WEBVTT - Amazon Surges While Apple Drops; Investors Brace for Jobs Report 0:00:02.480 --> 0:00:03.079 Good morning. 0:00:03.080 --> 0:00:05.920 I'm Nathan Hager and I'm Karen Moscow. Here are the 0:00:05.960 --> 0:00:07.440 stories we're following today. 0:00:08.560 --> 0:00:11.639 We begin with a tale of two tech giants this morning, 0:00:11.680 --> 0:00:14.800 and we start with Amazon. The shares are surging eight 0:00:14.840 --> 0:00:17.599 and a half percent in early trading. The company pulled 0:00:17.640 --> 0:00:21.040 off a financial double play this earning season, generating strong 0:00:21.079 --> 0:00:24.799 revenue growth while cutting spending. Punum Goyle is senior US 0:00:24.840 --> 0:00:27.000 retail analyst for Bloomberg Intelligence. 0:00:27.280 --> 0:00:29.920 If you think about the consumer and the consumer being 0:00:30.000 --> 0:00:34.440 stretched today, trading down, looking for value, looking for convenience, 0:00:34.520 --> 0:00:39.320 looking for speed, Amazon's getting those customers into its platform 0:00:39.680 --> 0:00:42.159 to make the transactions, and I think that's where the 0:00:42.159 --> 0:00:44.600 optimism is coming from. We saw in the quarter that 0:00:44.640 --> 0:00:47.760 online sales group five percent, which was a well ahead 0:00:47.800 --> 0:00:52.120 of expectations, and should that trend continue, the expectations for 0:00:52.320 --> 0:00:54.240 their double digit gains makes sense. 0:00:54.520 --> 0:00:58.600 Putem Goyle with Bloomberg Intelligence says Amazon's revenue increased eleven 0:00:58.680 --> 0:01:01.320 percent to more than one hundred third four billion dollars. 0:01:01.720 --> 0:01:04.160 Well, it's a different story at Apple this morning. Nathan 0:01:04.280 --> 0:01:07.640 shares are down almost two percent after lower than anticipated 0:01:07.680 --> 0:01:10.319 iPhone sales, and we get the details around Bloomberg's and 0:01:10.520 --> 0:01:11.960 Ludlow in San Francisco. 0:01:12.319 --> 0:01:15.399 Overall, the top lined Wrapple beat expectations, but it was 0:01:15.440 --> 0:01:18.399 the third consecutive quarter where they saw year on year 0:01:18.480 --> 0:01:20.640 sales declined. You have to go back to twenty sixteen 0:01:21.000 --> 0:01:24.520 for the last time that happened, and particular weakness on iPhone, 0:01:24.600 --> 0:01:28.440 which missed estimates in the fiscal third quarter. For Apple, 0:01:28.520 --> 0:01:31.120 the story that Tim Cook painted was that the smartphone 0:01:31.160 --> 0:01:34.199 market is still weak in the United States. 0:01:34.160 --> 0:01:37.840 And Bloombergs had Ludlower fors Apple revenue slipped one point 0:01:37.880 --> 0:01:39.320 four percent in the quarter. 0:01:39.560 --> 0:01:41.720 As for some other stocks on the move this morning, Karen, 0:01:41.800 --> 0:01:44.720 shares of draft Kings are up almost fourteen percent. The 0:01:44.800 --> 0:01:48.760 online sportsbook posted sales that beat expectations. Shares of block 0:01:48.880 --> 0:01:52.400 are down five percent. The payment company's July profit forecast 0:01:52.480 --> 0:01:55.480 fell short for investors, and shares of Coinbase are up 0:01:55.560 --> 0:01:58.560 about one percent. The Crypto Exchange reported a loss, but 0:01:58.640 --> 0:02:01.880 it was less than expected, and revenue also beat estimates. 0:02:02.160 --> 0:02:04.400 Well, Nathan, those are the market moves this morning, and 0:02:04.480 --> 0:02:07.160 now we wait for the latest reading on US jobs. 0:02:07.200 --> 0:02:10.560 The government issues payroll data for July this morning, and 0:02:10.600 --> 0:02:14.040 economists predict a gain of around two hundred thousand. Bloomberg's 0:02:14.040 --> 0:02:15.240 Michael McKee has more. 0:02:15.639 --> 0:02:18.480 Will July be the month the labor market finally slows. 