WEBVTT - Bloomberg Daybreak: January 25, 2023

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<v Speaker 1>Live from the Bloomberg Interactive Berger Studios. This is is Bloomberg

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<v Speaker 1>day Break for Wednesday, January. Coming up this hour, Microsoft

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<v Speaker 1>shares drop after a warning that cloud computing sales will slug.

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<v Speaker 1>Ernies continue to roll in with Tesla reporting Today, the

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<v Speaker 1>New York Stock Exchange cancel some trades after a glitch

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<v Speaker 1>at yesterday's Open, and the U. S. And Germany prepared

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<v Speaker 1>to send battle tanks to Ukraine. Today is the unveiling

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<v Speaker 1>of the Long Island Railroad Grand Central Route. Plus another

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<v Speaker 1>match shooting, this time in Washington State by Michael Barr.

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<v Speaker 1>More ahead, I'm John Stashtown Sports. The next held on

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<v Speaker 1>to met Cleveland overtime win for the Devils. The quarterfinals

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<v Speaker 1>continue at the Australian Open. That's All's trading ahead on

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<v Speaker 1>Bloomberg day Break on Bloomberg eleven, Free on New York,

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<v Speaker 1>Bloomberg on Washington, d C, Bloomberg one oh six one, Boston,

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<v Speaker 1>Bloomberg nine sixties and Francisco Syrius XM one nineteen and

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<v Speaker 1>around the world Old on Bloomberg Radio dot Com and

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<v Speaker 1>by the Bloomberg Business. Good Morning, I'm Nathan Hagar, and

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<v Speaker 1>I'm kerin Moscow. Here are the stories we're following today.

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<v Speaker 1>Now dropping Nasdaq futures follows a slowing sales outlook for

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<v Speaker 1>Microsoft and it's cloud computing business. Let's get the latest

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<v Speaker 1>on the earnings for the software maker, live with Bloomberg.

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<v Speaker 1>Steve Rappaford, Good morning, Steve, Good morning, Nathan and Karen.

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<v Speaker 1>Shares of Microsoft are down nearly two percent in pre

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<v Speaker 1>market trading after CFO Amy Hood estimated sales of its

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<v Speaker 1>Azure service will slow down in the current period by

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<v Speaker 1>four or five percent from the end of second fiscal quarter.

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<v Speaker 1>The tech giants cloud business was a silver lining in

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<v Speaker 1>a cloud of lackluster earnings. Microsoft's growth of two percent

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<v Speaker 1>in the second quarter was the slowest in six years. Meanwhile,

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<v Speaker 1>Microsoft could use its own technical support for its three

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<v Speaker 1>sixty five service, the company tweeting this morning it identified

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<v Speaker 1>a network configuration problem and it's working to mitigate the impact.

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<v Speaker 1>Live in New York. I'm Steve Rappaport, Bloomberg Daybreak. All right, Steve,

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<v Speaker 1>thank you. We may also see weakness and shares of

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<v Speaker 1>Texas Instruments today. They fell half a percent in late

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<v Speaker 1>trading after the chipmaker suffered its first sales decline since

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<v Speaker 1>we get more from Bloomberg's Charlie pillet T I delivered

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<v Speaker 1>a tepp At forecast for the current quarter, hit by

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<v Speaker 1>an industry slump. It said revenue in the first quarter

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<v Speaker 1>will be four point one seven billion to four point

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<v Speaker 1>five three billion. That compares with average annalists estimates of

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<v Speaker 1>four point four one billion. The outlook suggests that Texas

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<v Speaker 1>Instruments may not bounce back quickly from its sales slow down.

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<v Speaker 1>Wall Street expects revenue to decline throughout this year as

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<v Speaker 1>the company's customers focus on reducing their stockpiles of use

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<v Speaker 1>chips rather than ordering new ones. In New York, Charlie

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<v Speaker 1>Pellett Bloomberg Daybreak, Thanks Charlie, and the earnings continue to

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<v Speaker 1>roll in today. More than thirty companies reporting, and Tesla

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<v Speaker 1>is one we'll be watching. We get a preview from

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<v Speaker 1>Bloomberg's Jeff Bellinger. We already know that Tesla delivered a

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<v Speaker 1>record number of vehicles in the fourth quarter and two

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<v Speaker 1>volume was up from one, but the electric vehicle maker

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<v Speaker 1>achieved those numbers by slashing prices and several of its markets.

