August 1, 2025 • 40 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
President Donald Trump said he was directing officials to fire Erika McEntarfer, the commissioner of the Bureau of Labor Statistics, hours after a report showed US job growth cooled sharply over the last three months.
“I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY,” Trump said on social media Friday, accusing her, without evidence, of politicizing the jobs report. “She will be replaced with someone much more competent and qualified. Important numbers like this must be fair and accurate, they can’t be manipulated for political purposes.”
Friday’s jobs report from the BLS showed payrolls increased 73,000 in July after the prior two months were revised down by nearly 260,000. In the past three months, employment growth has averaged a paltry 35,000 — the worst since the pandemic.
BLS didn’t immediately respond to a request seeking comment. Former President Joe Biden nominated McEntarfer to head the statistical agency in 2023. She was confirmed in January of 2024, an election year, by a vote of 86-8, with then-Senator JD Vance voting “yea.”
Today's show features:
- Bloomberg News Economic Editor Molly Smith and Bloomberg News Senior Editor, Equities Americas Eric Weiner on the week in markets, and President Donald Trump's move to fire the head of the Bureau of Labor Statistics
- Bloomberg Intelligence Senior Defense Analyst Wayne Sanders on heightened tensions between the United States and Russia
- Laura Martin, Senior Analyst at Needham & Company on this week's earnings from Apple, Meta and Amazon
- Dr. Ellen Wald, President of Transversal Consulting and Senior Fellow at the Atlantic Council, on earnings from Exxon and Chevron, and the global energy trade
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:08):
This is Bloomberg Business Week, Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy. Plus global business finance
and tech news as it happens. The Bloomberg Business Weekdaily
Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio
(00:32):
Pivotal Week.
Speaker 3 (00:33):
That was mag seven earnings, a FED meeting, tar off deadline,
lots of economic data, you know, all this, a jobs
report this morning, President Trump. I'm not happy with the
labor report. We've got a FED governor right that's leaving
a FED official. There's a lot. So let's get to
our roundup of the week. We've got a great roundtable.
Eric Wiener is Bloomberg New Senior Editor Equities America's, along
(00:54):
with Bloomberg News Economics Editor Molly Smith, both here in
our Bloomberg Interactive Brokers Studio. We're not going to talk
about Rolex watches. We're not going to talk about the
great state of New Jersey, Jersey though sure it is
a great stake going there this weekend for it. Love it, Molly,
I want to begin with you you continue to digest everything.
We've had Mike McKee back in studio a total of
(01:16):
three times because of everything that just kept happening and happening.
Where to begin, what's front and center as you look
at the week.
Speaker 1 (01:22):
That was, Oh boy, I guess it's really more of
the day that was for me at this moment. So
really starting out with the jobs report this morning, weaker
than expected for July, but really the eye catching figure
was that downward revision to May and June, biggest since
biggest two month revision, sorry, since the pandemic got a
lot of people's attention. Spoke to issues that we've laid
(01:42):
out in a separate piece with seasonal adjustment issues as
well as what's been a broader issue of just declining
response rates to surveys. That makes you know, the initial
rate that BLS collects from firms that can change a
lot as they collect more sample in the subsequent months
when they survey these firms and more of them respond.
And then of course we get the big bombshell that
(02:03):
he is going to fire the head of BLS, Erica mcintarford.
This is a Biden era appointee, but really key to
keep in mind here that BLS is very much an independent,
non partisan institution, and anybody would tell you that that
is why there's statistics as well as the really the
breadth of US statistics as a whole are so good
it is because they are non partisan and they don't
(02:25):
have political influence.
Speaker 4 (02:26):
So this really is just like a.
Speaker 1 (02:28):
Huge announcement that you know of assuming that he does
follow through with it, that it really could undermine a
lot of public and market trust in the data.
Speaker 5 (02:37):
Well, the President piling on with a post at three
forty five saying, quote, in my opinion, today's jobs jobs
numbers were rigged, that's all in caps, in order to
make the Republicans and me look bad. He said that
Jerome too late, Powell is no better. But the good
news is our country is doing great. Mollie, you just
(02:57):
told us it's a non partisan organization. I feel foolish
even asking the question, but just respond to the President's
accusation that the numbers were rigged he presented without evidence.
Speaker 1 (03:06):
Yeah, that's definitely not how revisions work. Actually, we got
a comment from BLS saying that revisions are needed in
order to paint a more accurate picture of the job's
data and this is just a normal part of data
collection efforts. And if anything, this is being hampered now
more by the fact that Trump has slashed budgets for
a lot of these statistical agencies and cut their staffing,
(03:29):
or a lot of the staffing rather has left through
deferred resignations and other opportunities to leave. That the data
collection efforts have been severely hampered. So this was not
an issue of rigging numbers. That definitely is not what's
at play here. And people on both sides of the
aisle will tell you that that this is like a
really gosh how to say that the data integrity is
(03:51):
just so paramount to this institution and it's there to
serve a public good.
Speaker 3 (03:54):
Well, it's paramount to the market trade and how everyone
global investors look at the US markets. Eric, come on
in on that, because I do think about what Molly
said that if he is excuse me, this individual is fired.
You know what that means in terms of undermining US
financial markets.
Speaker 6 (04:10):
Oh, all the traders are talking about this specifically. I
mean if you look at to Molly's point, if you
look at data from the US where the gold standard
we have the broadest variety. We have the most accurate reports,
and it's been that way for a while. The struggle
(04:30):
that there was a great story. Actually, the struggle that
BLS has had getting responses speaks to what's going on
in the markets right now with companies not wanting to
give that data up. But the full faith and trust
of what traders do is based upon us not inserting
our political beliefs into what's going on in the economy
(04:53):
and just really showing people all these different facets and
then you, as a trader, can make up your mind.
If things st you know, being manipulated, or you start
sensing that they're being manipulated, that becomes scary as a trader.
Speaker 5 (05:07):
Eric, do you think that that could serve as some
sort of guardrail against firing or making politicizing this organization,
the same way that the bond market sort of served
as a guardrail with post the so called Liberation Day,
when the President referred to the bond market getting a
little bit quote yippie.
Speaker 6 (05:28):
Well, what's interesting about this specific complaint is that he
actually needs bad jobs data to get the rate cut
that he wants.
Speaker 3 (05:38):
So like the prit play hasn't checked out. The warp
function on the bloebob work.
Speaker 6 (05:44):
So yeah, so yesterday was forty percent chance of a
rate cut. Now it's over eighty.
Speaker 7 (05:49):
It's like eighty six, I think.
Speaker 6 (05:51):
So basically everybody is now pricing in off of that,
off of that job's report. Everybody's pricing in a rape
cut in September. So it actually works in his direction.
So I mean in terms of what we're hearing about,
what how people will position off of this, it's so
incoherent that you really don't know the question becomes. And
(06:14):
it's this way with the FED too, because the FED
is a board, so we act. He's acting like Powell
tells the Fed like in some sort of mafia, you know,
the way that you know Gott he controlled the Gambinos,
he tells them what to do.
Speaker 7 (06:28):
It doesn't work that way.
Speaker 6 (06:29):
So there's sort of a lot of hope that just
in general, there's just too much noise and not enough
action or not action really that's going to happen. But
there's fear that he will start trying to influence, he
will start actually influencing the numbers, and if that shows up,
(06:51):
then people start questioning.
Speaker 1 (06:53):
And similarly to what Eric just said, there. It's a
bit of a similar dynamic at BLS two. Right, It's
not that Eric and Tarfer is the sole discretion over
what the.
Speaker 4 (07:03):
Jobs data says every month.
Speaker 1 (07:04):
This is an institution of roughly two thousand people globally
at BLS or sorry and the US not globally.
Speaker 8 (07:10):
Who compile all these reports.
Speaker 1 (07:13):
And I mean, she certainly signs off on them, but
like she is not at all, Like I honestly would
question what role she in particular has in the data
collection itself, which happens much beneath her level. But something
else that is really interesting about this too. When Eric's
talking about how reports like this help Trump's chances to
get the rate cut that he wants, so have all
(07:35):
the other reports from BLS on inflation, the very reports
that he's been saying are so great. So it's really
interesting then that the initial report initial tweets sorry that
he said that he just found out that mcintarfur's a
Biden era and point, I mean, well, first of all,
she's been there for like a year and a half,
and also she's been the one overseeing these great inflation
(07:55):
reports that he's been touting.
Speaker 3 (07:57):
And not being political. But I asked this question to
Mike mcgeeo. I said, when we got the numbers for
the prior month, I know they've been revised downward, but
when they initially came out, it's not like we heard
from the White House saying, wait, we questioned this number.
So it's just something we're trying to be smart about. Molly,
I want to ask you one more time and just
kind of wrap up here thirty seconds. The US economy,
(08:18):
though we are seeing weakness, but we still have some
inflation signs.
Speaker 4 (08:22):
Yeah, I mean I think.
Speaker 1 (08:24):
I mean, if we're just looking at the jobs report today,
I think for a lot of the takeaway was for
economists was that this really helped square up some of
the weakness that we saw in the GDP report, about
this underlying demand gauge being so weak, consumer spending softening,
We get netwild why because we saw the job growth
has been weaker for longer than we previously thought.
Speaker 3 (08:43):
I want to save thirty seconds for eric last thoughts
on the markets and kind of as we get ready
for another trading week next week.
Speaker 6 (08:49):
Yeah, I mean, right now, it's how long does it
take this stuff to filter through? If you look at
Tariff's you know the window was six months the earliest.
We're not even there yet, So my question is what, yeah,
what the numbers are going to show, because data now
matters FED.
Speaker 3 (09:07):
Speak though, we're going to get start getting here in
a lot well.
Speaker 1 (09:10):
I mean also the umpshell news that FED Governor Adriana
Kugler who's stepped down, which I'm sure is another part
of the program today.
Speaker 3 (09:18):
I told him Mike, Mike McKee was like a boomerang.
