Loading summary
Transcript108 lines
- [00:01]
Scott Galloway
Support for the show comes from vcx, the public ticker for private tech The
- [00:05]
Sponsor/Ad Voice
US Stock market started history's greatest wave of wealth creation. From factory workers in Detroit to farmers in Omaha, anyone could own a piece
- [00:12]
Scott Galloway
of the great American companies.
- [00:14]
Sponsor/Ad Voice
But today, our most innovative companies are staying private longer, which means everyday Americans are missing out.
- [00:19]
Scott Galloway
Until now. Introducing VCX, a public ticker for private tech.
- [00:24]
Sponsor/Ad Voice
Visit getvcx.com for more info. That's getvcx.com carefully consider the investment materials before investing, including objectives, risk charges and expenses. This and other information can be found in the funds prospectus@getvcx.com this is a paid sponsorship
- [00:43]
Thumbtack Ad Voice
Avoiding your unfinished home projects because you're not sure where to start. Thumbtack knows homes so you don't have to don't know the difference between matte paint, finish and satin or what that clunking sound from your dryer is. With thumbtack, you don't have to be a home pro. You just have to hire one. You can hire top rated pros, see price estimates and read reviews all on the app. Download today.
- [01:09]
Indeed Ad Voice
This episode is brought to you by Indeed. Stop waiting around for the perfect candidate. Instead, use Indeed sponsored Jobs to find the right people with the right skills fast. It's a simple way to make sure your listing is the first candidate. C According to Indeed data, sponsored jobs have four times more applicants than non sponsored jobs. So go build your dream team today with Indeed. Get a $75 sponsored job credit@ Indeed.com podcast. Terms and conditions apply.
- [01:36]
Scott Galloway
Today's number 81. That's the percentage of Gen Z and millennials who plan to travel based on a movie and TV locations. Ed, why can't millennials take a joke?
- [01:45]
Ed
Why?
- [01:46]
Scott Galloway
Well, often it lands too close to their parents house. You'll get it. Keep thinking, you'll get there. Junior Year Classics Princeton Imagine you went to a real college Hits too close to home. Their home is their parents house.
- [02:02]
Ed
Oh okay.
- [02:04]
Scott Galloway
What does a millennial get on his wedding day?
- [02:07]
Ed
What's that?
- [02:07]
Scott Galloway
A participation trophy. W. How are you?
- [02:22]
Ed
I'm doing well. How are you?
- [02:23]
Scott Galloway
I'm good. I just. I spent most of last night I did one of my favorite things. I took an edible and packed which is like a seven hour experience for me.
- [02:31]
Ed
But it sounds awful to me. It actually sounds like my nightmare.
- [02:34]
Scott Galloway
This is what happens when you get older. A Rolls Royce starts looking cool. The douchest car in the world starts thinking I'd like. I'd like the cut of my jib in a Rolls.
- [02:42]
Ed
I already feel that way. But. Yep.
- [02:44]
Scott Galloway
You like the Silver Shadow? It's pretty cool.
- [02:46]
Ed
I like fancy cars with the suicide
- [02:49]
Scott Galloway
doors and the umbrella that comes out of the backseat. I once. True story. I was at Cipriani and this Rolls rolled up and Jay Z stepped out and got that umbrella out of the back door. I think just for a fact, it wasn't even raining. Second thing about, you can tell you're getting older, you start thinking, wow, cruise actually sounds like a pretty good time. Like, I never would have thought I'd be attracted or drawn to a cruise. And then what were we talking about?
- [03:14]
Ed
We were talking about packing high.
- [03:16]
Scott Galloway
Oh, yeah. Yeah. Packing becomes enjoyable.
- [03:18]
Ed
That's crazy to me.
- [03:20]
Scott Galloway
I love. I'm like, which shoes am I gonna wear? Do I need to transfer stuff to you? Start thinking. You start checking the weather. You wanna make sure that you're packing appropriately. I need. For me, packing used to be throw. Literally, you know, some. Some toiletries, a hoodie, a pair of jeans, some socks, some underwear and my edibles in a duffel bag. I used to be the lightest traveler in the world. I. I'm like fucking Queen Anne now. Headed to Rwanda.
- [03:45]
Ed
That's me. But I hate it because it's so stressful for me. I get made fun of whenever we go on work trips because I'll have a very large bag and then Claire will make fun of me because I'm being exactly sort of Queen Anne about it. But I find it so. I mean, I think it's the worst thing in the world trying to figure out and predict what am I going to want to wear? Are they going to be variables? Is the weather going to be bad? Is the weather going to be good? Doing all of this? And then once you've packed, like, that's it. That's all you've got.
- [04:14]
Scott Galloway
I used to be the person that just left, you know, a few clean pairs of underwear and my toiletries in a duffel bag, and I was ready to come and go. I don't have many things. I'm not that into things. I mean, I like homes, so I guess that's a thing. But I don't own a car. I've never been that into watches or art or anything like that. I do have a few things that I just absolutely love. And one of them, I love luggage. I love Ramoa. I love. By the way, Ramoa. If you're out there, you should absolutely be an advertiser. And I'll take selfies of me and the Ramoa going around the world to speak to the National Cotton Growers association about the future of AI. But I love good luggage, and it drives me crazy when people have bad luggage or, you know, especially people with money.
- [05:02]
Ed
Those Ramoa bags are ridiculously expensive, by the way. I mean, it's quite shocking. I mean, you have to spend over a thousand dollars to. To get even the smallest of those bags.
- [05:14]
Scott Galloway
Yeah, I think it's a pretty strong signal, though, and also sound like. I sound like a privileged douchebag, but I'll go there. It's kind of like your watch, your phone, and your luggage. And if you have a car, your car are sort of your signal. And what guys don't realize is that if they ever get. If they're about to get down the biggest turn on for a woman, I'm going to get shiver. This is. If you have a decent, relatively nice place like you actually put some thought.
- [05:42]
Ed
I think that's fair. I don't think you're going to get canceled for that. Yeah.
- [05:45]
Scott Galloway
And it's clean. And she thinks, oh, I wouldn't mind waking up here on the occasional Sunday morning.
- [05:50]
Ed
100%.
