Trascrizione completa di Anthropic Targets $1.4 Trillion Valuation in Blockbuster IPO

Those might be investors who are more short-term and focused, but that's all the art of an IPO. 00:04:33 Speaker 6: We know the retail side really wants bigger peers. 00:04:35 Speaker 5: Yeah, I'm glad you went there. Our head's in the same place. I mean, we spoke to Shiv Verma just last week, the CFO of Robinhood, who told us that it's competing with other retail brokerages for a bigger slice of Anthropix IPO. He said, quote, it's a food fight out there, so we're going to let our demand speak for itself and then let the companies decide. How big will retail be? in this IPO? 00:04:56 Speaker 7: Well, we expect it. 00:04:57 Speaker 8: To constitute about 15% to 20% of the deal. Now, the confusing thing about the IPO is that if you put all the bits together, it's about a $ 100 billion deal, but $ 26 billion of that is in this private placement. So the shares that are going to be available for the public market is going to be more in the order of like $ 74 billion, if you include the green shoe. And then of that, the retail component is probably going to be about 20%. So you can see like perhaps a I don't know, somewhere in the order of 15 billion, 10, 15 billion, something like that, going to retail. Now, when we say retail, you've got to be a bit clear about what you mean by retail. That can include high net worth individuals. It can include Robin Hood customers who are self-directed. Some people have very small accounts. It also includes the clients of other brokers who are not necessarily hugely wealthy people, but it's a range of different types of investors. 00:05:42 Speaker 1: Tell us about your story. 00:05:44 Speaker 6: I love this story about anthropic planning and IPO live stream with Dario Amadei and JP Morgan Chase's CEO, Jamie Dimon. 00:05:54 Speaker 1: What did you hear or find out? 00:05:56 Speaker 8: Well, JP Morgan, as we've reported previously, is running the retail aspect of this IPO, which basically means, you mentioned Robin Hood, but they're overseeing the high net worth retail investors, but also they're organizing the other retail brokers who are involved. And So they're overseeing this whole process, but obviously the stock will go out to a range of clients of different retail brokers and platforms. But yeah, JP Morgan, if you go back to SpaceX, they did a similar event where they live streamed over X interview with, or a fireside chat is the phrase that they're using. with elon musk and so this will be similar though my understanding is it may not necessarily be on x it might be on another live stream platform. 00:06:37 Speaker 5: Well anthropic doesn't own a social media service like you know spacex does so yeah yeah spacex owns. 00:06:44 Speaker 8: X so there's a few out there i mean the spacex ipo was uh it was there was a lot of fanfare associated with it because of elon musk's um you know following i guess and uh this one this ipo is is obviously huge as well um but but not really, not quite as much extravagance and fanfare as Anthropic, which probably reflects the, I guess, the personalities of the people who run Anthropic, I guess you could argue. 00:07:08 Speaker 5: It's a good point. I mean, there are seven co-founders of the company. Is it really Dario Amadei who's leading the sort of public face of this roadshow? 00:07:18 Speaker 8: Well, in the roadshow, his sister Daniela will be in the roadshow as well, and also the CFO. So, you know, generally you try and reel in multiple members of the management team and the CEO doesn't do all the talking. And I think, obviously, in a roadshow, you're always trying to demonstrate the depth of the management team, but also the breadth. 00:07:36 Speaker 7: Of the business as well. 00:07:37 Speaker 8: So, you know, generally, there's a broader effort from the management team to communicate the message. But, you know, if you watched the roadshow this morning, it really led off with Dario Amadai talking about AI really being the most promising technology in human history, I think the phrase was. So, you know, obviously, there's a fair amount of both... excitement and fear associated with that. And I think in his initial remarks, he addressed both the great opportunities of AI around advances in biology and mathematics and physics, but also the risks around things like someone getting a bioweapon or doing a cyber attack using AI. 00:08:14 Speaker 5: Sorry, Anthony, we're out of time. 00:08:16 Speaker 9: How many pages was the risk? 00:08:18 Speaker 5: Over 80 pages. 00:08:19 Speaker 3: Great. 00:08:20 Speaker 7: Perspectives? 00:08:21 Speaker 8: So I think Anthropic has been pretty upfront in talking about those issues, at least. 00:08:27 Speaker 6: Anthony, just real quickly, 20 seconds. If this goes well, should we assume OpenAI is just around the corner? 