WEBVTT - Anthropic Commits $50 Billion to Build AI Data Centers in US 

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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<v Speaker 2>What a time to be covering tech like you and

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<v Speaker 2>Ed Buglow do Carolin. Every day there are major news

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<v Speaker 2>items from major companies and just amazing amounts of dollars.

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<v Speaker 2>Today again, Anthropic commit's fifty billion dollars to build AI

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<v Speaker 2>data centers in the US.

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<v Speaker 3>How do you put it in context?

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<v Speaker 4>I mean, we become a bit numb, and then you

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<v Speaker 4>look to some of the other whopping numbers, like the

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<v Speaker 4>six hundred billion dollars that Mark Zuckerberg has said he's

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<v Speaker 4>spending in capital expenditure an AI data center. You go, oh, actually,

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<v Speaker 4>fifty billion doesn't feel that much.

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<v Speaker 3>Yeah.

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<v Speaker 4>But interestingly, Anthropic what's interesting about this one is, look,

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<v Speaker 4>they've been reliant on investment from Strategics.

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<v Speaker 5>For their access to cloud.

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<v Speaker 4>Google massive investor in Anthropic, and with that comes access

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<v Speaker 4>to cloud and to compute, So too has aws. Amazon

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<v Speaker 4>and AWS has been a real provider of chips and

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<v Speaker 4>particularly remember really Anthropic has been a strategic partner to

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<v Speaker 4>these cloud companies because they've been helping them build out

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<v Speaker 4>their chip offering and they've been helping training models on

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<v Speaker 4>the future generation of those vertically integrated companies. But now

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<v Speaker 4>they're saying, look, we think the US needs to continue

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<v Speaker 4>to build out AI infrastructure. As you've heard from Sam Altman,

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<v Speaker 4>who's already saying he's going to be spending trillions on

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<v Speaker 4>data centers and all the capital expenditure that goes with it.

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<v Speaker 4>Then of course we have the likes of Mark Zuckerberg

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<v Speaker 4>all in on it as well. So it feels as

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<v Speaker 4>though Darah Amadey, who was out of open Ai, came

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<v Speaker 4>over and set up Anthropic to do it in a

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<v Speaker 4>more cautious, humanity friendly way. He's now saying, look, us two,

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<v Speaker 4>we need to put some infrastructure out here.

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<v Speaker 6>Okay, So open ai is the chat GPT as Nthropic

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<v Speaker 6>is to cloud.

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<v Speaker 5>That's a chat they use. How widely usedes this clud

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<v Speaker 5>show they.

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<v Speaker 4>Are really nailing the enterprise space. This is where they've

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<v Speaker 4>managed to lead, in particular when it comes to coding.

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<v Speaker 4>So yes, they don't have eight hundred million weekly users

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<v Speaker 4>in the same way that chat to gpet does. But

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<v Speaker 4>people love it in the enterprise, and that really has

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<v Speaker 4>been their winning formula. They've been really rather profitable, thus

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<v Speaker 4>far more profitable at least or seeing more revenue growth

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<v Speaker 4>than open ai has been seeing because open ai has

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<v Speaker 4>been all about the spending, all about the reinvestment, and

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<v Speaker 4>in many ways, Anthropical have been seen as some sort

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<v Speaker 4>of more asset like version of this. Now that's kind

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<v Speaker 4>of casting that off a little bit. But they just

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<v Speaker 4>raised thirteen billion dollars. They are valued one hundred and

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<v Speaker 4>eighty three billion dollars. That was back in September, and

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<v Speaker 4>they have three hundred thousand business customers. Yeah, so they

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<v Speaker 4>have been managing to show that that the business model works.

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<v Speaker 2>Is there any expectation, Caroline that these companies may come

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<v Speaker 2>public at some point down the line, because I just

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<v Speaker 2>think about the money they're spending, and I know a

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<v Speaker 2>lot of people want to throw money at them, but

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<v Speaker 2>maybe even the public markets.

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<v Speaker 3>So are they talking about that?

