November 12, 2025 • 18 mins
Watch Scarlet and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence hosted by Paul Sweeney and Scarlet Fu
- Caroline Hyde, BTech Co-Anchor, discusses Anthropic planning to spend $50 billion to build custom data centers for artificial intelligence work in several US locations, including Texas and New York. The new sites will start coming online throughout 2026 and will create 800 permanent jobs and 2,400 construction jobs at the planned sites.
- Emily Mason, Bloomberg Fintech and Crypto Reporter, discusses shares of Circle Internet falling with concern that declining interest rates will weigh on future returns, overshadowing better-than-expected third-quarter revenue and earnings. Circle is exploring new products to diversify its revenue, including a blockchain-based payments network and a tokenized money market fund, as it faces potential pressure on revenue from declining interest rates.
- Mary Ross Gilbert, Bloomberg Intelligence, Senior Equity Analyst, Covering Retail, discusses her research on apparel sales potentially holding steady or edging higher this holiday season, despite Gen Z and Millennials cutting their holiday spending. Bloomberg Intelligence says that robust self-gifting trends will likely drive demand for clothing and accessories.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence podcast. Catch us live weekdays at ten am.
He's done on Apple, Cocklay and Android Auto with the
Bloomberg Business App. Listen on demand wherever you get your podcasts,
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Speaker 2 (00:23):
What a time to be covering tech like you and
Ed Buglow do Carolin. Every day there are major news
items from major companies and just amazing amounts of dollars.
Today again, Anthropic commit's fifty billion dollars to build AI
data centers in the US.
Speaker 3 (00:40):
How do you put it in context?
Speaker 4 (00:41):
I mean, we become a bit numb, and then you
look to some of the other whopping numbers, like the
six hundred billion dollars that Mark Zuckerberg has said he's
spending in capital expenditure an AI data center. You go, oh, actually,
fifty billion doesn't feel that much.
Speaker 3 (00:54):
Yeah.
Speaker 4 (00:54):
But interestingly, Anthropic what's interesting about this one is, look,
they've been reliant on investment from Strategics.
Speaker 5 (01:00):
For their access to cloud.
Speaker 4 (01:02):
Google massive investor in Anthropic, and with that comes access
to cloud and to compute, So too has aws. Amazon
and AWS has been a real provider of chips and
particularly remember really Anthropic has been a strategic partner to
these cloud companies because they've been helping them build out
their chip offering and they've been helping training models on
the future generation of those vertically integrated companies. But now
(01:24):
they're saying, look, we think the US needs to continue
to build out AI infrastructure. As you've heard from Sam Altman,
who's already saying he's going to be spending trillions on
data centers and all the capital expenditure that goes with it.
Then of course we have the likes of Mark Zuckerberg
all in on it as well. So it feels as
though Darah Amadey, who was out of open Ai, came
over and set up Anthropic to do it in a
(01:45):
more cautious, humanity friendly way. He's now saying, look, us two,
we need to put some infrastructure out here.
Speaker 6 (01:51):
Okay, So open ai is the chat GPT as Nthropic
is to cloud.
Speaker 5 (01:55):
That's a chat they use. How widely usedes this clud
show they.
Speaker 4 (01:59):
Are really nailing the enterprise space. This is where they've
managed to lead, in particular when it comes to coding.
So yes, they don't have eight hundred million weekly users
in the same way that chat to gpet does. But
people love it in the enterprise, and that really has
been their winning formula. They've been really rather profitable, thus
far more profitable at least or seeing more revenue growth
than open ai has been seeing because open ai has
been all about the spending, all about the reinvestment, and
(02:22):
in many ways, Anthropical have been seen as some sort
of more asset like version of this. Now that's kind
of casting that off a little bit. But they just
raised thirteen billion dollars. They are valued one hundred and
eighty three billion dollars. That was back in September, and
they have three hundred thousand business customers. Yeah, so they
have been managing to show that that the business model works.
Speaker 2 (02:39):
Is there any expectation, Caroline that these companies may come
public at some point down the line, because I just
think about the money they're spending, and I know a
lot of people want to throw money at them, but
maybe even the public markets.
Speaker 3 (02:50):
So are they talking about that?
Speaker 4 (02:51):
Well, Sam Almond has been saying like it's not. I
can't give you a date, but clearly they are on
a path in the next couple of years to going public.
And that is the idea was many of these businesses,
These founders feel that it's there. It's their duty. It's
a duty to be able to allow the everyday retail
investor as well as these very deep pocketed venture capitalists
to benefit from their businesses and be able to take
(03:13):
a chunk in within that. So we're seeing that these
companies are talking about going public. We've heard it slightly
less from the anthropics of this world, but I think
certainly there's going to be a push that these companies
can't remain private for ever and these boatloads of cash
that they need can't keep on coming from the same
group of investors.
