Buy Now, Pay Later Impacts Credit Score? & Novo Nordisk Breaks Up w/ Hims & Hers

0:00Tuesday on NBC, Jimmy Fallon and Bozma 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. Make the best idea win! On Brand with Jimmy Fallon. Series premiere Tuesday on NBC.

0:33Good Morning Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, buy now, pay later loans are coming to credit scores, so cherish that 800 while it lasts. Then a tsunami of job applications has hit LinkedIn, a tsunami that AI created, but might also be able to fix. It's Tuesday, June 24th. Let's ride.

0:55Look, we all know your iPhone takes a pretty good picture, but I'm going to have to raise you the Vera C. Rubin Observatory. This cutting edge telescope years in the making released its first images of deep space yesterday, and they were pretty dang epic considering the observatory contains the world's most powerful digital camera with 67 times more megapixels than your iPhone 16 Pro and a resolution so high that it could capture a golf ball on the moon and requires 400 Ultra HD TV screens to show a single image. Astronomers have been waiting a long time for this camera to come online because it's going to provide a transformational snapshot of space as humanity has never seen it before.

1:37That could include discovering a potential ninth planet in our solar system or, more urgently, detecting asteroids that could smash into Earth and wipe us out. In all, Vera Rubin could increase the number of known objects in the solar system by a factor of 10. The Wall Street Journal described it as a celestial flipbook that would capture 38 billion objects. It is so cool. It's already gotten to work, too, within 10 hours of turning it on. Found 2 ,100 new asteroids. Usually we ID about 20 ,000 a year or so off to a flying start. But I also want to call out why it's located high in the Andes Mountains in Chile.

2:11The BBC put it well. It's very high, it's very dry, and it's very dark. Darkness is so important for a telescope to work properly that you're not even allowed to use full beam headlights on the bus ride up to the mountain. So, Neil, if a cost-bus ride is what it takes to find some aliens, then I think that's a pretty worthy trade. Now a word from our sponsor, Domain Money. One of the reasons we've loved working with Domain over the past few weeks is that they know a one-size-all approach doesn't make sense. Do Toby and I wear the same size shirt? No, I've been hitting the gym. So why should we get the same financial advice?

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3:59Like a good neighbor, State Farm is there. Okay, let's quickly get you caught up with the latest events in the Middle East and the market reaction. A ceasefire between Israel and Iran announced by President Trump last night appears precarious after Israel accused Iran of launching two missiles at it three hours after the agreement went into effect. Israel has vowed to strike back against Tehran, while Iran denied that it fired missiles toward Israel. The flare-up came after a whirlwind day in which Iran retaliated against the U.S.'s weakened attacks against its nuclear sites, sending missiles toward an American airbase in Qatar.

4:34This was seen as an attempt to de-escalate the situation as the attack was telegraphed well beforehand to the U.S. and Qatar and no casualties were reported. And Toby, investors clearly breathed a sigh of relief. Yeah, they were certainly happy to see a de-escalation. Stocks had a muted day overall yesterday, but finished in the green while futures are slightly up this morning. Oil prices have also fallen about 5 % since the proposed ceasefire was announced. Oil is now trading at its lowest point in two weeks. So it's pared back all the gains that it has since the conflict broke out. So if this ceasefire holds, which is still an if at this point, it will be met positively by markets.

5:14OK, moving on. Burrito loans are coming to your credit score. Fair Isaac Corp, or FICO, which creates the most popular credit score in the U.S., said yesterday that it would incorporate buy now, pay later loans into its new models. the first time it's ever introduced a score to account for a type of loan. The goal is to solve one of the biggest challenges that's emerged from the explosion of buy now, pay later services, a lack of visibility. Analysts have warned that billions of dollars of so-called phantom debt are putting financial stress on consumers who chop up purchases into four easy installments.

