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We brought you a lot of earnings. The big one we want to focus on, though, of course, is Amazon's second quarter online stores net sales coming in above estimates. North American net sales for the second quarter come in above estimates, Physical store net sales come in above estimates, second quarter subscription service net sales come in in slightly above estimates, and operating income, that ever important one, coming
in way above estimates. The estimates were for four point seven to two billion, and we're seeing results of seven point six to eight billion. Stock up more than six percent in the postmarket. Right now, I want to bring in senior US retail analysts for Bloomberg Intelligence, Punamguoyle, who has had exactly seven minutes to go through this tire report. Poonum, give us the big takeaways you have.
Yeah, sure, so, just looking at the press release really quickly, it looks good on all fronts. I really can't find anything bad to say today, I think what caught us by surprise and in a good way is really AWS. You know, we were thinking that AWS sales would have slowed given just commentary we had heard from Microsoft, but those came in above expectations and they said the business stabilized. Also,
guidance was ahead of consensus. So overall, really across the board, we're seeing pretty good momentum at Amazon.
Well, talk to me about Amazon's retail business as well, because we know the analysts have been looking for signs that those margins are improving after their cost cutting measures. I know that you're just looking through all of this, poonam, but what do we know so far about that?
Yeah, I think the cost cutting is definitely helping the keep in mind that they continue to invest in that fast and free shipping and really speeding up those timelines. So I think the margin story, more than on the retail side, is just ab after turning to growth and really driving up that profitability to allow for other areas
of investment is key here. But we will continue to see them really, you know, remove costs where they're unnecessary or just not driving the ROI that we'd like to see from Amazon.
I was kind of joking Punham a few minutes ago when I talked about, you know, having to take a drink when you saw a mention of AI, just because it's totally what investors want to see. And again, I know you're a retail analyst, senior retail analyst for Bloomberg Intelligence, but we can't talk about Amazon without talking about AWS. And a big portion of Andanty Jasse's statement is dedicated to what AWS has been doing when it comes to
generative AI in the cloud. What do investors need to know about that?
Yeah, I think AI is going to be in every single conversation we hear from here on for many years to come, whether it's retail or tech companies. And Amazon will continue to invest in AI and will continue to use it as a competitive edge, whether it's for AWS or even for its online business. Both on the cost side avolves on the marketing and sales side, where it can really tailor assortments to better meat customers demand and really drive up that conversion. So we don't see that
conversation going away at all. It is going to take center stage. How we're going to determine the actual ROI from each of those initiatives within AI. It's probably going to be a little harder to really tell.
One of the other things that I'm fascinated in because I'm such a participant in it is the Prime Day event. Looks like in the Internet's report, more than three hundred and seventy five million items purchased customers, saving more than two point five billion dollars poonam. I know that the market typically sloughs off Prime Day, but what does the earning statement tell you about both Prime Day and the future of Amazon as kind of a retailer that consumers are going to go to for these purchases.
Yeah, I think Prime Day is an important event for Amazon. You know, they hold it twice a year, and they already spoke about it once right after the event where they that the first Prime Day was actually the biggest online sales day in their history, which means it's their past Cyber Monday last year as well. So that's encouraging, and it tells us that the consumer is seeking value and they go to Amazon to find that value. We're in a period of a time where the consumer is
really stretched down their dollars. Discretionary spending has been mixed and slowing as we move into the back half of the year for the all important holiday season. Amazon needs to continue to stay on top of consumer's mind, show their value promise, and all still show that they can have a pretty broad assortment at a good price and can get it to you fast for no cost.
If you're a prime number, Is Amazon where you find value?
Though?
Has it positioned itself as a value leader, especially in relation to and in comparison to Walmart and what Walmart's trying to do with its own prime competition.
Absolutely, I think you know, when you think of value, Amazon definitely provides value, especially when you look across Amazon's owned brands, right, I think that's where they can press the pedal a little further. Amazon basic items are provided at a pretty good value to consumers. And then more than value, it's about convenience, right. It's the fact that you go to Amazon and you type in that you
want the cell phone charger, and there you go. You have a laundry list of cell phone chargers that you could choose from, some branded, some non branded, and you can get them same day.
Okay, you're making me, you're reminding me about advertising advertising revenue. What's Amazon doing. What are we seeing with the most recent quarter when it comes to ad revenue?
Great, it was up twenty two percent in the quarter and continues to be a driving force or Amazon. They're doing really well on the advertising front. We continue to expect to see double digit gains there. And remember advertising that one business that probably could boast the highest profit margins, even better than AWS. So as Amazon scales that business, it's only going to continue to help drive its bottom line.
They also mentioned in the report there are premieres of additional Amazon original films and series, of course, I mean when a marvelous Missus mazol on some other great performers for them. Is there anything of note to you when it comes to the Prime video story in this earning statement here?
