Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg
Speaker 1: Business App. Listen on demand wherever you get your podcasts,
Speaker 1: or watch us live on YouTube.
Speaker 2: Big Big Week four Tech earnings here. The Apple numbers
Speaker 2: came out last night. I thought they were like, really good.
Speaker 2: So what does the stock market do? Down one percent
Speaker 2: in the stock here today. I've been doing this stock
Speaker 2: market thing for forty years. No idea how it works.
Speaker 2: Dan Ives does the globalhead of Technology Research Weber Securities Joints.
Speaker 2: It's live here in our Bloomberg Interactive Broker studio. Dan,
Speaker 2: what did you make of the quarter last night?
Speaker 3: For I mean now is a staggering quarter in terms
Speaker 3: of what you saw on iPhone, specifically in terms of China,
Speaker 3: I mean chininga massive towwind services strong.
Speaker 4: I don't miss say best case.
Speaker 3: Scenario that you could have seen the stock performance today,
Speaker 3: I'd say it's a massive head scratcher. I mean this
Speaker 3: is look, this is one where I think this stock
Speaker 3: should be up five to eight percent relative you know
Speaker 3: to what they perform and the guidance.
Speaker 4: But I think it also just comes down to the
Speaker 4: we've talked.
Speaker 3: About so much in the show, right, is that, what's
Speaker 3: the AI strategy, what's the monization? Show us the playbook.
Speaker 3: That's not Cooper Tino, that's not their DNA. And I
Speaker 3: think that's why the stock's kind of to little Larry
Speaker 3: David in terms of the reaction.
Speaker 5: So, how has it been their AI push because they
Speaker 5: have face concerns and they've really lagged behind their megacap
Speaker 5: tech peers.
Speaker 3: Look, I mean they they've watched AI from the stands,
Speaker 3: and I think that's been disappointing to many, including us,
Speaker 3: because you have the biggest install based in the world,
Speaker 3: you have one point five million iPhones. But now it
Speaker 3: comes down to the Google Gemini partnership is the first
Speaker 3: big step. They're bringing an outside talent, which is I
Speaker 3: think unique to what we've seen there. And then this
Speaker 3: is what I believe is going to build into a
Speaker 3: subscription service. I mean that is not being factored into
Speaker 3: the stock. And just I just go back to like
Speaker 3: a year ago, look at Google New York City cab
Speaker 3: drivers parish on it. Now today they're doing you know,
Speaker 3: tick er Tate parades for it. You go back to
Speaker 3: Meta a quarter ago. Now look at in this court.
Speaker 3: So we're just going to go through this just very
Speaker 3: sensitive time for tech investors.
Speaker 2: Looking at the Mark German Bloomberg News his reporting today,
Speaker 2: maybe some concerns he's calling out about gross margins in
Speaker 2: the current period due to rising memory prices, also some
Speaker 2: supply chain constraints with the iPhones three nanometer processor. Are
Speaker 2: all those things kind of suggesting to investors maybe we're
Speaker 2: going to have great sales, but maybe not the margins
Speaker 2: were looking forth, Yeah, I.
Speaker 3: Think that's I mean, I think that's in telegraph. But
Speaker 3: I do believe you have pricing increases when it comes
Speaker 3: to iPhone eighteen called one hundred hundred and fifty dollars.
Speaker 3: But Paul, I think, like what ultimately is going to
Speaker 3: move the stock, Like when investors are focusing on how
Speaker 3: do you get to three twenty five, three to fifty,
Speaker 3: how do you have a stock with.
Speaker 4: A three in front of it? It's not going to
Speaker 4: be sales margins.
Speaker 3: It comes down to lay out the AI strategy, show
Speaker 3: us the playbook, and that's why like Cook's gonna stay CEO.
Speaker 3: In my opinion, till that baton's handed because this is
Speaker 3: so important, I think to his legacy.
Speaker 5: And what about how it's coping with tariffs. The company
Speaker 5: said that it created a one point for billion dollar headwind.
Speaker 6: Have we reached the worst?
Speaker 4: Yeah?
