The Prof G Pod with Scott Galloway - Prof G Markets: Home Depot and the Housing Crisis, Stellantis Beats Tesla, and the Lithium Market

Episode Date: February 27, 2023

This week on Prof G Markets, Scott breaks down why Home Depot’s disappointing earnings are indicative of healthy market trends. He also takes a look at promising earnings from Stellantis, the second largest EV seller in Europe behind Volkswagen and ahead of Tesla. Finally, Scott explains why companies and resources are nationalized, and discusses what it means that Mexico is nationalizing lithium. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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cards, savings accounts, mortgage rates, and more. NerdWallet, finance smarter. NerdWallet Compare Incorporated. NMLS 1617539. This week's number, one-third. That's the ratio of kids that have worked for their parents. I asked my father, when was it time to see the dentist? And he said, when you get a job and can pay for your own fucking braces. Welcome to Prop G Markets. Today, we're discussing Home Depot's earnings, one of the largest EV sellers in Europe, and the lithium market. Okay, here with the news is Prop G Media Analyst Ed Elson, who is now dressing like me. Ed, what is going on?

Trust me, if you want to stay a virgin until you're 26, you're headed the right way. I'm great, Scott. How's Tulum? Muy bueno. Papi is here and he's mostly doing mushroom chocolates and meeting interesting Canadian women. So you're from Alberta. What's that like?

But yeah, it's nice. I like Tulum. It's very bougie. It's like boho chic. I'm having a nice time. Have you're from Alberta. What's that like? But yeah, it's nice. I like Tulum. It's very bougie. It's like boho chic. I'm having a nice time. Have you gone partying yet? You know, I'm here alone. So I, you know, me alone at a bar is sort of like, you know, everyone is just sort of like, don't make eye contact with them. I mean, I'm having a nice time, but yeah, I'm not really, I'm not really partying. Yeah. I've been to Tulum once. And just for our listeners, the reason I went to Tulum was because last year, Scott asked us, or Scott told us that we need to take a vacation.

He said, create a slideshow of different places that you want to go. And so we said, okay, we want to go to, maybe Claire can correct me, I think we said Mykonos, Saint-Pierre, and probably somewhere else in Europe. Don't forget about Cannes. Oh, yeah, Cannes, yeah. And Scott really supported that. And then he said, actually, no, I'm going to send you to Tulum. And then he gave us the contact details of his concierge and basically set up a four-day bender for four of his employees.

So that was a pretty intimate experience at Tulum. So there's a couple of things in there, and I'm being semi-serious here. And that is one thing I have learned is that the key to hiring is making sure that no one leaves. And that is fire the people that aren't working. I'm good at that. But then retain people that are good. It's just so much less expensive to retain a good person by providing them with economic and non-economic compensation. Retention is really the key to building a good small business or any business. And in addition, I believe that the number one source of retention or the way you build retention in your organization is if the person has a friend at work. If a worker has a friend at work, they're something like

40% less likely to ever leave. And in an era of COVID, we're saving a lot of money on office space. I thought, why wouldn't I take some portion of those savings and give it to you guys to have fun? And the thing about when young people go somewhere and their boss is paying for it, they tell everyone, they feel really fortunate. They, I mean, you guys, it's literally like you guys have died and gone to heaven. It's not that big a deal. But talk about a rookie move.

I asked you guys to come up with some ideas and you come back with San Tropez for the weekend. And I'm like, okay, first off, do you know how to get to San Tropez? And you're going to be a bunch of 20 somethings walking around with no access to the clubs there. We're just trying to push the limits. So daddy had to take over and say, all right, amateur hour's over. If you want to abuse alcohol

and have a weekend, that's my specialty. Okay, enough of that. Ed, take us through the weekly review of market vitals. The S&P 500 posted its longest losing streak since December. The dollar climbed. Bitcoin spiked briefly above 25,000. That's its high for the year. And the yield on 10-year treasuries hit its highest level since November. Shifting to the headlines.

The UK overtook India as the sixth largest stock market in the world. The Indian market has been dragged down by the ongoing drama at Adani Group, and was kicked off by the short-seller Hindenburg Research. We covered that a couple weeks ago. Bill Gates is investing $900 million in Heineken, the world's second largest beer maker. Part of that stake is attributed to the Bill and Melinda Gates Foundation. That's his non-profit. Amazon completed its $3.9 billion acquisition of One Medical after the Federal Trade Commission said it would not challenge the deal.

