Skip to main content

tv   Bloomberg Technology  Bloomberg  January 30, 2020 5:00pm-6:00pm EST

5:00 pm
>> welcome to "bloomberg markets." i am taylor riggs with paul allen. coming up in the next hour, international emergency. the world health organization says the coronavirus outbreak is a global health emergency. we will have details. plus, the evaluation club. amazon crosses estimates on earnings-per-share and revenue. we will have details.
5:01 pm
almost anything could happen. the iowa caucus is on monday. more on the race for the u.s. democratic presidential nomination. let's look at how u.s. markets fared today. we're interesting stuff in the u.s. we got numbers this morning and take a look at what that is doing to the broader markets. tech finally back to being in the lead, taking a pause from the concerns about the coronavirus, going back and letting the fundamentals and the earnings come back into the market. that means nasdaq, up and down 3/10 of 1% and industrials trying to brush off any concern about the economics here and trying to get back to fundamentals. unchanged after we heard from jay powell yesterday. hanging in there today, not moving in any direction on the index. taking a little lower, the not by much. i just have to say, it all comes
5:02 pm
back to tech earnings. finally, bigm and day for amazon. passing $2000ou stock, your joining the trillion dollar valuation. they are on the top line on the retail segment. it fell 88% of revenue. the cloud only 11%. analysts were worried. it looks like for now, amazon was able to get it done. we will have much more reaction coming up. paul: that was a powerful result. we look forward to unpacking that more. we have one market open for the region. that is trading for about one hour or so, off by about one third of 1%. sydni futures looking positive after the close in the u.s.. we will be watching japan closely today. a lot of data out of tokyo.
5:03 pm
job and retail numbers and industrial production, so plenty to watch there. we are keeping an eye on the yen, which has stayed stable through this concern over the coronavirus. australia haslar, a huge trade exposure to china. back to 2019 lows. taylor: in the meantime, let's get a check on the first word news. >> the u.s. economy is holding steady despite drops in major confidence indicators. the economy grew 2.1% in the fourth quarter, marginally outpacing estimates. that is the same as the previous , but there was business investment deteriorating. white house economic advisor larry kudlow says the u.s. is not seen any major economic impact from the coronavirus.
5:04 pm
the world health organization has declared the coronavirus a public health emergency of international concern. announced it will formally begin work to help coordinate government responses. decision comes as the number of cases passes 8000 worldwide, including the first person-to-person case in the u.s.. 170 people are known to have died and cases have been reported in india and the philippines. economics -- >> concern over the global outbreak of global coronavirus. the main reason for this declaration is not because of what is happening in china, but because of what is happening in other countries. is theatest concern potential for the virus to spread to countries with weaker
5:05 pm
health systems. theloomberg economics says outbreak may cut china's gdp quarter, 4.5% this down from 6%. the virus may inflict severe temporary impact on output. hong kong is estimated to face 1.7% drop in gdp growth with the u.s. and the euro area losing 1/10 of one percentage point. global news 24 hours a day on air and on quick take by bloomberg, powered by 127 journalist and analysts. i'm jessica summers. this is bloomberg. on the for more coronavirus, i want to get our china correspondent in beijing. who aboutrom the .aising the levels what do you hear on the ground in beijing?
5:06 pm
>> after refraining from declaring this a global health emergency, they are now putting that label on it which allows easier international response. they cite the risk that this virus could spread beyond the few cases we are seeing around the world and that countries with weaker health systems are more vulnerable. the death toll has reached 170. we are now seeing 8000 confirmed cases. the number of confirmed cases in china now exceed the number of cases it had during sars. the decision from the who came hours after the centers for disease and control and prevention reported the first case of human to human transmission in the united states, of a woman traveling china, coming back and infecting her husband. even though the disease is heavily concentrated in mainland china, we are seeing cases in asia, europe, united states, middle east and philippines.