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<v Speaker 1>Gene Munster of deep Water Asset Management has told investors

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<v Speaker 1>he expects disappointing numbers from Tesla Bloomberg Intelligence as Tesla's

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<v Speaker 1>discounts run counter to broader industry trends. Jeff Bullinger, Bloomberg

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<v Speaker 1>day Break, Jeff, thank you well. As Tesla reports earning

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<v Speaker 1>CEO Elon Musk is on the stand in a courtroom

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<v Speaker 1>in San Francisco and day three of his trial over

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<v Speaker 1>tweets to take Tesla private. Musk insisted he was acting

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<v Speaker 1>in the best interests of shareholders, and Baxter has the

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<v Speaker 1>latest from our Bloomberg nine sixty news room in San Francisco.

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<v Speaker 1>Musk more defiant in the third round. He addressed the

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<v Speaker 1>jury directly, saying the tweets, using the word considering, reflects

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<v Speaker 1>quote absolutely what I believed at the time, and emphasized

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<v Speaker 1>again that it wasn't a done deal. That's what one

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<v Speaker 1>means when they say they're considering, they're thinking about it.

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<v Speaker 1>Musk also said he would have had no trouble raising

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<v Speaker 1>money for the projects. Attorneys for the other side did

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<v Speaker 1>get him to admit that he did not have any

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<v Speaker 1>specific number from Saudi Arabia in San Francisco. I'm at Baxter,

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<v Speaker 1>Bloomberg Daybreak. Thanks Turning from Silicon Valley to Wall Street.

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<v Speaker 1>Now the New York Stock Exchanges canceling some trades after

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<v Speaker 1>a glitch during yesterday's open, Hundreds of securities began trading

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<v Speaker 1>without an opening auction price. The New York Stock Exchange

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<v Speaker 1>is not elaborating on what it calls a system issue,

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<v Speaker 1>and isn't saying what it may cost now. Nathan to

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<v Speaker 1>an m and a deal that never was. Rupert and

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<v Speaker 1>Lackland Murdoch are abandoning plans to reunite their two media companies,

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<v Speaker 1>Fox and News Corps. Some investors had voiced opposition to

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<v Speaker 1>the mergers, saying it undervalued company assets. The deal, first

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<v Speaker 1>announced in October, was widely seen as a way for

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<v Speaker 1>Lachland Murdoch to cement his control over the Family media empire.

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<v Speaker 1>Tuning to geopolitics now, Karen, the war in Ukraine remains

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<v Speaker 1>largely in focus, and now the US and Germany are

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<v Speaker 1>set to announce they will each provide battle tanks to Ukraine.

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<v Speaker 1>Amy Morris has the details from our Bloomberg newsroom in Washington.

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<v Speaker 1>The Biden administration is expected to announce as soon as

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<v Speaker 1>today that it will offer Ukraine the M one Abrams tank.

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<v Speaker 1>Germany had said it didn't want to be the only

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<v Speaker 1>ally to offer battle tanks. The White House decision helps

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<v Speaker 1>Allied nations move on from a split that had threatened

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<v Speaker 1>to undermine their unity, and it will allow Ukraine to

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<v Speaker 1>prepare for whatever offensive Russia could be planning for this spring.

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<v Speaker 1>Officials on both sides say they're still discussing numbers and

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<v Speaker 1>the timing of any delivery in Washington. I maybe Morris

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<v Speaker 1>Bloomberg daybreak right, Amy, thank you. While staying in Washington.

