Ed
Appearances
All-In with Chamath, Jason, Sacks & Friedberg
Biden chaos, Soft landing secured? AI sentiment turns bearish, French elections
Wait, hold on a second.
All-In with Chamath, Jason, Sacks & Friedberg
Biden chaos, Soft landing secured? AI sentiment turns bearish, French elections
Wait, no, no, no, no, no. No, wait a minute. Ed, please. A little respect here, please. Every year around the president's physical examination, he sees a neurologist. That's three times, right? So I am telling you that he has seen a neurologist three times while he has been in this presidency. So that is answering that question. No, it's not. No, it is.
All-In with Chamath, Jason, Sacks & Friedberg
Biden chaos, Soft landing secured? AI sentiment turns bearish, French elections
But I just, I also said to you, Ed, I also said to you, for security reasons, we cannot share names.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Are you going to compromise?
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
I just want to make it very clear. I'm not calling for an attack on Ari Emanuel. I've heard that this guy is an absolute bruiser attack dog. He can take anyone down. So I just want to make it publicly clear on the podcast. I have no beef with Ari Emanuel. It's only Scott who wants to pick a fight.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Let's talk about Nike, which has hit a five-year low as of its last earnings call. The market cap is now below $100 billion. Just to put that in context, that means that Nike is now almost three times less valuable than Hermes. And I use that example because just a few years ago, the opposite was true. Nike was almost three times more valuable. So this is a stunning drop.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Much of it a result of these tariffs. Also, the business at large. Scott, your reactions to Nike, their earnings, and the fact that the stock has plummeted five-year low.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Yeah, I mean, I think just to look at the earnings, I mean, it was a massive stock drop. It was around 7% or 8% in a day. It's interesting because the actual results from the previous quarter were not that bad. They beat on revenue. They beat on EPS. The big problem for Wall Street and for investors was the guidance. And this is important because you might remember
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
back when they switched the CEO, they brought in this new guy, Elliot Hill, Nike decided and they publicly announced that they were going to pause their reporting on guidance. And that was sort of a big deal that we talked about on this podcast. So they didn't report the guidance number in the 10Q itself, but they did talk about it on the call.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
And this is the part that really freaked out the market because they said that in the coming quarter, they expect that the year-on-year revenue, the sales number, will decline in, quote, the mid-teens range. So they're looking at a 14%, 15%, 16% drop on the top line. And that's both already very bad and way, way more dramatic than expected.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
And I think the question that people are asking, well, why is this happening? And the answer is what you'd expect. This is because of the tariffs. Because... out of the hundreds of suppliers and manufacturers that Nike works with, guess what? A quarter of them are in China. So they have these two choices now.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
You can either take the hit on the margin, which is going to upset people, specifically investors, or you can raise your prices, which is going to upset consumers who are already not very happy with the product assortment at the moment. And they didn't say which strategy they're going to go with. I think we could maybe expect both. Maybe they'll
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
raise prices slightly and also take a slight hit on the margin. I think what we can definitely expect, though, because they told us, is a significant decline in revenue.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Well, Claire's laughing, so clearly I don't get it.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
We'll be right back after the break for our conversation with Karsten Brzeski. If you're enjoying the show so far, be sure to give Property Market to Follow wherever you get your podcasts.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
It's been a rough week for your retirement account, your friend who imports products from China for the TikTok shop, and also Hooters. Hooters has now filed for bankruptcy, but they say they are not going anywhere.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Last year, Hooters closed dozens of restaurants because of rising food and labor costs.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Maybe in April of 2025, you're thinking, good riddance? Does the world still really need this chain of breasturants? But then we were surprised to learn of who exactly was mourning the potential loss of Hooters. Straight guys who like chicken, sure. But also a bunch of gay guys who like chicken? Check out Today Explained to find out why exactly that is, won't you?
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
I still can't put it together. Take me through it for the low IQ brain.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Welcome back. Here's our conversation with Carsten Brzeski, Global Head of Macro Research and Chief Eurozone Economist for ING, as well as Chief Economist for ING Germany. So, Carsten, we're happy to have you on today to talk about Germany, which we've been discussing a lot recently. Last week, Scott and I discussed this new defense spending package.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
We've also talked about the German stock market. And we'll get to all of that. But first, I would just like to get a general picture of what's happening in Germany. And I think a good place to start would be politics. Germany held an election last month. The Conservative Party won, but not by much. Tell us what happened in the German election.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Give us the state of play in Germany, the political situation, and what has happened since that election.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Oh, got it. Oh, you got it.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Yeah, we hear a lot about the AFD party here in America. Obviously, Elon has expressed support for this party. It's the far right party in Germany. And then you mentioned the rise of the extreme far left party in Germany. Your thoughts on what this says about the situation in Germany right now?
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Very slow this morning, clearly. How are you doing?
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
You mentioned there's five years of stagnation in Germany. And of course, last year, it happened again. The German economy shrank. I think GDP fell around 0.2%. Big picture, what has been going wrong in Germany? When you look at the economy, how it's performed compared to America in the past few years, what are the main issues that are causing that stagnation?
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Thank you. Thank you.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
You're going to join a frat. That's right. One thing I will say is that when I did the whole college tour with my mom, You don't really learn that much is what I found about the schools because you're just being inundated with all of this information and they all look great. But it was a great bonding experience to do that with my mom. I think that was my biggest takeaway. It's just a nice time.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Thank you. Thank you.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
That's nice. That's what I'm looking for. Should we bust into the headlines here?
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
You're welcome.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Apple is reportedly losing $1 billion annually on streaming. Apple TV Plus is the company's only unprofitable subscription in its very fast-growing services unit. Silver Lake is taking Endeavor private in a $25 billion deal. The newly formed entity will be called WME Group, with former Endeavor CEO Ari Emanuel serving as the executive chairman.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
This is especially relevant right now because...
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
sap which is of course the whatever you want to call it the sales force of germany is enterprise sas they just took the crown as the most valuable company in europe they just overtook nova nordisk as of this week now worth 320 billion dollars so i have the same question as scott it looks like maybe german tech is seeing a resurgence but historically it hasn't been
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Emanuel secured a nearly $174 million payout as part of the deal. And finally, Nike stock tumbled to a five-year low after the company projected a larger than anticipated revenue decline for the current quarter. Nike attributed the lower guidance to ongoing challenges, including tariffs and declining consumer confidence. Scott, let's start with your thoughts.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Carlsten, one final question from me. We've discussed many of the downside risks and the upside risks for Europe. We haven't fully gone into the tariffs. Trump has announced these reciprocal tariffs that are supposed to go into effect on April 2nd. We don't really know the details, but it should affect Europe.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Just as we wrap up here, give us a sense of what these tariffs will do to Europe, what Europe's reaction has been, and how impactful they might be.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Karsten Brzeski is the Global Head of Macro Research and Chief Eurozone Economist for ING. He previously worked at the Dutch Ministry of Finance and the European Commission. He is a 2019 JFK Memorial Policy Fellow at Harvard University and member of the Advisory Council on International Affairs for the Dutch Government and Parliament. Karsten, this was very enlightening.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Apple TV Plus is reportedly losing $1 billion annually on streaming.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Really, really glad you could join us today. Thank you for your time.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profity Markets from the Vox Media Podcast Network.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Yeah, I think that's the main point here. It actually goes back to what we were talking about with Southwest and their bag policy and Costco with their hot dogs, the idea that this is intentionally a loss leader. They're losing a billion dollars a year. And perhaps that's worth it to them because they say, well, maybe this is going to get people to buy iPhones.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
We're going to offer three months of free Apple TV Plus if you buy an iPhone or if you buy an iPad or if you buy a Mac laptop. And I think that is the question is how many people are actually buying Apple products because they want to get three months free? of free Apple TV+. I would argue zero people are buying these devices for that.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
And I would also add on to the fact that you have iPhone sales which are flatlining at the moment. I mean, we have seen an increase in laptop sales, but I really doubt that this $1 billion year loss is paying off. And then you just look at the numbers of the platform itself. averaging around $5 billion a year on content since they launched this in 2019, but they only have 45 million subscribers.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
And you compare that to, say, Max, for example, which has 117 million subscribers, and Netflix, which has more than 300 million subscribers. So it's not a very good business. And I just doubt that the upside that you're seeing in the sales of their other devices, I'm not sure that you could justify this as a worthy loss leader in the Apple business.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
And I think what we will probably start to see is Tim Cook getting under a little bit more pressure from shareholders about these issues. And I think we'll start to see that that content budget will shrink and shrink and shrink. Let's move on to Endeavor. and this acquisition by private equity firm Silver Lake. Just a reminder, what is Endeavor?
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
A lot of people know this company as WME, which is, of course, the talent agency that was founded by Ari Emanuel. You might know who that is. He was the guy who inspired the TV show Entourage. He's sort of the star talent agent in Hollywood. And WME, they represent all of the biggest movie stars, all the biggest pop stars. They also, by the way, represent Scott Galloway. But they also have...
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
These other businesses too. So, for example, they own a controlling stake in the WWE, the Worldwide Wrestling Entertainment Company. They also have a controlling stake in the UFC. So now Silver Lake is taking it private. It's been a public company since 2021. They're going to rename it the WME Group. And I think this is to reflect this new focus back onto talent and talent representation.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
They're paying a 55% premium. So $25 billion, that is 55% higher than its market cap before the bid. And it's also the largest take private deal in entertainment history. So Scott, your reactions to this deal? And maybe do you have any inside baseball, given the fact that you work semi closely with WME?
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
I think you are probably on the money here. I mean, he's getting $174 million in cash for the shares that he owns in this transaction. But I think probably the more important statistic here is that last year, for his compensation package, he got paid $84 million. And that's just... so stark in comparison to, as you say, the extremely low pay for the entry-level workers in this business.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Isn't it? I mean, at least that's what society wants us to think. Gotta get a Birkin, gotta get a home, you know.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
I mean, I know people who work at these companies and the life as a staffer and assistant at one of these big talent agencies is not very good. It's one of those glamorous industries where I think they get to take advantage of the fact that people really want to work in Hollywood, but these people do not get paid very well.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
And then you have the fact that the company, after going public, has done very badly from a shareholder perspective. I mean, Silverlake would say that the common stockholders here did very well here. They got $27.50 per share, which is a 55% premium to the share price that was unaffected by the bid. That's pretty good. But what you have to remember, though... is the IPO price, the issuance price.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
This company went public at $24 a share. So even if you were the very first investor, if you invested directly in the IPO, you have made a lousy return. It's around 14% in the last four years. The S&P in the same amount of time is up 40%. And so, yeah, this is a bad investment. And for a long time, it was even worse. I mean, at one point, the stock was down at $17.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
So I think you're probably onto something here, but I think the more interesting thing will be seeing what your agents over at WME will say after this episode releases.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I mean, he's learning from his master. So I would predict that by the time he's done with Commerce Secretary, when he's out of office, my prediction, he's going to return to the company and reinstate himself as chairman. And it'll basically be like he never left.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
final headline this new data from moody's the top 10 of earners in america now accounting for 50 of all consumer spending that's up from 36 in 1995 this is basically just another signal of how bad the inequality in america is really getting scott you know you've done a lot of work on this you've done a lot of research on this what are your initial reactions to this new data
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Yeah, we know what the wealth inequality looks like in America. As you said, the top 10% are owning 90 plus percent of the assets. But finally, we're seeing even despite the fact that the wealthy are actually underspending and they're hoarding, they are still driving the real economy. We're now having half of actual transactions in America are being made by... the top 10%.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
So I think it's sort of this double whammy. It's now transitioning into a new thing where, you know, in addition to controlling all of the assets, they now control the real economy itself. And, you know, we were discussing like, what are the second order effects of this? I think just to list them off right now, I think the first thing you'll see is just reduced social mobility.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
You're going to see more economic instability. So you're going to see more debt accumulation, more inflation, higher likelihood of these financial crisis events. You're going to see lower social cohesion, which we're already seeing less trust among your citizenry. And then I think the other thing is that we always see across every unequal society in history is you're going to see more crime.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
You know, crime rates go way up with, you know, general distrust and dissatisfaction with the state of affairs in this country. So our team kind of got together and we spitballed, okay, well, what is a good investment in that society? If that's where we're headed, where do you invest? Bunkers. Exactly. So, you know, just some kind of random ideas we threw out there. Private security.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I think we'll see more private healthcare, more investment in elite healthcare that services the rich. And then one thing that you've mentioned, which I agree with, luxury real estate. So more homes in Aspen, more homes in Palm Beach, more homes in the Hamptons. I think we'll start to see more and more of these siphoned off private bunker communities.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I guess at a certain point, this conversation becomes ridiculous because I'm essentially describing a dystopia and asking questions about how to invest in that dystopia. And I think, by the way, a lot of investors are having this conversation. So I guess my final question before we move on to a conversation with Mike is, at what point do we throw in the towel
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I was trying to imagine you skiing all week. I just can't picture it. That's what you were doing, right? None of us actually really knew where you were or what was going on. You were skiing, right? Yeah, I was in Zermatt.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
and say, okay, none of this is worth it? Like, why are we discussing investing in this world that we don't want to live in? At what point do we decide, okay, instead of playing along with these trends and investing in these trends, we have to reverse them? Like, what is the tipping point? At what point do you think that moment actually comes in America?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
We'll be right back after the break for our conversation with Mike Moffitt. If you're enjoying the show so far, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Are you a big skier? I love skiing. Really? Yeah, my favorite thing is having lunch in the middle of it. I love that you kind of get up early, you're sort of working out, but it's not that intense, but you feel like you've had this big workout and then you all kind of like get together and have this great big lunch and then you head home.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Okay, welcome back. Here's our conversation with Mike Moffitt, founding director of the University of Ottawa's Missing Middle Initiative, and also a former economic advisor to Justin Trudeau. Mike, thank you so much for joining us on the podcast.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I'll just start with this. We've been talking a lot about Canada lately, mostly in relation to Trump. You know, we had this 51st state drama, we had the tariff stuff, we've got this potential trade war. And I've been watching all of this go down, and it's gradually dawned on me just how little I actually know about Canada. And I talk with my friends about this
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
And I talk with my peers and it becomes clear to me they don't really know much either. So I don't think I'm in the minority. I think there are just a lot of well-read, informed Americans out there who don't know a lot about this country, which is why I'm just so glad to have you on today to fix that for us. So I'd love to start with just like an overview of Canada's economy.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
So how big actually is Canada? the Canada economy? What are its strengths? What are its weaknesses? And what makes it different from the American economy?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
That makes me think that this tariff situation is going to be a big, big problem. And we will get there. But just as we... continue to build this picture of Canada. Give us a sense of the political situation in Canada right now. I think most people probably know Trudeau has resigned, but he's still, from my understanding, prime minister for now. What's happening in Canadian politics?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
What's going to happen with Trudeau moving forward?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I didn't realize that until recently. You got Mark Carney, Bank of England and Bank of Canada. This guy's a machine.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
So interesting. And then my final question on this Canada 101 segment is the history of Canada. Could you just give us a very brief history of Canada? How did this country form? What are its cultural roots? How did we get to where we are today?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Scott, I will turn it over to you to get into the economics.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I just want to point out, I'm completely shocked that you know anything about hockey, Scott.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
We won't be able to wipe our house. Okay.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Yeah. And my final Trump-related question, I just have to get your comments on his proposal to make Canada the 51st state. Is there a soul in Canada who thinks this is a good idea? Or is it just completely absurd to everyone in the nation?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
We'll talk more about that revolution in this episode. Shall we bust into the headlines? Let's get on it.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Apple plans to spend more than $500 billion on American innovation over the next four years. The investment will fund the development of a manufacturing facility in Houston, which will build servers to power Apple Intelligence. The company has also pledged to create 20,000 new jobs.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Final question from me, Mike, and thank you so much. This has been informative, enlightening, and really appreciate your time. If America could learn one thing from Canada, what do you think it should be?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I'm more bullish on hockey. Mike Moffitt is an economist, business professor, and the co-host of the podcast, The Missing Middle. Mike is the founding director of the University of Ottawa's Missing Middle Initiative, and devoted to restoring middle-class prosperity to young Canadians.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Mike previously held the role of Chief Innovation Fellow for the Government of Canada, advising on innovation and manufacturing policy, and is a former economic advisor to Liberal leader Justin Trudeau. Mike, this was a pleasure. Thank you so much for joining us. Thanks, Michael.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Following Howard Lutnick's appointment as Secretary of Commerce, his 27- and 28-year-old sons will now help lead his investment bank, Cantor Fitzgerald, in his place. Brandon and Kyle Lutnik will take on the roles of chairman and executive vice chairman, respectively, while three longtime executives will share the CEO position.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
It's going to be flying them into Delray. There you go.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
As you've said before, we're a nation of reformers, not quitters. It's much more noble to reform than quit. That's good. That's very profound, Ed. Well, I didn't come up with it. It was you. I'm going to make you CEO of my investment bank. I can't wait. This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Mia Silverio is our research lead. Isabella Kintzel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profity Markets from the Vox Media Podcast Network. If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday. Lifetime
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
And finally, the top 10% of earners now drive nearly 50% of all consumer spending in the US. That's a record, according to Moody's Analytics, and it's up from 36% three decades ago. Moody's also estimates that the spending from this group alone accounts for almost one third of the nation's GDP.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
very timely considering our conversation just now, but let's start with Apple and Apple's plan to spend more than $500 billion on American innovation. This big spending plan, Donald Trump is very happy about it. He posted about it on Truth Social. Scott, your thoughts on this new investment from Apple?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Your thoughts? 100% in agreement. I think the thing you have to understand here is that Apple was going to spend this money anyway. If you look at the company's financials, you look at the OPEX, you look at the CAPEX, look at the guidance, $500 billion over four years is pretty much in line with expectations. In fact, some would say it's actually below expectations.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
So, yeah, this is not some big, bold, new investment. This is... par for the course for Apple. And I think the question is, okay, well, why would you make such a to-do about this? And the answer is quite simple. As you say, it's to appease Trump. Because you have to remember, Apple, of all the big tech companies, is the most reliant on China by far.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
And they have all of their supply chains are in China. They also, unlike companies like Google and companies like Meta, they also sell products in China. They're allowed to sell iPhones in China. That's a big market for them. So they can't afford to lose China as a supplier or as a customer. And so they need to figure out a way to protect that.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
And so this, to me, is like this genius, cost-effective way of doing that. Instead of investing billions in lobbying, or instead of investing even billions in new investments, they're basically just rebranding their pre-existing investment plan, which they were already going to do, but now it's got this pro-America, pro-Trump feel to the whole thing.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
And there's huge downside potential there. So I'm sort of in support of your move to trim. Let's move on to Cantor Fitzgerald and Howard Lutnick's decision to put his sons in charge of the company. Just some context on how wild this move actually is. You know, You might not have heard of this company because it's a private company, so it doesn't get that much publicity.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
It doesn't get that much coverage because, you know, you can't trade the stock. But on Wall Street, this is one of the biggest names. This is a huge bank. It employs 14,000 people. They have 60 offices across 20 different countries.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
And now this, what is essentially a megacorporation on Wall Street, it is now controlled by a 27-year-old and his brother, who is 28 years old, and who is also a DJ, which is just a... a funny but probably important little side note about the new vice chairman of Cantor Fitzgerald. So I think the two questions people are probably asking here is, one, how is this even allowed?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
How is this possible? And the answer is, Howard Lutnick controls and owns the company. He's certainly the majority shareholder. To the best of my knowledge, he's the only shareholder. But if you look into the ownership and the governance structure, it's actually not very clear. I think it's probably intentionally obscure.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
But what we do know for sure is he has the power in this company, so he can do whatever he wants. And then the second question I think people are asking is, why on earth would he do this? Why would you hand over a multibillion-dollar corporation to your Gen Z children who have basically no experience? And I have my own theories about this, but I'd first like to start with your take, Scott.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Why is Howard Lutnick, the new Commerce Secretary— handing this company to his kids? Because he can.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
We got rid of it because it didn't work. We looked through all of world history. I mean, humans clearly love hereditary succession, but what we have found is that it's just a bad model. It's unstable as a form of governance. And I'll just, on this point, from a shareholder perspective, if you look at... corporate history and having family succession plans.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
There's this study that we found that looked at all of the family-owned businesses through history, and it found that when you pass control on to the child, on average, financial performance declines. I think it's like a 5% drop in operating profitability. Another study found that family CEOs work, this is no surprise, on average, family CEOs work 9% fewer hours than parents. other regular CEOs.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
And another study found that family CEOs are held less accountable to their financial performance than regular CEOs. I don't think any of this is surprising, but I think the takeaway for me with these succession plans is it's almost never a good idea. One point in which I think this is different and which kind of explains this
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I think that this is Howard's way of not letting go of the company while he's serving in office. So he gives it to his kids and he'll still sort of de facto run the company. All he needs to do is give them a phone call, tell them the instructions. They say, yes, sir. Yes, dad. They execute. And he's still pretty much running the company that way.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
As we know, Intel has been more focused on this standard computing. He wants to restructure the company, likely in the form of layoffs. So he's going to fire a bunch of people. He wants to, quote, revamp the company's manufacturing operations. I don't really know what that means.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
And I think the big question that remains here, which we do not have an answer to, is whether he's going to break the company up or not. I think a lot of people are expecting that he's going to split it into the chip design business and then also the chip manufacturing business and go for an all-out corporate breakup and operate those two as separate companies. So far, we don't know.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
We can only speculate. So, Scott, your reactions to the new Intel CEO and your thoughts on what might happen under his leadership.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Yeah, I think it's important what you mentioned there about his time on the board of Intel. So yes, he was the CEO of Cadence Design Systems, which is this software company that actually makes the software that NVIDIA uses to design their chips. So he's deep in the AI game. He joined the board of Intel in 2022, and then he resigned in 2024.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
And as you point out, it's because he had these disputes with the CEO, Pat Gelsinger, who he thought was too nice, too bureaucratic, wouldn't lay people off, he thought he was too risk-averse, all of these criticisms that made him very unpopular at the time. But in hindsight, he was totally on point. And so it does certainly feel, to me at least, that he's almost the perfect guy for the job.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
He's been inside the machine, he's seen under the hood, and he was the only one who said, hey guys, none of this makes sense to me. I don't like the way this is set up. And he got ousted, or maybe he resigned, we don't really know what happened. But I think it does make sense to bring him back, because he's the only one who called bullshit when it really mattered.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
We'll be right back after the break for our conversation with Lynn Alden. And if you're enjoying the show so far, be sure to give Profiteer Market to follow wherever you get your podcasts.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Okay, welcome back. Here's our conversation with Lynn Alden, independent analyst, full-time investor, and the author of Broken Money. Lynn, thank you for joining us again.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
So I'd like to start with your reaction to this sell-off that we've seen in the stock market. So the S&P 500, it's down around 10% off of its high. It's officially entered correction territory. We're seeing all of this anxiety around tariffs and...
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
geopolitics and you know people talking about recessions again um i'd like to just start with your initial reaction to the drawdown any thoughts on this correction and perhaps any thoughts on how this compares to previous corrections in in stock market history sure so you know there's been a pretty good uh couple years in the market so 2023 2024 were both good for the market um
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
And I just want to say- Did you have any pets? I did. I had a dog.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
I wasn't a big fan of my dog. He was lame. And he bit other dogs. I think I've said this before. I just want to point out, I tweeted about this. On Twitter. You're still on Twitter. I also posted it on threads. Yeah. I'm going to cast a wide net. Okay. Sorry, go ahead. So I assume you watched White Lotus this weekend. I did, yeah.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Yeah, it does almost feel like all of the truisms of finance and portfolio management are suddenly true again. It's like, you know, you shouldn't just be overweight US tech, you should also invest in dividend stocks and international stocks and treasuries, etc. A lot there that's very interesting that we will definitely get into.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
I do quickly just want to get your take on tariffs and this tariff policy. I'm sure we're all getting bored of it, but... I do want to get your position because I think everyone we've talked to has had the same view, which is this is a bad idea and it's bad execution. And I actually just read a tweet from our friend Morgan Housel. And I love this. I think it's very true.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
He said, nutritionists fiercely disagree on what's the best diet, but all seem to agree that sugar is bad. The same seems true for economists and tariffs. I would like to get your view, because I don't think you're an outside-of-the-box thinker, I would say. I just want to check in. Do you have a different reaction to tariffs? Is there anything positive about this, or is it mostly bad?
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
So the scene that everyone's talking about where Sam Rockwell is talking about— Getting railed by other men as he's—yeah, right?
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Yeah. Okay, so the face that the other guy makes, that's me at the opening of every single show on this podcast.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
And how will those tariffs affect the dynamic you described there, where we have this trade deficit that kind of works because of the dollar status as the global reserve currency, and we've sort of been floating off of this benefit that we didn't necessarily earn, perhaps. I mean, what do implementing these tariffs do to that dynamic?
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Thank you. Thank you. Thank you.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Right now, I feel like the guy on White Lotus. I'm like, oh, oh, really? Hmm. I didn't know that.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Thank you. , , , , , , the P P P P P P P P men實 , , , , , , , , , , , , , , , , , , , , , , , , , , , , the the a and P P P P P P P P P P P P P
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
I grew up on SpongeBob SquarePants and Dexter's Laboratory.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Just want to begin to wrap up here. I'd love to just check in on your portfolio. One thing I admire about you, Lynn, is that you make your portfolio public so everyone can see what you're doing and what kinds of investments you're making. Are there any changes that you've made to your portfolio recently? Are there any investment themes or theses that you are focused on in 2025?
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Scott is rotating out, he's talked about it on the podcast, he's rotating out of US stocks into international stocks. I would say quite aggressively, Scott, you can interject wherever, but... From my understanding, Scott, you are dumping all of your Apple, I think all of your Amazon too, and you're going to put it into international stocks.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
It sounds like, Lynn, you agree it's time to start rotating. For anyone who's listening right now who feels overweight US stocks, how would you do it? How would you rotate out? Would you trim? Is there a certain percentage of your US stocks that you would trim in favor of international? What would the rotation actually look like?