Yes, So you know, we just ran some data earlier this month or last month, I should say, in July. The summer I Turned Pretty was released on July thirteen, and that's season two, and we saw a huge uptick in downloads on Prime Video. So content is king for
Prime Video. The more better the content that rolls out on Amazon, we think they'll definitely bring up interest in both getting new members onto Prime as well as just keeping members that are on it, still interested and really using the platform more and more in their daily lives.
Puna, Before we let you go talk to us about how to read into the strength of the consumer. You said that the consumers stretched right now, they're looking for value. Where else can we look in Amazon report to give us an idea for just how the American consumer, how the American economy is doing.
Yeah, I think the consumer is stretched, but the consumer is making trade off. So you're going to see an area of retail where some consumers will choose Amazon and some will choose to move away from some of the other retailers where they don't really have value, nor are they differentiated, and nor can they provide convenience. So we're
going to see a mixed bag of earnings. We just had Revolve report last night, and you know, they were talking about the consumer being weaker, especially on the luxury end, which is interesting to hear. And then we've heard dollar stores and others talk about how the value consumer is stretched. So it's really about the consumer making trade offs and going to the retailer that has exactly what they want to meet their needs. And Amazon fits that bucket is what they.
Dispersed Bloomberg Intelligence Senior US retail analyst Punamguayl.
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Another piece of history being made today as former President Trump is entering the courtroom. He's inside the courtroom for his arraignment on those January sixth charges. This is his third indictment as former president, here again appearing in a federal courtroom in Washington to be arraigned on those charges that he conspired to remain in office despite the loss of the twenty twenty election. So we are going to
dig into this story right now. We've got Bloomberg Law host and legal analyst June Grasso, and we've also got Bloomberg US Legal reporter David Veraicus. I hope I said that correctly. Day, Thank you so much. Okay, on the latest with the Trump indictment and that arrangement today, David, I want to start with you because we've gotten used to covering this type of event here when it comes to the former President. What is significant about today?
What is different for you?
What are you watching?
Well, this is what's known as an initial appearance and an arraignment, where Trump will be formally notified of the charges and he's expected to enter a not guilty plea. The judge will also set bail terms, and it's expected that he would be released until his trial. We don't have a trial date yet. It's possible the judge would
set a trial date, but probably not. This is a magistrate judge, and it's the district judge who would probably set the trial date and a schedule for pre trial hearings and motions.
David, I want to stick with you for one more and then we'll bring in in June. But you know, with Maddy was alluding to this with President Trump in appearing before court, this is the third indictment, and I think there's a risk that people sort of think to themselves, Okay, well this is now normal. This is not normal. This
is not normal in US history. Right now we're seeing a foecount indictment that accuses President Trump of conspiring to defraud the US, interfering with the counting votes in twenty twenty, obstructing conspiring to obstruct Congress's certification of the election results, and conspiring against the right to vote. I mean, these are some of these things that were in an indictment. Go back to the wake of the Civil Rights Act, was voting.
This is an extraordinary moment in our nation's history. The Justice Department has accused him essentially of an assault on democracy, and you know, Trump and his supporters say that he had a free speech right to say what he said at the time, and that the prosecutors will not be
able to show that he had criminal intent here. It's going to be a tremendous legal battle, and it's also going to be extraordinary over the next few months because of the need to set proper schedules between the three trials, and there's also the possibility of a fourth indictment. This is Georgia, right in Georgia and Atlanta, so we've never seen anything like this in our history. And all of this is bookending Trump's third run for the White House.
I just quickly want to stick with you on the Justice Department because you mentioned that I'm curious about how much feedback we're going to see the Justice Department getting in terms of the criticism that it's been this is political, that this is a political move. How much do you anticipate that commentary coming to the Justice Department.
I expect there's going to be a sustained political attack from the Republican Party, from Trump allies, from conservative media, and I also expect it's likely that the Justice Department won't respond except in court and so well. Trump can make a great deal of comments on social media and live, the Justice Department is greatly constrained in what they can say.
I want to bring in June Grosso. She is the Bloomberg Law host and legal analyst here at Bloomberg June. Every time in the last forty eight hours that we've gone by your desk, you've been reading this indictment. I don't know how many times you've redered it. This really three times? Okay, so it's about forty five pages. Give us your takeaways as you've spent so much time in it, and really the gravity of it.
Well, it's hard to overestimate or the gravity of this. And this is an attack on an alleged attack on American democracy, And what strikes me is the relentlessness with which former President Trump is alleged to have acted in this matter. He was told over and over again, and it's really set out carefully in this indictment. So they talk about how many times he was told and how many people he was told that the elections were fair, and they list, and that's why I think it's important
for people to read this. They list, for example, the defendant's vice president, the senior leaders of the Justice Department, Director of National and Intelligence, Department of Homeland Securities, Cybersecurity and Infrastructure Security Agency, senior White House attorney, senior staffers on the defendants re election campaign, state legislators and officials, state and federal courts. All those people, in different ways told President drump that the election, there was no fraud
in the election. And still he went forward and repeated the same things that they had told him were false. For example, he said more than ten thousand voters in Georgia were actually dead. He said that there were two hundred five thousand more votes than voters in Pennsylvania.
