AI Safety Fears, Fed Rate Hikes, & Airbnb's $250M Housing Fund

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0:37That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed sponsored jobs. You are tuning in to the Rich Habits Radar, our Friday episode of the Rich Habits podcast, where every Friday morning we're coming at you with the biggest headlines impacting you and your money. My name's Austin Hankwitz. As always, I'm joined by my incredible co-host, Robert Croak. And the three things sitting at the top of our Rich Habits radar this week include the Federal Reserve hiking interest rates for the first time in three years, the AI safety concerns that were raised over the weekend, and Airbnb fronting$250 million to help make housing more affordable for everyday Americans.

1:22That'll be a fun one to dig into. So, Robert, let's jump to our first story. So the Federal Reserve just raised interest rates for the first time in more than three years, and the most revealing part of the week wasn't the vote itself. It was everything that happened around it. On Wednesday, the Federal Open Market Committee, the FOMC, voted unanimously 12 to 0 to lift the federal funds rate at a quarter point to a target range of 3.75 % to 4%. That's the first rate hike in three years. Wors described it in his own language as removing a dose of accommodation. Fed speak for stimulus, which is a telling phrase because it suggests officials don't even think current rates are restraining the economy even after just raising them.

2:10Now, as we kind of think about the scale of what's really taking place underneath the hood, 16 of 18 FOMC officials penciled in at least one more rate hike later this year in 2026, with four of them seeing two more rate hikes between now and the end of the year. Compare that back to July when three officials actually dissented in favor of hiking while the committee held steady. Or back in June, Kevin Warsh had his first meeting as chair when the dot plot showed a committee clearly split on whether hikes were even needed. This time, Robert, it was a unanimous decision 12 to 0. Michael Gapin, chief U.S.

2:50economist at Morgan Stanley, revised his forecast up to three total hikes for the cycle. and put it bluntly, if you don't even think you're restrictive and oil isn't going anywhere, you've got some work to do. We definitely have some work to do, Robert. Kevin Warsh on stage named the actual driver of this being geopolitics, his word for the Iran war and the energy shock that it has caused. He's quoted saying there's no hiding from hotspots around the world. Earlier this year, several officials figured that the energy shock would fade just like the tariff shock did last year, but it hasn't. Crude oil climbed back above$100 a barrel.

3:28Diesel and refined products are up even further than that. I think I saw jet fuel, Robert, is up 90 percent year over year. And James Eaglehoff, the chief U.S. economist at BNP Paribas, said officials have, and I quote, reached the acceptance stage of grief on there being a bit of a moderate but persistent inflation problem. Yeah, President Trump picked Warsh after spending months attacking his predecessor, Jerome Powell, for not cutting rates fast enough. And Trump openly said Wednesday night he'd spoken to Warsh right before the vote. I talked to Kevin and I said, you might as well vote with the board because it's not going to matter.

4:09Do what you want. On Truth Social, after the decision, Trump wrote that interest rates should be 1%. That'd be great if we had 1 % interest rates, but Warsh, for his part, used his press conference to draw a line in public between him and the president. He went on stage and said, part of the independence of the Federal Reserve is we stay in our lane. Independence is a two-way street. That's about as close as a sitting Fed chair gets to publicly pushing back on the president, who just called him the night before of a rate vote. So Robert, the Fed just raised interest rates for the first time in over three years.

4:43What does this mean for our listeners and their money? It means a Fed chair willing to hike rates the same week the president publicly tells him it won't matter is a Fed that just bought itself real credibility. Incredible Feds get more room to keep hiking without spooking the markets, which is exactly what happened here as yields fell. So for your portfolio, that's a signal to stop betting on rate cuts anytime soon. Markets are now pricing nearly even odds of another hike or a hold in October, not a cut. So rate sensitive names, anything carrying heavy debt, gross stocks trading on future earnings, real estate are the ones that keep absorbing the pressure the longest and what you should be looking out for.

5:25And the bigger takeaway from my perspective is that for months, the markets have questioned whether the Federal Reserve would actually follow through on this hawkish talk, especially with a president that's leaning on it so heavily in the public purview. This week, Kevin Warsh answered that question with a unanimous vote in a direct on-camera rebuttal to the president who appointed him. And the bond market's reaction, Robert, tells you that Wall Street now believes Kevin is legit. Yeah, Austin, great takeaway. We always say don't fight the Fed. And I'm actually kind of excited and glad that Warsh held his ground and showed that the Fed can do their job correctly, even though it was against internal pressure from Trump.