He just came back and forth. Mollie Smith. Our thanks
to you, and of course our thanks to Eric Wiener
as well. Guys, have a great, great weekend. This is
Bloomberg Business Weekdaily.
Speaker 2 (09:30):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch US live on YouTube.
Speaker 8 (09:44):
Well.
Speaker 5 (09:44):
As Carol mentioned, President Trump said the US is moving
two nuclear submarines to respond to what he called quote
highly provocative statements from former Russian president Dmitri Medvedev. Trump
didn't immediately provide details on what instigated his move, though
his post Friday was the the latest in a public
exchange of heated rhetoric with the former Russian president who
(10:04):
currently serves as Russia's deputy Chairman of the Security Council.
We've got with US Wayne Sanders, he's Bloomberg Intelligence senior
defense analyst. He joins us from Maryland. Wayne's situations such
as this where we publicly hear about a declaration of
these machines of war moving into a different position, How
(10:26):
seriously do you take that in the context of escalating
conflict with Russia.
Speaker 9 (10:31):
Yeah, I would say that I'm more concerned about the
fact that President Trump actually said it out loud as
probably the bigger piece of it.
Speaker 7 (10:38):
We have the Virginia class submarines.
Speaker 9 (10:40):
We've got Los Angeles class submarines, both which are these
attack submarine types. Then we have the nuclear submarines, the
ICBM types, the ballistic missile submarines as they're known right.
We have a lot of these, and we have twenty
four Virginia class. We have almost fifty of the attack.
We've got fourteen that are the ballistic missile submarines, and
(11:02):
a lot of them are always operationally deployed and they
are there to provide force projection for military power across
for the United States around the world, right, So these
things are out there most of the time. Anyway, when
you think about a carrier strike group, they normally come
with a nuclear powered submarine as part of the complement
whenever the President decides to move.
Speaker 7 (11:23):
One of those carrier strike groups anywhere.
Speaker 9 (11:25):
So the fact that he's talking about where he's parking it,
I think is the key indicator here. Is saying, hey, look,
I've got these capabilities, I have these nuclear powered submarines
that you can't find, and I'm just telling you about
where they're going to be. But at the end of
the day, our technology is so good from a stealth perspective,
and others were ten years ahead.
Speaker 7 (11:45):
Of China and Russia at a minimum from that perspective.
So I think we're actually doing pretty well. But he's
making his statement clear.
Speaker 5 (11:53):
So you would argue that if this were like, what
would be the difference in your view if he had
kept this a secret, had done this in a way
that wouldn't actually communicate to the world about this repositioning,
would that actually mean that the tensions are more heightened
than they would be if he's publicly saying this. Since
(12:14):
he's publicly saying this. Can we read into this in
a way that's like, Okay, we shouldn't take it as seriously.
Speaker 9 (12:20):
Yeah, I mean, you know, we've talked previously in terms
of there's diplomatic information, military and economic levers of power
that you can use in the military side of the house,
and how you play a lot of those pieces.
Speaker 7 (12:31):
The fact that he's talking about it.
Speaker 9 (12:33):
Is probably a good time from that perspective, because if
you look at even Operation Midnight Hammer in the Iran strike,
you know, nobody talked about the fact that there was
an Ohio class ballistic or not the blistic missile one,
but they have four that are strike ones that fire
thirty tomahawks. Right. That's part wasn't talked about a whole
lot because everybody focused on the B two spirit in
(12:53):
the in the massive or in his penetrator. But that
was a key portion of it, and it was one
that wasn't just discussed. He didn't talk about, Hey, I
have this capability parked off of your off of your
your shore, off of your coast.
Speaker 7 (13:05):
The way that he is right now.
Speaker 3 (13:08):
How do you read this? I can't make sense of
the relationship between President Trump and President Putin, I don't know,
friends not friends, back and forth sanctions, that's still a threat.
I'm just trying to understand it.
Speaker 9 (13:21):
No, I think I think the key is from the
public view is making sure one of the best things
that he can do is use his information platform to
be able to make his his intentions clear. And part
of those intentions is I'm not I'm not happy with
what Midyette did and and I'm going to make sure
that everybody.
Speaker 7 (13:39):
Knows about it.
Speaker 9 (13:40):
I don't believe that from the perspective of where where
these are actually located? Right, Like I said, these things
are constantly operationally deployed anyway, So the fact that he
said it, as long as he's not giving a latitude
and longitude to where those locations are, you know, I
think that I think Putin knows right now that most
of the time there's probably some type of capability that
(14:02):
is somewhere near strike us.
Speaker 10 (14:04):
Since of it.
Speaker 7 (14:05):
Anyway, the fact is he's just mainly talking about it now.
Speaker 3 (14:08):
And is it significant that he didn't necessarily mention Putin
In this right somebody else that he's kind of ticked
off at, And so is that the way of kind
of keeping it safe and being like, hey, it wasn't
about you, it was about this other dude that's you know, Russian. Like,
is that kind of the justification or the or gave
President Trump the ability to do that?
Speaker 7 (14:31):
I would say yes, right. I think if you're looking
at the difference.
Speaker 9 (14:33):
Between escalation of force and de escalation of force with
a clear deterrence strategic deterrence message, this is a way
to be able to do that, and like you said,
I think that that gives him a little bit of
an out if Putin were to say anything to come
back and go no, no, no. I was responding to Medgettev
because Putin, I think, clearly knows that there is operational
(14:54):
capability around the world that we constantly use.
Speaker 3 (14:58):
Do you think he gave Putin again speculation? But I'm
going to go there? When do you think it gay?
President Putina heads up?
Speaker 9 (15:04):
I honestly don't know, because I don't know the inner
workings between Medyeedev and In Putin. I think that understanding
better the relationship between those two and how easy it
would be for President Trump to be able to say
I'm going to throw this out there at Medeta, but
it's not about you.
Speaker 7 (15:20):
Or if these two were partnered together.
Speaker 5 (15:22):
I'm going to read from the post that the president
made on true social quote based on the highly provocative
statements of the former President of Russia, Dimitri Medviedev, who
says the deputy Chairman of the Security Council, who's now
the Deputy Chairman of the Security Council of the Russian Federation,
I've ordered two nuclear submarines to be positioned in the
appropriate regions just in case these foolish and inflammatory statements
(15:44):
are more than just that. When we start out the
conversation with you explaining the way that these submarines are
part of carrier strike groups, does it mean that they
always travel together, they're always near one another. Does it
mean the entire strike group is being repositioned, or can
these nuclear subs go without other naval vessels.
Speaker 7 (16:05):
They're able to go. They're able to go without it normally.
What I was saying is that if you.
Speaker 9 (16:09):
Are going to put an aircraft carrier somewhere as part
of a defensive measure, and it's part of the entire
strike group packages you're talking about, you normally have your destroyers,
your frigates, have your nuclear powered submarine that we go
along with an aircraft carrier.
Speaker 7 (16:24):
So when you hear somebody say I'm deploying the US is.
Speaker 9 (16:27):
Gerald Ford and it's going to a specific location, normally
you can assume that this is the rest of the
compliment that's going to go there to not only protect
the aircraft carrier in the aircraft that are on it,
but the submarines can be free flowing that are separate
from that. Because obviously with twenty four Virginia Class, twenty
four Los Angeles Class, and fourteen of these Ohio Class
(16:48):
ballistic missile submarines, we have a lot more submarines than
we do carrier strike groups.
Speaker 5 (16:53):
Okay, Wayne Sanders got to leave it there. Bloomberg Intelligence
senior Defense analyst. He's a career military officer, ultimately was
a colonel in the US Army. Now at Bloomberg Intelligence.
We appreciate him joining us this afternoon.
Speaker 2 (17:06):
This is the Bloomberg Business Week Daily Podcast. Listen live
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New York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 3 (17:24):
All right, folks, let's get now to certainly something that
the equity markets have been focusing on, excuse me, all week,
and that has to do with MAG seven earnings. Right now,
I'm looking at Apple shares. They're down about two point
one percent higher.
Speaker 5 (17:37):
Earlier in the session too, they were.
Speaker 3 (17:39):
They actually showed some gains. That wasn't the case for
Amazon today It's been down as much as nine percent
right now, down about eight point six percent. Both reported
after the closed last night. Apple posting its fastest quarterly
revenue growth in more than three years, and yet Amazon
projecting weaker than expected operating income and trailing the sales
growth as some of its cloud rivals. So we definitely
(18:00):
are seeing some impact. It's all against the mag seven
that we've heard over the last two weeks or so.
Speaker 5 (18:04):
Great to have back with us. Laura Martin, senior analyst
over at Aninaman company who's coverage of the media, entertainment,
and internet spaces are a must read. She joins us
from Los Angeles. Laura, I want to start with Apple
and the pull forward or whatever we saw with the
huge beat when it came to that iPhone number, and
typically a time when people are not buying iPhones? How
do you explain it? Was it all about pulling forward
(18:25):
of demand to avoid tariffs?
Speaker 11 (18:28):
It is really that, I mean, that's what the market's
telling you today. Apple admitted that one hundred one thousand
basis points, so one percent of their revenue growth, which
was ten percent, well above average, was from pull forward.
And the market's telling you they think that number was
like five, you know, four half of the gain basically,
which and they also Apple also said they had eight
(18:48):
hundred million dollars of costs from tariffs in that second
that recorder they just reported, and it's going to go
up to one point one billion visibly in the September quarter.
But I think the mark is telling you they think
that could be higher in the September quarter.
Speaker 5 (19:03):
Oh so, does does this mean that we'll see fewer
iPhones bought in the first fiscal quarter Apple? But Apple's
December quarter, which typically is its biggest quarter, as a
result of the pull forward that we saw in this quarter.
Speaker 4 (19:18):
I think it's worse, it's faster.