5:48But there's no real understanding of the scale of the problem since those don't appear on credit reports. Now, FICO hopes to shine a flashlight into the murky debt forest with two new credit scoring models coming later this year that banks and credit card companies can use to evaluate consumers' credit worthiness. Toby, I guess you could call being factored into credit reports, buy now, pay later's bar mitzvah. It's all grown up and ready to be taken seriously. And the numbers back it up. The value of buy now, pay later transactions in the U.S. is expected to reach$108 billion this year, up from$94 billion a year ago.

6:21Yeah, and thank goodness because the visibility into these loans have just been so, so murky. A bank rate survey in May found that nearly half of all BNPL users experienced at least one money issue, overspending topped the list. So we're not really sure how much people are spending on these platforms. I mean, the platforms themselves do give us some data. Last month, Klarna reported that its losses from defaulted loans were on the rise. They've climbed to about 0.5 % as a share of their total lending, which doesn't sound like much. But again, the pie is growing here. So you do need insight into how people are, you know, expensing their burritos, if they're keeping up with their payments, and if this really is a black hole that needs to have a flashlight shine on it because you do need to know how people are spending their money.

7:07Now, the question is, will this be a credit builder or a credit buster? because it's not all necessarily bad if people are taking out these really they're really short term loans. It's very different than a credit card. But if you're just taking out a short term loan, paying it back quickly, will that increase your credit score? And potentially it could welcome a bunch of new people into the credit system and help them build credit, because often people who use buy now, pay later services don't necessarily have a credit card and they're using these services instead. FICO actually ran a study on this.

7:38They simulated the credit score impact of Buy Now, Pay Later's loans. And the results may surprise you. They showed that the majority of consumers with five or more BNPL loans from a firm would experience higher scores or no score changes at all. Now, one of the reasons, one of the main reasons that Buy Now, Pay Later services had withheld all this data from credit reporting agencies is that they feared that it would ding credit scores. But here's FICO saying, actually, it helps boost them. And what is interesting about just the whole credit industry in general is that it kind of works like iPhone releases.

8:12So FICO is obviously a very widely used by lenders. It's kind of like the gold standard. They say that 90 % of people use its scores when making lending decisions. That being said, though, a lot of them are using older models because they've set everything up to support FICO 6. But now FICO is actually onto FICO score 10, FICO score 10T. Those are the most updated ones. But a lot of people are still on FICO score 8, which was released back in 2009. So they think this is like adding a cool new camera to an iPhone. Bringing in that buy now, pay later data is something that will make lenders upgrade their systems and buy the new iPhone in this case.

8:51So it is just fascinating that they've been trying to get people up to date, but they've been slow to adopt new models. This might actually push a lot of lenders over the finish line. Hims and Hers has been a Wall Street favorite for most of this year, but the telehealth company came tumbling down yesterday after news that its partnership with Novo Nordisk was hitting the fritz. In a press release, the maker of Wagovi said it was cutting ties with him and hers after less than two months, accusing the company of using deceptive marketing to promote its own compounded weight loss drugs. The split marks the end of a rocky relationship.

9:27As demand surged for weight loss medications like Ozempic and Wagovi, supply shortage opened up the door for companies like HIMSS to prescribe cheaper compounded alternatives, leading to a major stock rally. But that rally faded when the shortage ended and compounding restrictions kicked in. Shares jumped once again, though, when Novo Nordisk announced that it would begin offering Wigobi through HIMSS and HERS to expand access, a rally which has faded once more, not that the relationship has crumbled. The big issue with HIMSS is that we had an agreement that the mass compounding would stop, and unfortunately, it didn't stop, a vice president at Novo Nordisk told Bloomberg.

10:03But there's two sides to every story, and Hims and Her's fired back saying that there are cases when custom compounded versions are needed for medical reasons. Regardless of who's right, the market reaction was brutal. Hims and Her's shares plunged 34 % yesterday, Neil, as investors digested the fallout. What a roller coaster here. They started this partnership in late April, and Novo Nordisk is looking for more people to get on Wagovi. That is their main objective here because they are locked in a very intense race with Eli Lilly, who has Manjaro and Zetbound. And they see these telehealth companies like Kim's and hers.