Speaker 6 (03:28):
My guess is when they do go public, you know,
the founders will have a huge swath of the voting
sharers and everyone else won't.
Speaker 5 (03:35):
Kind of like the Metas of the world.
Speaker 3 (03:36):
Yes, exactly.
Speaker 2 (03:37):
And what's interesting is we mentioned Meta they access the
bond market just a couple of weeks ago to fund
a certainly vision.
Speaker 3 (03:43):
Yeah, just incredible.
Speaker 4 (03:44):
But remember some mortment doesn't actually own any system significant
equity and opening ah okay, so how they would structure
him to have voting shares is another thing. Entirely, they
of course, are owned by the overall charitable not for
profit is in in control and some ways, but and
has shut stock of Open AI. But I don't know
what the breakdown of shareholding is by the good contract
(04:06):
the founders of Panthropic.
Speaker 6 (04:08):
I'm looking at the markets overall, Caroline and for a
second day, the Dow is outperforming the NAZAC one hundred.
Speaker 5 (04:13):
I don't know how many times you can say that
over the past couple of years. But the NASAC under pressure.
Speaker 6 (04:18):
And again it's this idea that you know, the AI
boom is now.
Speaker 5 (04:23):
A little bit more in doubt.
Speaker 6 (04:24):
There's a little bit more skepticism, and people are asking
questions about you know, is there a clear financial model
for profitable AI.
Speaker 5 (04:31):
There's a lot of NonStop investment.
Speaker 6 (04:33):
But then how do the people see returns in the
next year or two years as opposed to ten years
down the road.
Speaker 5 (04:41):
How has that conversation unfolded in the tech sector.
Speaker 4 (04:45):
It's unfolding by having either side of the equation come
on the Michael Bowries of this world saying, no one's
factoring in depreciation of chips. We think that this is
ultimately overvalued in a bubble. But then we're going to
have thread needle come on and really start to say, look,
the proof will be in the fundamentals, the proof will
be in the earnings. We've just had a cracking set
of numbers from most of the Magnificent seven. We're still
(05:06):
waiting on Nvidia AMD coming out once again showing that
the total addressable market for they're AI accelerators and were
broadly the chips is going to be one trillion dollars.
They're showing that they're going to guide for not just
two years, three years, but up to five years. They
think that they can be tuning to about thirty five
percent revenue increases every single year. And we're seeing Keeger
(05:27):
numbers coming in an the eighty percent field for an
AI accelerator, offering that MII is really selling well. So
I think that every time you question it, and yes,
you can look at the worry about the circular financing,
the anxiety that a lot of these companies that were
very asset light, think Matter used to be very asset light,
and to your point, now we're starting to see them
laden on debt. These things do fill people with some uncertainty,
(05:49):
but if really the revenue taps got turned on if
AMD can prove out that they're building a clear line
of sight on tens of billions of dollars of revenue,
people will give them the benefit of the doubt.
Speaker 6 (05:59):
I think everyone's grown very customed to seeing the cash
and short term investments line for all these big tech
companies at like hundreds of billions of dollars, and that's
not going to be the case if they're going to
continue investing this much and spending this much.
Speaker 1 (06:10):
Yeah.
Speaker 2 (06:10):
Even and we saw MetaStock get go down pretty precipitously
today when when Mark Zuckerberg said they're going to step
up their capex, yeah, by that degree.
Speaker 3 (06:17):
So that was interesting to see too.
Speaker 5 (06:18):
A little bit of caution there.
Speaker 2 (06:19):
Morgan Stanley out with report recently I just saw today
saying basically, boy, a lot of things have to break
right to generate returns on these investments, just writ large
on the industry.
Speaker 3 (06:30):
A lot of things really got to break right now.
Speaker 5 (06:32):
We don't know what's going to happen tomorrow with airplanes.
Speaker 3 (06:34):
Exactly, you know, exactly, So getting to the airport.
Speaker 4 (06:36):
Aucture and all the things that actually need to work
for us to be able to get the data centers
up and running.
Speaker 3 (06:42):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (06:49):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 5 (07:03):
Circle Internet group.
Speaker 6 (07:04):
It's the issuer of the second biggest stable coin, USDC,
and the shares are tumbling today, down about eight percent.
And this is on kind of what feels like a
pretty pedestrian reason. Concerned that lower interest rates will slow profits.
I mean, that's kind of unusual if you think, you
know cryptocurrency or crypto linked company with lower interest rates.
(07:25):
Let's bring in Emily Mason. She is a Bloomberg News
fintech and crypto reporter, as she joins us now, so
Emily just explained to us the dynamic here why lower
interest rates from the Federal Reserve would be a concern
for a company like Circle. Yeah.
