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Bloomberg Television1h 32m

AI Trade Roars Back, Anthropic IPO Outlook, Nordstrom Co-CEO on Going Private

Jitania Kandhari, Nathan Sheets, Liz Westcott, Gary Marcus, Tiffany McGhee, Evan Schlossman, Dan Niles, Pete Nordstrom, Dana Telsey, John Imah, Romane Bostick, Bonnie Quinn, Jatanya Kandari, Norah Melinda, Carol Masser, Tim Stenovich

Interview, Fireside Chat, Panel, Roundtable
  • The AI trade is projected to drive U.S. growth as a robust engine despite potential post-election policy headwinds, with expectations for the market to broaden from hardware enablers to software, financial, and healthcare adopters similar to the 2000 internet cycle.
  • The Anthropic IPO is anticipated to be a defining event with a valuation range of $1.4 trillion to $1.5 trillion, potentially serving as the second or largest IPO ever, while market pricing reflects a scenario where AI model prices decline and compute costs rise exponentially.
  • Investors expect margins for companies like Anthropic to normalize from current highs toward 15% to 20% as compute availability increases, and the market will scrutinize the structure of $900 billion in long-term compute commitments as either assets or liabilities.
  • Dan Niles anticipates that even if the AI market peaks, further rallies of 25% or more could occur before an eventual correction, while Gary Marcus predicts a future shift toward local processing as cloud computing requirements decrease.
  • Market pricing reflects a roughly 60 basis point higher rate environment through the March Federal Open Market Committee meeting, with a specific expectation of a 25 basis point hike in December and potential additional hikes early next year if oil prices remain high.
  • The 10-year Treasury yield is forecast to remain at approximately 4.8% to 4.9%, supported by market forces that pull rates down if they rise, with a projection for inflation models to rollover in the second half of next year if dollar and oil prices stay flat.
  • Real rates are expected to need to be normal to negative to allow the U.S. to grow out of public debt, while the Federal Reserve may hike more frequently than previously thought to address inflation and prioritize returning it to 2%.
  • Economic data suggests the U.S. economy may be stronger than the 2% baseline assumption, with underlying growth potentially exceeding previous estimates despite homebuilders facing pressure from rising mortgage rates and affordability issues.
  • Woodside Energy aims to create shareholder value with the Louisiana LNG project targeting its first production in 2029, relying on Henry Hub remaining structurally cheap through 2026 and strong global energy demand in Asia.
  • Fossil Group expects to benefit from increased consumer spending following third-quarter results and raised annual guidance, while Nordstrom plans to open up to 50 new Rack stores annually to drive expansion and expects to focus on fundamentals now that it is private.
  • Spree AI predicts a 40% to 60% higher conversion rate for consumers using its virtual trial and sizing tools, and analysts expect the retail sector to see continued investment in store formats and brand collaborations as competitors like Saks exit.
  • CoreWeave projects annual revenue between $13 billion and $13.3 billion for the current year and is expected to secure another loan with an investment-grade rating, while Microsoft may fund its AI build-out using internal resources.
  • Michael Burry's return to a long position in Lululemon is viewed as a bet on management turnaround ahead of the December 11th earnings report, which will test if the stock is an attractive opportunity based on fundamentals.
  • The Philadelphia Semiconductor Index is expected to continue its recovery having recouped all post-election sell-off losses, and the Grand Theft Auto 6 release next week is estimated to generate $1 billion in pre-sales.
  • The market expects equity investors to focus on bond market activity upon reopening as the AI trade is driven more by the cost of capital than technology, with key Fed speakers including Williams, Goolsbee, and Barr expected to influence the rate outlook.
  • Key risks include the sustainability of AI financing models and the unit economics of compute deployment, alongside potential volatility if the Anthropic IPO valuation does not meet market expectations or if inflation remains sticky.
  • Investors face a perception that the Fed must hike more frequently to address inflation even if hike sizes remain standard, and there is a view that the U.S. economy is stronger than previously thought with real rates needing to turn negative.