The Prof G Pod with Scott Galloway - Prof G Markets: Meta’s Year of Efficiency, the Adani Short, OpenAI’s Market Pull, and SoFi’s Win

Episode Date: February 6, 2023

This week on Prof G Markets, Scott shares his thoughts on why Meta’s stock roared after the company vowed to cut costs (and why he hopes Zuckerberg’s metaverse shows just an inkling of success). He then explains the market’s obsession with OpenAI, and why SoFi’s strong earnings might signal hope for the SPAC market. Finally, he reflects on the latest in the Adani Group Short saga and what it means for the Indian market.   Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices

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NMLS 1617539. This week's number,7 million dollars that's how much chelsea fc spent on new players this season more than every team in the spanish league combined what do you say to a chelsea fan who's got a hot looking woman in his arm nice tattoo Welcome to Prof G Markets. Today, we're discussing the market's renewed love for meta, ChatGPT's second-order effects, SoFi's turnaround, and the latest from the Adani Group saga. Here with the news is Prof G media analyst and Chelsea fan, Ed Elson. Ed, how are you?

I'm great, Scott. What's going on with that background there? You look like you're in a 19th century opera house. I'm at the Faina Hotel. It's very fancy here. I like it a lot. I'm in the biggest city in Latin America, Miami, and I'm holed up in a hotel. It's beautiful out, but instead I'm here with you at a pair of headphones in a hotel. It's beautiful out, but instead I'm here with you and a pair of headphones in a temperature-controlled room. You love it. So, Scott, last week we were talking about

how to make this show more freaky because, as you said, we need to go places that CNBC can't. We got a lot of great suggestions from listeners, but I wanted to read you this one, which I thought was especially good. If you want to do something CNBC won't do, you've got six months to plan it. Do a Burning Man episode.

What are your thoughts on a company offsite at Burning Man this year? Is that freaky enough for you? So this sounds like you couching a boondoggle in innovation. Am I accurate here? No, no, not at all. I want what's best for the company. Let me guess. The next freaky thing we could do is go to Cannes.

Yeah, we could get freaky in Saint-Tropez. How's that? You want us all to go to Burning Man? No one that works for me needs to see me at Burning Man. So actually, if I go to Burning Man, there's no chance any of you are going. I will pay you not to go if I'm there. So yeah. Anyway, speaking of that, the sand, the beaches await.

Get right to the news. What's going on? Let's start with our weekly review of market vitals. The S&P 500 hit its highest level in five months. The dollar fell on news from the Federal Reserve. Bitcoin climbed as high as $24,000. And the yield on 10-year treasuries fell. Shifting to the headlines. Big tech reported earnings and it was a mixed bag.

Google missed on earnings and revenue with YouTube revenue continuing to decline. Apple saw a 5% sales drop. That's its largest quarterly revenue decline in seven years. Amazon beat expectations but issued light guidance that stock was hit the hardest, down around 5% on the news. And Meta also reported. We'll be discussing Meta in depth shortly. The Federal Reserve raised interest rates by 25 basis points as expected. Fed Chair Jerome Powell indicated another hike next month is likely. He pointed to the fact that the labor market is still hot. U.S. job openings hit a five-month high of 11 million for December, and January's unemployment rate hit 3.4%. That's the lowest level in more

than 50 years. Meanwhile, the European Central Bank and the Bank of England both raised interest rates by 50 basis points. And finally, last week marked the third anniversary of Brexit. According to Bloomberg Economics, Brexit has cost the UK 100 billion pounds per year, or almost $375 billion since the split. If the UK had stayed in the EU, Britain's economy would be 4% larger. Scott, you've been in London for about five months now. What are your thoughts on this? I think there's few people that have done more damage to the UK in history than Nigel Farage, who was claiming it was going to be their independence day.

And the question is exactly who was Britain getting independence from? Other nations get independence from Britain, not vice versa. But if you think about the UK, fantastic education institutions, great culture, great place, a safe haven for wealth. Anyone with a lot of money comes to London and they basically say in London because of private property laws that we don't care how you made your money overseas. But the result is there's just a massive amount of capital that has inflowed into London and huge industries are propped up around that, banking and services. So they've got everything kind of going for them, except they always manage to snatch defeat from the jaws of victory. And in this case, Brexit, it's like, well, how could we increase our costs for our own citizens? And let's also reduce our access to the European continent in terms of the products we sell. So we're going to

reduce demand for our products, but we're going to increase the cost of our products. It just doesn't make any goddamn sense. It's like, you know what? We just, this whole prosperity thing, we don't like it. And we're going to do away with it. So yeah, I don't, I 100% still haven't figured out how this happened or why they don't repeal it.

