Pivot - China's AI Threat, SpaceX's Plunge, and Trump's Truth Social Grift

Episode Date: July 21, 2026

Kara and Scott unpack the latest Trump grift: Truth Social's paid fast lane for Wall Street. Then, China's new AI model rattles markets, and raises fresh questions about America's lead in the AI race. Plus, SpaceX stock comes down to earth, Netflix earnings spark concerns, and the Tate brothers are arrested.Watch this episode on the ⁠⁠Pivot YouTube channel⁠⁠.Follow us on Instagram and Threads at ⁠⁠@pivotpodcastofficial⁠⁠.Follow us on Bluesky at ⁠⁠@pivotpod.bsky.social⁠⁠Follow us on TikTok at ⁠⁠@pivotpodcast⁠⁠.Send us your questions by calling us at 855-51-PIVOT, or email [e-mail] Learn more about your ad choices. Visit podcastchoices.com/adchoices

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markets. Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher. And I'm Scott Galloway. Scott, how was it? The game. It was, it started off slow, first half was kind of a sleeper. And then the second half was great. And so, yeah, it was great to be there. I took my boys. What was the vibe of the place? You know, the Argentinian fans are incredible.

Yeah. And the Spanish fans are hot. So generally speaking, you know, check, check. And that live did a good job. I will say this. I thought FIFA put on an incredible tournament in terms of touch points and graphics and vibe. It was, you know, typically the final is not the best game.

What was unusual about the Cup, the tournament in Qatar was the final was the best game. It's like the Super Bowl usually isn't a very good game. And this wasn't, this was an okay game, not a great game, but it's sort of like, quite frankly, I'm exhausted. The World Cup, the tournament itself was incredible, but I'm kind of glad for it to be over. The thing in the middle was a little bit jumbled. It was sort of like. I didn't think it worked. I was like, where's bad bunny?

Like, where was the comprehensibility of it? I mean, when they, like, yell out Shakira and Elmo in the same breath, you're sort of like, what's going on here? Right. It just felt like a dog's breakfast. And I just, those things are hard to pull off. You got to try and please everybody and, you know, have somebody who's at the charts, but it's also ethnically ambiguous.

And then it's just, that's a difficult one. But just to put some numbers around it, the, I think the business story, and I've said this for a while that's going to come out, you're just going to see over and over, they're an advertiser, but they're going to be, they're going to get good or bad. They're going to get a ton of awareness. The World Cup will be the largest gambling event in history. Yeah, 5.6 billion.

Yeah. And Cal Street did more, get this, than 31 billion in trading volume in June. That's up 87% from May. Right. And the platform has declared $1 billion in daily volume every day since the tournament began June 11th. And they say just the World Cup volume, $23 billion, Polymarket set an all-time monthly record of 10.8. I mean, in just one game, USA versus Belgium, drew $64 million on Kalshi.

And what's interesting here is that when you have this much money wagered on matches, it's no longer, it's not longer a gambling story, it's a capital market story. And Kalshi's out of 3 million users during the World Cup. And it feels like prediction markets are kind of becoming the Bloomberg terminal for the... Yeah, but is that a good thing or just it is a is thing. I get it's an is thing, but is it a good thing? I generally think that wagering on sports is something that young men need to be educated about. I don't know if you can stop it. I don't know if you can ask someone to go fight for their country and then not wager on the Browns game. But I think there needs to be education and I think it needs to be regulated.

because it does prey on a more immature prefrontal cortex of a male. It does prey on an increasingly online youth. And there's just not getting around it. If you look at the data. Just they'll bet on anything, right? Once they get started, like they were betting on drug outcomes. It starts to get a little demented. There's just the pure addiction element in the fact that when a state legalizes gambling,

bankruptcies tend to skyrocket. Yeah, yeah. And then there's the potential for insider trading. I actually think that'll get arbitraged out when people realize if they don't have inside information, they should not bet. We'll get to that because Trump, I mean, I'll just say, White House teleprompter operator is being investigated over allegations that he used inside knowledge of the president's speeches to earn over 100K on Kalshi. And then Trump media is going to sell Wall Street Traders Investment firms as much $100,000 a month for faster access to his post. on Trump's social where he talks about, where he talks about what he's gonna do,

and then he bets against it's all like, it's both insider trading, it's insiderness, it's gaming the system, and then it's possible addiction. So, I mean, I think betting can be fun. It's just, this seems like on turbo, and especially when the president himself and his minions are all doing it. Well, there's, I mean, a couple things.

So just to wrap the, one of the more, I think one of the, or the most interesting thing that's not covered about this, prediction markets is that we used to discover information through traditional media and journalists. Sure. Now we discover it through markets. And when enough people have money on an outcome,

markets often become the fastest aggregator of truth. I use data from prediction markets more than I use data from traditional news outlets now. Whenever it's about politics or predicting anything, this tends to be the data source I go to. So there's this weird. neither good nor bad, it really is the wisdom of crowds has been monetized and is now being leveraged for data input for media companies such as our, such as ourself. The insider trading

thing, like, so people on both sides of the aisle engaged in insider trading. Trump came in and said, you guys are amateurs, I'm going to make millions, not thousands, maybe even hundreds and millions. And then just the brazenness of saying, this is tantamount. So Republicans will always say, and it's accurate, that Speaker Pelosi up 600 percent in the past 10 years, the S&P up 200 percent, that clearly she had access to material, non-public information. But she didn't start a wire service selling her inside information. Yeah, right. I know. It's like Hunter Biden amplified, right? It's like Hunter Biden selling crack on the White House lawn, just like being that brazen. And by the way, he hands down has the best social in the world right now.

Very, actually, very authentic talking about addiction. Anyways, I just can't, it goes back to the basic notion. If you're going to commit a crime, don't get a speeding ticket. Don't have an isolated incident. Yeah, just commit double murder and rob banks every fucking hour. Yeah, I know. And then everyone just doesn't know where to look. Honestly, everyone's looking for an edge.

It's such a grotesque. It's like, are you crazy? Are you nuts? I love it. All the little ones get caught, and then Trump does in plain sight and just steals and steals. He's just a thief. Speaking of which, he tried to steal the attention from the team. What was that wandering around the stage?

He got booed, right? Correct or not? He got booed on the way out. He did get boot on the way out. He got boot on the way in. You could hear. I'm sorry, excuse me, you're right, on the way in. But it was Claudia Shahnbaum, it was Prime Minister Carney or President Sharmine.

You know, they were all there. It makes sense that they were all there. It wasn't as bad as I thought it was going to be. I mean, no one likes to get booed. I don't, but I'm trying to remember it past Super Bowls. Are presidents usually applauded? I haven't been to that many events with presidents. They don't get booed like that.

He gets booed everywhere. He goes, but why was he on the stage? Could you even tell from where you were sitting? He wouldn't get off the stage, and then that infantina, his little guy who gives him awards, chased him across the stage, to try to get him to move. Because, you know, you're supposed to do this thing

where you push the... I don't think that was him attention-iring. I think that was him dottering. I don't think he'd know where to go. I thought that was, I just, I don't know if you could tell, but that's what was happening. It was weird.

It was weird. Of course, he just says, I think he was dottering. That's what I felt. Everyone's like, oh, he's taking attention. I'm like, I don't think he knows where to go. Like, because the guy ran after him. Like, I often do it when my mom was a global. But Johnny Infantino, like, FIFA has a terrible reputation,

and it's earned every ounce of that terrible reputation. These international sporting's organization committees, they kind of operate in the Netherlands, whether it's the ILC. Even the NC2A, I think, is not draped itself in glory. Because they have just a total lack of regulation. They have immense power. They have cartel power.

