Speaker 1: Good morning.
Speaker 2: I'm Nathan Hager and I'm Karen Moscow. Here are the
Speaker 2: stories we're following today.
Speaker 3: We begin with a tale of two tech giants this morning,
Speaker 3: and we start with Amazon. The shares are surging eight
Speaker 3: and a half percent in early trading. The company pulled
Speaker 3: off a financial double play this earning season, generating strong
Speaker 3: revenue growth while cutting spending. Punum Goyle is senior US
Speaker 3: retail analyst for Bloomberg Intelligence.
Speaker 4: If you think about the consumer and the consumer being
Speaker 4: stretched today, trading down, looking for value, looking for convenience,
Speaker 4: looking for speed, Amazon's getting those customers into its platform
Speaker 4: to make the transactions, and I think that's where the
Speaker 4: optimism is coming from. We saw in the quarter that
Speaker 4: online sales group five percent, which was a well ahead
Speaker 4: of expectations, and should that trend continue, the expectations for
Speaker 4: their double digit gains makes sense.
Speaker 3: Putem Goyle with Bloomberg Intelligence says Amazon's revenue increased eleven
Speaker 3: percent to more than one hundred third four billion dollars.
Speaker 2: Well, it's a different story at Apple this morning. Nathan
Speaker 2: shares are down almost two percent after lower than anticipated
Speaker 2: iPhone sales, and we get the details around Bloomberg's and
Speaker 2: Ludlow in San Francisco.
Speaker 5: Overall, the top lined Wrapple beat expectations, but it was
Speaker 5: the third consecutive quarter where they saw year on year
Speaker 5: sales declined. You have to go back to twenty sixteen
Speaker 5: for the last time that happened, and particular weakness on iPhone,
Speaker 5: which missed estimates in the fiscal third quarter. For Apple,
Speaker 5: the story that Tim Cook painted was that the smartphone
Speaker 5: market is still weak in the United States.
Speaker 2: And Bloombergs had Ludlower fors Apple revenue slipped one point
Speaker 2: four percent in the quarter.
Speaker 3: As for some other stocks on the move this morning, Karen,
Speaker 3: shares of draft Kings are up almost fourteen percent. The
Speaker 3: online sportsbook posted sales that beat expectations. Shares of block
Speaker 3: are down five percent. The payment company's July profit forecast
Speaker 3: fell short for investors, and shares of Coinbase are up
Speaker 3: about one percent. The Crypto Exchange reported a loss, but
Speaker 3: it was less than expected, and revenue also beat estimates.
Speaker 2: Well, Nathan, those are the market moves this morning, and
Speaker 2: now we wait for the latest reading on US jobs.
Speaker 2: The government issues payroll data for July this morning, and
Speaker 2: economists predict a gain of around two hundred thousand. Bloomberg's
Speaker 2: Michael McKee has more.
Speaker 6: Will July be the month the labor market finally slows.
Speaker 6: Fed officials have forecasts less hiring, more unemployment, and smaller
Speaker 6: wage gains for some time, but the monthly data have
Speaker 6: generally gone the other way. Economists see only a slight
Speaker 6: drop in hiring for last month and no change in
Speaker 6: the unemployment rate. Average hourly earnings gains, though slowing, are
Speaker 6: still forecast to be rising at at unsustainable pace, and
Speaker 6: inline forecast is likely to keep upward pressure on interest rates.
Speaker 6: Weaker than expected numbers might bring some relief, although the
Speaker 6: Fed doesn't meet again until late September. Michael McKee, Bloomberg.
Speaker 3: Daybreak, Mike Thanks. The other major story in Washington comes
Speaker 3: at a federal courthouse. That is where former President Donald
Speaker 3: Trump entered a not guilty plea to charges he conspired
Speaker 3: to obstruct the twenty election. After his brief court appearance,
Speaker 3: the former president called it a sad day for America
Speaker 3: when you look at what's happening.
Speaker 7: This is a persecution of a political opponent. This was
Speaker 7: never supposed to happen in America. This is the persecution
Speaker 7: of the person that's leading by very very substantial numbers
Speaker 7: in the Republican primary.
