Pope Leo's Surgery, a Hot CPI Print, and Anthropic's IPO Pitch

MayaOkay, I'm on my second coffee, a vanilla oat thing, and I still feel like the news got ahead of me this morning.

DavidYour coffee is not the problem, Maya. The news is just busy.

MayaFair. I'm Maya. This is the Morning Rundown, and David is here to keep me honest.

DavidSomebody has to.

MayaThree stories today: a pope recovering from surgery.

DavidA hot inflation number.

MayaAnd an AI company getting ready to walk onto the market stage.

DavidWhich brings up the question I keep chewing on. How much good news can a nervous market actually absorb?

MayaWait, are we calling that last one good news?

DavidDepends who's pitching it.

MayaFair. Let's start with a story that's about a person, not a number. The Pope. So the Vatican put out a medical bulletin, and CBC reported on it. Pope Leo XIV, who is seventy-one, had the lower lobe of his right lung removed on Tuesday.

DavidHmm.

MayaAnd the surgery confirmed lung adenocarcinoma, that's the diagnosis, in the Vatican's own words.

DavidThat's a heavy sentence to read on a Thursday morning. Was there any good news in the bulletin?

MayaSome, yeah. The Vatican said there were no complications.

DavidOkay, good.

MayaAnd here's what it didn't say. It did not announce any further treatment. Doctors, it said, are not currently speaking of chemotherapy.

DavidCurrently, I noticed that word.

MayaMe too. And that's as of the bulletin. It could change, so we're not gonna guess where it goes.

DavidTotally. No armchair oncology from two people with coffee mugs.

MayaFair. But the CBC report also quotes oncologists, and they called the prognosis excellent if the cancer was caught early.

DavidIf.

MayaBig if, yes. I'm just telling you what they said. The if is theirs, not mine.

DavidRight. And I think that's the honest place to leave the medicine. Surgery done, no complications, no further treatment announced.

MayaMm-hm.

DavidThe other thing I keep thinking about is the institution. A pope is out of commission, and the church is a global operation with a billion people in it. What does that look like day to day?

MayaWell, the New York Times ran a headline on Thursday that sums up its take. While Leo recovers from lung surgery, the church runs on autopilot.

DavidAutopilot. Hmm, that's an interesting word choice.

MayaIt's a headline, so I'm not gonna build a whole theory on it. I haven't got the article's details in front of me, but it tells you how the Times is framing the recovery period.

DavidFair enough. Keeping things steady is a pretty reasonable thing for an institution that old to do.

MayaAgreed. And honestly, the human part is simple. A seventy-one-year-old man had major surgery, and a lot of people are hoping he recovers well.

DavidYeah, no argument there. It's also a reminder of how we get news like this, not from rumor, but from a bulletin in careful language, where every word, like currently, is doing work.

MayaWhich is why I like sticking to what was actually said. When it's someone's health, the plain version is the respectful one. We'll leave the speculation to others and just pass along the facts as they were reported. Okay, speaking of things that make you hold your breath and wait for news.

DavidOh, you're going there.

MayaI am. We've gone from a health scare to a number that gave markets one, inflation.

DavidAh. Yeah, the morning's other big checkup.

MayaOkay, so the number. September CPI came out Wednesday, and headline inflation rose three point seven percent from a year ago.

DavidAnd the forecast was three point six.

MayaSo a miss by a tenth.

DavidA tenth sounds like nothing, but markets price in the forecast, so a tenth the wrong way is a surprise. On the month, prices rose zero point six percent, and that one was exactly as expected.

MayaWait, so the monthly number was fine?

DavidFine is relative. Zero point six in a single month is brisk. It just didn't surprise anybody. The yearly figure is what stung.

MayaHmm. And CNBC added a stat that made me sit up.

DavidGo on.

MayaCNBC notes that CPI has now been above two percent for about Sixty-five straight months.

DavidSixty-five months.

MayaThat's the longest streak like that since the nineties, CNBC says.

DavidThat's more than five years, Maya. Think about what two percent means. That's the target, the speed limit. We've been over it for longer than most people have had their current phone.

