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Speaker 2: All right, let's switch gears to technology.
Speaker 3: Always, always, always a lot of technology news out there,
Speaker 3: and it's news with really big numbers too, I mean,
Speaker 3: and today's no different. Anthropic has received offers from investors
Speaker 3: for new round of funding that could value the company
Speaker 3: at about eight hundred billion dollars or hire just they
Speaker 3: just the numbers, keep it.
Speaker 2: And this is a private company, yes.
Speaker 3: Yes, And if I'm you know, putting my IPO banker
Speaker 3: hat back on from back in the day, I'd be
Speaker 3: knocking on these doors so hard, saying let's rip this
Speaker 3: thing into public market.
Speaker 4: But we'll see.
Speaker 3: Mandy've Sing joins US global tech research lead for Bloomberg Intelligence.
Speaker 3: He's over in London right now, cracking heads over there,
Speaker 3: a bloom Intelligence over there, whipping them into shape, as
Speaker 3: well as seeing a bunch of clients. See I can
Speaker 3: look at his calendar, I see actually doing a lot
Speaker 3: of real business over there too, so we appreciate that
Speaker 3: generating some revenue hopefully. Man, do you talk to us
Speaker 3: about Anthropic here any surprise here, Well.
Speaker 5: I mean we knew when they released that thirty billion
Speaker 5: ARUR number that you know, the growth rate is phenomenal.
Speaker 5: It's been accelerating driven by the use of their product
Speaker 5: as a coding agent, and they seem to have leaf
Speaker 5: frogged open AI and the other frontier llms when it
Speaker 5: comes to coding agents specifically. So right now everyone is
Speaker 5: lining up to be part of their next funding round.
Speaker 5: And since open aie was valued at eight hundred and
Speaker 5: fifty billion dollars, given you know, Entropic has surpassed open
Speaker 5: ais arar, I'm not surprised that we are talking about
Speaker 5: eight hundred billion dollar range for Entropic in the next
Speaker 5: funding round.
Speaker 6: So the numbers that Paul was mentioning where a new
Speaker 6: funding round that could valuate at eight hundred billion dollars.
Speaker 6: It sounds like Anthropic doesn't actually need the money right now,
Speaker 6: so our investors just throwing money at the company and
Speaker 6: the company saying.
Speaker 2: Nah, no thanks, we're pretty good. We just raised thirty
Speaker 2: billion in February I.
Speaker 5: Would say these companies do need a lot of money
Speaker 5: simply because you know, they keep saying they are compute constrained,
Speaker 5: and look at you know what open ai has been
Speaker 5: doing with regards to you know, all the deals that
Speaker 5: they have signed to get the compute. And look, in
Speaker 5: the case of Hyperscalers, at least they have the free
Speaker 5: cash flow to pay for you know, the capex. In
Speaker 5: the case of Anthropic and open Ai, they don't have
Speaker 5: any free cash flow like the hyperscalers, so they actually
Speaker 5: need the money to pay for all the compute and
Speaker 5: AI infrastructure. And that's where you know, it's great that
Speaker 5: open ai was able to raise one hundred and twenty
Speaker 5: billion before Anthropic surpassed them in terms of err. I
Speaker 5: bet you they'll have a harder time now than they
Speaker 5: had a couple of months back. And right now it's
Speaker 5: Nthropics moment. So the more money they raise, the more
Speaker 5: compute they can lock in. And it is actually good
Speaker 5: that they have the compute to really spend on acquiring
Speaker 5: all the users and make sure they become a sticky product.
Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 6: Let's talk about Ramatz because LVMH came out in the
Speaker 6: Reselt yesterday and they seemed kind of encouraging. We thought, Okay,
Speaker 6: the luxury consumer doing well overall, Urmaz maybe not so much.
Speaker 6: Andrea Felsted is our Bloomberg opinion columnist joining us London. Andrea,
Speaker 6: what happened here with Ramez.
Speaker 4: Well, there's been a few worries about Hermez for the
Speaker 4: last sort of few months because there's been this reset
Speaker 4: in the luxury sector where a lot of brands have
Speaker 4: got new creative directors. So it was a bit of
Speaker 4: worry that harmez Witch is very much sticking with its designers.
