Soft Jobs Data Trims Fed Rate-Hike Bets

20:39We've got Laura Ulrich with us, Director of Economic Research in North America at Indeed Hiring Lab. She's also a former senior regional economist and senior manager at the Federal Reserve Bank of Richmond, primarily focused on research related to higher education and workforce dynamics, which, by the way, we got some great questions from our audience coming in just about this. She was also an economics professor and associate dean for undergraduate programs at Winthrop University. She joins us from North Carolina. Welcome, welcome, welcome. How would you describe today's payrolls report and how it changes your view of the labor market, if at all?

21:12I wouldn't say it necessarily changes my view of the labor market. We at The Hiring Lab and Indeed have been kind of describing the market as a market that is cooled, not necessarily that is cooling. We're kind of bouncing along the bottom. And I see that as the same today as I really did yesterday. However, I do think it is important to acknowledge that the payroll employment report came in about 100 ,000 jobs below consensus today. And so that's notable, right? It was much softer than what people were expecting.

21:43Carol Massar:So I am curious, too, and tell us a little bit more, if you would, Laura, about the activity you are seeing on the platform. What are the job listings? What are the jobs people are looking for? Give us an idea and give some context about data today versus maybe six months ago or just trends, because you guys see a lot. We do. We do. We have access to a lot of data, both on labor supply and labor demand. And I would tell you that we've been in kind of a, I wouldn't call it a steady state because there has been a bit of turbulence, right? We've been bouncing a bit, but we've been at about a job posting index of 102-ish, between about 101 and 102 since about September of last year.

22:30So that's kind of what leads partially to our viewpoint in that this is kind of a cold market that's bumping along the bottom. One interesting point, though, and you did see this reflected potentially in today's payroll employment report, we have seen some strength in some sectors where we were seeing considerable weakness before. So software development jobs, for example, are up 15 percent since early 2025. And we had seen considerable cooling in tech jobs and in the payroll employment report, jobs in both information and professional business services were up today. So we are starting to see some of those, I would say, sectors that maybe are more AI exposed that where we had seen a lot of softness to turn the corner of it.

23:16OK, you know, Brendan down in Maryland sent us a question during our last segment that would be great for you to weigh in on. It's about sort of these different areas of the of the economy and what you're seeing in terms of different sectors. He writes that it seems many jobs were lost in education. To what extent do you think these are permanent job losses as many municipal school districts have exhausted and no longer can use the massive federal funding they received during the pandemic era? Here's a great question. I did take note of that data point this morning. I think that the loss of those local education government jobs, that could be a bit of an anomaly with some issues with the seasonal adjustments.

24:00I think it'll be interesting to see what the number looks like next month. I will say, though, much of my background is in education, as you mentioned. And there is considerable pressure, both on higher ed, but also K through 12, partially because of the federal funding cuts, but also because there have just been fewer and fewer and fewer students enrolled in public schools. And so if you look at enrollment for many of those districts, it's been declining. And so there there's less need for staff and teachers at some of those districts as well.

24:30Carol Massar:Hey, I want to get to, because one of the things we talk about, Laura, when it comes to the labor market is the impact of AI, right? We're still trying to figure all of that out. And we thought, both Tim and I, when you talked about strength and software development jobs, we kind of were surprised at that. Yeah, I thought the bots were going to do it. Yeah. So that was interesting to us. You have done a new survey, the Indeed Hiring Lab Labor Market Outlook Survey. You talked to more than 100 U.S. economists and labor market experts. Tell us about the findings and what you heard? Absolutely. So we're really excited.

25:01This is a brand new product for us. We released it earlier this week. So we'll be doing this on a quarterly basis where we ask over 100 very well respected labor economists to predict what they think is going to happen, both to unemployment rates, but also our own job postings and Indeed. And along with that, we're going to be asking them some special questions. This time we had a lot of questions on AI. It was really interesting for us to see the results because from a macro point of view, there wasn't a lot of disagreement amongst economists. Many of them did see that there would be a slight decline in job postings and a slight increase in unemployment rates over the next year, but not a lot of movement.

25:39But the AI question got a much broader array of answers, I will say. A little over 50 percent of the economists that were surveyed, I think it's 57 percent, believed that AI would lead to job losses on net. About in the 30 percent thought it would lead to job gains on net. And then some are unsure. And I think that that wide array of responses from, like I said, this group of very well-respected labor economists really shows how much uncertainty there is in what path this might go in. But I will say at Indeed, we're starting to see, I mentioned that growth in software development, those jobs where we are seeing growth do tend to be what we're calling AI touch jobs.

