Prof G Markets: Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry

Still listening on the Prof G Pod? Follow Prof G Markets for more: Apple Podcasts Spotify Scott and Ed open the show by discussing the federal reserve’s interest rate decision, the Professional Tennis Player Association's lawsuit, and BYD’s new charging technology. Then they analyze Germany’s decision to boost defense spending while lifting its debt limit, unpacking the market’s reaction and broader economic implications. Finally, they break down ultra-luxury hotel group Aman’s latest funding round, and Scott explains how high-end hospitality brands are evolving to cater to an even richer clientele. Subscribe to the Prof G Markets newsletter Order "The Algebra of Wealth," out now 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.

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• 1:29Scott Galloway?

  Today's number 63,000. That's how many pages are in the newly released JFK assassination files, but none of them contain any revelations. Ed, what do JFK and Bill Clinton have in common?

• 1:41Ed Elson?

  What's that?

• 1:42Scott Galloway?

  Both their careers ended with a stained dress.

• 1:46Ed Elson?

  Dark.

• 1:58Scott Galloway?

  That's wrong.

• 1:59Ed Elson?

  Dark and gross.

• 2:00Scott Galloway?

  Ah.

• 2:01Ed Elson?

  Any thoughts on the JFK file, Scott?

• 2:03Scott Galloway?

  How did JFK break his arm?

• 2:06Ed Elson?

  Oh, a joke. Good. How did he break his arm?

• 2:08Scott Galloway?

  By helping, uh, Jack off a horse.

• 2:16Scott Galloway?

  Jack off a horse, break your arm.

• 2:20Ed Elson?

  But that's not even, that's not even JFK specific.

• 2:24Scott Galloway?

  Yeah. Yeah. I don't, I'm reaching, I'm reaching.

• 2:28Ed Elson?

  You're reaching, you're scraping the barrel. By the way, you know, today is a very special day.

• 2:33Scott Galloway?

  Special day.

• 2:34Ed Elson?

  You know what it is?

• 2:34Scott Galloway?

  I had that same anxiety that when my partner asks me, you know, wakes, it's like, oh, something. I'm like, happy birthday anniversary.

• 2:45Scott Galloway?

  It's like, okay.

• 2:47Ed Elson?

  I'm about to drop a bomb on you. It's my birthday today.

• 2:50Scott Galloway?

  Oh, my gosh. Ed, that's great because you get your driver's license this year, right?

• 2:54Ed Elson?

  Exactly. I'm finally eligible.

• 2:56Scott Galloway?

  Twenty six.

• 2:57Ed Elson?

  Twenty six.

• 2:58Scott Galloway?

  Constantly, I, the first thing I say about you when people ask me about you is I'm like, everyone said, people say very nice things about you. And I would say, you know, he's 25 and people are like, I know, that's so amazing. So, wow, 26. That's not as impressive.

• 3:11Ed Elson?

  Yeah, not as impressive. Do you have any, do you have any advice for me as I enter my 27th year on this planet?

• 3:16Scott Galloway?

  Advice to you at 26, try and get a great shape. I think every man under the age of 30 should be a fucking monster. You've still got a ton of testosterone and great double twitch muscle and great bone structure. And you're going to spend the rest of your life from 35 on just trying to maintain. So get to a really good place physically.

• 3:34Ed Elson?

  Bulk up. Okay.

• 3:35Scott Galloway?

  Say yes to everything, invest in relationships, try and establish as many friendships. It gets harder to establish friendships as you get older. So try and establish as many friendships as you can. And in the meantime, work around the clock, try and get professional trajectory. Such that you can have economic security by the time you're in your 40s and 50s and spend more time with your family. So.

• 3:56Ed Elson?

  Any mistakes you made at 26 that I should avoid?

• 3:59Scott Galloway?

  I made a lot. I think my biggest mistake was I wasn't as kind as I should have been. I looked at relationships as a transaction. If I wasn't getting as much, I exited the relationship. I saw my employees, I started companies from the age of 27. As kind of a transaction where I thought if I'm not getting more value out of them than I'm paying, I would fire them.

• 4:19Ed Elson?

  Well, you've had a massive turnaround on that.

• 4:21Scott Galloway?

  Yeah. Now I'm like, no, we, it's just the wrong role.

• 4:26Scott Galloway?

  I came of professional age in the Bay Area in the 90s. And there was this general zeitgeist that if you were talented and nice, it meant you were talented. But if you were talented and an asshole, it meant you were Steve Jobs. It meant you were a genius. And there was this terrible zeitgeist or cultural norm that being an asshole somehow indicated that you were super talented. And I adopted that. I was never mean, but I could have been a lot kinder professionally with people. And also personally, I looked at my relationships as a transaction, not as like, how do I, how do I end up on the right side of the ledger? And then something I did right was I spent a ton of time with my mom.

• 5:11Scott Galloway?

  And I know that sounds sort of lame, but I was very close to my mom. We spent a lot of time together. She constantly came, stayed with me. I constantly stayed with her. And that was, you know, I'm an only child. So that was very rewarding and we're really glad I did that. That's about it.

• 5:25Ed Elson?

  So I'll work on getting ripped. I will try to be nicer and I'll spend more time with my parents. I think that's a good, I think it's a good list of to do's. I'll check back a year from now.

• 5:36Scott Galloway?

  You're at a point right now, so up until the age of like 22, you're basically a total

• 5:42Scott Galloway?

  draw, you're a total, you know, liability for your parents. As a young man, I mean, especially think about you, you're literally out of central casting for parents right now. And anytime you spend with your parents right now, they're just going to get so much enjoyment out of. And, you know, it's, it's sad, but you don't, it's impossible to realize or really register. It's impossible. Have you ever lost anyone close to you?

• 6:05Ed Elson?

  Just my granddad last year.

• 6:07Scott Galloway?

  Yeah, but that's natural. I would say that's sort of, you're sort of expecting that and the fact you even have grandparents.