On and on, all things demonstrably untrue.
Yes, and suitcases of fake votes being counted.
In Georgia, conspiracy theories.
It's if you look at this, if you read it you'll see how the Special Council has laid out each and every detail, though I'm sure he is not given all the details out in this and it's overwhelming.
I would also point out there's going to be a legal question of Trump really believe these claims that there was fraud in the election, and how do you prove that though, Well, they have a lot of people around Trump who said that he told me this, or he told me that. They can use direct statements from his aids.
They can also use circumstantial evidence, and it may be that he was repeatedly told that your fraud claims are not true, and he believed it anyway, And so the burden is on the Justice Department and the prosecutors to prove what was in his mind.
Well, and June, I know you know this so well. But on the second page, the indictment acknowledges that former President Trump had that First Amendment right to lie. Talk to me about the distinction that's made in the indictment about the difference between that right and what was done.
So it's surprising to me that Donald Trump's luers are still advancing a First Amendment defense because obviously the Special Council has written this in a way to try to deflect any First Amendment claims. So there's a difference. First Amendment is speech. What they're alleging here is conduct, and that's there's a big difference in speech and conduct because with a conspiracy, with any conspiracy, they are going to be usually words spoken, and that doesn't make it a
First Amendment claim. It's the conduct that is at issue here. So the way he's written this is to say, yes, you can say this, Yes you can even say that the election was false, but that doesn't make it a First Amendment claim. So it's kind of surprising that that seems to be the main thread of the defense here.
What do we know about the co conspirators mentioned in the indictment to June, I know there's a lot of speculation about that, but having read it so many times, why can you tell us?
Well, I think we have identified at least five out of the six, and it could be that we've identified the sixth one, but I don't want to say anything.
At this point.
But so it's Rudy Giuliani is very obviously consputer number one. John Eastman's attorney has said that he is conspirator number two. You have Sidney Powell, the lawyer who appeared on so many with so many wild theories, and Jeffrey Clark, who was a former assistant Attorney General, and then Kenneth Chessper who is an appellate attorney. Those are the unnamed co conspirators.
And the question is is the special counsel going to name them at some point charge them, because if he names them, he's going to in an indictment he has to charge them.
So that's where I want to bring David in because there's a chance David that you know, if you're Rudy Giuliani right now, maybe you're being advised to cooperate with Special Counsel Jack Smith, and yeah, talk to us about you know that process there.
It's it's hard to tell for sure from the indictment whether any of the co conspirators are cooperating, although there is that possibility. There's one tactical reason that Jack Smith may have only charged Donald Trump, which is if you bring in more defendants, then that could prolong the trial and the proceedings. And it seems, as June suggested, that they want to make this as streamlined as possible to get in the trial before the.
Election is I can tell you what I just want to say one thing. I am sure that co conspiritor number two, who is Johnny Smith, the attorney, is not cooperating because his attorney is said that he's going to send a brief to the Special Council next week setting forth all the reasons why he should not be charged. That he was acting as the council.
We're getting a headline right now that the President Trump expectedly has pleaded not guilty to twenty twenty election charges. So no big surprise there.
But he also said that just to finish at the thought that if he is charged, he will not cooperate, he will not take a plea. So at least he's out of the game.
So, David, I guess it raises the question of one that wasn't able to answer when a colleague asked me earlier today when I was preparing for this interview with both of you and preparing for him to be at court. Is President Trump going to go to prison? I couldn't answer the question.
That well, first of all, that suggests that he'll be convicted. He has to be convicted, and you know it's possible that he could. He faces up to twenty years on the most serious charge. That's just on one charge, right, But the way the federal sentencing works is usually white collar defendants would serve considerably less time. So I can't answer the question of whether he's going to prison for sure, but I could say that he can run for president
under indictment. He can run for president if he's convicted, and even if he goes to prison, he could run for president. There's also the possibility that if he's elected, he could pardon himself. This is something that analysts legal nis have been talking about and it's kind of extraordinary and unprecedented. But we don't know quite how this will play out, but it seems to be a distinct possibility.
I've talked to lawyers and they seem to be on whether or not he would be sent to prison. Some lawyers I've spoken to said, well, he could be sent to a country club prison like they have out west, and we've heard about those prisons right where, or he could be placed under some kind of house arrest arrangement
at Mara Lago. Others have said that it might be that the president, who is in office at the time might do something like think that, okay, he's had enough right now he's been exposed, and might themselves, you know, grant him clemency of some kind. So I don't know if the judge would The judge here is a very tough sentencing judge, so I'm not sure she wouldn't send him to prison well convicted, Well, David.
What about Georgia the potential fourth indictment, Correct me if I'm wrong, But that's one that he couldn't parton himself from.
Right, The original indictment by the Manhattan DA Alvin Bragg, and any possible indictment by Fannie Willis in Atlanta, She's the Fulton County DA are not subject to pardons or clemencies under the federal system. So it seems that those are charges that present particular peril for Trump. But it also seems that it's almost certain that the Special Counsel would like to go first.
