 0:09:29.360 talking about, um even before the new FDA Commissioner, Scott 0:09:29.360 --> 0:09:33.200 Gottlieb got there. Um Mitzadella, who's ahead of the tobacco 0:09:33.280 --> 0:09:36.760 center there, He's made references um in the past to 0:09:37.480 --> 0:09:40.960 wanting to focus more on nicotine, to sort of taking 0:09:41.000 --> 0:09:45.120 a more nicotine centric approach um to how they deal 0:09:45.120 --> 0:09:48.560 with tobacco products. And so it seems like, you know, 0:09:48.760 --> 0:09:51.480 with with Gottlieb coming in that then maybe that was 0:09:51.559 --> 0:09:55.360 something that was able to be um hastened and that um, 0:09:55.400 --> 0:09:58.520 you know, possibly some of some of his ideas um 0:09:58.720 --> 0:10:00.520 kind of made this a bigger deal than it would 0:10:00.520 --> 0:10:05.440 have been before. And isn't it also a direct sort 0:10:05.440 --> 0:10:07.040 of an effort on the part of the FDA to 0:10:07.320 --> 0:10:12.200 encourage what they describe as safer alternatives to cigarettes, such 0:10:12.200 --> 0:10:19.480 as e cigarettes and vapor products. Definitely, the FDA has 0:10:19.520 --> 0:10:23.880 been looking into whether there are you know, safer products, 0:10:23.920 --> 0:10:28.400 so they they have authority through a two thousand nine 0:10:28.480 --> 0:10:33.720 law to kind of look at UM these reduced risk 0:10:33.760 --> 0:10:37.200 products is what they call them, and try to maybe 0:10:37.360 --> 0:10:41.360 get those UM FDA clearance. And so you know, they 0:10:41.400 --> 0:10:45.280 haven't quite stood behind anything yet and said hey, this 0:10:45.400 --> 0:10:48.880 is better for you UM than a cigarette might be. 0:10:49.080 --> 0:10:52.160 And they haven't really pushed back quite as a policy, 0:10:52.280 --> 0:10:54.680 but it looks like that could be the way that 0:10:54.720 --> 0:10:58.079 they're moving with this decision. They also talked about targeted 0:10:58.120 --> 0:11:01.559 relief I believe on the timeline for the f d 0:11:01.559 --> 0:11:08.760 AH looking at the regular regular regulations and the application submissions, right, yeah, 0:11:08.800 --> 0:11:11.680 that's right, the you know, to to be able to 0:11:11.679 --> 0:11:15.880 get in their UM these reduced rest products to turn 0:11:15.920 --> 0:11:19.360 in kind of the information they need to UM to 0:11:19.480 --> 0:11:22.280 be able to get on the market. They pushed that 0:11:22.360 --> 0:11:24.920 back so that UM and tried to ease some of 0:11:24.920 --> 0:11:28.319 the regulations so that you know, they could support the 0:11:28.840 --> 0:11:33.120 alternative is basically to smoking, the what they call combustible cigarettes. 0:11:33.520 --> 0:11:35.800 So anna, if they've been if the FDI, f d 0:11:35.960 --> 0:11:38.160 A has been talking about this for a while, why 0:11:38.240 --> 0:11:40.760 was there such a dramatic response in the shares of 0:11:40.800 --> 0:11:44.560 Philip Morris and Altria I think it was, you know, 0:11:44.720 --> 0:11:47.000 something that they have hinted up, but no one really 0:11:47.080 --> 0:11:49.719 knew exactly how they would implement it. Um as far 0:11:49.800 --> 0:11:54.199 as the the nicotine um levels goes as reducing those, 0:11:54.240 --> 0:11:57.120 and we still don't exactly know how they'll implement it. 0:11:56.760 --> 0:12:01.000 They thinking like this sounds pretty I don't know, sketchy, 0:12:01.120 --> 0:12:03.480 not sketchy as he likes. I don't know, you know, 0:12:03.600 --> 0:12:05.640 if this is kosher, but as as far as like, 0:12:05.880 --> 0:12:07.480 you know, sort of a sketch of a plan. They're 0:12:07.480 --> 0:12:09.959 planning to look at this and maybe address this. So 0:12:10.240 --> 0:12:12.560 it's sort of the reason why I sort of have 0:12:12.679 --> 0:12:16.400 doubts about the response in the market to this. I 0:12:16.400 --> 0:12:18.520 think you're right that it is a sketchypho plan. And 0:12:18.760 --> 0:12:22.480 that's something that that Commissioner Gottlieb has been doing in 0:12:22.520 --> 0:12:25.319 many different areas. He's saying, here's where I'm going. He's 0:12:25.360 --> 0:12:29.040 not waiting until everything is fully ready to go. He's 0:12:29.120 --> 0:12:32.679 kind of giving people direction on different things, whether it's 0:12:32.760 --> 0:12:36.400 drugs or medical devices, UM, and here on tobacco. As 0:12:36.559 --> 0:12:38.960 you know, this is where this is where he's looking. 