AI Coming for Fashion Models? & Travelers Scramble for REAL IDs

0:26Race the rudders! Good morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, your McLovin driver's license isn't going to cut it at airports anymore. What you should know about the real ID deadline that's coming up fast. Then a fashion giant H &M is making digital clones of its models so they can walk a runway in Tokyo while doing a photo shoot in Paris. It's Tuesday, April 1st. Let's ride.

0:59Good morning, everyone. Savor that word, though, because we do have an announcement to make. After more than 500 episodes of bringing you the news bright and early and more than 500 alarm clocks going off at 4 a.m. on the dot, we dug into the analytics a little bit and found that the majority of you were actually listening to the show in the afternoon. So we're following what the data is telling us. And starting this week, we're going to be shifting to an afternoon schedule. Yeah, we absolutely loved beginning our mornings with you, but we want to meet you all where you're at, which is the afternoon hours.

1:33You'll still get the same great energy and news and jokes that you're used to in the morning. But now we'll be bringing it to you at 7 p.m. instead of 7 a.m. Additionally, with that time change in mind, it didn't make sense for us to keep calling ourselves Morning Brew Daily. So to reflect the change, we're going to be rebranding as Afternoon Brew Daily, which I am very excited about. ABD got a nice ring to it. And that's about it. That is our big announcement. Is there anything else I'm forgetting, Neil? There might be one more thing. April Fool's. Psych. We are never leaving in the morning. We ride at dawn.

2:08Okay. Now a word from our sponsor, Tax Act. This is 100 % real. Toby, how are your taxes coming along this year? Taxes, Neil. I am a mess. I mean, I don't even own a business and I'm still stressed. What if I miss deductions or worse, accidentally commit tax fraud? Take a deep breath, Toby. Tax Act is literally designed for people just like you. They simplify the entire process, helping you find every deduction and credit you deserve with their deduction maximizer. That actually sounds very reassuring. But what if I still get stuck halfway through? That is where Tax Act's expert assist comes in.

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3:29AI models are once again the subject of a raging debate this week, but this time it's not open AI we're talking about. No, this week the AI models that are driving debate are actual models, digital replicas of real-life people who are indistinguishable from their human counterparts and might soon appear in online marketing campaigns, the Business of Fashion reported last week. The fast fashion giant H &M announced that it is partnering with agencies to create AI-generated twins of 30 or so fashion models this year for use on their social media and marketing campaigns. The company is in the exploratory phase of the project and stressed that real humans would be, quote, in full control of when the digital twin would be used and will of course get paid when it is being used.

4:13Still, it's opened up an uncomfortable can of worms in the fashion industry. Critics say that while models may benefit from having a likeness that can extend beyond in-person shoots, other pieces of the creative puzzle like photographers, lighting specialists, and hair and makeup stylists are all going to be affected. It echoes similar worries Hollywood had that led to a strike in 2023 with writers and actors pushing back on AI creeping into the film and TV industry. Still, H &M are not the first to test out AI-generated models. Hugo Boss and Levi's have already given it a whirl, and they likely won't be the last.

4:49But Neil, what I think is especially unsettling about what H &M is doing is just how scary accurate the representations are. The first time one of the models, Vilma Sjoberg, saw her digital twin, she said, it was interesting how good it actually was, noting that not even her boyfriend could tell the difference between her and her AI doppelganger, which both speaks to the quality of this technology and also landed the boyfriend in the doghouse. When you think about how much marketing collateral that the fashion industry needs to produce on a daily, weekly, yearly basis is almost unfathomable. unfathomable.

5:24So you can see why brands like H &M or other fashion companies want to reduce costs or find ways to streamline their process so that they don't have to pay as much to produce all this marketing collateral. And one of them, there's this opportunity afforded by Generative AI to create these digital twins. It's been happening in the auto industry for a very long time for marketing, and it's creeping into the fashion industry as well. H &M has certainly started a conversation with this announcement, and that's kind of what they wanted to do. Jorgen Anderson, who is the chief creative officer of H &M, said, we saw this as a way, as a big player in the industry to lead a conversation that takes the model, the agency, and the best interest of the fashion industry into consideration.