Amazon will get 200 doctors' offices and roughly 815,001 medical members in the transaction. Amazon also made the news for its return-to-office mandate that requires corporate workers to come in three days a week. In response, more than 20,000 employees joined a remote work advocacy Slack channel to voice their concerns. And finally, McKinsey is cutting 2,000 jobs, one of its biggest layoffs ever. For context, McKinsey has 45,000 employees, up from 28,000 just five years ago. Scott, what are your takeaways here? First off, let's start with McKinsey. Catherine and I,

my partner here at PropG Media, we worked for a firm called L2, and occasionally we'd be invited into a board meeting and McKinsey would be presenting. And literally, I tell the kids in my class at Stern, if a kid has a really thick Northern European accent and wears German glasses and is really pedantic and kind of awkward looking, I'm like, you're going to go to work for McKinsey. It is the land of awkward Northern Europeans. I've also been just struck. I was always so intimidated by McKinsey. They have such a great brand. I love their content. Whenever I've been in a meeting with McKinsey executives and they present, I've just been blown away around just how incredibly mediocre the work is. I'm like, this is just people using platitudes and throwing up models

on a screen that are an IQ test that no one can figure out. It just strikes me that this is arguably one of the best managed brands in the world because I literally was always like, okay, when is the insight part of this program? But again, what is everyone talking about? The 2,000 layoffs versus the 17,000 new hires in the last, whatever, last three years. Five years, yeah.

Last five years. If I were Amazon, what we have here is quiet firing. Return to work mandates are an easy way to fire people. And it goes something like this. Okay, I'm in HR and senior management has basically said, I'm under pressure from my shareholders. And it's pretty clear we overhired and we could lose 10, 20, 30% of our workforce and no client or customer would likely register the difference and all of those savings go to the bottom line. What's the most elegant way to shed 10 or 20,000 people to have this sort of elite culling, if you will, or culling of the expendable elite? Simple. Back to the office mandate. And you can bet, Ed, that if someone is really good and has legitimate reason for why they can't be in the office mandate. And you can bet, Ed, that if someone is really good and has legitimate

reason for why they can't be in the office, they'll make accommodations for them. But the other 5, 10, 15,000 people who join a Slack channel, hey, good luck with that. Best of luck to you. You should quit. We hate to see you go, but you should quit. Amazon's $3.9 billion acquisition of One Medical. I love it. I'm a really happy customer of One Medical. I love remote healthcare. When I got COVID, I immediately dialed into or connected on One Medical and I was paired with this lovely registered nurse. And he could not only prescribe me Paxlovid, but had visibility into which pharmacy had it in stock and sent me a map on how to get there. It was a really wonderful experience, fairly inexpensive. And also, I don't think the FTC or the DOJ should get in the way of this, which they've said they're not, because

that is one industry that needs more competition. The Bill Gates thing, I don't know what's going on there. I think that's just a value investment. At first, I was trying to read into it. Why are they investing a billion dollars? But I think they just see it as a good buy. And the UK overtaking India as the sixth largest stock market. You mentioned that I would bet Indian stocks are actually a decent investment right now because of the punishment of the overhang of the Adani group and the corruption there. But India is going to get a lot more attention because India, I believe, has passed China in population and is further behind the curve in terms of going into population decline, which I think is going to be the new, I don't know, sovereign debt. I think people are going to start talking about how much debt a nation has and also whether it's in population ascent or decline as a forward-looking indicator of its success. I also just want to go back to the layoffs. I mean, you've had experience laying people off in mass numbers. And I'm wondering, as a manager and as an employer,

how have you created those lists in the past? So I haven't run big companies. I've run small and medium-sized companies. I run companies until they get to about 100 or 120. As soon as we have a CFO or a head of HR, I know it's time for me to become chairman and bring in someone more thoughtful and reasonable than me who can scale the company. What I have done is I did it at profit once. We brought in a CEO of the brand strategy firm. He raised some money, went on a hiring binge, and a recession hit, and we had to

call 20 or 30 people into a room, a conference room, and had to say, you've all been laid off. That was, I think, one of the most rattling professional things I've ever been through. But there's no easy or elegant way to do it. I think you do it decisively and quickly. In that instance, we call people Sunday night or even maybe early Monday morning. And the ones who weren't being laid off, we told them not to come into the office. I also believe that if you're doing a layoff, you do it crisply and you get them out of the building and there's all this PR around turning off their phones and everything. I, you know, are shutting off their security access. I don't think you're mean about it. I don't think you should escort people out. Certain investment banks who escort people out was by