0:12:39.000 --> 0:12:41.680 This is what he would like to do. UM what 0:12:41.880 --> 0:12:44.080 comes out me and you know, that's a that's a 0:12:44.120 --> 0:12:47.640 totally different question. UM. You know, I think right now 0:12:47.679 --> 0:12:52.000 we're probably there probably lobbyists, UM, tobacco lobbyists all across 0:12:52.480 --> 0:12:56.200 Washington gearing up to do a lot of work in 0:12:56.280 --> 0:12:59.400 the next you know, a few months or year, however 0:12:59.520 --> 0:13:01.600 long this might take to come up with UM and 0:13:01.679 --> 0:13:04.720 talking to lawmakers. You know, there's a there's a good 0:13:04.760 --> 0:13:09.120 chance that there are some maybe particularly Republicans, who who 0:13:09.200 --> 0:13:13.720 don't want to interfere with cigarette products and might seek 0:13:13.760 --> 0:13:16.520 to block this. Well, maybe you could just also talk 0:13:16.600 --> 0:13:19.880 about the initiatives. I know that Philip Morris, for example, Uh, 0:13:20.040 --> 0:13:24.560 they're the maker of Marlborough. They have their own smokeless cigarette, 0:13:24.640 --> 0:13:29.960 right the what is it I i q O S Yeah, yeah, 0:13:30.040 --> 0:13:34.080 the you can't say it as nicely as Marlborough ken 0:13:34.160 --> 0:13:38.880 you right now? Um. They So, you know the notes 0:13:39.040 --> 0:13:42.320 I've seen this morning coming in from some of the 0:13:42.360 --> 0:13:46.600 analysts on Wall Street who cover tobacco companies directly saying 0:13:46.640 --> 0:13:50.760 that that could be a benefit, um, for for Philip Morrison, 0:13:50.800 --> 0:13:54.400 that they might be able to kind of take the 0:13:54.520 --> 0:13:57.440 lead in this in this market, given the shift that 0:13:57.600 --> 0:14:00.319 FDA is kind of starting to put in place. UM, 0:14:00.480 --> 0:14:04.160 these the non combustible cigarettes, they are considered more like 0:14:04.600 --> 0:14:07.320 products that would heat up instead of burn, so they 0:14:07.400 --> 0:14:10.840 kind of heat slowly at at a much lower rate um. 0:14:10.920 --> 0:14:13.720 And so you know, those kind of products could be 0:14:14.280 --> 0:14:16.640 where they're headed, and it looks like they kind of 0:14:16.679 --> 0:14:19.120 have the jump on that. I want to thank you 0:14:19.200 --> 0:14:21.760 very much for being with us a very important topic 0:14:22.200 --> 0:14:25.160 on EDNY explaining what is going on with the Food 0:14:25.160 --> 0:14:28.080 and Drug Administration working to cut the amount of nicotine 0:14:28.600 --> 0:14:33.080 in cigarettes to non addictive levels, the goal preventing thousands 0:14:33.120 --> 0:14:36.320 of tobacco related deaths a year. It was a surprise 0:14:36.400 --> 0:14:40.120 move and the shares are certainly reacting to it. Looking 0:14:40.120 --> 0:14:42.520 at the shares of Altria Group, they are down nine 0:14:42.600 --> 0:14:45.840 and a half percent. British American tobacco down more than 0:14:45.920 --> 0:14:49.360 six and a half percent. Uh, this is a story 0:14:49.360 --> 0:14:52.520 obviously we will continue to follow. Thank you very much. 0:14:52.800 --> 0:14:55.000 Don't you think it is I think it's fascinating, But 0:14:55.000 --> 0:14:57.440 I also don't totally understand the response because everyone, if 0:14:57.480 --> 0:14:59.560 everyone knows the FDA has been working on something, and 0:14:59.560 --> 0:15:01.600 then they put out something saying we're working on something, 0:15:01.600 --> 0:15:03.680 and everyone freaks out. I don't totally get it. Well, 0:15:03.720 --> 0:15:05.520 now it's on paper and they can all freak out 0:15:05.560 --> 0:15:22.640 and they're selling this thought. David Garrity is our just 0:15:22.880 --> 0:15:24.800 our guest now. He is the chief executive of g 0:15:24.920 --> 0:15:29.400 v A Research, and he is also a columnist at Investopedia. 