6:08So we'll hold on to our hats, see what happens. But I'm excited for the future of the markets. And we've seen already as we film this that we're pretty stable right now. Absolutely. Let's now jump to our second story. On Saturday, Anthropix CEO Dario Amadei called for the industry to pace the development of cutting edge AI. Within days, OpenAI's Sam Altman and ex-AI's Elon Musk, two guys that hate each other, right? They were in that lawsuit, Robert. They both chimed in publicly and said, yeah, we kind of agree with Dario on this one. Dario also laid out his reasoning about it in a blog post. And in that post, he says, I believe that if slowing down bought us even an extra year or two before models reach critical levels of capability, then we use that time to advance alignment.

6:52We could greatly reduce the risk that something goes seriously wrong. Altman posted on X that the pace of progress could go very badly and that humans could lose control of the future of AI, adding no amount of American competitive pressure should justify recklessness. And this didn't come out of nowhere. And we all saw Jacob Coxon, a researcher who recently left Anthropic, said he was quitting the industry entirely over fears that lab are racing to build systems that won't be able to be controlled. I didn't really like that one. I felt it was a concerted effort to really sabotage AI growth and just throw a wrench in all of the cool things that are happening.

7:33But we'll keep an eye on that. Well, Robert, Jensen Wong would agree with you for sure. He is on the optimistic side of it all, but it kind of has to be right for his shareholders. OpenAI's own AI agents had separately hacked into two different platforms. Again, this happened about maybe three or four weeks ago. hugging face and Ruby gems and several current Anthropic employees have reportedly said that in Dario's own words that AI systems could end humanity, I quote, as early as within the decade. Now that's the backdrop that got three people who all compete for the same money, right? These are all competitors.

8:08They all said in public, essentially the same thing at the same time, like, yeah, maybe we should slow down a little bit. I'd love to know who pulled that lever and said, all right, guys, we're going to put the brakes on everything a little bit here, and we need your help. But Wall Street's take was simple. Even if AI investment slows, Microsoft and its peers stay wildly profitable. Why suppliers like Micron and Intel need new orders just to keep their growth story alive. Trump made his own position pretty public. He took it to Truth Social where he wrote, there is a sick conspiracy going on against AI and data centers and the only one that is happy about it is China and called safety warnings a hoax that could drive them into oblivion and bankruptcy.

8:50He then called NVIDIA's CEO Jensen Wong live on stage at a Los Angeles tech conference and was quoted saying, the robots will not be taking over, the AI will not be taking over, it's all a hoax. Jensen Wong's response was pretty abrupt as well. That is right, we are not going to let that happen, sir. Vice President J.D. Vance also added his own skepticism, calling the industry's request for regulation a Trojan horse. Yeah, I remain bullish. And even with all that noise, one trade made complete sense. Cybersecurity. Austin's been talking about it forever and telling people where to go and how to invest in all this.

9:28And AI researchers are mostly worried about the technology's threat to cyber defense specifically and the market price that fear immediately. CrowdStrike was the S &P 500's single best performer that Monday, up 14%. Palo Alto Networks, Fortinet, and ServiceNow also all posted big gains as well. On the other side, chip and hardware suppliers got hit. The Philadelphia Semiconductor Index dropped 5.9 % on the news, its worst day since July, with Corning, Teradyne, and Coherent all down at least 12%. Worth noting, the Semiconductor Index is still up over 100 % for the year, So this reads more like investors taking profits after some names tripled in months than a real reversal in the AI conviction.

10:15So a lot of digest here, but Austin, walk our listeners through, what does this mean for you and your money? I love that you had mentioned cybersecurity. When we were writing this episode and building our outline, Robert, I was, you know, I looked up my position in CrowdStrike and I'm up 858 % on my CrowdStrike position. I just, cybersecurity is here to stay. CrowdStrike, Palo Alto Networks, Fortinet. There's so many of them. They're so incredible. Cloudflare is another great one. Yeah. Own cybersecurity. And if you have a wallstreetfavorites.com subscription, you will see that over on Wall Street Favorites, all of these names still have great upside attached to them.

