Takeaways from the Second Debate + Does the US Need a Sovereign Wealth Fund?

Scott and Ed open the show by discussing recent inflation data, Oracle’s earnings, Wall Street’s decision to curb working hours for young bankers, and Open AI’s newest model. Then Scott shares his reactions to the President debate and breaks down business learnings from Kamala Harris’ performance. Ed predicts which stocks he thinks will benefit most from the Presidential race. Finally, Scott and Ed discuss a proposed sovereign wealth fund and explain why it seems unnecessary for the U. S. to have one. Order "The Algebra of Wealth," out now Subscribe to No Mercy / No Malice Follow the podcast across socials @profgpod: Instagram Threads X Reddit Follow Scott on Instagram Follow Ed on Instagram and X Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Speaker 00

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• 1:29Scott Galloway?

  Today's number, 790. That's how many islands are in Scotland, 130 of which are inhabited. Ed, in Scotland, if you buy a three-year-old whiskey, you can call it Scotch. Any younger than that? It's just bad parenting, Ed.

• 1:54Scott Galloway?

  Ed, I'm in Scotland. I'm in Scotland.

• 1:58Ed Elson?

  I couldn't tell from the haunted house behind you. You've got to tell everyone where exactly you are in Scotland and why you're there and what the occasion is.

• 2:06Scott Galloway?

  I'll go in reverse order. I'm turning 50. And the naked, I look 49 and 7/8. I am here and 100 of my closest friends are showing up. By the way, you came in at 102, so you just missed the list.

• 2:20Ed Elson?

  Just missed it, just missed it.

• 2:22Scott Galloway?

  You just missed the list. I'm in, I'm outside of Aberdeen. At a place called The Five Arms and no joke, I am, I've got, we've taken over a hotel. We've been planning this for two years and all my, basically my entire life is flying in over the course of the next 24 hours. This isn't airing till Monday, so it's almost sort of, I don't worry that I'm hexing it. Anyways, I'm here celebrating a nice moment in life, Ed. I never thought I'd get here. I never thought I'd be here at this point, so I'm very, very happy to be here. That's probably the alcohol speaking, but I'm actually, I am actually very happy to be here.

• 3:00Ed Elson?

  Any anxiety?

• 3:01Scott Galloway?

  It's funny you even ask that.

• 3:02Ed Elson?

  Better be fun, better be fun.

• 3:04Scott Galloway?

  I've been thinking a lot about that. I do have anxiety. I'm already sort of just hoping it goes really well and that everyone else has a nice time. It's really weird. When I was your age, Ed, I didn't have enough anxiety. I almost got kicked out of UCLA three times. I was on academic probation and then if you get less than a 2.0 the next semester, a quarter, you go subject to dismissal. I was subject to dismissal, I was on academic probation, I think four or five times. I was subject to dismissal two or three times and I just wasn't worried about it. I just didn't care. I'm like, God, I'll just take an easy econ class and get a B and everything will be fine. And I should have been more worried about my life back then. From the age of 30 to 40, I think I had exactly the right amount of anxiety and anxiety is a key, is a key attribute or trait for survival.

• 3:49Scott Galloway?

  You're supposed to be anxious about shit because there are things that can kill you. And then from about the age of 40, 45 on, I've been too anxious. I don't, and unfortunately I get anxious the day after I drink alcohol, so I'm pretty much anxious kind of five, six days a week. But yeah, now I worry about fucking everything, Ed. I worry about my kids, I worry about business. I don't worry that much about you guys.

• 4:11Ed Elson?

  I couldn't tell.

• 4:11Scott Galloway?

  No, I do. Do you feel like you're an anxious person?

• 4:15Ed Elson?

  Well, I think, I think hosting is a very anxious thing because you're inviting a bunch of people, they're taking time out of their day, in this case their entire weekend, to come and celebrate you. So you kind of, there's all this pressure to. Get everyone to have a good time. I'm a terrible host because I get anxious. I'm always checking in on people, making sure they're having a good time. And then I think I become annoying. I think the best hosts are the one who can do all the work, get anxious beforehand, and then just totally let go, have a good time, let people do what they want to do, don't be too controlling. Those are the best hosts, and I am not one of them.

• 4:48Scott Galloway?

  Jesus Christ, don't be so fucking mature. Like, when did this happen to you? Seriously. No, it's good advice. I'm Muslim. My answer for that is, is good beer and edibles.

• 4:58Ed Elson?

  Yeah, exactly. That's a good idea.

• 5:00Scott Galloway?

  I want to get through. I want to get everybody here. I want Saturday night. I want the speeches to go well. I want everyone to feel welcome and loved. And then I'm just gonna let loose. So I'm not gonna drink, because I get very emotional when I drink, and I'll just be walking around sobbing all the time, which kind of brings the whole vibe down. Man, I'm real happy to be here. Anyways, enough of that shit. Get to the news. Get to the news, Ed. What's going on?

• 5:22Ed Elson?

  Let's start with our weekly review of market vitals.

• 5:31Ed Elson?

