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- [00:00]
Ed Elson
K Pop demon hunters Saja Boy's breakfast meal and Hunt Trick's meal have just dropped at McDonald's. They're calling this a battle for the fans. What do you say to that, Rumi? It's not a battle. So glad the Saja Boys could take breakfast and give our meal the rest of the day.
- [00:14]
Timberland Narrator
It is an honor to share.
- [00:16]
Liz Hoffman
No, it's our honor. It is our larger honor.
- [00:20]
Ed Elson
No, really stop. You can really feel the respect in this battle. Pick a meal to pick a side.
- [00:27]
Timberland Narrator
Ba da ba ba ba and participate
- [00:29]
John McNeil
in McDonald's while supplies last.
- [00:31]
Timberland Narrator
It's not just something you made. It's the privilege that you get to work with your hands. It's building something that serves a purpose. Proof that you have the grit to keep going. At Timberland, we understand you take your craft seriously and we do too. Which is why our products are built to the highest quality. We put in the work so you can perfect yours with purpose, in every detail and crafted with intention. Timberland built on craft. Visit timberland.com to shop Zootopia 2 has
- [01:01]
Liz Hoffman
come home to Disney Plus.
- [01:03]
John McNeil
Let's go get ready for a new case.
- [01:05]
Ed Elson
We're the greatest partners of all time. New friends Gary the Snake and your
- [01:09]
Liz Hoffman
last name the Snake Dream Team New Habitats Zootopia has a secret reptile population.
- [01:14]
John McNeil
You can watch the record breaking phenomenon at home. Zootopia 2 now available on Disney Plus. Rated PG. And right now you can get Disney plus and Hulu for just $4.99 a month for three months with a special limited time offer. Ends March 24th. After three months, Plan Auto renews at $12.99 a month. Terms apply.
- [01:30]
Liz Hoffman
Today's number four. That's how many car accidents Tiger woods has now been involved in after he rolled his car over in Jupiter Island, Florida last week. Today's other number is 20. That's how many dollars it would cost you, Tiger, if you simply ordered an Uber. Money market if money is evil, then that building is hell. Welcome to Profg Markets. I'm Ed elson. It is March 31st. Let's check in on yesterday's market vitals. The NASDAQ fell as a tech sell off deepened. The index is firmly in correction territory heading into its final day of the quarter, down 13% from its October peak. Meanwhile, the S and P also declined and the Dow was flat. Treasury yields dropped after Jerome Powell indicated the Federal Reserve will look past the oil shock and keep rates steady. His comments came as Brent crude prices rose to more than $116 per barrel. Okay, what else is happening? Some of the most powerful people in tech are now formally advising the White House. President Trump has named 13 industry leaders to the President's Council of Advisors on Science and Technology, also known as pcast. Appointees include Marc Andreessen, Jensen Huang, Mark Zuckerberg, and Larry Ellison. Their mandate is to advise the White House on science and tech policy, and their goal is to ensure that, quote, all Americans thrive in the golden age of innovation. Co chairing that council is David Sachs, whose time as AI and crypto czar has come to an end. And also Michael Kratzio, director of the White House Office of Science and Technology Policy. Joining us to discuss this council and what it means for AI policy, we're speaking with Liz Hoffman, senior Semaphore Business and Finance Editor and host of Compound Interest. Liz, welcome back. So I want to get right into this. This has. These councils have existed for a long time. FDR had his first one in 1933. Historically, it seems like they've usually been academics, but this time it's really industry leaders. It's the people who are actually building this technology, people like Zuckerberg, Jensen Hu, Marc Andreessen, et cetera. What do you make of this council, and is it surprising in any way to you?
- [04:04]
Ed Elson
First, I think there was a missed opportunity in not getting the acronym to be podcast. I don't think you'd have to try that hard. The Presidential Order Directoring Council of whatever, because that is the crew here. Yeah, no, I think you're right. And that's extremely intentional. There was David Sacks was talking about this and said, I think these are doers. And you can feel however you feel about the politics here. But one complaint that was really widely felt in the private sector about the Biden administration was less the sort of policies they were pursuing than the personnel pursuing them and the sort of access that private sector people had. Say what you want. Even Trump's first term, he would say something that the private sector didn't like, but they would call up Steve Mnuchin, they would call up Gary Cohn, and there would be this back and forth. And that totally went away during the Biden administration in the sense that people were making decisions who, who would never run a P and L, who would never run a balance sheet, never really underwritten risk for a living. That has obviously come back. So that, I think, is the most charitable and least politicized view of all of this, and seems fine to me. AI is really important. It's really important economically. It's really important for national security. And I think we'll all remember that Senate hearing where a bunch of the big tech executives were being questioned by senators who clearly just had no idea how they made money. I mean, that knowledge gap between people doing the regulating and writing the laws and the industries they're regulating has been pernicious before. And so that's one way to look at it. The other is this is just another sort of corridor of power that is cropping up, and that there are a lot of asks from the industry and they now have a more direct line to people who can give them what they want.