26:24These are jobs that either have AI in the title. So think like AI engineer or machine learning specialist, something like that. A data center technician is another one that's growing a lot. Or they mention AI as being a skill or a characteristic of the job and the job description. So those jobs are on the rise on our platform for sure. They're also on the rise in terms of what people are seeking. And so really from our vantage point right now, I would say today, from my perspective, it's much easier for me to point to some growth that we're seeing from AI in the labor market to actual destruction from AI doing people's jobs.

27:02Carol Massar:But as you pointed out in the press release, you guys said when a group like this converges on something like AI as they did, right? In terms of the impact, it's worth paying attention. When it splits, that tells us something too. In this quarter, it did both. Is that fair in terms of how I'm reading it? It did. We asked one really interesting thing was we asked the economists exactly what sectors do you think there'll be the largest decline in jobs and what sector do you think there'll be the largest increase? And there were two occupational sectors from our data that ended up on both lists. That was software development and data and analytics.

27:33So some of the economists thought this is where we're actually going to see the most loss and others thought this is where we're going to see the most gain. That was a surprise to me. I didn't expect to see the same sectors end up on both lists.

27:45Carol Massar:It's just, it's a reminder that we're figuring our way. People say we're early in on this, right? And understanding really the impact. I mean, we're trying to figure this out and we don't really know, right? Longer term, exactly how it plays out. I totally agree. I think one thing that we do know, and we did another survey internally at Indeed, where we asked employers if they were seeking what we defined as AI native or AI fluent talent. AI native talent has nothing to do with age. You can be a Gen Xer like me and be AI native, but it basically means that you default to AI technology to help you across multiple workflows.

28:21AI fluent is you still feel comfortable across workflows, but you don't necessarily default to it. And 45 % of employers said they were actively recruiting AI native talent, but only 14 % of workers in the survey considered themselves AI natives. So I think one thing we do know right now is people who do have AI related skills and talent are being hotly demanded in the labor market. Well, let's make this a little personal because our team told us that you have a couple of kids. I guess they're not kids anymore, but they're young men entering the labor market right now. And this is, I think it's fair to say, a really interesting time to enter the labor market.

29:04You're talking about this AI fluency and being AI native. What do you tell them about the skills that they need to succeed in this market? It's a great question. And yes, I have three sons, 16, 19, and 22. I'm sorry for the third one that I did not mention. You don't know who you are. He won't mind. But the oldest just finished graduate school in data science, which in R &D data has been one of our softest areas. So you can imagine for me and the work that I do, doing the research that I do, but also living life as a mom trying to help this young adult. He has landed his first full time job, which is excellent news for our household.

29:43But it was very tough. And what I kept stressing to him was that, in my opinion, it's really important for young job seekers to prove to companies that they are better off, the company is better off with AI plus them than AI without them. And that's a tough road to navigate right now, but I do think it's extremely important. So I think being an AI native is very important. I have stressed that to my sons and I've stressed it to myself too, as someone who is older, only 11 % of Gen Xers in our survey even define themselves as AI fluent. And I've had to work hard as an older worker myself to become an AI native and to really dig into it.

30:28So I think it's something that in my view is extraordinarily important. As we do go into this period, that is going to be so uncertain because I believe that for my children's generation, one of the most important skills they can have is adaptability.

30:43Carol Massar:I got to ask you about one more data point from your survey finding. We've only got about a minute or so left, but you guys found a larger majority, 57 % of panelists said they expect downward pressure on the wages of college-educated workers over the next year versus 34 % who said the same for workers without a degree. Forgive me, but just about 40 seconds. Why do you think that is? Yeah, I think that the sectors that are most likely to be impacted, especially in the short run are many white collar sectors that college educated people flow into. I'll say too, we've done some work at Indeed looking at how that collides with the demographic shifts that you guys were talking about before.

31:21And what we've kind of predicted through this is that we might have an excess of workers moving into these white collar roles with a combination of demographic shifts and AI. And so if that happens and supply exceeds demand, seeing downward pressure on wages would be pretty rational to expect.