• 6:11Ed Elson?

  No, I really, I, I am very inexperienced with loss and death. I will say that.

• 6:16Scott Galloway?

  Yeah. And you don't realize, especially with your parents, you don't realize how quickly it comes when they're really old. And. I really, that was something I got right. I spent a lot of time with my mom.

• 6:27Ed Elson?

  Okay, I like that.

• 6:28Scott Galloway?

  All right, fuck that. Talk about AI and GDP. Let's get on with this shit. Let's get on with tariffs.

• 6:33Ed Elson?

  I just want to remind our listeners that we have a weekly newsletter now for Prof G Markets. It's the Prof G Markets newsletter, which breaks down key market moves with data-driven analysis from me and from Scott and from the Prof G team, including our fan favorite Mia Silverio, our research lead at Prof G Media. And that goes out every Monday, so I encourage you to go subscribe to that newsletter. Go to profgmarkets.com and you'll have the updates every Monday in your inbox. It's a great newsletter. And with that, let's start with our weekly review of market vitals.

• 7:13Ed Elson?

  The S and P 500 climbed, the dollar increased, Bitcoin broke its losing streak, and the yield on 10-year Treasuries dipped. Shifting to the headlines, the Federal Reserve held interest rates steady, but raised its inflation forecast for the year to 2.7%. They also lowered their 2025 GDP growth projection to 1.7%, that's a dip from December's estimates. However, the major indices rose as Fed officials penciled in two rate cuts for the year. Novak Djokovic's Professional Tennis Players Association is suing the game's governing bodies, alleging that they operate as a cartel. The organization claims that the men's and women's tours, along with the International Tennis Federation,

• 7:56Ed Elson?

  colluded to restrict competition and limit players' earnings. And finally, BYD shares hit an all-time high after the company unveiled a new technology that fully charges its latest EVs in just five minutes. The charging system will debut in the company's new sedan and SUV, both set to launch next month. Scott, let's start with your thoughts on the interest rate decision from the Fed.

• 8:20Scott Galloway?

  This is tough because they say that the markets sometimes climb a wall of worry. And just as we started saying that the markets were really in trouble, it feels like the last two days they've kind of rallied a bit. But I just saw this as a bit of a nothing burger. What did you think?

• 8:35Ed Elson?

  Yeah, I mean, I think you raise rates if inflation is heating up and you cut rates if the economy is slowing down. That's what these rate decisions are about. If you don't know what's going on, if you don't have enough data or evidence to support a move in either direction, you don't do anything. And that's basically what Powell said. He said, quote, uncertainty is remarkably high, so we're not going to be in any hurry to move and we'll wait for further clarity. And this is the same dynamic we discussed last week in the context of companies and the struggles that they're facing, where they can't make decisions because they just don't know what Trump is going to do. They don't know what the tariffs are going to look like, and they don't know how supply chains are going to

• 9:15Ed Elson?

  shift. And so what you have now is an economy where, from the bottom, all the way up to the top, from from Main Street businesses, then to corporations, and then to Jerome Powell at the Federal Reserve, everyone is stuck in this state of limbo, where, you know, it's kind of like purgatory, like you don't know if you're going to heaven or if you're going to hell. So you just sit around waiting. And I think that's one of the big concerns, that we've gone from this economy that is very active, that does everything, to an economy that does nothing, that has no choice but to basically just sit around and and and wait for someone else to make a move. And I think the other thing to remember

• 9:55Ed Elson?

  here, you know, this was unsurprising that he held rates steady. Most economists and most markets and analysts expected this. But if you look back a few months ago, that was not true. You know, a few months ago, there were actually a lot of predictions that we would see a rate cut in March, because a lot of people believed that inflation was getting under control, we were moving towards that target of 2%, and we might be able to cut rates earlier than we expected. And I think the fact that this was so unsurprising to everyone is another indication of where we are from an inflation perspective. We're basically resigned to this notion that prices are going to go up again. And I think you

• 10:39Ed Elson?

  have to feel for Jerome Powell, who has done an incredible job so far, getting inflation under control, trying to get to 2%. He's been doing this for years now, very diligently, and it's been working. And then, you know, Trump makes all these decisions that move everything in the opposite direction. He has to be incensed about this. Trump has thrown a wrench in this whole operation that he's been working so long to get under control. And it's kind of remarkable the way he handles these press conferences, because you know he's pissed. There's no way he couldn't be pissed. People also about the tariffs. He said, quote, "With the arrival

• 11:20Ed Elson?

  of the tariff inflation, further progress may be delayed." He's so neutral and so calm about everything, but he just has to be angry on the inside. But he's done such a good job of just saying, you know, this is what we're going to do. We're just going to react to whatever the executive branch decides, and we'll see what happens. So it's sort of a masterclass in, I would say, objectivity, but also stoicism and not showing your cards. And maybe we have something to learn from that.

• 11:48Scott Galloway?

  I think the Fed chair has basically one job description, and that is remain calm and carry on. It just wouldn't help if he showed up sweating, freaked out, and like, fuck, I don't know. It's, I've never, I'm just, I'm totally awake. I can't sleep. I'm so freaked out. And look at this data. Jesus Christ, I don't know what to make of this.

• 12:06Ed Elson?

  Yeah, maybe I'm giving him too much credit.

• 12:08Scott Galloway?

  If you want someone to kind of look nonplussed, like they're sleeping fairly well, and not to be too alarmed, it needs to be the Fed chair. Like, if the Fed chair shows up, you know, without his shoes, and like, he's been on a bender all night, it's just like, and popping pills, like, I think it would be hilarious.

• 12:25Ed Elson?

  That would be way better for us. That would be more fun to cover.

• 12:27Scott Galloway?

  If every 15 seconds he said, I'm sorry, hold on a second. And he like, struggled to get his pills out of his briefcase, and then like, started like, throwing pills into his mouth and crunching on these things.

