Prof G Markets: Google’s Quantum Breakthrough & The World Cup Goes to Saudi Arabia Episode Release Date: December 16, 2024

Episode Overview In this compelling episode of Prof G Markets, hosts Scott Galloway and Ed Elson delve into two major headlines reshaping the global landscape: Google's groundbreaking advancement in quantum computing and Saudi Arabia's acquisition of the hosting rights for the 2034 FIFA World Cup. Alongside these primary topics, they also touch upon significant market movements, corporate restructuring, and emerging trends in the pharmaceutical and beverage industries.

Market Highlights

Kroger's Acquisition of Albertsons Blocked

Timestamp: [04:01] – [10:04]

The episode kicks off with a discussion on a pivotal moment in the grocery sector: a federal judge has halted Kroger's $25 billion acquisition of Albertsons. The decision, backed by the FTC, argues that the merger would harm consumers by limiting competition.

• Scott Galloway expresses skepticism about the merger's true intent, stating, “This is populist bullshit because just as diapers weigh diapers and gas prices kind of weigh on people's sort of view of the world” ([05:27]).

• Ed Elson adds that the real competition threat comes from giants like Amazon and Walmart, noting, “The biggest grocery supermarket in my mind is Walmart” ([08:46]).

The hosts debate whether the merger was a strategic move to compete with online retailers or a misframed effort within the supermarket sector. They conclude that larger players like Walmart and Amazon are the more formidable threats, rendering the Kroger-Albertsons merger less impactful in the broader competitive landscape.

Warner Brothers Discovery Split

Timestamp: [10:50] – [15:16]

Next, the conversation shifts to Warner Brothers Discovery's strategic restructuring. The media conglomerate is splitting into two distinct units: one focusing on streaming and studio operations, and the other on linear TV networks.

• Scott Galloway anticipates this move as a precursor to a potential spinoff, predicting, “This means the spin, in my opinion, is going to happen” ([12:27]).

• He also shares his investment perspective, highlighting Warner Brothers Discovery as a solid stock pick due to its strategic positioning and market response ([15:16]).

The hosts discuss the implications for shareholders and the media landscape, suggesting that the separation allows each division to focus on its core strengths, potentially leading to increased market valuation and operational efficiency.

Eli Lilly's GLP1 Drugs for Addiction

Timestamp: [15:38] – [20:16]

Eli Lilly is set to begin testing its GLP1 drug, Zepbound, as a treatment for drug, alcohol, and tobacco addiction. This development has significant implications for the pharmaceutical and beverage industries.

• Scott Galloway remarks on the transformative potential of GLP1 drugs, stating, “These drugs are scaffolding on our instincts” ([16:25]).

• Ed Elson highlights the immediate impact on the alcohol industry, noting substantial stock declines in major alcohol companies like Boston Beer and Brown Forman ([18:16]).

The discussion centers on how these drugs could reduce addictive behaviors, thereby challenging the revenue models of industries reliant on addictive products. The hosts anticipate a "meltdown" in the alcohol sector as GLP1 treatments become more widespread and effective.

Google’s Quantum Breakthrough

Timestamp: [27:35] – [37:46]

A significant portion of the episode is dedicated to Google's unveiling of its new quantum chip, Willow, which boasts the ability to solve complex problems exponentially faster than the world's most advanced supercomputers.

• Ed Elson provides a comprehensive breakdown of quantum computing, emphasizing its exponential processing power and the challenges of error rates ([27:35]).

• Scott Galloway questions the practical applications and immediate benefits for consumers, pondering, “How do people invest around this?” ([31:31]).

They explore potential applications in healthcare and encryption, particularly the threat to Bitcoin's security. The hosts predict that while quantum computing holds immense promise, its adoption and integration into practical use cases will be gradual, and the sector may face a surge of corporate hype without corresponding real-world results.

Additionally, they discuss investment opportunities, highlighting companies like Rigetti Computing and IonQ as key players in the quantum computing landscape, noting significant stock performances and strategic contracts.

Saudi Arabia’s 2034 World Cup

Timestamp: [38:04] – [54:16]

The episode culminates with an in-depth analysis of Saudi Arabia securing the hosting rights for the 2034 FIFA World Cup, marking a strategic move to position itself as a global sports leader through substantial investments and branding efforts.

• Scott Galloway critiques the inherent corruption within international sports organizations like FIFA, suggesting that Saudi Arabia leveraged its financial might to secure the bid: “This is what's happened here. I think this may be the first time that there was only one nation bidding” ([40:59]).

• Ed Elson provides context on the economic inefficiency of such mega-events, citing a study from the University of Lausanne which found that 95% of Olympic Games and World Cups lose money ([45:04]).

The discussion touches on Saudi Arabia's broader economic ambitions to transition from a fossil fuel-based economy to one centered around services and tourism. While acknowledging the questionable human rights record, the hosts debate the potential long-term economic benefits versus the immediate financial costs, ultimately contending that the event serves as an extravagant global advertisement aimed at attracting investment and human capital.

Notable Quotes:

• “Power corrupts. And absolute power. Absolutely corrupts.” — Scott Galloway ([01:48])

• “These drugs are scaffolding on our instincts.” — Scott Galloway ([16:25])

• “This is populist bullshit because just as diapers weigh diapers and gas prices kind of weigh on people's sort of view of the world.” — Scott Galloway ([05:27])

• “This means the spin, in my opinion, is going to happen.” — Scott Galloway ([12:27])

Predictions and Wrap-Up

Timestamp: [55:34] – [62:10]

Wrapping up, Scott shares his forecasts on corporate behaviors and market trends. He predicts a significant earnings beat from Meta, driven by its monetization strategies around societal rage and polarization.

• Scott Galloway states, “If you put a frog in water and then turn the heat up, it doesn't know it's being boiled to death. I don't think we realize just how bad the rage has become in the United States” ([58:56]).

He underscores the profitability of companies like Meta by leveraging negative societal emotions, suggesting a continued trend in digital platforms capitalizing on societal discord for financial gain.

Closing Thoughts:

The hosts emphasize the intertwined nature of corporate strategies, technological advancements, and socio-political dynamics in shaping future market landscapes. They encourage listeners to stay informed and critically evaluate how these factors influence investment opportunities and economic stability.

Conclusion

This episode of Prof G Markets offers a thorough exploration of significant developments in technology, corporate mergers, pharmaceutical innovations, and global sports branding. By dissecting these topics with insightful commentary and expert analysis, Scott Galloway and Ed Elson provide listeners with a nuanced understanding of the forces driving today's capital markets and the broader economic environment.