Speaker 3: I think worst is probably in the rearview mirror network.
Speaker 3: That's why I also play nice in the sandbox in DC,
Speaker 3: which Trump has been huge positive but it goes back
Speaker 3: to cook ten percent politician ninety percent CEO. So he's
Speaker 3: been able to navigate that extremely well. Now investors are okay,
Speaker 3: it's good time. What should the growth catalyst? It was
Speaker 3: a huge step in the right direction last night, but
Speaker 3: you see, like investors and this is going to be
Speaker 3: a narrow in this tech earning season. Any blemish anything
Speaker 3: investors don't like, they're going to take these stocks down.
Speaker 4: And we saw that with Microsoft and others.
Speaker 2: Talks about trying to hear because that's been a big
Speaker 2: and overhang for this company for the last couple of years,
Speaker 2: if not more. What do you think the status is
Speaker 2: right there about China and Apple?
Speaker 4: Well, I think it's a lot more positive today.
Speaker 3: I mean, go back, they were kind of in the
Speaker 3: middle of a sort of old Western fight between US
Speaker 3: and China now is those tensions have come down. That's
Speaker 3: how that's been a huge positive for Apple. That's why
Speaker 3: Apple and Tasla are the two tech companies are always
Speaker 3: caught in there. I think you've seen those talents. Look,
Speaker 3: it's so important twenty percent iPhone sales. You need that
Speaker 3: to be a market that's showing growth. And that's why
Speaker 3: you're seeing it. They're delivering everything you want to see.
Speaker 3: But the one thing that's.
Speaker 4: Missing, it's the AI strategy.
Speaker 3: And that ultimately, that's that's really the hearts and lungs
Speaker 3: of what's gonna Haven't.
Speaker 4: They articulated a strategy and maybe.
Speaker 2: That strategy is we're just gonna wait and we're gonna
Speaker 2: partner with whoever we need to partner with, and that
Speaker 2: is our strategy.
Speaker 4: Have they said that or is that not enough?
Speaker 3: Look, they've been it's essentially the last few wwdcs.
Speaker 4: It's been about to the future. Michael J. Fox moment right.
Speaker 3: The point is like they've really been on a treadmill
Speaker 3: at two point five speed. I think part of it
Speaker 3: was like they were hoping it was going to be
Speaker 3: internally developed that wasn't going to happen. They've probably been
Speaker 3: I think slow and culturally it's actually hurt them. That's
Speaker 3: why you start to see changes. And ultimately they needed
Speaker 3: Google win the DOJ suit for this to happen. If
Speaker 3: Google don't win dojsuit, this can this partnership can happen.
Speaker 3: Should they have bought Perplexity, should they have done others?
Speaker 3: Of course, But that's why this is go time for Apple,
Speaker 3: and that's what the stocks reflecting investors like, should give
Speaker 3: me something?
Speaker 5: And do you say that they have a chance in
Speaker 5: overtaking their peers.
Speaker 3: Look, I think when you have the biggest install based
Speaker 3: in the world and you have a Hall of Fame
Speaker 3: Mount Rushmore CEO like Cook, you could be late to
Speaker 3: the game, but twenty twenty six, they can't fumble the football.
Speaker 3: This this has to sort of be their moment. I
Speaker 3: think it's off to a strong start, but as we're
Speaker 3: seeing in tech, this is gonna be much more highly screwtinized.
Speaker 3: You're not going to get be given the sort of
Speaker 3: maybe latitude.
Speaker 4: Just give them this market thirty seconds left before we
Speaker 4: let you go. Can you give us your call on
Speaker 4: Tesla right here?
Speaker 3: I mean, I think it's going to be a historical
Speaker 3: year for Tesla. It's the autonomous and robotics error that's
Speaker 3: now taking place, plus thing about SpaceX and XAI. What
Speaker 3: that's doing the musk ecosystem, Muscu's wartime CEO, and it
Speaker 3: comes down that's why six hundred spase case, eight hundreds
Speaker 3: bowl case, and this now starts the AI revolution at Tesla.