security. Unless they've done something illegal, I don't think you do that. But I think it needs to be kind of short and violent. And the sooner you do it, the more severance you can give. But we don't talk about this a lot. I think part of being a good manager is not only strategic hiring, but strategic hiring. We'll be right back after the break

with a look at Home Depot's earnings. differentiates their investment approach, what learnings have shifted their career trajectories, and how do they find their next great idea? Invest 30 minutes in an episode today. Subscribe wherever you get your podcasts. Published by Capital Client Group, Inc. Support for this show comes from Constant Contact. You know what's not easy? Marketing. And when you're starting your small business, while you're so focused on the day-to-day, the personnel, and the finances, marketing is the last thing on your mind. But if customers don't know about you,

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and send the perfect email to every customer and create, promote, and manage your events with ease all in one place. Get all the automation, integration, and reporting tools that get your marketing running seamlessly, all backed by Constant Contact's expert live customer support. Ready, set, grow. Go to constantcontact.ca and start your free trial today. Go to constantcontact.ca for your free trial. Constantcontact.ca. We're back with Prof G Markets. Home Depot disappointed with its earnings last week. Sales were relatively flat, missing Wall Street's estimates,

and the company also forecasted a drop in profits for 2023. The company cited a few reasons for this miss. First was lumber costs. Lumber prices surged last year, but are now down around 50% from a year ago. Second, wages. Home Depot will spend a billion dollars in wage increases for its employees, which will have a negative impact on its margins. And finally, the economy.

The CEO, Ted Decker, pointed out that people are spending more on services, like travel and dining and experiences, and less on goods. In this case, home improvement products. Home Depot shares fell 7% after the call and ended that day with one of the biggest declines out of all of the S&P 500 stocks. Scott, what are your thoughts here? My thoughts are what's bad for Home Depot shareholders is good for the world. And that is, there's this incredibly powerful force in the universe, and that is reversion to the me. And that is, there's this incredibly powerful force in the universe, and that is reversion to the me. And that is, luck is almost perfectly symmetrical. And that is, if you have

great luck around investment, that means you're due for bad luck and you should pull in your horns. When you have bad luck, I think that's the time to be most aggressive because it means you're due for good luck. And what I've just been blown away by is how the majority of trends have reverted to where they would have been had there been no pandemic. So if you look at e-commerce, if you just took the growth rate of e-commerce in 2019 and took it out another three years, you see this huge spike up, but then it's come down and it's exactly where it would have been on its own. And what we're seeing here is vicious reversion to the mean around the amount of money people are spending on their homes. When people were stuck in their homes 24 by 7,

they decided we need to upgrade. We need to renovate. And all of a sudden it's like, no, revenge travel. The last thing I want to do is be in my home. I experienced this at Section 4. We had this massive growth in 20 and 21 in online education. And then towards the end of 22, we couldn't get arrested because the last thing anybody wanted to do was be stuck in their house, staring at a screen, learning about brand strategy. And the business is probably where it would have been had we just kept growing the way we were growing pre-pandemic. So this is healthy regression to the mean or reversion to the mean. And the other thing I really like about this is that frontline workers in retail are getting a raise. And I like that. I think it's hugely overdue.

If you ever see an organization putting its workers in commercials, that means they're underpaying them. With courage in your eyes and determination on your mask-covered faces, an organization putting its workers in commercials, that means they're underpaying them. With courage in your eyes and determination on your mask-covered faces, and you continue to do it day in and day out, you are the ultimate doers, and who you are makes us who we are. We are the Home Depot, and we couldn't be more proud of you.

That means we're underpaying. You don't need to be called a hero if you're paying someone a fair wage. They're fine not to be called a hero. So Home Depot, I like the stock going down here because it's a function of some healthy trends. One, young people and people getting out of their house, and two, frontline workers and retail employees making more money. Just going back to the economy. So, U.S. existing home sales, we just had some data come out, existing home sales dropped for the 12th straight month just now, and it's at its lowest level in

more than 12 years. And you've been describing that people aren't investing in their homes as much, and we're going to see revenge travel. How long do you see this lasting? I mean, Home Depot is forecasting a massive drop in their profits, basically for the entire year. Do you think that that's an over-projection? As it relates to home ownership, there was some very disturbing data that came out last week, and that is one in three houses nationally are purchased all cash, meaning the rich are ballers.