6:12You can debate the second part of that sentence, but what they have done is certainly start a conversation. Right. And I do think that they think being upfront about their AI usage is the way forward here and involving the actual stakeholders in the process, which are the models themselves, is a much better way of going about it than, you know, trying to replace them on the low low. So I do think that that is one of the reasons why this is maybe getting a little bit more, I don't know, consideration from the industry at whole versus another way of going about it. So how does this actually work, though?

6:44To create the twins, H &M takes just a lot of pictures of the models in motion. They go all the way down to details like birthmarks, how they move, how they walk, their movement patterns to generate enough data to create this accurate twin. and I mean I mentioned the boyfriend thing but a lot of people they surveyed people within the own company H &M and only a slim majority could actually distinguish the difference so it looks like the technology is finally meeting the moment where it's at and I do think if you are a model and you want to expand your visibility what a great way to do it I mentioned at the beginning of the show that you can be at a shoot in Tokyo while also at a shoot in Paris at the same time this allows you to basically expand your likeness across the globe with no real bounds of geography anymore, which could be a major unlock of revenue for these people.

7:35Yeah, they quoted one model as saying she's like me without the jet lag talking about her digital twin. They quoted another model saying finally a way for me to be in New York and Tokyo on the same day. And the implications of that are kind of massive. You know, you wonder whether these top end models will get more work and squeeze the bottom end of the industry because they can be in New York and Tokyo on the same day in a fashion shoot in Tokyo or on a runway in New York at the same time. So you only need to hire these people twice, essentially. So it's kind of mind boggling to think about what will happen to the hierarchy of models.

8:14And also, of course, what will happen to everyone working on photo shoots. That is the main concern about AI replacing people's jobs is that you have all these stylists, photographers, lighting assistants that currently work on photo shoots. The big pushback to H &M's announcement is that this will replace their jobs. I do think this is a how far we've come a moment as well, because if you go back to 2011, H &M tried to work with AI back then. At that time, the technology was not exactly where it was today. And so they were superimposing the heads of real models onto computer generated mannequins for a swimwear campaign that was universally panned.

8:50But so there is some parallels and some symmetry here showing just how far the technology has arrived and just how much H &M has been trying to do something like this over the last decades. So we'll see if the wider industry starts embracing this practice or if it's one of those things, much like happened in Hollywood, that gets a lot of pushback and ends up, you know, not actually becoming a widespread thing. You all know that tomorrow, President Trump is expected to announce sweeping tariffs on countries around the world that have higher trade barriers than the U.S., those countries are likely to respond with tariffs of their own, escalating this simmering conflict into an all-out global trade war.

9:29Caught in the crossfire, perhaps more than any other sector, are American farmers. U.S. farmers help feed the world, exporting an estimated$170 billion worth of agricultural products this fiscal year. On the flip side, that makes their pork, fruits, veggies, and soybeans prime targets for other countries aiming to strike back against U.S. tariffs. We've already seen this play out with the first round of tariffs last month after the Trump administration raised tariffs on Chinese imports. China retaliated by putting a 15 % tariff on U.S. chicken, wheat, corn, and cotton, and Canada slapped 25 % tariffs on processed foods such as wine, sausages, and baked goods.

10:08Given that Canada, China, and Mexico are the three biggest foreign buyers of American farm goods, the agricultural industry is at risk of losing market share in those countries due to tariffs. The president has said that domestic demand will make up for those losses in exports, telling farmers they'll benefit by making more product to be sold inside the United States. Still, there is a great deal of apprehension out on the plains. In a Purdue University study, over half of farmers said that trade policy was their most important issue over the next five years. Farmers are contending with a lot of challenges right now.