Speaker 2: SpaceX that I feel happens that that's gonna lift just
Speaker 2: the whole feeling about Elon in general.
Speaker 3: I would think, Look, it goes back to like he's
Speaker 3: playing you know, he's playing like chess, others playing checkers
Speaker 3: when it comes to what he's navigating here, and that's
Speaker 3: what haters will hate. But when SpaceX comes out, I mean,
Speaker 3: you know you're talking about we're basically make some amost
Speaker 3: a trillion.
Speaker 4: Biggest listing every I mean one and a half trillion
Speaker 4: dollar evaluation. That would be just extraordinary to see with
Speaker 4: us more from Bloomberg Intelligence coming up after this.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on applecar Play and Android
Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
Speaker 1: you get your podcasts, or watch us live on YouTube.
Speaker 2: We've spoken to I don't know many many voices on
Speaker 2: this pick of mister Walsh for the FED chair. We've
Speaker 2: had people like Neil Dudda very negative. We've had people
Speaker 2: like Terry Haynes a Pangaea quite positive. Yes, so there
Speaker 2: seems to be a wide range of views out there.
Speaker 2: A about mister Walsh as a nominee number one and
Speaker 2: number two just kind of about you know, policies in general.
Speaker 2: So we'll have to see how that plays out. One
Speaker 2: voice we absolutely wanted to get to hear from is
Speaker 2: Danielle di Martino Boo. She's the CEO and chief strategistic
Speaker 2: QI Research and she spent a good stretch at the
Speaker 2: Dallas Fed, so she knows how all this stuff works. Danielle,
Speaker 2: love to get your opinion on the nomination of mister
Speaker 2: Kevin Walsh.
Speaker 6: Well, I'm I'm cautiously hopeful.
Speaker 7: UH President Richard Fisher served when worsh was on the board,
Speaker 7: and they were two large deterrens of quantitative easing UH
Speaker 7: worse famously called QE reverse Robin Hood. He and I
Speaker 7: said on a panel when he was at Stanford a
Speaker 7: few years ago, and we share the same views that
Speaker 7: going as far out on the easing spectrum as QE
Speaker 7: was not good for the financial markets, was not good
Speaker 7: for the for the overall US public. And I'm hoping
Speaker 7: that he doesn't go in that direction, that he's not
Speaker 7: tempted to go to zero interest rate policy again, and
Speaker 7: that we steer clear of QE and continue to shrink
Speaker 7: the size of the Fed's balance sheet. These are all
Speaker 7: things that worsh has indicated that he would advocate for doing,
Speaker 7: and I hope that he follows through with that.
Speaker 5: After the nomination there will be the confirmation, and we've
Speaker 5: had some of the sources telling us that it may
Speaker 5: not be as smooth. What is your projection for that?
Speaker 6: Well, you know, I listened live when Senator Tom Tillis.
Speaker 7: Was interviewed earlier this morning on Bloomberg and he has
Speaker 7: a very good point. And it's not that he's philosophically
Speaker 7: misaligned with Kevin Walsh. In fact, I think he thinks
Speaker 7: he's a great candidate, But he was He used the
Speaker 7: word frivolous as it pertained to the lawsuit that he
Speaker 7: was waiting until the Department of Justice's frivolous lawsuit was.
Speaker 4: Frivolous.
Speaker 7: Charges were dropped against Chair Powell before proceeding with any nominee.
Speaker 7: I think Senator Thune, Senator Majority Leader Thune has backed
Speaker 7: that this will not be possible. You will not be
Speaker 7: able to progress Worsh through the nomination process, unt build
Speaker 7: the Department of Justice releases Durrum Pale from these criminal charges.
Speaker 2: Danielle, how do you think mister wash will move as
Speaker 2: it relates to interest rate policy? There are you know
Speaker 2: a lot of folks have pointed out that he's become
Speaker 2: maybe even more dubvish, less hawkish with time in most
Speaker 2: recent times, and that may or may not have some
Speaker 2: political ramifications.
Speaker 4: How do you think he'll try to proceed with this FED?
Speaker 4: So you know, of.