0:02:18.560 --> 0:02:22.280 Fed officials have forecasts less hiring, more unemployment, and smaller 0:02:22.320 --> 0:02:25.160 wage gains for some time, but the monthly data have 0:02:25.280 --> 0:02:28.360 generally gone the other way. Economists see only a slight 0:02:28.480 --> 0:02:31.120 drop in hiring for last month and no change in 0:02:31.120 --> 0:02:34.920 the unemployment rate. Average hourly earnings gains, though slowing, are 0:02:35.000 --> 0:02:38.400 still forecast to be rising at at unsustainable pace, and 0:02:38.560 --> 0:02:42.160 inline forecast is likely to keep upward pressure on interest rates. 0:02:42.600 --> 0:02:46.080 Weaker than expected numbers might bring some relief, although the 0:02:46.080 --> 0:02:50.560 Fed doesn't meet again until late September. Michael McKee, Bloomberg. 0:02:50.080 --> 0:02:53.400 Daybreak, Mike Thanks. The other major story in Washington comes 0:02:53.400 --> 0:02:56.280 at a federal courthouse. That is where former President Donald 0:02:56.280 --> 0:02:59.160 Trump entered a not guilty plea to charges he conspired 0:02:59.200 --> 0:03:02.400 to obstruct the twenty election. After his brief court appearance, 0:03:02.440 --> 0:03:05.360 the former president called it a sad day for America 0:03:05.560 --> 0:03:07.480 when you look at what's happening. 0:03:07.560 --> 0:03:11.480 This is a persecution of a political opponent. This was 0:03:11.600 --> 0:03:15.440 never supposed to happen in America. This is the persecution 0:03:15.600 --> 0:03:19.320 of the person that's leading by very very substantial numbers 0:03:19.720 --> 0:03:21.240 in the Republican primary. 0:03:21.720 --> 0:03:24.519 Former President Trump's next court data is set for August 0:03:24.600 --> 0:03:26.839 twenty eighth. That's when the judge is expected to set 0:03:26.880 --> 0:03:30.119 a trial date. Trump is not required to attend that hearing. 0:03:30.320 --> 0:03:33.679 Well Nathan Reactions still pouring in following that indictment to 0:03:33.800 --> 0:03:37.440 long a shot presidential contender and former Texas Congressman Will 0:03:37.520 --> 0:03:40.920 Hurd says Trump is only running for president so he 0:03:40.920 --> 0:03:42.000 can avoid jail time. 0:03:42.320 --> 0:03:46.000 He's a bully, he's a liar, and he's only running 0:03:46.560 --> 0:03:48.360 in order to stay out of prison. And what's even 0:03:48.600 --> 0:03:53.400 crazier is that he is using, you know, hard working 0:03:53.440 --> 0:03:58.760 Americans dollars to fund his illegal bills. Right, He's allegedly 0:03:58.800 --> 0:04:01.480 a billionaire, but he can't pay his own legal bills. 0:04:02.120 --> 0:04:04.680 And former Texas Congressman Will heard me the comments on 0:04:04.720 --> 0:04:07.880 Bloomberg Sound on. Catch the program weekdays at one pm 0:04:07.920 --> 0:04:10.960 Eastern on Bloomberg Radio and download the show wherever you 0:04:11.000 --> 0:04:11.960 get your podcasts. 0:04:12.080 --> 0:04:15.000 Karen, there's also news on US China relations this morning, 0:04:15.040 --> 0:04:18.680 this time involving spies. Two US sailors have been charged 0:04:18.720 --> 0:04:22.760 with selling military secrets to China. Bloomberg's Nancy Lyons has 0:04:22.800 --> 0:04:23.720 more from Washington. 0:04:24.040 --> 0:04:28.440 Both men are Chinese born, naturalized US citizens, The Justice 0:04:28.440 --> 0:04:30.760 Department says. One of them, twenty two year old Petty 0:04:30.800 --> 0:04:34.640 Officer second Class Chin Chow Patrick Way, was arrested and 0:04:34.760 --> 0:04:38.400 charged with espionage for passing images and locations for various 0:04:38.480 --> 0:04:42.320 naval ships, as well as dozens of technical manuals. Randy 0:04:42.320 --> 0:04:45.400 Grossman is the US Attorney for the Southern District of California. 0:04:45.600 --> 0:04:48.400 Whether it was greed or for some other reason, Way 0:04:48.440 --> 0:04:52.760 allegedly chose to turn his back on his newly adopted 0:04:52.760 --> 0:04:56.640 country and enter a conspiracy with his Chinese handler. 