Speaker 7 (07:40):
So Circle issues USDC, and they that's a staple coin
peg to the US dollar, and they maintain that peg
by holding reserves in cash and short term treasuries.
Speaker 5 (07:49):
They keep the yield.
Speaker 7 (07:51):
From the treasuries and that's kind of how they make
money and that's where most of their revenue comes from.
So if interest rates go down, you know that shows
up in earnings and that causes some concern for investors
and analysts.
Speaker 3 (08:03):
So what have their recent results been.
Speaker 7 (08:04):
Like, I mean, this is their second time reporting since
going public. They benefited heavily from all the hype around
stable coin, especially before the Genius Act was passed, and
their stock performed really well.
Speaker 5 (08:17):
It's kind of.
Speaker 7 (08:17):
Been down since their summer highs, and that's kind of
because of the concern from the interest revenue, but also
because of some of the distribution partners that they have
they pay. They have revenue sharing agreements with coinbase, for example,
who helps distribute their coin.
Speaker 6 (08:34):
So if this company for now is kind of a
proxy for a money market fund because it's earning's track
short term treasury yields, it must need to do more
to diversify its revenue streams.
Speaker 5 (08:45):
What is it looking at? Yeah, that's what they're doing.
Speaker 7 (08:49):
And then if you talk to Jeremy A. Lair who's
the CEO, he'll kind of say that lower interest rates
are actually good for the company because it means that
there's higher velocity of money, there's more investment, and then
people want faster move money like stable coins, and they
also might want to use products like their Circle Payments network,
which recently is experimenting with like a stable coin payouts
product which like helps people can helps people to pay
(09:10):
out globally with USDC, and they're trying to move more
USDC volume onto their own platform instead of working with
distribution partners like Coinbase, and that kind of could help
them as well. But they see the lower interest rates
as a positive thing. And also the USD circulating supply
is increasing very heavily as they add new partners, so
that also kind of could potentially offset the lower interest rates.
Speaker 2 (09:33):
Emily, your beat is fintech and crypto reporter, two things
that didn't exist even just a handfull of years ago.
Talk to us about broadly the kind of the intersection
of the growing crypto market and applications like fintech.
Speaker 7 (09:51):
Yeah, I mean, I think what's kind of the most
interesting right now is like fintech when it came onto
the scene was sort of like building very interfaces on
top of his existing financial infrastructure, and then crypto's pitch
is much more sort of like rebuilding the financial infrastructure
with things like blockchains, and now the conversation is kind
(10:12):
of about bringing the traditional world and the traditional financial
institute infrastructure together with crypto rails and Circles really kind
of sitting at the center of that and trying to
bring stave a coin and like integrate that with how
traditional markets work, and that's involves a coming together on
both sides, Like traditional firms kind of have to upgrade
(10:33):
and make their systems interoperable with cryptotechnology, and then crypto
firms also have to kind of move into a regulated environment.
And that's been something that Jeremy Alair has talked about
for a long time, like he really thinks that crypto
needs to be regulated and Circle that's been a big
part of their narrative is like we are kind of
like the suits in the room, and we're going to
be regulated and that's how we're going to go about
doing business.
Speaker 5 (10:53):
You're kind of the most tradfy of the DeFi world.
Speaker 6 (10:56):
In other words, if we want to get technical, this
is going to be a dumb question, Emily, but we've
seen how Bigcoin and the rest of the cryptocurrencies had
a pretty rough October. They're struggling to regain momentum. All
these digital coins are not the same as stable coins.
But is that shift in sentiment and conviction on bigcoin
and all coins, especially from institutions, affecting demand it off
(11:18):
for stable coins or are those two just not linked.
Speaker 5 (11:22):
I mean stable coin.
Speaker 7 (11:23):
Has used a lot of the times, like anytime there's
a lot of trading happening in crypto like and in
crypto tokens like stable coins kind of benefit because they're
used to like move in and out of those markets.
The stable coin the whole point is that it's like
a stable currency. It's peged to the dollar, it's one
for one, so the price of it really shouldn't be
impacted at all by like crypto market movements.
Speaker 6 (11:44):
But does it does demand affect it or does sorry
does the spillover involve like demand waning for sable corn
or increasing for stable coin.
Speaker 7 (11:54):
I think where like the demand growth for stable coin
is going to come from is like it moving out
of a tool for just for crypto trading. It's going
to be like people in countries where the local currency
is volatile wanting to hold stable coin, or people wanting
to actually use it for payments or like stable cooin payouts.
Like if you're a US based company and you're employing
a bunch of people around the world who want to
hold a stable currency like the dollar, the stablecoin is
(12:16):
the best way to access it, then you can pay
them that way. Like that's where growth from. That's where
demand for stable coin is going to come from. I
don't think it's like super tied to the trading necessarily,
Like people use stablecoin to get in and out of
crypto markets, so you know, they might see more volume
of trading activity is high, but their journeys are kind
(12:37):
of becoming less linked.