- [05:46]
Liz Hoffman
Wouldn't the conflict of interest here, though, to play devil's advocate, wouldn't it be that the people who are supposedly going to regulate this technology are also the people who are most heavily invested in this technology? They're the ones who are incentivized to profit from this technology. I mean, it would be one thing if you had a council of people with whom technology leaders could speak with and maybe who had some background in technology. But it's literally Jensen Huang. It's literally Marc Andreessen. It's literally the people who are most invested who want to profit off of this thing. Is that not a conflict?
- [06:27]
Ed Elson
It's absolutely a conflict. But, I mean, this administration is full of them, I think. And it's a slightly less pernicious one than people's kids making a lot of money on crypto deals and Trump selling half of his family business to the Middle East. I mean, you don't have to look far and wide for things that are genuinely problematic. I'm not that bothered by this one, because I guess, what's the alternative? Right? Again, you have this being regulated by people who have no idea what it is. I would also say that there is a surprising and actually slightly comforting range of ideas and viewpoints within the AI community about actually how best to regulate this. I would be more concerned if everyone was just full steam ahead. But there are real anthropic has put out a different version of how this technology ought to be used and regulated. There are states that sort of have their own point of view. I don't know, but I don't think that the alternative is a whole lot better where you have got a bunch of octogenarian senators trying to oversee this. I would also say, and look, David Sacks has been a real lightning rod. He's the presidential advisor sort of chairing a lot of this stuff. I think it's hard to argue that he is richer now being in the white House than he would be if he was in Silicon Valley, like actually investing in this stuff. So I don't know. Yes, it is. You got to be worried about it. But as the knowledge gap between the people regulating huge sections of the economy and the people in them gets wider, I'm not really sure there is a better option than to bring people to the table. By the way, the one people, one group of people not in this are the big. The big AI models themselves. You wonder whether there isn't. This isn't gonna end up being some kind of origin story where Elon Musk's turn to the right. A lot of it kind of goes back to his snub from the Biden Ev Council. I don't know. I was surprised to see that group, Sam Altman, those folks not included here.
- [08:25]
Liz Hoffman
Right. Elon Musk wasn't in it. I guess he had his fallout with the president.
- [08:29]
Ed Elson
That one a little less surprising. But yeah, you would expect to see Sam or Dario or other folks who are running these models.
- [08:36]
Liz Hoffman
Right. But I guess I just want to push back for a moment because, I mean, with David Sacks as the example, it seems as though his policy, his approach to AI regulation has been, let's not really regulate AI, let's make it kind of a free for all. And at the same time, he was still invested through his investment firm, Craft Ventures, in a lot of companies that were building in the AI space. And it does seem that that is kind of the risk here. I agree with you. Having a bunch of oxygenarian senators who don't really know what they're talking about on this council advising on things that they've literally never built products in seems like a bad idea. But it also seems like a little bit of a bad idea to have the individuals who are most incentivized to build policy. Not that necessarily protects Americans, but that allows them to profit as much as possible. And it just makes me think, can we not find some sort of happy medium? Can we not find some people who aren't balancing their other job as a VC in Silicon Valley and being a special employee for the government, people who could actually do the job of regulating, but who also have some fluency in the language of business? I don't know, someone like you. Could we not get people in there who know what this is about, but who also aren't going to be totally incentivized to simply get as little regulation as possible to profit as much as possible?
