Cannes Lions and Tech Trends

Support for the show comes from Odu Running a business takes everything you've got, and a lot of the tools out there that are supposed to make your life easier just aren't great at talking to each other And that means you end up having to toggle between a dozen different apps and services just to keep the lights on Enough of that. Now there is Odu the all in one fully integrated platform that might actually help you get it all done Thousands of businesses have made the switch, so why not you? tryry Odoo for free at odoo d. com That's odoo dot com Support for the show comes from BCX, the public ticker for private tech. The US stock market started history's greatest wave of wealth creation from factory workers in Detroit to farmers in Omaha Anyone could own a piece of the great American companies But today, our most innovative companies are staying private longer, which means everyday Americans are missing out until now, introducing VCX, a public ticker for private tech, now available wherever you buy stocks Visit getvcx. com for more info. That's getvcx. com Carefully consider the investment material before investing, including objectives, risks, charges, and expenses, this and other information can be found in the fund's prospectus at getvCX. com. This is a paid sponsorship When I scraped my car in that parking garage, I was worried that it could be a long process to take care of it Like a landscaper's first day trimming a hedge m I have definitely already been here. Now is it left, right or right, left Well mayaybe I'll cut a path out and find my way back later But it wasn't like that. I filed a claim in under two minutes on the GaIio app and they handled it from there. It was taken care of almost as quickly as it happened. It feels good to get help quick. It feels good to GaIio. Money markets mas. If money is evil, then that building is hell. S It's never one so sir Welcome to Profty Markets. I'm Ed Elson. it is june twenty fifth. Let's check in on yesterday's market vitals The S andP five hundred and NSdDAQ declined as chip stocks extended their losses. However Micron stock popped more than nine percent in after hours as it quadrupled its revenue in the latest quarter. We will see how those results impact the rest of the chip sector today. Oil dipped below seventy dollars for the first time since before the war. The yield on tenure treasuries fell. The dollar climbed as Bitcoin crashed below sixty thousand dollars to its lowest level since October of twenty twenty four And finally, Ali Baba shares sank three percent A Anthropic accused the company of quote illicitly accessing its AI models. Okay What else is happening here America finally has a plan to make housing affordable, but President Trump is holding it hostage. in a rare bipartisan feat Congress passed the most significant piece of housing legislation in thirty six years on Tuesday The twenty first century Road to Housing Act aims to lower housing costs and increase supply cuts red tape on new construction and makes loans easier to secure It also sets limits on the role of institutional investors in the housing market, a policy which Trump himself has championed, but Yesterday Trump abruptly cancellled plans to sign this bill. He said he wouldn't sign it until Congress passes a separate voter ID bill called the Save America Act Home buildilders rallally anyway with KB home up seventeen percent, Dreamfinders homes up thirteen percent and century communities up ten percent joining us to discuss this bill. We're speaking with Darryl Fairweather. Chief economist at Red Fin Darrel Thank you so much for joining us on the show. I'm just gonna tell you how I feel about this right off the bat I hear your response and and Pret pretty disappointed by this because I saw that bill whichich I was very optimistic about. It seemed like we were finally making a bipartisan effort to get the cost of housing down, which has exploded. I mean We can go through many different metrics, but the fact that you know I often look at the age of first time home buyers, which is now forty. and back in nineteen ninety one, it was twenty eight, we could go through the list. And then the president shuts it down att a moment where I thought we all agreed U Could you just walk us through This bill And then also your reactions to it either ing or perhaps not happening. Yes, I was excited that this bill passed through Congress because there is a lot of great stuff in it. There are provisions that tie government money to local municipalities increasing their supply of housing and making it easier to build, which I think is so important. There are provisions about manufactured and modular housing, making it easier for people to finance those types of homes, which could unlock a lot of additional housing supply You can put an ADU in your backyard that's manufactured or that's modular, and that's a great way to increase the housing supply. There are also provisions in there about providing money for homes that are at risk of natural disasters. And then you have some stuff in there about investors buying homes. You know I think overall, this bill ended up in a really great place that housing advocates can get behind. And it is disappointing that it's not going to become law today But I remain optimistic that this will get over the finish line. Why do you feel optimistic that this will ultimately happen? Because it's so supported on both sides. I mean, I' just looking at how it passed three hundred fifty eight to thirty two in the House, eighty