Speaker 3: Former President Trump's next court data is set for August
Speaker 3: twenty eighth. That's when the judge is expected to set
Speaker 3: a trial date. Trump is not required to attend that hearing.
Speaker 2: Well Nathan Reactions still pouring in following that indictment to
Speaker 2: long a shot presidential contender and former Texas Congressman Will
Speaker 2: Hurd says Trump is only running for president so he
Speaker 2: can avoid jail time.
Speaker 8: He's a bully, he's a liar, and he's only running
Speaker 8: in order to stay out of prison. And what's even
Speaker 8: crazier is that he is using, you know, hard working
Speaker 8: Americans dollars to fund his illegal bills. Right, He's allegedly
Speaker 8: a billionaire, but he can't pay his own legal bills.
Speaker 2: And former Texas Congressman Will heard me the comments on
Speaker 2: Bloomberg Sound on. Catch the program weekdays at one pm
Speaker 2: Eastern on Bloomberg Radio and download the show wherever you
Speaker 2: get your podcasts.
Speaker 3: Karen, there's also news on US China relations this morning,
Speaker 3: this time involving spies. Two US sailors have been charged
Speaker 3: with selling military secrets to China. Bloomberg's Nancy Lyons has
Speaker 3: more from Washington.
Speaker 9: Both men are Chinese born, naturalized US citizens, The Justice
Speaker 9: Department says. One of them, twenty two year old Petty
Speaker 9: Officer second Class Chin Chow Patrick Way, was arrested and
Speaker 9: charged with espionage for passing images and locations for various
Speaker 9: naval ships, as well as dozens of technical manuals. Randy
Speaker 9: Grossman is the US Attorney for the Southern District of California.
Speaker 10: Whether it was greed or for some other reason, Way
Speaker 10: allegedly chose to turn his back on his newly adopted
Speaker 10: country and enter a conspiracy with his Chinese handler.
Speaker 9: The other sailor was charged with conspiracy and receipt of
Speaker 9: a broad in Washington. Nancy Lyons Bloomberg Daybreak, All.
Speaker 2: Right, Nancy, thank you well. Back on Wall Street. Another
Speaker 2: corporate item to catch you up on. It looks like
Speaker 2: the next chapter for Simon and Schuster reads like an
Speaker 2: acquisition Bloomberg. Steve Rappaport joins us with the detail.
Speaker 11: Steve, good morning, Karen and Nathan. It's not in the
Speaker 11: books yet, but sources tell the Wall Street Journal private
Speaker 11: equity firm kkar As in advanced talks to buy the
Speaker 11: publisher for roughly one point sixty five billion dollars. It's
Speaker 11: the second attempt by Paramount Global to offload Simon and Schuster.
Speaker 11: A potential sale to rival Penguin Random House was blocked
Speaker 11: by a federal judge. Simon and Schuster is nearly a
Speaker 11: century old and rich in literary history, with legends like
Speaker 11: Ernest Hemingway, f Scott Fitzgerald, and Stephen King gracing its pages.
Speaker 3: In New York. Steve Rappaport Bloomberg Daybreak Time Now to
Speaker 3: take a look at some of the other stories making
Speaker 3: news in New York and around the world with Bloomberg's
Speaker 3: John Tucker. Good Morning, John, Good.
Speaker 12: Morning, Nathan Blong. Outland railroad service it could be delayed
Speaker 12: this morning after a dear ralman in Queens yesterday. Thirteen
Speaker 12: people were hurt. The injuries for minor. The incident involving
Speaker 12: all eight of the train's car has occurred before at noon,
Speaker 12: about a half a mile east of the Jamaica Train station.
Speaker 12: The MTA investigating, but the incident has been ruled out
Speaker 12: as speed as a factor in that derailment. The United
Speaker 12: Auto Workers is asking car makers for a forty percent
Speaker 12: pay increase. Let's get more in that story from Bloomberg's
Speaker 12: Jeff Bellinger.