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Lynn Alden is a full-time investor, independent analyst, and the author of Broken Money, Why Our Financial System is Failing Us and How We Can Make It Better. Her work has been featured in the Wall Street Journal, Business Insider, Market Watch, and CNBC. She has also served as a consultant to startup companies, hedge funds, and executive committees. You can find her research at lynnalden.com.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Lynn, always a pleasure to have you on the show. Thank you again for joining us. Thanks, Lynn.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Bye now, pay later, firm Klarna has officially filed for an IPO on the New York Stock Exchange. Analysts estimate its valuation is around $15 billion. That is a sharp decline from its $46 billion peak during the pandemic. Google is acquiring cybersecurity startup Wiz for $32 billion. to strengthen its cloud security offering.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Back in July, the companies were in talks for a $23 billion deal before Wiz walked away from the deal. Now, Google expects to close on its largest acquisition to date next year. And finally, Intel's new CEO, Lip Bu Tan, is just days into his tenure and has already outlined his new plan for the company. His strategy includes revamping chip manufacturing with a focus on chips that power AI servers.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Scott, let's start with Klarna, which is looking to IPO now. This is a buy now, pay later company. I've been pretty critical of buy now, pay later in the past. I think you have too. My view is that this is... basically just a misleading rebrand of a product that already has a very negative reputation in society, and that product is debt or credit. People do not like debt. They don't like credit.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
They don't like these banks that make money off of the people they service defaulting on that debt and that credit. And so companies like Klarna and...
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
a firm which is another bnpl firm and afterpay they came in they said hey we don't like debt either we hate those big mean banks so we have a new product it's called buy now pay later it lets you purchase things now and then you delay your payment of those items in the future and of course this is literally the definition of debt it's just repackaged in a different format with a different brand and a different name to be fair to klana they have sort of cleaned up their act
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
They're a lot more forthcoming now about what they're actually selling. But I'm still a little bit wary of this company because I'm especially wary looking at the language in the prospectus for this IPO, which begins with this tirade against traditional banks.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
The CEO says that Klarna is an amazingly diverse group of people with really one thing in common, and that is their resentment of traditional banks. So I'm still a little bit... iffy on buy now, pay later and Klarna, but the company is doing quite well. Revenue's up almost $3 billion, expected to go public at a $15 billion valuation. What do you think of Klarna's potential IPO, Scott?
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
I think one thing to mention there, you're asking about, you know, proposing the idea that they're targeting young people. That is exactly what they're doing. 70% of their users are Gen Z or millennial. And as soon as you look at the logo, that makes sense. It's sort of this sort of Gen Z-ified, clean logo with a pink background. And some of their marketing campaigns I find quite funny.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
They have partnered with high-profile celebrities, including Paris Hilton, ASAP Rocky, and Snoop Dogg. So this is definitely targeted to young people. Again, I have no issues investing in the IPO. I agree with you. I think this is a very reasonable valuation.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
But I do think if you are a user of Klarna, and if you are someone who's young and you somehow think that you're getting a great deal by paying with Klarna, oh, maybe I'm circumnavigating credit card debt. I just want to remind you again, this is no different from that. This is credit. It's basically the same as using a credit card. It's just packaged differently. You're still borrowing
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Let's move on to this acquisition of Wiz by Google. This is very interesting because 10 months ago, you and I were discussing this same headline, except it was that they were acquiring Wiz for $23 billion. And we talked about how that was going to be a huge win. You warned Wiz employees, many of whom would have made millions off of this, not to get too excited.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
because we believe that given the situation and from a regulatory perspective, maybe this wouldn't go through. And then a couple of weeks later, the deal was actually called off. Wiz said they were walking away from the deal and they said that they were gonna pursue an initial public offering instead. So here we are 10 months later, It's the same deal, except this time it's for $32 billion.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
It's 40% higher than when we last discussed it. Scott, what do you make of this? And what do you think changed? They tried to do this 10 months ago. They said no, and then suddenly they're down to do it again. Trump.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
I'm in agreement with you that that's why they did this. Where we might disagree, I think they are misassessing the positions of the DOJ and the FTC under Trump. Because as we discussed with Jonathan Cantor, who used to lead the antitrust division at the DOJ, these new heads at both the DOJ and the FTC... These people are not soft on antitrust.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
These are the people who decided to continue the frameworks that were established under Biden. They're very tough, they're very active, and they're very much focused on big tech and on cracking down any and all monopolies that are emerging in that industry.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
So if Wiz has done this under the assumption that they're now in a more lenient environment when it comes to antitrust, I would encourage them to go look at Andrew Ferguson's resume who's leading the FTC. Go look at Gail Slater, who's leading the antitrust division of the DOJ. These are not the big tech sympathizers you think they are.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
It might have seemed that way based on Trump's positioning and having all those guys over for lunch at Mar-a-Lago, but the leaders of these groups agencies themselves are not going to be cozying up. I don't think it's going to be the cakewalk that they think it is, but we'll see.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
If I were to predict, I don't think this necessarily falls through, but I do think we're going to see massive scrutiny and it's again going to be a one or two year ordeal because the other side note to this is that it's Google's largest acquisition by far. So I think this is going to be long and drawn out. But I do agree with you.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
I think they saw a regime change and they said, okay, now is our time to strike. Let's go over the proposed changes for Intel as outlined by their new CEO, this guy Lip Bhutan. So we've been talking about Intel a lot and the issues that have been ailing this company. And here's what he wants to do with Intel now. This was reported by Reuters. He wants to focus more on AI and
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
I mean, the list kind of goes on. I guess what has stood out to you so far and what have been kind of your main takeaways from this presidency so far?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Yeah, you mentioned that term, fafonomics, which I've read about and which I love. Could you just spell out exactly what that means for us?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Yeah, chaos as a strategy sounds about right to me. Why do you think we have reached that point? Why do you think people are attracted to this chaos as a strategy system that we seem to be reverting to right now?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
One of the big themes you talk a lot about is this idea of the vibe session. A lot of people love that term. And basically what that means is this disconnect between the reality of the economy versus the way people feel about the economy. And it was very relevant last year when you had low consumer sentiment, but at the same time, the economic data was actually quite strong.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
It was incredible for us, but we need to make this year even bigger. So we hope you will attend. If you want more info on how to go to the recording, go to voxmedia.com slash SXSW. That's voxmedia.com slash SXSW. And with that, let us get into the headlines.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
I'd just be interested to hear what you think about where we are today. Do you think we are still in a vibe session? Is there still a disconnect between how people feel about the economy versus how the economy actually is going right now? Or do you think we've kind of come to our senses?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
What would you say are the most important pieces of data that we should be looking at? I mean, I feel like, you know, when we say, oh, the economy is doing well, oftentimes we're saying, you know, GDP is expanding or inflation has come down, but... Then you look at the price of houses and the fact that none of our generation is even close to being able to afford a home.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And perhaps that's what we should be looking at. Like, what do you think is most important when it comes to measuring or taking our temperature as a nation and checking in? How well are we doing?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
People are very interested in Gen Z all of a sudden, it feels. I mean, they really want to know how we think, probably because we're now entering the workforce and suddenly we're all a bit more relevant. I'd like to get your view. How do you think Gen Z feels about the economy right now? What do you think is most top of mind for our generation?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Korean shareholders are urging the company to slash its valuation to around $30 billion. That's down significantly from its peak of $100 billion in 2022. According to those familiar with the matter, some shareholders believe the valuation cut is necessary to get the IPO over the finish line. South Korea has temporarily blocked new downloads of DeepSeek over privacy concerns.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Yeah, just some stats we could point to here. I mean, the cost of college has just gotten out of control. And just this stat, for my grandparents, the annual cost of college was 13% of their income. For our generation, it's 43%. And if you look at housing, the average cost of a home for my grandparents' generation was three times their annual income. For us, it's seven times. So it does...
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
just feel as if Gen Z is a lot poorer than our parents and certainly their parents. What do you think our generation can do about this?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
I mean, how are we supposed to navigate a world where we've been told, you know, these are the rules of the game and then suddenly we go out into the world and the rules appear to be completely different and completely irrelevant and certainly not applicable to the lives that our parents led. What do we do about that?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Yeah, I think where you're also headed is you have to completely adjust your expectations. And I think one of the big problems for our generation is that from being online all the time, our expectations have been completely nuked about what we can actually expect professionally and in our lives. This survey that I just saw Which I just found crazy.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
They asked all these different generations what they thought a successful income is. And I just want to read you these stats here. So for baby boomers, the baby boomers believe that a successful income is on average $100,000. For Gen X, it is $212,000. For Millennials, it is $180,000. And for Gen Z, it's $588,000. That's what we believe success is. And this just tells me that, I mean...
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Regulators said the app will be reinstated on Apple and Google app stores once DeepSeat complies with the country's personal data protection laws. And finally, Argentina's president, Javier Millay, is facing lawsuits and potential impeachment after promoting a meme coin on X. The coin briefly soared to a $4 billion market value only to crash within hours of its launch.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
It tells me that something is broken in our brains, certainly about how we think about money. I'd love to get your take on, you know, what do you think is broken? And, you know, maybe to what extent is this a function of the fact that we have lived the majority of our lives, pretty much our entire lives online?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And if you're enjoying the show so far, hit follow and leave us a review on ProfgMarkets. We're back with ProfgMarkets. You've also said that Gen Z can be broken up into three groups, which I found interesting. You said each one having, quote, a differing relationship to digital reality. What are these three groups in Gen Z, in your view, and how do they behave differently?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
The coin's creators are accused of a rug pull scheme where developers launch and promote a token and then cash out as its value peaks. Okay, so let's start with Shein. Shein is down to $30 billion reportedly valuation. The first thing I can tell you about this, Scott Galloway is not gonna be happy. As many of you probably know, Scott is an investor in Shein.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Yeah, it's almost varying degrees of how online each generation is, and we are becoming increasingly extremely online, which is the technical term for it. And there's also in that term an implication that if you're extremely online, you have a tendency to overemphasize the importance of the digital world, or you see everything through the digital world and it sort of distorts your perspective.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
But, you know, I'm curious from your perspective as someone who has kind of built a career online and achieved a lot of success from posting on TikTok, from posting on social media, which has led to all of these other opportunities. um um
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
I actually don't know how much he invested. I also don't know what the terms were on his investment. I don't know what the valuation was. And we will find out. We'll make sure we ask him when he comes back. What I do know, though, is that the last time Shein was valued, it was worth $66 billion. And the year before that, it was worth $100 billion. So we're now looking at a $30 billion IPO.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
That is a 70% decline in less than three years. This is not good news for Sheehan. Now, why is this actually happening? We've had a lot of people say that it's market conditions, there's supply chain issues, there's issues with the logistics on the IPO. Maybe that's true. But I think most of this is a distraction from the real issue, which is Donald Trump.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And more specifically, Trump's suspension of this tax law that we've talked about known as the de minimis provision.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
So what is the de minimis provision? This is a rule that we have in the US for any shipments that come into the US, if they're worth less than $800, then you don't have to pay taxes. And this was originally designed so that Americans could go on vacation and go and buy souvenirs and bring them back and it would be duty-free.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
But instead what happened is we had all these foreign e-commerce companies who realized, okay, if we can make our products really cheap, if we can make sure that every order is below $800, then we can access the U.S. economy, we can access the American consumer, and not have to pay taxes. And so that is why in the past decade, the total value of de minimis shipments in the U.S.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
has gone from $40 million to $40 billion. And more than 30% of those shipments come from two companies, and those companies are Timu, which you've probably heard of, and yes, Shein. So in other words, this tax law is the backbone of Xi'an's business model. So Trump has threatened to end this. He knows how important this tax exemption is to China. He knows how important it is to Chinese companies.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And if he does end it, it would likely ruin Xi'an's business. So this has always been one of my problems with Xi'an as an investment, is that their key differentiator isn't any form of technological innovation. Their differentiator is their willingness to exploit a loophole in the US tax code.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Now, as we know, exploiting tax loopholes is a great business model until it isn't, until something in the tax code changes. And that's exactly what's happened here. This loophole on which this entire business was built is now under threat.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And until we have clarity on what will happen to the de minimis provision, I don't think this company can go public because we simply can't know what the business is going to look like. So Scott, if you're listening to this right now, I think it's going to be a long time until this company actually IPOs. It was supposed to IPO this April. That was the goal.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
It's now looking like it's going to be delayed a lot longer. And if I had to put my money on it, my bet would be that an IPO is probably going to come in 2026. But maybe I'm wrong. And let me know if you think so. And you can always hold me to account.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
So South Korea has temporarily blocked new downloads of DeepSeek. We don't know if this ban is going to last longer. I think this is the right move from South Korea. And I'm honestly surprised it didn't happen sooner. The reality with DeepSeek is, yes, it's cheap. Yes, it uses fewer chips. Yes, its reasoning capabilities are highly advanced. But it is also unbelievably insecure. as a technology.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
It's one of the most compromised technologies we've ever seen. Its encryption is the weakest in the industry. It is, according to research, four times more vulnerable to hacks than ChatGPT. We've already had multiple data leaks, and Wiz has published some pretty concerning research on this too.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And on top of all of that, their data is stored in the servers of the Chinese government, and DeepSeek has openly said this. So if you're a nation like South Korea that has even a slightly frosty relationship with China, there's practically no reason you shouldn't ban this. It really isn't worth the risk.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
There really isn't any upside in hosting a Chinese chat GBT that threatens the privacy and security of your citizens. And by the way, OpenAI's chat GBT is banned in China. So South Korea is one of the first countries to do this. I think in the next couple months, we're going to start to see a torrent of other countries banning Deep Seek.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And I think the first country we could probably expect this from is America. You know, if Trump wants to go through with this whole reciprocity thing, then Deep Seek is... probably the best place to start. And in fact, we are starting to see some state legislation that is banning DeepSeek on government devices. So Greg Abbott in Texas, he issued a ban. Kathy Hochul in New York, she issued a ban.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And so did Glenn Youngkin in Virginia. So to me, This is sort of a no-brainer. I cannot see any meaningful upside in keeping this app around. But perhaps I'm missing something. And if I am, let me know in the comments and we can have that debate. But as of now, the stance for me is quite simple. DeepSeek is not worth this risk. South Korea has got this right. DeepSeek should be banned.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
a website was launched promoting this project called the Viva La Libertad project. And the mission was, quote, to boost the Argentine economy by funding small projects and local businesses. Now, exactly how this would be accomplished was not clear. It wasn't really mentioned anywhere. And in conjunction with that project, there was a cryptocurrency that launched called Libra or LibraCoin.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And just a side note, It was launched on this platform called FixFloat, which notably does not ask for any personal identification. Everyone is anonymous, and it is most commonly used for scamming and rug pulling. So it's a very shady start to begin with. None of this really mattered, though, until half an hour later,
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
The president of Argentina, Javier Millay, tweeted out the news of Libra and LibraCoin, and he directed his 4 million followers on where they could go online and buy the token. And within 45 minutes, the market cap of Libra went from virtually nothing to four and a half billion dollars.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Now to put that in context, that would make Libra, this cryptocurrency, the ninth most valuable company in Argentina. Within an hour, one and a half billion dollars worth of Libra coin was transacted between buyers and sellers. Then, all of a sudden, the early investors started to sell, and the value of Libra plummeted.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And after one hour, Libra had lost 70% of its value, until eventually President Milley deleted his tweets, and he apologized for what happened. He said, quote, I was not informed of the fine details of the project, and after learning, I decided not to continue spreading it. But by that time, the damage had already been done. 75% of the investors lost money.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And according to the on-chain data, many lost up to $10,000, some lost up to $100,000. So the financial damage here is once again, just enormous. And the winners, of course, there are always winners with these crypto tokens. The winners were the developers of Libra, who sold at exactly the right time. Many of them made millions, and one of them netted almost $9 million in profit.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
So I think what we have here is the same dynamic we had with Trump coin, where the power of a presidency, in this case Argentina's presidency, was abused. to essentially trick people into wiring their money to a handful of anonymous individuals with no financial protection, no recourse, and it's unlikely that these people will ever see their money back. I doubt it will ever happen.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Welcome to Prof G Markets. Scott is out this week. I believe he is in Switzerland or Austria or somewhere. He's skiing. He's not with us. He's slacking. That's basically what's happening. So I'm filling in this week. I'm speaking with Kyla Scanlon, the author of In This Economy, How Money and Markets Really Work.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And this is exactly why I personally don't like crypto. I think it's one of the most useless and the most destructive technologies of our time. And when you put it in the hands of the wrong people, they can levy extreme damage on a lot of people who don't really know what's happening. And I think that's what happened here, probably. I don't think this was a malicious operation by President Milley.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
I don't think he was behind the scenes orchestrating this. I mean, he deleted the tweet. He eventually expressed regret. I think the most likely scenario is that he got tricked. And that's a shame because so far, Milley has actually done quite a good job. He's brought inflation way down. He's brought wages way up. He's expanded the Argentine economy.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
I was with Argentinians this weekend and they were huge fans of President Milley. He's doing everything he really should be doing. But now that this has happened, this is a huge hit to his credibility. Because it basically means one of two things. Either he's a scammer himself, which I don't believe, but it's possible. or he's easily duped by scammers.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And neither of those things reflect very well on him or on Argentina. It's a massive sign of weakness. And so what happened as soon as the markets opened, the Argentinian stock index fell 6%. And this is exactly the kind of thing that rattles investors. So it's now being investigated in the courts. We'll soon find out what actually happened and what he actually knew about this Libra coin.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
But what is clear is that this is going to be a very long road to recovery. And this is certainly the lowest point so far in the Javier Millet presidency. We'll be right back after the break for our conversation with Kyla Scanlon. If you're enjoying the show so far, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And we'll be talking about the economics of our generation, which is Gen Z. But before we get into the show, Just a reminder, Scott and I will be recording a live episode of Prof G Markets from the Vox Media Podcast stage at South by Southwest on March 10th. We had an incredible time last year. I was just shocked by the feedback and also just how many of you showed up.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Welcome back. Here's our conversation with Kyla Scanlon, financial writer, video creator, podcaster, and author of In This Economy, How Money and Markets Really Work. Kyla, thank you very much for joining us once again on Profiteer Markets. Thanks for having me. So we're exactly one month into the Trump presidency. A lot has happened. We've had tariffs. Doge, we've had drama with Greenland.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Yeah, I think there's a question of, will it be banned? We don't know. And then there's the question of, should it be banned? I think I'm in total agreement with you. I mean, DeepSeek has, according to almost all the research, the weakest encryption in the industry. It's four times more vulnerable to hacks than ChatGPT.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
And then there's the reciprocity perspective, which you point out, which is ChatGPT is banned in China. So it seems if we're going to have this aggressive stance on physical goods. We should probably have it, that same stance on the most important technology of our time, which is AI. But to your point, there's no clarity on what the decisions actually are. We'll be right back.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
But rich, that's the most important part.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
The big banks are forecasting an increased risk of a recession in the next year. A model from JP Morgan estimates a 31% probability. That's up from 17% at the end of November. And Goldman's model also ticked up to 23%. On top of trade war fears, warning signs are flashing across the economy. Unemployment came in unexpectedly high. Consumer sentiment hit a 15-month low.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
And Atlanta's Federal Reserve expects U.S. GDP to contract this quarter. Meanwhile, an increasingly volatile S&P 500 just posted its worst week since September, and the Nasdaq is down more than 7% year-to-date. A lot in there. Scott, I think probably the most alarming piece of that is just this recession forecast from these big banks who are increasing the probability of a recession.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Given what you're seeing in the markets, given what we've seen in, I think we're now on day 48 under Trump, how concerned are you that we're going to see a recession in America this year?
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
I just point out, this is my mentor. This is all I've got. And this is how we start the show. Unpaid internship. Unpaid internship. Career experience. Let's get to the headlines. Let's do it.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
is postponing new AI updates for Siri after engineers failed to resolve bugs in the project. Originally set for release next month, the updates are now delayed indefinitely. Sony has removed more than 75,000 deepfake AI recordings of its artists, including Harry Styles, Queen, and Beyonce. Executives argue these AI songs cause, quote, direct commercial harm to legitimate recording artists.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Yeah. The crowd's going wild. When we look at how the stock market is reacting to these policies so far, it hasn't been good. And what's so interesting is that if you look at the global stock market right now, minus the U.S., So take all of the stocks, exclude all of the American companies, the global stock market is up 7.5% year to date so far.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
So basically, we're having a uniquely American problem in the stock market right now. Now, What's interesting has been Trump's and his administration's response to this. And I just want to read you a quote that he said to Congress in his address to Congress. He said, quote, there will be a little disturbance, but we are OK with that.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
And Scott Besant, the Treasury Secretary, he went on CNBC, he gave one of his first big public speeches on TV, and he said, quote, "...the market and the economy have just become hooked, and we've become addicted to this government spending. There is going to be a detox period." So in other words, the markets are not liking what's happening.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
But, you know, I'm a little surprised that Trump isn't actually pointing fingers and blaming Biden, as I would have expected. Instead, he's actually owning up to what's going to happen. And they're saying, yes, this might hurt. We might feel some pain in the economy, but ultimately it's worth it. This is necessary. This is our medicine and we're going to do it.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
I'd like to get your reaction to that, Scott. Is there validity in that argument? Is it fair to say that America maybe needs this shakeup? They need this pain and will suffer in the short term, but that's worth it.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
And finally, the White House is considering restricting access to DeepSeek over national security concerns. Potential measures include banning the chatbot from government services, removing it from app stores, and limiting how U.S. cloud providers can offer the AI models. Scott, let's start with your thoughts on Apple with this product delay. They are postponing their new AI updates for Siri.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
It's so funny because often the question is, okay, you have the losers and you have the winners. Who are the winners? Who are the losers? It's very, very difficult to identify a single winner in this, but I have identified one and that is options traders. So zero day options trading is exploding right now.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
And this is what a zero day option is basically an options contract that expires within 24 hours and they've reached a record high. I really had to scrape the barrel to find a winner here. But it is striking that on this technical level in the stock market, the people who are being rewarded here are not the value investors.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
It's not the people who are investing long term into the real economy in America. In fact, they're getting burned. The people who are winning in the stock market are the traders, the gamblers, the speculators. It's basically the people who want to make a quick buck off of volatility, because volatility is one of its highest ever right now.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
So I kind of look at what's happening in our economy right now, where we have an explosion in crypto, we are seeing record sports betting. And now I'm looking at what's happening to the stock market, it feels as though we're devolving from an investment economy into a gambling economy. Would you see it the same way? And does that concern you?
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Thank you. Thank you.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Thank you. Thank you.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Thank you very much, Scott. This episode was produced by Claire Miller and engineered by Benjamin Spencer. We got to do the credits. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Big list of people, and they're all over there.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Thank you for joining us. If you liked what you heard, give us a follow on Prof G Markets. And now we've got a little bit of time for some audience questions. I think we have some mics up here. If anyone would like to ask a question, we've got about five, 10 minutes.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Yeah, I think we should point out that this is highly unusual from Apple. I mean, they almost never delay their products after they've been announced. I think it's only happened maybe twice in the company's history. So it's especially bad, especially given the conversation we just had last week about this lack of innovation at Apple.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
I think we could do one more. Yeah.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
where you had i mean the biggest product has been the headset which so far has been a flop You look at the iPhone, which hasn't really changed in the last 10 years. The iPad hasn't changed, nor has the Mac. And now it appears they are falling behind on AI. And supposedly within the company, employees are questioning the management of the AI division.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Apparently there's a bit of a loss of faith there. The question I would pose to you, at what point does that loss of faith move up the chain to Tim Cook? I mean, I think everyone loves Tim Cook and they have done for many, many years now. But we're seeing a lot of questionable decisions. You know, they did not invest in data centers. He canceled the Apple car. He decided to launch this headset.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
I wish we could do more. But we are, unfortunately, way over time. Thank you, South By.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
We'll see if it works. I don't think it will. But at what point, Scott, do you think shareholders and the board will start questioning Tim Cook's leadership? Could we get to that point?
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
This on its own... If you're listening to the podcast and you're not in person, he's holding up an AirPods case. AirPods. Has less gravitas in audio.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Let's talk about this news from Sony. So Sony has taken down 75,000 AI deepfake recordings of their artists. Scott, I'm interested to get your view because last week you yourself were deepfaked. on a mass scale. I don't know if anyone saw this, but on Instagram and TikTok, there were several deepfake videos surfacing of Scott recommending stocks, recommending cryptocurrencies.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
The strangest was Scott recommending a supplement, except it was Sam Harris's voice dubbed over you.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Very strange. That one was the least convincing. You have some experience with this, with being deepfaked. What is your reaction to these deepfakes, and how are you personally dealing with being a victim of it?
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Isn't it? I mean, at least that's what society wants us to think. Gotta get a Birkin, gotta get a home, you know.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Yeah, there were an estimated 8 million deepfakes, or estimated to be 8 million deepfakes shared online this year. That's up 16x from 2023. Very interesting though, 9 out of 10 deepfakes are used to promote cryptocurrencies. That's the main use case.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
So I agree on the Section 230, but it also seems that we could maybe reduce the deepfake industry or take it down by 90% if we simply regulated crypto as well, because that's the main thing it's being used for. Let's talk about DeepSeek. The US is considering banning DeepSeek. This is coming a few weeks after South Korea made a similar decision. They said no downloading DeepSeek on our app stores.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
They said it was a security concern. I talked about it on the podcast. I said, I think most countries will follow suit. And my prediction is that the US would be the first to do it. It seems that is probably going to happen, though we don't have confirmation. This is only rumors swirling around. What do you think, Scott? Should we be banning DeepSeek? Is this the right move from government?
Prof G Markets
The State of Trade with China — ft. Alice Han
I'm going to go to Mexico City first, and then we're going to hit Puerto Escondido, and going to go surfing and dancing, and yeah, it'll be a good time. Are you guys really going surfing? That's on the agenda. I'm terrible at surfing. I've done it once, and I sort of decided I was never going to do it again.
Prof G Markets
The State of Trade with China — ft. Alice Han
In fact, I did it for the first time with the Prof G team, and it was a pretty laughable attempt, Claire can attest. So we'll see. Maybe I'll try it again. You're tall. It's hard for tall guys to be good surfers. Exactly.
Prof G Markets
The State of Trade with China — ft. Alice Han
I've been reading a lot about Napoleon. He really reminds me of Napoleon in the sense that he was, you know, so successful, so prolific, the king of the world, got too high on his pride, crowned himself emperor, and then decided to start making enemies with everyone he met. And ultimately, it landed him in a position where as soon as he lost... Everyone turned on him.
