Prof G Markets - What the AI Scare Gets Wrong

Episode Date: March 2, 2026

Scott Galloway and Ed Elson unpack the Citrini Research piece that took down markets last week, and reveal where they see opportunity. Then they discuss Trump’s State of the Union and examine real data to figure out how the country is actually doing. Finally, they break down who the winners and losers are now that Netflix has dropped out of the bidding war for Warner Brothers Discovery.  Subscribe to the Prof G Markets newsletter  Order "Notes on Being a Man," out now Note: We may earn revenue from some of the links we provide. Subscribe to No Mercy / No Malice Follow the podcast across socials @profgmarkets Follow Scott on Instagram Follow Ed on Instagram, X and Substack Send us your questions or comments by emailing [e-mail] Learn more about your ad choices. Visit podcastchoices.com/adchoices

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zero days before day zero. The world needs defenders. Defenders need DarkTrace. Visit darktrace.com slash defenders for more information. Today is number 57. That's the percentage of American dating app users who are men. Ed, True Story. I was furious when I found my wife had a profile on Raya. That lying bitch isn't fun to be around. I like the Ronald McDonald approach to dating. Quarter pounder. Oh, that's right. Claire's got her hands over her eyes. She's got her hands over her eyes.

At least it's clever. How are you, Ed? I'm doing very well. Back in New York. Good to be here. Oh, you did make it home. I made it home. I made it home.

The blizzard was a real problem. So Ed is like an amateur traveler, like a little snowstorm, and he's stuck in London for three days. He's like, oh, no, I missed a flight. I have to be here until the winter solstice and go on the queen. Queen Mary. You're so amateur. You know, I also left a sweater on the plane, so I'm now having to deal with that. So you are right. I am an amateur. I'm sorry. Okay. Okay. Dude, do you realize how much shit? The fact you even brought that up. I know. I should just, I should just go get myself a new one, right? But it's my favorite sweater. I looked online,

tried to find it, couldn't find it in the right color. And so, yeah, I put the complaint in. For a sweater, I've lost computers and passports and panorai watches on planes, and this is what you do. Oh, I need a new computer, panorai, or passport. You're never getting it back. Well, how do you think these flight attendants look so good when they're not working? You think they've ever returned to anything? I will check back with you. I'm going to get that sweater back.

You're going to get your sweater back, yeah. How are you? I'm doing really well. I've done a Dutch podcast. I'm trying to figure out what to do with resistance. I'm subscribing going to March. Do I do Meta March? I'm doing this event next Sunday in Minneapolis.

My youngest got a shadow day at a high school we were applying to, so I'm taking him to the U.S., and then I might go to the Zero Bond opening party in Vegas. So a little bit of chocolate and peanut butter there. Do you have to go to the Zero Bond opening policy in Vegas? No, the correct question is, do I have to go to the fucking Shepard? day for my kids high school. Daddy needs to head to Vegas. Love that. Vegas. Vegas, baby.

You want to come with me? Yeah. Now I'm taking Claire. I think Claire's dirtier than you. I don't think she minds me getting fucked up. I think Claire wants to go. I think Claire wants to go. I think you should take Claire. You'll judge me. You seem surprisingly uncomfortable. Where my joke's that bad today? I do. You seem very uneasy. Is it because you don't have your favorite sweater? Do we need to get Ed a plushy? Yeah, he needs to stuff down. Do we need to get Ed a plushy? That's what you decide to talk about on the podcast,

that you left a sweater on a flight. I live a boring life. These things are important. You have a very exciting life. I'm not going to the Zero Bond opening party in Vegas. Yeah, but the problem is you're going to get more action in South by Southwest. Everyone's going to be like, can you introduce me to Ed? Well, speaking of South by Southwest, quick shout out.

We are returning to the Vox Media podcast stage at South by Southwest on Saturday, March 14th. I'm very excited about it. Scott, I think is very excited about it. So join me and Scott at 10 a.m. for a live taping of Prof.G. Markets. Last year was honestly pretty epic. We filled out that auditorium, and we had a great time. The year before that was our very first time doing a live show. less epic but still pretty fun but I think this year is going to be the greatest ever Is it another thing? Are we doing, do we have a sponsor?

Are we doing it at some corporate headquarters? Are we doing it actually at South by Southwest? We're doing it at South by Southwest on the Vox Media podcast stage, on the main stage. We're taking, I think 16 of us are going, aren't we? It's like a bunch of us. You guys stay at a shitty hotel and daddy stays at the Austin proper

because Daddy's Daddy. But I love it there. I think it's so much fun. And please, I'm trying to be sincere, which isn't easy for me. But please come up and say hi, especially. Ed's a little like pretentious and a little arrogant, thinks he's better than everyone else.

I am told, Claire and I are down with the digirati at Southby. Well, before we move on here, I'd love for you to really genuinely and passionately read the info about our special discount on the voxmedia.com website. Could you do that? Great that they're discounting us already. That's a good sign. For more info and a special discount, visit Voxmedia.com slash SXSW.

That's Voxmedia.com slash SXSW. We'll see you there. Oh, that's compelling copy. That's compelling copy. You can feel the excitement. It's palpable. Okay, let's move on. Now is the time to buy.

I hope you have plenty of the world of all. A blog post about AI from Satrini Research stirred up some market chaos last week. After it dropped, the Dow fell as much as 2%. And software stocks fell 5%. We've seen markets react to AI commentary before, but this time there was a twist. This piece wasn't really an analysis. This piece was actually fiction. Titled the 2008 Global Intelligence Crisis, the blog imagines a scenario where AI drives unemployment to 10%,

where consumer spending collapses, where markets plunge and the entire economy is fundamentally reshaped. So Scott, we discussed this a little bit with Josh Brown during the week last week. He had some interesting thoughts. We also got a lot of feedback from our audience. A lot of people are very shaken by this article. Again, it doesn't really tell us anything we didn't already know, but it does imagine a potential scenario where AI is so powerful, it's so productive, that actually it just completely rewrites the script of our economy and actually puts the S&P, puts all markets into the red, and takes the consumer economy down with it. So let's just start with your initial reaction to the Satrini Research article,

the blog post, and also how the market's reacted. I think the best thing about that paper, that paper inspired an enormous drawdown in the market, and it's inspired me to start buying stocks and Apollo, TPG, and Blue Owl. Because, I mean, just to summarize, and I bet everybody's already heard this, but the basic notion is that, okay, these white collar work gets kicked in the nuts, right?

And that unemployment basically doubles, and then there's, because of all these big spenders who have good jobs, get fired, They cut their consumer spending and consumer companies are forced to look for places to save money to maintain their EBITDA margins. They turn to AI and it just kind of inspires us and so on and so on in this downward loop. That's not an original concept. I mean, the idea that we've gone from 90% of us in agriculture to 2%, you would have thought that people being laid off, spend less money, spend less money on food. Technically, it's not a new concept.

