Why raise money in euros?

A four-letter word that's the key to this economy? Yeah, I got that. J-O-B-S. From American Public Media, this is Marketplace. In Los Angeles, I'm Kai Risdahl. It is Monday today. This one is the 2nd of November. Good as it always is to have you along, everybody. You know, this is, for you, the layperson, the first week of November. Weather's getting colder, days are getting shorter, and it is, sadly, getting very much darker earlier. For those of us in the business and economic press, though, it is jobs week, baby. It is jobs week all week. A relief, to be honest, after the steady drip-drip of inflation and the Fed and oil and the stock market. In order this week, we'll get the job openings and labor turnover survey tomorrow, ADP's private sector payrolls Wednesday, first-time claims for jobless benefits and worker productivity on Thursday, and then October's unemployment report come Friday. Marketplace's Mitchell Hartman gets us going with what this economic week might bring. Through spring and summer, the job market seemed on pretty solid footing, says David Royal at Thrivant Financial. But then. The focus on employment got revised away in September, so all of a sudden the jobs picture looks a little more murky. Part of the issue is that job creation, when we've gotten it, has been pretty narrow. We've seen consistent growth in health care, but that's driven by the aging population, not a strong economy per se. Manufacturing and construction are holding up largely because of the AI boom. Sneha Puri is at the Indeed hiring lab. Data centers are driving a lot of the job growth, especially in engineering. Other than that, there's a lot of work to be done, and there's a lot of work to be done, though job openings are weak, the low-hire side of the equation. And that means employees have little leverage to demand higher wages, says Nick Tremper at small business payroll firm Gusto. Small business owners aren't necessarily saying that they have to compete on wages for talent. Average hourly earnings are now growing at the slowest pace since before the pandemic. Sneha Puri sees this in job openings at Indeed. It's significantly lower than inflation. That is a cause for concern. Low-hire has another negative implication for employment, says Jasmine Escalera, career expert at My Perfect Resume. When companies aren't bringing new employees into their organizations, that can make finding work much more challenging for people who are unemployed. All in all, it makes for a grumpy worker cohort, says Daniel Zhao at jobsite Glassdoor. Employee sentiment. Employee sentiment is quite poor. When we look at reviews on Glassdoor, the overwhelming theme that is coming from workers who are anxious is job security. And that's a reflection of the other half of the phrase we keep using for this job market, low-fire. Crucially for workers, if we are in a low-hire job market, the cost of being fired is much higher. And we see that reflected in long-term unemployment trending upwards. Which he says is unusual and worrisome when the economy is actually growing. I'm Mitchell Hartman for Marketplace. On Wall Street today, well, wait, I'll tell you what. Let's look at the New York mercantile exchange instead, because oil is the story. Crude down just about 8% or so, both major benchmarks. You might have seen the news that there's talk of more talks about talking in the Middle East. Equities today. Tech was the loser. We will have the details when we do the numbers. We'll be right back. Per available room, kind of a standard hospitality industry metric, was up 6.5% this quarter from the same period a year ago. That is globally, by the way. And on their call with analysts this morning, executives at that company got an increasingly common question. What is agentic AI doing to its business? We thought that was a good question, too. Agentic AI in the whole travel industry, right? Marketplace's Stephanie Hughes went in search of the answer. You know how safe it is to be in a hotel room? Some families have that one person who handles all the trip planning. In Sam Bishop-Hanna's family, she is that person. Once upon a time, I thought I wanted to be a travel agent. I thought that was like truly my calling. Bishop-Hanna now works in data analytics just outside Boston. And she turns to ChatGPT and Claude when she's doing travel planning. For big trips, it's useful for planning itineraries. For a quick weekend to New York, she uses it to recommend hotels. I'm like, look, I want to stay in the East Village. We're probably going to do X, Y, and Z. So I want it to be convenient to the subway or et cetera, et cetera. This is what the travel industry calls discovery. It's one of the areas Marriott noted is being changed by AI. And it's affecting how people decide where to stay. A.J. Alluri is a professor of hospitality and tourism at West Virginia University. What AI is doing is it will give you a personalized shortlist from everything what you said, and potentially an option for you to complete the booking itself. Handing over a booking to a travel agent is a great way to get a better understanding of what's an AI agent does involve a fair amount of trust. But Bank of America analyst Sean Kelly thinks we'll get there. 