- [05:51]
Scott Galloway
But the, the chasm in your packing strategy is it's absolutely okay to pack a lot if you look nice. And that's where the chasm comes in.
- [05:58]
Ed
And that's a good point. We've got a lot to get into today, so I'm going to launch us right into it.
- [06:06]
Scott Galloway
Go ahead.
- [06:06]
Ed
Today we are discussing what the markets tell us about the war in Iran and also anthropic stand against the Pentagon. By the way, just a reminder, we will be recording our live episode from the Vox Media podcast stage at 10am this Saturday at south by Southwest. We're very excited about it. We hope to see you there. We've told you enough about it. If you're in Texas, come, come hang out with us. It'll be a lot of fun.
- [06:30]
Scott Galloway
It will be great. I got another live event coming up. Ed, I noticed how you just glossed over that on Sunday.
- [06:36]
Ed
Yeah, we'll keep moving.
- [06:37]
Scott Galloway
We'll keep moving. Ed's a little jelly. Ed's a little jelly of the other podcast. He just thinks because he has a foot and a half on Kara Swisher that somehow she's his nemesis.
- [06:49]
Ed
I don't know what you're talking about. I don't even know what that podcast is.
- [06:54]
Scott Galloway
Now is the time to buy. I hope you have plenty of the wherewithal.
- [07:00]
Ed
The US and Israel launched military strikes on Iran last week. They killed Iran's leader, Ayatollah Mane A and several high ranking military officials and damaged government and defense sites. The conflict shows no clear signs of winding down. President Trump said the campaign could intensify and last for weeks, while Iran has indicated it is not willing to negotiate with the U.S. despite the turmoil, markets have been relatively calm. The S and P is down quite modestly since the strikes began and the yield on 10 year treasuries climbed. However, one of the more significant reactions has been in energy with crude oil prices surging to an 18 month high. So Scott, our job is to look at the markets here, or at least our job on this podcast is to look at the markets, what the war is telling us about what's happening, the markets also what the market is telling us about what's going to happen in the war here. I think one takeaway is that if you are looking to the markets to tell you something about the future, it would be that the future of this conflict will probably be somewhat contained. Just the stock market's reaction basically flat since this happened. And of course treasury yields climbing, which means that actually people have been investors have been selling their Treasuries and Treasuries are usually the safe haven asset when conflicts break out. You'd expect the opposite to happen. Now I'm not sure what I make of it or I think I'm a little skeptical of the market's reaction. But let's just start there. Your reactions to what the markets are telling us about this military conflict.
- [08:45]
Scott Galloway
I think you nailed it. I think the market thinks it's going to be an eruption. It'll probably ding some of the earnings of travel stocks, luxury stocks dependent upon airport retail. It'll take travel down. I was thinking about going to India in Bahrain and we're now in April. Now we're contemplating whether we're going to go not so it's just a short term hit to earnings, but in terms of a long term war or real structural impact, it doesn't look as if the market believes that's going to happen. And if you look at most wars, typically stocks fall in the short term and then they actually recover pretty robustly. And what's happened essentially since 911 where stocks in New York real estate checked down but then came ripping back. The check down is usually shallower and shorter than usual because people look for the bump and start investing in the bump before it's even had a chance to go down. And in addition the kind of risk on of metals going up, metals have come down. So what do we have? We have some of the stocks that have been hit really hard, the travel stocks. Right. So basically airlines and crew stocks are down about 10%. I thought LVMH is down. I thought the most interesting thing in the market was that the Cosby or the Korean market had its largest one day decline, I think in history or since 2000. For a long time it was down, I think at 1.11%. And I think it's because they're pricing energy. The flows, 20% of the oil flows through the Straits of Hormuz. The big, the kind of, the big loser here arguably is China, which gets 80% of the oil exported out of Iran was going to China, similar levels or, or pretty big levels out of Venezuela. So the supply of energy into Asia has been hit hard. And also there's just a general recognition and it might be that the cost goes up so dramatically. This is just letting some air out of the balloon that a lot of their biggest companies, whether it's Samsung or they're, you know, building microchips, they just require a lot of energy and that if energy spikes, that will really have a big impact on their earnings. But I basically, I essentially think the markets are saying, and this is why the markets are so powerful, because it takes out all emotion or conflicts of interest. The markets are immoral. There's nothing like getting truth from someone than asking them where they're actually investing. Right? Oh, I love when whenever a company asks me to call, I've been on board somewhere raising money and they asked me to call investors, the first thing investors ask is, are you participating in this round? And that's Wonder Woman putting a golden lasso around you. So I think what the markets are saying here and the markets get it wrong is that they think this conflict is going to hurt some companies in the short run. But effectively, if oil is up 10 or 12%, diesel's way up more because of supply chain concerns in Europe in the short term. But I think the market is essentially saying, and you tell me if you think I got this wrong, this conflict is going to hit certain sectors in the short run, but we think the conflict is short lived and the world will return to some level of normalcy sooner rather than later.