Well, it's interesting in June, I know you know this. So while the Special Council is going to focus on the idea that mister Trump was not delusional at the time, is there any chance of that changing because it would save him from prison time.
I don't think so. I think that, you know, in order to prove his case, he's going to have to prove that Donald Trump had intent, as David was saying, and you know that's true of any crime, that you have to prove intent. And I think that there's no way that the Special Council would would deviate from that or in any way say that Donald Trump was not of sound mind in his defense. May try that, but no, no, seriously,
I just don't think that that. I mean, some of the defenses that they've put out are what you said, first Amendment, advice of counsel. You know, there are different ways that they'll approach it. They also have sort of as Donald Trump has said over and over and over again from years and years, that it's a witch hunt and that he's being prosecuted, that there's a you know, favoritism in the prosecution. So that may be another one, but he is upsound mind.
And then timeline, I feel like is the next big important question because we do want to know whether or not there's a chance that he could be back in the Oval office by the time that this case has decided. What do we know about the timeline?
Well, I'll give you a live update. Trump has pleaded not guilty in federal court in DC. The judge is releasing him without bail, and he's agreeing to various conditions of release, but there is no trial set yet in this case. The Manhattan DA's cases scheduled for March, and the mar Alago documents cases scheduled for May.
The New York Attorney General's suit is also is going in October, and then Jean Carrol in January.
Sorry, guys, we're going to wrap because we've got to break the Apple earnings. But June we're going to have you back in a bit.
I do want to thank both of you. That's Jean Grasso. She is Bloomberg Law host and legal analysts, and also, of course, Bloomberg US Legal reporter David Doriakis on the latest with the Trump indictment.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business App, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa, play Bloomberg eleven thirty.
All right, well, plenty of news to get you. Fortunately, we go from Amazon earnings to the latest with President Trump's indictment, to Apple earnings, and we've got great guests for all of them, including our next one, Thomas Thornton, President and founder of hedge Fund Telemetry, on the latest Apple earnings joining us. You have Tom had only you know, wow, look at this thirty three three minutes to go through these numbers. But give us your gut reaction here.
You know, it looks like it's pretty much in line. I think everybody was expecting services to offset the weaker hardware, and that's generally what we got. Mac was a little better, I've had a little lighter. EPs was better, and revenues were sort of inline. I think I'm a buysider, so I think that the buyside had a little higher expectation for revenues. But you know, I think it's it's pretty much in line, and now we want to see what we're going to get for the next quarter.
How do you think they did that with EPs? How did they get EPs to come in above estimates when revenue was just in line? What did they do on the inside their last quarter?
You know they could I think I noticed some of their operating expenses were lower, and you know they've got the mass buy back, and that guy that does the buyback should be getting the biggest bonus.
A good point.
With his elbow on the button all day, that's.
A good point.
That was such a great question, Tim of how they got there that I love that question. I'm stealing that for the rest of earnings, for the rest of my life covering them.
Tom.
I want to go to you on the iPhone revenue missing estimates. I know that we kind of anticipated that, particularly because of the sluggish sales of the iPhone and some of those other devices there, But talk to me about how critical it's going to be moving forward for Apple to really dig deep into those iPhone sales figuring out ways to get consumers to either upgrade or get new products.
Well, I'm a little surprised that the iPhone sales were light. They were expected to be up one year over year, which isn't so great, but it's light. And now they have the iPhone fifteen that it's coming out. I don't think it's it's stably going to be a big event. From a new feature standpoint, It's going to look pretty
much the same a little better camera. And you know, the one reason I thought that they would have a little bit better iPhone sales was they cleared out a lot of inventory in June and in China especially, So it's it'll be interesting to see what the management says on the calls regarding that.
I'm really glad you brought up China because I want to talk about the Greater China story. Third quarter Greater China revenue was a bright spot for the company, fifteen point seven to six billion. Estimates were for fourteen point
five to nine billion. Dig deeper there, though. The China story is so important to Apple, and it's got a very complicated relationship with the country when it comes to how it stores its data, where its products are made, and increasingly where its products are not going to be made in the future as it transitions at least some of them to suppliers and to manufacturers who are building plants in India. Talk to us about the China story.
Well, First of all, Tim Cook is the best CEO because he knows how to play the political game very very well. He does it all the time in China and he does it in the US as well. But I think that. The one thing about China that I'm a little concerned about going forward is they just announced that they're going to put limitations on children and their handsets their phones, So that could be a little bit of a problem going forward because they did see a
pickup in services and services. That's interesting because the game there were a lot of games released in the second quarter in China and China approved them, So this could be a little bit of a headwind going forward.
So let me get this straight. If a kid is not staying up late after ten pm in their room playing on their iPad or their iPhone games and not buying those games, or not not buying products within the games, if they're in at purchases in China because China is cracking down on that, you see that as a real headwind for the company.
Yeah, it's it's a risk. I mean, I think that they had a lot of momentum coming out of Q two and it could be a little bit of a headwind for them. Look, I think kids are going to try and figure out a way to download games and play games as much as they possibly can, maybe more now I don't know.
