AI Stocks Rebound as Fed Hike Bets Return

0:00If you invest, lead a business or allocate capital, one-sided views aren't enough. Join me, Brad Rogoff, the Global Head of Research at Barclays on the Flipside podcast. Each month, I go head to head with one of our expert analysts on my global team to debate the economic and market issues that matter most. From inflation and AI to equity and credit trends, each debate helps you see what headlines might miss. Find the Flipside wherever you get your podcasts.

0:29Scarlet Fu: When you're a business owner interested in expanding to new markets, there's a lot to consider and countless questions to answer before making the call. The most important one being, are you ready? That's where ChachiPT comes in. Give it a goal, add your files, and ask chat to help you map out different scenarios for the future of your business. So when growth is on the table, you've got an expansion plan ready to implement. Get started at ChachiPT.com. Small businesses are the pulse of every community. They bring people together, create opportunities, and drive growth. Chase for Business helps business owners like you with personalized guidance and convenient digital tools all in one place.

1:08Scarlet Fu: With that guidance and your determination, you can take your business farther and help build a brighter future for your community. Learn more at chase.com slash business. Chase for Business. Make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JPMorgan Chase Bank, N.A., member FDIC. Copyright 2026, JPMorgan Chase and Company.

1:34Scarlet Fu: Bloomberg Audio Studios, podcasts, radio, news.

1:44Scarlet Fu: This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7 a.m. Eastern on Apple CarPlay or Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. David Malpass joins us, former president of the World Bank Group. David, we had an election last week. I'm not sure if you were paying attention. What does that mean for you? We had a change in Congress. And how does that just kind of influence? What do you think is going on out there in terms of what we're going to hear from Washington over the next couple of years? Hi, Paul.

2:21Good to be with you. And I hope what we hear today is honoring veterans. And so people will be making clear that that's a really important part of the United States, of our culture and of our beliefs. As we go forward, they're going to have to sort out what the priorities are. And we've seen already some of the opening of that on immigration. So people want the border closed, but they want changes in how the enforcement goes. I would say that's broadly, you know, implementation by the federal government has been is hard. It's this huge behemoth and getting it to move in a different direction is is really hard.

3:05And now there'll be divided opinions on how to do that in every area, in the health area, in defense spending and so on. So they'll just have to figure out how they're going to sort that out. I was in the Reagan. So Reagan faced this in 1987. So that were that both the Senate and the House were Democrat and the debt limit was coming up. So, you know, that Washington has been here before, but it was very difficult. He really didn't like the debt limit because, you know, you've already spent the money. What am I supposed to do? And so the president is on the hook to raise the debt limit. So that'll be one of the challenges next year.

3:43Scarlet Fu: What is your confidence that they will pass a continuing resolution during this lame duck period to keep the government funded until what, like first quarter of 2027? So that's an issue and the Republicans want to have it go all the way through the fiscal year to September of 27 so that they don't have to come back to the issue over and over again. One thing people outside Washington don't see as much is the idea of a continuing resolution means nobody made decisions on what to spend. They just kept it on autopilot. And so it means that around the government, people are wasting a lot of time over and over again trying to figure out what new spending should be and then just stay on autopilot.

4:29So it's unfortunate that they operate that way. Whether they'll get it done here in November and December, we'll have to see. I imagine they probably will be able to do that. That should be a high priority.

4:41Scarlet Fu: I mean, this rests on the Republicans, right? Because they control the House and Senate right now. That's right. But they have such a thin majority, you have to get people together. Now, I saw the Hegsteth impeachment went down. So that shows you there is some continuity in the Republicans. I think they're realizing that the vote didn't go at what they're trying to do. They want to keep going with what they're trying to do and get a lot done here in November and December. The defense spending bill, which is appropriate, we talked about that today, is also hanging. That's the authorization for new spending.