10:43One of the issues is that USDA and aid funding is in limbo right now with the new administration coming in and pausing a lot of that aid. And also you have the tariffs that are being lobbed at their main trading partners, China, Canada, and Mexico. And then also deportations are impacting a tight, already tight agricultural label market. And this is a very uncertain industry. I mean, even beyond those things I just mentioned, just weather is one of the hardest reasons why it's so hard to turn a profit as a farmer. So the government has typically stepped in and tried to smooth over some of those uncertainties with these aid programs.

11:18But now with those aid programs up in the air, the word uncertainty has just come roaring back and a lot of farmers are going, where does this actually leave us? Well, last time in 2018, Trump put tariffs on China. China put tariffs back on corn, soybean hogs and sorghum from the United States. The United States stepped in with aid to farms. They sent direct payments totaling$28 billion to help smooth that over, as you mentioned, preventing a financial catastrophe hitting farms because they saw these foreign markets dry up. It looks like a similar thing could happen this time around. Again, we don't know exactly what tariffs are coming from the U.S.

11:55tomorrow, and we don't know what the retaliation would be. But Agricultural Secretary Brooke Rollins said that the administration is probably going to provide financial support for farmers if they see their markets dry up overseas. So that would probably be a lot more than$28 billion because that was just a trade war with China back in 2018. This is going to be a trade war with the whole world, including Canada and Mexico, which are two of the top three foreign markets for U.S. farmers. So we'll have to see how the details play out, but the U.S. farmers are certainly in the center of this trade war.

12:27If you don't have a real ID yet, you really got to get on it because the May 7th deadline is looming. Those who don't use a passport to fly will have to show TSA a real ID, aka a federally compliant license, in order to board a domestic flight to go visit your grandparents in West Palm. How do you know if you're already part of the real ID gang? The marking varies by state to state, But for the most part, look at the top of your card for a gold star. There's a lot of you, though, who do not get a gold star when it comes to time management. About one in five travelers currently flying in the U.S.

13:02are not Real ID compliant, according to the TSA. And that has led to insane demand at DMVs. People across the country have reported hours-long lines, especially in places like Pennsylvania, where the opt-in rate for Real IDs sits at just 26%. In Florida, demand is so high that a network of scalpers has popped up selling off DMV appointments they've hoarded for a profit. Now, getting stuck in a long line may not be entirely your fault. The federal government has delayed the deadline for enforcement three times now, but this time it is pinky promising that you better get your ducks in a row. Neil, I feel like this is something we've all seen on airport signs for years now, but it's finally happening.

13:45It's finally happening. And just this morning I checked and it turns out I am one of those one in five travelers that are flying through U.S. airports without a real ID. So I guess I need to get on that. The good news is that you can use your passport instead. That will work if you do need to fly after May 7th and you don't have your real ID. But it just shows that New York was one of those states that issued not fake IDs, but not real IDs alongside real IDs. and somehow I ended up with a non-real ID. So yes, I would encourage you to look at your driver's license because this May 7th date is approaching and it's been an absolutely long time coming, which I think led to this scramble at DMVs over the past few weeks.

14:29This was initially part of a law from 2005 and the goal was to increase security around IDs. It was pushed back three times during the pandemic and now I guess finally it is coming and yeah, you see DMVs all around the country, kind of expanding hours. New York said it was opening DMVs on Saturdays, which it hadn't before in order to get more appointments in. Yeah, it is interesting too, the approach that some states are taking. On Illinois' Secretary of State's website, they say, don't rush the date, real ID can wait, which sounds to be exactly opposite of what we're saying right now. Basically, they're saying, don't put this massive crush on DMVs right now.

15:08We cannot support you. So you can just fly with your passport, get a real ID a little bit later. But it is just classic, I don't know, Americans procrastinating to the very last moment. I mean, May 7th is coming up here. I encourage you to get all your documents in line too because a lot of these horror stories we are reading where people who waited hours in these DMV lines and then show up at the front and say, oh, you don't have the appropriate documents you need to verify your identity to get this new real ID. So make sure you have your ducks in a row. make sure you get this done, especially if you have, you know, some trips coming up in the summer.