MayaOkay, that I can picture. My phone is ancient.

DavidSo here's what it does to your wallet. Prices don't come back down. A three point seven percent rise on groceries, rent, car insurance. It stacks on the last year, which stacked on the year before. Your paycheck has to outrun a treadmill that keeps speeding up.

MayaAnd a lot of folks feel that at the register before they ever see a CPI report.

DavidTotally. And I'll say where I land. A dollar that keeps shrinking is a quiet tax on anybody saving or living on a fixed income. The fix isn't glamorous. It's a government that lives within its means and a central bank that finishes the job. I'm not pinning this on one party. It's been years.

MayaOkay, but what about the big ticket stuff? Somebody trying to buy a house or finance a car is watching this number too, right?

DavidRight. And here's the thing. I can't tell you what any central bank does next, and nobody should pretend to. But the logic is simple. A hotter than expected print makes it harder for anyone to argue that borrowing costs should ease anytime soon. If inflation stays sticky, a mortgage or a car loan stays expensive for longer.

MayaAnd savers. You said a shrinking dollar is a quiet tax on them.

DavidIt cuts both ways. If your savings account pays less than inflation, your balance goes up, but your buying power goes down. If it pays more, you finally get something for your patience. I don't have your bank's rate in front of me, so go check it. That's the practical homework from this number.

MayaFair. So the data lands and then what? Stocks?

DavidStocks did not love it.

MayaThe S&P five hundred fell about one percent per CNBC's market coverage.

DavidAlongside a sell-off in AI-related stocks. That's what the coverage reports, both things on the same day.

MayaWhy would inflation hit AI names harder, though?

DavidI'd be careful. The coverage reports are both things happening together. What I can say is those stocks are priced for lots of growth far in the future, and a hotter inflation print makes everybody nervous about that.

MayaOkay. Explain the far in the future part. Why does that make them touchy?

DavidThink of it this way: if a company's big payoff is years away, what people will pay for it today depends on how much they value that distant money. When inflation looks stubborn, the future money feels less valuable, and the waiting feels riskier. That's a general idea about valuation, not something the coverage said about this particular day.

MayaSo the more of the story is tomorrow, the more a hot number stings today.

DavidThat's the sensitivity. Yes. It's an explanation, not a verdict.

MayaWhich is a me too instinct, honestly. Everyone looks at the same number and flinches at the same time.

DavidHerd with a spreadsheet.

MayaAnd it didn't stay in New York.

DavidNo. By Thursday, investing.com was reporting that Asian stocks slumped as the chip rout deepened after the hotter US inflation data.

MayaChips. So the sell-off traveled.

DavidRight. That same investing.com roundup also lists headlines from several outlets about the chip sell-off. So it was clearly a widely covered story.

MayaOkay, so it wasn't a one outlet story.

DavidThe list suggests not, but I'm not gonna put words in anyone's mouth beyond the headlines. What we can say is that the hotter US data was followed by a slump in Asian chip stocks.

MayaThat's wild, right? A number comes out in the US, and chip shares a world away are under pressure?

DavidMarkets don't sleep. Neither does inflation, apparently.

MayaHa. Okay, so that's the mood. A market that just got a cold splash of reality and AI stocks, the ones shivering.

DavidMm-hmm.

MayaWhich brings us to a company about to ask that jumpy market for a lot of faith, Anthropic. Okay, David, so Anthropic. I'll admit I had to reread the headline twice.

DavidWhy? What's the headline?

MayaBBC says the company flagged a revenue surge ahead of its stock market debut.

DavidFlagged it? Like a waiter flagging the special?

MayaKind of. And the BBC adds the context that some investors have become concerned about the amount of money being spent on AI infrastructure.

DavidWhich is a separate worry from this morning's inflation story, though the two are both about nerves around AI.

MayaRight. So the timing is, um, interesting.

DavidLet me poke at that. Investor concern about spending is really a question about whether the money going out ever comes in. A revenue surge is the obvious thing to point to in answer.

MayaSo that's why you flag it?

DavidThat's the reading that makes sense to me, but it's my inference. The BBC didn't spell that out.

MayaFair enough. Inference noted.