0:15:29.960 --> 0:15:32.560 And David, you're gonna tell us a little bit about 0:15:32.600 --> 0:15:37.640 Amazon earnings or lack thereof, right, certainly, Well, no, with 0:15:37.680 --> 0:15:40.720 regards Amazon, mean, we're looking at a company here that historically, 0:15:40.840 --> 0:15:42.520 you know, over the twenty years that has been public 0:15:42.560 --> 0:15:44.680 and obviously the years before then when it was private, 0:15:45.080 --> 0:15:48.080 has typically focused very very much on gaining market share 0:15:48.120 --> 0:15:50.360 and has not been shy about spending money in order 0:15:50.400 --> 0:15:52.680 to do that. And now while we're in a situation 0:15:52.720 --> 0:15:57.120 here where revenues are continuing to outpace analyst expectations, the 0:15:57.200 --> 0:16:01.000 company hasn't necessarily fully made its turn towards a commitment 0:16:01.080 --> 0:16:05.000 to consistent profit that people were hoping for, in which 0:16:05.040 --> 0:16:07.000 I think has been instrumental in helping to drive the 0:16:07.000 --> 0:16:10.080 stock price higher over the last twelve the twenty four months. 0:16:10.600 --> 0:16:13.920 You know, Shara O. V Day, a Bloomberg Gadfly columnist here, 0:16:14.440 --> 0:16:16.240 had made a really good point, I thought, which is 0:16:16.400 --> 0:16:20.520 why our shareholders surprised by this. Amazon has said, we 0:16:20.560 --> 0:16:23.120 are going to spend money on new initiatives, we are 0:16:23.160 --> 0:16:26.360 not going to try to generate even bigger profits. This 0:16:26.440 --> 0:16:29.280 shouldn't have come as a surprise, so why did it? 0:16:29.840 --> 0:16:31.720 I think on the margin, what you have to consider 0:16:31.760 --> 0:16:34.640 is that as Amazon has grown and gone into more 0:16:34.760 --> 0:16:39.520 verticals and has essentially captured the market capitalization associated with 0:16:39.560 --> 0:16:43.560 those prospective competitors, that the pool, if you will, of 0:16:43.600 --> 0:16:47.840 institutional investors investing in Amazon are no longer strictly speaking, 0:16:47.880 --> 0:16:50.960 the technology oriented investors that it was in the past. 0:16:51.080 --> 0:16:54.280 That now people have begun to look upon Amazon as 0:16:54.320 --> 0:16:58.400 being a proxy or an eligible substitute for investing in 0:16:58.400 --> 0:17:01.680 the retail sector or investing in the consumer sector. And 0:17:01.720 --> 0:17:05.400 I would argue that the expectations associated with those investors 0:17:05.440 --> 0:17:10.280 and they're investing parameters have obviously favored profits more over time. 0:17:10.320 --> 0:17:13.879 And so it's these new marginal investors or investors coming 0:17:13.960 --> 0:17:16.760 in on the margin who arguably are the ones that 0:17:16.800 --> 0:17:20.120 Amazon needs to be concerned with, and the ones who 0:17:20.119 --> 0:17:24.359 are concerned about Amazon's expense growth well, and Amazon plays 0:17:24.359 --> 0:17:26.840 in so many different fields just as you described, and 0:17:26.880 --> 0:17:29.680 I keep thinking of the Amazon effort when it comes 0:17:29.720 --> 0:17:32.320 to your living room, whether it is the Alexa uh 0:17:32.480 --> 0:17:35.840 speaker that is connected to their vast inventory of stuff 0:17:35.840 --> 0:17:39.240 that you might not need, plus also their entertainment offerings 0:17:39.240 --> 0:17:43.760 with Amazon Prime Video that competes directly with Apple in 0:17:43.800 --> 0:17:46.040 many ways. And if you could talk