Anthropic's $1T IPO, Inflation Updates & Billions in Bitcoin Losses

18:02Robert Croak:Now, at the same time, the economic activity picture was actually encouraging. So the Beige Book described growth as modest overall, with employment as steady, and the AI investment boom providing a genuine tailwind to several districts. Manufacturing hit its highest level in four years. The ISM Manufacturing PMI came in at 54 for the month of May, highest since May of 2022, up from 52 in the month of April. That's five consecutive months of expansion. Services, They also came in beating expectations. The services PMI had its 23rd consecutive month in expansion territory. So the economy is moving up and to the right.

18:38Robert Croak:But unfortunately, as the Beige Book is telling us, so is inflation.

18:43Austin Hankwitz:So you have an economy that's growing, but the inflation problem is getting worse, not better. PCE is at 3.8%. CPI is at 3.8%. And both are running nearly double the Fed's 2 % target. And now the Beige Book is telling you the pass-through effects are broadening throughout the economy. This sets up Kevin Warsh's first FOMC meeting on June 16th and 17th as potentially the most consequential Fed decision since the rate height cycle began. The Fed funds rate has been at 3.5 % to 3.75 % for three consecutive meetings. The April vote was 8-4, the first time since October 1992 that four officials dissented.

19:26Austin Hankwitz:Bank of America has pushed its first rate cut forecast to July of 2027, and the bond market is pricing essentially zero cuts through year's end. So, Austin, this seems really scary to me. What does this mean for you and your money?

19:41Robert Croak:The Beige Book confirms what the data has been telling us for months now, which is the Federal Reserve is stuck. Growth is fine, right? ISM manufacturing is at this four-year high. Services are expanding. Jolt's job openings surging to 7.6 million in April. We just talked about that. But inflation is also accelerating. It's not decelerating. Warsh inherited the worst possible setup. So here's the thing to watch. It's what Robert and I are going to watch on June 16 and June 17. Does Warsh signal any willingness to hike rates or does he take a wait and see approach. His reform-oriented Federal Reserve language from the swearing-in ceremony suggests he wants to break from Powell's framework, but nobody knows in which direction.

20:32Robert Croak:And depending on what that May jobs report comes in at, the pressure for a hike could intensify. If it's weak, the case for staying put gets stronger, but either way, that 3.5 to 3.75 interest rate isn't going anywhere for a while. So make sure you own those quality names with real earnings. Now, here's the fun part, Robert. Despite all of this, the Russell 2000 is still up 17 % year to date. Isn't that interesting?

20:58Austin Hankwitz:Yeah, Austin, markets are all over the place. We've seen a lot of all-time highs happening, but we've also seen a lot of negativity. And we just have to really keep an eye on all of these reports because they're so important with the Fed of what's going to happen next? What's going to happen in Q3 and Q4 in these markets? So we will definitely keep an eye on this for everyone that follows along on the podcast.

21:20Robert Croak:Yeah, follow along on the podcast, share the podcast with your friends that care about the Federal Reserve and inflation and the jobs data and earnings and S1s and IPOs. That's what these Friday episodes are all about. They're all about the biggest headlines impacting you and your money and making sure that you understand what's going on and maybe what we're doing with our money to see how we're going to navigate some of these headlines. So Robert, every episode we have our radar points, which are essentially an opportunity for you to go get three of your favorite headlines that you think are really meaningful and fun.

21:52Robert Croak:I get three of mine and we come and we talk about it show and tell style. So I'll let you start us off here with your three radar points.

22:00Austin Hankwitz:Well, yeah, we talked about this on Rich Habits Network inside the live last week where I was talking about how people really need to pay attention to these headlines, not just to have knee-jerk reactions, but also to understand where the market sentiment is and where things are going. And we saw just the other day that Marvell surged 22.5 % to a record high after NVIDIA CEO Jensen Wong said the company is on path to$1 trillion, a bold call for a chip maker currently valued at only$234 billion. NVIDIA put$2 billion into Marvell earlier this year to tighten the integration between Marvell's custom chips and NVIDIA's networking gear.

