Amazon Selloff on Massive Spend; Bitcoin Traders Buy Dip

0:00Donald Trump is rewriting the Washington rulebook and reshaping the global economy. If you're trying to connect the dots behind the headlines, Bloomberg's Trumponomics podcast is here to help. I'm Stephanie Flanders, head of government and economics at Bloomberg. Every week, I'll bring you a smart, focused conversation with reporters and experts from Washington, Wall Street and beyond. Listen to new episodes every Wednesday and follow Trumponomics wherever you listen. Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy.

0:38Bond markets are massive, murky, and let's be real, lots of firms throw a couple flashy funds your way and call it a day. But not Vanguard. At Vanguard, institutional quality isn't a tagline. It's a commitment to your clients. We're talking top-grade products across the board of over 80 bond funds, actively managed by a 200-person global squad of sector specialists, analysts, and traders. These folks live and breathe fixed income. So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at vanguard.com slash audio. That's vanguard.com slash audio.

1:14All investing is subject to risk, Vanguard Marketing Corporation Distributor. Bloomberg Audio Studios. Podcasts. Radio. News. Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we start with big tech and a big number,$650 billion. That is how much four of the biggest U.S. tech companies plan to spend this year on capital expenditures. Bloomberg News has calculated the spending plan by Alphabet, MetaPlatforms, Microsoft, and Amazon will set a high-water mark for spending by any single corporation in any one of the last 10 years. Shares in Amazon fell after the e-commerce giant announced its latest earnings and plans to spend$200 billion this year on AI data centers, chips, and other equipment.

2:06CEO Andy Jassy says the money will predominantly go to the company's cloud unit, and most of that spending will be for AI workloads. Speaking on the earnings call, Jassy said it will be worth it. When I look at this, what's happening, it's kind of unbelievable if you look at the demand of what you're seeing already with AI. but the lion's share of that demand is still yet to come in the middle of that barbell and that will come over time. And Amazon shares are down almost eight percent after Andy Jassy spoke with the spending set away on profits. Poonam Goyal covers Amazon for Bloomberg Intelligence.

2:43They need to invest, right? We know that Amazon has to continue to invest in cloud services. It needs to invest in AI. So there's a lot of catch up that needs to be done here. I think the long run narrative here is still good. The underlying results were solid across both AWS and retail. And Bloomberg Intelligence Analyst Poonam Goyal notes that some of Amazon's capital expenditures will go toward its effort to compete with SpaceX's Starlink internet service by placing satellites in low earth orbit. And Karen, the AI disruption trade has the S &P 500 on track for its worst week since April, and the risk-off mood has extended to crypto as well.

3:22Let's get the market roundup from Bloomberg's John Tucker. John, good morning. Yeah, Nathan, this is not unlike that DeepSeek sell-off a year ago. Investors have been spooked by developments on a couple of fronts. The rollout of those models from Anthropic that threaten to make software services redundant, alongside the eye-watering spending plans of the big tech companies you were just mentioning. Now, the tech-heavy Nasdaq Composite Index now a 3 % year-to-date loss. The risk-off mood, it did extend to Bitcoin. The selling picked up steam this week in line with the unwinding of leverage bets and broader market turbulence.

3:57Nobel laureate Paul Krugman sees a possible crisis of faith in crypto. I think it's a big wake-up for people. Maybe this isn't actually going to be an enduring asset. The sell-off briefly dragged Bitcoin to a more than 50 % retreat from the October peak. Just yesterday, investors pulled$434 million from U.S. exchange-traded funds for Bitcoin. And now this morning, stock futures are modestly higher, and Bitcoin is up 4%, close to$66 ,000 a token. In New York, I'm John Tucker, Bloomberg Radio. All right, John, thank you. Let's turn to geopolitics now. And Oman said it mediated indirect talks between Iran and the United States over Tehran's nuclear program.

4:38In a post on Exxon said its foreign minister met separately with Iranian foreign minister Abbas Saragachi, then with U.S. Mid-East special envoy Steve Witkoff and Jared Kushner, President Trump's son-in-law. Bloomberg Economics Defense Lead Becca Wasser tells Bloomberg Balance of Power she has some concerns. I am most certainly not optimistic. And I think some of that is because of the firepower that we've seen massed in the region at this point in time. We've also seen Iran engage in some risky behavior, whether that is an attempt to seize a U.S. flag tanker or whether that is having a drone buzz near the U.S.

5:18carrier in the Middle East. And Becca Wasser is defense lead for Bloomberg Economics. The talks come after a chaotic week that initially saw plans for regional countries to take part in talks in Turkey. McCarran, President Trump is calling for the creation of a new nuclear arms treaty with Russia as its existing New Start agreement expires. Post on Truth Social, the president writes, quote, rather than extend New Start, we should have our nuclear experts work on a new, improved and modernized treaty that can last long into the future. Former Republican Congressman Patrick McHenry thinks it's a good idea.

