Inflation Is Soaring — Here’s What Happens Next

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“And for a year and 50, do you have new disciplines?”

For a year and a 90, do you have a new class? Sure, then try the Asia Green Garden, or just a boulevard? For a year and a 40, do you have a year and a 90? Or maybe a year and a 90? For a year and a 50, do you have a 50?

That's good for everything to be the price. Now you have a lot of money. ID, Buddhist Fiat Island. What does it take to be prepared for disaster? You have to be confident.

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so you don't have to get ready. New episodes Sundays wherever you get your podcasts. For years, if you ran a media company, you obsessed about Google, because Google could send a fire hose of traffic your way. But now things are changing, fast.

So last year I told all of our teams,

“you need to plan your businesses around there being no search.”

And if you don't have a plan for that, you may not have a business. I think it was very effective. That's Roger Lynch, the CEO of Conday Nass, the home of fabled magazines like the New Yorker and Vogue. And if you want to hear how Lynch is thinking about Google and AI companies

and who's going to replace his most famous editors, good news. You can hear all of that on channels with Peter Kafka. That's out now everywhere. Today's number, $109 billion.

That's how much Americans spent on lottery tickets last year. More than they spent on movies, books, concerts, and sports tickets, combined. Ed Tristory, my ex-wife asked if I'd still love her if I won the lottery. And I'd say, "Yes, of course we'd, I'd miss you, but I'd still love you."

I've never bought a lottery ticket, have you?

Whenever my kids have friends over, I'd go out and buy much lottery tickets, and I come back and we'd play scratch with all of that. Do you? It's totally fun. It's love, lot of, they love, lot of, they're like, "It is just amazing watching them celebrate,

and me spending $20 so they can win three." So they get the money, because I'm imagining this, like it's your opportunity to win the lottery, and they are allowed to be witnessed to that. They're just child labor scratching stuff off.

But they, so they get the money if they win. Is that the deal? Yeah, of course, unless it's big, unless it's big, then pop and it's to come in and buy a second. For our, let me give you a little, let me give you a little tip, right?

When you go on vacation or something, and there's kids around, eight, not eight, like 10, teenagers. Anyone like 10 to 16, you want to be the cool uncle? I get some point, your friends will start procreating. And, I was looking for a good joke there, I couldn't think of that.

Anyways, and you'll show up, and what you do is you bring lottery tickets for the ticket, for the kids, it's fun, it's a ton of fun. Sort of buy your way into their hearts. Yeah, that's called being a man, Ed. What you don't, you think that's rude.

Oh, okay, okay, Mr. Puris, buying your way into their hearts. I'm just putting words to it, I'm with you, I'm with you. What do you think you get in on your charm and EQ?

“Yeah, that's what we do Ed, that's what we do.”

I love it, I think it's good advice. Bride them with lottery tickets, maybe candy. That's what my granddad used to do. He would just give us a bunch of candy, and my mom would get all upset with him, because we weren't allowed to be having that.

But we loved him for it, it was a hit, that's the way to do it. I think I'll probably employ that strategy as well. I just give up straight-up cash, and I like to put it. I like to put it in a rubber band, so I feel like a mobster. Now, I slip it in their pocket and I'm like, don't tell your dad.

Don't tell your dad, don't tell your dad. I love that, I genuinely love that. We only have nine days until the approaching market store kicks off with a sold-out show in San Francisco on May 27th. We're then headed to LA on the 28th, head surround us.

The Sea of Netflix will be our special guest, and then we head to Miami for the 30th. And then Chicago on June 1st, where we'll be interviewing Governor J.B. Pritzker, who will be joining us on stage, and on June 2nd, we're finishing things off with the one and only Anthony Scaramucci in New York City. Tickets are still available, but we are going to sell out.

So if you're interested in LA, Miami, Chicago, and I think we still have a few left in New York City, visit propertymarkets tour.com to secure your tickets now. You excited about this, Ed?

Very excited. Finally hitting the road.

We've got all guests, CEO of Netflix.

What's happening to Hollywood? Does Hollywood have a future? It'll be very spicy. I'm sure I'm sure you will have some hot takes and kind of put them in the hot seat. I'm excited to speak with Governor Pritzker,

about the future of America, what we should do about AI policy, what we should do about policy related to wealth inequality, and income inequality, which is obviously been a huge theme on our show. And then there's nothing better than finishing things off with the mooch, who's just the man.

I'm very excited to go. It's going to be a big, it's going to be a lot of fun. It's going to be a good time. Shall we get into our stories? Let's do it. Two new inflation reports last week painted a very discouraging picture.

Consumer prices rose 3.8% in April from a year ago, marking the highest inflation reading in three years.

But perhaps even more notably for the first time in three years,

wage growth failed to keep pace with inflation. So real wages are going down. The pressure wasn't just on the consumer side, producer prices, which measure wholesale inflation, they also climbed 6% year of year.

That was not only hotter than expected, but it was the biggest increase since 2022. So Scott, the inflation picture is not looking good. First we had the tariffs, we had liberation day, which we said on this show, would increase inflation.

It was somehow a debate back then.

“I remember saying, I think prices are going to rise significantly”

by the end of the year, which is exactly what happened. And I remember a lot of people saying, oh, really you think so? Because the Treasury Secretary is saying the opposite, the President is saying the opposite. And now, of course, that's exactly what happened.

We went from 2.3% which rose to 3% in just a matter of months. And then you add on top of it, this war in Iran, which is massively increasing the price of fuel, massively increasing oil prices, and therefore gas prices is probably going to have some more effects on food prices down to line, or up to 3.8%.

And they say about the producer price index, the wholesale inflation, that that is really our best indicator of what is to come, because that's the top of the supply chain. That's what businesses are paying for products, and then those businesses are going to pass those on to consumers.

So it's probably going to keep going up.