Think about one in three houses. I think over half the houses in Naples, Florida were purchased for all cash. And at the same time, first-time homebuyers have hit a record low, meaning young people can't afford homes, but older rich people can now pay cash. So this directly goes to income inequality and incumbents and advantage being ceded to old people at the expense of young people. We have a housing crisis because of this nimbiest bullshit culture we have. It is so difficult to develop. And that is once I have a home, I'm going to endorse and show up to the local architectural review board. And I mean, I'm not exaggerating.

We bought a piece of property in Delray. We're planning to develop on it. And someone showed up to the local review board meeting and said, well, I like to walk my dog over there. And I'm like, okay, that's called trespassing. And they decided to delay the approvals three months to talk about where there's other places this lady can take her dog to shit and pee over my property. But the local boards have incentives. They all own homes. And everyone who shows up to the meeting owns a home. The people who don't show up to the meeting are young people who want to move there who can't afford a home.

They don't show up and say, hey, I'm thinking about buying a home in Delray. Is there any way you could make it not unaffordable for me by having more housing stock? We have a housing crisis. We have a crisis of too few freshman seats at colleges. And we have a crisis where it's hard for small companies to emerge past the big guys. And it all comes down to the same thing. The incumbents have weaponized government to their advantage. Once you have a home, a college degree, or a

business, you don't want new entrants. And we need legislation that basically ensures that the law errs on the side of growth and new entrants. And that always gets people's hair on fire. What you're seeing in the housing market is more of a psychological phenomenon. That's in addition to just the raw economics where young people can't afford it. You're seeing the economic impact of higher interest rates. So the affordability, if you make, I don't know, $2,000 or $3,000 a month, or you can pay $2,000 or $3,000 a month for a mortgage, it's gone from you can afford $750,000 home to half a million dollar home. So that just takes down, that's just a gut punch to the housing market. In addition, what we're seeing is the psychological impact of what I call just a standoff. And the standoff is the following. A couple who own a home think, okay, the Joneses

14 months ago got $700,000 for their home. That must mean my house is worth $720,000. And they ignore the data that as interest rates have gone up and housing prices come down, no, your house is probably worth $550,000. They refuse to believe that. People always anchor off the high point. And meanwhile, the buyers are reading all this data and think they're going to come in and swoop in and buy something on the cheap. And what there hasn't been yet is there hasn't been capitulation or price discovery. And that is, I was looking for a home in Colorado. I love it there. I've seen the inventories build dramatically, but there's nothing trading hands

because again, the sellers are still, still want to believe that it's early 2022 or late 21. And the buyers want a crash. The buyers think a crash has happened and it's somewhere in between, but I would bet in two to three quarters, you're going to start to see capitulation. People need to move the death, divorce, disease, whatever it is. And you'll see stuff get repriced. The good news is housing prices need to come down. Young people need to be able to afford homes. So I'm hoping that home prices do come down substantially. Now, if you bought a home in the last two years, that's going to be bad for you. There's always pain, but there's just no getting around it. A great means of saving is to own a home. It's a point of pride for people and young people can afford them.

So I'd like to see housing prices come way down. Well, here's a tiny little piece of good news. Biden is cutting mortgage insurance costs for new home buyers insured by the Federal Housing Administration. It's only cuts costs by $800 a year. That's 0.3%. But it's something and perhaps it'll slightly move the needle on this housing issue. One of the most profitable car companies in the world is one you've probably never heard of, Stellantis.

Stellantis is the parent company to car brands such as Chrysler, Fiat, Jeep, Dodge, and Citroën. And last week, it reported blowout earnings. Revenue came in at $191 billion, up 18% on the year. It had earnings per share of $2.78 versus $2.67 expected. And it also posted impressive operating margins of 13% for 2022. For General Motors, that number was 11%, and for Ford, 7%. And finally, Stellantis is emerging as a premier electric vehicle company. The company delivered 288,000 EVs last year, up 41% from 2021. That makes it the second largest EV seller in Europe, behind Volkswagen, but ahead of Tesla. What do you think of this? Well, first I want to do a survey with you and Claire. Had

either of you ever heard of a company called Stellantis? No. Never. I only kind of realized what it was when I heard that they make Jeep. I literally had never heard the term Stellantis before and it made me feel really out of it. And then someone said, oh, it's the Chrysler Fiat brand. But $191 billion in revenues, up 18%, $18 billion in net profit, $12 billion in free cash flow, up 78%, and five confirmed locations for new gigafactories and plans to build a fast charging network in Europe. So the metaphor for EVs is they're following the same arc as streaming. And that is media companies were so focused on maintaining the legacy assets, couldn't get out of their own way. And Netflix just came in and said, we can raise cheap capital, we can lose money, we can overinvest in content at a great value.