25 years ago, 20 years ago, everybody thought it was crazy to put your credit card number into the Internet. And here we are today. Nobody could imagine life without it. You will see that adoption curve like the Internet, but dramatically faster. Kelly says some hotels are also using AI to field calls for the front desk. Say the woman in room 237 says she needs extra towels. The AI agent on the phone can let you know. The fact is that 80 to 90 percent of those inquiries are going to be highly repetitive things. Kelly says that frees up the actual person at the front desk from being on the phone so they can give their full attention to the guests in front of them. I'm Stephanie Hughes from Marketplace. Tell me what I'm looking at. So this is a hundred and eighty thousand square foot facility that's optimized for turning out large high power satellites. Satellites are, of course, the whole reason we've got GPS and we can check weather on our phones and watch live television from the other side of the planet. Neil Conjure, the guy I'm talking to, is a co-founder of a company called Google. He's a co-founder of Google. He's a co-founder of a company that makes satellites. It's called K2 Space. We wanted to build the largest, highest power satellites as a true infrastructure play. That's Karan Conjure. And yes, they sound alike. They are brothers. Karan is the CEO. He's the MBA guy. Neil is an engineer and chief technology officer, used to work at SpaceX. I met them at K2's factory in Torrance, California, 25 miles, give or take, south of downtown L.A. And also one of the hubs of the environment. He's a co-founder of a You can, right now, get a 50-kilogram satellite. That's about 110 pounds, small-ish for satellites. You can get one onto a SpaceX rideshare launch for around $350,000. That rate logically goes up the heavier your satellite gets. But you can get one onto a SpaceX rideshare launch for around $350,000. That's about $350,000. But K2 is building this company on the premise that bigger and thus more powerful satellites are the future. What we're walking on right now is something that will give you a sense of the scale of what we're trying to build. This being radio, nobody can see what you're talking about. So we have on the floor a bunch of taped outlines. I'm going to guess this gizmo in the center here. This is supposed to represent the satellite itself. Exactly. And then we're walking now on the solar array. Exactly. All right. Panels extending way out on the sides of a satellite that power the whole thing. How big? How big is it from one end of the solar array to the other end of the solar array? So for our 20 kilowatt satellite, it's about 50 meters. For our 200 kilowatt satellite, it's over 100 meters. Just to simplify, right? Yeah. Please, please. The smallest satellite we will ever build is as large as the largest satellites that have ever existed. And the next one that we build will be effectively 10 times larger. K2 launched their first satellite. It's called Gravitas on a SpaceX rocket back in March. Their goal is 100 of them. a year. They're kind of big satellite cages into which their customers can put whatever they want, broadband equipment, weather monitoring systems, what have you. That's the entire play. We're building the infrastructure, and the application or payload you sit on top of it can vary based on the mission. Right now, a lot of those missions are for national security. K2's got a contract with the U.S. Space Force and is one of the partners on the Trump administration's Golden Dome Missile Defense Program, which, not for nothing, the Congressional Budget Office estimates could cost $1.2 trillion when all is said and done. The Golden Dome is basically the space-based interceptor program. It's a super sci-fi concept, but actually the technology stack is starting to be there to be able to achieve this objective. So Elon Musk won't take my calls anymore, so I can't ask him, but I'm going to ask you. We've had the whole Starlink-Starshield thing with him in Ukraine. Do you have qualms? Do you have qualms about you as a private company having that kind of influence on national security? I think every piece of infrastructure has been used for national security purposes ever, right? You look at everything from the computer to the Internet, right? It's been used for national security purposes. Our parents immigrated to this country. We love this country. We were born here. We're Americans, and I want to do everything we possibly can to ensure that we have an advantage versus everybody else. And so it's quite clear to us what we're doing and why we're doing it. Wasn't really an answer. I'm the CEO of this company, right? This is what I'm supposed to do. How's the sibling thing working out, by the way? I have to say, building a space company with your brother is about as good as it gets. The space company these brothers built has 400 employees and is valued at almost $7 billion because of the potential that investors see in space. A lot of that potential, can you guess where this is going, is about artificial intelligence. And data centers. Artificial intelligence data centers. In space. That's very, very much a hot topic. And, you know, historically, there was no way you would have been able to do any type of meaningful compute in space. With our satellites and with what we're seeing in the industry, that now is actually in the realm of possibility. But once again, back to getting it actually up there, right? I mean, it's still cheap. Yeah, it is quite expensive. I mean, part of the innovation is we designed the satellites to stack. So you can put many satellites per launch vehicle. Historically, the way you launch satellites was you said one satellite, one launch vehicle, right? If we can divide it by 10 or divide it by 20, it actually makes the economics kind of work. Show me around. Where are we going? Yeah. Let's go on to mission control first. Show me something cool. Mission control was dark. It was quiet. Two rows of desks facing three giant monitors on the wall up front. What's this thing on the right screen there? Looks like