“And I think there's so much to get into here on what prices could do”

to not only are economy, but also to markets. I have some thoughts on what the chain reaction might look like, but let's just start with your reactions to these inflation numbers that we just got last week. Trump won reelection in large part because of his promise to reduce prices.

But now his approval on inflation is worse than President Biden's ever was. It's striking, obviously the Iran war is driving a very visible price, and that is energy. It's specifically that was responsible for 40% of last month's inflation increase. Gas is over $4.50 nationwide in California to over $6.

What's interesting or what I find is interesting is that this type, people, I think people are too focused on from a societal standpoint, unemployment. It's 4.5%. At some point, at some point, we got to start someone has to acknowledge that this whole AI job apocalypse has been a bunch of fucking bullshit. But that doesn't mean we're off the hook because if you look at societal unrest,

it's not when people aren't working, that they revolt. It's when people are working and yet they're hungry. And that's exactly what's happening now.

We don't basically inflation is outpacing wages,

which means your quality life goes down. So someone who's out of work is depressed, but someone who's working too fucking jobs and can't pay for their health insurance, they're angry. And so I do think this is really going to haunt the President and when the Republicans in the midterms.

This is when people get very, very angry as they think, okay, I can't take a vacation this year. Despite the fact, I just took on another evening shift on the weekends.

“Now, I think the political impacts are plain to see.”

We're already seeing a consumer sentiment, which is in a lot of ways a political poll hitting record lows. His approval ratings just tanking would definitely going to see this show up at the midterms and maybe even the next election too. I mean, the political implications are just enormous. I think what is interesting is the market so far as we've discussed

are then investors aren't so worried about this. There's the political implications then that there's the market implications. And one of the things that we've been talking about is, yes, these higher prices impact the real economy, it impacts consumers. But increasingly, that doesn't matter when you look at stock prices because the stock market

is largely a reflection of big tech and also the spending habits of the top 10 percent.

They're not really affected by gas prices going up. This stuff doesn't really matter.

Something I'm beginning to think though and bear with me on this because I'm going to

“go through kind of like a chain reaction of events that could occur here that I think that”

investors should really be considering and perhaps even pricing in. I think we are underestimating the possibility that we're going to see an impact on consumer spending as a result of inflation, which will be semi-material to these big tech companies but will be very material to the stock market. So the reason I think this is because it feels very much like what happened in 2022. And what happened in 2022 was you had this unbelievable inflation

which had an impact on consumer spending but it wasn't gigantic. Essentially what you had was

you had very, very strong consumer spending growth in 2021 and then as inflation started to show up and people started to to really feel the pain of that consumer spending still grew but the growth was a lot smaller. It was 3% versus 9% the year before. So consumer spending growth fell 70% around six percentage points. So you saw a deceleration in consumer spending. Now that sounds like not a big deal that probably doesn't matter but what it led to was something

“really interesting which I think we could be in for in 2022 which was a deceleration in marketing”

budgets and advertising budgets. And people kind of forget this but this was the thing that really

killed the tech sector in 2022 which by the way fell around 30% that year. It was a lot it was a

lot bigger drop than the S&P which fell around 20% which is worst year since 2008 but all the tech stocks just got crushed, messy got crushed. And a big reason why that happened was because suddenly consumers didn't have as much money to spend. They weren't spending as much or they want the trajectory of this spending wasn't as fast and accelerating as it used to be. And as a result advertisers decided to stop spending. And this was an SEC filing for Meta back in 2022

which I think has a lot of similarities to what we're seeing today. They said quote, "As macroeconomic pressures reduce the likelihood of consumer purchases of discretionary goods and services, advertisers are more likely to reduce their spending as they anticipate a lower return on investment. The company also believes that marketers have reduced spend as a result of pressures on their advertising budgets by factors such as inflation rising interest rates

and related market uncertainty." So that was their diagnosis that you had inflation which was affecting the marketing budgets which was affecting their revenues. And indeed that is exactly what we saw. Meta's revenues declined. They declined by about 4% by the end of the year. We saw the same thing with Google's ad business. Search revenue declined 2%. YouTube ad revenue fell 8% the Google ad network their revenue fell 9% by the end of the year. And so essentially what you

had was this small little moment of inflation not reducing consumer spending overall but just having an impact on the growth. It had a material impact on the advertising ecosystem which then had a material impact on the businesses of big tech. And then of course we saw Meta comes out and they say, "Hey, we're struggling right now and so we're going to be a lot more efficient. We're going to pull back on our spending. We issued these very large capex guidance numbers and we're going

to reduce them now because now we need to get serious because we're seeing that our growth isn't as exciting as we used to see. This feels very much like what could happen this year. The entire market

“is dependent on the capex guidance of a few companies. We're now seeing inflation which I believe”

is here to stay because I don't think we're getting out of Iran anytime soon. And as soon as that impacts consumer spending such that it impacts advertising budgets and digital ad dollars, I do believe that could have a serious impact on the tech companies and as a result, how much money they're willing to spend on AI and therefore sentiment and excitement and momentum as it relates to the AI trade which as we have discussed is essentially propping up this entire market.

I'm not saying that is going to happen but I think that is a series of events that could happen. I apologize for the long explanation but I do think it's important and that is at least on my mind right now. Your narrative is a logical one. The two things that I think will probably you know, again, a long lines of what could go right. I think that you likely will see a reduction in consumer advertising because of a decrease in consumer spend because of inflationary pressures

and sort of there's no higher and no higher environment and a lowering in consumer confidence.

the AI companies are going to spend tens of billions of dollars on marketing and that's money that didn't exist even two, three years ago because between open AI and anthropic they're in a celebrity death match and then Gemini, all of these guys there's literally trillions of dollars up for grabs, at least their view is that whoever establishes leadership or the number two spot. Whoever is the leader gets a trillion more in market cap whoever is the number two gets 500

going more than the number three, you know, they just traded higher multiples and then down and down