Prof G Markets
The State of Trade with China — ft. Alice Han
And the guy died alone of stomach cancer in St. Helena in exile. And it feels like Elon is just going, God, you're so sexy right now with all your history.
Prof G Markets
The State of Trade with China — ft. Alice Han
I did. People hated that movie. I thought it was quite good. I liked it. Yeah, I thought it was quite good. I thought it was a very similar character arc, and I could totally see that happening for Elon.
Prof G Markets
The State of Trade with China — ft. Alice Han
We'll be right back after the break for our conversation with Alice Hahn. And for even more Profiteer Markets content, check out our new Profiteer Markets newsletter. Click the link in the description or go to profiteermarkets.com to subscribe.
Prof G Markets
The State of Trade with China — ft. Alice Han
Welcome back. Here's our conversation with Alice Han, China economist and director at Greenmantle. Alice, it's great to have you back on the show.
Prof G Markets
The State of Trade with China — ft. Alice Han
So it's been three months since we had you on. And by the way, everyone just raved about you. So we're very happy to have you back. When we spoke, China was in a slump, or at least the economy was. And there was this prospect of... government stimulus. There was speculation over whether that would revive the economy or not. Side note, Scott and I made this gentleman's bet.
Prof G Markets
The State of Trade with China — ft. Alice Han
I predicted it would not bring China back to life. He predicted it would. We haven't really talked about China since then. So give us like the 1,000-foot view. Where does China's economy stand right now? What are the issues? What's going well? What is happening in China?
Prof G Markets
The State of Trade with China — ft. Alice Han
Socializing with my friends. It's good stuff. By the way, we should just plug this in really quick. Prof G Markets will be live at South by Southwest on March 10th. Again! Very excited about that. We'll be on the Vox Media Podcast stage. So if you want to learn more about that, go to voxmedia.com slash SXSW, South by Southwest, voxmedia.com slash SXSW. It's going to be epic. Last year was a blast.
Prof G Markets
The State of Trade with China — ft. Alice Han
Yeah, you mentioned deflation there. I'd love to double-click on that because I just find this idea of deflation very strange because the rest of the world is struggling with... this thing called inflation. You know, we've been trying to get prices down. And meanwhile, China has been struggling with deflation. Apparently prices are too low. So two questions. One, what is deflation?
Prof G Markets
The State of Trade with China — ft. Alice Han
Why is it a bad thing? And two, how come China is suffering from what seems to be the opposite problem as basically everyone else in the world?
Prof G Markets
The State of Trade with China — ft. Alice Han
So you've got a country where the economy is trying to stay afloat by basically shipping stuff out to other countries, and the US has slapped these tariffs on. So what does that do to the Chinese economy if we have an additional 10% tariff on everything from China? In addition, you mentioned the steel tariffs and the aluminum tariffs. What does that do to China's economy?
Prof G Markets
The State of Trade with China — ft. Alice Han
I'm very excited. Let's get into the headlines.
Prof G Markets
The State of Trade with China — ft. Alice Han
One of the big moves recently was this suspension of this de minimis provision. And just as a reminder to our listeners, this is this tax exemption, which basically allows shipments worth less than $800, they enter the US duty-free. Thank you. Thank you.
Prof G Markets
The State of Trade with China — ft. Alice Han
President Trump announced a 25% tariff on all aluminum and steel imports to the US starting in early March. He also plans to implement reciprocal tariffs on countries that impose duties on US goods.
Prof G Markets
The State of Trade with China — ft. Alice Han
Trump has also proposed closing the carried interest loophole, which allows investment fund managers to pay a lower capital gains tax on carried interest, which is one of their primary forms of compensation. His plan would tax carried interest as ordinary income, which could reduce the federal deficit, by $13 billion over the next decade.
Prof G Markets
The State of Trade with China — ft. Alice Han
And finally, a group of investors led by Elon Musk has submitted a $97.4 billion bid to buy the nonprofit that controls OpenAI. OpenAI CEO Sam Altman responded to the offer on X. He said, quote, no thank you, but we will buy Twitter for $9.74 billion if you want. Scott, your thoughts, starting with Trump's 25% tariff on steel and aluminum.
Prof G Markets
The State of Trade with China — ft. Alice Han
Two final questions from me. The first is DeepSeq. So my reaction to DeepSeq was quite simple. I didn't really believe them. I didn't believe that they only built it with a handful of chips, that the chips were all worse than the chips that we use in America. There's been some confusion over whether they actually had the H100s or not.
Prof G Markets
The State of Trade with China — ft. Alice Han
I didn't believe that it only took them $6 million to build the thing. I feel like there hasn't been a conclusive answer on that. I got a lot of criticism saying that I'm being unreasonably anti-China, I'm kind of biased against China, which, by the way, might be true. But I feel like I still don't have... I haven't landed on this issue. So I'd just love to get your take on DeepSeek. How real...
Prof G Markets
The State of Trade with China — ft. Alice Han
is DeepSeq and how seriously should we be taking it?
Prof G Markets
The State of Trade with China — ft. Alice Han
Final question. In the most recent JP Morgan earnings call, Jamie Dimon said that there were two main threats to America. First was inflation, and the second was instability. And he said this was the number one risk. And this was what he said exactly, quote, geopolitical conditions remain the most dangerous and complicated since World War II. Do you agree with Jamie Dimon?
Prof G Markets
The State of Trade with China — ft. Alice Han
The steel unions are just incredibly powerful. I mean, you mentioned that lobbying power there. You want to get the steel workers on your side. And this is to the benefit of American metal companies. I mean, we saw this in the stock market. U.S. steel went up. Cleveland Cliffs went up. Steel Dynamics, Alcoa, all of these steel and aluminum stocks in America rose. Why?
Prof G Markets
The State of Trade with China — ft. Alice Han
Because, I mean, pretty simply, they're going to have more demand now. You can have less international metal coming into America, which gives all of these domestic metal companies more pricing power. This is a win for US steel and aluminum companies. Now, who are the losers?
Prof G Markets
The State of Trade with China — ft. Alice Han
Ed, we're going to China. Going to China. I'm down.
Prof G Markets
The State of Trade with China — ft. Alice Han
Alice is a China economist and director at Greenmantle, a global macro and geopolitical risk advisory company. She graduated in history and economics from Harvard and holds a master's in East Asian studies from Stanford University, where she focused on Chinese political economy and fintech. Alice, this was a pleasure. I can't wait to have you back on the show again very soon. Thanks, Alice.
Prof G Markets
The State of Trade with China — ft. Alice Han
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from the Vox Media Podcast Network.
Prof G Markets
The State of Trade with China — ft. Alice Han
If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday. Lifetime
Prof G Markets
The State of Trade with China — ft. Alice Han
Obviously, the international metal companies, and most of those companies that are gonna be affected are in Mexico and in Canada and in China, but there are also some companies in Europe and in South Korea and in Japan that sell us a lot of steel, and those stocks all fell on this news.
Prof G Markets
The State of Trade with China — ft. Alice Han
But the most important loser here, which you kind of referenced, is just the consumer, because this is gonna drive up the cost of steel, it's gonna drive up the cost of aluminum, which we need in order to build houses and cars, and so the prices of houses and cars are gonna go up, but also we need them to just manufacture everything in America.
Prof G Markets
The State of Trade with China — ft. Alice Han
Anything that is manufactured in a factory has an element of steel or aluminum to it. And so if we're going to dramatically increase the price of steel and aluminum, it's just going to increase the price of everything. And the estimation on what it'll do to inflation, the price of all goods, it's estimated this will increase inflation by 0.1%. So it's not huge. It's not a real...
Prof G Markets
The State of Trade with China — ft. Alice Han
you know, issue, but it's still increasing the price. So again, it all sounds very pro-America. It's like got this very America first feel to the whole thing. But as we've done with all of these tariffs, you know, you do the math and ultimately you realize this just hurts us and it's for no good reason at all. Let's talk about the carried interest loophole.
Prof G Markets
The State of Trade with China — ft. Alice Han
You have been pushing for this for a while, actually. Why don't you first just remind us, what is the carried interest loophole?
Prof G Markets
The State of Trade with China — ft. Alice Han
Yeah. I mean, to be fair to Trump, we both agree this is exactly the right move by Trump. He tried to do this in 2017. It was struck down in Congress. And then Joe Biden tried to do the same thing, and it was struck down again. And so Trump is now trying it again for the third time. It's just so fascinating because it's clearly a bipartisan issue.
Prof G Markets
The State of Trade with China — ft. Alice Han
The only people who don't like this are the people in private equity and the hedge fund managers. And I guess the politicians that they pay and that they back. Everyone else, both in government and in just the general public, is for it. So I guess the question now is... Will Congress have the spine to go through with it?
Prof G Markets
The State of Trade with China — ft. Alice Han
Let's wrap up here with this Elon Musk bid for OpenAI. Let's just sort of first address this one detail. There's been some confusion over what he's actually bidding for. Some say it is the operating assets of the business. Others say it is the nonprofit arm that controls the company. As of this recording, we don't actually know.
Prof G Markets
The State of Trade with China — ft. Alice Han
What we do know, though, is that either way, a successful purchase of either of those two things would mean that Elon has control of OpenAI as we know it. So I think the question here is, would the board accept $97 billion to relinquish control of the company? The answer is quite simple. No. I mean, this company was last valued at almost $160 billion.
Prof G Markets
The State of Trade with China — ft. Alice Han
They're currently in talks with SoftBank for a valuation of $300 billion and Elon has offered 97. So he's off by around $200 billion. And that doesn't account for the fact that you're probably going to need an acquisition premium or the fact that Sam Altman just doesn't want to sell. So I think if you account for all of those factors, you know, this is the hottest company in the world.
Prof G Markets
The State of Trade with China — ft. Alice Han
They're already extremely well capitalized. Sam Altman doesn't want to sell, and he also just doesn't like him. If you account for all of that, I think a serious offer, I'd like to get your take, would be half a trillion dollars, at least. And then he's come up with 97. So I don't think this is a serious offer. I know you've said this is probably just an attempt to slow him down. I would agree.
Prof G Markets
The State of Trade with China — ft. Alice Han
He's also trying to do that in court, so we'll see where that goes. But more than anything, this is just another example of how far Elon has fallen. And I was just thinking, like, I think back to the Elon Musk of 2010. who at the time was sort of an inspiration to people. This was the guy who built stuff.
Prof G Markets
The State of Trade with China — ft. Alice Han
He was the champion of getting things done, of innovating, of making products that are useful to people. He really captured people's imaginations. And I just think, imagine if you told that Elon that in 15 years, he would be spending $100 billion, not to build a new company, but to tear down the progress and the innovation of someone else's company.
Prof G Markets
The State of Trade with China — ft. Alice Han
A company which, you know, for all of its faults, it has inspired millions of people around the world. It's inspired trillions of dollars of value in the marketplace. It's created arguably the greatest technology of our time. You know, what would he say about that? Like, would he be proud of this? Would he think that was cool?
Prof G Markets
The State of Trade with China — ft. Alice Han
So I feel like we increasingly need to think about Elon and his role in America. We need to think of him as two different people. There was the pre-Twitter Elon and there's the post-Twitter Elon. And those are two totally different characters. You know, one is like an innovator, he's an inspiration. The other is a shit poster. The other one is embarrassing.
Prof G Markets
The State of Trade with China — ft. Alice Han
Isn't it? I mean, at least that's what society wants us to think. Gotta get a Birkin, gotta get a home, you know.
Prof G Markets
The State of Trade with China — ft. Alice Han
Ed Banter, where are you? I'm in New York, as usual. I'm actually heading to Mexico this weekend, which will be fun. Por qué, Eduardo? My friend's doing a big birthday bash, so we're all going, a bunch of me and my friends are heading out to Puerto Escondido. Where's that? I don't know that. It's in Oaxaca, I believe.
Prof G Markets
The State of Trade with China — ft. Alice Han
So, you know, I'm criticizing Elon again, but when I criticize him, I'm not criticizing his past achievements, who he was. I'm criticizing who he is now. And I really believe that the man he is now would be a total embarrassment to the man he used to be. And this is just another example of that.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
if I could just make one amendment to that claim, I would say the rivers are reversing or they're beginning to reverse. And I think it's hard for us to say right now with any certainty they have reversed. We flipped the switch and now it's going in this direction. And I think that's the thing that we're going to have to keep track of over the next few months and over the next year or so is...
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
At what point can we definitively say the rivers have reversed? Because if they have, what we're about to see is just a total flip of the entire world order. And all of the conventional wisdom that we've understood about the stock market and the way markets work, it's all been tied to America and America's ability to dominate.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
I mean, I'm young, I don't have that much experience, but I can tell you that every single investor who is alive today has lived under this paradigm. And this is the only thing we've been used to. And so if this is happening, if the rivers are definitely reversing, then this really changes everything.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And so I think the thing we need to be very careful and wary of is when we definitively make that call.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Yeah, my friend Rick Stengel put it perfectly. He was like, you know, I have a perpetual trade deficit with my barber. Trump thinks that the solution to that is to put a 50% tariff on haircuts. I like that. One topic you brought up when we were discussing this earlier in the week was this idea that people have been floating around that Trump might have used chat GPT to come up with this policy.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Your joke doesn't even make sense.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Because if you ask... ChatGBT for a simple tariff formula that the U.S. could use to match other countries' trade barriers and to protect the American industry. ChatGBT's response I'll just quote what we found here. A basic tariff setting formula could be based on the trade imbalance between the U.S. and a given country.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
I do, I get it. It's just like, it's barely a joke.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And it basically replicates exactly what we saw from the Trump administration. I think it is a legitimately feasible scenario that Trump and his team went on OpenAI and they used ChatGPT to come up with the tariff rate for the nation. I think that's actually possible.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
I think the question is, what are they going to do now? And if we believe that they're using ChatGBT to run the economy, it's an interesting exercise to try to predict their movements based on our own ChatGBT entries. So our research associate, Isabella, put in some of these prompts in ChatGBT. Here's a prompt. Markets are down after our trade announcement. What should we do?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
response from ChatGPT. If markets react negatively, emphasize long-term benefits of the trade action, job creation, national security, independence. Float stimulus measures, infrastructure plans, tax credits to steady investor sentiment. Signal confidence in the economy through strong messaging and selective data releases. Avoid panic.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
That's true. We're never going to have a hostile takeover. I know that. By the way, are you tan? You look quite tan today.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Position short-term volatility as proof that bold change is underway. Keep in mind, overcorrecting or spinning too hard can deepen market distrust. This is essentially what we've seen over the past few days. I think the only thing we haven't seen flat out are these actual stimulus plans. However, he did mention that we're going to allocate a trillion dollars to the Defense Department.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
So there's some stimulus right there. Here's another prompt we put in. What should we do as the administration if the economy goes down 35%?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
ChatGPT, recommended actions, emergency fiscal package, trillions in direct stimulus, cash payments, food aid, extended unemployment, bailouts for critical sectors, monetary and financial stabilization, coordinate with the Fed to cut interest rates, inject liquidity, and backstop credit markets, temporary capital controls or trading holds to stabilize markets, international coordination.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
You know... we could, I think, pretty easily predict what's going to happen. And if you also just look at the history of recessions, what we've also found is that the most fiscally stimulative times in economic history are the times that come right after a recession. So we've been talking a lot about deficits, we need to figure out these deficits, we need to figure out our debt.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
I think one thing that we could certainly expect from this is even more stimulus, even more spending, because if this gets worse, I don't think the administration's going to have a choice but to start spending again.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
You look good. You should do this for every episode, no?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
We'll be right back after the break for our conversation with Gary Stevenson. If you're enjoying the show so far, be sure to give Property Markets a follow wherever you get your podcasts.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Here's our conversation with Gary Stevenson, host of the Gary's Economics YouTube channel. Gary, thank you for joining us on Profiteer Markets.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
I just want to point out before we get going here, Gary, you are, I think, the most sought after guest we have ever had on this program. I look through the comments on our YouTube channel, on our Spotify. Our entire audience has been begging for you to come join the show for maybe a year, maybe two years. So this is like a big moment for all of us. And we're very happy to have you on today.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
So thank you. Seriously, thank you for joining us. Let's start off with just the rundown of who you are. and how you got here. You talk a lot about what's happening to the economy, particularly in terms of inequality. Where did this all begin for Gary Stevenson?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Yeah, well, I think you're looking good today. I like the makeup. Thanks, brother. Thanks for that. You're welcome. I just want to point out before we get into the show, we have been nominated for a Best in Business Webby Award. We're very excited to be nominated. But so far, I am shocked to report we're actually in second place right now. So please go vote for us. Go to vote.webbiawards.com.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Type in Prof G Markets. You'll find us there. Please vote for us. And we're going to leave a link in the description to make it very easy for you. We have to win a Webby. It would be crazy if this show doesn't win a Webby this year. So please, let's make it happen. Go vote for us. Profiteer Markets, that's vote.webbiawards.com. Scott, any other closing thoughts before we enter into this episode?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And yeah, we're excited. We got the Webby Honoree Award last year, but that's not good enough.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Yeah, we went when No Mercy, No Malice won the Webby many years ago. But I want to go back to the party, so please just do it for me. I don't have enough of a social life, and I want to go hang out with the team and put on a coat and tie. Yeah.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
as predicted the markets have whipsawed amid volatility this week on monday the s&p 500 slipped into bear market territory for the first time since 2022 that was the same day the index had surged seven percent after a false tweet claimed that trump was considering a 90-day pause on the tariffs and then the markets came tumbling down again by tuesday
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
kind of what you're saying is that throughout history, inequality is a natural force. Inequality begets more inequality. And the only thing that sort of undoes that is a trigger event that causes a redistribution among our society. And what you're saying is... World War II, that was the trigger.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
That was the redistribution mechanism, where you had this massive crisis which reshaped the world order. And if you look back through previous historical events, often it goes that way, that there's either some sort of global...
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
military event some sort of giant war and oftentimes another mechanism is a revolution i mean you brought up america for example um that that is a moment where you had essentially a revolt and that was the redistribution mechanism it feels as though i mean you say that you're betting on the you're trading and betting on the collapse of society which i think sounds a little bit uh
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
nihilistic, but when we look through history, you're not off the mark there. But I think what we could be striving towards is some sort of redistribution mechanism that doesn't involve death, pain, and suffering. I feel like that's the thing we're working towards. And so I'm just wondering if you see a future in which we can pull that trigger and
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
and not have people with pitchforks killing each other? As you say, we don't have a societal collapse. Is that possible?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
The markets were rallying on hopes for trade deals with select countries, and then the administration confirmed an additional 50% tariff on China would go into effect. That's a threat that the president had made the day before, and the stock market fell all over again. So, Scott, things are moving extremely quickly, up and down, huge volatility.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
We'll be right back. If you're enjoying the show so far, hit follow and leave us a review on Profit Markets.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
I'd love to get your reactions to what's happening in America and particularly what Trump is doing. I think, I would bet that there would be a large percentage of the MAGA base who hears this conversation, who would hear this conversation and say, well, we've got our guy in. This is the guy who's going to break up the world order. He's going to flip the world on its head.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
The stock market is crashing, which means that rich people are hurting. We're going to bring back manufacturing, and then we're going to see the restoration of the middle class, or at least poor people in America are going to get richer. I think that's a conversation that is being had in America. What would be your response to that statement? And what are your reactions to Trump and these tariffs?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
The only thing I can say with certainty is that by the time our audience is listening to this episode, things will likely have changed again. And what do you know, things have changed. Right after we recorded this conversation, Trump announced a 90-day tariff pause on most countries except for China, and the China tariff has been raised to 125%.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
I think what is very clear is that in terms of the gravity... that Trump brings to this presidency, this willingness to turn everything on its head, that might be the part where you and I, I think, Scott, agree that actually the situation is getting quite dire and we need to do something big to switch things up, basically.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
The trouble is tariffs, as you say, won't do that because it's essentially a regressive tax that's going to show up in the form of inflation, which is going to affect poor people. And they've done a very good job to convince the American people that it's only going to affect the rich. In reality, it's going to, I think, affect the poorest hardest.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And what I find whenever we have this conversation about inequality is all roads lead to tax the rich. It's very simple. It's like, I love how you simplify things down, you boil it down. It's like, where did the money go? It went all the way up here into this top 1%, 0.1%. How do we get the money out? You have to tax them. It's a very simple conversation.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
But as you say, this is all in the realm of politics and actually getting to that point is very difficult to do because we're still in the argument phase. We're still trying to convince people, hey, look how unequal things are. You're getting screwed in a lot of ways. So I don't know if it'll happen in my lifetime. Maybe it will.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
But for people who are listening to this and want to think about ways that they can change things or protect themselves at an individual level, maybe you're not going to go see the greatest wealth tax that you've ever seen in the history of our society, but maybe there are things that you can do on an individual level to grow your wealth, to protect yourself, to establish economic security,
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And as I call in right now, I'm looking at the tickers. The NASDAQ is up almost 10%, and the S&P is up almost 8%. So this is a truly insane week for markets. And I apologize that we're not completely up to date on this episode, but this conversation that we recorded before the pause is still relevant.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And I'd love to, as we wrap up here, to hear from you what your advice would be to individual people. How do you deal with this new world?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
It's still very important in terms of how to invest over the next four years and how to tackle these issues. So don't go anywhere, stick around for this conversation and we will get into the tariff pause and what it all means for you on Monday's episode. With that, let's go back to Scott.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Gary Stevenson is a YouTuber and former financial trader known for his economic commentary and activism against economic inequality. He studied at Oxford, worked with economic think tanks and founded a YouTube channel, Gary's Economics, which focused on teaching people about real world economics.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
His first book, The Trading Game, the story of his time as a trader is published by Crown Currency in the US and Penguin in the UK. The paperback has been number one for nine straight weeks and counting. Congrats on that, Gary. And thank you so much. for joining us. Our YouTubers, our YouTube audience is going to be very excited about this.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Scott, it finally happened. We finally got Gary Stevenson on the podcast. What are your reactions?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Dan Shallan is our intern. Hugh Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Prof2Markets from the Vox Media Podcast Network.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
That 90-day pause that you talk about, this fake headline went around, and it started on Twitter. It said that Trump was going to pause these tariffs for 90 days. And what's so crazy is that within minutes, in the same way that meme stocks moved, the S&P climbed 7%. It added almost $4 trillion in value. off of a fake headline, off of a rumor.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And then suddenly the White House announced that it was fake, Trump was not considering a 90-day pause, and the stock market immediately plummeted again, and that $3.5 trillion in market value was erased again within minutes. So two initial takeaways here. One, your volatility prediction was spot on.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
We've never seen this level of volatility before. And two, it is remarkable just how much the investment community hates these tariffs. The fact that they were willing to go in and start panic buying. because they saw some unsubstantiated rumor on their Twitter feed, that to me is an indication of just how desperate the markets are right now.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
They would do anything to believe and to be told that these tariffs aren't real, that it's all a negotiating ploy. But of course, they were denied that reality and they immediately started panic selling again just a few minutes later. I mean, the stock market has literally turned into like a meme stock market. It's unbelievable.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
I do want to talk about what's happening in the bond market, though, because it shows you just how disastrous these tariffs really are. But to understand that, we need to go back to the arguments the administration made in the first place as to why these tariffs were a good idea. We covered some of those arguments on Monday. It's 4D chess. It's a negotiating tactic.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
It's going to bring back manufacturing, etc., etc. We broke down those arguments. One argument we didn't cover, though, was the argument that has been made by the Treasury Secretary, Scott Besson.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And his argument is that if we implement the tariffs and we, because of that, bring down the stock market, we will also bring down Treasury yields, which in his view will be a good thing because lower yields means lower rates, lower borrowing costs for both consumers and for our country. And it also reflects this faith, not in the US stock market, but in the US debt market and our government.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Because remember, you know, treasury yields going down is synonymous with treasury prices going up. It basically reflects a demand for US debt. It reflects trust and optimism in our government and in our nation at large. So that was the plan. That was the Scott Besant plan, at least. Now, what actually happened to treasury yields? Initially, as you would expect, they came down.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And that's always what happens when you see a giant stock market sell-off. You see this flight into treasuries instead. And many in the MAGA camp were very quick to point this out. You know, they said, look, the yield's down again. What they didn't point out, though, was that yields bearish. barely came down.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
You look at the 10-year yield, it went just below 4%, which is around where it was a year ago. But at that time, the S&P was at 6,000. Today, we're hovering at around 5,000. So already, it's a huge red flag, the fact that investors are fleeing the stock market and then they're not reallocating into the treasury market in the numbers that we would have expected.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
But then it gets really bad because at the beginning of the week, the yield on the 10-year started to go up again, and then it breached 4%, and then it kept rising, and now at the time of this recording, it's at around 4.2%, which is higher than what it was before the tariffs.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
So basically what this means is, you know, in addition to this exodus out of the American stock market, which, as I said, is usually accompanied by an entry into the U.S. Treasury market as people flock to safety, what we're seeing is an exodus out of both markets, the stock market and the debt market.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
So investors have completely lost their faith in American companies and American debt, the American government. In other words, the entire world is turning itself away from America wholesale. Now we'll see if this continues, and there's a chance that by the time this airs, the yield will have come back down. But if it doesn't, and if this trend does continue,
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
then I believe that what we're witnessing today is probably the most important business story, certainly of the past decade, arguably of the 21st century. Because if you look at the numbers so far, you look at the three-day performance of the S&P, this is worse than COVID and as bad as 2008.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
But what makes this different from those events and from any event ever in America, in American financial history, is that this was done on purpose. This was not a natural disaster. This was an intentional disaster, and we've never seen that before. So we're going to spend, I think, the next three years on this podcast trying to figure out how to navigate this.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
But I just want to recognize up front this is going to be like a wild journey. Like we're going to be tackling issues that have never been tackled before. As you say, we might be witnessing this global rotation, this global reorganization away from the US. This might be the end of American exceptionalism. I don't want to jump to conclusions. I don't,
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
also want to recommend that you sell right now. I don't think we can make those conclusions yet, but I do want to be clear about what is on the table right now. And there is no doubt a restructuring of the world order is on the table. It hasn't happened yet, but it might. And I think our responsibility as investors is to deal with that.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
So my promise today in the midst of this insanity in tariffs is As the host of this podcast, also as a young person who wants to get rich and who just wants to live a good life, I'm going to do everything I can to arm this community and everyone who listens to this podcast. I want to arm you with the tools you need to not just fall off the ship here. And to me, that means accurate information.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
actual insight that is truthful, diverse perspectives, not from these grifters or these conspiracy theorists and these SPAC pumpers whose only real intention is to enrich themselves, but from real analysts who actually understand the issues. Because these are uncharted waters. It's never been more important to understand what's actually happening today.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And we're going to see so much lying in the next few years. And you have to be able to see through it. And if you don't think you can do that, then you have to choose the right people to inform you. And maybe it's not Scott, and maybe it's not me, but you do have to choose, and you have to choose wisely.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And if you are going to go with us, and if you're going to go with Prof G Markets, I just want to say, you know, I appreciate the trust, and I hope we've earned it, because it is going to be a wild ride. But... I just want to say on this podcast now, it is my commitment over the next several years to hold up our end of the bargain. I want to make sure that we are weathering the storm correctly.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And I do think that our guest today, Gary, is going to be a great start in our effort to reflect that commitment. Sorry for the rant.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
So now we have our government actively recommending individual tickers to the public, and these aren't even companies. These are assets that generate no revenue, no cash flows, no profits, assets whose value is entirely dependent on the greater fool theory. I mean, this is literally the equivalent of the US government creating a national Beanie Baby Reserve. There is literally no difference.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
And it benefits no one other than the people who already own Beanie Babies. And in this case, those are the people who are crypto investors, most of whom are in Silicon Valley and who are good friends with David Sachs, who is the guy who came up with this whole charade. You know, Elon keeps on talking about how the government is the biggest scam in history. That might be true now.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
This might actually be the biggest scam in history. Let's move on finally to tariffs. Your thoughts, Scott? This has been, I guess, a long time coming, but it is finally in effect. 25% tariffs on Canada and Mexico and an additional 10% tariff on China. What happens now, Scott?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Yeah. Just to go through the numbers that we can expect, if these remain intact, it's expected prices across the board will rise 0.7 percent, according to estimates. The price of certain other goods will be even higher, for example, fruits and vegetables, which we largely get from Mexico. Also, smartphones, they're expected to increase in price by more than $200. GDP growth is expected to fall.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
This is our worst opening ever.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Economists are expecting a 0.6% decline. Interest rates are expected to remain higher for longer, as expected. Corporate profits are expected to fall, unless, of course, corporations just pass all of the costs on to the consumers, which is, of course, entirely possible.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
All of this in concert, that is why the S&P and the Dow and the Nasdaq all had certainly one of their worst days in a long, long time. And basically all of the gains that we saw in the stock market since the election, it's all been erased because of this decision. What's the upside in all of this? I don't know. I mean, as I've said, it's very much like Brexit.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
You shoot yourself in the foot and you label it patriotism because you decide, oh, we're better off alone. But every economic study said Brexit would be a disaster. But people just loved the emotional argument. It was so compelling. They loved this sort of fake reboot version of patriotism. independence. And now the UK has its tail between its legs.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Most of the country agrees it was a giant mistake. And I think, as you say, I think a similar thing is happening here. All the ingredients look the same to me. So my prediction is quite simple. Sounds like it's the same as yours. This is Brexit 2.0. People feel very patriotic. And then we turn around and we see all the damage that we did to ourselves.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
We realize we buried ourselves for no good reason at all. We'll be right back after the break for a conversation with Jonathan Cantor. And if you're enjoying the show so far, be sure to give Profiteer Market to follow wherever you get your podcasts.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Welcome back. Here's our conversation with Jonathan Cantor, former Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice. Jonathan, thank you so much for joining us on Profiteer Markets. Great to be here. So we are nearly 50 days into Trump's second term. We've had a lot of attention on tariffs, on foreign policy, on immigration.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
What we haven't been hearing that much about, though, is antitrust. It feels like it's been kind of...
