WEBVTT - Coinbase Posts $667 Million Loss, Revenue Declines 20% 0:00:02.520 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business 0:00:10.520 --> 0:00:14.400 Week Daily reporting from the magazine that helps global leaders 0:00:14.440 --> 0:00:18.360 stay ahead with insight on the people, companies, and trends 0:00:18.360 --> 0:00:23.360 shaping today's complex economy. Plus global business finance and tech 0:00:23.440 --> 0:00:27.320 news as it happens. The Bloomberg Business Week Daily Podcast 0:00:27.640 --> 0:00:31.720 with Carol Masser and Tim Stenebek on Bloomberg Radio. 0:00:32.080 --> 0:00:35.200 I'm looking at shares of Coinbase in the after hours. 0:00:35.240 --> 0:00:37.240 They're taking a leg lower, and like you said, Carol, 0:00:37.280 --> 0:00:40.160 this stock was under pressure but still down one point 0:00:40.240 --> 0:00:43.640 seven two percent, bouncing around but in the red as 0:00:43.680 --> 0:00:46.080 we speak. In terms of fourth quarter total revenue that 0:00:46.200 --> 0:00:49.240 missed estimates, the company expects headcount to grow slightly higher 0:00:49.560 --> 0:00:52.519 than in Q four. Fourth quarter adjusted IBADA came in 0:00:52.560 --> 0:00:56.040 below estimates. Fourth quarter adjusted EPs came in at sixty 0:00:56.080 --> 0:00:57.160 six cents below estimates. 0:00:57.160 --> 0:00:58.880 What are you saying, I'm looking at the release looking 0:00:58.920 --> 0:01:01.520 forward to twenty twenty six. We continue to be optimistic 0:01:01.560 --> 0:01:05.480 about the long term trajectory of the crypto industry. And 0:01:05.520 --> 0:01:08.960 they also said it was a strong year in twenty 0:01:09.000 --> 0:01:14.440 twenty five for Coinbase, both operationally and financially, and so yeah, 0:01:14.560 --> 0:01:17.800 they say, as regulatory clarity emergence, we believe crypto will 0:01:17.880 --> 0:01:21.240 update all financial services and Coinbase as well positioned to 0:01:21.280 --> 0:01:26.520 capitalize on that transition. So, you know, but connect Start underperformed. 0:01:26.520 --> 0:01:28.440 It was down nine percent in twenty twenty five. So 0:01:28.480 --> 0:01:30.440 even if it was a good year financially for the company, 0:01:30.600 --> 0:01:31.800 investors didn't reward it. 0:01:31.959 --> 0:01:32.800 Yeah, let's see what. 0:01:32.720 --> 0:01:35.520 Monique Malema has to say. She's Bloomberg News equities reporter. 0:01:35.600 --> 0:01:39.360 She's in Toronto, follows this name. Was twenty twenty five 0:01:39.480 --> 0:01:43.440 a strong year for coinbase and does twenty twenty six 0:01:44.080 --> 0:01:47.039 should they be Coinbase optimistic about the year and the 0:01:47.040 --> 0:01:50.360 long term trajectory of the crypto industry at this point 0:01:50.440 --> 0:01:50.840 in time. 0:01:52.760 --> 0:01:55.040 So twenty twenty five was a mixed year for Coinbase. 0:01:55.080 --> 0:01:57.720 We saw at the start of the year there was 0:01:57.800 --> 0:02:00.560 a lot of momentum as the Trump administry came in 0:02:00.760 --> 0:02:04.320 was really embracing crypto, and we saw a huge wave 0:02:04.360 --> 0:02:09.119 of investment into cryptocurrencies, which benefited Coinbase on their transactions 0:02:09.120 --> 0:02:12.160 and trading. But as we've seen crypto prices pullbacks and 0:02:12.840 --> 0:02:15.600 that record high they hid in October, we've seen that 0:02:15.639 --> 0:02:18.200 way on coinbas as, shares and We've also seen it 0:02:18.240 --> 0:02:21.040 way on their revenue as less people are trading on 0:02:21.080 --> 0:02:25.160 the platforms, which means less transaction revenue and also less volumes. 0:02:25.360 --> 0:02:28.000 Monique, what is their bal what does their balance sheet 0:02:28.000 --> 0:02:29.640 look like? I'm just looking at it, says In January 0:02:29.680 --> 0:02:32.960 twenty twenty six, we know this. Our board expanded our 0:02:33.040 --> 0:02:36.120 share and long term debt repurchase authorization by an addicitial two 0:02:36.200 --> 0:02:40.960 billion dollars. We were mindful of reducing our overall dilution opportunistically. 