“and down and down. So they're going to as I think they hit technical parity I think they're going to”

massively increase their traditional marketing or budgets and whereas in those line items and even

exists before we're starting to get advertisers from AI that I just had never heard before

because the race is so fast it's like in 1999 when I raised money for an envelope we just spent so much we would drunk sailors was like okay got to get brand awareness because we're going public in 1999 or 2000 so we're buying pages in condon asked by the way I just want to see the developers product too um you can save your money they all look they all look very hot I will give them that but it took me back to the odds when I was just spending a shit ton of money trying

to build the commerce companies and e-commerce companies were spending money like trying

“concealers and I think you're going to see that for the next 12 or 24 months I just think that”

hyper scalars are going to spend I don't think anthropic even has a CMO right now they're going to spend so much money on marketing over the next 24 months which they actually get a CMO comes to them who will be someone who wears black and looks cooler than they and it gets invited to cooler parties and starts talking about brand and intangibles and associations and feelings and brings up the Sophie ad Google search ad that made everyone cry and and they will

talk Daria on modei and spending $20 billion on branding they did not exist before in addition

the thing your analysis doesn't incorporate is that and Jason Horowitz two or three years ago spent $0 on elections this year they're going to spend $ 115 million the midterms are coming up we're about to see the most of noxious unhealthy anti-democratic tsunami of money going to these elections and it's all going to flow through podcasts, prenaids, direct mail, local TV, local new

“stations and I think that will be another crazy sugar high so I'm actually I think I'm less”

bearish on the ad market than you are it'll be very interesting I'm going to can next month to get their read although no one ever really talks about anything we just drink rosé and then we go see like the killers at the spotify beach party but I have tried and tracked down someone who knows what they're talking about as some about the ad market but my sense is the hyper scalars are about to become entirely new spenders in this space so I think it's a really interesting point

and I just want to be clear on where I stand on this I'm not necessarily bearish on the ad market as a whole but I think that there is a philosophy in the markets right now that if inflation rises all of these tech companies are just completely protected from it and I think that we're being a little bit too I don't know lenient let resting our laurels whatever the phrase may be to describe just this idea that that it's not going to affect the tech companies and my point is we have seen

inflation and consumer spending affect the tech companies before now your point which is an interesting one is that AI marketing budgets will essentially save the advertising ecosystem if we were to see a pullback in spending on advertising in 2026 or in 2027 I think that's that's plausible and that's a really interesting point I would point out though we're continuing to put all of our eggs in this one basket of AI well not only depending on the hyperscalers to increase our GDP growth which as we know

AI was responsible for a third of GDP growth last year with end saying we need AI companies to

prop up the advertising market too and at a certain point you start to run out of AI companies to do that I mean you've got and throw up it you've got open AI but if we're waiting on alphabet to be the primary advertiser well we're waiting on alphabet to advertise on its own platform being google so we're becoming like dangerously concentrated and dependent if that is the dynamic that we think it is going to play out again very dependent on these AI companies to be sort of the the rising

on advertising as a business matter it makes a 97% of their overall revenue still for google it's

about 75% I mean these companies still need people regular people to spend money such that

“advertisers go out there and buy out slots so I think your point is interesting I think it's”

point taken I would just clarify I'm not necessarily bearish I just think this is a dynamic that is worth acknowledging and I don't think we can say that big tech and the top 10 stocks are completely protected from what might happen in the real economy what might happen in inflation if we do see a consumer spending pullback that could be a problem somebody would say well the difference between 2022 is that now we have these gigantic companies like Nvidia and Broadcom and they don't need

the advertising dollars but what I would also point out is that half of their revenue is coming

from those five same customers matter alphabet Amazon Microsoft Oracle I mean those companies are still dependent those are still the big tech companies and they're propping up the entire business so we're kind of going back to this circular issue that we've discussed before and my only warning

“I don't think you can assume that inflation won't hurt these players I think it can”

and we'll start to see it if it does in the form of lower growth in that biggest businesses which is digital advertising so to your point if you look at from November of 2021 to so I think it was September of 2022 there was a slowdown in meta it wasn't a collapse I think it slowed down I think you said there decline was 5% but when the market is pricing that you'll continue to grow 23% a year and you don't your stock collapses and in that 12 month period meta shed 77% of its market value

a lot's 3/4 of its value so there's the actual gross dollar volume slow down and then there's the impact a small gross dollar decrease I mean meta has been these stocks are sort of priced to perfection and they are huge companies growing at 20% a year and they're stocks reflect that so say the ad market doesn't collapse but people kind of pulling the reins a little bit if meta doesn't

“continue to grow at 20% and say say if meta now it's only only grew 4% or 8% I think the stock”

is cut in half so price discovery and stocks that are trading at this kind of multiple you don't you don't need to have a decline in the business you just have to register a disseleration in the growth and the stock will the stock will throw up so I think you could see I wouldn't be surprised if some of the bigger players I still think Google is incredibly well positioned I'd be a little scared to hold meta right now because of what you're saying although Instagram just feels like

such a freaking jargon I run it does and we should also recognize that Matt is priced pretty well

right now so I mean it looks reasonable doesn't it for the first time in a while yeah I'm on