- [12:01]
Ed
I think that's exactly what the markets are telling us. And to be fair to the markets and to your point, that is often what happens. I mean, this is one of the strange things about war and about military conflicts is that usually they are not that impactful to the markets. Or at least you look back Since World War II three quarters of the conflict since then. If you measure a year after the conflict began, stocks ended up in the green. You saw a positive return. And actually JP Morgan did this study and they found that S and P returns are actually the same on average during peacetime and following conflict. So I think recent history would tell us that this is strangely not that impactful on markets. Um, and I think that can be a little frustrating for us sometimes because Rob Armstrong makes this point. We often want the markets to tell us what we really believe. And I look at the death and destruction that is happening, and part of me wants to think, you know, this is like a big deal. This is scary, this is problematic for various reasons. And I want the market to reflect that. The markets are definitely not reflecting that, at least not yet. The markets believe that this is going to be contained, it's going to be. Maybe there's going to be a little bit of instability, but not so much that it's really going to hit investors very hard. That's what the markets believe right now. Now, the question you bring up is, are they right or are they wrong? And usually, I would say usually the markets are pretty much right. I'm not someone who thinks that the markets are always getting things wrong and investors don't understand what's happening, but I'm also someone who believes that the markets can get things wrong sometimes. And that's how I felt about the Citrini article. I think that's how you felt about the Citrini article too. When this AI blog post comes out and suddenly everyone devolves into a panic, they start pricing in things that don't really exist yet they don't have evidence of. And to me, that was a moment where the markets got it wrong. We'll see what happens over the next few years. On this occasion, I'm not so certain that the markets are getting it wrong. But I am struck by the markets certainty about what is happening here. And I felt this way when we talked with Steve Eisman about this, where I said, you know, what does this do to your investment strategy? And he said very, very plainly, this doesn't change anything. This won't change my investment strategy by a single dollar. And I'm hearing this a lot, actually, among investors, that this isn't a big deal, it's contained. Trump has essentially concluded the problem, and we're now living in an era of actually more stability and more certainty now that the bombs have been dropped than we were before. I'm just not so convinced of this. And I think there are plenty of what ifs that the markets ought to be at least considering, but they seem to be not even willing to even acknowledge. I mean, the first what if would be what if Iran is destabilized even further? What if the nation devolves into something even worse? And by the way, that is not an unlikely scenario because it is exactly what we've seen in most of the regime changes throughout recent history. It's what we saw in Iraq as an example. I mean, we've seen many instances where there's actually been more instability, more chaos, more death and destruction within the region following a regime change. So there are a lot of, of what ifs here, a lot of what could go wrong, a lot of worst case scenarios that to me are very big deals. And I am struck by investors general consensus here that none of this is going to happen.
- [16:08]
Scott Galloway
Whether or not you think that bombing Iran and trying to diminish their capacity to continue to sponsor and wreak havoc in the Middle east, it is clear that the American public feel that at a minimum, the President should have gone to Congress, should have informed Congress, would have been much better off had he figured out a way to use diplomacy to enlist one or more European and Gulf allies. And also it's reflecting a level of incompetence. And I call right now Iran as war is improv. It literally feels as if they're making it up as they go. Right. So the messaging, we'll be there for five days. We could be there a long time. This is a special combat mission according to Republican senators. No, according to the President, it's war. We want regime change. We're not necessarily interested in regime change. Both those statements came from the President not being able to get American citizens out of the Gulf. No one actually thought through, well, what happens when everyone wants to come home? What's our plan for getting our own citizens out? Bombing Tehran, where we have probably more pro west sympathy or empathy than many of the rural regions that are much more theocratic and loyal. It just feels as if it's not. Tactically they are absolutely diminishing their navy, their missile launch capability. I do believe that they're going to totally neuter their capacity to build nuclear weapons. So tactically you could say it's a, I would argue it's a win. So far they're achieving objectives. But when you have no real thoughtful delineation of what the objectives are and the story keeps changing and you're going about it alone and you basically have held up the middle finger to Democracy and aren't even briefing the Senate Intelligence Committee. I mean, I've never seen Senator Warner so apoplectic. And it shows just such extraordinary incompetence. Because wouldn't you want to at least brief Senator Warner, who has had several presidents in front of him and oversees the intelligence community or informs the intelligence community to kind of get his thoughts? Want to brief Senator Kelly, who has flown dozens of combat missions to get the benefit of their thinking? Wouldn't you want to have Representative Seth Moulton, who was in the Marines, I think in Iraq and or Afghanistan, to get their feeling about what might be going on the ground? Because the reality is we haven't had diplomats there since 1979. So other than relying on the Mossad, which is obviously going to have their own agenda and their own objectives, we have no color or real context here. And it looks as if America, this is another data point and the larger impact on the market. It's not the war itself, but another data point that America is no longer the operating system through which the world operates. We used to have. We controlled the, we controlled the supplies or the routes of energy. Right. It was generally speaking, ships and maritime passageways were kind of off limits. We just sunk a ship with a torpedo for the first time since World War II in international waters. We were the one. Everything was settled in dollars. Loosely speaking, our trade and our IP agreements were the ones that people lived by. It was our, our 700 military bases overseas ensured the safe flow of global trade and international norms. And now what they see is, okay, here's a rogue nation. We used to be the one ensuring no nations went rogue. Now we are that rogue nation. And something happened that I actually think, you know, it's the stuff you don't see that's or that doesn't get reported that has a bigger impact. India and Canada just struck a trade deal and they said we're going to do. It's a $50 billion deal. And the really interesting thing within that deal was they've decided they're going to settle all of that trade in non dollar denominated currencies. So they're not only rerouting their supply chain and trade agreements around the US they're purposely trying to figure out a way to de dollarize to no longer have what I would argue is the most formidable carrier strike force in the world, and that is the US Dollar. Everything settles in dollars. So we have access to everything in terms of flows of capital and power. And we also have the ability to sanction people really Severely because everyone wants to settle in dollars. So what this is, I think the markets have said, okay, this conflict will probably be ring fenced, it'll probably end sooner rather than later. But I do what you're going to think, what you're going to see over the next year, I think the market, the US Market is going to underperform and we're going to see a weakening of the dollar. Because this is yet another example where nations think, Jesus Christ, the operating system we've been operating on is no longer, we can no longer depend upon it because these guys, quite frankly, are out of fucking control. They no longer see themselves as part of the West. They no longer feel the need to. You know, if we'd gone in with British, French and German intelligence and resources, fewer of those missiles would have landed or hit targets in the Gulf. Now, granted, those missile launches have been, have largely diminished. It looks as if Iran may have run out of munitions to fire at their neighbors. If we had figured out a way to try and get one or two Gulf states to join us, it would have just had so much more legitimacy. It would have been another example of how the west brings people together and has some checks and balances. Instead, I think the biggest danger to the markets is not the actual action in Iran. It's another data point that we are now that rogue nation.
- [21:42]
Ed
But I don't understand why, because all of the points you bring up here should not instill or inspire much faith in Trump's decision making on this issue. At least that is my view of it.
- [21:55]
Scott Galloway
Agreed.