Yeah, but I don't know what the you know, I don't know how that looks in China. How do you control for that? I truly don't know.
Well, you know, China can do a lot of different things. Went with Apple and to shut down some of the the access that people can have to their phones.
Well, let's I just want it for contact, Maddie. I just want to repeat sort of the how important of a segment Greater China is as a reportable segment. In the most recent quarter, the three months that ended July first three, it was the third biggest reportable net sales by reportable segment coming after year up with twenty billion dollars in the Americas with a thirty five point three billion Greater China coming in Maddie at fifteen point seven five eight billion dollars.
Yeah, and it's just interesting. I mean, looking at the headline here, it kind of says it all from Markum and Apple meeting estimates after services help offset that hardware slump. I wonder how the China story plays into that from your perspective, Tom, is there a world in which that hardware slump is saved because of the China story For Apple?
Well, there were a couple sell side notes that I read it said that, you know, we had a big iPhone cell through in June. It was a big, big, big month, a lot of inventory cleared, but they saw some China deceleration in July. So those are the early checks that we're what we're seeing right now. So it's it's gonna be tough too with the new phone. I just can't really get too excited about it. There's been some talk about delays. Yeah, there's also that going around.
Okay, so Tom, you give me the opportunity to kind of like, you know, you read my mind here. I was thinking as we went into this report today, I think I forgot I used to cover this company so closely. I used to get every new iPhone as a review model. I don't even know which iPhone I have anymore. It takes great pictures, it runs fast, It does everything I needed to do, and I don't see myself upgrading at the same rate that I used to upgrade. This is a story I've been saying for five years.
At this point, that's true.
You can go back and look at the past three iPhones, and you've heard the bulls say we're going to see this giant refresh upgrade cycle it's going to happen. I think this one's going to be a little tougher too, because they are planning on raising the prices of the phones. And one thing that's probably smart for them is they're going to focus on the high priced bone to push
out a little harder out there into the market. But look, if the economy slows, if you have the college student loan repayments start to happen, I think that's going to be a little bit tough. And the other thing is people are sort of throwing away this next quarter and they're looking more towards the December quarter. So I think that's why the stock's moved higher in anticipation for the wide release of the iPhone fifteen. So I think that's
kind of what's happening. The market isn't really punishing the stock too much right now. It looks like it's pretty much in line.
We pause for me. On the student loan story, you're saying that the unpositing of student loan repayments in the fall is potentially a sizeable headwind for Apple sales.
Yeah.
Absolutely. The average repayment is four hundred dollars a month. I think that's gonna change a lot of consumers spending plans, and certainly, again, as Tim said, if your phone is working just fine, why do you really need to upgrade to a phone that is basically the same as what you have right now? There's nothing really that exciting in the phone. The next phone that's gonna have wines around the block and people waiting for the next great thing.
Well, I think that's exactly why you saw the release of Apple's Vision Pro the unveiling. I don't want to say the release. That's why we saw the unveiling in the last few months of Apple Vision Pro tom because that is where Apple sees a growth area. It's just so different than anything Apple has ever released in the past, not just because of price, not just because of product category, but because of availability and how they're not making it available to so many people. What's your read on it.
Well, look, I think that Apple is flexing its muscles as far as a technology company again, and that's really nice to see. We've all been enamored with all the great technology that Apple's released over the years, and this is certainly something that is really really stunning. The technology
is just mind blowing. I haven't seen one on obviously nobody's really seen it, but I just think the price point is going to be difficult, and they're not going to have this in wide release until the first quarter next year, so this is really something that they're going to I mean, it's kind of a bad thing that they're going to miss the holiday seasonal shopping for this new product.
Oh that's funny. I would really not want that under my Christmas street, but I can imagine a lot of people would, so I understand it. I'm sorry, I'm really headsets like I can't I'm not the market for it, and I also feel like women don't want to wear headsets, but that's a separate story that we're going to cover.
I also want to talk to you about the earnings call because I anticipate that there are going to be a lot of questions about the headset, a lot of other questions about iPhone sales, how they're planning to deal with that. What would your single biggest question.
Be, Well, there's there's there's three things that I think they're going to talk about, and let's just start right with the obvious AI. What are they going to say about AI? And then there's India, Then the headset. They'll talk about that, and then obviously they'll talk about the iPhone fifteen and how wonderful it's going to be. But AI is what people are going to be listening for.
If they have something that's meaningful that they're going to release for the consumer, maybe this order or next quarter, what would that look like. It's probably going to be something like Siri, something in a very advanced type of search product, huh, that they'll have. I don't know. I just think it'll be interesting to see if they can come up with something that's different and unique and something that people can use on their phones seamlessly like every other Apple product.
Tom, we really appreciate you taking the time in joining us this afternoon, especially only having three minutes to actually go through these numbers. You gave us a lot of really good stuff. That's Thomas Thornton, president and founder of the Hedge Fund Telemetry, joining us to talk about the latest Apple learnings.