Speaker 11 (19:19):
So the June quarter over delivered because they pulled forward
demand from the September quarter. Those are all old iPhones, okay,
and then in late September you typically get the new
iPhone and then you start this new annual cycle of
the new iPhone. And one of the things they said
that's turning the stock today is that Siri and Apple
Intelligence will only be integrated next year, by which they're
(19:41):
probably talking calendar year, which means the earliest we'll see,
you know, jenerative AI features drive an upgrade cycle for
the iPhone would be not September of twenty five, it'd
be September of twenty six. So then that tells you,
so this is dead money again, right, there's nothing driving
and there's risk here. Not only China subst drove a
(20:01):
really nice China growth number, four point eight percent China
revenue growth. People are worried that that is also like
that subsidy isn't going to recur, and we've had a
couple negative litigation regulatory decisions. Right, we've got we've got
the feed to twenty billion dollars a year is what
Google Search pays Apple to be the default search engine
(20:24):
on all iOS devices. I think that's pretty clear from
channel checks and DC that is not going to be
allowed to persist. So that's twenty billion that will come
out of services if it isn't allowed. And then similarly,
we have the epic they got Apple got a negative
epic Games which allows that which allows consumers to pay
(20:44):
directly to apps and not have Apple share thirty percent.
So that's another that's an app store risk that over
the next twelve months, not immediate, but over the next
twelve months.
Speaker 3 (20:54):
You know, Laura, We've had the luxury of talking with
you in the last week or two and talking specifically
about Apple. You've got a HOLD rating on it. It
doesn't sound like you have a lot of concerns. I
guess I should say why not put a cell rating
on it?
Speaker 6 (21:08):
You know?
Speaker 4 (21:08):
I mean, I think so.
Speaker 11 (21:09):
One of the issues is when you look at the
other mag seven, they basically have a singular strategy, which
is envision generative, AI is disruptive. We everyone else is
going to spend eighty five to one hundred billion dollars
in CAPEX in twenty twenty five alone, and we're going
to grow at twenty percent in twenty twenty six with
(21:31):
no Every one of them has been pushed on what
is that return on capital incremental capital? They all say,
we don't know. We just think it's going to be big.
If you don't believe that. If you're an investor and
you think that jeneritive AI is overhyped or the economics
are further off into the future, Apple.
Speaker 4 (21:47):
Is a great place to hide.
Speaker 11 (21:49):
They are spending twenty billion dollars a year, not eighty
five billion dollars a year. Jenerative AI is sometime in
the future. They're not spending they're not hiring people like
Meta Is for one hundred million dollars each to work
on super intelligence. This is Apple is a great place
to hide. If you are an investor that doesn't believe
in generative changing the world.
Speaker 3 (22:09):
Well, you know, it's interesting that you say that. I
can't remember who was either on surveillance this morning with
Tom and Paul, but it was just something to the
point that, well, wait a minute. You know, Apple often
isn't you know, first mover on some big changes, right,
we talked about it.
Speaker 7 (22:25):
Creates the tablet.
Speaker 5 (22:26):
They didn't create the music player, they didn't create the smartphone,
but they created the best of all those things exactly.
Speaker 3 (22:31):
So if they're saying, hey, guys, go ahead and spend
you know, your billions or trillions or whatever, the heck,
it is figure out this AI thing and then we'll
come in and we'll collaborate or partner with somebody. Maybe
that's not such a bad strategy.
Speaker 12 (22:44):
So it's risky business.
Speaker 11 (22:46):
So on the call last night, Tim Cook got this
question and what he said is, I don't see a
world where the consumer doesn't have an iPhone, which is
basically a computer in his pocket.
Speaker 4 (22:57):
Okay, that's a vision of.
Speaker 11 (22:59):
The future that Johnny Ive who's gone to Open AI
is trying to displace. Johnny Ive, who developed every Apple
product you have in your pocket while he was at
Apple for twenty years, is now saying he regrets creating
the screen because he thinks it makes people not pay
attention to one another. So he's trying to move the
next device with generative AI backing to not.
Speaker 12 (23:20):
Be a screen.
Speaker 11 (23:21):
So that may not work, but if it does Apple,
that's a problem for app. That is an existential risk
problem for Apple. So long as an iPhone and a
screen are going to be sort of the user device
of record and they're going to persist in ten years,
you might be right.
Speaker 4 (23:39):
That might be possible.
Speaker 11 (23:40):
What you just said, Apple can copy the best of Android,
which will have Gemini. Because Google has Gemini in every product. Now,
that will work.
Speaker 12 (23:49):
But if Jimmy I've and open AI are right and
screens are going away, that's problematic for a smartphone maker.
Speaker 5 (23:57):
I guess that's maybe where whatever they're working on for
a face computer could come in. Laura, I want to
go back to what you said about Gemini and Android
because of the way that Gemini is baked into Google devices. Now,
you say in your most recent note that Apple is
a single product company, its valuation risk is material if
iOS falls too far behind Android, would you say that
(24:18):
iOS is already behind Android right now?
Speaker 1 (24:21):
Oh?
Speaker 4 (24:21):
I would absolutely, I would.
Speaker 11 (24:23):
I mean when you look at Google's its revenue is
accelerating over at Alphabet, and its costs are going down,
so its productivity per employee is going up. Why Because
eighty percent of engineers are using Gemini to do their
first draft of code for new products. They're introducing new
products faster, they're integrating, They over delivered on advertising because
(24:47):
they're integrating all these better convert both Meta and Google
because they're using generative.
Speaker 4 (24:52):
AI to increase the conversion rate.
Speaker 11 (24:54):
So yes, Gemini is being integrated into everything at Alphabet,
Android included.
Speaker 5 (24:59):
Does it matter to two comments here? One is the
network effects that Apple has, And we're speaking with Laura
Martin over at Needham. If you're just joining us, the
network effects that Apple has, at least here in the
US are really strong, right, the blue bubbles for when
you're on I Message and the other Apple products that
you have that ideally are supposed to work seamlessly with that. Plus,
doesn't Gemini have an app that you can just use
on your iPhone? So if you want to use Gemini
(25:21):
as sort of a copilot here, if you are an engineer,
you can just do it on your iPhone, but through
an app that you get at the app store, if
it's standalone.
Speaker 4 (25:30):
But I mean, I think my guess.
Speaker 11 (25:32):
Is where Alphabet's going is they're going to integrate. They're
going to integrate Gemini into everything on your device. It's
going to know where your appointments are, it's going to
know who your friends are. It's going to be a
personal assistant integrated into your Android phone. It's going to
be a bigger idea than just a separate app where
you go to it. It's going to be like, even
if you listen to the meta vision of the world.
(25:54):
Super intelligence is about having a robot friend that does
everything for you better than a human can make you.
I mean, it's just I think these are bigger ideas
than an app store.
Speaker 4 (26:07):
By the way, some.
Speaker 11 (26:08):
CEO's visions of their apps are disappearing. So then you say,
so what replaces them?
Speaker 4 (26:13):
Well, I don't know. Used to be websites. Then we
went to apps. What's next? It may not be apps?
All right?
Speaker 3 (26:20):
You mentioned I want to just get to Meta and Amazon?
What about Meta? You know? In terms of I mean
that Stock was just off and running following it's quarterly update,
those ad sales numbers, certainly catching everybody's attention, a mega
megaspen when it comes to AI. What is your hot
take on that one?
Speaker 11 (26:39):
So Stock up strongly, really strong fundamentals, just sixty percent margins,
twenty two percent revenue growth, and a huge company which
was the fastest of the group that we the big
tech companies we call really strong fundamentals. We are cautious
on Meta, and that is because they took their capex
(27:01):
to seventy billion this year and one hundred billion next
year again no return in sight, and their stock comp
per person is going through the roof as they hire
super intelligence employees, with press reports saying they're paying one
hundred to three hundred million over three years for each
of these people.
Speaker 7 (27:20):
Pretty good work, get it, I'll say.
Speaker 1 (27:22):
Yeah.
Speaker 11 (27:23):
My guess is they're trying to change the world right
and they believe in super intelligence, which this isn't a
vision of making you and I'm more productive. This is
about replacing human beings with machines that teach machines. So
it's literally terminator like life imitating art type of stuff.
Speaker 5 (27:39):
Doesn't sound like your pro AI in that In that context,
let's stick.
Speaker 4 (27:44):
Let's stick to Meta as a stock.
Speaker 12 (27:46):
My concern is that we're kind of we're losing.
Speaker 11 (27:49):
Five billion dollars a quarter on reality labs, and we're
still funding the Metaverse, and we're funding Quest goggles, and
we're funding ar glass way band glasses, and now we're
funding a Jenna competition with companies.
Speaker 4 (28:02):
Twice their size. All of that feels like a lot.
Speaker 11 (28:04):
Of capital spending to me and actually costs to me
without a clear sense.
Speaker 5 (28:09):
But investors are saying they are okay with it up
to now because they believe that Mark Zuckerberg has this
vision for super intelligence, which to be honest, nobody has
actually articulated to me, well, what does that world look
like that that meta wants to create and thinks will
be so profitable?
Speaker 3 (28:26):
Are they?
Speaker 6 (28:26):
Okay?
Speaker 3 (28:27):
Just because the ad sales number came in really strong,
Like if it didn't, might everybody be like maybe not?
Speaker 11 (28:32):
Okay, Yes, absolutely, he is buying the right to spend
money like a drunken salor because his fundamentals and his
core business are strongly over delivering consensussessments. The day that stops,
the music stops, and suddenly people are going to take
a hard look at these You know, he's making five
(28:54):
year commitments for these super intelligence employees, and he's making
ten year commitments with the money.
Speaker 4 (28:59):
He's spending on data.
Speaker 11 (29:00):
So all of this money he has a free pass
so long as his core business is growing twenty two percent.
Speaker 5 (29:07):
Okay, okay, totally makes sense, sort of the free pass
Like Elon was, you know, allowed to be CEO of
many different companies and investors were fine with it until
they weren't. Jack Dorsey the same thing, right, It works
until it doesn't. Yeah, what about though, the promise of
this being profitable in the future, all this investment ultimately
(29:28):
paying off beyond making ads more efficient, what is that vision?