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<v Speaker 4>Well, Sam Almond has been saying like it's not. I

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<v Speaker 4>can't give you a date, but clearly they are on

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<v Speaker 4>a path in the next couple of years to going public.

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<v Speaker 4>And that is the idea was many of these businesses,

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<v Speaker 4>These founders feel that it's there. It's their duty. It's

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<v Speaker 4>a duty to be able to allow the everyday retail

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<v Speaker 4>investor as well as these very deep pocketed venture capitalists

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<v Speaker 4>to benefit from their businesses and be able to take

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<v Speaker 4>a chunk in within that. So we're seeing that these

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<v Speaker 4>companies are talking about going public. We've heard it slightly

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<v Speaker 4>less from the anthropics of this world, but I think

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<v Speaker 4>certainly there's going to be a push that these companies

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<v Speaker 4>can't remain private for ever and these boatloads of cash

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<v Speaker 4>that they need can't keep on coming from the same

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<v Speaker 4>group of investors.

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<v Speaker 6>My guess is when they do go public, you know,

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<v Speaker 6>the founders will have a huge swath of the voting

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<v Speaker 6>sharers and everyone else won't.

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<v Speaker 5>Kind of like the Metas of the world.

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<v Speaker 3>Yes, exactly.

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<v Speaker 2>And what's interesting is we mentioned Meta they access the

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<v Speaker 2>bond market just a couple of weeks ago to fund

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<v Speaker 2>a certainly vision.

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<v Speaker 3>Yeah, just incredible.

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<v Speaker 4>But remember some mortment doesn't actually own any system significant

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<v Speaker 4>equity and opening ah okay, so how they would structure

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<v Speaker 4>him to have voting shares is another thing. Entirely, they

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<v Speaker 4>of course, are owned by the overall charitable not for

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<v Speaker 4>profit is in in control and some ways, but and

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<v Speaker 4>has shut stock of Open AI. But I don't know

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<v Speaker 4>what the breakdown of shareholding is by the good contract

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<v Speaker 4>the founders of Panthropic.

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<v Speaker 6>I'm looking at the markets overall, Caroline and for a

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<v Speaker 6>second day, the Dow is outperforming the NAZAC one hundred.

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<v Speaker 5>I don't know how many times you can say that

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<v Speaker 5>over the past couple of years. But the NASAC under pressure.

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<v Speaker 6>And again it's this idea that you know, the AI

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<v Speaker 6>boom is now.

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<v Speaker 5>A little bit more in doubt.

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<v Speaker 6>There's a little bit more skepticism, and people are asking

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<v Speaker 6>questions about you know, is there a clear financial model

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<v Speaker 6>for profitable AI.

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<v Speaker 5>There's a lot of NonStop investment.

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<v Speaker 6>But then how do the people see returns in the

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<v Speaker 6>next year or two years as opposed to ten years

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<v Speaker 6>down the road.

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<v Speaker 5>How has that conversation unfolded in the tech sector.

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<v Speaker 4>It's unfolding by having either side of the equation come

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<v Speaker 4>on the Michael Bowries of this world saying, no one's

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<v Speaker 4>factoring in depreciation of chips. We think that this is

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<v Speaker 4>ultimately overvalued in a bubble. But then we're going to

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<v Speaker 4>have thread needle come on and really start to say, look,

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<v Speaker 4>the proof will be in the fundamentals, the proof will

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<v Speaker 4>be in the earnings. We've just had a cracking set

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<v Speaker 4>of numbers from most of the Magnificent seven. We're still

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<v Speaker 4>waiting on Nvidia AMD coming out once again showing that

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<v Speaker 4>the total addressable market for they're AI accelerators and were

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<v Speaker 4>broadly the chips is going to be one trillion dollars.