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
outshined by these other issues so i'm really excited that we can discuss this with you today for those that don't know jonathan is probably the number one expert in america on antitrust i mean he worked for a number of years at ftc he was a partner at several top law firms then he led the antitrust division for the doj under joe biden until he resigned in december of last year so
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Jonathan, give us the state of play of antitrust under Trump at the moment. What has happened thus far and how have things changed since you left?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
And what is like the other side of the argument? I mean, so it sounds like where you land is tough in terms of antitrust, tough on regulation and enforcement. These new picks are probably in the same camp. And that's for the benefit of the public, basically. What is the other side of it? What could he have gone with otherwise?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
So if you had to outline the top priorities for this administration when it comes to antitrust, maybe one or two things they definitely want to accomplish when you look at what they've done so far, what do you think those priorities would be?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Why do you think that health care is such an important priority right now?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
I think one of the other big issues that a lot of people are talking about is just the power of lobbying. That's certainly important in the cultural conversation around healthcare, the idea that politicians are basically being paid off, or at least, you know, these healthcare companies are investing millions, maybe billions into lobbying such that these regulations can work in their favor.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
You served in government for three or four years. You can now speak freely, I assume. How bad is lobbying in government? Is it something that you experienced yourself? It's everywhere, right?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
The whole lobbying industry feels so obscure and strange. Yeah. In a lot of ways, I just don't really understand how it actually works. So just at a very basic level, what does lobbying actually look like? Is it a meeting with someone and they present all the arguments as to why something should or should not be done? Why is it so compelling and why does it push politicians forward?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
I mean, it sounds like, you know, you are fighting against that to the best of your ability. It's possible now that the DOJ will be—have its funding cut with DOJ. I mean, what do you think of that? Do you think that Doge will target the DOJ? And if so, what would that mean for antitrust?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Are there any sectors of the government that you believe actually could benefit? from budget cuts or from at least being inspected by some form of government efficiency oversight?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
It burned down. I saw that. I had serious schadenfreude on that because obviously I've never gotten in.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Thank you. Thank you. Thank you.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Yeah, I've heard of this. By the way, we really need to put a moratorium on the members club's talks because the problem is both you and I are irrationally obsessed with this stuff in a way that's very unhealthy and strange. That's because I'm a narcissist. So, I mean, I could talk about this with you all day, but, you know, we really got to... Well, just let me finish up here.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
As you look at the state of competition across the US, and I think maybe let's put big tech aside, because I think it's clear what's at stake there. Which sectors would you say are most in need of antitrust enforcement? In other words, where in the economy, aside from tech, is monopolization most problematic or most egregious?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Everything you've said so far feels so bipartisan. Like, I can't figure out how— How you could really take issue with any of your positions that have been explained on this podcast. But I'm going to try, or at least, you know, I want to point out some things that would maybe be said on the Republican side of things.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
I love that distinction. Who, in your view, is on the side of the former? Who, in your view, in America today, or which kinds of people want more monopolization in America? The monopolies.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Buying a house has long been considered the best way to build wealth and move into true adulting.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
I'm sure you'll get into Soho Muse, but by the time you get in, there's going to be another Soho Muse. Yeah, probably. All right, enough of that shit. Get to the headlines.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
So it's basically in line with what we're seeing in government right now, which is You know, the tech oligarchy is emerging where we have a few monopolists who are running around trying to convince everyone that we should maintain these monopolies. And now they're getting cozy with the president. What is your view on these people's relationship with Donald Trump and does it concern you?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Jonathan, this has been exceptional and I really appreciate your time. I have one final question for you. If you had to give... a piece of advice to young people who are listening to this program who are interested in government, who are interested in service, and they're trying to figure out how to provide value for our country, what would your advice be?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
European defense stocks hit their highest level in four years after President Trump's meeting with Ukrainian President Zelensky put pressure on European leaders to boost defense spending. The stock's Europe Aerospace and Defense Index rose 8%, while London's FTSE reached a record high.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Jonathan Cantor is the former Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice under the Biden administration. During his tenure, he brought major antitrust lawsuits against Google, Apple, Live Nation, and Ticketmaster, UnitedHealth, RealPage, American Airlines, the meatpacking industry, and many others.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
He also previously served as an attorney at the FTC and he founded his own law firm, Canton Law Group. Jonathan, this was so great. I really appreciate your time. And I will just say it's very nice to have you out of office because now we get to hear about how things actually work, which is a great benefit. So, you know, there's a silver lining there. All right.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profity Markets from the Vox Media Podcast Network.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday. Lifetime
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Trump is planning to create a national crypto reserve that would include Bitcoin, Ether, XRP, Solana, and Cardano. It's the first time he's proposed actively buying crypto in regular installments, rather than simply stockpiling the assets. Bitcoin and Ether jumped more than 10% on that news.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
And finally, the 25% tariffs on imports from Mexico and Canada are officially in effect after hopes for a last minute deal fell through. Trump said there was, quote, no room left to negotiate with the two countries. All three major indices fell on that news with the S&P 500 suffering its worst day of the year. Okay, Scott, we have three Trump headlines.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
I know we said we were going to try to talk a little bit less about Trump, but the trouble is politics and markets, they are simply connected. And these are the biggest stories that are moving the markets right now, and they all have to do with Trump. And I think that's probably by design.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Let's start with your thoughts on European defense stocks rallying after that rattling meeting we saw between Trump and Zelensky last week.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Okay, the handbag you can probably manage without. But what about a house? Surely that's actually good, right? We're going to find out this week on Explain It To Me. New episodes every Sunday morning, wherever you get your podcasts.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
I'm completely with you on the silver lining here. And just, if we look at the numbers, so last year, Russia spent, if you adjust for their purchasing power and defense, they spent $462 billion on defense last year. All of Europe, meanwhile, spent only $457 billion, so less than Russia. And if you look at that as a percentage of their GDP, the difference becomes even more stark.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
So Russia spent 7% of their GDP on defense. That number is expected to increase this year to 7.5% or higher. And then on average, Europe spent 2.2% of its GDP. So yeah, Europe can spend more. Trump wants them to go to 5% of GDP. He wants to make that a minimum. That's very unlikely. I think for a lot of these countries, it's just not possible for them economically.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
But I think Europe has gotten the message loud and clear. They're on their own now. I think we're going to see double-digit percentage growth in defense spending from all of the major European governments, which means that these defense companies will be in very, very high demand. We saw shares in Rheinmetall, which is Germany's largest defense company. Those rose 15%.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Britain's BAE Systems rose 14%. Leonardo, a defense company from Italy, that rose 17%. So the markets are basically telling us, European governments are going to significantly increase their defense spending, and that's going to benefit these defense companies.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
I wouldn't invest in those defense companies myself, because I think the market is reacting a little too over-enthusiastically to this, what happened last week. I think they're expecting these budgets to transform overnight, but in reality, these transitions happen quite slowly and quite steadily. They have to get through governments, they have to figure out these supply chains. I mean,
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
reconstituting an entire army is not an overnight job but there is no doubt europe will be bolstering its militaries and i do i like the silver lining you point out there and i think i agree with it let's shift to crypto and this new u.s crypto reserve so our government will be buying bitcoin ether xrp solana and cardano in regular installments
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
I find this quite ironic because, you know, you think about the conversation we just had about Ukraine, where America's position is, sure, you need help, but we can't afford it. We've got our own problems. Meanwhile, we can afford buying up billions of dollars of useless cryptocurrencies that provide no benefit to the real economy whatsoever, which I find ridiculous.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
The fact that these headlines are happening in the same weekend.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Yeah, the person you're talking about there is David Sachs, of course, who is the AI and crypto czar. He is a significant crypto investor, both individually and through his VC firm. And I do want to just play you a clip from the All In podcast And this was recorded, I think, a couple of years ago. Really? You mean the All Grifter podcast? Yeah, the All Grift podcast.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
And basically, David and his boys are talking about their positions in Solano, which is one of these cryptocurrencies that is going to be included in the National Crypto Reserve. I'd like to get your reaction to this.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
David Sachs did sell his individual crypto position before he joined the government. So he doesn't own Solana anymore, but his VC still owns stakes in these crypto startups. And of course, all of his friends are big crypto investors. So yes, he's not enriching himself directly with this move, but he is certainly enriching himself indirectly. And he is for sure enriching his friend.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
So I just want to get that argument out of the way. But doesn't he have huge investments in crypto-related companies? He has huge investments in crypto-related companies, exactly.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Well, this is the argument these guys like to make. So I'm just, I'm steel manning their corrupt position. Yeah.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
The delivery was wrong. To bean on your face? Oh, dude, shut the fuck up.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
I think that applies specifically to Bitcoin. And, you know, I'm willing to hear the Bitcoin argument out. But, yeah, it is ultimately a bet against the U.S. dollar. So why would the U.S. government be betting against its own currency? This is completely different, though, because this is— a ton of other cryptocurrencies in addition to the Bitcoin.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Many of you will probably be relieved to hear that. We'll just be getting into the markets today. Later on, I'll be speaking with Tim Higgins, Wall Street Journal columnist covering the automobile industry. We'll cover his thoughts on the winners and losers of the auto tariffs. But before we do that, let's get into the headlines.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
On day one, they were clocking a million new signups every hour. I don't know about you, but my entire social media feed has been filled with these AI-generated images that people have been making on ChatGPT. Everyone's making these Studio Ghibli images. images. Some people are taking images and turning it into the Muppets characters.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Last week, my sister sent me a picture of her and her new dog, except it was an AI-generated image that rendered them as cartoon characters. She said she was playing with ChatGPT all day. This is the kind of creative inspiration that I don't think you can really capture or understand with just numbers. To me, it's so much bigger than that. To me, this is a once-in-a-generation product.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
I think the only thing that stands in OpenAI's way, is the competition. You know, it's not a question anymore of whether AI is going to take over the world. Everyone knows that's going to happen. It's a question of which AI company takes over the world. And the only real competitors you have right now are DeepSeek, Anthropic, and Gemini.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And you look at the user numbers on those platforms, you look at what they're doing in revenue, they are tiny compared to OpenAI. OpenAI is totally running away with it. So I'm really bullish on this company. My prediction, I think OpenAI is the next trillion dollar company. I think the growth potential there is massive. I think the technology is out of this world. I love using it.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
I use the product every day. I talk to my friends, they use it every day. People in all sorts of sectors, people in consulting, people in finance, people in creative industries. And so $300 billion valuation for this company, what I believe is the next big tech company, I think the investors are getting a good deal and I would have liked to be in the deal myself. Those are the headlines.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
We'll be right back for our conversation with Tim Higgins. We're going to be breaking down what is going on in the car industry and what these tariffs are going to do to the car industry. Stay with us.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Welcome back. Here's our conversation with Tim Higgins, columnist for The Wall Street Journal, CNBC on-air contributor, and the author of Power Play, which is a book about Tesla. Thank you for joining me on Profiteer Markets, Tim. Well, thank you. So there are a lot of headlines about cars that are floating around in the news this week.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
President Trump announced reciprocal tariffs on U.S. trade partners, marking the occasion as Liberation Day. He also imposed a 25% tariff on imported vehicles. Elon Musk's XAI has purchased his social media platform X. The all-stock deal values X at $33 billion or $45 billion when you include the debt.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And so we really want to get you in here to talk about this today. For those that don't know, Tim covers media and tech for The Wall Street Journal, but he's also covered a lot of the auto industry as well. And of course, he wrote that book about Tesla. So we're going to focus on the automobile industry exclusively today. And I'd like to start with this new tariff that Trump introduced last week.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
He's putting a 25% tariff on all foreign-made cars and also a 25% tariff on all foreign-made auto parts. So, Tim, break it down for us. One, why is Trump doing this? And two, what does this mean for the car industry and for the economy at large?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Yeah. So, you know, all the car stocks basically dropped across the board after the announcement. And I think that was probably expected for the foreign car stocks. But, you know, then I see stocks like General Motors and Ford, they're also dropping. So why are they dropping as well? Is that because of what you said there, that they also rely on car parts that are outside of the U.S. ?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Are there any winners of these tariffs? I mean, we've been over the losers, of course, the foreign car companies. Sounds like most of the American car companies, too. Are there any winners here that you could identify?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And finally, OpenAI closed a $40 billion funding round led by SoftBank, which values the company at $300 billion. It is the largest private funding round in tech history. Okay, let's start with these reciprocal tariffs. Of course, everyone is talking about it. Liberation Day has come. You know, I think the idea of reciprocal tariffs, reciprocity, I actually think that's a nice idea in theory.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Yeah, there was this quote he said that I wanted to get your take on. The reporters were asking him about the prices and if he was concerned about what this would do to prices, because I think this is one of the main consequences of these tariffs is that prices go up. He said, quote, I couldn't care less.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
I hope they raise their prices because if they do, people are going to buy American-made cars and we have plenty. So his point is, you know, let them raise the prices because it doesn't matter whether Because people will buy American and the American cars, the American companies won't have to raise their prices. I guess my question to you, is that true?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Is that true that we have enough American car makers and, you know, enough American car part makers? Can we do this all on our own such that the price of a truly American car won't actually go up?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
You mentioned Tesla there, that it's a winner, potentially, from these tariffs. I'd like to talk about Tesla more generally, which you've covered extensively. It's been a very bad year for the stock overall. It's down 36% in the first quarter. worst performance for the company in any period since 2022. They've lost almost half a trillion dollars in market cap.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
As you look at Tesla today, what do you think are the biggest obstacles for the company right now? What's gone wrong? And what do you think the next four years look like for Tesla?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
I don't see any issue with saying, you know, you guys charge us this amount and we're going to charge you the same amount right back. Reciprocity, that sounds fair to me. The thing is, if you're going off of what Trump says, you would get the idea that we are the benevolent nation when it comes to tariffs. You'd get the idea that everyone else is screwing us.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Yeah, it seems that the valuation, which is still actually quite high, I mean, yes, the stock's down 36%, but on a price-to-earnings multiple, still trading at 130 times earnings, and then you've got GM trading at 5, 6, 7, Ford at 5, 6, 7, Stellantis in the same ballpark. I mean, it's a totally different situation. It's a totally different valuation.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And it certainly appears that the real story here for Tesla, or at least the growth story, is, you know, the robotaxis and the energy business and the AI and the robots, etc. As you look at all of those other businesses... which I often write off because I say, well, show me when they ship. But when you look at those businesses, which of them is most compelling to you?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
You know, they've been playing hardball. We've been playing softball. So let's play hardball right back. And I would agree with that notion if it were true. And the trouble is, it isn't. The reality is that we are in fact the stringent nation when it comes to tariffs. Most other nations are actually more lenient than we are. And I can give you countless examples of where that is the case.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
If you had to sort of fashion a bull case on Tesla, which of those businesses do you think is going to really drive the value for the company?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Thank you. Thank you. Thank you. Thank you.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
You look at Japan, for example. We charge 25% on every Japanese truck that enters the U.S. Meanwhile, for American trucks that enter Japan, the tariff is 0%. You look at Brazil. We charge them 81% for their cane sugar. They charge us 14%. You look at New Zealand. We charge them 13% for their butter and 10% for their milk, and they charge us nothing. In fact...
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Thank you. Thank you.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Since 2009, we have implemented the highest number of domestically beneficial trade interventions, more than any other nation, three times more than Germany, three times more than Canada, five times more than France. So actually, when you look at the tariff situation, It's not that everyone's playing hardball and we're playing softball. We're actually going pretty hard on everyone.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And I'm fine with the idea of reciprocity. I think reciprocity makes sense. But let's be clear. True reciprocity would mean we're in for hundreds and hundreds of tariffs that are coming right back in our direction. We are not the benevolent nation we think we are. In fact, we are quite hawkish on trade. So we'll see where this goes. I think implementation is going to be a nightmare.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Two companies we haven't mentioned are Rivian and Lucid. I'd say those are the other EV leaders in America, at least. Where do they stand in all of this? How are they faring at the moment? And are they in a similar position? Are they in a similar mess that these legacy car companies are as a result of these tariffs?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
That's at least what many economists are saying. It's very difficult to do this as quickly as Trump is saying we can do it. I don't see those tariff revenues hitting our bottom line anytime soon. But I think the most important consequence of this action is we are going to see extreme retaliation from every other nation around the world when it comes to tariffs.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
We've talked about all of these different car companies, these car stocks. Is there a car stock or a car company that you think that we're not paying enough attention to right now? We talk a lot about Tesla, been talking a lot more about BYD recently, I would say, but there are so many others out there.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Is there a company that you're particularly interested in that you think that we should be paying more attention to, either for good reasons or for bad reasons?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Tim Higgins is a columnist for The Wall Street Journal. He writes about the worlds of autos, media, and tech. He became a columnist in 2023 after working for more than two decades as an award-winning reporter, covering everything from the bankruptcy of General Motors to the 2016 presidential campaigns. He is also a CNBC on-air contributor and the author of Power Play, a book about Tesla.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
I don't see how this works in our favor. All this is to me, is a reflection of our delusion, our tendency and obsession with thinking that we are the victim in a world where both historically and presently, you look at the numbers, we are in fact, in most cases, the victim. Let's talk about XAI.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Tim, this was great. I'm glad we got the auto update, and I appreciate your time. Well, thank you. This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Thank you for listening to Profiteer Markets from the Vox Media Podcast Network. If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday. Lifetime
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
The first thing you might be thinking here, certainly the first thing I thought when I saw this headline, wow, XAI is valued at $80 billion, X, the social media company, is valued at $33 billion, $45 billion when you include the debt. That's actually really impressive. You think back to just a few months ago.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
when Fidelity marked down their stake in X and they were valuing the company at less than $10 billion. And in those few months since that point, the tech sector has only been in decline. The Nasdaq's down around 11% year-to-date. So I see this headline, I think, well, things must be going awfully well over at X if the company is commanding a $45 billion enterprise value at this point.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
I want to clear this up right off the bat. Both of those numbers are fake numbers. They are totally an accounting trick, and they are an example, in my view, of Elon's incredibly deft understanding, not of how to run and operate a business, but of how to game the markets and inflate the perceived value of his companies way beyond what is even remotely reasonable or logical.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And he's used several distinct strategies to get there here, and I'm gonna explain them now. The first thing you have to understand here This was an all-stock deal, meaning no cash was exchanged in this transaction. What this deal does is it says to the shareholders of X, we're diluting your ownership stake in X, and in exchange, you're going to receive these shares in XAI.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And to the shareholders of XAI, the opposite. We're diluting your stake in XAI. In exchange, you're going to get these shares in X. So to assign any dollar amount to this transaction, to begin with, is a red herring, because... no dollars were exchanged. The only thing that matters here is the ratio in the value between the two companies because that's what determines the dilution.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And what the ratio tells us is that the shareholders in X will own 30% of the combined company and the shareholders in XAI will own 70% of the combined company. But no one got richer and no one got poorer because again, no cash was exchanged. So how did we arrive then at this gigantic valuation? Well, a lot of it has to do with the power of the word AI. XAI is an AI company.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And despite the fact that it has generated almost no revenue yet, investors are willing to overlook that. And they're willing to assume that over the long term, the company is going to make a lot of money. Elon Musk knows this. And that's why he's combining these two companies.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
He believes that if he can rebrand the social media platform as an AI company, he can inflate the perceived value, which will make it a lot easier for him to raise money in the future. And by the way, I'm sure he's right. But again, this doesn't have anything to do with actual dollars. It has no basis in revenue, no basis in earnings.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
This is all a function of his ability to tell a compelling story. Now, everything I've described so far is pretty standard in the world of venture capital. An all stock deal, that's pretty common. Pumping AI, that's common too, we've seen it a lot. Here's where it gets a little dicey though.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
You might remember a few weeks ago, we discussed a headline that X had been valued at $45 billion in the private markets. not with stock, but with cash, meaning someone had actually paid money at that valuation. And I asked the question to Josh Brown, who the hell is paying for this? You know, revenues are down at X 40%. EBITDA is shrinking. It's down to $1.2 billion.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And apparently, by the way, that's a highly adjusted number, which means the real number is even smaller. So how does the valuation add up? Well, I found my answer. According to Bloomberg, the buyer in that private transaction was Elon Musk. Elon invested $150 million of his own money at the ridiculous valuation of $45 billion.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
So when you read that headline, when you read a headline that says X valued at $45 billion, including debt, you're not actually getting the real story here. The real story is that Elon Musk valued X at $45 billion. The whole thing is a charade to make you think the company is more valuable than it really is. So I'm just fascinated by this transaction.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
because it shows you just how good Elon Musk is at gaming the system. You know, he's a master of branding, using the word AI, combining the company, turning this whole thing into an AI company.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
He's a genius in creative accounting, massively adjusting the EBITDA of X, the social media company, and then going in and buying shares in the private markets and not disclosing that it's him buying the shares so that everyone thinks the company is more valuable than it is. But most importantly, He understands more than anyone else that in 2025, all of this is worth it.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Because if you can convince other people that you're more successful than you are, that your company is more valuable than it really is when you go in and look at the revenue and you look at the numbers, if you can do that, you can ride the momentum until you actually are successful. The common term for this is fake it till you make it. But Elon Musk is a champion of this principle.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And this transaction, what we've seen here, XAI buying X for $45 billion, including debt, the numbers are nothing. The numbers are meaningless. This transaction is simply a reflection of his fundamental belief in that principle, that if you fake it, eventually you will make it. And that's what these numbers are. They are fake. Okay, OpenAI, $40 billion in funding, $300 billion valuation.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
This is the largest financing round in history. Actually, the valuation is higher than any IPO in the history of global markets. So this is a huge deal. And I think the question everyone's asking and everyone's going to be asking is, is it worth it? Is this company overvalued? My opinion, I don't think it is. I genuinely believe that this is a once in a lifetime company.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Apple, Microsoft, Google, Berkshire Hathaway, Standard Oil. I think OpenAI is on track to reach a level of influence and a level of value that is comparable to these companies. And if I could have invested in this company at $300 billion valuation, I would have.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
But before we get into the details, I just want to check in on a prediction that Scott made on this deal and the role that SoftBank would play in it.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Welcome to Prof G Markets. So Scott is out this week. He's on his grand college tour with his son. I believe they are in Chicago right now. They just visited Northwestern and UChicago. Fun time to be in the Galloway family. So I'm flying solo today, which means we're not starting with a joke. We're not starting with a dick joke. Many of you will probably be sad to hear that.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
So that prediction didn't really pan out. OpenAI has secured that $300 billion valuation, but there is an interesting caveat in the deal. And that is SoftBank is leading the round with $30 billion. but they've said that if OpenAI doesn't restructure into a for-profit company by the end of the year, they're going to reduce that investment to $20 billion.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
So to be fair to Scott, we do have a new and fairly significant term here. But in terms of the valuation, we're still at $300 billion. SoftBank was down for that. They did not get the jitters. And as I've said, I think that this is the right valuation. Let's look at the numbers on this company. Let's look at why this is such a strong company. On revenue,
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
The company's on track for $13 billion in sales this year. Huge. On users, they've now hit 500 million weekly active users, not monthly actives, weekly active. So in other words, the population of the entirety of North America So the US, Canada, Mexico combined, they are logging on to ChatGPT and using the product every week.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
This is absurd growth, especially when you consider the fact that ChatGPT launched only 26 months ago. It's only a couple years old. But what makes it so compelling to me, what makes the $300 billion valuation worth it, is the monetization rate at OpenAI. Only 5% of ChatGPT users are paying for the product.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And as I've said before, this isn't because OpenAI hasn't figured out how to monetize the platform. They're smart people. It's because they've chosen not to. They're sacrificing revenue in exchange for growth. And all it would take if they wanted to 5, 10, 15x their revenue overnight would be to flip a switch. And the switch would be very simple.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
It would be a paywall that says, if you want to continue using ChatGPT, please insert your credit card details here. This is an absurdly strong position to be in. And it honestly reminds me of the early days of Amazon and of Facebook and of Google. The only difference though, is that the customers of OpenAI are already paying for the product. They're not reliant
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
on advertising to supplement the revenue. And by the way, they could take the ad model if they wanted to. That's certainly on the cards for OpenAI, but they have chosen not to. Instead, they're shooting for growth and it's paying off tremendously. So those are the numbers. Now let's just talk anecdotally about the success of this company.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
I have never seen a product that has captured the imagination of the public like ChatGPT has. And it all started really with the launch, when they launched two years ago. The eureka moment for me was when my mom showed me that she was using ChatGPT to generate a personalized poem that she delivered to me and my family on New Year's Eve two years ago. And...