0:02:41.280 --> 0:02:42.639 We are deliberately well. 0:02:42.480 --> 0:02:45.960 Capitalized with eleven point three billion in cash and cash equivalents, 0:02:46.240 --> 0:02:49.280 to weather these cycles and continue to invest in the 0:02:49.320 --> 0:02:50.560 future of finance. 0:02:50.840 --> 0:02:52.480 Is their balance sheet solid? 0:02:54.440 --> 0:02:56.919 So analysts do think that their balance sheet is still solid. 0:02:56.960 --> 0:03:00.240 You know, Coinbase, they are the largest cryptocurrency exchange in 0:03:00.320 --> 0:03:04.040 the US. There are on much solid fitting compared to 0:03:04.440 --> 0:03:06.960 some of the smaller crypto firms that are out there. 0:03:07.200 --> 0:03:10.200 But you know, analysts are also expecting that cryptocurrency is 0:03:10.200 --> 0:03:12.640 going to continue to kind of see a downturn going 0:03:12.800 --> 0:03:15.079 through this year. So that's going to continue to weigh 0:03:15.120 --> 0:03:17.560 on coin Base, even if they can weather it for now. 0:03:17.560 --> 0:03:19.919 And we've seen some analysts already pull back their price 0:03:20.320 --> 0:03:24.120 targets and their estimates for coinbasis earnings for this year 0:03:24.160 --> 0:03:24.839 and next year. 0:03:25.120 --> 0:03:27.480 Yeah, how do you explain the analyst community has just 0:03:27.520 --> 0:03:31.400 been a brutal to this company over the past few weeks. 0:03:31.760 --> 0:03:33.880 You had a great article. It was kind of an 0:03:33.919 --> 0:03:36.960 earning's preview, but also much more than that because it 0:03:37.000 --> 0:03:39.560 gave the context for what all these analysts are saying 0:03:39.560 --> 0:03:43.080 about the company recent double downgrade to the company as well. 0:03:43.240 --> 0:03:46.320 Why are analysts so bearish? 0:03:46.600 --> 0:03:49.360 So anamals are really beverish because of the downturn we've 0:03:49.400 --> 0:03:52.680 seen in crypto markets. Bitcoin is down over forty percent 0:03:52.760 --> 0:03:55.880 from the higatt hidden October, and that's really weighing across 0:03:55.880 --> 0:03:59.880 the whole crypto ecosystem. We had an analyst at Lonesse, 0:04:00.080 --> 0:04:02.560 crispian Heart, say today that they felt that they were 0:04:02.560 --> 0:04:05.120 foolish for thinking that crypto markets were going to be 0:04:05.160 --> 0:04:07.920 recovering more quickly than they are, and they're the ones 0:04:07.920 --> 0:04:10.640 that did the double downgrade on Coinbase. We've seen six 0:04:10.680 --> 0:04:14.320 analysts cut their price targets on Coinbase this month alone, 0:04:14.440 --> 0:04:17.920 so they're really realizing that this downturn we're seeing in 0:04:17.920 --> 0:04:20.560 crypto people are thinking is not going to be changing 0:04:20.640 --> 0:04:23.000 anytime soon. They think prices are going to continue to 0:04:23.040 --> 0:04:26.560 be depressed, and with so much of Coinbase's business at 0:04:26.560 --> 0:04:30.560 this point being focused on cryptocurrency, they think that's really 0:04:30.560 --> 0:04:31.960 going to weigh on the company's shares. 0:04:32.080 --> 0:04:33.320 What do you think they're going to be kind of 0:04:33.360 --> 0:04:36.279 hammered on on the call with investors and analysts. I mean, 0:04:36.320 --> 0:04:38.600 the stock it is still down, but it's pairing some 0:04:38.680 --> 0:04:42.159 of its deeper losses after it reported earnings. It's still 0:04:42.200 --> 0:04:44.680 down though, about two point two percent. 0:04:44.760 --> 0:04:45.039 Here. 0:04:46.880 --> 0:04:48.680 A lot of the focus for analysts has been how 0:04:48.800 --> 0:04:52.280 was this company going to expand its revenue base. We've 0:04:52.320 --> 0:04:54.280 seen that coinbas announce last year that they're going to 0:04:54.320 --> 0:04:58.719 be venturing more into prediction markets, into equities trading, and 0:04:58.760 --> 0:05:02.400 all these other products that are hoping to diversify the 0:05:02.440 --> 0:05:06.240 company from being so concentrated in the crypto industry. And 0:05:06.279 --> 0:05:09.120 that's something analysts think can help kind of balance out 0:05:09.160 --> 0:05:11.400 some of these declines that are happening in the crypto space. 