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<v Speaker 4>They're showing that they're going to guide for not just

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<v Speaker 4>two years, three years, but up to five years. They

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<v Speaker 4>think that they can be tuning to about thirty five

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<v Speaker 4>percent revenue increases every single year. And we're seeing Keeger

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<v Speaker 4>numbers coming in an the eighty percent field for an

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<v Speaker 4>AI accelerator, offering that MII is really selling well. So

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<v Speaker 4>I think that every time you question it, and yes,

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<v Speaker 4>you can look at the worry about the circular financing,

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<v Speaker 4>the anxiety that a lot of these companies that were

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<v Speaker 4>very asset light, think Matter used to be very asset light,

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<v Speaker 4>and to your point, now we're starting to see them

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<v Speaker 4>laden on debt. These things do fill people with some uncertainty,

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<v Speaker 4>but if really the revenue taps got turned on if

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<v Speaker 4>AMD can prove out that they're building a clear line

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<v Speaker 4>of sight on tens of billions of dollars of revenue,

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<v Speaker 4>people will give them the benefit of the doubt.

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<v Speaker 6>I think everyone's grown very customed to seeing the cash

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<v Speaker 6>and short term investments line for all these big tech

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<v Speaker 6>companies at like hundreds of billions of dollars, and that's

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<v Speaker 6>not going to be the case if they're going to

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<v Speaker 6>continue investing this much and spending this much.

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<v Speaker 1>Yeah.

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<v Speaker 2>Even and we saw MetaStock get go down pretty precipitously

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<v Speaker 2>today when when Mark Zuckerberg said they're going to step

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<v Speaker 2>up their capex, yeah, by that degree.

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<v Speaker 3>So that was interesting to see too.

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<v Speaker 5>A little bit of caution there.

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<v Speaker 2>Morgan Stanley out with report recently I just saw today

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<v Speaker 2>saying basically, boy, a lot of things have to break

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<v Speaker 2>right to generate returns on these investments, just writ large

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<v Speaker 2>on the industry.

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<v Speaker 3>A lot of things really got to break right now.

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<v Speaker 5>We don't know what's going to happen tomorrow with airplanes.

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<v Speaker 3>Exactly, you know, exactly, So getting to the airport.

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<v Speaker 4>Aucture and all the things that actually need to work

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<v Speaker 4>for us to be able to get the data centers

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<v Speaker 4>up and running.

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<v Speaker 3>Stay with us. More from Bloomberg Intelligence coming up after this.

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<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

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<v Speaker 1>weekdays at ten am Eastern on Apple, Cocklay and Android

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<v Speaker 1>Auto with the Bloomberg Business App. Listen on demand wherever

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<v Speaker 5>Circle Internet group.

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<v Speaker 6>It's the issuer of the second biggest stable coin, USDC,

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<v Speaker 6>and the shares are tumbling today, down about eight percent.

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<v Speaker 6>And this is on kind of what feels like a

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<v Speaker 6>pretty pedestrian reason. Concerned that lower interest rates will slow profits.

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<v Speaker 6>I mean, that's kind of unusual if you think, you

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<v Speaker 6>know cryptocurrency or crypto linked company with lower interest rates.

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<v Speaker 6>Let's bring in Emily Mason. She is a Bloomberg News

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<v Speaker 6>fintech and crypto reporter, as she joins us now, so

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<v Speaker 6>Emily just explained to us the dynamic here why lower

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<v Speaker 6>interest rates from the Federal Reserve would be a concern

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<v Speaker 6>for a company like Circle. Yeah.

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<v Speaker 7>So Circle issues USDC, and they that's a staple coin

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<v Speaker 7>peg to the US dollar, and they maintain that peg

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<v Speaker 7>by holding reserves in cash and short term treasuries.

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<v Speaker 5>They keep the yield.

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<v Speaker 7>From the treasuries and that's kind of how they make

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<v Speaker 7>money and that's where most of their revenue comes from.

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<v Speaker 7>So if interest rates go down, you know that shows

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<v Speaker 7>up in earnings and that causes some concern for investors

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<v Speaker 7>and analysts.

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<v Speaker 3>So what have their recent results been.

