Anthropic flags AI risk in IPO filing, OpenAI scraps new model, AMD to buy World Labs | The 8:30

Well, good morning and welcome to the 8:30. Little glitch there. Um, I don't know what happened to our intro. Um, look, coming into the Tuesday, futures are green. >> It's right there. It's the >> It's right there. Futures are in the green, but all eyes are on one thing and one thing only right now, and that is anthropic. We got the news late last night. [music] Reuters has uh some of the reporters have reviewed a uh a copy of the IPO perspectus philanthropic uh long awaited. We thought we weren't going to get that from the company officially until at least post the midterms. >> Well, we're we're not I mean official we're really not. That's true. We're really not. Reuters has apparently reviewed an early copy of it um and pulled out some numbers that are are really quite drastic and really quite stark. I just want to run through a few of those. Top line 2025 revenue we keep in mind they don't include 2026 figures here 2025 revenue nearly $4.6 billion up 12fold from rough roughly 400 million in 2024 that is a massive growth operating loss however has grown to 8 8.06 06 billion in 2025 against 2.98 billion in 2024. More growth there in the other direction. Something else I want to point out, compute and infrastructure expenses. 7.33 billion in 2025, which is about three times what it was the preceding year and more than half of the total 12.65 billion in total operating expenses. This is an expensive company to operate. They're projecting $518 billion, basically half a trillion dollars in planned compute and cloud and infrastructure obligations in the next few years. It's an expensive company. >> So, so to me there there are sort of two parts to this to this story. Well, there let's call it three parts. Part number one, the financials, which yeah, I mean, we knew the company was losing money, and I do find it a little curious here that they didn't get the 2026 numbers. They only got the 2025 numbers. Come, I'll come back to that in a second. Second is the risks. We knew that the risk factors in these IPOs would be excited. >> I said this on this show it was going to be 100 pages long >> and indeed you were correct. And third is who leaked the prospectus? Why you know whenever something like this comes out before it's supposed to come out >> you you have to wonder who did it come from? What were their motivations? What does this do for them? >> That's right. >> Um and so those are kind of the three tracks I'm thinking about for anthropic. >> Yeah. I mean I this this kind of like free association here, right? This is a lot in this thing that kind of hit us yesterday. >> Um so big the big thing that kind of that you just touched on was who leaked it and why. What's happening today? What could be happening later today? Something in San Francisco. Maybe it's a open AI devel uh dev day, right? Interesting that you're spinning some conspiracies. That's some heat. >> No, no, no, no, no. I'm just bringing up facts. Okay. I didn't say anything about it. >> Okay. Why can't I spin a conspiracy? Who cares? >> Hey, correlation is not causation. >> So, that's one thing, right? You mentioned were the 2026 numbers. Why were those was it a selective leak of the prospectus? It sounds like when you read the reporting that they had the full prospectus. >> This is not saying we saw part of it or we only saw a piece of it. We saw the >> So, why isn't the numbers that are really more curious about it? >> We're threequarters of the way in the You would think that those numbers would be there. You mentioned the spending on compete, right? 7.3 billion last year. I mean, we know they're spending a billion a year alone on SpaceX compute, right? So, we know that number obviously it's going up, etc., etc., but also the the actual loss, what $42 billion for 2025. >> That's right. Now, some of that has a chunk. >> It includes a chunk that's possibly will be converted to open uh sorry to anthropic stock. That's right. Which some people are saying this is a real expense. This is not some fairy tale expense. This is actual real money that could go out the door for them. is not a small loss. This is a large loss. So, it's a very interesting kind of peak into this world. Um, it's kind of scary from for a lot of reasons. Uh, if you're an investor, this is a big bet on what the $2 trillion valuation, what's going to happen in the future. Uh, so I'm not saying it's a this is you stay away from it. But it's just kind of these big numbers are kind of scary to see for a company becoming a public company. >> And we knew that the numbers would be like this, but it's another thing to see them in black and white. the one the thing I would bring up about about the the the loss that you were talking about. So again, $42 billion according to Reuters, it's includes $34 billion in an accounting charge that reflected an increase in the estimated value of financing that could eventually turn into anthropic shares. That's right. So my question about that is, is it recurring? In other words, is that a rolling situation over time that we could see repeated >> that kind of accounting charge? So that's >> or is it the full charge as of right now? or just a one time. >> Um, so I mean, so I think investors, I mean, we saw from SpaceX, it doesn't matter how much money you lose. That's right. >> As long as you're going to make money in the future and >> as long as the story's good >> and that's what we don't know. One other thing I would point out, um, just from the financial perspective and then I think we can get into the risk factors. From the financial perspective, a quarter almost a quarter of its revenue came from two customers alone. >> Yep. >> Now a quarter is not I mean it's not half. >> It's not half. could be worse, >> but it's still it's two anchor customers and they point out the prospectus warrants per Reuters that many of their largest customers are not on long-term commitments, which means they could pull their money in their spending at any moment. >> Yeah, >> that's a bit risky. >> Same with AI comput deals like that's six month I think six month window for you could pull out of the deal. Um, noting that the revenue of 4.6 billion for 2025, not great. Again, 2025, right? >> It's really going to be interesting. Maybe this is this is just a lot of us you know, bloiating here. And really the true number is that 2026 Q2 or Q3 numbers like that'll really sell the case for for this IPO because these all seem kind of like not great. But again, >> you know, it's funny. I just want to mention the existential risks, right, that that >> Yeah, let's talk about that. Let's talk about those risk factors. I think the FT said 80 pages of the 261 pages in the filing were were regarding [laughter] the comparison regarding risk factors. >> 80 pages against 48 describing the business, >> right? And it's also a lot fewer than space than the risk factors in SpaceX's uh perspectus. But yeah, that quote was that a advanced AI could pose quote catastrophic or existential