• 12:38Ed Elson?

  That would be good.

• 12:38Scott Galloway?

  I'd love to see, I'd love for him just in the middle of these questions from senators, just love to see him just like, bend over and just do a giant rail academy.

• 12:51Scott Galloway?

  What would happen to interest rates then? What happened to the, what would happen to 10 year response then?

• 12:55Ed Elson?

  What would happen to the stock market? Exactly.

• 12:57Scott Galloway?

  Uh, yeah, I don't know. I, you, you say you got a feel for Chairman Powell. I feel for the American people that are, have to live under a fascist ass clown making decisions that no one can, no one can discern like which direction we're headed in. This is, is that unfair fascist ass clown? FAC, I, I, this is, the, the silver lining is the following, and that is, I do think the American economy, the, the gears just keep turning. And people, people keep innovating, people keep wanting to buy shit, people keep wanting to make money, people keep coming up with new ideas.

• 13:37Scott Galloway?

  And I think we probably overestimate the impact that the White House has on, it makes for a lot of headlines, but I wonder, I'm pretty sure we overestimate it or underestimate it. We give them too much blame and too much credit. But I would argue that this is, um, these decisions, it would be impossible, I think, for them not to trickle down. And the fact that the GDP estimates have already come down, I think is evidence, these decisions are, are not good for the economy.

• 14:06Ed Elson?

  Let's talk about this tennis lawsuit that was filed by Novak Djokovic and his association of tennis players, also strangely funded by Bill Ackman. And I read the complaint that they filed in, in New York federal court. And I gotta say, it is so compelling. I mean, issue after issue, I mean, the, the first main thing that they address is price fixing, the fact that these tennis leagues all collude with each other to suppress the amount that they pay their tennis players. And they have many specific examples. One of them, which is kind of interesting is that Larry Ellison. Who bought the BNP Paribas Open, which is one of these tournaments, he actually tried to increase the prize money. He wanted to increase it by 1.6 million dollars and the

• 14:49Ed Elson?

  ATP tour and the WTA tour said, no, we're not going to do that because that means we're going to have to increase the prize money for all the other tournaments. They also have examples of limiting the endorsements that these players can make. Like if you want to compete in these leagues, you have to forfeit your name and your image and your likeness rights. They also control the kind of equipment you can use. They control which kinds of sponsors and sponsorships you can accept. And then there's some interesting stuff about the working conditions, which sounds a little ridiculous, like boo hoo, professional tennis players, but it honestly does sound quite grueling when they lay it out. You have to play in every tournament year round. And if you don't, if you skip

• 15:32Ed Elson?

  a game, you get penalized, even if it's for like an emergency. And it's intentionally an extremely packed schedule. They overfill the schedule specifically so that other tournaments that might pay the players more don't compete. And so the players don't go play in other tournaments. And so what you have here is an extremely vibrant, clear antitrust monopolization situation. But as I think you'll probably bring up, the situation with antitrust and sports leagues is quite precarious. And I could go into that in a second, but I do first just want to get your reactions to this lawsuit.

• 16:12Scott Galloway?

  I love this. I think there are a few sectors that are more corrupt than sports leagues. And that is they leverage the fact that people feel really benign about them to establish regulatory capture. And they get even legislation that enables them to be monopolies. I mean, if you and I wanted to start a football team, an NFL team in Chicago, we can't. The NFL gets to decide. They can control supply. And the owners love it because that means that they buy $4 billion. And if they hold on to it for 10 years. They know it'll go up in value because they know the number of billionaires will increase as the economy increases and there's a fixed set of supply. I mean, these things are so corrupt and they leverage this monopoly power and they

• 16:54Scott Galloway?

  extract rents from the players, from consumers, ticket prices have accelerated. They're essentially legal monopolies. And it's just ridiculous to think that why shouldn't you be able to start a tournament, create another team? I mean, think about any business that said, okay, for every city, there can only be two software companies. And the governing body ruled by the owners of these software companies get to decide who the entrants are or are not. And then if they basically have one league, that means you extract rents from the players where you're the only game in town and you get to decide, you know, how much money to make or don't make.

• 17:35Scott Galloway?

  So it's, and it's especially bad in tennis where the players command only 18% of the total revenue generated by the sport compared to basketball where the players get 50% and soccer get, they get 61%. So I love this and I, I love that Liv came in and basically challenged the monopoly of the PGA. So I think competition is a good thing, but this is a perfect example of corruption with this veneer of benign goodwill because people have such affection for sports. But these are monopolies and the rents being charged to ticket holders or consumers and

• 18:16Scott Galloway?

  advertisers who have, you know, have a limited supply of, of, of games, et cetera, and to the players themselves is bottom line is corrupt. It's, I, I love, I love this, Ed, I love it.

• 18:28Ed Elson?

  I think the, the important thing you mentioned there though, is legal monopoly. And this is what the, this is the very interesting thing about sports and sports leagues. We have very robust antitrust laws in America and in Europe. We crack down on anti-competitive behavior constantly. I mean, we talk a lot on this show about antitrust and antitrust enforcement. There is one exception, both in the US and in Europe, to antitrust laws, and that is sports leagues.

• 18:58Ed Elson?

  They have decided in the courts, both again, both in America and in Europe, that sports leagues are not like regular businesses, that sports leagues actually need monopolization. They need these governing bodies to cooperate with each other because their belief is that sports only work if you have basically cooperation among the governing bodies such that the teams and the players can compete on an even playing field. In other words, their belief is it needs to be rigged in favor of entertainment. And this is a long, strange history that goes back all the way to 1922, when there was an antitrust lawsuit against the Professional Baseball League

• 19:39Ed Elson?

  in America, what is now the MLB. And the Supreme Court decided to make an exemption for the baseball league. And that is why today the MLB is the only entity in the United States that is not subject to antitrust laws. So this will be really interesting to see because yes, they make a great case here. Yes, if you look at all of the details, it's 100% a monopoly. There's no question about it. But if you look at the history of antitrust in sports, I think it would indicate that this is probably not going to go through because every time this happens, the courts review it, they look at the legislation and they say, yeah, you know, we see where you're coming from, but sports is different. So we can't convict here. So we'll see what happens. I'm kind of rooting for the tennis players. Maybe that's just because I like

• 20:24Ed Elson?