31:40Carol Massar:All right, great stuff. Please, please come back and join us again. We would love to have you. Thanks for having me. Have a good weekend. Laura Ulrich, she's Director of Economic Research in North America at Indeed Hiring Lab. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

32:00Carol Massar:This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work. I'm Carol Masser. Globetrotters hunting for airfare bargains are in for a rude awakening, as the days of stumbling across a cheap seat on a popular flight could soon disappear. Bloomberg's Juan Ha reports that airlines from Delta to Virgin Atlantic are adopting artificial intelligence to change seat prices more quickly by weighing dozens of variables in real time, helping capture more revenue while shrinking pricing gaps that once allowed travelers to find bargain fares. Machine learning models can more accurately forecast demand by analyzing historical booking patterns, seed inventory, and seasonal trends, while also continuously tracking competitors' fares and capacity changes to update prices in near real time.

32:47Carol Massar:The technology could lead to higher fares on busy routes as airlines pack flights closer to capacity, but may also result in lower fares on off-peak and lower-demand routes. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChachiPT.com today by selecting Work Mode. Available on Plus and Pro plans.

33:15Hey everyone, it's Cal Penn. I'm the host of Earsay, the Audible and iHeart Audiobook Club. This week on the podcast, I am sitting down with Ray Porter, the narrator of Andy Weir's audiobook Project Hail Mary, massive sci-fi adventure about survival and science and what happens when you wake up alone very far from earth. I really had to make a decision because I caught myself getting that frog in my throat and starting to get teary as I'm narrating some of these sections and it's like, okay, yo, yo, yo, is this indulgent? And I really thought about it. I was like, no, at this point it would kind of be betraying the trust the author and the listener have in telling this story if I don't go through it.

33:59But there's places in this book that deeply emotionally affected me, and I left it on the mic. That's great. Because it served the story. People will say like, oh my God, I cried at the end. It's like, yeah, dude, me too. Listen to Earsay, the Audible and iHeart Audiobook Club on the iHeartRadio app or wherever you get your podcasts. Wait, I came in for two things. How is this$47? All right, we're going to need a plan here. Just start simple with Bank of America Advantage Safe Balance Banking. No overdraft item fees, no monthly maintenance fee if you're under 25. Plus, as a new checking customer, you can earn$100 when you open an account and make qualifying Zelle or debit transactions.

34:39Oh, that's actually really simple. Safe Balance Banking, one less thing to figure out. Learn more at bfa.com slash earn100. Terms and conditions apply Bank of America and a member FDIC. You're listening to the Bloomberg Business Week Daily Podcast.

34:54Carol Massar:Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. This story definitely caught our attention. Tim set it up so well. It's about one sports fan and what he's paying to watch all of the streaming channels and sports that he loves on streaming channels. And it turns out to be more than$2 ,000 a year. He's got to share some passwords. Like, what is he doing? We know what goes on at the Stenevek Castle. Okay, why so much? As our team reports out, the rise of streaming services has made it difficult for U.S.

35:28sports fans to follow their favorite teams without special subscriptions, with pro leagues signing deals with multiple services and creating a bewildering schedule and some steep costs. We've got Randall Williams, Bloomberg News senior reporter and the co-host of the Bloomberg Business of Sports podcast. That podcast is available at Bloomberg.com, Apple, Spotify, or wherever you get your podcasts.

35:48Carol Massar:Also means it's the weekend because it's dropped. Hey, good to have you here. Lots to talk about. Thank you for having me. Well, it's great to have you. We're going to get into the streaming costs. I feel like we have to go to FIFA, though. Okay, we can start there. Right, because last week we talked about, and it looked like they were trying to get outside investors and all this stuff. That's done, right? It's dead. They died after we talked to you. No, literally, shortly after it died, and I think I ended up reporting on it, like maybe three hours after, which is nuts. The thing that remains to be seen is if Gianni Infantino, the FIFA president, is going to win his re-election next year.

36:22He was, I would say, reaffirmed as president this week in Morocco, where I believe he said the final is probably going to be played there. But UEFA has not, they have not said anything different. They still are not supporting him. Many people who are just sort of joining the conversation right now about FIFA and post-World Cup might not understand. I certainly don't. I can paint the picture. The tension between UEFA and FIFA, was this just the straw that broke the camel's back? Or have there been tensions for a while? There have been tensions for a while. I think that when Gianni Infantino, of course, is looking at FIFA as a business, as most executives do.