0:05:11.440 --> 0:05:14.160 But they really want to see more gains in those areas, 0:05:14.200 --> 0:05:17.600 particularly in prediction markets, which has become such a massive market, 0:05:18.120 --> 0:05:21.640 to really see that there is more longevity and more 0:05:21.640 --> 0:05:25.320 sustainability outside of this downturn that's in crypto right now, 0:05:25.520 --> 0:05:25.840 what I. 0:05:25.800 --> 0:05:26.360 Don't I mean? 0:05:27.000 --> 0:05:31.640 Correct, help me understand this this monique. If stock prices 0:05:31.680 --> 0:05:37.279 go down to exchanges that have stock suffer because they're 0:05:37.279 --> 0:05:40.520 still buying and they're still selling. Is the crypto industry 0:05:40.560 --> 0:05:44.279 different in that the exchanges only do well when the 0:05:44.279 --> 0:05:45.240 prices go up. 0:05:47.680 --> 0:05:54.320 So redactions are transactions, Yeah, transactions are transactions, But for crypto, 0:05:54.600 --> 0:05:58.200 the difference is that a lot of crypto is sentiment driven. 0:05:58.520 --> 0:06:01.719 So when crypto prices are depressed, that means that a 0:06:01.720 --> 0:06:04.039 lot of people in the crypto industry start pulling out. 0:06:04.120 --> 0:06:06.640 We've seen that that there's been mass liquidations in crypto 0:06:07.040 --> 0:06:09.720 that we've seen people go to other markets like prediction markets, 0:06:09.800 --> 0:06:11.960 or to the stock market, or just sitting back when 0:06:12.200 --> 0:06:15.400 prices become depressed. So it's not just about the fact 0:06:15.560 --> 0:06:18.280 that the crypto prices are lower. It's that then that 0:06:18.360 --> 0:06:21.920 also leads to lower volumes, which isn't necessarily the same 0:06:21.960 --> 0:06:24.360 in stock markets, even when the stock markets down, people 0:06:24.400 --> 0:06:27.559 might be switching to other areas of the stock market, 0:06:27.720 --> 0:06:30.039 versus in cryptos, some people are just choosing to lead. 0:06:30.800 --> 0:06:32.720 You know, I'm looking at ogu caref for the write 0:06:32.720 --> 0:06:37.400 through on Coinbase here in the aftermarket, and she reminds 0:06:37.480 --> 0:06:40.800 us about rival exchange Gemini space Station, saying this week 0:06:40.800 --> 0:06:42.440 that it plans to cut up to twenty five percent 0:06:42.480 --> 0:06:46.080 of its workforce and scale back international operations, so underscoring 0:06:46.800 --> 0:06:51.840 how these rapidly weaker markets can basically translate into operational pressure. 0:06:52.520 --> 0:06:55.320 Is there any operational pressure on Coinbase that we know of? 0:06:57.880 --> 0:07:00.520 Not that I'm aware of. In terms of the operation pressure, 0:07:00.680 --> 0:07:04.000 like I'd mentioned, they're really focusing right now on expanding 0:07:04.000 --> 0:07:06.440 their products so that there's not going to be so 0:07:06.560 --> 0:07:09.920 much concentration in crypto, and so there will be a 0:07:09.960 --> 0:07:13.120 focus on the prediction markets, on the equities trading, on options. 0:07:13.120 --> 0:07:16.240 But the production markets have their problems too, right, I mean, 0:07:17.000 --> 0:07:19.920 especially when so much as sports right and sports gambling 0:07:20.240 --> 0:07:23.480 or gaming if you will, I mean, the gambling guys 0:07:23.480 --> 0:07:27.240 and the gambling platforms who are highly regulated have got 0:07:27.240 --> 0:07:29.200 to be looking and say, well, wait a minute, you know, 0:07:29.360 --> 0:07:31.320 there's got to be some regulation that's going to come 0:07:31.320 --> 0:07:33.440 in to these prediction markets. 0:07:35.360 --> 0:07:38.400 Yes, definitely. It's not an area without its own issues. 