  Djokovic. But if I had to predict, I would say that the PTPA here does not win this case. I would predict that the sports leagues will come out on top.

• 20:35Scott Galloway?

  You may be right because I don't know what the kind of established law is, but you want to talk about corruption, start talking about the international bodies that don't even have to abide by anyone. They they live in this kind of nether nether land where there's no, essentially, they're not subject to laws of any one nation. And they've established such monopolies and people have tried to take them on and it hasn't worked. Ted Turner started something called the Goodwill Games, try and start a competitive. My big idea when the World Cup was going through all of this nonsense, I do work with Nike, Adidas, and I brought up with both of them, I said, why wouldn't you basically start a nonprofit and host a competitor or start a competitor, the World Cup, and just give all the money back to the, you know, try and break even, but basically

• 21:19Scott Galloway?

  try and root out the corruption that about six, eight years ago, the corruption at UEFA went just absolutely insane with paying off local officials and it became about bribes, what host country got to host the World Cup. So anyways, I would like to see, I hope this works, but I trust that you've done the homework here and don't think that you think the courts are going to side with the league.

• 21:43Ed Elson?

  Let's move on to BYD. Remember, this is the Chinese electric vehicle company and they've just come out with this new charger for their vehicles, which is four times more powerful than Tesla's supercharger. So it adds 80 kilometers for every minute of charging. There are some technical questions that need to be addressed. For example, there are concerns over what this does to the lifetime durability of the battery. It might decrease the quality over time. Supposedly it doesn't work very well for older car batteries. So there are little questions around it, but the overarching implication here is quite simple. BYD is pulling away from Tesla, both in terms of the vehicle sales. We've talked a lot about that. BYD

• 22:26Ed Elson?

  is now the global leader in EV sales as of last quarter. But now, you know, Tesla had this differentiator, this supercharging system that everyone is very excited about, and BYD is now pulling ahead in charging too. So Scott, your reactions to this news and the fact that BYD climbed again, it's now at a record high?

• 22:47Scott Galloway?

  There's just no getting around it. BYD has surpassed Tesla on almost every level in terms of tech. And Tesla's sales in China had been cut in half in February. They're down 49%, while BYD's rose 161%. Their latest vehicle is 75% less expensive, so four BYDs for the price of one Tesla. This feels like it sort of is a metaphor for China in general, and that is in the last three months, China has kind of evidenced or indicated or a metaphor for the resurgence is BYD. Year to date, BYD stock is up 64% and it trades at 33x earnings, while Tesla

• 23:26Scott Galloway?

  is down 38%, but still trades at 166x earnings, or said differently, and I love this stat. The market values each Tesla car sold at 425,000 in market cap, and each car from BYD, even after this run-up, for $39,000 a car. So even despite the fact that BYD's stock has skyrocketed and Tesla's has come down, I mean, think about this, the market still values Tesla at 10x the value per car produced by BYD, and BYD is growing. So one of these, it would appear, it would appear either BYD is dramatically, and this is the question,

• 24:07Scott Galloway?

  is BYD dramatically undervalued, or is Tesla dramatically overvalued? And of course, I believe the answer is yes.

• 24:14Ed Elson?

  Yeah, it is pretty remarkable, the stock performance of this company so far, up 60% year-to-date. It's up almost 100% in the past year. It's doubled in the past year. And I think there was a great article by Liam Denning at Bloomberg, which I think you shared with us. And it basically just plots the stock prices of these two companies in the past three months, year-to-date, Tesla versus BYD. And what is so striking is that it looks like, it's basically a mirror image. I mean, if you're listening to the podcast, it's harder to describe, but you know, for every dollar increase in BYD stock, you see

• 24:57Ed Elson?

  a dollar decrease in Tesla stock. And you know, you just plot it out, BYD up 50%, 50 to 60%, Tesla coming down 50 to 60%. And basically what it tells you is, this isn't just a matter of, oh, BYD is doing really well right now. This is a matter of BYD is actively eating Tesla's Every time Tesla does not make a sale or their sales decline, you're seeing an increase reflected in the sales of BYD. Every time Tesla's stock comes down, BYD's stock goes up. So I think we can only expect this trend is going to continue. And it does feel like the market is beginning to recognize that this other company in China that has these cheaper cars, it also has cheaper software.

• 25:42Ed Elson?

  It's got these superchargers that are four times more powerful than Tesla's. It's becoming very clear. BYD is probably going to be the new Tesla.

• 25:53Ed Elson?

  We'll be right back after the break with a look at Germany's defense spending. If you're enjoying the show so far, be sure to give Prop G Market a follow wherever you get your podcasts.

• 26:11Scott Galloway?

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• 26:55Scott Galloway?

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• 27:28Scott Galloway?

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• 28:35Scott Galloway?

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• 29:20Scott Galloway?

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• 29:46Ed Elson?

  We're back with Prof G Markets. German lawmakers approved a major boost in defence and infrastructure spending. The plan removes borrowing limits for defence spending above 1% of GDP and creates a $533 billion infrastructure fund. It's a major shift for Germany, which is historically cautious on defence spending and on debt. Previous borrowing limits were capped at 0.35% of GDP. Now, this move could drive up to $1 trillion in investments over the next decade. We've discussed on this show how increased defence spending in Europe may boost their equity markets, right, as investors are looking for an exit strategy from the US. It does appear that that rotation is already starting to materialise, and I have some data

• 30:30Ed Elson?

  we can go through. But first, Scott, I want to get your reaction to this news from Germany. Massive defence spending, a big increase in infrastructure spending too, and also the German stock market on that news hit a record high.