  The S and P 500 rose, the dollar was flat, Bitcoin climbed, and the yield on 10-year Treasuries hit a 52-week low. Shifting to the headlines. The Consumer Price Index increased just 2.5% from a year earlier and eased slightly from July. That is its lowest level in three years. And in other economic news, median household income rose 4% in 2023 to more than $80,000. That's the first increase since 2019. Oracle's revenue came in higher than expected, rising 7% year-over-year. Cloud services became the company's largest business, with revenue up 21% from a year earlier, and shares rose 15% to a record high. Wall Street is limiting the amount of hours that young bankers can work. JPMorgan

• 6:16Ed Elson?

  announced it will cap hours for junior investment bankers at 80 hours a week. Bank of America already had a cap in place, but it has a new timekeeping tool that will more closely track the hours its junior bankers work. And finally, OpenAI is releasing a new AI model known internally as Strawberry, which is trained to spend more time coming up with an answer before it responds to a prompt. The new model will be able to solve multi-step math and coding problems. Scott, your reactions, starting with the inflation and economic data.

• 6:47Scott Galloway?

  So inflation, the Consumer Price Index, just 2.5%, down from, I think, 2.8 or 2.9 last quarter. It's at its, almost at its target, 2%. And then household income rising 4%. I mean, basically, you have the Goldilocks economy. Now, the psychological problem that happens is, one, social media loves shitposting, and there's a certain gravitas and intellectual, I don't know, vibe you get when you're a pessimist. But, and people just love to shitpost our government. And also, people credit their own grit and character for their household income increasing. But when diapers go up in price, or oil goes up, or gas goes up in price, they blame whoever's in office. But this is about as strong as economy as you

• 7:32Scott Galloway?

  could point to anywhere in the world. The problem is, I would argue, is that we don't distribute it equally. Just as that technology philosopher said, was it William Gibson or someone else, said that the future is here, just not evenly distributed. Prosperity is here. An unbelievable economy is here. It's just not evenly distributed. And I think of, you know, I think of what, I've been, we're writing a post in the Mercantile Malice about minimum wage. And I believe that the one thing you could do most seamlessly to reduce diabetes, high blood pressure, depression, suicide, decrease divorce rates, would be to raise minimum wage to 25 bucks an hour, instead of building a gigantic apparatus,

• 8:17Scott Galloway?

  which all these government programs are, which tend to be somewhat inefficient, instead of a thick layer of unions, which are trying to protect workers whose intentions are noble but are very inefficient and sometimes corrupt, just put more money in the pockets of Americans with a minimum wage of 25 bucks during a period where employment is this strong. Do you know what percentage of American households have, make less than $75,000 a year?

• 8:39Ed Elson?

  I'm gonna guess.

• 8:42Ed Elson?

  Twenty percent.

• 8:45Scott Galloway?

  Get this, fifty percent. Half of American households make less than $75,000 a year. What would raising minimum wage to 25 bucks an hour do for them? Anyways, bit of a tangent, but I'm very happy about CPI only being at dropping to two and a half percent. What are your thoughts?

• 9:00Ed Elson?

  Yeah, just on that point. So, I mean, one thing we should point out is that that household income number is inflation adjusted. So it is somewhat meaningful. There is one statistic that was in that same report that came from the Census Bureau. And that was that the poverty rate in America fell. But the number is quite staggering. It fell from 11 and a half percent to 11.1 percent. So that means that there are 37 million people in America who are still living in poverty.

• 9:39Ed Elson?

  And, you know, to your point, I think we spend a lot of time analyzing a lot of technicalities in the markets. And we should be doing that. You know, we think about the yield curve and interest rates and P E ratios, et cetera, et cetera. And there's value to that. But I think there is also value in keeping the big picture front of mind. And the big picture is that one in 10 Americans cannot afford basic necessities to live. So I would hope that it also reminds us that while, yes, we are doing pretty well on a relative basis. When we look at other countries, if you look at just America from an absolute perspective, we could certainly be doing a lot better in this country.

• 10:20Scott Galloway?

  Oh, I hundred percent agree. There's, I mean, more stats. One in five children in America live in a household that's food insecure. Whatever all the blessings are of the fruits of our riches, we do, in my view, a pretty shit poor job of distributing and allocating resources despite the fact that we just have so much of it. Now let's talk about Oracle's earnings.

• 10:44Scott Galloway?

  You kind of, you kind of own this. Talk about Oracle.

• 10:47Ed Elson?

  Well, one segue that we could use here is that, you know, you're talking about wealth inequality, income inequality. Larry Ellison, who is the founder of Oracle, added $14 billion to his net worth in one day after these earnings. He is now the fifth richest person in the world. He is ahead of Bill Gates. His net worth is, wait for it, $168 billion. It's just staggering. We can get into a conversation about that, but I think we've already covered the inequality part. Let's talk about the Oracle earnings themselves. Earlier this year, I said I was bullish on Oracle. My thesis here was that Oracle is

• 11:29Ed Elson?

  kind of the fourth Musketeer when it comes to cloud computing. The options are basically Amazon, Google, Microsoft, or Oracle. And my view was that Oracle is a really attractive company for AI companies, especially AI startups, because Oracle is the only one that isn't actively developing its own LLM. So if you're an AI company and you want to compete with the likes of Microsoft, who's developing Copilot and working with OpenAI and ChatGPT, or Google with Gemini, you probably don't want to be also paying them to keep your lights on. You'd probably rather go with a compute provider who you ultimately won't be competing with. In this case, that would be Oracle. And I think we are seeing this play out. If we

