Final Thoughts On Snap's Future

Support for the show comes from Faragama. This Father'say, Faragama presents there the thingsings I have learned from your collection Because a father's influence is reflected in the details in the way they dress in the appreciation of materials and in making considered choices. These elements build over time and become part of a shared identity. And Faragama wants to highlight the style, assertiveness, and poise that are naturally showcased with the everyday moments between a father and the ones they love. Discover Fargamo's Father's Day gifting selection at fararagamo. com or in store 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. com That's odoo. com Support for the show comes from ECX, 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 evil then that building is helded Oh Welcome to Property Markets. I'm Ed Elson. It is june eighteenth. Let's check in on yesterday's market vitals The major indices tumbled, following the Federal Reserve's press conference, more on that in a moment. Treasury yields spiked as did the dollar and the odds of a rate hike before the year end are now at sixty two percent on Calcii. Meanwhile, SpaceX declined for the first time. since it went public, ending the day down five percent Okay What's happening Snap just unveiled its new augmented reality glasses, and despite a lot of anticipation and a lot of hype, it was a bit of a flop The glasses called Snap spepecs feature an in frame display which overlays apps onto the real world. They're priced at two thousand one hundred ninety five dollars, making them significantly more expensive than Meta's Rayband display glasses which start at eight hundred dollars. CEO Evan Spiegel called Snap spepecs a leapfrog advancement and the computer of the future, but the market doesn't seem to agree The stock closed down almost eight percent today and it's now off forty percent over the past years. So Here to tell us more about the Snap specs and potentially why it was such flop. To Wall Street, we're speaking with Mark German Maging editor and chief correspondent for Bloomberg News Mark, thank you for joining us. These glasses are all over my social media feed And not in a good way Everyone is making fun of them. and I've gott to say, I've looked at these things, I've seen the way that they sit on Evan Spiegel's face, particularly his ears. And I just think this thing is way too heavy and cumbersome and they don't seem to look very good And I wonder if that's the problem here. What do you make of these snap specs and also the reaction to them. I think for the available technology today, something that has augmented reality, something that's an all in one wearable headset, I think the design actually is quite good. And I think the price is actually quite reasonable for the tech. Now, I don't think it's reasonable for a mass consumer. I don't think anything of this ilk is going to become a hit at two thousand two hundred dollars US. But I do think for what the state of this technology is, they are in a fairly good place. I think the eight percent decline in their stock is more a reaction to how expensive these are to develop and build and how much money Snap is putting into this product that is unlikely to become a smash hit. So I think that's what the concern is stemming from. But in terms of the technology, it's intense technology, it's advanced technology And I think it's an exercise that's showing us what eventually is going to be a mainstream computing form factor because I do heavily believe in the augmented reality category. I'm just not sure Snap is going to be the one to take it to that next level What do we know about how much they're spending on this stuff. because we know that Ma's been plowing tens of billions into this thing, Apple the same doing the same thing But it's almost like they have the capital and the cash flows to do it Snap is a significantly smaller company and yet they're also going for the big fish in augmented reality. So what do we know in terms of spending and and whether this is even possible for a company like SnAap They've spent billions on this and I do think it is certainly possible for a company like SnAap There's a scenario in which there is gigantic demand for these things. I think they are going to find a way to be able to get these into the hands of consumers. But I think early on, this is going to be the early adopter of early adopters. This is going to be developers. This is maybe going to be an enterprise play. If you think about the other products that have launched in this space, none of them have been really taken have really taken the world by storm A lot of these are enterprise products. And a lot of these companies, they don't even sell the product anymore. Microsoft tried their hands on this with the Holo Lens. Meta has tried their hands on this as well. The Quest is no longer the priority. It's all about the smart glasses. Magic Leap no longer sells their product anymore. They become an ARLens supplier now based in the US. The Apple Vision Pro obviously has not taken off in the way that Apple had anticipated So this is not a thriving category at this point. I think we're still in a very early stage here. What is