What's different here is the speed and they think the severity. But where I had with this is that effectively what you have, now the companies I'm looking at, I've been doing a lot of selling and buying. I've been selling down Apple and Amazon for kind of resistant unsubscribe, and I'm reallocating it into SaaS companies. And also, I think the new opportunity is in these PE private credit or what they call business development firm. So just to look at them, Apollo is trading at 14 times earnings while maintaining double digit earnings and AUM growth. and that's how they make money is they deploy AUM and they collect two and 20 on it. So it's trading below market multiple of the S&P despite higher growth.

TPG is trading at about a third below kind of fair value estimates relative to its peers. It's got incredible fundraising and it's expanding its fee earnings. And essentially these prices reflect pessimism more than growth trajectory and then Blue Owl, which was kind of the ground zero for this, has a 70% dividend yield, and, you know, the market appears to be, in my opinion, over-inflating the fears around private credit. Or put another way, I think the opportunity here, and I want to get your thoughts, is that there's a growth versus valuation mismatch, and that is all three of those companies are growing AOM and recurring fee revenue, and sector multiples compressed due to kind of private credit or liquidity fear. So I would argue, kind of to summarize, compress multiples plus durable fee growth plus strong fundraising, all adds up to what I think is undervalued stocks relative to the broader market. All those companies you mentioned, they have gotten really hit hard after this article came out.

Some other names that have gotten really hit hard, again, because of this AI narrative, Visa, MasterCard, American Express. door dash, a lot of the big software names, and you ask yourself like, okay, what are all of these companies, what have all of these stocks have in common? If you look at their fundamental businesses, they do not have a lot in common.

They're very different businesses pursuing very, very different objectives. The thing that all of those companies have in common is they were all mentioned by name in the blog post, which tells you that these drawdowns have, absolutely nothing to do with fundamentals, nothing to do with what we're actually seeing with their businesses on the ground, nothing to do with their earnings.

It's all about the vibes. It's all about the fact that they were included in the big bucket of stocks that this guy who wrote this interesting, and as we've discussed, very well-written article that was really creative and really fun to read. I think that's an important underlooked aspect of this. And they were all mentioned by name.

And because of that, you saw this gigantic drawdown literally in a single day on all of these stocks because they were included in that article. And that is like the most obvious, perfect example of narrative running away from fundamentals, narrative becoming untied and untethered from the numbers. And so I think you're right with your instincts to just go in and be like, I'm probably going to have to buy these things, because it is such a clear indication of such a level of panic and confusion in the markets. I mean, imagine you are an asset manager and you've been invested in, let's say, DoorDash for a number of years, and you've done pretty well if you were an early investor.

And imagine this article comes out because your friend's friend sent it to you over DM on Twitter, and you read it and you see the name DoorDash, and the guy who wrote the article says that DoorDash is going to be the poster child of the AI apocalypse. And then you see people retweeting it and people commenting about it. And then you start to look at the markets. Maybe you see a little bit of a drawdown beginning to occur. And then suddenly you say, oh my gosh, all bets are off. I'm panic selling right now.

That is such a crazy thing to do. And what I would love to know is like, who is actually selling right now? I mean, we could talk about the macro themes in this blog post. I think there's a lot in there that is very interesting and that we should take seriously. But the selling pressure that we're seeing after these blog posts come out, it's sort of the same thing with the other blog the other week. Something big is happening. Another dude writing a think piece, it's a creative writing project,

not telling us anything new, telling us all the same things that we already know, but reframing it in a creative and slightly dumerish way. And then suddenly we're deciding to just rewrite everything based on that interesting and creative think piece. I mean, it really doesn't make a lot of sense. So I think that your instincts are correct on that. On the blog itself, I mean, some of its conclusions, I think, are fair and worthy of discussion. I think that there is a real unemployment risk here with AI that is worth talking about.

I think that the way that the article kind of ties in all of the different elements, and pieces in the ecosystem and how there could be a chain reaction that is triggered by AI. I don't agree with the idea that it's going to bring down the markets by 40%. I think that's way over the top. But the fact that all of these things are interconnected,

I think that is a worthwhile statement. But it's the conclusions that are being drawn and the actions that are being taken after these things come out, which just makes me think, like, where is your conviction? I mean, if you were invested in these companies for the past 10, 15 years,

and then suddenly some guy writes something, and you decide, this is it, now I'm going to sell. It's like, well, then I don't really agree with your prize in the first place if this is what it took, some article that some guy wrote online that was kind of interesting and spurred some imaginative thoughts.

So we should turn, I guess, to some of his economic predictions. What were the biggest assumptions around some of the macro factors he's assuming here. The central stat is, again, he's writing this as if it's 2028, and we're looking at what's happening in the headlines, quote, the unemployment rate printed 10.2%,

and the cumulative drawdown in the S&P was down to 38% from October 2026 highs. And the central thesis is that AI adoption is going to cause this mass unemployment, which is going to reduce wages. and reduce earnings across the board, and it's going to put the economy into this downward spiral. And there's this idea that he brings up called, which he calls ghost GDP. And I'll just read you the quote.

It says, when cracks began appearing in the consumer economy, economic pundits popularized the phrase, ghost GDP, output that shows up in the national accounts, but never circulates through the real economy. And this is really the central idea of this AI thesis, that there's going to be a lot of value that is created, but none of us are really ever going to see it. And I think that that is arguably fair only up to a point.

And the trouble is it gets into this level of dumerism that just is really unrealistic, where there's this idea that actually we're not going to be able to get paid anything, because AI is going to completely replace us, which is going to completely eviscerate incomes, completely eviscerate wages. And meanwhile, as that is happening, consumption of the AI products is going to keep growing and growing and growing. And this is the part that doesn't really make sense, because how is it that you're going to

have people who don't have enough money to pay for anything or to consume anything, and yet consumption continues to go up? And this is the part where he's very descriptive on the value destruction that we might see, but then completely ignores the value creation and what we might do with all of that productivity. And I think this is the thing that a lot of people are taking issue with. It's something that I take issue with as well. I think that there's not enough analysis of what's going to happen

on the other side of those accounts. I mean, if you've got consumption going up, then that necessarily assumes that people have money to pay for things. But he doesn't really acknowledge that side of the equation. He only focuses on the downside, which when you read it is kind of interesting. But when you start to logically think it through, it doesn't really make much sense. What you've done, and I want to use it as a jumping out point, you've been talking a lot about what does AI mean for your career. And I've been thinking a lot about, okay, on a meta level, how should you be thinking about not only how you allocate your financial capital?