• 12:11Ed Elson?

  look at the actual earnings here, revenue growth was up 7%, which is fine, not great. Cloud revenue was up 21%, which is very strong. But the most important number here was the remaining performance obligations, which is basically code for booked revenue that is going to come in the next 12 months. That number was up 52%. So they are clearly partnering with a lot more companies who want to get their computing power. Morgan Stanley is now estimating that AI revenue will increase from 15% of Oracle's total cloud revenue to more than half by 2027. So that's why Oracle's at an all time high. The stock's up 50% year to date. I think it's essentially emerging as one of the AI juggernauts.

• 12:55Scott Galloway?

  Well, you called it. You, you sort of said this was the little, you know, the big AI company that no one's talking about. And I would say probably Larry Ellison and maybe Reed Hastings are the least talked about CEOs who have been the biggest players in the world of tech. By the way, if you ever want to go to a great hotel in Palm Springs, which I know you're thinking about Larry Ellison, this is what people worth 160 billion do, or whatever he is worth, he has a winter home out there that's spectacular. He built this world-class golf course and spa, and obviously it kind of sits fallow, so he turned it into a hotel.

• 13:27Ed Elson?

  He also owns an island in Hawaii. I don't know if you've seen this, but he owns the island of Lanai. I think it's the largest private island in the world, and I think he's built the Four Seasons on there, too.

• 13:37Scott Galloway?

  I've stayed on Lanai. When I'm back in my previous life, I used to go there with my ex-wife, and we'd stay at the Logical Elliott, and we'd go to Lanai. Hold me, Ed, hold me. Anyways, stay at the Sensei. Look, they're doing, they're doing an amazing job. The stock's trading at a forward P/E ratio of 25. Microsoft and Amazon trade at 32, which kind of connotes that there might be some additional juice here in terms of the stock. Oracle and Nike are the two stocks I have in my NYU savings or 401K, or whatever it is. When I started there, they had some matching programs, so I listened to the future, Scott, and I started maxing it out. And I went into Nike, which is literally shit the bed, and Oracle, which is good to hear is doing really well. Should we talk about limiting

• 14:22Scott Galloway?

  the number of hours young bankers work?

• 14:25Ed Elson?

  Please, I am so excited to get your take on this. What do you think of it?

• 14:29Scott Galloway?

  I'm of two minds here. So, so I was part of, my first job out of college was at Morgan Stanley, and I have never worked with a larger concentration of assholes. These were just like, not nice people. And it was, it defined the term abused children syndrome. And that was when I was young and in finance, they all fucking hated their jobs. I mean, sorry, there's like one or two people who are big dealmakers and love it, but for the most part, they were really smart people who were overachievers, who got jobs in investment banks. And by the time they were 30, they were making, back then, you know, $300,000 or $500,000, which is a lot of money, and they just couldn't leave. Most jobs are usually one of two things.

• 15:12Scott Galloway?

  They're either very interesting, but a lot of pressure, a lot of stress, or they're incredibly boring, right? But easy, not a lot of stress. And investment banking was this unique combination of a job that was incredibly mind-numbingly boring with a massive amount of pressure placed on it. I remember being at the printer, this is, I'm dating myself, and we would have to, this is the person printing the S1. And there was this company called Bowen and all these other things and they would take me to football games or out to dinners and they always had like hot people who would want to take you to a baseball game such that you would spend $120,000 printing the prospectus of the IPO Morgan Stanley was taking out at their printer.

• 15:54Scott Galloway?

  And my job was to go to the printer and spend all night proofing the prospectus. First, I proof it forward, then backwards because literally it was cause for you to be terminated, i.e. fired, if base rental payments on page 68 of the prospectus had an apostrophe and base rental payments on page 136 did not. And I worked, I worked probably, I don't know, 60 to 80 hours a week and some weeks 100 hours. I remember there were some times where I would go in on like a Thursday and basically would just go, you know, kind of 60 hours straight. And you weren't allowed to leave as an analyst, you know, the most junior person, you had

• 16:36Scott Galloway?

  to be there before anybody else and you couldn't leave until everyone senior to you left, even if you didn't have work to do. I had a chair thrown at me. What'd you do wrong? Do you remember? I think I remember we, it was the Orange County Transportation Authority were issuing bonds and we had no chance of getting the business, but we had to get it out and we didn't get it out in time. And so this VP, um, his name rhymes with Steven Dorkin, see above asshole, came into the office and threw a chair and or threw a chair at me, whatever, I probably deserved it. But like, that's the kind of shit you would just, if someone threw furniture at an employee in this day and age, they'd be fired. Now, having said that, this notion that somehow, i- if you genuinely believe Jamie Dimon

• 17:20Scott Galloway?