00:08:33 Speaker 8: Well, I think the fact that Anthropic is going now instead of OpenAI suggests that Anthropic is further ahead in terms of its financial profile being more appealing to public markets. So I think their businesses are a bit different as well. So it's really going to be interesting how quickly OpenAI comes behind it. But I don't think it's going to be until well into next year. So it might be a little bit of a different story. 00:08:55 Speaker 5: Stay with us. More from Bloomberg Businessweek Daily coming up after this. 00:09:07 Speaker 6: We did get the Consumer Price Index, ex-food and energy, up three-tenths of a percent from a month earlier, according to the Bureau of Labor Statistics. Topping estimates for a third straight month, overall prices jumped four-tenths of a percent as the cost of essentials climbed across the board. And we've had a couple of Fed speakers kind of weighing in on all of this. 00:09:27 Speaker 5: Yeah, Fed Governor Chris Waller warning that a half-point rate increase in December may be needed. That was followed by a speech by Dallas Fed President Lori Logan, who backed at least two additional quarter-point hikes, adding

that those may be necessary at a quicker pace than officials have moved this fall. 00:09:42 Speaker 6: Here's Governor Waller speaking this morning in London with Bloomberg's Francine Lacroix following his speech. And then we've got Fed Bank President of Dallas President Lori Logan earlier today in prepared remarks from a conference in Houston. 00:09:54 Speaker 3: If you look at the SEP, we had two to three rate hikes. That's not dramatic, right? So it's not, it's not that we're gonna jack up the policy rate 150 basis points or 200 basis points. So we are looking forward and saying, we need to do something, at a minimum, probably take back the three insurance cuts that we put in last year. Those were good decisions. We ex-post didn't necessarily need them. 00:10:20 Speaker 10: It remains clear to me, given the current outlook, that the FOMC needs to implement at least two more 25 basis. 00:10:27 Speaker 9: Point rate increases. 00:10:29 Speaker 10: After two more increases are in place, it would make sense in my view to pause and examine economic and financial developments to determine what further action may be appropriate. 00:10:41 Speaker 6: All right, that, of course, Fed Bank of Dallas President Lori Logan, preceded by Fed Governor Chris Waller. Back with us is Matt Lazzetti. 00:10:47 Speaker 7: He's Chief U.S. 00:10:47 Speaker 6: Economist at Deutsche Bank. 00:10:49 Speaker 1: Good to have you here. 00:10:51 Speaker 7: Good to be here. 00:10:51 Speaker 6: We're hearing from the Fed speakers. I can say what your note says, but you go ahead and take it. Where do you see rates going or what the Fed needs to do based on what we saw today? 00:11:00 Speaker 3: Sure. 00:11:00 Speaker 7: So our view changed a little bit today. 00:11:02 Speaker 2: Prior to today, we thought that the Fed would raise rates two more times, 25 basis points each in December and March. I think that was very well aligned with what we had heard from Fed officials, which was they needed to raise rates, but they could do so at a gradual quarterly pace. 00:11:16 Speaker 7: I think after. 00:11:16 Speaker 2: Today's data, you have enough evidence building that inflation pressures are sticky and more persistent, that two more 25 basis point rate hikes is just probably not enough. So now we expect that the Fed is going to raise rates again in January, December, January, and March, back to back to back, 75 basis points of rate increases. You know, we could talk about Governor Waller's view around 50 basis points, but that's not our base case at this point. 00:11:37 Speaker 1: It feels aggressive, is it? What are you worried about? 00:11:40 Speaker 7: So I think we need to just consider the overall context here, right? 00:11:43 Speaker 2: We are now going on almost six years of inflation being above the Fed's objective. We have an economy where growth is actually very robust and strong. We have a labor market with just last week, you saw the jobs gains well above 100,000, the unemployment rate falling to 4.1%. And there's nothing really telling you at the moment that monetary policy is restrictive enough or tight enough to bring inflation down. So within that context, you know, another 75 basis points of rate hikes. While it may seem aggressive, it's not obvious that that's even enough. 00:12:10 Speaker 5: In hindsight, did the Fed get it wrong at its most recent policy meeting, not raising rates? 00:12:15 Speaker 2: Look, I think we were comfortable with them not raising rates. I think if they were to hike by 50 basis points in December, they'd be telling you a kind of a clear signal that they made a policy mistake in October. 