0:07:38.760 --> 0:07:40.840 We know the CFTC had said that they are looking 0:07:40.920 --> 0:07:45.000 at creating some types of rules or frameworks around prediction 0:07:45.080 --> 0:07:49.400 markets when it comes to things like sports. But for 0:07:49.600 --> 0:07:53.080 people who are in this space, the idea of something 0:07:53.440 --> 0:07:56.920 being a little volatile of operating, you know, somewhat in 0:07:56.920 --> 0:08:00.600 a bit of an area that hasn't been fully regulated, 0:08:00.600 --> 0:08:03.480 it isn't out of the ordinary. For crypto you know, 0:08:03.600 --> 0:08:05.600 this is something they are used to. They're used to 0:08:05.640 --> 0:08:07.880 the fact that, you know, even for crypto markets, we're 0:08:07.960 --> 0:08:11.960 still seeing legislation being debated. So for them, it's not 0:08:12.240 --> 0:08:15.200 as much of a fear of going into prediction markets 0:08:15.240 --> 0:08:18.400 with that uncertainty because they've already been for so long 0:08:18.480 --> 0:08:19.960 having to operate in uncertainty. 0:08:20.160 --> 0:08:23.840 Hey, speaking of prediction markets, we're getting DraftKings results. Crossing 0:08:24.320 --> 0:08:26.920 shares fell as much as fourteen percent in the immediate 0:08:26.960 --> 0:08:29.360 aftermath of these, now down about nine and a half percent. 0:08:29.600 --> 0:08:31.760 The company sees twenty twenty six revenue six and a 0:08:31.800 --> 0:08:34.800 half to six point nine billion dollars that came in 0:08:34.840 --> 0:08:37.600 below estimates of seven point three to two billion dollars. 0:08:37.640 --> 0:08:40.360 The twenty twenty sixth revenue outlook miss is what is 0:08:40.360 --> 0:08:43.480 pushing the stock lower. Fourth quarter revenue did meet estimates, 0:08:43.480 --> 0:08:47.280 fourth quarter adjusted Ibada did come in above estimates. Fourth 0:08:47.360 --> 0:08:49.800 quarter earnings per share coming in above estimates too. 0:08:49.880 --> 0:08:52.280 Yeah, and I think it's interesting fourth quarter looking back 0:08:52.320 --> 0:08:54.960 at the quarter that was monthly unique payers four point 0:08:54.960 --> 0:08:57.319 eight million. The estimate was five point forty three million, 0:08:57.360 --> 0:08:57.520 so a. 0:08:57.520 --> 0:08:59.480 Little bit below as well as you look. 0:08:59.520 --> 0:09:03.000 But that out look as certainly what Scott investors a 0:09:03.000 --> 0:09:05.079 little bit, a little bit nervous. The stock, by the way, 0:09:05.200 --> 0:09:08.200 is down twenty seven percent already in twenty twenty six. 0:09:08.280 --> 0:09:10.360 Monique Malima, we are going to let you go. She's 0:09:10.400 --> 0:09:13.199 Equity's reporter for Bloomberg News. She joins us from Toronto. 0:09:13.200 --> 0:09:16.439 She covers coinbase. She covers the entire crypto industry. Check 0:09:16.480 --> 0:09:19.240 out her reporting and more on the Bloomberg terminal and 0:09:19.400 --> 0:09:22.640 at Bloomberg dot Com. Stay with us more from Bloomberg 0:09:22.720 --> 0:09:24.760 business Week Daily coming up after this. 0:09:28.720 --> 0:09:32.560 You're listening to the Bloomberg Business Week Daily Podcast. Catch 0:09:32.640 --> 0:09:35.360 us live weekday afternoons from two to five e's during 0:09:35.520 --> 0:09:39.480 Listen on Applecarplay and Android Otto with the Bloomberg Business app, 0:09:39.640 --> 0:09:42.400 or watch us live on YouTube. 0:09:43.440 --> 0:09:45.480 Eric Wiener, he walked into our studio. 0:09:45.520 --> 0:09:49.520 He's like, what okay, and like you could almost say 0:09:49.520 --> 0:09:52.000 that every day, but there are days where it's like, 0:09:52.320 --> 0:09:54.600 oh my god, right, why do you say that though 0:09:54.600 --> 0:09:59.160 specifically because it's not like everything was down today, No, 0:09:59.240 --> 0:09:59.959 not at all. 0:10:00.559 --> 0:10:03.480 It was a weird day. See we've been having a 0:10:03.480 --> 0:10:07.480 lot of weird days. Is that it is the AI 0:10:07.600 --> 0:10:12.160 scare and and it's you have this roving AI worry 0:10:12.320 --> 0:10:16.920 that's just taking out entire industries at once, sort of 0:10:16.920 --> 0:10:20.280 a cell now and then see what happens later. So 0:10:20.400 --> 0:10:24.360 today we saw like logistics stocks get hammered because the 0:10:24.400 --> 0:10:28.000 company that was the singing machine company and made karaoke 0:10:29.200 --> 0:10:32.520 equipment now has an AI bot that does logistics and 0:10:32.559 --> 0:10:36.079 they're taking out you know, billions of dollars in market cap. 0:10:35.920 --> 0:10:38.520 From logistic is a real thing. It's a real thing. Okay, 0:10:38.880 --> 0:10:46.480 well yeah, like what is that? Well it's really strange. 