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<v Speaker 1>New questions are being raised about the handling of classified

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<v Speaker 1>documents now that secret papers have been uncovered in former

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<v Speaker 1>Vice President Mike Pence's home. That follows discoveries that have

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<v Speaker 1>both President Biden and former President Trump under investigation. Tennessee

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<v Speaker 1>Republican Marcia Blackburn since on the Senatejudiciary Committee, and she

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<v Speaker 1>says the Presidential Records Act needs to be reformed, cleaning

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<v Speaker 1>up that process, making certain that we tighten those protocols

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<v Speaker 1>in how the documents are viewed, when and where they're viewed,

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<v Speaker 1>how you send him in send them out, That is

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<v Speaker 1>an appropriate step to take. Senator Blackburn says she liked

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<v Speaker 1>to see the committee take action this year. She was

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<v Speaker 1>a guest on Bloomberg Sound On with Joe Matthew. Catch

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<v Speaker 1>the show weekdays at five pm Eastern on Bloomberg Radio,

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<v Speaker 1>or listen anytime to the Bloomberg Sound On podcast. Its

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<v Speaker 1>thirty five degrees under a clear sky in Central Park.

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<v Speaker 1>We got rain moving in this afternoon, with some wet

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<v Speaker 1>snow potentially mixed in to start breezy highs near forty

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<v Speaker 1>five degrees. The temperatures will rise through the night as

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<v Speaker 1>the rain continues. Time now to look at some of

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<v Speaker 1>the other stories making news in New York and around

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<v Speaker 1>the world with Bloomberg's Michael bar Good morning, Michael, Good

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<v Speaker 1>morning Nathan. New Yorkers are about to get a critical

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<v Speaker 1>commuter service they've waited ye years for. The Long Island

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<v Speaker 1>Railroad were run to Manhattan's Grand Central terminal. The Allied

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<v Speaker 1>Double R will begin limited service today for at least

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<v Speaker 1>three weeks, with Writer's changing trains at the Jamaica stop

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<v Speaker 1>in Queen's during the initial launch. The m t A

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<v Speaker 1>says direct service in the Grand Central WI will roll

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<v Speaker 1>out after that. The eleven point one billion dollar project

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<v Speaker 1>has suffered years of delays. Authorities say they don't know

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<v Speaker 1>yet what caused a gunman to open fire and kill

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<v Speaker 1>three people at a Circle K convenience store in Yakima, Washington.

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<v Speaker 1>Police Chief Matt Murray literally, as he was opening the door,

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<v Speaker 1>he started shooting these people. And then after shooting both

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<v Speaker 1>of them. And remember he was not masked up. He

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<v Speaker 1>did nothing to conceal his identity. He walked out, saw

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<v Speaker 1>somebody else in a car, and shot them. Chief Murray says,

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<v Speaker 1>the suspected gunman, twenty one year old Jared Haddock, shot

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<v Speaker 1>and killed himself. How Speaker Kevin McCarthy says in battled

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<v Speaker 1>New York Freshman Representative George Santos could be removed from

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<v Speaker 1>this if the Chambers Ethics Committee determined that he had

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<v Speaker 1>broken the law, but not until then. The Long Island Republican,

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<v Speaker 1>who presented a largely fictitious version of himself when he

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<v Speaker 1>ran for a House seat, has been denounced by prominent

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<v Speaker 1>members of both parties. Nevertheless, Santos has been given two

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<v Speaker 1>spots on different committees. Meanwhile, McCarthy is kicking two time

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<v Speaker 1>Democrats off the powerful House Intelligence Committee. McCarthy rejected former

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<v Speaker 1>Intel Committee Chair Adam Schiff and member Eric Swalwell. The

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<v Speaker 1>speaker was asked why Santos gets committee seeds and Schiff

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<v Speaker 1>and Swalwell are out. The Intel Committee is different. You

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<v Speaker 1>know why, because what happens in the Intel Committee. You

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<v Speaker 1>don't know what happens in the Intel Committee. Although the

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<v Speaker 1>secrets are going on in the world, other members of

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<v Speaker 1>Congress don't know. McCarthy, however, appointed members of his own

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<v Speaker 1>party to powerful committees who pushed the monked conspiracy theories

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<v Speaker 1>and election denial. Both Francis says being gay is not

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<v Speaker 1>a crime. The Pope, in an to view with the

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<v Speaker 1>Associated Press, is criticizing laws that criminalize homosexuality, saying God

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<v Speaker 1>loves all his children just as they are. Global News

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<v Speaker 1>twenty four hours a day on air and on Bloomberg Quicktake,

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<v Speaker 1>powered by more than journalists analysts more than a hundred

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<v Speaker 1>twenty countries. I'm Michael Barn. This is Bloomberg, Nathan. Thanks Michael.