Speaker 13: The request for forty percent pay increases over four years
Speaker 13: is part of the uaw's opening proposal and contract discussions
Speaker 13: with General Motors Ford Stilantis. The current labor pact expires
Speaker 13: September fourteenth. Along with the raises, the UAW has also
Speaker 13: said it wants cost of living allowances, improved pensions, and
Speaker 13: better treatment for temporary workers. The requests are among the
Speaker 13: largest ever to major corporations. General Motor says the company
Speaker 13: plans to offer wage increases, but said the union is
Speaker 13: asking too much. Jeff Bullinger, Bloomberg Daybreak.
Speaker 12: Divided Federal Appeals Court is reinstated the Biden administration's rule
Speaker 12: that limited asylum eligibility. The rule seeks to curb unlawful
Speaker 12: entries into the US by presuming certain groups of unauthorized
Speaker 12: migrants ineligible for asylum. Ten days into the coup in Niger,
Speaker 12: US defense officials eight hundreds of American military personnel remained
Speaker 12: stationed in the West African country. Pentagon spokesman Burgadier General
Speaker 12: Patrick Ryders's there have been no changes to the US
Speaker 12: military force posture.
Speaker 14: We're continuing to monitor the situation, which remains fluid and evolving,
Speaker 14: but right now again our focus is going to continue
Speaker 14: to be on a diplomatic solution to the situation there.
Speaker 12: Nigeria has been a key partner in the West fight
Speaker 12: against Islamic extremists. Authorities in South Jersey still searching for
Speaker 12: two people after a house explosion Thursday morning left to
Speaker 12: two others dead and two children injured in Atlantic County.
Speaker 12: The cause of the blast still unknown, but it was
Speaker 12: so intense it reduced the house to rubble and damaged
Speaker 12: other nearby holmes, and the unrelenting heat making an unwelcome
Speaker 12: return to more parts of the nation. In Texas, Ramona
Speaker 12: and monwey Iisen were found dead inside their home outside
Speaker 12: Houston after their air conditioning failed. The great grandparents would
Speaker 12: have been celebrating their fifty second anniversary this week. Global
Speaker 12: News twenty four hours a day, powerplin more than twenty
Speaker 12: seven hundred journalists and analysts in more than one hundred
Speaker 12: twenty countries. I'm John Tucker. This is Bloomberg Nathan.
Speaker 3: Thank you John. Time now for our Bloomberg Sports Updacod morning.
Speaker 3: John Stashauer, Good morning, Nathan.
Speaker 15: The Yankees able to do something they failed to do
Speaker 15: in four attempts last fall in the American League Championship Series.
Speaker 15: They beat the Astros at the Stadium. They got back
Speaker 15: to back home runs with two outs in the first inning.
Speaker 15: Don Carlos stands with a man on, then Billy McKenny
Speaker 15: Kyle Tucker homer in the sixth for Houston to tie
Speaker 15: the game. Anthony Volpie's RBI single bottom of the six
Speaker 15: put the Yanks back ahead, and they won four to three.
Speaker 15: Clay Holmes working out of a jam in the ninth.
Speaker 15: They won without Anthony Rizzo. He's on the injured list
Speaker 15: with a concussion that likely dates back to a collision
Speaker 15: back in May. At that point, Rizzo was batting over
Speaker 15: three hundred. Since then one seventy two, Domingo Herman season
Speaker 15: is over. He's in alcohol rehib SNY reported Herman was
Speaker 15: drunk in the clubhouse before Tuesday's game. Matts swept in
Speaker 15: Kansas City, lost again to the lowly Royals nine to two,
Speaker 15: and after three losses to a team forty games under
Speaker 15: five hundred, the Mets now play three in Baltimore, who's
Speaker 15: twenty five games over Max Scherzer, debuted for Texas, pitched
Speaker 15: the Rangers to victory. The Angels lost on a Seattle
Speaker 15: Grand Slam of the ninth Ennis Show. Heyo Tani in
Speaker 15: defeat to his fortieth home run. Preseason football Canton, Ohio
Speaker 15: Jets had leads of thirteen to nothing sixteen to seven
Speaker 15: at the half. The Browns, who had two long touchdown
Speaker 15: drive second half to win twenty one sixteen. Former Jets,
Speaker 15: Joe Cleco and Derel Reebis among nine to be inducted
Speaker 15: to the Hall Tomorrow. Easy went for the Phoenix Mercury
Speaker 15: as Forty one year old Diana Tarrossi scored forty two points,
Speaker 15: a WNBA record thirty two in the second ALP Tarrosite
Speaker 15: won over ten thousand points for her career.
