The Prof G Pod with Scott Galloway - Prof G Markets: Tesla’s Terrible Earnings, the FTC’s Noncompete Ban, and 24/7 Trading at the NYSE

Episode Date: April 29, 2024

Scott shares his thoughts on why Tesla’s stock surged, despite worse than expected first quarter earnings. He then reflects on how a ban on noncompete agreements will be beneficial for workers. Finally, Scott and Ed discuss the benefits and drawbacks of 24/7 trading at the New York Stock Exchange.  Order "The Algebra of Wealth," out now Subscribe to No Mercy / No Malice Follow the podcast across socials @profgpod: Instagram Threads X Reddit Learn more about your ad choices. Visit podcastchoices.com/adchoices

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NMLS 1617539. This week's number, $68 million. That's the value of coins Americans throw out every year. Why did Buddha start pulling coins out of his butt, Ed? Because change comes from within. A little dad joke. Thread the needle there pretty well. Today on Prop G Markets, we're discussing Tesla's earnings, the ban on non-compete agreements, and 24-hour trading at the New York Stock Exchange. Here with the news, pulling data out of his ass, is Prop G media analyst Ed Elson.

Ed, what is the good word? I'm very well, Scottott i enjoyed our photo shoot yesterday that was fun i bet you did you view little attention whore i liked how uncomfortable you were on camera that was kind of cute yeah no i was but i liked when they started telling you to wear my clothes because yours looked so bad that was my favorite part i'm pretty sure you told me to wear your clothes which i think everyone else wanted me to wear my clothes. Which, as the boss, that qualifies as them. It's collective we. Apparently, my clothes

aren't form-fitting and yours are, right? No, yeah, mine accent my human growth hormone at the age of 49. Get to the headlines, Ed. Let's start with our weekly review of market vitals. The S&P 500 was volatile, the dollar fell, Bitcoin dropped, and the yield on 10-year treasuries climbed.

Shifting to the headlines. Spotify reported a first quarter revenue increase of 20% from a year ago and a record high $180 million profit. These earnings come after a trying year for Spotify, where it laid off more than a quarter of its workforce and raised prices for the first time in a decade. Netflix memberships rose 16% in the first quarter from a year earlier, substantially higher than predicted. However, the streaming company announced it will stop reporting quarterly subscriber numbers and revenue per user starting next year. The stock plunged to 9% on that news. That's its worst performance in two years. Meta's revenue increased more than 27% from last year, beating analyst expectations.

But shares fell more than 15% after the company issued lighter-than-expected revenue guidance and also announced that it would increase spending on AI investment. FIFA and Apple are nearing an agreement over the TV rights to a new World Cup-style tournament for club teams. The deal could be valued at about $1 billion, and the month-long tournament will be hosted in the U.S. in 2025. And finally, President Biden signed a bill into law that gives TikTok up to 12 months to arrange a sale to an American company before it gets banned in the U.S. TikTok's CEO said it would challenge the law on grounds that it violates the First Amendment. Scott, your thoughts?

So in order, Spotify, first quarter revenue increase of 20%. It feels like the year of efficiency is that people are doing more with less, which obviously impacts the bottom line in a very positive way. But also, I wonder if a lot of this can be reverse engineered to a couple industry dynamics. The first is that the market is consolidating and there's fewer options. So people are, you know, and they're cracking down on passwords. So it has given the streamers, not only across video, but across music, pricing power. And it's no longer as much about growth as it is about profitability. But the tail that wags the dog here is Netflix. And Netflix has given everyone cloud cover to raise their prices because they have pretty aggressively raised their prices. And I wonder if this is, I mean, Spotify is really the kind of the, it's almost, I would imagine, is dominant in their medium as Netflix is in video. So good for them, I guess, is they're, I don't know if they're also cracking down on password sharing or what's going on, but I would imagine this is, they're going to have some of the same champagne and

cocaine of increased revenues and lower costs. Yeah, I think that's exactly right. And it's the same thing we saw with Meta a year ago. They increased the revenue, which is a combination of price increases, as you mentioned, as well as a jump in usership. Plus, they reduced costs. They're spending less on content.