You're British. What's your insight here? Well, I haven't been in Britain for eight or nine years, but- You have the accent, which means you have credibility here. What's going on? Well, I haven't been in Britain for eight or nine years, but I remember... You have the accent, which means you have credibility here. What's going on? Well, what I remember from when Brexit happened and when Farage was on a tear was his big

shtick was that Europeans are coming in and stealing all of our manufacturing, basically. And it's specifically the big thing you talk about is that the Spanish are coming in and they're taking our fish when we leave we get back control of what is rightfully ours we're talking here about our territorial waters we are still dumping back dead hundreds of thousands of tons of fish every single year the whole thing is sick frankly and the sooner we leave it and put in place proper conservation the better and he started a movement because of it. And then, you know, the thing that I learned from Brexit is that you just cannot have direct referendums on policies that are just going to completely change the economic trajectory of your country. And that's what they did. They said,

okay, well, we're going to have to ask the public about this at some point, so let's just do it. And they didn't think about the fact that, okay, they actually might vote yes on this thing. And it put them in a hole and now they can't pull back from it because they don't want to look stupid. So it's just the perfect example of the dangers of direct democracy, which I'm sure that I will get shit for saying that. But the reality is we have representative democracies for a reason. We don't vote directly on massively impactful economic decisions. We leave that to our representatives who have experts who recommend the best solution moving forward. But they said, fuck it, let's just ask everyone if we want to leave the European Union. Of course, Farage riles everyone up and they say, yeah, let's do it, we're down. It's an interesting point, and it sounds even more intelligency above British accent, but you're right, we have a representative of our elected government that's supposed to

slow things down and think about them. I just think this thing would have died in committees. Too many lobbyists would have said, wait, you're going to kick us in the nuts? I don't care if you're Rolls-Royce or Burberry. They just would have said, you realize how bad this is going to be for us, right? There's so many bad things about our elected democracy, specifically gerrymandering and how money kind of washes over Washington. But it is true that there's a reason we have a buffer. Do you have any thoughts on the other headlines? The other thing that I thought was really interesting was the Fed raising rates by just

25 bps. I think that the markets, at least in tech stocks, the ones that are more sensitive to interest rates are ripping today because people see a light at the end of the tunnel of this more hawkish Fed policy. And people are now even saying that they can see their path to the Fed bringing down rates at the end of this year, early 24. I think that's really interesting. I think we could be on the cusp of a pretty dramatic tick up in growth stocks again. And we've already seen it. They've already started their recovery. It'll be interesting to see how long it lasts. But what's really fascinating is there's a huge perception or a gap between how the economy

is actually doing and the real data or how people think the economy is doing and how it's actually doing. Recent economic data has been really positive. Inflation over the past six months was less than 2% at an annual rate. Real GDP has increased almost 7%, 6.7% under Biden. And America's gained 4.5 million jobs in 2022. But still, most Americans feel pessimistic about the economy in early December, an Associated Press poll. So three quarters of Americans describe the economy as poor. And the worst headline in the world, and the reason it's never a headline, is things marginally better today. That is never a headline. And it's interesting because I'm a glass half empty kind of guy, but I just don't think if you really take a sober look at the data,

I don't think you could ignore that things are beginning to actually look pretty good. I'm also, and I'll stop my rant, I'm 100% convinced now, that's not true, 80-90% convinced, we're not going to have a deep recession because, and I don't know what the psychology is or the phenomenon is called, I'm sure there is, it has been named, but if you worry about something long enough, it doesn't happen. That's been my experience. Remember how worried we were about Greek sovereign debt infecting all of the European economy? It's the things you're not worried about that get you. No one except Bill Gates and maybe Fauci was worried about a pandemic killing a million Americans. That just wasn't something we were thinking a lot about. we have been talking and worrying and having indigestion over this impending recession for what feels like about two years now and i guess it makes sense the shit you're worried about you prepare for and as a function of that it's less likely to happen okay after the break we'll get into meta's earnings and chat gpt stay with us. The Capital Ideas Podcast now features a series hosted by Capital Group CEO, Mike Gitlin.