risks to humanity. When's the last time we saw the word existential in a risk factor? >> When's the last time you saw an IPO filing say we could end the human human race >> as correct me if I'm wrong. I don't think the SpaceX IPO perspectives laid out a risk of ending humanity. >> No, I didn't see that in there. Um, so [laughter] you're telling me like this is just I don't I can't believe we're in this world right now. I'm sorry. I take a step back. We're in a world right now where we see an IPO fil that talks about, oh, we might end the human race, but hey, you still might want to invest in us, too. >> Well, and >> you're going to make a lot of money along the way. Yeah. I mean, well, listen, listen. If you had some milk and you drank the milk and the chances are it could wipe out 10% of the human race, wouldn't you drink the milk if it would make things better? >> Sorry, that was the SNL. That was >> Yeah. Yeah. That was a It was a great bit. >> No, you wouldn't drink the Really? >> But then, but then >> he's like, "Do the milk bit. I already did the milk." Didn't work. [laughter] >> On a on a on a serious note, I do want to note something we've kept talking about here, which is the idea that like, okay, fine. So slow down. So stop your progression. The problem though is that your enterprise customers especially keep wanting that next model which makes it harder to slow down. Anthropic per Reuters specifically points to that and says its customer usage and as a result its revenue is driven by new models that develop quote at a continuous and overlapping cadence that is inherent to remaining at the frontier of AI development translated. We've got to keep pumping out new models. or else the business fails. So, how do you balance that against Jacob Cox's word, the exanthropic researcher, a 10% chance that we're all going to die? >> So, you have all of this and I feel like there so so the numbers here are not great. The risk factors are alarming as we know and I feel like there's also this increasing drum beat in the background of not just for anthropic for this whole industry. Yes. >> How much they are going to need to make over time >> to actually get a return given the amount that they're spending. So in the last week alone, Goldman Bane is the latest Brookings like we um >> um Jake uh Bernstein Jacob Bern not Jacob >> uh >> Jared Bernstein there and it was a J. All these people have come out with these assessments of this and the numbers are huge. And then today our friend Torstston over at Apollo also did an analysis and he looked at okay if you look at the bottoms up analysis in other words if you look at the analysts who cover the tech sector specifically and they say okay what is operating cash flow for tech going to be $2.4 trillion by 2028 is the number they came up come up with those individual analysts. So that's an increase of over $1.2 trillion. However, if you look at the other sectors in the S&P 500 that are not tech, you would think that they if they're going to be paying the tech sector for this AI, their uh numbers would also have to go up, >> be commensurate, >> but they're not. >> They're not >> if you look at those estimates. So, that's just another way of slicing the question of like how is all of this going to get paid for? I mean it's interesting to see if obviously we haven't seen the filing but if they mentioned the risk of open models right the open weight models like you know >> one would have to think that they would have would have mentioned that as well >> you would think um because of the fact that could just take the head off that that trade right talking about all this investment into physical uh buildout for AI and there's no commensite return on the other end who's left holding the bag you know it's >> well that so that is the most important question of this whole thing yeah right like we we've been debating and you know we've had this ongoing debate okay about the concerns about the future of AI you know people like Ed Zitron have been pounding the table on the capital concerns and the financing concerns for a while okay and then you have the investment community that is still all in on AI in terms of investing in these companies in this stock and the private credit of all of it so the question is if it doesn't work who gets left holding the bag that's the question >> and this this what I keep thinking about with all the debt that gets issued, >> right? >> At some point that debt comes due >> and there's got to be someone holding the bag at the end of that >> and maybe it all gets paid. Maybe it does. Maybe all of this works out and everything is fine and AI makes our makes the world amazing. We don't die from it. >> Yeah. >> It cures cancer. It makes us all more effective. It improves our lives. Everybody makes tons of money and everything goes great. >> Yeah. >> That's the that's the you know, that's the optimistic scenario. >> Sure. I think we should kind of move on to the I want to keep going on the risks risk factors though. >> So go ahead. Yeah, go. So thank you. [laughter] Well, I mean the so I I mentioned today about open AI and about how dev day is today, >> but also right they mentioned that they scrapped their latest model due to safety concerns, right? >> Talking about you know how GPT 6.1 Astra uh >> basically kind of was during internal testing uh was causing some problems. Essentially what they're talking about is they weren't able to control sort of safety controls there with with the with with the models, right? There's two things they talk about, right? Uh that was interesting. I saw this art right article about it. Basically there's measurement alignment where they talk about alignment with with human values and being safe and things like that. Then there's also scope authorization where the thing kind of goes on its own and tries to figure out how to solve a task. Now the the the labs are also pushing that because they want to say how I don't want to I don't want the the the model to to give up too easily. We want the model to keep pushing >> and I don't want it to have to come back to me every time. >> So you have that push pull where keep doing the job, keep pushing forward, don't do anything bad. How do you how do you sort of control that? And that's what they're having issues with and they and they think that they're going to control model laziness is what is how uh OpenAI talked about it. So you know you have this issue with alignment versus safety and then also the scope authorization. You know they talk about the newer models we're going to scrap this one. a newer model is going to come out that's gonna be gonna have safety at the focus and be okay with these things. Are we supposed to believe that? >> And by the way, you know, the other thing it increased on deception, higher levels of deception, which is not really what you want out of these models. I thought it again, like >> maybe I'm too, you know, conspiratorally minded this morning. I thought it was interesting that OpenAI in the spirit of openness comes out and tells the journal