#FinanceDaily IPO🪟🔐?; 🛢️flowing?; @openai raise; $FICO🤮; @nycmayor loss

of attention, I think it is, listen, the IPO market may now be a little bit chilled because of all the reporting about this IPO being shelved and SpaceX and Anthropic, you know, coming and so forth. But I do think that they are all individual cases. I'll make the case for that in a little bit. We had a second straight down day for the S&P, but not by a lot by any stretch. The Dow was down a quarter of the S&P, less than that and Nasdaq effectively flat on the day. We've got gold back above 4200 and we have micron as the notable reporter after hours today and the meeting yesterday at the White House. We'll talk about that brand in the lunch, the coveted lunch for which we now have the table, the seating chart for the folks that were at this important meeting with Elon sitting directly next to the president of the United States. But the who's who of tech and AI there and there being I guess a self-policing pledge, let's call it at best on the industry as it relates to AI. We'll chat a little bit about that as well, open AI in the market these days or talking about raising $30 billion at a $1.4 trillion valuation overshadowing obviously CalShi raising a billion at a $40 billion valuation and blockchain.com raising a half a billion, just a half a billion as if we snap and that kind of money just shows up. blockchain.com looking for a half a billion at a $4 to $6 billion valuation. One other thing, a bit of a war of words between the CEO of AT&T, Stanky and Elon Musk about Starlink trying to wrestle some control away from legacy telecom carriers, talk a little bit about that. Oh, honest, I also want to talk to you about the SPR and the loan of $40 million barrels, I don't know what this means for the increasingly depleted SPR and what $40 million barrels means to the market generally. The debt interest of the United States is now firmly above a trillion dollars so we will pay a trillion dollars in interest payments per year. And then lastly, we've got the America.gov launch which I think should have been Elon's rollout but I'll be it finally, we now have out of the federal government AI-powered federal services portal that people are able to not only use but also scrape for important data, everything from passport renewals to Medicare enrollment will come later but also things relating to government contracts with transparency so at least it's a start there. All right, let me go to Paul first and talk a little bit about FICO and what happened yesterday to fair Isaacs and then a little bit further about the housing market more generally. Good morning, Paul. You want to go ahead and tell everybody what's going on with FICO and why the destruction of their stock price? Well, yeah, primarily what's happened is I think back in maybe six months ago, actually it's been a much longer project but the federal government has been focusing on alternative scores for credit rate credit your credit bureau scores and like a lot of times people try to use these interchangeably they try to say FICO and you say credit score those aren't the same things but there are multiple other competitors to FICO. The primary one is vantage score which is effectively owned by the three credit bureau companies so that's trans union, experience and, and, uh, uh, expe, uh, aquifax, right and what they are, you know, they're doing is they kind of add or use alternative data including paying your cable bill, paying your utility bill, paying your rent which for people with, you know, not perfect credit or kind of can, can at least show your credit worth of your ability to pay your bills on time. If you only have one credit card or you don't have any credit according to the old style, these would be kind of the alternative so there has been this push for mortgage originators to use these alternative scores when I say mortgage originators, I mean companies that are originating conforming mortgages so that's your Fanny and Freddie which is most of the US market. So that's the given that's the biggest market and the push for FICO being, you know, just a choice, you know, just one of the options, not the primary option, you know, that's where you know, FICO could lose their effectively was monopoly and FICO is not, is the model, it's not the, it's not the, uh, the credit bureau so the credit bureaus, uh, the three companies we mentioned, use the model to generate your score. And so the model is a, you know, it's a, it's a mathematical, I guess, model that uses the number of, the number of credit lines you have, the number of, uh, you know, credit calls that you take and, uh, you know, and, and, and see the, how, how much the liquids you are, you know, that you've had in the past or any other kind of negative marks on your credit. So FICO is the model, the bureau is used the model, the bureaus can use other models. So Vantage score is one of the other models. And I think that's the thing it's like prying, uh, people away from just FICO and getting used to it. The concern is, you know, we don't have decades of history of, of the models or the, the, the, the, the, the, the, the, the, the, the, behavior based on the score that we do with FICO. When, when people run up your FICO, they're not really like measuring what, you know, your specific ability to pay, it's just, they're comparing what other people with the same score, how they performed over time, right? So they're kind of just using, you know, the analysis there. Long term, the, the federal government, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, the, mortgage programs will be using more, than, probably more Vantage score. And that just, you know, kind of is a big, uh, kind of drop in what FICO's, uh, business would be. And then it's not just going to be mortgages, it's going to be, uh, the, uh, you know, auto sector, kind of other banking sector, banking sectors. And then also companies that use, sometimes when you get your FICO, your free