10:58Wall Street loves the names. We think that they are correct. And Robert, the big takeaway here is that when people that are building the world's most powerful technology all agree in in public that it might be dangerous, we have to slow down, the market's answer was to buy the dip and buy some insurance. And I think that just tells you that this AI trade is durable. And in my opinion, it's a lot more on the back of Anthropic and OpenAI to make this revenue and to show this demand, as well as this new Muse agent that just came out with Meta versus trying to, like, figure out the perfect things with the semiconductors and some of the other things.

11:34I really think it has less to do about the public perspective of AI safety and more of can Anthropic and OpenAI continue to generate hundreds of billions of dollars of revenue. Yeah, I think, you know, the whole purpose of the Rich Habits podcast and the Rich Habits Network is to educate people and prepare them for the market conditions no matter what they are. And that's why I'm glad you brought up Wall Street favorites, because I think it's one of the best tools on the Internet to really stay ahead of things and understand what Wall Street is putting their money toward and what they think about these convictions we talk about in these secular growth trends.

12:08So good call out there. But Austin, before we jump into our third story, support for the show comes from VCX, the public ticker for private tech. For generations, American companies have moved the world forward through their ingenuity and determination. And for generations, everyday Americans could be a part of that journey through perhaps the greatest innovation of all, the U.S. stock market. It didn't matter whether you were a factory worker in Detroit or a farmer in Omaha. Anyone can own a piece of the great American companies. But now that has changed, Robert. Today, our most innovative companies are staying private rather than going public.

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13:20This and other information can be found in the fund's prospectus at GetVCX.com. This is a paid sponsorship. So, Robert, let's roll into our third story here, which is Airbnb fronting a quarter billion dollars to help everyday Americans have more affordable housing. Kick us off. So for years, we all know Airbnb has been the villain in America's housing affordability story, blamed by city council, state lawmakers, and just about every local news segment on rent for tying up homes that could otherwise house full-time residents. And this week, CEO Brian Chesky decided to stop playing defense and start writing checks instead.

14:01And I'm excited about this one. So take it away. Yeah, Airbnb is committing$250 million to a new program they're calling the Housing Accelerator, providing what's known as gap financing. It's the money that fills the hole between what a developer can borrow at market rates and what a project actually costs to build, especially when rents on the affordable units cannot be raised. They can't go higher and higher and higher to cover that gap. So priority now goes to affordability and mixed income housing, which is a lot better than, you know, Robert, you're in St. Pete right now. All that's being built in St.

14:41Pete are these luxury condos. Yeah, definitely. in the first project, so roughly 200 affordable units in Austin, Texas, is sitting on a 20-acre site that used to be a Home Depot and a car dealership that's been sitting vacant for a decade after the city bought it. An Airbnb-specific check for that project is$6.4 million. Chesky didn't dress up the motive, quote, I've just lived in the crosshairs of the number one political issue in most major cities in America. And I can't stare at the problem for much longer without Airbnb trying to offer up some solutions. I love that. Let's get more CEOs that want to offer up solutions for housing affordability.

15:24And let's also now talk through the scale of the math. Airbnb's individual investments will typically cover around 10 % of a project's total capital, which sounds small on paper, but Daniel Hornung, the former Biden administration housing official who's now running this new program for Airbnb, says that that 10 % gap is usually exactly what is needed to unlock the other 90 % and get a stalled deal like the one here that's been sitting on 20 acres in Austin, Texas for a decade now, moving again. I'm a little skeptical because I looked it up when we were writing this, And Airbnb is sitting on$12 billion in cash, and they're willing to give up$250 million towards this problem.

16:10So I think it's a great start, but I'd love to see them do more and commit more around the country. Because if you look at it, over a decade, Airbnb expects its$250 million to translate into$5 billion of actual construction capital once recouped funds get reinvested into new projects. a 20 times multiplier if it works as designed. And the timing isn't random on this, Austin. Rising interest rates are precisely why these deals stopped penciling out in the first place. And Sean Donovan, HUD Secretary under Obama and now CEO of Enterprise Community Partners, laid out the mechanism plainly, quote, you're not going to be able to charge more for the rents because it's affordable housing.