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<v Speaker 1>Time for the Bloomberg Sports Update, now brought to you

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<v Speaker 1>by Tri State Autie. Good morning, John Stash How good morning, Nathan.

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<v Speaker 1>Much need to win for the Knicks. They had lost

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<v Speaker 1>their last four of that trouble holding leads, and at

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<v Speaker 1>the Garden they led Cleveland by eleven fourth quarter. Calves

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<v Speaker 1>rallied but missed two game time shots of the final seconds.

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<v Speaker 1>Nix held on one oh five, one oh three. Another

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<v Speaker 1>big night for Julius Randall thirty six points made, eight

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<v Speaker 1>three pointers. Five came in the first quarter. Devil's hosted

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<v Speaker 1>Vegas Trail date Dougdee. Hamilton's scored that forced overtime. So

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<v Speaker 1>here's using the center circle across the line, looks up,

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<v Speaker 1>tries to duck under a check, it comes free. They score,

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<v Speaker 1>pluck cooks that Hamilton between the circles and drives one hole.

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<v Speaker 1>It's the other over time Hamilton Devil's Radio. They won

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<v Speaker 1>three two. They won seven of the last eight college hoops.

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<v Speaker 1>Easy win for Rutgers by twenty over Penn State Georgetown

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<v Speaker 1>Vita Paul. That ends a twenty nine game Big East

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<v Speaker 1>losing streak for Patrick Ewing's Joya's. First time Scott Roland

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<v Speaker 1>was on the Hall of Fame ballot, he only got

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<v Speaker 1>ten percent of the vote. He just got seventy six percent.

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<v Speaker 1>He'll be inducted this summer in Cooperstown with Fred McGriff,

0:10:31.920 --> 0:10:33.959
<v Speaker 1>who was named by the committee. Roland will be only

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<v Speaker 1>the eighteen third baseman in the Hall. Played for four teams.

0:10:37.720 --> 0:10:40.280
<v Speaker 1>Was the seventh time All Star and eight time Gold

0:10:40.280 --> 0:10:43.079
<v Speaker 1>Glove winners Australian Open. Right now in Novak Djokovic has

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<v Speaker 1>won the first set, with Andre Rubile have the winner.

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<v Speaker 1>This match will play New Jersey native Tommy Paul in

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<v Speaker 1>the semifinals, Paul Housted fellow American Bench Shelton in four sets.

0:10:52.800 --> 0:10:56.360
<v Speaker 1>Women's quarterfinal wins for Arena Sabolanka Belarus she's yet to

0:10:56.400 --> 0:10:59.960
<v Speaker 1>lose a set, and Magdalette of Poland she upset Carolina

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<v Speaker 1>Flt's good that John Stash and Bloomberg Sports live from

0:11:06.280 --> 0:11:09.520
<v Speaker 1>coast to coast, from New York to San Francisco, Boston

0:11:09.600 --> 0:11:13.559
<v Speaker 1>to Washington, d C. Nationwide on Sirius, xamp, the Bloomberg

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<v Speaker 1>Business app, and Bloomberg dot Com. This is Bloomberg Daybreak.

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<v Speaker 1>Good morning, I'm Nathan Hagra. As we keep our focus

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<v Speaker 1>on tech earnings this morning, Microsoft is the first big

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<v Speaker 1>cap tech company to report in the shares right now

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<v Speaker 1>are down about two per cent after the software giant

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<v Speaker 1>warned of slowing sales this quarter, particularly in the cloud.

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<v Speaker 1>This afternoon, we will get more on the tech picture

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<v Speaker 1>and h automobiles as well. When Tesla reports, it's earnings.

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<v Speaker 1>Let's bring in Bloomberg Quick Take correspondent Alex Webb to

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<v Speaker 1>break down what we saw yesterday from Tesla. I'm sorry

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<v Speaker 1>for Microsoft here from Tesla later, as I said, Alex,

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<v Speaker 1>good morning. Obviously the cloud had been the big growth

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<v Speaker 1>center from Microsoft, and now there's this warning that as

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<v Speaker 1>you can only grow by about four to five percent

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<v Speaker 1>this quarter. Is this about managing expectations or does this

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<v Speaker 1>say something about the broader macro backdrop for attack. Well,

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<v Speaker 1>let's clarify that a little bit. It isn't that it's

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<v Speaker 1>only going to grow for or five percent. It's that

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<v Speaker 1>it's going to grow four or five percentage points slower

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<v Speaker 1>than in the fiscal second quarter where it grew in

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<v Speaker 1>the mid thirties. So you can infer that it's probably

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<v Speaker 1>going to grow, you know, around UM. That's still you know,

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<v Speaker 1>a growth number that a lot of people would love

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<v Speaker 1>to have, but it's clearly slower than it has been previously.