- [10:03]
Ed Elson
I was not invited, nor was my colleague Reid Obergati, who actually knows A lot, A lot about this stuff. Sure. Obviously, yes. There's like a million AI safety groups and like, having them included would be the normal thing to do. Like, that's not generally how this administration operates. So they don't have a lot of respect for precedence and how we've kind of consistently done things. Yes, I, I agree. But you know, I do think that, that the, you know, there's always been this gap between regulators and the people they're regulating. But like, for example, the Federal Energy Regulatory Commission, ferc regulates utilities. Like, there's a, this sort of price of having people who understand the industry in the regulatory seat is kind of allowing that revolving door over time. Right. Letting people come in and come out and get paid in the private sector. That's how you get them there in the first place. This one, they don't need that. Right. These guys are so wealthy and there's not a lot of incentive to bring them in to a true regulatory role. And so I really do worry that this is, that that knowledge gap is just going to be incredibly wide here for a technology that is very powerful and developing really quickly.
- [11:10]
Liz Hoffman
I guess the thing that would make me maybe a little bit more comfortable is this is an advisory council. They're not actually writing the laws, but they're going to have some sort of advisory role and maybe they'll shape things in some capacity. I guess the question then becomes how significant are these councils really? Do they really influence policy in a way that is meaningful?
- [11:33]
Ed Elson
You'd be hard pressed to find one, you know, during the Biden administration and probably, and certainly Trump won when you remember, by the way, like no CEOs really wanted to, to be kind of anywhere near that, that administration from an advisory perspective. You know, they tend to crop up kind of around national emergencies and go back to 08. And there was obviously some, a lot of private sector input into how that problem would be solved or honestly, even the pandemic. Warp Speed had an advisory council with a bunch of pharma CEOs. It was a huge win. And I often say it's weird. Warp Speed was one of the biggest wins from Trump's first administration that he completely walked away from. It totally worked. It was in fact, very popular, but he never took any credit for it because of the politics had shifted around it. So we'll see. I think there's a balance to be struck between sort of being regulators, being in opposition to the industry they regulate while trying to sort of tap their expertise or at least have some open lines of communication I think often is helpful. This one seems fairly lopsided in that respect, but there's just I hate saying AI is different. This time is different. This technology does fundamentally feel different to me and so I think that having private sector involved is probably helpful and understanding that not all of them want necessarily exactly the same thing. They are competing with each other very aggressively, which is not where I like to put my eggs, but could be a little bit of a of a check on on this sort of one way push.
- [13:08]
John McNeil
All right.
- [13:08]
Liz Hoffman
Liz Hoffman, Semaphore Business and Finance Editor and also host of Compound Interest. Liz, thank you. Always appreciate your time.
- [13:15]
Ed Elson
Always fun Ed
- [13:18]
Liz Hoffman
after the break, SpaceX is filing for liftoff and if you're enjoying the show, please follow our new Prof. G Markets YouTube channel starting next week. That is where you will find all of our content on YouTube.
- [13:38]
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- [14:41]
Timberland Narrator
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- [15:10]
Liz Hoffman
Whether you bond over streaming bingeworthy videos, watching sports recaps, video gaming, or by unplugging altogether, the 2026 Lincoln Nautilus Hybrid keep you connected throughout Your journey. Learn more@lincoln.com available connectivity, features and functionality vary by model. Package pricing, trials and term lengths vary by model. Video streaming and games are only available while parked. We're back with Prof. G Markets. SpaceX is preparing for its biggest launch yet. According to the information, the company aims to file its IPO prospectus imminently. It's reportedly targeting a valuation of $1.75 trillion and hopes to raise $75 billion in the offering. That would make it the largest IPO in history. Earlier this year, Musk merged Xai into SpaceX, which had already absorbed the social media platform X. Which begs the question, will Tesla be the next Musk property to join the SpaceX conglomerate? Lots of questions here. Here to help us break it down, we are joined by John McNeil, CEO of DVX Ventures, former Tesla president, GM board member, and author of the new book the Algorithm. John, good to see you. I'm going to get right into this here. You just published a book called the Algorithm. It's basically about how Elon built both Tesla and SpaceX. And now SpaceX could be going public. It could be the largest IPO in history. As someone who has worked with Elon and as someone who's written about this company, what do you make of this company now going public?