Speaker 3: JNS Dashaward. Bloomberg Sports.
Speaker 13: From coast to coast, from New York to San Francisco,
Speaker 13: Boston to Washington, DC, nationwide on SYRIASXAM, the Bloomberg Business app,
Speaker 13: and Bloomberg dot Com.
Speaker 3: This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. Tech
Speaker 3: earning season is wrapping up with mixed results from two
Speaker 3: of the biggest names in the digital economy. Amazon delivered
Speaker 3: a strong performance in its latest quarter, while Apple's third
Speaker 3: quarterly revenue decline cut a little bit deeper than many
Speaker 3: investors may have expected. Let's get some insights now from
Speaker 3: one of the top tech analysts on Wall Street and
Speaker 3: outlook for how the digital economy could go from here.
Speaker 3: Gene Munster is with us this morning, the managing partner
Speaker 3: at Deepwater Asset Management. Gene, it's great to speak with
Speaker 3: you on this Friday morning. Let's start off with Amazon,
Speaker 3: because it really did seem to come in a lot
Speaker 3: better than expected, not just on the e commerce side,
Speaker 3: but on the cloud as well, all while cutting costs.
Speaker 3: What stands out to you from Amazon's results, well.
Speaker 16: Two things stand out. First is the pressure point.
Speaker 17: So every company has really one or two pieces that
Speaker 17: investors hyper focus around in earnings. And the pressure point,
Speaker 17: of course was AWS and it was slightly better after
Speaker 17: being worse for the past year, so it grew by
Speaker 17: twelve percent. Investors were looking for plus eleven percent, so
Speaker 17: that was positive and the majority of their profit comes
Speaker 17: from AWS, and so that stood out. The second piece
Speaker 17: related to profit is the retail profitability bumped up for
Speaker 17: the first time in four quarters and so that had
Speaker 17: a margin of about two and a half percent, and
Speaker 17: that said, it's been negative and retail is seventy five
Speaker 17: percent of Amazon's business. So you put those two together
Speaker 17: and what you get is upside on their profitability.
Speaker 16: And not only that, that carries forward into the September quarter.
Speaker 17: So when they gave guidance, guidance was up called the
Speaker 17: midpoint of their operating income was twenty seven percent higher
Speaker 17: than what the street was expecting for September.
Speaker 16: So all good when it comes to profitability.
Speaker 17: And actually even revenue for September is going to be
Speaker 17: up slightly higher than what the street, four percent higher than.
Speaker 16: What investors were expecting.
Speaker 17: So a good day for Amazon after a long time
Speaker 17: of having some difficult reports and guidance.
Speaker 3: Yeah, particularly when the focus coming into this year had
Speaker 3: been on pretty extreme cost cutting measures from Amazon. Do
Speaker 3: you expect that to continue? Gene? What was the bigger
Speaker 3: driver as well for this revenue beat on the e
Speaker 3: commerce side? Was it more sales to customers or more
Speaker 3: cost cutting?
Speaker 17: It was sales to customers In terms of the cost cutting.
Speaker 17: Is it going to continue? The answers It's part of
Speaker 17: I guess an efficiency piece of Amazon a lot of
Speaker 17: big tech companies are talking about this, but we're through
Speaker 17: the big cuts that we've seen over the past year,
Speaker 17: so don't expect headlines about Amazon cutting people. And then
Speaker 17: what drove that the retail upside was paid units, that's
Speaker 17: the number of items that they sell online. Surprisingly accelerated
Speaker 17: in the quarter, was up nine percent year of year
Speaker 17: versus up eight percent in the March quarter.