• 30:45Scott Galloway?

  I think this is overdue, and just to call balls and strikes, I think that this is a benefit that we've derived from the Trump administration. I don't like the way they're going about it, but, you know, for a long time, everyone has been saying that Japan and Germany and Europe have been freeloaded or free-riding off of the military umbrella and expenditure of the United States. And finally, it looks like they're stepping up. And I do think that that is a direct function of Trump's withdrawal, or basically saying you can no longer count on us. I mean, this will be good, I think, for the German economy, because they're outstanding in manufacturing. So you would think that they would make great weapon systems. And I like the idea. I think Germany is a well-run, well-governed place, and, like I said, I think defence spending

• 31:30Scott Galloway?

  could be the stimulus. And also, I'm trying to play this trade. I think the Europe and defence trade is going to be a big one. And I've just recently made an investment in European Aviation company that I think has some defense opportunities and I'm doing it based on two things. I'm hoping to get sort of a double whammy of capital flows into Europe and also the increase in defense spending.

• 31:56Ed Elson?

  Yeah, if you just look at the the stock market, the DAX, D A X, the German stock market, it rose around 2%. It's now up 15% year to date. It's one of the best performing stock markets in the world right now. You compare it to the S and P, which is down 4%. It's outperforming the US. It's also outperforming emerging markets. And, you know, I think the question is, why is it doing this well? Because 500 billion in stimulus, it's a lot, but it's not that much. And I don't think it's the sole explanation for why you're seeing this explosion in values. And I think what's really driving this rally right now is the story that this spending decision tells about what is going to happen

• 32:41Ed Elson?

  in Germany. Because we've discussed this before. This is a country that hates debt. And they have a 60% debt to GDP ratio. It's the lowest of the G7 by far. You look at the UK, it's like 100%. The US, obviously, really high, 120%. And in addition to simply not taking on debt, they also have all of these rules and these controls that prevent them from borrowing in the future. This is just the way their economy works. And I think a lot of that is sort of a post-traumatic stress from the Second World War, where they realized, we can't really trust ourselves. We need to take extreme measures. We need to make sure we never dig ourselves into these kinds of holes. And one way we can

• 33:26Ed Elson?

  do that is by stringently limiting our ability to borrow money. As a result, as we've talked about, their economy has been eh, you know. Fine, but compared to the US, pretty sluggish. And so I think last week was this pivotal moment in the narrative where the government said, by a huge majority, by the way, okay, we're going to dramatically change our approach to spending. And in addition to that spending bill, they also stripped out these debt limits I talked about, these controls that they have on how much they can borrow, which are literally enshrined in their constitution. So I mentioned that 0.35% number. It used to be that the deficit was only allowed to hit 0.35% of GDP.

• 34:10Ed Elson?

  That was the max. And last week, they said, nope, we're going to get rid of that. We're going to make an exception here. So I think a lot of this is also a turning point in the story for Germany. They had this decades-long love affair with balancing the budget, with being fiscally conservative. And they literally just decided, we're not doing that anymore. You know, we're going to have this big fiscal spending package today, and I think investors are probably believing if they're going to do this now, they're probably going to do similar things in the future. They're probably going to spend even more tomorrow. And all of that government spending, of course, is going to, if we're being realistic, is mostly going to go to German companies and all of that money is going to flow to their bottom line.

• 34:53Scott Galloway?

  The rivers are reversing. European equity funds registered their largest four-week inflows in nearly 10 years. And that's the most significant rotation out of US into European equities since 1999. And a B of A survey showed that 60% of investors expect stronger European growth in the next year, up 9% from just two months ago. So 9% of people thought Europe was going to grow. Now it's 60%. The thesis I would have going into this is that they're estimating, or they're proposing, that the European Union is going to go from 1.9% of GDP on defense to 3%, a $19 trillion economy. You're talking about 150 to 200 billion in additional CapEx that the market wasn't expecting

• 35:38Scott Galloway?

  just six months ago. And that's annual. And where's that going to go? And what companies are going to be in front of that tsunami of capital? And not only that, with the tension between the US and Europe, it used to be, okay, Europe, increase your defense spending. And by the way, please buy our submarines and our missiles. And there's no fucking way they're doing that now. Germany might say, in order, in order to build these systems, we might buy some parts from UK and Italian companies, or French companies. But no, we're not, we're not going to buy from the US. Sorry, guys. It'll be an intra-European stimulus. I think it's, I think it's really fascinating. I'm also quite optimistic about it. I like the fact that Europe, who would, what I think

• 36:18Scott Galloway?

  is kind of the home of a lot of progressive liberal thought, and really has been a kind of a beacon of light for, I don't know, philosophy and democracy and kind of modern civilization. I'd like to see them get their time in the sun outside of just Zara and LVMH.

• 36:37Ed Elson?

  Yeah, I just want to emphasize that Bank of America data you mentioned right there, because it is pretty remarkable, especially in the context of everything you've been talking about. You've been saying for months that you want to rotate out of the US and into Europe. And I just want to emphasize this data. So this is the, the survey that Bank of America does of all of the fund managers. It's a very reliable survey to understand how capital flows are moving in the world. And they found that US equity allocations, allocations into American companies in March, so this month, they dropped 40%. And that is the largest drop ever. Meanwhile,

• 37:17Ed Elson?

  Eurozone stock allocations jumped 27%. And that shift from US equities into European equities, that transformation, that is the largest shift since 1999. So the thing that you've been talking about for months now, and which I've been kind of like, okay, maybe, yeah, okay, you're going to rotate out, you're going to trim your holdings. It's literally happening in record numbers now. And it does beg the personal question.

• 37:49Ed Elson?

  How far into that rotation are you right now? I think the dream scenario would be that you sold immediately when you said you were thinking about it two months ago, but I know that these things take a little bit more time.