5:07 pm
i want to point out that the director general said he is praising china's efforts to contain the outbreak and has never seen a country -- respond so aggressively. haverganization does confidence in china's ability to fight the escalation. he said there is no need at this time to interfere in travel and trade, even though we are seeing governments, airlines and businesses take more aggressive action. british airways halting flights to china. you, selina wang reporting from beijing. for more on the worldwide effects of the coronavirus, i'm going to bring in macro advisor joiningt, thank you for us. i know it is early, but as you take a look at any effects of the virus, where the early in
5:08 pm
pacts on your economic radar? >> thank you very much for having on. at job is really to look what the policymakers are saying. we don't really crunch the numbers ourselves. ont we have learned is that tuesday, china's top economic policy body, the national development and reform commission, reported to the state council, which is headed by the premier and they gave their initial assessment of the coronavirus on china's economic growth. ther assessment was that hit to first quarter gdp was going to be about 1.5 percentage points. the expectation was originally that it would be similar to q4 of 2019. now they are looking at around 4.5%. that is what they are looking at, and of course, you have to
5:09 pm
look at the risks surrounding that in the forecast. taylor: do you get any comfort knowing that the world health organization is not restricting travel? >> i do not at all. i think they are trying to put this in perspective, and i think a lot of that is to try to control panic levels. i think there is a legitimate argument to be made that there is a strong reelection globally as well as within china, but what they have really lauded the chinese strong reaction to spread the virus and the same time, they are telling the global community not to worry. areal specifically is an that one has to look at very closely, because a lot of people like to compare this to the sars epidemic of 2002-2003, but i
5:10 pm
think those comparisons are spurious. try to look at what the last example of this was, and chinese travel, just a look at some data 2003, chinesen travel to the united states was 160,000. it was a tiny drop. now it is 3 million travelers. spending $36 billion within the united states. it is ine of travel our mess. it has exponentially changed. if you're trying to take a template of the spread and apply think that is misguided. paul: chinese equity market has been closed of course for the lunar new year, but we will feel some of the impact of this later when we have pmi out for
5:11 pm
january. we have a chart here indicating what we are expecting. is there a risk here of a downside? pmi is survey data, so i guess the question is exactly when that covered and when the survey was taken. i don't know the answers to that. i would need to know that. i would not be surprised if there was a downside surprise, but even if there was not, i think that the impact is going to be felt in february. expectations for that 4.5 percent q1 gdp, it is indicated on what happens february. the chinese government is expecting that the spread of the virus will peak in mid-february
5:12 pm
and that essentially by the end of february, you will have this virus under control. that is really the wildcard and i think that is where we are going to start seeing the data and activity numbers show between now and february. taylor: thank you. up, amazon sores after a strong fourth-quarter earnings report. we will break down the numbers next. this is bloomberg. this is bloomberg.
5:13 pm
5:14 pm
paul: amazon shares soared in late trading after reporting strong fourth-quarter earnings. the tech giant beat expectations across the board on revenue, operating income, and amazon web services sales. protections for a slump falling 3.02 billionrom
5:15 pm
dollars per year earlier. joining us to discuss this is research analyst. spike, amazonrs adding the equivalent of amazon's entire market cap. what was the standout here for you? >> there were several positive takeaways in the quarter. abovevenue number was expectations and guidance. more importantly, the operating away allally blew analyst expectations, including ours. even more remarkable, the fact that they were going into the holiday season spending heavily on one day shipping. that was really remarkable against those odds. i think the amazon web services business continues to hold its own in the face of competition
5:16 pm
from microsoft cloud offerings. we know that microsoft has been getting share, but we think amazon has gotten a lot of attention in terms of potential deceleration of growth. i think this quarter, they really answered all doubts, in the top line and about 26.5% operating margins. we are seeing amazon web services on the forefront of a lot of technology and innovation, but you look at the other areas, prime membership group. when you look at those numbers, i think you get a sense that the holiday was a major catalyst without. a lot of positive takeaways across the board with remarkable execution. was: amazon web services one that was going to be watched closely. expectations firmly managed care to say the least. what do they need to do to remain competitive against microsoft and google without
5:17 pm
expanding unsustainably? >> i think they are actually doing what is within their control. the biggest upside ac for them now is international markets. margin markets like india being a notable call out there. pentagon cloud infrastructure contract to , whichft was a deep blow they are still litigating, but that being said, i think this is a huge market that will be big enough. it's three major players, amazon is still the dominant player, despite competition from microsoft and google. this is a business that is going to hit around $40 billion awsnue and you can envision being a huge chunk, potentially