And they basically had the playing field to themselves for the better part of a decade. And then finally, the content guys said, okay, we have to get into this business. We have to do it well. We have to make the requisite investments. Shareholders, hold your nose. Here we go. And Netflix stock peaked a trough, was cut 75%. And now Netflix has all sorts of viable competitors. I think the same thing is playing out in EVs. And that is none of the traditional automakers wanted to make the requisite investments. All of their factories were optimized for internal combustion engines. They didn't know anything about producing EVs. They'd heard all the scare tactics around internal combustion engines going away and never believed it and wanted to think that big suburbans were going to be selling forever. And then boom, Tesla comes along, is able to attract incredibly cheap capital, pulls away from anyone else and is now worth more than the entire US and German auto industry. And they said about three or four years ago, I think there's a real lag. They started getting really serious. What's interesting is Jason

pointed out, these guys have been making EVs for the better part of a decade plus. They've just been shitting EVs and now they have a good one. But what are you seeing? This is kind of like Disney Plus, right? This is HBO Max, whatever, the new entrance. I guess HBO is not a new entrance,

but all of a sudden there's viable competitors to Netflix. And I think that means, and again, this is my Waterloo, I will die on this hill. I think Tesla is going to follow the same arc as Netflix in terms of its stock. Yeah. I mean, so the first EV or one of the first EVs in 1996, GM created the EV1. No one bought them and they stopped building them in 1999. And I think the comparison you're making is that like, you know, Stellantis is the combination of Chrysler and Fiat. They merged a few years ago and then they rebranded to Stellantis. And the idea here is that this is sort of a legacy entrant like an HBO that is finally getting involved in this space. And the only thing that

could happen now is that Tesla's market share is going to decline. And what we saw with Netflix, so in 2007, Netflix had a 91% market share on all over-the-top streaming media. And then by 2019, the market share was down to 19%. So with Tesla, its U.S. market share was 80% in 2020. And then in 2022, it's down to 65%. And I guess your point is the only thing that could happen is that that keeps on going down as all of these legacy companies start to pile in. Yeah, the question is, will the growth of the market supersede Tesla's loss of share to competition? And I think Tesla's stock is so priced to perfection that when it experiences the kind of competition they're experiencing, I think the market's just going to start looking for reasons for why this thing shouldn't be valued as much as in the entire German and US auto industries. To be fair, Elon Musk deserves a lot of credit here for sort of inspiring and catalyzing the race to EV. It just wouldn't have happened. It would have happened. It wouldn't have happened as aggressively

and as quickly as it is now because he did such an amazing job with Tesla. I want to circle back to this idea of the Stellantis brand, which I had never heard of, Claire had never heard of, and you had never heard of. And I'm looking at these price-to-earnings ratios. Stellantis is at 3.3, price-to-earnings Ford 5.2, GM 6.7. Do you think it's possible that the disparity in those multiples is a product of the fact that people don't know what this company is? I mean, is that a thing where a corporation's brand isn't known enough to investors? And as a result, they just don't pay enough attention. They don't buy. I made my living until I was in my 40s based on one thing, and that is brand equity translates to irrational margins and above market stakeholder return.

And it all comes down to this. You're in a bar. You see someone you're attracted to. She asks you what car you have. You can either have a Tesla Model 3 or you can have a Stellantis, which is a slightly better car at a slightly lower price. Which car are you more excited to tell this potential mate about? The Tesla. Yeah.

And look, the reason I bought a Tesla is I want to signal to friends and people that I care about the world and I'm rich. That's a subtle way of saying I'm in a midlife crisis. And show me any high margin product, I'm going to show you something that either makes you feel closer to God, makes you feel like a better parent or makes you feel more attractive to potential mates.

And Tesla is an amazing self-expressive benefit brand. Stellantis, what the fuck is Stellantis? And Claire just mentioned probably the best brand in the Stellantis portfolio, Jeep, which has always maintained kind of an American,

gritty, tough feel to it. But the world's wealthiest man, it's not Elon Musk. It isn't Warren Buffett. It's a guy who figured out that if you can figure out a way to reinforce brand equity, such that when someone carries a product, it signals to the world that they are a superior form of this species. Their cheekbones are higher. They're wealthy. They appreciate art. They're good storytellers.