FICO or your free credit score on your credit card, you know, website or your other, you know, your, your banking website, they're using Vantage score. They're usually, they're not using your FICO. So like, there's other sources that people have really been pushing, uh, Vantage score over FICO. So that, that's the biggest thing. I didn't, I didn't read specifically the, the, the, the, the report that came out yesterday, but like, that's what's happening with FICO. It's just, it's kind of getting pride out of its, you know, I'm not going to say it's, it was a monopoly. There were, there were always were other scores besides FICO and Vantage score. They just weren't being used, uh, primarily, there's a few there used for like subprime auto for people that just don't have any credit, uh, in the, in the traditional sense. And now, you know, uh, you know, Freddie and Fanny really gave this to, and truly the FHFA, uh, that gave this stamp of approval on Vantage score. Several, several months back. This isn't something that's happened yesterday. It's been going on for a long time, probably even several years. It's just now, it's getting implemented. Right. Thank you for all of that, uh, Paul. Um, you know, for, I'm assuming the majority of people on this space have had something to do with credit bureaus on their credit scores over time. I, I, I had a lot to do with them in the wake of 2008, um, when just the world collapsed on my head. And, uh, I had to be concerned about my credit score for the first time in any very, very, very long time. Um, and, um, the, the, the, the irony here is, you know, as, as borrowers, uh, whether you're individual borrower and you care about FICO or you care about experience or Equifacts or Trans Union or if you're a corporate borrower, right? There, there, there isn't much by way of competition in these spaces. And the irony here is is you're just going from one, uh, controlling, uh, credit bureau, uh, which until now has been FICO to, uh, uh, broadening the mafia just slightly. Um, and that's why FICO has come under tremendous pressure. Um, like Paul said, this is not new news. Um, you know, already the, the statement was made already back in early September. But yesterday it was another statement out of Bill Pulti from the FHFA that essentially set, he said, you know, the, the monopoly is over. Uh, I don't think it's, you know, all the sudden this tremendous saving grace for borrowers, uh, it just means that fair isakes won't get a hundred percent uh, of the fee revenue that comes from checking a person's credit score. Um, at least those that come from, you know, certain originators like Fannie Mae, Freddie Mac, whatever. Um, so that's where this is at. It's just, it's interesting, you know, we live in an age where moats, business moats are becoming narrower and becoming shallower. This is one part of the world where the moat has been incredibly impossible to surmount for an incredibly long period of time. And again, like I said, is just going from one devil's hands into another devil's hands. It's not like this upstart came along and is rocking this world, not at all. Eventually, I assume something will come along to rock this world. But essentially fair isakes is no longer the only game in town when it comes to scoring uh, for purposes of mortgage. Go ahead, Paul. And it all, it all came out of also like being equitable. You know, this is from the Biden administration that people that had uh, poor credit in terms of fair isakes model versus but they were solid uh, bill payers. And that's that that's the issue. Like you and there are people that they call it a thin file. Like if you don't have, if you just have one credit card or something like that, like I had like, I think maybe 10 years ago, I only had like one credit card. And like my FICO was okay, but it wasn't like high. And it was like, they're like, yeah, you don't, you don't have enough credit. Like you don't have enough credit history. I'm like, oh, maybe I should, like, like you had to open up multiple like additional credit cards just to kind of like add to the file. So you least had some history and like usually I buy cars for cash. I bought a car. I said, oh, get alone. And so at least it'll it'll kind of like make my file a little add more lines. It's crazy that you got to you got to take out more credit to prove your, your borrowing ability. And then there it doesn't really look at your income or anything like that. So you could have people that are making hundreds of thousands of dollars a year. And they can have a 500 FICO if they, you know, missed a few, you know, MX bills or something like that. So traditionally, fair, Isaac's model and you know, it measures like your ability to pay your bills. But it doesn't look at your income. So that's something that, you know, quite honestly, I don't know how the vantage score works beyond that it looks at other data. But this push has been out there for years, like, you know, maybe from at least 10 years ago, I was working on projects where they were, we were looking at alternative data. And now I think what the ability to have use AI for some of this and open source of some of these data providers, like you can kind of run some of it. But the biggest question I still have is like, what is a, you know, a 700 vantage score versus a 700 FICO score, like are they the same thing? Now we all know post COVID, all the credit scores were kind of pushed up artificially with all the transfer payments from the government. So that's something that we knew that FICO's were kind of like over, you know, kind of like, you know, kind of overscore, not overscoring, but they were like, they were giving a little false impression of what a score was, like 10 years ago. So and people run their models off of that, they run these credit matrices, they'll run LT, loan to value and credit score. And that's how they'll figure out your interest rate, at least for credit mortgages. That kind of went away after COVID.