- [21:57]
Ed
And so what I don't understand is why there seems to be this kind of blind faith and trust in his ability to handle this competently. And what I've seen, all of the points you made, no congressional approval, no willingness or effort to inspire or reach some level of legitimacy and consensus on this issue, either in America or, or with our allies. Also, the fact that he was the anti war candidate for many, many years, I mean, this whole thing, his whole political career really began with, I think Iraq was a bad idea. I think Afghanistan was a bad idea. Personally, I, I don't see that much evidence that this situation is that much different from what we saw before. I don't think that he's proven that to us. There seems also, as you say, the messaging, you know, what are we actually trying to achieve here? Are we at war? Are we not at war? And to me, that's not a function of bad messaging, that's a function of actually bad strategy. I don't think it's that they don't know what to say, I think, is that they actually do not know what the plan is. They don't have a strategy. And so all of that makes me think we are getting into very, very dangerous territory here. We are potentially witnessing what might be the next trigger of some very, very difficult long war. Something similar to what we saw with Iraq, which, by the way, they also told us was only going to last a few days, a few weeks. They said it wouldn't. I mean, Donald Rumsell literally said, I doubt this will last six months. That's what he told us. It ended up lasting eight years. It ended up costing $3 trillion. Nearly 40,000Americans were injured, four and a half thousand Americans died. So all of this to me says we don't really know what we're getting into here. And there are so many other downstream effects that could be really dangerous. For example, one very likely scenario would be that this isn't contained, that Israel hits Iran's oil facilities. Iran starts hitting other nations oil facilities to just cause some chaos because they're frustrated, they're on the back foot. Oil starts, the price of oil starts to go up, could easily breach a hundred dollars a barrel. At which point, what does that do to inflation? At does that do to the interest rate policy of the Federal Reserve? That's its own thing. What this could do to the affordability crisis and to gas prices in America and also in Europe, could also massively destabilize Europe. And we're already seeing this in liquid natural gas prices, which are skyrocketing in Europe. Not the case for America. We're insulated from the issue a little bit more because we have our own supply. So that's good. But then even things like cyber attacks, I mean, we've already seen a huge increase in cyber attacks on Israel, literally days after they struck Iran. What if that happens to America too? What if there is a refugee crisis? I mean, this is a country with a population of 90 million people. What happens if they all decide, okay, we're out of here, this is a hot zone, which it is, and they decided to start fleeing to Europe. What does that mean for the political complexion of, of Europe? What does that mean for the rise of right wing populism which is already gaining some steam in Europe? What would that do to European markets? How would that affect American markets? Like, my mind is like whirring with all of the what ifs. And I get that I'm more of a pessimist than most, but I feel like that's kind of what the markets are supposed to be contending with right now. And purely based on my conversations with investors, I feel like no one is honestly contending with those potentially bad outcomes. We'll be right back after the break, and if you're enjoying the show so far, send it to a friend and please follow us if you haven't already.
- [26:00]
Sponsor/Ad Voice
Support for the show comes from Monarch. Smell that Spring is in the air. That means sunshine, flowers in bloom and tax season. Listen, some of us look forward to sending out our semi annual emails to our CPAs, but for the rest of us, fear not, Monarch is here. Simplify your finances with Monarch Monarch is the all in one personal finance tool
- [26:18]
Scott Galloway
designed to make your life easier.
- [26:20]
Sponsor/Ad Voice
It brings your entire financial life, budgeting, accounts and investments, net worth and future planning together in one dashboard on your phone or laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch subscription with Code Markets. Monarch can comb through the data to surface insights personalized to you, such as hidden patterns, identifying lifestyle creepers, inflation changes in savings rates, and more, which might help you make an informed decision about how to use your tax return. Achieve your financial goals for good with Monarch, the All in one tool that makes money management simple. Use code markets@monarch.com for half off your first year. That's 50% off@monarch.com markets.
- [27:02]
Scott Galloway
Support for the show comes from VCX,
- [27:04]
Sponsor/Ad Voice
the public ticker for private tech. For generations, American companies have moved the world forward through their engineering and determination. And for generations, everyday Americans could be part of that journey through perhaps the greatest innovation of all, the US Stock market.
- [27:17]
Scott Galloway
It didn't matter whether you were a
- [27:18]
Sponsor/Ad Voice
factory worker in Detroit or a farmer in Omaha, anyone could own a piece
- [27:21]
Scott Galloway
of the great American companies.
- [27:23]
Sponsor/Ad Voice
But now that's changed. Today, our most innovative companies are staying
- [27:27]
Scott Galloway
private rather than going public.
- [27:28]
Sponsor/Ad Voice
The result is that everyday Americans are excluded from investing and getting left further
- [27:32]
Scott Galloway
behind, while a select few reap all the benefits. Until now. Introducing vcx A public ticker for private
- [27:39]
Sponsor/Ad Voice
tech, VCX by Fundrise gives everyone the opportunity to invest in the next generation
- [27:44]
Scott Galloway
of innovation, including the companies leading the
- [27:46]
Sponsor/Ad Voice
AI revolution, space exploration, defense tech and more. Visit getvcx.com for more info. That's getvcx.com carefully consider the investment material before investing, including objectives, discharges and expenses. This and other information can be found in the Fund's prospectus@getvcx.com this is a paid sponsorship. Support for today's show comes from Framer. Let's say your Marketing team wants a new landing page so the design team mocks it up and then your engineering department, who's already got too much on their plate, responds with yeah, we'll get to it. Thousands of businesses, from early stage startups to Fortune 500s are choosing to build their sites in Framer, where changes take minutes instead of days to solve this very problem. Framer's enterprise grade no code website builder used by teams at companies including Perplexity and Miro to move faster with real time collaboration, a robust CMS with everything you need for great SEO and advanced analytics that include integrated A B testing. Your designers and marketers are empowered to build and maximize your.com from day one. So whether you want to launch a new site, test a few landing Pages or. Or migrateyourfull.com Framer has programs for startups, scale ups and large enterprises to make going from idea to live site as easy and as fast as possible.
- [29:03]
Scott Galloway
Learn how you can get more out
- [29:04]
Sponsor/Ad Voice
of your.com from a framer specialist or get started building for free today@framer.com markets for 30% off a Framer Pro annual plan. That's framer.com markets for 30% OFF framer.com markets. Rules and restrictions may apply.
- [29:26]
Ed
We're back with property markets.