They have monopoly power. These stadiums weren't even allowed to say, I'm at Gillette Stadium or MetLife, they had to cover it up such that FIFA would have total monopoly power on all monetization of bad revenue. Interesting. Yeah, it definitely feels as if, and I'm a capitalist, I don't think there's any better way to leverage the most powerful instinct

than a self-preservation than capitalism. And I do think it's just proven over and over that creates the growth you need for social services. But it does feel like it's just gone too far. Yeah, yeah, I think you've had too much World Cup. But speaking of Gryfters, I'll tell you something that hasn't gone too far. Andrew Tate and his brother Tristan had been arrested in Miami after British authorities issues 38 new charges against them, including allegations of rape and trafficking. These guys, I mean, there was obviously a big meme about his outfit, which was very strange.

It was this strange sort of, you know, lady outfit. It was an odd outfit. But I'm very happy they're arrested. For anyone who wants to read about them, you will understand that these people need. to be thrown into jail and never let out again. I'm so happy. I hope Trump doesn't try to stop them from being extradited to England, which is where these latest, they were, of course, jailed in Romania. Do you think he'll do that? I hadn't even thought of that. Yeah, Trump could, he did. How do you think they got back here from Romania? Trump put the pressure on Romania to let him out.

God, I think with all the shit he's under with Epstein, that's the last thing you do. You know, Amanda got this right. This is Epstein in real time. This is Epstein in real time. This is Epstein in real time, like with the government letting these people off all the time. That's how they got back here. That's why they were partying the main in their lady outfits. But these two are rapists and sex traffickers and they and child molesters. I just, this is just the fact that the Trumps are so tight in them with them, JD Mans follows them. It's not, there's one, there's manosphere is one thing.

These two are predators and should be thrown into jail. I'm glad Britain came after them. Yeah, I agree. And I don't. I know it's 38 new counts. I'm glad that the justice system is taking over here. But the good news in the lens I look at this through, you know, to a certain extent is that young men have moved on from the Tates.

They're no longer a thing. The media has not, and I think it's good that they maintain coverage and that they're brought to justice for what would feel like just so many allegations that they're going to spend, you know, It's probably a pretty safe prediction that they may spend a decent part of the rest of their life in jail. The Crown Prosecution Service has added new charges, rape, human trafficking, and decent images of child and assault. Yeah, this is their thing. This is their.

And it brings their, it brings Andrew Tate's total charges to 42. They found additional alleged victims in Bedfisher and Hertfisher bringing the total number of accusers in the UK case to seven. Both of them had dual U.S.-UK citizenship and are now waiting extradition. The thing that doesn't get a lot of attention, and I think might be the reason they end up in jail, is people don't talk a lot about the actual business model. And that is, Andrew Tate didn't get famous from kickboxing or big brother. He may have gotten famous doing that, but he got rich teaching men to get rich, teaching men to get rich. Basically, hustler's university.

And he had this bogus subscription. Remind me of like Trump University, this bogus subscription education platform. And at one point, they think he had 100,000 people, almost all men, roughly at $50 a month at its peak. So $5 million a month in recurring revenue from basically an affiliate market pyramid scheme where the product was mostly more affiliate marketers.

And the pitch was never subtle. dominance, submission, and this thing called the Matrix is a worldview where women are property and violence against them is a lifestyle brand. They've really set young men. The few, and I want to give more young men more credit than just believing everyone was a Tate fan. But the scary thing about that part of the manosphere and what was so mendacious about it is it would start off okay, be fit, be action-oriented, take control of your economic life. And then it just became about dominance and misogyny and crime and a grift. Yeah, rape, right, really.

Let's just, like, just call it what it is. I mean, they, like, sell rape as a product. I just, I think that they, they should go to jail and stay there. And I would agree that, like all kinds of young men have rejected them. My sons years ago had rejected them, had looked at them, looked at their stuff, because it was really popular when they were teenagers. And I was sort of disturbed by that because I had been very aware of his messaging. And I had rejected it.

That said, he had enough followers. to be able to party on. And among the followers, apparently, are Baron Trump and others. And it just, it's, you know, in this case, I don't blame Baron Trump. This is grotesque, but it's very attractive in some way. And they are essentially rapists and sex traffickers.

And now pedophiles and the Trump administration better remove itself for many because it is. It's Epstein in real time. These guys, at the end of the day, I believe they're going to be found guilty of a lot of different crimes and spend a lot of time in jail. The thing I find most interesting, is that how were obvious grifters like this

and such vile people able to get so much traction? And get so much influence. 100% care. They're very close to the Trump people. And I go back to what Peter Drucker says, that every business success can be reverse engineered to a change in demographics. And so what's the demographic here?

What's the market that opened up? And I believe that it's millions, it's a cohort that unfortunately has exploded, and that is a cohort of loneliness and downward mobility. young men and they created demand. And guys like Tate supplied it. Yeah, must be girls' fault. Wrapped in Bugatti's and grievance. This isn't your fault. And this, the thing that he has kind of in common with Trump was the persecution or grievance complex that they leverage.

The Tate Brothers standard response to every legal action across countries that accuse them of crimes has been the same script. This is a conspiracy against me because I speak the truth. Right. Exactly. And does that remind you of anybody? Right. So they take a specific evidence-based allegation, and they reframe it as an attack on the truth or on an idea. And it's effective because it's flattering to the audience that if you believe him, you're not defending an accused rapist. You're defending free speech in a movement.

So I find, like, how did this happen to me will be written about in, you know, sociology books. They don't... I agree. I agree. Let me tell you, there's a story which I mentioned a couple

weeks ago in June called Andrew Tate's Empire of Abuse by Heidi Blake from the New Yorker. You need to read it. It is just... She interviewed everyone. It's an incredible indictment

on a lot of people that facilitated it, but it'll give you a primer into why these people belong in jail and should stay there for the rest of their lives. And I'm glad they got arrested

in such an embarrassing way, too. You know, and their weird little... Oh, by the way, the silver lining here, Scott Galloway has his Halloween outfit. I know that. Everybody was talking about that. Oh, my God. They're just, except they're rapists, Scott.

You could do better. Well, I'll take the gay prostitute look as opposed to the rapist. Although, no gay would dress like that. Sorry. No gay, he looks like a Midwestern lady paralegal. Anyway, okay, Scott, let's go on a quick break when we come back. SpaceX stock has taken a dive. Support for the show comes from Vanta.

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this, I think, is going to be super helpful not only for law firms themselves, but internally for general counsel's accompanies. Harvey is AI tailored for law. You can learn more at Harvey.aI. Scott, we're back. This is an interesting story. Ed is all over this, man. I've been following Ed.

He loves this story. SpaceX stock is no longer blasting off. Let's use a rocket term. Shares of the company are down almost 23 percent wiping out almost a trillion dollars in market value. One could say that it was overvalue. and it's not really wiping it out. It's just coming down to where it belongs.

As we tape, the market cap for the company is 1.63 trillion. And going down, the short squeeze is quite heavy on here. Let's us know what you said about the stock in early June. I think SpaceX is about to hit a 10-year high on the minute it goes public, meaning it'll be all downhill from there. Yeah, I think you got this. And so talk about what's happening here in the short squeeze, what's occurring. I think most of the float, which is very small at this moment,

is devoted to short sellers. So explain the situation. I think Elon Musk will be remembered as arguably the greatest engineer in a sector, but that sector is not space or EVs. That sector is the financial markets. He is engineered in concert with Goldman and JP Morgan, a means of creating demand, whether it's just this will be a good trade, or it's Elon.