5:20And it's always done at this point in the year. But they have to bring together majorities in order to do it. And a reconciliation bill would be good if they could do that because that would allow some things that are hard to get a majority for, such as permitting reform. you know, around the country, energy is really important in the inflation data yesterday. Electricity prices were up. And what the country needs is lots more energy focused on making electricity. But the permitting has been a real problem for that. So maybe they could get that done here by year end. David, we're in the final two years of President Trump's second term here.

6:03oftentimes presidents focus on foreign policy during those years. We have a summit coming up with President Xi and President Trump here. What do you expect to come from that? What do you think the objectives are for the U.S.? Well, the U.S. has said it wants some stability in the relationship, recognizing that China's fully a part of the world's supply chains. So for, I think, quite a bit of time into the future now, there's got to be some trade-off of we would like to get deeper supply chains in the U.S. at a time when China has an economy of scale making this stuff. So that's a real financial and engineering challenge for the U.S.

6:45So I hope they focus on that, on stability in the relationship and not having China be as aggressive as it has been in the South China Sea and in the Arctic and so on. And of course, the spying is in some way will be overhanging the summit.

7:05Scarlet Fu: Does that make things more difficult or does it, I mean, I'm just curious how that hijacks whatever conversations President Xi and President Trump will be holding. You know, I've met with lots of world leaders, including President Xi, and I've been at the APEX summits and they are where people meet in a somewhat, I don't want to call it scripted because President Trump is really not scripted. He's making decisions and pushing things forward. But there is an organization structure where they will talk about a list of things that they have to work on and maybe make some agreements. So that's okay.

7:50I haven't seen whether Putin, you know, one of the wild cards is whether Putin shows up.

7:55Scarlet Fu: Yeah, that is a big question because President Trump kind of extended an invitation to President Putin and said, you know, come join us and make this a trilateral. David, thank you so much for visiting us in studio. A pleasure to speak with you as always. David Malpass, former president of the World Bank Group and former undersecretary of the Treasury for International Affairs. Stay with us. More from Bloomberg surveillance coming up after this.

8:26Join me, Brad Rogoff, and my team at Barclays Research as we debate what's driving markets on the Flipside podcast. Find the Flipside wherever you get your podcasts.

8:56Scarlet Fu: research competitors, industry forecasts, and market signals. It can turn the findings into a strategic deck in your team's template that you can review before presenting to your leadership team. Growing a business is ambitious, and ChatGPT can help you do it with confidence. Get started at chatgpt.com.

9:19Scarlet Fu: You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10 a.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. Here's some amazing data points here. Year-to-date hyperscaler insurance represents 36 % of the aggregate CapEx forecast by the good folks at Goldman Investment Research. Penciling in 35 % of hyperscalers CapEx will be debt financed in 2027. Holy cow. Remember the days when these tech companies did not go to the debt markets? They had cash on the balance sheet. Tons of cash on the balance sheets.

9:56Yeah. Now they're coming. So they're coming to people like Amanda Lineham, chief credit strategist at Goldman Sachs. Amanda, can your market, how's your market digesting all this hyperscaler new issuance? Good morning. Thank you for having me. The credit market, especially in the investment grade part of the ecosystem is digesting the issuance, but we're seeing this kind of episodic spread widening, which is generally reflective that it's highly unusual in the credit market to have such jumbo deals happening in quick succession, all kind of correlated around the same theme, which is AI. Generally, when we see these jumbo financings in the IGE credit market, it's for M &A.

10:34It's kind of a one and done situation. And then the companies stay out of the market and really focus on deleveraging. So the manner and the scale and the concentration of this is a bit of a paradigm shift for the credit market. So our expectation is that, look, it's going to require a range of markets, structures and currencies to finance it, almost an all-hands-on-deck situation. And then we expect ongoing spread widening to allow this debt to clear at a higher discount.