they their their head of safety systems did an interview with the Wall Street Journal. That's who had this story that they were scrapping this model. Came out and said we're scrapping this model. We'll have some other new ones that will incorporate the learnings from this. But we're scrapping this one in the interest of of doing the right thing. >> I mean interest of humanity. First of all, you don't have to tell anyone you're scrapping. you need to scrap it and then you do the next model. Right. And then again we talk about >> when we talk about the anthropic IPO the safety stuff. Why did OpenAI delay their IPO? >> Safety. They they say it's because of safety. >> Yeah. >> Right. Right. I mean at at the same time um you know you they have that developer day that's coming today. Reportedly there going to be other products and models that they're going to be coming out. It just won't be that particular one. Reportedly, we're not going to get the um hardware introduction yet. That's been rumored. >> That feels like a thing you save until you're ready to IPO. >> But also, they they teased a potential agent, right? That was Yes. >> Right. Like a amuse style agent. >> And this goes back to the bigger picture of of the of these companies competing each other, right? So about six months ago, I would say Anthropic was ahead, right? They were doing quite well. Their latest model was killing it. And then now people talk about OpenAI, they've caught up. The new versions of Codex are much better. there may they might be better and more reliable than anthropic and then then the next model will come up from anthropic and then they'll overtake you know so we're in this race this war here right this of of these models kind of competing against each other um but the problem is the pu the more you push the more risks >> well this this is exactly what anthropics is pointing out in their perspectus saying the business imperative says that we can't slow down in our development now what what could we maybe see I think you might see more of uh like anthropics project glass wing where they uh put together their mythos model that's supposed to be extraordinarily powerful, extraordinarily dangerous. And they've locked down access to only themselves and a very small circle of partners. And when we say partners, we mean like developed world governments, uh JP Morgan and Goldman Sachs, like some of the most reputable firms in the world to do uh preliminary defense. I think you could see some of that. But at the same time for these guys who are looking to IPO, who are looking to get massive valuations, who are looking to get investor money if you can't slow down then what are you going to do when you have to keep coming out and saying ah something happened I don't know what to do. >> What's interesting about the mythos um situation to me as well is the knock on that was not that it would get out of control. The knock on that was that to your point it was too powerful. >> It could be used uh by bad actors to take off the international banking system. >> Right. Whereas the latest wave of models, the latest models, the the concern is that they are doing things that humans do not want it to do. >> They're acting alone. The model itself is dangerous. >> Right now, Jensen Wong would say that's an engineering problem. >> They're not giving it the right directions. However, again, coming back to the anthropic risks factors, one of the things they pointed out is it is difficult to give the models specific enough instructions. We talked about this yesterday to anticipate everything they would do because they don't act like humans. They don't >> for lack of a better word think like humans and so it's difficult for us as humans to anticipate and instruct it properly. >> Well, this is the they call it in Silicon Valley like the paperclip problem, right? And the idea is if you take an AI model and you say look make me as many paper clips as possible with the given resources. The AI's line of thinking will be okay well how do I get the most energy to make the most paper clips and the most resources? Well, wouldn't it be convenient if there were no humans standing in my way? If there were no buildings standing in my way if if the the earth was scoured of resources just to make paper clips and you've solved the problem. Yes, but you've done it in the absolute wrong way. And you wouldn't have thought like as a human to create those parameters. >> No. No. You wouldn't have thought you would have to say, "Hey, don't kill people to make paper." >> Are you going to make Clippy? Are Clippy going to be a real thing now for Microsoft? Remember Clippy? >> Oh, we all remember Clippy. >> Clippy. [laughter] >> I mean, this is kind of like the little Muse guy, right? >> I kind of want to go back to something you just really touched on with the bad actors. It was already seen that anthropics models were being used by the Iranians to to to work on >> Yeah. The Houthi militias, Iranians, Chinese. It's they already found. Was it anthropic or was it opening eye? >> It was anthropic. They put out a risk report saying they've been used for ballistic missile modeling and targeting um >> drug. Yeah. Yeah. Uh biologic warfare weapons and drug >> you guys saw the FBI the FBI just got hacked. All of their personnel records got hacked. I don't even know if that even had to do with AI. It was just >> Anyway, leaving that aside. So, let's get to regulation then, right? And whether there is going to be any reg. seems like TLDDR there ain't going to be any regulation even though there's all these people meeting in um in DC today at least not in the short term right but you've got all of the luminaries who are going to be having lunch uh with President Trump today and then separately you have a bunch of meetings that are scheduled to happen on the hill between members of Congress. Now, some of these members of Congress already have in introduced legislation, but because um uh Congress is in the House is in recess until post the midterms. >> Yes. And Senate's about to go in recess. So, it seems like there is not imminently anything happening even though there are pieces of legislation on the table, right? We know that um Bernie Sanders has proposed legislation. um Ted Lou uh who's a Democrat and Nathan Moran who is a Republican um a bipartisan bill that has a kill switch among other things. Ted Lou has been tweeting up a storm about about these dangers and all of this. >> But even though these guys are all going to be in DC today, >> it doesn't seem like it's going to come up with much. >> To your point, legislating always takes a long time. The House is already in recess and won't come back till after the midterms. Sentence's getting there quickly. It's worth noting later this week we'll get a Senate subcommittee hearing and the title of that I think is worth quoting rogue AI securing the homeland against AI agent attacks. That'll be uh they're expected to call several third party AI researchers of the types who have been kind of identifying some of these problems and these