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<v Speaker 7>Like, I mean, this is their second time reporting since

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<v Speaker 7>going public. They benefited heavily from all the hype around

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<v Speaker 7>stable coin, especially before the Genius Act was passed, and

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<v Speaker 7>their stock performed really well.

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<v Speaker 5>It's kind of.

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<v Speaker 7>Been down since their summer highs, and that's kind of

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<v Speaker 7>because of the concern from the interest revenue, but also

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<v Speaker 7>because of some of the distribution partners that they have

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<v Speaker 7>they pay. They have revenue sharing agreements with coinbase, for example,

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<v Speaker 7>who helps distribute their coin.

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<v Speaker 6>So if this company for now is kind of a

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<v Speaker 6>proxy for a money market fund because it's earning's track

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<v Speaker 6>short term treasury yields, it must need to do more

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<v Speaker 6>to diversify its revenue streams.

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<v Speaker 5>What is it looking at? Yeah, that's what they're doing.

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<v Speaker 7>And then if you talk to Jeremy A. Lair who's

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<v Speaker 7>the CEO, he'll kind of say that lower interest rates

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<v Speaker 7>are actually good for the company because it means that

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<v Speaker 7>there's higher velocity of money, there's more investment, and then

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<v Speaker 7>people want faster move money like stable coins, and they

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<v Speaker 7>also might want to use products like their Circle Payments network,

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<v Speaker 7>which recently is experimenting with like a stable coin payouts

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<v Speaker 7>product which like helps people can helps people to pay

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<v Speaker 7>out globally with USDC, and they're trying to move more

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<v Speaker 7>USDC volume onto their own platform instead of working with

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<v Speaker 7>distribution partners like Coinbase, and that kind of could help

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<v Speaker 7>them as well. But they see the lower interest rates

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<v Speaker 7>as a positive thing. And also the USD circulating supply

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<v Speaker 7>is increasing very heavily as they add new partners, so

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<v Speaker 7>that also kind of could potentially offset the lower interest rates.

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<v Speaker 2>Emily, your beat is fintech and crypto reporter, two things

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<v Speaker 2>that didn't exist even just a handfull of years ago.

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<v Speaker 2>Talk to us about broadly the kind of the intersection

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<v Speaker 2>of the growing crypto market and applications like fintech.

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<v Speaker 7>Yeah, I mean, I think what's kind of the most

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<v Speaker 7>interesting right now is like fintech when it came onto

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<v Speaker 7>the scene was sort of like building very interfaces on

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<v Speaker 7>top of his existing financial infrastructure, and then crypto's pitch

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<v Speaker 7>is much more sort of like rebuilding the financial infrastructure

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<v Speaker 7>with things like blockchains, and now the conversation is kind

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<v Speaker 7>of about bringing the traditional world and the traditional financial

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<v Speaker 7>institute infrastructure together with crypto rails and Circles really kind

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<v Speaker 7>of sitting at the center of that and trying to

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<v Speaker 7>bring stave a coin and like integrate that with how

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<v Speaker 7>traditional markets work, and that's involves a coming together on

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<v Speaker 7>both sides, Like traditional firms kind of have to upgrade

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<v Speaker 7>and make their systems interoperable with cryptotechnology, and then crypto

0:10:37.480 --> 0:10:40.559
<v Speaker 7>firms also have to kind of move into a regulated environment.

0:10:40.600 --> 0:10:42.560
<v Speaker 7>And that's been something that Jeremy Alair has talked about

0:10:42.559 --> 0:10:44.200
<v Speaker 7>for a long time, like he really thinks that crypto

0:10:44.280 --> 0:10:46.719
<v Speaker 7>needs to be regulated and Circle that's been a big

0:10:46.720 --> 0:10:48.400
<v Speaker 7>part of their narrative is like we are kind of

0:10:48.440 --> 0:10:50.000
<v Speaker 7>like the suits in the room, and we're going to

0:10:50.000 --> 0:10:52.160
<v Speaker 7>be regulated and that's how we're going to go about

0:10:52.160 --> 0:10:52.840
<v Speaker 7>doing business.