Instagram and I'm real it's all the time I'm either watching an economist or some other stuff which we won't get into don't ask you my don't ask to see my explorer page bad we're gonna do it one day we should do it at the live show we should add play your phone onto the screen that'll that'll that'll get a lot of views well that's one way to end your livelihood when you go back to the Princeton you'll be famous for your Princeton reunion you'll just be much less wealthy

they're like oh yeah what happened that guy wow so it's property markets with ed alson and Anthony scare moochie that's a good show i'm bullish on that i'm a good show and we'll be a good show tell me any ideas I know what you're up to it's like when my kids are dead can I see your phone now um anyways where were we meta yeah these companies are jargon odds so just to slow down would significantly impact their stock prices yeah absolutely the slowdown is a really

important point some of these businesses like they i mean google's revenue did grow that year but it was a single digit growth in q3 and that was enough to freak everyone completely freak them out completely freak shake investors confidence and if we saw that that is certainly what would happen again and then the other thing that we should just recognize in terms of this inflation point rate hikes i mean that was the other big force in 2022 is that we

into this extremely aggressive rate hiking cycle and i was just point out what we saw on calcium at the beginning of the year the odds of having any rate hikes in 2022 when less than

the odds of a rate in 2022 have tripled and that is also striking because you'll remember one of the big themes coming into the year for 2022 we pointed out some of the concerns going into the year some of the issues about maybe there's an AI bubble that was maybe a problem there was some uncertainty around AI's impact on the job market etc but what we all knew is that we were entering a rate cutting cycle and you don't want to bet against the markets when when you're experiencing

rate cuts suddenly that has changed because of these inflation numbers and i would also add

basically all goes back to Iran it's like how long are we going to stay there is this going to be

another month or is it going to be another year if it's the latter then suddenly you're dealing with a completely different inflationary picture which will have a completely different interest rate environment which will have a completely different impact on the stock market so i do believe we're getting to a point now where inflation could be a real problem from the investment perspective

“and i don't have any decisions to make yet but i think if you're an investor this is something”

to start taking seriously over it will be right back after the break and if you're enjoying the show so far send it to a friend and please follow us on youtube or spotify or wherever you get

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for free that's up work dot com slash markets to connect with top talent ready to help your business grow that's upworka dot com slash markets up work dot com slash markets we're back with proxy markets the IPO market is heating up in a meaningful way AI chip maker

at a hundred eighty five dollars a share the stock opened at three hundred fifty dollars a share and then later rose to three hundred eighty five dollars per share at raised roughly five and a

half billion dollars in the IPO markets and investors are already looking ahead to what could

be an even bigger wave of offerings with SpaceX andthropic and open AI or reportedly preparing for IPOs in the coming months so Scott we have got our first really big AI IPO cerebrus cerebrus is this chip company just a little bit about what their actual offering is they're known for having these chips they're essentially really big they're about the size of a dinner plate you can actually fit fifty seven eight one hundred chips that's the Nvidia chip onto a cerebrus chip and as a result

of that they are reportedly very fast they are reportedly fifteen times faster than other GPUs when carrying out standard tasks reportedly over a thousand times faster for highly specialized tasks not to get too technical but essentially the reason that they are faster reportedly again I'm not an AI expert but the reason that they are reportedly faster is because they take the compute and the memory and they put it all on one piece of silicon all in one place

and compared to a standard GPU and Nvidia GPU we have compute and memory in different places

“and separate chips which are stacked next to a processor it essentially means that you have to”

move the data across these chip boundaries for the cerebrus chips you don't have to do it because it's all in one place and because it's this giant chip where it all sits together so that's why investors at a very very broad level are excited about this company also just an incredible time to be a chip company because as we've discussed Intel is skyrocketing AMD micron sand disc all of these chip companies are just on a tear right now so you couldn't really imagine a

better time to IPO as a company having said that there are some red flags here which we should get into but first is your reactions to this flagship AI IPO and perhaps what this might mean

for the IPO market going forward that fucking hate this company why we have never seen in the history

“of markets a sector accelerate as fast this quickly is the chip sector I think the the chip”

sector is literally up 60% in the last 45 days an entire sector is up 60% this company as far as I understand it it's revenues it's revenues are it's increased less than two two X but its valuation is increased sixfold I think it went public at a 40 billion dollar valuation now it's trading and I think six to your 70 it's trading at 100 times revenues and it's up it's doubled its revenues and video trades at 26 times revenues and still controls 85% of the chip market they were going

to go public in 2024 but at the last minute over intense scrutiny of it's heavy reliance in a single customer it would true it still has that reliance Emirati AI firm G42 what the fuck is that

which accounted for over 85% of its revenue in the first half of 24 so they got they cancel the IPO

their revenue is still concentrated in the same foreign state actor group 42 accounted for 24% of revenue last year and state owned UAE university accounted for 62% of its revenue this feels like one of those Chinese companies that the moment it had anything resembling an audit you found out there was nothing there well they did the investors disagree and I just want to point

“out exactly what you're saying here with this G42 point because it's so important because last year”

you and I discussed this company and we pointed out that they were getting 85% of their revenue from G42 which is this UAE state backed AI firm that sort of burst under the scene kind of randomly basically because the UAE has a bunch of soft and wealth money to just put this AI company together investors agreed and there was a lot of scrutiny they were like hey 85% from one company this year they say don't worry we've reduced our G42 revenue exposure to 24% when from 85 to 24

so don't worry about it but to your point 62% of revenue now comes from a new customer which is Mohammed bin Zayed University of AI which is the UAE state backed research university based in Abu Dhabi which means 86% of their revenue is still coming from one customer which is the sovereign wealth fund of the UAE so that that they didn't fix the problem to your point like that that is striking it's not only revenue mix but the incentives are the customer base so when both

and start having to like you know kiss the ass of Iran and move into an information and technology

“economy and tourism economy they they want some of that AI is pixie dust and someone there said”

I know if this company succeeds you know this this boats well for us so it's not only revenue mix but it's quality of customers when when I sold L2 and when I sold profit the reason we got another couple turns on revenue and we sold was the quality we had Nike PNG Toyota's clients and when you look at the customer mix here I mean this is this is crazy town this literally is crazy town and so I look at this thing it's trading at 322 right now this is pet.com out of the UAE

I just don't this thing makes they they doubled the revenues and they reduced the revenues from one UAE entity to another government owned UAE entity and then bragged that they had diversified their revenues that's the fault that really bugs me is that they're lying about what's changed since lost yet nothing's changed in fact they're more reliant it was 85% lost you know 86% how I know is somewhere somewhere in this thing we're going to find out that either Steven

“Whitkoff or Jared Kushner is a shareholder that's the only thing I've fairly certain of here”