Speaker 3 (12:40):
Stay with us or from Bloomberg Intelligence coming up after this.
Speaker 1 (12:47):
You're listening to the Bloomberg Intelligence podcast. Catch us Live
weekdays at ten am Eastern on Applecarclay, and Android Auto
with the Bloomberg Business app. Listen on demand wherever you
get your podcasts, or watch us live.
Speaker 3 (13:00):
I metube all right, whether we like it or not.
The holidays are up, Honest, scarlet Ful and Paul.
Speaker 2 (13:05):
Sweeney live here in our Bloomberg and Director Broker Studio,
streaming live on YouTube and with the Holidays of honas
that means shopping and for retailers. It is obviously the
most important time of the year kind of right now
through a year end, so we want to get a
sense of how that's shaping up for the retailers out there.
Mary Ross Gilbert, senior equity analyt. She covers the retail
space for Bloomberg Intelligence. She's based in our Los Angeles office. Mary,
(13:28):
thanks so much for joining us here. We're, you know,
kind of right into November, getting into the thick of
it here.
Speaker 3 (13:32):
How's the holiday shopping season shaping up? What are your
companies saying?
Speaker 7 (13:38):
Thank you, Paul.
Speaker 8 (13:39):
So, if you look at how the holiday shopping is
is shaping up, I think it looks I think it
looks very positive. So I think we are going to
see an increase and particularly for apparel retailers, that's usually
like the largest category that consumers. If you look at
those that have been pulled by all the holiday service
surveys that have been conducted, including the National Retail Federation,
(14:02):
and they have over eight hundred over eight eighty two
hundred respondents in their surveys, and the other ones are
pretty sizable, you know, relatively speaking, around five thousand. So
they're showing that there's definitely a higher percentage of shoppers
wanting at peril and accessories for gifts, So that should
(14:23):
be good news for apparel. But gen Z is planning
to cut back on their overall holidays spending by that,
you know, by twenty three percent. Millennials just one percent.
Speaker 2 (14:37):
Wow, So the gen Z these are the younger folks,
maybe tougher time finding a job. Maybe, you know, student
debt is that kind of the driver there.
Speaker 8 (14:48):
Yeah, I think I think that could be part of it. Yeah,
it could be the job market situation that might be
happening there because these are really like the seventeen to
twenty eight year olds. So we I've been hearing some
you know, talk about some of these latest graduates, you know,
having a difficulty finding a job. I think it's just
probably going to take longer because generally unemployment is still
(15:12):
very low and soon we'll be getting you know, more
data on that. But we're seeing resilience if you look
at the data so far with Bloomberg second measure for
apparel retailers and department stores and off price, we're seeing
good sales coming in for the third quarter, and they'll
start reporting their numbers in the next few weeks. So
(15:33):
I think we're off to a good start, and I
think Black Friday sales are already happening. Macy's is out
today with fifty percent off on their private label brand
product and they expect to have other drops every week. Wow,
So everyone's focused on starting now yep with promotions.
Speaker 2 (15:52):
So Mary, you know, economists talk about a K shaped
economy out there, some consumers, maybe the ones that own
assets like stocks and bonds in real estate, doing more
than good and kind of everybody else struggling a little bit,
particularly with inflation.
Speaker 3 (16:07):
How does that get reflected in retail sales?
Speaker 2 (16:10):
Does it mean you just kind of if you're an investor,
look at on Amazon Target where I can get some
some some deals.
Speaker 8 (16:18):
Yeah, and that's actually what's happening, and that's why you see,
let's say, pretty robust sales overall coming out of off price.
You know, so think of TJ Max, Ross Stores and
Burlington stores, and Burlington's at the very low end if
you look at credit card delinquencies or you know, those rates,
and a lot of these companies that we're tracking represent
(16:41):
the credit cardholders for like department stores and for some
select apparel brands such as gap, et cetera. And when
you look at that data, delinquencies are actually lower this
year versus a year ago, but not for the very
low income, which kind of speaks to what you're talking
about and inflation. Actually, those are up in the teams,
(17:05):
you know, for the very low income consumer, So think
like under fifty.
Speaker 3 (17:09):
K yep, yep.
Speaker 2 (17:10):
How about e commerce, Mary, I know the pandemic folks
are saying, kind of pulled forward maybe four or five
years of share shift from bricks and mortar to a
digital what's the e commerce growth story look like these days?