5:18 pm
half of the equity evaluation of amazon stock, which is why closed over $1 trillion today, which says a lot about potential offside. taylor: i want to look at hr i'm seeing on my terminal. if you think we are just in the early stages of a big market opportunity, wiry only growing at 33% year-over-year when microsoft is higher? we get as a question lot from investors. i think the simple answer is the law of large numbers. we have several orders of magnitude, the size of microsoft cloud. i think that really answers the question. that being said, there is a lot to be said about how microsoft has really invented this area. it is doing a lot of things right. also, amazon kind of quibbles with the trump
5:19 pm
administration and the pentagon did not help the perception. all, the market stays in the best growth. there is a tie there that i think will serve the industry dominant players very well, especially the early movers like aws and microsoft. finally, i want you to take another look at a chart i'm showing here. this is as of close thursday, so it is not yet reflecting the post market movement, but if it were, this would be a $1 trillion company. is that valuation justified? >> i think so. that is why we have kept our high recommendation in the face of the antitrust and government investigations. i think this is likely to be a volatile stock in the year ahead , but we are heading to the
5:20 pm
presidential election year with all of the potential chatter about antitrust. this is a name that you know what you're getting into, but the core business remains intact. cloud,ft to enterprise you see they are on the cutting edge of some of these innovations, whether it is machine learning or artificial intelligence. another point that jumped out, 40 million active users for fire tv this quarter. you get a sense they are building a big ecosystem in the hardware devices, and alexa and hurt thatit doesn't they just got seven or eight golden globe nominations. they are really getting traction in trans media, with content creation, along with the likes of netflix and hulu. for joining us to analyze those results.
5:21 pm
still to come, count down to iowa. just four days until the caucus. democrats on the final stretch and the latest from the ground. ♪
5:22 pm
5:23 pm
taylor: there are only a few more days for democratic candidates make their pitch to voters in iowa. the ground inon des moines already with a preview of what to expect. i want you to remind our global audience, the importance of the iowa caucus and how different they are from a typical primary. they are different. that is absolutely right.
5:24 pm
is significance is that it really the first votes we will have in 2020. the first chance for the rest of the country to see how the presidential candidates are doing in selling their message to the voters. with not all state lot of delegates to answer to whichtional convention, decides who the nominee is, but it is the first chance to see who is doing well, and that is very significant. taylor: can we glean anything from who the iowa caucus chooses, who the front runner is in iowa, what sort of ripple effect that could cast in some of the other more major states? because what voters want to see around the country is someone who can win an election. itself holdst iowa a tremendous amount of importance, it shows who can win.
5:25 pm
electability is a key argument. democrats want to pick someone who they believe can beat president donald trump in november. someone who can win iowa might be able to do that. tradition has a long of picking the winner. the person who wins the iowa caucus, they want to think they have chosen the person who will be the nominee. sometimes it is the truth and sometimes not, but they did pick hillary clinton and barack obama so they have a good track record. in terms of any surprises that the caucus might generate, what might we be expecting their? >> any outcome is going to be a surprise, because the race is so fluid right now. the top candidates are so close in the opinion polls, one minute is bernie sanders, the next it
5:26 pm
is elizabeth warren. the next, it is joe biden. the next, it is pete buttigieg, who was once the mayor of a small city. , or minnesotae senator amy klobuchar is trailing behind them. anyone of them could be the winner of the caucus. it is very unusual in that it is not a foregone conclusion. couple -- paul: a couple of left-wing candidates, when it comes to track record, where does iowa choosingterms of candidates away from the center? i would democrats tend to be a little more liberal than the rest of the country so that does bode well for bernie sanders and elizabeth warren. is a sense that bernie
5:27 pm
sanders and elizabeth warren might be what democrats want in their hearts but in their heads, they are thinking who can be donald trump. bernie sanders and elizabeth warren have some policies that are a little outside the mainstream. famously thataid what works in san francisco will work in michigan but what works in michigan doesn't always work in san francisco. taylor: wonderful analysis. thank you for joining us. you can follow our live coverage on the monday caucus on bloomberg television, bloomberg.com and sirius xm. in the meantime, breaking news, the coronavirus death toll has risen to at least 212 people. that province is reporting 42 coronavirus deaths through january 30. coronavirus death toll in china rising to at least 212.