about Apple, because 0:17:46.040 --> 0:17:49.119 they're going to be releasing their results on Tuesday, certainly well, 0:17:49.119 --> 0:17:53.600 I mean Amazon waiting in very, very effectively, but you 0:17:53.720 --> 0:17:56.560 and an Apple arguably seems to have been late in 0:17:56.640 --> 0:17:58.960 terms of the battle for the living room, if we will, 0:17:59.320 --> 0:18:00.800 But I would say that you know, in the case 0:18:00.840 --> 0:18:02.960 of looking at Apple, we do have something to look 0:18:03.000 --> 0:18:05.480 forward to in the fall, which is the introduction of 0:18:05.560 --> 0:18:09.440 the tenure anniversary iPhone um price points. They are seen 0:18:09.520 --> 0:18:11.399 to be moving north of a thousand dollars, So there 0:18:11.400 --> 0:18:15.200 may be some questions about affordability from a consumer standpoint, 0:18:15.240 --> 0:18:19.760 but nevertheless, from an investor's perspective, owning Apple ahead of 0:18:19.760 --> 0:18:22.879 a product introduction has typically been a good time to 0:18:22.960 --> 0:18:25.280 own the stock. And if we wanted to look at 0:18:25.359 --> 0:18:28.840 sort of evaluation of Apple relative it's to its growth rate, 0:18:28.920 --> 0:18:32.600 say is compared with Amazon, Apple is trading it far 0:18:32.760 --> 0:18:35.719 less of a demanding multiple relative to its expected growth 0:18:35.800 --> 0:18:39.080 rate based upon earnings estimates held by put out by 0:18:39.119 --> 0:18:41.639 the Street versus those of Amazon, and so as a 0:18:41.680 --> 0:18:44.679 result of investors wanted to have exposure to tech. You know, 0:18:44.800 --> 0:18:47.440 from a tactical standpoint, probably not a bad idea to 0:18:47.480 --> 0:18:50.720 be looking at Apple over Amazon in here, David, I 0:18:50.760 --> 0:18:53.440 love the war for the living room. It's sort of 0:18:53.480 --> 0:18:56.120 could connote a lot of things, but this is perhaps 0:18:56.160 --> 0:18:58.320 not the one that people think of with you know, 0:18:58.400 --> 0:19:00.840 marital discord, but even you know, I want to talk 0:19:00.840 --> 0:19:02.520 a little bit about a point that Liam Dunning of 0:19:02.520 --> 0:19:04.960 Bloomberg made earlier in the show where he was talking 0:19:04.960 --> 0:19:08.639 about Exxon and that the issue with the shares falling 0:19:08.680 --> 0:19:12.280 after the release of their their second quarter earnings really 0:19:12.280 --> 0:19:15.640 came because their prices were already so elevated their share 0:19:15.680 --> 0:19:19.159 price um that anything but perfection was going to be 0:19:19.440 --> 0:19:22.639 such a disappointment. I mean, as Amazon basically in the 0:19:22.680 --> 0:19:25.480 same boat, and that going forward, unless they're able to 0:19:25.520 --> 0:19:28.359 deliver the sky in the moon, you're going to see 0:19:28.600 --> 0:19:31.399 a continued weakness in their shares. Now, I would say that, 0:19:31.480 --> 0:19:36.600 you know, given the midpoint guidance for operating UH income 0:19:36.840 --> 0:19:39.639 for Amazon in the third quarter, that number being you know, 0:19:39.680 --> 0:19:42.560 a negative I think one million dollars. So the company 0:19:42.640 --> 0:19:44.520 arguably saying that they might be in a position just 0:19:44.560 --> 0:19:48.600 to lose money in the third quarter. UM. Investors typically 0:19:48.600 --> 0:19:51.560 had looked for Amazon for a big finish to the year, 0:19:51.680 --> 0:19:54.040 a big fourth quarter, and so I would say that 0:19:54.080 --> 0:19:57.560 probably Amazon trades flat to down, but find some support, 0:19:57.640 --> 0:20:00.000 you know, going into maybe the end of August, beginning 0:20:00.000 --> 0:20:03.879 of September, when investors start setting themselves up for a 0:20:03.960 --> 0:20:06.439 run into the year end. And the fact is that 0:20:06.520 --> 0:20:08.960 Amazon is going to be very well positioned with the 0:20:09.000 --> 0:20:13.080 recent Amazon Prime Day. Uh, they've sold more Echo Slash 0:20:13.119 --> 0:20:16.680 Alexa powered devices, UM, you know from that standpoint, and 0:20:16.680 --> 0:20:19.320 they're moving into more categories. So clearly the share of 0:20:19.359 --> 0:20:22.240 wallet they'll be gaining, arguably is going to be growing. 