  or anybody else, that these people shouldn't be working that hard, then institute a culture where you compensate and reward the managers. Based on feedback from the junior employees that they're providing some semblance of balance. Cause the notion that you're somehow going to electronically track how many hours people are working is just bullshit. And also, I used to go in on a regular basis on a Tuesday morning and then leave on a Wednesday night. I would work 36 hours straight. Why? I immediately summed up, having gotten in at Morgan Stanley where I didn't deserve to get a job offer, but I did, that I wasn't as well skilled, well educated as the other people. Not because UCLA wasn't a fantastic education, but because UCLA was the kind of place, because it was a public school and it had classes with 400 people

• 18:05Scott Galloway?

  where you could hide and not work. And I was one of those people. So I showed up to Morgan Stanley woefully underskilled and I knew it. The other 87 analysts were just better than me. So I thought, okay, what are my advantages? And you always want to ask this as a young person, what are your advantages? My advantage was that I didn't have a girlfriend. I didn't have many friends at that point, living in LA. I was living at home with my mom. I didn't have any dogs, any hobbies. And I was also quite fit and very disciplined, where I could take a lot of pain. So I said, I know, I'm going to show these folks that I'm here to play. And at least once a week, I'm going to work the night through. And this was the kind of culture that rewarded that.

• 18:47Scott Galloway?

  So if you were really serious about having bankers or young bankers work less, it's pretty simple. Hire more fucking junior bankers. So there's more bandwidth and create a compensation system for their bosses that changes the culture such that it's like, no, we were going to make you a VP, but we're not because the word is everyone in your group is especially the junior people are working fucking 80 hours a week. And we don't reward that here. We punish it. I do believe that there are companies. That position themselves in the marketplace and people where they say, okay, this was the implicit deal at Morgan Stanley, it's still the implicit deal, I think at Goldman,

• 19:29Scott Galloway?

  maybe less so now, we own your ass. You have no life. All your relationships, they're going to suffer. Your health, probably going to suffer too. Oh, you love New York? Well, guess what? You're not going to experience much of it over the next few years because you're going to experience the the bowels of Goldman or Morgan. And guess what? In exchange for that, we're going to get you further, faster economically and professionally than you would anywhere else in the world. And you know what? I signed up for that. That's what I wanted. And a lot of young people want that. So, anything that risks health, okay, that's a whole other ball of wax. But there is an entire generation, including myself, of young people who say, you know what? I will give you everything in exchange, I want more.

• 20:14Ed Elson?

  I'm surprised you're not more harsh on the junior analysts and junior bankers who have been complaining about this, who are saying how terrible it is, the hours are so long, that we're struggling with our mental health. I mean, this is why this is all happening, is because people my age are complaining about it. And you mentioned that point, that when you went into banking as an analyst, that's what you signed up for. You knew what you were signing up for, and you came to play. And so the idea that you have people who are experiencing what is regular in banking, people my age who are saying that this is too much, they can't handle it, you have decided, by going into banking, that you want to be a millionaire,

• 20:58Ed Elson?

  likely a multi, multi-millionaire, that's something that you have decided you want for yourself. You've also decided that you want to make close to $200,000 in your first year out of college per year. These are things that you want. And if you want these things, be clear that you should be willing to work yourself so hard that you start to struggle mentally and physically. That's the game that you're signing up for. And if you don't like it, then go do something else. I think that's fine. But the idea that you would complain, having gotten yourself into that position, knowing what the stakes are, knowing how difficult it is to build wealth in America, yeah, you're gonna have a pretty shitty week, you're gonna lose some sleep.

• 21:35Scott Galloway?

  Two things. One, I agree with you. And two, I don't want to ever hear you bitch about anything about this company.

• 21:45Scott Galloway?

  Now, like, at some point, the difference here, the only thing I will caveat this with is that in order for the American economy to grow, we've needed to bring in women. And it's also makes sense that women should be afforded the same economic opportunities as men. Where that culture doesn't work is when women start using their ovaries. And that is when you create a culture of people expected to work 60 to 80 hours a week, what you're essentially saying is no one's allowed to have kids here. So while I can see that type of culture for the young analysts, it's unhealthy to create, I think, that type of culture with people as they start to think about starting families. Because distinct of all the bullshit around the modern man, women disproportionately shoulder

• 22:29Scott Galloway?

  the responsibilities with children. So unless we create a work environment where we respect the fact that the species needs to procreate, we want to create corporate America an opportunity for women to maintain acceleration in their careers. If you look at compensation in corporate America, it's actually been trued up between men and women until women have kids. And then they drop way down. So I buy that all hands, Hunger Games culture, you don't like it, go somewhere else, we're going to pay you a shit ton of money, we own your... And I appreciate your perspective on it. I think things change when people get older, though, and they start thinking about families.

• 23:11Scott Galloway?

  Because if you're going to expect people to work 80 hours a week, what you're saying is we don't want mothers here. Hundred percent. And that's a problem.

• 23:18Ed Elson?

  Let's finish out with this new model that has been released by OpenAI, known internally as Strawberry, known now publicly as O1. Any thoughts on this new, very powerful reasoning model from OpenAI?

• 23:33Scott Galloway?