Speaker 4: We have got a new designer coming, but it's very
Speaker 4: much sticking with it's creative. You know, setup is going
Speaker 4: to get left behind. And what's really focused people's minds
Speaker 4: is Chanelle. There's been this Chanell mania and Chanell was
Speaker 4: one of the brands that was most criticized for raising prices.
Speaker 4: But they've got this new designer, Matthew Blasi. Everyone loves
Speaker 4: his clothes, everyone loves his bags. There have been frenzies
Speaker 4: at Chanel stores, and the worry is that some people
Speaker 4: who would have bought her Mez bag will switch to
Speaker 4: Chanelle in steady. Had that going on anyway, then what's
Speaker 4: happened to day is you've got got that backdrop today
Speaker 4: Hemez has shown that it's not the resilient story that
Speaker 4: everyone expected. Homes has outperformed. There are long weight lists
Speaker 4: for its bags, so when times are tough, it can
Speaker 4: just work its way through the weight list. If someone said, oh,
Speaker 4: you know, I can't afford to borking right now, there'll
Speaker 4: be someone else on the list who can been really resilient.
Speaker 4: But what's happened is is it's been really hurt by
Speaker 4: the Middle East, and not just the Middle East, by tourists.
Speaker 4: And the big revelation was that they said they got
Speaker 4: more than fifty percent of their sales in France from tourists,
Speaker 4: and that was a surprise because the market had always
Speaker 4: thought it was the local customers that were keeping them going,
Speaker 4: and that they have such a big tourist exposed. All
Speaker 4: this is adding up to show that Hermes is not untouchable,
Speaker 4: and that's why the shares have rerated. The shares have
Speaker 4: rerated already. That they're on about thirty six that they're
Speaker 4: thirty three times thirty four times times the next twelve
Speaker 4: months earnings. That sounds like a lot, but its five
Speaker 4: year average is forty eight times. So you can just
Speaker 4: see how much it's been public. And I think there
Speaker 4: were probably some hopes that you know, it would reassure
Speaker 4: today and the shows were gone up. That's not happened.
Speaker 3: I think one of the harder jobs in Global Wall
Speaker 3: Street is to be a luxury analyst, because not only
Speaker 3: do you have to have the numbers right and the
Speaker 3: multiples right in your earnings models, but you have to
Speaker 3: have a call on fashion, which is fickle to say
Speaker 3: the least. Here is it exactly if you'remez, do you
Speaker 3: just bring in some new blood?
Speaker 2: Here is that in terms of well they.
Speaker 4: Are doing that. They've got a lady called Grace Wale's
Speaker 4: Bonner who's a very well respected men's were designed a
Speaker 4: big surprise. She's going to be the creative director of men'swear.
Speaker 4: She's been very influential. Her collaborations with added US helped
Speaker 4: to spark the you know, the big jump in demand,
Speaker 4: but Added US traders, particularly those sambas, but they were
Speaker 4: everywhere a couple of years ago. She's very powerful, she's
Speaker 4: very well respected. She could although it's men's where she
Speaker 4: could bring a bit of a bit more of a
Speaker 4: you know, a bit more pizzazz back. They're also doing
Speaker 4: Hope couture. But the question this morning on the analyst
Speaker 4: call was are you going to reduce capacity? There are
Speaker 4: certain bags, the Kelly, the Burkin, and also the Constants
Speaker 4: which quite hard to get. You have to put your
Speaker 4: name on a list. Her miss is gradually ramping up production.
Speaker 2: Now.
Speaker 4: Ferrari also had these problems, and it's kind of dial
Speaker 4: back its production of like the bog standard model. If
Speaker 4: you can get a bog standard Ferrari like a you know,
Speaker 4: a run of the real Ferrari, and it's doing these
Speaker 4: very special editions. So could hermis do that? Could it,
Speaker 4: you know, limit some of its bags and even go
Speaker 4: more up market and do like super rare burk In
Speaker 4: super break Kelly's, or even a new bag altogether that
Speaker 4: could compete with which you now so great news, you know,
Speaker 4: potentially for for resale values that have been coming down.
Speaker 4: Very bad news. If you've got your name down for
Speaker 4: one of these bags, it could be you know, if
Speaker 4: they change the model, it could be getting even harder.
Speaker 4: They'll find one.
Speaker 1: Stay with us.
Speaker 3: More from Bloomberg Intelligence coming up after this.