16:56So every time interest rates go up, It subtracts the amount of market rate capital that you're able to attract for the deal. It then creates gaps you need to fill somewhere else. That is the exact same rate pressure we were just talking about earlier, Robert. It's not just squeezing home builders selling half a million dollar houses. It's squeezing the affordable and mixed income projects in a city that, you know, Austin, Texas needs built more of. Yeah, here's the number puts this all in perspective. Estimates of the total U.S. housing shortage range from 2 million to 10 million units, according to Donovan.

17:30And even at the most optimistic 20 times multiplier, Airbnb's$5 billion in eventual capital is a rounding error against the shortage that could require tens of billions of dollars, maybe more, to close that gap. alongside the capital the company is launching an open source data set tracking housing policy nationwide and a five million dollar competition for tech that simplifies actually building homes betting that zoning and permitting reform matters as much as the money and i really like that part of this more than anything because everyone i talk to around the country that are builders that are in real estate like myself all struggle with the local zoning and permitting.

18:15In some areas, Austin take up to a year, 18 months to get the zoning approved and finished, and they need to fix that. We live in a world with a lot of technology. It should never take a year to 18 months to get that done. Completely agree. It should never take that long. And, you know, I'll give Austin, Texas their flowers. You know, rents have gone down dramatically in Austin, Texas. The median house has gone down dramatically in Austin, Texas, because they have done such a good job of getting things approved and built so quickly. So yeah, I'd be curious to see how this quarter billion from Airbnb gets dispersed elsewhere around the country, places that really need affordable housing and what's really going to get built here.

18:56And I'm optimistic. I'm always optimistic when someone says, and I think it's great, right? Let's think about this for a second, Robert. There's a company out there that reports to shareholders. It doesn't report to the everyday person. It doesn't report to the government. Like this is a government problem. Like, why isn't Trump doing something? Why didn't Biden do something? Why didn't Obama do something like this is like affordable housing is it's not on the backs of Airbnb to try and solve. They're saying, cool, we'll come up with a quarter billion because we do want to solve this problem. And we're always, you know, people blame us for it.

19:26Like, okay, blame us. Like, but we're putting solutions. We're not just, you know, we're coming to the table with a solution to try and help this problem. What's everyone else doing? And maybe there's a lot of stuff that's going on behind the scenes that I don't see, but I respect it when people say, sure, there's a problem. Here's our solution. What's yours? And their solution, it's a quarter billion dollars. I mean, you remember vividly, we talked about this at length in the Rich Habits Network, when I was trying to do the tiny home affordable housing community in Toledo, Ohio. There was a perfect site that would hold 90 homes and I spent a year in red tape and couldn't get it pushed through and that really speaks volumes there needs to be more government intervention to get this done and that starts at the base level of understanding what is needed and how to fix the problem so let's talk about this 250 million dollar program I don't think it's going to move Airbnb's earnings in any material way It's a political and reputational hedge, but not a growth driver.

20:24But it does something else that's definitely worth watching. It takes the regulatory ammunition away from city councils, weighing short-term rental restrictions, which is a real tail risk for a stock trading at a premium multiple that assumes those restrictions stay limited. And the bigger takeaway for me, Austin, is the same rising rates that just cut Lennar's profits in half are also the reason affordable housing deals are falling apart in cities all across America. And it took the company most often blamed for the housing crisis to point out that the real culprit driving today's gap isn't Airbnb listings.

21:02It's the cost of capital itself. That cost of capital, Robert, is 5%. 5%. Why would someone go invest in the stock market and earn 7.5 % when they can go get it for free from the government at 5 % and not take on any equity risk? And I think a lot of people are starting to say, wait a second, I need to go buy this. I go invest in real estate, make this money, go do whatever over here, but I could get 5 % locked down over here. A lot of people are saying that. A lot of same people are saying, no, I still want the real estate. My real estate deal is getting blown up because I used to be able to borrow money at 2.5 % 3%.

21:34Now it's, I mean, I'm getting quoted on my mortgage here, Robert, at 6.5%, 7.5%. It's crazy right now. Yeah, but the big takeaway too, and I love that point, is the fact that a lot of people never really consider, unless they're really trained professionals, to carry cost of capital when you have these delays because of the municipalities. So you think about it, you raise $2 million,$5 million for a project, then you have a year's worth of delays between permitting and zoning and getting up and running. And meanwhile, the clock is running on that ROI of the capital that you borrowed from investors.