threats to start working toward that. Uh back in June, Florida Attorney General James Oatmeer, a Republican, sued OpenAI, just yesterday uh put out a temporary injunction trying to say that look, you have to stop marketing your products as safe. You have to stop pushing your development. Um all these kind of requirements. You have to uh if you're going to develop new models, you've got to use third party guard rails. >> And he says the only reason that something terrible hasn't happened, >> grace of God. >> Grace of God. That's right. >> Like basically, it's an accident. It's only it's only like by luck that we something terrible. But this is the problem with uh the Capitol Hill approach which will come and should come. >> But uh litigation lags technology. I've said this before. Litigation lags technology. >> Legislation lags litigation. Think about social media. How long did it take before we saw real lawsuits with real teeth? And how long did it take until we saw real legislation? >> Well, and as I pointed out, we already have some litigation. >> Have we seen legislation with real teeth for social media? It's starting. It's starting. >> I haven't seen anything yet, but I mean, maybe maybe it's day. >> There there are efforts on the hill, right? But this is my point. You got the major meta suit. Um when was that? Last month. Feel like times times. >> Yeah, last month. That was really the first kind of landmark case we've seen for uh this harm social media is doing to teenagers, for addiction rates among teenagers and all those kinds of things. Um the suicide rates you see and now we're waiting in legislation. Take AI where the technology is changing every day. How do you bridge that gap and keep up? >> Yeah, I think I I mean we're just just thinking out loud. talking about, you know, it all started with that amai emade emodai. >> Amade emade like emodus. >> Emodus emade >> emay letter, right? That kicked off earlier this month. It kicked off all this this sort of the the >> what do you want to call it? The the the whole mess of this stuff going on right now. Maybe there's like, you know, Congress Congress can do stuff like special committees and things like that. Maybe they should start there. Right. Right. And and by the way, our our friend Dan Ies is going to be on with with Brian Sazy um in in on on Unleash today. And I know what he's going to say because I've heard him say it. Do we really want to leave legislation and regulation of AI to Cong members of Congress who are working on flip phones and Blackberries? That was his line, right? You know, he's very concerned about competition from China. And what I'll say is like not all members of Congress are idiots. >> Exactly. No, some of them actually know what they're doing. And like pedigree. >> Exactly. You know, look at Mark Warner who had who has been a leader on, you know, so yes, there are people who know what they're doing and and I understand the China argument, but like when the when the and maybe it is regulatory capture. I don't know this whole idea that these guys are begging to be regulated because they want to protect their >> you slow everybody else down. >> I get all of that and yet and yet and yet. Well, let me step back for just a moment and do the philosophizing for us, for the three of us. >> Go back to the nuclear race. >> All the scientists working at on this around the world looked at that technology, looked at what they saw at Los Alamos, looked at what happened in Hiroshima and Nagasaki and decided amongst themselves the only appropriate measure was for it to be governed by a global body because they were worried if it was left to the military that has problems. If it's left to citizen scientists, that has problems. Leave it to a major global body that can coordinate control and regulation. I would not be surprised to see that kind of thing happen here. It brings Dario's letter brings me back to a letter and I can't remember the scientist who wrote it, but a scientist who's working on the nuclear technology wrote a letter to the White House saying, "My intent is to scare you." >> Right. Yes. >> Because the technology is that dangerous. It feels like we are back at that moment again. And I understand the argument that Congress has historically not been that great at legislating technology, but at the same time, when you have a technology this powerful, you see the need for some kind of governance. >> Yeah. I don't know if we'll get a global >> No, probably not. As much as I would love to see that, probably not. I mean, in part because the president of the United States does not >> well and also once if Democrats take the house after the midterms, all of this in Congress is going to kind of sit for like two years. But just to kind of just just sort of piggyback on what you were saying earlier, it's like you can attack Congress for being inept or whatever, but it's the only Congress we have. And you can't have the you can't be going going to Trump being like, "Yes, help us. Give us a lot of money. Give us a lot of resources. Let's make AI great." And then not and be like, "But don't regulate us." Like, it doesn't work that way. what they're they're saying regulate. I thought I was asking for regulation. >> I'm just talking about what Dan I said, right? There's people that AI bulls that are saying no bull argument. >> No, we got to fight we got to fight China. It's like well you can't have both ways. You can't have it give me all the money and all the resources but don't do anything on my to hold me back like no sorry there's there is on those >> and there's a way of regulating them while still allowing them to grow. >> That's right. you know, is it as Jensen has said, it doesn't behoove them from a business case perspective to put out products that are not controllable. >> That's right. Exactly. Right. So, he would say they could regulate themselves and yet like there, you know, there could be a balance. >> Industry historically does not h any industry does not have a great uh track record of regulating itself. >> It's hard to look at something from the outside when you're that deep in it. >> Yeah. >> Yes. Exactly. >> All right. Well, we're gonna take a break. Coming up. [laughter] Coming up, we're going to talk about another IPO that is being delayed, by the way. It is Aura [music] of the Aura Ring. We're going to talk about why that could be happening next. >> If you love it, then you [music] should have put a ring up. >> [music] >> Heat. Heat. [music] [music] [music] [music] [music] Heat. [music] Heat. [music] >> [music] [music] >> Down. [music] Down. [music] [music] [music] Down. >> [music] >> Take a deep Heat. Heat. [music] >> [music] [music] [music] [music] [music] [music] >> Ah. >> [music] [music] [music] [music] >> Boy, what a >> Welcome back to the 8:30. We will not be talking about football. Not on my watch, but we will be talking about a delayed. >> Come on. What's going on here? What's going on here? [laughter] >> We will be talking about a delayed [applause] IPO. Okay, let's talk about Aura. >> That's what I'd