Through the words and experiences of investment professionals, you'll discover what 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. I just don't get it. I just wish someone could do the research on it. Can we figure this out? Hey, y'all.

I'm John Blenhill, and I'm hosting a new podcast at Vox called Explain It To Me. Here's how it works. You call our hotline with questions you can't quite answer on your own. We'll investigate and call you back to tell you what we found. We'll bring you the answers you need every Wednesday starting September 18th. So follow Explain It To Me, presented by Klaviyo. We're back with Prof G Markets. Meta, whose stock got crushed last year, missed on earnings.

But the market loved it. The company brought in $32 billion in revenue, down 4% from a year ago, but still higher than Wall Street's estimates of $31.5 billion. But earnings per share came in at $1.76. That's 50 cents below market expectations. Yet the company's stock was up more than 20%. So what got the market so excited? Well, Mark Zuckerberg said in the earnings call that 2023 would be the quote, year of efficiency, which the market took to be a hint at further layoffs. The company also promised to reduce capital expenditures

from $37 billion to $30 billion. And finally, Facebook reached the golden number. The social media platform now has 2 billion daily active users. So Scott, I think this deserves at least a partial victory lap. In November, you said that the best performing large tech stock of 2023 would be Airbnb, Chinese tech stocks, and also Meta. Could you explain your thesis there and also your general reaction to these earnings? Meta became oversold. And it was obvious or seemed fairly obvious to me that the moment that Mark Zuckerberg woke up from this fever dream, ayahuasca-induced hallucination of the metaverse, that the billion dollars a month they were wasting on the metaverse

would immediately flow to the bottom line. And since we made the prediction in November, the stock's up 50%. And I hate this company. So I'm proud of this prediction because I'd like to think we call it balls and strikes. And we said the moment he takes the cash from the cash volcano that is their core business and stops pissing it away or immolating it on the metaverse, it all flows to the bottom line. And all he had to say was that we're reducing capital expenditures from $37 billion to $30 billion. And everyone said, okay, that must mean he's waking up. The anesthesiologist is bringing him to, and he's going to stop spending so much on the metaverse. And the stock just ripped up.

There was also some other things that just highlight the power of this company. As you referenced, over 2 billion daily active users. TikTok might pass that, I think, in the next couple of years. But for now, meta or Facebook or Instagram is really the unprecedented, most successful product in history. There is no religion, economic system, TV show, reality show, whatever you want to call it, product that gets 2 billion daily active users. Nothing. Also, there's some really fascinating tidbits from the earnings call. Air France is

now using WhatsApp as its primary means of customer service and communication, which just gives you a sense of the potential for WhatsApp. I mean, WhatsApp could be the biggest global telco company, or maybe that moves to AI and customer service, but the power that could be unleashed there at some point. And right now, that potential is fallow from an economic standpoint. They're not charging, but it is striking. And even things like Reels was up, I think, 20%. I find myself, I don't know about you, Ed, I'm watching Reels more, not because it's better, but I still find myself on Reels a lot because I am right there. When I look at my Instagram feed to see what other people are saying and specifically what

people are saying about my content, because I'm desperate for other people's affirmation, you click on the top on that little circle and it's lit up and you start seeing reels. So it's kind of the power of a captive audience. But the market just loved the fact that he appears to be stirring from this, you know, meth-induced coma or, you know, whatever you want to call it, that the drug is running out

and he's sobering up around the metaverse. Yeah, so they lost $14 billion on the metaverse last year, specifically on their Reality Labs group. And I think the big question that everyone had is, are you going to keep pushing for this ridiculous metaverse dream? And Zuckerberg didn't really mention that at all in the call and then finally towards the end of the earnings call one analyst asked if we should expect increased losses on reality labs in 2023

the CFO Susan Lee responded to that question she said quote we still expect our reality labs losses to increase in 2023 and then something that Zuckerberg said, he said, quote, none of the signals that I've seen so far suggest that we should shift the Reality Lab strategy long-term. We are constantly adjusting the specifics of how we execute this.