22:43Austin Hankwitz:Marvell's forecasting its custom chip business alone will top$10 billion in revenue by fiscal 2029 as hyperscalers keep building out AI data centers. The stock added over$45 billion in market cap in a single session, and that is a sign that the AI infrastructure trade is spreading well beyond NVIDIA into the picks and shovels names, designing the interconnect technologies that link thousands of processors together. So keep an eye on it. You see Trump calling out stocks. You see NVIDIA, you know, Jensen Wong calling out things, and you just see all of this movement. So I think these trades are alive and well, but just keep an eye on them.

23:21Austin Hankwitz:My second call out, and I feel we were so right on this one, Austin, and you really, really nailed it earlier this year, months and months ago, and that is MicroStrategy's$11 billion in losses on their Bitcoin. Strategy, formerly MicroStrategy, is sitting on nearly$10.8 billion in unrealized losses on its Bitcoin treasury with a position down 25 % year-to-date after Bitcoin slid recently to around$62 ,600. The firm has$63.9 billion of invested capital against a current balance worth just$53 billion. And the stock is down 66 % over the past year as volatility hammers the entire crypto ecosystem.

24:07Austin Hankwitz:And my third point today is NVIDIA goes in on the AI-enabled PC market. This one really shocked me. I didn't see it coming. I didn't see any warnings. And NVIDIA just declared war on Intel, AMD, Qualcomm, and Apple in the PC market. At Computex on Monday, Jensen Wong unveiled the RTX Spark, a super chip that pairs with a 20-core ARM CPU custom-built with MediaTek on TSMC's 3-nanometer process with a 6 ,144-core Blackwell GPU and 128 gigabytes of unified memory, delivering desktop RTX 5070-level graphics performance in a laptop. That was really hard for me to read, but what it means is this is a much faster chip, and Wong called it the single most important tool of humanity.

25:04Austin Hankwitz:And here's the thing to watch out for. Microsoft is co-developing it to turn Windows into what they're calling an agentic AI OS, where AI agents run locally on your machine and not in a cloud. So this is huge news because NVIDIA is not just resting on their laurels to take over data centers, but they want to own the entire compute stack from cloud to your laptop and everything in between. And this really reshapes the$250 billion PC market the same way they reshape the AI infrastructure market.

25:38Robert Croak:That's really interesting. As someone who has OpenClaw and went out and got a, what is it, like a$600 Mac Mini to host my OpenClaw, I'm not running a local model on it because I just don't think it's strong enough. I mean, this is way stronger than what I've got here for$600. So it's really interesting to think that you could run a model locally on your laptop. And I think that's where a lot of this is going, because I think as more and more of these corporations are, especially Windows, right, but more and more of these corporations are starting to go and look and say, hey, wait a second. we want to use these AI agents for our own productivity and our processes and projects and things like that.

26:19Robert Croak:But I'm using an AI agent and I'm doing Anthropik, or if I'm using OpenAI's chat GPT, they can read and see every single thing that my company, my business is doing. I don't know if I want that compared to one of these local models. You can go download some of these local models or, I've never done it, so I don't know the technical term here, But I've heard you can literally just take a Kimmy K or whatever it is, or one of these local models and get it on your phone or your laptop or your computer, whatever's going on. And it's like having the whole large language model just right there on your machine itself, not doing this communication with Anthropic and subscribing to their$20 or whatever it might be or$200.

27:03Robert Croak:So it's really interesting that NVIDIA is enabling and creating these types of machines, these computers that hopefully will have their own models running on them, maybe even just straight out of the box.

27:15Austin Hankwitz:I love it because I think about guys like me and you and anyone else that owns companies and all of that, the efficiencies that it creates. And we hear a lot of people talking about the age of abundance as we move forward further into AI and agentic models and all of this robotics. So I think it's important for us to just stay on top of it because I know that my companies are already infinitely more efficient. You've built some really cool things within your stuff through Claude and all that. So I'm really excited about it. I was just shocked because I didn't even know this was a move for NVIDIA.

27:49Austin Hankwitz:So I probably shouldn't have been surprised, but I'm excited to see what comes out of this.