And they've also brought headcount down around 20% from a year ago. So the result is, and the thing that Wall Street is so excited about, is just this dramatic margin expansion. Gross margin for the quarter was 27.6%. That's up around 250 basis points from a year ago. I think the question for me would be, how have they been able to increase monthly active users by 20% despite increasing prices? My best guess would just be that the average US consumer is doing better

than we think. I mean, we saw bank earnings the other week, which show that consumer spending is actually accelerating, hence the increase in their credit businesses. We've been seeing similar stories coming out of the Fed data. So I think maybe the story behind the story here is that consumers are generally doing fine, maybe better than fine. And the advantage that streaming audio has over streaming video is the churn, because pretty much every streaming video player has, I think, between like four and eight percent churn, which means every year you have to almost replace a third of your customer base, except for Netflix. Because of the absolute volume of content, there always seems to be something you're kind of looking forward to watch, whereas a lot of

people download the entire season at TED and then cancel Apple Television. Whereas with music, it's different, right? There's something you want to listen to every day because it has everything. So it seems that after kind of five or seven years of underperformance, Spotify is finally getting their day in the sun. And I'm actually a big fan of Spotify. It's hard to imagine one app could distill an entire medium down to an icon. So Spotify has done, I think, a pretty impressive job. Netflix memberships up 16%. I thought that was amazing. I mean, that's a huge number. The thing that was most interesting, though, was that there's a decision to stop reporting quarterly subscriber numbers and

revenue. It's like buying clothes that accentuates the positive. Like me, if I were a woman, Ed, I would wear a lot of miniskirts because I have fantastic legs if I were a woman. So I would be like hiking up the skirts. I'd be in a lot. Daddy would show up. Daddy has more legs than a bucket of chicken if daddy was a mommy. I'm sure that's a hate crime. But anyways, my point is you want to accentuate.

Brunello Cuccinelli, a size too small. That's it, right? Anyways, size too small. that hurts. That hurts. That's after you said that my clothes are too big. Well, yeah, you look, you literally look like an old man that takes no pride in your appearance. Size too small, that hurts my feelings. Okay, anyways, they're all trying to come up with the right words that will, that will make their company and numbers seem the strongest. So Alphabet doesn't break out by division its numbers because people would figure out that it's essentially search and the seven dwarves.

Almost everything loses money. YouTube makes really good money by most standards, but they have this juggernaut, the world's largest tollbooth ever constructed in the history of mankind called search. So they'd rather just report one kind of lump sum and not break it out. They also don't want to give too much information to their competitors. The only thing that's a little bit scary here is that if I tried to read into the tea leaves here, what they probably realize is that they're going to have pricing power in international growth, but that everyone in America has already signed up, and they may, in fact, have a few quarters

where they have flat or negative subscriber growth in the US. And that'll be the lead in every headline. And Netflix could report great revenue growth, great profitability growth, but if their largest market begins to plateau or even decline in terms of subscriber growth, that'll be the lead and investors will take it down. So I imagine they've said, our numbers are going to be fine. We'll have good growth, but that growth will be an international, which will likely have lower revenue because you don't have the same pricing power in markets where they don't have the same disposable income. This is me guessing, but the choice of words is surprisingly deliberate and strategic in earnings calls and the way they report data. Doesn't that just annoy you? I mean, one, because, you know, one of the central issues of these Hollywood strikes was transparency around data and viewership.

And what Netflix promised SAG-AFTRA and then delivered on for a second was, you know, we're going to be more transparent. We're going to start reporting these detailed statistics about subscriptions. And so the idea that they would now walk back that transparency to me is just a betrayal of what they agreed on. And then the other reason that I don't like this is just as an analyst, I want more data. I want a better, you know, more comprehensive, accurate understanding of the company. And this is a subscription business. I want to know how many subscribers they have. Netflix is saying, actually, we don't want you to see our business in full. We don't want you to have a comprehensive understanding, likely because they think, we don't think you'll like

what you see. But doesn't this just kind of annoy you as an analyst and as an investor? Well, there's a lot of things that annoy me. Like, the question is, should a company in a certain sector be required to have certain disclosure around certain topics? If you're a subscription business, you're described as a media company with a subscription component. Should they say you have to report average revenue per user? Should there be recording requirements just as they have a definition of EBITDA? The bottom line is companies have kind of been just muscling around analysts and the investor public for a while. And my friend Richard Kramer calls it,