And we talk a lot about where we think things are oversold and there's opportunity as we do in the Saturday. space and now the private credit space or the business development space. In terms of your own human capital, the way I would try and frame it is the following. My mom was a secretary, and she oversaw the secretarial pool at the Southwestern University School of Law in downtown L.A., where, by the way, I worked in the mailroom, and that's gone away. Word processing, you know, there's no more secretaries. They're gone. But my mom had good EQ and went upstream and became an executive assistant. another example. We have every piece, every contract I had with an advertiser, with an employee, I used to, if I got an investment document, if I'm negotiating an agreement with Vox,

I'd send to our lawyers. And some mid-level, not even a partner attorney, would review it, come back with some thoughts, I'd jump on the call, cost me $1,000, $5,000. Every agreement sent it, sent it to a lawyer. Now, I say to Claude who's working with us, no, you're smart, have AI look at it, give the prompt on what you're worried about it, get a feedback, and you're now the in-house counsel. At the same time, so being a quote-unquote fairly mid-level attorney, that's not a good place to be. At the same time, I'm spending more money than ever on a woman named Lucy Lee, who's this partner at a firm called Citron, around things like corporate structure. ensuring that the types of compensation strategies for you guys that give you the opportunity to sell shares at some point long-term capital gain, structuring the company such that any capital I put in, if we hold onto it for five years, might qualify for 1202. I am spending probably more on legal this year, but it's moving upstream from reviewing simple advertising agreements to, okay, corporate

structure and tax efficiency, which is Latin for tax avoidance. So the question everyone should be asking in their job is, of all the things I do here, what is most complicated? And generally, most of them come down to, a lot of them come down to sort of EQ or complexity. What do I do that's hard or complex? What involves relationships? And will I have an opportunity to move upstream or downstream, you know, because a lot of that stuff will be taken out. I think this is a really important point. You mentioned you're pulling back on a certain type of legal service, and you're spending a lot less money on that because you've got this AI tool that is helpful, and you've

hired someone who's going to consolidate that work. But then you're spending more on the corporate restructuring over here. And that is a dynamic that I think a lot of people are not really recognizing, which is, sure, some money might move out of this ecosystem. But then where is it going to go? That's the question that people aren't really asking enough and that the Satrini Research Article actually refuses to acknowledge at all.

They spend a lot of time saying, here's where the money's going to move away from. It's going to pull out of here and here and here and here and here. And then, I don't know. And they just offer no other alternatives. And I think one of the, in my view, one of the silliest predictions is the idea that friction goes to zero.

This is a big thesis that we see in the article. The idea that all forms of friction in business and in daily life, when you're trying to book something and it takes time and it's annoying, all of these things that often involve some level of middle management or human relationships,

all of that is going to go to zero because AI agents can do them for us. Therefore, friction on which a lot of the economy is built is going to be entirely eliminated. That's the way they describe it. It's just gone now. That, again, is the wrong characterization. Because what's happening, it's not that the friction is suddenly eliminated,

is that we now have a technology in a set of companies that are just handling the friction better than the old companies, which is the same thing we always see with technology. If you look at Visa, which was brought up in the article or MasterCard, someone might make the argument that when they came up with the credit card, they eliminated the friction. of paying with a check or paying with cash, and so therefore friction is gone.

No, the friction has just been handled by someone else, and now the value and the money is accruing to a different player. The same thing is going to happen with these AI agents, and the same thing is going to happen for, as you say, you're taking the money away from here, and now I'm going to spend it on something that is also worth my time. And so the money's going to go to someone. The only real concern, if this, I mean,

if the doomsday's and I mean, if the doomsday's actually plays out, would be that all of the value is sucked up and literally hoarded with no redistribution mechanism whatsoever into the hands of literally just like the few people that own the AI companies. Now, that's not a totally ridiculous statement because we're already seeing how that's kind of playing out in our current economy. But it's not going to go to the extent that I think that this article assumes, you're going to need some level of consumption in the regular economy for the value to go up

and for the value to accrue somewhere. And that's the part that the article doesn't really acknowledge enough. I do want to say one more point. This was a YouTube comment that I read this morning that was responding to Josh's view that I think is kind of similar to us that this article is a little bit out there, and it's fiction, it's not going to happen.

So I just want to get your reactions to this YouTube comment. This guy says, okay, Josh, but what happens when AI renders my kids $250,000 finance undergraduate degree useless because he can't get an entry-level analyst job because the jobs have all been assimilated under some AI chatbot? Or if their law degree is useless because they can't get an associate job because the partners have discovered AI can get rid of 80s,

of their associates and paralegals. When this hits white collar the way automation has hit blue collar jobs, then what? Are we all communists for advocating for UBI? Or do they all pivot to just deliver for Uber Eats? Oh, wait, they can't. All the cars are autonomous because of a robotic delivery driver. This was a popular comment on the YouTube. I just want to see if you have any thoughts or responses to that.

I think that comment is a function of dissatisfaction with our economy where too few people are enjoying the spoils. I don't even think, some of that is a function of technology, but what we hate to admit is we keep voting in people. You know, Bernie and Senator Sanders and Senator Warren have been bitching and moaning about inequality for 30 years while they've been in the Senate, including when they controlled all three houses. We have purposely chosen Democrats and Republicans income inequality. So, yeah, technology has been played a part in it. But be clear, we have decided we want income inequality in the U.S. because we all believe at some point that will be a millionaire and just wait to see how we treat

the bottom 99% when we're in the top 1%. Now, is that a breaking point where it's at the same, the genie coefficient is at the same levels of France during the French Revolution? Absolutely. But what Josh has said that really struck me, you need to ask yourself what could go right. I love that. So what does your kid do? First off, in terms of this, this, narrative that your college degree isn't worth. That's effectively what he's saying is that the college degree at Stern or at EVA is not worth three to five hundred thousand dollars. Okay, I get it in theory, but guess what? Applications hit record highs this year to law school. If there's a place you would think people would not be applying to school or would have no

pricing power, you would think it'd be law schools. No evidence of that. People are still doubling down on law school. I would argue that probably it's because EQ you and being a well-rounded person better immunizes you against whatever change comes down from this technology or others than anything else you can do. In addition, when people ask me, what's the difference when I speak here in the UK, what's the difference between the UK and the U.S? I say the same thing. You're the ones that stayed. The word risk defines our success. We're more willing to take risks on capital. We're more willing to start crazy, stupid businesses. People are much, more promiscuous with their own capital, thinking maybe someday I'm investing in the right Google,

people are much, much more risk aggressive, giving up a good job and moving to San Francisco and taking a lower salary and more equity in a startup. And just along the lines of risk, the number of new business permits or new business applications in 2004, not that long ago, was 150,000 new business applications. This year, or last year, it was half a million. triple the number of people have decided to try and start their businesses. Some of that might be because they've fed up in the corporate world or they don't have any choice, but whatever it is, it's just striking how many people are starting businesses. When I graduated from business school in 2002, 92, there were only two entrepreneurs in my entire class,

and my co-founder was the second. No one was starting businesses. I, you know, just to be the optimist here, there is a really solid case here around what could go right. The American ethos of risk-taking and understanding of technology, every innovation in technology has over the medium and the long-term created more jobs. The market responds with good government policy. It tries to fill in the gaps. Unfortunately, the V might be more severe here in America. We are not good at taking care of the people are retraining them who are on the market.