Speaker 16: And so that was a surprise.
Speaker 17: And why was it a surprise is because the consumer
Speaker 17: has been more sluggish, and you'd have expected those numbers
Speaker 17: to continue to cliine off of larger numbers, the law
Speaker 17: of large numbers. So the paid numbers suggest that the
Speaker 17: breadth of Amazon's retail business continues to be healthy.
Speaker 3: Will it continue to be healthy if we do continue
Speaker 3: to see consumer sluggishness into the rest of this year, I.
Speaker 16: Think that it will decline.
Speaker 17: Those growth rates will decline, will go from nine percent
Speaker 17: to eight to seven. But I think that the bigger
Speaker 17: picture is that it's still going to grow faster than
Speaker 17: broader retail. When we think about bricks and mortar, it's
Speaker 17: still depending on the numbers that you look at, sixty
Speaker 17: to eighty percent of what we buy is bought and physical,
Speaker 17: and so I think that yes, it will accelerate, but
Speaker 17: it's still going to be much better than what the
Speaker 17: alternative is for investors. And separately, as we fast forward
Speaker 17: and look at how this plays out over the next
Speaker 17: many years, we still have a large growth opportunity around
Speaker 17: e commerce. It's a part of the Amazon story that
Speaker 17: is surprisingly not talked much about, the retail piece. But
Speaker 17: I think that even though if it slows in the
Speaker 17: near term for a few quarters, I think it's still
Speaker 17: in a great place longer term.
Speaker 3: Gene monsters with us this morning. The managing partner in
Speaker 3: deep Water Asset Management is these earnings not just from Amazon,
Speaker 3: but from Apple. Want to turn to the iPhone maker now,
Speaker 3: because we were expecting going into this reporting cycle, Gene,
Speaker 3: that Apple was going to report a third straight quarter
Speaker 3: of revenue declines. But it seems like those iPhone sales
Speaker 3: numbers came in a little bit worse than a lot
Speaker 3: of analysts were expecting. Did Apple's results meet your expectations?
Speaker 16: They did?
Speaker 17: In terms of the June quarter. I generally think about
Speaker 17: this is you got to look at this in the
Speaker 17: sum of the parts. There's some quarters where iPhone does
Speaker 17: a little bit better and carries the story, and that's
Speaker 17: been the case over the last few quarters. And then
Speaker 17: sometimes other parts of the business carry the story. In
Speaker 17: this case it was services, which is twenty percent of
Speaker 17: their business. When you put it together, the reason why
Speaker 17: I wasn't surprised is the June quarter effectively was inline,
Speaker 17: and that's not why the stock is down. It is
Speaker 17: at all time highs and so there's some expectations built
Speaker 17: in there. But I think that what stood out to
Speaker 17: investors on this was that their expectations for the September
Speaker 17: quarter was a little bit muted versus where I would
Speaker 17: have been at. So they guided to revenue being down
Speaker 17: one percent year every year, and investors were expected to
Speaker 17: be up one percent. So in the case when Apple,
Speaker 17: whenever you have that small deviation off of those high expectations,
Speaker 17: you get this reaction of the stock being down a
Speaker 17: little bit.
Speaker 16: But that's what stood out to me from the quarter.
Speaker 16: But I don't think that was what was most important
Speaker 16: about the outlook.
Speaker 3: What was most important about the outlook for you.
Speaker 17: The most important part was this active base of devices,
Speaker 17: and they led the press release off and talked about
Speaker 17: this this is a theme that they've been talking more
Speaker 17: about and speaks to an investor shift. What it is
Speaker 17: is the number of devices that are used on a
Speaker 17: monthly basis. So they said that number grew. They didn't
Speaker 17: give the percentage growth, but it grew. It's continued to grow.