most analysts, sycophants and stenographers, that the only analysts that get access to the company and the CEO are people who are willing to basically smear Vaseline over the lens and make them look good no matter what. I agree there should be some sort of, I don't know, standard metrics. Meta's revenue increased more than 27 from last year. That's incredible. A company of this size up this much. The share is falling 15%, similar to Netflix. I think a lot of that, the market will always look for excuses around why the stock got taken down. I think a lot of times it's just, it's kind of Occam's razor. I think it's just that the stocks got out a little bit over their skis. I mean, these stocks have had such incredible growth. I think the market was just looking to let a little air out. And also the AI investment thing, it basically kind of connotiencies that we really loved is coming to a close

and we're going back into this investment phase in AI. And while AI holds great promise, the one thing that's guaranteed, the reality is it just costs a shit ton of money. And so they took the stock down. Any thoughts? I would bet that a lot of investors were having flashbacks to a few years ago when the company decided that they were going to spend 10 billion a year on the metaverse. And as we've discussed, and as you predicted many years ago, that was a

terrible idea. That's been proven as measured by VR headset sales or lack thereof. The difference to me here is AI is not the metaverse. And unlike the metaverse, which had basically no relation to meta's underlying business, which is advertising, AI can do a lot for meta's ad business. It can optimize the algorithm. It can boost engagement.

It'll improve targeting, which will increase usage by advertisers. It'll also allow meta to increase prices on their ad sales. I mean, the upside on AI for Meta to me is huge and it's right there for the taking. So when I look at this, my initial reaction is that investors have probably unfairly punished Meta here. And I think it's because they're conflating spending on a terrible business, which is Metaverse, with spending on a great business, which is AI. Yeah, no, AI, AIO. Um, look, uh, I really hope this AI thing pays off

because the amount of money and hype around this shit is just... Or that it destroys humanity. I mean, our expectations are just so big one way or the other. Uh, yeah, yeah, we'll see. I think everyone's wondering... At some point, we're gonna have to get to the show me part of the show where just the staggering amount of money that's going into this thing,

they're going to have to show signals or start reporting hard metrics around how this starts to pay off. I think they'll get another sort of year of leeway, but at some point people might go, is this a lot of jazz hands? And because the investments they're making here are pretty extraordinary.

FIFA and Apple are nearing an agreement. Basically, FIFA and Apple want to recreate the World Cup. I'm super excited about this. I wonder how many games these young men can play. And they are young men. Because between the FA Cup, the Euros, the whatever you call them, the thing I'm going to in Germany, the domestic leagues, La Liga, the Prem, et cetera, how many tournaments can they support?

But when you have Apple and FIFA behind you, it's pretty valuable. And FIFA has, I mean, Apple has a reputation for doing things in a very high-quality way. FIFA has a reputation for being corrupt motherfuckers hiding in between the nether netherland of international law or the lack thereof. But Apple has deep pockets. They need something to really kind of ignite Apple TV+, so to speak. I think it's a great idea.

I'll go. What do you think? I think it's a really good idea. I mean, I find it strange that the headlines are reporting it as a new tournament there's it's it's a reframing of a tournament that already exists which is the club world cup and that's a competition that basically takes the best team from each continent and has them play and then we find out who the best team in the world is what's interesting is that it's not a very big deal among football fans compared

to say Champions League. And I think the reason for that is because it includes all these teams from outside of Europe and those teams just aren't any good. Like last year the final was between Man City and this no-name Brazilian team Fluminese. Now what's different about this tournament is that it's now going to take multiple teams from each continent, which crucially means it's going to take multiple teams from Europe. So now you're going to see Man City versus,

you know, Arsenal, Chelsea, Barcelona, Real Madrid. Those are the games that make all of the money. So I think this is a huge deal for Apple if it goes through, because it's possible that this new reframing of an existing tournament could become the most culturally relevant competition in all of football besides the international world cup so i think if this works it would be hugely profitable i was also wondering just as a brand

guy if it represented a seeding or a transfer of brand equity and passion from national brands to club brands in other words do you have more people more passionate about Liverpool, Man City, and Chelsea than you do about Team England? Yeah, I think that's a great point. And I'll bet there's a lot more money in it. Plus, they'll be doing it every year. I mean, the World Cup's only every four years, same with the Euros. Champions League generates more than $2 billion per year. If this is the ultimate tournament, I don't know, maybe it'll be generating double. This deal's worth a billion. Also, just as I think about it, the cost to put it on is probably less because

it can't be inexpensive, both from a capital and a human capital standpoint, to pull, you know, Bukaya Saka from Arsenal and have him train with the team England and get to know the players, new uniforms, new coach, like a new kind of operating dynamic as opposed to, all right, Arsenal, just head to Atlanta for the game. So this to me feels like a winner, Ed. Yeah.