Elon always gets his investors back or look at all these pictures of rockets. look at all this flowery, we work-like language about the world being an interstellar species or an interplanetary species, constraints apply, and then unprecedented valuation. We've never seen anything like this. Call the president or call whoever get included in the NASDAQ 100, get demand that no IPO has ever been fortunate enough to register. Now, everyone talks about, okay, they've lost a trillion dollars in market value, but it's still worth $1.6 trillion.

Yeah. This isn't. I'm going to say it's a $35 stock. It's not a broken company. It's a reminder that gravity eventually applies to stocks, too. And this is what IPOs have become. And that is they're no longer an opportunity for retail investors to participate in America's greatest companies.

They don't create value. They no longer create value carrot. They transfer value from optimistic public investors to early private investors because Because as someone who's on or been on the board of a lot of private companies, there's so much capital available in the private markets that if the people who really know the company and the sector well think, you know what, there's still a lot of growth and value here, they keep it off in themselves and they find their own capital and they invest. And they don't need to access the public.

If you wanted to raise a couple hundred million bucks like Google did back when they went public in the 90s, you had to go public. VCs and institutional investors didn't have that kind of capital. Now, the only, basically I've said this for a while, the IPOs have now become the last stop on the chump train. And that is, okay, we don't think there's upside anymore here. Basically, it's a means, it's like showing up to an IPO right now is like showing up to a poker game

after everyone else already knows each other's cards. And then you're the chump. And it's like that whole thing. If you don't know who the dumbest person in the room is, it's you. Now, having said that, if you can get in, on shares at the pricing, like from your investment bank or your social investor or whatever it is, there's these guys engineer a one-day pop. If we had a real SEC chair coming in, I think a really

solid review of the IPO process of this company. Or even tokenization, even let's throw a bone at the crypto guys, maybe they should tokenize private companies, put it on the blockchain and create a level of transparency and disclosure using A. that more people can participate in these companies pre-IPO. But the IPO process itself is now a transferable. Well, and not only that, it kind of defines the term rigged. Explain what the short sellers are doing here and why this float is, they kept the flow tight in order to create the pop, correct?

Well, as a percentage, so first off, okay, they waived the rule that was included in the NASDAQ 100. They also waived another rule. Typically, when a company goes public, it has to float a certain amount of the company. With this, although they raised $80 billion on a $2 trillion dollar market cap company, that means only 4% of the firm's shares were available. Right. And they have all sorts of staggered lockups. They have effectively soft lockups that if you buy through certain platforms, you get banned from the platform. If you sell the stock, which is they don't want to call it a lockup because that would violate certain SEC conditions and create a different class of stocks. So they created a way or a workaround that's

effectively a lockup. But people, Basically, this is one of the most shorted stocks in history now because people are betting it's going to go down. And what people do is they borrow stock and say, I'll sell it back to you at the same price for a fee. And they're hoping that it'll go down and they get to sell it back to you at the price when they initially shorted the stock. It's dangerous because any move up creates a short squeeze and it can create velocity

on the way up. Which Elon has battled before with Tesla and other things. He and source sellers have been a lifelong fight over the valuation. of his companies. Yeah, this is, look, this is a company that is, and every time I say this about Musk, I'm wrong, and to be fair, Musk is delivered in spades for his investors. The people who invested in Twitter, it's like, they must have thought, I'll write this thing off, and he's like figured out a way to stuff it into SpaceX and talk about rockets, and

those people now have a chance to get their money out. But here's the thing. I believe they're going to get their money out, and there's going to be an enormous number of investors who've made a lot of money, to be fair, a lot of private investors, and it will create some economic growth. A friend of mine from one of the investment banks said that there are 12 new billionaires just in Texas. You know, the IPO market and capital formation in the U.S. and SpaceX is part of this is a marvel. Except they may not be stay billionaires, right? Elon's no longer a trillionaire now at this point.

Okay, but still. The amount of wealth created here. I get it. But it's on the backs of Duke. right? Someone's going to be at the short end of the stick, and that's going to be... Oh, okay. To be fair, okay. I don't think we're out there telling people, it's overvalued. I mean, Goldman Sachs and Morgan Stanley putting a price rating on it at 205 and 300, that is an exercise in creative writing. And I wonder if we're headed back to, again, 99. Remember when people were saying, analysts were saying putting out buy recommendations and then in private email saying this is a piece of shit. There's just no fucking way. I don't care who that Morgan Stanley analyst is. My guess is he or she is a very bright person. And in exchange for the fees for underwriting this company and exchange for the opportunity to manage the wealth of the shareholders post the IPO, which is actually a bigger business for these investment banks that people don't talk about.

There's a general on the analyst, not to say this thing's overvalued. It's worth 40 bucks to share. That goes back. Right. And Sarbanes-Oxley, I think, was supposed to cure that, and it has not. The only difference is it used to be, if you had a certain type of company, the analyst riding it up was the most important thing, and the analysts used to show up to pitch the IPO. And they're no longer allowed to do that. They're supposedly not talking to each other, but there's no fucking way.

Anyone with half a brain would put a $300 price target on this thing. What would you do here? As an investor? Yeah. Just sit quietly. If you're an, do you mean a shareholder or just an investor? Yeah, if you're a shareholder now, is it going down? Sell.

Are you kidding? Yeah. The, let me just say, the way I look at it is I just look at the asymmetry of potential upsides and the underlying valuation. The asymmetry here is very dramatic that if this stock was at seven, it's much more likely, what is it now, 140 or something? Yeah. It's much more likely this stock's at 70 than 280.

So you have asymmetry to the. downside, which means sell. Now, you've got to look at tax ramifications if you got into the IPO or whatever, but also if you're a private market investor, you might be up 10 or 20x on this, which again, credit SpaceX, credit Elon, credit the markets for creating that. Oh my gosh. Get out. I've had calls. I haven't had a call from anyone at SpaceX. I've had calls from employees at Open AI and Anthropic that are being pitched to buy their shares in the secondary market. And I would say the same fucking thing, sell at least 50%. And call me, I hope I'm wrong.

Lock in most or all of those. Lock it in. All right. Well, speaking of which in that topic, China is once again staking its claim in the AI race. This is a really interesting story, something we've talked about a lot. Chinese startup Moonshot AI just unveiled a new open source model called Kimmy K3, which the company says can match top models from OpenA and Anthropic on important benchmarks. Moonshot has priced the model at $15 per million output.

tokens. That's cheaper than Anthropics, Fable 5, which cost $50 for the same level of output. AI and semiconductor shocks dropped on this news, similar to what we saw with Deepseek last year. Scott, before we discussed this, I'm going to play a prediction you made last December about China, AI, and Trump. Let's listen. I think China's about to go for the jugular here, and I think that they're going to massively engage in what I'll refer to as AI dumping, and that is these open, open, open-weight models, including QN3 Max. These models are just much cheaper, lower power consumption,

and everyone from Airbnb to other Fortune 500 firms are starting to recognize that these things are lower cost. And I think essentially China's going to say, okay, the fastest way to kick this guy in the nuts is that he's made a giant bet on AI, including the S&P and his entire economy on AI, and we're just going to start dumping AI into the U.S. market. So great prediction. I want to talk about how concerned our U.S. companies.