  I love the fact they're saying that we have, we have a model that's going to take longer to figure shit out. It's like... Well, you know, when you press on something online and it spins a wheel like, oh, it's thinking, or it's finding you deals right now. It's fine. Searching for the best deal on the web. And it has a guy like with a magnifying glass and he's searching. It's like it gives you this emotional feeling that someone else is working for you. I would just like to know, do they need to slow that thing down? Or are they trying to pretend that this is being more thoughtful? I don't know. What are your thoughts?

• 24:06Ed Elson?

  Well, I think that is the question and no one's really been able to try it yet apart from internally. So I think we should try it out, but just a few stats that they have listed. They put GPT four and this new one, oh, one, this new reasoning model, they put them up against each other to do the qualifying exam for the International Mathematics Olympiad. GPT four got 13% of the problems right. This new one got 83% of the problems right. They also had it do a jailbreaking test. GPT four scored a 22 on a scale of zero to 100. And the new oh, one model scored an 84. So it does seem like this new model, it's more mathematics

• 24:49Ed Elson?

  minded, is just incredibly powerful.

• 24:54Scott Galloway?

  Look, I just get the sense that its technology becomes more about frictionless flow and network effects and agility, that if you have the ability to get out ahead in front, establish leadership and then have access to cheaper capital, they have access, they can raise tens of millions of dollars. No one can keep up with them right now. They have a great team. They have a great leader in Sam Altman. You know, this just, it does feel like, like I said, it feels like they're running away with it. And we've been saying this for a while.

• 25:23Ed Elson?

  We'll be right back after the break with a look at how the debate moved the markets.

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• 27:11Ed Elson?

  We're back with Prof G Markets. Vice President Kamala Harris and former President Donald Trump faced off in what will likely be their only debate, and the verdict from the markets was clear: Harris won. Bitcoin started to slide as soon as the debate began and was down 4% by the morning. Trump Media stock tanked 15% when the market opened and ended the day at an all-time low. Meanwhile, solar stocks rose, with the potential Harris presidency building well for clean energy. Scott, this is basically the opposite of what happened in the July debate, when the markets were signaling that a Trump presidency was basically certain. What are your takeaways from the market's reaction this time around?

• 27:51Scott Galloway?

  Well, look, I'm busy this weekend, but if you want, we can hang out next weekend and do transgender operations on illegal aliens in prison this weekend. And my mom said I could bring a friend. I just.

• 28:03Ed Elson?

  And then we're gonna eat Leia.

• 28:04Scott Galloway?

  I was just about to say, everyone should know Leia and gangster are safe. They're safe. Someone, I saw an illegal immigrant putting honey glaze on their fur and I figured out something's wrong here. I mean, watching her, you know, was the debate started at 2am London time and by 3:15 I'm like, I'm out, she's won. I just, it doesn't matter. She could throw up on herself the next 15 minutes. What will be more interesting, well, or as interesting, is what industries do well or poorly based on, you know, based on the fact that she's maintained her momentum. And I think as we've talked about, you have, you know, the, the alternative energy ETFs went up, Bitcoin went a little bit down. His stock was off 13 or

• 28:48Scott Galloway?

  15%. Donald Trump Media, meaning that the, basically the shareholders of that company think the likelihood he's gonna become president is down by 13 or 15%. But it's, it's, um, I thought it was fascinating. I'm obviously not a big Trump fan, so I was really happy with it. But it'll be interesting to see what stocks, I mean, so far it's hard to read a lot from the market. What are your thoughts, Ed?

• 29:11Ed Elson?

  I think she did an incredible job. I mean, it was, it was obvious that she was far more prepared than he was. I mean, he, he, he doesn't prepare, but the, the amount of prep that clearly went into this, the amount that she had her talking points ready, um, she had clearly practiced a lot and it really came through. Um, two things that I noticed about her that I thought were really impressive. One was her facial expression when he was talking. She clearly knew exactly what facial expressions to pull and it just, it framed everything he was saying. It made it look so much more ridiculous when she would sort of smirk and smile, um, and laugh at, at everything he was saying. I thought that was really impressive. The other thing I thought was really impressive was the handshake that she went in for at the very beginning.

• 29:56Scott Galloway?

  Total power move.

• 29:57Ed Elson?

  Total power move, just walking in there. And being assertive and also respectful and also direct. And I'm wondering if maybe you have any insights, any learnings on ways that that can be beneficial to you, to an individual in the business world. Has there ever been a time perhaps where, you know, being assertive with your body language, with your physical body language in a business setting has perhaps benefited you or you've seen that play out?

• 30:27Scott Galloway?

  My first boss, Carter Cordner, actually, you know, as I was shitposting everyone to Morgan Stanley, actually a lovely guy, um, who took a real interest in me. He, he taught me, he said, when you go into a meeting, he said, unless everyone's already, unless you're late, walk around, go to them and shake their hand and introduce yourself. And, and I wouldn't have done that naturally as a 22 year old, I would kind of said hi or waited for someone to introduce myself. He said, no, go around the table and, and walk to everyone, say hi, Scott Galloway, shake their hand. And I mean, that sounds, and I, it reminded me of that. She went over, she went over to them. I thought it was fantastic. And something I tell my boys, anytime they meet somebody, they walk up, they square their

• 31:10Scott Galloway?

  hips, they square their shoulders, they make eye contact, they shake their hand and they introduce themselves and say, it's nice to meet you and they hold eye contact. And I can't tell you how many parents comment on it. They are, you know, it's like, as a kid or as a young professional, and I didn't get this, get the easy stuff right. The difference in your brand, when there's an eight o'clock meeting and you show up at 7:55 versus 8:05, it's just get the easy stuff right. For 10 minutes, you, you set a different tone about your own brand.