0:04:56.839 --> 0:04:59.640 The other sailor was charged with conspiracy and receipt of 0:04:59.640 --> 0:05:04.120 a broad in Washington. Nancy Lyons Bloomberg Daybreak, All. 0:05:04.120 --> 0:05:06.239 Right, Nancy, thank you well. Back on Wall Street. Another 0:05:06.400 --> 0:05:08.440 corporate item to catch you up on. It looks like 0:05:08.480 --> 0:05:11.000 the next chapter for Simon and Schuster reads like an 0:05:11.000 --> 0:05:14.080 acquisition Bloomberg. Steve Rappaport joins us with the detail. 0:05:14.120 --> 0:05:16.760 Steve, good morning, Karen and Nathan. It's not in the 0:05:16.800 --> 0:05:19.440 books yet, but sources tell the Wall Street Journal private 0:05:19.480 --> 0:05:22.159 equity firm kkar As in advanced talks to buy the 0:05:22.160 --> 0:05:25.440 publisher for roughly one point sixty five billion dollars. It's 0:05:25.480 --> 0:05:28.480 the second attempt by Paramount Global to offload Simon and Schuster. 0:05:28.720 --> 0:05:31.520 A potential sale to rival Penguin Random House was blocked 0:05:31.560 --> 0:05:34.440 by a federal judge. Simon and Schuster is nearly a 0:05:34.480 --> 0:05:37.359 century old and rich in literary history, with legends like 0:05:37.440 --> 0:05:41.039 Ernest Hemingway, f Scott Fitzgerald, and Stephen King gracing its pages. 0:05:41.200 --> 0:05:49.440 In New York. Steve Rappaport Bloomberg Daybreak Time Now to 0:05:49.440 --> 0:05:51.120 take a look at some of the other stories making 0:05:51.120 --> 0:05:53.400 news in New York and around the world with Bloomberg's 0:05:53.440 --> 0:05:55.240 John Tucker. Good Morning, John, Good. 0:05:55.160 --> 0:05:58.000 Morning, Nathan Blong. Outland railroad service it could be delayed 0:05:58.040 --> 0:06:01.920 this morning after a dear ralman in Queens yesterday. Thirteen 0:06:01.960 --> 0:06:05.719 people were hurt. The injuries for minor. The incident involving 0:06:05.760 --> 0:06:08.240 all eight of the train's car has occurred before at noon, 0:06:08.279 --> 0:06:10.880 about a half a mile east of the Jamaica Train station. 0:06:11.360 --> 0:06:14.800 The MTA investigating, but the incident has been ruled out 0:06:14.839 --> 0:06:17.920 as speed as a factor in that derailment. The United 0:06:18.040 --> 0:06:22.240 Auto Workers is asking car makers for a forty percent 0:06:22.400 --> 0:06:25.680 pay increase. Let's get more in that story from Bloomberg's 0:06:25.720 --> 0:06:26.440 Jeff Bellinger. 0:06:26.760 --> 0:06:30.120 The request for forty percent pay increases over four years 0:06:30.240 --> 0:06:34.080 is part of the uaw's opening proposal and contract discussions 0:06:34.080 --> 0:06:38.640 with General Motors Ford Stilantis. The current labor pact expires 0:06:38.680 --> 0:06:42.839 September fourteenth. Along with the raises, the UAW has also 0:06:42.960 --> 0:06:47.040 said it wants cost of living allowances, improved pensions, and 0:06:47.160 --> 0:06:50.680 better treatment for temporary workers. The requests are among the 0:06:50.760 --> 0:06:55.039 largest ever to major corporations. General Motor says the company 0:06:55.080 --> 0:06:58.280 plans to offer wage increases, but said the union is 0:06:58.400 --> 0:07:02.200 asking too much. Jeff Bullinger, Bloomberg Daybreak. 0:07:02.440 --> 0:07:06.279 Divided Federal Appeals Court is reinstated the Biden administration's rule 0:07:06.279 --> 0:07:10.880 that limited asylum eligibility. The rule seeks to curb unlawful 0:07:11.120 --> 0:07:15.160 entries into the US by presuming certain groups of unauthorized 0:07:15.200 --> 0:07:19.679 migrants ineligible for asylum. Ten days into the coup in Niger, 0:07:20.200 --> 0:07:24.040 US defense officials eight hundreds of American military personnel remained 0:07:24.120 --> 0:07:28.200 stationed in the West African country. Pentagon spokesman Burgadier General 0:07:28.240 --> 0:07:30.960 Patrick Ryders's there have been no changes to the US 0:07:31.080 --> 0:07:33.000 military force posture. 0:07:33.320 --> 0:07:37.240 We're continuing to monitor the situation, which remains fluid and evolving, 0:07:38.200 --> 0:07:40.400 but right now again our focus is going to continue 0:07:40.400 --> 0:07:44.400 to be on a diplomatic solution to the situation there. 