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
I really think this is a good rule of thumb in tech. I think if your parents start using a product, a frontier tech product, that means you have something extremely special. Even my grandparents are playing with this. That's just not normal. That doesn't really happen in tech. And since that point, it's only gotten better. It's only gotten more viral. Last week, OpenAI launched image generation.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And then they're using the proceeds from the bonds that they sell to buy even more Bitcoin, which they again use to sell even more bonds by using collateral again. So it's just rinse and repeat, rinse and repeat. You buy more Bitcoin, you sell more bonds. You buy more Bitcoin, you sell more bonds. That is a Ponzi scheme. You're using existing investors' money to pay out new investors.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And it would be different if the bonds were secured by, you know, a productive asset, an asset that generates actual cash. But they're not. They're secured by an asset whose value is entirely dependent on more investors entering the ecosystem. And that, to me, is definitionally a Ponzi scheme.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
But I just think that we've been so distracted by the astronomical returns that we've been seeing on these stocks. I mean, we just pointed out GameStop is way up this year, and it increased even more when they announced this treasury strategy. MicroStrategy increased 600% in one year.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
It's so numerically compelling that I think what is happening is what so often happens with Ponzi schemes that we're so excited by it, we turn a blind eye to what's really going on. And I think a lot of other companies are now doing this. You've got GameStop, there's company Semler, Metaplanet, Kula. They're all public companies.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And you even now have the NASDAQ including MicroStrategy in the index fund, meaning we now have millions of dollars of retirement account money and pension fund money going into these things. And I think it's a Ponzi. And all it would take for the whole thing to come crashing down is for the price of Bitcoin to drop. And you made that point to Michael.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
You said, what happens if Bitcoin goes to, say, $40,000, I think? And his response was, well, what happens if a meteor hits us tomorrow? which is clearly a false comparison because the chances of a meteor striking the Earth are infinitely lower than the chances of the price of Bitcoin going down.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
That's good. That is good. I like that joke. That's clever and historical. It's time for banter. What's going on in your life? I'm doing okay. I woke up with a bit of a cold this morning, which isn't ideal, but otherwise doing quite well. You sound fine.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
So, you know, I've been, you know, a little reticent to talk about this aggressively because, you know, I don't want to make an enemy out of anyone, but it's getting to a point now where we're seeing so much adoption of this GameStop, which is owned by so many retail investors, it is the retail stock. And now they're adopting this strategy.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And as I just mentioned, they say, we're going to buy the Bitcoin, but first we're going to sell the bonds to do it. So it's the same strategy that we've seen. And to me, this is really concerning, but perhaps you have a different view.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
I'd agree with you if the underlying asset had any sort of cash yield. Maybe it's... Ponzi's scheme doesn't feel right because he's not actively defrauding people and going and saying, hey, I'm going to take your money and then we're going to put it over here. But what is happening is that the value of the asset is dependent on other investors entering the ecosystem. And the difference is that...
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
those investors are anonymous because it's just people who buy Bitcoin. The whole thing is predicated on, in the same way that your friend was taking other people's money and then paying it out to someone else. This is the same system, it just has more people in the chain, is what I would say. More points of contact, basically.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
I think we can call it an asset. I don't think it's a security. But I think we can call it an asset. But that dynamic that I described, this thing no longer works if people don't keep coming in. The whole thing is predicated on that. So as soon as that stops, as soon as new investors don't enter, The whole thing collapses. My sense of this is pretty simple.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
But he makes the argument that the whole thing is protected because it's a bond. But, you know, I think he picks and chooses different parts of this financial play such that he can say things like, well, what if a meteor strikes us tomorrow? And by saying, oh, it's a bond, you're protected. But then in certain occasions...
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
not pointing out that actually it's a convertible and, you know, this is going to convert to equity. And you could very well lose all your money if Bitcoin goes up tomorrow, but then crashes the next day. Yeah, you're equity now. You're wiped out. Some people are now owning it in their portfolios and they didn't even sign up for it because it's now part of the NASDAQ.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And this is why I'm being aggressive now and not before. It reminds me of 2008 in a lot of ways, where so many more companies and institutions are buying into it, I think because they look at the numbers, look how much it's gone up. And that's the part that concerns me, which is why I want to flag it.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
It was very sexy. Look, he's really – he's an amazing salesman. He has great analogies, but at one moment he compares – He compares it to real estate, and he says this is like buying real estate in Manhattan. And the next moment, he's comparing it to commodities. And the next moment, he's comparing it to Henry Ford and the fire that fueled the car.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
I mean, these are all very different arguments that he's picking and choosing. I think you're a little jelly.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Okay, what I can guarantee, the comments are going to say Ed is jealous of him, for sure.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
We'll be right back after the break with a look at an activist play at Lyft. If you're enjoying the show so far and you haven't subscribed, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Last year, Hooters closed dozens of restaurants because of rising food and labor costs.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
We're back with Profit Markets. Activist investor Engine Capital has taken a 1% stake in Lyft and is calling for a strategic review of the company. They've raised concerns about Lyft's stock performance, their strategic direction and governance, and they're also calling for the removal of Lyft's dual-class share structure, and they've proposed new candidates for the board.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
The stock rose more than 2% on that news, but it is still down more than a third over the past year. I would first like to point out, Scott, which is what an unserious activist play this is, because they're asking to reorganize the shareholder structure and get rid of the dual-class shares. dual-class shares exist so that this doesn't happen.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
They exist so that founders can protect themselves from these activists coming in and trying to change the company. So I don't think this is going to go through. I don't think they're going to get what they want here. Maybe have a different view. But it does raise an important question, which is what can Lyft do to revive itself? It is performing very poorly.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
It's down around 85% since and when public. And you were once an activist investor. And from my understanding, you also know the CEO of Lyft as well. You're friendly with him. So what is your reaction to this activist play? And perhaps if you were the activist yourself, how would you approach this company strategically?
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Thank you. Thank you. Thank you.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Thank you. Thank you.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Yeah, I'm not drinking that much. I drank a little bit last night. My friends took me out to the grill in New York. Have you been to this restaurant? This is like the successor to the famous Four Seasons restaurant. It's in the Seagram building. Fancy. So they went out and bought me a nice dinner. It was very nice. And they forced a martini on me. So I did drink last night.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
I didn't really want to. But, you know, I got peer pressured. But beautiful restaurant. I would highly recommend, yeah, the grill. Apparently it's where Bob Iger goes every lunch.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
A martini. Anyways, get on with the headlines. Let's do it. Let's start with our weekly review of market vitals. The S&P 500 fell ahead of Trump's auto-tariff announcement and struggled to recover. The dollar climbed, Bitcoin was relatively stable, and the yield on 10-year treasuries rose. Shifting to the headlines. Delaware is making big changes to its corporate governance laws.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And this is the, I mean, liberal arts degrees have been in decline and people have been saying, you know, what's the point of these liberal arts degrees? But it is, it does, it's starting to feel that now that we've almost over-indexed so hard on the hard sciences and on the computer sciences that suddenly the economy is seeming to kind of reshift and
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And we're starting to see more emphasis on the soft skills, the ability to communicate, to tell a story, to have a strong sense of history. I mean, maybe I'm being biased because I got a liberal arts education. But there was this interesting quote by this guy, Amjad Massad, who is the CEO of Replit, which is this big software company. And he was talking about this new trend of vibe coding.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And this is this trend that is becoming very big in Silicon Valley, where engineers are basically just prompting AI to build the code for them. And you now have very reputable, even, you know, computer science professors who are teaching people how to vibe code because they recognize this might be the future of coding. You don't need to have a really perfect understanding of computer science.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
You can basically use AI to just push the ball down the line. And he was making the case for vibe coding, this guy, Amjad Mossad. And he even said that he doesn't think people should be learning to code anymore.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
That to me is like a glowing endorsement of liberal arts. But I'm curious to get your take.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
such as restricting shareholder lawsuits against founder-led companies. The move aims to prevent businesses from relocating to states with looser regulations. Waymo is launching its Robotaxi service in Washington DC in 2026. The company currently operates in San Francisco, Los Angeles, Silicon Valley, and Phoenix. And finally, GameStop is officially adding Bitcoin to its treasury reserves.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
I mean, if I were to summarize your advice there, it's to get as good an understanding as possible of other people. And yourself. Right. And the only way that you could do that is through meeting other people and establishing relationships with them. And I do think that is actually great advice because it makes you nimble in any situation economically.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
I mean, the biggest realization for me coming out of college was I thought these companies that I heard about with these big... sort of amorphous conglomerate brands that have all these rules and definitions for, you know, these are the skills that you must learn, and this is the type of person you must be. In fact, it's all just groups of people.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And your ability to get hired is, as you say, a function of whether the person in charge of the hiring decision likes you and wants to work with you. And that was honestly a really eye-opening experience for me, is realizing that Life and work is literally just interacting with people. So if you can be really good at that, then I think you'll be fine. That's the key.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Let's take a look at the week ahead. We'll see the unemployment rate for March and U.S. reciprocal tariffs are set to go into effect Tuesday on what Trump is calling Liberation Day. Scott, any predictions from you?
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kintzel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profiting Markets from the Vox Media Podcast Network.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Its stock initially surged on the news, but it eventually fell 23% after the company announced a $1.3 billion convertible bond sale to fund the investment, which is, of course, exactly what MicroStrategy did. Scott, let's start with your thoughts on...
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
this change coming from Delaware, and just some context, and I mean, this is coming right after this highly controversial lawsuit against Tesla that we covered, where the Delaware court ruled against Elon Musk, they cancelled his $56 billion pay package, and in response, Elon decided, fuck you guys, I'm leaving Delaware, I'm going to reincorporate Tesla in Texas, and we've seen other companies either
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Isn't it? I mean, at least that's what society wants us to think. Gotta get a Birkin, gotta get a home, you know.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
following suit, moving, or they're at least signaling their intention to move one of those companies is Facebook. And so this is Delaware's response to that immigration out of their corporation system. They're loosening their governance laws in favor of founders. They're making it harder for shareholders to sue. They're also narrowing the definition of a conflict of interest.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
These are all the very conditions that made that Tesla lawsuit possible in the first place. And so this is basically their reaction to what happened with Tesla. They're now acquiescing. Scott, your reactions.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
the most important stat you mentioned there is the fact that a third of Delaware's tax revenue comes from these incorporation fees. I mean, people ask, you know, why do all these companies incorporate in Delaware? The answer is that historically, Delaware has been a very pro-business state. You have tax benefits, you know, strong privacy laws.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
This is generally speaking throughout history, throughout corporate history, this has been a good place to incorporate your company. And now we're seeing a reversal of that trend. People are now deciding, due to what happened with Elon, that Delaware is actually anti-business. And so I think to an extent, they don't really have a choice but to loosen up on these laws right now.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Because if they don't, and if they just let companies leave the state, they're going to lose out on a ton of tax revenue. And when you look at the state, this entire state is really reliant on these relationships with these corporations. I don't like it. You know, I don't like that we're seeing, once again, regulators bending the knee to billionaires.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Critics are calling this the billionaire's bill, this decision to loosen the laws. And they're right, because this is specifically designed to appease the billionaires, specifically designed to make the founders of these giant companies, which hold all of the shares and all of the voting power,
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Companies like Facebook, where you've got Mark Zuckerberg and all of his interests, and then, of course, companies like Tesla. This is all to make them feel happier about being in Delaware. And it's a trend that we keep on seeing, where regulators recognize the power of billionaires. They recognize how much we need them in terms of taxes.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
We're so reliant on these rich people and their ability to contribute to government revenue. And so they have to do it. So I don't blame them for doing it. But is this a good thing? No, I don't think it's a very good thing. I don't think it's good that we are seeing a state basically rewriting their laws and rewriting their rules of equity to make the richest people in the world happy.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Let's talk about Waymo. Waymo is currently operational in San Francisco and LA and Phoenix, but next year it will be in DC. So they are scaling very quickly. Scott, your thoughts on Waymo?
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
What do you get angry about?
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Does anyone ever recognize you when you get in the Uber? They're like, oh, you're that guy, Scott Galloway, and try to spark a conversation. That has never happened to me in an Uber. So clearly they're not the target audience. So you can rag on them as much as you want.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
I'm rich. I don't need to be kind. I'm pretty sure that's, yeah, that's definitionally a douche bag.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Should I write children's books? By the way, I kind of agree with you, but I'm trying to work on that. I think I need to be better and more amenable to small talk. You're young. You're still in your mating years. Yeah, exactly. But just to focus on Waymo as opposed to being antisocial, just some data. So Waymo completed more than 4 million paid rides last year.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
What's the difference?
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
That's more than 11,000 autonomous taxi rides every single day. And I just want to compare that to the competitors of Waymo. You mentioned Tesla, which I agree. I think when people say they hear the word robotaxi, they think of Tesla. How many paid robotaxi rides did Tesla complete last year? Zero. You look at the other competitor, Zoox, which is owned by Amazon.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Last year, they completed, wait for it, zero paid rides. Cruise, which is owned by General Motors, they also completed zero rides last year. By the way, they also ended up shutting down that business entirely. In other words... This is one of the most important technologies of our time, or so a lot of people say. And Waymo is the only company in America that has figured it out.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Tesla's been talking about it for 10 years. They've shipped nothing. Meanwhile, Waymo is fully operational in three major metro areas. It's expanding across four more. I think they're even testing in Japan right now. So I think if you had to identify a sector...
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
where there is the greatest disparity between the market leader and the runner-up, I think you would have to say that sector is autonomous vehicles and robotaxis, and you'd have to pick Waymo. And, you know, you mentioned the branding point. I don't think Waymo gets enough credit for this. I mean, this is an incredible company. They're absolutely killing it right now.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And when you look at the competition, it just proves how difficult it is, both from a technological perspective and also from a regulatory perspective. This is the only autonomous company which is actually supported by regulators because they recognize, yeah, this thing is safe. They've tested it. They've proven that it works. And now they can expand.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
I haven't done the analysis on Waymo individually. But if the robo-taxi market is as big as people say it is, if it warrants the multiples that we're seeing in Tesla, I mean, how else could you justify... the valuation of Tesla right now if it isn't autonomous driving. Fair point. If we're comparing it with that, then yeah, I'd invest for sure.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Let's talk about GameStop. GameStop is deciding to purchase Bitcoin. They're adopting the same strategy that we saw with Michael Saylor at MicroStrategy. I'll just start off by pointing out that this is This really worries me because GameStop isn't the first to do this. There are other companies that are following suit. We've been over some of those companies in our episode with Josh Brown.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
So this is becoming a thing now. A lot of these companies are buying Bitcoin and doing the same thing that Michael Saylor did. And why is that a problem? You know, we've been friendly with Michael. I know you're friends with him. I think we've been kind of nice, or at least we've gone a little bit easy on MicroStrategy.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
But I think it's getting to a point where this is becoming so popular among companies, you know, not just GameStop, but dozens of other companies. I think we now need to be more candid about what MicroStrategy is doing. I think what they're doing is a Ponzi scheme. They're buying up Bitcoin, and then they're using the Bitcoin as collateral to sell bonds.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Oh, a joke. Good. How did he break his arm?
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
I think the important thing you mentioned there, though, is legal monopoly. Yeah. And this is the very interesting thing about sports and sports leagues. We have very robust antitrust laws in America and in Europe. We crack down on anti-competitive behavior constantly. I mean, we talk a lot on this show about antitrust and antitrust enforcement.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
There is one exception, both in the US and in Europe, to antitrust laws, and that is sports leagues. They have decided in the courts, both again, both in America and in Europe, that sports leagues are not like regular businesses, that sports leagues actually need monopolization.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
They need these governing bodies to cooperate with each other because their belief is that sports only work if you have monopolization. basically cooperation among the governing bodies such that the teams and the players can compete on an even playing field. In other words, their belief is it needs to be rigged in favor of entertainment.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And this is a long, strange history that goes back all the way to 1922 when there was an antitrust lawsuit against the professional baseball league in America, what is now the MLB. And the Supreme Court decided to make an exemption for the baseball league. And that is why today the MLB is the only entity in the United States that is not subject to antitrust laws.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
That's not even JFK specific.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
So this will be really interesting to see because yes, they make a great case here. Yes, if you look at all of the details, it's 100% a monopoly. There's no question about it. But if you look at the history of antitrust in sports, I think it would indicate that this is probably not going to go through because every time this happens, the courts review it.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
They look at the legislation and they say, yeah, you know, we see where you're coming from, but sports is different. So we can't convict here. So we'll see what happens. I'm kind of rooting for the tennis players. Maybe that's just because I like Djokovic. But if I had to predict, I would say that the PTPA here does not win this case. I would predict that the sports leagues will come out on top.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
You're reaching. You're scraping the barrel. By the way, you know, today is a very special day. Special day.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Let's move on to BYD. Remember, this is the Chinese electric vehicle company, and they've just come out with this new charger for their vehicles, which is four times more powerful than Tesla's supercharger. So it adds 80 kilometers for every minute of charging. There are some technical questions that need to be addressed.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
For example, there are concerns over what this does to the lifetime durability of the battery. It might decrease the quality over time. Supposedly, it doesn't work very well for older car batteries. So there are little questions around it. But the overarching implication here is quite simple. BYD is pulling away from Tesla, both in terms of the vehicle sales. We've talked a lot about that.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
BYD is now the global leader in EV sales as of last quarter. But now, you know, Tesla had this differentiator, this supercharging system that everyone was very excited about. And BYD is now pulling ahead in charging too. So Scott, your reactions to this news and the fact that BYD climbed again, it's now at a record high.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
I'm about to drop a bomb on you. It's my birthday today.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Yeah, it is pretty remarkable, the stock performance of this company so far, up 60% year-to-date. It's up almost 100% in the past year. It's doubled in the past year. And I think there was a great article by Liam Denning at Bloomberg, which I think you shared with us. And it basically just plots the stock prices of these two companies in the past three months, year-to-date, Tesla versus BYD.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And what is so striking is, is that it looks like it's basically a mirror image. I mean, if you listen to the podcast, it's harder to describe. But, you know, for every dollar increase in BYD stock, you see a dollar decrease in Tesla stock. And, you know, you just plot it out. BYD up 50%, 50% to 60%, Tesla coming down 50% to 60%. And basically what it tells you is this isn't just a matter of
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
oh, BYD is doing really well right now. This is a matter of BYD is actively eating Tesla's lunch. Every time Tesla does not make a sale or their sales decline, you're seeing an increase reflected in the sales of BYD. Every time Tesla's stock comes down, BYD's stock goes up. So I think we can only expect this trend is going to continue.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And it does feel like the market is beginning to recognize that this other company in China that has these cheaper cars, it also has cheaper software, it's got these superchargers that are four times more powerful than Tesla's, it's becoming very clear BYD is probably going to be the new Tesla. We'll be right back after the break with a look at Germany's defense spending.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
If you're enjoying the show so far, be sure to give Profiteer Market to follow wherever you get your podcasts.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
We're back with Profiteer Markets. German lawmakers approved a major boost in defense and infrastructure spending. The plan removes borrowing limits for defense spending above 1% of GDP and creates a $533 billion infrastructure fund. It's a major shift for Germany, which is historically cautious on defense spending and on debt. Previous borrowing limits were capped at 0.35% of GDP.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Yeah, not as impressive. Do you have any advice for me as I enter my 27th year on this planet?
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Now, this move could drive up to $1 trillion in investments over the next decade. We've discussed on this show how increased defense spending in Europe may boost their equity markets, right, as investors are looking for an exit strategy from the U.S. It does appear that that rotation is already starting to materialize, and I have some data we can go through.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
But first, Scott, I want to get your reaction to this news from Germany. Massive defense spending, a big increase in infrastructure spending too, and also the German stock market on that news hit a record high.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Yeah, if you just look at the stock market, the DAX, D-A-X, the German stock market, it rose around 2%. It's now up 15% year to date. It's one of the best performing stock markets in the world right now. You compare it to the S&P, which is down 4%. It's outperforming the US. It's also outperforming emerging markets. And, you know, I think the question is, why is it doing this well?
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Because 500 billion in stimulus, it's a lot, but it's not that much. And I don't think it's the sole explanation for why you're seeing this explosion in values. And I think what's really driving this rally right now is the story that this spending decision tells about what is going to happen in Germany. Because we've discussed this before, this is a country that hates debt.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
I mean, they have a 60% debt-to-GDP ratio. It's the lowest of the G7 by far. You look at the UK, it's like 100%. The US, obviously, really high, 120%. And in addition to simply not taking on debt, they also have all of these rules and these controls that prevent them from borrowing in the future. This is just the way their economy works.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And I think a lot of that is sort of a post-traumatic stress from the Second World War, where they realized, we can't really trust ourselves. We need to take extreme measures. We need to make sure we never dig ourselves into these kinds of holes. And one way we can do that is by stringently limiting our ability to borrow money.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
As a result, as we've talked about, their economy has been, eh, you know, fine, but compared to the US, pretty sluggish. And so I think last week was this pivotal moment in the narrative where the government said, by a huge majority, by the way, okay, we're going to dramatically change our approach to spending.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And in addition to that spending bill, they also stripped out these debt limits I talked about, these controls that they have on how much they can borrow, which are literally enshrined in their constitution. So, you know, I mentioned that 0.35% number. It used to be that the deficit was only allowed to hit 0.35% of GDP. That was the max. And last week they said...
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Bulk up. Okay.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Nope, we're going to get rid of that. We're going to make an exception here. So I think a lot of this is also a turning point in the story for Germany. They had this decades-long love affair with balancing the budget, with being fiscally conservative. And they literally just decided, we're not doing that anymore. You know, we're going to have this big fiscal spending package today.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And I think investors are probably believing if they're going to do this now, they're probably going to do similar things in the future. They're probably going to spend even more tomorrow. And all of that government spending, of course, is going to, if we're being realistic, it's mostly going to go to German companies and all of that money is going to flow to their bottom line.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Yeah, I just want to emphasize that Bank of America data you mentioned right there, because it is pretty remarkable, especially in the context of everything you've been talking about. You've been saying for months that you want to rotate out of the U.S. and into Europe. And I just want to emphasize this data. So this is the survey that Bank of America does of all of the fund managers.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
It's a very reliable survey to understand how capital flows are moving in the world. Thank you. Thank you. Thank you. Thank you.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Thank you. Thank you.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Thank you. Thank you. Thank you. Thank you.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
One thing I often think about, Scott, we've addressed what the world looks like when it's ruled by the mega rich. You know, we've seen huge monopolies form. Money and lobbying power starts to take hold in the government. You start to see these populist movements.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
You also start to see the rise in these luxury brands and these luxury items and these businesses that specifically service extremely rich people where you can charge these incredibly high prices. My question is, is what is going to happen when all these billionaires and multimillionaires start dying. Because they're all getting old-ish.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And what's going to happen when all of that wealth is transferred on to, I mean, if we had to guess, their children and their grandchildren. What happens to a society that is dominated by people not who made obscene wealth, but who inherited obscene wealth?
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
So I'll work on getting ripped. I will try to be nicer. And I'll spend more time with my parents. I think that's a good list of to-dos. I'll check back a year from now.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
My question is... What is going to happen when the wealth transfer finally occurs?
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
By the way, this funding round by Armand, they're looking for investors as we speak, and they're specifically looking for high net worth individuals to invest. If you got the call from Armand tomorrow inviting you, say, to an SPV into the new Armand residency, would you invest?
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
That's so brutal.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Let's take a look at the week ahead. We'll see the personal consumption expenditures index for February, as well as earnings from GameStop and Lululemon. Do you have any predictions for us, Scott?