TikTok? Hello, ladies. Look, you nailed it. I sat on Bill Maher two years ago. I like to name drop. Did I tell you I'm going on Bill Maher tomorrow? By the time this ends, you'll have already been on it. I sat on Bill Maher two years ago. I like to name drop. Did I tell you I'm going on Bill Maher tomorrow? By the time this ends, you'll have already been on it. That's right.

Get this. Get this. Back to me. I'm going on with Don Lemon and, like, hold on, RFK Jr. RFK. What should I ask RFK? We're going to be in the overtime panel discussion together. What would you say to RFK Jr. on the overtime panel on Bill Maher?

What's your workout routine? He's in good shape. He's 70 years old and he's in really good shape. Yeah. Yeah. No, I'm going to ask him that. You and RFK. Yeah, me and RFK Jr. Do you have a plan for what you're going to ask him? I guess I would ask him, is your radical narcissism and reckless views on vaccines, A, going to accidentally elect a fascist and create tremendous unwarranted death, disease, and disability among children? There's that.

That's probably where I would kick it off. Shit, I don't know. And then Don Lemon, me and D. Lemon, the very handsome Don Lemon. Anyways, I'm excited about that oh anyway I'm sorry TikTok TikTok

like I'm thrilled about this I think people get it wrong I think that this they're not going to lose their TikTok I think this is smart

I think we're going to look back and across a bunch of things we regret about Big Tech one of them will be

letting the ultimate propaganda tool in to create a frame through which our youth views America and the rest of the world. I think it's stupid. I think Americans are easier to fool than convince they've been fooled. And I think that's what's going on here. We do need systemic wide privacy legislation, but there's no reason why we can't walk and shoot them at the same time. And the thing that I think the media and people miss is that it's framed as a ban and it's all or nothing.

And I just don't think that's accurate. I think we're probably going to see an actual divestment once they're forced to divest. They got 12 months to negotiate with the White House to figure out some sort of accommodation and figure out is there a way we could make you comfortable and continue to operate here. Saturday was literally one of the best days. This is how old I'm getting. I couldn't break away from C-SPAN. And I started calling people saying, this bill might go through. And I'm like, what the fuck are you calling me for?

But in one fell swoop, we passed a bill for aid to Ukraine, aid to Israel, and forced divestment within a year of TikTok. And I was just, I thought all three of those things are really important. I think Speaker Johnson deserves credit. So, but yeah, I've wanted this for a couple of years, and I thought it was going to happen. I'm glad it is. But again, I don't think anyone's going to lose their TikTok. We'll be right back after the break with a look at Tesla's earnings. We're back with ProfitG Markets. Tesla reported worse than expected earnings for the first quarter, with revenue falling for the first time since 2020 and profits dropping more than 50% year over year. The company

also burned through $2.5 billion. That's its largest free cash outflow ever. However, Elon Musk also vowed to launch their more affordable vehicles as soon as 2025, and the stock rose 14%. Scott, this was, by almost every metric, a pretty awful quarter. Why do you think the stock rose? I don't know. Maybe it was the opposite. To date, it's been the worst performing stock in the S&P, so maybe there's some people who felt it was oversold and came in. Musk has, you know, obviously a reputation as someone who just has an incredible insight into how to leverage technology or new technologies. So right now the company is playing a serious game of jazz hands. They're like, let's talk about our energy revenues and the margins there.

Let's talk about AI. Let's talk about autonomous robo-taxis. Let's do anything but talk about our core business, which is an automobile business, which is like any other automobile business getting increasingly shitty and hard to maintain profits in. And you're seeing that at Tesla. And the markets seem to really like the conversation around going all in on AI. I think it's sort of a couple of things that people felt maybe the stock was oversold, although I don't think that's the truth at all. I think it's when you look at it relative to other big tech companies, it trades at a higher multiple than big tech. And if you look at it relative to auto companies, it trades in an insane multiple. So they want to pretend they're anything but an automobile company.