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Speaker 6: Let's stick with industries overall and talk about the auto sector,
Speaker 6: clearly very much impacted by the rising oil prices. Stillantis
Speaker 6: Ford GM, they all have to keep a very close
Speaker 6: eye on how oil prices are trending, especially as they
Speaker 6: have transitioned away from evs at least in the United
Speaker 6: States to focus on those big gas guzzling vehicles. Let's
Speaker 6: bring in now Steve Mann. Steve runs our Global Autos
Speaker 6: team here and Industrials Research, and.
Speaker 2: He's actually in New York today. Hi, Steve, You've got
Speaker 2: to see you.
Speaker 7: Hello.
Speaker 6: So talk a little bit about what SLANTIS is doing,
Speaker 6: because it's now looking into reviving a partnership with China's
Speaker 6: doll Func Motor that would involve joint car production in
Speaker 6: Europe and China.
Speaker 7: Yeah, we actually wrote about the emerging trend of you know,
Speaker 7: global automakers using China as a manufacturing base and really
Speaker 7: take the competition to the Chinese, because the Chinese has
Speaker 7: done really well exporting vehicles out of China, not only
Speaker 7: in Europe, but in many parts of emerging markets, Southeast Asia,
Speaker 7: parts of Latin America. So, you know, I think for
Speaker 7: global automakers like Stillentis, I think Volkswagen is considering doing
Speaker 7: the same thing. GM is definitely doing. It is really
Speaker 7: to build cars in China at a low cost base
Speaker 7: and then compete with the Chinese in these emerging markets.
Speaker 3: Why would so What are the BYD's the Chinese auto
Speaker 3: companies saying about.
Speaker 7: This, Well, I think I think, you know, they feel
Speaker 7: they have an advantage because they are you know, local,
Speaker 7: They feel that their automobiles are more techy and resonates
Speaker 7: with especially the younger first time car buyers, and many
Speaker 7: of them are in emerging markets. So you know, I
Speaker 7: think I think the Chinese will will continue to export
Speaker 7: quite a bit of vehicles going forward.
Speaker 6: What does this mean for these kinds of vehicles in
Speaker 6: the US. I mean, we're still obsessed with the gas
Speaker 6: couzling vehicles. They've done away with all the tax credits
Speaker 6: for greener vehicles. How does this position Stilantis and other
Speaker 6: carmakers for how they offer lower cost vehicles for Americans?
Speaker 7: Yeah, interestingly, that's a good question because a lot of
Speaker 7: the buyers in emerging markets are actually skipping the ice
Speaker 7: gasoline vehicles and going straight to electric. So that's also
Speaker 7: an advantage to some of the Chinese local automakers, but
Speaker 7: it actually helped the global automakers like Slilentis because even
Speaker 7: though the US have stepped back on EV's, the rest
Speaker 7: of the world are not. Right, they're still pushing EV's,
Speaker 7: so they need to continue to bill EV's. They still
Speaker 7: need to invest in evs. So you know, having them
Speaker 7: produced in China and able to compete in the rest
Speaker 7: of the world with the Chinese, you know, gives them
Speaker 7: a great, great option and great revenue stream.
Speaker 3: So if i'm if I'm STILLANTUS here, one of the
Speaker 3: brands Jeep or whatever the car will be, the vehicle
Speaker 3: would be manufactured in China at that cost. I'm gonna
Speaker 3: stick my stick my jeep name on it and sell
Speaker 3: it in France or the US.
Speaker 7: Yes, it's possible. So it's a little bit difficult in
Speaker 7: the US because there are terrorists, and I think the
Speaker 7: administration actually frowns on that. They actually had some discussion
Speaker 7: with this GM about that. But I think more in
Speaker 7: the rest of the world, like Europeans and the emerging markets.
Speaker 6: We keep talking about how the lowest cost or the
Speaker 6: average price of a new car in the US is
Speaker 6: north of fifty thousand dollars, right, Yes, that's where we're
Speaker 6: standing at in terms of actually coming to market with
Speaker 6: an affordable, low cost vehicle.
Speaker 2: Tesla's supposed to come out with something.
Speaker 6: And I don't know if we have any kind of
Speaker 6: timeline on that. Have GM and Ford kind of skipped
Speaker 6: making this a priority?