I think I was probably a good one just to just to to expand on the issue of customers so one thing just to sort of steel man cerebrates from what I understand and granted I'm not again I'm not an AI expert so I can't tell you how great their chips really are but from what I understand hearing it from AI leaders their technology is pretty good that's my understanding of the situation whether I should believe these people I'm not sure that's a different story but

supposedly the technology is pretty exciting and impressive but the trouble you have to you do have to look at the customer base and you do have to look at the financials the financials are not great I mean they doubled their revenue okay great but in the AI world that's actually not that

impressive and it's about half a billion dollars which is certainly not that impressive in the

AI world specifically and it doesn't warrant the valuation that we're seeing right now but you talk about the there are the customer there are the potential customer that is in the pipeline that everyone is excited about is open AI they have this deal with open AI where open is going to deploy 750 megawatts of cerebrates chips and this is very exciting because if they ramp it up to full capacity it essentially means that cerebrates is going to generate around $7 billion in annual

revenue from open AI everyone's very excited about that because that is of course more than 13 times that 2025 total so they're like they're gonna make a ton of money in the future with open AI but this gets back to the classic AI question it's like how confident are you really that open AI is actually going to make good on that contract they've promised to spend $1.5 trillion the number goes

up and down and this entire company is basically a bet on they will on open AI making good on that

contract and the contract is very important because they also have an exclusivity agreement in there which says that you can't sell your chips to these other competitors they don't name them but we can assume it's probably Google XAI and Thropic so they're so dependent on open AI and again in the backdrop of that Ronan Farrow article which says that board members at open AI say that

“Sam Altman is unconstrained by the truth the fact that he is a cereal liar that's what they say it's”

on the fact it's a rumor they say that he's a cereal liar that's important when it comes to these financial contracts and there's another strange detail here which is that open AI just gave a

$1 billion loan to cerebris at 6% interest and my question is why if I mean why aren't you just

paying for their services why is the customer giving out a loan to the provider and then monetizing that loan? That's a very strange relationship in addition by the way open AI is going to receive stock warrants in cerebris so that's the other weird part of the deal like well we'll have this contractual relationship and then also we'll get equity in your company this goes back to the problem with the circular revenue in AI it's like open AI is now a customer, a lender, a shareholder

in the company which is just adds more fuel to the fire which is like these deals and these contracts are very confusing and a little shady and there's certainly not something that you want to rely on or could project any sort of meaningful consistent cash flows in the future he just can't really trust these contracts it's kind of like the press release thing with Trump he just says that we have

on the odd chance they actually have an application or use case loan amount billion dollars

they just raised a certain amount of money I get I'm dead so I'm top of the capital stacks so I'll get my money back and should these chips actually have an application I have another potential supplier so is this an over value company may it go away yeah but is worth least a billion dollars which I get back because I'm I'm on the capital stack with debt I understand that absolutely this thing just just it just smells the high heaven it feels really sketchy and I can't wait

till this thing has options this is I won't be able to resist going way by way out of the money you're going to show it to oh yeah this feels this feels ridiculous to me and by the way do you not try this at home? I won't short it because your losses are technically it's coming to go to 2000 right what I'll do is I'll buy puts way out of the money puts because then I know my losses are limited to the money I purchase I usually like to write explain that well if you

buy okay so there's different ways to short a stock if you if you short it you're technically loading it to someone else and you agree to buy it back at the current price meaning if it triples we have to go into the market and buy a stock a triple the price and then deliver it to it at the price you agree to short of that so technically your losses are unlimited you can also write calls and that is you can say okay in this stock the calls are going to be very expensive

because a lot of volatility so you could be on the side where you write calls to people who are buying calls and you can get you get some premium that way you also have unlimited losses at the stock

“goes to a thousand two thousand three thousand dollars if it becomes a meme stock if you want to limit”

your losses and it doesn't have the same sort of asymmetric premium you would buy puts so you might buy puts struck it say I don't know September trading you know with a strike price of 250 meaning that if it goes below 250 you're in the money and you have to pay to buy those things but then you know your downside is limited to what you spend on those on those puts options are really great way to lose money because it's you're is so much has to go right in terms of timing

and there's huge transaction costs and even when you win it short term capital gains so it's not something to be done at home I do it because I have an addiction to gambling and I try to limit it to playing options which makes me feel like I'm not gambling but investing which is a total lie done right yeah I so question it to a small a small portion of my portfolio so it's more like fun it's more consumption for me in the way I look at it but this thing is just this thing is just this isn't saying

this is crazy town it'll be right back and for even more markets content sign up for our newest letter at proffgmarkits.com support for the show comes from Lairdon executives are being asked to justify a i-span manager as can show ROI often without the right visibility CFOs and CIOs are basically being told make AI pay off and do so safely the real challenge right now isn't adopting AI it's understanding

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episodes on Wednesdays you can watch it on YouTube or listen in your favorite podcast app with Profzy markets. The romantic recession doesn't seem to be letting up. Recent earnings from match group and bumble showed continued weakness in dating apps with paying users declining across the board match groups total paying users fell 5% bumbles dropped 21% at the same time dating itself is getting more expensive according to a survey from BMO's real financial

progress index. The average cost of a date in the US has climbed nearly 13% year over year to $189. America's now going on fewer dates overall roughly 12 a year now down from 14 a year in 2025. So Scott I mean the earnings here are interesting in match group which owns Tinder, hinge, okay, queued their paying users fell however I would also note that their revenue per user also rose and as a result their overall revenue did rise not great but they rose 4%

year over year so that is interesting probably relates to the case shape but bumble I mean just a flat out loss total paying users fell 21% revenue fell 14% there are a lot of questions around all these businesses sustainable in a market where young people seem to be kind of opting out of dating they seem to be just getting tired of swiping. What do you make of these earnings and the fact that dating itself might potentially be dying? There is definitely a with their honey a sex