five to five in the Senate. likeike this is as bipartisan as they come Is that why you feel optimistic about it? Yes, it's bipartisan. bothoth Republican and Democrat lawmakers support it, and also people support it. People recognize how unaffordable it has become to buy a home or even to rent a home, and they want their leaders to take action. So I think that this is the future that people have gotten on board with the idea that we need to increase the supply of housing if we really want to make housing more affordable And this is the direction that the country is headed in. I don't think that just one person is going to be able to stop it. One of the provisions that's been a little bit controversial, it seems that everyone agrees that we need to do whatever we can to increase the supply. I think. I mean, I'd be interested to hear if maybe there's some pushback that you're seeing from the NIMBI community perhaps, but I feel like we making headway there. but there is some controversy over this bill to limit the ability of institutional investors to buy up single family homes. That is part of this bill What is your view on that provision This has been kind of a popular topic in the world of housing, like should we be letting black Rck go out there and buy thousands of homes? and is that having a bad effect on the price of housing, what is your view on that debate I think that this final bill came to a very logical place with respect to that issue. I do not think that private equity or institutional investors are the reason why housing has gotten so unaffordable. I think they arere more a symptom than a cause. And although the bill claims to ban them from the market, what it really does is it caps the number of homes that they are allowed to own puts in some regulations on how they can rent those homes out. They need to allow renters to have an opportunity to buy the homes and they also need to keep records of rental payments so those renters have a history for when they go to buy a home that can be used for their credit history. So I think where we ended up in the end is actually pretty logical place. And I know that Elizabeth Warren is going to say that they banned institutional investors. I don't think that's what actually happened. It was moderated. I think that's a good thing Where are we in terms of housing prices at this point? I mean, I think we all know They're high How high and how have they changed over the past year or so So it was actually just last week that the median home price crossed over four hundred thousand dollars for the first time, according to our RedFin data. And I think that's one of the reasons people are so upset. It's really difficult to find those three hundred thousand two hundred thousand dollars homes that are affordable on a middle class salary now. And then on top of the home price, mortgage rates are high. They are neearly they're more than double what they were during the pandemic. So if you were buying, say, a four hundred thousand dollars home a couple of years ago during the pandemic, you would actually have to pay about one thousand dollars more per month It because of the difference in interest. And that's why people have gotten so frustrated because mortgage rates went up so quickly in twenty twenty two. they've remained high partially due to the trade war and due to the conflict in Iran. And that continues to make housing just so unaccessible, especially to first time home buyers who have to get a mortgage in order to be able to afford a home bu can navigate around interest rates, wealthy people can navigate around interest rates, but regular people can't Could you explain further the connection between what we've seen in the Middle East, in Iran and how that ultimately funnels through to housing prices? Or I guess housing becoming less affordable overall Yeahes, so the reason why mortgage rates are so much higher now than they were during or before the pandemic is because of inflation. When inflation heats up, The Federal Reserve has to raise interest rates in order to suck money out of the economy to get demand to come down and inflation to come down. And this has a disproportionate impact on the housing market. The housing market is very interest rate sensitive because you have to borrow in order to buy a home. So when inflation started going up because of the trade war and then because of the conflict in Iran That directly made mortgage rates higher. Mortgage rates for a thirty year fixed rate were five point nine nine percent the day before the conflict in Iran started. and now they're above six point six percent. So you can definitely see the difference that the conflict in Iran is causing to the market. And that lowers demand for housing, but it also makes it less likely for homeowners to sell Because many homeowners have these record low mortgage rates they got during the pandemic back when everybody was refinancing or buying. And if they were to give that up and to buy again, they would have to pay much more for that new interest rate. So these high interest rates are really just suffocating in the housing market. We're seeing near record low amounts of homes being sold because both buyers and sellers canan't afford to make it happen when these mortgage rates are so high It's this terrible combination if you got higher prices because there's lower supply, plus all of these other exgence factors which are causing higher interest rates. so you're paying more to borrow and then also paying more to buy. seems like, you know This is exactly what