37:01But there's also a purest mentality in all sports, in golf and tennis and football and basketball and everything else. And so you think about the innovations that Gianni Infantino, that's what he would call it and say, like such as hydration breaks, commercial breaks that are used to sell ads. That's not typical in football. UEFA is very strongly opposed to that. And he's even said in the Euros that they won't be doing it. But that is something that if UEFA was trying to maximize TV dollars that they could sell. But they're talking about the purity of the game of soccer and they're saying, no, absolutely not.

37:33So then you, you, you know, relay that into what's happened recently. FIFA made$15 billion from the World Cup. And then after that, they're going to be like, you know, we're going to sell stakes. We're going to do this with Thrive Capitals, Joshua Kushner. And UEFA is like, listen, no, we've had enough of you and we're going to be trying to probably get rid of you come next year.

37:54Carol Massar:Yeah. Do they have the power to do that? I think it's going to take some rallying and they need they need there has to be another potential candidate. I have not seen any reports that someone has been trying to rally against them. It's just that they do not support him. I also don't anticipate that Gianni Infantino in four months is going to be able to change UEFA's mind. So who can UEFA find to really go up against Gianni Infantino? And the reality is Infantino, as much as he has done with the Trump administration and for the World Cup, it's hard to argue that he hasn't done a good job. You make$15 billion the most ever, it's going to be hard to get rid of anybody who's just made record-setting profit.

38:34Carol Massar:And won't there always be that tension between FIFA and kind of the regionals? Of course, because FIFA owns the World Cup, which is the, you know, it's over the entire world. Whereas, you know, you have your CONCACAF, you have your soccer federation in South America, you have UEFA, and each of them have their own tournaments. You have the Euro, you have Copa America, but the World Cup is when everybody competes. So there's always going to be some tension there. They've got to be a little jealous that this went so well. Just a little bit. But so listen, there was a story on the Bloomberg, too, the next World Cup and the money deals, Randall.

39:07Carol Massar:FIFA exploring selling U.S. media rights for the next two World Cups together, which would keep the hydration breaks that boosted it. They're not going away, are they? I don't think so. I mean, once you get a taste of advertiser money in 30 seconds and all, and you got to think about it. This is exclusivity. At the Super Bowl and at other events, those 30-second ads sell for$8 million apiece, but they never really rerun. And when you're watching the World Cup, you see the same ads over and over and over and over again. Well, yeah, my son's like talking to me about Bank of America, Home Depot. And like he's seven years old and never watches other commercials.

39:39And he knows. And by the way, David Beckham's in all of these. Of course. So this is great news for David Beckham, I guess. It's great news for all of FIFA's partners is because it really is one of the most exclusive, you know, advertisements that you can possibly have. because it's going to run in every single match across various continents and regions. So they are going to take this to market. They're probably going to shop around to whoever's willing to pay the most. But of course, you want the reach angle of this. There's not one inch of that screen that is not taken up by an ad, even when the game is going.

40:10Absolutely not. Everything is an ad in there. So much so that even the stadiums. Think about the stadiums. We're not calling MetLife Stadium MetLife. We're calling it New York, New Jersey Stadium.

40:20Carol Massar:That blew my mind. How the heck did they get that done? I mean, they obviously have an insurance partner. And, you know, SoFi Stadium became Los Angeles State and so on and so forth. I just could not believe that they're willing to go that far to protect sponsors. But if sponsors are paying a premium and that's what they're asking for. So that's why they did it. I think it's part of it. Because those, those, but the naming rights that, you know, you get naming rights for a stadium. You expect that, that those, that name to be used when the stadium is mentioned. It's twofold. The stadiums and their owners were willing.

40:55They wanted the World Cup, and they wanted those matches and that revenue that came from FIFA. And so they were willing to cover up the names. At the same time, FIFA is like, we don't want anybody profiting off the World Cup except for us and our partners. And so even if it's Mercedes-Benz Stadium in Atlanta, Hard Rock Stadium in Miami, there were banners that were hung up that said New York, New Jersey Stadium. And it's hard for me to say New York, New Jersey Stadium when the stadium is in New Jersey.

