How to Take Advantage of the $2 Trillion Anthropic IPO

Hello and welcome to being exponential. Today we are doing our macro episode in the studio. So uh Luke, let's just dive right into it. Uh let's talk about the pressing issue that could affect the uh AI market. Seems like we got something every week. So now >> let's um discuss the bond market and the treasury. Uh all those uh actions that are affecting the long end of the curve, >> not necessarily the short end of the curve. What is your take on that? How can that affect, you know, the semis and all the things that we are making money on currently? >> Yeah, well, the market's been in a sour mood over the past week or so, I'd say. I mean, we had that, you know, big obviously July selloff and then we had uh the big V-shaped recovery, but then the V-shaped recovery has kind of hit some resistance. We've kind of flattened out uh across the market really. The S&P, the Dow, the NASDAQ, uh SMH stocks, uh infrastructure stocks, semiconductor stocks, AI stocks, etc. It's kind of been the trend just across the board. And the reason for that flatlining of this rally or the fatiguing of the rally is I believe um macroeconomic pressures. Uh the bond market is kind of encapsulating those economic pressures and expressing them through higher yields that what we have is you have a situation in the Middle East where things are not getting resolved. Trump is uh declaring economic D-Day on Iran and oil is pushing back up to $90 a barrel. Right? I think today we're at 87 $88 a barrel. Uh that means inflation stays sticky. That means we're at, you know, three% lower threes, upper twos on the inflation number probably for the foreseeable future. And that means that yields have to stay higher for longer. Interest rates have to stay higher for longer. Worsh can't cut against that backdrop. Uh, but Wars also doesn't really want to hike because Trump put him in there to cut rates. He doesn't want to be the bad guy that's now hiking and all that stuff. So, the bond market's doing the work for him and is sending the long term or the long end of the curve higher. So, now we're at 4.7 4.75 in the 10-year, 5.3 and above on the 30-year. So, that's that's a scary situation for consumers because it puts downward pressure on consumer spending. These are the rates that really determine these are your mortgages, these are your auto financing rates, these are your long-term financing rates. And that for most consumers, that's the bulk of their expenditures. And so when those rates don't come down, the bulk of their expenditures don't come down. They stay high. So their discretionary spending stays lower. And we saw that Walmart reported earnings and Walmart did show that exactly right. Like consumers are slowing down, right? So that's the pressure that's really hitting the markets right now is okay, the macro backdrop isn't the best. We have higher for longer interest rates. We have higher for longer oil prices. And we have lower for longer consumer discretionary spending. And the market's not all that excited or enthused about that, nor should it be. The reason that I think this is ultimately an overreaction is or for the AI trade is an overreaction is I don't see how this impacts AI spending plans at all. That we do have a weak consumer. We've had a weak consumer. I would say since 2022, right? Like the consumer came out gang busters with those co checks lasted into 21, but as soon as we got to 22 and the co checks ran dry and the savings kind of also started to come down a little bit, the consumer has been under pressure. 22, 23, 24, 25 and into 26. And that hasn't really stopped the AI trade at all. It hasn't changed hyperscaler spending plans. It hasn't changed much of anything really. The 10-year Treasury yield, yeah, we're at 4.7%, but we bounce between 3.8% 8% and 5% for the last two years. And regardless it was at 3.8 or at five, hyperscaler spending plans didn't change. The AI trade didn't change. Oil, we saw oil at 120. We've seen oil at 50. Hyperscaler spending plans haven't changed. So these risk factors that are facing the market are very real. But I think what they do more than anything is reinforce the AI bifurcation thesis that is kind of at the heart of what we believe is going on in the economy and in markets where the macro backdrop is Goldilocks bad. It is bad enough to weigh on the consumer, weigh on discretionary spending, weigh on travel plans, weigh on all that stuff, but not bad enough to change this massive multi-t trillion dollar AI infrastructure buildout. And so ultimately, I do think that what we're seeing right now, the market gets comfortable with it and we do get a buying opportunity in in AI stocks or not even a buying opportunity, I think the rally resumes, right? buying window was late July, early August with that Leopold low. Now we're just getting a little fatigue of that rebound rally, but I think it resumes pretty soon because again, none of these risk factors are are at a level where it would change that the buildout, the AM structure buildout >> 100%. So I I do have to ask, you know, the question I always ask in these situations. Um the 30, you know, is the highest it's been since 2007, 2008, a very auspicious year, but is the market essentially pricing in the taco trade? Are are we just assuming that Trump will roll over when it comes to >> I almost think the opposite actually. I think the market's pricing in that there is going to be no resolution over there. Like the market is finally I think coming to terms. I think there was always this you know a deal is coming a deal is coming a deal is coming. there was this perpetual hope that a deal is coming and that's why oil went from 120 back down to like the 70s, >> right? >> But now oil is coming back and again it's it hasn't been a spike and that's what tells me this is more like the market is kind of reassessing. It's not the market having a knee-jerk reaction. Oh my god, we're going from 80 to 120. No, the market fell from 120 down to 70 and they've been grinding higher. 