So to me, it's like he's almost signaling, okay, we're going to bring down the CapEx, it's the year of efficiency, we're going to pare down losses. But in terms of what they're actually going to do about the metaverse dream, I'm not sure that they're walking the talk here. If they're still quietly saying, you know, we might increase the reality lab spend. I mean, what are your thoughts on that? I think they carefully curated that word efficiencies.

And I think they're signaling that this might be coming to an end, or they at least might be reducing that spend, or they're going to look for reductions and spend elsewhere. $14 billion on reality labs over the course of a year. If they took all of that capital and said, okay, it's literally meaningless, which it is, it's a total waste of money, which it is. And they put it all to the bottom line, $14 billion in profits, annual profits. Just those profits would make Meta one of the most profitable companies in the world. That's the level of spend and waste here. The other thing to keep in mind is, and this is more of a life lesson, success is the best thing. The next best thing is quick failure. The best thing that could

happen if you want this company to go down in flames or severely be diminished in terms of its economic power and clout would be that there's some more signs of success with the metaverse. Because the worst thing that can happen to you, the worst thing that can happen to you is you fail slowly. I started Red Envelope in 1997, and there was always signs of potential and success. Fast growth, easy to raise cheap capital, NASDAQ IPO in 2002, always some signs of success. Always trouble, never really had a strong economic model. Shit show of management. All this shit that was hitting this company every day. And then 2008 comes 11 years later, credit crisis, our letter of credit or our credit line gets pulled. Longshoreman strike in the Port of Long Beach, all our Christmas merchandise held offshore. The guns spitting out the labels at the Kentucky, Ohio border fulfillment facility start sending

gifts to the wrong addresses. Boom, we are out of business in nine weeks. That's bad. But what was profoundly fucked up was it took me 11 years to fail. That is the worst professional experience I've had, not because of the failure, but because it was an 11-year failure. And so I am hoping, and I want to encourage everybody to buy an Oculus and to go on their social media platforms and say how much they love Horizons World or whatever it's called. Because I would like a little bit of success here to create a massive failure. Yeah, I mean, he's in a different position though to you because, I mean, he's in so

deep here. He's a public company CEO, 2 billion users on his biggest platform, and he literally changed the name to the new strategy. So I'm just thinking about perceived value here. I wonder if it actually makes sense to put it to bed sort of slowly, sort of quietly hedge his bets as opposed to say,

oh yeah, wait, my bad. We should have just been Facebook. Meta was stupid and I'm an idiot. You're exactly right. He can turn chicken shit into chicken salad here, and that we have such progress because of the good work in Reality Labs around video gaming. We're going to focus here. And the great thing about video games is it won't require the same level of expenditure.

He'll come up with a bunch of reasons to take that $14 billion down to $7, $5, and then ultimately $1 or $2 billion, you know, scaling back and try and position it as a victory. OpenAI, the company behind the text-generating AI bot ChatGPT, launched a pilot subscription plan called ChatGPT+. The premium plan starts at $20 a month and offers faster response times and priority access during peak hours. It feels like ChatGPT just can't stay out of the headlines right now. This comes right after the news that BuzzFeed will start using OpenAI to generate its own content. BuzzFeed

stock popped more than 300% after that announcement. So, Scott, clearly the market loves AI, but do you think it's reacting rationally? Well, no. The markets are typically irrational in the short term, but over the long term get increasingly rational. And effectively what you have is, and Bruce Buchanan, an economist at the Stern School, a colleague, he has a theory or he has a construct that has sort of changed the way I look at business or distilled all business down to something very basic. And that is all business comes down to three lines. The bottom line is your costs, right? The cost of producing a product, the human capital, the factory, et cetera, plant, property, equipment. And then the middle line is the price you charge for that service or product. And then the third line at the top is the perceived value of that product. Now, there's only two ways to add shareholder value.

You either bring the cost line down or you take perceived value up. So far, ChatGPT has created excitement around the bottom line moving. It's not saying, oh, great, BuzzFeed is going to be able to use AI to create more interesting articles, a greater breadth of articles that offer real insight, better reading, none of that. It's not about pushing the top line up. It's about bringing costs down.