00:12:25 Speaker 7: I don't think they need to move that aggressively. 00:12:27 Speaker 2: Inflation expectations are not telling you that Fed credibility is at risk. We've had some tightening of financial conditions taking place I think the Fed can move at 25 basis point increments, but they can't move at a quarterly pace at this point. I think going by 25 basis points through March, that's 100 basis points of rate hikes in totality over that time. 00:12:43 Speaker 7: I think that that would balance the risks for them pretty well. 00:12:46 Speaker 6: I mean, in terms of where we saw some hotspots, I mean, we continue to talk about the high price of housing. What in particular is worrisome when you look at the individual components? 00:12:54 Speaker 2: Yeah, I think the worrying thing is that it's actually very broad-based. If you go back two months ago, we had this spike in wireless telephone services inflation that drove a lot of the upside mists. The past two prints have been pretty broad-based, and I think for the Fed, that's going to be more concerning. There are things that you can attribute to AI-related price pressures. TV inflation was high. Smartphone inflation was high. You've seen some pickup in computer price inflation. But it was far more broad-based than that. Shelter inflation picked up. SuperCore, which is services, ex-shelter, was up 40 basis points. CoreGoods, ex-used cars, was the highest print since early 2025. It's broad base, and I think that's what the Fed needs to act upon. 00:13:31 Speaker 5: How pushed through are diesel prices in some of the goods price increases that we've seen? 00:13:37 Speaker 2: I think it's hard to tell at this point, but it's not obvious that it's a key element. So medical care commodities spiked higher this morning. Household furnishings kind of surprised the upside. AI-related items are kind of clearly driving price pressures. So I think we're probably at the early stages of seeing that pass through. 00:13:52 Speaker 5: The reason I ask is because we have seen oil prices come down. And if we do see an end to this conflict sometime soon, maybe we'll see a normalization when it comes to oil. And maybe that brings down prices. Not brings down prices, but inflation doesn't rise as quickly as a result of that. 00:14:09 Speaker 2: Yeah, I think

from the Fed's perspective, that's helpful in truncating these upside risks to inflation as we look ahead. But I think as they look at the breath, they probably have to conclude that this is not just about energy or diesel, it's really not even just about AI. You have very broad-based price pressures that monetary policy is supposed. 00:14:25 Speaker 5: To act upon. 00:14:27 Speaker 6: All right, so three rate increases, you're thinking. I mean, you said the economy's strong enough. What will those rate increases really get at in the US economy that is really fueling inflation right now, Matt? 00:14:38 Speaker 7: Yeah, so I think that this is the question, right? 00:14:40 Speaker 2: So if you believe that inflation is being driven by energy prices, and obviously rate hikes are not going to help increase the supply of energy, then monetary policy doesn't do anything. And also, if you believe that AI-related price pressures and demand is not sensitive to interest rates, then monetary policy won't do anything. But if you take the view that I do, which is that it is more broad-based and demand-driven, and you actually do see, I think, AI-related demand and CapEx being sensitive to interest rates and broad financial conditions, monetary policy has a role to play here. 00:15:11 Speaker 7: They need to tighten financial conditions. 00:15:13 Speaker 2: They would probably be somewhat happy with equities, comes to the steam coming out of that, some credit widening. 00:15:18 Speaker 7: Interest rates rising. So probably happy. 00:15:20 Speaker 6: About a little bit of the pullback that we saw in terms of selling off the midterms? 00:15:23 Speaker 2: I think they believe that it's a necessary outcome that you have some changes in financial conditions that reduce demand. Chair Warsh talks about removing a dose of accommodation. We heard from several Fed speakers over the past day that financial conditions are actually supportive of growth. Given where inflation is, given where the overall macro backdrop is, The Fed needs financial conditions to tighten. 00:15:45 Speaker 8: Oh, go ahead. No, no, please. 00:15:47 Speaker 6: I always think about the component prices that go in. So we get PPI on Friday. So what are you watching in that report? 00:15:52 Speaker 2: Look, I think for markets, the focus is always on the components of that report that go into PCE inflation, because that's what the Fed targets. So health care is a key component of that. And there's been some other adjustments, portfolio management. 00:16:04 Speaker 6: Not going down, according to my own personal view. 00:16:06 Speaker 3: No. 00:16:06 Speaker 2: And actually, in today's CPI, you actually saw that. So health insurance actually did come down. That's a little surprising, I think, given the experience. But medical goods rose sharply. Hospital services inflation also rose sharply. So you do see that health care inflation in today's print. 00:16:20 Speaker 7: What are you thinking? 00:16:21