• 31:43Ed Elson?

  Going back to Trump media stock, which fell to a record low, a lot of that is of course because of the debate, but then there's also a little wrinkle, which is that the lock up period expires next week. And what that means is that the early investors, as this was a direct listing, the early investors will finally be able to sell their shares. And one of those early investors, of course, includes Trump. So just a prediction question for you, come September 19th, do you think Trump will sell?

• 32:18Scott Galloway?

  It's a tough one. I don't think so, because I, the brand of, on the first possible moment that he sold, if he does, could take the stock down so far, so fast, that he ends up hurting himself. If I were him, I'd put in a planned sale program, and this is what a lot of CEOs do. They say, all right, I have a ton of stock, every, every 90 days, I'm going to sell X number of shares. And what that does is, it takes out the interpretation by the, you know, the hecklers, right? Oh, she sold a bunch of shares, that must mean she's, doesn't like it, and she didn't sell shares this quarter, so she must be feeling bullish. If you just say, I'm putting in place a planned sale program, and I'm going to sell 400,000

• 33:00Scott Galloway?

  shares every 90 days, that doesn't spook the market. It'd be interesting to know what the other sellers are, but here's the thing, if you own this stock, unless you believe he's going to win, and that this has in fact become a tracking stock, and that he'll figure out a way in sort of a kleptocratic fashion to support the company, this company has zero value. This company has negative value. It's not growing, its user base is flat to down. I think it does single-digit millions of dollars, and it's losing hundreds of millions? I mean, it's, it's not a company. And so, if you have a lot of people trying to run through a crowded door here, it could be a real problem. Now, the moment everyone, what I have found, though, generally, though, with stocks, is

• 33:45Scott Galloway?

  when everyone's freaked out about, about the lockup period expiring, on that day, a lot of times the stock goes up, because what you're talking about, the fear you're talking about, is reflected in the stock right now. And so, if in fact, there aren't a bunch of whatever it's called, Form Fives, or I forget what it's called, when you have to sell stock as an insider, if not as many of them, everyone's going to be watching this, if not as many of them are selling... And the expectation of massive sales has already been built into a stock that's off, I don't know, 40% in the last 30 days or something, or 60% in the last three months. Then the stock may go up. In other words, I'd be very careful trying to play around this. But what I'm fairly confident saying is this stock will be less than a dollar

• 34:29Scott Galloway?

  at some point in the next 12 months if he does not, if he is not reelected.

• 34:34Ed Elson?

  Yeah, I think that's an interesting point. I think what's interesting also is the timeline here because he sort of needs to time this. I mean, supposedly, he needs the cash, right? Because he's got all these lawsuits. So you'd think that he's probably going to time this based on whether or not he becomes president. Because if he becomes president, he parties himself and the lawsuits go away. He's not necessarily going to need the cash. So it really is all hinging on that. And I think if he loses, he's going to then need to really time it correctly. Because, you know, the stock is probably going to plummet at that point. But he's going to need the liquidity, but only in the situation where he doesn't win the presidency. So it's a very interesting situation. He's probably the first, he is

• 35:17Ed Elson?

  the first person in history to be in a situation like that. Just as we wrap up here, I just want to point out, as we try to relate this to markets, I mean, who is this going to benefit? I mean, the takeaway really here is, the race is on. That wasn't, that didn't feel like the case a few months ago, but clearly it is now. That's what the predicted markets are showing, is that we have an extremely tight race. And who is that going to benefit? It's going to benefit advertisers. So I think we should be keeping an eye on all the broadcasting stocks. So Fox, Disney, Warner Brothers, Comcast, I think we'll see huge earnings from them in the next quarter. And then also, we should be thinking about the local stocks, local

• 35:59Ed Elson?

  broadcasting. So, you know, Gannett, Nextar, Tegna, I think these are stocks that are going to see a big bump, a big run up in the next few months or so, because we're going to see a huge amount of advertising in the districts that matter.

• 36:15Ed Elson?

  We'll be right back after the break with a look at sovereign wealth funds.

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• 38:00Ed Elson?

  We're back with Prof G Markets. Former President Trump recently said that if elected, he would like to create a sovereign wealth fund for the United States. After that speech, the White House also revealed they were already working on a proposal for the exact same thing. Sovereign wealth funds are state-owned investment funds, and they're typically used in economies that rely mainly on resource extraction, such as Saudi Arabia and Norway. While there's currently no national sovereign wealth fund in the U.S., there are several state-level funds, like Alaska's Permanent Fund.

• 38:31Ed Elson?

  Scott, what are your thoughts on a US sovereign wealth fund? And do you think this is a good idea?

• 38:37Scott Galloway?