27:54Robert Croak:Yeah, and I'm still telling you, my dark horse for AI is Apple. I still think they're going to do or have or say something that just makes it all really fun and exciting. Now, Robert, before we jump to my radar points, which I'll be talking about the pattern day trading rule updates that we alluded to earlier. I'll be talking about Google's$80 billion equity offering and now the recently announced New York Stock Exchange partnership with Anthropic for that glass wing cybersecurity side of the equation. We got to hear from this episode's sponsor, Aura ETFs, and the U.S. defense ETF trading under the ticker DUTY.

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30:13Austin Hankwitz:And investing involves risk, principal loss is possible, and it's distributed by Foreside Fund Services, LLC.

30:20Robert Croak:All right, Robert, let's now jump to my three radar points. We'll never forget opening up my first brokerage account and buying AMD stock at$18 a share with it when I was in college. And that was on Robinhood. I didn't have that much money. And I was trying to figure it out. Right. And so I put this money on Robinhood. It was like 2016, 2017. It was a long time ago. And I got 100 bucks in here, buying a couple of shares of AMD. And I start buying and selling. I start buying and selling a little bit. And then I get this thing that flashes on my screen, Robert. it says, hey, no more buying and selling until you have$25 ,000 in your account because you're going to be flagged as a pattern day trader.

30:57Robert Croak:Well, my first radar point to call out here is after 25 years, the pattern day trading rule is officially dead. Starting today, you no longer need$25 ,000 in your account to make more than three day trades in a week. FINRA is completely scrapping the threshold entirely and replacing it with a real-time risk monitoring system by brokers instead of these arbitrary trade counts. Robinhood and Webull are live immediately. Schwab is going to switch on June 8. Interactive brokers and E-Trade are coming soon. It's a massive unlock for retail investors, especially those that are, you know, let's say, for example, oh, I'm really excited.

31:38Robert Croak:I'm going to buy this. Wait a second. Maybe I don't want to buy this. Let me just sell this real quick. Or they sell, you know, everyone mistakenly or like just it's so annoying because like sometimes like, wait, I want to buy this real quick and oh shoot maybe I don't want to get that I made the wrong decision or like oh I want to sell this and oh maybe I should buy it back this doesn't make sense like we're emotional creatures especially when you're first getting started and it's so cool to see that now this like restriction is gone because I vividly remember getting so frustrated about trying to like buy and sell or do something in the same day and Robinhood being like nope can't do that because laws and I'm like, dude, come on.

32:16Robert Croak:Now, margin rules, they still apply. You need$2 ,000 minimum and a 25 % maintenance so the guardrails aren't gone there. Just a little bit smarter for you. Let's now jump to my second story, Google's$80 billion equity offering. Robert, this one is nuts. Alphabet just raised$80 billion in the largest equity offering in tech history. Warren Buffett's Berkshire Hathaway anchored it with a$10 billion private placement, which is remarkable considering that Buffett avoids tech historically. But anyway, no longer running the company. So I guess it makes sense now. The deal included a$30 billion underwritten public offering that was oversubscribed and ultimately priced at$35 billion, bringing the total haul to that$80 to$85 billion range.

33:03Robert Croak:The money is going straight into AI infrastructure. Alphabet expects$180 to$190 billion of capital expenditures this year, six times what they spent in 2022 and two times double the size of what they spent last year. And the, I quote, overwhelming majority of that is going to technical infrastructure to meet their CEO and what they have called the AI demand being meaningfully exceeding available supply. So that's what's so interesting, Robert. We have a company like Alphabet generating$400 billion a year in annual revenue, and they still have to go and raise 80 billion just so they can meet the demand because they can't supply everything that they need.

33:47Robert Croak:I mean, you've seen the backlogs of Google Cloud. It's unbelievable. So Google is definitely treating this like a winner take all moment. And I think it's really interesting. I've seen some rumors online about people saying, well, Google coming in for an$80 billion offering is going to take some equity away from SpaceX, some equity away from Anthropic and OpenAI and kind of being a little bit competitive around that. So I think that's an interesting call out. And my last radar our point, but certainly not least, and shout out to Joe Benarok for sharing this with us, is the New York Stock Exchange partners with Anthropic to find cybersecurity vulnerabilities with that project Glasswing.