DavidTiming is everything. What's the surge number?

MayaCNBC's headline says Anthropic's third quarter revenue is said to hit sixteen point eight billion dollars.

DavidWait, in one quarter?

MayaOne quarter, Q3. And notice the words "is said to." CNBC is reporting it. It's not confirmed.

DavidGood. Keep that wobble in there. A headline number is a headline number.

MayaTotally. And I only have the headline, so I can't tell you how they got there.

DavidWhich is worth saying out loud. A headline tells you a figure was reported. It doesn't tell you what's counted in it or whether anyone has verified it.

MayaRight. So all it really establishes is that CNBC reported a number for one quarter.

DavidFair. Then let me bring the other piece of paper.

MayaUh-oh.

DavidDavid smirk. Fortune wrote up a leaked prospectus, which Reuters reviewed first, and it's the full year twenty twenty-five numbers, so different period. Hold that thought.

MayaOkay, I'm holding.

DavidRevenue for twenty twenty-five was about four point six billion dollars.

MayaOkay, that's still a lot.

DavidIt is. The operating loss was about eight point oh six billion dollars.

MayaWow. So the loss was bigger than the revenue.

DavidRight. And then the net loss, according to Fortune's account, is forty-two billion dollars.

MayaForty-two? With a B?

DavidWith a B. Now, the filing hasn't been independently confirmed, so treat it as leaked and unverified.

MayaGot it. Leaked, not gospel.

DavidRight. And it gets harder for the pitch. Fortune says two customers accounted for nearly a quarter of revenue.

MayaTwo, as in you could fit them in a Prius.

DavidYou could fit them in a booth at a diner. And many of the large customers aren't locked into long-term contracts.

MayaMeaning they could walk.

DavidMeaning they aren't tied in. If you're a skeptical investor, that's the line you circle.

MayaHmm. Because a big customer without a contract is basically a really enthusiastic maybe.

DavidI'm stealing that.

MayaWalk me through it for a regular person. Why does that concentration matter?

DavidPicture a shop where two customers account for nearly a quarter of everything it sells. If one of them changes its mind, that shop's year looks very different. And if they aren't locked in, nothing ties them down. But we don't know whether any of them plans to leave, so that's a risk to weigh, not a prediction.

MayaOkay, but let me be careful because I can feel us about to mash these together.

DavidPlease do. I'm about to.

MayaThe Q3 number is one source, CNBC, from this quarter. The losses are a different source, the leaked filing from all of twenty twenty-five, different periods.

DavidRight. You can't subtract the twenty twenty-five losses from a Q3 revenue figure and call it math. They don't offset.

MayaAnd the reverse holds true. The big Q3 headline doesn't erase what's in the twenty twenty-five filing.

DavidExactly. Each one answers a different question. The headline says a lot of revenue has been reported lately. The filing says what the picture looked like over all of twenty twenty-five and who was paying. Neither one is the whole story.

MayaSo what's the actual question?

DavidThe skeptical investor's question. A giant quarter of revenue sounds great, but does it come from a few customers who could leave, and what did it cost to produce?

MayaAnd we don't know the answer.

DavidWe don't. And I won't guess how any IPO goes. Plenty of people have been confidently wrong about that.

MayaYeah. I've been one of them over a very small stock once.

DavidWe're not doing your portfolio today.

MayaThank God. Okay, so on one side, you've got a revenue headline that's blowing the doors off, and on the other, a leaked filing full of red ink and a short customer list.

DavidAnd investors who, per the BBC, are already asking about how much gets spent on AI.

MayaWhich honestly is a lot to put in one morning.

DavidIt is. A pope, a price index, and a pitch.

MayaThat's the rundown on the big three. David, shall we wrap it up?

DavidLet's wrap it up. So the through line, if there is one, a big promise walked into a skeptical market.

MayaHa. And the market had already had a rough morning.

DavidRight. And patience is the one thing a nervous market never has in stock.

MayaNeither do I before my second coffee. Mine's gone cold, honestly.

DavidThen we should let people go enjoy their day.

MayaThanks for hanging out with us, everybody, and that's the rundown.