- [29:28]
Scott Galloway
Anytime you start a war, there's an enormous X factor, including the worst case scenario, a downward spiral that results in somebody detonating a nuclear bomb. I mean, because the reality is the enemy gets a voice in this and you can't predict what they're going to do, all norms kind of go out the door. What is it war is, is negotiation when all diplomatic efforts have failed. But also you could make these arguments and never decide to go into Kosovo and liberate people, to not create a multilateral force and go into Kuwait and push out Hussein to not fight their war again. After we got nothing from World War I but a bunch of injured and maimed Americans and to strike a deal with Hitler. And there was a very large movement. The biggest hero, the Elon Musk. The biggest hero in 30s America was Charles Lindbergh who was absolutely against. There was a huge anti war. Basically a lot of people accused FDR of lying to the American public to try and send armaments to Europe. So there is always a thoughtful and reasoned argument around how any war or any conflict could result in Armageddon. I get it. I would argue that and this is my prediction, oil in a year from now will be less expensive than it was at the beginning of this conflict or war. Let's call it a war and that the biggest opportunities from an investment standpoint, if things go right, if we can figure out a way to ensure that, if the war in Ukraine comes to an end and we can figure out a way to ensure that they have some reasonable sense of security, I think the amount of investment that's going to pour into Ukraine because of the spillover of technology and drones and surveillance technology, I think the Ukrainian economy is absolutely going to boom. But the key will be to make sure that we help them at least win the war, have enough negotiating power such that we're preventing the next war, just not scheduling it. If we in fact can figure out a way, if the Iranian military has diminished to the point and their launch capabilities, their ability to lay mines in the Straits of Hormuz, their ability to enrich uranium, if all of that is absolutely neutered, I think the Middle east is safer. If we can, and this is the optimist viewpoint, and let's go to what Josh Brown says, what could go right if we got, not even get a pro west government or ruling party, but a neutral one that embraces technology, maybe normalizes relationship relations with Israel, which has a lot of technology, normalizes or has enough, a neutral enough relationship with Europe and the US to get better oil infrastructure and technology. I think you're going to see an economic boom in Iran. I think the private equity guys will all of a sudden be flying in. There'll be a Four Seasons in Tehran where they're there trying to figure out a way to invest. So a lot of times look at World War II. What have been the two most productive economies the last half of that century?
- [32:36]
Ed
Germany and Japan. But those are the exceptions to the rule kind of here. If we're talking regime change and if we're talking US Involvement, like those were success stories.
- [32:50]
Scott Galloway
Do you think the Venezuelan economy is going to be better two years from now or two years or two years back?
- [32:55]
Ed
I think it's a very open question. I think right now, fair enough. I think right now there is some support for the US And I think that there is, as you mentioned, in Tehran and Iran, there is support for the American cause because they have been so oppressed. But I mean, my mind just go. I feel like we've seen this movie before. We saw this in Iraq where there was also some support for the US and then there was so much instability over the next few years that suddenly everyone decided to go. Actually, we wish these guys didn't come in here. Whether or whether they're Right or wrong, I'll leave that up to them. But the reality is, you know, when the invasion, a year after the invasion happened, the Iraqis were pretty split. And then three years later, all of them decided that, that America was the enemy.
- [33:42]
Scott Galloway
So far, that was the worst geopolitical mistake of this century. Was George Bush lying to us and getting, propping up his CIA director and General Powell to say there are weapons of mass destruction there wasn't. He himself didn't have plans. The organizing principle of an Iraq, unlike Iran, wasn't death to Israel and death to America. But this is how I would summarize it, the why and what they're doing. I think that Trump would have had, potentially, had he gone to Congress, he would have gone for an authorization of the use of military force. They never get a declaration of war. And I think he may have gotten or may not, but he needed to do that because what it forced him to do was to say, oh, this is a defensive posture. Well, why is it defensive? Because they were about to be attacked and if they were attacked, they would attack us back. Okay, so you're saying that Israel is now running the military and US Policy, the what and the why here and why now, I think have real rational justification. The problem is no one trusts the guy that's driving the bus to execute it correctly and that it could backfire because if our messaging is wrong, if we don't execute. Well, if we. I mean, right now, quite frankly, I believe everyone just wants this war to be over. I think the worst thing we could do right now is make a bunch of hollow excuses for pulling up stakes and leaving. Because what's the next time we want to take military action? The nation just points its missiles at its neighbors and says wait four or five days and hire a bunch of troll farms to piss on the president on social media. Russia, to their, I don't say to their credit, but Russia has lost a million people and has spent four years and has not moved an inch. Meanwhile, Spain won't put a single fucking boot on the ground. And I hate to say this, but it kind of goes back to what the one smart thing that I forget, the guy Mashi Yosu san said, who would you rather be less rather be in a fight with someone who's really smart or someone who's fucking crazy. And the reality is the west, if the west leaves right now, and I understand that there was no legitimacy going into Iran that he lacked the legitimacy, when you declare war, this is war, you are supposed to get congressional approval and let the US Public have a vote in this vis a vis their representatives. And you have more legitimacy going in if you go in with a multinational force. He did not do that. People on the left and right are pissed off by the way. He's got about, I think it's 72 or 77 support of Republicans, 17% of Democrats. This, as everything, is a dramatic political divide. The more probably better litmus test is independents, and it's only got about 30, 32% support. But again, I go to. This is another data point that the leader of the free world does not know how to allocate resources in a responsible, safe way. I think he could have made a very solid argument for why this was a good idea if he'd outlined objectives that were very straightforward, measurable, had a multilateral force, including European nations and Gulf nations, gone to Congress, briefed the right people. And if Congress. If he didn't get the votes, then he shouldn't do it, because this is war. This isn't a defensive act where he's understandably given the rights to move quickly. So this isn't, in my opinion, this is moved from whether or not this was the right thing to do. The bottom line is this is another data point where we think we have an autocrat who does not think things through, who acts based on the last person he spoke to, whether it was Secretary Rubio or Bibi Netanyahu, and is allocating our resources in a very irresponsible, dangerous way and has the whole world going, jesus Christ. The knock at the door now that we're supposed to be scared of was supposed to be the good guys. Now they're the knock at the door.
- [37:38]
Ed
The one thing I don't. I'm not sure I'm aligned with you on is when you say that they're messaging. I mean, as the example, they come out and they say, in so many words, this was Netanyahu's decision. He brought us into this. That's what Rubio basically says.