15:43Up next, we're talking about Larry Fink's annual letter. Eczema isn't always obvious, but it's real. And so is the relief from EBCLIS. After an initial dosing phase, about four in 10 people taking EBCLIS achieved itch relief and clear or almost clear skin at 16 weeks. And most of those people maintain skin that's still more clear at one year with monthly dosing.

16:34when treated with EpGliss. Before starting EpGliss, tell your doctor if you have a parasitic infection. Searching for real relief? Ask your doctor about EpGliss and visit epgliss.lily.com or call 1-800-LILY-RX or 1-800-545-5979. Tuesday on NBC, Jimmy Fallon and Bozema St. John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you.

17:11Make the best idea win! On brand with Jimmy Fallon. Series premiere Tuesday on NBC. Now we need to talk about a letter. No, it's not the thank you notes you rush through after your wedding. It's the annual letter to shareholders penned by BlackRock CEO Larry Fink and released yesterday. This letter is read even more closely in investing circles than Warren Buffett's yearly missive because BlackRock is the largest asset manager in the world. It has large stakes in hundreds of public companies. And Fink has caused tectonic shifts on Wall Street with his statements on topics like ESG and sustainability in the past.

17:48In essence, as BlackRock goes, so goes the finance world. So where is the finance world going now? Into private investments, which was the main theme of Fink's letter this year. Fink said he wants regular Americans to have more access to private investments such as real estate, infrastructure, private loans that are currently only available to institutional investors such as pension firms and insurance companies. In his call to democratize private investing, Fink wrote, assets that will define the future, data centers, ports, power grids, the world's fastest growing private companies aren't available to most investors.

18:23They're in private markets locked behind high walls with gates that open only for the wealthiest or largest market participants. Fink aims to throw open those gates and let us plebs start feasting on private investments that are currently blocked off. Toby, I am curious, though, who do you think might benefit from that? I think I have an idea. Of course, this is not entirely an altruistic letter. Over the past 14 months, BlackRock has been shelling out a lot of money to buy these private asset classes, just shelled out$12.5 billion to buy Global Infrastructure Partners, and it's in the process of completing another$12 billion acquisition of a private credit firm.

19:00And then also kind of the coup de grace of all this is that they are buying, they bought this new data provider called Prequin that actually aims to make private valuations less opaque for investors because it's very easy to come to a valuation of a public company, you know, just shares outstanding times, share price. But private investments don't have shares outstanding, so it's much harder to, you know, assign a valuation to something like a port or something like that rather than an actual S &P 500 company. So this is all part of this grand vision to lower those walls. And yeah, maybe it is something that will benefit normal everyday investors.

19:37But obviously, Fink acknowledged the fact that, yes, this stands to benefit BlackRock as well. Right. He said, you may assume that I'm talking my book. And he's like, yeah, you're you're kind of right. At the same time, the entire finance world is going in this direction. So BlackRock is now going to compete against KKR, Apollo, these big private equity firms that are just buying up. ports and real estate and infrastructure and data centers all around the world. BlackRock just bought a couple dozen ports from around the world. It's in the process of buying those two ports at the Panama Canal from a Hong Kong firm.

20:11So this is the direction the finance world is going in. And right now, you know, people like you and me, Toby, and people listening, like have no access to buying private investments and, you know, buying, even buying your home is really impossible. So how are you going to invest in, in, you know, a real estate asset class. That is where the finance world is going. And that's why Fink said in the future, you won't, you know, the 60-40 stock and bond portfolio that compromises most, you know, 401ks will instead shift to a 50-30-20 approach, 50 stocks, 30 bonds, 20 % private assets. And he projects that those funds with that scenario will outperform the typical 401k by 14.5 % over a 40-year period.