This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim sten Of from Bloomberg Radio.
We're gonna go.
Back to DC here because former President Trump is expected to leave the courthouse soon. The hearing has wrapped up, and we're getting some reports in about potential next steps when it comes to trial dates. So we're gonna jump right into it with our guests here. We've got Bloomberg Law host and legal analyst June Grasso. We've also got
a fantastic guest to talk about this, Robert mens. He is a former former federal prosecutor and partner at Macarter and English to talk with us about this as well.
June, I a household name to you, June, I feel like.
Okay, I have been Yes, I've known him for decades. Bob, I don't know, for years and years.
In as soon as Maddie said, introduced you, Robert, she said, Bobby.
I mean you too, should just talk.
Just go Jim and.
I don't need to be here.
Go ahead, Maddy. I jumped on you.
No, no, no, June, you know what I what I wanted to say and get Bob's opinion on this. So the judge, the magistrate judge who told Trump that she's consulted with the trial judge has set August twenty eighth as the next hearing date in Judge Chuckins Court, and also in seven days wants briefings about how long the case is going to take. So does that indicate to you that they're going to try to move this quickly?
I think they will try to move it quickly.
I think the judge here wants to get her hands around the issues in this case as soon as possible. She wants to put the defense on the record as to what they think they're going to need in terms of timing to be ready to go to trial. I'm sure the prosecution is going to say they'll be ready to go as quickly as possible, as quickly as.
They can get a trial date from the judge.
So it's really going to be up to the defense to try to explain what time they need. They're going to want discovery, obviously from the prosecution. The extent of that discovery is going to drive the timing of this trial. How many documents kind of discovery are we talking about? Unlike the mar Lago case, where there are all kinds of issues about national security, because of the nature of that case, we really don't have that here so much if we have it at all, and so this case
could be fairly streamlined. And I do think that this judge is going to try to move this case along as quickly as you can.
Well, as you mentioned, though, Trump's lawyers will do whatever they can to delay it. Robert, as a former federal prosecutor here, what do you anticipate that they could do that would be effective in their efforts to delay the trial?
Well, I think they're going to tell the judge they need a certain amount of time to absorb all the information. Again, I think it will depend on the volume of discovery that prosecutors are going to provide to them. We just don't really know what that is at this point, but
there could be literally hundreds of interviews. Those may or may not be memorialized in grand jury testimony, for example, they could be memorialized in what's called the three to zero two, which is an FBI memorandum that memorializes the interview.
All that stuff has to be provided to.
The defense, and the defense does have to have a reasonable amount of time to absorb that information to prepare for trial, and.
The judge will be sensitive to that.
I mean, she's gonna want to move this case along, but she also is going to be very aware that the defense does have to have a reasonable amount of time to get ready here, because if she moves too quickly, that creates some kind of an issue. Even if there's a trial, even if there's a conviction, it could be overturned on appeal if the defense can say, we were just simply not ready to defend this case.
So we're gonna have.
To see what the discovery looks like. That will ultimately drive the scheduling.
Here, excuse me, I got to turn my microphone. If you're watching us on YouTube, you can see on the right side of the screen President Trump has left court after pleading not guilties, now making his way to Reagan
National Airport to board his jet. June I want to know about timing here, and we did just here from Robert about you know, the delicate balance that the judge has to to sort of walk to make certain that the defense has enough time to prepare, but also that it's not something that's delayed, especially their political implications here too.
Absolutely, he's going to be campaigning. And you know one of the dates that they set was that they were considering was near one of the debates, which he said he hasn't going to be in, and a lot of these hearings the defendant doesn't have to be there for the hearings themselves. But I think what's really interesting, and I mentioned this before, is that da Alvin Bragg, who has a firm trial date of March twenty fifth of next year, has said that in the interests of justice,
he would consider, you know, moving that trial date. And let's all face it, this case is considered the most important of the case is because of what allegedly happened here, and so I would think that this is the case and it'd be interesting to see whether the prosecution is going to try to move this case faster than the classified documents case, which, as Bob and I have discussed just recently, the classified documents case seems like it's more straightforward,
but you have all those classified documents that have to be dealt with. And another thing is John Laura, who is one of Trump's attorneys, was on I think it was CNN the other night and he was saying that this case, this trial could take nine months or year. Bob, obviously that seems a little bit long.
Well, you know, it isn't It isn't.
I mean, I've tried lots of cases in federal court and defended them, and it's not that unusual to have a trial that ultimately goes to trial, you know, a year or more after the indictment. But again, that depends on a lot of other factors, you know, like the volume of documents that the defense has to review and analyze, you know, where they need to engage experts. For example, in a financial fraud case, the defense is going to say, don't judge me to hire an accountant, a forensic account
to go through all this. Then you've got issues about scheduling with the with the lawyer's other schedules, and of course you have the judges schedule. But this is a case that is so important that clearly the judge is going to clear her schedule to try this as soon as possible, and I think she's going to expect the same from the defense lawyers. She's not going to say, well, we're going to bump this trial because the defense lawyer has got a conflict with some other trial.