the wrong side of this trade, but not to sound too much like, I don't know, a Pollyanna here, I think it's a pretty interesting time to be coming out of college and looking at different opportunities. If Ed Elson was coming out of Princeton, and you had two co-founders, now granted, you're white and privileged and a little bit snooty, but, okay, you come out of Ohio State or you come out of Michigan State, which are both really good schools, and you are outstanding at leveraging AI and you're going to start a seniors, you know, some sort of, you're going to help people find the right seniors facility for pop up or Nana. And you're going to charge them 200 bucks instead of the consultants charge 5,000. And then you're going to negotiate using AI agents the best deal possible. I think that's a really cool little bit. I just made that up in, you know, 30 seconds. I think it's a really cool little business and people are going to fill all sorts of niches and be able to find capital and not, you know, and do really cool. cool, interesting businesses. If I was coming out of school right now, I'd be saying I'd want to learn AI and I'd want to understand health care and I'd want to I'd want to cut a swath through

the middle of those two things. Anyways, long-winded way of saying, I think it's important to ask what could go right. I think the thing that a lot of people are feeling right now is there's this incredible cognitive dissonance because the argument for what could go right, as you say, is actually very, very strong. And we've heard it from you, we've heard it from me and we've heard from many others. At the same time, the argument for what could go wrong is also quite strong, because this technology is incredibly powerful, and we don't know what's going to happen. We're at such a time of incredible uncertainty that having a position on either side, both of them are very reasonable. And that's why I think a lot of people would maybe listen to us right now and say,

oh, they're talking out of both sides of their mouth. It's like, yeah, because there are different futures here. And there are different probabilities to those different futures. And that's what we're trying to parse out right now. What is the probability of it going right? What's the probability of it going wrong? They're both decent probabilities. Now, a framework that I would add on to this, I think, going forward, I think it is the investor's job to ask what could go right. Because as you say, if you are an investor and you spend all your time thinking what could go wrong, you are going to get absolutely destroyed. If you never put your capital to work, if you never take risks, if you always think that tomorrow's going to be doomsday, you're just never going to get rich.

That's just the reality. So that's why we're asking this question. This is an investing show. This is a market show. If you want a chance of getting rich, sorry, you must ask yourself what could go right. You have no other choice. If you want to just sit and stay, you know, never increase your income, never increase your assets, then, okay, go for it and just always ask what could go wrong. Having said that, I also think that it is the government's job to ask what could go wrong. It's the regulator's job to be asking that question. What could AI do to job displacement? How many jobs could it theoretically get rid of? If that happens, what is going to be our response to that? How do we regulate this technology such that we don't walk into an economic disaster?

And the thing that I am noticing right now is that the investors right now seem to be obsessed with the question of what could go wrong, which is a bad idea. And the government seems to be obsessed with the question of what could go right. The government seems to think everything's going to be fine. Don't worry about it. Hands off. Everything's going to be great. We're not even going to include any policies. In fact, we're going to create policies that make sure that no one else creates any policies.

And that is a very, very stupid idea because we should be. be asking that question, it is a legitimate possibility. We should be thinking about things like UBI. We should be thinking about a worker reinvestment fund. We should be thinking about what would happen if the unemployment rate actually was 10%, not if you're an investor. I don't think that's a very wise move to assume that. But if you're in government, if you're a regulator, I think these are good things to assume you should be erring on the side of caution. And what we're seeing in government is not that at all. The fact that we're talking about this means convincing me, this is not going to happen as it's played out because it's the shit you're not expecting

to get you. Very few people other than a really intelligent CIA analyst was thinking, oh, a bunch of young men from Saudi Arabia are going to hijack planes and slam them into buildings. That just wasn't something we were worried about. That took down the economy for a brief time. The subprime crisis, you know, Michael Burry saw, but not many people saw that, including the smartest financial people in the world, were layering on layering and all their risk. models did not turn this up. We did not see a virus shutting down the economy and taking GDP down 31%. It's the shit you're not worried about. You're too young to remember this. We spent a year masturbating over Greek sovereign bonds. We were convinced that Greece was going to take down the EU

and the global economy. You know, 2% of the GDP of Europe and we sat here obsessing over it. There's a phenomenon when you worry about something a lot. It doesn't happen because you start to prepare for it. So I just don't think by virtue of the fact that we've done so much catastrophizing around this, we don't worry about it. The thing that is actually a bigger issue in the markets right now is the following. AI and the CAPEX and the incredible opportunity of AI and the excitement around these things, which I think is probably overhyped as well to the upside, has created real economic growth, CAPEX, and buoyed the market, right? But a sclerotic industrial, policy that makes Europe look more competitive and more decisive, where we have an administration

saying, anthropic, you've got to do what we want. Even though you're a private company, you've got to do what we want. We're not putting in place laws around guardrails, around how companies should behave. We're just going to do one-offs based on this guy's blood sugar level. Oh, the administration is going to get to decide who gets to acquire whom. And, oh, we're taking a stake in one ship company and not others. Oh, we know how to run a, steel company, when the deepest pools of capital become more shallow because foreign investors don't know who the fuck they're waking up to next because there's different laws that might be imposed on them. What has happened in the last 12 months, despite the massive investment and

success of these tech companies, the American market has underperformed every major market. Why? Because the dollar's gotten much weaker because people have less faith in the full credit and faith of the United States government, our ability to pay back in stacks because of fiscal irresponsibility. And the entire world is rerouting their supply chain around us, including the capital they invest in these companies. And one of the reasons that people were willing to invest so much capital in the U.S. is because there was a rule of fair play. And we have lost that, and people are rotating out of U.S. stocks. That is, in my opinion, a much bigger threat to our economy when we have decided that with a third of the world's GDP, we can control it,

whereas we used to be the operating system through cooperation rule of law and standards and consistency, where we were the operating system for two-thirds of the world's economy, and everybody wanted to invest in the U.S. Do you think big Canadian pension funds are thinking, how do we invest more in the U.S. right now? Fuck you, I'll invest in Alibaba. or invest in mistral or whatever it is or Salonist in Germany. They're like, we need to diversify away from this asshole. And you're seeing that show up in our valuations in our market. That is in my view, that is the existential threat here to a decline in our prosperity. Is the price of products go up when people either ban our products or stop buying our products,

shrinking our markets for exports. They impose reciprocal tariffs. human capital stops coming here, which reduces the quality of our teams. And institutions don't want to invest in everything we do here, taking the PE down of everything, reducing or increasing our cost to capital, making us less competitive, because of absolutely head-up-your-ass, sclerotic, lurching, irrational, industrial policy from our government. In my opinion, it's not the terminator that It's going to kill us. It's a fucking clown called the president. We'll be right back after the break.

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LinkedIn ads and get a free $250 credit for the next one. Just go to linkton.com slash Scott. That's LinkedIn.com slash Scott, terms and conditions apply. We're back with Profi Markets. President Trump used his 107-minute state of the union to paint an optimistic picture of the country declaring what he called a, quote, turnaround for the ages. He touched on everything from inflation and immigration to healthcare and voter fraud. But not everyone feels so positive about it. So let's move past the rhetoric and let's dig into the numbers.

