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Chapter 1: What are the reasons behind the booming corporate bonds in AI?
On All of It with me, Alison Stewart, we'll talk about art, music, theater, literature, history, food, well, all of it. Hear in-depth, insightful interviews with authors like Zadie Smith, musicians like Steve Earle, actors like Kate Winslet, and beyond. You never know who you'll hear next on All of It, but it's always worth listening. That's All of It, available wherever you get your podcasts.
Olen Shannon Maldonado, käsintehtyjä artesaanituotteita myyvän Jaui lahjakaupan perustaja. Valitsin Shopify, koska alustoja testatessani totesin sen ehdottomasti yhdeksi helppokäyttöisimmistä alustoista. Minulla oli tärkeää pohtia kehittymistämme tulevaisuudessa. Kaikki myyntiin tarvittavat työkalut, kuten varaston suunnittelu, ovat kätevästi dashboardissa.
Aloita ilmainen kokeilu shopify.com-sivustolla.
The Federal Reserve started its meeting today. I wonder what Kevin Warsh is going to say tomorrow. From American Public Media, this is Marketplace. In Los Angeles, I'm Kai Rizal. It is Tuesday. Today, this one is the 16th of June. Good as it always is to have you along, everybody. Kevin Warsh coming up in a minute, but we begin today with a somewhat but not really a hypothetical question.
Is there such a thing as having too much money? It's relevant on an individual level as the world tries to decide how it feels about its first trillionaire. But it's also relevant on the corporate level because really big companies sitting on really big piles of cash are going to the capital markets to get more. Alphabet issued $85 billion worth of new shares last month.
Amazon and Alphabet as well have gone to the bond market to raise billions in the past couple of months. Nvidia did the same thing yesterday. The raising cash part isn't unusual. It's the they've already got so much of it. That's the news. Marketplace's Henry Epp gets us going. This is really all about data centers.
Big tech, as you know, is all in on artificial intelligence, which takes a massive amount of computing power to run. So they're building out that infrastructure, which is costing them collectively hundreds of billions of dollars just this year. Julie Osk is a tech analyst and founder of Osk Advisory.
This is an unprecedented level of capital expenditure for most of these companies.
And the cash they have on hand is not enough. So that's why they're going to the bond and equity markets, says Brent Phil, managing director of tech research at Jefferies. You can't fund this by just straight equity or straight debt. You need a collection of financing vehicles to fund this AI boom.
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Chapter 2: How much are tech giants investing in AI infrastructure?
Before investors change their minds, says Dan Ives, head of tech research at Wedbush Securities.
We're in the window where capital is there. Six months from now, that capital might be narrowed.
Because as the AI boom goes on, investors will want to see companies actually make a return on all this data center investment, says Brent Thill at Jefferies. And this is what's concerning investors is when you look at the type of spend, are we going to get the ROI? The answer, Thill says, might not be clear for a few more years. And he thinks this AI hype cycle might also have years to go.
To put it in terms of the internet boom a generation ago. It feels more like mid-90s at this point. And the dot-com bubble didn't start to burst until 2000. I'm Henry Epp for Marketplace. Wall Street today, tech not so good, most of the rest kind of a wash. We will have the details when we do the numbers. This is Fed Week for those who observe.
And since 2011, this has been its identifying audio.
Good afternoon. The Federal Open Market Committee concluded a two-day meeting earlier today. Today, the Federal Open Market Committee decided to raise the target range for the federal funds rate.
We at the Fed will do everything we can to achieve our maximum employment and price stability goals. Thank you. I look forward to your questions. Press conferences from the chair, Bernanke, Yellen, and Powell, in that order. Kevin Warsh, the new guy, hasn't committed to doing one after every meeting, but seeing as tomorrow is going to be his first, we thought a little history might be in order.
I would start the story way back in 1994 when the FOMC decided to publish statements after their scheduled meetings.
That's Tom Laretz at the NYU Stern School of Business. Alan Greenspan, you might remember, was the chair back in 1994.
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Chapter 3: What challenges do companies face in showing returns on AI investments?
Chair Yellen, whose idea press conferences were in the first place back when she was vice chair, she kept press conferences at four times a year. And then Jay Powell in 2019 started doing pressers after every meeting. Here's Kunal Sangani at Northwestern University.
By making every meeting live, you're getting yourself into giving a lot more forward guidance, a lot more guidance about how interest rates are going to unfold in the future.
And one of the tradeoffs of that is, you know, that forward guidance could turn into forward handcuffs. Which is Chairman Warsh's point. Warsh, by the way, has not actually said how many press conferences he might do.
I think it's an open question whether eight press conferences a year is the right amount or whether scaling back would do the job while not sort of impeding the ability of the Fed to react quickly and still make policies and policy decisions on a short horizon. We're dancing around the big question. How does Warsh want and envision leading the Fed?
And with what consequences for president, for his relationship with Congress, and obviously for how markets interpret what the Fed's going to do.