0:07:44.600 --> 0:07:47.040 Nigeria has been a key partner in the West fight 0:07:47.080 --> 0:07:51.560 against Islamic extremists. Authorities in South Jersey still searching for 0:07:51.640 --> 0:07:55.520 two people after a house explosion Thursday morning left to 0:07:55.560 --> 0:07:59.239 two others dead and two children injured in Atlantic County. 0:07:59.480 --> 0:08:02.440 The cause of the blast still unknown, but it was 0:08:02.480 --> 0:08:05.120 so intense it reduced the house to rubble and damaged 0:08:05.200 --> 0:08:09.600 other nearby holmes, and the unrelenting heat making an unwelcome 0:08:09.640 --> 0:08:12.760 return to more parts of the nation. In Texas, Ramona 0:08:12.840 --> 0:08:15.960 and monwey Iisen were found dead inside their home outside 0:08:16.000 --> 0:08:20.280 Houston after their air conditioning failed. The great grandparents would 0:08:20.280 --> 0:08:24.080 have been celebrating their fifty second anniversary this week. Global 0:08:24.120 --> 0:08:26.600 News twenty four hours a day, powerplin more than twenty 0:08:26.600 --> 0:08:29.559 seven hundred journalists and analysts in more than one hundred 0:08:29.600 --> 0:08:32.360 twenty countries. I'm John Tucker. This is Bloomberg Nathan. 0:08:32.440 --> 0:08:39.840 Thank you John. Time now for our Bloomberg Sports Updacod morning. 0:08:39.920 --> 0:08:41.320 John Stashauer, Good morning, Nathan. 0:08:41.400 --> 0:08:43.760 The Yankees able to do something they failed to do 0:08:43.920 --> 0:08:46.800 in four attempts last fall in the American League Championship Series. 0:08:46.880 --> 0:08:49.319 They beat the Astros at the Stadium. They got back 0:08:49.360 --> 0:08:51.480 to back home runs with two outs in the first inning. 0:08:51.800 --> 0:08:54.280 Don Carlos stands with a man on, then Billy McKenny 0:08:54.320 --> 0:08:56.680 Kyle Tucker homer in the sixth for Houston to tie 0:08:56.720 --> 0:08:59.679 the game. Anthony Volpie's RBI single bottom of the six 0:08:59.720 --> 0:09:02.200 put the Yanks back ahead, and they won four to three. 0:09:02.440 --> 0:09:04.520 Clay Holmes working out of a jam in the ninth. 0:09:04.559 --> 0:09:07.320 They won without Anthony Rizzo. He's on the injured list 0:09:07.640 --> 0:09:10.680 with a concussion that likely dates back to a collision 0:09:11.200 --> 0:09:13.679 back in May. At that point, Rizzo was batting over 0:09:13.720 --> 0:09:18.040 three hundred. Since then one seventy two, Domingo Herman season 0:09:18.120 --> 0:09:22.000 is over. He's in alcohol rehib SNY reported Herman was 0:09:22.200 --> 0:09:26.400 drunk in the clubhouse before Tuesday's game. Matts swept in 0:09:26.480 --> 0:09:30.679 Kansas City, lost again to the lowly Royals nine to two, 0:09:30.760 --> 0:09:33.800 and after three losses to a team forty games under 0:09:33.840 --> 0:09:36.880 five hundred, the Mets now play three in Baltimore, who's 0:09:36.960 --> 0:09:40.440 twenty five games over Max Scherzer, debuted for Texas, pitched 0:09:40.480 --> 0:09:43.800 the Rangers to victory. The Angels lost on a Seattle 0:09:43.880 --> 0:09:46.120 Grand Slam of the ninth Ennis Show. Heyo Tani in 0:09:46.240 --> 0:09:50.320 defeat to his fortieth home run. Preseason football Canton, Ohio 0:09:50.440 --> 0:09:53.120 Jets had leads of thirteen to nothing sixteen to seven 0:09:53.160 --> 0:09:55.640 at the half. The Browns, who had two long touchdown 0:09:55.720 --> 0:09:58.280 drive second half to win twenty one sixteen. Former Jets, 0:09:58.320 --> 0:10:01.480 Joe Cleco and Derel Reebis among nine to be inducted 0:10:01.480 --> 0:10:04.400 to the Hall Tomorrow. Easy went for the Phoenix Mercury 0:10:04.440 --> 0:10:07.720 as Forty one year old Diana Tarrossi scored forty two points, 0:10:07.760 --> 0:10:11.280 a WNBA record thirty two in the second ALP Tarrosite 0:10:11.360 --> 0:10:13.600 won over ten thousand points for her career. 0:10:14.040 --> 0:10:15.920 JNS Dashaward. Bloomberg Sports. 