- [16:54]
John McNeil
The basis of the approach in the algorithm is simplicity, and that's Elon's organizing principle is simplicity. So I think There might be three reasons why Tesla may become a part of SpaceX and these entities might combine. I don't have any inside knowledge, but. But these three reasons are pretty significant. So the first is it's easier to run one public company than two. And so that is that simplicity argument number one. But I think beneath that, it solves a couple of problems. Tesla is essentially becoming an autonomy company in terms of humanoid robots and car robots. And so both of those things rely on AI as their operating system. And so Tesla, as you know, invested $2 billion into X earlier this year. But combining the entities of Tesla, SpaceX and X into one entity would put the AI resources closer to the application at Tesla. So I think that's a second reason. And a third reason is there's been a lot of talk about Elon's frustration with his. His portion of the cap table at Tesla. He wants more. And this would seemingly help to solve that problem of combining Tesla in, given its significant SpaceX ownership. He would sort of solve the problem of who the majority shareholder is at Tesla when one moves. So I think those three things probably point to this being a higher than 50% chance of happening.
- [18:30]
Liz Hoffman
You took Lyft public, you were the company's coo, so you were there for an ipo. I mean, just as an observer here, if you're trying to combine SpaceX with Tesla, is it not going to be a lot harder? If SpaceX is its own public company, it has all of its new regulations, you've got all these retail investors in the mix at that point. Why wouldn't they just combine the two things now? Why take it public first? And will that not make things more complicated down the road?
- [19:00]
John McNeil
You're right, Ed. It makes it more complicated to do it post the SpaceX IPO. Not impossible, but more complicated. You invite in, I think, an extra layer of regulators, whereas you have one company to look at now versus two then. So I think it is easier now to do. But I'm not sure they want to slow this down, because Elon's got this line in the sand where he wants this done by his birthday.
- [19:25]
Liz Hoffman
Just on the valuation here, $1.75 trillion, that would make it the seventh most valuable company in the world. That would make it more valuable than Meta. It would also make it more valuable than Tesla, which is quite striking. I'd love to get your reactions to this valuation target that they're shooting for $1.75 trillion. Does that make sense to you?
- [19:49]
John McNeil
If you break it down first and say, let's add up the pieces, you've got the SpaceX business, which has got 90% market share in launch and call it 99% market share in satellite Internet, so two kind of monopoly positions in that business. And then you've got Xai, which is competing in the world of the kind of trillion dollar valuations of OpenAI, and then maybe three quarters of a trillion for anthropic. So putting those two pieces together, you've got to depend, I think, a lot on retail investors to look past any fundamental financial metrics on what would justify that valuation, which I think is why they're reserving a third of the IP for retail. I think they need that retail demand not only for the valuation, but to your early point, this is going to be the largest capital raise in history with $75 billion. So they're going to need everybody from institutions to retail investors coming to the table to fill in that book. That's a big, big order book.
- [20:54]
Liz Hoffman
It seems to me that, I mean, Elon is clearly a master of a lot of things, but this is kind of a criticism here, incoming is that he's Kind of a master of getting us to not look at the fundamentals, which is exactly what is happening with Space X here. I mean, you look at the fundamentals, the fact that they've, I think they did around $15 billion in revenue, they want a $1.75 trillion valuation. At which point you say yes, because this is an entirely different business. This is space, this is going to change the world. And then when we start to talk about the idea of merging Space X with Tesla, to me it starts to sound like we're doing a lot of fundamentals laundering of some kind. To basically make us forget about the fact that Tesla sales are not that great right now and make us start to look into the future and get all excited about all these things, such that we are down to pay extraordinary multiples for these shares. Would you not say that that is perhaps what is happening here? And does that not make you, I don't know, a little bit uncomfortable maybe?
- [21:58]
John McNeil
I would say I've never met somebody as good at their promote as Elon. He is incredible. And to your point, Tesla is a declining car business with declining margins. Margins have fallen by half in the last two years and yet it's worth twice as much as all other car companies combined. And so he has got an ability to get people to defy financial logic around these valuations. And I think there are plenty of people that have lost a lot of money saying I'm either short or I'm not participating in Tesla. And I've learned not to bet against the guy. But he is unique in his ability to get people to look past financial metrics and financial fundamentals.
- [22:52]
Liz Hoffman
What do you think this means for the automobile industry? Obviously that's really your expertise here. If Tesla were to merge with SpaceX, I mean, if we're really combining those two things, does that have any downstream implications for the other players for say, gm?
- [23:10]
John McNeil
I can't see any in the sense that we're all kind of racing towards the same existential issue, which is autonomous cars and factory automation to compete with the Chinese. Those are the two issues that ought to be on every car manufacturer's mind. And I don't think it changes that dynamic at all. And those are clearly the two things that Elon's got Tesla pointed at us as well.