The Warsh dance starts tomorrow, 2.30 Eastern. Stay tuned. You might have seen this a couple of days ago that last month for the first time, solar supplied more electricity in this country than coal did. And that's despite the Trump administration's hostility to renewable energy and its support of coal.
Late last year, the administration ended a federal tax credit for residential rooftop solar panels. But commercial and utility scale projects still do qualify for the next couple of weeks anyway. Marketplace's Caitlin Tan has more on that one. I called up Solar Montana, a solar installation company, and I got Belinda Romero on the phone.
We're doing very well. We have quite a few commercial jobs that we're working on.
They're putting solar panels on libraries, colleges, fire stations, and there's federal money still on the table.
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Chapter 4: How is the solar energy market evolving in relation to federal tax credits?
Her group is encouraging people to pool their resources, buy solar in bulk, and some states are even offering their own tax credits. I'm Caitlin Tan for Marketplace. There are a bunch of ways to figure out what's going on in this economy. Data, of course, that's got its uses. Analysts and economists, they're pretty good, too. Best, though, the people who actually make this economy go.
Patrick Smith is one of them. He runs Loftus Ranches. That's a hops and apple farm up in Yakima, Washington. Patrick, it is good to talk to you again. Good to talk to you, Kai. All right. First things first. How are things at Loftus Ranches? Yeah. I mean, one of these days, I hope that we have one of these calls and I can say costs are down, prices are up, and everything is going great.
Today's not that day. There's been plenty in the press lately about cost pressures on the farms, whether it's fertilizer prices, diesel prices. Obviously, a lot of cost pressures that we're facing. And here in Washington State, not only are we facing a drought yet again this year, but USDA earlier this year came out with a report ranking all the states by one measure of farm profitability.
And here in Washington State, we had the distinction of coming in dead last in that report, 50th out of 50 states. So it's been a rough go for the farm economy here in Washington lately. Yeah. Yeah, so this basically echoes a conversation I had with a corn and soybean farmer that we know in Iowa, not to play one against the other. But once again, this is farmers being price takers, first of all.
You guys don't get to decide. And also just the macro sense that farming is really hard now. Yeah, certainly. The inability for us to pass on cost increases is a major part of why we're seeing such economic difficulties on the farms. A lot of farms are struggling to stay in business.
Here in Washington State, we just saw one of the largest tree fruit growers in the state filed bankruptcy within the last couple of weeks. But it's just kind of indicative of the state of... things in, uh, in this industry right now. Yeah. Well, let me ask you as a tree fruit grower, right? You grow apples, um, also hops, we should say, as we've said many a time.
Um, what, what are the crops looking like? I mean, you know, too many crops is bad cause then prices go down, but you gotta have crops to take the market. How, how are things? Yeah, we're starting to finally see some acreage coming out of production.
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Chapter 5: What does Fox's acquisition of Roku mean for the streaming industry?
Really? Really? Wait, sorry. Well, that's really interesting you say finally, because you're an apple guy, and apples, obviously, you've got to grow the trees and this and that, and it's not like you can just turn off the switch. Right, right.
And so that's been one of the biggest problems in agriculture here in Washington state, really throughout the West, where we're a lot more heavily indexed to these permanent crops. These cycles just repeat themselves over and over again.
And so we entered this period of structural oversupply where the industry was just producing far more than was really demanded and forces farmers to eat the cost increases that we've seen over that period of time. Can I ask what's going to sound like a really silly question to a guy whose life this is, but how do you take parts of your acreage, your apple acreage out of production?
Do you like cut down the trees? Do you not fertilize? What do you do? Yeah, chainsaws are the most effective tool, yeah. That seems so drastic. It is. It is. But the fact is that on our one farm, we have orchard blocks each year that we evaluate. When we look at it, we can't cover the cash cost of growing it.
And so without the visibility to pricing improving, how long can we lose money just on...
labor fertilizer crop protection products you know in some cases invested 40 50 60 thousand dollars an acre getting these trees into production but at the end of the day you know using four or five thousand dollars an acre year over year is not that interesting i'm perhaps i'm over romanticizing this but but doesn't it just take a little piece of your soul to cut down all these trees
Oh, yeah, absolutely. Especially when there's no great alternatives to go into. I mean, without American consumers deciding to significantly increase their consumption of fresh apples, the only real way for the industry to get to a place of relative health and sustainability is to reduce production. Patrick Smith, Loftus Ranches, Bell Breaker Brewing, and various other side hustles.
Patrick, thanks a lot. Always good to talk to you. Of course. Thank you, Kai. Appreciate it. Coming up.
There's a mansion deficit.
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Chapter 6: How has the Federal Reserve's approach to press conferences changed over time?
Dave & Buster's Entertainment missed analyst expectations and reported that comparable store sales were down more than 5% for the quarter. Ticker symbol on that one? Play, P-L-A-Y, down 6.25%. Also, shout out to the parents out there. Good stuff with their kids there. Anyway, Price Wars and the pizza business have convinced Yum! Brands to get out of the pizza business.