Speaker 8 (17:25):
You know, e com growth is looking strong when we
look at the data, like I said, for the third
quarter that we're seeing from Bloomberg second measure, it's showing
actually online sales were stronger at the department stores except
for Coals Coals online businesses, I mean not their online business,
but actually their credit customer is shopping less, like in
(17:48):
the double digits less, so that's kind of an issue
for them. But generally we're seeing stronger pool with online
sales there. Now. There is also a delineation between the
type of consumer. If it's gen Z, they tend to
prefer shopping more in store and we see that with
Abercrombie and Fitch's Hollister brand, so they are about seventy
(18:12):
percent of their sales are generated online. And then it's
the inverse when you look at their namesake brand, Abercromby,
because that consumer is those are millennials, and millennials prefer
to shop online, so sixty percent of their sales are
being generated online versus in store.
Speaker 1 (18:32):
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Bloomberg Business App. Listen on demand wherever you get your podcasts,
or watch us live on YouTube.
Speaker 2 (00:23):
What a time to be covering tech like you and
Ed Buglow do Carolin. Every day there are major news
items from major companies and just amazing amounts of dollars.
Today again, Anthropic commit's fifty billion dollars to build AI
data centers in the US.
Speaker 3 (00:40):
How do you put it in context?
Speaker 4 (00:41):
I mean, we become a bit numb, and then you
look to some of the other whopping numbers, like the
six hundred billion dollars that Mark Zuckerberg has said he's
spending in capital expenditure an AI data center. You go, oh, actually,
fifty billion doesn't feel that much.
Speaker 3 (00:54):
Yeah.
Speaker 4 (00:54):
But interestingly, Anthropic what's interesting about this one is, look,
they've been reliant on investment from Strategics.
Speaker 5 (01:00):
For their access to cloud.
Speaker 4 (01:02):
Google massive investor in Anthropic, and with that comes access
to cloud and to compute, So too has aws. Amazon
and AWS has been a real provider of chips and
particularly remember really Anthropic has been a strategic partner to
these cloud companies because they've been helping them build out
their chip offering and they've been helping training models on
the future generation of those vertically integrated companies. But now
(01:24):
they're saying, look, we think the US needs to continue
to build out AI infrastructure. As you've heard from Sam Altman,
who's already saying he's going to be spending trillions on
data centers and all the capital expenditure that goes with it.
Then of course we have the likes of Mark Zuckerberg
all in on it as well. So it feels as
though Darah Amadey, who was out of open Ai, came
over and set up Anthropic to do it in a
(01:45):
more cautious, humanity friendly way. He's now saying, look, us two,
we need to put some infrastructure out here.
Speaker 6 (01:51):
Okay, So open ai is the chat GPT as Nthropic
is to cloud.
Speaker 5 (01:55):
That's a chat they use. How widely usedes this clud
show they.
Speaker 4 (01:59):
Are really nailing the enterprise space. This is where they've
managed to lead, in particular when it comes to coding.
So yes, they don't have eight hundred million weekly users
in the same way that chat to gpet does. But
people love it in the enterprise, and that really has
been their winning formula. They've been really rather profitable, thus
far more profitable at least or seeing more revenue growth
than open ai has been seeing because open ai has
been all about the spending, all about the reinvestment, and
(02:22):
in many ways, Anthropical have been seen as some sort
of more asset like version of this. Now that's kind
of casting that off a little bit. But they just
raised thirteen billion dollars. They are valued one hundred and
eighty three billion dollars. That was back in September, and
they have three hundred thousand business customers. Yeah, so they
have been managing to show that that the business model works.
Speaker 2 (02:39):
Is there any expectation, Caroline that these companies may come
public at some point down the line, because I just
think about the money they're spending, and I know a
lot of people want to throw money at them, but
maybe even the public markets.
Speaker 3 (02:50):
So are they talking about that?
Speaker 4 (02:51):
Well, Sam Almond has been saying like it's not. I
can't give you a date, but clearly they are on
a path in the next couple of years to going public.
And that is the idea was many of these businesses,
These founders feel that it's there. It's their duty. It's
a duty to be able to allow the everyday retail
investor as well as these very deep pocketed venture capitalists
to benefit from their businesses and be able to take
(03:13):
a chunk in within that. So we're seeing that these
companies are talking about going public. We've heard it slightly
less from the anthropics of this world, but I think
certainly there's going to be a push that these companies
can't remain private for ever and these boatloads of cash
that they need can't keep on coming from the same
group of investors.
Speaker 6 (03:28):
My guess is when they do go public, you know,
the founders will have a huge swath of the voting
sharers and everyone else won't.
Speaker 5 (03:35):
Kind of like the Metas of the world.
Speaker 3 (03:36):
Yes, exactly.
Speaker 2 (03:37):
And what's interesting is we mentioned Meta they access the
bond market just a couple of weeks ago to fund
a certainly vision.
Speaker 3 (03:43):
Yeah, just incredible.