you don't want. And it does seem that this is becoming more and more a political issue that is at the center of our politics. I mean, the idea of buying a home is central to everything we do in America. It's central to the American dream And increasingly, it's becoming impossible Let's assume This goes through Let's assume that the bill passes. Trump does sign it Is there anything? I mean, are you optimistic that once this passes, we might actually see housing prices come down? and is there anything that might get in the way of that outcome So I don't think that home prices will go down in terms of the sticker price that you see, but what will happen is that home prices won't go up as much as they would in the absence of this bill allowing more supply to be built. And we're projecting that over the next decade, home prices will still go up, but they will go up slower than wages and slower than inflation And effectively buying a home will become more affordable over time. And we can make it more affordable over time even more if we add more supply. And that's what this bill really does. It's not just the federal bill. There's also a lot of action happening at the state level and the local level. And I think in general, the YMbis, the people who have been advocating for more housing supply in general, are winning all across the country All right, Daryl Fairweather, Chief economist at Red Fin. Darl, this was Extremely informative. Thank you so much Thank you O for the break Meta gets into prediction markets And for even more markets insights, you can subscribe to my weekly newsletter, simimply put A simply put.profgmedia. com Support for the show comes from Vanguard. to all the financial advisors listening, let's talk bonds for a minute. Capturing value in fixed income is not easy. Bond markets are massive murky and let's be real. lots of firms throw a couple flashy funds your way and call it a deck. But not Vanguard. Vanguard bonds are institutional quality. Institutional quality isn't a tagline It's a commitment to your clients. It mes top grade products across the board. The lineup includes over eighty bond funds. They are actively managed by a two hundred person global squad of sector specialists, analysts, and traders Lots of firms love to highlight their star portfolio managers, like it's all about that one brilliant mind making the magic happen. Vanguard's philosophy is a little different They believe the best active strategies shouldn't be locked away with one person, they should be shared across the team That way, every client benefits from the collective brain power, not just one individual's take So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at vanguard d. com slash audio That's vanguard. com slash audio. All investing is subject to risk Vanguard Marketing Corporation, distributor Support for the show comes from sof. If you're a parent helping your child navigate college, you know just how fast the costs can pile up between tuition, housing, textbooks, and everyday living expenses, funding higher education is a major financial commitment That's where today's sponsor, Sfi comes in SoOFI offers private student loans that can cover up to one hundred percent of school certified costs not just undergrad and graduate tuition But sofI can also help cover housing, books, food, and other education related expenses SofA's private student loans are all about flexibility. They offer competitive fixed or variable rates multiple term options and monthly payments so you can build around your budget The application process is completely online and you can check your rate in minutes And for families exploring their options together, adding a qualified coosigner may help improve chances of securing a lower interest rate And there are zero fees required. That means no origination fees or late fees, no surprises. What you see is what you pay back Head to sofi. com slash proroGty stududent to check your options and get your education funded the smarter way That's sofi d. com slash prorofG student Originated by SOFI Bank and a member FDIC terms and conditions apppplied please borrow responsible Support for the show comes from LinkedIn ads. There's no worse feeling than making a major investment in something only to realize it didn't exactly live up to the hype, such as buying a nice piece of tech that ends up in storage collecting dust, or Taking a business workshop where your main takeaway was little more than a few motivational words If you work in marketing, this can happen with ads. You optimize for the numbers, that look great, impressions, reach and reactions But when they don't show revenue, well, that can turn into an unfunund conversation with the CFO. LinkedIn has a word for that, buull spend. Reach the right buyers with LinkedIn ads and invest in what looks good to your CFO According to the twenty six Dream Data benchmark repeport, LinkedIn ads generated the highest ROoaz of all major ad networks. It's one hundred and twenty one percent. You can target by company, industry, job title, and more. It's time to cut the bull spend. advertise on LinkedIn, the network that works for you Spend two hundred and fifty dollars in your first campaign on LinkedIn ads and get a two hundred and fifty dollars credit for the next one. Just go to LinkedIn d. com slash Scott That's linkedIn dot com slash Scott. Terms and conditions apply We're back with Profty Markets. The world's largest social media company may soon be expanding into prediction markets. Mark Zuckerberg recently directed his team at Meta