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
To that point, we made the point that U.S. stocks have come down, but they're still expensive. You make the same case with Europe. European stocks have gone up, but they're still cheap. I think you're probably right there. This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profiteer Markets from the Vox Media Podcast Network. Join us for a fresh take on markets on Thursday.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
No, I really, I am very inexperienced with loss and death. I will say that.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
I just want to remind our listeners that we have a weekly newsletter now for Profiteer Markets. It's the Profiteer Markets newsletter, which breaks down key market moves with data-driven analysis from me and from Scott and from the Profiteer team, including our fan favorite, Mia Silverio. our research lead at Prof G Media, and that goes out every Monday.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
So I encourage you to go subscribe to that newsletter, go to profgmarkets.com, and you'll have the updates every Monday in your inbox. It's a great newsletter. And with that, let's start with our weekly review of Market Vitals. The S&P 500 climbed, the dollar increased, Bitcoin broke its losing streak, and the yield on 10-year treasuries dipped, shifting to the headlines.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
The Federal Reserve held interest rates steady, but raised its inflation forecast for the year to 2.7%. They also lowered their 2025 GDP growth projection to 1.7%. That's a dip from December's estimates. However, the major indices rose as Fed officials penciled in two rate cuts for the year.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Novak Djokovic's Professional Tennis Players Association is suing the game's governing bodies, alleging that they operate as a cartel. The organization claims that the men's and women's tours, along with the International Tennis Federation, colluded to restrict competition and limit players' earnings.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And finally, BYD shares hit an all-time high after the company unveiled a new technology that fully charges its latest EVs in just five minutes. The charging system will debut in the company's new sedan and SUV, both set to launch next month. Scott, let's start with your thoughts on the interest rate decision from the Fed.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Yeah, I mean, I think you raise rates if inflation is heating up and you cut rates if the economy is slowing down. That's what these rate decisions are about. If you don't know what's going on, if you don't have enough data or evidence to support a move in either direction, you don't do anything. And that's basically what Powell said. He said, quote,
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
uncertainty is remarkably high, so we're not going to be in any hurry to move, and we'll wait for further clarity. And this is the same dynamic we discussed last week in the context of companies and the struggles that they're facing where they can't make decisions because they just don't know what Trump is going to do.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
They don't know what the tariffs are going to look like, and they don't know how supply chains are going to shift. And so what you have now is an economy where, from the bottom, all the way up to the top, from Main Street businesses, then to corporations, and then to Jerome Powell at the Federal Reserve, everyone is stuck in this state of limbo, where, you know, it's kind of like purgatory.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Like, you don't know if you're going to heaven or if you're going to hell, so you just sit around waiting. And I think that's one of the big concerns, that we've gone from this economy that is very active, that does everything, to an economy that does nothing, that has no choice but to basically just sit around and wait for someone else to make a move.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And I think the other thing to remember here, you know, this was unsurprising that he held rates steady. Most economists and most markets and analysts expected this. But if you look back a few months ago, That was not true.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
You know, a few months ago, there were actually a lot of predictions that we would see a rate cut in March, because a lot of people believed that inflation was getting under control. We were moving towards that target of 2%, and we might be able to cut rates earlier than we expected. And...
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
I think the fact that this was so unsurprising to everyone is another indication of where we are from an inflation perspective. We're basically resigned to this notion that prices are going to go up again. And I think you have to feel for Jerome Powell, who has done an incredible job so far getting inflation under control, trying to get to 2%.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
He's been doing this for years now, very diligently, and it's been working. And then, you know, Trump makes all these decisions that move everything in the opposite direction. He has to be incensed about this. Trump has thrown a wrench in this whole operation that he's been working so long to get under control. And it's kind of remarkable the way he handles these decisions.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
press conferences, because you know he's pissed. There's no way he couldn't be pissed. People also about the tariffs. He said, quote, with the arrival of the tariff inflation, further progress may be delayed. He's so neutral and so calm about everything, but he just has to be angry on the inside. But he's done such a good job of just saying, you know, this is what we're going to do.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
We're just going to react to whatever the executive branch decides, and we'll see what happens. So it's sort of a masterclass in I would say objectivity, but also stoicism and not showing your cards. And maybe we have something to learn from that.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Yeah, maybe I'm giving him too much credit.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
That would be way better for us. That would be more fun to cover.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
What would happen to the stock market? Exactly.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Let's talk about this tennis lawsuit that was filed by Novak Djokovic and his association of tennis players, also strangely funded by Bill Ackman. And I read the complaint that they filed in New York federal court. And I got to say, it is so compelling. I mean... issue after issue. I mean, the first main thing that they address is price fixing.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
The fact that these tennis leagues all collude with each other to suppress the amount that they pay their tennis players. And they have many specific examples. One of them, which is kind of interesting, is that Larry Ellison who bought the BNP Paribas Open, which is one of these tournaments, he actually tried to increase the prize money. He wanted to increase it by $1.6 million.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And the ATP Tour and the WTA Tour said, no, we're not gonna do that because that means we're gonna have to increase the prize money for all the other tournaments. They also have examples of limiting the endorsements that these players can make. Like if you want to compete in these leagues, you have to forfeit your name and your image and your likeness rights.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
They also control the kind of equipment you can use. They control which kinds of sponsors and sponsorships you can accept. And then there's some interesting stuff about the working conditions. which sounds a little ridiculous, like boo-hoo, professional tennis players, but it honestly does sound quite grueling when they lay it out.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
You have to play in every tournament year-round, and if you don't, if you skip a game, you get penalized, even if it's for, like, an emergency. And it's intentionally an extremely packed schedule. They overfill the schedule specifically so that other tournaments that might pay the players more don't compete and so the players don't go play in other tournaments.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And so what you have here is an extremely vibrant, clear antitrust monopolization situation. But as I think you'll probably bring up, the situation with antitrust and sports leagues is quite precarious, and I can go into that in a second, but I do first just want to get your reactions to this lawsuit.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
That's wrong. Dark and gross. Any thoughts on the JFK file, Scott?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
I can't wait to see it. Where are you? You're not in your usual studio.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
I'd love to get your thoughts on Michael Saylor's strategy in general. I look at what he's doing. I'm very skeptical of it. You know, you described the premium to NAV there. And a lot of why that's happening is because he's basically securitizing the value of Bitcoin to issue bonds and then using the bond proceeds to buy even more Bitcoin and just levering and levering and levering. And to me...
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
At a certain point, it starts to look more like a Ponzi scheme than anything else. The whole thing feels extremely unstable, especially when you bring up those historical comparisons of adding blockchain to these companies. It feels very similar to that. And then, add on top of that the fact that the Nasdaq has now decided to include this company in the Nasdaq 100.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
This adds a whole new dimension of concern for me because now you have millions of people in pension funds and people's retirement accounts holding this thing that arguably doesn't have much value or at least that isn't generating real cash flows in a normal, regular way that another company would. Perhaps I'm being too negative. Does this make sense to you?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Very exciting. And we should plug your podcast, The Compound. I know you don't like doing a promotion. Last time I asked you where our fans could go follow you, and you said, don't follow me. So I'm just going to tell the fans straight up, go check out The Compound. Let's just get into The show, we've got a lot to get through. So let's start off with the market vitals.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
We'll be right back after the break with a look at Intel. If you're enjoying the show so far, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
We're back with Prof G Markets. Intel could be headed for a breakup with the help of TSMC and Broadcom. TSMC is exploring taking control of Intel's US factories, while Broadcom is in talks to acquire Intel's chip design and marketing business. Intel stock surged 16% on that news, marking its biggest rally since 2020. So, Josh, this feels quite important symbolically.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
I mean, just going back through history, in the year 2000, Intel was the sixth largest company by market cap in the world. It hit a peak of half a trillion dollars in market value. And since then, it's shed almost 80%. We've seen this AI explosion. Its competitors have exploded in value, chipmakers like TSMC, AMD, Broadcom, NVIDIA.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
And now Intel is not even among the top 10 most valuable chipmakers in the world. And it appears as though it's going to be split up into two and acquired by the two companies it was specifically trying to compete with, which are Broadcom and TSMC. What went wrong for Intel? DEI. DEI.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
The S&P 500 hit a record high. The dollar declined, Bitcoin was flat, and the yield on 10-year treasuries fell. Shifting to the headlines. U.S. housing starts slowed in January, with new residential construction falling 9.8%. Builders scaled back construction due to harsh winter weather, while also grappling with challenges from high mortgage rates, tariffs, and inventory shortages.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Elon Musk's X is in talks for a funding round at a $44 billion valuation. That's the same price Musk paid for it over two years ago. The funds would be used to support new initiatives, including video products, and to help pay down some of the company's debt. And finally, Michael Saylor's move to transform MicroStrategy into a Bitcoin treasury company has inspired a string of copycats.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Just going back to the decision to get into Foundry, and just to clarify for our listeners, Foundry is basically getting into the actual manufacturing of these chips. Most of the big companies we're talking about, NVIDIA, NVIDIA is probably the best example, Broadcom, they're designing chips, which is just a better business, and then they pay someone else to produce it for them.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
And Intel decided they wanted to try to get into the business of actually producing these chips for other companies like Qualcomm. This is the business that TSMC is in. And so they made that decision to go into Foundry. And I think everyone would agree with you, that was a bad decision. They got caught completely flat-footed.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
This AI boom took off, and then suddenly everyone has these GPUs and Intel's operating with a kind of shitty CPU business. And then also they're investing huge amounts of capital into building out this Foundry business. I guess from sort of like a management perspective, What could they have done differently? Should they just not have invested in Foundry to begin with?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Should they have invested more maybe in R&D, trying to predict AI? I mean, I feel it feels very easy to say, oh, what a terrible decision.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
At least 78 public companies have followed suit, including a meal delivery service and a coal mining firm. Also, GameStop shares jumped 20% after revealing it was considering a Bitcoin investment. housing starts data. I will say right off the bat, this is extremely disappointing to me.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Yeah, exactly. Just looking ahead now, so we've got Broadcom, which is eyeing the chip design business, and then TSMC is looking at purchasing the foundry business. There are a lot of questions over how viable any of this really is. I've seen some analyst notes pointing out that TSMC has very different equipment to Intel, so maybe you won't have those synergies that people were expecting.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Maybe it doesn't actually make sense for them. I think the biggest question mark, though, is... Thank you.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Thank you. Thank you. Thank you.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Just given all of the conversations we've had around the cost of housing in America, the median home price today is $420,000 in America. The median age of a home buyer is 56. And Scott and I have talked about this before. Our view is pretty simple. The way we solve this is we build more homes. And so I see this data housing construction actually going down.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
And just as a young person who at some point would like to buy a home, I hope, it makes me a little depressed. So let's just get your reactions to this housing starts data, perhaps any thoughts on why this is happening.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Yeah, it certainly feels very apocalyptic, and it's very interesting that gold has this association with geopolitics and inflation, but really just panic. It's like when the world starts to look like it's crumbling, suddenly people start to be interested in gold.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Exactly. And I would just like to get your final reaction to this, because we had Ray Dalio on the podcast. And it was very interesting because, you know, he was very concerned about the world from a geopolitical perspective. And I think a lot of people are very concerned about the world geopolitically.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
I mean, I think back to what Jamie Dimon said in the most recent earnings call, where he said that we are in the most unstable geopolitical time since World War II. And Ray Dalio basically told us, you know, if I were to put my money into anything, it would be gold. And my reaction, I think, is similar to yours, which is... Is this really worth the panic?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
And if we are to panic to the extent that these people say we should, what is buying gold going to do for us? Is that really going to solve our problems? So I guess I'd be interested to get your view on gold from a geopolitical perspective. You know, does Ray Dalio's view make sense to you?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
I'd rather own a farm and food, yeah.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Let's take a look at the week ahead. We'll see data on the personal consumption expenditures index for January. We'll also see earnings from Salesforce, Dell, Berkshire Hathaway, and Nvidia, which will be a huge one. Josh, this is the part of the show where I ask Scott for a prediction. No pressure, but...
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Do you have any predictions or is there anything that you're thinking about in the next couple months or so that you think that our listeners might want to keep an eye on in the markets?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Josh Brown is the co-founder and CEO of Ritholtz Wealth Management, a New York City-based investment advisory firm managing more than $5 billion in assets for individuals, corporate retirement plans, and foundations. Josh, just an absolute pleasure as always. Thank you so much for coming on.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to ProfgMarkets from the Vox Media Podcast Network.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Join us on Thursday for our conversation with Mike Moffitt, only on ProfgMarkets.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
To what extent do you think tariffs are going to play a role in this? It's good to hear that there's a positive read on this. I think Scott and I have a tendency to just see the negative in everything. But, you know, we've got 30% of softwood lumber coming from abroad, 32% of appliances coming from abroad. There was also this new data from the National Association of Home Builders
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
And they found that homebuilder confidence had its biggest drop since COVID. It fell 13 points. And I think a lot of that we could probably assume is a response to the possibility that the tariffs are about to be slapped on all of these materials. And suddenly the cost of constructing homes is going to go up. Now, I don't want to just blast Trump immediately at the top of the show.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Yes. Let's move on to the X valuation, this funding round that's going to value X at $44 billion, the same amount Elon paid for Twitter.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
It's going to be none for me. How about you? Would you invest in this?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
The other big question here is like, how did they land on this number as the valuation? We basically have no signal into what this thing is actually worth. And this is the big question that we've been asking. And it's very hard to know because we don't see the financials anymore ever since it went private.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
But the best signal that we got was from Fidelity, which owns a stake in X, and they valued the company at $10 billion. And that was just in December. So I guess the thing that I can't really wrap my head around is how could these new investors, whoever they may be, justify a new valuation of $44 billion when just a few months ago it was valued at less than a quarter of that?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
I wonder if this might be... due to Elon's association with Trump, maybe having that connection makes people more excited and more bullish on the company. Maybe it also has to do with XAI, Elon's new AI startup, which is reportedly raising in a $75 billion valuation. Maybe they think that X, the social media platform, can capture some of the value of the AI company, or
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Maybe they've just quadrupled their revenues overnight, but I highly doubt that. So what do you think, Josh? What do you think these investors in this potential round for X are seeing that the guys over at Fidelity two months ago didn't see?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Welcome to Prof G Markets. So Scott is still away. He's still on the slopes. We're beginning to think he's quite quitting, but we're not too worried about that because today we have one of our favorite guests on the show. You've heard him before. We have in the studio, the one and only downtown Josh Brown. Josh, thank you so much for joining me.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Yeah, absolutely. I mean, we certainly saw all of these blue chip advertisers fleeing the platform. And it feels like what might be happening now is they're starting to come back, especially after the election. Do you think we might see that swing back?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Let's move on to MicroStrategy. Multiple companies now copying the playbook where you just basically buy up a bunch of Bitcoin. I look at these companies and the common thread I see among all of them is that they're all shitty companies, is what I would say. And I think back to what Michael Saylor said on this podcast, which is that before he got into Bitcoin, MicroStrategy was struggling too.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
So I'm seeing this Bitcoin strategy. It kind of looks like the get out of jail free card for shitty, struggling businesses. Do I have that wrong or do you think that's sort of what's happening here?
Prof G Markets
The S&P 500 Enters Correction Territory
Maybe he wants something to do. He's just written his book. By the way, respect to Eric Schmidt. I really don't want to just rag on this guy, and I do respect him a lot as an operator and as a businessman. But it feels like he's bored. He sees Bezos and Branson and Musk, and he's like, hey, that looks like fun. I want to do that. They're CEOs of those companies. Why don't I do it?
Prof G Markets
The S&P 500 Enters Correction Territory
Maybe he can run it from St. Bart's and all will go smoothly.
Prof G Markets
The S&P 500 Enters Correction Territory
Take a note out of Scott's book, Eric Schmidt. Let's talk about Neom. This is Saudi Arabia's plan to build a new city. It's gotten a ton of coverage over the years, ton of hype, ton of interest. Yeah. Just for those that don't know, the plan is to build a 105-mile-long glass-domed megacity in the desert of Saudi Arabia.
Prof G Markets
The S&P 500 Enters Correction Territory
It's supposed to house 9 million people with no cars, fully staffed by robots, fully powered by wind and solar. It's supposed to have its own ski resort. And my personal favorite stat, it's supposed to have its own artificial moon. I've thought this is ridiculous for a long time because it's... just unrealistic. And now we're learning they're 55 years away from completion.
Prof G Markets
The S&P 500 Enters Correction Territory
The projected cost is $9 trillion now. And I just want to emphasize the original budget for the city was 500 billion. So they are over budget by 1700%, or in dollar terms, $8.5 trillion. And I think this highlights a problem that I've flagged before about Saudi Arabia and their investment decisions, Quite simply, I think they're childish. I just don't think these are very serious investors.
Prof G Markets
The S&P 500 Enters Correction Territory
The combination of the ski resort and the moon, the obsession with the Premier League, with the World Cup, with golf, with giant AI chips, that company Cerebrus, the obsession with esports and gaming. Just last week, they bought Pokemon Go, for $3.5 billion.
Prof G Markets
The S&P 500 Enters Correction Territory
And I look at what's happening in Saudi Arabia and what they're investing in, the whole thing to me is reminiscent of a rich kid with a billionaire dad who just gave him the keys to the family trust. And by the way, that's pretty much what that country is. The only difference is that it's not a trust fund, it's an oil reserve. So I think these are unserious, frankly, stupid investments.
Prof G Markets
The S&P 500 Enters Correction Territory
But I'm going to brace myself for when you call me racist in the next two minutes.
Prof G Markets
The S&P 500 Enters Correction Territory
I do think there's a difference between a high-speed rail and an artificial moon. And there's somewhere in that difference is where we draw the line. To your point, though, they are attracting a ton of investment. They're attracting especially a lot of consulting businesses and advisory businesses. The advisory business has grown 13% in the Gulf states in the past year.
Prof G Markets
The S&P 500 Enters Correction Territory
What's going on with you, Ed? I'm doing pretty well, Scott, back in New York. And I'm just kind of... I just feel very good about how that South by trip went. I thought that was a great show. Talk about that. That was awesome, wasn't it? So much fun. I think the key detail is that we had 1,500 people outside of the doors.
Prof G Markets
The S&P 500 Enters Correction Territory
Deloitte has nine offices in the UAE alone. And there's this stat that I love, which is that McKinsey, which is consulting on this Neom project, McKinsey is reportedly earning more than $130 million per year to consult on Neom. And my reaction to that is, you got to hand it to McKinsey.
Prof G Markets
The S&P 500 Enters Correction Territory
I mean, they are just exceptional at finding rich people, building them PowerPoint presentations, and then charging them crazy fees. And all I can think is just what a great business consulting is. These huge margins, very little overhead. You were a consultant for many years. Do you have any thoughts on just how the consulting business works?
Prof G Markets
The S&P 500 Enters Correction Territory
So that's what I've been telling everyone when I just come back and brag to people about how successful this show is. That's my big takeaway, that we had to turn away Two-thirds of the audience. What was your takeaway?
Prof G Markets
The S&P 500 Enters Correction Territory
I love it. By the way, I think if you were still doing that today, you would be printing money in the Gulf and kissing ass in Riyadh. But maybe you'll still do that anyway. We'll be right back after the break with a look at the latest on tariffs. And if you're enjoying the show so far, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
The S&P 500 Enters Correction Territory
We're back with Profiteer Markets. The tariff drama has continued to unfold. Last week, so much happened. So I'm just going to take you through a timeline of all things tariffs. So first off, back in February, Trump announced a 25% tariff on all steel and aluminum that comes into the U.S. And the big news is that that tariff officially went into effect last week on Wednesday.
Prof G Markets
The S&P 500 Enters Correction Territory
Then, as we discussed in the previous week, the Premier of Ontario announced a 25% tariff on all electricity that comes out of Ontario. And Trump got very mad about this. And a few days later, he said he would double tariffs on Canada's steel and aluminum to 50%. Now, in response to that,
Prof G Markets
The S&P 500 Enters Correction Territory
Doug Ford backed down, he suspended his tariff, and then after that, Trump also backed down, and he brought the tariff back down to 25%. In other words, a ton of headlines and a ton of back and forth, but nothing actually happened. We're still in the same position we were a couple of weeks ago. Let's just shift to what happened in Europe.
Prof G Markets
The S&P 500 Enters Correction Territory
As I said, that steel and aluminum tariff, which applies to the whole world, that came into effect on Wednesday. So that does affect Europe. Europe's response was, we're going to tariff you right back. They put a tariff on American whiskey, on American jeans, on Harley Davidson motorcycles. It's a pretty hilarious lineup of items. I think they're intentionally cartoonish to make a statement.
Prof G Markets
The S&P 500 Enters Correction Territory
But if you add up the numbers, it does actually make sense, because those tariffs will be $28 billion on America, and that's the same amount Europe will pay on the steel and aluminum. Then in response to that, Trump got angry again. He threatened a 200% tariff on European wine. Okay, now the question is, does any of this actually matter?
Prof G Markets
The S&P 500 Enters Correction Territory
Probably not, because for all we know, the picture will look very different in a few days. There'll be reversed, unreversed, increased, decreased, whatever. And I have to say, Scott, It's beginning to make my job a little ridiculous because the size and scope of these policies and the financial impact they have on our economy, they're too big to ignore.
Prof G Markets
The S&P 500 Enters Correction Territory
I can't simply resign from understanding them and say, I don't really know what happened with tariffs. They went up, they went down, whatever. At the same time, though, this is a complete and utter waste of my time. And for analysts and for investors and for CFOs and CEOs, it's even worse because for those guys, there is actual money on the line. If you're a Jack Daniels or a Levi's or a U.S.
Prof G Markets
The S&P 500 Enters Correction Territory
Steel, you do need to understand the tariffs. You need to write up research reports. You need to model out the economics, analyze the downside, analyze the upside. It's a lot of work. And so these guys probably spent weeks figuring out what will these tariffs actually do to our business. And they woke up one morning, they checked the news and bang, none of it mattered anymore.
Prof G Markets
The S&P 500 Enters Correction Territory
That's not true at all. Yeah. What did you think of that? We went to this Vox Media dinner and it was very cool for me because I got to sit next to Andy Roddick and I was a huge fan of him growing up.
Prof G Markets
The S&P 500 Enters Correction Territory
And that's the thing that I think corporations and executives are going to be most upset about this. And we'll talk about what's happened in the markets. But Scott, first, just your reactions to what happened last week with tariffs.
Prof G Markets
The S&P 500 Enters Correction Territory
Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
Prof G Markets
The S&P 500 Enters Correction Territory
Okay, you got to give Andy Roddick his credit. Fastest serve in history, yes.
Prof G Markets
The S&P 500 Enters Correction Territory
It doesn't sound as good when you're reading the Wikipedia page. Yeah, choose signs you're checked.
Prof G Markets
The S&P 500 Enters Correction Territory
Get to the headlines. Okay, good. Let's start with our weekly review of MarketVitals. The S&P 500 entered correction territory, the dollar snapped its losing streak, Bitcoin fell below $80,000, and the yield on 10-year treasuries dropped on Monday but recovered through the week. Southwest Airlines will begin charging passengers for checked bags.
Prof G Markets
The S&P 500 Enters Correction Territory
I mentioned at South by Southwest, a big winner here are these traders who are trading on the volatility. Let's focus on stocks for this session. I have two groups of winners here. First off, we have the domestic steel and aluminum stocks. That's basically two or three companies. It's like U.S. Steel and its Nucor. There are...
Prof G Markets
The S&P 500 Enters Correction Territory
Very few companies that are actually benefiting from the tariffs from a steel and aluminum perspective. And actually, if you look since inauguration day, they're almost flat. So they're barely winners. But I think we can count them because last week when the tariff stuff happened, they rose a little bit. The second group of winners is what I will call the defensive stocks.
Prof G Markets
The S&P 500 Enters Correction Territory
And these are stocks that are highly unspeculative. No tech. very old, very mature, and crucially, these are the stocks that issue dividends. So companies like Johnson & Johnson and Coca-Cola, they are up since Trump took office. Again, not by that much, It's not a huge win, but they are outperforming. And I think the dynamic we're seeing here is investors are now looking for safety.
Prof G Markets
The S&P 500 Enters Correction Territory
They're not interested in these moonshot AI bets or software plays or anything basically that depends on an optimistic future. Instead, they're going to the stocks that can hand you cash in your pocket today, the dividend stocks. Let's go to the losers. First off, the tech companies. Amazon down 10% year-to-date. Apple down 11%. Google down 12%. Nvidia down 17%. Also, the banks.
Prof G Markets
The S&P 500 Enters Correction Territory
Citigroup, Morgan Stanley, Goldman Sachs. They're all suffering since Trump was elected. Small cap stocks, so these are the small market cap companies, companies in the Russell 2000, they are taking a beating right now. Also Tesla, of course, that's its own story, but it's down 35% on the year. Now, what do all of these companies have in common, all of these losers? It's so interesting.
Prof G Markets
The S&P 500 Enters Correction Territory
They are all the Trump trades. These are the very companies that we talked on this podcast that were supposed to benefit from the administration. You remember we spoke with Tom Lee. He was bullish on these companies specifically. And to be clear, I agreed with him.
Prof G Markets
The S&P 500 Enters Correction Territory
But the market is basically telling us right now, hey, remember everything we said about Trump and who he's going to help and which companies are going to benefit? Forget all of that. No longer true. We misjudged him. We didn't realize. Sorry, our bad. And this is all reminding me of something that Anthony Scaramucci told us nine months ago.
Prof G Markets
The S&P 500 Enters Correction Territory
Beginning in late May, passengers get a free checked bag only with top-tier loyalty status, a business class ticket, or their airline's credit card. Shares rose 8% on that announcement. Former Google CEO Eric Schmidt has acquired a controlling stake in rocket startup Relativity Space, and he will now take over as its CEO. The company is known for its use of 3D printers for rocket production.
Prof G Markets
The S&P 500 Enters Correction Territory
When we were in the middle of the election, no one knew what was going to happen. And Trump was beginning to talk about this tariff thing. And there was this consensus view on Wall Street, and I had many discussions with many investors and many people on this podcast. There was this view that it's all just talk. He doesn't really mean it. He's throwing meat to the base.
Prof G Markets
The S&P 500 Enters Correction Territory
He's not going to go through with this. Think what it would do to the markets. He doesn't want to do that. Why would he do that? Anyway, we had that conversation with Anthony Scaramucci, and I put forward that thesis to Anthony.
Prof G Markets
The S&P 500 Enters Correction Territory
I mean, he completely nailed it. And I think it is very interesting to see what's happening in the markets right now, the fact that the markets are down and Wall Street and corporations are suddenly realizing, oh my God, he was serious. Maybe he's not on our side. And I think that's the vibe shift that is making Wall Street and investors so freaked out right now.
Prof G Markets
The S&P 500 Enters Correction Territory
We thought that Trump was one of us. Maybe he isn't. Let's take a look at the week ahead. We'll hear the Fed's interest rate decision for March. We'll also see earnings from Nike, FedEx, and Five Below. Scott, any predictions?
Prof G Markets
The S&P 500 Enters Correction Territory
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profiteer Markets from the Vox Media Podcast Network.