Speaker 5: I mean, I guess what I'm thinking is... what changes your view about the next few months? Could there be something that happens, whether it's the equity market, whether it's these newly elected members of the House and Senate cracking down on new data center construction? Does anything change your view about what productivity looks like over the coming years? 00:16:44 Speaker 2: Yeah, I think for the Fed, very keen near term is going to be just how financial conditions evolve here. I think they do get somewhat worried if you see AI sentiment really coming out, and you see kind of sharp, volatile, disruptive moves in financial conditions. 00:16:57 Speaker 7: That gives them some pause, I think. You saw it at the October meeting. 00:17:00 Speaker 6: One stock is doing that. 00:17:01 Speaker 3: What? 00:17:02 Speaker 5: One stock is doing that. 00:17:02 Speaker 1: Oh, you're at NVIDIA? 00:17:03 Speaker 5: Yeah. 00:17:04 Speaker 2: They will need broader base, I think, to be more worried and kind of concerned on that front. So I think through the December meeting, that's the key point to watch because we don't have another inflation print before the December meeting. As we enter Q1, inflation just matters a lot. They need to see a lot of progress happening on those monthly prints. 00:17:19 Speaker 6: Hey, just real quickly, 30 seconds. Midterms, how does that impact anything in your world? 00:17:24 Speaker 7: Look, not significantly. 00:17:26 Speaker 2: We haven't been expecting much in terms of fiscal policy changes, and certainly that is backed up by the blue sweep that we saw. There's a key question, I think, on what you get from moratoriums on AI and data center build-outs. Our view is that that more likely impacts things as you go into 2028 rather than 2027. 00:17:45 Speaker 1: Stay with us. More from Bloomberg Businessweek Daily coming up after this. 00:18:02 Speaker 6: NVIDIA's independent board members have retained former acting U.S. attorney of the Southern District of New York, June H. Kim, and his firm, Wachtell Lipton, to conduct an independent probe into whether NVIDIA's CEO, Jensen Huang, was targeted for foreign intelligence. 00:18:16 Speaker 8: So, you know, the. 00:18:17 Speaker 1: Last 24, 48 and. 00:18:20 Speaker 6: Counting hours, we've talked a lot about NVIDIA and the future of Jensen Huang in a big way. We know the board is probing, as we said. What's interesting, though... is something maybe more daunting, and that is the possibility, however remote, although it is part of the conversation now, of NVIDIA without its singular leader. 00:18:40 Speaker 1: We are talking about Jensen Wang. 00:18:42 Speaker 6: He has insisted for years that depriving China of access to the company's chips was the biggest threat to U.S. leadership at AI, and now we know of another risk, and that is the most powerful man in America, AI in particular, biggest cheerleader, was having an affair with a suspected Chinese spy. This is the words

of R. 00:19:00 Speaker 1: Dave Lee. 00:19:01 Speaker 6: He's a columnist for Bloomberg Opinion. He covers technology. A lot to get here. But first, it does look like the board is stepping up. They're doing their duty and their due diligence. I think, to be fair, we have to wait and find out what gets found out. 00:19:15 Speaker 5: Yes, indeed. 00:19:16 Speaker 11: And I think, you know, this hiring of this firm kind of speaks to something I was talking about in the column there, which is, you know, there may be this perception that the internal investigation might not pull back as many layers as it might. But of course, it does seem like they're trying to at least give that. that perception of taking this incredibly seriously. Look, I think what the other threat is, as you were saying, and the point I'm making in the column, is that as well as NVIDIA's own internal work, there's going to be this other show of Congress, which, as we know, is going to have a change in... power thanks to the midterms where there was a huge swell behind a couple of things holding ai companies accountable holding tech billion billionaires accountable as well jensen huang obviously fits both of those bills. 00:20:02 Speaker 5: But when they were campaigning on holding some of these folks accountable, they weren't thinking about it from this perspective. This completely changes the equation. It does change the equation. 