34:22Robert Croak:So Anthropic, the company behind Claude, just landed one of its biggest enterprise developments yet, the New York Stock Exchange. ICE, which operates the New York Stock Exchange plus clearinghouses, data services, and mortgage technology, announced that they're deploying Anthropics Cloud Mythos Preview across their entire cybersecurity infrastructure as part of Project Glasswing, a recent initiative to use AI to find and fix these cybersecurity vulnerabilities before they get exploited. This is massive news because ICE runs the most critical financial infrastructure on the planet, and choosing to go with Anthropic over Google or Microsoft or OpenAI for that job is a major credibility signal for Claude in these regulated industries.

35:11Robert Croak:Also highlights that a new AI monetization lane that doesn't maybe get enough attention. Not talking about chatbots or content generation or OpenClaw and the APIs, whatever, but autonomous cybersecurity for mission-critical systems where a single breach could disrupt global markets. Think about how much JP Morgan and Morgan Stanley and these other big financial institutions are going to say, Anthropic, let me give you a little bit of money. I want access to some of that cybersecurity stuff you got going on over there. So again, shout out to Joe Benarok for sharing that with us here, but really, really, really cool headline.

35:46Austin Hankwitz:Yeah, I think my biggest takeaway from your radar points today is the pattern day trading rule going away. I always thought it was just inefficient and wrong that they're going to tell someone that may want to trade or swing trade stocks or whatever, that they can't day trade unless they have$25 ,000. And that really is kind of a sign of the times by this going by the wayside, because there's so many retail investors. We talked about this in the Rich Habits Network the other night. I looked up a stat and it said since COVID, there had been 30 plus million new accounts opened up by retail investors in the last four or five years.

36:25Austin Hankwitz:And I think that's an important part of this, of why this had to happen. because there's a lot of people out there that want to get in the investing game but don't have$25 ,000. So I like that they've lowered the threshold. There's still going to be guardrails, but more and more people can get out there and learn and do trading if they want to without having to have the$25 ,000. That's my favorite takeaway from your radar points today.

36:50Robert Croak:I am a big believer in, yes, people should be investors and not day traders because day traders tend to lose money over a long period of time. we all get that i'm just a big believer in let someone do whatever the heck they want to do right so you want to day trade i'm not going to stop you and i don't think it's cool that the regulators want to stop you either so if you want to do your day trading more power to you i hope you learn to make a ton of money um but yes i vividly remember robert like being in college and be like oh yeah i'm gonna like buy this stock here then i'm gonna sell a little bit high oh it's green today i made seven dollars that's my lunch today i'm just gonna boo-boo bop no more boo-boo bopping.

37:25Robert Croak:I couldn't do it. Wouldn't let me. But now everyone can boo-boo bop down the street and go make their lunch money. I love it. Everyone, thanks so much for joining us on this week's episode of The Rich Habit Radar. If you learned something, please consider sharing this with a friend. We have these Friday episodes trying to do our best to get the biggest headlines, the most impactful news events, and sharing them with you every single Friday morning. So if your portfolio is up, down, left, right, and in circles, you know why and what's driving the markets on a weekly basis.

37:55Austin Hankwitz:And for all of you that are out there building that stock portfolio and want to learn more, make sure you check out wallstreetfavorites.com. It is incredible. We've added more tools. It is, in my opinion, and I'm a little biased, but we did build this. I think it's the best tool out there to help people figure out how their portfolio is going to perform, what stocks should be in their portfolio, and how to react to the markets as they stay right now. So make sure you check out wallstreetfavorites.com.

38:22Robert Croak:That's right. Wallstreetfavorites.com to see what Wall Street thinks about your portfolio. Price targets, buys, sells, hedge fund trading, all of that is on wallstreetfavorites.com. Go type in your portfolio to see what Wall Street thinks about it. Thanks, everyone, and we'll see you on Monday.

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