There's a general belief, I believe, that the market senses that they will be able to lay off 20, 40, 60% of their editors, journalists, and tech staff using AI while holding onto the majority of revenues because they'll be able to produce a reasonable facsimile of the content they produce on dramatically less resources, which will massively bring down their costs, thereby creating much greater margins. An example of how AI is pushing the perceived value line up to add shareholder value,

right now the perceived value of Bing, based on the incremental value that AI or OpenAI might add to Bing, is improving the perceived value of Microsoft's search offering. In the day they call it Bing by ChatGPT or AI Bing, market share of Bing is going to go from 6% to 20% or 30% because the perceived value, whether it makes a better search engine or not, TBD, will go up.

So both things happen, but it's a useful construct. All stakeholder value is moving one or more of these lines. Could you ever see ChatGPT bringing costs down at ProfitG Media? Yeah, actually, we'd like to speak to you after the show, Ed. If the answer was yes, I'd lie to you. But I think the history of technology or technological innovation is there's always fear. Robotics are going to put every middle class person in manufacturing out of work. And there's some truth to that, but it also, over the long

term, automation and robotics have created more jobs. It's just changed the complexion of those jobs. And what we've been bad at, and especially in America, is recognizing that we need to reinvest and support the people who are hurt or displaced because it creates a lot of anger. But overall, it creates more jobs and it creates economic growth. The same thing will happen here. We immediately go against the above catastrophizing to the jobs that will be lost. But the reason why I believe this technology is so incredibly deflationary is more psychological. And that is people are going to say, well, you know, maybe I won't threaten to leave if I don't get the raise I want, because I hear there's this new

technology coming. And I've heard that BuzzFeed is going to lay off half its staff. And I've heard that the new strategy du jour is to lay off 10, 20, 30% of the employees. My friend just got laid off at Amazon. So I think this technology is really deflationary, but more than anything, I think it's the psychology. Yeah. So it seems like a lot of people are worried about their jobs. I've seen a ton of headlines about it, but how do they actually feel? Let's go to Mia on the street. Okay. So our first question is, could AI replace your job? Yeah. I'm very concerned about that. Yes, it can. I hope so. I don't want to work anymore. The question is,

will my boss know that AI is replacing my job? Do you feel like it already is replacing your job? Some aspects. I use chat GPT quite frequently. And what is it that you do? I'm in venture capital. I do hair. So imagine the calamity that could happen if you let a robot who thinks they know do it. No, definitely not. I think about it often and I think that they're going to develop something and it's going to be not good. It's going to cause a lot of tears. Someone like myself who's in nonprofits and is doing grant reports, it does seem like AI is encroaching more and more on that territory.

I do know that a lot of tech companies are fearful of AI. So maybe it is smart enough and we're just too dumb to realize it. Well, hopefully not. Okay, we'll be right back after a quick break with a look at SoFi and Adani Group. 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 special series from Pivot sponsored by AWS, wherever you get your podcasts. What software do you use at work? The answer to that question is probably more complicated than you want it to be. The average U.S. company deploys more than 100 apps, and ideas about the work we do can be radically changed by the tools we use to do it.

So what is enterprise software anyway? What is productivity software? How will AI affect both? And how are these tools changing the way we use our computers to make stuff, communicate, and plan for the future? In this three-part special series, Decoder is surveying the IT landscape presented by AWS. Check it out wherever you get your podcasts. We're back with ProfgMarkets. Digital bank SoFi reported fourth quarter earnings last week,

and it was a beat on all counts. The company grew its revenue by 60% from a year ago to $450 million, that beat expectations by $27 million. It also narrowed its losses from $0. share last year to just 5 cents a share. And the company expects to reach profitability by the end of 2023. SoFi shares rose 12% on the news. Now, this is an interesting stock because last year, SoFi had a terrible track record. The company went public in January via a SPAC.

And just a reminder, SPAC stands for Special Purpose Acquisition Company. It's where you raise public funds with a shell company, which then acquires a private company at a later date. And in this case, that was SoFi. And it's also a controversial way of going public

because you're not subject to the same disclosures as a regular IPO. And you also don't need to raise money from big institutional investors. Plus, the sponsor of the SPAC gets a nice chunk of the company for raising the money and for closing the acquisition. Now, in this case, that sponsor was Chamath Palihapitiya. Chamath took many companies via SPAC over the past several years, and he's been heavily criticized for their underperformance.