They're, of course, calling it AI communism, one of them, one of the, one of the top people, about what China's doing. Does that mean centrally planned AI? Well, no, they're giving away for free, everybody and benefiting society. That's called thumping. Yeah, exactly. There's nothing more capitalist than trying to consolidate markets. Than what they're doing here. So Trump's former AIs, or David Sacks, called this a new model concerning and argued U.S. is setting itself back with regulation saying this is how

you lose the AI rights. There is no regulation, David. So I don't know what you're talking about. Well, I think he's talking about the data center moratorium in New York. Whatever. It doesn't matter. It is this is not why this is not the problem, David. The problem is these costs. So Scott, go for it. Because you really did. This has stayed with me when you started talking about it last year. And I remember thinking he's dead right about what China's going to do. And you're right. It's not AI communism. It's AI capitalism. It's AI capitalism is what's happening. This, Kara, this is the biggest story that's getting. This is the business, the biggest business story that is getting the lease coverage. And that is everyone thought the AI race would be won by the company with the smartest model. And increasingly, it's looking like it'll be won by whoever can drive margins to zero the fastest. China isn't going to beat open AI in a frontier model, a premium AI. That's not what they're trying to do here. They're trying to make premium AI economically irrelevant. That is exactly correct.

Moonshot pricing AI at roughly 70% below comparable frontier models. It's impossible. It's not competition. It's dump. Get used to the word. Exactly. It's AI dumping, folks. And this is what China has done.

This is just like, for God's sakes, if we had a Secretary of Commerce who didn't have his head up as ass, God, for God's sake, just spend an hour with Gian Riamundo. For God's sake, just get Justin Wolfers in there and just listen to the people. They'll tell you what is going on and what you can do about it. This is what China did to solar panels, steel, EVs, and batteries. First, they match Western quality, or they don't even match it, 80, 90%. Close. Actually, they match it.

With cars, they've matched it. But go ahead. Then they cut the price by two thirds. Then they own the market. investors should stop asking who has the best model. The salient key question is the following. Who still has pricing power in 24 months? Yes.

So Trump will try to keep them out of here the way they did with EVs, but it doesn't matter because across the globe, China will own the markets everywhere, like they do with EVs. If you go anywhere except the United States, their EVs are everywhere, everywhere. So what happens? happens here. Because they're going to try to keep, they'll keep it out of this. This is what

these, these companies are freaking and they either want to be bailed out or they want to be protected, which is, of course, typical of them because they're communists. So what, what, what does the Trump administration do? Since as you noted, they're banking, as you completely presently noticed, they're banking on this. They've staked their entire market upon this. I think that's exactly, that's what you said, his entire economy on AI, and we're going to start dumping AI onto the U.S. market. So what is, what did the Trump administration do, especially, because they're in there, especially after the midterms, they don't have a lot of moves to make here. When you make unilateral non-market decisions that are caked in bad judgment, you end up in a quagmire, you end up in a

corner with no good options. Sounds like Iran. That's exactly right. Whether it's going into Iran without consulting Congress, your allies, having a plan around the state of hormone moves, is you end up with no, no good options. By deciding to no regulation, making a huge bet on AI infrastructure, or making an enormous bet, the market has just gone so crazy, so concentrated around small number of companies. And what you have here is he's going to be in a real quagmire because you think, well, okay, he's just going to regulate it

and tell these companies they can't use, tell American companies they can't use, to tell American companies they can't use Chinese models. But the most frightening graph for the American economy and the global economy is one of those mountain graphs. And it shows that in the last 90 days, token usage of Chinese models is gone from like single digits to 53%. The majority of AI consumption now in the U.S. appears to be coming from Chinese open weight models.

And here's the problem. whether it's David Sacks or whoever it is that has an enormous investment or just the economy has an enormous investment and is dependent upon the growth of Open AI and Anthropic and VDiv and all these companies, the chip guys, the infrastructure guys won't be hit as hard. But the front end models, if they get hit hard, the whole thing could, you know, those dominoes are already starting to tip. But the problem is every VC and all the other people that he caters to are going to call them and say, I can't afford to build this new insurance AI company if you all of a sudden overnight decide I can't use Chinese Open AI models. So he's surrounded by a lot of donors who are making a lot of money arbing down the application layer to a cheaper LLM layer.

And then there's the cyber security exposure. I mean, it just goes on. And he doesn't surround himself. He surrounds himself with people who want to make money in the short term, but don't think about the long-term echo system here. So this is, this is, I call this, okay, two things. AI dumping and next quagmire. He's going to be in a box here. He's going to be in a corner here.

He doesn't even know. He doesn't even know. I don't think he understands AI. I don't think he cares. I don't think he's on his way out and he's trying to grab for whatever he can. You know, like, remember those things where they gave you a cart and you ran around a supermarket? You had 10 minutes to take everything. That's what it feels like.

Like he's running around. Not that he could run around. I forgot about those. Get to the meat. This is, so I was a macro-micro-economics graduate fellow in business school. This is literally going to be the most exciting, fun period to look at just how people, it's like smooth holly all over. We used to just talk about how stupid tariffs were. And there was different historic events, the oil shock of the 70s where we talk about how stupid they were in the 20s during the Great Depression to actually constrain in tight and physical support.

why this era is just replete with head-up-your-ass decisions that illuminate economics and markets. And then they blame like some housewife in Utah who doesn't want a data center. I think you're absolutely right. The focus on data centers is probably too much. But at the same time, it's not enough because the ones that they stick right in front of people or right in the midst of people, they couldn't have done it well. They had to like do it in the most aggressive. Really tone-deaf way.

tone deaf way. I've been talking to a lot of people who are building these things and they're like, we can show that we make money from it. I'm like, oh my God, they hate you. Like, you really have lost the narrative here so badly that you need to recalibrate what you're doing. So I never, I never, you know, miss a chance to intellectually virtue signal. I think being a critical think means that on a regular basis, if you do what we do, you inflame the people who think they know you and trust you and like you. And you say something because you think it's the truth and knowing that people are going to get angry.

I do this like every couple of weeks. I say something that people think are stupid or wrong, and they like let me know via email and social. And that's fine. I think that probably means, one, I get it wrong. And two, I'm doing something right. And the latest one, people are inflame that I said the data center pushback was populist bullshit.

No, you said some of it was. Well, let me be clear. Whether it's a chicken processing plant, a nuclear power plant, or the Ford factory, generally speaking, in every economic progress involves just very understandable nimbism. It's like, no, I don't want the chicken processing plant next to me. I don't want three-mile island a mile from my house. The charge of local government is to weigh the externalities versus the upside and make a thoughtful decision representing their community. And if you just go item by item here, you know, some are

very real concerns. I think that probably the Memphis would even. Probably the most significant is the idea that it would strain the grid and send up electricity costs on middle class households such that Sam Malman could get richer. That is a very legitimate concern that should be screened for. But what gets missed is that many, if not the majority of these plants, will be off grid, empowered by natural gas. No, that is perfectly fine. I just think you have an Elon in Memphis. this, like poisoning people of color, poor people of color. You've got a Kevin O'Leary in Utah, like accusing people being charged. Poisoning people of color is a pretty charged statement. Why do you say that? Because there's lawsuits right now. Methane, because he has a methane. There's a lawsuit.

This is a lot, well, there's a lawsuit happening where he opened the thing, where he's releasing all levels of methane and it's causing pollution and poisoning. That's what that's like. Whether it's Listen, it'll be in court. This will happen in court. And I'm just saying this is what it looks like, is that they cannot help themselves. Or you have Kevin O'Leary accusing people being Chinese communists in Utah. They could not have picked a worse spokesperson. They couldn't have picked doors.