We're going to take a look at the data on inflation. on markets, on GDP, and employment, and we are going to reach a consensus on the real state of the Union. So, Scott, I think maybe we should just start with some of the untruths that we witnessed in this state of the Union, just so that we're all on the same page here

about how America is doing and what's true and what isn't. So I think the first big lie that we need to just dispel immediately is that we're all right. is that we secured $18 trillion of foreign investment in 12 months. I have no idea where Trump has gotten this number from. That is literally more than half of our current GDP. His own website says that the number is 9.7 trillion, which is also a made-up number. This is like based on nothing,

as we've said, none of these are actual deals. They're just verbal commitments, and then they explode the numbers by 100% to the upside and the downside depending on the day. I mean, that number is totally bogus. So that's the first thing. The other thing he said is that foreign countries are paying the tariffs. Not true. Multiple studies have been done. 90 to 96% of the tariff burden is falling on US firms and US customers. He said the prices are plummeting downward. Not true. Prices have risen nearly 3%. inflation is going up. Gas is below $2.30 in most states, $199 in some. Also not true. no state had an average below $2.37. And only two states average below $2.50.

Those were sort of the big lies. So now that we agree, hopefully, that those are not true. Let's start with your reactions to the state of the union. I thought it was mostly a nothing, Burger. I thought if I try to cleanse my biases, I thought it came across as robust. He didn't say a lot. I didn't think it was that.

I mean, it felt like not much to me. I was waiting for some sort of announcement. There was no new policy. He'd tease tax cuts. We didn't see that. It was 75 minutes. There was 20 standing ovations. There was 80 applause breaks.

I feel like these, you know, I feel like Congress burns more calories clapping than actually legislating. Totally great. And, okay, so unemployment, to be fair, unemployment is pretty low. inflation is down from its peak, but it's still above where it was when Biden left office. GDP growth is positive, but it's especially concentrated around a small number of companies. He's sort of asking everyone to stare at AI and big company CapEx and then take off your glasses when you're looking at your grocery receipts, right? So, I don't know.

I felt like it was a masterclass in cherry picking. I have trouble getting through the whole thing. So I didn't, I actually thought the Democratic response from Abigail Spamberger, is that our name? I thought that was really strong. I actually have an idea there that I want to pitch you. But like the data, the data was sort of real. The spin was much realer. And again, I just don't think we're dealing with the real issues here.

And that is the deficit. I think at some point we're getting an adult in the room that says, okay, folks, you know, Democrats, we're going to have to cut spending. Republicans, we're going to have to raise taxes. Let's get to it. Who are the adults in this room? Is anyone actually ready to address? When we need a billion doses of GPO1 drugs to try and bring the average cost of health care from $13,000 per person down by $400 a year for the next 10 years and address the deficit because all roads lead to entitlements, which lead to health care. Anyway, no, I feel like I would love to just write this. beach and just look at all of them and say, okay, who's ready? Is there anyone in the middle here ready to actually address these issues? So, you know, I had, I have trouble watching it at this point. I just think it's so insane. And these, at one point, I think he said that we brought an $18 trillion in investment. I mean, where the fuck is even getting these numbers? It's like, so it felt like it's an earnings call, whereas investors are the Republicans, and there's no SEC. He can't

get in trouble. You can just throw out numbers. It's a great analogy. It'd be like if Jensen Huang said our earnings were up 11 million percent. It's the greatest earnings quarter in history and our backlog

we're going to grow. This, we grew our revenues 440 fold. It's honestly a great point. There should be legal implications for lying about the numbers of the economy during the state of the union address. If we have legal implications for Jensen Wong saying the wrong thing, shouldn't that exist for the president? It's a really good point.

That's an interesting statement on America, and that is we're much more protective and value investors more than we do citizenry. Right. So, oh my God, that was the most insightful thing we've ever said at. That was, it comes to us at South by Southwest. It's a really good point. I hadn't heard of that. Let me just bring it down a bit, quarter pounder. Sorry about that. His, I mean, just to run with this analogy between the State of the Union address and an earnings report, I think that's exactly right.

There's a level of spin here and cherry picking, which was actually quite deft. And I think you actually have to give credit to whoever wrote that speech for navigating all of these issues pretty well. But to your point, he's asking America to believe that everything is going really great for Americans and that gas prices are coming down and that food prices and grocery bills are coming down. He's asking everyone to believe that when that is simply not true. And consumer sentiment among Americans right now is absolutely tanking. Most Americans, two-thirds of Americans agree that he has completely bungled these tariffs. think most Americans are realizing what tariffs are doing to consumer prices, what they are doing

to their grocery bills. That is, they're making their grocery bills go up, because as we've discussed, the tariffs are being passed through onto the consumer, and so it's consumers that are paying the cost of the tariffs. We're also saying that a lot of Americans are saying, we just don't agree with and we don't approve of how he is handling the economy. And yet, he's asking in the State of the Union, for us to just say, things are going well. Look at this number over here. Look at this number over here. Look at the fact that our GDP has grown. Look at the fact that our, quote, economy is roaring like never before. And then, as you kind of point out, not acknowledging that the reason that is happening is because AI is adding a full half percentage point to GDP growth right now,

because America is essentially becoming a giant bet on AI. The reason that we're probably going to see some more growth in the next year is, as you say, because of this unbelievable deficit spending, which is going to reach $2 trillion next year, that's a level that we've only reached during recessions and during pandemics. So the underlying situation and picture isn't great, and he's asking us to believe it is great. But the most important point is the one you brought up in the previous section, which is that you look at the stock price. We are underperforming every major index, every major international market right now, by a pretty significant margin. And you look at last year where, yes, the S&P rose 16%, which was good, but you look at the all-country world

index minus the U.S., which rose 29%, which is almost double the return of the U.S. Not even dollar adjusted. What was our big prediction, the end of 24, rotation out of U.S. stocks into rotation out of US. And then the big question was, is this going to continue in 26 or was all of the juice squeezed out of that trade in 2025? It is continuing. Year to date, S&P is flat. Year to date, MSCI World minus USA index is up 10%. So all of these other stock markets, I mean, they are outperforming. And you can get up there on the stage and you can say, look at the stock market, we're doing well. But as we all know, all of the stuff is, relative. When you compare us to the rest of the world, we're actually not doing so well,

which is surprising because you would think that if we own all of the AI companies, which we do, why aren't things going well? I think it's to your point. The capital flows are adjusting. People are rotating out. People are looking for an excuse to sell these companies and to get into something else. And that's a real problem for him and for Americans. But again, it doesn't matter how great the barbecue is if it's raining out. like the atmospherics and the context matter. And you can't, there's some amazing companies in Latin America that have grown their revenues and profits every year for the last 10, 20 years, and all of them are flat or down because you can't outrun flows. And the flows out of Latin America have been one way to other markets until last year.

So great companies, maybe with exception of Mercado Libre, just went down. You can't, you know, market dynamics trump individual performance. And what we're seeing now, because again, of a lack of faith in our current administration and industrial policy and a degradation of the rule of law, I think you're seeing flows out. And with respect to the state of the union, I loved what, I think it was with Jonathan Haidt, I forget who said this about Mark Zuckerberg and Meta, you know, they would say, all right, what's happening with teen depression? And they would cite a bunch of false data or lies.