0:10:53.120 --> 0:10:55.920
<v Speaker 5>You're kind of the most tradfy of the DeFi world.

0:10:56.040 --> 0:10:59.240
<v Speaker 6>In other words, if we want to get technical, this

0:10:59.280 --> 0:11:01.320
<v Speaker 6>is going to be a dumb question, Emily, but we've

0:11:01.360 --> 0:11:03.840
<v Speaker 6>seen how Bigcoin and the rest of the cryptocurrencies had

0:11:03.840 --> 0:11:07.600
<v Speaker 6>a pretty rough October. They're struggling to regain momentum. All

0:11:07.640 --> 0:11:09.880
<v Speaker 6>these digital coins are not the same as stable coins.

0:11:09.880 --> 0:11:14.839
<v Speaker 6>But is that shift in sentiment and conviction on bigcoin

0:11:15.000 --> 0:11:18.160
<v Speaker 6>and all coins, especially from institutions, affecting demand it off

0:11:18.160 --> 0:11:20.880
<v Speaker 6>for stable coins or are those two just not linked.

0:11:22.440 --> 0:11:23.439
<v Speaker 5>I mean stable coin.

0:11:23.280 --> 0:11:25.240
<v Speaker 7>Has used a lot of the times, like anytime there's

0:11:25.280 --> 0:11:27.520
<v Speaker 7>a lot of trading happening in crypto like and in

0:11:27.559 --> 0:11:30.520
<v Speaker 7>crypto tokens like stable coins kind of benefit because they're

0:11:30.679 --> 0:11:32.760
<v Speaker 7>used to like move in and out of those markets.

0:11:34.320 --> 0:11:36.360
<v Speaker 7>The stable coin the whole point is that it's like

0:11:36.400 --> 0:11:38.679
<v Speaker 7>a stable currency. It's peged to the dollar, it's one

0:11:38.679 --> 0:11:41.720
<v Speaker 7>for one, so the price of it really shouldn't be

0:11:41.720 --> 0:11:43.800
<v Speaker 7>impacted at all by like crypto market movements.

0:11:44.280 --> 0:11:47.880
<v Speaker 6>But does it does demand affect it or does sorry

0:11:47.960 --> 0:11:51.559
<v Speaker 6>does the spillover involve like demand waning for sable corn

0:11:51.679 --> 0:11:52.720
<v Speaker 6>or increasing for stable coin.

0:11:54.000 --> 0:11:56.280
<v Speaker 7>I think where like the demand growth for stable coin

0:11:56.360 --> 0:11:58.679
<v Speaker 7>is going to come from is like it moving out

0:11:58.720 --> 0:12:01.160
<v Speaker 7>of a tool for just for crypto trading. It's going

0:12:01.240 --> 0:12:03.760
<v Speaker 7>to be like people in countries where the local currency

0:12:03.800 --> 0:12:06.240
<v Speaker 7>is volatile wanting to hold stable coin, or people wanting

0:12:06.280 --> 0:12:09.240
<v Speaker 7>to actually use it for payments or like stable cooin payouts.

0:12:09.240 --> 0:12:11.840
<v Speaker 7>Like if you're a US based company and you're employing

0:12:11.840 --> 0:12:13.920
<v Speaker 7>a bunch of people around the world who want to

0:12:13.920 --> 0:12:16.760
<v Speaker 7>hold a stable currency like the dollar, the stablecoin is

0:12:16.760 --> 0:12:18.319
<v Speaker 7>the best way to access it, then you can pay

0:12:18.360 --> 0:12:22.320
<v Speaker 7>them that way. Like that's where growth from. That's where

0:12:22.320 --> 0:12:24.400
<v Speaker 7>demand for stable coin is going to come from. I

0:12:24.400 --> 0:12:27.480
<v Speaker 7>don't think it's like super tied to the trading necessarily,

0:12:27.640 --> 0:12:29.880
<v Speaker 7>Like people use stablecoin to get in and out of

0:12:29.880 --> 0:12:32.640
<v Speaker 7>crypto markets, so you know, they might see more volume

0:12:32.679 --> 0:12:37.559
<v Speaker 7>of trading activity is high, but their journeys are kind

0:12:37.559 --> 0:12:39.200
<v Speaker 7>of becoming less linked.