0:10:18.280 --> 0:10:21.240 From coast to coast, from New York to San Francisco, 0:10:21.600 --> 0:10:26.880 Boston to Washington, DC, nationwide on SYRIASXAM, the Bloomberg Business app, 0:10:26.920 --> 0:10:28.040 and Bloomberg dot Com. 0:10:28.480 --> 0:10:33.240 This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. Tech 0:10:33.320 --> 0:10:36.679 earning season is wrapping up with mixed results from two 0:10:36.760 --> 0:10:40.360 of the biggest names in the digital economy. Amazon delivered 0:10:40.360 --> 0:10:44.200 a strong performance in its latest quarter, while Apple's third 0:10:44.360 --> 0:10:47.800 quarterly revenue decline cut a little bit deeper than many 0:10:47.920 --> 0:10:50.839 investors may have expected. Let's get some insights now from 0:10:50.880 --> 0:10:53.280 one of the top tech analysts on Wall Street and 0:10:53.400 --> 0:10:56.719 outlook for how the digital economy could go from here. 0:10:56.880 --> 0:10:59.720 Gene Munster is with us this morning, the managing partner 0:11:00.120 --> 0:11:03.040 at Deepwater Asset Management. Gene, it's great to speak with 0:11:03.160 --> 0:11:06.000 you on this Friday morning. Let's start off with Amazon, 0:11:06.200 --> 0:11:08.640 because it really did seem to come in a lot 0:11:08.720 --> 0:11:10.920 better than expected, not just on the e commerce side, 0:11:10.960 --> 0:11:14.000 but on the cloud as well, all while cutting costs. 0:11:14.520 --> 0:11:18.480 What stands out to you from Amazon's results, well. 0:11:18.440 --> 0:11:21.320 Two things stand out. First is the pressure point. 0:11:21.440 --> 0:11:24.480 So every company has really one or two pieces that 0:11:24.640 --> 0:11:28.280 investors hyper focus around in earnings. And the pressure point, 0:11:28.320 --> 0:11:32.400 of course was AWS and it was slightly better after 0:11:32.559 --> 0:11:35.800 being worse for the past year, so it grew by 0:11:35.880 --> 0:11:40.319 twelve percent. Investors were looking for plus eleven percent, so 0:11:40.440 --> 0:11:43.920 that was positive and the majority of their profit comes 0:11:44.000 --> 0:11:47.200 from AWS, and so that stood out. The second piece 0:11:47.280 --> 0:11:51.520 related to profit is the retail profitability bumped up for 0:11:51.640 --> 0:11:54.480 the first time in four quarters and so that had 0:11:55.200 --> 0:11:57.719 a margin of about two and a half percent, and 0:11:58.040 --> 0:12:01.679 that said, it's been negative and retail is seventy five 0:12:01.760 --> 0:12:04.760 percent of Amazon's business. So you put those two together 0:12:05.280 --> 0:12:08.680 and what you get is upside on their profitability. 0:12:09.080 --> 0:12:12.000 And not only that, that carries forward into the September quarter. 0:12:12.200 --> 0:12:15.839 So when they gave guidance, guidance was up called the 0:12:16.000 --> 0:12:20.360 midpoint of their operating income was twenty seven percent higher 0:12:20.800 --> 0:12:22.960 than what the street was expecting for September. 0:12:23.440 --> 0:12:26.200 So all good when it comes to profitability. 0:12:26.240 --> 0:12:28.319 And actually even revenue for September is going to be 0:12:28.400 --> 0:12:32.400 up slightly higher than what the street, four percent higher than. 0:12:32.320 --> 0:12:33.760 What investors were expecting. 0:12:33.880 --> 0:12:37.319 So a good day for Amazon after a long time 0:12:37.400 --> 0:12:39.800 of having some difficult reports and guidance. 0:12:40.240 --> 0:12:43.640 Yeah, particularly when the focus coming into this year had 0:12:43.720 --> 0:12:46.760 been on pretty extreme cost cutting measures from Amazon. Do 0:12:46.840 --> 0:12:49.760 you expect that to continue? Gene? What was the bigger 0:12:49.880 --> 0:12:52.760 driver as well for this revenue beat on the e 0:12:52.920 --> 0:12:56.440 commerce side? Was it more sales to customers or more 0:12:56.520 --> 0:12:57.120 cost cutting? 0:12:59.160 --> 0:13:03.600 It was sales to customers In terms of the cost cutting. 