It is selling Pizza Hut to a private equity firm. Yum! Brands heated up 2% on the day you're listening to Marketplace. There's a lot going on right now. Mounting economic inequality, threats to democracy, environmental disaster, the sour stench of chaos in the air.
I'm Brooke Gladstone, host of WNYC's On the Media.
Want to understand the reasons and the meanings of the narratives that led us here and maybe how to head them off at the pass?
That's On the Media's specialty.
Take a listen wherever you get your podcasts. This is Marketplace. I'm Kai Risdahl. Fox has entered the streaming chat. The media company that has long relied on straight-up cable TV for its success said this week it is buying Roku for $22 billion. Roku, as in the streaming program that comes automatically installed on smart TVs in more than 100 million households.
It's the thing you see before you click on the app that you actually want to watch. Marketplace's Kelly Wells has more. This is a smart play for Fox, according to John Giegengack, who's founder and head analyst at Hub Entertainment Research. Because out of all the problems that TV watchers face these days... Their biggest frustration is how complicated it is to use television.
Which is where a streaming aggregator like Roku comes in. Giegengack says his company has studied how TV watching has changed.
The number one thing that they turn on first... has switched from some kind of a cable box to an app inside of a smart TV. And for 100 million households, that's Roku. Now Fox can sell ads to those people directly on the Roku platform, which means more money, says Peter Cohen, who teaches management practice at Babson College.
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Chapter 7: What impact do economic conditions have on farmers in Washington State?
On top of that, being the bridge between users and content pays well, too, says Brandon Katz with the entertainment analytics company Greenlight Analytics.
Suddenly I want to watch Netflix and I have a Roku device. Well, Fox is taking a bite out of that subscription and advertising revenue and all the other streamers and apps that you subscribe through your Roku app as well.
Katz says Fox seeded the content creation race to the likes of Disney and Netflix years ago. But claiming this gatekeeper role? Katz calls that move a home run for Fox. I'm Kaylee Wells for Marketplace. This is shaping up to be, as you know, the summer and perhaps the fall of the ginormous initial public offering. SpaceX last week, Anthropic and OpenAI set to follow suit.
SpaceX worth two trillion dollars now, give or take the latter two of them based in San Francisco, pushing valuations of a trillion dollars apiece. Even before all that IPO cash, though, San Francisco has had the highest and the fastest rising home prices in the country. That's according to Redfin. So Marketplace's Megan McCarty Carino takes us to the front lines of the AI boom.
A turnkey restored Edwardian home hit the market last month for just under $3 million, right outside the neighborhood known as Cerebral Valley for its concentration of AI workers. We've got this beautiful viola marble fluted backsplash. Realtors Crystal Pollack and Kelly Bennett show me some of the home's unique selling points.
There's a motorized stairway to the attic that folds into the ceiling. Two-car parking. two-car parking, which is also a rarity. But perhaps the most distinctive thing about this listing is one of the forms of payment accepted, shares in OpenAI or Anthropic. We have had at our open houses, a lot of folks come in and be like, oh my gosh, I wish this was six months from now.
And so when they were talking about it, the seller said, well, yeah, I would just take their stock for it. AI equity has literally become the currency of the market. Some shareholders have been able to cash out stock before the IPOs by selling to new investors. It's driving a frenzy of bidding wars. There's a mansion deficit.
That was the term I coined.
Yeah, he said mansion deficit. Luxury real estate advisor Alexander Lurie, who also happens to be the mayor's brother, shows me around one of these rarities on a hilltop stretch known as Billionaire's Row.
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Chapter 8: How is AI influencing real estate trends in San Francisco?
But the wealth is accruing to a small group as the rest of the industry contracts. Egan says the city lost about 40,000 jobs in the last three years, mostly in tech.
It's really a tug of war between something that's in decline and something that's growing rapidly.
That dueling reality is taking a psychological toll on the city, says Didi Das, a former engineer who's now a partner at a VC firm that's a major investor in Anthropic.
To see it up close and personal is, it's very stark. I mean, overnight I have friends who are worth billions of dollars.
And others shaken by a newfound sense of precarity, even with enviable big tech salaries.
People who are like, you know, I felt like I did everything right in my life. I went to, I don't know, Stanford and MIT. I was top of my class. I took the right job. I did everything right. But I don't know if my job even has value anymore.
He says the term permanent underclass gets thrown around a lot in tech circles, unironically. It's the idea that if you miss this wave of wealth, there may never be another. A fear of missing out is also palpable in the real estate market, says realtor Kelly Bennett, who's working on that Edwardian listing.
You know, once these companies IPO, what's going to happen to the home prices then? I mean, you know, we might look back on this time and think, oh, shoot, I wish I'd gotten in in spring 2026. Yeah.
Back when you could still get a home for $3 million. In San Francisco, I'm Megan McCarty Carino for Marketplace.
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