73 76 78 80 82 84 86 8 been grinding higher. This is the market pricing out the taco. This is the market realizing that there is really no clean exit ramp off ramp for the situation in the Middle East. And so we're probably going to be stuck with it for a little while longer, at least several months. And that means we are stuck with 80 to $90 oil. That means we're stuck with a 10-year between four, five and five. That means we're stuck with the 30-year between five and probably 53, 54. So, we're stuck with those. But I think the good news is is that we're not going to break out above those ranges. See, that's where I think you're starting to get the trouble zone for waving yellow flags for the AI trade. The AI trade has proven it can persist. The AI infrastructure build can persist through the ranges I just gave you. If we start to break above those ranges, there's no proof point that the AI trade does persist. Historical proof point that it persists above those ranges. I don't think we get above those ranges because the economy, like I said, we're Goldilocks bad. You don't get a 10-year surging to 5% plus 52, 54, 55 when the consumer is as weak as they are, when job growth was negative last month, when wage growth is slowing and is actually below inflation. like you do not get a long-term yield spike with that with the current macroeconomic factors we have at play. If something dramatic were to change there and then we do break above those ranges, then you got to reassess. But as of right now, the bulk of evidence is what we have is what we're stuck with. We're not going to go much lower, but we're not going to go much higher on, you know, oil yields, all that stuff. And therefore the current market situation I think is one that will persist which to me is an AI bifurcation between AI stocks going higher over several months and everything else kind of just I mean not being on the sidelines but you know barely going higher or even going lower like a Nike or a Walmart or something like that. >> Gotcha. Last question on this topic. So Bent uh you know the Treasury are buying bonds, buying back bonds and then even international I believe they they bought some in Japan. >> Um so the take there is that this is just kind of um hedging against midterms. Do you foresee midterms potentially being an issue uh with the AI trade? >> Yes. Yeah. I I think that's the bigger jitter. I don't think it's midterms because I don't think enough I mean >> I don't think enough power is going to shift in the midterms for it to matter. >> Yeah. >> But I do I mean the forces are building. Like to me I've talked about this multiple times on this podcast. What is going to kill this boom is not going to be the 10ear Treasury yield. It's not going to be the Iran war. It's not going to be all these things that people are talking about. It's not going to be this overbuild out and dark AI or whatever. It's not going to be that stuff. Like the demand is there. We just got numbers from Anthropic. We just got some from OpenAI. Their annualized recurring revenues or ARR are over hundred billion dollars right now. These were companies that didn't even exist pretty much. I mean, they existed but not as operating entities selling stuff to other businesses. They pretty much didn't exist until like two or three years ago. And now they're over hundred billion in ARR growing like 35% 40% quarter over quarter month over month. Like so this is this is a massive growth story. The demand is there. We've seen things like token prices come down. Bears are kind of like, "Look at compute, the cost. If you look at the cost of a GPU, it's it's been collapsing. Look at that. That means it's all getting commoditized." No, that's Jeban's paradox. What happens is you decrease the cost of compute and you increase how many people use that compute, the volume, and you've seen that, right, with the ARR growth numbers out of um OpenAI or Anthropic. If you look at Open Router uh and you look at the um open source model usage, those numbers are going crazy as well. So what we've seen is Jevans paradox in real life as uh tokens have come down as compute cost has come down compute volume compute usage has gone exponential. So all of these things are actually working in favor of the AI trade. The buildout I think Bloomberg just put out new estimates for uh 2027 hyperscaler spending and it's going to be over a trillion dollars. We weren't supposed to get to I I follow those estimates very closely. We weren't supposed to hit a trillion until 2028 2029, right? Like 2027 was supposed to be like an 800 to 900 year. Now people are saying it's going to be like 1.2 trillion. So like those numbers keep going up. So all this stuff is working. What's going to end all of it potentially and this is my big risk I said before is is legislation, right? I think Pennsylvania just passed a uh a big piece of legislation which is going to meaningfully it's not going to ban data centers, but it's going to meaningfully slow a lot of data center construction in that state. New York has gone farther. Florida is looking at doing something. California is looking at doing something. So all these states and that's what you have right now is you have this tug-of-war between the federal which is like you know