- [37:57]
Scott Galloway
That is the stupidest thing they have. And this is not. This is a high bar. That is absolutely the stupidest, most damaging thing they could have said.
- [38:06]
Ed
But what if it's true? Like, I mean, if it's a messaging problem. I mean, if it's. They. They flubbed their explanation. That's one thing.
- [38:16]
Scott Galloway
So you think that. That Netanyahu and AIPAC are effectively controlling the President and deciding if and where we. We declare war?
- [38:26]
Ed
I think that what Rubio said I could see as being true, which is that Netanyahu said, we're going in. Join us or not. And then America decided join us.
- [38:37]
Scott Galloway
I don't think America scares that easily. I don't even Trump, I don't think that, I think it more likely when something like this and we won't know until those tapes are eventually the truth is like oxygen trapped underwater. At some point there's a bit of an earthquake and the oxygen reaches the truth reaches the service. I think what more likely happened, I think he respects Netanyahu. And Netanyahu was one of probably several voices saying this could be your legacy. You could unlock vis a vis this incredible resource and the best performing organization in the world, the US Military. You could unlock unprecedented peace, prosperity and stability in the Middle east with this bold leadership action. And oh, the free gift with purchase. Wink, wink. You're going to push Epstein out of the news for a few weeks. But I don't, I just do not buy and I'm uncomfortable with the notion that I feel of plays into this trope that 2% of the population in the US that is Jewish is somehow controlling the US government. Agreed. I don't doubt that Trump listens to Netanyahu and respects him, but this was Trump's decision. And if they said we're going in with or without you, they could have, fine. They're not afraid to do that. What's become clear since October 7th is that Israel is the superpower in the Middle East. Yeah, that they are. I mean, if you look at we talked about geopolitical disasters, Iraq disaster, total fucking disaster and set off a hallucination that has damaged your generation that can be distilled down to the following, oh, hey everybody. Hey old people, we can cut your taxes and go to war because guess what? We have so much built up trust because of previous generations responsibility and leadership that we have massive borrowing capacity. George Washington to George Bush, 7 trillion in deficits. George Bush to Donald Trump, another 30 trillion in deficits. Right. So that was a huge mistake. The second biggest geopolitical mistake and may have surpassed was October 7th if someone had told Sinwar and Khomeini, you're both going to be dead. And Assad is going to be playing video games in Moscow. And Hezbollah, the supposedly great fighting force, is going to be neutered. The Houthis in Yemen are going to have, are basically going to be just bothersome, but not a real force. And Iran is not even going to have control over its own skies. And Syria is now run by some. I mean, this was the biggest mistake we made the Second biggest mistake or biggest mistake so far of the century. I think Sinwar and Iran and let's be honest, it was Iran made the biggest mistake. Again, let me just wrap all this up. How are the markets responding? They believe this is short term and going to be ring fenced. There is always an X factor because the enemy has a say in it. I do believe that the biggest mistake here, I think that Trump could have made a very strong argument for why to do this, why now? Why it's an opportunity right now if he'd set very clear objectives and quite frankly had a secretary of war that didn't have his head up his ass and was a little bit more competent. We are veered so far from the markets. Reel us back in, Ed, reel us back in.
- [41:54]
Ed
We have veered far. But I do think that it all relates. That's the problem. We're trying to price massive levels of uncertainty here. That is what the market's job is to do at this point. And so that is the question. They believe we're okay. And then I guess the question is if you're an investor, do you agree with that? And I think there's a decent argument for that and I also think there are some decent arguments on the other side as well.
- [42:19]
Scott Galloway
Well, let's, let's make a bet here and let's timestamp it. And I keep saying let's timestamp it and our producers don't listen to me. In a year, do you think oil is going to be higher or lower than it is now?
- [42:28]
Ed
I think it will probably be lower. I think I agree with you, but. And my certainty rating on that is very low. That's not a bet that I'm willing to put a lot of money on because I don't feel much conviction in it. But if I had to gun to my head, I would agree with you. Oil goes lower. We'll be right back. And for even more markets content, sign up for our newsletter@profgmarkets.com subscribe.
- [43:07]
Sponsor/Ad Voice
Support for the show comes from Vanta. If you're a business owner, you may have noticed that both risk and regulation are ramping up and customers expect proof of security just to do business. And demonstrating trust to customers and prospects is critical to closing deals, but it can also be costly, time intensive and complex. Vanta says that's where they come in. Vanta automates your compliance process to bring compliance, risk and customer trust together on one AI powered platform. They automate the process of achieving and maintaining compliance with over 35 security and privacy frameworks including SOC2, ISO 27001 and HIPAA. This helps companies get compliant fast and remain compliant, opening doors to next level growth opportunities and freeing up valuable time. Invanta doesn't just help you check boxes, it helps you build real trust at scale. With continuous monitoring, real time reporting and security reviews you can share instantly. VANTA makes it easy to prove your security posture to customers, partners and investors. So instead of scrambling for audits and spreadsheets, you get a system that works in the background, keeping you compliant, reducing risk and helping your business move faster.
- [44:07]
Scott Galloway
With confidence, you can get started at
- [44:09]
Sponsor/Ad Voice
Vanta.com markets that's V-A-N-T A.com markets Vanta.com markets
- [44:18]
Public Investing Ad Voice
support for the show comes from Public, the investing platform for those who take it seriously. On Public you can build a multi asset portfolio of stocks, bonds and options and now generated assets which allow you to turn any idea into an investable index. With AI it all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% a year over year you can literally type any prompt and put
- [44:42]
Sponsor/Ad Voice
the AI to work.
- [44:43]
Public Investing Ad Voice
It screens thousands of stocks, builds a one of a kind index and lets unless you've backtested against the S&P 500, then you can invest in a few clicks. Generated assets are like ETFs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to public.com provg and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com provg paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors llc. SEC Registered Advisor Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosures available at public.com disclosures.