10:37And there's a bunch of these out there that are have a direct relationship with consumers. And so they looked at these companies and said, wow, if we get our products on their sites, on their marketplaces, perhaps we could convert these people from using compounded versions. And maybe we'll brand those those versions as maybe unsafe because they are not FDA regulated. And maybe we can convert them to Wiggovi, to our brand name. That was the idea here. But it's fallen apart as they accuse hims and hers of sort of still selling mass compounded versions, even though the law states that they cancel.

11:12We'll see whether this maybe balloons into more significant legal action. And the way that HIMSS and HERG is kind of getting around the terms of that partnership is that they are offering compounded shots to a very limited group of patients because they need so-called personalized dosage of the medication. And that is technically allowed under FDA rules. So that is why they didn't change their business model as much as Novo Nordisk was. They were trying to have their cake and eat it, too, because they were like, we want to still have this revenue stream from selling actual Wagovi. But we also like having our little compounded business on the side.

11:45That just didn't sit well with Novo Nordisk, who, by the way, has been going through it. Since it became the most valuable company in Europe last year, it's fallen about 20 percent. It just cycled through a CEO. It still hasn't named a successor there. So its stock fell about 5 percent yesterday as well, too. So this wasn't great news because you're right. It did want that excess, that extra distribution channel. Right. They lost a sales channel. So analysts expect them to go on the hunt for others like him's and hers. But overall, just a pretty disastrous partnership that shows the precariousness of the compounded weight loss industry right now.

12:22Applying to jobs has always been frustrating and competitive. But in the age of AI, you could be going up against someone who doesn't even exist. AI sludge has taken over the job search, declared the New York Times, and it brought some wild receipts from LinkedIn to back it up. In the past year, the number of applications submitted on LinkedIn has spiked more than 45 % to 11 ,000 applications sent in every single minute, fueled by generative AI tools, making it less work than ever to apply. Some candidates are using ChatGPT to create a resume containing all the keywords from a job description, and all that takes is a one-sentence prompt.

12:59Other, more adventurous types are employing more freewheeling AI agents who will scour the platform for relevant jobs and apply automatically for you. And even others like North Korean IT criminal networks are inventing fake avatar people to apply for remote jobs. And this is a problem that's only getting worse. By 2028, one in four job applicants could be completely made up, according to analysis from Gartner. Toby, this is a migraine-inducing development for job seekers who are asking, how can I possibly stand out in the sea of applicants? And it's also a huge concern for the people doing the hiring who are asking, how can I possibly sift through the sea of applications to find the right person?

13:36the system seems broken. Yeah, the New York Times article focused on one fully remote role at a tech company that only required three years of experience. And it got an insane amount of applications. After 12 hours, 400 applications had been submitted. By 24 hours, there were 600. And then just a few days later, the number was sitting at 1 ,200 applications. And the hiring manager was like, I'm three months into this, and I'm still sorting through all these applications. And they all start to look a little bit the same, because if they are AI-powered, which a lot of them are, it becomes this sea of sameness because they're all using the same keywords.

14:10They're all using the same prompt. So you know what hiring managers do? They go to AI to help them kind of sort through the deluge of applications they just received, see who is really qualified by probably doing some keyword matching. So right now it's kind of AI talking to AI in a lot of cases, which is just not a good outcome for anyone involved. Yeah. The solution here seems to be somehow more technology. Chipotle has introduced an AI chatbot screening and schedule tool named, of course, Avocado with a space in between them. I don't see how that's relevant to recruiting at all, but they say it's reduced hiring time by 75%.