Speaker 7: Course that is going to be the perception. I've seen
Speaker 7: a lot of the comments that he's made, but.
Speaker 6: I would I would just say this.
Speaker 7: I think that coming in that Worsh will be more
Speaker 7: aligned with Christopher Waller and that he will recognize that
Speaker 7: the FED is failing on its employment mandate and use
Speaker 7: research and data and alternative data sets to justify continuing
Speaker 7: to bring the FED funds rate down. And I think
Speaker 7: that that's entirely appropriate. But again I'm hoping that that
Speaker 7: he aligns back with his original thinking that zero interest
Speaker 7: rate policy is not the way to go, and that
Speaker 7: he finds a more reasonable FED funds floor somewhere around
Speaker 7: two percent.
Speaker 5: So if Worsh does become the FED chair, what changes
Speaker 5: first for markets? Policy direction, communication, or maybe reaction function.
Speaker 6: I think reaction function becomes critical.
Speaker 7: We have to remember that Worsh was he was a
Speaker 7: critical player during the global financial crisis. He has deep
Speaker 7: understandings of financial markets. We've seen some movement and leverage
Speaker 7: loans this week, We've seen a lot.
Speaker 6: Of activity in private credit.
Speaker 7: The good news is we need somebody who has a
Speaker 7: deep understanding of the banking system and the financial system,
Speaker 7: their linkages, and I think he'll be able to be
Speaker 7: a good steward at the FED given the extended valuations
Speaker 7: we've seen in some of the kind of risks and
Speaker 7: threats of financial instability that are percolating out there.
Speaker 2: Danielle, he has a remit or he's talking about a
Speaker 2: remit to narrow the focus of the FED here. Do
Speaker 2: you think that's widely shared at the FED?
Speaker 6: Well, I wish it was more widely shared.
Speaker 7: I've long said that we need to go back to
Speaker 7: having just the inflation mandate, and that the inflation and
Speaker 7: labor mandates are inherently in conflict with one another. He's
Speaker 7: also advocated to continue shrinking the Fed's balance sheet even
Speaker 7: if he brings interest rates down, and I hope he
Speaker 7: goes forward with that as well. But you're right he
Speaker 7: would have an uphill battle with a lot of the
Speaker 7: more dubbish members of the board, but he would certainly
Speaker 7: be more aligned with individuals who are Federal Reserve district
Speaker 7: presidents who do not advocate for a larger balance sheet.
Speaker 2: What do you think FED Chairman j Powell will do
Speaker 2: when he steps down from his leadership position. Do you
Speaker 2: think he'll stay on the board or who just sail
Speaker 2: off into the sunset?
Speaker 7: I think it was very I think was very telling
Speaker 7: two markets, and it was very telling to the current
Speaker 7: administration that he refused to answer the question at the
Speaker 7: press conference. And I would encourage Jerome Powell to stay
Speaker 7: on through January of twenty twenty eight. Philosophically, at least
Speaker 7: we know that the two are aligned.
Speaker 6: The two do not like, or at least I.
Speaker 7: Should say, Jerome Palell back when he was first appointed
Speaker 7: to the FED came very close to dissenting against QE three.
Speaker 7: So I would hope that the two would be able
Speaker 7: to work together and that Jay Powell would stick around
Speaker 7: until his term ends.
Speaker 5: And if Warsh really is committed to the wearing rates
Speaker 5: very quickly, how much influence does the chair really have
Speaker 5: in persuading other governors Because it's not just his one vote,
Speaker 5: as everyone has repeatedly said.
Speaker 6: That is absolutely the case. He could be looking at
Speaker 6: a number.
Speaker 7: Of descents on day one. However, I think with the
Speaker 7: messages coming out, with just the clear data that we're seeing,
Speaker 7: whether it's Conference Board or University of Michigan, or the
Speaker 7: fact that so many Americans are not filing for unemployment
Speaker 7: insurance and yet Google Trends shows you that we've got
Speaker 7: an almost record level of American searching for file unemployment,
Speaker 7: I think that data will speak for itself and that
Speaker 7: many will be on board with lowering rates. If we
Speaker 7: have to wait to do so until June, I certainly
Speaker 7: hope that is not the case.