41:22Carol Massar:We saw it. We were like, is that a mistake? It came down to the fact that the host committee is called New York, New Jersey host committee. And so that's why the stadium was named that. But nonetheless, it is a bit far-fetched. I'm like, that's too far. But anyways. We mentioned streaming costs coming into this. Meteorites. What were they for the past World Cup? What might they be for the future World Cup? I believe the media rights are around$485 million, around that half a billion dollar mark. I believe they will probably go for double that. I mean, this was probably one of the most successful World Cups.

41:57Carol Massar:So if they sell them for two, you're talking about a$2 billion deal? I'm saying at minimum a billion. I could see$2 billion, but that depends on who shows up and wants it. Because it's U.S. media rights? Yes. But the challenge with that is going to be the time zone for the next one. Time zone. It's five hours ahead. We really worked in our favor. Yeah, it's five hours, six hours ahead, I believe, in Spain, Portugal, and Morocco. I think it's doable. They have to figure out the schedule and when the players are going to be playing. We're not going to see it. I would be shocked, unless the U.S. somehow ends up in the final in 2030, I would be shocked that if the number surpasses what it was this year, which was, I believe, 64 million viewers, which is probably the most watched soccer ever here in the U.S.

42:38I think you're going to go. I probably will. Yeah. Bloomberg grants me permission. You got four years to make it.

42:46Carol Massar:Are you listening, anybody? No. Randall Williams, Bloomberg News senior reporter, co-host of the Bloomberg Business of Sports podcast. Check it out. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

43:03Carol Massar:This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work. I'm Carol Masser. Globe trotters hunting for airfare bargains are in for a rude awakening, as the days of stumbling across a cheap seat on a popular flight could soon disappear. Bloomberg's Juan Ha reports that airlines from Delta to Virgin Atlantic are adopting artificial intelligence to change seat prices more quickly by weighing dozens of variables in real time, helping capture more revenue while shrinking pricing gaps that once allowed travelers to find bargain fares. Machine learning models can more accurately forecast demand by analyzing historical booking patterns, seat inventory, and seasonal trends, while also continuously tracking competitors' fares and capacity changes to update prices in near real time.

43:50Carol Massar:The technology could lead to higher fares on busy routes as airlines pack flights closer to capacity, but may also result in lower fares on off-peak and lower-demand routes. That's the Bloomberg Tech Minute brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChachiPT.com today by selecting Work Mode. Available on Plus and Pro plans.

44:18Hey, everyone. It's Cal Penn. I'm the host of Earsay, the Audible and iHeart Audiobook Club. This week on the podcast, I am sitting down with Ray Porter, the narrator of Andy Weir's audiobook Project Hail Mary, massive sci-fi adventure about survival and science and what happens when you wake up alone very far from earth. I really had to make a decision because I caught myself getting that frog in my throat and starting to get teary as I'm narrating some of these sections and it's like, okay, yo, yo, yo, is this indulgent? And I really thought about it. I was like, no, at this point it would kind of be betraying the trust the author and the listener have in telling this story if I don't go through it.

45:02But there's places in this book that deeply emotionally affected me, and I left it on the mic. That's great. Because it served the story. People will say, like, oh, my God, I cried at the end. It's like, yeah, dude, me too. Listen to Earsay, the Audible and iHeart Audiobook Club on the iHeartRadio app or wherever you get your podcasts. Wait, I came in for two things. How is this$47? All right, we're going to need a plan here. Just start simple with Bank of America Advantage Safe Balance Banking. No overdraft item fees, no monthly maintenance fee if you're under 25. Plus, as a new checking customer, you can earn$100 when you open an account and make qualifying Zeller debit transactions.

45:42Oh, that's actually really simple. Safe Balance Banking. One less thing to figure out. Learn more at bofa.com slash earn100. Terms and conditions apply Bank of America and a member FDIC.

45:53Carol Massar:You're listening to the Bloomberg Business Week Daily Podcast.

46:06We are trying to figure out what's going on with AI debt. So far this year, Amazon Alphabet, NVIDIA, Meta, Oracle, and SpaceX. Check this out.

46:13Carol Massar:I know. Together, they raised more than$200 billion from dollar bond sales that dwarfs the$13 billion from high-grade tech companies in the same period last year. Think about the Alphabet offering yesterday. day, 10 tranches over, you know, so much investor interest and they're not done. That's at least all the analysis that we've been seeing. But there's a little bit of a chill. I don't get it. I don't know. It's a chill engulfing AI linked debt as tech borrowing surges. Buyers have grown weary that massive AI spending will not pay off. We've got Davide Barbusha with us, Bloomberg News corporate finance reporter.