rather talk. >> Do you think the Bears players are wearing Aura rings? >> Some of them are. >> Yeah, exactly. Whoop straps, Aura rings, and the rest. Um, Apple watches maybe, although those I would think they would get smashed if they're playing. >> Oh, definitely. >> Ora rings are a little probably or easier. In any case, Aura is delaying its IPO. Um, and this there's been a string of these companies lately. What's interesting is Aura was supposed to come public this week. >> That's right. >> Right. And now it's saying no, it's not doing it. It is saying that this is because of market conditions, uncertainty in the IPO market is what uh the company talked about here. Um and uh Tom Hail in the statement, he's the CEO of the company. He says, "We aim to deliver an extraordinary IPO for our employees, investors, and we have the luxury of choosing our moment. In the meantime, we'll execute against the opportunities ahead." So, hitting the pause button here um on what was a pretty anticipated IPO. >> That's right. >> Yeah. I mean, look, it and this is actually a pretty kind of successful company, right? 5.7 paid members. They say the company's profitable. Uh they see 90% revenue growth this year. you know, uh, the Auro Ring 5 has had a strong launch apparently. So, this is all very positive things. So, what's going on? You know, what I noted here and was very interesting is that many of the most of the selling stock is from insiders. >> It's not going to actually raise the company a lot of money, right? It's mostly about a some sort of liquidity event, right, for a lot of these in uh these insiders there. Um, >> and then the question is, did they think that and they said it was oversubscribed, right? But was it enough for them to sell? Now, I think that's the big question, right? It wasn't enough money. >> Yeah. It's also interesting just to step back and look at kind of the broader IPO market in 2026 and where we were coming into this year. All the bankers on Wall Street were saying this should be a banner year for IPOs because we got SpaceX. We're probably going to get Anthropic. We've gotten kind of a string of other IPOs that have done pretty well even if they weren't huge banner names. But to your point, this is not the first delay we've seen this year. Just uh earlier this month we saw tech nuclear which was supposed to be a very big debut in the nuclear energy space and also for the application for data centers that got pulled back as well also citing uncertainty and so is there something broader going on of what are we seeing in the surface that says maybe is not our moment. >> Um Bamboo Insurance by the way was another one was a private another privately held company um that was going to do a public offering. Um so I was emailing with Avery Marquez. She is director of investment strategies at Renaissance Capital. Renaissance Capital and longtime IPO sort of expert. They have an ETF that tracks uh new IPOs. And she said it broader macroeconomic volatility is almost certainly a driving factor here. At least we're talking about aura. She said maybe there were some specific things in the case sort of sector specific things in the case of tech or in the case of the insurance IPO. Um but she said you know when you look at the spike in yields rate hikes that there is some pressure on growth companies. And then I also emailed with Jay Ritter. You guys might know him from University of Florida. He directs the IPO initiative here. And he said specifically about Aura, there are some valuation concerns. If you think about other consumer IPOs that just had one product that they kind of have stalled out. He brought up GoPro Pelaton, you know, where you have seen these sort of single product companies that haven't necessarily performed very well. and the valuation that was being put on Aura he said kind of assumes that growth high growth is going to continue. So you would think that they would have sort of discovered that before the end stages of the IPO process, but then maybe if you layer on the higher yields and some of the other concerns, right, >> that's why you get that >> the macro is not great. And also to to Aver's point uh from Renaissance, uh there's a really good metaphor from uh Amy Woo Silverman at RBC Capital Markets. uh she said this to me in PR just about a month ago on one of our shows that the market looks right now a lot like a duck in the water kind of floating along underneath the surface of the water the feet are kicking like crazy and the point is and this comes back to our discussion yesterday about the dispersion trade yes the S&P is by and large kind of trending up nicely and smoothly underneath the service we're surface we're seeing some pretty violent volatility pretty violent rotation there have been single days where whole sectors have dropped two or three% that's a tough market to bring an IPO. >> Yeah. >> Up in. >> Um I will say there is an IPO that's scheduled to price today when you talked about it before. Acceleration. Remember this one? >> Acceleration. >> Acceleration. >> I wonder what what where was that word born [laughter] like in what board like you know or what founders are sitting around and think of acceleration. Anyway, it's it help they help build data centers. They do like infrastructure and thermal management and they're trying to raise as much as $720 million. Again, that's supposed to price tonight. Mhm. >> We'll see if it happens. >> Let me give you a fun anecdote. You know the band Evan Essence? You remember this like early 2000s band? >> You know the story of how they got their name? >> I do not. >> The uh the the founding members sat down one night with a dictionary and just flipped it open to a random page looking for names and saw the word eancence and they were like that sounds cool. >> What does eancence mean? >> I don't actually know but I wonder how much of that happens with some of these companies. >> We have to go to a dictionary. >> I just want to quickly quickly just talk about like also the Fed meeting coming up, right? This is also we're on this hiking path and if you have cash like do you want to be deploying it on IPO stuff when it's becoming more more expensive to to deploy it right you can just keep it somewhere else and that's right >> and we'll talk about that but yeah I mean it's just a tough tough time right now especially after so much money went into the SpaceX IPO that's right a lot of competition for capital now I'll tell you who else is watching the IPO market very carefully [laughter] >> come on >> we need to like give a segue award every day. >> We need I don't >> like we need like a little trophy, a little segue trophy every day. >> I think so far I've won today. So far I've won. I'll tell you who else cares. Bankers on Wall Street and at Goldman Sachs, which has been one of the banner names for a lot of these big IPOs. Got the lead right position right behind Morgan Stanley on the SpaceX IPO. A lot of palace intrigue suddenly coming out of Goldman. The news overnight from the Wall Street Journal citing people at the firm