to create a prediction markets app similar to Kalschi and poolymarket called Arena An initial version of the app involves making bets on real world events, using in game points, although wagering with real money has not yet been ruled out. So here to discuss this Potential new direction for Meta. We're speaking with the reporter who actually broke this story. We're speaking with Mike Isaac Times teechnology correspondent, Mike. G to see you. Thank you for joining us. U Meta is working on a prediction markets platform, I guess, somethingomething like Chalstreet, something like Polymarket What do we know about this So when I found out about it, my jaw kind of hit the floor just because I's like it's kind of an intense thing to do, especially right now, you know? It's a moment where all of these markarkets are being heavily scrutinized, even if they are technically playing in a legal gray area, according to every analyst. But Zuckerberg, as far as my sources have told me, Zuckerberg himself has ordered this up. It's one of these things where he's really an astute, I would call him an astute student of just like obsessing over what people do online. and leaving let's say leaving value judgments out of it some of the time, but like like just saying Prediction markets, calcium and polymarket are two of the largest, fastest growing activities on the internet for a while. How can we bring some of that activity into Facebook U, as far as I know it's, you know N going to be a stand alalone app, but also have the social graph from Facebook and Instagram kind of integrated somehow because their whole point is, you know, do it with your friends and family. That's where you make bets on things in the world It is striking because I mean, for a guy who's led a company that has been scrutinized for engaging in the kinds of Digital addictions and digital habits that a lot of people would say are bad for you health wise, bad few mental health wise, this is sort of the next controversial thing is prediction markets because it's controversial for the fact that it's quite similar to gambling in a lot of ways U and I guess I'm just struck by the fact that he doesn't seem to care about that. or maybe he does and he decides that The money's worth it. I mean Do you know if that's been part of the calculus for the people over at Meta? It's a great point. was After the story broke, it was actually great because a lot of people started coming out of the woodwork and sending me more stuff. And there's a few things. One, There are a lot of people inside of Meta right now who are not happy that they're actually working on this. I think there are people like as you might imagine, prediction markets are very controversial. Like a lot of folks call them pathways to gambling. A lot of folks call them outright gambling under a different name and are upset that they're not called gambling apps They're again, they're still in this process of where does regulation exist at all around them? you know, It's like stalled in Congress as far as some of these bills are going. So like It's controversial to begin with and not a ton of people knew about it. It was a small team working on it under the direction of Zuckerberg Um That said, I saw another document that was talking about what they do is a lot of these risk assessments internally like it's essentially pros and consless. and one of the the things they had a category that specifically was about regulatory risk And um, because they're playing with with not real money, they said this was like low low risk and that's how they can sort of justify it. I still think that's probably a rosy view, like it's it's You're in the middle of exactly what you're saying. You're in the middle a bunch of high profile court battles, class action lawsuits, essentially calling your app addictive in a lot of ways. and then you bring about like it's just like inviting more pain and scrutiny. but I think Mark Zuckberg has a high pain tolerance threshold, especially if he believes this is something that can benefit him and Meta in the long run Yeah, and I would add on to that the fact that we've got the sequel to the social network, which is going to be all about this. So it's going be even more public pressure, which I guess he's not that worried about. the fact that they're doing In game points. is striking, it seems to me that maybe that means that they don't want to delve into the regulatory cesspit too aggressively, but I do wonder, I mean, How are you going to make money doing that Or is that really even the point? Do you think that ultimately the strategy would be test it, see if it works, and if people like it, then we'll start using real dollars? There's a version of this where you know, the folks I talk to have not ruled out, as you noted, have not ruled out ever making a financial component, a real money component to it. I think Uh Zuckerberg Again He cares about behavior and activity. And if there's a way to capture behavior, even if it's not direct directly financially motivated, There are indirect ways. He's all about indirectly monetizing a lot of stuff that's on their platform and at the end of the day, will always go back to scale. We have Three and a half billion users The two things we need to think about is how to keep them coming back and then shoving different forms of monetization in there. So I can imagine a world in which This U highly I'm not even going to say the word addictive because that comes loaded, but like let's say this highly engaging activity brings people back to Facebook