“recession and I think it's a lot of different things these guys have been being down so badly”

if you're just looking for a market perspective I actually think they're a good buy that the cheapest they've been and they're actually expanding internationally but there's something there's just something more upsetting here and that is 3/4 of young single women in nearly 2/3 of young single men have not dated or dated only a few times in the last year and nearly 40% of single

women aged 22 to 35 never go on dates supposedly 62% of men in the UK under the age of 30 aren't

even trying to date I think the I think the entity or the elephant in the room here the people aren't seeing is AI and that is especially young men I think a lot of men are slowly but surely being sequestered from traditional relationships and entering into frictional relationships with character AI and then you layer and porn on top of that and that is I think men who for whatever reason I've said this I think we need to embrace young men's horniness and I think young

men need to do a better job of trying to modulate frictional relationships with character AI's and porn because I think wanting to have your own romantic relationships as a tremendous motivator for trying to be a better man because oftentimes the heart thing and the right thing are the same thing and the most rewarding things in life are relationships and they're really hard it is really hard to establish contact into a rejection be persevere figure out what a woman wants

quite frankly and have physical intimacy maintain the relationship that it's just very hard and that's

“why it's so wonderful that's what real victory feels like and I think a lot of men I worry”

are now opting for control over connection and that is when they're with an AI or speaking to an AI

or absorbing porn they never feel rejected they never feel insecure not I mean we've all had

those feelings we've all texted people and not heard back and wondered what did I do wrong or we've had our sort of heart trampled on or we feel insufficient or insecure or like we can't compete in a mating market or we just we don't have the money to go out or we enter into a relationship and we're totally fucking a basket case about it because we're insecure about the dynamic of the

without any friction and it's a it is such a hollow empty promise so I wonder if the air being

sucked out of the room here is that a lot of young people are deciding I'd rather have a friction less relationship with an algorithm the screen much less going on a dating app which don't have incentives to pair people up but for people to constantly be being back on the apps maybe spending a little bit more and finding out oh there's a bigger better deal so I find all of this data

“really alarming I think it requires some sort of government response around subsidizing third spaces where”

people can meet the good news is I do see or that you do see evidence of a trend of young people recognizing there's a problem and doing meetups and run clubs and stuff like that

that they are in fact getting out of touch and grasp more but this whole I think there's something

much bigger than a midcap company struggling here I think this is this is this is a veneer or an indication of a much deeper problem in our society I 100% agree with that just to go back to these struggling midcap companies and to your point the story isn't that bumble and match group are struggling the story is the dating appears to have been gamified and then people are now just opting out of dating entirely that has far larger implications just on a human level but also even

on a societal and economic level but I would like to just discuss this AI in dating dynamic what we are seeing is that these CEOs of these dating companies are looking to embrace AI as much as possible so the match group CEO spends a rask off he said that he is looking into AI curated dating the bumble CEO Whitley Wolf heard she said they're going to try to scrap the swipe dynamic entirely and try to just lean on AI and have this personal AI dating assistant but then she also

is saying something which seems a little absurd she's floating this idea of having AI bots dating each other's AI bots she talks about this I just want to play this clip and get your reaction you could in the near future be talking to your AI dating class here and you could share your insecurities I just came out of a breakup I've commitment issues and it could help you train yourself into a better way of thinking about yourself and then it could give you productive tips for

“communicating with other people if you want to get really out there there is a world where”

you're dating concierge could go and date for you with other dating concierge no no truly and then you don't have to talk to 600 people and all of St. Francisco for you say these are the three people you really ought to meet no no truly well they interview the loss in her face what do you make it that's gone well nothing says romance like outsource flirting performed by stochastic parents trained on red at therapy language it's just and I think she's with bumble that's right

I think bumble should be for people we want to get laid and don't have friends like you're supposed to go to your friends for this type I don't this is also nihilistic I don't you know and I'm virtually signaling right now but remember the property avatar that was up for about six hours anything that takes you away from the motivation to ask your friends for

“advice ask your mom your dad for advice convince you that maybe you should go to a bar get a”

little bit fucked up develop some courage and when you see someone go up and say I like your dress where you guys from I just this whole attitude and then and you know what this is going to go we have a special avatar that finds hot women for 49 95 a month I mean they're immediately going to start pricing and dumb versus smart versus better a I mean I this whole thing I like market places one out of three relationships begin on dating apps so there's a role for them but I am now

and again I see the glasses half empty now there are some good things about AI in terms of partnership for seniors I use AI all the time I'm fascinated by it one of the benefits of AI is it is creating political moderation where social media creates political extremism because AI is so vanilla and so worried about offending or upsetting you it tends to take extremist views and move them and moderate them which is like I think a good thing but the idea that you're going to

begin outsourcing advice and your representative I mean I'm convinced when you're on your first

date it's not you it is an avatar of you you're sitting there especially in your 20s people

suited and they're out of the later the other person is going to find the real you right so

“and I couldn't figure that out whenever I was dating when I was your age I think you're a lot”

more secure than I am um musta goes your better looking more successful and have a better parent to me that other than that also you're better educated other than that there was no reason for me to be less less secure but when I was in my 20s dating I was trying to constantly trying to figure out how do I get them to like me as trying to figure out how I like me and show up and decide if someone likes me right you just don't which is a real I mean that's a that's the real

problem in the dating world and continually to this day it's a really important point I mean

I'm I'm now believing we should begin to subsidize third places any yes I want to reverse