Or putting them even close, but when people are paying more for electricity, and it looks like, you know, it looks like local officials are on the take or, you know, there's a lot of controversy about the Louisiana. a plant. I don't know. That should be litigated, essentially, by a... This is my fear. My fear is that because people are, quite frankly, this is the newest vessel for understandable anger around income inequality, that blue states are going to pass these moratoriums rather than saying, how could we make this so lucrative for the citizens of Minnesota in terms of property taxes and an entity that does, in the short run, granted, in the long term, not a lot of of jobs in the short run, creates some vocational jobs, and we get property taxes from an

entity, a reliable property taxes from an entity that doesn't tax our social services almost at all. They have closed-loop water systems and uses their own energy that's off-grid and pays a lot of property taxes. And if I were these guys, I've told you my idea, I would try and get those payments locked in because I don't think as many of these things are going to be built. Right. No, I get that. I think that more dreams aren't forever. They are, let's have a figure out, get this to do this in a right way. But that's what hearings and public hearings and our legislative officials are supposed to do without a governor weighing in and just doing a blanket moratorium. Right, but a lot of these tech companies are jamming these things through. I mean,

this is the issue, is that they want to take a minute so they can do things like that. And just, you know, I think it's actually an interesting business because Meta's in talks to least computing power from its data centers to Anthropic. That could be worth $10 billion over two years, similar to a deal, Anthropic just made with SpaceX for computing power, but only a third of the size. You know, meta is, wants to use this compute, these infrastructure computers to get in the cloud computing business to offset the costs of AI CAPEX. You know, there's all manner of things working out here. And certainly, government should be part of it.

I think it's just the manner in which several of the most high-profile properties are going in that creates this hatred, essentially. This is techno-narcissism, income inequality. I don't give a flying fuck about you. I say tone-deaf things. I think that humans require too much power. I think there's a genocide against white Afrikan. This is, there's no.

Oh, and by the way, I have a tendency, the people I cohort with have a tendency to go to islands where there's underage girls. There has never been an easier target right now. Correct. Than the Tech Brothers. And some of it is well earned. At the same time, a public official's job is to balance it.

Here's what I fear. Blue states will fill political pressure to make long speeches and put on moratoriums on data centers. The Republican southern states will say, come one, come all. And they're not stupid. They're not going to let them just like soak up all the water. I think they're smarter than that. And what I worry about Kara is that while Democrats in blue states will feel righteous, we won't have as much tax revenue to pay for SNAP benefits and pay our high school teachers.

I get that, but the actual backlash is happening in Tennessee, right? Let me read this from Reuters. That's a good point. That's a good point. Is that Colossus? Is that where Colossus? Yeah, yeah. Elon Musk's XAI has installed far more gas turbines without federal permits at its Colossus 2 data center project in Tennessee than it publicly acknowledged that pollution is hitting predominantly black neighborhoods the hardest.

Reuters analysis found. Like this is just, this is just like a layup for any reporter. And this potential emissions from the turbines are far beyond the threshold that require a federal permit and would release in near predominantly black communities already estimated to be suffering disproportionately high rates of lung disease, according to Reuters. I mean, poisoning. Yeah, and that has a consistent and rough history that corporate America tends to go into areas. Exactly. And if they had done it in the right way and saying, like, we're going to help the community. We're going to give it. You're absolutely, but they couldn't help themselves.

And they, of course, I personally, I think Elon doesn't. more damage to these people than anything else, like in terms of the way he behaves. And then you have, you know, the moron Kevin O'Leary coming up to side calling people Chinese communists because they object. Like every single thing that gets built gets objected to. But the way they handle the objection is, anyway, I would agree. I think you were absolutely right. And I don't think you're wrong. I just think the way they did it in high profile places creates this. And it is an opportunity. It's just a question of how much an opportunity, how much a state or a local area should get.

Anyway, it's a really interesting story, but you're right. You got this 100% right, along with China. The Chinese dumping, to me, is one of your greatest calls that was a long time ago. Go on. That's the way I want to start the week. People are going to just use these Chinese models, and there's all manner of cyber issues around that security issues, too. Not that I trust these American companies much either.

All right, let's go on a quick break when we come back. Why Netflix's latest earnings have investors concerned? support for the show comes from NPR. Is social media bad for your mental health? Are we spending too much on other people's weddings? Why is heteropessimism trending? If the culture is asking it, NPR's It's Been a Minute podcast is talking about it. It's been a minute stands for your right to be curious, one big question at a time.

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And check out Claude Pro, which includes access to all of the features mentioned in today's episode, cloud.aI slash pivot. This is not in the script, but I use Claude. I use Cloud co-work, and I have enabled or activated my email, such that it can go through my emails and answer questions. And I found that to be one of the biggest unlocks in terms of productivity and utility in my professional life. Scott, we're back.

Netflix shares just hit a 52-week low after the company's latest earnings report. Revenue and income were roughly in line with expectations, but investors were spooked by a third quarter revenue forecast that raises concerns about growth, another red flag engagement. This has been really the talk of lots of people. Ted Sarando's hit back at those sophomore slump viewership drop-off

report saying it's very common in the industry in season two fall if has actually improved this year. Netflix also says subscribers watch 97, billion hours in the first half of the year up 2% from last year. Not 2% is not that great. But the company is cutting back on what we watch reports, now releasing data only once here instead of twice. They're obviously thinking about live TV channels. They got podcasts on there. They're doing short form stuff. Subscription bundles they're thinking about, which they never thought they would do. They're looking like TV to me, like, or whatever. They're looking like YouTube is what they're

trying to do. So talk about what's happened here. they were sort of on a high, like they could do no wrong, and now people are sort of slapping at them pretty hard. I didn't see this coming. It's a big, big story. I thought their stock, I thought the company was going to be well-positioned benefit from not spending $118 billion such that they could, you know, have Scott Pelle like get angry, or maybe they would.

I mean, I think they dodged a ball. Well, they wouldn't have ever had, well, no, they wouldn't have handled it that way. They wouldn't have gotten CBS. Yeah, that was C&N. Yeah, that was Skydance. You see what I'm saying, though. Like, I, I, there's just no way you could have pulled off a big, I think, I think they, they showed real, the board and Ted showed real discipline walking away. I don't, I got to a point where it was like, okay, we're going to be house poor here. We're going to be trying to figure out ways for 10 years to figure out a way to show return on this. To a certain extent, they become a, if you look at the earnings call, they become victims of their own success. Wall Street's no longer asking, can they win? They ask, can they keep winning forever? And, and you, you talked about this. 97 billion hours watched, and that's unbelievable, but it's up 2%.

And people are used to double-digit growth from Netflix. And the problem is it's not a startup anymore. It's becoming cable with a much better interface. And every media company eventually realizes the same thing, and that is attention is finite. And the next story growth isn't adding subscribers. It's owning more hours of your day. But they've made more progress against that than they get credit for. they're going into live sports, they're going to have NFL games, they're actually bidding,

which I care about on the 2030 World Cup. I just did that Brian Williams thing that you did. Yeah. Yeah. You know, we started talking about when we're going to hang up our cleats and he's like, you know, when the fastball is no longer fast. I'm like, oh, Brian. Oh, Brian. You know, he's got the let's put those horses away wet and tired. Yeah, he's got this. He's like, well, that's like having a mousina convertible. And you're like, I don't even know what that means, but it's sense. He sounds very down home. He does. Yeah, he's a very,

anyways, very likable. He's an affable, handsome fellow. Yeah, just a nice handsome guy. But look, the bottom line, this company, Netflix, has almost been cut in half. And I like a bottoms evaluation. It's trading at its lowest P.E. in a while. I think the company is a buy here solely because.