Boom, that's LVMH. And this guy, Bernard Arnault, has known that for decades and through savvy deal-making has become the wealthiest man in the world. So brand equity, show me irrational margins on any consumer product. I'm going to show you a great brand. Well, in order to supply all these EVs, car makers are going to need lithium, a lot of it.

So we'll be right back after a quick break with a look at the rare earth metal market. Thank you. series, I focus on our relationships with our colleagues, business partners, and managers. Listen in as I talk to co-workers facing their own challenges with one another and get the real work done. Tune into Housework, a special series from Where Should We Begin, sponsored by Klaviyo. Hey, it's Scott Galloway, and on our podcast, Pivot, we are bringing you a special series about the basics of artificial intelligence. We're answering all your questions. What should you use it for? What tools are right for you? And what privacy issues should you ultimately watch out for?

And to help us out, we are joined by Kylie Robeson, the senior AI reporter for The Verge, to give you a primer on how to integrate AI into your life. So, tune into AI Basics, How and When to Use AI, a primer on how to integrate AI into your life. So tune into AI Basics, How and When to Use AI, a special series from Pivot sponsored by AWS, wherever you get your podcasts. We're back with Prof G Markets. Mexico is nationalizing its reserves of lithium, the rare earth metal used to produce batteries for mobile phones, solar energy systems, and electric vehicles. Lithium has often been referred to as the new oil, and Mexico's president, López Obrador, has made that link clear.

In a news conference last week, he said, quote, the lithium is ours, a callback to the 1938 Mexican saying, quote, the oil is ours. And that refers to when the country seized all of the oil assets from foreign companies. So this move will make the government responsible for all lithium exploration, all extraction, all development. And Mexico's lithium reserves are the ninth largest in the world world behind Canada and the Democratic Republic of the Congo. So, Scott, why would Mexico or any country for that matter want to nationalize a resource like this? Well, they see it as a strategic asset that offers an opportunity for greater security, greater economic growth. But the reality is

it's a bad move. When you nationalize assets, it's usually a move by a government that's failing and basically wants to steal from rich people who have weaponized government and the populace rises up and they nationalize, you know, the local brewery or whatever it is. It's usually, governments are usually not very good at running industries. They're good at running the Navy. They're good at running industries that we need a natural monopoly in, whether it's utility. They're good at running companies where there's a social good but aren't profitable. But this doesn't make any sense.

Even in developing markets that have no love for Western economies or the people in their fancy suits that come down from Shell or Exxon. They usually, at the end of the day, decide to bring them in to help them extract the oil because they can run the business better than they can. And I think this is a very negative looking forward indicator for the lithium industry in Mexico and in general Mexico. It's one thing to have tight regulation or control, but ensure there's not a lot of corruption. But nationalizing industries usually doesn't work out well. It usually means that the industry is going to be engaged in a certain type of different type of corruption, and that is contracts go to whoever gives money to politicians. And government employees don't have the same level of incentive or creativity oftentimes

in this type of industry. So why are they doing this? I don't know. I think it's a bad move. Yeah, we've nationalized companies in the U.S. before, but usually it's in response to something that's gone fundamentally wrong with the industry. So for example, in 2008, we bailed out AIG, which was basically nationalizing it in response to the financial crisis. Amtrak was nationalized in 1971. That was when a bunch of railroad companies went bankrupt. The airport security industry was nationalized by the US. That happened in 2001, right after 9-11. We've never done it voluntarily like this. It's always been a situation that's sort of forced our hand. But when do you think nationalization makes sense?