Speaker 4 (03:44):
But remember some mortment doesn't actually own any system significant
equity and opening ah okay, so how they would structure
him to have voting shares is another thing. Entirely, they
of course, are owned by the overall charitable not for
profit is in in control and some ways, but and
has shut stock of Open AI. But I don't know
what the breakdown of shareholding is by the good contract
(04:06):
the founders of Panthropic.
Speaker 6 (04:08):
I'm looking at the markets overall, Caroline and for a
second day, the Dow is outperforming the NAZAC one hundred.
Speaker 5 (04:13):
I don't know how many times you can say that
over the past couple of years. But the NASAC under pressure.
Speaker 6 (04:18):
And again it's this idea that you know, the AI
boom is now.
Speaker 5 (04:23):
A little bit more in doubt.
Speaker 6 (04:24):
There's a little bit more skepticism, and people are asking
questions about you know, is there a clear financial model
for profitable AI.
Speaker 5 (04:31):
There's a lot of NonStop investment.
Speaker 6 (04:33):
But then how do the people see returns in the
next year or two years as opposed to ten years
down the road.
Speaker 5 (04:41):
How has that conversation unfolded in the tech sector.
Speaker 4 (04:45):
It's unfolding by having either side of the equation come
on the Michael Bowries of this world saying, no one's
factoring in depreciation of chips. We think that this is
ultimately overvalued in a bubble. But then we're going to
have thread needle come on and really start to say, look,
the proof will be in the fundamentals, the proof will
be in the earnings. We've just had a cracking set
of numbers from most of the Magnificent seven. We're still
(05:06):
waiting on Nvidia AMD coming out once again showing that
the total addressable market for they're AI accelerators and were
broadly the chips is going to be one trillion dollars.
They're showing that they're going to guide for not just
two years, three years, but up to five years. They
think that they can be tuning to about thirty five
percent revenue increases every single year. And we're seeing Keeger
(05:27):
numbers coming in an the eighty percent field for an
AI accelerator, offering that MII is really selling well. So
I think that every time you question it, and yes,
you can look at the worry about the circular financing,
the anxiety that a lot of these companies that were
very asset light, think Matter used to be very asset light,
and to your point, now we're starting to see them
laden on debt. These things do fill people with some uncertainty,
(05:49):
but if really the revenue taps got turned on if
AMD can prove out that they're building a clear line
of sight on tens of billions of dollars of revenue,
people will give them the benefit of the doubt.
Speaker 6 (05:59):
I think everyone's grown very customed to seeing the cash
and short term investments line for all these big tech
companies at like hundreds of billions of dollars, and that's
not going to be the case if they're going to
continue investing this much and spending this much.
Speaker 1 (06:10):
Yeah.
Speaker 2 (06:10):
Even and we saw MetaStock get go down pretty precipitously
today when when Mark Zuckerberg said they're going to step
up their capex, yeah, by that degree.
Speaker 3 (06:17):
So that was interesting to see too.
Speaker 5 (06:18):
A little bit of caution there.
Speaker 2 (06:19):
Morgan Stanley out with report recently I just saw today
saying basically, boy, a lot of things have to break
right to generate returns on these investments, just writ large
on the industry.
Speaker 3 (06:30):
A lot of things really got to break right now.
Speaker 5 (06:32):
We don't know what's going to happen tomorrow with airplanes.
Speaker 3 (06:34):
Exactly, you know, exactly, So getting to the airport.
Speaker 4 (06:36):
Aucture and all the things that actually need to work
for us to be able to get the data centers
up and running.
Speaker 3 (06:42):
Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1 (06:49):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Apple, Cocklay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 5 (07:03):
Circle Internet group.
Speaker 6 (07:04):
It's the issuer of the second biggest stable coin, USDC,
and the shares are tumbling today, down about eight percent.
And this is on kind of what feels like a
pretty pedestrian reason. Concerned that lower interest rates will slow profits.
I mean, that's kind of unusual if you think, you
know cryptocurrency or crypto linked company with lower interest rates.
(07:25):
Let's bring in Emily Mason. She is a Bloomberg News
fintech and crypto reporter, as she joins us now, so
Emily just explained to us the dynamic here why lower
interest rates from the Federal Reserve would be a concern
for a company like Circle. Yeah.
Speaker 7 (07:40):
So Circle issues USDC, and they that's a staple coin
peg to the US dollar, and they maintain that peg
by holding reserves in cash and short term treasuries.
Speaker 5 (07:49):
They keep the yield.
Speaker 7 (07:51):
From the treasuries and that's kind of how they make
money and that's where most of their revenue comes from.
So if interest rates go down, you know that shows
up in earnings and that causes some concern for investors
and analysts.
Speaker 3 (08:03):
So what have their recent results been.
Speaker 7 (08:04):
Like, I mean, this is their second time reporting since
going public. They benefited heavily from all the hype around
stable coin, especially before the Genius Act was passed, and
their stock performed really well.