I'm running a book called renewal about public policies I think we should have a reverse footless and that is any venue that has dancing gets tax subsidies because dancing involves alcohol typically men and women and hooking up and I I would love to see a return on my atheist I think we need way more religious institutions that is one of the cheapest forms of bumble in the world because it doesn't matter what church temple and mosque you're at all the older people

start going okay who are the single people here who are the single men here are the single woman there approximately in each other's way class you know Moisha come over here and meet Sarah right it just they're good at pairing people up and they don't and then they don't they don't see on a screen every other temple in the upper side and who's hotter and who hasn't the best filters to show off their abs or pretend they're richer than they are and you start

are constantly thinking that you can do better anyway I'm I'm very I'm I'm I'm I'm I worry that when you see the destruction and rights of passage whether it's going to prom and some of it's been politically correct bullshit they've canceled a lot of the rights of passage the father the father daughter dance prom at some schools was cancel because they saw this shaming people who weren't so well that's the whole point you're supposed to have pressure to

ask a girl out otherwise you never do it you know the only reason I went to my ninth grade junior

prom with Lynn Sugamura was my friend was going and I was like freaked out that I wasn't going to go I mean you just had you did these things I don't know where I'm going with this at I just don't

“make it I think it's really important I think there's another question like you're talking about”

subsidizing these third places which I love that idea I do wonder if the market's going to just reward third places itself because this is something we were talking about last week when I come to drinking where we're seeing a lot more interest a lot more investment going into these in-person physical community-based events like we talked about these wrong clubs and these sauna raves I mean all of these products and services that are all about getting people together

in a room and rubbing elbows and meeting each other I do wonder if people are so fed up with the online experience that the market's just going to sort of correct itself and the money's going to flow into those experiences in-person physical experiences but if not I agree we should do something about it on a policy level because it is getting insane the loneliness academic is such a problem at this point where you know we've gone through the data before but

17% of Americans say they have zero close friends what so ever today that is a real problem

“that clearly you need to do something about it shifting over for a moment to this”

expense problem I mentioned the fact that the cost of a date has gone up nearly 13% year of a year I will also mention that Gen Z is spending more on average on dates than any other generations spending roughly $205 per date today that is according to the the source that I read above this real financial progress index from BMO and this sort of reminds me of something that Derek Thompson told us on the podcast on the daily last week which is that Gen Z is the most

materialistic generation that young people are obsessed with money more so than other generations I'm not sure if it's necessarily true but this data makes me think that maybe it is I think it is and then I saw this clip recently go viral which I'd like to get a reaction to this is this guy isn't Gen Z but this is Logan Paul's co-host on on his podcast very popular podcast this guy Mike Maylach is this YouTuber and he was on someone else's podcast and they were asking him how much

he spends on his dates and his what he said he's not representative of everyone but it seems to be

indicative of why we headed how much on average do you spend on a first date thousands this

I got a hotel yesterday so that she could change before no one would stay at it she couldn't change

“in the restroom I don't know why did that I think we should pair him with the CEO of Bumble and”

they should be the first people to go to Mars I think we'd solve a lot of problems though if those are the two first people on SpaceX's initial mission to Mars you don't like the hotel room before nobody to get changed in no I know guys like that they're called douchebags they're called

50-year-old dudes or 40-year-old dudes that hit it big who never had any game and so they want to

surround them so it's their money they can do what they want that's a totally different echo system it happens in Abisa mechanism same parts where guy gets a jet he invites three of his good friends and then 12 ridiculously or six ridiculously hot young women they pay for everything and that's their only currency when I was in college the only currency for losers was cocaine now it's just straight up money where they can just you hey do you want to go to a

“beefancy black coffee sure you know who wouldn't and also there's a lot of Instagram has”

fucked up everything everybody thinks when I got out of college I was working my house off Morgan Stanley I was living my mom I got out of business school didn't know what I want to do in my life started a consulting company living in Oakland living in a $280 a month apart man my life was not that fabulous and that was okay I was happy I had a I had a girlfriend we were totally into each other I was trying to make money I was enjoying what I was doing running a

strategy firm at the age of 27 you know I was happy and then I started getting some clients in York and I came back to New York and I went to places like Pangea and Lotus and I got invited by some rich guys I met to St. Bart's and I'm like Jesus Christ I didn't even know this shit was

out there this life like I had never been exposed to it so being the mature person I was I went home

and said I want to divorce and I I moved to New York to live the full douchebag lifestyle and this is a little bit reductive and it's extraordinary my ability to bring everything back to me well now this is useful this is informative but being exposed everyone every day is exposed to a point one percent life everyone is exposed to central pay or to staying at the almond in Utah or going and getting artists passes at Coachella and they think I need to be part of that

and the the currency for that is either being ridiculously hot in young as a woman or being ridiculously rich as a guy who is willing to spend that kind of stupid money to have what I call fake not I want to call fake friends and by the way it's it's an I want to be clear it's an empty and meaningless experience but as far as empty and meaningless experiences go it's pretty fucking good I don't want to I don't want to lie I see the attraction I've participated in it

I'm not going to lecture it anyone not to do it but there's not a lot of what I'd call real lasting connection in it and there's a real downside to it and that is 99 percent of people are not or 90 percent are not going to have access to that ecosystem and it makes them feel worse about themselves they're just at home wondering why I didn't get invited to the Hamptons or I don't have

the money that the woman I want some women and by the way we always I call men douchebags women have

become increasingly materialistic and a lot of men younger men feel insecure about their ability to attract equality made if they aren't making a shit ton of money so I'm not I'm not one of these people that it's as always it's all men's fault it's not the problem you know there there is a certain amount of materialism unreasonable expectations in generally like low character behavior from both genders around this shit yeah and what we're missing is you know I don't know the answer

“here but I I believe that in person work in person school more religious institutions tax”

subsidies for places where people can get together mandatory national service where young people meet each other in the agency of doing something more productive other than seeing dip low and mechanism that gives people a chance to kind of to find people who love them for who they are because I think the pressure being placed on young women to be ridiculously hot and in the right environment all the time in the right clothes and also to kind to be fucking super women

women are expected to have it all oh wait but she doesn't have a job she's just a part of well okay how she's supposed to look like that and take off from micking us on three days notice of checks has a fucking job that is the job yeah and dudes at 28 are expected to be making a million bucks a year so they can drop a hundred and twenty thousand dollars on a summer rental and

with clips like that going viral that clip did go viral we're arguably making it more viral by

discussing it on this podcast but the thing that isn't being said is that isn't normal I didn't also isn't cool but the trouble is when you see more and more of these clips which go viral because that's so absurd I think it's starting to make people think that it is normal to spend thousands of dollars on a day that it is normal to go to micking us and fly out 10 different women and spend 150 thousand dollars on this experience the more that we start seeing people saying that the more we

think that that is happening the more we think that that is standard normal and cool and so that seems to be a big reason why people seem to be spending so much money on these dates because they