cloud. That's a visualization of the satellite in space. In space, over northern Australia at the time, the six controllers on duty monitoring. Ordering the data, streaming down from it. A lot of the engineers that designed the satellite actually get to operate the satellite in flight. So they train to be mission operators, and they've done a great job in missions so far. So far. No pressure, guys. No pressure at all. Now, the fun part is we're actually spending a lot of time building an autonomy stack. So we want these satellites eventually to be able to operate on their own. Because it's not for a period of time where it's just one, but we're going to have hundreds of satellites, right? And you won't be able to have a mission control for those hundreds. So the goal is to basically, you know, five and ten years from now, we're going to be able to operate an entire constellation sitting at your laptop in a Starbucks. What could possibly go wrong? I mean, I get it, but oh my. Automating that mission operator work sounds kind of harsh, but bringing down the cost of building and operating satellites at scale is the challenge they're trying to solve in this factory. All right, we'll keep it moving. Once again, I am surprised at how clean and quiet and tidy a satellite or a rocket manufacturing plant is. It's kind of wild. Yeah, so, I mean, you really want everything to be in its right place, right? If you're building a manufacturing line, any mess has really lost its production efficiency. So our production team does an amazing job of keeping things really clean and tidy, everything in the right area in their unit cell, and the line is continuously moving. Oh, wait, that's a solar array. Yeah. No way. So we're standing right next to one of those solar arrays that you saw up on the screen. All right, well, you're going over, so I'm going over. I was like, ooh, can I walk there? Yes, we can. It's 60 feet long, about 10 feet high. This is just one solar array. On the satellite that's up in space right now, we have two of them per satellite. Are you guys making this solar array? Yes, we make pretty much the entire solar array fully in-house. So the solar arrays are one of our most vertically integrated components because power is key to what we do, right? Everything comes back to power, so we have to own it down to the lowest level of supply chain. K2 says 90% of the components for their satellites are made in-house, and that vertical integration includes advanced propulsion systems all the way down to individual metal components made at their in-house machine shop. Can we get back to data centers in space for a second? How long is it going to be until we don't have to have all those gajillion data centers in, like, Ohio and Virginia, and you guys just take care of the problem up in space? Yeah, it's interesting. I was having a conversation with someone about this last night. Long term, all compute will be in space. And the questions are just, like, how long will that take? Is it going to compete with terrestrial data centers one year from now or two years from now? Probably not. Will it be competitive five and ten years from now? I think so. Do you worry at all about the. All right, fine. I'm going to go there. The AI bubble that we seem to be in the middle of? Yeah, if you look at, like, any big macro tech shift from, like, the dot-com through to, like, you know, where we're at today, like, there always are cycles, right? Does it feel really hot right now? I think there's, like, a lot of companies doing really well, right? There's a lot of capital going around. It could be a cycle, but I think long term, compute is something that's going to be required and needed over decades. And Neil and I are in this for, like, the next few. And I think. The other thing to highlight is that we as a business, right? Our goal is to be general purpose infrastructure, whether it's compute, whether it's communications, any application in space that needs massive power. So you're application agnostic. You don't care. You just want people to use your satellites. Exactly. Exactly. How soon until you outgrow this place? We are already looking for more space. Are you? Yeah, yeah. We're about to add probably another 200,000 square feet over the next four to six months. And then we had about a million square feet. Call it, you know, three years from now. Wow. Of course. Three years in this economy. What with how fast AI is changing and how fast we're getting new heavy rocket launch capacity and who knows what geopolitics is going to bring. Three years is a very, very long time. Yeah. Coming up. Some of our buyers are saying, you know, I've just had it. I have to take a break. I get that 100 percent. First, though, let's do the numbers. Dow Industrials up. Two hundred and thirteen points on the day. Four tenths percent. Fifty one thousand nine hundred and eighty three. The Nasdaq subtracted two hundred and seventy two points. Just shy of one and one tenth of one percent. Closed to twenty five thousand one sixty four. S&P 500 down thirty eight points. About a half percent. Seventy five and forty one. Stephanie Hughes was telling us about Marriott a minute ago. Beat Wall Street's third quarter expectations. Raised its own revenue growth projection for the year. Marriott International found four and a quarter percent on the day. Hilton Worldwide. Rose two and two tenths percent. Hyatt Hotels increased about three percent on the day. Choice Hotels. Sure, we'll go one more hotel. Beat expectations as well. It picked up six and seven tenths percent. Bonds up. Yield on the 10-year T-note down four point nine one percent. You're listening to Marketplace. This is Marketplace. I'm