Speaker 5 (08:17):
It's kind of.
Speaker 7 (08:17):
Been down since their summer highs, and that's kind of
because of the concern from the interest revenue, but also
because of some of the distribution partners that they have
they pay. They have revenue sharing agreements with coinbase, for example,
who helps distribute their coin.
Speaker 6 (08:34):
So if this company for now is kind of a
proxy for a money market fund because it's earning's track
short term treasury yields, it must need to do more
to diversify its revenue streams.
Speaker 5 (08:45):
What is it looking at? Yeah, that's what they're doing.
Speaker 7 (08:49):
And then if you talk to Jeremy A. Lair who's
the CEO, he'll kind of say that lower interest rates
are actually good for the company because it means that
there's higher velocity of money, there's more investment, and then
people want faster move money like stable coins, and they
also might want to use products like their Circle Payments network,
which recently is experimenting with like a stable coin payouts
product which like helps people can helps people to pay
(09:10):
out globally with USDC, and they're trying to move more
USDC volume onto their own platform instead of working with
distribution partners like Coinbase, and that kind of could help
them as well. But they see the lower interest rates
as a positive thing. And also the USD circulating supply
is increasing very heavily as they add new partners, so
that also kind of could potentially offset the lower interest rates.
Speaker 2 (09:33):
Emily, your beat is fintech and crypto reporter, two things
that didn't exist even just a handfull of years ago.
Talk to us about broadly the kind of the intersection
of the growing crypto market and applications like fintech.
Speaker 7 (09:51):
Yeah, I mean, I think what's kind of the most
interesting right now is like fintech when it came onto
the scene was sort of like building very interfaces on
top of his existing financial infrastructure, and then crypto's pitch
is much more sort of like rebuilding the financial infrastructure
with things like blockchains, and now the conversation is kind
(10:12):
of about bringing the traditional world and the traditional financial
institute infrastructure together with crypto rails and Circles really kind
of sitting at the center of that and trying to
bring stave a coin and like integrate that with how
traditional markets work, and that's involves a coming together on
both sides, Like traditional firms kind of have to upgrade
(10:33):
and make their systems interoperable with cryptotechnology, and then crypto
firms also have to kind of move into a regulated environment.
And that's been something that Jeremy Alair has talked about
for a long time, like he really thinks that crypto
needs to be regulated and Circle that's been a big
part of their narrative is like we are kind of
like the suits in the room, and we're going to
be regulated and that's how we're going to go about
doing business.
Speaker 5 (10:53):
You're kind of the most tradfy of the DeFi world.
Speaker 6 (10:56):
In other words, if we want to get technical, this
is going to be a dumb question, Emily, but we've
seen how Bigcoin and the rest of the cryptocurrencies had
a pretty rough October. They're struggling to regain momentum. All
these digital coins are not the same as stable coins.
But is that shift in sentiment and conviction on bigcoin
and all coins, especially from institutions, affecting demand it off
(11:18):
for stable coins or are those two just not linked.
Speaker 5 (11:22):
I mean stable coin.
Speaker 7 (11:23):
Has used a lot of the times, like anytime there's
a lot of trading happening in crypto like and in
crypto tokens like stable coins kind of benefit because they're
used to like move in and out of those markets.
The stable coin the whole point is that it's like
a stable currency. It's peged to the dollar, it's one
for one, so the price of it really shouldn't be
impacted at all by like crypto market movements.
Speaker 6 (11:44):
But does it does demand affect it or does sorry
does the spillover involve like demand waning for sable corn
or increasing for stable coin.
Speaker 7 (11:54):
I think where like the demand growth for stable coin
is going to come from is like it moving out
of a tool for just for crypto trading. It's going
to be like people in countries where the local currency
is volatile wanting to hold stable coin, or people wanting
to actually use it for payments or like stable cooin payouts.
Like if you're a US based company and you're employing
a bunch of people around the world who want to
hold a stable currency like the dollar, the stablecoin is
(12:16):
the best way to access it, then you can pay
them that way. Like that's where growth from. That's where
demand for stable coin is going to come from. I
don't think it's like super tied to the trading necessarily,
Like people use stablecoin to get in and out of
crypto markets, so you know, they might see more volume
of trading activity is high, but their journeys are kind
(12:37):
of becoming less linked.
Speaker 3 (12:40):
Stay with us or from Bloomberg Intelligence coming up after this.
Speaker 1 (12:47):
You're listening to the Bloomberg Intelligence podcast. Catch us Live
weekdays at ten am Eastern on Applecarclay, and Android Auto
with the Bloomberg Business app. Listen on demand wherever you
get your podcasts, or watch us live.
Speaker 3 (13:00):
I metube all right, whether we like it or not.