5:28 pm
the world health organization earlier raised the level to an international health crisis. all of that up next. this is bloomberg. ♪
5:29 pm
5:30 pm
paul: welcome to "bloomberg markets." i am paul allen in sydney. let's check in on the first word news with jessica summers. >> president trump's impeachment defense has undergone a dramatic transformation on capitol hill. saying his call with ukraine was perfect, it has gone to saying it was not criminal. toing it was permissible, asserting that foreign help to win reelections is not impeachable. former national security advisor john bolton is still waiting to hear from the white house. the administration wants to
5:31 pm
block his upcoming book. prospect of some thing further out exists. that is how it all ties together. england stood for meeting.carney's final they signal that easing may be needed soon. they cut gdp forecast and predicted inflation will only return to target by the end of next year. that prompted investors to predict a rate cut this year. force latest warplane is struggling with another issue. the pentagon says the 25 millimeter gun on the fighter can't shoot straight and has unacceptable accuracy. intended to be the most
5:32 pm
advanced aerial platform ever but the program has been plagued by massive cost overruns and delays. and the world's leading oil producers are debating whether to move forward with the next meeting on the virus outbreak. opec is due to meet in march, but reports say the gathering may move to next month as producers assess the likely impact on energy. -- others saidid they were unaware of plans to move forward. global news 24 hours a day on air and on quick take by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. as we just mentioned, we have a headline crossing the terminal. coronavirus death toll in china has risen to at least 212.
5:33 pm
more on the efforts to combat the virus, let's go to where dr. gregory glenn is standing back -- standing by. start with the updated death toll. 212 people now losing their lives. the virus to has a survivability rate of 98%. where does this fit in terms of previous outbreaks we have seen, maybe from spanish flu all the way to 2003? >> it is quite concerning. hard toit is of the judge at this point what the mortality rate will look like. as we balance against the level of health care some patients receive, i would just say it is
5:34 pm
a very concerning outbreak. the patients who are affected are very sick. they are in the hospital. hospitals are overwhelmed. it is quite worrisome. paul: the world health organization making that emergency declaration earlier today. why did take so long to get to that point and what does it mean in practical terms? not a publicam health expert in terms of epidemiology. that this is a gigantic problem. i would point to the fact that it is flu season in the u.s., one of the worst in 10 decades. we saw some published data, there were 8000 deaths today and 40,000 hospitalizations. asis inpens on a record the u.s..
5:35 pm
we have novel viruses that come and vaccines, which is my area, is a very appropriate way to respond to these problems. you think about developing a vaccine on this, today the cdc confirmed the first person to person contraction of the virus. what information does that give you as you work on a potential vaccine? dr. glenn: i think we are a vaccine company, we are local, but think globally. the u.s. is certainly an important priority, but we know that this is transmissible and does not respect borders. again, very much like the flu every year, as a company, we are accustomed to thinking how to
5:36 pm
address this problem. would be very very helpful to control and epidemic, to keep people from dying and falling ill. the transmission is known. it is no surprise with the travel with some of the cases cropping up, it would be transmitted to the u.s.. we are watching it carefully. one thing that happened in the past 10 years is several , both coronavirus. a lot of people have started thinking about how to address a crisis like this. obviously monitoring a vaccined to develop that could address these novel viruses. taylor: you are a vaccine specialist, so i am curious, why
5:37 pm
would a vaccine be different than and antibody? dr. glenn: that is a really good question. they are related, of course. that we scaled up and manufactured originally came from immune response, so the antibodies are mostly going to be deployed to someone who is sick. that can be quite challenging. it is not necessarily a given that that can work. , we save the cow is out of the barn, it can be difficult to get it back in. depending on how far into the ,llness someone would be antibodies may or may not be helpful, especially for these respiratory diseases. developed,g could be it would be a specific measure. it is not really clear -- vaccines have a really good track record.
5:38 pm
almost miracles in terms of being able to prevent serious disease. that is a very desirable outcome. of course, our challenge is timing. can we develop it soon enough to be relevant? that is going to be -- we are working very hard to see if we can achieve a good vaccine within the timeframe that it could be used. what do we know about the ability of this virus to mutate and how does that make it difficult to develop a vaccine? dr. glenn: it is a very good in biotech and vaccine technologies, they are just outstanding in terms of characterizing the proteins on the surface of the virus, how they mutate, what they do.