What does that world look like in your view at
least articulated by Mark Zuckerberg.
Speaker 11 (29:38):
So again, so Mark Mark is just he has got
a big idea. He wants to replace Apple, that's for sure,
so does open AI. So Apple takes a thirty percent
tithe on every dollar earned on its platform, and that
hurts Mark Zuckerberg not only because Apple gets paid for
a lot of work he is doing on Facebook and Instagram,
(29:58):
but also it allows them to change policies and procedures
like around security and safety and privacy. That costs Mark
Zuckerberg ten billion in revenue three years ago, and since then,
Mark Zuckerberg is all about replacing Apple or that piece
of hardware with ray bound glasses or Quest goggles.
Speaker 12 (30:17):
Or something or the metaverse.
Speaker 11 (30:19):
He's trying to displace Apple, and he wants to be
the backbone that everybody has to pay thirty percent to.
Speaker 12 (30:25):
So that's his main economic mission.
Speaker 11 (30:27):
And now Jenerative AI comes along, which I think, you know,
I think many CEOs thinks it changes everything. Even Apple
said it's the biggest technological disruption of our lifetime. And
they benefited from mobile which you would have thought that
would they would have thought was bigger than Jenai, but
apparently not.
Speaker 3 (30:42):
So.
Speaker 11 (30:43):
I guess the question is meta is saying we think
they're super intelligence. We think every human being is going
to have a robot that they hold on to, maybe
without a screen. We don't know, you know, we don't
know what the form factor is. But that does things
for you where you see the world differently and it
helps you get through the world. But I don't think
we know what that is yet, and he doesn't either.
(31:04):
That's why he's hiring fifty smart people to have robots,
train robots faster to do stuff humans can't do.
Speaker 3 (31:11):
Well, nobody can do what you can do. We want
to ask you about Amazon. Sure this dock down still
more than eight percent here in the aftermarket, and I
think there is concerns about kind of the cloud spend comparison,
you know, among the big hyperscalers, Amazon still the biggest
when it comes to you know, we think about what's
going on in terms of the cloud. What you take
(31:33):
here are what we kind of need to be thinking
about with Amazon, because investors seemed pretty disappointed, are you.
Speaker 5 (31:40):
So?
Speaker 11 (31:40):
I think here's what I think is going on with
Amazon answer the first half of that question. So they
had very strong revenue growth up thirteen percent, which was like,
you know, we were four percentage points below that, and
very strong EPs and margins. But the problem is they
gave very tepic guidance. Are really worried about tariff's impacts here,
(32:03):
so they're worried about the next shoe to drop. They're
advertising grew very robustly at thirty twenty three percent, which
is great, and I think that would have been higher.
Speaker 12 (32:12):
Had not Tamu and Chean.
Speaker 11 (32:15):
Stopped advertising, you know, sort of on April tenth because
they lost the Dominimus except rule exception, So I think
that would have been higher. But that's a fabulous number.
Nobody's focusing on today.
Speaker 4 (32:25):
And I think.
Speaker 11 (32:26):
People investors we've talked to are frustrated with capital spending
on Kuiper, which has no revenue, capital spending for ten
years so far, on Alexa no revenue, and like they're
going to urban delivery same day, and I think people
don't understand their core business of e commerce.
Speaker 4 (32:43):
I think people don't understand that as to use a capital.
Speaker 11 (32:45):
At the same time, they just raised their capex guidance
when you do the numbers to round numbers, one hundred
and fifteen, one hundred and twenty billion this year. The
next closest is Microsoft and Google at eighty five billion,
So they're quite a bit above everybody else on the jennerative,
a I think and then AWS has a mnemic revenue growth,
you know, neg I mean thirty two percent margins in
(33:07):
the cloud business, and they were thirty nine percent ninety
days ago, like what the heck? And they say their
capacity constrained. So then we would forgive them if they
only report seventeen percent revenue growth, But then why aren't
your margins sixty percent?
Speaker 4 (33:20):
Why aren't they forty percent?
Speaker 11 (33:21):
Again it why not sell to the highest bidder the
last you know, you know, one gig of capacity. So
we saw that in both Azure over at Microsoft and
in Google Cloud slower I mean growth rates.
Speaker 12 (33:36):
But really high margins. And that just didn't play out at.
Speaker 3 (33:38):
Amazon all right around the world. We went, thank you
so much, Laura always appreciated by the way, Laura's got
a by rating on Amazon with a two hundred and
sixty five dollars share price target. The stock right now
just below two fifteen his share Laura Martin, have a
great weekend. Senior analyst at Needham and Company. Joining us.
Speaker 2 (33:54):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five pm Eastern.
Listen on Apple CarPlay and Android Auto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 3 (34:08):
Both Exon Mobil and Chevron posted better than expected results
after record oil production cushioned the impact of lower crude prices.
This is coming in a week where we've got oil
headed for its biggest weekly jump since Israel attacked Iron
in jude Let's get to it. Longtime oil industry watcher,
doctor Ellen Wald is back with us. She's president of
Transversal Consulting and Senior Fellow at the Atlantic Council. She's
(34:30):
also author of Saudi Inc. Which talks about the history
of Aramco and Saudi Arabia. Joining us from Boca Raton, Florida. Ellen,
great to have you back with us. Exon Chevron's result
last quarter? Was it full of special caveats and nuances.
Walk us through what we got from those companies and
what it tells us about kind of the oil market
and the oil business.
Speaker 4 (34:50):
Yeah, exactly.
Speaker 8 (34:52):
You know, both of them, they reported earning drops.
Speaker 10 (34:54):
I think that was very much expected given how low
oil prices were this past quarter pair to last year
and even the first.
Speaker 8 (35:03):
Quarter, so so that was very much to be expected.
Speaker 10 (35:05):
But at the same time, both of these companies are
looking very strong. Uh, you know, going forward, We've got
Chevron's acquisition of hess Is finally has passed its final
legal hurdle and it's going through. And then you know,
with Exxon's acquisition of Pioneer Natural Resources, you know, it
really looks good. They've got a lot of really good
acreage in the Permian which is considered highly profitable.
Speaker 8 (35:28):
Both companies are working together on off.
Speaker 10 (35:31):
Four projects in Guyana that are also expected to be
highly profitable.
Speaker 8 (35:35):
You know, Chevron, you know, It's project in Kazakhstan also
looks good.
Speaker 10 (35:40):
Despite all of these you know, slight snaffhoos in terms
of OPEC and production, it's just it's it's generally looking good,
especially as OPEK is expected to increase its production. The
really the big question that we see going forward here,
I think it's mainly.
Speaker 8 (35:55):
Oil prices, and the big question here is.
Speaker 10 (35:58):
Really, you know, what is going to happen with this
tariff business. I think the resolution or the deal with
Europe has definitely brought some more stability to that. You know,
with this resolution of these tariff issues or these trade
issues come the expectation of more trade, and more trade
is good for oil demands, so that's where you know,
that's where we're kind of looking in terms of the
(36:19):
market with that. I also think that the energy part
of that deal is very very good obviously for oil companies,
especially in the US, considering how much oil and gas
and other energy products the Europe has agreed to buy
from the United States. Really the question is can the
US actually supply all of that oil, given the fact
(36:40):
that the amount that they're talking in terms of the
dollar amount is basically like the total amount of oil
exports that the US exports already, So there's some questioning there,
But overall, it definitely looks good for American producers and
oil companies in the United States, even if the exact
details of that I think remained to be seen and
(37:01):
have to be hammered out. The other big question coming
up is just this tariff and secondary tariff issue with Russia.
Speaker 5 (37:09):
So that's the trade side of this, and I'm wondering
about the US economy side of this, and it's kind
of front and center today, at least when it comes
to the jobs market. Given a headline miss and the
revisions that we saw over the last few months from
the BLS numbers that we got earlier today, what, in
your view, does it potentially weakening job market or cracks
starting to appear in the job market due to the
long term demand picture for oil.
Speaker 10 (37:31):
Yeah, so weeks in the job market, cracks and fishers
there are definitely not a good sign for oil demand
in the United States, and I think that we saw
that with the weekly report as well.
Speaker 8 (37:43):
There was some kind of we would have expected a
much you know, we would have expected.
Speaker 10 (37:47):
Higher consumption and higher demand for this time of year.
Generally the summer months tend to be higher demand, and
what we saw was actually kind of weak, and in fact,
some people were actually questioning whether this was a reliable
But I think even kind of the revisions in the
jobs report, I think we have to say that, yeah,
this is definitely concerning. I think that it depends what
(38:08):
we see going forward in terms of oil consumption, particularly
as we're leading up to kind of end of summer,
you know, kind of the summer finale. Generally oil consumption
goes up around in gasolin consumptions up.
Speaker 8 (38:22):
Will it go up as much as expected? I think
is really the number we're looking to see.
Speaker 9 (38:27):
Ellen.
Speaker 3 (38:27):
I want to go back to something you said about
you know what we get in terms of possible sanctions
from President Trump when it comes to Russia. He has
said he expects to hit Russia with sanctions on August eighth,
so a shorter deadline for Russian President Vladimir Putin to
basically halt the war in Ukraine. Those sanctions, as we've
been reporting at, would likely take the form of tariffs
(38:47):
and countries that buy Russian energy. So I'm just curious
tie together the importance of Russia in the oil energy markets,
but also the complicated relationships, whether it's Russia, China, Russia
Indian because it all kind of comes together.
Speaker 8 (39:02):
Yeah, exactly. I think that you know, this is a.
Speaker 3 (39:05):
Really just about a minute left, So I just want
you to be able to manage that this.