0:10:46.559 --> 0:10:50.600 So what you have is the idea. You have two 0:10:50.640 --> 0:10:53.480 ideas that are filtering through the market right now, both 0:10:53.520 --> 0:10:57.200 related to AI, that seem to be at conflict with 0:10:57.240 --> 0:11:00.480 each other. You have on one level, big company spending 0:11:00.480 --> 0:11:04.080 a ton to develop AI, and the market saying, you know, when. 0:11:03.920 --> 0:11:05.720 Are we going to start seeing some returns from this? 0:11:06.320 --> 0:11:08.680 And are you spending too much and is this throwing 0:11:08.720 --> 0:11:12.000 good money after bat? So they get hit. Then you 0:11:12.120 --> 0:11:15.080 start seeing some little obscure company that used to make 0:11:15.160 --> 0:11:18.480 karaoke machines saying we've got an AI bot that is 0:11:18.520 --> 0:11:21.880 going to fix logistics, and all of a sudden they 0:11:21.880 --> 0:11:26.640 sell off logistics companies. Now, I don't necessarily know that 0:11:27.080 --> 0:11:30.760 the market knows exactly how this is going to play out. 0:11:30.960 --> 0:11:33.600 They're just thinking that right now, sentiment is so soft 0:11:34.040 --> 0:11:36.720 that you just get get out, well you can, and 0:11:36.760 --> 0:11:38.920 then buy back in twenty five percent later. 0:11:39.520 --> 0:11:41.400 I want to bring in Bloomberg News senior editor and 0:11:41.400 --> 0:11:43.800 author of the Everything Risk newsletter, Ed Harrison. He joins 0:11:43.880 --> 0:11:48.480 us from our Washington dcbureau, and I want to bring 0:11:48.520 --> 0:11:52.560 you in because you write about risk the Everything Risk newsletter, 0:11:52.559 --> 0:11:56.120 and it seems like the risk right now is that 0:11:56.200 --> 0:11:58.439 there's going to be you know that old commercial from Apple, 0:11:58.480 --> 0:12:00.760 there's an app for that. Well, as soon as there's 0:12:00.840 --> 0:12:04.840 an AI for that, whatever sector that is sells off. 0:12:05.000 --> 0:12:05.600 What's going on? 0:12:07.240 --> 0:12:10.199 Yeah? Hey, Tim, So remember we were talking a few 0:12:10.280 --> 0:12:13.440 days ago. I was saying that there was people were 0:12:14.160 --> 0:12:17.640 de risking ahead of time and that this was building. 0:12:17.720 --> 0:12:20.280 But we're at an inflection point where we really don't 0:12:20.360 --> 0:12:23.200 know how that's going to work out. I think Eric 0:12:23.320 --> 0:12:26.160 is hitting the nail on the head that people are, 0:12:27.040 --> 0:12:30.800 you know, selling a bit and asking questions later. But 0:12:30.920 --> 0:12:34.720 obviously if the if the economy holds up, then you 0:12:34.760 --> 0:12:37.600 know they can re risk. You know, from where I 0:12:37.720 --> 0:12:44.079 sit today, this has an algo selling momentum driven. 0:12:44.600 --> 0:12:45.320 Feel to it. 0:12:45.640 --> 0:12:48.199 When you look at like the mag seven as an example, 0:12:48.400 --> 0:12:54.520 apples down the most there. There wasn't really any news 0:12:54.600 --> 0:12:57.760 flow on this, so this is really just the algos, 0:12:58.280 --> 0:13:01.920 you know, taking the moment some of this trade into 0:13:01.960 --> 0:13:04.880 small caps, the rotation, et cetera, and then we just 0:13:04.880 --> 0:13:07.360 have to see, you know, does this have legs as 0:13:07.400 --> 0:13:08.520 a results of the economy. 