reporting that Goldman Sachs, the board there, has started discussing a plan for President and CEO John Waldron to take over for current CEO David Solomon, either late 27 or 2028. Now, step back a moment. John Waldron's been there a long time. He's actually been there the exact same amount of time as Solomon. They've been at the bank the same amount of time. Brought him over. That's right. Brought him over together. And Waldron's always been looked at as the next guy, as the guy who was going to be in line to take over whenever David decides he wants to go DJ in Greece as a full-time gig and stop running the world the world. >> But he's probably going to continue to be chairman even if he will be he will be chairman as CEO, >> but he'll be stepping out of kind of the day-to-day role. And there have been reports that Waldron's been taking on more of the CEO responsibilities and then some of the figures below Waldron have been taking on some of his figures and responsibilities. Now, there's some really interesting intrigue. Back when I was covering hedge funds, we were all over this uh last year. There was some confusion and concern about what was going to happen, when the transition was going to happen. And to play Kate Waldron and Solomon, the bank, the board offered them both an $80 million five-year retention award in early 2025 to say, "Look, guys, hold on for a little bit. Stay on. We do have things in the works." For Waldron, it was a promise of >> this is you are not waiting in vain. You are not going to get passed over. This is going to be a big transition and really only with the exception of Jamie Diamond at JP Morgan. David Solomon's become the face of Goldman Sachs. He's one of the global leaders of banking. It would be a big transition for the sector. >> Yeah, it would be a big transition, but it doesn't feel like that uh revolutionary a transition. I feel like when Blankfine went stepped down that I mean he that was a big that was like a >> size and it's taken um Solomon a good amount of time to find his footing or took him along I mean he has now found his footing like I was looking at the stock performance the stock is up more than 300% since he took over CEO which was in October of 2018 that's an outperformance of the broader banking sector it's an outperformance of JP Morgan by the way um and it's an outperformance of the S&P 500 but like for the first couple of years it didn't do a heck of a lot. You know, he was struggling with like the sort of do we want to be go into retail banking? >> Well, the consumer banking thing was a big hit against him that he had a lot of his deputies really turning against him >> and then they sort of abandoned that and then went back to the Goldman Sachs that we know and love, the killer, you know, right? Like that, you know, it's so so it's been um it's been interesting to watch his tenure. >> One one quick thing just to note like that. So Salman's not going anywhere, right? is going to be executive chairman for a couple of years even when potentially reportedly when Walder takes over. >> He will have more time to DJ. >> He will more time to DJ. But but the thing is is that sort of there's there's always a >> the incoming CEO. It's always kind of like you have a guy standing behind you who's still exec chairman and it's sort of not an ideal situation to have your old boss kind of still there uh running the show from like a from the board point of view. You kind of want a a fresh sort of >> you want a clean cut. Yeah. Yeah, although very close though may not get that. Maybe it's fine. Uh Tony Tony Fred the spokesman for Goldman said when they asked about the story said quote there's no definitive timeline didn't deny it. So it might just be one of the things that's like you know >> the everyone secret everyone know everyone knows about these days >> and let's be very clear these big firms have succession talks all said it is required by investors that you have a succession plan >> but now it seems it's getting a little more serious. The other question this will open up for the firm is that let's say Waldron steps up and gets the job as CEO. That means someone else has got to become COO and president. The three people in the running are the two heads of their global investment banking desk and then the head of their global asset management unit. >> If one of them or someone else gets that job as president and COO, then who leaves because they because they got passed over? >> And if you're Goldman, who's the one you're okay with leaving, >> right? Who are you willing to let walk out the door because they got passed over? You don't want the asset management guy to walk out with all these, you know, [laughter] trillion dollars of assets coming. Um >> um guys, this I want to talk about the broader market for a little bit. Um I do not win win the segue award today. Um let's talk about bonds. [laughter] >> I'm just going >> Well, Sal was I guess he was a high yield guy. Yeah. >> Yeah, that's right. Yeah. >> But let's let's talk about what's going on bonds because we are still seeing bond um yields at pretty high levels and >> pretty high. Truly multi-deade highs. >> Pretty high. Um and the headline or returning to normal depending on who you talk to. Um the headline this morning is that Jim Biano who has been a bond bearer for a long time is turning bullish on US treasuries. Um he said this in um an interview with Bloomberg and he he kind of he doesn't say like he's all in. He's sort of like I'm putting a toe in the water. It's a value play. Um and that he says that if you see yields above 5% that it makes things more attractive. Now, this kind of echoes what Rick Reer of Black Rockck told our Brian Sazy just last week, and I want to play what he had to say about bonds at these levels. >> When you hit five, there's a lot of buying that comes in. I wouldn't suggest to people like jump in on the 10-year yet. Like, we have the growth is strong, we have a war, we have a huge amount of supply coming. I think you got to be cautious on the 10-year, but so can you drift a bit higher in yield? You could. You definitely you definitely could. And you know, part of why I'm in this mode of like, you know, keep my interest rate exposure moderate, just keep clipping coupon. And, you know, my funds are up this year. >> So, Rick's sitting pretty uh in that his funds are up this year, >> you know, but he but like but that point that you do when you hit these thresholds that more people, you know, do tend to come in. Um is pro sounds like it's kind of what Biano is looking at too. >> Yeah. Sorry. Go ahead. Go ahead. >> No, go. So, basically, no timing. It's all about timing. It's timing right now. Look, if you look at the TLT, right, the big the big bond ETF, right, has been a dog, right, for many years, even before, right? Even before this recent just destruction with yields spiking, right? So, the question is, is now the time to come in? Um, you know, Bianca talking about, hey, look, I'm not he's not I'm not even saying it's he's saying that the bond yield ripping is not going