Speaker 4: Stay with us more from Bloomberg Intelligence coming up after this.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
Speaker 1: Auto with the Bloomberg Business App. Listen on demand wherever
Speaker 1: you get your podcasts, or watch us live on YouTube.
Speaker 4: Here's another group of stocks I totally missed. You're to date.
Speaker 4: These big energy oil companies are just ripping here.
Speaker 2: Excellent up sixteen percent year to date, Chevron up fourteen percent.
Speaker 4: Nice moves there.
Speaker 2: The company's reported earnings and some pretty good numbers, I thought,
Speaker 2: But what do I know?
Speaker 4: Vince Piazza, he's the expert senior equity research channels.
Speaker 2: He covers all the oil and guests stuff for Bloomberg Intelligence.
Speaker 2: Joining us live here in our Bloomberg Interactive Broker studio.
Speaker 2: This may be the one, two, maybe three days he
Speaker 2: spends in the Big Apple we got him.
Speaker 4: Folks in studio.
Speaker 2: Talk to us about what you heard, what you learned
Speaker 2: from Exon Mobile, from Chevron, from the most recent earnings.
Speaker 8: Yeah, well, well, I think for the most part what
Speaker 8: you've seen the last couple of days is really the
Speaker 8: after effects of the storm, right, especially helping natural gas
Speaker 8: and really the the underlying benchmarks for oil. But for
Speaker 8: the for the four q sherm on Exxon, you know,
Speaker 8: down sequentially on earnings, pretty much as expected though, right,
Speaker 8: because of the realization's quarter over quarter on the lower
Speaker 8: on lower oil prices.
Speaker 4: You know, going forward, it's steady, it's steady as she goes.
Speaker 8: Really, it's really about disciplined investing in the business, allowing
Speaker 8: the Permian and also Guyana uh uh to provide that upside.
Speaker 8: And really it's about the upstream side of the business,
Speaker 8: because the downstream is in a secular decline, a structural
Speaker 8: decline with the headwinds. But it's really about the upstream.
Speaker 8: It's really about the Permian. And you know about the
Speaker 8: Permian why because we watch Landman, that's right. So, but
Speaker 8: what we're going to see in twenty twenty six, really
Speaker 8: not only from the big integrates, but also from the
Speaker 8: other companies are going to reporting, is what do you
Speaker 8: think about natural gas.
Speaker 4: Here at these levels?
Speaker 8: And are they going to turn off the spig and
Speaker 8: on production, which we really don't view it as such.
Speaker 8: We think the capital discipline will be maintained. We don't
Speaker 8: think there'll be a great deal of production growth coming
Speaker 8: in twenty twenty six. And what you're going to get
Speaker 8: is a return of excess cash.
Speaker 5: So both Chevron and Exon beat earnings expectations this quarter.
Speaker 5: But Exon managed to grow profit and Chevron's profit declined
Speaker 5: despite the beat. What did Exon do correctly from an
Speaker 5: operational and strategic standpoint that maybe Chevron didn't.
Speaker 8: Yeah, so you know, Exon has a pioneer and that's Permian.
Speaker 8: So the Permian and the Guiana has worked out quite well.
Speaker 4: The usually the driver for Exxon.
Speaker 8: What's interesting though, when you think about the free cash
Speaker 8: flow that both Exon and Chevron generate. Exon somewhere around
Speaker 8: five and a half billion dollars, yet they paid out
Speaker 8: almost ten billion in distributions via share buybacks and dividends,
Speaker 8: and you know that can be done because of because
Speaker 8: because of Exon's financial flexibility, big cash hoard, so they
Speaker 8: can support those distributions and their shareholder engagement. Similar for Chevron,
Speaker 8: but Chevron a little bit lagging because of you know,
Speaker 8: they just acquired Hess. They're integrating Hess, so they're a
Speaker 8: little bit further behind the process. But also for them,
Speaker 8: they also have Guyana via HES and they also have
Speaker 8: the Permian as well, So somewhat smaller, some a little
Speaker 8: bit behind where Exon is, but they're catching up as well.