• 38:02Scott Galloway?

  The answer is not far enough. I started selling down Apple and Amazon. They started dropping, so I thought I'll wait till they get back. Then they haven't gotten back. And this is one of my many flaws as an investor. Apple and Amazon are kind of 80 or 90% of their all time highs, but because they were at 100% of their all time highs 60 days ago, I'm kicking myself and I don't want to sell. So I wish I'd actually done what I said to do. My biggest investment is in real estate, but my second biggest is with a fund run by my friend Orlando Marchand, and he just invests in non U.S. special sits. And he's up, it's Atlanta Partners, he's up 12% year to date. And I like him because he's highly diversified.

• 38:47Scott Galloway?

  The last four years has been really difficult for him because he's not in U.S. growth, but he's been flat because he's good and he's been very diversified. Actually, we're actually a little bit up. I shouldn't say that. I think we've compounded at eight or 9%, but everything else has been compounding. And now that everything's going down, he's rocking and rolling. The bottom line is I didn't rotate as aggressively as I should have, but what my friend Orlando, who I've been talking to about this says is that these cycles are usually multi-year cycles. And so we're kind of in the second inning. If you really believe our thesis is accurate, there's this great rotation of the rivers reversing flow. We're kind of, we're an inning one, maybe we're in the bottom of the first inning. And you're going to see, because even if you look at Apple, all right, okay, it's lost

• 39:30Scott Galloway?

  20% of its value in the last whatever, two, three months, it's still at a P of 31. The hard part is when you think about, and the reason I've been a bit reticent, my two biggest equity holdings are Apple and Amazon is that. I have about a, I'm up about somewhere between eight and 12 fold on each of them. So you gotta ask yourself when you're selling a stock, what other equity do I want to buy at 77 cents on the dollar because I'll take a 23% tax hit. So I gotta feel strong enough that there's an opportunity, a better opportunity with 77 cents on the dollar rather than just holding Apple and Amazon. And I got to that point a couple of months ago. I'm still going to continue to sell down because while it's not the most expensive it's been,

• 40:15Scott Galloway?

  it's still expensive. And I am actively looking for European and I've always been somewhat remiss to invest in Chinese stocks, although I wish I had. But where I'm really starting to look now is at Latin America where you haven't seen the same sort of run up. And I think there's a lot of great deals, specifically in Brazil. But I am going to, you know, I calculate I'm like 80 or 90% in US related equities and investments in real estate and I want to move down to 50 or 60.

• 40:47Ed Elson?

  Yeah, I'm sure there are a lot of people listening who are trying to think, okay, well, what do I do? How do I get some European exposure? Well, I would say if you want to do this yourself, when we talk about this a lot, the safest way to do it, and probably the smallest way to do it, is just to buy a diversified portfolio of stocks in the form of an ETF. So some, some of the low cost options you could look at, Vanguard has VGK, also iShares has one, IEUR, that's their core Europe ETF. Those are just options that are low cost. I'm not saying you have to do those. I'm not being paid by Vanguard or iShares to say that. I think the point being though, I wouldn't go in and try to find all of the gems in the European stock market. Don't go picking individual stocks.

• 41:31Ed Elson?

  I think the best thing that you could do here is just look at the European stock market indexes, look at the ETFs and the index funds and find the ones that are low cost and that makes sense for you.

• 41:43Scott Galloway?

  In sum, you're exactly right. Index funds, dollar cost averaging, but keep in mind, if you're 100% invested between your real estate, between your savings and between your stocks in US companies, you might think you're diversified or not. And Goldman just put out a research saying that when stocks get this expensive, it usually indicates almost flat returns for the next decade. So, you know, we'll see. They've been wrong before. But absolutely, I think you want a little bit of exposure to some of the international markets. I mean, just think about the sentiment around Europe, how much has changed in the last 60 days and what it's overshadowed. China, as evidenced by the BYD story, is having a bit of a like,

• 42:26Scott Galloway?

  don't, don't forget about us between DeepSeek, between BYD. China's like, I don't, you know, forget about us at your own peril, folks. We're still the second largest economy. We're still very good at what we do. We're still really well managed. I mean, I'm even thinking about going back. I never, I didn't think I'd be back in China for another five or 10 years. And I'm thinking, oh, maybe it's time to do a trip there. We were talking to Alison about it.

• 42:47Ed Elson?

  We gotta do a trip and we gotta do a live podcast there. And we gotta meet with Xi Jinping in the Politburo.

• 42:53Scott Galloway?

  Oh, yeah, that's gonna happen. Yeah, that's, we're such players. Yeah.

• 42:59Ed Elson?

  Influence.

• 42:59Scott Galloway?

  You're more likely to stop in Seoul on your way back and join a K-pop band.

• 43:06Scott Galloway?

  I'll be the sullen one. I'll be the sullen one that gets addicted to heroin. You'll be the front man that everyone's crazy about. Anyways.

• 43:15Ed Elson?

  We'll be right back after the break with a look at ultra-luxury hotels. If you're enjoying the show so far, hit follow and leave us a review on Prof G Markets.

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• 44:32Scott Galloway?

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• 45:42Ed Elson?

  We're back with Prof G Markets. Ultra-luxury hotel group Arman is seeking $2 billion from investors to drive its global expansion with plans to grow its presence across the Middle East and Africa. The funds will support 23 ongoing hotel projects and the development of Arman residences, a collection of lavish homes offering hotel-level amenities. Additionally, the company plans to launch a new hotel line tailored to a younger clientele. This is not groundbreaking news. It's not earth-shattering from an economic perspective, but we got to cover it because, Scott, you are the expert, the world-renowned expert on luxury hotels.

• 46:24Ed Elson?

  You've stayed at probably every Arman property in the world. And so, you know, any time that the Arman shows up in the headlines for any reason, I think we got to cover it. I think we got to look at the luxury hotel market. So, Scott, please take it away. What is your reaction to the Arman Group going out and raising $2 billion to expand across the globe?