- [45:30]
Sponsor/Ad Voice
Support for the show comes from SoFi. Let's face it, student loans are slowing down your financial goals. It's time for a smarter strategy. That's where SoFi comes in. SoFi is helping you tackle student debt by refinancing your loans with flexible term options. We're talking about potentially saving thousands of dollars over the life of your loan. Or you could lower your monthly payments so you can put that money towards things like saving for a home or building an investment portfolio. Right now you can get fixed rates starting as low as 4.24% APR with SoFi's discounts and the best part? There are no penalties or fees required. It takes just two minutes to check your rate with SoFi. And checking your rate won't affect your credit score at all. They've already helped over 580,000 members. Refer to finance more than 50 billion in student loans. Visit sofi.com markets to see how much you could save. That's sofi.com markets. And start making smarter money moves with SoFi. SoFi student loans are originated by SoFi Bank NA member FDIC. Additional terms and conditions apply. NMLS 696891.
- [46:36]
Ed
We're back with property markets. Last month, we thought Anthropic's super bowl ad was going to be its big moment. The ad went viral, racking up nearly 5 million views on X in under 24 hours. But the buzz then faded, and now the real big moment may have actually arrived. At the end of February, anthropic rejected a $200 million Pentagon contract. The company refused to allow its technology to be used for surveillance of U.S. citizens or autonomous military Strike swiftly blacklisted them, and hours later, OpenAI picked up the contract. But taking that stand appears to have paid off for Anthropic. Claude climbed to number one in the App Store, and Anthropic's enterprise market share rose to 32%, overtaking OpenAI. Meanwhile, ChatGPT's uninstall rate in the US reportedly jumps nearly 300% after news of its Pentagon deal broke. Now the question will be, how hard of a line is Anthropic actually willing to draw? It looks like the company is now back in negotiations with the Pentagon, seeking a compromise that would enable the government to keep using its technology. It would also prevent Anthropic from being excluded from the military supply chain. So, Scott, I think this is very interesting because this goes back to something that you were saying a long time ago when tariffs were unfolding, where you said, actually, if you're the leader of a large public company, a lot of them were very scared to say anything bad about Trump or to stand up to him or to disagree with him in any way. And you made the point, actually, this could be good for you.
- [48:13]
Scott Galloway
In business school, we have, we have ethics, we have leadership, and we have sustainability courses.
- [48:19]
Sponsor/Ad Voice
And they each cost.
- [48:19]
Scott Galloway
Every course costs $7,000. Let me save you $21,000.
- [48:23]
Sponsor/Ad Voice
Ethics.
- [48:24]
Scott Galloway
Think about right and wrong, okay? That's the ethics course. Leadership. Do the right thing, even when it's hard, boom, you're done with leadership and the sustainability, thinking about doing the right thing, doing the right thing when it's really hard, you might make money out it. Boom, you're done. I just saved you $21,000. When you don't speak out on behalf of our wonderful allies and other companies and speak out on behalf of your own company. Just wait, folks. In the long run it's just really bad for you not speaking out.
- [49:00]
Ed
Someone's now tried it it in Dario Amadei who stood up to the President and what happens? Install rates of Anthropic and of Claude skyrocket and actually their revenue, their ARR went from $14 billion to $19 billion in two weeks, which is a 36% increase. It's just unbelievable. So it seems that they have actually proven your point here. But let's get your reactions to what's happening between Anthropic and Trump and the Pentagon and OpenAI.
- [49:32]
Scott Galloway
He's the first CEO who said no and he's absolutely right. Anduro builds weapons so the government can kill people. The Silicon Valley wokester ethos was no, we're going to walk out during lunch because we don't like Google working with the Defense Department. Well, good for you. That'll show them, you little woke bitch. Meanwhile, they go back to the cafeteria and get your sushi and cry into your or Atlantic. Anyways, they get to do that. Palantir. If they want to provide data to Israel, as long as they get security clearance, they're allowed to do that. Because as long as you comply with the law, you get to operate within, you're entitled to and subject to the laws. When the Pentagon starts saying no, you gotta do this and he said, he stuck up the middle finger and guess what? We're here for it. America's here for it. And as I mentioned before, on Sunday we're going to Minneapolis. We've had this resist and unsubscribe movement highlighting a bunch of companies to unsubscribe from. The next evolution of it is the following. We're going to try and put out a bunch of data and a bunch of messaging and a bunch of media encouraging people to not use an unsubscribe from OpenAI but to subscribe and patronize Anthropic. If you believe that companies have the right to operate under the laws and not and should not be subject to intimidation from the President or the Pentagon to do exactly what they want when they're not comfortable with it, then sign up for Anthropic. He's the hero we were waiting for. And it's and we have been saying this for I've been saying this for six or nine months. There's an enormous commercial opportunity for the first person who gets off their knees and says, fuck you, I'm an American. This is an American company. We get to operate by the law. We get to decide who we work with. We can't do it based on sexual orientation. We can't not serve people because of their. Their sexual orientation or their race. Actually, that's not true. Now, I think the Supreme Court has decided you don't have to make a cake for someone if a gay wedding cake. But anyways, my point is he's the guy. Finally, someone took advantage of the biggest commercial opportunity of the last six months. And that is to stand up and say, you know what is. Last I checked, being an American and being incorporated in America means we have to. We absolutely have to operate by rule of law, but also we are protected by rule of law, meaning we get to make these decisions. And he's been articulate, he's been forceful. And this goes to another prediction we made, I think about three, four months ago, that within a year, Anthropic would be worth more than OpenAI. Mostly because I think OpenAI is going to decline in value.
- [52:34]
Ed
It's been proven now. I mean, I just returned to this unbelievable number that their ARR. Their annualized recurring revenue weeks ago was $14 billion, and today it is $19 billion. Like, we literally have the data in front of us that getting off of your knees, as you say, standing up to the President, literally translated into a $5 billion revenue opportunity. And who knows how much it'll increase in the future. Meanwhile, look at the damage that it is levying on his greatest competitor, which is OpenAI and Sam Altman. They step in, they say, okay, we're going to take the contract with the Pentagon, and suddenly the uninstall rate absolutely skyrockets. One and a half million users leave ChatGPT, and then there's this movement online that starts to trend. Hashtag, cancel GPT. So we're watching the evidence play out in real time. And I think the other thing that is so interesting is how badly Sam Altman is fumbling the bag every time. From a PR and communications perspective, something that is quite striking. A year ago, 9% of Americans said they disliked Sam Altman. That's already a pretty big number. Today that number is 20%. So it has more than doubled in the past year. And you think about all the things that he's gotten wrong. Obviously, his response to that super bowl ad, his very awkward Senate hearings. His very awkward interview on Jimmy Fallon where he tried to present as this fun, likable, relatable guy, ended up being quite awkward and seeming quite honestly a little evil in a lot of ways. But then I think the most, except the worst moment we've seen from him happen a couple weeks ago. And I just want to play this clip for you, get your reaction, because I think this is probably the worst thing Sam Altman has ever said in a public forum.