“think that that is something that you have to do I want to be like these famous influences I”

want to be like these rich youtubers I want to spend lots of money on these dates and then I'm

sure that it affects both men and women in the same way women start to expect it oh he didn't spend enough money on this date I saw this clip of this guy spending thousands of dollars clearly this guy is on a baller clearly he doesn't care enough about me it doesn't respect me enough and then the same thing goes for men it's like oh I need to spend thousands of dollars on this date because real men that's what real men do that's what Mike may lack does so I'm a loser if

I don't then it's sort of like just this vicious cycle where we're going to spend more and more money and I feel like we need people to speak out and say hey one this isn't normal and two it isn't actually cool like you're actually admitting to being I love what you said cocaine was the currency for losers in college and now for people today it's just pure money you're outing yourself potentially

“as a loser by saying that you need to spend tens of thousands of dollars for your date to go”

right I just wish with it we could sort of like I don't know we shouldn't glorify that behavior so I've said this before I think men should pay for everything I think the fertility window of women is much shorter the downside of sex is much greater for them the downside of pregnancy is much greater for them in some when a woman a young woman who is of childbearing age is spending time with you quite frankly her time is more valuable than yours in addition for her to show up in most

relationships she spent two three four hundred bucks before she's walked through the door that's Sephora getting waxed getting an outfit to compete with increasing expectations she spent more money on the date before she's even showed up well I've spent all the money on pet tides so my entire beauty routine when I was your age was occasionally splash water on my face anyways so man pay for everything

“but in addition it's not just paying for everything it's demonstrating excellence and in”

demonstrating effort and every mammal there's a there's a courtship where the male tries to throw out its feathers or sing a song or fly around or bring the owl or rat or something that you want to have sex with there's a courtship ritual across all mammals where the male tries to impress the female and to believe that isn't here is is not true unfortunately impressing a woman in a capitalist age with Instagram has just become all about fucking money and what I would offer to men

is that you can replace money with effort if you try to think of something cool to do your culture you know what's going on you know a cool little bar you you you you you you know I'm at that guy because I'm I'm lame but I hear about dates I hear about young man my son my oldest son was saying that he was going to take a date to see that that cheap student tickets to that 3D thing of Abba and I'm like he gets it he gets it he's making an effort he's showing up and saying

I put some thought into this and we're going to do something really cool and he got student tickets so in the middle of the week so it wasn't a lot of money and I thought to myself that you know he gets it he's going to be just fine my other son wants to borrow my black card to take his girlfriend to like he also got Taylor Swift so they get it just on different ends with a barbell but you realize the amount of dating amongst high schoolers has been cut at half I mean I was six to

140 pounds with bad skin and I dated everyone dated I mean not a lot but I did date and now it just appears at no one's dating anyways I find the whole thing I find the whole thing I'd like to find a company that is I don't know I I wonder if we should actually this is probably

the good time to announce that property media is I is IPOing as the world's first semiconductor

company powered entirely by podcasts charisma and evita adjusted vibes and anyways I attempted to segue out of my my how discouraged I'm about young people not getting drunk and having sex I thought it was encouraging I really like your point about effort I think it's true I think it goes

now take pep you really take peptides okay I'll make sure you feel better take the Wolverine

peptide and I want to see if you go out third arm as I look at the weekend we will see earnings

from home depot loads target Walmont and Nvidia we will also see the minutes from the federal reserves last meeting and consumer sentiment for May Scott do you have any predictions cerebrus below 50 bucks into a month makes no fucking sense at some point sanity will creep in I'm not don't buy don't don't play the markets on this this thing's crazy it could become a

“meme stock it could go to a thousand I think there's a much greater probability it's below 50”

bucks this is a state run the UAE trying to prop up a company in a hot area it's got no legitimate

customer base it's trading at a greater multiple than in Nvidia this just feels this feels like late stage chip capitalism my prediction is inflation is only going to get worse for at 3.8 percent today don't think we're going to get out of Iran anytime soon I think oil prices are going to continue to rise I think that we can see close to four and a half percent inflation

“by the end of the year I guess my prediction is covid level inflation by the end of the year”

your prediction should be a rate hike and if you think that's going to happen well depends on this new guy Kevin Warsch is he going to bow to the king or is he going to have a spine again the media is missing the mechanics of how the FOMC works and how rates are increased or decreased and that is they think it's all about one guy he's won the board that's right he's one of 11 votes he sets the agenda he's the spokesperson there's no fucking way the governors of the fed right now

“would vote for a rate increase no way no a rate decrease I'm sorry did I say rate increase you rate”

said rate increase they they wouldn't vote for a rate cut today no no shot I agree with that if your prediction is true then you're much more likely to see rate increases than decreases yes

100 percent so maybe I'll tack that on in this speaks to the power and the beauty of what's

called an intransity of a transcendent government and the the sand in the gears of a authoritarianism and that is checks and balances we want we want what is it 11 or 12 governors deciding this we don't want one percent deciding this this episode was produced by Claire Miller and Alson Wison engineered by Benjamin Spencer our video editor is Jorge Carty our research team is down to the lawn is about a cancel Cristina Donahue and Mia Savario Jake McPherson

is our social producer Drew Barris is our technical director and Catherine Dylan is our executive producer thank you for listening to property markets from property media if you liked what you heard give us a follow and tune in tomorrow for a fresh take on the markets and the good night.