all out support for AI growth and infrastructure buildout and then you have the states which are you know left and right fighting back against that. And I think this that tugof-war is ultimately what breaks the the AI trade that there's this populist movement that is anti-AI and that's going to gain momentum. Not enough momentum by the midterms to really matter, but I think by 2028 absolutely that is going to be the biggest talking point for the 2028 elections. And I do think the populist side's going going to win. And I do think that that's going to cause a massive slowdown, forced slowdown, manufactured slowdown of the EA infrastructure buildout, which ends up killing this trade. So I, you know, looking at that from that perspective, like, you know, a 2-year window here. I think, you know, we're like 1998 if this is the dot boom. Uh 992000 were the best years. So I do think that there's a lot of runway ahead. Uh but, you know, there is definitely a shock clock and it's on >> 100%. Yeah. I mean, at face value, it's an easy story to tell. Left, right, coming together against our common enemy that's killing our environment. Um, but I want to end on a more positive note here. So, you did mention Open AI, you mentioned anthropic. Following your Twitter, you're always banking on the table on uh what the talks of AI not being profitable have uh started to become false, right? So, I I'd love to get your read on that and then, you know, just talk about the anthropic uh IPO numbers projected to be, I believe, 2.2 2 trillion at this point. >> Yeah, I mean I think the valuation get as high as 3 trillion in the IPO. Um I'm I'm hugely bullish on Anthropic. I do think that I mean yeah the numbers there are sensational. I mean they're growing super quickly but they're also profitable, right? Like that that's absurd to be growing as quickly as they are arguably the fastest growing company in the history of at least the recent history of you know capitalism. and for them to at the same time be profitable is stupid. Like that's just absurd. And so yeah, that's worthy of a $23 trillion valuation. And I think that, you know, if you kind of want to play there, and this this is a flyer. This is a total flyer. I'm not personally recommending this in any of our model portfolios. It's a total flyer. But, uh, the Fundrise ETF or the Fundrise Innovators Fund, I forget what it's called. the ticker's VCX >> that is the only real stock out there that has direct exposure to anthropic. So you know how like there was um formerly Surro Capital SSS which is now Neoeller NSLR um that has preo exposure to OpenAI DXYZ and NASA had preipo exposure to SpaceX. Well, VCX has pre IIPO exposure to Anthropic. Now, VCX is it's a crazy volatile stock. I mean, it came out at like 30 and it went to 500 because it was the only thing that had preo exposure to Anthropic and then it dumped all the way to 80 and then it spiked all the way back to 300 and then it dumped all the way to 30 and now it's kind of stabilizing around 30. And I think there is potential, again, this is a flyer, so I'm not I'm not saying go out and buy VCX, but um I think there's potential for this thing to kind of have that pre uh benefit from that preIPO hype window. You know, Vanthropics IPO is in September. >> We're going to get a lot of news drops over the next few weeks. All those news drops could create a preipo frenzy for Anthropic and that could send VCX up from like 30, 40 to, I don't know, maybe mid hundreds or $200. So, I think that's an interesting way to to play this IPO. Um, again, super high risk. I mean, just look at the stock chart and it'll tell you it's super high risk, but I think it's an interesting way to to get at this anthropic IPO, which personally I am very excited about. >> Yeah, definitely. The the trajectory of anthropic has been the most interesting out of the the big LLM models. They started uh you know, second dog to open AI. Then you had the the >> essentially the beef with the administration was like you can't do this, you can't do that, block the mythos and yet through all of that they've kind of >> they've I don't want to say they've conquered the LLM market, but I mean they're close to it, right? >> Yeah. I mean, listen, the best technology wins out, right? Like that's that's what Anthropic has proven. Like there's been a lot of stuff drama if you will, but yeah, I mean they have the best LLM, right? like that AI model is fantastic. Claude is fantastic. I use chat GBT, I use Grock, I use Claude, I use Gemini, but when it comes to like I really need to get something ambitious done, something big and important done, I'm always going to Claude, right? Chad GBT is my uh AI for like my freezer stopped working the other day and the temperature started rising. Oh my god, what do I do? That's where I go to Chat GPT, right? It's like my personal problem solver in my personal life. Um, Gemini I like to use for visual stuff. I've always said that Gemini I think is the best at visuals. Uh, I use Gro trying to glean social sentiment. So like very recently I actually would like to talk about this. You know, Trump said that they're going to make a big substantial purchase of Bitcoin. >> Um, and I wanted to like kind of glean this the social sentiment on that. So I use Grock to do that. But when it comes to big ambitious work, you know, doing real stock, real stock research, really diving into things, Claude is is always my go-to. So, yeah. You want to talk about the Bitcoin stuff? >> Sure. >> Yeah. So, um, Bitcoin's reawakened a little bit. >> Mhm. >> This this is something that was languished around the low 60s, mid to low 60s for a long time. And then