00:20:10 Speaker 7: What I think is going to be particularly. 00:20:13 Speaker 5: This is national security in a way that hasn't been talked about with AI, right? 00:20:17 Speaker 11: I think what it brings into focus here, and actually I think the bigger, perhaps more profound repercussion here, is what this means for the foreign policy when it comes to sharing American technology with the world, right? We saw Chuck Schumer on the Senate floor today specifically talking about the risk of sharing American technology. He mentioned three bills that are designed to restrict chip use by China. Now, Jensen Huang, of course, has been pushing for that to be much more open. He says it's good for American AI that they have American chips because it means America will retain its leadership in that area of Chinese models using those chips. Through his actions, I think it's less likely that that's going to happen. In fact, I think we might see a pullback from what exists today in terms of what chips are available to Chinese companies. We might even see repercussions, not just on Chinese AI access to these chips, but the sort of the periphery, which is these other countries that NVIDIA was selling chips to. And as we've seen, there are concerns now that those chips are either being passed on, still in the boxes to Chinese firms, or rented out to Chinese firms to build their AI systems. Now, I don't think you can kind of understate how profound that change might be. 00:21:32 Speaker 7: This could really shift the sort. 00:21:34 Speaker 11: Of global dynamic in how AI

is built, who has the power, how that power is disseminated around the world into other markets, particularly the developing world. You know, the consequences of this are pretty enormous. 00:21:48 Speaker 7: God, there's so many questions. 00:21:50 Speaker 6: But I do think about, you know, his initial argument, Dave, about, you know, we should let China have this, you know, have our technology so that they are not kind of doing their own thing and coming up with perhaps their own expertise. But I wonder if past has shown us, I think about Apple in China a lot and what they have learned and how they have run with it in terms of, you know, manufacturing anything and everything and their robotic expertise. So is there something to his argument? And then having said that, you know, I don't know what we do off of it in terms of national security. 00:22:29 Speaker 11: I mean, the school of thought from Kuang, actually plenty of other people in the AI space is if NVIDIA is the chips that are used to build cutting-edge AI in China, then there's a dependency there, right? And one of the reasons why NVIDIA has performed so well in recent years is because when you build on NVIDIA chips, it's not just a case of saying, oh, we'll choose that chip instead of that chip. You architect your work differently, whether you're using NVIDIA or somebody else, which is why when you see companies like Google, for example, trying to sell their chips online, that's a challenge because they need to help companies move over to that system instead. So the argument is that if these Chinese models are on NVIDIA chips, then it's going to be hard to shift from that. And in this period of time where American chips are better than chips made by, say, Huawei, then that's the time in which you sort of cement those habits, cement that lock-in, that moat. But obviously the reverse argument is that Why give China the chance to build any AI at all if we've got the best chips over here? 00:23:38 Speaker 5: Is there a way, though, and this is kind of perhaps coming to light with understanding Megaspeed's role here, is there a way for China to have NVIDIA chips and access that processing power by using data centers that are not in mainland China? Yes, yeah. It's a pretty simple workaround. 00:23:56 Speaker 11: Well, I mean, and that's what's alleged to be happening. I mean, I guess then the onus is on the customers of NVIDIA to make sure that that's not happening, and it's on NVIDIA to audit the people it's selling, just as any other company has to audit its own supply chain to make sure there aren't risks present in it. 00:24:13 Speaker 5: That's the challenge for NVIDIA. 00:24:15 Speaker 11: The accusation, and it's not even just related to Megaspeed, which is the company that Alice Wong was the director at, was that this system is lapped all over the place, whether it's NVIDIA's checks or even the Commerce Department's checks as well, and so whether these international firms are indeed