The holidays are up, Honest, scarlet Ful and Paul.
Speaker 2 (13:05):
Sweeney live here in our Bloomberg and Director Broker Studio,
streaming live on YouTube and with the Holidays of honas
that means shopping and for retailers. It is obviously the
most important time of the year kind of right now
through a year end, so we want to get a
sense of how that's shaping up for the retailers out there.
Mary Ross Gilbert, senior equity analyt. She covers the retail
space for Bloomberg Intelligence. She's based in our Los Angeles office. Mary,
(13:28):
thanks so much for joining us here. We're, you know,
kind of right into November, getting into the thick of
it here.
Speaker 3 (13:32):
How's the holiday shopping season shaping up? What are your
companies saying?
Speaker 7 (13:38):
Thank you, Paul.
Speaker 8 (13:39):
So, if you look at how the holiday shopping is
is shaping up, I think it looks I think it
looks very positive. So I think we are going to
see an increase and particularly for apparel retailers, that's usually
like the largest category that consumers. If you look at
those that have been pulled by all the holiday service
surveys that have been conducted, including the National Retail Federation,
(14:02):
and they have over eight hundred over eight eighty two
hundred respondents in their surveys, and the other ones are
pretty sizable, you know, relatively speaking, around five thousand. So
they're showing that there's definitely a higher percentage of shoppers
wanting at peril and accessories for gifts, So that should
(14:23):
be good news for apparel. But gen Z is planning
to cut back on their overall holidays spending by that,
you know, by twenty three percent. Millennials just one percent.
Speaker 2 (14:37):
Wow, So the gen Z these are the younger folks,
maybe tougher time finding a job. Maybe, you know, student
debt is that kind of the driver there.
Speaker 8 (14:48):
Yeah, I think I think that could be part of it. Yeah,
it could be the job market situation that might be
happening there because these are really like the seventeen to
twenty eight year olds. So we I've been hearing some
you know, talk about some of these latest graduates, you know,
having a difficulty finding a job. I think it's just
probably going to take longer because generally unemployment is still
(15:12):
very low and soon we'll be getting you know, more
data on that. But we're seeing resilience if you look
at the data so far with Bloomberg second measure for
apparel retailers and department stores and off price, we're seeing
good sales coming in for the third quarter, and they'll
start reporting their numbers in the next few weeks. So
(15:33):
I think we're off to a good start, and I
think Black Friday sales are already happening. Macy's is out
today with fifty percent off on their private label brand
product and they expect to have other drops every week. Wow,
So everyone's focused on starting now yep with promotions.
Speaker 2 (15:52):
So Mary, you know, economists talk about a K shaped
economy out there, some consumers, maybe the ones that own
assets like stocks and bonds in real estate, doing more
than good and kind of everybody else struggling a little bit,
particularly with inflation.
Speaker 3 (16:07):
How does that get reflected in retail sales?
Speaker 2 (16:10):
Does it mean you just kind of if you're an investor,
look at on Amazon Target where I can get some
some some deals.
Speaker 8 (16:18):
Yeah, and that's actually what's happening, and that's why you see,
let's say, pretty robust sales overall coming out of off price.
You know, so think of TJ Max, Ross Stores and
Burlington stores, and Burlington's at the very low end if
you look at credit card delinquencies or you know, those rates,
and a lot of these companies that we're tracking represent
(16:41):
the credit cardholders for like department stores and for some
select apparel brands such as gap, et cetera. And when
you look at that data, delinquencies are actually lower this
year versus a year ago, but not for the very
low income, which kind of speaks to what you're talking
about and inflation. Actually, those are up in the teams,
(17:05):
you know, for the very low income consumer, So think
like under fifty.
Speaker 3 (17:09):
K yep, yep.
Speaker 2 (17:10):
How about e commerce, Mary, I know the pandemic folks
are saying, kind of pulled forward maybe four or five
years of share shift from bricks and mortar to a
digital what's the e commerce growth story look like these days?
Speaker 8 (17:25):
You know, e com growth is looking strong when we
look at the data, like I said, for the third
quarter that we're seeing from Bloomberg second measure, it's showing
actually online sales were stronger at the department stores except
for Coals Coals online businesses, I mean not their online business,
but actually their credit customer is shopping less, like in
(17:48):
the double digits less, so that's kind of an issue
for them. But generally we're seeing stronger pool with online
sales there. Now. There is also a delineation between the
type of consumer. If it's gen Z, they tend to
prefer shopping more in store and we see that with
Abercrombie and Fitch's Hollister brand, so they are about seventy
(18:12):
percent of their sales are generated online. And then it's
the inverse when you look at their namesake brand, Abercromby,
because that consumer is those are millennials, and millennials prefer
to shop online, so sixty percent of their sales are
being generated online versus in store.
Speaker 1 (18:32):
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