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<v Speaker 1>And it sort of speaks to the way that a

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<v Speaker 1>lot of demand was front loaded by the pandemic as

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<v Speaker 1>people were working from home. UM companies in particular invested

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<v Speaker 1>more in enabling remote work. That of course entailed a

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<v Speaker 1>lot of cloud investment so UM. It means that the

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<v Speaker 1>growth now isn't quite as good now. Of course, the

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<v Speaker 1>growth in the second quarter was only two overall for

0:12:53.920 --> 0:12:57.920
<v Speaker 1>the for the whole company, including Azure and so UM.

0:12:57.960 --> 0:13:00.400
<v Speaker 1>The concern then will be that if if as You're

0:13:00.440 --> 0:13:02.880
<v Speaker 1>is slowing down even further than it has a bigger

0:13:02.920 --> 0:13:05.559
<v Speaker 1>knock on effect on the overall companies performance now. I

0:13:05.559 --> 0:13:07.800
<v Speaker 1>guess it raises a question as well, doesn't it, about

0:13:07.840 --> 0:13:10.040
<v Speaker 1>what the growth picture could look like for other big

0:13:10.120 --> 0:13:14.280
<v Speaker 1>players in the cloud, particularly Amazon Web Services and Alphabet

0:13:14.280 --> 0:13:17.800
<v Speaker 1>as well. Yeah, I think there's more, probably more concern

0:13:17.880 --> 0:13:23.520
<v Speaker 1>around Alphabet. Around Google Cloud, they've been a very distant

0:13:23.600 --> 0:13:26.200
<v Speaker 1>third place. Amazon really tops the part when it climbs

0:13:26.200 --> 0:13:29.559
<v Speaker 1>it comes to the cloud offering. Um, they managed to know,

0:13:29.720 --> 0:13:33.440
<v Speaker 1>really build stickiness with their customers, even though you know,

0:13:33.520 --> 0:13:36.960
<v Speaker 1>you increasingly hear whispers about how how good the this

0:13:37.040 --> 0:13:40.480
<v Speaker 1>sort of interface is. Google has even though it's cloud

0:13:40.480 --> 0:13:42.560
<v Speaker 1>operation has been expanding it it has often been loss

0:13:42.559 --> 0:13:45.559
<v Speaker 1>making because it's investing so hard to try and catch up.

0:13:45.880 --> 0:13:49.120
<v Speaker 1>The interesting thing with Microsoft Cloud is that we've heard

0:13:49.200 --> 0:13:52.960
<v Speaker 1>so much around open AI, s Chat, GPT in recent weeks,

0:13:52.960 --> 0:13:54.839
<v Speaker 1>and that is something that is going to launch a

0:13:54.880 --> 0:13:57.360
<v Speaker 1>Microsoft Cloud before we see anyone as you are Microsoft

0:13:57.360 --> 0:14:00.880
<v Speaker 1>Cloud offering before we see it anywhere else. Um. You know,

0:14:00.880 --> 0:14:03.440
<v Speaker 1>if you're if you want to build an AI business

0:14:03.559 --> 0:14:06.520
<v Speaker 1>on chat GPT for instance, you will have to be

0:14:06.559 --> 0:14:09.320
<v Speaker 1>doing it with Azure. So you know, as we looked

0:14:09.320 --> 0:14:11.360
<v Speaker 1>at the medium to long term, that could be a

0:14:11.400 --> 0:14:14.600
<v Speaker 1>big positive for that business. Yeah, you mentioned the open

0:14:14.640 --> 0:14:17.760
<v Speaker 1>Ai investment obviously something that was got a lot of

0:14:17.800 --> 0:14:20.840
<v Speaker 1>attention from investors ahead of this earnings report. Is it

0:14:21.000 --> 0:14:24.760
<v Speaker 1>something that investors can at least hang their hats on

0:14:24.800 --> 0:14:27.320
<v Speaker 1>and have a little bit of excitement about amid the

0:14:27.480 --> 0:14:32.360
<v Speaker 1>disappointment in the earnings outlook for Microsoft. It is certainly

0:14:32.400 --> 0:14:35.320
<v Speaker 1>something that is you know, generating some excitement, clearly not

0:14:35.440 --> 0:14:38.480
<v Speaker 1>enough to offset any decline in the in the share price.