5:39 pm
all that information can be utilized to design an appropriate strategy. there are a lot of coronavirus's. corona is a strike -- a spike that looks like a crown. it is called the spike protein. cell,hey do is bind to a inject genetic material into the cell, then it takes over and makes more viruses. you can block the process by blocking the spike protein and should have good protection. we have a lot of evidence of that is true with sars and previous viruses that are quite different. it is one thing that i wish we had gotten to the point where he had a sars vaccine developed. i would say some promise that if , theave a vaccine for sars commonality between the proteins in sars and the wuhan virus,
5:40 pm
that could work on serious illness. that is going to be a question for the new vaccine. are they broadly cross protective? you know we can achieve some of that in flu today. developmentines in that can broadly cross protect and as the virus mutates, you could give them the vaccine and i will have some effect. that is going to be an important question for the coming year, if the virus mutates. right now, we have very little information. as a company, we are able to get the secrets of the virus in january. it was confirmed, so the information is all very fresh, but we can compare the genetic sequence with a current virus with sars, which would be how much mutation has occurred.
5:41 pm
all that information is very thatl to find a vaccine may be useful now and in the future. gregory glenn, thanks so much for joining us. still to come, amazon shares soaring in late trading. the earnings call at the start and more on the company is a fourth-quarter coming up next. this is bloomberg. ♪
5:42 pm
5:43 pm
taylor: ibm has named its chief executive officer to replace longtime ceo. he will continue as executive chairman and serve through the end of the year, when she will retire after almost 40 years with the company. joining us for more is bloomberg intelligence software analyst. we are getting analysts writing in and i wonder about your take.
5:44 pm
they say a long-overdue leadership change. it is good news, given it potentially lines the growth with a dynamic landscape. this is surprising but good? >> that is largely because she was responsible -- he has been running the cloud business for a while. ibmrary to what i would say of 10 years ago or so, he has been vocal about working with other cloud providers and i think that is really the big change here from tech companies from about 15 years ago is they are not open to working with others. they would have make very hard time going forward. your point. ibm's share performance has been flat, but you can't overlook her 40 years at the company. what kind of legacy does she leave? >> this is the one i think if it works well, it could transform
5:45 pm
the country. he could help the company going forward. otherwise, there was a lot of going back -- the ibm before that was, there were a lot of legacy is in there were not going that well. there is more emphasis on share buyback or making sure finances are fine rather than transforming the portfolio of the company. the pivot point was the red hat deal. it will take a few years for that. we have started to see some growth rate coming out of that. i think that is the big change for them. taylor: what is the number one thing that the incoming ceo and the new president need to do day one? >> they need to say that ibm is open to business with their rivals. they are open to new portfolios of applications and clouds. not just ibm cloud, but amazon, google, microsoft, and they will
5:46 pm
help them migrate workloads. that is the big opportunity in enterprise tech. microsoft results yesterday were very strong and driven by hybrid cloud strategy. fast.eds that taylor: thank you for the analysis. now, sticking with some cloud providers, amazon is concerned about the cost of its next-day delivery. profits crushed wall street estimates. stocks surging 12% on the news. we are joined by the founder and imise. est i am looking at a terminal of amazon web services. year-over-year, beating estimates but one of the
5:47 pm
lowest growth rates we have seen. well below rivals like microsoft. are you still bullish on the cloud? >> absolutely. the overall numbers are getting large but the total market for basically cloud services is being completely underestimated by basically the entire market, which is why you continue to see investors chase stocks like microsoft here, because azure is growing like a weed. i just don't think that people understand how large the adjustable market for all of these services are going to be. when you look at broad microeconomic trends such as capex spending in the u.s., it is being replaced by spending on software and what drives all that software, cloud services. taylor: the total addressable market is high, why are they not seeing higher than 34% growth rate? >> at the end of the day, they
5:48 pm
are dealing with two big competitors in google cloud and microsoft, which are very good products. rate is going to match the growth rate of large productivity suite software packages, and some of those big companies are now seeing growth rangein the 30%-40% year-over-year on the top line. there are a lot of other smaller productivity software and enterprise software names that are growing 70% year-over-year, and i do think we will continue to see startups that continue to come to market with 6 billion-dollar dollar ipo's and above. we just saw data dog come to the market with a very successful ipo. there is going to be a wave of the is that continue to come out, but the really big players like salesforce and others are