doing what they said they're doing. 00:24:33 Speaker 5: One thing that I still don't understand, and we're starting to learn more about this, and I know you're on the Bloomberg opinion side, so I want to ask you the timeline here. And why we learn about things, when we learn about them, when or if Jensen Wong was notified at the time that intelligence officials realized who he was communicating with and what allegedly she was part of. That sort of thing, I imagine, will become... a very big interest to lawmakers if and when he does testify. 00:25:08 Speaker 8: Right. 00:25:09 Speaker 5: If he does appear in front of the Senate. Is it an if? 00:25:13 Speaker 11: I mean, it feels like you have to do that. And it's going to be a question of who knew what and when. Right. It's interesting to me, and we've seen the reaction of Trump in the past few days about this, that this wasn't taken more seriously. We saw Trump in a briefing yesterday, he's been like, well, he's kind of a good guy. Perhaps, you know, often leaks like this are a release valve, you know, when flows of information can't go their proper channel, this is the way to get out. Perhaps now with Democrats taking control in the House and Senate, this has perhaps been seen as the time when actually something might be done about this. But yeah, I think it's just, you know, how was it that Jensen Huang and his team weren't aware of this risk, even without U.S. intelligence letting them know, you know, this is, I guess, from the outside, it looks obvious that this was a risk, but clearly not enough of a risk internally in NVIDIA to follow that. 00:26:09 Speaker 6: New York Times just out. This is a quick headline, so we're going to get a little bit more details for you. But Secretary of State Marco Rubio, according to the New York Times, had told President Trump on a China trip or on the China trip about Jensen Huang. Marco Rubio, we've done reporting too about him giving some warnings. I do wonder about this. I think Dave speaks to a bigger concern about the proximity of certain individuals to the White House and the administration. We just showed a picture of Jensen Wong with the Commerce Secretary, Howard Lutnick. But just the close proximity and access and influence that certain individuals have, that you do wonder whether normal precautions and safety protocols, whether they were not followed as closely as they should have been. And that questions that were asked were maybe not followed through on and answered. 00:27:04 Speaker 11: Well, I think this goes down to something we've observed with several of the tech CEOs, right? Getting incredibly close to Trump as he took power, giving money to the ballroom, standing behind him at the inauguration. Jensen Huang was one of those figures who was close with Trump, having dinner and and advising him a lot on policy, which of course is at the heart of this incident. It's interesting, the flight that they're referring to in this Times piece, there

was a summit that Trump had many tech CEOs on. Jensen Huang was left out. All of a sudden he was back here and they picked up in Alaska. 00:27:36 Speaker 6: That's right. 00:27:37 Speaker 5: He flew on his private jet to Alaska where Air Force One had stopped ostensibly to refuel. Jensen Huang gets on Air Force One and suddenly joins the trip to China. 00:27:48 Speaker 3: Right. 00:27:48 Speaker 11: And as The Times is reporting just now, they're saying that just before that happened, Marco Rubio, who was overseeing the draft of this memo outlining the concerns, warned Trump sort of again, I guess, before that sort of pickup was made and perhaps questioned whether that was a wise idea. I think where you wonder about the dynamics here is whether Trump prioritized having these powerful people close to him and on his side, as opposed to the potential risk that we now know was in the air. 00:28:16 Speaker 6: And to be fair, I mean, this was an initiative that the administration, the president picked up on in terms of AI and making sure that the U.S. prioritized it as a nation also for national security. 00:28:27 Speaker 5: The New York Times reporting, and I'm reading from the New York Times piece, Mr. Trump was not particularly moved by what he heard from his national security advisor and continued with the plan to pick up Mr. Wong, the people with knowledge of the event said. 00:28:39 Speaker 2: Mr. 00:28:39 Speaker 5: Wong, once aboard Air Force One, saw the president, quote, very briefly, but, quote, remained in the separate part of the plane for almost the entire trip, the official said. 00:28:47 Speaker 11: I mean, this also brings to question Trump's insistence yesterday that he hadn't heard about it until the last few days and that he brought it up with with Huang and he said he didn't know about it. 00:28:55 Speaker 6: So many questions, right? 