it going to take for this stuff to work Because you know we've been hearing about it for such a long time And it seems like there's issues with how long it lasts in terms of battery, like the look of them. motion sickness I mean, so many things like What do you think it would look like to see an AR headset that actually is popular A lot of things are going to have to converge. You're going to have to see a combination of all the battery life, which we don't have yet. You're going to have to see a price point in the thousand dollars to fif thousand hundred dollars range, which we're not at yet You're going to have to see that be in an all in one design that's nearly as thin and light as everyday glasses and we're so many years away from that And you're going to have to see that all with visual fidelity and quality where you can't really tell the difference between the real world and what you're seeing in the displays because that technology has to look innovative, has to look impressive, has to look highly legible. And so I think we're several years away from hitting any of those metrics, let alone all of them converging simultaneously into a singular product But what we're seeing from Snap is the closest incarnation to that yet I just want to read you a tweet that I saw. This is from a user Uncle Doomer U this individual said, quote, Anyone who has ever built anything can tell you that there's a point in the development cycle where the sunk costs become too great. And the entire org chart starts walking on eggshells around an exec too tunneled in to realize that his product sucks So that was in relation to these snap specs I think it does kind of capture probably what the concerns are on Wall Street which that Evan Spiegel is the founder CEO. He has He and his co founder, at least have ninety nine percent of the voting power. He decides what to do as a company. He is going full steam ahead with this thing And I think there are now concerns for the company, which you know the stock has been really struggling He's O over his skis or maybe in over his head or too committed to this vision. I'd just be curious to get your reactions to that view of Evan Spiegel in the direction of this company I think investors are asking, why are we playing with hardware when you know the money is to be made on high margin products, which is applications and software and AI. And so yeah, the big question is, why are you even playing in hardware and burning all this money? And SNnap recognizes this. This is why they've created a subsidiary called Specs Inc, which they're running this all through. I think it's gonna to help know the numbers they're able to talk about in their earnings reports and what have you. I think that's the driving force behind this. But you know they've been investing so much in this for twelve years. They are really one of the pioneers in the AR space. if you think about the lenses and different overlays and such can do in Snapchat. So I think there's a lot to like from this product. It's just not something that people are going to buy Say this just doesn't work out Snap specs, there are no sales and it' it really is a flop What do you think that means for the company? Like is there a viable way out for Snap U if specs don't work. Well, the viable way out is being the platform or the app provider and becoming a hit software product like they were on the iPhone for these next generation of devices that someone is going to have success with, whether it's Apple, Amazon, or Meta or even Snap, someone is going to do this successfully and being able to transform Snapshat to being the killer app on that platform on that hardware will probably be their next step I think if this specs product is not successful, I don't think this is a wrap. I think they'll keep trying and keep building and try to get out a subsequent version that's thinner, lighter My final question for you, Mark, would you ever buy these things or we these things It's hard to tell. I haven't used the latest version at this point. I'm going to have to see the use cases and how they would fit into my daily life. I am a huge believer in the AR glasses category. I will say that All right, Mark Germman, managing editor and chief correspondent for Bloomberg News Mark. We really appreciate your time. Thank you. Thank you, sir Off of the brake the first unanimous Fed rate decision of the year And for even more markets insights, you can subscribe to my weekly newsletter, simimply put at simply putut. proftymedia. com Support for the show comes from Odu. Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other? One for sales, another for inventory, a separate one for accounting. Before you know it, you are drowning in software instead of growing your business. This is where OdDU comes in. OdU is the only business software you'll ever need It's an all in one fully integrated platform that handles everything. CRM, accounting, inventory, e commerce, HR, and more No more app overload, no more juggling logins, just one seamless system It makes work easier. And the best part Odi replaces multiple expensive platforms for a fraction of the cost. It's built to grow with your business, whether you are just starting out or already scaling up Plus it is easy to use, customizable, and designed to streamline every process. So you can focus on what really matters Running your business. Thousands of businesses have made the switch, so why not you? Try Odoo for free at odoo. com. That's odoo. com Core for the show comes from VCX, the public ticker for Private Tech. For generations, American companies have moved the world forward through their ingenuity and determination. And for generations, everyday Americans could be a part of that journey through perhaps the greatest innovation of all. The U.S. stock market It didn't matter whether you were a factory worker in Detroit or a farmer in Omaha, anyone could own a piece of the great American companies. But now, that's changed. Today, our most innovative companies are staying private rather than going public. The result is that everyday Americans are excluded from investing and getting left further behind while a select few reap all the benefits. Until now Introducing VCX, the public ticker for private tech, now available wherever you buy stocks. VCX by Funrise, gives everyone the opportunity to invest in the next generation of innovation, including the companies leading the AI revolution, space exploration, defense tech, and more Visit getvcx. com for more info. That's getvx. comot 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 getbcX. comot This is a paid sponsorship Support for the show comes from Better Help Summer can be a mix of things. For some, it's about travel, adventure, making memories. For others, juggling everything can feel overwhelming. Kids at home, pack schedules, shifting routines. It's easy to slip into survival mode and wonder where the days are going Taking time for yourself can make a difference. and therapy can support that, helping you feel more confident setting boundaries and making space to recharge so that summer feels more balanced and enjoyable With betterter helpel, you can connect with a licensed therapist online. You'll be matched based on your needs and can switch anyt time if it's not the right fit. With over thirty thousand therapists and millions of clients worldwide, people are finding the support they need with better help You don't have to say yes to everything this summer. Find guidance in therapy. Visit betterethelp d. com slash voxPods to get started. That's better Hlp d. com slash voxPods We are back Crofty Mets In its first decision under Chair Kevin Warsh, the Federal Reserve held rates steady. It was the fourth meeting in a row that rates went unchanged, but it was the first time this year that the vote was unanimous. Still, the committee is divided on the path forward. nine officials expect at least one hike this year, while eight expect to hold and one cut. meanewhile, Wash declines to submit his own rate forecast and unusual move for a sitting chair As a reminder Inflation remains elevated, reaching four point two percent in May, the highest reading in three years. Joining us to discuss This interest rate decision and Kevin Warsh's first press conference. We're speaking with Mark Zandy, Chief economist at Moody's Analytics. Mark Thank you for joining us on the show. The Fed has decided to hold rates here, which no one was surprised by. I think the one thing that really stands out to me at least. is that the vote was unanimous this time. No one voted to cut which to me says that The Fed and all of its officials are really taking inflation seriously at this point or at least maybe more seriously than they were before. What do you make of what we saw in this press conference Yeah, that's right, Ed. I think they're taking the inflation very serious. You know, as you point out, we're percent ish and that's double the Fed's two percent target and Chair Wh did make a point several times about price stability and the two percent target And then you got the dot plots, which are very clear that many of the Fed members want at least one rate hike this year or thinking there will be at least one rate hike this year and perhaps two And that was much more haawkish than I had anticipated, certainly for this first meeting for Cha Wall Wire show Yeah, I was a bit taken aback by how aggressive they were on this at this first meeting. Which is also striking given what the rhetoric we've been hearing from the president who has been aggressively calling for rates to be cut. This is what he was complaining about with Chair Powell for the longest time. debate over whether Kevin Washw would kind of obey those demands, those sort of implicit demands or if you would decideed to be haawkish. He has decided to be hawkish here in a lot of ways Defying the president. Do you think that this could be I don't know, maybe a point of tension Moving forward, were you surprised by the fact that he didn't do what the president might have wanted him to do Well, you know he couldn't do it. any, you know, even if he wanted to, right? I mean, he's a vote on a committee with a lot of votes and clearly the committee had a very different perspective on things. So even if he wantanted to cut interest rates that wasn't going to happen. And I think the data are pretty clear. I mean, it's irrefputable that the inflation is just too high. and