11:00Scarlet Fu: Yeah. And it very much feels like this is the new normal, that we're not going to go back to the days that Paul was describing. Of course, I look at what happened with CoreWeave, and it was kind of the epicenter of investors' fears over excessive borrowing to fund this AI build-out. We got Cori's earnings report yesterday, and it was pretty bullish. How much does that calm things down in the credit market? I think it's important, and I will say I give a lot of credit to my equity colleague, Gabriella Borges, who upgraded the stock a bit ago when that sentiment was not in her favor. And the point that she made, Scarlett, which I think resonates with credit investors, is really what we should be focusing on here is how does the unlevered IRR, so that return, equate to and compare against a higher weighted average cost of capital?

11:42You know, speaking to the point on the higher cost of debt. And so long as that's accretive, that gives this this trend further momentum to run. I do think it was important in terms of sentiment. Our view on this has been that the while the IG market bond issuance activity, as you mentioned, Paul, has been robust in the past two weeks. The high yield market has still felt like it's in a bit of price discovery mode. So that may change after this in terms of the sentiment allowing some of these deals that may have been on the sidelines to come through. That is our expectation. You mentioned the high yield market.

12:16How is that market vis-a-vis the investment grade market here? A lot of folks have been talking about it for a long time, that the spreads are very, very tight. Maybe you're not getting compensated for that risk. How do you guys think about it? Objectively, looking at high yield spreads at 320, anything below 400, I consider absolutely on an absolute level tight. But it is actually, when you look at the ratio between high yield and IG, actually high yield is trading at a bit of a larger discount to what the current IG levels of, say, 88 basis points would suggest. You know, we call that decompression or underperformance of high yield.

12:52I would say, though, the bigger picture, Paul, is that the high yield market is just larger, more diverse, and higher quality than even pre-pandemic and certainly pre-financial crisis. The average bond deal in the high-yield market so far this year has been comfortably above a billion dollars. That's one bond deal that's not even a capital structure. So to think about the size of company that you would need to actually bring that to the market, these are scaled companies in large part.

13:16Scarlet Fu: I think that's really important, the fact that the composition of the high-yield market has changed so much from what we're accustomed to. You look at high-yield, and of course, the triple C area has been kind of problematic, and people worry that it's going to spread, spread to other parts of high yield and maybe at some point spread to investment grade. Why are those fears overblown? It's a great question. So I think the key point that I would say is that I do not view the triple C cohort as emblematic of kind of broader credit backdrops. In fact, triple C's have been widening since May. And I think the key point that kind of validates why that's been happening is if you looked at triple C's, they were barely at one times interest coverage in June, right?

14:00So they were they were point eight times interest coverage, meaning they didn't really have enough earnings to cover interest on an aggregate basis. Since then, rates have only sold off. And our expectation is that it will just be harder for them in a higher cost of capital environment to grow into those capital structures. Triple C's are 10 percent of the high yield market. In large part, if you look at most of these companies, something has happened to their business on an idiosyncratic basis that has allowed them to stay in triple C's. We've actually tracked a fair amount of firms that have graduated out of that category into single B territory.

14:30And that's also contributing to that valuation that you mentioned, Scarlett, because what's left behind is almost a bit of adverse selection. So I think it's the left tail, as we call it. You know, there are parts of different markets that have those laggards that just never quite grew into their capital structures. And I would put triple C's in that category.

14:46Scarlet Fu: All right, Amanda, thank you so much for joining us today. Really appreciate you're coming in. Amanda Lynam is Chief Credit Strategist at Goldman Sachs. Stay with us. More from Bloomberg Surveillance coming up after this.

15:06Scarlet Fu: You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10 a.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app, Or watch us live on YouTube. Scarlett, you know I watch Landman. Yeah, so you're an expert on all things oil. I'm an expert on oil and gas. And Texas, also. Texas, exactly. They love me down there. We actually do have an expert on energy, and his name is Ed Hears. He's the Energy Fellow at the University of Houston. Ed, you guys down there in Texas had quite the week last week with the elections. What is you what are the energy folks down there thinking about kind of the changes in the Texas political landscape?