Or it would clear that they were hiding data, their own data, about how much mental impact anguish it was creating on young people, especially girls. And this one person said something that really struck me, but it was Francis Hogan. And that is, when all the mistakes are in your favor, they're not mistakes, they're lies. And I constantly use that quote when I check out of hotels.

I never check my bill, but whenever I do, I find mistakes. The mistakes are never in my favor. It's always, oh, wait, didn't you check in a day? No, I didn't check in on Wednesday. I checked in on Thursday. Oh, it says here you had, you know, six gingerails. No, I didn't touch somebody. There's never a mistake where they forget to charge you. And I always say this. I'm like, when all the mistakes are in your favor, they're not mistakes, they're lies. And every single, mistake in his state of the I mean the lying has gotten so

out of control that it's been normalized that it's been okay we've just given up on fact checking and the North Korean or the Soviet Pala Bureau or Duma here will just stand I mean the thing that it reminded me of

is in North Korea and in Iraq under Hussein when they'd have these meetings or state of the unions you got the very real sense that if they were not seen jumping up and applauding, there was a chance they might be strapped to a cannon and executed the next day.

And that's not much of an exaggeration. That's how it felt. It's like, okay, I don't care if you're Republican or not. You're smart people. You can do math. They didn't bring $18 trillion back to the U.S. and new investment. These tariffs aren't making America.

I mean, these guys know this is fucking bullshit. But they're all so scared. I just can't figure out what is so, amazing about being an elected leader. Because I do think he has the power to primary people, but is it just that awesome to be in Congress? Like what, what is so incredible about being in Congress that you're willing just to prostrate yourself like this? But yeah, it was a series of meetings. And it was my idea is the following. Did you see the Democratic response from Abigail Sandberger? I didn't. Okay, so Abigail Spanberger, 46, former, I believe she was either in

the NSA or the CIA, just a former intelligence officer, just such an incredibly impressive person, exactly who you want in government, and she's the 75th governor of Virginia. She did the response. This is my idea. I called, and I called a Democratic senator who's running for president, so he has to take my calls because he thinks I'm going to give him a lot of money. But I'll text him and say, I have an idea, and he's like, oh, name drop him and ruin his campaign. He calls me right away. These four guys, they have to listen to me. It was awful. Anyways, so I got an idea for the next.

So 30 years ago, the halftime show was irrelevant. Everyone took a break. No one cared. No one really cared about Michael Jackson or whoever. I remember my favorite was they had a Disney halftime show once. All your favorite Disney characters. And now the halftime show is more important than the game. I would make a real effort over the next two years to make the half,

to make the Democratic response more important than the Republican response. I'd rent an amazing venue. I would hire Jay-Z's Rock Nation, give me a huge budget. 10,000 rabid, hot young Democrats have fucking amazing music lead up to it. Her speech was so awesome, and I'd have lights and sex, because the moment it comes after the majesty and the sex appeal of the rotunda, it just feels flat. Sex it up.

Sex it up, make it super cool, super overproduced, and turn it into the halftime show that's more important. Because the contrast, if you read her speech, it was outstanding. It was fact-checked. It was really solid. She went right for the jugular and everything she said was on point. They did her a disservice by not wrapping it. It was all chip no salsa, all substance.

They need to sex it up. Anyways, that was my big idea. We'll be right back. And for even more, Markets Insights, sign up for our newsletter at profityummarkets.com slash subscribe. This episode is brought to you by SoFi's small business loan marketplace. You know SoFi,

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We're back with Profitey Markets. Netflix has dropped out of the Warner Brothers Discovery bidding war. That clears the path for Paramounts to make the acquisition just days after submitting a revised $111 billion offer. Warner Brothers gave Netflix four days to counter, but the company declined, saying the deal was, quote, no longer financially attractive. The transaction will still need regulatory approval, but for now, Paramount has come out on top. On the news, Warner Brothers stock fell 3%. Paramount climbed 7%, and Netflix popped 10%. Scott, Paramount, David Ellison, the son of Larry Ellison, they are the winners.

or it appears they're going to be the winners pending regulatory approval, initial reactions to Paramount beating Netflix. Well, it depends what you mean by winners. So let's talk about winners and losers here. And the top of the list in terms of winners

is Warner Brothers Discovery shareholders. And that is David Zazlov. I think he was a pretty, I don't know, mediocre operator. He's an outstanding investment banker. I mean, they literally got, if either the Ellison's or Surroundos ever thought, you're going to bid more than 25 bucks a share for this, you know, six months ago, they would have said no fucking way. That company's not worth it. This is a company that's gone from a low of seven bucks a share to 31 with no change. Arguably, the business has gotten worse over that period. So he was, he put on a master class and his bankers and how to get testosterone involved and competitive dynamics. And literally every possible cent on the table has gone to Warner Brothers Discovery shareholders.

So they're the biggest winners. A close second in terms of winners is Netflix shareholders. Because what this shows, or Ted's around us specifically, what this shows is Ted is a disciplined operator. He can put out a press release saying we have an obligation to shareholders at some point. No deal makes sense. he was able to show he could do a deal, he handled it well, I think he acquitted himself well, and they're doing with good operators do, and that is they walk away when it no longer, you know, every deal makes sense at some price and no deal makes any sense at a certain price.

So him walking away from this deal, they save, I think, the total consideration was approximately $120 billion. And then, and we predicted this, the stock. is up 10% Netflix on the news. So with a $350 billion valuation, they got $36 billion for walking away in increased market cap. They're going to get another $2.5 billion in cash for the breakup fee. So if you look at the total consideration to say $120 billion plus the kind of $40 billion free gift with purchase in terms of stock appreciation and the breakup fee, you know, Netflix got $160 billion technically for not doing this deal. And, I mean, we're getting to the point where Netflix could take the money that they're registering from not buying Warner Brothers and the increase in their stock price.

And now they're in striking distance of potentially buying Disney. Disney's got about a $200 billion market cap. So for, you know, close second in terms of winners, Ted Surround us and Netflix from showing discipline and walking from a deal that made no sense. In addition, if I were them, and I were more McAvellian, I would start firing up my lobbyists and start questioning this deal, lawsuits everywhere. And I would try and, not scuttle this deal, but delay it. And it's going to put most of Hollywood into a sense of stasis. And that is, I have a deal at Netflix. During this period, it would. was sort of, I don't want to say on hold, but there was a lot of insecurity around what they were

going to do. Supposedly CBS and Paramount are in a bit of like flux right now for a lot of different reasons. So the insecurity here is going to be pretty dramatic. Meanwhile, Ted's around us can say to his creative team, just for shits and giggles, what could we do? What else could we do with $120 billion? Could we own sports? Could we become the biggest sports network and history and go out and buy a bunch of rights, Olympics, NFL. Could we decide that we're going to be the most dominant streaming media platform and all of Southeast Asia, Latin America, and Africa over the next decade? I mean, there's just, they've got a lot of firepower now that they weren't going to shoot at this. So Netflix, the second biggest