Last year, SoFi lost 80% of its value. And two other companies in Chamath's SPAC portfolio, Virgin Galactic and Clover Health, lost 75% and 80% respectively. So, Scott, SPACs have gotten a really bad name, but these are strong earnings from SoFi. So what do you make of this company? It's interesting because SPACs have become synonymous with a company that shouldn't have

gone public and is underperformed. But it would be, I think, irrational and unfair not to believe that there is some chicken salad amongst the chicken shit here. And that is, it's just unlikely that every SPAC is a shit company. There's got to be something out there that will be enduring and will work. And this might be that company. The numbers look really strong. It's got decent margins and it's growing, which means at some point, if they continue to grow the way they grow and maintain the current cost structure, they will become profitable. I mean, but today, I mean, it's been okay. All I need to know about whether I get near the stock or specifically that I shouldn't get near the stock is that it's a SPAC, meaning stay the hell away. So this would be great for the SPAC market

to have a winner here. But yeah, at some point, one of these or more of these companies will likely emerge. Yeah, let's just talk a little bit about the company itself. So personal loan originations are up 50% from a year earlier, 46% increase in total deposits. The bank portion of the business brought in $30 million in net income on a gap basis. They're projecting gap profitability by the end of the year.

I mean, this is super impressive. And three months ago, it felt like every progressive sort of digital forward consumer bank was going to get screwed just purely based on market conditions. But they've actually grown the business here. So what do you think SoFi is getting right? They're trying to position themselves as sort of the AWS of fintech, and that is offer services around the loan process that other financial institutions can adopt and make sense for them to outsource it to SoFi. So they want to be, they're kind of stepping into the supplier side of fintechs and that platform grew their revenue 62% year on year to 315 million, which is

really impressive. And their financial services grew 189% year on year to $167 million. Yeah, this will be big for the SPAC market, and that is it'll convince more investors to kind of try and wade through the rubble and see if they can find other underappreciated SPACs that have been written off for debt. Last week, we mentioned a short- report from Hindenburg Research that accused the Indian conglomerate Adani Group of engaging in, quote, brazen stock manipulation and accounting fraud over the course of decades. Here are some updates on that story. Since the report came out,

Adani stock has fallen 40%. And last week, it only got worse. Adani Group was in the process of completing a $2.4 billion equity sale to a group of institutional investors. And on Wednesday, the transaction was cancelled. In just a few hours after that news, the stock fell by nearly 30%. And to add some more context here, Adani Group is run by Gautam Adani, who was until a few days ago, the third richest man in the world. The company operates multiple different businesses, including airports, port management, food processing, and renewable energy. But the majority of Adani Group's revenue comes from coal. So Scott, there's a lot to unpack here. Where do you want to start? I think the most interesting thing is this new class of what I'll

call investigative investing. And the work here is really substantial. They've made a big investment in trying to understand all of these shell companies and all these subsidiaries and what was an arms transaction and whether there was corruption and entities that looked like as if they just existed to pump the stock. There was accusation of trying to intimidate journalists who were questioning the value of this. I just think everyone is so, including myself, so just blown away and impressed by Hindenburg that they find this thing, they say something's wrong in Mudville or something stinks, they start digging and they just do an unbelievable job of investigative reporting. And then they make a shit ton of money investing against the stock.

Now, that makes them biased. But if you read the deck, it looks like they've done their work. I mean, they've really backed it up. The other thing is I think that the Indian market really suffers from this. I think this casts a real pall over the Indian system, if you will, and that is there is a lot of data that shows key to prosperity or economic growth, if you will, is trust. And what do we mean by that? Countries that have rule of law, institutions, or regulatory frameworks such that if you invest in a company and they end up being

criminals, there's some recourse or that there's some disclosure requirements or standards such that it's less likely there's going to be corruption and you're going to wake up one morning and have a really bad surprise. The market cap lost by Adani is dramatic, but the market cap loss that's much greater but can't be directly attributed is the amount of market cap that will be lost by every Indian company because of the stench this creates around all Indian companies. Yeah, I mean, some of the criticisms that Hindenburg has leveled against this company,

one of the main things is this idea of promoter holdings disclosures. And what they're referring to with that rule is, it's a rule for India's stock market, that basically 25% of the float of a public company needs to be held by non-promoters or non-insiders, people who aren't affiliated with the company. And what Hindenburg found is that with all of these Adani subsidiary companies, by the way, there are seven publicly listed subsidiary companies beneath Adani Group.