  So sovereign wealth funds have a layer on top of them where they have an objective outside of just straight ROI. So the biggest funds or the funds that every hedge fund manager in the world is going, you know, hat in hand to are in the Gulf, Adia, PIF. And generally speaking, the jig is sort of up there. And that is those, those funds, those sovereign wealth funds have the objective of trying to transition their economies back away from a fossil fuels economy to tourism, services, education. And now, when you go there, they're mostly only willing to fund companies that are going to bring business or find other capital to bring business into the region.

• 39:17Scott Galloway?

  They're no longer about, oh, you're a Korean national born in Japan, we're going to give you $100 billion to go play in traffic and invest in, you know, US startups. I think those days are over. In general, the best, the best marketing in the world is tobacco companies. A company whose primary product is death, disease and disability that figures out a way to sell a product at 96 points of margin and create these very aspirational brands, that's the best marketing in the world. The second best marketing in the world by sector has been the financial services sector that has convinced you that they can outperform the S and P because they have these old guys and suspenders and all these models and people from the smartest schools and wealthy people

• 40:01Scott Galloway?

  like to believe they should have access to something different. So they continue to invest in these funds. And if you added up all hedge funds, all mutual funds, all internal investments, I mean, this is an enormous industry. Everyone on CNBC, they have underperformed the S and P by the amount of their fees. So what you're basically doing is buying the S and P, but giving some guy with, that's highly credentialed and highly aggressive, an unbelievable living. And the same is true here. These funds, as your data shows, have underperformed the larger market. Now, they say they can justify it because they say if we're Alaska with a Norwegian wealth fund, we want to increase influence around the world, or we want to bring more jobs to Alaska, fine, that's a secondary objective.

• 40:45Scott Galloway?

  The reason I'm not a fan of this in the US is that We don't really need this. We have more capital formation than any country in the world by a factor of five, 10, or 100. We don't need, I don't think, to try and aggregate capital to have influence through capital. We do it through the dollar. We do it through sanctions. You know, if we say to a country, we're shutting you off and you can no longer do business in dollars, you know, two thirds of the world has trouble doing business with them. So we kind of have, unless we decided we were building a sovereign wealth fund to try and, I don't know, I don't know what objective they'd even place on it. But to me, generally speaking, when you get the government involved in something, you're

• 41:27Scott Galloway?

  going to pay an inefficiency or an administration tax. So I just, I feel like this is redundant and not really needed. This feels to me like more of a chess beating kind of fun thing to talk about. It doesn't, I don't see the rationale here.

• 41:41Ed Elson?

  And it also isn't clear at all how you'd fund this thing because, I mean, the characteristic of a sovereign wealth fund, I mean, what makes it different from any other pile of money that's in the government's jurisdiction? One of the differences is that it's separate from the central bank and it's separate from your finance ministries. So in our case, that's the treasury. So Janet Yellen would not have control over this thing. And then the second difference is that typically the way that you fund it is it comes from an unusual excess or surplus of assets. So in Ireland, for example, which we've discussed before, Ireland is a tax haven for big tech companies. It collects huge amounts of tax

• 42:24Ed Elson?

  revenue from companies like Google and Apple and Microsoft. And therefore, they run a budget surplus. They're at around $10 billion in budget surplus in 2024. Saudi Arabia, another example, they're just a giant oil farm. So they can sell a shit ton of oil and they have all of this excess asset. They have a budget surplus of around $30 billion. So, you know, that's the way that other countries fund their sovereign wealth funds. It's that you have a lot of money left over. So my question for Harris and for Trump and for the White House. Where the fuck is our money? We don't have any excess money. I mean, we've been running a trade deficit since the seventies. We fund our entire economy with debt. How are you going to pay for this?

• 43:08Ed Elson?

  There is no money left over. There's nothing really left to sell. So, I mean, I was confused and looked into this question. How are they going to fund it? Biden and Harris don't have an answer, or at least they haven't stated it. Trump's answer, he says that we're going to fund it with tariffs, that his tariff plan is going to reverse the deficit. And then, once we are running on a surplus, because of his tariffs, we're going to be able to create the US Sovereign Wealth Fund. So, my read is similar to yours. It feels like this is mostly a bunch of posturing, and it seems as if both sides here seem to think that a US Sovereign Wealth Fund basically just sounds cool.

• 43:53Scott Galloway?

  So, the only time Democrats and Republicans agree, the only thing that passed for bipartisanship is they both come together. Republicans want to cut taxes and spend more on defense. Democrats want to raise taxes and spend more on social services. So, they come together and say, I know, let's cut taxes and spend more money. The only thing that they cooperate together on is reckless spending the results and unbelievable deficits on your generation. Whenever Harris and Trump agree on anything, it's the stupidest fucking idea. It's like a tell. No tax on tips. Okay, only 2% of Americans make tips. The majority of them don't pay any federal income tax, and you want the waiter to get a tax cut and not the dishwasher. This is just fucking stupid. So, this strikes me similar to Congress,

• 44:38Scott Galloway?

  that if Harris and Trump agree on something, it means it's a really bad idea. And this will go to my prediction. Something else they agree on is also a really bad idea. Ooh, I'm teasing my prediction, Ed. I'm teasing it. People can't wait. People on the edge of their seats.