0:13:08.679 --> 0:13:12.160 Yeah, I'm looking at the VIX too, and we did 0:13:12.200 --> 0:13:15.080 go a little bit above twenty one today, but we 0:13:15.160 --> 0:13:18.240 closed just at twenty or just below twenty one. Is 0:13:18.280 --> 0:13:19.360 that significant, Eric? 0:13:19.679 --> 0:13:20.120 Yes? 0:13:20.280 --> 0:13:23.959 Yes, I mean that will to feed into what's going 0:13:24.040 --> 0:13:27.880 on in the equity markets. When you get these selling pressures, 0:13:28.200 --> 0:13:30.760 you often see the VIX bomp of over twenty. If 0:13:30.800 --> 0:13:33.360 it holds there, yeah, then it means that there's real 0:13:33.360 --> 0:13:36.400 sustained fear. But today was one of those days where 0:13:36.440 --> 0:13:40.280 you know, we had a pretty significant downdraft, so it 0:13:40.400 --> 0:13:44.800 jumping over twenty twenty isn't and not necessarily holding there 0:13:45.000 --> 0:13:47.200 isn't exactly you know, a fear gauge. 0:13:47.280 --> 0:13:49.520 Is this just a case though things just feeling jittery? 0:13:50.080 --> 0:13:53.120 Yes, And then it doesn't take much for people to 0:13:53.200 --> 0:13:56.760 be like, Okay, maybe logically or fundamentally this doesn't make sense, but. 0:13:56.800 --> 0:14:00.000 I'm out that well, that's it. So if you look 0:14:00.000 --> 0:14:05.240 look at what's going on with the real estate firms 0:14:05.320 --> 0:14:09.360 or whatever that we're hit by THEAI selling, yeah, this 0:14:09.520 --> 0:14:12.280 is actually going to help them, like it's not necessarily 0:14:12.360 --> 0:14:17.120 going to help or financial services, you know, the wealth managers, right, 0:14:17.160 --> 0:14:20.840 Schwab is going to do well with this. Employees that 0:14:20.880 --> 0:14:23.320 Schwab may not do well with this because you're going 0:14:23.360 --> 0:14:25.640 to lose some workers. You're going and your salaries are 0:14:25.680 --> 0:14:27.600 going to go down, but the stock should do well. 0:14:27.880 --> 0:14:30.680 So exactly what the logic is behind this is hard 0:14:30.720 --> 0:14:34.880 to say. It's really, you know, to paraphrase ad, it's 0:14:34.920 --> 0:14:38.080 really you know, sell now and sort of wait. And 0:14:38.160 --> 0:14:40.400 where you start seeing it pop up like in places 0:14:40.440 --> 0:14:44.160 like in small caps, that's where you start thinking This 0:14:44.200 --> 0:14:46.560 doesn't exactly make sense because they would normally be risk 0:14:46.640 --> 0:14:47.040 off too. 0:14:47.640 --> 0:14:50.200 So if we move past the sort of day to 0:14:50.240 --> 0:14:52.320 day market swings here and look at the fundamentals of 0:14:52.360 --> 0:14:55.120 the US economy, we're getting more data. We got more 0:14:55.160 --> 0:14:58.800 data this week. We got a jobless report for last 0:14:58.840 --> 0:15:01.320 month on Wednesday with was weird. We got initial job 0:15:01.320 --> 0:15:03.440 list claims. Today you are getting a post on the 0:15:03.440 --> 0:15:07.400 lifelog that together the shows a weakening employment picture. What 0:15:07.440 --> 0:15:08.120 are you looking at? 0:15:09.520 --> 0:15:13.680 Yeah, So what I'm thinking is is that generally we 0:15:13.760 --> 0:15:16.880 have a decent employment market, but it's weakening. And the 0:15:17.040 --> 0:15:21.400 number that we saw on Wednesday wasn't reflective of the 0:15:21.440 --> 0:15:24.920 weakness that we're seeing. Number one, we saw a lot 0:15:24.960 --> 0:15:29.480 of layoff announcements. Number two, we also saw weather that 0:15:29.760 --> 0:15:34.040 should be negative for jobs, at least in a temporary sense. 0:15:34.040 --> 0:15:39.120 And then we've seen two consecutive upticks and initial claims, 0:15:39.120 --> 0:15:42.760 and we saw continuing claims tick up this past week 0:15:42.800 --> 0:15:45.920 as well. All of that speaks to when you look 0:15:45.960 --> 0:15:49.560 at the BLS data, that these are things that weren't 0:15:49.600 --> 0:15:53.360 in the actual numbers for January. In fact, on the 0:15:53.400 --> 0:15:57.400 BLS website they say specifically, none of the weather was 0:15:57.560 --> 0:16:01.040 in the you know, in our collection period. So the 0:16:01.360 --> 0:16:05.440 February number is going to be worse, and so we're 0:16:05.480 --> 0:16:07.760 seeing a little bit that will help in terms of 0:16:07.800 --> 0:16:13.720 the jitters, unfortunately, help continue those jitters going forward. The 0:16:13.760 --> 0:16:17.880 only positive I could say is that we're looking at 0:16:17.880 --> 0:16:22.400 CPI potentially coming down that's going to be released tomorrow. 