With all of those companies, the share of ownership held by Adani's insiders is almost exactly 75%. And that's publicly disclosed. But beyond that, Hindenburg found several offshore companies that own 10% more shares. And Hindenburg believes that all of those accounts are directly tied to Adani's insiders. The reason they think that is because those funds' portfolios have a roughly 99 percent concentration in Adani Group shares. So, you know, if that's true, then this is a public company, it's the largest in India, that's 85 percent owned by one group. In this case, it's the Adani family,

which to me just screams fraud. It all kind of comes down to this notion of wash trading or figuring out a way to send fake signals such that the marketplace begins to believe an illusory, unreal, inflated value of the shares you own that you can then sell. It sounds like these offshore groups that are linked and have a vested interest or are controlled by existing shareholders or current

shareholders were trying to manipulate the stock without disclosing who they were, such that the value of these shares would go up and then they could sell at an opportune moment. This is fraud. And this is why we need regulators and we need transparency and we need disclosures. But this is, you know, you saw this at FTX where they would create all sorts of entities to try and prop up the value of their coin. And then, you know, ultimately over time, you create Jenga here, you create a house of cards. And when one, you know, one of these wooden blocks gets pulled out, whether it's disclosure, whether it's the value of the coin going down, whatever it might be, or a regulator stepping in. The whole thing collapses. I got to think that the Indian government and regulators have got to restore faith in the market and swoop in and may make an example of these guys.

I think they're all sort of hoping that we just hold on and it slowly corrects or just stop, we stop the hemorrhaging. But the numbers you pointed out are just so extraordinary that I think at some point the government goes, okay, the markets in the world, the global investment world wants a blood offering. And the blood offering is going to be Adani. But it comes down to how powerful they are, how politically connected they are. Treasury will release its monthly income statement for January. This usually doesn't get much attention, but with the debt ceiling looming as a political fight, that's probably about to change. We've also got earnings from Disney, Uber, Lyft, CVS, Activision, Blizzard, Robinhood, and your favorite, Scott, Chipotle. Do you have any predictions for us? So my prediction is this is the recession

that never materializes. We have on a lot of levels, a pretty strong economy right now. It appears as if the markets have new mojo right now. So I hate to feel this way. I never liked to be a bull, but it just, I would say that my sentiment right now is more bullish and it's been in a long time. And I think you're going to see these tech stocks continue to rip because I think people are going to go between the threat of AI reducing the wage leverage that employees have between the number of people they're going to lay off and between an economy that still continues to do pretty well. By the end of this year, you're going to see record earnings across the tech sector. So,

I'm very bullish on the growth part of our economy right now. That's all for this episode. Our producers are Claire Miller and Jason Staver. Special thanks to Catherine Dillon, Ed Elson, Mia Silverio, and the Property Media team. 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 markets episode every Monday. That's right, Office Hours on Wednesday and Markets on Monday.

Lifetime You help me In kind Reunion As the world turns And the dove flies And love, love, love, love AI could potentially figure out what color the client wanted

and figure out exactly which color that is. But then a person ultimately would have to still do the hair. Well, everyone's hair is different. So let's say they say let's pick the color. Is it going to work on that person's hair? Probably not. But AI would know. No, because then they'd have to test the strand.

Okay. Hello, I'm Esther Perel, psychotherapist and host of the podcast No. No, because then they'd have to test the strand. Okay. Hello, I'm Esther Perel, psychotherapist and host of the podcast, Where Should We Begin? Which delves into the multiple layers of relationships, mostly romantic. But in this special 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. Thanks for having me. Support for this podcast comes from Klaviyo. You know that feeling when your favorite brand really gets you. Deliver that feeling to your customers every time. Klaviyo turns your customer data into real-time connections across AI-powered email, SMS, and more, making every moment count. Over 100,000 brands trust Klaviyo's unified data and marketing platform to build smarter digital relationships with their

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