You know. Laura was saying that the case, the trial itself, could take nine months to a year you know the trial, right, not getting to trial. I mean, do you think that's an overestimate?
Yeah, I mean it certainly is, because you know the length of the trial is going to be largely driven by the prosecution.
Right.
I mean, in any case, what typically happens is, you know, most of the witnesses, and many times all of the witnesses are prosecution witnesses. The defense usually does not put on many witnesses at all. Now that's not to say that in this case they may not call some witnesses, but the government bears the burden of proof. Obviously, the government has to prove each and every element of the case beyond a reasonable doubt, and so the burden is on them to put the case on.
It's their case.
They can streamline this case as much as they see it is necessary or to move it along. I see no way this case would last a year to try. That's just hyperbole. That's never going to happen, Robert, depending on I.
Want to jump in because I don't have a ton of time, and I want and given that you're a former federal prosecutor, you're now a partner at the macarter in English as well, how strong is the government's case.
Well, I think it's a pretty strong case, but I do think there are some defenses here, and you know, the defense here has already alluded to that.
You know, this is a case that's going to be tried.
In the court of public opinion long before it ever gets to the court room. That's clearly the defense strategy here. You know, they're looking for some type of jury nullification, which means they have to convince just one juror to not vote to vict regardless of what the evidence is, if they believe that the entire process has been rigged.
I think that's what.
They're shooting for here. But they are going to raise the First Amendment issue, that this is really a free speech case, and they're also going to raise this advice on lawyers. They're going to say that President Trump relied on the advice of these counsel and as such, she's allowed to rely on that, and.
That's a defense. If those lawyers were wrong, it's not his fault. He hasn't committed a crime.
Well, I also want to ask about the point that you made earlier June about the timelines of the different cases here. Yeah, Bob, I'm curious from your perspective, what's the right strategy for that?
Well, first of all, you know, they can't really control Alvin Bragg, as June said, but he's already agreed to step back, which makes a lot of sense. So we really have these two federal cases at this point, unless the DA in Atlanta also jumps into the fray here.
I think if I'm the special counsel I'm looking at that case at mar A Lago, I do think they're strong facts, but it's not as compelling a case, and the defense frankly does have a better argument given the classified documents, that this case is going to take a long time. So I think we're going to see the government double down on this case and try to push it as forward as quickly as they can.
Especially because in Florida they now they had a superseding indictment adding another defendant, which makes it a little more complicated. They have now three three code defendants, So that's another reason why that case may lang.
Robert, if you are Special counsel Jack Smith right now, how confident are you feeling about this?
I think he's pretty confident. I think there's obviously a lot of evidence out there. His indictment was incredibly detailed. It showed a lot of work that the Special Council's Office had done. They've done a lot of interviews, They've got statements obviously from Vice President Pence, you know, former.
US Attorney General Bill Barr.
I mean, there's all kinds of people there who obviously we're giving advice to foreign President Trump that the election was not stolen, that he didn't win the election, and he went on to make these statements. Anyway, they also have his state and I also think to think the prosecutors are holding back some of that evidence. They're not going to show their entire hand in this indictment. So I think there's more to come when this case actually goes to trial.
Yeah, Mark Meadows just mentioned as chief of staff in passing a couple of times. Now you got to wonder if he's not a co conspirator, is he cooperating?
Does he seem you're not gonna you already went through the co conspirators June.
No, he's no, he's not. No, he's not he's not one of the co conspirators that are unnamed. So you're saying, I'm speculating that since he's not and he was so involved in what Trump was doing, and he was on the phone call with the Georgia Secretary of State, remember that. And I'm just one. I'm speculating. Is he then cooperating and that's why he's not listed at all?
Right, We're gonna have to leave it there. Guys, really appreciate both of you joining us this afternoon. A special thanks to our guest Bloomberg Law host and legal analyst Drian Grosso and also Robert Vin's former federal prosecutor and partner at the law firm, Macarter and English, join us to talk the latest with President Trump.
A brother mac a journal. Now about you? Let me drive?
Oh no, no, no, no, Honry please, I'll do the gravels. Excuse me, I want to drive.
It's good question.
This is the drive to the clothes on Bloomberg Radio.
All right, Well, we got fewer than seventeen minutes on the way to close right now, and despite some of the selling yesterday, we're seeing a bit of stability in the broader markets. Is wait to hear results from Apple and Amazon. Taking a look at what's going on on the S and P five hundred, We're down two tenths of one percent, the down down one tenth of one percent, an Astec down one tenth of one percent. Here to discuss the big picture as well as today's trade is
Beata Ker, chief Impact Officer at the Kopia Group. It's a private equity firm. Biatta was though formerly cohead of Investment in Well Strategies at Burns in private wealth Management, so we know that even though she's at a PE firm now, she does not ignore the public markets. Piata, good to have you with us this afternoon. First of all, what's a chief impact officer do?