Speaker 7: Uh No, I think you know, first of all, there
Speaker 7: are kind of rumors in social media that, you know,
Speaker 7: Tesla is going to go back and think about reintroducing
Speaker 7: a smaller compact vehicle. But GM is still investing. They're
Speaker 7: still launching the Chevy Bolt. Look they have GM does
Speaker 7: have a strong portfolio of evs not in the US. Well,
Speaker 7: they do have a strong portfolio in the US, but
Speaker 7: they also have a strong portfolio in China. And you know,
Speaker 7: I think I think the US automakers, even though they
Speaker 7: have dial down the investments in evs, they're not forgetting
Speaker 7: about it. They are still spending a lot of money.
Speaker 7: Ford is introducing something in twenty twenty seven twenty twenty eight,
Speaker 7: a smaller, more affordable vehicles. Look in the US. It's
Speaker 7: interesting to see even those EV sales have been down,
Speaker 7: the infrastructure, the charging infrastructure, actually is continue to expand.
Speaker 7: I think as consumer finds the the convenience of having
Speaker 7: an EV's, I think there's still a place for EV's
Speaker 7: in the US, but not at at the growth way
Speaker 7: we saw in the past.
Speaker 2: Stay with us. More from Bloomberg Intelligence coming up after this.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
Speaker 1: you get your podcasts, or live on YouTube.
Speaker 6: All six big banks have now reported their results, and
Speaker 6: clearly the war, the uncertainty that the war has created
Speaker 6: has not really damped stock trading because their equity trading
Speaker 6: desks did incredible business in the first quarter. Herman Chan
Speaker 6: is our senior analyst for US banks here at Bloomberg
Speaker 6: Intelligence and he joins US now. Herman which bank came
Speaker 6: out ahead overall because they all did really well when
Speaker 6: it comes to equity trading, less well on fixed income trading.
Speaker 6: But when you look at the results as a whole,
Speaker 6: which bank comes out of the winner.
Speaker 8: Yeah, I would say Morgan Stanley probably outshined the most
Speaker 8: across the trading front, both on equitis and fixed income.
Speaker 2: But overall everything was great.
Speaker 8: On the trading front. We're talking about twenty five percent
Speaker 8: growth inequities, eleven percent growth in fixed income across the
Speaker 8: six banks. Really strong results. Fixed income, as you mentioned before,
Speaker 8: was a bit more mixed with Goldman weaker, Bank of
Speaker 8: America touch weaker, but everybody else was really strong on
Speaker 8: the fixed side.
Speaker 3: What are they saying about the pipeline here for business
Speaker 3: because it seems like this is going to be a
Speaker 3: year where we could potentially get some mega IPOs. I'm
Speaker 3: thinking SpaceX and all the anthropics and all the kind
Speaker 3: of st Yeah.
Speaker 8: Yeah, I think the IPO calendar looks a bit spottier.
Speaker 8: We have the big blockbuster names like you mentioned with SpaceX,
Speaker 8: potentially open AI, anthropic data bricks. Those are going to
Speaker 8: be the headline ones. But on the other hand, maybe
Speaker 8: some less activity from the private equity backed businesses that
Speaker 8: may be finding it tougher sledding in terms of getting
Speaker 8: into the markets giving the volatilty and the environment today.
Speaker 8: But nonetheless, there's going to be these blockbuster deals that
Speaker 8: are going to happen this year in.
Speaker 6: Our view, and it doesn't appear that companies have held
Speaker 6: off or held back from deal making either, even with
Speaker 6: all the uncertainty caused by the war.
Speaker 2: Yeah, that's right.
Speaker 8: M and A at least for the first quarter was
Speaker 8: solid strong all the way around on a year over
Speaker 8: year basis. That was gangbusters up sixty eight percent year
Speaker 8: every year. So we'll see how that continues given some
Speaker 8: of the you mentioned. The volatility is great for the
Speaker 8: trading front, less so for M and A activity and
Speaker 8: equities issue, and so it'll be a bit of potentially
Speaker 8: slowing down over the course of the year.
Speaker 3: So we heard Ted pick On earlier today with Lisa
Speaker 3: Bromwitz and talking about the Morgan standing results. Man, they
Speaker 3: look they look pretty solid. There is that in the
Speaker 3: returns they're generating. Talk about tools about the returns this
Speaker 3: big banks are generating now before versus you know, several
Speaker 3: years ago.