Prof G Markets
The S&P 500 Enters Correction Territory
And finally, Saudi Arabia has reportedly invested $50 billion in its NEOM project so far, with the total projected cost reaching $8.8 trillion. That is more than 25 times the country's annual budget, and the project's construction is expected to continue for another 55 years. Scott, we will start with this new policy from Southwest Airlines.
Prof G Markets
The S&P 500 Enters Correction Territory
This is very interesting because the whole free bag check thing has been central to Southwest and its brand for years. In fact, they actually trademarked this phrase, bags fly free. So this was their big differentiator. And last year, the company even said that the free bag policy was the third biggest reason why customers choose Southwest Airlines. And now they're scrapping it.
Prof G Markets
The S&P 500 Enters Correction Territory
Now, why are they doing it? It's quite simple. It's because of Elliott Management, the activist firm. You might remember last year, Elliott bought a 10% stake in Southwest. They installed five directors to the board. And this was one of their big arguments in that play. They said, we want to charge fees on the bags. So I'm very interested to get your view on this.
Prof G Markets
The S&P 500 Enters Correction Territory
This feels like almost a classic business school case study. Like there's a fork in the road. Do you charge extra on this thing you know you can make money off of? Or do you forego the additional revenue and maybe you get some more loyalty and maybe some more interest from your customers in the long run? What do you think, Scott?
Prof G Markets
The S&P 500 Enters Correction Territory
I do want to bring up a similar story in Costco, because I think this is one of my favorite stories in business. So Costco is famous for their hot dogs, and specifically the fact that their hot dogs cost $1.50. And they have cost that amount since 1985. They are known for this. Now, of course, this doesn't really make that much sense economically. Inflation has risen almost 200% since then.
Prof G Markets
The S&P 500 Enters Correction Territory
So if they were selling it at the same price, what $150 was in 1985, they should be selling it for $450 today. Several years ago, the then CEO, this guy, Craig Jelinek, he was looking at the situation, looking at the income statement. He said, okay, we need to raise the price of these hot dogs. We're losing money on this. So he goes to the founder of Costco, Jim Senegal,
Prof G Markets
The S&P 500 Enters Correction Territory
And he says, you know, hey, this isn't really working. I know the 150 thing, the hot dogs, it's cute, but I think we need to raise the price. And Jim responded with what I think is the most iconic line in the history of business. He said to him, quote, if you raise the price of the fucking hot dog, I will kill you. And that was it. End of story. To this day, the Costco hot dog is $1.50.
Prof G Markets
The S&P 500 Enters Correction Territory
That happened back in 2009. The stock was around $50 per share at that time. It's now at around $1,000 a share.
Prof G Markets
The S&P 500 Enters Correction Territory
I don't think it's because of the hot dog, but I do think there is something to be said for sacrificing potentially short-term profits in exchange for, in the future, goodwill, a better brand, stronger brand, customer loyalty, all of these things that ultimately over the long-term result in greater profits and more shareholder value. So I think...
Prof G Markets
The S&P 500 Enters Correction Territory
I wonder if Elliott even cares about the long-term value of this company because presumably they're just trying to make as much money as they can in as short a time as possible, and then they sell their position and move on to the next thing.
Prof G Markets
The S&P 500 Enters Correction Territory
Let's move on to Eric Schmidt, the former CEO of Google, who is now taking a new CEO position at Relativity Space, which is this small space startup that builds rockets with 3D printers. I think most notably here, Eric Schmidt bought his way into this. So he made an offer to the company to buy a controlling stake, but that offer was contingent on his becoming the CEO.
Prof G Markets
The S&P 500 Enters Correction Territory
the then CEO who founded the company, this young entrepreneur, he has stepped aside and he will now take a seat on the board. Scott, I don't love this on a personal level. Just the visual of a billionaire who sees Bezos and Musk and Branson all getting involved in the space race, then deciding not to build his own company, but to buy his way into one, combined with the visual of
Prof G Markets
The S&P 500 Enters Correction Territory
this young Y Combinator entrepreneur being swept to the side.
Prof G Markets
The S&P 500 Enters Correction Territory
It just, it all reminds me of this intergenerational wealth dynamic that we so often talk about, where you have all of these old guys who are billionaires with too much money and too much time on their hands, and then they just use the money to install themselves into positions of power where they can play pretend startup or play pretend politics. Maybe that's too harsh.
Prof G Markets
The S&P 500 Enters Correction Territory
As I'm saying it out loud, I actually think maybe I am being a little harsh. But that is where my mind goes.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Let's talk about this new initiative from the EU, Invest AI. This is sort of their version of Stargate. This is a 200 billion euro, which is roughly around 200 billion dollars at this point, to invest in AI across Europe. This seems like a pretty good idea, I would say. I mean, I feel like Europe and the EU generally gets shitposted for investing. not being ahead of the curve on tech or AI.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And just some pretty staggering numbers here to reference. The US raised $209 billion in VC funding last year. Europe raised only $62 billion. So America's share of global venture capital is 57%. This is last year. Europe's was only 16%. If you look at AI VC funding specifically... US makes up 74% of funding. Europe makes up 9%.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
So Europe is way, way behind the puck when it comes to AI and, generally speaking, technological progress. So now it looks like they're trying to rectify that with this AI initiative. Do you have any reactions to what the EU is doing?
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
I'm just surprised that you're making the genetic argument. I'm down to hear it out. It's the first time I've heard this from you, that Americans are genetically predisposed to taking risks, and perhaps that is the explanation behind their vast wealth.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Culturally, I think Europe feels and has felt for generations that they have more to lose. They've basically just rested on their laurels. And it's interesting to see that this is happening only after America did it. It's also happening only after China came out with DeepSeek.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
The fact that, you know, I think everyone is surprised to see, oh, wow, Europe is committing to AI, but they're only down to do it once America did it. And then once China basically showed them, you guys are behind the curve. So they're taking the risk, but after everyone else did.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
We'll be right back after the break with a look at Reddit. And if you're enjoying the show so far, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Yeah, I'm doing pretty well. I'm in Mexico City, heading to Puerto Escondido tomorrow.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Reddit reported fourth quarter earnings that largely beat analyst expectations with sales up 71% from a year earlier. It also posted its second quarterly profit since going public. However, the stock dropped more than 13% after user growth missed expectations.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
CEO Steve Huffman explained that a change in Google's search algorithm led to, quote, volatility in user growth, but assured investors that traffic has since recovered. Scott, you are a Reddit, pretty significant Reddit shareholder. What are your initial reactions here?
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Casa Miraval. It's not that nice. It's okay. It'll do. Yeah, I'm heading out tomorrow. We're going to Puerto Escondido. It's going to be great. I had tacos for breakfast, lunch, and dinner yesterday.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
What's Mexico City like? It's a hot city right now. It's great. I haven't seen that much of it yet. One thing I did notice that was kind of interesting is there are BYD stores and BYD ads everywhere. I haven't seen a BYD vehicle yet, but it is interesting. I mean, I've seen it at least five times. You never see that in America.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
I didn't expect you to say that. I mean, you mentioned the valuation there that perhaps is undervalued. I'm with you. I think this is still undervalued. And I think, you know, Dropping 13% after that quarter, I don't think was warranted. The thing that Wall Street was upset about clearly was the user number. So users grew 39% to 101.7 million. Investors were expecting 103 million.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And I think what really freaked them out was what Reddit said about this change in the Google search algorithm. So you might remember last year,
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
reddit got this big boost because google changed how it ranks search results it was called the hidden gems update and the new google algorithm basically prioritized what they called authentic content so that is content that is user generated that you find on forums that you find on chat rooms i.e reddit so this was a this is a great thing for reddit last year
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Now, according to the CEO, this quarter, or this last quarter, Google changed the algorithm again. And we don't really know why or what exactly changed, but that was why you saw this, quote, volatility in the user growth. And I think that's what upset Wall Street here, this idea that Reddit is too reliant on Google. They're not growing organically on their own.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And so when Google changes their algorithm, suddenly that causes a problem for their growth. I think that's a fair criticism. I think the bigger criticism of Reddit though, and this is a bull case, is they just punch below their weight on everything. Ninth most visited website in the world. It's higher than Netflix. It's higher than Amazon. You've got 100 million daily active users.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
So these are people who are using it every single day. They don't release the monthly active users, but it's estimated to be around a billion. A billion people using this once a month, at least. And yet the company is worth only $35 billion. It's less than a tenth of the value of Netflix. And so we're talking about this as a team. And Mia did this really interesting analysis.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
So we were discussing the cultural significance of Reddit. You know, the idea, how important is Reddit to society? And we landed on this term, mindshare. And we wanted to figure out a way to kind of quantify that for Reddit. Is there a way to come up with a score for the amount of mindshare that Reddit has in people's minds, in their conversations, in society at large? So Mia...
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
did this analysis she looked at website visits she looked mentions on tv wikipedia page views job search volume you know how many analysts track the stock etc etc all these different metrics to kind of get a gauge for this mindshare and then she came out with a weighted average and we called it the mindshare score and what she found is that reddit's mindshare rating is
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
is only four times lower than Google's. But if you look at the market cap, it's more than 60 times lower. So in other words, if you were to look at Reddit as a multiple of mindshare, and let's be clear, this is very non-gap. We came up with these metrics on our own. But if you looked at it as a multiple of mindshare, Reddit is severely undervalued.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
So clearly China's trying to push that in Mexico, which is kind of interesting. But yeah, it's a beautiful city. It's a good time. Going to Contramar later tonight. Apparently that's the great restaurant. Maybe we'll check out the Soho House. It'll be good.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And so this begs the question, like, what does Reddit need to start doing to start punching above its weight, or at least to live up to the expectations that come with the fact that you are a top 10 website in the world, that everyone knows who you are. Everyone who uses the internet is using Reddit in some sense. We use it all the time. And we have our Reddit page
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
which I love, and we love engaging on that. But the company is still very small relative to its peers. So what do you think it would take? I guess you mentioned the podcast there, but what else do you think it would take for Reddit to start punching at least in line with or above its weight?
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
This explains so much. Keep going.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Thank you. Thank you. Thank you.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Over France, over Italy, over Greece, Mexico wins.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
I mean, everything's been crazy cheap.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Glad you're glad. And before we get into the show, I just want to promote the Markets newsletter. So we've expanded this show into a new weekly newsletter. We're breaking down key market moves with data-driven analysis and crisp visuals every Monday. So please subscribe now at profgmarkets.com. I think the newsletter is pretty great.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
It's kind of everything in the podcast and you get to read it in about two minutes. It's sort of exactly what you need on a Monday. I wasn't a big fan of it at first.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
They can already get that on YouTube. They can already get that on Spotify. I also don't think it's whatever the fuck CNN Plus was. Something about that didn't work.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
It's too produced. You lose all of the authentic feel that you get with the podcast and with that relationship with podcasters. What do you think a good Netflix show for a podcaster would look like?
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Can you do that? Can you invest that much, bring in that many people and maintain the level of authenticity that you get online? on podcasts. I would argue, I don't think it's possible to do that. I think the more highly produced you get, the less real things start to feel.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And there's something nice about you being in a hotel and there's a curtain behind you and we can actually see what is happening in your life. Because as I've said, I think the thing that people crave most is connection with people. This is what I wrote about in that blog post, People are the New Brands. They crave connection with real people
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
because of this issue with loneliness that we keep on seeing. And I don't think that a highly produced Netflix series is going to be the kind of thing that addresses that level of connectivity and authenticity that you get with podcasts.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
We'll see earnings from Walmart and Alibaba. We'll also see consumer sentiment data for February. Do you have any predictions for us, Scott?
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
They always find a way to justify it. I mean, I agree with everything you said, and yet I don't think it'll happen because the market always somehow, this company, they just love this company. They always figure out a way to say, no, no, there's still more room to run.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
I think it's a great newsletter. I'm excited about it. Let's start with our weekly review of MarketVisals. The S&P 500 was volatile, the dollar declined, Bitcoin dropped, the yield on 10-year treasuries jumped. Shifting to the headlines. Inflation came in hotter than expected, with the consumer price index rising 3% in January from a year earlier.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from the Vox Media Podcast Network.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Join us on Thursday for our conversation with Kyla Scanlon, only on Prof G Markets.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Who is that? Mike Myers. What's the guy's name?
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Yeah. Speaking of inflation, let's talk about the cost of private schools in America. Yeah.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Prices jumped 0.5% from December, which was the biggest monthly increase since the summer. All three major indices fell on that news. Average tuition at US private schools surged to nearly $50,000 this year. marking the biggest increase in at least a decade. Schools kept tuition steady during the pandemic, but rising teacher salaries and material costs are now pushing prices higher.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And finally, the European Union has committed to mobilizing 200 billion euros for AI investments. 50 billion euro will come directly from the EU, while more than 20 investors, including Blackstone and KKR, have pledged the remaining amount. 20 billion euros will be set aside to fund four AI gigafactories dedicated to training large language models. So let's just start with this inflation read.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Let's just go over the important numbers really quick. So the CPI rose 3% year over year. Core CPI, which strips out food and energy. And as we've discussed, the reason you want to use core CPI as opposed to CPI is because food and energy prices are very volatile. So it can sometimes sort of distort what's really happening. And that rose 3.3%. So even higher. This was not
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
This is not a very good report. The big drivers were shelter, transportation, medical care. But the item that's getting the most attention here is the price of eggs, which has risen 15% in the past month alone and 53% in the past year. So a carton of 12 eggs now costs more than $8 on average. A year ago, it was less than $5. And the reason this is happening is kind of interesting.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
It's because of this outbreak of bird flu, which is a common problem in the industry. But apparently right now, the outbreak we're seeing is one of the worst we've ever seen. And this is a huge problem for farmers, because if you find one single case of bird flu, it means you have to kill your entire flock. So in the past four months...
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
American farmers have killed 15% of all of the chickens in America. So supply is really low, which is why prices are really high. Your reaction, Scott, to this inflation data and perhaps eggs specifically?
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Certainly going to get worse the way we're headed so far. I housing accounts for nearly a third of the overall CPI rise. And we keep on seeing this with every single inflation print. It's like, it's very high. What was the problem? It was housing. The way we're headed in terms of immigration and tariffs, this is all only going to get worse.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
I think the question is, can Trump sort of vaccinate himself from being associated from this whole inflation thing? Because Biden, we know, I mean, after COVID, you had all these supply chain issues around the world, which sent prices skyrocketing, not just in America, but everywhere in the world. Every single government was dealing with inflation. Biden did a terrible job
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
of making clear to the American people that actually it doesn't really have anything to do with him or his policies. This was a global problem. But it's very hard to convince the American public of that when you go to the gas station and prices are up 10%. And the same might be true here with eggs. I mean, people could be showing up to the supermarket. Eggs are up 53% in the past year.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And usually when something like that happens, the first person you blame is the president. Now, the question for Trump is, is he going to do a better job of pushing the blame somewhere else? And I think the answer is probably yes. I think he's going to be talking a lot about bird flu. By the way, he's blamed this inflation print on Biden already. He said, this isn't my fault.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And I honestly, I think that's actually a fair assessment. I think inflation is, you know, sort of a lagging indicator. But If this continues, it's going to be a big problem for him because this was really the big issue that was on the ballot in November. Speaking of inflation, let's talk about the cost of private schools in America, up to $50,000, up 7%.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
I find this so interesting because you talk a lot about this issue in higher education specifically, where you have Colleges driving down supply with lower and lower admissions rates, at the same time driving up prices, and it's all culminated in what we call kind of the Hermesification of higher ed, where they're basically adopting the same go-to-market strategy as an Hermes or a Louis Vuitton.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
college degrees are becoming increasingly luxury items. Well, now we're seeing that same dynamic, not just at colleges, but in high schools and in middle schools and even elementary schools. And I just want to point out this crazy stat that I saw. In New York,
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And granted, New York is an exception, but in New York, the average tuition for a private elementary school, so this is grades K through five, these kids are like six years old, the average tuition is $22,000 per year. And, you know, then you look across America, the fact that it's now up to $50,000 for private schools from elementary to high school. For boarding schools, it's $73,000.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And meanwhile, the admissions rates continue to go down, i.e. there is still incredible amounts of demand. People are still down to pay for this. But it's only a very specific cohort in America who can actually do that. So... What does this say about America? What does this say about our education system? Where is this all headed?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
You're right. I'm setting you up for failure. How about let's set you up for success here and just talk about this aspiration situation. Because you wrote about this... four years ago.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Yeah, we think it's you.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And I remember calling her. This is probably why Walgreens failed. They lost her.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
This is, by the way, one of my first jobs at Prof G Media, was you were talking about this company, Aspiration, and it was my job to go in and do the research because you had this feeling that this company, which was selling credit cards, but also positioned itself as helping with climate change, you said, this is definitely a bullshit company. You had the team look into it.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
I'm glad we learned that. Yeah, we learned a lot about hiring decisions on this show. Let's talk about Ontario and their decision to cancel the contract with Starlink. I think you predicted something like this would happen, or you at least kind of warned about it, that Starlink, you know, one big problem for Elon Musk would be if people start canceling Starlink contracts. Kind of...
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
an incredible move. The premier of Ontario, Doug Ford, had some interesting things to say about this, and we've got a clip. So let's take a listen.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Your reaction, Scott?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
I think you say, I mean, the domino theory of cowardice. I think this is basically showing that we're about to see the domino theory of revolt. I mean, this guy's the first one to do it, and it's only $100 million, which is not a big deal for Starlink, which did $8 billion in revenue last year. But Canada overall is Starlink's second largest market behind the US.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
They've got half a million Starlink subscribers in Canada. And I think what this shows is this guy's the first to do it, but we're going to see a domino effect. And I think all of these other provinces follow suit. I don't think you want to be a leader in Canada who looks weak up against Donald Trump.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
I looked into it and we determined, yes, this company is fake. We have a clip from what you said about this company on the Prof G pod.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And what we're seeing is that the entire nation is sort of coming together and rallying against a common enemy. And there's just this one stat I found fascinating from YouGov. 82% of Americans say they consider Canada to be an ally. In Canada, that number is now 33%.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
It's what happened with Twitter. And then you saw all those Twitter competitors rise up and now Threads is... Threads, Blue Sky, Post.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
I mean, some of them...
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
That was what I was hinting at.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Okay. We'll be right back after the break with a look at BlackRock's investment in the Panama Canal. If you're enjoying the show so far, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
We're back with Profiteer Markets. A BlackRock-led consortium has acquired two major ports on both sides of the Panama Canal for nearly $23 billion. The ports were previously owned by a Hong Kong-based conglomerate, but the deal still requires approval from Panama, which retains control of the canal.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
BlackRock CEO Larry Fink personally pitched the deal to Trump after the president expressed interest in having the ports and the canal controlled by the U.S. Scott, your initial reactions to BlackRock buying those ports from this company, C.K. Hutchison?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Banger. And now the guy's been arrested for fraud. By the way, it never went public because I think investors eventually caught on to this. But he's now been arrested. You called it.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Yeah. I think we should just like remind ourselves of the context here. I mean, I think everyone probably knows a couple of months ago, Trump said he wanted to reclaim the Panama Canal. He said the Panama Canal had been taken by China and that America needed to take it back. And then there was that notorious moment where
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
where he was asked if he would use military force to take it over, and he didn't rule it out. Now, of course, it's not true that China owns the Panama Canal, but it is true that there are companies with ties to China which own and control many of the ports that are in the Panama Canal.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And one of those companies is this company we're talking about, CK Hutchison, which is this company based in Hong Kong. It's owned by this billionaire, Li Ka-shing. And now they are selling those ports that are on either side of the canal to BlackRock. Now, there's been some questions around how much does this have to do with Trump? How much does this have to do with geopolitics?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And one of the heads of C.K. Hutchinson, which owns the ports... He said it has nothing to do with Trump. He said, quote, I would like to stress that the transaction is purely commercial in nature and wholly unrelated to recent political news concerning the Panama Ports. I just want to get this out of the way. That's totally a lie. No question about it. This had everything to do with politics.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
It's been extensively reported that that this company only started looking to sell right after Trump made those comments about Panama and about China. So let's just be clear from the get-go, this is 100% a geopolitical response. There's no doubt about it. Having said that, I think what the guy at CK Hutchinson is trying to get at
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
is that from a commercial perspective, this was an amazing deal for them. The origins of the deal were political, but the result was a success because the value of those ports that they sold, as determined by analysts, was $13 billion. they sold it for 23 billion. So they got a nearly 80% premium on those assets. That is huge.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And by the way, 23 billion is more than the entire market cap of the company before the deal. And as a result, shares in the company skyrocketed. They were up 20%. So it's a huge success for this company, CK Hutchison. And I think that begs the question, okay, they sold it for 80% above market value. Why was BlackRock down to pay?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Why were they down to splurge that much in what is now the largest infrastructure deal in the company's history? How did that make sense to them? And I have some initial thoughts, but I'll throw it back to you. What do you think was the draw for BlackRock here?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
No, I think what's in it for BlackRock and what made this worth it is what it does to their relationship with the president. Because he looks excellent now. You know, he was... talking about how he wants the U.S. to control the Panama Canal, and people were ragging on him, saying, this guy doesn't know what he's doing. And he pulled it off, and at no cost to the government.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
The whole thing was paid for by BlackRock. And there is no denying this only happened because of him. So he looks like a genius now. He gets to brag about it in his speeches. In fact, that's exactly what he did in his address to Congress. And most importantly, I think he is now grateful to Larry Fink and to BlackRock, who are officially in his good books now.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And that's so important because for a long time they weren't. This is the company that spearheaded the ESG movement, that told investors that DEI is central to everything they do. This is the company that... just generally speaking, the Republicans hated. And so I think Larry Fink saw this opportunity. There was a chance to get on Trump's good side, to make him look like the hero.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And it only cost him, you know, a few billion dollars. So in my view, it was probably worth it.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Don't you think that is an economic decision at this point? I feel like what we're seeing with these companies is actually it is. Yeah, that's a good point. Your fiduciary obligation to suck up to the president.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Thank you. Thank you. Thank you.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Thank you. Thank you. Thank you. Thank you.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Few people actually knew what Aspiration was, which I think is why it was so prescient of you to point it out. I just want to point out what some of the red flags we found with this company were. So the first... The first red flag was that they were trying to SPAC, and there were just a bunch of kind of bullshit companies that were SPACing. They did have a giant celebrity investor list.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
One of those investors was Leo DiCaprio. That was kind of a red flag. And then as we looked into it, it started to get worse and worse. So they had this ESG fund that they called the Redwood Fund, and they charged these exorbitant fees on it. But when we looked at the actual portfolio, what we found is that it was just a regular portfolio.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And they even had positions in Southwest Airlines, which, of course, burns through fuel, and also a fracking company, which was hilarious. Their worst crime, though... was this thing called EBITDAM.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
and get out of us growth and tech well next time i'm going to need to hear what those actual european companies are because i look at the european i'm going to go into an index i might go into a levered index from direct sound but i'm going to go into a diversified mix etf or index around eu value stocks and are there any companies in there in the index or any any companies that you're seeing in europe that you think oh yeah they're doing well well i mean i just like a lot i think
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Exactly. This was earnings before interest, taxes, depreciation, amortization, and marketing. And according to this company, they were EBITDAM profitable. But then you look at the fine print and you realize they were spending 150% of their revenue on marketing.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Let's take a look at the week ahead. We'll see the consumer and producer price indices for February, and we'll also see earnings from Oracle, Adobe, and Williams-Sonoma. Scott, do you have any predictions?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
My prediction would be that Apple is sub $200 in the next six months. I think that their numbers are flatlining, their hardware revenue is down, and they've been leaning on a narrative. And I think that narrative is fizzling out because you can just look at their products and you can look at their ads. It's becoming very clear this is a very mature and increasingly uninteresting company.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
I'm not sure how I feel about you selling all of your Apple. I'm also not sure how I feel about you going totally out of US growth entirely. I think there's still a lot of value in US tech in companies like Nvidia and Google, for example, I'm pretty bullish on. But Apple, I think that's probably a good idea to trim.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profiteer Markets from the Vox Media Podcast Network.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
So they're trying to position themselves as a profitable company, but they're saying, oh, this marketing thing, we're spending basically all of our money on marketing, but don't worry about that. We're profitable. And that was sort of our, that was, I would say our biggest red flag. This company is bullshitting their investors. And so it never spacked. And now the guy's going to jail.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
I can't wait. Let's get into our weekly review of MarketVitals. The S&P 500 declined, the dollar slid, Bitcoin was volatile, and the yield on 10-year treasuries climbed. Shifting to the headlines. Disney is laying off nearly 200 employees, or 6%, of its workforce in its ABC News Group and Disney Entertainment Networks divisions.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
As part of the cuts, the company is also shutting down political and data journalism site FiveThirtyEight, which it acquired in 2013. Walgreens is officially going private after closing a $10 billion deal with Sycamore Partners, The private equity firm is expected to keep Walgreen's core US retail business while potentially selling off or spinning out other parts of the company.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And finally, Ontario canceled a Starlink contract worth 100 million Canadian dollars after US tariffs on Canadian imports took effect. Scott, let's get your thoughts, starting with Disney deciding to lay off 200 employees, nearly 6% of the workforce, at ABC and their entertainment networks.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Yeah, I find this interesting because I visited the ABC studio last week. One of the producers on ABC News took me around and it was really cool. And I was just kind of struck by how impressive this operation was. Like the office looks like a cross between like NASA... airspace control, and also like the trading floor of Goldman Sachs.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And it's filled with people like gaffers and technicians and coordinate. I was asking him like, what do all of these people do? He's like, oh, this guy's on this team, this guy's on this team. I mean, it's thousands of people, literally. It's actually 3,300 people.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
But in the back of my mind, the whole time as I'm walking around, I'm like, this is amazing, but there is no way this makes any sense economically. The fact that you have, as you said, revenues down 9%, operating income down 16%, 6 million people canceling their cable subscriptions in 2024, and yet... The operation looks like it's the headquarters of the CIA.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
So I was sort of walking around like, okay, something has to give here. And that's what we're seeing. In this case, the thing that's giving is the workforce. And as you say, this isn't the first time we've seen this headline. And yeah, I don't think it's the last time we'll see this headline. I think we're going to see many, many more headlines like this.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Well, it hasn't happened yet, and they'll probably counsel on me again.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
It's not doing very well. Agreed.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
I'm doing very well. I'm in New York. I'm excited for South by Southwest. We're going to be heading over this weekend. Of course, this episode will be out by the time we're there, but I think it's going to be great. You know what I'm really excited for, though, is the flight back. Why is that? Flying with you. Oh, I'm sorry. I meant to tell you that there's just not enough... Not enough seats.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Let's talk about Walgreens, which is going private, being bought out by this private equity firm, Sycamore Partners. This is kind of a big moment for this organization. very iconic American company. This company has been around for 120 years. It's been a public stock for almost 100 years. It's been public since 1927.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And now you have this icon of American consumerism, and it's being bought out by a PE firm for a tenth of what it used to be. Ten years ago, this company was worth $100 billion. The price tag today is $10 billion. Your reactions to this news, Scott?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
I think it's a whole confluence of things. And the way I would summarize it is just bad management. I think probably one of their worst mistakes is just their inability to modernize their pharmacy business, which they really depend on. Those Walgreens pharmacies were incredibly traditional when you compare it to the pharmacies at somewhere like CVS.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And I think they woke up one day and telehealth had taken off and reimbursement rates had come way down. And they just got crushed, especially against CVS, which was establishing itself in the pharmacy benefit manager business too. They also bought Village MD, which was a disaster. They were just too late to the party. They bought that company after COVID. It didn't work.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
They ended up taking a $6 billion impairment charge. And then I think the final thing...