14:47HireVue is another booming platform that conducts AI video interviews. And LinkedIn also is addressing the problem, or at least trying to address the problem by introducing its own AI agent that can help candidates and recruiters do things like write follow-up messages, conduct screening chats, suggest top applicants, and search for potential hires. So it seems like the only solution here, at least maybe they're not thinking creatively enough, is layer even more AI onto the system, but you just think that it will hit a breaking point and all this tech will go away and we get back to where we were.

15:19Yeah, but maybe the law has something to say about this too, because there's this IT professional in North Carolina who said he applied for more than 100 jobs from 2017 and 2019, he got rejected by every single one of them. And now he's going after those application tracking systems saying that they potentially discriminate against him either for his age or his race. So that puts these sellers of recruiting software on the back foot by saying that, hey, if our algorithms are screening people out unfairly, that might cause them to use them less. So that is potential another angle to this AI hiring rush.

15:54What if these systems are being discriminatory. It can lead certain people to be shut out from opportunities. Let's take a quick break because we have Toby's Trends coming right up. Raise the runners. Raise the sails. Raise the sails. Captain, an unidentified ship is approaching. Over. Roger. Wait, is that an enterprise sales solution? Reach sales professionals, not professional sailors. With LinkedIn ads, you can target the right people by industry, job title, and more. Start converting your B2B audience today. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started today at linkedin.com slash campaign.

16:34Terms and conditions apply. The Jack Welch Management Institute at Strayer University helps you go from I know the way to I've arrived with our top 10 ranked online MBA. Gain skills you can learn today and apply tomorrow. Get ready to go from make it happen to made it happen and keep striving. Visit Strayer.edu slash Jack Welch MBA to learn more. Strayer University is certified to operate in Virginia by Shev and as many campuses, including at 2121 15th Street North in Arlington, Virginia. Scrolling on X the other day, I came across a post from Chamath Palihapitiya, a venture capitalist and one quarter of the popular All In podcast.

17:14He asked his 1.8 million followers a simple question. Should I launch a SPAC? 50 ,000 responses later, the answer was a resounding no. And yet Chamath, the self-proclaimed king of SPACs, is ignoring that finding and once again going down the SPAC path, which is what I want to talk about on today's edition of Toby's Trends. A SPAC stands for Special Purpose Acquisition Company, which is a type of vehicle for bringing businesses to the public markets. A SPAC lists on a stock exchange as a shell company that investors can pump money into. And then the idea is to take that capital and find a real business to merge with or acquire.

17:50They've existed on U.S. stock markets for over three decades now, but had a heyday during the pandemic, with everyone from Virgin Galactic to Coinbase using them to make their public debuts. Soon, those SPACs were overrun by speculators pushing shell companies to astronomical valuations that often collapse if or when they eventually merge with a business. But amidst a historically slow IPO market, there is a hint of SPAC mania creeping back into markets. Along with Chamath cheesing a return, Bitcoin evangelist Anthony Pompliano recently raised more than$750 million with brands to create a publicly traded Bitcoin treasury company.

18:26And the industry's annual conference was also decidedly more active than in years past as banks and private investors are beginning to reconsider the much maligned asset class. So, Neil, all these headlines have me wondering one thing on today's Toby's Trends. are SPACs back? They are somewhat back. IPOs of SPACs have raised$11.2 billion so far this year. That is up from$1.8 billion in the same period a year ago. So there's certainly a tick up. We are still far from the heights, the excesses, one might say, of 2021 when$172 billion was raised via SPAC IPOs, and everyone from A-Rod to Jay-Z was getting in on it.

19:10So I think what you're seeing is that there's been a sea change in attitude toward SPACs, and probably that comes straight from the top. It comes from President Trump and this overall deregulation agenda, where the SEC is just taking a lot more laissez-faire approach, thank you, AP Euro, to the markets, to regulating financial markets. Seems like some of the banks that have pulled back three years ago over reputational risk and regulatory scrutiny are coming back in, or at least tiptoeing back in. Yeah, and probably the best way to see this revival is you go back to mid-2022 when the SPAC bubble totally burst, and that was when the industry's annual conference I talked about had Stormy Daniels as like a headline speaker where everyone was just kind of like, I don't know if we want to be here anymore.