5:49 pm
mature businesses now. i think we can be very happy with the fact that they are growing 30% year-over-year. of highlights and that earnings report, but i want to focus on one of the low lights and that is the international arm of the business. to really matter but it is hard to tell in any given quarter how much money they're going to spend. international,o that has not been a massive part of the business, but they are inng to continue to invest these different attempts. that is why at the end of the
5:50 pm
day, amazon continues to have long-term success, although short-term, it is hard to call those numbers while the revenue they blew out of the water again. one day delivery has been big for amazon. costs for that have risen as well. >> the market is telling you that they can and they are basically giving them a long leash to spend whatever they want. quarter to quarter, it is important to note that the market does care about the bottom line, but if you are an investor here, are you going to dig into the numbers and prod bezos on what? he is spendingat the end of the day, he has proven that long-term, he is able to make enough big bets into winners. even though he admits that if you are not losing big on some of these, you are not going fast enough and betting big enough. that some ofact
5:51 pm
these businesses are seeing rising costs and obviously, you see that with wage growth in the u.s., but they just put up a big eps number relative to whatever own was expecting, so hard to get on his case. taylor: you are going to stick with us because coming up next, we will unpack the rest big earnings from this week. this is bloomberg. ♪
5:52 pm
5:53 pm
paul: breaking news on the bloomberg terminal, south korean manufacture coming up with a big miss of fourth-quarter operating profit. that is about 19 million u.s. dollars, about half of what was estimated. fourth quarter growth quarter on quarter 8%.
5:54 pm
7% and a hugen a boost on those fourth-quarter earnings. that is going to be one to watch when it gets trading. big tech companies did report earnings this week. china,mon theme was specifically coronavirus. we are here with lead drug and. -- here with leight drogan. le while iti is horrible thatgh: four or five months when apple will be ramping up the 5g pipeline. --ter that it happened now's now because it will disrupt the ability to put product into market. a macro economic
5:55 pm
scale, this is going to have a significant impact given how much everything is leveraged to chinese growth which will come down significantly. protest the, it may be more acute. we don't know what that is going to look like. it doesn't look like the way tesla is joining now that it will discount deliveries in china as the stock continues to rocket. expectations for deliveries and revenue this quarter continue to take up for tesla. everything looks good there. enjoyed burning the shorts once again yesterday, but going ahead with concerns over the coronavirus, the uncertainty of the supply chain, could the short possibly have the last laugh? leigh: here's how i see the last
5:56 pm
couple years of tesla and going forward, musk faked it until he made it. he arguably committed securities and accounting fraud, but he got through that and put up the numbers that were needed in order to get the company to profitability and that company is seeing tremendous momentum now in its product pipeline. disrupted, over the next couple of quarters, i don't feel that investors are going to ding him for that too much, given it seems he has proved he can make the business profitable and the demands for the cars they are. if that slips up, i don't feel that is going to matter at this point too much. taylor: the flipside of this is facebook, which posted earnings which just eat, but that is just not good enough these days with high valuations.
5:57 pm
what did you learn about facebook's ad business going forward to monday when it comes to off about? leigh: it is very obvious that mark zuckerberg knows that he is kind of starting to tap out his platform in terms of how big this business can be without ofing on to another paradigm engagement for his user base, which is why you heard him talking so much about ar and vr. the question is, how far are we actually away from workable product, consumer products in the market that give him another paradigm to put ads on? the readthrough on the core business for google doesn't really matter that much, given google could turn it up and turn it down as it wishes in any given quarter. the question is google spending and that is the variable everyone is looking for. sol: the drug and, thanks
5:58 pm
much for joining us. plenty more ahead next hour. stick with us. moment,a opens in a futures pointing higher. this is bloomberg. ♪
5:59 pm
6:00 pm
paul: i am paul allen in sydney were markets have just come online. taylor: welcome to "bloomberg the coronavirus acquired a global health emergency as cases continue to rise. the world health organization praises china's aggressive response to the outbreak in sharp contrast to the criticism back in 2003.

85 Views

info Stream Only

Uploaded by TV Archive on