Yeah, I would agree. Well, two reasons. One, it can, it's the operating system for, for non-work hours. And every time, and this happened to Netflix three or four years ago, the stock was way down. And right now, the fear is the clip economy. YouTube.

Yeah, YouTube is the fear. We have a new generation of people that don't want to go longer than two or three minutes, and that YouTube and that clips on instant reels are going to begin to soak all the time away. Their ad tier has actually done really well and is responsible for a lot of their new startups, which, by the way, I thought was a bad idea.

And the reality is, Ted and his, God, what's the Co-Cio's name? I don't give him enough credit. Greg. Yeah, co-CEO of Netflix. The bottom line is every time people talk about this company's overvalued and the stock gets hit, Greg Peters, it ends up being a buying opportunity. Yeah, I would agree.

Although they do have risks from, I worry about some of them being a little, jumpy with the podcast, with a, like, they're just sort of trying everything, and maybe they may need to be a tiny bit more. Yeah, but they're very analytical. They are. That's correct. They know what they're doing. They can pull stuff. They have, they're using AI and analytics to look at what should be on the home screen. What shouldn't? Yeah, I agree. I think of any media. You don't want to bet against Ted and Greg. I really don't. I'm actually looking at the stock for the first time. I told you my Netflix stock story. I bought it at 12. That's the good news. On a risk adjusted basis or split adjusted basis, it's now at 700. The bad news is I sold it three months later

at 10 to take a stock loss. I want to find a time machine so I can go back in time and kill me and then kill myself. Seriously, I wouldn't be doing this Joey Bag of Donuts podcast. Well, you know, it's a question of what you do. And I think they were smart not to get that, as you said. And speaking of which, we got Eric Gardner from Puck. The other story is, of course, the Paramount Warner Deal and the AGs, which have sort of stopped it in its tracks for now. But let's listen to Eric Carter from Puck about what's happening in Paramount, because this also slows down a competitor of theirs. Let's hear his summary of that. For the first time, Paramount's people are starting to talk about the Supreme Court. So what's going on there? Well, yeah, of course, the Supreme Court could eventually

factor maybe if an injunction is issued and Paramount appeals it up. But I think there's more going on here. I think it has to do with bargaining positions. I think that the state AGs know that if they can drag this case on, it will cost the Ellison's a lot of money, $1.2 billion if it's, you know, delayed a few months. And, you know, so what are Paramounts people doing in response? Well, they're talking about the consequences of pursuing this fight on and on and on. They're talking about how the Supreme Court has conservative justices who might change antitrust standards, who might make it tougher for future mergers to be blocked. And so they're pointing out the cost that way as well. Injunction ruling will come soon. And after that, both

sides will assess their options. Maybe they'll get into a room and start negotiating what a deal could be. And so they'll have these kind of future considerations in mind. So another interesting media question. I personally would be on Netflix side on this kind of stuff in terms of figuring out how to get back, you know, how to get back in what they're doing. I guess they eventually will solve the problem and then have to deal with the next problem, which is the debt that they have, which is enormous, away from all the other. noise about that merger. The debt is the biggest story there. Yeah, I don't. I was against the consolidation here, and then I spent some time with two economists that I really respect

at NYU and Chicago, and they both convinced me just in very sober way that this does not, even the combined Warner Brothers Discovery doesn't qualify, or excuse me, Paramount, doesn't qualify as a monopoly. And the industry, the industry. needs to consolidate and you don't get to pick the political leanings of the consolidator. That's not reason for blocking a merger. Now, if I were the unions, if I were Sag Afterra in California, I'd be going apeshit crazy and using whatever leverage I could because I do think these guys are going to be more of a threat to employment at this price and with their backgrounds in AI than another acquirer would

have been. But again, that's not a reason legally to block a merger either. We like consolidation. We like efficiency. That's part of capitalism. I think this is mostly political. And I understand that, okay, if you're going to weaponize attorney generals and AG's and the DOJ, we're going to do the same thing against your donors. I get it. I like hitting back. At the end of the day, maybe California gets some consolation or they have to spin something. But this goes through. This goes through. This goes through. But again, these guys might be the dog that caught the car. That's correct. That is correct. Then what? Look at the debt here.

And Oracle, Daddy's daddy's piggy bank is off 44% because everyone realizes no fucking way. Open AI can buy a trillion dollars in Oracle. It is really something. Or $100 billion an Oracle compute. Yeah, to me, Netflix is the one I would focus. I still would be bullish on Netflix compared to this. No matter how this turns out for Paramount, it's not good going forward because they're going to have, they're going to have endless things to deal with, along with the political stuff, like, along with it.

It just goes, it's much more trouble. I think what Netflix is doing to try to figure out what works is actually a great idea. Like even if I think half the things won't work, I kind of like that they're actually out making things, and that's what Paramount needs to focus on, is what can they do to re-eagorate their businesses. And they're not going to, they're stymied by the AGs. They're going to be stymied by the politics. They're going to be stymied very much so by the debt, which is what everybody should be focused on. So in this case, Netflix, to me, is the one that's doing the most interesting, I think. Yeah.

You know, stocks off 50%. I don't think you want to bet against this management team. I think, let me put it this way. I think there's more, again, going back to asymmetry, if the stock doubled and just went back to where it was, I think people would say, yeah, that kind of makes sense. If it got cut in half here, that would be exceptional. So, again, asymmetry versus to the upside versus asymmetry to the downside in terms of like, Is our word for the day.

Well, it just, oh, my God, you want to talk about a new defense department, just with asymmetry over and over. But anyways, I like, I think this is actually an opportunity. Yeah, yeah. Anyway, it's an interesting time in media. Anyway, all right, Scott, one more quick break. We'll be back for wins and fails. There's a civil war happening in the Democratic Party.

And if there's one place that that's playing out most clearly, it's in Michigan. A crucial Senate primary battle in Michigan that could determine control. control of Congress in November. Congresswoman Haley Stevens and Abdul Al-Sayy. A progressive Democrat and a moderate Democrat. In the end, it all comes down to the dreaded E-word, electability. But in Michigan, one candidate is trying to turn the electability concept on its head. If we think that voters walk around asking, where do I sit on some theoretical left-right

spectrum, then in theory, the bulk of the voters are somewhere in the middle. The problem, though, is that that model hasn't really actually. accurately predicted our politics for a very long time. If Michiganders wanted moderate, why would they have elected Donald Trump twice? Dr. Abdul-El-Sayette is making the progressive case for America first, and he's trying to settle the Democrats' ideological battle in the process. This is about the many versus the money. I'm a Sted Herndon, and this is America Actually. Catch us every Saturday on YouTube or wherever you get your podcast.

Okay, Scott, we're going to do wins and fails. I shall, I don't know, I have two. I'm going to have two. Well, no, actually. Your show. Your show, lady, you do you. I do me. Kathy Griffin put out this great thread showing a picture with her and this 23-year-old.

Oh, yes. She said, Internet, have-out it. And I'm like, and I wrote back, Kathy, have out it. Yeah, have-out. You're consenting adults. Enough men are doing the same thing. Enjoy yourself. Yes, enjoy your money.

You're going to be dead soon. Congratulations. Do what dudes do. Yeah, yeah. Yep, yeah. Anyway, as I predicted, speaking of good predictions, the Odyssey did a crazy numbers at the box office and sort of knocked off the anti-woke people who thought.