now it's breaking up to the low 70s, 72,000 at last check because Trump had this big summit with all the crypto CEOs. And then coming out of that summit, he said that the United States government is looking at making a substantial purchase of of Bitcoin, which is, if you kind of remember back to early 2025, he talked about, you know, they created the national reserve for for Bitcoin, >> but nothing came of that, right? All they did was they seized other Bitcoin and kind of held it and didn't sell it, but they didn't buy new Bitcoin. They didn't make new purchases. They were just seizing uh illegal uh activities related to that. So, this is a it's I love the price action on Bitcoin, but to me, it's still all talk, no walk. Like, we've heard 17 different iterations of the same narrative. We're going to buy Bitcoin for two years now. Like, I' I've heard this a lot. There was no concrete detail given this week about why this time is different. He just said it again. So, like I get it. It's like, you know, there's hope there, but I'm not gonna, you know, go all in on Bitcoin on Opium. And so, I do believe that Bitcoin is due for a very strong 2027, but I still think we're stuck in that inner having dead zone. Uh, the Clarity Act is the big thing to watch there, but, you know, that's a September 15th vote, so we're still a month out from that. And I don't think it passes cuz right now, I think you need six Democrats to jump over and support it for it to pass. and none of them have come out and publicly supported it. So, in its current construction, so I just think that's still in a stalemate and I don't think that that moves forward and unless that does if that moves forward then all of a sudden I think you do have to get really bullish on cryptos. But if that doesn't move forward, then Trump just saying we're going to buy Bitcoin without actually buying Bitcoin doesn't really do anything for me. So, I I like the move. We reclaim the 200 day moving average, which is nice. But, we're still below the 50WE, which is around $80,000, and that's the big level for me. Uh, so until we reclaim the 50we or the clarity act passes or the government does actually start buying Bitcoin, I don't think you should buy into this bounce. It could it's probably a deadcap bounce unless one of those three things happens or multiple of those three things happen. >> Definitely. I mean, in regard to Bitcoin, is it safe to say that the general investor, you know, not the the diamond hands crypto investor is a bit jaded? Because with everything going on in Iran, Bitcoin should have spiked because we considered it the the safe bet or the hedge and when when the dollar's going crazy or when the market's going crazy, but that didn't happen. >> Yeah. I mean, maybe I just think Bitcoin investors, crypto investors, and actually, you know what, I don't mean to categorize them. All investors these days have short-term memory loss. like it's just like it's just boom boom boom boom like the markets move so fast and there's so much news flow and there's so much going on and so much fundamental developments and macro developments and uh economic developments and geopolitical developments that it's just like okay Bitcoin didn't rally you know in 20 in the first half of 26 okay whatever you know as soon as it starts rallying again everyone's going to FOMO into it right that's just that's kind of what happens you know people kind of forget they don't really you know hold on to it or stick with those jaded feelings so um I My thesis has been and remains that we're stuck in an inter dead zone with cryptos. That inter having dead zone based on cycle history ends in late 26 early 27 which is going to be about 12 to 16 months before that fifth having in the spring of 28. Uh that's normally when Bitcoin and crypto start picking up some some price momentum and enter a new boom cycle. I do think we get some more clarity on the clarity act by that time. Then we get past the IPOs. We saw that the SpaceX IPO did cause a lot of weakness in Bitcoin because people sold Bitcoin going into that IPO to buy SpaceX. Um, so I think we got to get through the anthropic IPOs and probably the Open Eye IPO as well. And so once we get past all that stuff, then I think, you know, the kind of the roof will be opened for Bitcoin to to rally once again. But I I just think we're kind of stuck until then. That's been my thesis. Subject to change again if if September 15th yields a a more positive result than what I think. >> 100%. Okay. Uh, I think this a great place to end it. Do you have any uh closing notes here, Luke? >> No, I think that's all. Yeah, I mean the market just kind of it's it's in a sour minute. It's kind of fatigued. Uh, but I don't think that there's nothing to glean from that. I think we're going to get back into rally mode really quickly. The fundamentals remain strong. Earnings are still going higher. Estimates still going higher. The buildout's still happening. Uh, nothing really meaningfully bad is happening on the yield front. Yes, they're going up, but they're not above historical ranges that at which the AI trade continued to work. Oil is not breaking out above levels that it wasn't at before, right? 80 90 95. It's a very comfortable level for the AI trade at least. Not for consumers, for the for the AI trade. So, I'm I'm not seeing the risk factors uh be big enough to derail the rally. Meanwhile, the good stuff remains good. So, I think the rally resumes pretty soon. Awesome. All right, that's it for Being Exponential, our macro episode. We hope you enjoy it. Please make sure to like, comment, ask those questions. We will be answering them. Take care.