0:16:22.840 --> 0:16:26.880 Two point five percent is demonstrably below three percent. That 0:16:26.920 --> 0:16:30.480 would be a good number that would help perhaps stop 0:16:30.520 --> 0:16:32.080 some of the jitters that we're seeing now. 0:16:32.200 --> 0:16:35.440 To be fair, and everybody always reminds us, you know, 0:16:35.480 --> 0:16:37.600 you got to look longer term. S and P was 0:16:37.680 --> 0:16:41.880 up sixteen percent last year, twenty three percent twenty twenty four, 0:16:42.040 --> 0:16:45.000 and up twenty four percent in twenty twenty three. Eric, 0:16:45.240 --> 0:16:48.680 We've talked about these three consecutive years, a very strong gains. 0:16:48.840 --> 0:16:50.600 I mean, at some point the market. 0:16:50.360 --> 0:16:51.560 Takes a little bit of breather. 0:16:51.600 --> 0:16:54.080 We've seen this where we'll get a ten percent correction 0:16:54.160 --> 0:16:55.920 and then it moves to the upside again. 0:16:56.440 --> 0:17:00.840 Well that's I mean, in the longer term scheme of things, 0:17:01.160 --> 0:17:05.000 the market is okay. The concern would be that sentiment 0:17:05.040 --> 0:17:09.600 has been pretty lousy since October really, so you're starting 0:17:09.640 --> 0:17:13.200 to see real kind of pain come through when you're 0:17:13.200 --> 0:17:15.959 talking about employment and you're seeing like what's going on 0:17:16.040 --> 0:17:18.879 with crypto, You're what the concern there is is that 0:17:18.920 --> 0:17:24.400 people aren't spending, people aren't investing, Individuals are stepping aside, 0:17:24.600 --> 0:17:28.040 and that can bleed into a lot of different industries. 0:17:28.359 --> 0:17:30.920 So the concern, you know, the idea that like you 0:17:30.960 --> 0:17:34.920 would have a sluggish year isn't necessarily the problem. It's 0:17:35.000 --> 0:17:37.879 the reasons behind it. And if we're not getting growth, 0:17:37.920 --> 0:17:40.720 if jobs aren't there, then this can be more. 0:17:40.520 --> 0:17:42.800 Sustained and economic growth. 0:17:43.440 --> 0:17:45.800 Yeah, we do have economic growth right now, but the 0:17:46.480 --> 0:17:49.760 question is what it's measuring, because it's that ky you know. 0:17:50.320 --> 0:17:54.800 So if we're having economic growth but investors but individuals 0:17:54.840 --> 0:17:57.560 aren't spending, then the question is how much can like 0:17:57.600 --> 0:18:00.439 the top twenty percent keep the market of keep the 0:18:00.480 --> 0:18:02.160 economy afloat two? 0:18:02.520 --> 0:18:06.960 Eric's point ed Airbnb shares hire right now. They rose 0:18:07.280 --> 0:18:09.920 four and a half percent and extended trading. The company's 0:18:09.960 --> 0:18:13.399 first quarter revenue forecast exceeded the average annal assessment. Is 0:18:13.400 --> 0:18:16.520 this that top twenty percent that Eric's talking about right here? 0:18:17.600 --> 0:18:21.920 Yeah, that case shaped economy is really creating a lot 0:18:21.920 --> 0:18:26.440 of uncertainty about what's happening. And I would also reiterate 0:18:26.480 --> 0:18:29.920 what Eric said about the jitters beginning in October. I 0:18:29.920 --> 0:18:33.919 thought it was interesting, you know, the vics actually bottomed 0:18:34.080 --> 0:18:38.879 in the day before Christmas, and so you could the 0:18:38.960 --> 0:18:42.560 jitters that we had during the shutdown were sort of 0:18:42.680 --> 0:18:47.600 overtaken by year in a buying into the year end, 0:18:48.040 --> 0:18:51.080 and then people took a week off between Christmas and 0:18:51.119 --> 0:18:54.440 New Year's and then suddenly people came in with fresh eyes, 0:18:54.480 --> 0:18:57.640 and those same sort of concerns that Eric was talking 0:18:57.640 --> 0:19:01.080 about that people had during the shutdown October and November 0:19:01.280 --> 0:19:05.879 have now come back. And then the question is can 0:19:05.960 --> 0:19:11.119 the top twenty percent actually