Well? Thanks for the question and thanks for having me in your right. Public markets and private markets are very correlated, and impact is very correlated to investment. In the Kopia Group, we are focused on providing capital to lower middle market companies and particular diverse owned businesses, and as an impact officer, I'm focused on measuring the impact of our capital, which ultimately we think will help narrow the wealth gap for underrepresented communities in the US.
When you say providing capital, do you mean you're investing in these companies as a private equity partner, as a venture capital partner, or using private credit.
Well, it is the latter. It is private credit, and that is where we are squarely focused as a capital provider. And one of the great benefits of private credit is that it's non emotive capital. And we know equity in businesses is in fact the greatest asset to forming wealth in this country. So providing capital for growth that is not diluted gets the owner to retain their equity yet accelerate growth is really the vehicle of investment that we've chosen.
So why does a company come to you instead of a bank for money?
Well, first of all, the banks used to be seventy percent of the capital provider for lower middle market companies. At last count, post Silicon Valley it is ten percent, so we know post GFC there was a huge retrenchment of banks from a regulatory perspective, and this year's events
have only continued that trend. So frankly, the banks have been there for them for shorter term financing accounts, receivable revolvers, but growth capital, acquisition capital with an average tenor four to five years, private credit organizations have really stepped up to be the primary providers for this really important segment of our economy.
Can I ask you about private credit, because I'm curious about what happens to our economy when private credit stops being able to kind of save us. Am I right to be worried about that?
I think it's a great question. I think it's always great to worry about the next thing. I think what's interesting about private credit it's actually been around for over thirty years. It's just been part of banking institutions, and I think the leading private credit lenders in today's market many ways have been former bankers, if you will. So private credit capital has been around, just in various functions
and different types of organizations. And I think the other thing that's reassuring is that lately there is no evidence of private credit going away. In fact, it's really an exploding ask the class from the positive sense in terms of many capital providers such as ourselves, launching to really be there for those organizations.
Yeah, and you mentioned kind of always wanting to look ahead to the next shoe to drop and the next negative thing that could be coming. It makes me think about the jobs report that we're going to be getting in tomorrow, likely to be positive as it has been, But what are you anticipating and what are you thinking that the market reaction could look like tomorrow.
Well, at the Kopia Group, I'm going to center my answer more around how that affects the lower middle market businesses that were in particular focused on, and one of the key statistics sell shares that in fact, lower middle market businesses are the fastest growing segment of the middle market,
and in fact they've been hiring aggressively. So statistics show that these businesses continue to be revenue positive, and while wages are going up and they're managing margins and that's an area of pressure, job growth is actually something that we see as a positive trend in the private markets. And as you know, in the broader public and private market picture, this economy has appeared to be very resilient.
So I thought the Fitch downgrading this week was it st timing, because obviously jobs and wages have remained quite robust, and the US economy has not appeared to be struggling. So I would just add that broader perspective on recent macro.
Events economy is surveyed by Bloomberg, are expecting the payrolls report to show wow, look at that two hundred thousand tomorrow and last months would be two hundred nine thousand by last month. I mean June, because we're do in July tomorrow. So beyond payrolls tomorrow, let's talk broader about the equity markets. And again, I know you're in private equity. Now, you're focused on private credit, but you do not ignore
what's going on in the equity markets. We're up on the S and P five hundred more than fifteen percent so far this year, more than seventeen percent, even with the pullback that we've seen this week. Are we in over our skis?
Well, I'm not sure we're in over our skis. We might be the beginning of a new bowl market. Frankly, there's a lot of robust nature to the economy. I think we should just watch valuations relative to earnings. As you know, earnings and multiples do tell the story of the equity markets, and I think you could see some pullback given how robust this rally has been. But another thing to point out about the rally is, remember how
narrow it has been. It's reminiscent of prior equity rallies where you had a couple of key names note in
the technology space really driving most of the return. So I think, kind of bringing it back to private credit, I think what we're seeing is a lot of enthusiasm from allocators that might be long term optimistic about equities, but feel really great about investing with companies with our cash flowing businesses and yield in the meantime, while there might be some ongoing volatility in the equity markets.
How much do you think about big earnings like Apple on Amazon today in your kind of overview on your work.
Not that much.
You know, what effects our earnings and what happens to our companies is ultimately fortune five hundred. Growth does affect the types of companies we're looking at, because we're looking at investing in healthcare and business services and logistics, in distribution and in food. So of course the supply chain is going to flow through to lower middle market businesses, and in particular, what we would know is commitments to invest with diverse suppliers. Is that benefit to the opportunity
set that we see here at the Coopia Group. So of course, the overall economy matters day by day earnings, especially as say for the tech companies, a little bit less of an area of focus for the sectors that we're king in.
On be out of just ten seconds. What's your recession outlook for the next twelve months.
I think we're in a soft landing scenario. I think I'm optimistic and constructive about the overall economy.
All right, there it is. I have to end on some soul asylum. Sarah, great choice, nice job.
We love the music.
We do love the music. Here Biata Kerr, chief Impact Officer at the Kopia Group, who really thank you for taking the time today.
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