Yeah, there's some arguments as to why that might come back in as the Iran war winds down and hopefully oil prices come in and stay down and that translates through But there's a lot of reasons to be concerned that it willll be more persistent as well. You know We talked last time about artificial intelligence and the impact that's having on inflation, which will be more durable. You know, I think the reality of what's going on is just too difficult to ignore. You just can't. And you know, therefore, you have to be hawkish. The other thing to consider I don't know if the president would think this way, but you know, I think it's clearly the case. that if you start trying to cut interest rates in a world where everything screams you should be raising interest rates, you might get the federal funds rate target down. You know, by definition, you can get that down because you're the Fed. But long term interest rates will go the opposite direction. they'll rise. And in fact, they did rise today. So I don't think he Chan Walsh Warsh had any options here, right? he had to go along with this and be very haawkish in the way he's presenting things. Yeah. just look at the odds on Kalciy of a Fed rate hike. It started around twelve percent towards the beginning of the year. now we're up to sixty two percent. So Traders believe that the likelihood is that we will see a rate hike. I think I would agree. I would be and should him. your perspective on that too going to Iran for a moment We have seen this Dal memorandum for debate how real we think it will be, but seems certainly more real than previous announcements of deals that we have seen before because Iran has signed up this and they've publicly spoken about it. Did we Did we learn anything from the Fed or at least on their views of how real this deal actually is because It seems that what happens in Iran is the most consequential event as it relates to inflation and prices So It seems that there's something that we might be able to learn about what's happening in Iran from the Federal Reserve Did we get any insight on that front or still unclear? I don't know that we get any insight into what's going on with Iran and how they're thinking about it. I mean, I'm sure they're as uncertain as we are about how this is going to play out. playing into there thinking that maybe we need a r hike or two here just to keep things for inflation from becoming even worse in the context of the uncertainty around the war But I didn't learn anything per se about the war and how that might unfold. I'm guessing there is in the dark about this as Everyone else is. this thing can go in lots of different directions. I will say you know, I mean, I'll push back on the rate hike. My sense is the economy is also re prettytty soft. You know, yeah, we did get a couple of three months of good job numbers. But I suspect that's not going to be sustained, particularly as the deficit financed fiscal stimulus that we've enjoyed since the beginning of the year fades into the background, and we're still paying higher prices for gasoline and groceries. So I think the Fed's got a problem not only with inflation, but they arere also going to have a problem with growth, which is going to complicate things even further for them Oh wow. So you would you would bet then that we probably won't see a hike this year. I mean, where do you stand? No, don I don't think so. My sense is that you know it' clearly the inflation screams for a rate hike, but the job market will be tellelling a strong story that ray hikes don't make any sense. and maybe be Ray Cut and that'll go to a draw and we don't get any change in policy this year. that would be my my thinking. So but, you know There's a lot of script here to be written. but my sense is as we move into the summer months, the economy is going to start to weaken again All right, Mark Zandy, Chief economist at Mood' Analytics. Mark, always appreciate your time. Thank you Anyime, Ed AI is taking an outsized presence in the market from AI companies going public to the rise of AI agents trading on a user's behalf. Now more than ever, investors need to consider what role AI should actually play in their portfolio. So Joining us to discuss that is an AI researcher who brought machine learning to Wall Street decades ago Rand Dar is a professor at the NYU Stern School of Business, founder of SCT Capital Management and author of Thinking with Machines, his new book Vant Thank you for joining me on the show. You are an AI researcher. You founded a hedge fund that specializes in machine learning and machine learning based investment. So you were quite early to this. AI is now taking over So I'd be interested to hear from you how AI is changing investing and if we should be using it to invest. Yeah, you're right. You know, when I went to Wall Street when I brought machine lear to Wall Street, it was AI was sort of you know it was a thing that people viewed with suspicion. You know, you had economists who were used to sort of linear models and you had physicists who used to physical kinds of models and machine learning sort of fell in this awkward space. They didn't quite know what to make of it And my objective really was to see if I could get a