46:49He joins us here in the Bloomberg Interactive Brokers studio. Can you just settle for us the distinction between what Carol mentioned, that Thursday offering from Alphabet attracting roughly$115 billion of peak demand. That's according to people with knowledge of the better. And they raised only? 25. Yeah, 25. You were on this byline, by the way, so you know about this. Then today you have this story out that talks about the chill that's engulfing. As

47:13Carol Massar:we talked about this on our editorial call this morning, each of these companies is different and has different offerings. What did you find? So it's kind of interesting. So the Google deal comes after a string of, well, there were three deals between June and July, essentially, where we had SpaceX, we had NVIDIA, we had Amazon raising$25 billion each. And these deals did not do particularly well in the secondary market, which, you know, traders and investors care very much about. Because if a bond doesn't do well in the secondary market, then it becomes sort of difficult to pull sales off going forward.

47:50Carol Massar:Well, explain that, right? It's important to see kind of the movement of these investments. No, explain that. That's what I'm saying. Well, essentially, when a bond is issued, there is a primary market where it gets absorbed, and there are books or orders for that bond sale, and then the bonds just start changing hands in the secondary market. And if it loses value, then the narrative around the asset in question becomes problematic, right? And harder for that entity, right, to come back and do another issuance. Exactly. OK, so enter the banks and sort of the narrative or like the narrative that's emerging around the attempt to sort of rekindle demand for at least part of this debt.

48:31So what happened after these three deals? There was a different deal by BlackRock. It was for a data center. So it was by BlackRock, but not just a corporate deal. It was still AI, essentially. And with this deal, which was smaller in size, about half of those,$12.5 billion, the banks on the deal essentially kept the orders limited to so-called buy and hold investors. So institutional investors that are, let's say, strategically invested in these assets or like these assets don't plan to essentially make a quick profit by selling these assets the moment they start trading.

49:10Carol Massar:Wasn't like relying on the secondary market, right? Well, the idea of this was essentially to make sure that it wouldn't be like an offloading in the secondary market immediately. And so what happens is that they created what in sort of banker lingo is called scarcity value. So the bonds were not easily available and that made them more valuable. As somebody who watches this market, are they creating an environment and so it's not reflecting the real trade and demand that's out there? Like it's kind of, I don't want to say covering it up, right? You're allowed to do this. There's nothing illegal.

49:46Carol Massar:But I mean, it speaks to the difficulty with some of these issues. Definitely. It definitely does. Because the fact that, I mean, everyone knows that there's going to be, there has been already a ton of debt issuance to finance the AI build out. There's going to be even more. So there's no doubt that the market is aware of that. There are still questions as to the pace and the cadence, like the frequency of these bonds. And so those three deals, one after the other, as I said, between the end of June and July, kind of spooked the market a little bit. And so there was a need in the market for a deal that did well, essentially.

50:22And so the Black Record deal happened. And then after that, we saw the Google deal yesterday, which did particularly well. Where do, I mean, should we think about this from a yields perspective, too, on what these investors are being paid for taking on this risk? Like, how does it vary from one company to another? Well, that's the thing. So, yes, there was an order book or, you know, let's say the quality of investors participating in the Black Record deal was, as I said, more buy and hold. But let's not forget that what these bonds were offering in terms of yields was particularly high. So we're looking at, in the case of BlackRock, it was like 7.5%.

51:02Carol Massar:Not too shabby, right? Yeah, which makes it closer to a high-yield credit rather than an investment-grade, blue-chip type of credit. What did Alphabet offer? I don't remember, but it was something like, if I'm not mistaken, 15 basis points above their existing curve. Okay. So that is a premium that makes the new bonds essentially attractive. Davide, is it important to like what BlackRock did? This was a data center deal. So was this real estate? Was this like what versus what we're getting from Alphabet or, you know, or what SpaceX or Amazon was doing? I mean, like where do we think about, okay, these buckets are similar versus this?

51:45Carol Massar:I'm trying to figure out, too, what this means in terms of the AI spend and trade and how investors are getting much more discriminatory. Yeah. I mean, data center debt, particularly in the investment-grade market, is a new thing. Yeah. It started, I think, this year, actually. And it's essentially project bonds. So it's bonds to finance the actual project, as opposed to, for instance, a corporate, straightforward corporate deal, senior unsecured bonds issued by a company, where the use of proceeds can include, for instance, AI investment, but it can also be refinancing of debt or any other thing.