Oh, my kids went and saw it. Yeah, pulling in $124 million for opening in the U.S., $250 million across the globe. Huge. Huge numbers. People were just not stopping, non-stop talking about it, which was interesting. Huge sales of the Odyssey itself,

the Emily Wilson edition, which is considered a much better translation, which he based it on just all over the place, just doing really well. And I appreciate it. It's a great film. And it deserves it. And it shows that if you make really great blockbusters that are interesting and challenging in a great movie, people will go to them and gets people back in the theaters, which is great

economically, speaking of all the knock-on effects. And I love that they just, nobody cared about the stupid and woke stuff that they thought might hurt it. And neither did Chris Nolan. I think they thought Chris Nolan was conservative. I don't think he's anything. I think he just likes to make good movies. I thought that was great.

I thought that was great. It was a fail on behalf of the anti-woke people, which was great from my thing. I think I'm going to do a fail-win kind of thing. Mark Warner, who was at, I interviewed Gina Romando at Johns Hopkins this week, which was a great interview to go up soon. And Mark Warner came to the dinner, Senator Warner, and then he had to leave because he had to go on TV to talk about Trump's crazy speech, which we're not discussing at all because it was insane,

which I think was a big, turned out to be. a big Nothingburger, his election security. It's his attempts to slow the election, the midterms down, inevitable. There is an election interference. It just was from Potus when he tried to get votes out of Georgia. It's called January 6th. Yeah, and AFPROs. So anyway, so Mark is very much, I have to say, I give him great credit.

And he pilloried CBS for running the Trump speech for, I know, 17 minutes without any comment, especially given Trump's record. By the way, MSNBC did it for 10 or so. I have to give credit to CNN, which I thought did the best job of the handling this because they had a lot of the digital stuff to do so. They did not run the speech live because of Trump's record on lying about election interference, like very clear record. But they did keep feeding Caitlin Collins. I thought she did a great job clips, and then they would comment on them and fact-checked them in real time as they were happening. And at the same time, they did avail themselves.

They did put the speech on the streamer live, but next to it were reporters commenting on commenting and fact-checking in real time next to the stream, which was great. They used digital means to do this, which was great. They should do that at debates. They should. It was so well done. We had this idea two years ago. Right. Have a Chiron with a bipartisan committee doing pants on fire or truth or most of them.

true. Right. This is what they did. And just fact-checked them. But they allowed people to watch it, which is like on the streaming where it belonged, but they didn't do it on broadcast television. And they had reporters. And then they had reporters reading the documents and commenting on them in real time. I thought, I've got to say, apparently, from when I talked to people at CNN, Mark Thompson was behind that. It's exactly how you handle that. And I think Mark Warner was absolutely correct to Pillarie CBS for just putting it out there without any kind of fact-checking. for as long as they did. I think MS should not have done it either. So I'm going to be equal time there. But I thought Mark was great. And he's very concerned about what Trump is trying to do. And it was a real fail on behalf of several news organizations and a win for CNN to be doing it that way. Others did not. I think ABC didn't run it. NBC didn't. But I thought they did the best job because it did provide the speech in real time, but put around the guardrails that reporters are supposed to do. So I was really kind of pleased to see that, just to see that done so well in the CNN as it currently runs. And so kudos to for them and Mark Thompson for doing it. And Mark Warner for warning about it. Go ahead. Yeah, you know, there's very few people you meet

and you think this guy would be a great president right now. I think Senator Warner would be an outstanding centrist president. Absolutely. I really, he's so, he just had the tragic death of one of his kids. But he keeps going, and I really appreciate his public service. Yeah. Well, there are a lot of calls on the Democratic Party for him to run. People saw him as very electable, but he's had a lot of struggles with it, or he's had real

tragedy, and he's always, as one should, opted for his family. Anyway, okay, so my loss is, again, and we have to point this stuff out. And I always promise myself I'm going to be more focused on business and tech. and less part of the raid cycle. But I do think it's important we continue to point this stuff out. Trump media is building a paid subscription product out of insider trading.

And that's not hyperbola. That's the actual SKU here. The offer is the following. For a fee, Wall Street firms or investors get Trump's true social post delivered in milliseconds ahead of the public feed. I know. It's insider trading.

That's what it just is. It's front running insider trading. The launch is August 1st. Clients are already signed up and Trump owns 41% of the company and he's selling, or, you know, so like, let's strip the euphemism. This isn't a data feed. It's a front running service and the product being sold isn't information. It's the ability to trade on insider information before the country reads the same sentence.

And so why, why? So why does this matter? In April, Trump posted that Iran had fully reopened the strait of Hormuz. It was false. Oil moved anyways. The post was the event. The truth was optional. So he can move markets if and when he decides it's beneficial for him or the people paying for his insider trading API.

Trump has used true social to move markets on tariffs, Fed personnel, military strikes. Every one of those posts is now a product with a millisecond. paid tier. And every rule in modern securities law, reg Ft, blackout windows, insider trading statutes exist to prevent one thing, someone getting to trade on material information before everyone else does. And the reason we do that is the reason capital formation is unparalleled in our society. And companies get access to cheaper and cheaper capital, which means crazier and crazier ideas deeper in the barrel get funded. And occasionally those deep in the barrel batch shit crazy ideas end up being alphabet and we end up having more tax revenue and more jobs for our kids is because

the 99% of investors who don't have access to inside information or the 99.99% still feel like they have a fighting shot. Russia has absolutely no stock market, despite being a, a, a real economy and having a lot of firms that create a lot of cash flow value, because the populace believes and knows the game is rigged against them. And so they don't invest in it. And if you continue to have a small group of people who can engage in inside, it's getting to the point now where everything's gambling and someone else is the house because you don't have inside information. No, it's just so blatant. It's so crazy blatant. It's nuts. Well, it's the logical endpoint of a pattern that's existed for a while.

2.2 billion in Trump's disclosed income during his time in office, 1.4 billion of a crypto, more than any public crypto company made last year. Also, his stock trades also. 22,000 of them in 2025. Biden made 13 in his whole presidency. Invidia shares bought a week before Commerce approved Nvidia chip sales to China. Palantir bought nine times before he publicly praised its war fighting capability. Meanwhile, SEC enforcement actions against public companies, 80 a year under Biden.

Yeah. Four in the last year. Enforcement is down at FDA. Well, that's why we have suddenly Legioneer's diseases back, why we have the dirty, the poopy lettuce. This is, he just was, he's trying to take out scientific things on judges today. Like, every day it's a different thing. This is like a removal of all government regulation in order to help people. Mike Monty. Markets, functioning markets, of which we have the best in the world, and again, people

don't, people take for granted how incredible it is for small companies. I was able to raise hundreds of millions of dollars in my 30s for bad shit crazy ideas and some worked and some didn't. Like, where else can you do that? Yeah, I agree. Where else do the most talented people in the world want to come to business school here and then head to the valley so they can start these crazy fucking ideas and they can find capital to do it? The difference between the, the difference between us in Europe, but one of the biggest differences comes down to risk. People who are willing to bet their human capital on something and capital willing to risk their own money on those crazy risk takers. And if the game is rigged, that capital starts to go somewhere else. They, the markets run

on one assumption. Price reflects information available to everyone at roughly the same time. That's the whole shooting match. And Truth APA doesn't cheat on that assumption. It sells tickets to that cheating. And once Wall Street has a fiduciary reason to keep him posting, you haven't just corrupted a president. You've made corruption a cash flow positive business model. This is putting in place structurally corruption and seeds of doubt around the markets. Yep. And why wouldn't Wall Street buy it? I mean, it's a chance to make money. You make money. I'm tempted to buy it, Kara. Right. I know. I thought, okay, it's $100,000. I'll trade on. And if I make make money, I'll donate a Democratic candidate. And then I thought, okay, is that a good or a bad idea?