0:12:40.200 --> 0:12:43.280
<v Speaker 3>Stay with us or from Bloomberg Intelligence coming up after this.

0:12:47.240 --> 0:12:50.920
<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us Live

0:12:51.000 --> 0:12:54.400
<v Speaker 1>weekdays at ten am Eastern on Applecarclay, and Android Auto

0:12:54.480 --> 0:12:57.560
<v Speaker 1>with the Bloomberg Business app. Listen on demand wherever you

0:12:57.600 --> 0:12:59.800
<v Speaker 1>get your podcasts, or watch us live.

0:13:00.000 --> 0:13:03.120
<v Speaker 3>I metube all right, whether we like it or not.

0:13:03.200 --> 0:13:05.720
<v Speaker 3>The holidays are up, Honest, scarlet Ful and Paul.

0:13:05.520 --> 0:13:07.520
<v Speaker 2>Sweeney live here in our Bloomberg and Director Broker Studio,

0:13:07.600 --> 0:13:09.680
<v Speaker 2>streaming live on YouTube and with the Holidays of honas

0:13:09.679 --> 0:13:13.440
<v Speaker 2>that means shopping and for retailers. It is obviously the

0:13:13.480 --> 0:13:16.160
<v Speaker 2>most important time of the year kind of right now

0:13:16.200 --> 0:13:17.839
<v Speaker 2>through a year end, so we want to get a

0:13:17.880 --> 0:13:20.559
<v Speaker 2>sense of how that's shaping up for the retailers out there.

0:13:20.559 --> 0:13:23.440
<v Speaker 2>Mary Ross Gilbert, senior equity analyt. She covers the retail

0:13:23.440 --> 0:13:28.200
<v Speaker 2>space for Bloomberg Intelligence. She's based in our Los Angeles office. Mary,

0:13:28.240 --> 0:13:29.840
<v Speaker 2>thanks so much for joining us here. We're, you know,

0:13:29.880 --> 0:13:32.080
<v Speaker 2>kind of right into November, getting into the thick of

0:13:32.120 --> 0:13:32.520
<v Speaker 2>it here.

0:13:32.920 --> 0:13:35.679
<v Speaker 3>How's the holiday shopping season shaping up? What are your

0:13:35.679 --> 0:13:36.280
<v Speaker 3>companies saying?

0:13:38.240 --> 0:13:38.920
<v Speaker 7>Thank you, Paul.

0:13:39.160 --> 0:13:42.880
<v Speaker 8>So, if you look at how the holiday shopping is

0:13:42.880 --> 0:13:45.680
<v Speaker 8>is shaping up, I think it looks I think it

0:13:45.720 --> 0:13:48.720
<v Speaker 8>looks very positive. So I think we are going to

0:13:48.720 --> 0:13:52.720
<v Speaker 8>see an increase and particularly for apparel retailers, that's usually

0:13:52.800 --> 0:13:55.679
<v Speaker 8>like the largest category that consumers. If you look at

0:13:55.679 --> 0:13:58.120
<v Speaker 8>those that have been pulled by all the holiday service

0:13:58.880 --> 0:14:02.320
<v Speaker 8>surveys that have been conducted, including the National Retail Federation,

0:14:02.760 --> 0:14:07.320
<v Speaker 8>and they have over eight hundred over eight eighty two

0:14:07.600 --> 0:14:10.920
<v Speaker 8>hundred respondents in their surveys, and the other ones are

0:14:11.280 --> 0:14:15.960
<v Speaker 8>pretty sizable, you know, relatively speaking, around five thousand. So

0:14:16.080 --> 0:14:20.400
<v Speaker 8>they're showing that there's definitely a higher percentage of shoppers

0:14:20.520 --> 0:14:23.520
<v Speaker 8>wanting at peril and accessories for gifts, So that should

0:14:23.560 --> 0:14:27.720
<v Speaker 8>be good news for apparel. But gen Z is planning

0:14:27.800 --> 0:14:32.200
<v Speaker 8>to cut back on their overall holidays spending by that,

0:14:32.960 --> 0:14:36.760
<v Speaker 8>you know, by twenty three percent. Millennials just one percent.