0:14:38.960 --> 0:14:41.520
<v Speaker 1>It's quite hard for people to know how this stuff

0:14:41.560 --> 0:14:44.400
<v Speaker 1>gets monetized because you know, even Sam ale Than, the

0:14:44.760 --> 0:14:47.400
<v Speaker 1>CEO of open Ai, has been saying that this is

0:14:47.400 --> 0:14:50.800
<v Speaker 1>not in the long term going to be a high

0:14:50.880 --> 0:14:54.680
<v Speaker 1>profit business or high margin business. It's something that you

0:14:54.720 --> 0:14:57.760
<v Speaker 1>will have as an assistant in many things you do,

0:14:57.800 --> 0:15:00.800
<v Speaker 1>plugging into things you do and I you look at

0:15:00.840 --> 0:15:03.240
<v Speaker 1>that will then you infer that it is a way

0:15:03.280 --> 0:15:06.840
<v Speaker 1>of pushing people towards Azure as your itself is cleaning

0:15:06.920 --> 0:15:11.120
<v Speaker 1>very high margin and so it's it's a an additional

0:15:11.160 --> 0:15:13.960
<v Speaker 1>feature that can attract customers, but in and of itself,

0:15:14.000 --> 0:15:16.160
<v Speaker 1>it's probably not going to be making a huge amount

0:15:16.160 --> 0:15:18.880
<v Speaker 1>of money in the medium to long term. It's just

0:15:18.920 --> 0:15:21.480
<v Speaker 1>that it you know, like you get a car with

0:15:21.600 --> 0:15:24.800
<v Speaker 1>a particular feature, even if the future itself isn't that expensive.

0:15:25.120 --> 0:15:27.480
<v Speaker 1>Kind about a minute left here, Alex. Of course we're

0:15:27.480 --> 0:15:30.960
<v Speaker 1>waiting to hear from Tesla this afternoon. Obviously there's been

0:15:31.000 --> 0:15:33.880
<v Speaker 1>so much attention on the CEO Elon Musk. I imagine

0:15:33.880 --> 0:15:35.640
<v Speaker 1>you're gonna be trying to look past up some of

0:15:35.640 --> 0:15:38.600
<v Speaker 1>the antics of late and let us know what your

0:15:38.640 --> 0:15:41.640
<v Speaker 1>focus is going to be on when we hear from Tesla. Yeah,

0:15:41.680 --> 0:15:43.800
<v Speaker 1>you must is going to be taking a break from

0:15:43.800 --> 0:15:45.760
<v Speaker 1>his court dates over the past few days. If if

0:15:45.800 --> 0:15:49.560
<v Speaker 1>he does appear on the call um, the real attention

0:15:49.640 --> 0:15:51.440
<v Speaker 1>is going to be on what kind of color they're

0:15:51.440 --> 0:15:54.880
<v Speaker 1>going to get one pace of deliveries. There's had to

0:15:54.880 --> 0:15:58.680
<v Speaker 1>be some very severe discounting or Tessa has done some

0:15:58.760 --> 0:16:04.360
<v Speaker 1>massive discounting to try to offset declining pace of deliveries.

0:16:04.440 --> 0:16:06.480
<v Speaker 1>They've not been able to deliver all the cars they've

0:16:06.480 --> 0:16:11.280
<v Speaker 1>been making, So how demand profitability pasted delivery shape up?

0:16:11.320 --> 0:16:13.080
<v Speaker 1>Those are the things that investors are really going to

0:16:13.160 --> 0:16:17.760
<v Speaker 1>keep an eye Appleporn. This is Bloomberg Daybreak Today, your

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