machine to learn how to trade, right? That was just an open question. it wasn't clear to me that that was even possible I and You know, after a few years, I had a conversation with Sct actually in twenty fifteen, you know, called shouldhould you trust your money to a robot And I sort of broke the investment landscape into three holding periods, you know high frequency, short term and long term. highigh frequency being intra dayay shhort term being days to weeks and long term being like weeks to months to years. At that time, my position was that AI had tremendous potential in invest in investing in the high frequency and in the short term space becausecause there was sufficient data And machine learning methods were actually capable of picking up on the nuances in markets that you know the cruder linear models sort of missed And I recall that Scott ended that conversation by saying, okay, so trading flows will disappear, but private equity and long term investing is safe. And I said, yeah, that's pretty much the case Ironically, I' had a similar conversation with Dam Modoran in twenty fifteen about, you whether we could you know, simulate him. and at that time you felt it just wasn't possible with the tools But in twenty twenty two with you the emergence of LLMs, we sort of revisited that. And now three years later, three plus years later, you know we're getting ready to release the Dutotheran bart nextxt month for, you know, commercial use and fairly confident that we've actually managed to simulate his kind of thinking to a reasonable degree. So to the extent that you actually believe in sort of a free cash flow model to the firm, fundamentals as opposed to investing U We've actually managed to do that reasonably well So You know, I think we're close. and you know, we're there where AI can actually play a pretty significant role in sort of long term systematic investing. What was it about long term investing that made it difficult to use machine learning for long term investing previously? I mean, we know that machine learning has been used for high frequency trading you know, the stuff that is less long term, short term stuff U But then AI comes along and now it's possible. Why is it possible now? So, you know, the The traditional view of machine learning is supervised learning. You have examples that you learn from. There just weren't sufficient examples or training data to learn from, right? know know D Motrin is sort of exceptional in terms of the number of reports he's written you know, which going into sort of the low thousands maybe at this point But that isn't sufficient data to really train an AI. like considering compared to how much data there was in the high frequency in the short term space. So there just wasn't enough training data. What's different now, and this is something I write in my book is this emergence of general intelligence where the machine knows something about everything division between Common sense reasoning and expertise is broken down, right? To me, that's like the big deal about AI that's made it a general purpose technology. That was always the hinderance, you know that we sort of drew this artificial boundary between expertise and common sense. and with LLMs became available. So now you can build on this sort of substrate of you a machine that has common sense U And you don't need as much training data because it's ingested sort of the wisdom of humanity on the internet And now it's a question of like know tilting it in an appropriate direction, such as a value or a fundamentals approach like the Mldn does,? And that's what's made it feasible for you know, reasoning about sort of long longer term investment horizons I'd be curious Demoter and thinks of the Demoter and bot. Have you spoken with him about it? Does he have a view on the fact that he's been automated, do it agree? So I've discussed the SpaceX valuation with him. you know, he, you know, published his report. And then that ran the bot several times on it. and I shared it with them and asked him what what he thought And he thought that its's thinking is you know mirrors his, you know relatively closely, even though the bot was much more bearish than he was. His valuation was like one point two trillion. The bot had a hard time justifying anything above half a trillion. So he actually feels that it does a reasonably good job of simulating him where it falls short in my estimation. is in sort of the quality of framing questions, right? He has a sort of exceptional ability to sort of frame the problem in a in a way that then sort of you, drives the analysis. You know, weve tried really hard to do that and the machines got good at actually, you know, coming up with these traaming questions. But in my estimation, that's where it falls short, you know, relative to its master. Well, half a trillion dollars on SpaceX. I think this is the Demoder andbark might be the first Well the only person entity in the market that is more bearish on SpaceX than I am. So It's quite a striking number. Visant Dar is professor at MYU Stern, founder of SCT Capital Management and author of Thinking with Machines. Visant, this is fascinating. Thank you for joining us. Thanks for having me on the showhead