second biggest winner here. Let's talk about, and then I think you'd have to say Paramount because this was an existential must do for Paramount. If Paramount hadn't gotten this deal and gotten some scale, they would have been in the company that paid, overpaid for a subscale paramount. So their only way out here is scale. Now, can they ever show dad a return on this investment. You know, I don't know, that remains to be seen, but at least now they are a scaled player in Hollywood, whether they decide to use AI, but they now have the requisite scale to compete with the bigger players. I agree up to a point that Netflix is coming out a win here, because that price is totally ridiculous for the company. As you point out, this is a company that was

trading at $7 to $10 a share as recently as a year ago. and now a company's come in and decided to buy it for $31 a share. That is ridiculous. And the reason that they're willing to do that is because it's the son of Larry Ellison, who's the founder of Oracle, who is a multi, multi, multi, multi billionaire. And that's the only reason that this is even possible in the first place is you've got a guy who doesn't really know what to do with his tens of billions of dollars. And that's how he's putting up the money for this deal,

which is why he's willing to pay such an irrational price for it. And it would be dumb for Netflix to pay that much money. And they said that. They said this is an irrational. This is a ridiculous price. We're not going to pay it. Having said that, though, we should also acknowledge that since this all unfolded, Netflix stock is still down.

It's up since in the past, you know, month or so. But remember, this all started to go down before that. This started to go down in December from the time that Netflix was announced as or revealed as one of the potential buyers of Warner Brothers, the stock has slid from 100 to around 85, and they have lost almost $200 billion in market cap since that moment. Now, is that purely because of the Warner Brothers deal?

I'm not so sure. I think there are probably some other forces of play there too, but it's hard for me to position Netflix as a total winner coming out of this, considering the fact that before Netflix and Warner Brothers were even in the same sentence, Netflix was trading at above $100 a share. Right. So depending on when you time, sort of the deal was revealed,

whether it was before Netflix entered the fray, they are off kind of 20 plus percent. But it just, this press release, that they're walking, the stock's up 10 percent in the pre-market. They're the winner of the week or the month, for sure. I think we're in agreement here, and that is, as soon as the market looked at this deal, the market said they're overpaying. And one of Netflix's advantages is similar to Apple, and that is their culture is so strong internally, and they've built such an incredible machine.

They aren't very acquisitive because, as Demoderin points out, two-thirds of acquisitions don't succeed. One, because testosterone gets involved and they overpay, and it becomes about winning and losing. And, two, the acquire overestimates synergies and underestimates the difficulty of integration. So, I mean, this would have been all hands on deck of the most talented people or managers at Netflix trying to figure out how to incorporate, how to like, how to get Frankenstein to move into your house and get along with your three kids who are, you know, Frank is different. And he's going to be a big presence here. And if it doesn't work, the whole household's going to come down. So the parents, you know, the babysitters, the grandparents, everybody was going to be.

going to be focused on, wrong metaphor here, on how to integrate Frank. And now it's just going to be a lot of fun to say to Bella Bajaria, who's arguably one of the better content minds in all of Hollywood, we just got, we just freed up a lot of money. What are your ideas here? So let's go through, let's go through the losers. I think first and foremost, the biggest loser is the creative community. This combined company, they have paid so much for these two companies, when I say they, the Ellison's for Paramount and Now Warner Brothers. There's no vision that's going to increase revenues to the extent to justify these prices they paid. They are going to have to focus on the expense side. Larry Ellison is one of the biggest players in AI. I think I use the analogy in the first Star Wars, Obi-Wan Kenobi is on the Millennium. and Falcom. It has to sit down because it feels a disturbance in the force, and that disturbance is that millions of people died in an instant when Darth Vader orders the Death Star to destroy the planet Alderon. And he said he hears a scream and then nothing. I think last night when

this deal, when Netflix walked, I think you heard a scream from millions in the creative community that they're just, the unions, WGA and Sagra are literally too fucking stupid to realize. what just happened. It's the image of Ted Sarando's feeling a disturbance in the force. Taking a seat, having a breath. Ted was a Jedi. So say what you want. Hollywood bitch is about Netflix having too much power.

But Ted likes Hollywood. I was at the BAFTA Awards. He shows up with a bow tie. He likes creatives. The guy ran video store chains. He was the manager of a video rental chain. He likes movies. He likes the creative community.

Netflix may have outsourced much of their production overseas, arbitraging geographically. But he believes in big production, makeup artists, gaffers, editors, actors. You know, he's sort of, he is part of the community. Do you think Ellison gives a shit about, I think he's going to literally say to his son, all right, okay. This has been a lot of fun. I'm glad it's your legacy. This company is trading at a crazy multiple Vibata. You got to grow revenues, high single digits. You got to cut expenses 10 to 20 percent within 24 months. Where are those, well, how are we going to do that, Dad, without dramatically reducing the

top line? We're going to use AI. And instead of putting out 30 movies at 150 million each, we're going to put out 50 movies at 30 million each using this new cool thing called AI. And I'm not saying it's going to work. It might be much AI slop. But that all roads lead to the following. Sagafra and WGA, grab your fucking ankles. You are about to see so many people in your unions get so road so hard and put away wet. You're going to see a destruction in human capital. It's going to make it's going to make. It's going to make. make Jack Dorsey's announcement yesterday look soft and cuddly. The other losers, I do think that the American public, and this would have been true of whether Netflix or Paramount one, I think this consolidation and concentration is not good for America. Whether it's Netflix owning Warner Brothers, I compared it to like Walmart owning LVMH or with Paramount, we're going to have CBS, CNN,

Paramount and TikTok in the hands of one entity. I don't think that's good. And Warner Brothers and HBO and HBO Max and TNT and Discovery and MTV and Comedy Central, like the list is quite insane. Fair points. You know, the people at CNN this morning, it's like a wake over there right now. They're so freaked out. Totally.

Having said that, I'm not as worried. People have made these existential trends about free speech in America. I find, I said this to Kara yesterday. I'm like, if the Washington Post and CNN go away, America's going to be just fine. Because I think what you find is the two things between us and what I would call more fascism are one midterm elections and two, what I refer to as distributed media. And that is a lot of people, Jake Tapper, Anderson Cooper, Dana Bash, Michael Smirkconnish, they're all incredibly talented. If they need to, they're just going to go start their first. own media companies, go to work for Puck, Axios, their own podcasts. It's not as if their voices

are going to be silenced. And the means of production here has gotten so expensive and inefficient. I pulled up, I did an analysis of our listenership in the core demographic versus CNN, CNBC, and Fox. And I can show that more people, more people in the core demographic listen to profiting markets than listen to any CNBC show. And we do it at a lot of the media. And we do it a fraction of the cost. So this is, you're going to see there'll be some, there'll be some high profile exits from CNN. They'll write out their contracts because quite frankly they're overpaid from an old day, you know, a days gone by where people would pay $80,000 for a 30 second spot to convince you you had opioid-induced constipation. Those days are gone. But I don't think it's what I, I don't,

I, you know, CNN, at least the morale there, that's a loser. But I don't think it's the existential threat to media you think. It's a really interesting point because I think that aligns with the way Hollywood sees Paramount and the Ellison family at this point, and also the way the journalistic

institutions like CNN and all of the legacy journalists view David Edison and the Ellison family, and that is they don't like them. I mean, the pushback against CBS and his decision to bring in Barry Weiss

and then leading to Anderson Cooper, leaving 60 minutes. I mean, more and more, it seems as though the predominantly more liberal community that is entrenched in these institutions, they do not like David Edison. We just saw that photo that went viral of David Ellison hanging out with Lindsay Graham before the State of the Union. And now he's going to own all of Hollywood.