pull this market along. So 0:19:11.280 --> 0:19:14.040 far they have, but that retail sales report that we had, 0:19:14.960 --> 0:19:17.240 you know, causing the question whether that's actually the case. 0:19:17.480 --> 0:19:19.159 I want to go back to some of the earnings 0:19:19.200 --> 0:19:21.960 after the close. Applied materials out and we're seeing the 0:19:22.040 --> 0:19:25.159 stock rally in a big way in the aftermarket, largest 0:19:25.240 --> 0:19:27.840 US supplier of chip making equipment giving an upbeat sales 0:19:27.880 --> 0:19:31.800 forecast for the current quarter, signaling that demand for artificial 0:19:31.800 --> 0:19:35.960 intelligence and memorysetment conductors are fueling purchases. So ed there 0:19:36.040 --> 0:19:38.280 is this kind of yin and yang, like we're watching consumers, 0:19:38.320 --> 0:19:41.359 we're watching the economy. There's also that AI trade, which 0:19:41.359 --> 0:19:43.800 in some ways there's the AI scare that is freaking 0:19:43.840 --> 0:19:46.639 out some sectors, and then there's that spend in AI. 0:19:47.160 --> 0:19:49.119 You know, when you've got something like this, it just 0:19:49.560 --> 0:19:52.320 to some extent points to some cross currents in the market. Right, 0:19:52.320 --> 0:19:53.520 there's some good, there's some bad. 0:19:55.200 --> 0:19:57.359 Yeah, And what I would say is is that if 0:19:57.400 --> 0:19:59.840 you look at it from a very very macro perspective, 0:20:00.119 --> 0:20:03.960 we have six percent deficits, we have tax cuts coming, 0:20:04.280 --> 0:20:07.600 and we have massive AI spend. As we've seen the 0:20:07.760 --> 0:20:11.639 likes of Alphabet, you know, the likes of Amazon say 0:20:11.680 --> 0:20:14.879 they're going to continue to spend more. They're taking on 0:20:15.040 --> 0:20:18.679 debt to spend more. Those are tailwinds that are very 0:20:18.720 --> 0:20:24.560 difficult for you know, barring some sort of macro shop 0:20:24.680 --> 0:20:29.560 to overcome. So really, the economy might be slowing, but 0:20:29.680 --> 0:20:34.240 it's not you know, slowing into anything that should have 0:20:35.520 --> 0:20:38.040 a sustained negative impact in the near term. 0:20:38.320 --> 0:20:40.360 A Matt shares up more than nine percent. Eric wreen 0:20:40.400 --> 0:20:43.119 Or Bloomberg new Senior Editor, Equities Americas and Bloomberg new 0:20:43.200 --> 0:20:46.200 Senior editor and author of the Everything Risk newsletter, Ed Harrison, 0:20:46.520 --> 0:20:47.240 I thank you. 0:20:47.320 --> 0:20:50.200 Stay with us. More from Bloomberg Business Week Daily coming 0:20:50.280 --> 0:20:51.200 up after this. 0:20:54.640 --> 0:20:58.080 If you are listening to the Bloomberg Business Weekdaily podcast, 0:20:58.320 --> 0:21:01.880 catch us live weekday afternoon from two to five pm Eastern. 0:21:02.000 --> 0:21:05.040 Listen on Apple CarPlay and Android Auto with the Bloomberg 0:21:05.119 --> 0:21:09.399 Business apt or watch us Live on YouTube. 0:21:09.800 --> 0:21:11.680 I said, we were going all in on the economy 0:21:11.680 --> 0:21:13.199 this hour. We kind of do that every day, but 0:21:13.440 --> 0:21:15.400 you know, that's kind of what we do, but we're 0:21:15.400 --> 0:21:18.159 doing it from a few different angles on that. I 0:21:18.240 --> 0:21:21.000 want to bring in Stuart Pauli's US and Canada economists 0:21:21.000 --> 0:21:23.600 for Bloomberg Economics. He joins us here in the Bloomberg 0:21:23.600 --> 0:21:26.720 Interactive Brokers studio. We want to broaden this out to 0:21:26.880 --> 0:21:31.280 the entire world. The economic effect of potential conflicts. Bloomberg 0:21:31.320 --> 0:21:34.280 Economics team is out with a special report about global 0:21:34.359 --> 0:21:38.560 risk is called Flashpoint Counting the cost of potential conflicts 0:21:38.960 --> 0:21:41.320 US China war over Taiwan, the cost of escalation on 0:21:41.359 --> 0:21:44.760 the Korean Peninsula, war between Russia and Europe, kind of 0:21:44.800 --> 0:21:47.440 modeling this stuff out. Venezuela is in there as well. 0:21:47.680 --> 0:21:49.880