52:25In this case, it's essentially project bonds where, in the case for BlackRock, for instance, it was BlackRock funds taking an ownership stake in the project company that is going to develop this data center, meta at the other part of the ownership. And then the BlackRock funds raise the financing to essentially back their stake in the project. We're speaking with Davide Barbusha, Bloomberg News corporate finance reporter, joins us here in the Bloomberg Interactive Brokers Studio. Here we are. Oh, you wanted to say something? I just want to think.

52:56Carol Massar:Do you think it's interesting that Meta was part of this? Because people are questioning the Meta strategy. Well, this is, let's just put it this way. This is not the first data center of Meta. They actually sort of inaugurated the data center trend with a very large transaction late last year. It was like the Hyperion data center in Louisiana with Blue Hour, which was much larger than this one. So this is not the first time they do this. So I was going to say, here we are going into, we're done seven months of the year. So we're a little over halfway done with this year. And so far already, we've seen, what, 200 billion, more than$200 billion in bond sales.

53:38What do your sources tell you about what the rest of the year is going to look like? So like, as I said, everyone knows there's going to be a ton of debt coming up. Forecasts keep changing. But like 200 billion more? 150 billion more? There is a Barclays estimate which was total hyperscaler debt. So large tech companies at$280 billion for the total of this year. So we're looking potentially at another$80 billion. But if you look at the whole space, so including data centers, including the broader tech sector, there are estimates, I think, fresh JP Morgan assets that put it at about$500 billion.

54:16Carol Massar:dollars yeah so what do you watch in terms of you know the the big question that's out here david like we're just trying to figure out again going back to you know for here we are three years in right getting ready to i think enter our fourth year when it comes to the ai spend and build and just trying to figure out when is it overdone and i'm just curious the things that you watch or what you hear when you are reporting this stuff out what are you hearing from folks in the industry I mean, there is a concern, obviously, around that. It's mainly driven by the pace of issuance and the pace of the financing.

54:53There is a concern of capacity overbuilt. There is a concern that the technology may become obsolete relatively soon. Yeah. So that's another, yeah. What are we going to do? Let's say that, this is not to be answered right now, but let's say that happens. What do we do with all these data centers?

55:11Carol Massar:and you just turn them off? Leave them there? This is why you think about just other rushes, the energy market or two, and the overbuild and to drill, drill, drill. They have seen their cycles where - Booms and busts, if you will. Booms and busts in a big way. And anybody in the industry is just very cautious. And I feel like, are people being cautious? Well, I mean, it does have feelings. It does remind people of previous technology-driven boom and bust cycles. But we'll see. We've seen the tech earnings recently were relatively positive. So they were positive also for this Google bond, for instance.

55:50Okay, this just got me thinking. And, Carol, we've talked about this before. But if we think about this from the perspective of the LLMs that people use, just the chatbots. I woke up yesterday morning and asked Claude a question. But it was like, you need to upgrade in order to ask this question. so i just went to open ai and chat gpt and asked the same question there and when i run out of space there i just use you know the google one you've no loyalty to anything no loyalty i know

56:15Carol Massar:and this is where like this is what we're trying to figure out or where we think about companies and the spend are saying wait you don't really need to use this expensive tool to do what you you are like there's going to be a point where people are are not maybe necessarily offering it to everybody, right? Employees, like, we're trying to figure this out. Sorry, we're doing this to you. No, no, no, I understand, but like the scale of the finances suggests that there's a lot of demand. Yes. Like they wouldn't do it unless they thought, which is what we talk about with Mandeep Singh from Bloomberg Intelligence.

56:48Carol Massar:There's the demand, there's the backlog. The customers. The customers, right? So there's the sales and the revenue. You just wonder, can it all come to a quick start, stop at some point? I don't know. That's the big question. Davide, this is a great story. Thank you for stopping by. Bloomberg Interactive Brokers Studio. Davide Barbusha, he's corporate finance reporter for Bloomberg News. You can check out his reporting and the entire team's reporting on the Bloomberg Terminal and at Bloomberg.com. This is the Bloomberg Businessweek Daily Podcast. Available on Apple, Spotify, and anywhere else you get your podcasts.

57:20Carol Massar:Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

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