5:50I think we haven't addressed nuclear disarmament in over a generation here in the United States. I think it's a worthwhile endeavor. I think the complexity of this administration's foreign policy is not well understood by the market. Everything is interconnected. Russia, the Middle East, China. Russia, Ukraine, Middle East, China. Canada. All the trade conversations, all the foreign policy and Department of War actions, they're all connected. Former Republican Congressman Patrick McHenry is now a Bloomberg News contributor. He spoke on Bloomberg's balance of power as well, noting that New START was the last remaining major arms control treaty between the U.S.

6:33and Russia. Meanwhile, Nathan, a top Russian military intelligence officer was wounded in an assassination attempt in Moscow, according to the country's investigative committee. Lieutenant General Vladimir Alexeyev was hospitalized after a gunman fired several shots outside a residential building in northwest Moscow. Alexeyev is first deputy head of the GRU military intelligence agency. Turning to Washington now, Karen, President Trump is looking to address Americans' cost of living concerns through a new online portal. Starting tonight, dozens of the most commonly used prescription drugs will be available at dramatic discounts for all consumers throughout a new website.

7:15It's called TrumpRx.gov. Speaking at a primetime White House event, President Trump said more than 40 medications will be available on the site, including Novo Nordisk's Ozempic and Wegovi for$199, as well as EMD Sirono's fertility treatment. For example, a single dose of the most common IVF drug in the country, Gonal F, will plummet from the highest price in the developed world that we paid. The United States was subsidizing everybody. We paid the highest to the lowest price in the world. President Trump's new website will get around the pharmacy benefit managers that go between drug makers and insurance companies.

7:54Pharma companies say the current system forces them to charge more and limit patient access. But it remains to be seen whether Trump Rx will significantly bring down costs and entice more Americans to buy direct rather than through insurance. Well, staying with politics here, Nathan, the race in New Jersey between a one-time political director for Senator Bernie Sanders and a former congressman was too early to call in a special House Democratic primary for a seat that was vacated after Mikey Sherrill was elected governor. Former Representative Tom Malinowski started election night with a significant lead over Ana Lilia Mejia, based largely on early results from mail-in ballots.

8:32The margin narrowed as results from votes cast that day were tallied. More than 61 ,000 votes counted. Mejia leads Malinowski by 486 or less than one percentage point. Okay, let's update you now on the search for Nancy Guthrie, the mother of NBC Today's show host Savannah Guthrie, who was last seen at her home Saturday night. Earlier this week, Savannah made an emotional plea to her mother's apparent kidnapper in Arizona. This morning, Savannah's brother, Cameron, made an appeal of his own. This is Cameron Guthrie. I'm speaking for the Guthrie family. Whoever is out there holding our mother, we want to hear from you.

9:10We haven't heard anything directly. We need you to reach out and we need a way to communicate with you so we can move forward. But first, we have to know that you have our mom. We want to talk to you and we are waiting for contact. Authorities in Arizona have not identified any suspects or persons of interest, but tests show blood found on Nancy Guthrie's front porch does match her DNA. Investigators have found no proof that Savannah Guthrie's mother is still alive. five days after she was taken from her home in Tucson over the weekend.

9:45Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. The Northeast, including New York City, will get a brief touch of snow this weekend before a frigid blast of Arctic air pushes through the region. Bloomberg meteorologist Rob Carolyn has the latest. Michael, we've got one more blast of Arctic air to get through here in the Tri-State area before temperatures start to moderate during next week. National Weather Service has an extreme cold warning in effect for the Tri-State area from 10 a.m.

10:17Saturday morning through 1 p.m. Sunday afternoon. We're also under a wind advisory Saturday morning through midnight on Sunday. So not only do we get the Arctic air moving in, but it's going to be accompanied by some very strong winds. That's going to push the wind chills well below zero at times Saturday night and Sunday morning. You'll feel like it's 20 to 25 below. I'm Rob Carolman, Bloomberg Radio. Thank you, sir. Archbishop designate Ron Hicks will officially take over the Archdiocese of New York today. An installation mass will formally mark the beginning of his leadership. Hicks spoke at a news conference Thursday from St.

10:51Patrick's Cathedral. You're going to notice that I will reference a number of times, Pope Leo XIV. I will strive always to be obedient and respectful to him and also collaborate with his vision. Hicks succeeds Timothy Cardinal Dolan. Democratic lawmakers responded with anger over reports that President Donald Trump told Senate Minority Leader Chuck Schumer last month he would release$16 billion in federal funds for the Gateway tunnel project in exchange for renaming of New York's Penn Station and Washington's Dulles International Airport after him. According to several media outlets, Schumer reportedly told the president that he did not have the power to approve the request.

11:38The Gateway Development Commission has warned that it must stop work today on the New York-New Jersey tunnel project under the Hudson River unless the Department of Transportation immediately releases federal funding tied to the project. Global news 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg Karen. Thanks Michael. Time now for our Bloomberg sports update and for that we bring in John Stashauer. That's Karen NFL awards night ahead of Sunday's Super Bowl in San Francisco. Matthew Stafford named NFL MVP the Rams quarterback at age 37 through for over 4 ,700 yards 46 touchdowns.