• 44:54Ed Elson?

  Yeah, I can't wait. Just skip ahead if you're listening. Final question. Say we did create a US Sovereign Wealth Fund. It's called US Ventures. Who'd be the general partner?

• 45:11Scott Galloway?

  I'd like to see Britney Spears.

• 45:15Scott Galloway?

  I mean, why not? I mean, let's be honest, not many of you have any fucking idea what they're doing. Britney Spears and Coco the monkey. I'd like to, and they just throw darts.

• 45:26Ed Elson?

  Yeah.

• 45:27Scott Galloway?

  But we find those dogs that can smell bladder cancer and urine and say to them, all right, can you pick a stock? It would, I don't, it wouldn't make any fucking difference. As long as they're diversified. Shit, I don't know. Who would you want to run this thing?

• 45:42Ed Elson?

  I'm pretty convinced by you. Let's go Britney Spears. Maybe throw Peter Thiel in there.

• 45:46Scott Galloway?

  Yeah. Well, Peter Thiel had a fund and it did really, it did really well until it didn't. He was in the hedge fund business. I forget the name of it. It had some like.

• 45:53Ed Elson?

  Well, he's also founders fund, so.

• 45:54Scott Galloway?

  Clarion. He had no Clarion. It was called Clarion or Clarion. He had, well, the founders fund is in his wheelhouse. The guy is a great investor in terms of VC, but he had a fund that invested in publicly traded stocks and it did really well. I think this was back in the aughts and then it did really not well. And I think David Hasselhoff, I'd like David Hasselhoff to run the US.

• 46:16Ed Elson?

  Maybe Taylor Swift as well.

• 46:17Scott Galloway?

  And the guy who was the lead singer from Flock of Seagulls. I'm like, I'd like to get him involved. I'd like to get him involved. It doesn't matter, Ed.

• 46:26Ed Elson?

  Let's take a look at the week ahead.

• 46:29Ed Elson?

  We'll see US retail sales and housing starts for August and all eyes will be on the Federal Reserve as it delivers its interest rate decision for September. Scott, finally you can tell us our prediction.

• 46:40Scott Galloway?

  Okay. As we reference, anytime Trump and Harris agree on something, it's a ridiculously stupid idea. They both agree that the acquisition of US Steel by Nippon Steel should be blocked. So let's talk a little bit about US Steel. This is basically a shadow of itself, a former icon. It was at the turn of the 20th century, one of the most important companies in the world. It became the most valuable company in the world for a hot minute. It was the first company to ever reach a billion dollars in revenue. By the end of World War II, it employed a third of a million people. Now, US Steel employs 20,000 people, 4,000 in Pennsylvania, very strongly union. 5% of the global US steel market is controlled by Japan, 4% is

• 47:24Scott Galloway?

  the US and China's like 50 or 60. China's basically just run away with the steel market.

• 47:30Scott Galloway?

  And the US is no longer competitive in steel for a variety of reasons. Probably most specifically, we decimated Japan and Germany's infrastructure. But the one advantage of that was that they got to build from the ground up and think about innovation. And they're just better at it. And then China came in with an emerging steel industry and it's just blown by everybody. But it's been politicized. You know, US Steel, right? This is pure jingoist nationalist bullshit. Japan, there's some sort of security risk. So they're saying, oh, no, we can't sell it to Japan. Japan is more American than many states right now. Japan is an unbelievably strong ally. They're great with technology. They produce steel more efficiently than we do.

• 48:12Scott Galloway?

  This is a lifeline for US Steel, a company that is now worth a whopping $8 billion, right? So Nvidia loses 30 US Steels in one day last week, but we're worried about the Japanese coming for US Steel. This is such bullshit. So my prediction is the following. I don't think this thing is going to go through. And of course, the unions have said, raised their hand and said, we're uncomfortable with this. Okay, great. You should join the Writers Guild to make sure that you fuck over your constituents with a bunch of posturing that results in layoffs. And that's what's going to happen here. This acquisition is going to be blocked for purely political reasons.

• 48:52Scott Galloway?

  You're going to see layoffs and you're going to see US Steel stock, which is at 35, sub 20 bucks within 12 months. In addition, the more mendacious part of this is that if you're a small company, a business, a big business, what you want is your stocks to go up because there is the possibility of an international company coming in and acquiring your company. When we start coming up with bullshit nationalist reasons why companies can't buy American companies that pose no security threat whatsoever. It reduces the price, the takeover premium of every company that has strategic value to international players. This is just so fucking stupid. It makes my hair stand on end.

• 49:36Scott Galloway?

  So my prediction, this is not going to go through for purely political nationalist reasons and US Steel's stock is going to be below 25, 20 bucks a share in 12 months. And those 20,000 precious employees at US Steel are going to be more like 10 or 12,000 because US Steel is going to have no choice without a big brother subscale to start closing plants.

• 49:58Ed Elson?

  This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Our executive producer is Catherine Dillon. Mia Silverio is our research lead and Drew Burris is our technical director. Thank you for listening to Prof G Markets from the Vox Media Podcast Network. Join us on Thursday for our conversation with Chris Anderson, only on Prof G Markets.

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