15:48You know, I don't think it's really much of an issue for the folks in energy. This was all mainly about the social programs. Okay. The rural votes, the rural counties shifted big time to blue. They may still have been red, but there were millions of votes that came over to the blue side. the Republicans had pushed through a school voucher program calling it so-called school choice, where they were raiding the property taxes that were paid in for public schools and diverting those to private schools. This really hurt the local communities, which live for Friday night football, Friday night lights.

16:27Exactly. Mojos.

16:28Scarlet Fu: So to that end, does the change in political leadership, what effect does it have on the energy industry, on the E &P industry in Texas? Shouldn't have any change on the E &P industry. What we are seeing is an election of a Democrat who's an engineer, who's worked with Schlumberger for many years in his career, to the Railroad Commission. That's the regulatory body for oil and gas. Now, he'll be in the minority against a guy whose main qualification is a Grammy award-winning gospel singer.

17:05and one who's related to all of the West Texas independents who don't like to spend a penny on anything. There are tens of thousands of orphaned wells in Texas. Those need to be cleaned up. The Railroad Commission needs to respect the rights of landowners, the rights of mineral owners, and kind of push away from always bowing down to the operators. So, Ed, one of the big issues here for just the global markets is AI and the energy needed to support AI in these data centers here. What's your view of the electricity market and the grid here in the U.S.? I know Texas has its own grid. I mean, you guys, you know, you're independent there.

17:49But how do you think about that? Well, since 1938, Texas has had its own grid for the most part. It covers about 85 percent of Texans. And in essence, we have two operating models. One is ERCOT, the Electric Reliability Council of Texas. And it operates with an old-style Soviet Union linear programming model that minimizes the price or the cost, if you will, minute by minute. It really doesn't look ahead. We separated the generators from the consumers and did this 20-odd years ago. that the governor was a C-minus econ student at Yale at the time. And it's a market that rewards scarcity, not reliability.

18:35And so as the market gets really tight, the price goes way up. There's a huge, I mean, tens of billions of dollars have been funneled over to bonuses and stock buybacks versus building new power plants. So ERCOT has to rebuild. It has to build a new market following the horrible freeze in 21, the grid failure that killed 246, cost the state up to$200 billion in damages. Governor Abbott appointed an independent guy to run the Public Utility Commission. He said this market needs to be scrapped, but nobody liked his proposal. So they're still in the legislature wrestling with this. And now we face the new demand from data centers.

19:20The ones that are already in Texas have driven up the wholesale price of electricity for everyone. Governor Abbott did a full 180 in the face of bad polling numbers and decided to put a moratorium on the addition of new data centers. You know, I think what's going to happen in ERCOT and PJM, MISO, SVP, other grids, the data centers are going to have to bring their own power plants. And again, as we look at Texas, we've got ERCOT, and then we have these little pockets that don't work in the ERCOT market or not part of it. Intergy, which is on East Texas side, El Paso Electric, the municipals, Austin and the city of San Antonio, those residents pay more than 20 % less than the rest of us in ERCOT.

20:07So how come they get a better deal than those of us in a so-called deregulated market? Yeah.

20:13Scarlet Fu: So these are all questions and concerns that led to the change in power in Texas overall. It all added up that women's health, you know, the maternal death rates in Texas are worse than nations in Africa. So my question here, then, as you mentioned, the data centers will need their own power plants. How likely is that? I mean, how do we see that happening in the next year? in the next two years? It's going to be very difficult if they're using gas-fired power plants because there's now a three - to five-year lag time in lining up the new turbines. What some entrepreneurs are doing is they're stripping engines from the old jet aircraft out in the boneyard in Arizona and reconfiguring those.