12:18Miles Garrett named defensive player of the year after setting a new SACS record. Mike Vrabel named coach of the year. Sunday, he'll coach the Patriots in the Super Bowl against Seattle. From baseball, Tarek Skubel won his arbitration case against the Detroit Tigers. He'll make$32 million. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy. Bond markets are massive, murky, and let's be real, lots of firms throw a couple flashy funds your way and call it a day.

12:56But not Vanguard. At Vanguard, institutional quality isn't a tagline. It's a commitment to your clients. We're talking top-grade products across the board of over 80 bond funds, actively managed by a 200-person global squad of sector specialists, analysts, and traders. These folks live and breathe fixed income. So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at vanguard.com slash audio. That's vanguard.com slash audio. All investing is subject to risk, Vanguard Marketing Corporation Distributor.

13:45early so the news is fresh, not recycled, and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break. So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens. It's smart, calm and to the point. And it fits into your morning. You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris.

14:23On Apple, Spotify, YouTube or wherever you get your podcasts.

14:32Coast to coast on Bloomberg Radio. Nationwide on Sirius XM. And around the world on Bloomberg.com and the Bloomberg Business app. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. It is a staggering number. $650 billion is how much the four biggest tech companies plan to spend this year in the race for AI dominance. We learned last night Amazon alone accounts for nearly a third of that at$200 billion. Raising questions once again for our investors about whether the payoff from AI is going to catch up with all that spend. Joining us this morning is Parmi Olson, tech columnist for Bloomberg Opinion.

15:08These concerns you share, Parmi? Good morning. Hi, good morning. Yeah, I mean, we've obviously been seeing big tech companies spending a lot on AI and the infrastructure to build AI over the last 12 to 24 months. So this is nothing new. But I think what we're really starting to see and what really intrigues me about this is this kind of almost an identity shift for these companies. Because if you think about why they're so valuable in the first place, it's that they're asset light, right? They have a lot of staff and they maybe have some data centers, but then they build this incredibly valuable software and they have incredible margins.

15:46Now they're becoming these kind of capital intensive infrastructure operators. They're almost like telecoms now with all this CapEx spending. So it does feel like this is a gradual shift and we're seeing it continue to happen. And there's definitely going to be some kind of questioning in the market about whether they deserve these premium valuations when they are spending quite so much. Yeah. And it's interesting to see how the reaction has played out just through this earning season when Meta Platforms reported how much they were going to spend. The market seemed to like it. Not so much for the rest of these names so far.

16:21What do you make of that? It's, you know, with everything that's happened in the market this past week, and we can talk about the trigger from Anthropic as well. It's so hard to identify exactly why markets move the way they do, as I'm sure you know. And let's also just point to the irony here that over the past six months to a year, the markets have been so fraught and volatile. We've had huge wobbles over concerns that AI is just completely overhyped. And then now we've got this trillion-dollar wipeout for any stock that is potentially in AI's path. So it's kind of like I think we're trying to figure out what the balance is here, and it could go either way.

17:02Yeah, let's talk a little bit more about that Anthropic news in our last 30 seconds here. We had the legal tool earlier this week and now a new AI tool for financial research. Are we seeing the same kind of reaction in the market to this latest tool from Anthropic? Yes, we are. But it's so strange because the actual tool is not framed even by Anthropic as being aimed at finance. It's a general improvement on Claude Opus, both for enterprise workflows and for agents and for coding as well. But I think somehow the market has just picked up on the financial element. And it's quite... These companies, again, going back to the unpredictability of all this, Anthropic, even inside the company, didn't know that their other feature, Claude Code, was going to be so devastating to programming and that so many programmers would use it.

17:51They didn't even predict that the latest legal plugin that they announced on Friday, which was very quietly released, would have such an impact on enterprise software shares. So again, these companies are coming up with these products so quickly, and they're a very productive company, but they don't know the impact they're having. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify or anywhere else you listen. You can also listen live each morning starting at 5 a.m.

18:26Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston and nationwide on Sirius XM Channel 121. Plus, listen coast to coast on the Bloomberg Business app, now with Apple CarPlay and Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

19:12I'm Barry Ritholtz, inviting you to join me for the Masters in Business podcast. Every week, we bring you fascinating conversations with the people who shape markets, investing, and business. CEOs, fund managers, billionaires, Nobel laureates, traders, analysts, economists, everybody that affects what's going on in the market, whether you own stocks, bonds, real estate, commodities, crypto, you really need to hear these conversations. Sometimes it's behaviorists like Dick Thaler or Bob Schiller. Sometimes it's fund managers like Peter Lynch, Bill Miller, Ray Dalio. Sometimes it's authors, Michael Lewis, author of The Big Short and Moneyball.

19:57Regardless of the conversation, these are the folks that move markets each week. That's the Masters in Business podcast with me, Barry Ritholtz. Listen on Apple, Spotify, or wherever you get your podcasts.