Those are interesting examples. So in the case of TSA or airport security, your profit motive is in direct opposition to the social good, and that is keeping dangerous people off the planes. And so it probably makes sense for that to be a highly regulated or government-controlled entity. When the government has come in and nationalized banks or industries, they usually then spin it out. They usually say the only reason we're nationalizing it, which is Latin for bailout, is because it represents systemic failure. And that is if JP Morgan goes away or Goldman Sachs or Barclays or Lehman or whoever, Lehman was allowed to fail, so that's a bad example. But if they're allowed to fail, they might be too big to fail and they might start a crisis. And when we kind of nationalized, if you will, or bailed out General Motors, and I think it was

Chrysler, I think, we then spun them out. And actually, I think the government got back more than it put in, if I'm correct. So it's one when there's a direct social good that's totally contrarian to any sort of profitably run business, or you have systemic risk and you need to come in. I would argue that we need less bailouts and more failure. It really disappointed me that we bailed out all these airlines and businesses with our hands out. I would have liked to have seen hundreds of thousands of small businesses go out of business during COVID and people have their hair on fire because they think of small businesses like puppies. And it's just the only way you give young budding entrepreneurs a shot is through the violent winds of disruption are allowed to gale. And the 26-year-old recent graduate of Brooklyn

Culinary Academy wants to come in and buy a restaurant that's failed on the cheap. That's the point. And there are exogenous shocks that are sometimes really bad for you. There was an exogenous shock from 2009 till 2021 called a historic bull run. And we didn't impose special profit taxes or bull market taxes on people. So when we have the exogenous shock of the pandemic, I think you let businesses go out of business. Why on earth did we bail out Delta? And then something you were mentioning on our editorial call the other day is the idea of energy as sort of as a geopolitical force. Could you elaborate what you meant by that?

Well, the Gulf is a power player. And the reason they're a power player is they sit on top of these oceans of a resource that is incredibly valuable and who not only they decide to sell it to, but what roots, secure supply routes they set up is sort of an indicator. It's the oxygen to the world economy, and they can technically cut off or restore oxygen to any economy. If you look at the flows of energy, you're really talking about the flows of power. And America is blessed. We're an energy exporter. Now, granted, you have to do stuff with it. It doesn't guarantee anything. Russia is a basket economy. Some of the biggest nations in the world

or some of the biggest oil producers in the world have not been able to get out of their own way. But the question triangle, which refers to three of the biggest lithium reserve countries, which are Bolivia, Argentina, and Chile. They account for 55% of the world's lithium reserves. So this feels like a huge deal for South America. Do you think that lithium could be South America's ticket to becoming a global geopolitical superpower? Yes, in a word. I mean, it's really interesting. It's better to becoming a global geopolitical superpower? Yes, in a word. I mean, it's really interesting. It's better to be lucky than good. And with the U.S., we always talk about our great innovation culture, and we have that

in democracy and emphasis on education. But really, the two things we're blessed with are traditionally an openness to immigrants. And two, we sit on unbelievable swaths of almost every asset, whether it's oil or timber, you know, or agriculture. I mean, the breadbasket of the world, you could argue, is in California's Central Valley. I mean, we produce more almonds. I mean, it's just, we have resources everywhere and then friendly neighbors, etc. But this could be, I think this would be wonderful. I think those nations, I'm a big fan of Argentina, mostly for football reasons, but, and they make great beef, super nice people, great beef. I'd like to see Argentina do well. I think that's the right

reasons a nation should prosper. Okay, let's take a look at the week ahead. We'll see consumer confidence data for February, as well as earnings from Zoom, Target, AMC, Salesforce, and Lowe's. Do you have any predictions for us? You know, I learned one of the things I love about doing this is I learn. And my prediction is, and I'm going to put a little bit of money behind this, and we should timestamp it for a year from now, I'm going to go buy some Stellantis. When I look at these numbers, when I read how well they're killing it in EVs, and then I look at their valuation, it feels to me like this could be a spring waiting to pop, that as they get more traction in the EV

market and continue to post the kind of numbers they're posting, that people are going to wake up and go, you know, great tastes, growth in EVs, plus low calories, a really inexpensive valuation. So my prediction, or what we should timestamp for a year from now, is I'm going to go buy some Stellantis at the current price, and we'll report back in 12 months on how it did. That's all for this episode. Our producers are Claire Miller and Jason Stavers. Benjamin Spencer is our engineer and Drew Burrows is our technical director. Special thanks to Catherine Dillon and Mia Silverio. If you like what you heard, please follow, download and subscribe.

Thank you for listening to Property Markets from the Vox Media Podcast Network. Join us on Wednesday for office hours and we'll be back with a fresh take on markets every Monday. Reunion as the world turns and the dark lies in our eyes. And they think, why on earth am I working my ass off? Hold on one second. Hola. Hola. Hola. Es posible.

Ven detras en aproximadamente una hora. Bueno. Gracias. Nice finish. Daddy's so interesting. He has such depth and texture to him. He has such depth and texture to him. Is it cerveza time?

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