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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 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 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.
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 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 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 have political influence.
So this really is just like a.
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.
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
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.
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, 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 just so paramount to this institution and it's there to serve a public good.
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.
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 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 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.
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.
Well, what's interesting about this specific complaint is that he actually needs bad jobs data to.
Get the rate cut that he wants.
So, like the priest play hasn't checked out the warp function on the bloemob work.
So yeah, so yesterday was forty percent chance of a rate cut.
Now it's over eighty. It's like eighty six, I think.
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 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.
It doesn't work that way.
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, then people start questioning.
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.
Jobs data says every month.
This is an institution of roughly two thousand people globally at BLS sorry and the US not globally.
Who compile all these reports.
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 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 reports that he's been touting.
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, though we are seeing weakness, but we still have some inflation signs.
Yeah, I mean I think.
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 gage 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.
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.
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 speak.
Though, we're going to get start getting here in a lot well.
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.
I told you 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.
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.
Well.
As Carol mentioned, President Trump said the US is moving too 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 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 seriously do you take that in the context of escalating conflict with Russia.
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. We have the Virginia class submarines. 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 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 one of those carrier
strike groups anywhere. 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 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.
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 he's publicly saying this, can we read into this in a way that's like, Okay, we shouldn't take it as seriously.
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. The fact that he's talking about it 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 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.
The way that he is right.
Now, 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.
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 knows about it. 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 is somewhere near strike this.
Since of it.
Anyway, the fact is he's just mainly talking.
About it now.
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?
I would say yes, right.
I think if you're looking at the difference 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 capability around the world that we constantly use.
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?
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, or if these two were partnered together.
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
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.
They're able to go. They're able to go without it normally. What I was saying is that if you 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.
So when you hear somebody say I'm deploying the US.
Is 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 ballistic missile submarines, we have a lot more submarines than we do carrier strike groups.
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.
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 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.
Earlier in the session too, they were.
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
are seeing some impact. It's all against the mag seven that we've heard over the last two weeks or so.
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 of demand to avoid tariffs?
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 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.
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.
I think it's worse, it's faster.
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 probably talking calendar year, which means the earliest we'll see you generative 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 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 on all iOS devices. I think it'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 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. 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?
You know, I mean, I think so.
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 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 jenerative AI is overhyped or the economics are further off into the future, Apple.
Is a great place to hide.
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.
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.
Creates the tablet. They didn't create the music player, they didn't create the smartphone, but they created the best of all those things exactly.
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.
So it's risky business.
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. Okay, that's a vision of 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.
Be a screen.
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.
That might be possible.
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. But if Jimmy I've and open AI are right and screens are going away, that's problematic for a smartphone maker.
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 iOS is already behind Android right now?
Oh?
I would absolutely?
I would.
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 they're integrating all these better convert both Meta and Google because they're using generative AI to increase.
The conversion rate.
So yes, Gemini is being integrated into everything at Alphabet, Android included.
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 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'd get at the app store.
If it's standalone.
But I mean, I think my guess 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, 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. By the way, some CEO's visions of their apps are disappearing. So then you say, so what replaces them?
Well, I don't know. Used to be websites, then we went to apps. What's next? It may not be apps?
All right? 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 its 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?
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 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.
Pretty good work, get it, I'll say.
Yeah.
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.
Doesn't sound like your pro AI in that In that context.
Let's stick.
Let's stick to Meta as a stock.
My concern is that we're kind of we're losing 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 twice their size. All of that feels like a lot of capital spending to me and actually costs to me without a clear sense.
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?
Are they? Okay? Just because the AD sales number came in really strong, Like if it didn't, might everybody be like maybe not?
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 year commitments for these super intelligence employees, and he's making ten year commitments with the money.
He's spending on data.
So all of this money, he has a free pass so long as his core business is growing twenty two percent.
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 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.
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, 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 or something or the metaverse.
He's trying to displace.
Apple, and he wants to be the backbone that everybody has to pay thirty percent to. So that's his main economic mission. 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 so. 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. That's why he's hiring fifty smart people to have robots, train robots faster to do stuff humans can't do.
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 here are what we kind of need to be thinking about with Amazon, because investors seemed pretty disappointed.
Are you.
So?
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,
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.
Had not Tamu and Chean.
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.
And I think.
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.
I think people don't understand that as to use a capital.
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 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?
Why aren't they forty percent?
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, but really high margins, and that just didn't play out at Amazon all.
Right around the world. We went, thank you so much, Laura, always appreciate it. 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.
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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 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.
Yeah, exactly, you know, both of them, they reported earning drops. I think that was very much expected given how low oil prices were this past quarter compaired to last year and even the first quarter, so so that was very much to be expected. 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 is 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. Both companies are working together on off toour projects in Guyana that are also expected to be highly profitable. You know, Chevron, you know, It's project in.
Kazakhstan also looks good.
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 oil prices, and the big question here is 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 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 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 have to be hammered out. The other big question coming up is just this tariff and secondary tariff issue with Russia.
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.
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. There was some kind of we would.
Have expected a much you know, we would have expected.
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 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 gasoling consumption rights up. Will it go up as much as expected?
I think is really the number we're looking to see.
Ellen.
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
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.
Yeah, exactly. I think that you know, this is.
A really just about a minute left, So I just want you to be able to manage that this.
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 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.
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.
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