- [54:30]
Sam Altman (clip)
People talk about how much energy it takes to train an AI model relative to how much it costs a human to do one. Inference query theory, but it also takes a lot of energy to train a human. It takes like 20 years of life and all of the food you eat during that time before you get smart. And not only that, it took like the very widespread evolution of the hundred billion people that have ever lived and learned not to get eaten by predators and learned how to like figure out science and whatever to produce you. And then you took whatever you, you know, you took. So the fair comparison is if you ask ChatGPT a question, how much energy energy does it take once its model is trained to answer that question versus a human? And probably AI has already caught up on an energy efficiency basis measured that way.
- [55:15]
Ed
Let's get your reactions.
- [55:16]
Scott Galloway
There are certain looking glasses into people's character and souls. And I've always thought two easy ones are how people treat service staff. Do they look them in the eye, are they patient with them, do they tip well? And then also how they treat their pets. I have a close friend who I like to drink with and no matter what, at exactly 11 and I might lose him as a drinking buddy, he's like, I gotta get home and get my dog out. Just how you treat your pets and how you treat staff. Looking glass in the people's soul. And there's a lot of different things, right? This was a rare moment when we had a bit of a looking glass into Sam Altman's soul and he's a fucking nihilist. He is basically saying there is a rational reason to invest more in non sentient beings because sentient beings require too many resources. It's like, well, all right boss, that means you're the guy who's looking for the doll and rather than having a human to have a relationship with, that right? You really don't understand what the shooting match, the reason we're here is to create friction and resources and investment and relationships and resources to create sentient beings we can have relationships with. And that he even thinks that way, that it's unfair. When you think about the amount of energy we have to put into raising a child to get to the point where it's intelligent, that, wait, I can replicate that with less energy. Just that he's thinking that way feels. It feels. Quite frankly, it just feels frightening. Someone who sees power and ROI as besting emotion, relationships and sentience and no, power and ROI in the markets and AI are all meant to unlock greater prosperity and an absence of anxiety such that you can focus on those little energy consumptive nightmares called children. That's the whole fucking point, is that we do all this other stuff such that we can make the investments in these children that are worth it. And I thought, this is such a statement from someone who has not had enough love in his life or hasn't experienced what it's like to raise children and genuinely sees maybe a legitimacy of the rise of the robots. It's kind of this Peter Thiel nihilism weirdness that they just look at stuff as ROI being the end game. No, the reason why we pursue ROI is such that we can waste time and money and be very inefficient with the investments we make in our. I still haven't gotten my money back on my children yet. I'm not sure I'm ever going to. In almost every calculation of roi, I say this to my kids all the time. I'm like, I talk to them about becoming a man and the idea of surplus value. And I'm like, you're surplus negative right now. I'm like, the school's spending way more than you're giving back. We give you so much more love than you give us. I'm like, do you know how much I'm spending on you? My son's been selling Pokemon cards. And I'm like, okay, give that to me back. I've forced my kid who just got into college to go through and tell me how much I will have to make pre tax such that he can join a fraternity and sorority and, you know, and make out with girls from, you know, from Richmond, Virginia. Negative, negative value. But this is the whole point. The whole point of humanity or being a parent is that you make these investments because that's where you give in to purpose. That's where you give in to the most loyal Americans. And some of the most satisfied Americans are veterans. They will never get an actual return on their service and being away from their families, but it gives them purpose that they're able to invest in something that you're able to give up your resources and your emotions and invest in something, realizing on a tangible anodyne level, you'll never see a return. What you get back is knowing that you added value.
- [59:33]
Ed
I think that's well said. I think that it is a very significant, concerning question for us. I mean, what do we do about the fact that the leaders and the builders of the technology of tomorrow appear to have a genuine fundamental misunderstanding of the point of life, of the point of why we're all here, what existence and humanity is actually all about? I mean, what does that mean for us? I totally agree with you. I think, Sam, we saw into his soul there. He does not have an understanding of these things. He doesn't have an understanding of purpose. And I think that quote said it all. Now the question's going to be Dari Amadei. He now appears to be in talks again with the Pentagon. Is he going to fold on his previous position? I mean, I. I hope not. We'll see how these talks unfold. But I think he has something good here which is standing up for his actual beliefs and his values. If he caves, then maybe it was fake, maybe he didn't have values. At which point we'll have to turn again. But it is very interesting to see how this is all unfolding. I'm going to wrap us up here because I know that you need to go. Let's take a look at the week ahead. We will see inflation data from the Personal Consumption Expenditures Index for January and the Consumer Price Index for February. We will also see earnings from Oracle and Adobe. Any predictions, Scott?
- [60:57]
Scott Galloway
My prediction is no. And that is Dario Amadei has taken his company from 14 billion a year in AR to 19 billion a year in AR with one simple strategy. No. And by the way, the average S and P company, I think does 18 billion a year. And I think that is going to give CEOs the confidence to say no. I think you're going to see a half a dozen to a dozen CEOs over the next 30 days. Find their testicles and say no.
- [61:27]
Ed
This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Jorge Carter. Our research team is Dan Shalon, Isabella Kinsel, Kristen O' Donoghue and Mia Silverio. Jake McPherson is our social producer. Drew Burrows is our technical director and Catherine Dillon is our Executive producer. Thank you for listening to Prof. G Markets from Profit G Media. If you liked what you heard, give us a follow and join us for a fresh take on markets tomorrow.
- [62:03]
Sponsor/Ad Voice
You have me
- [62:07]
Scott Galloway
in kind
- [62:10]
Sponsor/Ad Voice
Reunion.
- [62:25]
Scott Galloway
La.