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
were these lawsuits they just got a ton of lawsuits and most of them they settled on and just this year a couple months ago they got sued by the doj for essentially selling opioids illegally so i think just it's kind of simple from a management perspective it's been a disaster i think the question is what does sycamore do with this company where do they go from here
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
It's expected they're going to split it up into three units, where you have Walgreens Pharmacy, they also own Boots in the UK, which I'm sure you're very familiar with now, which is their UK pharmacy, and their healthcare unit, which is called Shields Health. And Sycamore did a similar thing to Staples, which they bought back in 2017.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
One interesting stat from the team that I'd like to get your reaction to, one in five private equity-owned companies go bankrupt within 10 years of acquisition, and that is 10 times higher than the rate of publicly-owned companies. So I guess the question I would pose to you is, what does Sycamore do with this company? And could they just bankrupt the company, possibly, based on that stat?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
There's only seven seats on the plane. How many seats are on the plane?
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I mean, some people say, you know, Waymos are more expensive to build. They're more expensive to operate, which is probably a fair point. But I think the larger point still stands. Waymo is the only one that has figured it out. And now they're going to market with the biggest ride-sharing company in the world, Uber. Meanwhile, Tesla has shipped nothing. So I think this is a pretty big deal.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I think full-scale commercialization is still a long way away. But to me, this signals Uber's actually kind of leading the pack in autonomous. And I get the sense it's probably very undervalued at this point.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
No, I don't care at all, actually. And this is the first year I've decided I'm just not watching. I feel like I'm always watching because I feel like I have to. But I've just decided, you know what? I'm not interested in the NFL. I'm not going to watch this year.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Or a boy or a scared 16-year-old boy.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
And by the way, Uber had their own autonomous vehicle unit, which they scrapped in favor of this. And I think the market said, oh, they don't know what they're doing. Actually, it's a smart move for exactly the reason you said.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I'm excited. I'm going to track you down. I'm going to make sure I see Scott on ketamine.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
We'll be right back after the break for a look at Spotify's earnings. If you're enjoying the show so far, be sure to give Profiteer Market a follow wherever you get your podcasts.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Spotify posted its first full year of profitability ever, with gross profits rising 40% year over year. The streaming platform also added a fourth quarter record of 35 million monthly active users. That's a 5% increase from the previous quarter. Spotify Wrapped was one of the top drivers of user engagement, fueling double-digit growth. Shares surged 13%. after that earnings report.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I'm just going to point out, I made one prediction on our 2025 predictions episode, and that was that Spotify would be the media platform of the year, in addition to YouTube, which I'm also really bullish on. But I am just... consistently impressed with this company, the innovation, their integration of video, the integration of comments and polls, their transition to profitability now.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I think if there's one platform that can rival YouTube in this new digital age, I think it's Spotify. And we're starting to see it in the numbers here. Scott, your reactions to Spotify's earnings?
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Well, they didn't connect it to revenues, but they connected it to user engagement, which that's what it's all about. It just creates heat and excitement. And I think possibly— I mean, full disclosure, I don't use Spotify because I've always used Apple Music and I've never wanted to go through the cumbersome process of transporting everything over.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
But when Spotify Wrapped came out, it was the first time I was like, maybe I should switch because this just sounds fun to have this little... presentation about me and all of my music habits. So I think that would be the answer.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I thought you used to be a big NFL fan, Scott, no?
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I know it's coming. I know it's wrong.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I would love that invite. Well, let's just go over some of the numbers here because I think they're pretty incredible. So Spotify's monthly active users hit 675 million. beat estimates by 10 million, which means that one in 12 people on Earth is on Spotify. Premium subscribers grew 11% year over year. That was despite the price hikes. Average revenue per user up 5%.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
First profitable year in the company's history, which I think is a very big deal, and stock is now at an all-time high, $620 per share. We should probably think about what could go wrong for Spotify. I think one potential issue is this growing public resentment towards Spotify and specifically towards Spotify and how they pay their artists.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
So a lot of people say that Spotify squeezes their artists. They don't pay them enough. They reward the top 1% and the other 99% get screwed. And that's timely because Chapel Roan, who just won the best new artist award at the Grammys, she actually called this out. She didn't call out Spotify specifically, but she called out the whole music industry of which, of course, Spotify plays a huge role.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
So let's just listen to what she said.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
No, I completely agree with you. And I think this just, it reminds me of all the dynamics that we've seen in Hollywood. And the reality is, artists have been getting screwed since the dawn of time. And, you know, historically, it's been the record labels that have screwed their artists. And I think back to the 1950s, this is probably the most famous examples, we had all of these
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
incredible black musicians who are suddenly dominating the charts and then none of them got rich because they signed these shitty deals that ultimately rewarded the owners of the record labels so you know this is this dynamic of artists getting screwed to an extent is nothing new but i don't think i mean a lot of people are blaming spotify for this saying that they just don't pay them enough and blaming the business model i really don't think you can blame spotify for this
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Because all you have to do is look at the financials. You have to remember, this is Spotify's first ever year of profitability. So for the 16 years before this, Spotify was losing money. They were losing money to pay employees and to pay for technology. And yeah, to pay their artists. And so I'm not trying to like... make a sob story for Spotify.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
But I think all I would say is this is a business and the business has to make money. And this year was the first time they ever did that. The other side to this... You know, one other way that they could have paid their artists more, or they could pay their artists more, would be to massively raise prices for the consumer. But actually they haven't done that.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
And in the past 16 years, the price has gone from $9.99 to $11.99. So actually on an inflation-adjusted basis, Spotify actually got cheaper. And then you compare that to things like Netflix, Netflix has more than doubled its prices in that same amount of time. So, you know, I'm sure someone's being greedy here. I'm sure, you know, the record label has screwed some artist here or there.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
But the fact that Spotify is getting wrapped into this, like, as the big bad company that's just sort of ruining the music industry, I just don't think... That is true. And I think ultimately what this is, is that, as you say, being a struggling artist is a bad business. It just doesn't really work. And in almost all industries, It only starts to make you real money when you hit the 1%.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
And finally, Chapel Roan has done that. And I don't think she's going to be giving her money away to the other 99%. I think she's going to be, you know, claiming her check from whichever record label she's signed to. So I have a very boomery outlook on this. Sounds like you do too, and it sounds like we're just in fervent agreement.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Yeah, a good amount of my friends do ketamine. I can't tell if you're serious. You know it's illegal to just do it.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Okay. Just making sure you're clear.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
And they'll keep making music.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Thank you. Thank you. Thank you. Thank you. Thank you.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
And, you know, the way people do it is they snort it. You're really going to go out and... Oh, really?
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Well, I'm excited to see you in a couple of hours. I'm going to come over and hang out at your house.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Thank you. Thank you. Thank you.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
You excited to see me?
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Let's start with our weekly review of Market Vitals. The S&P 500 inched up throughout the week. The dollar declined, Bitcoin was volatile, and the yield on 10-year treasuries dropped. Shifting to the headlines. Disney earnings beat expectations on the top and bottom lines. However, Disney Plus lost 700,000 subscribers with another modest drop expected in the current quarter.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Thank you. Thank you. Thank you.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
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Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
The stock fell 4% following that earnings report. Novo Nordisk saw strong fourth quarter demand for its weight loss drugs, with Wegovy sales more than doubling and Ozempic sales rising 12% year over year. Profits also exceeded analyst expectations, up 29% from a year earlier. The stock rose on that news. And finally, Uber's fourth quarter revenue beat expectations, rising 20% year over year.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
We could beat the Ramsey network, surely. Yeah. We got to do that.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profity Markets from the Vox Media Podcast Network.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I don't want to promise anything. Your face gets like sullen. You start looking down at the floor. I just know it's coming.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
However, Operating income was lower than expected, and the company issued weak booking guidance for the current quarter, and Uber's stock fell 7%. Scott, your reactions, starting with Disney's earnings. A beat, but the stock did fall.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Yeah, I think these earnings, I mean, Wall Street did not react well to these earnings, and I think rightly so, because I think this was just unimpressive on so many levels. I mean, Disney Plus subscribers declining, not by much, it was around 1%, but still a decline. And Disney Plus' response, or Disney's response, was, well, you know, we rose prices, so this is expected.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
and by the way, that's kind of what you said too, but you look at Netflix, Netflix also raised prices last year and they still added 19 million subscribers. So I don't fully buy the, you know, we're raising prices and therefore subscriptions are going to fall off. We've seen it with Spotify too. Spotify raised prices and their subscriptions are still continuing to climb.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
You also mentioned the churn rates. I just see this as... such a big issue in all of streaming that it makes me believe that streaming is in a lot of ways, uninvestable over the long term. Apple TV's churn rate is 8%. Peacock's churn rate is 9%. Disney's churn rate is on the low end, but still it's really high, it's 5%.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
So if you just wanna stay flat in any given quarter, you basically have to grow your subscribers by 5% every single quarter, which is just, insane. I mean, I just don't see how that is a sustainable business model. And then the second thing that makes me concerned about Disney was their box office results, which were exceptional, but it was all because of this one movie, Moana 2.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
And that was kind of what saved these earnings. Without that movie, this earnings report would have been pretty terrible, which again begs this question, like, how sustainable is this business where you're basically riding on your growth vehicle, which is Disney+, is pretty stagnant, and then... you're also relying on these sequels every single year.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I mean, Moana 2, Inside Out 2, Deadpool and Wolverine. At what point are people just going to get bored of these sequels? Who's going to watch Moana 3 and Moana 4 and Moana 5? How much longer can this go on for?
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
But if you want to keep that business going, you've got to also be creating original and persuasive and compelling intellectual property, which they're not doing. No one's going to ride the Moana 3 ride.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
By the way, just before we move on here, when is your Netflix show coming out?
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
We need to get you on camera here. Is that part of the plan? I hope so.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Let's talk about Novo Nordisk. This was a pretty important earnings report for this company because they, simply put, have not had a good year. The stock's down 30% in the past 12 months. They tried making this new GLP-1, this drug called Kagrisima, and the trials failed. They've been outclassed by Eli Lilly, who have been showing from their studies that their drugs are just more effective.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
So Novo Nordisk is not in a great place. They needed a really strong showing, not from the insulin business or the glucagon business or any of their other medicines, but from the GLP-1 business, because that, as we know, is the only thing Wall Street cares about with this company. And rightly so. That's where all the growth is coming from. The results were pretty good.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Wegovy sales more than doubled. If you look at that in combination with Ozempic, the obesity drug business is up more than 50%. So the GLP-1 business is doing quite well. I think the question here is a larger question, which is, will this whole GLP-1 thing live up to the hype that we had about 16 months ago? And that's sort of up for debate.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I mean, I've seen market size predictions saying this is a $100 billion market. Some say it's a $500 billion market. No one really knows. So I kind of look at this company, I look at these earnings, and I don't really have an answer. The only thing I can conclude with Novo Nordisk is, you know, wait and see.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
To his point, the only company that actually innovated this drug that didn't stumble its way into it was Eli Lilly, who created their own versions, of course, after Novo Nordisk figured this whole thing out accidentally. So I think if you're thinking about, okay, how do I get exposure to GLP-1s? Yes, Novo Nordisk is the market leader. It has the greatest market share in the US and in the world.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
But I think in terms of culture and innovation, all that stuff that Aswath talks about, I do think Eli Lilly is probably a better bet from that perspective. Let's move on to Uber. Uber reported earnings. Revenue grew 20%. They had this kind of soft guidance, $42 billion in gross bookings expected in the quarter coming up. And the stock did not react very well.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I thought the most interesting part with these earnings was that Uber is officially launching a wait list for its Waymo partnership. So... This is going to happen in Austin first and later in Atlanta. Uber and Waymo are teaming up and self-driving taxis are coming in 2025. And I think the most important thing here is the autonomous taxi fleet, it's not coming from Tesla. It's coming from Uber.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
And I think that's notable because it just highlights this market bias that we keep on seeing towards Tesla, where Tesla will go out and talk very vaguely about full self-driving and autonomous taxis and the stock rips. Meanwhile, Uber does it and the stock declines. People just don't take it seriously for some reason. And I can't really wrap my head around it.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
You're going to have to elaborate. It's the final part that I'm really intrigued in.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I also think that there is something to be learned from Warren Buffett just being happy to pay his taxes. Like, that's just on a personal, emotional level. I think if we can—you know, we clearly need to raise more tax revenue. If there is any way for—
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Americans or people anywhere really to feel a little bit less resentful when they when they make their tax payments and to feel that feeling of actually having pride and it being a bragging point how much you contributed to the U.S. government which it seems like that's you know everyone who pays their taxes is like fuck this I don't want to pay my taxes but
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I do like that Warren Buffett is kind of changing the sentiment there. And I will also shout out Andrew Yang, who one of his great policy proposals when he was running for president was that we should basically have the government send out videos, including local governments, to taxpayers telling them, here's everything we did with your money this week or this month or this year.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
And I think if you could sort of just change the mentality when it comes to paying taxes. I mean, it's a little bit of a soft point, but I do appreciate that Warren Buffett is leading that movement of, okay, paying a lot in taxes is not necessarily a bad thing. You're doing a service to your country.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I guess you have to start off believing in your country and liking your country to begin with, which is... becoming rarer and rarer in America. Let's talk about BP. They're deciding to shift away from renewables, investing more in oil and gas.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I guess the first question I had reading this headline is, how much did Elliott Management, the activist investment firm, how much did Elliott have to do with this? Because... Two weeks ago, it was leaked that they had this stake in BP, roughly 5%. They wanted to clearly address BP's underperformance. It's down 8% in the past year.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Meanwhile, Shell is up 7%, and all the other energy companies are doing a lot better. And then suddenly, two weeks later, we see this turnaround in strategy. So I guess my first question for you, Scott, to what extent do you think this was Elliott's doing?
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
So, sir, you think that you basically think that they believe that the world wanted them to be a renewable company. So they said, oh, we're a renewable company. And now the world wants them to be an oil and gas company. So they're saying we're an oil and gas company.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
They are putting $10 billion a year additionally into oil and gas. So I think, I mean... I think I'm sort of half with you in that this is probably what they thought the market wanted because the way the pendulum is sort of swinging back away from ESG.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
But I would also put forward the possibility that a lot of this has to do with AI and just the fact that they couldn't really predict what was going to happen in terms of how AI was going to explode over the next few years. And you've got billions of dollars being plowed into these data centers, which are already... one of the biggest strains on power in our economy.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
And it's expected to double in just a couple of years, quintuple in maybe the next 10. So I do think at the same time, I'm sure there's probably a marketing element to it. I think at the same time, these energy companies are realizing like,
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
shit, we've been investing in these renewables, which are probably pretty exciting over the long term, but the short-term demands of AI are way higher than we thought. And the reality is these renewables that we've been investing in, they won't cut it. And if we want to meet demand, we do need more oil and we do need more gas, especially gas. Liquid natural gas is ideal for data centers.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
So I think I'm sort of half with you there, but I do think there is some substance here in the fact that Power demand is just going up. And we're not going to power these data centers with windmills and solar panels. We're going to do it with oil and gas.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
And so if you're not investing in that, or at least maybe to your point, showing Wall Street that you're trying to invest in that and that you're being realistic about the demands of AI in the next few years, then you're going to get punished. And that's why we've seen BP down, or at least kind of flat. over the past year or so. It's up 37% in the past five years. Chevron's up 109%.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Exxon is up 183%. So they have been getting crushed. And I don't like to be the big energy guy, but I do support this move.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
That is crazy.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
We'll be right back after the break with a look at NVIDIA. If you're enjoying the show so far and you haven't subscribed, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Yeah, you didn't do anything wrong. I mean, you shouldn't have pursued this woman specifically, clearly.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
We're back with ProfgMarkets. Nvidia reported fourth quarter earnings that beat expectations with revenue up 78% from a year earlier. The company also forecasted higher than expected first quarter revenue with the CFO confident in a quote, significant ramp in sales of Blackwell, which is its next generation AI chip.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
However, Nvidia also warned that profit margins would be tighter than expected as it accelerates the rollout of the Blackwell chip. After fluctuating between gains and losses, the stock actually fell slightly in extended trading. Scott, just your headline initial reactions to NVIDIA's fourth quarter earnings and perhaps the market's reaction to those earnings.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I think what the market wants from NVIDIA now is...
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
they need a home run to be fine they need to consistently hit a home run and only if they knock the ball literally out of the park will will they get a bump in the stock but you know we can just look at the numbers here so sales up 80 to 39.3 billion net income up 80 to 22.1 billion beat on revenue by three percent beat on guidance by five percent i think the most important stat here is their data center revenue beat
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
They beat data center revenue expectations by 6.3%. And that's, as we know, the most important thing for Wall Street right now. I think they did $115 billion in data center revenue in 2024. It's just unbelievable. So it was a great quarter. But as you say, great isn't good enough. And so they kind of flatlined. But in my book, that's kind of a win for NVIDIA.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
What happened in the basement, water under the bridge. Let's start over.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I think a lot of people are expecting at this point that NVIDIA, they're looking for anything to bring the stock down. And so the fact that they were able to maintain themselves is kind of impressive. We should probably talk about DeepSeek and what Jensen Huang said about DeepSeek. He mentioned it pretty much first thing on the call. He said, I'll just quote what he said.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
He said, quote, So he kind of sounded bullish on DeepSeek in a way. He then went on to say, that DeepSeq is, quote, an excellent innovation, but even more importantly, it has open-sourced a world-class reasoning model. Nearly every AI developer is applying R1 or techniques like R1 to scale their model's performance.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
So if I were to translate what he's saying about DeepSeq, it's that DeepSeq can only be good for NVIDIA. He says, you know, it can consume more computing power, and I'm not totally sure about that, and I don't really believe him, given what we saw in the research paper where DeepSeek said, no, we consume less compute.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
But he also said that it's democratizing AI, which will ultimately lead to even more demand for computing power. And on that point, I do agree with him. I think that, you know, if DeepSeat can make this stuff more accessible, then we're going to see more people accessing it and more people using this stuff, which is only going to lead to more demand for compute, which can only benefit NVIDIA.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
This is... We've talked about this before. I think this is Jevons paradox. A lot of tech bros talk about this. This paradox that the cheaper and more efficient a product gets, the more it is consumed in the real economy. And so Jensen's comments at the start of the call were, this is what's going to happen. It's more accessible. It can only benefit us. I'm sort of with him.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I think the 100 times more compute power comment was probably a little bit misleading, but I look at this and I think, okay, NVIDIA's crushing it. Keep going.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I couldn't believe when he said that. By the way, we were wondering, how much do you think he put in?
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Which is the most important thing in the wealth management business.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I prefer the real stories.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
It was interesting. I mean, I was watching CNBC the night before the earnings, and CNBC had probably every single analyst on their roster come on to talk about this topic and specifically to make a big, bold prediction about it. And it was really interesting seeing all of these analysts getting so fired up.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
This isn't CNBC. Agreed. Let's start with our weekly review of Market Vitals. The S&P 500 declined, the dollar rose, Bitcoin fell, and the yield on 10-year treasuries hit its lowest level since December. Shifting to the headlines. Tesla's market cap has fallen below $1 trillion, erasing nearly all of the stock's post-election gains.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
By the way, they had Aswath Damodaran on. And his prediction was NVIDIA is going to beat, but the stock's going to come down a little bit. Aswath absolutely nailed it, as he often does. But I guess the big takeaway for me from watching that and from seeing all of the memes online on Twitter, on Instagram, on threads, this is basically like... the Super Bowl for nerds now, for business nerds.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Oh, it's a new sport, 100%. And there was this great data from the team. Google search volume for NVIDIA beat out at 4 p.m. the day of the earnings. It beat out searches for the New York Times, for Wikipedia, for Instagram, and for ChatGPT. So this really is like... Yeah, it's the business Super Bowl.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
It's one of those moments where the entire business community is coming together and they're making predictions. And it's a ton of fun. It's a ton of fun for CNBC, too. And as someone who's trying to make business news more interesting, I kind of love it.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I think you should become an activist and maybe you can pitch that next time. There you go. We'll be right back after the break with a look at the new American gold card. If you're enjoying the show so far, hit follow and leave us a review on Proficy Markets. We're back with Profiteer Markets.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Trump is launching a new gold card program offering residency and a path to citizenship for wealthy investors, but it comes with a steep price. Thank you. Thank you. Thank you. Thank you.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Shares are down more than 25% so far this year, as investor concerns mount over growing competition and Elon Musk controversies. Warren Buffett announced that Berkshire Hathaway paid nearly $27 billion in taxes in 2024. That is the largest tax bill ever paid by a US company, accounting for roughly 5% of all corporate income taxes collected in the country that year.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
And finally, BP announced it is shifting back to fossil fuels and scaling down investments in green energy. The company plans to spend around $10 billion a year on oil and gas to win back investors after its fourth quarter profit hit a four-year low. Despite that move, BP shares closed down about 1.5%. Scott, we'll start with Tesla, and I'm bracing myself for your victory lap here.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Thank you. Thank you. Thank you. Thank you.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
You predicted on February 13th.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
It was trading at $356 a share then. We're not below $200, but we're now at $286. So it's down 20% since your prediction. Take it away.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from the Vox Media Podcast Network.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Join us on Thursday for our conversation with Jonathan Cantor, only on Prof G Markets.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Really?
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Yeah, I mean, I think the question that we've been trying to ask is like, what started this slide with Tesla stock? I mean, it's pretty dramatic what happened. It's down around 20% in five straight days, falling below a trillion dollars. It's now down 34% since its peak in December. I think the thing that really triggered this is this data that came out from Europe.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Tesla's vehicle sales are down almost 50% across Europe. Meanwhile, overall EV sales across Europe are up almost 40%. So clearly, people just hate Teslas. And it's not very surprising why. I mean, you just look at the UK, for example, where, you know, Elon is talking about how he wants to put
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
the British Prime Minister Keir Starmer in jail, it's not very surprising that the British public is now saying, hey, we're down with electric vehicles, but we're not going to buy Teslas anymore. And so it's finally being reflected in Tesla's financials.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I think the thing that I've been thinking about a lot when it comes to Elon and when it comes to Tesla, I've been waiting for what I would call his Wellington moment. And I'll explain what I mean by that. As I've said to you before, I think the similarities between Elon Musk and Napoleon Bonaparte, and you're going to call me a history nerd, but I don't care. Just a nerd.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I think the similarities are very striking in that you have Napoleon, who was this like miraculously successful guy who took over all of Europe and tried to take over the world, and at the same time was also pretty universally disliked. But people never really did anything about it because they thought, you know, this guy is so talented. He's so powerful.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
He conquered the Russians and the Prussians and the Spanish. He installed himself into office. He crowned himself emperor. Like, how could we ever bet against Napoleon? You never bet against Napoleon. And that's basically why people went along with this guy who was acting... honestly, very irrationally and kind of insane.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
But it was only when he suffered this crushing defeat at Waterloo against the Duke of Wellington that people realized, actually, maybe this guy isn't untouchable. Actually, maybe he isn't a god. And the whole world turned on him at the exact same time, including the French, by the way. And he was banished to this remote island where he died sad and alone.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
And I believe that that moment is coming for Elon. I believe it's going to take some big loss and suddenly all of this mystique and this intrigue and all of our glorification of his leadership abilities and his character and his genius, it's all just going to disintegrate in a second. And... At that moment, I think the citizens start to turn on him. We've seen that happening already.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
But more importantly, I think the markets will turn on him too.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Agreed. But this is what people believe and this is what the markets believe. And so this is what I mean. I think you need a moment. You need to see that the God fall from grace. You realize he's mortal. You realize that actually he's not all he was chalked up to be. And suddenly that's when the world collapses in on itself. But... We've been talking about Elon for way longer than we should have.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
So let's just move on to our second headline here, which is Berkshire Hathaway paying $27 billion in taxes last year. I think the thing that's interesting is what Warren Buffett said about this tax bill. Specifically, he was talking in his shareholder letter, in his annual letter to Berkshire Hathaway shareholders. He was explaining how proud he was
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
of paying this tax bill and contributing this revenue to the US government. And I'll just quote one part of this, because I'm supportive of what he said, but I also take some issue with it. So in the letter, he's describing the beginnings of Berkshire Hathaway and how they were struggling at the beginning. And then he says, quote,
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Fast forward 60 years and imagine the surprise at the treasury when that same company, still operating under the name of Berkshire Hathaway, paid far more in corporate income tax than the US government had ever received from any company, even the American tech titans that commanded market values in the trillions.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
So he's basically saying, look how far we've come, look what we're contributing to the government. But at the same time, he's kind of taking a shot at big tech. and accusing them of not paying taxes, which is true and fair, and I agree with it, but I do find it a little bit rich coming from Warren Buffett, who has done a very good job of avoiding taxes himself.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I mean, if you look at the history of Berkshire Hathaway, they have a long list of tax avoidance strategies, and they've had no problem taking full advantage of them. We could go through some of those examples, but what I would summarize this as is,
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I respect the point, but I don't love this holier-than-thou attitude from Warren Buffett, who's kind of presenting himself as like the Jesus of taxes, which isn't necessarily true. But... Let's hear what you think of this. I assume you're a supporter of this.