• 46:48Scott Galloway?

  So, I'm fascinated by this industry, as you referenced. I spend a disproportionate amount of my money on, I wrote that book on happiness. And one of the things I took away from it, I struggle with happiness. And one of the things I took away from writing a book on it is that every piece of research says that we overestimate the happiness, things will give us and underestimate the happiness that experiences will give us. So I spend a disproportionate amount of my income on travel and I don't travel to cities. I travel to hotels. I'm obsessed with those hotel lists and I just find it absolutely fascinating. And if there's a great new hotel, I'll travel to the hotel. I didn't go to the PSG game with my son in Paris. I went to the new Cheval Blanc.

• 47:30Scott Galloway?

  That's how I travel. I go to hotels. I don't go to cities and I'm fascinated by the business. So first off, the business model, let me back up.

• 47:39Scott Galloway?

  Peter Drucker said demographics are destiny and that is every major business trend can be predicted by demographics. And what you want to do is you want to get in front of a demographic trend. It's like surfing when the waves are perfect, right? It's easy to be a great surfer with great waves or a great skier with great powder. And demographics are the great powder and great waves. And one of the biggest demographic trends, quite frankly, is just the wealthy. The number of millionaires in the US, Ed, get this, has doubled since 2020. So it's just, it's staggering. One in 15 Americans is now considered a millionaire and a projected 16% growth to 25 millionaires by 2028. So the fastest growing demographic group is not even the 1%, it's a 0.1%.

• 48:23Scott Galloway?

  And if you think about the brands in the hotel space, the nicest brands were the Ritz Carlton and the Four Seasons. They were kind of the duopoly for rich people. And then Mandarin Oriental kind of saw an opportunity out of Hong Kong, came in, tapping into wealthy Asians and the great brand halo of Asian service. And then the explosion in mega kind of centimillionaires and billionaires, not even, but just very, the super wealthy, so to speak. I'd say that's probably people 10 million dollars and above. A whole raft of brands have come in above those luxury brands. Rosewood, Amane, as we're talking about, Cheval and Blanc, Sixth Senses. And they basically have come in and they've leveraged a lot.

• 49:08Scott Galloway?

  They've leveraged demographics, they've leveraged the new means of branding. And that is only the Four Seasons or the Ritz Carlton or Marriott or Hilton had the money to develop very expensive reservation systems and do branding. And now branding isn't a function of advertising. It's a function of Instagram. And these hotels are literally an Instagram orgy. They are so over the top. They have such a beautiful clientele. They're in such beautiful locales that basically their entire marketing is on, at the Hotel Ducap, at any given moment, there are a thousand Instagram postings an hour just saying, look at this place. Look how incredible this place is. Look at how incredible the food is.

• 49:51Scott Galloway?

  If you go to, you know, whatever it might be, I'm trying to think of the Rosewood Myakoba. These things are just built for Instagram. So they've taken advantage of this new kind of content creation usurping marketing spend or replacing or obviating the need for marketing spend. And you have also post-COVID, a sort of a YOLO mentality where people are saying, for the first time, I'll spend $5,000 a night on a hotel. And people, even rich people, never would have thought of that. They never would have considered it, but now they're like, okay, maybe I know someone who's died, maybe I'm in my 60s. I've got the money. This thing is extraordinary. This place is just extraordinary. I, you know, will pay $5,000 a night.

• 50:35Scott Galloway?

  The business model is also incredible because what they do is they find a local billionaire that wants to say, I own the Four Seasons in Hawaii, Michael Dell. They pay for the construction. They then enter into a management agreement with the flag, the Four Seasons or Rosewood. Who manages it, does the service, does the training, does the standards, the decorations, the interior design, has the reservation system, and they take, say, between eight and 12% a year, which doesn't sound like a lot, but most of it hits the bottom line because the cost of the employees is funded out of the revenue. And then they take an additional eight to 12%. So even in 2008, when the market crashes, the Four Seasons still makes money because they're taking eight to 12% off the top. And they have a

• 51:19Scott Galloway?

  services agreement where the owner of the Four Seasons in Midtown Manhattan basically has to declare bankruptcy because he has to maintain certain levels of service per his agreement with the Four Seasons. So the Four Seasons only actually owns one of their hotels. The rest, they get other people to finance and they take a very high margin management fee to kind of run the place. So they outsource the capital risk. They manage, or they train, or they create the service standards, and they just get all high-margin, incredible revenue. In addition, they found another way to make a shit-ton of money, and that is they said, okay, let's take a $5 million or an $8 million condo in a high-rise on the beach in South Beach,

• 52:00Scott Galloway?

  and we branded the Amen Residences, and we can charge $12 million for it because they get hotel amenities and the branding. And the owner, when he or she is not there, can put it back into the rental pool, and they rent it out, and they split the revenue. The owner gets 50%, and the brand gets 50%. So I get someone else to finance the construction of something, ridiculously overpay for it, and then it continues to make revenue for me because of the brand. I mean, this really is a lesson in the power of brands, a lesson in the power of demographic trends, and a lesson in kind of business models around you don't want to be in the business of owning the capital. You want to be in the business

• 52:44Scott Galloway?

  of managing it and taking revenue off of the top.

• 52:47Ed Elson?

  One thing I often think about, Scott, we've addressed what the world looks like when it's ruled by the mega-rich. You know, we've seen huge monopolies form. Money and lobbying power starts to take hold in the government. You start to see these populist movements. You also start to see the rise in these luxury brands and these luxury items and these businesses that specifically service extremely rich people where you can charge these incredibly high prices. My question...

• 53:18Ed Elson?

  Is what is going to happen when all these billionaires and multimillionaires start dying? Because they're all getting old ish. And what's going to happen when all of that wealth is transferred on to? I mean, if we had to guess, their children and their grandchildren. What happens to a society that is dominated by people not who made obscene wealth, but who inherited obscene wealth?