And it seems like he emphasized in the call that he wants to really highlight or pimp out the fact that they're buying so many of these GPUs and says they're going to buy more. It's like, don't look at the automobile side of the company. We're AI, right? So he's also talking about a new, more affordable EV. I just think that's crazy. I don't think he's going to win a war in affordability against China with BYD. I mean, BYD's trading an EV to EBITDA of, get this, of six and Tesla trades at

35. I mean, Google, Meta and Microsoft are 2021, 26. So Tesla, whose business appears to be in structural decline, trades at a higher multiple than these amazing companies with IP and- Yeah, the real AI companies, yeah. Meta's growing at 27% and trades at 21%. So I just think, I think the market on this day, at least, seemed to think that A, it was either oversold or that Musk plus a massive investment in AI is chocolate and peanut butter. Yeah.

Elon said, I mean, his quote was, if you value Tesla just as an auto company, you fundamentally have the wrong framework. And he also said, we should be thought of as an AI or robotics company. The auto business, as we've said, did terribly. Deliveries down 8%. Also seen price cuts, so revenues down 13%. Gross margins down from 19% to 16%. The list goes on, and it makes up 80% of the total business. Do you buy this Tesla is more than a car company argument? No, and I want to identify as a giraffe. I mean, it's an amazing automobile company. It deserves to trade at the upper range of what automobile companies trade up, but this is what they do. They wrap steel around a battery and four tires, and they do an amazing job of it. I think it's an amazing car, but he wants you to believe it's anything but what it is. He actually, his track record in AI is pretty, I don't know,

pretty disastrous. He was involved, to his credit, he's a visionary on AI, got involved very early in open AI, but he doesn't know how to manage it or turn it. I mean, arguably the stupidest decision in business over the last 10 years from a wealth standpoint, not that he needs it, was Elon Musk leaving in a huff from open AI. And I get the feeling he goes home every day and twists the legs off his Barbie doll or kicks the dog and thinks, fuck, I could have owned 20 or 30% of OpenAI

if I just wasn't such an asshole. He's playing catch up in AI and there's just no doubt about it. So I don't, again, look over here. Don't look at my core business because I want to pretend I'm something I'm not. We've also been hearing a lot about robo-taxis. Earlier this month, Elon tweeted that the robo-taxi would be unveiled in August. August 8th was his date. And then he also said on the earnings call that this robo-taxi fleet could be, quote, the biggest asset value appreciation in history. But the report gave us no details on the rollout. It gave us no details on any regulatory approval. It didn't

really give us details on anything. So as it stands, if you were an investor, would you be taking the robo taxi business seriously at all? I think he's lost a ton of credibility. He said in 2017, I think, within two years, there'd be a million autonomous Teslas on the road. 2019 kind of came and went, let me think, five years ago, and I can prove that. I mean, I think you wearing Bruno Cuncinelli will result in the largest asset appreciation in history.

That has about as much credibility. Yeah, okay. Big words. Big words. How and why? The FTC has banned non-compete agreements, which prevent employees from working for or founding their own competing companies after they leave their job. According to the FTC, one in five American workers are subject to non-compete agreements.

So once the ruling goes into effect, 30 million people will be free to change their jobs at will. The only exception will be made for existing non-competes with senior executives. But all told, it's estimated this will increase average annual earnings by more than $500. Scott, you've been advocating for this for a while. You've actually wrote a No Mercy, No Malice blog post about it. Why do you think this is a good idea? It's simple. The more people bidding on your labor, the more potential people who want to rent your labor, the higher the rents you can charge. And non-competes do nothing but reduce the number of bidders on your labor. This is a straightforward transfer of wealth from employees who tend to be younger to shareholders who tend to be older. Yet again, another transfer of wealth from young and middle-class earners to wealthy senior executives who have reason. I mean, if L2 is purchased for $160 million and they don't want

me to compete with them for whatever, six or 12 months, and they can define what the competition is, I don't even think you can justify that, but at least I can empathize with it. But telling a hairdresser that they can't walk across, they're not competing in hairdressers now and in chefs. What's next? Not competes for babysitters? Again, this is just so wrong. And let me just say, Lena Kahn could potentially replace Marguerite Vestager as my new brain crush. I like that she's doing this. I think it's great. And what do we have in America? Do we have a dearth of corporate profits? No, they're at all-time highs. What we have is as a percentage of the economy, wages continue to not be, not outpace inflation. They did the last quarter. But look, for the last 30 or 40 years,