Speaker 17: Now it's over two billion devices. It hit that two
Speaker 17: billion number back in December, but continues to grow. Why
Speaker 17: that's so important is that's really the flywheel, and that
Speaker 17: is this concept that consumers buy one Apple product, they
Speaker 17: fall in love with it, they buy another product, they
Speaker 17: add a service, they upgrade, and this process just repeats
Speaker 17: over years. That's what keeps investors, gives them the ability
Speaker 17: to sleep well at night, and that's why Apple's multiple
Speaker 17: I think has been going up. But that all important piece,
Speaker 17: this active install base continue to do well.
Speaker 16: And then separately, how you continue to grow.
Speaker 17: More specifically is the India opportunity is significant, and Cook
Speaker 17: talked as much about that. I think you're gonna hear
Speaker 17: a lot more about India related to Apple and the
Speaker 17: years to come.
Speaker 3: There's been a lot of attention, of course, as you know,
Speaker 3: on artificial intelligence throughout this year. When it comes to
Speaker 3: the tech story, did Tim Cook say enough about AI
Speaker 3: in the call.
Speaker 17: He didn't say much at all about it, and it
Speaker 17: has been kind of representative how Apple has approached to
Speaker 17: this mega theme is not to say much about it,
Speaker 17: kind of just more speaking in terms of their products,
Speaker 17: and Apple's AI approach is more based on how AI
Speaker 17: impacts their hardware. The vision pro the new device that
Speaker 17: they have coming out next year is there's a lot
Speaker 17: of AI that goes into building that. But there's an
Speaker 17: opportunity that wasn't talked as much about. And I refer
Speaker 17: to this as personalized AI. Not just the ability of
Speaker 17: AI to answer a question for you, but to actually
Speaker 17: do a task, to book a flight, to book a reservation,
Speaker 17: to help move some money around, whatever it may be.
Speaker 16: There's opportunities for AI to do that.
Speaker 17: Apple has a great position because of their view on
Speaker 17: privacy and security.
Speaker 16: They didn't talk much about that.
Speaker 17: I do think that is something you'll hear more about
Speaker 17: from Apple AI in the future.
Speaker 3: Do you think we're going to hear more about AI
Speaker 3: from Amazon as well? It seems like Amazon's kind of
Speaker 3: playing catch up a little bit when it comes to
Speaker 3: some of these other companies that put so much attention
Speaker 3: on this technology, like Microsoft, and Alphabet.
Speaker 16: Definitely.
Speaker 17: If you're going to kind of put a grid together
Speaker 17: or kind of rank the big tech companies in terms
Speaker 17: of how much they're talking about AI, probably apples at
Speaker 17: the bottom of the list, and then the one up
Speaker 17: from that is Amazon. Not to say they don't have opportunities,
Speaker 17: they just haven't been talking as much about it. But
Speaker 17: Amazon does talk about a relative to different ways that
Speaker 17: they are hosting these models and specifically the opportunity.
Speaker 16: That they have around AWS.
Speaker 17: And that's one of the reasons why I think that
Speaker 17: the stock is doing well today is this positive commentary
Speaker 17: related to AWS and how it's going to start to
Speaker 17: grow a little bit faster than the back half of
Speaker 17: the year.
Speaker 16: And so, yes, Amazon has a lot to say.
Speaker 17: About AI, not as much as Microsoft's and Google. Google
Speaker 17: mentioned AI fifty three times on their prepared remarks on
Speaker 17: their joom call hard to keep up with that pace,
Speaker 17: but Amazon clearly has an opportunity in AI.
Speaker 3: Is there still room for this tech rally that is
Speaker 3: dominated this year to continue?
Speaker 16: Yes.
Speaker 17: The reason is that our dependency on these companies has
Speaker 17: always been high, it's been growing, and now we're at
Speaker 17: the kind of the front. The first six months of
Speaker 17: what's going to be a decade shift around AI. I
Speaker 17: believe it will exceed the hype, and I think that
Speaker 17: these big tech companies will be some of the biggest
Speaker 17: beneficiaries of it.
Speaker 1: This is Bloomberg day Break Today, your morning brief on
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