21:03Solar is expanding dramatically and rapidly, and batteries are fabulous. So on ERCOT now, it's almost 40 gigawatts of solar farms, almost 40 gigawatts of wind farms, and 21 gigawatts of short-term battery storage. That's what's driving the growth in the Texas electricity market. Talk to us about refineries. Do we have a shortage of refining capacity out there in the marketplace? Well, globally we do, but not here in the U.S. You know, as they say in Texas with Blue Bell ice cream, we eat all we can and we sell the rest. You know, we're marketing about one and a half million barrels of diesel a day to the global market.

21:47Our consumption of crude oil, our domestic consumption of crude oil has been tailing off the last few years, about 2, 2.3 percent last year. And so globally, Europe has shut down many of its refineries. in Asia, they're not getting enough crude to run through their refineries. Iran has taken a number of refineries offline from its competitors. And of course, Russia's involved with this as well. In fact, some of the news reports yesterday said that MBS had asked Putin to stop supplying missiles to Iran because they were coming back in on the Saudis. And if you're going to play a big game here. Well, Putin really doesn't need further competition from OPEC members.

22:32And having somebody blow up somebody else is a good way to obtain market share. So I forgot to turn on the microphone there.

22:43Scarlet Fu: Very quickly, when it comes to oil prices, what's going to be the driver here? Because everyone's looking for some kind of resolution to the Iran war, of course, including the current administration. But a lot of things are out of its control. So how do you see this shaping up? Are Brent likely to stay at these prices of about the low 90s? Can WTI stay below 90 as people kind of struggle and bump their way towards some kind of resolution? Speaking for Billy Bob and Landman and all the Texans, no, please, no. This is a great time for the oil patch and a spectacular time for refiners. Once every 22 years, it's good to be a refiner.

23:28And with the blockade, with the conflicts, even if peace breaks out today and the street is reopened, the price of oil will drop significantly, but not below 70, 75. What we look to see is this continued constriction in the refined products market. You know, David, one of your earlier guests was talking about inflation numbers and how things in the commodity markets kind of have tipped over. You know, a recession will do that for you, too. And, you know, kind of afraid we're pointed that way. Stay with us. More from Bloomberg Surveillance coming up after this.

24:13Scarlet Fu: With Jatchy BT, you can do more than get answers. You can get things done. When you're running a business and looking to expand, you need a clear view of the landscape before making any decisions. ChatGPT can help you prepare. Connect your Google Drive, point to relevant files and reports, and ask chat to research competitors, industry forecasts, and market signals. It can turn the findings into a strategic deck in your team's template that you can review before presenting to your leadership team. Growing a business is ambitious, and ChatGPT can help you do it with confidence. Get started at ChachiPT.com.

24:50If you listen to financial news, you know a lot of time is spent thinking about what's next. The next opportunity. The next investment. The next move. But sometimes what matters most is being ready for what you never saw coming. A storm damages a second home. A pipe bursts above a collection you spent decades building. An unexpected loss puts a growing business on pause. Those are the days no one sees coming. But for more than 75 years, Cincinnati Insurance has been ready when they do. With deep expertise, coverage for businesses, homes, valuables, and more, Cincinnati Insurance works with independent agents who take the time to understand what matters to you.

25:30Together, they help protect more than what you own. They help protect what you're building toward. And when a bad day does come, Cincinnati Insurance has real people there to help make things right. Because planning for the future isn't only about knowing what's next, It's about making sure you're ready for what you can't predict. Let Cincinnati insurance make your bad day better. Find an independent agent at CINFIN.com.

25:59Scarlet Fu: You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10 a.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. We want to bring in now Gotham Mukunda. He is a lecturer at the Yale School of Management. He's also a Bloomberg opinion contributor. And we speak with him regularly because he's got very pointed perspectives on what we see out there. And Gotham, before we go anywhere, I want to get your thoughts, first of all, on the controversy around NVIDIA. We now have a situation where the company itself, the FBI, reportedly, according to President Trump, are now looking into Jensen Huang, the CEO's relationship with a woman who the government has identified as a Chinese spy.