Speaker 10 (39:08):
Is a really big ass I think that if we
do see any kind of secondary sanctions on countries that
buy Russian oil, either we're going to see these countries
dropping their purchases of Russian oil, and that's going to
put more demand on other oil sources, the US, OPEK,
Saudi Arabia, et cetera. And that could definitely cause oil
prices to go up in the short term. But if
(39:30):
they decide that they don't care about this, then you know,
we're just going to see more purchases of Russian oil
and that could definitely cause prices across the board to
kind of defleate.
Speaker 3 (39:39):
All right, going to leave it there, Ellen, Thank you
so much. Doctor Ellen Wall, President of Transversal Consulting, Senior
Fellow at the Atlantic Council. She's also author of Saudi Inc.
If you want to understand Saudi Ramco, Saudi Arabia when
it comes to the energy markets.
Speaker 2 (39:52):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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(40:13):
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Speaker 2 (00:08):
This is Bloomberg Business Week, Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy. Plus global business finance
and tech news as it happens. The Bloomberg Business Weekdaily
Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio
(00:32):
Pivotal Week.
Speaker 3 (00:33):
That was mag seven earnings, a FED meeting, tar off deadline,
lots of economic data, you know, all this, a jobs
report this morning, President Trump. I'm not happy with the
labor report. We've got a FED governor right that's leaving
a FED official. There's a lot. So let's get to
our roundup of the week. We've got a great roundtable.
Eric Wiener is Bloomberg New Senior Editor Equities America's, along
(00:54):
with Bloomberg News Economics Editor Molly Smith, both here in
our Bloomberg Interactive Brokers Studio. We're not going to talk
about Rolex watches. We're not going to talk about the
great state of New Jersey, Jersey though sure it is
a great stake going there this weekend for it. Love it, Molly,
I want to begin with you you continue to digest everything.
We've had Mike McKee back in studio a total of
(01:16):
three times because of everything that just kept happening and happening.
Where to begin, what's front and center as you look
at the week.
Speaker 1 (01:22):
That was, Oh boy, I guess it's really more of
the day that was for me at this moment. So
really starting out with the jobs report this morning, weaker
than expected for July, but really the eye catching figure
was that downward revision to May and June, biggest since
biggest two month revision, sorry, since the pandemic got a
lot of people's attention. Spoke to issues that we've laid
(01:42):
out in a separate piece with seasonal adjustment issues as
well as what's been a broader issue of just declining
response rates to surveys. That makes you know, the initial
rate that BLS collects from firms that can change a
lot as they collect more sample in the subsequent months
when they survey these firms and more of them respond.
And then of course we get the big bombshell that
(02:03):
he is going to fire the head of BLS, Erica mcintarford.
This is a Biden era appointee, but really key to
keep in mind here that BLS is very much an independent,
non partisan institution, and anybody would tell you that that
is why there's statistics as well as the really the
breadth of US statistics as a whole are so good
it is because they are non partisan and they don't
(02:25):
have political influence.
Speaker 4 (02:26):
So this really is just like a.
Speaker 1 (02:28):
Huge announcement that you know of assuming that he does
follow through with it, that it really could undermine a
lot of public and market trust in the data.
Speaker 5 (02:37):
Well, the President piling on with a post at three
forty five saying, quote, in my opinion, today's jobs jobs
numbers were rigged, that's all in caps, in order to
make the Republicans and me look bad. He said that
Jerome too late, Powell is no better. But the good
news is our country is doing great. Mollie, you just
(02:57):
told us it's a non partisan organization. I feel foolish
even asking the question, but just respond to the President's
accusation that the numbers were rigged he presented without evidence.
Speaker 1 (03:06):
Yeah, that's definitely not how revisions work. Actually, we got
a comment from BLS saying that revisions are needed in
order to paint a more accurate picture of the job's
data and this is just a normal part of data
collection efforts. And if anything, this is being hampered now
more by the fact that Trump has slashed budgets for
a lot of these statistical agencies and cut their staffing,
(03:29):
or a lot of the staffing rather has left through
deferred resignations and other opportunities to leave. That the data
collection efforts have been severely hampered. So this was not
an issue of rigging numbers. That definitely is not what's
at play here. And people on both sides of the
aisle will tell you that that this is like a
really gosh how to say that the data integrity is
(03:51):
just so paramount to this institution and it's there to
serve a public good.
Speaker 3 (03:54):
Well, it's paramount to the market trade and how everyone
global investors look at the US markets. Eric, come on
in on that, because I do think about what Molly
said that if he is excuse me, this individual is fired.
You know what that means in terms of undermining US
financial markets.
Speaker 6 (04:10):
Oh, all the traders are talking about this specifically. I
mean if you look at to Molly's point, if you
look at data from the US where the gold standard
we have the broadest variety. We have the most accurate reports,
and it's been that way for a while. The struggle
(04:30):
that there was a great story. Actually, the struggle that
BLS has had getting responses speaks to what's going on
in the markets right now with companies not wanting to
give that data up. But the full faith and trust
of what traders do is based upon us not inserting
our political beliefs into what's going on in the economy
(04:53):
and just really showing people all these different facets and
then you, as a trader, can make up your mind.
If things st you know, being manipulated, or you start
sensing that they're being manipulated, that becomes scary as a trader.
Speaker 5 (05:07):
Eric, do you think that that could serve as some
sort of guardrail against firing or making politicizing this organization,
the same way that the bond market sort of served
as a guardrail with post the so called Liberation Day,
when the President referred to the bond market getting a
little bit quote yippie.
Speaker 6 (05:28):
Well, what's interesting about this specific complaint is that he
actually needs bad jobs data to get the rate cut
that he wants.
Speaker 3 (05:38):
So like the prit play hasn't checked out. The warp
function on the bloebob work.
Speaker 6 (05:44):
So yeah, so yesterday was forty percent chance of a
rate cut. Now it's over eighty.
Speaker 7 (05:49):
It's like eighty six, I think.
Speaker 6 (05:51):
So basically everybody is now pricing in off of that,
off of that job's report. Everybody's pricing in a rape
cut in September. So it actually works in his direction.
So I mean in terms of what we're hearing about,
what how people will position off of this, it's so
incoherent that you really don't know the question becomes. And
(06:14):
it's this way with the FED too, because the FED
is a board, so we act. He's acting like Powell
tells the Fed like in some sort of mafia, you know,
the way that you know Gott he controlled the Gambinos,
he tells them what to do.
Speaker 7 (06:28):
It doesn't work that way.
Speaker 6 (06:29):
So there's sort of a lot of hope that just
in general, there's just too much noise and not enough
action or not action really that's going to happen. But
there's fear that he will start trying to influence, he
will start actually influencing the numbers, and if that shows up,
(06:51):
then people start questioning.
Speaker 1 (06:53):
And similarly to what Eric just said, there. It's a
bit of a similar dynamic at BLS two. Right, It's
not that Eric and Tarfer is the sole discretion over
what the.
Speaker 4 (07:03):
Jobs data says every month.
Speaker 1 (07:04):
This is an institution of roughly two thousand people globally
at BLS or sorry and the US not globally.
Speaker 8 (07:10):
Who compile all these reports.
Speaker 1 (07:13):
And I mean, she certainly signs off on them, but
like she is not at all, Like I honestly would
question what role she in particular has in the data
collection itself, which happens much beneath her level. But something
else that is really interesting about this too. When Eric's
talking about how reports like this help Trump's chances to
get the rate cut that he wants, so have all
(07:35):
the other reports from BLS on inflation, the very reports
that he's been saying are so great. So it's really
interesting then that the initial report initial tweets sorry that
he said that he just found out that mcintarfur's a
Biden era and point, I mean, well, first of all,
she's been there for like a year and a half,
and also she's been the one overseeing these great inflation
(07:55):
reports that he's been touting.
Speaker 3 (07:57):
And not being political. But I asked this question to
Mike mcgeeo. I said, when we got the numbers for
the prior month, I know they've been revised downward, but
when they initially came out, it's not like we heard
from the White House saying, wait, we questioned this number.
So it's just something we're trying to be smart about. Molly,
I want to ask you one more time and just
kind of wrap up here thirty seconds. The US economy,
(08:18):
though we are seeing weakness, but we still have some
inflation signs.
Speaker 4 (08:22):
Yeah, I mean I think.
Speaker 1 (08:24):
I mean, if we're just looking at the jobs report today,
I think for a lot of the takeaway was for
economists was that this really helped square up some of
the weakness that we saw in the GDP report, about
this underlying demand gauge being so weak, consumer spending softening,
We get netwild why because we saw the job growth
has been weaker for longer than we previously thought.
Speaker 3 (08:43):
I want to save thirty seconds for eric last thoughts
on the markets and kind of as we get ready
for another trading week next week.
Speaker 6 (08:49):
Yeah, I mean, right now, it's how long does it
take this stuff to filter through? If you look at
Tariff's you know the window was six months the earliest.
We're not even there yet, So my question is what, yeah,
what the numbers are going to show, because data now
matters FED.
Speaker 3 (09:07):
Speak though, we're going to get start getting here in
a lot well.
Speaker 1 (09:10):
I mean also the umpshell news that FED Governor Adriana
Kugler who's stepped down, which I'm sure is another part
of the program today.
Speaker 3 (09:18):
I told him Mike, Mike McKee was like a boomerang.
He just came back and forth. Mollie Smith. Our thanks
to you, and of course our thanks to Eric Wiener
as well. Guys, have a great, great weekend. This is
Bloomberg Business Weekdaily.
Speaker 2 (09:30):
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch US live on YouTube.
Speaker 8 (09:44):
Well.
Speaker 5 (09:44):
As Carol mentioned, President Trump said the US is moving
two nuclear submarines to respond to what he called quote
highly provocative statements from former Russian president Dmitri Medvedev. Trump
didn't immediately provide details on what instigated his move, though
his post Friday was the the latest in a public
exchange of heated rhetoric with the former Russian president who
(10:04):
currently serves as Russia's deputy Chairman of the Security Council.