Speaker 8: Yeah, I mean, returns are improving across the board. JP
Speaker 8: Morgan leads a twenty three percent return on tangible equity
Speaker 8: and then even some of the laggards like City Group
Speaker 8: at thirteen percent ROTCE. That's relative to their expectations of
Speaker 8: ten to eleven percent for the year. So everybody is
Speaker 8: actually increasing their returns. It's been helped by the trading
Speaker 8: results that we saw in the first quarter. It's also
Speaker 8: been helped by stable expenses. I think AI will be
Speaker 8: a big driver of that going forward as well. With
Speaker 8: less headcount growth for the industry, but positive operating leverage,
Speaker 8: all of the top line strengthlets falling to the bottom line,
Speaker 8: which is good to see.
Speaker 6: I'm glad you bring up expense growth because there's a
Speaker 6: Bloomberg News story indicating that the Wall Street banks cut
Speaker 6: five thousand jobs.
Speaker 2: In the most profitable quarter.
Speaker 6: Ever, how much is this an indication of what we're
Speaker 6: going to see quarter after quarter from here on out?
Speaker 6: I mean, is this the kind of pace of job
Speaker 6: cuts that we might anticipate.
Speaker 8: Yeah, It's an interesting question. It was a question that
Speaker 8: was asked by the analyst on the earnings cause across
Speaker 8: a number of the banks that reported. I think the
Speaker 8: management teams were a bit shy to really give out
Speaker 8: concrete numbers, but AI has been a game changer, especially
Speaker 8: on the consumer side, where Bank of America gave some
Speaker 8: numbers on the headcount on the consumer site, it's come
Speaker 8: down drastically and a lot of that has to do
Speaker 8: with areas that are more manually intensive and also areas
Speaker 8: like the call center where you just don't need the
Speaker 8: same amount of people doing that. Given the fact that
Speaker 8: Make of America has bolstered their AI chat bob, which
Speaker 8: they named Erica, that's been driving a lot of the.
Speaker 2: Client in headcount needs. So we'll start.
Speaker 3: Hearing from the regional banks soon. They have a much
Speaker 3: lower exposure to the capital markets business. So what are
Speaker 3: you going to be looking for from the regional banks show?
Speaker 8: Yeah, regional banks kicked off earnings today with P and C,
Speaker 8: M and C and first to rise in reporting.
Speaker 2: I'd say it was a mixed bag.
Speaker 8: P and C probably outshown outshined on the lending front
Speaker 8: with strong loan growth, particularly in commercial lending, and that
Speaker 8: was echoed across the big banks as well, where they
Speaker 8: saw broader growth in commercial lending, increasing lineation which has
Speaker 8: been in the doul drums for several quarters given the
Speaker 8: uncertainty of tariffs last year, and then some pick up
Speaker 8: in production from areas like small businesses and the like.
Speaker 8: So that's great to see for banks like P and C.
Speaker 8: For M and C, it was a bit weaker. They
Speaker 8: did guide down on their net interest income because of
Speaker 8: less growth in consumer lending.
Speaker 6: When it comes to the big banks, there are a
Speaker 6: lot of questions about private credit and how exposed these
Speaker 6: big banks are too potentially bad loans made directly to
Speaker 6: some of these companies.
Speaker 2: Is this a problem for regional banks.
Speaker 8: It's it's also been a growth driver for regionals, so
Speaker 8: it's it's a area that's been one of the outstanding
Speaker 8: areas for loan growth. That being said, there there is
Speaker 8: virtually no concern across the management teams. I can point
Speaker 8: to P and C CEO Bill Demchek that just spoke
Speaker 8: earlier this morning. He said there was a question on
Speaker 8: and like where on the you know, loss curve, could
Speaker 8: could credit private credit b in a recessionary environment. And
Speaker 8: basically said it's not on the curve. He's saying that
Speaker 8: they don't expect any losses. And he contrasts that comment
Speaker 8: with what happened a few years back on the office
Speaker 8: commercial real estate front, where they were very open about
Speaker 8: their exposures and potential loss rates.
Speaker 2: There they virtually.
Speaker 8: Saly know losses from their private critics. So that's great
Speaker 8: to hear that, and they were very adamant about that.
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