00:28:57 Speaker 5: Unraveling by the moment. Stay with us. More from Bloomberg Businessweek Daily coming up after this. 00:29:15 Speaker 6: We've talked a lot about high energy prices this year following the U.S. war with Iran, diesel costs in particular, which factor into commercial transportation costs and filtering the cost of so much in our economy. We've seen prices move around a little bit, but this has been a general theme and trend this year. Now, on that, a new index was launched today focusing on fleet spending and mobility. Here to talk about it is Melissa Smith. She's president and CEO of WEX. 00:29:38 Speaker 7: It's the $ 5. 00:29:39 Speaker 6: 9 billion market cap payment processing and global commerce platform to the fleet industry. She joins us here in studio. That stock, by the way, is up 20% year-to-date. 00:29:48 Speaker 1: Welcome, welcome. 00:29:49 Speaker 3: Thank you. 00:29:50 Speaker 9: It's great to be here. 00:29:51 Speaker 1: We're looking forward to this. 00:29:52 Speaker 6: We love anything connected with transportation and moving things around. It's such a great read on

the economy. But first off, tell us about your company. There are folks who might not be so familiar, and the vantage point that you have when it comes to commercial fleets. 00:30:05 Speaker 9: Yeah, I'd love to. 00:30:06 Speaker 12: So, WEX is a global payments company. We sit in the middle of work that can't go wrong. And relevant to this conversation, we do business with over 600,000 vehicles and fleets globally. 00:30:18 Speaker 5: So the real-time data that you see is pretty granular. Like you understand what these companies are spending money on, how it's changed day to day, or even hour to hour. What have you noticed recently? 00:30:31 Speaker 12: Yeah, actually, there's some important trends that we looked at. And one of the things that is probably most surprising to people is that these fleets need to continue to move, regardless of what's happening with fill prices. So fill prices were up 43% through the end of September, year over year. and gallons were flat. So regardless of what's happening, it's going to squeeze their margins, but they actually have to continue to fuel. 00:30:53 Speaker 5: So things are moving at the same rate, but it's more expensive to move them. 00:30:56 Speaker 8: That's right. 00:30:57 Speaker 5: There's been no, I mean, is that surprising? Should there have been a pullback when prices go up? This is not the type of thing where it's kind of negotiable whether or not somebody wants a product or service delivered. 00:31:07 Speaker 12: I think that's an excellent point. The goods still need to get moved. And I'll give you an example. One of our customers is a utility company. you know, they still actually need to go and repair lines when there are storms. And so probably no shock, but for them, that costs them $ 5 million more in the first half of the year than it did historically. 00:31:25 Speaker 9: And so, you know, what we're encouraging. 00:31:26 Speaker 12: People to do with this data is to make informed choices, to use the information to make better choices. 00:31:31 Speaker 6: So what is the information that they can use to make that better choice? 00:31:35 Speaker 10: Yes. 00:31:35 Speaker 12: So we give benchmark data throughout the United States so they can actually compare their price to what is the actual average And one of those examples is that on average, just under 40% of fleets are actually paying more than that benchmark. So they can expect why, you know, is it appropriate or not? 00:31:55 Speaker 3: Right. 00:31:56 Speaker 6: Am I being gouged inappropriately, so, or what? 00:31:59 Speaker 12: And it could be just out of, you know, you don't want to go out of your route, you know, way out of the way in order to actually feel at a lower price. And so some of it makes sense, and other parts is just giving them the data to make, you know, more informed choices. 00:32:11 Speaker 5: You launched this WEX index, and this is the news, and I'm curious about the timing of this, and when you decided, okay, we're going to actually take this data and we're going to put it into a format that makes it possible for people to get information from this. Was this something that you decided to do before we saw the spike in fuel prices this year? 00:32:30 Speaker 9: What better time? 00:32:31 Speaker 12: I had the huge spike in fuel prices, and at the same time, we've seen a big increase in fraudulent activity. It's about 12 times from phishing attempts in our customers from the end of 2022 till now. And so the combination of fraud powered by AI and the increase in field prices, we've thought we're in this wonderful position to be able to share that data. 00:32:55 Speaker 1: There's a lot in this report. 00:32:57 Speaker 6: Tell us what might surprise, like I think about our investing audience, what might be interesting to them? 00:33:02 Speaker 12: I think for them that fleets can't control fuel prices, but they can respond to what's happening. 