the tension between capital and labor, capital has beaten the shit out of labor, which means we need more laws that transfer back some of that capital from shareholders to employees. And this is one of those things. I love this. What do you think? Well, I just think the stat that really supports your point about hairstylists and cashiers and security guards, et cetera, is that one third of minimum wage jobs are subject to non-compete agreements, a third, which is kind of insane. But, you know, the US Chamber of Commerce and all these other big business lobbying groups are suing the FTC to block this. They believe it is, quote, unnecessary and unlawful. And their big complaint is that this is going to compromise their ability

to protect their IP. Could you take us through what that means exactly, why they're concerned about that, and why banning non-competes might affect intellectual property and the protection of that IP? Yeah, you're the AI team, the like deep ops AI team at Snowflake, and there's 18 of you and you all walk across the street to a competitor. That's the fear that those people take that IP. Now, there are laws that are distinct from non-competes that say if you use our IP and people have been fired, arrested, and some even gone to jail, if you take a disk with the code, That's illegal. I don't think you can basically make employees indentured servants. I think they should go where they should go. And your job is

to create compensation and IP that people decide to stay with you out of personal decision. You could argue that at a senior level, because trade secrets are so important, that you might have garden leave policies, or you might have some sort of non-compete for a certain amount of time, not very long. But when you have non-competes at every other level, it's just simply put. I mean, the data that struck me, it's estimated that this law or this change would increase average annual earnings by more than 500 bucks. How the fuck can you be against that? Are people saying, oh, labor's making too much money, the average earner is making too much money and corporations aren't doing well enough? I mean, come on. This feels like a no-brainer. I'm really happy about this. I trust it'll hold up in the

courts. I think it's got, I just, it just is so shocking and exciting to me that America keeps getting it right lately. Yeah. And just some statistics about what a good thing it is. I mean, it's in 2008, Oregon decided to ban non-competes for hourly workers and that increased average wages by 3%. Hawaii made a similar move back in 2012 for tech workers, and that increased wages 4%. And then I think the biggest piece of evidence for me that this is a good idea is that California has banned non-competes basically forever. I mean, since the 19th century, they've banned them. And despite that, it remains the largest state economy in the US. It contributes $4 trillion

in GDP every year. It's home to the largest companies in the world. And in fact, a lot of people and scholars believe that it's because of the non-compete ban that Silicon Valley ever happened in the first place, because it promoted competition between engineers, between companies, which led to this highly productive and highly competitive business environment. I guess the only thing I would ask you is, you know, is there anything we're missing? Is there any downside that we're not factoring in here? The catastrophizing will be that there will be chaos and that you'll have full teams right before a product's about to launch,

go to the highest bidder and take all of their human capital and their IP over to the competitor next door, and it'll create a lack of innovation and chaos across companies. That just is not borne out. As a matter of fact, the FTC estimates that an additional 8,500 new businesses will be created each year. And we have the case study, and you just brought it up, but it bears repeating. Just AI alone in the Bay Area has recreated by value the entire global automobile industry in just several weeks or increased the market cap creation of these companies. It rivals the entire market cap of the entire auto industry. And guess what? They've been operating with this banning of non-competes. So are the other 49 states for some reason more susceptible? I mean, it's just, this is an easy one. This is an easy

one. Yeah. Does it make it a little bit harder for companies? Are they going to have to pay employees more? Might it hit their bottom line earnings when they can basically sequester an individual from the rest of the market in terms of renting out his or her labor? Yeah, probably. And guess what? That's a good idea. We need to give, restore more leverage to workers from employers. We'll be right back after the break with a look at 24-hour trading. we're back with prof G markets since the 1870s the New York Stock Exchange has kept regular

trading hours allowing stocks to trade from morning to afternoon. Schedules have shifted through the years. For example, the exchange was open for business on Saturdays until 1951. But today, trading hours are Monday through Friday, 9.30 to 4. However, that might change. The New York Stock Exchange is now considering 24-hour trading, seven days a week. This move could legitimize round-the-clock trading, a trend that's grown alongside cryptocurrencies and platforms like Robinhood.