0:13:03.720 --> 0:13:06.280 Is it going to continue? The answers It's part of 0:13:06.880 --> 0:13:09.319 I guess an efficiency piece of Amazon a lot of 0:13:09.360 --> 0:13:12.240 big tech companies are talking about this, but we're through 0:13:12.679 --> 0:13:15.600 the big cuts that we've seen over the past year, 0:13:15.679 --> 0:13:19.160 so don't expect headlines about Amazon cutting people. And then 0:13:19.280 --> 0:13:24.200 what drove that the retail upside was paid units, that's 0:13:24.280 --> 0:13:29.320 the number of items that they sell online. Surprisingly accelerated 0:13:29.400 --> 0:13:31.720 in the quarter, was up nine percent year of year 0:13:32.120 --> 0:13:34.600 versus up eight percent in the March quarter. 0:13:34.679 --> 0:13:36.600 And so that was a surprise. 0:13:36.679 --> 0:13:39.040 And why was it a surprise is because the consumer 0:13:39.160 --> 0:13:43.800 has been more sluggish, and you'd have expected those numbers 0:13:43.920 --> 0:13:46.640 to continue to cliine off of larger numbers, the law 0:13:46.640 --> 0:13:50.839 of large numbers. So the paid numbers suggest that the 0:13:52.080 --> 0:13:55.880 breadth of Amazon's retail business continues to be healthy. 0:13:56.640 --> 0:13:58.920 Will it continue to be healthy if we do continue 0:13:59.000 --> 0:14:04.760 to see consumer sluggishness into the rest of this year, I. 0:14:04.920 --> 0:14:06.640 Think that it will decline. 0:14:06.679 --> 0:14:09.200 Those growth rates will decline, will go from nine percent 0:14:09.360 --> 0:14:12.280 to eight to seven. But I think that the bigger 0:14:12.360 --> 0:14:15.120 picture is that it's still going to grow faster than 0:14:15.360 --> 0:14:18.559 broader retail. When we think about bricks and mortar, it's 0:14:18.640 --> 0:14:21.400 still depending on the numbers that you look at, sixty 0:14:21.440 --> 0:14:24.120 to eighty percent of what we buy is bought and physical, 0:14:24.640 --> 0:14:28.920 and so I think that yes, it will accelerate, but 0:14:29.040 --> 0:14:31.480 it's still going to be much better than what the 0:14:31.560 --> 0:14:35.160 alternative is for investors. And separately, as we fast forward 0:14:35.200 --> 0:14:37.240 and look at how this plays out over the next 0:14:37.320 --> 0:14:41.840 many years, we still have a large growth opportunity around 0:14:41.960 --> 0:14:44.920 e commerce. It's a part of the Amazon story that 0:14:45.240 --> 0:14:48.920 is surprisingly not talked much about, the retail piece. But 0:14:49.160 --> 0:14:51.400 I think that even though if it slows in the 0:14:51.440 --> 0:14:53.880 near term for a few quarters, I think it's still 0:14:53.920 --> 0:14:55.280 in a great place longer term. 0:14:55.680 --> 0:14:58.400 Gene monsters with us this morning. The managing partner in 0:14:58.440 --> 0:15:01.840 deep Water Asset Management is these earnings not just from Amazon, 0:15:01.960 --> 0:15:04.960 but from Apple. Want to turn to the iPhone maker now, 0:15:05.080 --> 0:15:09.040 because we were expecting going into this reporting cycle, Gene, 0:15:09.160 --> 0:15:11.880 that Apple was going to report a third straight quarter 0:15:12.040 --> 0:15:15.280 of revenue declines. But it seems like those iPhone sales 0:15:15.400 --> 0:15:18.720 numbers came in a little bit worse than a lot 0:15:18.760 --> 0:15:22.760 of analysts were expecting. Did Apple's results meet your expectations? 0:15:24.760 --> 0:15:25.160 They did? 0:15:25.560 --> 0:15:28.360 In terms of the June quarter. I generally think about 0:15:28.400 --> 0:15:29.880 this is you got to look at this in the 0:15:29.960 --> 0:15:32.920 sum of the parts. There's some quarters where iPhone does 0:15:32.960 --> 0:15:35.360 a little bit better and carries the story, and that's 0:15:35.440 --> 0:15:37.720 been the case over the last few quarters. And then 0:15:37.800 --> 0:15:40.560 sometimes other parts of the business carry the story. In 0:15:40.600 --> 0:15:42.920 this case it was services, which is twenty percent of 0:15:43.000 --> 0:15:45.960 their business. When you put it together, the reason why 0:15:46.000 --> 0:15:48.720 I wasn't surprised is the June quarter effectively was inline, 0:15:49.200 --> 0:15:51.000 and that's not why the stock is down. It