- [23:35]
Liz Hoffman
All right, John McNeil, CEO of DVX Ventures, author of the new book the Algorithm. I got a copy. I don't have it with me, but I have it at my apartment. I appreciate you sending it to me, John, really appreciate your time Great to
- [23:47]
John McNeil
talk to you, Ed.
- [23:50]
Liz Hoffman
Before we end, a quick update on the Iran war. As of this week, we have officially been at war for more than a month. This is week five of the conflict. And just as a reminder, we are now officially over the amount of time Trump said this war would last. On day two, Trump told us this would take, quote, four weeks or less. He then separately told the New York Times that it would take four to five weeks. Pete Hegseth also followed up and said, quote, this is not Iraq. This is not endless. Well, here we are in week five. We are now breaching the original estimations of the duration of this war, very similar to what happened with Iraq. And there is still no indication that we are anywhere close to ending this. In fact, yesterday we learned that our military presence in the region had grown by roughly 10,000 troops. We also learned that Houthi rebels in Yemen are now joining in on this war. Iran is also now making threats to attack American university campuses in the Middle East. And Trump is threatening to, quote, completely obliterate Cog island while the Pentagon makes arrangements for even more ground operations. In sum, this war is far from over, which also means we must now brace for even more economic impact. Here is just a quick update on how prices have risen since we invaded Iran. We'll start with oil, the price of which has now risen nearly 60%. As a result, gas prices in the US are now up more than 30%. And over in Europe, that number is now 75%. We also discussed how this affects the price of fertilizer. A couple weeks ago, I mentioned how fertiliser prices had risen roughly 25%. Well, now that number is almost 50%. Fertilizer is, of course, essential for growing food, which means that grocery prices will also be affected. But many other goods will be affected, too. Things like construction materials and therefore, housing costs. Also consumer packaging, home electronics, and many, many more. And as a result, inflation expectations are now rising even higher. Just last week, the OECD raised its 2026 inflation forecast to 4.2%. That is more than a full percentage point than what they had previously estimated in December. Let's also check in on how this war has affected the markets. Since we invaded. The S and P has fallen roughly 7%. The Dow has also fallen roughly 7%. Shout out to Pam Bondi, who literally called the top in her Senate hearing. European stocks are down 8%. Japanese stocks are down 12%. In fact, global stocks as a whole have lost roughly 9% of their value in since the start of the war, that is more than $10 trillion in market value, which has evaporated over the course of a month. As for the direct costs to the government, well, the bill has now risen to more than $25 billion. That is money coming directly out of the federal budget. It's also enough money to cover health insurance for 2.7 million Americans. That was a lot of numbers. I know, but the reason I'm highlighting these numbers is because we are now getting to a point in this war where we are actually starting to lose track of them. The longer this goes on, the more we forget just how expensive this is, not just in terms of dollars, but also in terms of lives. I can also give you the death toll. We are up to more than four and a half thousand. So it's now getting to that stage where we start to view this not as a tragedy, but as a statistic. We are becoming desensitized to the destruction that is happening in Iran, which is why we have to keep track of it. We have to remind ourselves where we were a week ago or where we were a month ago. And we need to reflect on what our expectations were at that point in time. We need to consider what used to sound like a big number and then compare it to the numbers that we are seeing today, which have of course, gotten even bigger. And only then will these numbers actually have any meaning. Only then will we appreciate just how detrimental this war really is. And hopefully, hopefully once we do that, we will start to have a more appropriate response to all of this. We might react to these headlines with an appropriate level of outrage as opposed to doing what we did with Iraq, where no one really understood what was happening, so they just reacted passively and with a sense of general confusion. Hopefully that won't happen this time. Hopefully we'll actually do something about it. But that isn't going to happen if we don't keep track. We have to continue to know the numbers and more importantly, we have to make sure we all understand what those numbers actually mean. Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss, edited by Joel Patterson and engineered by Benjamin Spencer. Our video editor is Brad Williams. Our research team is Dan Shalon, Isabella Kinsel, Kristin o' Donoghue and Mia Silverio. And our social producer is Jake McPherson. Thank you for listening to Profgy Markets from Prof. G Media. If you liked what you heard, give us a follow. I'm Ed Elson. I will see you tomorrow.