I don't. Yeah. Yeah. He doesn't care about people. Maybe it doesn't amount to anything. And also, I don't have the infrastructure to trade on milliseconds. They literally, they are going to be selling the silverware from the White House before they go. They're going to put it on eBay. They're going to put on plates on eBay. But this feels like it was tailor-made. And I have no evidence of this. But Citadel is some of the brightest minds in the world. They built, they spent millions building just a cop, a wire to their headquarters where they would get information a millisecond faster, and then they have the technology to trade on it. And by the way, it's perfectly legal. This feels like a quantum trading, whatever the term is, went to him and said, we have

an idea. Yeah, of course. No. He's done this over and over again, selling access. Selling access is what it is. This is what he knows. Coin-operated presidency. This is not only corrupt, it is going to cost entrepreneurs in the markets, and it threatens this unbelievable thing that is unparalleled, not as capital formation. All right. My win is what I'll loosely call Gen Z's Band of Brothers, and that is military recruiting, or the military recruiting crisis, at least in the short term, appears to be over, and Gen Z has ended it. The Navy Army Air Force and the, Space Force have all hit their 2026 recruiting goals nine months ahead of schedule. That's the strongest recruiting class in 15 years. It's a testosterone, isn't it? Oh, God. Three years ago, the services

fell short to their goals by as much as 25%. ROTC is surging. Dartmouth's program grew from eight cadets to 35 and three years. And this is happening despite a very unpopular conflict in the Middle East amongst a generation skeptical of America's role in the world. And everyone, of course, is claiming credit. Secretary Hexas says the military stopped being woke. Recruers point to prep courses and modernized outreach. But the best reporting on this has been from the Wall Street Journal, and they talked to the recruits themselves. And it's a much simpler story. Well, the military is selling what the rest of the economy stopped providing, and that is purpose and belonging. One sailor, and I thought this was very moving, said he joined because he wanted to

find my place somewhere. That's what young people want. They just want to find their place. economics are playing a role here. Full tuition ROTC scholarships is college cost or plus health care and education benefits, rights. They're offering this just as the entry level job market appears to be softening. Also, I think it comes down to one word, and that is trust. Institutional confidence is collapsing everywhere, yet the military ranks is America's second most trusted institution behind only small business. So I've also said, I think the armed services are, I think there's a lot of young people, especially young men, who are really untethered, wandering, and lost. And I believe that the service is, it's obviously not for

everybody, but I think for a lot of people, it's a fantastic means of marinating, feeling a sense of purpose, meeting other people. I would agree. You know I wanted to go in the military, as you know. And my dad, let me just say, my dad, went into the military. military right after college. He was a doctor, right? He took to, yes, he sent him to college. It sent him to medical school. And he served for 10 years and he died right when he got out. But he, he, this is how he did it. You know, he was from a family of limited, more limited means. And this is how he got, you know, he got out of West Virginia, essentially. And one of the only problems that I have right now, we, it, well, besides

heck set this, a moron, is that is, is, um, with, holding promotions from women and people of color. Gotcha. Or scrubbing the name of gay veterans off of ships. Like unfairly not promoting women. Like, he has a thing out for women and people of color in the top ranks, and that's grotesque. Like, that's supposed to be the fairest place in the world. And the fact that he's withholding is, this is not, they didn't get their promotions

because it's woke. It's just gross what he's doing at the top in terms of withholding those things. And that's not what the military is about. But I do think it's a great alternate. And the question is, are they really screening people? That's the thing. Look at what happened at ICE. This guy who just murdered someone, I think, was never vetted.

Like, the vetting has to happen because this one guy who shot, turns out he has very severe mental illness. I think when they go through the ice vetting, when this is all cleaned up, it's going to be pretty repulsive. The kind of people they let hand of the gun told to get out there and chase immigrants. Our military branches are clearly doing something right. And that is, if you look at leadership, if you look at elected officials, if you look at successful business people, if you look at some of the most successful people in business school, we have a wonderful program at NYU Stern, where we're bringing veterans. At my company, and it's not, I mean, it's a little bit of patriotism, but we always interview

veterans. They're very impressive people. And as a matter of fact, until this year, 70% of the men showing up to a recruiter's office didn't qualify because of obesity or they were unable to pass a mental health test. Or education, too. So Gen Z signing up not only reflects more patriotism on their part and different things, some good, some bad on the economy, it reflects the young people. It reflects well on young people.

Yeah. And also, there's nothing, there's no greater leveler in the United States so far than the military because nothing like being in a foxhole or counting on someone for your life for the life of others, puts race, how rich their father is, their sexual orientation in a fucking backseat where it belongs. It's like, can I trust this woman with my life? And I don't care who your daddy is. Wait, you didn't want to go into the military, right?

You didn't have an interest in it? Oh, no. My dad took me to Annapolis. He was in the Royal Navy. And it was one of those moments, Kara. We went and we toured Annapolis where it was clear. my parents lack the sophistication to know what was going on. Because we toured Annapolis and my dad wanted me to go and we were pretending that I was going to apply. I didn't have the grades.

I didn't have the SAT scores. And then they said you have to get a letter of recommendation from one of your senators. And like, we're fairly like lower middle class. We didn't even know how to go about that. It just the tour cry frankly was one of those moments. where you realize like, you're unremarkable and you have no business being there. And it was just sort of, I just remember the trip with my father,

quite frankly, being quite depressing. Like, I'm not, I'm not of this ilk, and my parents don't even realize. They're so unsophisticated. They did no homework on what's required to get into Annapolis. Oh, no, no, no, I feel bad for young Scott. Oh, now I feel pain for young Scott. I would have been an admon.

Oh, yeah. So instead I went and, like, went to, like, crazy fucking fraternity parties and like made out with hot women at UCLA games. You did fine. It did fine. Things worked out, Kara. Anyway, we want to hear from you. Send us your questions about business tech or whatever's on your mind. Go to NMIMag.com slash pivot to submit a question for the show or call 85551 Pivot. Elsewhere in the Kara and Scott universe this week on on, I'm talking about the rise of insurgent progressives with a panel of political experts. One of them is Amanda Littman, co-founder

and president of run for something, a great group, attracting young people of all kinds to public office. Let's listen to a clip. If you don't like DSA, it is possible for the establishment wings of the party or the old guards such as it is to offer a different vision. Like, they could avail themselves of selling something that would solve the problems and speaking to the anger people feel. The fact that they have instead chosen to punch left or to, you know, blame the young people who want these wild and crazy things. Like, make an argument. I think she makes a good point.

Make an argument. I think it's a great. It's a really interesting organization. Okay, that's the show. Thanks for listening to Pivot. And be sure to like and subscribe to our YouTube channel. We'll be back on Friday. Today's show is produced by Lara Neiman,

Zoe Marcus, Taylor Griffin, and Todd, engineered the episode. Thanks also to Drew Burroughs, Mr. Veyron, Dan Ceylon. The Shock Corraz Vox Media's executive producer of podcast. Make sure to follow Pivot on your favorite podcast platform. Thanks for listening to Pivot from Box Media. We'll be back later in the week for another breakdown of all things. Tech and business.

Congratulations to Team Spain beating Argentina 1-0. An extra time. Golden ball. Best player, Rodry from Spain. Golden Booth. Killion Mbapé. God, incredible. Ten goals.

Edging Messies 8. A wonderful career from Messi. This is the last World Cup. The Golden Glob. Best goalkeeper. What a wonderful tournament. Thanks to everyone who came in well-done America. Thank you.