is 0:15:51.240 --> 0:15:54.600 at all time highs and so there's some expectations built 0:15:54.640 --> 0:15:56.920 in there. But I think that what stood out to 0:15:57.080 --> 0:16:00.920 investors on this was that their expectations for the September 0:16:01.040 --> 0:16:04.040 quarter was a little bit muted versus where I would 0:16:04.080 --> 0:16:06.680 have been at. So they guided to revenue being down 0:16:06.840 --> 0:16:09.520 one percent year every year, and investors were expected to 0:16:09.600 --> 0:16:12.120 be up one percent. So in the case when Apple, 0:16:12.160 --> 0:16:15.840 whenever you have that small deviation off of those high expectations, 0:16:16.160 --> 0:16:18.000 you get this reaction of the stock being down a 0:16:18.080 --> 0:16:18.360 little bit. 0:16:18.400 --> 0:16:20.760 But that's what stood out to me from the quarter. 0:16:20.920 --> 0:16:23.440 But I don't think that was what was most important 0:16:23.440 --> 0:16:25.400 about the outlook. 0:16:26.920 --> 0:16:28.720 What was most important about the outlook for you. 0:16:28.800 --> 0:16:33.640 The most important part was this active base of devices, 0:16:33.720 --> 0:16:36.400 and they led the press release off and talked about 0:16:36.440 --> 0:16:38.680 this this is a theme that they've been talking more 0:16:38.720 --> 0:16:42.120 about and speaks to an investor shift. What it is 0:16:42.320 --> 0:16:44.760 is the number of devices that are used on a 0:16:44.800 --> 0:16:47.560 monthly basis. So they said that number grew. They didn't 0:16:47.600 --> 0:16:50.640 give the percentage growth, but it grew. It's continued to grow. 0:16:50.800 --> 0:16:54.880 Now it's over two billion devices. It hit that two 0:16:54.920 --> 0:16:57.360 billion number back in December, but continues to grow. Why 0:16:57.440 --> 0:17:00.760 that's so important is that's really the flywheel, and that 0:17:01.040 --> 0:17:05.080 is this concept that consumers buy one Apple product, they 0:17:05.160 --> 0:17:07.040 fall in love with it, they buy another product, they 0:17:07.080 --> 0:17:10.440 add a service, they upgrade, and this process just repeats 0:17:10.480 --> 0:17:14.440 over years. That's what keeps investors, gives them the ability 0:17:14.520 --> 0:17:17.399 to sleep well at night, and that's why Apple's multiple 0:17:17.520 --> 0:17:20.160 I think has been going up. But that all important piece, 0:17:20.280 --> 0:17:22.880 this active install base continue to do well. 0:17:23.200 --> 0:17:26.760 And then separately, how you continue to grow. 0:17:26.880 --> 0:17:32.120 More specifically is the India opportunity is significant, and Cook 0:17:32.200 --> 0:17:33.919 talked as much about that. I think you're gonna hear 0:17:33.960 --> 0:17:36.440 a lot more about India related to Apple and the 0:17:36.560 --> 0:17:37.120 years to come. 0:17:38.359 --> 0:17:40.920 There's been a lot of attention, of course, as you know, 0:17:41.119 --> 0:17:44.399 on artificial intelligence throughout this year. When it comes to 0:17:44.520 --> 0:17:47.679 the tech story, did Tim Cook say enough about AI 0:17:48.040 --> 0:17:48.520 in the call. 0:17:49.920 --> 0:17:52.280 He didn't say much at all about it, and it 0:17:52.480 --> 0:17:55.320 has been kind of representative how Apple has approached to 0:17:55.359 --> 0:17:57.920 this mega theme is not to say much about it, 0:17:58.080 --> 0:18:01.000 kind of just more speaking in terms of their products, 0:18:01.040 --> 0:18:04.120 and Apple's AI approach is more based on how AI 0:18:04.280 --> 0:18:08.040 impacts their hardware. The vision pro the new device that 0:18:08.080 --> 0:18:10.000 they have coming out next year is there's a lot 0:18:10.040 --> 0:18:13.479 of AI that goes into building that. But there's an 0:18:13.560 --> 0:18:16.800 opportunity that wasn't talked as much about. And I refer 0:18:16.840 --> 0:18:19.680 to this as personalized AI. Not just the ability of 0:18:19.760 --> 0:18:21.840 AI to answer a question for you, but to actually 0:18:21.960 --> 0:18:25.520 do a task, to book a flight, to book a reservation, 0:18:25.800 --> 0:18:28.680 to help move some money around, whatever it may be. 0:18:28.840 --> 0:18:30.720 There's opportunities for AI to do that. 0:18:31.119 --> 0:18:33.639 Apple has a great position because of their view on 0:18:33.760 --> 0:18:34.880 privacy and security. 