We've got with US Wayne Sanders, he's Bloomberg Intelligence senior
defense analyst. He joins us from Maryland. Wayne's situations such
as this where we publicly hear about a declaration of
these machines of war moving into a different position, How
(10:26):
seriously do you take that in the context of escalating
conflict with Russia.
Speaker 9 (10:31):
Yeah, I would say that I'm more concerned about the
fact that President Trump actually said it out loud as
probably the bigger piece of it.
Speaker 7 (10:38):
We have the Virginia class submarines.
Speaker 9 (10:40):
We've got Los Angeles class submarines, both which are these
attack submarine types. Then we have the nuclear submarines, the
ICBM types, the ballistic missile submarines as they're known right.
We have a lot of these, and we have twenty
four Virginia class. We have almost fifty of the attack.
We've got fourteen that are the ballistic missile submarines, and
(11:02):
a lot of them are always operationally deployed and they
are there to provide force projection for military power across
for the United States around the world, right, So these
things are out there most of the time. Anyway, when
you think about a carrier strike group, they normally come
with a nuclear powered submarine as part of the complement
whenever the President decides to move.
Speaker 7 (11:23):
One of those carrier strike groups anywhere.
Speaker 9 (11:25):
So the fact that he's talking about where he's parking it,
I think is the key indicator here. Is saying, hey, look,
I've got these capabilities, I have these nuclear powered submarines
that you can't find, and I'm just telling you about
where they're going to be. But at the end of
the day, our technology is so good from a stealth perspective,
and others were ten years ahead.
Speaker 7 (11:45):
Of China and Russia at a minimum from that perspective.
So I think we're actually doing pretty well. But he's
making his statement clear.
Speaker 5 (11:53):
So you would argue that if this were like, what
would be the difference in your view if he had
kept this a secret, had done this in a way
that wouldn't actually communicate to the world about this repositioning,
would that actually mean that the tensions are more heightened
than they would be if he's publicly saying this. Since
(12:14):
he's publicly saying this. Can we read into this in
a way that's like, Okay, we shouldn't take it as seriously.
Speaker 9 (12:20):
Yeah, I mean, you know, we've talked previously in terms
of there's diplomatic information, military and economic levers of power
that you can use in the military side of the house,
and how you play a lot of those pieces.
Speaker 7 (12:31):
The fact that he's talking about it.
Speaker 9 (12:33):
Is probably a good time from that perspective, because if
you look at even Operation Midnight Hammer in the Iran strike,
you know, nobody talked about the fact that there was
an Ohio class ballistic or not the blistic missile one,
but they have four that are strike ones that fire
thirty tomahawks. Right. That's part wasn't talked about a whole
lot because everybody focused on the B two spirit in
(12:53):
the in the massive or in his penetrator. But that
was a key portion of it, and it was one
that wasn't just discussed. He didn't talk about, Hey, I
have this capability parked off of your off of your
your shore, off of your coast.
Speaker 7 (13:05):
The way that he is right now.
Speaker 3 (13:08):
How do you read this? I can't make sense of
the relationship between President Trump and President Putin, I don't know,
friends not friends, back and forth sanctions, that's still a threat.
I'm just trying to understand it.
Speaker 9 (13:21):
No, I think I think the key is from the
public view is making sure one of the best things
that he can do is use his information platform to
be able to make his his intentions clear. And part
of those intentions is I'm not I'm not happy with
what Midyette did and and I'm going to make sure
that everybody.
Speaker 7 (13:39):
Knows about it.
Speaker 9 (13:40):
I don't believe that from the perspective of where where
these are actually located? Right, Like I said, these things
are constantly operationally deployed anyway, So the fact that he
said it, as long as he's not giving a latitude
and longitude to where those locations are, you know, I
think that I think Putin knows right now that most
of the time there's probably some type of capability that
(14:02):
is somewhere near strike us.
Speaker 10 (14:04):
Since of it.
Speaker 7 (14:05):
Anyway, the fact is he's just mainly talking about it now.
Speaker 3 (14:08):
And is it significant that he didn't necessarily mention Putin
In this right somebody else that he's kind of ticked
off at, And so is that the way of kind
of keeping it safe and being like, hey, it wasn't
about you, it was about this other dude that's you know, Russian. Like,
is that kind of the justification or the or gave
President Trump the ability to do that?
Speaker 7 (14:31):
I would say yes, right. I think if you're looking
at the difference.
Speaker 9 (14:33):
Between escalation of force and de escalation of force with
a clear deterrence strategic deterrence message, this is a way
to be able to do that, and like you said,
I think that that gives him a little bit of
an out if Putin were to say anything to come
back and go no, no, no. I was responding to Medgettev
because Putin, I think, clearly knows that there is operational
(14:54):
capability around the world that we constantly use.
Speaker 3 (14:58):
Do you think he gave Putin again speculation? But I'm
going to go there? When do you think it gay?
President Putina heads up?
Speaker 9 (15:04):
I honestly don't know, because I don't know the inner
workings between Medyeedev and In Putin. I think that understanding
better the relationship between those two and how easy it
would be for President Trump to be able to say
I'm going to throw this out there at Medeta, but
it's not about you.
Speaker 7 (15:20):
Or if these two were partnered together.
Speaker 5 (15:22):
I'm going to read from the post that the president
made on true social quote based on the highly provocative
statements of the former President of Russia, Dimitri Medviedev, who
says the deputy Chairman of the Security Council, who's now
the Deputy Chairman of the Security Council of the Russian Federation,
I've ordered two nuclear submarines to be positioned in the
appropriate regions just in case these foolish and inflammatory statements
(15:44):
are more than just that. When we start out the
conversation with you explaining the way that these submarines are
part of carrier strike groups, does it mean that they
always travel together, they're always near one another. Does it
mean the entire strike group is being repositioned, or can
these nuclear subs go without other naval vessels.
Speaker 7 (16:05):
They're able to go. They're able to go without it normally.
What I was saying is that if you.
Speaker 9 (16:09):
Are going to put an aircraft carrier somewhere as part
of a defensive measure, and it's part of the entire
strike group packages you're talking about, you normally have your destroyers,
your frigates, have your nuclear powered submarine that we go
along with an aircraft carrier.
Speaker 7 (16:24):
So when you hear somebody say I'm deploying the US is.
Speaker 9 (16:27):
Gerald Ford and it's going to a specific location, normally
you can assume that this is the rest of the
compliment that's going to go there to not only protect
the aircraft carrier in the aircraft that are on it,
but the submarines can be free flowing that are separate
from that. Because obviously with twenty four Virginia Class, twenty
four Los Angeles Class, and fourteen of these Ohio Class
(16:48):
ballistic missile submarines, we have a lot more submarines than
we do carrier strike groups.
Speaker 5 (16:53):
Okay, Wayne Sanders got to leave it there. Bloomberg Intelligence
senior Defense analyst. He's a career military officer, ultimately was
a colonel in the US Army. Now at Bloomberg Intelligence.
We appreciate him joining us this afternoon.
Speaker 2 (17:06):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Apple car
Play and Android Auto with the Bloomberg Business App. You
can also listen live on Amazon Alexa from our flagship
New York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 3 (17:24):
All right, folks, let's get now to certainly something that
the equity markets have been focusing on, excuse me, all week,
and that has to do with MAG seven earnings. Right now,
I'm looking at Apple shares. They're down about two point
one percent higher.
Speaker 5 (17:37):
Earlier in the session too, they were.
Speaker 3 (17:39):
They actually showed some gains. That wasn't the case for
Amazon today It's been down as much as nine percent
right now, down about eight point six percent. Both reported
after the closed last night. Apple posting its fastest quarterly
revenue growth in more than three years, and yet Amazon
projecting weaker than expected operating income and trailing the sales
growth as some of its cloud rivals. So we definitely
(18:00):
are seeing some impact. It's all against the mag seven
that we've heard over the last two weeks or so.
Speaker 5 (18:04):
Great to have back with us. Laura Martin, senior analyst
over at Aninaman company who's coverage of the media, entertainment,
and internet spaces are a must read. She joins us
from Los Angeles. Laura, I want to start with Apple
and the pull forward or whatever we saw with the
huge beat when it came to that iPhone number, and
typically a time when people are not buying iPhones? How
do you explain it? Was it all about pulling forward
(18:25):
of demand to avoid tariffs?
Speaker 11 (18:28):
It is really that, I mean, that's what the market's
telling you today. Apple admitted that one hundred one thousand
basis points, so one percent of their revenue growth, which
was ten percent, well above average, was from pull forward.
And the market's telling you they think that number was
like five, you know, four half of the gain basically,
which and they also Apple also said they had eight
(18:48):
hundred million dollars of costs from tariffs in that second
that recorder they just reported, and it's going to go
up to one point one billion visibly in the September quarter.
But I think the mark is telling you they think
that could be higher in the September quarter.
Speaker 5 (19:03):
Oh so, does does this mean that we'll see fewer
iPhones bought in the first fiscal quarter Apple? But Apple's
December quarter, which typically is its biggest quarter, as a
result of the pull forward that we saw in this quarter.
Speaker 4 (19:18):
I think it's worse, it's faster.
Speaker 11 (19:19):
So the June quarter over delivered because they pulled forward
demand from the September quarter. Those are all old iPhones, okay,
and then in late September you typically get the new
iPhone and then you start this new annual cycle of
the new iPhone. And one of the things they said
that's turning the stock today is that Siri and Apple
Intelligence will only be integrated next year, by which they're
(19:41):
probably talking calendar year, which means the earliest we'll see,
you know, jenerative AI features drive an upgrade cycle for
the iPhone would be not September of twenty five, it'd
be September of twenty six. So then that tells you,
so this is dead money again, right, there's nothing driving
and there's risk here. Not only China subst drove a
(20:01):
really nice China growth number, four point eight percent China
revenue growth. People are worried that that is also like
that subsidy isn't going to recur, and we've had a
couple negative litigation regulatory decisions. Right, we've got we've got
the feed to twenty billion dollars a year is what
Google Search pays Apple to be the default search engine
(20:24):
on all iOS devices. I think that's pretty clear from
channel checks and DC that is not going to be
allowed to persist. So that's twenty billion that will come
out of services if it isn't allowed. And then similarly,
we have the epic they got Apple got a negative
epic Games which allows that which allows consumers to pay
(20:44):
directly to apps and not have Apple share thirty percent.