to stop. It's it could continue higher, but now is the right time. Riskreward is is good right now. Uh, supposedly he added some to the wisdom tree fund, right? Some duration there. >> Looking good there. uh you know we talking about you know you mentioned Rick Reer also he said he told the journal also he's dabbling in in longer dated m maturity uh bonds so maybe it's just the timing is right right now uh but a lot of people have been burned by this trade >> yeah the other question is you have to you have to think through why are yields rising >> part of the problem right now is that there are a lot of different drivers that could explain it you have the Fed uh on what looks to be a tightening cycle with rates set to rise uh probably at least once more this year if not twice And into 2027, you have the war in Iran, which is pushing up energy prices all over the world and pushing up inflation. >> And we're seeing correlations between yields and oil at the highest degree. >> Isn't it bonds and tariffs that are sort of making it the Fed have to act here, right? It's not like the Fed's acting out of nowhere. We feel like right now, you know, it's like >> right. And it's also the uh the AI boom, which is a kind of a historic investment cycle, the competition for capital there, the debt issuance there that's taking out potential buyers >> and the growth and the that's >> creating. And so this is the other argument. The US economy is growing. Yes, the rate has slowed down a little bit in the last few quarters, but it is growing. This is Scott Besson's argument as what he calls himself the bond trader chief. We will grow our way out of this. The AI boom is strong enough to carry us out of this. If you're looking at the bond trade right now, the question you have to ask yourself is which one feels more important to me and which one feels like it's going to be the one that wins out? >> Which of these reasons? >> Yeah. Which one wins? And I see you see a lot of these strategies talk about what they're saying is look this war can't go on forever. We're going to see that potentially end at some point which will bring down oil prices which will bring the pressure on prices which will bring down the Fed talking about hiking and maybe restore some normaly there and then that makes the bonds at this point an attractive investment because yield will have to come down right that's the argument right in a nutshell and it's the bet that this war will end soon >> let me give the bear tick even if the war ends quote unquote tomorrow the energy system has been fundamentally changed there is damage that will take years to recover over at refineries, at uh export terminals, at ports, there is a whole industry of shipping where prices have just soared for tankers. And those will take time to come down. All of this >> take time to come down, but they're not going to go up. >> They're not going to go up. >> I mean, the problem is you can't just reset overnight. >> Maybe there's a new floor, but there's also not a higher. >> But if there's a new floor, that's going to ripple out throughout the entire market. Is there now a new floor for energy pricing? Sure. Is there now a new floor for yields? And then will that spur more appetite for bonds, right? >> You know, uh I saw I think I think your Denny was talking about this. I saw someone I think um >> uh online about how your Denny was saying that basically uh I got to read I got to find this thing. I got to find this thing. Hold on. >> Okay. All right. Look, lost of thought lost. >> I mean the thing is that we need a little bug a bug for that too. Like >> that's true. >> Um you know I think the other thing is the question of all of this is timing it, right? Like most humans in the market like Rick Reer is managing billions of dollars um in these funds, right? Dan Iverson of PIMCO is managing billions of dollars whereas most people are not going to be moving around their capital within the bond market specifically that much on a short enough time horizon that they're going to be trying to time the peak in yields. Because we all know we've been doing this long enough, even you Jake have been doing this long enough, you [laughter] know, like it's it you can't time the market. Buffett time in the market beats timing the market. >> That's right. >> So Yard Denny, just real quick, he says that basically the route is due to the um the yen carry trade unwinding as the bankage pan raises the policy rate forcing carry traders to sell government bonds they bought worldwide with proceeds from cheap yen loans. So this is still that's part of it too. That's part of the mix. Yeah. You know, we talked about before like is it because we're concerned about debt? Is it because we're concerned about inflation? Is it because we're concerned about just other things like that? the the AI uh bond boom actually could just be some of these trades sort of unwinding and apparently he says that the trade allowed many governments to run budget deficits without putting upward pressure on bond yields. Now that's coming home to roost, right? So um [snorts] maybe we're not fully out of it yet or maybe that this is just sort of it's over it's sort of evolving. >> We also can't forget the deficit in Washington and I think you mentioned >> definitely has been forgetting the deficit. He brings he I'm surprised you didn't bring it up already. Oh, there we go. [laughter] >> I'm just saying you up, my friend. >> I'm just saying it's a concern. It's a concern as to why >> it's a concern. >> I'm also the kind of guy that that says >> run a def deficit. It's that's what it's for. Like we have the ability to do these things, right? It's fine. We're going to be fine. >> But if you if the argument for the people buying bonds is that they're not buying that, then that then it's a problem, >> right? Yes. Right. Yes. >> Yeah. I also think Ray Dalio's firm Bridgewwater, he's now stepped out, but his firm has kind of kept the ethos alive. They've they came out a year or two ago with a theory they call modern mercantileism, which is this idea of deglobalization that trade uh historic trade agreements and trade partnerships are breaking down. We're seeing countries nationalize, focus on energy security, close their borders down, close their borders down to trade. All of that is then going to drive yields higher. >> Yeah. I mean, speaking of which, you got Jamie Diamond in the Wall Street Journal this morning like effectively saying, "Europe, get your act together." >> [laughter] >> I mean like that's >> which he's been a longtime critic of of your >> This is the Western world essay that wrote. >> Yes. Yes. Exactly. That's what he was talking about. Um guys, guess what's just crossing the wire? Earnings from Carnival. >> I'm Let's I I'm interested in earnings from Let's Break them down. Um let's talk about them real quick. The company coming out with earnings per share on an adjusted basis that beat analyst estimates a buck 43 versus the$135 that analysts were projecting. Ibida a little bit better than estimated as well. Um, and you know, the company has been kind of battered here by some of these factors that we're talking about, namely higher fuel costs. The shares are are getting a pop here with this number coming out better than estimated. Um, but the stock is down what almost 30% year to date. Um, the company also said net yields in the fourth quarter will be about 1.7%. Yields is an important way that we measure how uh the cruise lines are doing here. But fuel prices since the last report are up about 20%. So this is really something that it and the other cruise lines have been contending with even as like demand for cruises seems to have held up relatively well and I'll have to dig further into this statement to see what they say on that front. Um but you know it's um >> it's looked pretty good. Yeah. >> Demand wise 2027 booked occupancy and pricing already at record levels. 