22:09And it just makes it really difficult to pencil for anything in real estate because of that. Yep. Yep. No, I like that breakdown, Robert. Let's continue to break down stories inside of our radar points. I've got a couple of radar points. Robert's got a couple as well. Sort of show and tell here. Things that I think are really interesting. Things Robert thinks are interesting. I'll take a first stab at it. OpenAI is already in talks with investors at raising more money here at a$1.2 trillion valuation. So they've held these discussions for a new funding round at that$1.2 trillion, and this just came after they released ChatGPT6, Astra.

22:45That$1.2 trillion valuation is up from$852 billion just back in March when the company raised$122 billion from investors including NVIDIA, Amazon, and SoftBank. We talked about it here on the podcast. Now, since then, OpenAI says they've crossed a billion active users, 200 million businesses, strong growth for Kodaks. Revenue was up to$6.7 billion in the quarter. That makes up June, up from$5.7 billion a quarter before. But operating margins, Robert, actually fell a little bit, pushing profitability further out into the future. CEO Sam Altman said the company's long-anticipated IPO is now expected in 2027, no longer here in 2026, after the AI safety concerns that bubbled up over the last couple of weeks.

23:40So the same week that Sam Altman is publicly agreeing that AI might be dangerous enough to slow things down, his own company is shopping at a big valuation bump to make OpenAI now worth more than Walmart, America's largest retailer by market cap. So it's crazy to see just how fast this company is growing and how he's being a little thoughtful about what to say here. Got to raise money over here. I should look good if I agree about the AI safety stuff. He's a smart cookie. Now this one's got me excited, Robert. United Airlines, they have turned the middle seat into a sports bar. Hear me out. United Airlines announced a deal with Dish Network this week to stream live NFL and college football games across ABC, CBS, NBC, Fox, FS1, ESPN, ESPN2, NFL Network, all of them straight to the backseat screens on more than 200 of the Starlink-equipped planes running every weekend now, Robert, through Super Bowl Sunday.

24:43United Airlines has roughly 525 of their 1 ,800 mainline and regional aircrafts right now equipped with Starlink as of this month, targeting a thousand planes by the end of the year and all of the planes by the end of 2027. That is an awesome, awesome place to be, especially when you compare it, you know, to the Deltas and the Jet Blues of the world that are still going with Amazon's Leo satellite network. So Wall Street Favorites, I looked up United Airlines on wallstreetfavorites.com. It's showing a 50 % upside here in the stock. Over 41 different analysts are covering it, trading at about 100 bucks a share.

25:20The biggest gap between current stock price and analyst upside of any airline company that's tracked on WallStreetFavorites.com. So I thought that was a great call out. I love this as a catalyst. We'll have to keep the stock in our purview here. And the last thing I want to talk about is, you know, Robert, earlier this year, we saw what a lot of people called the SaaSpocalypse. OpenClaw came out, you know, coding agents, all these cool tools. I, you know, I have an open claw and everyone realized, wait a second, I can go code any application I want. I don't need to use the applications that I'm paying for at an enterprise level, like Salesforce, like ServiceNow, like Workday, right?

26:02I can go make my own applications. Well, CEO Mark Benioff of Salesforce had something to say about that. Salesforce told their investors at Dreamforce this week that they expect annual revenues to exceed$63 billion in 2030. He's quoted saying, our relevance has never been higher. Our ability to walk up to any customer now and show them a piece of technology that can radically transform their company very, very rapidly is unprecedented. So if you're like us and you've been dollar cost averaging into the sales forces and the service nows of the world, and you knew the SaaSpocalypse was overblown and wasn't really a thing, congratulations.

26:42You're definitely in the green now. I love these radar points today because when you think of open AI, you know, I just feel they're pushing back the IPO because they've got to, you know, open the curtains to all their earnings and their books and everything to be able to achieve that IPO. And there might be some wrinkles behind the curtains we don't know about yet. But I also really like the fact that you mentioned the overblown SaaSpocalypse because let's face it, AI is here to stay. Everything is getting built out, but there are still millions and millions of people. All of these large companies are playing catch up to the people that are building in AI in real time every single day.