Scott, what do you make of this news? Well, you could argue this is an attempt to keep up in terms of innovation. I would argue it's probably the exchange that's wanting more money because it's hard to imagine there won't be more trading if it's 24 by 7 versus what is just, what, 35 hours a week right now. And what this potentially does is it opens you a stock market to more Asian investors. The thing I don't like about this is that I like the idea of having a cooling off period. And that if something happens on a Friday, the stock goes crazy. If it goes too crazy, they have circuit breakers, they shut it down until people can kind of take a breath. But what we also have is something happens on a Friday, you have the weekend to take a beat and

wrap your head around it. And one of the reasons we had this run on Silicon Valley Bank is that there was a lack of friction around transferring your deposits because everyone can now transfer deposits off their phone. And I just wonder if it creates more volatility when at three in the morning, there's some sort of bad news or a strike in Iran and people can go on and start selling like crazy. And then people feel like they can't go to sleep or they need alerts on their phone. And the other thing I don't like about this is I do not think it is good for people's mental health. I have paired my holdings and publicly traded stocks to probably 15 or 20% of my net worth because I just hate checking my phone. And what's crazy is

because I have a scorecard, the number I get every day from my stocks has a disproportionate impact on my psyche, you know, because the other stuff doesn't have a number on it. So I don't, I don't know. It just feels like the financialization of everything. I think it was coming. It's hard to argue against it, but I don't, personally, I don't like it.

Well, I wanted to get your thoughts on sort of the cultural implications of a move like this. I mean, I know my friends who work on Wall Street and sales and trading, and even guys who work in hedge funds, the only thing that protects their weekend really is the fact that they can only make their trades

from 9.30 to 4 p.m. Monday through Friday, and then they get to take the weekend off. So I'm wondering what you believe this might do to the culture of Wall Street and how it could impact the lifestyle of basically any financial services worker who might be listening to the podcast right now. worked for a hedge fund and he would have to wake up really early to like look at the European markets. You know, it's just like the markets never rest means that a lot of these people are never going to get the rest themselves. I also wonder if it's going to expedite the incorporation of AI that will kind of serve as bots going out there and monitoring everything and looking for, you know, keeping tabs around, okay, if there's this level of volatility, you need to wake me up or I don't know. It just feels like a lot of this is going to, I wonder how much of this additional human

coverage that's needed is going to be accomplished with bots. I think one of the things that prompted this was crypto, which as you know, can be traded 24 by 7. But also there's this startup that's backed by Steve Cohen of 0.72. And it's this startup called 24Exchange, and they recently applied for SEC approval to launch the very first 24-7 stock exchange. So I think this is also kind of a reactionary move maybe to fend off competition from crypto and also from this new proposed stock exchange.

But just a thought experiment, if it were up to the market and the 24 by 7 exchange and the current 9.30 to 4 p.m. exchange both were at a similar position in terms of liquidity, who do you think would win? What do you think the market would decide it prefers? Because there's the mental health benefits of the current framework, but then there's also the possibility of just increased liquidity and additional trading volume fees or a concern for the mental well-being of Americans? Let me think. Let me think. I ponder. I ponder. We're going to 24 by 7, and it's not going to go back. And traders will like it. If traders are consumers, it's like probably having... I mean, there was probably some benefit to having linear TV where if you didn't watch Channel 7 at 8 p.m. on Friday nights in 1972, you missed the Brady Bunch.

That might have been better for us than having it accessible all the time. This is the equivalent of streaming video versus linear, right? It says you can have on-demand trading at any time and you can binge trade. I mean, I just think like what happens when traders start getting ridiculously fucking high and they can trade at 2 a.m. because who knows, they might do better. They might outperform the market. Some of the trades I've made have definitely been feel like they're inspired by meth. We will look back on the 930 to 4 trading day with nostalgia. We'll look back on it and think, oh, you know, Florence Henderson.

We're just going to feel good about it. And I don't know why, like how we ever put up with it. Let's take a look at the week ahead. We'll see earnings from Apple and Amazon. We'll also hear the Fed's next interest rate decision, as well as the unemployment data for April. Do you have any predictions for us? Well, my prediction is, as I started thinking about RFK Jr., because, as I said, I'm going to be with him on Bill Maher. And my prediction is the following.