26:47Scarlet Fu: Is this the beginning of the unraveling of the AI trade or is this much ado about nothing? So the unraveling of the AI trade is beyond anything I could speculate on, but it's certainly not much ado about nothing. And there are three different scandals that are kind of all tangled together here and we need to we need to deconstruct. So one, and the one which is definitely not, you know, sort of where NVIDIA is, the thing they're going to use as their defense, is American intelligence apparently had clear information that Jetson Huang was in a close relationship with an agent of Chinese intelligence and did not alert them.

27:22That is an extraordinary breach that is just inconceivable under any other administration. And it's, you know, and that should be, you know, Huang's defense and be like, hey, it's not my job to guard against Chinese intelligence. That's your job. Why aren't you doing it? Totally valid. Right. But the other two are much more serious. One is that it's clear that NVIDIA has used its sort of considerable lobbying power and its considerable influence with the Trump administration, including a twenty five million dollar donation to the Trump ballroom project to basically get the Trump administration to look the other way and not enforce export control laws.

27:58And that's, you know, that is a scandal that involves both NVIDIA and the Trump administration for agreeing to do that. And I note, for example, that the list of companies that are on the prohibited list that cannot receive exports, right, that that has to be constantly updated because, you know, shell companies are created to manage that and try and get around it. That has not been updated in more than a year by the Trump administration. They've just decided not to do it, right? So that's a huge, huge issue. The third one is that the scale of what we're seeing, of what the information that's now coming out that suggests that the amount of chips that we're getting out to China, where there are accusations that could be as much as 20 percent of all NVIDIA sales, suggests that this isn't just a thing of like, oh, one or two people were kind of making some sales to make their quota.

28:44It's almost inconceivable, if it's anything approaching that scale, that knowledge of that evasion was not pervasive throughout the company. And if that's true, you're talking about a major issue where, you know, maybe not this administration, but any future one, and certainly Democrats in Congress are going to be asking for a huge investigation for, you know, prosecutions, even jail time for the people involved. And at the least, everyone in NVIDIA is going to be lawyered up for the next God knows how long. So, you know, one of the issues here is, you know, the CEO himself. I mean, talk about key man risk or key person risk here.

29:21Jensen Wong, a lot of people kind of equate him with AI writ large, like he has to be there. I mean, is there risk for Mr. Wong here as it relates to his position in the company and the industry? So, I mean, there are definitely risks and much depends on what comes out. And, you know, there will be a lot of people who are sort of and you're already seeing, you know, major figures in Silicon Valley being like, oh, you know, no big deal. These things happen. It's just an affair. Let's let's let's all just, you know, brush it under the rug and keep moving forward. I don't think that's a plausible outcome for this because there's so much information has already come out that looks really, really bad that you can all be almost certain that more will.

30:07And every time there's a new revelation of more chips. And again, we could be talking about as much as 20 percent of NVIDIA total sales. Right. The threads will keep unraveling. And if I mean, if they get an email or a text message or anything from Hong saying, oh, you know, just ignore the export control laws, I've taken care of it, the administration will ignore us. That's when you start to get into a much more difficult situation.

30:34Scarlet Fu: I feel like NVIDIA was the prime target here. But do we presume that other companies, other executives at other companies may have been approached by alleged Chinese spies or may have been, you know, might be just as vulnerable to this kind of, you know, espionage? Given how important these chips are and how critical this is to the global economy and to everybody's economy, if you are an executive at a major company who wasn't approached by a Chinese spy, you should be deeply offended. um like i mean this is what happens it's a major swarming thing like like i i i lived in china in 2016 when i was doing when i was advising the u.s navy and before i went i got the briefing where they said look if the most beautiful person woman you've ever met in your entire life approaches you in a chinese bar don't think it's because you've suddenly become cool um yeah you know i was like i'm a little offended but you know okay um you were warned so so you know so of course i mean Seriously, like if you haven't been approached by a Chinese spy, you're doing something wrong in your career if you're in this industry at a senior level at this point.