0:14:37.240 --> 0:14:40.520
<v Speaker 2>Wow, So the gen Z these are the younger folks,

0:14:41.240 --> 0:14:45.560
<v Speaker 2>maybe tougher time finding a job. Maybe, you know, student

0:14:45.640 --> 0:14:47.040
<v Speaker 2>debt is that kind of the driver there.

0:14:48.760 --> 0:14:51.280
<v Speaker 8>Yeah, I think I think that could be part of it. Yeah,

0:14:51.400 --> 0:14:54.960
<v Speaker 8>it could be the job market situation that might be

0:14:55.000 --> 0:14:57.800
<v Speaker 8>happening there because these are really like the seventeen to

0:14:57.840 --> 0:15:00.960
<v Speaker 8>twenty eight year olds. So we I've been hearing some

0:15:01.760 --> 0:15:06.240
<v Speaker 8>you know, talk about some of these latest graduates, you know,

0:15:06.360 --> 0:15:08.640
<v Speaker 8>having a difficulty finding a job. I think it's just

0:15:08.640 --> 0:15:12.200
<v Speaker 8>probably going to take longer because generally unemployment is still

0:15:12.360 --> 0:15:15.160
<v Speaker 8>very low and soon we'll be getting you know, more

0:15:15.240 --> 0:15:18.600
<v Speaker 8>data on that. But we're seeing resilience if you look

0:15:18.640 --> 0:15:22.160
<v Speaker 8>at the data so far with Bloomberg second measure for

0:15:22.360 --> 0:15:26.720
<v Speaker 8>apparel retailers and department stores and off price, we're seeing

0:15:26.760 --> 0:15:29.720
<v Speaker 8>good sales coming in for the third quarter, and they'll

0:15:29.720 --> 0:15:33.080
<v Speaker 8>start reporting their numbers in the next few weeks. So

0:15:33.240 --> 0:15:35.240
<v Speaker 8>I think we're off to a good start, and I

0:15:35.240 --> 0:15:39.040
<v Speaker 8>think Black Friday sales are already happening. Macy's is out

0:15:39.080 --> 0:15:42.520
<v Speaker 8>today with fifty percent off on their private label brand

0:15:42.560 --> 0:15:46.400
<v Speaker 8>product and they expect to have other drops every week. Wow,

0:15:46.560 --> 0:15:51.720
<v Speaker 8>So everyone's focused on starting now yep with promotions.

0:15:52.040 --> 0:15:55.600
<v Speaker 2>So Mary, you know, economists talk about a K shaped

0:15:55.600 --> 0:15:58.640
<v Speaker 2>economy out there, some consumers, maybe the ones that own

0:15:58.880 --> 0:16:02.280
<v Speaker 2>assets like stocks and bonds in real estate, doing more

0:16:02.320 --> 0:16:06.200
<v Speaker 2>than good and kind of everybody else struggling a little bit,

0:16:06.240 --> 0:16:07.200
<v Speaker 2>particularly with inflation.

0:16:07.880 --> 0:16:10.120
<v Speaker 3>How does that get reflected in retail sales?

0:16:10.160 --> 0:16:12.920
<v Speaker 2>Does it mean you just kind of if you're an investor,

0:16:12.960 --> 0:16:15.520
<v Speaker 2>look at on Amazon Target where I can get some

0:16:15.520 --> 0:16:16.280
<v Speaker 2>some some deals.

0:16:18.320 --> 0:16:21.080
<v Speaker 8>Yeah, and that's actually what's happening, and that's why you see,

0:16:21.760 --> 0:16:26.560
<v Speaker 8>let's say, pretty robust sales overall coming out of off price.