And what does it mean if all of Hollywood decides they hate their new boss. Does that mean that they just don't want to work with them anymore? What does it mean if all of Hollywood realizes that their new boss is going to try to fire 50 to 60 to 70% of them? What does that mean for the remaining 30 or 40% left over? Are they going to say, screw this? We don't want to work with you. We don't want to be on your team. Does that mean that they're going to all shift over to Netflix, which, as you say, actually has become entrenched in Hollywood in a way where I think Hollywood respects and likes Netflix. In a lot of ways, it was kind of the saving grace of Hollywood over the past decade. And I think that is something that is probably going to be an underrated force in the

markets, and that is just how unpopular David Ellison is becoming among the very community that he is trying to be a part of. He wants to be in the Sunset Boulevard Hollywood Club. He wants to be in the newsrooms at CNN. He wants to be working with these people. And they're They're all probably going to say, screw this guy. We don't like him. The Ellison's brought in, bought the free press, basically was an aquaheer for Barry and Bury Weiss and her team. I actually think, and they hate her. And the creative community hates her because she's, again, there's a bit of a bias there. She's a Republican. I think they've been a little unfair. I think the free press is actually very innovative and did a great

job. However, Barry has created, has scored just a series of own goals, whether it was spiking a CBS story. You know, she's come across a little bit as a propaganda vehicle or doing the president's bidding. And a center-left creative community hates that. There has been a series of unforced errors on the part of the Ellison's vis-a-vis Barry Weiss that have basically dyed their hat, black and kind of confirmed the creative community's worst fears. The idea of, it'll be really interesting to see if they say Barry Weiss is now in charge of CNN because that's when I do think you see hair on fire. Now, the notion that they're all going to walk out tomorrow is just kind of, is just sort of a fantasy because, and I'm not exaggerating. If you were to name,

10 of the top TV journalist anchors, I have probably had offline substantive conversations with half a dozen of them, and it goes something like this. I realize that this ship is sinking, and I'm thinking about doing a podcast or starting, you know, they're all like want to figure out the next thing. And I have an open conversation. I'm like, okay, how much money you're making? And they're like this. I'm like, how long is your contract? I'm like, Don't go fucking anywhere. You're overpaid. Yeah, what are the numbers? Ish.

From my Googling around, it's something like high, high single-digit millions. Yeah, the tier two ones, and I won't name them because they'll get upside, get one to three million. The tier ones get five to ten, and there's quite a few that make between 10 and 20 million a year. I think Sean Hannity makes the most, so I make 25. Yeah, and so they all have these visions that they're like,

I love the idea of being in control of my own content and starting a substack and a podcast and a YouTube, channel. I'm like, yeah, you'll make 60 grand. And in five or six years, if you work your ass off or work harder than you're working now, and some of them do work hard, most don't, you're going to get to a half a million or a million bucks a year because you're very talented and people like what you do. But be clear, don't go anywhere. You're going to take it, you're going to take a, so the notion that somehow they're going to break their contracts and leave where they're getting paid $2 to $3 million to show up at 4 p.m. and work to 8 p.m. and host a show that's got two,

200 or 300,000 viewers, it's like they're hoping you leave. The question becomes, though, how long can they remain overpaid? And I think that is something that Daddy Ellison's going to come in and say, this is fucking ridiculous. Why are you paying this talking head $10 to $20 million a year? Cut it. Well, there's only a few of those, but I'll give me an example. Chris Wallace, who was at CNN, he was making $7 million a year.

And CNN said, I would imagine the conversation with something like this. Chris, you're a legend. We love you. We want to keep you. we're going to take you from seven to one million. And Chris goes, wait, I'm Chris Wallace. And he leaves. I heard from Chris Wallace the last 12 months. So nobody ever thinks they're overpaid. I've never had anyone say to me in a bonus meeting. I've had them say, wow, thank you, this is great, or that's generous. But they've never said, you know what? The moons have lined up. And let's be honest, I'm overcompensated right now.

You always anchor off, this is your natural tendency. You look at the year you made the most money. and you think, oh, that's how much I'm worth. No, it's not you were overpaid. And almost every one of them is making a lot less money than they were a couple years ago, right? And then they go to new media, and some do it really well. Like Don Lemon and Chris Cuomo have really made an effective transition to new media. But I bet they're making a third of what they made in the heyday of cable news. They're making good money and they're building enterprises that they own, and I think they'll make more.

but I bet a guy like Don and Chris were making five to ten million bucks a year, and they are making substantially less than that now. And they are the most successful of the ones who got off the island. They've built really, really interesting little media companies that are growing, or they're participating in kind of this new media ecosystem. But this industry, it's going to be, I think it's going to be chaos in the next 12, 24 months. Okay, let's take a look at the weekend. We'll see the unemployment report for February. We'll also see earnings from ASD space mobile target and broadcom. Scott, do you have any predictions?

Yeah, I made it. I think there's real opportunity. I don't know what you call these business development, private capital hedge funds, Apollo 14 to 70 times earnings, double digit earnings growth plus AUM growth. And trading it what feels like or trading at a multi-year low, TPG, is trading at a third below kind of fair value estimates. Unbelievable fundraising. I know some people who work there, they are just a juggernaut in terms of their fundraising, which is kind of the raw capital for what they make money on.

I think the current pricing reflects pessimism more than growth trajectory. Even blue owl, I'm doing a basket of these things. It's got a 7, 8% dividend yield. In some, the market is discounting private credit fears. And I think there's a growth versus valuation mismatch. All three are growing AUM and recurring fee revenue. The sector multiples have compressed due to private credit liquidity fears that I think are overblown. And market pricing, the market's basically pricing risk more aggressively than current earnings trends justify.

And on my thesis and the reason I'm starting to buy these things is that compress multiples plus durable fee growth plus strong fundamentals equals potential upside relative to the broad. market. So anyways, my prediction is that a basket, Blackstone, Blue Owl, TPG, and Apollo is going to outperform the market. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Jorge Carty. Our research team is Dan Jelon, Isabella Kinsel, Chris and Donahue, and Mia Silverio. Jake McPherson is our social producer. Drew Burroughs is our technical director, and Catherine Dillon is our executive producer. Thank you for listening to Prof. markets from property media. If you liked what you heard, give us a follow and join us for a fresh take on markets

on Monday. Okay, well, I think you guys are doing a bang-up job. Super excited to hang out in South by Southwest. We should definitely do a Zoom while we're all down there. That's good. Definitely to a Zoom. Really excited to see you guys.