Kai Risdahl. Alphabet announced this morning it's going to issue just shy of seven billion dollars worth of new debt. Another sign the big technology companies of which Google's parent is among the biggest are still eager, nay desperate perhaps, to raise yet more money to finance their AI infrastructure build out. In this particular case, though, the why is nowhere near as interesting as the where. Alphabet is going to be issuing its new bonds, not here, but in Europe. Meta, too, is said to be thinking about a big euro denominated debt sale later this week. That's according to Bloomberg News. As Marketplace is jumping. As Justin Ho reports, big tech has quite a few reasons to be looking overseas right now. One big reason why companies are issuing debt in Europe is because they've already been issuing so many bonds here at home, says Randy Vogel, head of fixed income with Wilmington Trust. We saw $25 billion from Microsoft last week. We've got another $10 billion from Oracle already this week. We're likely to get a large deal from Meta this week. Vogel says some investors are getting a little concerned about all this debt. Other investors have actual caps. On how much debt they can buy from a single company. Either way, Vogel says. These companies have had to tap other sources of funding in other markets. And the euro market is one of those markets. Plus, a lot of the tech companies we're talking about make a lot of money in Europe. John Bai, a professor at Northeastern University, says when a company pulls in a lot of euros, for instance. It makes sense for a company like that to actually raise financing in that same region. That's because big international tech companies could pay off. That debt in euros instead of having to deal with the mess of converting currency into dollars and dealing with exchange rates, which have been. kind of volatile. Guy Lebas is chief fixed income strategist with Janie Montgomery Scott. Issuing bonds in euros is sort of an easy way to reduce the volatility. Issuing debt in Europe can also be cheaper. Winnie Caesar, global head of strategy at CreditSite, says in some cases, interest rates on corporate debt in Europe are more than one and a half percent lower than in the U.S. And that is one of the things that a company is going to consider when they're thinking about tapping other markets. You know, what is the difference in my borrowing cost? Caesar says companies are especially sensitive to borrowing costs right now, given that interest rates have been rising more broadly. Because if they keep rising, Caesar says investors are going to get more nervous about whether a company can handle it. That is going to start to impact how I think about this company's fundamentals and the repayment of that cash flow. And if investors start worrying about getting paid back, they'll demand even higher interest rates as a result. I'm Justin Ho for Marketplace. The problems plaguing the real estate market are pretty well known. We have talked a lot of late about the mortgage rate, 7.24 percent on an average last week. That's for the third year, and it's according to Freddie Mac. Discouraging, to say the least. Inventory is the other challenge. We are short, give or take, four, maybe five million housing units. And that scarcity is felt all up and down the price curve. Cynthia Cummins is the owner of Kindred SF Homes in San Francisco, where she is seeing some things. All I know is what I know right now. And right now it's, it's bonkers. It's, you know, trying to find properties for buyers right now is like, um, you know, being at a, at a candy store, being a little kid at a candy store with a quarter to spend and finding out that the price of a bit of honey has gone up to like, you know, $3.50. Um, nationally inventory was, uh, up a little bit year over year, six percent. Inventory in San Francisco for single family homes year over year was 33% down. I, uh, recently sold a 1,000 square foot condo in a really wonderful San Francisco neighborhood. We had 10 offers and we asked 1.3 million. So that's, that's 1300 a foot. And it sold for 1.8 million. Right now, some of our buyers are saying, you know, I've just had it. I don't know. I can't do this. I think it is all, it's the fault of AI. Um, you know, there's a lot of, of wealth being generated. Um, so that's fueling it. There's that. And then there's the, I don't know, the golden handcuff effect of a lot of people in the city who've been there for a long time, who have these really low mortgages, like less than in some cases, 3%. And they are, they feel trapped. Of course, mind you, those, those people, those empty nesters with the low mortgage rates in the beautiful houses in San Francisco, um, if they want to go be near their grandchildren, they're going to have to, to fly out there and visit them because their kids can't afford to live in San Francisco. cynthia cummins she is the founder also the owner of kindred sf homes in san francisco this final note on the way out today an update from anthropic which is expected to go public sometime in the next couple of weeks the company said today that as of the end of last month it is under contract for data centers and chips and computing power to the tune of 895 billion with a B dollars. 70 billion of that is due to be paid over the next year. Total revenue for the company this year through September 30th, 33 billion dollars. See also Justin's story about these companies borrowing ever more money. Amir Babawi, Caitlin Esch, John Gordon, Noya Carr, Steve Mullis and Stephanie Sieck are the Marketplace editing staff. Kelly Savera is the news director. And I'm Kai Risdahl. We will see you tomorrow, everybody. This is APN.