So that's another that's an app store risk that over
the next twelve months, not immediate, but over the next
twelve months.
Speaker 3 (20:54):
You know, Laura, We've had the luxury of talking with
you in the last week or two and talking specifically
about Apple. You've got a HOLD rating on it. It
doesn't sound like you have a lot of concerns. I
guess I should say why not put a cell rating
on it?
Speaker 6 (21:08):
You know?
Speaker 4 (21:08):
I mean, I think so.
Speaker 11 (21:09):
One of the issues is when you look at the
other mag seven, they basically have a singular strategy, which
is envision generative, AI is disruptive. We everyone else is
going to spend eighty five to one hundred billion dollars
in CAPEX in twenty twenty five alone, and we're going
to grow at twenty percent in twenty twenty six with
(21:31):
no Every one of them has been pushed on what
is that return on capital incremental capital? They all say,
we don't know. We just think it's going to be big.
If you don't believe that. If you're an investor and
you think that jeneritive AI is overhyped or the economics
are further off into the future, Apple.
Speaker 4 (21:47):
Is a great place to hide.
Speaker 11 (21:49):
They are spending twenty billion dollars a year, not eighty
five billion dollars a year. Jenerative AI is sometime in
the future. They're not spending they're not hiring people like
Meta Is for one hundred million dollars each to work
on super intelligence. This is Apple is a great place
to hide. If you are an investor that doesn't believe
in generative changing the world.
Speaker 3 (22:09):
Well, you know, it's interesting that you say that. I
can't remember who was either on surveillance this morning with
Tom and Paul, but it was just something to the
point that, well, wait a minute. You know, Apple often
isn't you know, first mover on some big changes, right,
we talked about it.
Speaker 7 (22:25):
Creates the tablet.
Speaker 5 (22:26):
They didn't create the music player, they didn't create the smartphone,
but they created the best of all those things exactly.
Speaker 3 (22:31):
So if they're saying, hey, guys, go ahead and spend
you know, your billions or trillions or whatever, the heck,
it is figure out this AI thing and then we'll
come in and we'll collaborate or partner with somebody. Maybe
that's not such a bad strategy.
Speaker 12 (22:44):
So it's risky business.
Speaker 11 (22:46):
So on the call last night, Tim Cook got this
question and what he said is, I don't see a
world where the consumer doesn't have an iPhone, which is
basically a computer in his pocket.
Speaker 4 (22:57):
Okay, that's a vision of.
Speaker 11 (22:59):
The future that Johnny Ive who's gone to Open AI
is trying to displace. Johnny Ive, who developed every Apple
product you have in your pocket while he was at
Apple for twenty years, is now saying he regrets creating
the screen because he thinks it makes people not pay
attention to one another. So he's trying to move the
next device with generative AI backing to not.
Speaker 12 (23:20):
Be a screen.
Speaker 11 (23:21):
So that may not work, but if it does Apple,
that's a problem for app. That is an existential risk
problem for Apple. So long as an iPhone and a
screen are going to be sort of the user device
of record and they're going to persist in ten years,
you might be right.
Speaker 4 (23:39):
That might be possible.
Speaker 11 (23:40):
What you just said, Apple can copy the best of Android,
which will have Gemini. Because Google has Gemini in every product. Now,
that will work.
Speaker 12 (23:49):
But if Jimmy I've and open AI are right and
screens are going away, that's problematic for a smartphone maker.
Speaker 5 (23:57):
I guess that's maybe where whatever they're working on for
a face computer could come in. Laura, I want to
go back to what you said about Gemini and Android
because of the way that Gemini is baked into Google devices. Now,
you say in your most recent note that Apple is
a single product company, its valuation risk is material if
iOS falls too far behind Android, would you say that
(24:18):
iOS is already behind Android right now?
Speaker 1 (24:21):
Oh?
Speaker 4 (24:21):
I would absolutely, I would.
Speaker 11 (24:23):
I mean when you look at Google's its revenue is
accelerating over at Alphabet, and its costs are going down,
so its productivity per employee is going up. Why Because
eighty percent of engineers are using Gemini to do their
first draft of code for new products. They're introducing new
products faster, they're integrating, They over delivered on advertising because
(24:47):
they're integrating all these better convert both Meta and Google
because they're using generative.
Speaker 4 (24:52):
AI to increase the conversion rate.
Speaker 11 (24:54):
So yes, Gemini is being integrated into everything at Alphabet,
Android included.
Speaker 5 (24:59):
Does it matter to two comments here? One is the
network effects that Apple has, And we're speaking with Laura
Martin over at Needham. If you're just joining us, the
network effects that Apple has, at least here in the
US are really strong, right, the blue bubbles for when
you're on I Message and the other Apple products that
you have that ideally are supposed to work seamlessly with that. Plus,
doesn't Gemini have an app that you can just use
on your iPhone? So if you want to use Gemini
(25:21):
as sort of a copilot here, if you are an engineer,
you can just do it on your iPhone, but through
an app that you get at the app store, if
it's standalone.
Speaker 4 (25:30):
But I mean, I think my guess.
Speaker 11 (25:32):
Is where Alphabet's going is they're going to integrate. They're
going to integrate Gemini into everything on your device. It's
going to know where your appointments are, it's going to
know who your friends are. It's going to be a
personal assistant integrated into your Android phone. It's going to
be a bigger idea than just a separate app where
you go to it. It's going to be like, even
if you listen to the meta vision of the world.
(25:54):
Super intelligence is about having a robot friend that does
everything for you better than a human can make you.
I mean, it's just I think these are bigger ideas
than an app store.
Speaker 4 (26:07):
By the way, some.
Speaker 11 (26:08):
CEO's visions of their apps are disappearing. So then you say,
so what replaces them?
Speaker 4 (26:13):
Well, I don't know. Used to be websites. Then we
went to apps. What's next? It may not be apps?
All right?
Speaker 3 (26:20):
You mentioned I want to just get to Meta and Amazon?
What about Meta? You know? In terms of I mean
that Stock was just off and running following it's quarterly update,
those ad sales numbers, certainly catching everybody's attention, a mega
megaspen when it comes to AI. What is your hot
take on that one?
Speaker 11 (26:39):
So Stock up strongly, really strong fundamentals, just sixty percent margins,
twenty two percent revenue growth, and a huge company which
was the fastest of the group that we the big
tech companies we call really strong fundamentals. We are cautious
on Meta, and that is because they took their capex
(27:01):
to seventy billion this year and one hundred billion next
year again no return in sight, and their stock comp
per person is going through the roof as they hire
super intelligence employees, with press reports saying they're paying one
hundred to three hundred million over three years for each
of these people.
Speaker 7 (27:20):
Pretty good work, get it, I'll say.
Speaker 1 (27:22):
Yeah.
Speaker 11 (27:23):
My guess is they're trying to change the world right
and they believe in super intelligence, which this isn't a
vision of making you and I'm more productive. This is
about replacing human beings with machines that teach machines. So
it's literally terminator like life imitating art type of stuff.
Speaker 5 (27:39):
Doesn't sound like your pro AI in that In that context,
let's stick.
Speaker 4 (27:44):
Let's stick to Meta as a stock.
Speaker 12 (27:46):
My concern is that we're kind of we're losing.
Speaker 11 (27:49):
Five billion dollars a quarter on reality labs, and we're
still funding the Metaverse, and we're funding Quest goggles, and
we're funding ar glass way band glasses, and now we're
funding a Jenna competition with companies.
Speaker 4 (28:02):
Twice their size. All of that feels like a lot.
Speaker 11 (28:04):
Of capital spending to me and actually costs to me
without a clear sense.
Speaker 5 (28:09):
But investors are saying they are okay with it up
to now because they believe that Mark Zuckerberg has this
vision for super intelligence, which to be honest, nobody has
actually articulated to me, well, what does that world look
like that that meta wants to create and thinks will
be so profitable?
Speaker 3 (28:26):
Are they?
Speaker 6 (28:26):
Okay?
Speaker 3 (28:27):
Just because the ad sales number came in really strong,
Like if it didn't, might everybody be like maybe not?
Speaker 11 (28:32):
Okay, Yes, absolutely, he is buying the right to spend
money like a drunken salor because his fundamentals and his
core business are strongly over delivering consensussessments. The day that stops,
the music stops, and suddenly people are going to take
a hard look at these You know, he's making five
(28:54):
year commitments for these super intelligence employees, and he's making
ten year commitments with the money.
Speaker 4 (28:59):
He's spending on data.
Speaker 11 (29:00):
So all of this money he has a free pass
so long as his core business is growing twenty two percent.
Speaker 5 (29:07):
Okay, okay, totally makes sense, sort of the free pass
Like Elon was, you know, allowed to be CEO of
many different companies and investors were fine with it until
they weren't. Jack Dorsey the same thing, right, It works
until it doesn't. Yeah, what about though, the promise of
this being profitable in the future, all this investment ultimately
(29:28):
paying off beyond making ads more efficient, what is that vision?
What does that world look like in your view at
least articulated by Mark Zuckerberg.
Speaker 11 (29:38):
So again, so Mark Mark is just he has got
a big idea. He wants to replace Apple, that's for sure,
so does open AI. So Apple takes a thirty percent
tithe on every dollar earned on its platform, and that
hurts Mark Zuckerberg not only because Apple gets paid for
a lot of work he is doing on Facebook and Instagram,
(29:58):
but also it allows them to change policies and procedures
like around security and safety and privacy. That costs Mark
Zuckerberg ten billion in revenue three years ago, and since then,
Mark Zuckerberg is all about replacing Apple or that piece
of hardware with ray bound glasses or Quest goggles.