2028 bookings are running ahead of last year at higher occupancy and pricing. You noted that was it 20% increase in fuel costs >> on $150 million is is what that entails in additional fuel costs which >> is a lot but you know we've seen airlines billions more per quarter on fuel costs and you know these these these these uh cruise ships aren't exactly fuel efficient here. is burn. We just see the amount of diesel they burn is insane, right? Um but yeah, I mean seemingly like you said a lot of cost pressures, inflation, the maybe a squeeze consumer, but at least in the US they're still spending on cruises. >> Yeah, let's let's just point out um uh this is the 10th consecutive quarter of record revenues for this company. >> I mean, a lot of the cruise most of the cruise companies have been performing well on that front. the come I think I saw an analyst note um uh a preview of the earnings that said they wouldn't necessarily come out with a new yield forecast but they have so fully year constant currency net yields up about 2.3% and yields is total revenue minus all of the costs that go into uh cruising here so that also could potentially be a positive surprise yesterday by the way Royal Caribbean got a couple of upgrades remember it just took a 50% stake in sandals terrestrial resorts um for uh $3 billion um and it got upgraded by UBS and Bank of America yesterday. So even though none of the cruise lines are up year to date, at least not if you look at the big three, Carnival, Royal, Norwegian, um you know, but this is a little bit of a positive turn at least for now. >> Yeah. I mean travel stocks, right? I mean guess AI can't disrupt that just quite yet. Um do you want to talk about bail resorts? Really, really quick. One more detail from Carnival I'm just seeing in the release. They've successfully opened Celebration Key, which is their new exclusive destination on Grand Bahama Island. Wait for it. >> With the world's largest swim up bar. [laughter] >> I just had to get it in there. I wonder how many like like largest like I wonder like length of the bar. Like how many people can you fit around the bar? >> Oh, that's I think we need to dig into that. >> Yeah. Yeah. Yeah. So >> I know we need to do some reporting on the ground reporting. >> Take the show on the road. [laughter] Yeah. Uh, so stick >> What is that, John? He's in my >> He wants our producer wants to come also. >> He wants to field produce. >> Okay. What [laughter] about skiing? Do we want to go skiing? >> I want to do a Gman thing where we just talk to John directly in front of the camera just like >> I think we should. >> There's this guy named John. He's excellent producer. >> We love the guy. He's the honcho. Yes. Yeah. So, Veil Resorts. Okay. Vel Resorts. Right. So, on the stick with vacation trade here. [snorts] Uh, a little weaker here. company reported it sold 12% fewer ski passes through September 18th for the coming upcoming ski season compared to last year. Uh days sold in past revenues also down uh fullear revenue down four and a half% compared to last year which it attributed to record low snowfall. This is the effect of >> potentially clim climate change, global warming. You know these guys operate a bunch of places like Veil, Beaver Creek, Kevin, California, Park City in Utah, right? Yes. Yes, >> these are massive uh ski resorts in in this country. If they're not getting the snow that they need, how are you going to have a business? >> There there are two main problems for um for ski resorts. One is that and the other is it's expensive to ski, right? And so Veil sells these passes that the diehard skiers do buy, but then if you want to extend it to others, then it's an issue. And so they've been trying to attract younger skiers by discounting the passes to try to move more of those. And it's it's funny like in places like Europe, skiing is like half the cost if not less than that. >> Much cheaper. >> You have it here sort of financially sort of engineered skiing here. Uh remember just last just last year I believe there was these bunch of labor uh unrest and strikes. That's right. >> And all the finance guys traveled out west to go skiing were complaining viciferously about long lines because they're they were on strike. So you have labor costs too in addition to just it's an expensive endeavor. You have kids. You guys go. Too expensive. Don't want to go. >> Um, we do like day skiing, right? >> Just around like >> Hunter, things like that. >> Yeah. The area. We haven't done like a full I don't ski, so >> I'm not pushing for fullation. I don't >> You get You get on the snow. >> No, >> you seem like a snowboarder. You were definitely a snowboarder at one point. >> Never. Never. I would cross country ski. >> Okay. Which is I know, but no, I don't. >> She's a snowboarder. I know she [laughter] >> may maybe in my brain but not in my actual real life remix. >> Let's talk about the weather just a little bit. Yes, global warming, climate change playing a role here for this year specifically. The super Elino we're looking at I'm keeping our weather talk going this whole time. >> It's predicting a warmer winter >> for the northern US. A much warmer winter for much of the northern and northeast US. That's going to be a problem for resorts where the imperative need is snow. You got to ring fence your your ski resort investments. >> I know. You got to you got to t her price. You got to ring ring uh you know ring your uh your available resorts investments. >> Exactly. >> This we need another thing for every time you mention El Nino which I think is like every day. >> It's at least once a day. >> We're going to ring we're going to ring fence El Nino. >> Yeah. [laughter] It's this and it's the midterms. >> Um futures are higher at the moment. Guys, that is it for the 8:30. Brian Sazi [music] is next. We are unleashing him as we speak. Speaking of leaves, you guys hear [music] [music] >> [music] [music] [music] [music] [music] [music] [music] [music] >> Hey, [music] [music] hey, hey. Down. [music] [music] Heat. >> [music] >> Downow. [music] >> [music] >> Down. [music] Hey. [music] Down. [music] [music] [music] Ah. >> [music] [music] >> Hey, [music] hey, hey. >> [music] [music] [music]