20:57Obviously, BlackRock is going to sell those funds. So that is where he thinks this finance world is going, and usually people listen to him. And then one thing that people noticed from Fink's letter this year is that if you go back a few years, one of BlackRock's big new initiatives was sustainable investing, ESG investing. And if you go down through the letter this year, all of that language has been removed. He's completely changed his tune. It was actually a very apolitical letter in general, like he didn't want to step on any toes. So that also speaks to just the general, I don't know, maybe unease of an asset manager like BlackRock in the current administration.

21:35They don't want to step on anyone's toes. And they also are just kind of walking back from some of those hot button social and political issues that, you know, is really leaning into as as recently as 2020. One, you know, so one political topic that he did mention very briefly was that protectionism is back. And he alluded to all of the uncertainty in the economy. He said, I hear it from nearly every client, nearly every leader, nearly every person I talk to. They're more anxious about the economy than at any time in recent memory. But he also did this assurance. He said, we have lived through moments like this before.

22:09And somehow in the long run, we figure things out. So a final note of optimism from Larry Fink. Now let's sprint to the finish with some final headlines. Up first, Newsmax's stock debuted on the New York Stock Exchange yesterday and did the max in its name justice. The conservative media outlet opened at$14 a share, a 40 % jump from its$10 IPO price, then proceeded to skyrocket as high as 735 % during its first trading day, raising$75 million in the process. Compared to other recent IPOs, Newsmax's performance stands out. another debutant, Corweave, had a disappointing first trading day, which saw the AI company fall about 10%.

22:49The success of Newsmax didn't come from major funds suddenly getting jazzed about the prospects of investing in cable news. It was mainly retail investors pumping the stock in a GameStop-esque moment, more than anything related to the company itself. Newsmax lost more than$55 million in the first six months of 2024 on revenue of roughly$80 million, and now it's worth nearly$11 billion. Insane, definitely shades of GameStop and AMC in 2021 with this IPO. The question now is, can it sustain it? And history shows probably not. So there are two dozen stocks that ended their initial sessions after their IPO up more than 300%.

23:31And they've been losers in the long run. Shares of the average company in that basket are down 85 % from their IPO price. So when the Reddit hordes kind of move on to the next shiny thing and they get bored with Newsmax, they get bored with GameStop and they see something else, then we'll see what happens to Newsmax because you're right. It is loss making, but it is sort of held its own as a cable news channel. It is firmly number four behind Fox News, MSNBC and CNN, and it turned its founder, Chris Ruddy, into a billionaire. So he's got that going for him. major bummer by next NFL season we probably won't know in advance whether Taylor Swift will attend a Chiefs game that's because the FAA has introduced a system that allows private jet owners to request their registration information such as name and address be kept private the change which is part of the FAA reauthorization act of 2024 could deal a potentially fatal blow to the cottage industry of private jet trackers who had kept us all informed about where Musk Zuckerberg Bezos Swift and Kim Kardashian were flying via publicly available data from the FAA.

24:39That received pushback from social media barons like Zuck and Musk, who blocked those flight tracking accounts on their platforms, and Swift even sent a cease and desist letter to the most prolific PJ tracker, Jack Sweeney, citing safety concerns. Toby, a big blow to those of us who want to speculate on football coaching moves. Wonder which high-ranking official with direct access to the FAA made this happen. Taylor Swift, I'm looking at you. No, I'm just kidding. This new system came down during the pipeline, during the Biden administration. So it's been in the works for a while. This has been something that, you know, the billionaire class has not been happy with for a long time now.

25:14They say it's a big safety concern if you know exactly where you are. And you're right, this cottage industry, I mean, Jack Sweeney was this college kid who just suddenly became the subject of ire of all the billionaires in the world because he ran all these private jet tracking accounts. I feel like it's just a bygone era of social media now. We're never going to get those insights into, you know, those 20 minute private jet rides that some of these billionaires were taking from California cities to California cities. And you're right. Yeah. We're not going to be able to track like who's going to the Masters or it's bad for the sports industry.