Speaker 12 (30:17):
Or something or the metaverse.
Speaker 11 (30:19):
He's trying to displace Apple, and he wants to be
the backbone that everybody has to pay thirty percent to.
Speaker 12 (30:25):
So that's his main economic mission.
Speaker 11 (30:27):
And now Jenerative AI comes along, which I think, you know,
I think many CEOs thinks it changes everything. Even Apple
said it's the biggest technological disruption of our lifetime. And
they benefited from mobile which you would have thought that
would they would have thought was bigger than Jenai, but
apparently not.
Speaker 3 (30:42):
So.
Speaker 11 (30:43):
I guess the question is meta is saying we think
they're super intelligence. We think every human being is going
to have a robot that they hold on to, maybe
without a screen. We don't know, you know, we don't
know what the form factor is. But that does things
for you where you see the world differently and it
helps you get through the world. But I don't think
we know what that is yet, and he doesn't either.
(31:04):
That's why he's hiring fifty smart people to have robots,
train robots faster to do stuff humans can't do.
Speaker 3 (31:11):
Well, nobody can do what you can do. We want
to ask you about Amazon. Sure this dock down still
more than eight percent here in the aftermarket, and I
think there is concerns about kind of the cloud spend comparison,
you know, among the big hyperscalers, Amazon still the biggest
when it comes to you know, we think about what's
going on in terms of the cloud. What you take
(31:33):
here are what we kind of need to be thinking
about with Amazon, because investors seemed pretty disappointed, are you.
Speaker 5 (31:40):
So?
Speaker 11 (31:40):
I think here's what I think is going on with
Amazon answer the first half of that question. So they
had very strong revenue growth up thirteen percent, which was like,
you know, we were four percentage points below that, and
very strong EPs and margins. But the problem is they
gave very tepic guidance. Are really worried about tariff's impacts here,
(32:03):
so they're worried about the next shoe to drop. They're
advertising grew very robustly at thirty twenty three percent, which
is great, and I think that would have been higher.
Speaker 12 (32:12):
Had not Tamu and Chean.
Speaker 11 (32:15):
Stopped advertising, you know, sort of on April tenth because
they lost the Dominimus except rule exception, So I think
that would have been higher. But that's a fabulous number.
Nobody's focusing on today.
Speaker 4 (32:25):
And I think.
Speaker 11 (32:26):
People investors we've talked to are frustrated with capital spending
on Kuiper, which has no revenue, capital spending for ten
years so far, on Alexa no revenue, and like they're
going to urban delivery same day, and I think people
don't understand their core business of e commerce.
Speaker 4 (32:43):
I think people don't understand that as to use a capital.
Speaker 11 (32:45):
At the same time, they just raised their capex guidance
when you do the numbers to round numbers, one hundred
and fifteen, one hundred and twenty billion this year. The
next closest is Microsoft and Google at eighty five billion,
So they're quite a bit above everybody else on the jennerative,
a I think and then AWS has a mnemic revenue growth,
you know, neg I mean thirty two percent margins in
(33:07):
the cloud business, and they were thirty nine percent ninety
days ago, like what the heck? And they say their
capacity constrained. So then we would forgive them if they
only report seventeen percent revenue growth, But then why aren't
your margins sixty percent?
Speaker 4 (33:20):
Why aren't they forty percent?
Speaker 11 (33:21):
Again it why not sell to the highest bidder the
last you know, you know, one gig of capacity. So
we saw that in both Azure over at Microsoft and
in Google Cloud slower I mean growth rates.
Speaker 12 (33:36):
But really high margins. And that just didn't play out at.
Speaker 3 (33:38):
Amazon all right around the world. We went, thank you
so much, Laura always appreciated by the way, Laura's got
a by rating on Amazon with a two hundred and
sixty five dollars share price target. The stock right now
just below two fifteen his share Laura Martin, have a
great weekend. Senior analyst at Needham and Company. Joining us.
Speaker 2 (33:54):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
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Listen on Apple CarPlay and Android Auto with the Bloomberg
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Speaker 3 (34:08):
Both Exon Mobil and Chevron posted better than expected results
after record oil production cushioned the impact of lower crude prices.
This is coming in a week where we've got oil
headed for its biggest weekly jump since Israel attacked Iron
in jude Let's get to it. Longtime oil industry watcher,
doctor Ellen Wald is back with us. She's president of
Transversal Consulting and Senior Fellow at the Atlantic Council. She's
(34:30):
also author of Saudi Inc. Which talks about the history
of Aramco and Saudi Arabia. Joining us from Boca Raton, Florida. Ellen,
great to have you back with us. Exon Chevron's result
last quarter? Was it full of special caveats and nuances.
Walk us through what we got from those companies and
what it tells us about kind of the oil market
and the oil business.
Speaker 4 (34:50):
Yeah, exactly.
Speaker 8 (34:52):
You know, both of them, they reported earning drops.
Speaker 10 (34:54):
I think that was very much expected given how low
oil prices were this past quarter pair to last year
and even the first.
Speaker 8 (35:03):
Quarter, so so that was very much to be expected.
Speaker 10 (35:05):
But at the same time, both of these companies are
looking very strong. Uh, you know, going forward, We've got
Chevron's acquisition of hess Is finally has passed its final
legal hurdle and it's going through. And then you know,
with Exxon's acquisition of Pioneer Natural Resources, you know, it
really looks good. They've got a lot of really good
acreage in the Permian which is considered highly profitable.
Speaker 8 (35:28):
Both companies are working together on off.
Speaker 10 (35:31):
Four projects in Guyana that are also expected to be
highly profitable.
Speaker 8 (35:35):
You know, Chevron, you know, It's project in Kazakhstan also
looks good.
Speaker 10 (35:40):
Despite all of these you know, slight snaffhoos in terms
of OPEC and production, it's just it's it's generally looking good,
especially as OPEK is expected to increase its production. The
really the big question that we see going forward here,
I think it's mainly.
Speaker 8 (35:55):
Oil prices, and the big question here is.
Speaker 10 (35:58):
Really, you know, what is going to happen with this
tariff business. I think the resolution or the deal with
Europe has definitely brought some more stability to that. You know,
with this resolution of these tariff issues or these trade
issues come the expectation of more trade, and more trade
is good for oil demands, so that's where you know,
that's where we're kind of looking in terms of the
(36:19):
market with that. I also think that the energy part
of that deal is very very good obviously for oil companies,
especially in the US, considering how much oil and gas
and other energy products the Europe has agreed to buy
from the United States. Really the question is can the
US actually supply all of that oil, given the fact
(36:40):
that the amount that they're talking in terms of the
dollar amount is basically like the total amount of oil
exports that the US exports already, So there's some questioning there,
But overall, it definitely looks good for American producers and
oil companies in the United States, even if the exact
details of that I think remained to be seen and
(37:01):
have to be hammered out. The other big question coming
up is just this tariff and secondary tariff issue with Russia.
Speaker 5 (37:09):
So that's the trade side of this, and I'm wondering
about the US economy side of this, and it's kind
of front and center today, at least when it comes
to the jobs market. Given a headline miss and the
revisions that we saw over the last few months from
the BLS numbers that we got earlier today, what, in
your view, does it potentially weakening job market or cracks
starting to appear in the job market due to the
long term demand picture for oil.
Speaker 10 (37:31):
Yeah, so weeks in the job market, cracks and fishers
there are definitely not a good sign for oil demand
in the United States, and I think that we saw
that with the weekly report as well.
Speaker 8 (37:43):
There was some kind of we would have expected a
much you know, we would have expected.
Speaker 10 (37:47):
Higher consumption and higher demand for this time of year.
Generally the summer months tend to be higher demand, and
what we saw was actually kind of weak, and in fact,
some people were actually questioning whether this was a reliable
But I think even kind of the revisions in the
jobs report, I think we have to say that, yeah,
this is definitely concerning. I think that it depends what
(38:08):
we see going forward in terms of oil consumption, particularly
as we're leading up to kind of end of summer,
you know, kind of the summer finale. Generally oil consumption
goes up around in gasolin consumptions up.
Speaker 8 (38:22):
Will it go up as much as expected? I think
is really the number we're looking to see.
Speaker 9 (38:27):
Ellen.
Speaker 3 (38:27):
I want to go back to something you said about
you know what we get in terms of possible sanctions
from President Trump when it comes to Russia. He has
said he expects to hit Russia with sanctions on August eighth,
so a shorter deadline for Russian President Vladimir Putin to
basically halt the war in Ukraine. Those sanctions, as we've
been reporting at, would likely take the form of tariffs
(38:47):
and countries that buy Russian energy. So I'm just curious
tie together the importance of Russia in the oil energy markets,
but also the complicated relationships, whether it's Russia, China, Russia
Indian because it all kind of comes together.
Speaker 8 (39:02):
Yeah, exactly. I think that you know, this is a.
Speaker 3 (39:05):
Really just about a minute left, So I just want
you to be able to manage that this.
Speaker 10 (39:08):
Is a really big ass I think that if we
do see any kind of secondary sanctions on countries that
buy Russian oil, either we're going to see these countries
dropping their purchases of Russian oil, and that's going to
put more demand on other oil sources, the US, OPEK,
Saudi Arabia, et cetera. And that could definitely cause oil
prices to go up in the short term. But if
(39:30):
they decide that they don't care about this, then you know,
we're just going to see more purchases of Russian oil
and that could definitely cause prices across the board to
kind of defleate.
Speaker 3 (39:39):
All right, going to leave it there, Ellen, Thank you
so much. Doctor Ellen Wall, President of Transversal Consulting, Senior
Fellow at the Atlantic Council. She's also author of Saudi Inc.
If you want to understand Saudi Ramco, Saudi Arabia when
it comes to the energy markets.
Speaker 2 (39:52):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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(40:13):
and always on the Bloomberg terminal
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