00:33:08 Speaker 9: And so they have. 00:33:09 Speaker 12: Control over where they fuel, and they control the type of fuel that's happening, and they can look for just unusual patterns. 00:33:17 Speaker 9: And a lot of what's in that. 00:33:18 Speaker 12: Report talks about what we're seeing for patterns, the time of day that people are typically purchasing, the types of fuel that they're purchasing. And what we know is that more than 81% of our fleet customers have customers, have drivers that are fueling at three times the average. 00:33:37 Speaker 9: And so those are just outliers that people can go look at. 00:33:40 Speaker 5: Are they buying the type of fuel that they're supposed to be buying? 00:33:43 Speaker 9: Actually interesting point. 00:33:44 Speaker 5: Because there's the premium question, right? Which can actually end up costing companies a lot of money if they're not filling with diesel, if they're filling with actually unleaded. 00:33:51 Speaker 9: No, it's a great point. 00:33:52 Speaker 12: So what we find is 7.6% of our customers are filling with premium. And sometimes that might make sense, but it's another point that people can actually look at and say, is that needed or not? 00:34:03 Speaker 6: In terms of the level of activity, we said you had a great vantage point when it comes to the US economy. So are you Is anybody cutting back and not doing as much because of the excessive costs? 00:34:15 Speaker 12: I think people are trying to. They're looking at ways to create efficiencies. But in general, what they're doing is focusing on the things they can control. So where are they filling? What locations are they looking at? What type of fuel types are they purchasing? And then what are the anomalies that they can actually affect? 00:34:35 Speaker 9: And so it's more... really diving into the details. 00:34:38 Speaker 1: So adjusting, but not cutting back in terms of service. 00:34:41 Speaker 9: No, not cutting back in terms of service. 00:34:43 Speaker 12: I think our customers have to

actually move goods or make service calls. 00:34:50 Speaker 9: It's just kind of a byproduct of what they do. 00:34:53 Speaker 5: You know, in the airline industry, there's this idea that, okay, if we retire the older planes that are less efficient and spend more up front on more fuel-efficient planes, we can save money over the long term on fuel. 00:35:06 Speaker 3: Yes. 00:35:07 Speaker 5: When it comes to logistics firms, the firms that you work with, do they push forward any investments for more fuel-efficient vehicles? 00:35:16 Speaker 11: Yeah. 00:35:16 Speaker 12: What we find is actually upon renewal that people are using more fuel-efficient vehicles. 00:35:23 Speaker 9: And so they are looking at that. 00:35:24 Speaker 12: We also know that looking at the fleets within our portfolio, one of the things we'll advise them on the ability to adopt. 00:35:31 Speaker 9: And convert to an EV and have more of a mixed fleet. And if you look at our portfolio. 00:35:36 Speaker 12: about 27% of the fleets that we've surveyed actually would save 15% or more of their total cost of ownership by migrating to an EV vehicle. So there are certainly opportunities, both in terms of just when they were renewing, but also looking at the type of fleets they have in their portfolio and optimizing that. 00:35:55 Speaker 6: Melissa, how much of your customer base, you talked about 600,000 members of the fleet community, is corporate versus government? 00:36:05 Speaker 7: Yeah. 00:36:05 Speaker 9: So government is actually relatively small. 00:36:08 Speaker 1: It is small. 00:36:09 Speaker 12: We're in this privileged position. We do actually do business with the federal government and a number of states. But if you look at the total universe, we have much more in the construction trades and manufacturing. 00:36:20 Speaker 9: If you look across our portfolio, you see quite a bit of retail there as well. 00:36:25 Speaker 6: Is there any variances in terms of retail? You talked about the volume is pretty much staying consistent. Is that true for all the industries? And just got about 25, 30 seconds. 00:36:33 Speaker 12: Yeah, I would say like some industries just tend to spend more in terms of volume. Like volume at retail has just more average activity. 00:36:42 Speaker 9: And so there were nuances. 00:36:44 Speaker 12: Across each of the industries, but I would say those nuances have looked pretty consistent. 00:36:48 Speaker 1: All right. Interesting. 00:36:49 Speaker 7: All right. 00:36:50 Speaker 6: So economy doing okay? 00:36:52 Speaker 8: Great question. 00:36:53 Speaker 1: Is it? 00:36:54 Speaker 7: We'll see. 00:36:55 Speaker 9: I think you're hearing more about that from others. 00:36:57 Speaker 4: This is the Bloomberg Businessweek Daily Podcast. Available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal. 00:37:20 Speaker 5: © transcript Emily Beynon