0:20:22.440 --> 0:20:25.520 And bottom line, we are looking at an economy that 0:20:25.600 --> 0:20:28.760 probably remains relatively stable going into the second half of 0:20:28.800 --> 0:20:31.520 the year, both domestically, and we're seeing some strength coming 0:20:31.520 --> 0:20:35.119 in major markets such as Europe overseas. David, just quickly, 0:20:35.400 --> 0:20:38.560 do you believe that people will be speaking into their 0:20:38.640 --> 0:20:44.399 Alexa devices ordering groceries from whole foot Um. We'll have 0:20:44.440 --> 0:20:47.560 to see if the Trump administration allows that transaction to 0:20:47.600 --> 0:20:49.960 move forward, but I would certainly expect that, yes, this 0:20:50.080 --> 0:20:53.320 is something likely to happen. Well done, all right, Yeah, 0:20:53.359 --> 0:20:55.600 I mean honestly, I think that this is uh, this 0:20:55.640 --> 0:20:57.919 is really key. I was reading on the Market's Live 0:20:58.000 --> 0:21:01.399 blog on Bloomberg how the IT sell off and Amazon's 0:21:01.440 --> 0:21:04.840 shares has really driven and sell off across emerging markets equities, 0:21:04.880 --> 0:21:07.159 and how this has had huge ripple effects in a 0:21:07.200 --> 0:21:10.880 variety of markets. So clearly what happens here has a 0:21:11.000 --> 0:21:15.800 very very big ramification on many other markets. David Garretty, 0:21:15.880 --> 0:21:17.800 thank you so much for joining us. David Garretty as 0:21:17.880 --> 0:21:21.240 chief executive officer of g v A Research and a 0:21:21.280 --> 0:21:25.360 columnist and invest Opedia, and he always provides good insight 0:21:25.440 --> 0:21:29.399 into the world of fang and technology. Coming up, Politics, 0:21:29.440 --> 0:21:33.920 Policy and Power with Amy Morris and Roz Krasney. Amy, 0:21:33.960 --> 0:21:37.240 I hear that there's some I don't know stuff going 0:21:37.280 --> 0:21:40.360 down in Washington these days. We have ten shows in one. 0:21:40.600 --> 0:21:42.639 We're gonna take twenty pounds of news and put it 0:21:42.680 --> 0:21:45.760 in a five pounds show. The Russia sanctions bill could 0:21:45.760 --> 0:21:48.800 face a presidential veto Russia's reacting to it as well. 0:21:48.840 --> 0:21:51.080 We're gonna follow all of that. The Affordable Care Act 0:21:51.080 --> 0:21:54.560 repeal has collapsed. You may have heard Senate Republicans blocked 0:21:54.600 --> 0:21:57.479 that bill. We're gonna find out where they go from here. Also, 0:21:57.760 --> 0:22:00.600 we got the second quarter GDP numbers, and it is 0:22:00.640 --> 0:22:03.360 also Trump's first full economic quarter, so we'll find out 0:22:03.359 --> 0:22:05.920 a little bit more about how he is doing as well. Well. 0:22:05.960 --> 0:22:08.480 A lot to listen to ten shows in one Politics, 0:22:08.480 --> 0:22:11.399 Policy and Power with Amy Morris and Roz Krasny. They 0:22:11.400 --> 0:22:13.879 will jam it all in to that hour, and it 0:22:14.000 --> 0:22:16.920 is an important hour to listen to. I'm Lisa bram 0:22:16.920 --> 0:22:33.400 Woit's along with pim Fox. This is Bloomberg. I'm looking 0:22:33.400 --> 0:22:37.520 at the x On mobile, which missed estimates for earnings 0:22:37.760 --> 0:22:41.600 basically because cuts failed to offset output declines. To give 0:22:41.680 --> 0:22:43.800 us a little bit more perspective, I want to bring 0:22:43.840 --> 0:22:47.600 in Liam Denning Bloomberg Gadfly columnists who focuses on all 0:22:47.680 --> 0:22:50.600 things energy and Liam, what was the big takeaway for 0:22:50.640 --> 0:22:54.639 you from these earnings? Well, I think with with x 0:22:54.760 --> 0:22:59.480