We talk about so many things that impact the presidential race, whether it's immigration or bodily autonomy or the Middle East. What we're not talking about is I think the thing that's going to decide who wins president is RFK Jr. get is the reason why Bill Clinton won, an unknown governor from Arkansas, was because of Ross Perot. Ross Perot, I think, got about, I don't know, 15 or 18 points, and two-thirds of it, or 60% of it, came from Bush, which was enough to put Clinton over the top. Ralph Nader handed the presidency to George Bush over Al Gore. Everyone that voted for Nader would have gone to Gore, the majority of them. And RFK Jr. now has a big enough base. And if he stays in the race, and I think he will, because I think he's a total narcissist, he'll stay in the race. And with those sorts of numbers, it really just comes down to who he pulls from. And so far, it looks like he's pulling more from Trump than I don't know if I told you this I actually talked to a friend of mine and we actually got not fairly down far down the road but we got

the money together and I said let's offer the RFK campaign a million bucks if they pick Aaron Rogers as the VP or at least say a million dollars. Don't even say why. We love Aaron Rodgers and we'll give you a million bucks in the campaign because he needs money to get on all these ballots. We need a million bucks. We'll give you a million bucks if you put Aaron Rodgers. Because if I put Aaron Rodgers on the campaign, he's this big bro-y stupid conspiracy guy who believes in vaccines. We're human guinea pigs. I think that would help pull from Trump. And I thought, this is how we get Biden in office. Let's just give a bunch of money to RFK

if he picks Aaron Rodgers. Instead, he picked a- Sergei's wife, ex-wife. Yeah, he picked Sergei's ex-wife who believes that you can solve infertility by getting more sunshine. Well, you know why he picked her. Well, 15 million reasons why.

Isn't she going to give him money? She's got the money. She's got the money, yeah. Exactly. It wasn't for her understanding of geopolitical issues and her deep understanding of the Sixth Fleet and the Indian Ocean. Jeez, how fucking stupid is that? I mean, really?

Really? Maybe that's what you should ask him. Yeah, what the fuck are you thinking? Tell us about your running mate. Yeah. Anyways. But what happened to the Aaron Rogers fund? We circled the money.

It was pretty easy. And we thought, okay, what's the best outreach to the campaign? And then he announced that he was going. I thought when the rumor was he was going to pick this ex-wife of Sergey, who sounds like a modestly talented lawyer. I thought, I didn't think that was real. I thought, he's crazy, but he's not stupid. It ends up he's both. Anyways, it saved me a million bucks.

But look, on November the 5th or whenever the day is after the election, what we're going to realize is that RFK Jr., or specifically who voted for him, determined who won president. This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producers are Jennifer Sanchez and Alison Weiss. Our executive producers are Jason Stavis and Catherine Dillon. Mia Silverio is our research lead, and Drew Burrows is our technical director. Thank you for listening to Prof G 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. You held me in kind reunion As the world turns and the dark flies In love I'm alive And the dove flies in love.

That's right. You didn't ask me about my boot launch. You didn't mention that we were number one on Amazon. Number one on Amazon. You want to brag about it for a bit? Well, I just did, Ed. Number one. I had to brag about it.

I had to bring it up. Numero uno in Amazon. That's right. That's right. That's right. To resist is futile. Give in to the doubt. How are you feeling? You feeling good about it or? You know, once I attained massive wealth, I became depressed. It's much harder than you think, Ed. I hate those people when they say that. I literally hate those people. I want to kill those people. I'm like, okay, come here.

Like, just have a truck run over you and see if that, will that help? Will that help ease your pain from what it's like to be rich? I've never understood that shit. All those articles about those guys getting therapy after they got rich. No, it feels fucking amazing. It feels really nice. I'm really grateful. And by the way, just the same offer to everyone out there. If you buy The Algebra of Wealth, a simple strategy or a simple formula

for achieving economic security, and you post a receipt on any social at all, I will donate $50 to Charity Water, who is bringing potable water to sub-Saharan Africa, a wonderful charity. So it gives me a chance to pretend I care about the world while getting to number one in the New York Times bestseller list. He cares. He says he doesn't, but he cares. Also, make sure you tag him at ProfGalloway. Thanks for saying that.

The $50 hoe, Prof G.