Speaker 2: Chevron's in Venezuela has been in Venezuela for a long time.
Speaker 4: Yes, lieperally the only ones. Everybody else said, the heck
Speaker 4: with this, what do you think is going to happen
Speaker 4: going forward with the change in regime?
Speaker 8: Change in Venezuela very slow, It'll be a very slow
Speaker 8: uptick in output. They're roughly around two hundred and fifty
Speaker 8: thousand barrels per day right now. You could see that
Speaker 8: doubling in about two years. But this is about sourcing
Speaker 8: in country, don't see. We don't see the backdrop for
Speaker 8: incremental higher investment in country to grow that output. We
Speaker 8: just see them reallocating within the country to get that
Speaker 8: output going. And two hundred and fifty thousand barrels over
Speaker 8: the next call twenty four months isn't really that big
Speaker 8: of a production boost. When you think about the global
Speaker 8: franchise and roughly four million barrels a day of output.
Speaker 5: It does seem like international opportunities are the way to go,
Speaker 5: at least for them. But in your view, which companies
Speaker 5: portfolio and growth investments, maybe our better position to deliver
Speaker 5: growth in the longer term for the price of oil.
Speaker 4: Oh.
Speaker 8: In my view, and we've said this in a lot
Speaker 8: of what we've published in the last year or so.
Speaker 4: Exon definitely because of the franchise in the Permian. Because
Speaker 4: of Guyana, Chevron will get there.
Speaker 8: They're lagging somewhat only because of the length the delayed
Speaker 8: arbitration over Hess, but now they have the Guyana piece
Speaker 8: as well, the participation with Exon in Guyana. They also
Speaker 8: have the Permian as well, So both of these enterprises
Speaker 8: have those key pillars for growth. For twenty twenty six,
Speaker 8: even out to twenty thirty, both have provided very reasonable
Speaker 8: growth expectations.
Speaker 4: A lot of those expectations a lot.
Speaker 8: Of that that the theme is really on the upstream
Speaker 8: side of the business. That's what we're going to drive
Speaker 8: the business for Exon. The downstream investments and the energy
Speaker 8: products that will also be a positive for them. But
Speaker 8: at this point Exon does seem to have the upper
Speaker 8: hand and in terms of the scale in the Permian
Speaker 8: and also Guyana as well, I will say that I
Speaker 8: wouldn't be surprised if more is done on the upstream
Speaker 8: side because this is a maturing industry, right and so
Speaker 8: consolidation is the key. What we have said in what
Speaker 8: we've published over the last several years is this industry
Speaker 8: needs to consolidate. We will have fewer but much larger
Speaker 8: players in the upstream business here in the lower forty
Speaker 8: eight that gas. But I'm just going over the last
Speaker 8: couple of months. We went from four dollars down to
Speaker 8: almost two and a half dollars. Now we're above four
Speaker 8: dollars for nat gas. It's been all over the place.
Speaker 8: How are investors playing that gas these days? So in
Speaker 8: our twenty twenty six outlook, we focused on NAC gas
Speaker 8: over WTI oil.
Speaker 4: There are structural.
Speaker 8: Advantages that natural gas has number one, not only on
Speaker 8: the LNG side, but also in the build out for
Speaker 8: the tech data centers. These are structural growth opportunities for
Speaker 8: natural gas that crude oil does not enjoy. And natural
Speaker 8: gas remains in the process of consolidation as well, whether
Speaker 8: it's in Appalachia or in the Hainesville. So once again
Speaker 8: you will have fewer operators, but larger operators. Stronger operators
Speaker 8: molecules in the hands of much larger operators with better
Speaker 8: balance sheets able to manage these businesses going forward.
Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify,
Speaker 1: and anywhere else you get your podcasts. Listen live each
Speaker 1: weekday ten am to noon Eastern on Bloomberg dot com,
Speaker 1: the iHeartRadio app tune In, and the Bloomberg Business app.
Speaker 1: You can also watch us live every weekday on YouTube
Speaker 1: and always on the Bloomberg terminal