20:01The SPAC industry just got a really negative connotation because a lot of companies did soar up to these drastically high valuations and then collapsed as soon as a real business came in and inhabited the Shell company. But now it looks like a lot of bankers and private investors are going like, hey, actually, I do see this as an easier path towards the public markets, especially with the IPO market just being so clogged up right now. That being said, though, there are a lot of crypto companies that are flooding into the space. The Financial Times talked to one person at the conference that said a lot of people are trying to become a Bitcoin treasury company like Anthony Pompagano, like Michael Saylor's strategy has done.

20:42So that seems to be one of the chief things propelling this SPAC boom, which I don't know if that is necessarily something that reflects well on the industry again, because these are speculative companies. So it's in a good place right now, but maybe long term, we're just going through another boom and bust cycle. Perhaps. So maybe the biggest symbol that SPACs are back is that Goldman Sachs is reentering the SPAC business. They're going to start underwriting deals again after three years away. They step back in 2022 and they're stepping back in. And as the financial firms are, they have such a, they're sheeple.

21:16They have such a herd mentality. If Goldman Sachs does something, then Morgan Stanley and Citi are going to cop back in. So maybe the floodgates are open. Say that five times fast. Goldman Sachs is bringing SPACs back. There we go. Okay, let's sprint to the finish with some final headlines. Two things that are extremely hot right now, New York and nuclear power, are teaming up in what could be a potentially historic partnership. Yesterday, New York Governor Kathy Hochul told the Wall Street Journal that she directed the public utility to build a large nuclear power facility upstate, which would be the first new U.S.

21:46nuclear plant in more than 15 years. It's intended to produce at least one gigawatt of new nuclear power generation, which is enough to power about one million homes. She said, I'm going to lean into making sure that every company that wants to come to New York and everyone who wants to live here will have to never worry about reliability and affordability when it comes to their utility costs. Nuclear power is having a renaissance after decades of disinvestment in plant retirements, mainly thanks to the surge in electricity demands from AI data centers. New York wants to be the Florence. Yeah, Kathy Hochul has made this a priority since she became governor.

22:20She's had a conversation with Trump that led to him lifting a stop work order on this big offshore wind project. So that was a big win for her. And this all actually traces back to the closure of another nuclear power plant that was 40 miles upriver from Manhattan, the India Point nuclear plant. When that was closed, that was 25 % of all the electricity needs for New York City, poof, gone, just like that. So in its absence, you know, fossil fuels have stepped in to make up the difference. So Kathy Hochul has obviously made this a priority. She wants to bring nuclear back to New York City because of what was lost, you know, just a few years ago.

22:57Zillow has a database of 160 million properties, but it wants more, much to the annoyance of industry competitors. In a suit filed in New York federal court yesterday, the real estate brokerage Compass claimed that Zillow was trying to maintain an illegal monopoly over online home listings. In an effort to pull some views away from Zillow, which gets about 227 million unique visitors a month, Compass launched a program called Private Exclusives, which features about 7 ,000 listings available only to Compass agents and buyers. But Zillow didn't like that and in April announced that any home that was put up for sale but not available on Zillow within 24 hours would be permanently banned from the site.

23:37Now Compass is pushing back on what it sees as anti-competitive practices, a.k.a. the Zillow ban. Neil, this is contentious because Compass thinks that no one company should have so much power over the real estate market. But Zillow doesn't think that any company should hoard listings either. It's contentious also because the online real estate listing space is pretty much all that exists now in helping people find a home. Basically, nearly 100 % of buyers report now that they use the internet in their home searches. So any company that controls that marketplace will be the destination that people go to.