31:39But it is not just the spying. The spying is part of the game. Spying happens. That's not the big deal. The big deal is if stuff is actually getting out. And I know there is no reason to believe that this is just restricted to NVIDIA. A year ago, the CEO of Broadcom was asked, are some of your things getting into China? And he laughed and then said, no comment. I think that answer speaks for itself. So, Gotham, we're going to have a summit between President Xi and Trump coming up, I believe, November 18th and 19th in China here. I can't imagine this isn't going to be front and center, although I'm hearing some reporting that maybe they're trying to keep it in the back burner.

32:23But how do you think that might play out? So I actually don't expect that this would be front and center. And, you know, in a normal administration, even at norm, it wouldn't be front and center because this is how the game is played. Like we spy on them. They spy on us. That is not that isn't that is just part of the expectation. And absent something really egregious, it's not going to disrupt these negotiations because everybody knows it's already happening. What's really the key is that, you know, what we're there had been a lot of speculation that the Chinese AI industry was sort of built on domestically domestic Chinese domestic trips.

32:58and was taking a new approach and not required, you know, American computation, these American computational sort of skills. So if what we're seeing turns out to be true, all of that was a smokescreen by Chinese intelligence to cover up their success at getting very, very high-end chips from NVIDIA and other companies. If that is true and the United States now actually decides to take export control seriously, that's going to have some pretty significant economic implications for the Chinese.

33:26Scarlet Fu: Just a quick note here. We got a red headline here on the Bloomberg Terminal. The Anthropic mega IPO is said to be multiple times oversubscribed. We're not sure exactly what number it is, or I'm still waiting for the actual details on this. But again, our reporting indicates that the mega IPO of Anthropic is said to be multiple times oversubscribed. When I did this for a living, we didn't get our orders until like the last day. They're still doing the roadshow right now. I know, but we didn't get our orders until the last day. Has something changed then? I don't know. I think this is just one of these crazy things that people want to say, hey, no, we're really interested.

34:00We'll take 10 % of this deal or something.

34:02Scarlet Fu: I guess this means that this IPO is going through without question because it's got them for a while. There may be question marks over whether it might be delayed because the sentiment was kind of crumbling and the AI trade was showing some cracks there. But how important is it for Anthropik to get to the valuation it wants? Or is it more important for it to get that first day pop? So, I mean, I think what's most important for them is more than the valuation, more than the pop. What's given the control that Anthropik's founders will have over the company where they are more immune to stockholder pressure than just about anyone else in the world.

34:36What is most important to them is getting enough cash reserve that they can have a cushion against the gigantic commitments for compute that they've made. Right. Like like you can. when you look at sort of their strategy over the last few years, they've essentially been doing rounds and just putting the money in the bank. They seem to be much more computationally efficient than everyone else. And this is a really interesting, I think, massively undercovered story with Anthropic, that it seems like what they've been doing is using their internal models, which they believe are better than everybody else's, not just to push the performance frontier forward, but to make themselves Pareto dominant at all levels of performance across cost, even when compared to the open models, which is not something that I think has really been covered properly.

35:20Scarlet Fu: Thank you so much for joining us today. Really appreciate the opportunity to get your thoughts. Gautam Mukunda is lecturer at Yale School of Management and Bloomberg Opinion Contributor. This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, 7 to 10 a.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.

36:13the ums, fixes the typos, and the result sounds like you wrote it, four times faster than typing. So the email that used to take two minutes now takes 30 seconds. Whisperflow is free. Download it at whisperflow.ai. That's W-I-S-P-R flow dot A-I. With ChatGPT, you can do more than get answers. You can get things done. Whether you're leading a big project, planning an elaborate trip, or trying to balance work and life, ChatGPT can help. Give it a goal, plus things like files, notes, or project plans, develop a trip itinerary with daily updates, or create a prioritized schedule, so you can spend less energy sorting out the details and more on bringing your biggest ideas to life.

36:54Get started at ChatGPT.com.