more often. How many more what does your ad inventory do there? It opens up, you get more time spent. And so even if they never make it a for money thing, I think it if it works It could it could yield some some sort of benefits to them It is striking just good of a copycat Mark Zuckerberg is if it's You know, starting Reels as a copy of TikTok and Instagram stories which copied snap now he's copying Calciian poolymarket. I mean, it's been a winning strategy before. So I mean, I feel like we have every reason to believe it might be a winning strategy again Just going back to what you said about how the team at Meta feels about this the idea that people They don't want to be working on this. They're not excited about this. It's an interesting point because We're at a time in the markets where investors are starting to feel the same way about Mark Zuckerberg, specifically when it comes to spending on AI which is he's spending all of this money on these data centers. He hasn't communicated a clear vision for where we're going to see a real return. I mean, that was already a concern and he's doing probably the worst job of all the hyperscalers in communicating, here's how we're going make money off of this thing I'd be curious to know Is that a feeling that is growing among the staff? att meteta, do we know if there is a lack of trust or faith or concern that is growing aside from The prediction markets? Yeah, you nailed it. I think the So this sort of controversial their' building also comes at I was talking to someone there who's been around for a long time who was telling me this is probably one of the worst times they've had for the company. likeike people are morale is really gnarly. They made the case like look, we're still making money and we're building things or whatever. but like AI and the threat of competition around them has got a level of paranoia in across the board that they're going to get unseated, I think at the top ranks. And then at the bottom ranks, you're just sort of going through enormous layoffs and real structural change on how they've rejiggered a lot of the engineering teams in a way is actually having them bleed attrition is going up because other companies are coming in and taking those engineers. So it is like a very tumultuous time inside of Meta right now. and I think The Uh, I've only seen a few like moments inside over the years where folks are outright sort of on the verge of mutiny. onene of them was around the Trump election stuff and misinfo suddenly being a thing. And really now in the wake of the layoffs and all the sort of turbulence, like it's pretty gnarly inside and the top is trying to calm the troops, but it's been hard, I think All right, Mike Isaac, New York Times teechnology correspondent. reallyally fascinating stuff, Mike. We appreciate your time. Thank you for having me The Cn Lions Festival, the advertising world's biggest annual gathering kicked off this week in the south of France. Over five days, thousands of executives from advertising, media, tech and entertainment all descended onto CAann to network hand out awards and debate where the business is headed. So we wanted to hear from a can regular our very own Scott Galloway, who's gonna to give us this dispatch from the ground, Scott, good to see you. takeaways learnings from this year's Can. Well, first and foremost, what is On everyone's mind is the absolute invasion of the Tartan arrmy here You're going to see a bunch of ginger babies who want haggis, not mother's milk in nine months The Tartan Arm's just taken over the south of France. That's very exciting. If the Tartan Army were one fifty one year old Jewish professor wearing a team Scotland Go. You're gonna need to give that put that in the in the laundry soon. I think you're on day seven. You Well I bought my team Englland Jersey, so I'm ready to switch loyalty Okay, so three I think three big major names. One, I think last year everyone was AI is a threat and going to take over everything. And this year, it's more about how do we incorporate AI and also I think a little bit of a sigh relief. Creativity is one of the places that it is not under attack from AI And that is remember this about this time last year there was the AI C commercial. Do you need your media agency? Do you need creative? And the answer is that with AI, you probably need like creative is even more important in terms of standing up out, right? You got this giant chip and need sals and the sals is creative. So thirteen thousand people biggest can ever in ninety countries. U the biggest trend here is creators And that is there's now last year there were four hundred creators. this year there's five hundred. Brands are going to spend about half their marketing budget on some sort of cate or economy, whether it's an influencer or a YouTube The stars, The ironic thing is the industry used to be about celebrating the industry itself and they they seem to have not wok up and realizeed they're no longer the protagonist that it's no longer the means of production, deciding what good advertising is. It's consumers deciding which creators they want without the middle, without the people actually You know, he used it used to be Madison Avenue giving awards to each other. Now it's a bunch of studios or people with ring lights. And then I would say the other really big trend is sports. and that is There's now lion sports, spports is the ultimate cultural religion whether it's the World Cup, whether it's advertising, finding the only place you can get live is on sports