0:18:35.240 --> 0:18:36.560 They didn't talk much about that. 0:18:37.000 --> 0:18:39.399 I do think that is something you'll hear more about 0:18:39.440 --> 0:18:42.080 from Apple AI in the future. 0:18:42.320 --> 0:18:43.880 Do you think we're going to hear more about AI 0:18:43.960 --> 0:18:47.520 from Amazon as well? It seems like Amazon's kind of 0:18:47.560 --> 0:18:49.280 playing catch up a little bit when it comes to 0:18:49.359 --> 0:18:52.000 some of these other companies that put so much attention 0:18:52.560 --> 0:18:55.320 on this technology, like Microsoft, and Alphabet. 0:18:57.000 --> 0:18:57.440 Definitely. 0:18:57.480 --> 0:18:59.800 If you're going to kind of put a grid together 0:19:00.240 --> 0:19:03.480 or kind of rank the big tech companies in terms 0:19:03.480 --> 0:19:06.159 of how much they're talking about AI, probably apples at 0:19:06.160 --> 0:19:07.639 the bottom of the list, and then the one up 0:19:07.680 --> 0:19:10.280 from that is Amazon. Not to say they don't have opportunities, 0:19:10.280 --> 0:19:12.119 they just haven't been talking as much about it. But 0:19:12.320 --> 0:19:15.800 Amazon does talk about a relative to different ways that 0:19:15.880 --> 0:19:20.679 they are hosting these models and specifically the opportunity. 0:19:20.160 --> 0:19:21.680 That they have around AWS. 0:19:21.800 --> 0:19:23.920 And that's one of the reasons why I think that 0:19:24.160 --> 0:19:26.560 the stock is doing well today is this positive commentary 0:19:26.680 --> 0:19:29.680 related to AWS and how it's going to start to 0:19:29.960 --> 0:19:31.800 grow a little bit faster than the back half of 0:19:31.840 --> 0:19:32.120 the year. 0:19:32.200 --> 0:19:36.600 And so, yes, Amazon has a lot to say. 0:19:36.920 --> 0:19:41.919 About AI, not as much as Microsoft's and Google. Google 0:19:42.000 --> 0:19:45.440 mentioned AI fifty three times on their prepared remarks on 0:19:45.520 --> 0:19:48.760 their joom call hard to keep up with that pace, 0:19:49.280 --> 0:19:52.320 but Amazon clearly has an opportunity in AI. 0:19:52.720 --> 0:19:55.280 Is there still room for this tech rally that is 0:19:55.520 --> 0:19:57.000 dominated this year to continue? 0:19:58.880 --> 0:19:59.120 Yes. 0:20:00.119 --> 0:20:04.560 The reason is that our dependency on these companies has 0:20:05.040 --> 0:20:07.520 always been high, it's been growing, and now we're at 0:20:07.600 --> 0:20:10.560 the kind of the front. The first six months of 0:20:10.640 --> 0:20:14.639 what's going to be a decade shift around AI. I 0:20:14.760 --> 0:20:16.480 believe it will exceed the hype, and I think that 0:20:16.600 --> 0:20:18.439 these big tech companies will be some of the biggest 0:20:18.480 --> 0:20:19.359 beneficiaries of it. 0:20:22.000 --> 0:20:24.879 This is Bloomberg day Break Today, your morning brief on 0:20:24.960 --> 0:20:28.439 the stories making news from Wall Street to Washington and beyond. 0:20:28.800 --> 0:20:31.520 Look for us on your podcast feed at six am 0:20:31.640 --> 0:20:35.240 Eastern each morning, on Apple, Spotify, and anywhere else you 0:20:35.359 --> 0:20:36.320 get your podcasts. 0:20:36.640 --> 0:20:39.320 You can also listen live each morning starting at five 0:20:39.359 --> 0:20:41.959 am Wall Street time on Bloomberg eleven three to zero 0:20:42.040 --> 0:20:44.800 in New York, Bloomberg ninety nine to one in Washington, 0:20:45.000 --> 0:20:47.840 Bloomberg one oh six to one in Boston, and Bloomberg 0:20:47.960 --> 0:20:49.560 ninety sixty in San Francisco. 0:20:50.000 --> 0:20:53.119 Our flagship New York station is also available on your 0:20:53.200 --> 0:20:58.200 Amazon Alexa devices. 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