0:16:26.720 --> 0:16:30.440
<v Speaker 8>You know, so think of TJ Max, Ross Stores and

0:16:30.520 --> 0:16:33.560
<v Speaker 8>Burlington stores, and Burlington's at the very low end if

0:16:33.600 --> 0:16:37.680
<v Speaker 8>you look at credit card delinquencies or you know, those rates,

0:16:38.080 --> 0:16:41.080
<v Speaker 8>and a lot of these companies that we're tracking represent

0:16:41.120 --> 0:16:44.720
<v Speaker 8>the credit cardholders for like department stores and for some

0:16:44.880 --> 0:16:48.920
<v Speaker 8>select apparel brands such as gap, et cetera. And when

0:16:48.960 --> 0:16:52.520
<v Speaker 8>you look at that data, delinquencies are actually lower this

0:16:52.600 --> 0:16:56.840
<v Speaker 8>year versus a year ago, but not for the very

0:16:56.880 --> 0:16:59.640
<v Speaker 8>low income, which kind of speaks to what you're talking

0:16:59.640 --> 0:17:04.640
<v Speaker 8>about and inflation. Actually, those are up in the teams,

0:17:05.040 --> 0:17:08.080
<v Speaker 8>you know, for the very low income consumer, So think

0:17:08.200 --> 0:17:09.400
<v Speaker 8>like under fifty.

0:17:09.119 --> 0:17:10.320
<v Speaker 3>K yep, yep.

0:17:10.680 --> 0:17:14.120
<v Speaker 2>How about e commerce, Mary, I know the pandemic folks

0:17:14.200 --> 0:17:16.600
<v Speaker 2>are saying, kind of pulled forward maybe four or five

0:17:16.680 --> 0:17:20.520
<v Speaker 2>years of share shift from bricks and mortar to a

0:17:20.640 --> 0:17:24.240
<v Speaker 2>digital what's the e commerce growth story look like these days?

0:17:25.280 --> 0:17:28.119
<v Speaker 8>You know, e com growth is looking strong when we

0:17:28.119 --> 0:17:30.280
<v Speaker 8>look at the data, like I said, for the third

0:17:30.359 --> 0:17:34.240
<v Speaker 8>quarter that we're seeing from Bloomberg second measure, it's showing

0:17:34.280 --> 0:17:39.119
<v Speaker 8>actually online sales were stronger at the department stores except

0:17:39.160 --> 0:17:43.719
<v Speaker 8>for Coals Coals online businesses, I mean not their online business,

0:17:43.720 --> 0:17:48.840
<v Speaker 8>but actually their credit customer is shopping less, like in

0:17:48.880 --> 0:17:51.080
<v Speaker 8>the double digits less, so that's kind of an issue

0:17:51.080 --> 0:17:54.960
<v Speaker 8>for them. But generally we're seeing stronger pool with online

0:17:55.000 --> 0:17:59.679
<v Speaker 8>sales there. Now. There is also a delineation between the

0:17:59.720 --> 0:18:03.679
<v Speaker 8>type of consumer. If it's gen Z, they tend to

0:18:03.720 --> 0:18:07.439
<v Speaker 8>prefer shopping more in store and we see that with

0:18:07.920 --> 0:18:12.439
<v Speaker 8>Abercrombie and Fitch's Hollister brand, so they are about seventy

0:18:12.480 --> 0:18:15.640
<v Speaker 8>percent of their sales are generated online. And then it's

0:18:15.760 --> 0:18:20.400
<v Speaker 8>the inverse when you look at their namesake brand, Abercromby,

0:18:20.760 --> 0:18:25.480
<v Speaker 8>because that consumer is those are millennials, and millennials prefer

0:18:25.560 --> 0:18:28.800
<v Speaker 8>to shop online, so sixty percent of their sales are

0:18:28.840 --> 0:18:31.199
<v Speaker 8>being generated online versus in store.

0:18:32.720 --> 0:18:37.399
<v Speaker 1>This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,

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