It does seem that that is the new kind of cultural touchstones. But those are sort of the takeaways I get from Can this year What about some of the tech companies like Snap? I know you had that there was the Snap party, which we were wondering if you would actually get invited to that party given what we said about the Snap specs was you were not too. compimmentary of that new product. But then also met has come out with these new glasses as well. Is that getting a lot of play, the snap specs and then also the new metaglosses? Not really. I would say I went to the Snap dinner and I met a bunch of very impressive people. and one of the most One of the amazing things about the market, Snap is hired a bunch of really talented people from Ma and alphabet. And I've said, why would you? I mean, these are talented people who've decided to join SnAap. And I'll say, whyy did you come over and I share Evans's vision and a great culture They're lying. This is what I believe is happening If you're in charge of recruiting for SnP, you call a VP and Meta and you say, okay We'll give you options worth a million bucks. If the stock s. It's worth five or ten million, where is the stock more likely to triple in the next twenty four months? Meta going from two trillion to six trillion. or snap showing any sign of life and going from four to twelve bucks a share So it's weird, despite it's almost like their low stock price is a bit of a feature, not a bug, but I was very impressed by their ability to recruit people. And I don't think it's because they share Evans's vision of a computer on your face future. And the other the other thing about Big tech, OAI had a big party with a bunch of creators. My first time at the festival this year. And it reminds me it's like Dejaavu. It's like ten or twelve years ago when the most sought after event was to go to Cheryl Sandberg's book signing party. And I felt like this is just so hilarious as she runs her fingers through their hair before she shoots them in the fucking face These guys are basically inviting the people whose Wh's house they just robbed while they were sleeping. So the notion that a bunch of creators are showing up to open AI that, you know, it's like inviting a hijacker to an air show is the way I would describe it. But we've been here before It was one of the bigger events. peopleople have been talking about it, but Yeah, I don' m' I'm focused on quuite frankly I'm focus on the spotify party tonight Monford and Sunons And then the Yahoo party, DJ Testo, because I know you are wondering about that to be honest, doesn't sound that cool. But you did get invited to the Snap party. Wait, I saw Ludicrest last night. I'm like nineteen ninety called the Mst itss Artists back. Yeah It could be better than that. So but final question You did get the invite from Snap They didn't rescind. Yeah, because the show didn't air until Monday. The event was There we go. The event was Sunday notight good. Now to be fair, they're smart people there. I actually This is going to sound weird, but it as shit posting of Snap I've done at four bucks a share and nine billion or whatever it does in market capap. I actually think Snap's a pretty decent buy right now. because I think at some point, Evan wakes up from the fever dream either spins the group or closes it down and the company is actually the core platform Shareholders have had to spend three and half billion dollars on a stupid wearable to figure out that Evan is more Mark Zuckerberg than he is Steve Jobs. And by the way, that's just fine. A core platform of a half a billion people a day is a great business But I would say the tech companies taking a back seat. The stars of this can are the Five or six hundred people walking around and you see a crowd around them And you're like, oh, she does the most famous food blog in Sweden. Yes, Creators influencers. Yeah, influencers. and the most encouraging thing about the creator economy is fifty percent of the spend is going to the nano and micro influencers, meaning the long tail So it's different than kind of social media or podcasts where it's a win or take most. There does appear to be a lot of opportunity for little niche players, which is know encouraging for the ecosystem. You're in Europe, are you seeing any interesting European companies in Cn as well? I actually think and this is a prediction Best performing one day IPO, the biggest pop of a tech company of an IPO in June is not SpaceX at twenty two percent There's a company being taken out by JP Morgan and Goldman Sachs. I think it's pricing next week sometime. And it's actually an Italian company and it's the Berkshire Hathaway of forgotten but beloved brands. Any idea what I'm talking about? I do not. Nobody does. and that's the strange thing. AI and American companies have sucked so much oxygen out of the room. There's a company called Bending Spoons and it's a roll up of All of these kind of forgotten but beloved brands. So Evernote, event Bright meet up AOL Um, Zemio All of these really interesting companies that never got quite iconic status, but we're good companies that spend hundreds of millions, sometimes billions to establish a great customer base and recurring revenue. And this company has gone in and bought them on the cheap, uses AI to clean up the back endnd costs This is a company that Q one of twenty twenty five did about a two hundred and fifty million lost one hundred and twenty million, Q one of twenty twenty six is going to do over six hundred million and just went profitable to twenty seven million