• 53:46Scott Galloway?

  Just to keep it real, I want to talk about a couple of other hotel stories.

• 53:52Scott Galloway?

  When I was right out of business school, I started a company called Profit and we did consulting and we would just take any engagement. And I took an engagement with a pager company, helping them figure out their customer service. And it was in Minneapolis and I went with my friend Lee Lotus. And it was, I remember it because it was the day of the Clinton Bush Perot debate. And we're, we got a hotel for 39 bucks a night, I think at the Minneapolis airport. And we had to go out and try and buy nose plugs or some like weird Vaseline to put under our, or weird scent to put under our noses, because it stank so badly of smoke. It literally felt like someone had fallen asleep and been burned alive by the smoke.

• 54:33Scott Galloway?

  And, and then the other one was I was at, I had a client, I think it was Roots or some Canadian company, the Montreal, in Montreal. And it was as, you know, it was my own company, we're a small business. So it was like, I think it was like 70 Canadian. And I checked in and it was 1993 and you know, whatever, I was your age. So the first thing that I do, I settle in and I turn on porn. And it's not working. So I called down to the front desk. I'm like, the TV is not working. So this Asian woman comes up.

• 55:03Ed Elson?

  It's the White Lotus scene again.

• 55:04Scott Galloway?

  Yep. It turns on the TV and of course the porn comes up and it's like going in and out. So she sits there and starts banging on the TV and occasionally the porn comes in and it comes out, comes in, comes out.

• 55:16Ed Elson?

  Were you not ashamed?

• 55:17Scott Galloway?

  Oh, it was fucking humiliating. It was like crazy embarrassing. And I remember thinking, and then this couple, this family of like five is looking for the room. They come into my room and start going, where's room 308? As my porn is coming on and off my TV, she's banging on the TV. And I looked at the couch, I remember the exact moment, I looked at the couch and it was covered in plastic and I thought, this is where people come to kill themselves. This is that kind of place you said, I want out, I can't fill this void in my chest. I'm gonna go check into this hotel. Anyway, so I've had, I've seen, I've seen hotels from all ends of the spectrum. I'm sorry, what was the question, Ed? What was the question?

• 56:01Ed Elson?

  My question is, what is going to happen when the wealth transfer finally occurs?

• 56:07Scott Galloway?

  Look, I believe in a really aggressive inheritance tax. I don't believe in dynastic wealth. One, it's bad for society, so rich kids get into the best schools and also inherit the money so that they can start businesses. And there's a myth that the middle class is a naturally occurring organism. It isn't. It requires additional redistribution of income. And Republicans and the incumbents would like us to believe that, oh no, the middle class is a naturally occurring organism and it'll come back on its own. No, if you don't take money from corporations and the most fortunate among us and redistribute it into the middle class, the middle class throughout history eventually goes away. And what you have with dynastic wealth is you're taking capital that should go back

• 56:52Scott Galloway?

  into the ecosystem and just creating these dynasties of unproductive rich people. Now, the good news is that most of them aren't very happy. And so for me, the reason that you can justify an exceptional inheritance tax is that additional capital or inheriting more than, say, 10 million bucks, that doesn't increase the happiness of your kids. I know a lot of rich kids and I know a lot of kids who are not rich and the levels of happiness are not greater among the rich kids. So if, if the whole point is to create a society where people can have purpose and meaning and live a happy life and they're getting no additional happiness. If you let them inherit more than, say, 10 or 20 million dollars, then what's the

• 57:33Scott Galloway?

  point when you could redistribute that capital to other people and give them more of a shot? So I hate dynastic wealth, but what you're seeing, and I see it, I mean, I'm, I think I've always resented rich kids because I'm not one of them and I was always jealous of them. But you're, what you're talking about is already happening, Ed. I mean, when you go to these nice hotels, there's people in their 50s and 60s and you can tell it's probably their money. And then there's a whole raft of a younger generation. To be clear, some of them, whether it's tech, some of them, you know, whatever it is, but a lot of them are there with their parents' credit card. It's already happening.

• 58:11Ed Elson?

  By the way, this, this funding round by Aman, they're looking for investors as we speak, and they're specifically looking for high net worth individuals to invest. If you got the call from Aman tomorrow inviting you, say, to an SPV into the new Aman residency, would you invest?

• 58:32Scott Galloway?

  Hundred percent no. The returns are, the returns are shitty because it's a vanity investment. So there's a lot of people that love the, I'm sure they have some sort of deal. People love the idea of investing in Aman. So that means they can extract, they can get very cheap capital, which spells shitty returns. So I would bet that it's just not a great investment. It's like timeshares or I would, I would, I don't, I haven't seen the paperwork on the underlying dynamics, but because so many people love the idea of investing in Aman, they're going to get a disproportionate amount of capital such that they will be able to offer really shitty terms. I would bet the returns will be awful, but maybe there's some psychic return of saying, oh, I'm an owner of Aman and I get,

• 59:13Scott Galloway?

  I get 10% off of rates. I remember more hotel stories back when I remember taking my girlfriend, I was trying to impress her to a nice hotel in Cabo, but I signed us up. The reason I got to go is I signed us up for a timeshare tour. And it was at a turn on when I told her we had to take a two hour tour in the middle of the day to look at timeshare opportunities. That's what happens when you roll with a dog. That was, when I laid that on her, got her down to Mexico, I'm like, oh, I got this like free cocktail thing for us. She's like, I'm not going to go. I'm like, you need to go. It's a timeshare pitch. We have to go. Otherwise I can't get this room right.

• 59:52Scott Galloway?

  Do you think that's, do you think that's a turn on?

• 59:54Ed Elson?

  God damn, that doesn't work.

• 59:57Ed Elson?

  Let's take a look at the week ahead. We'll see the personal consumption expenditures index for February as well as earnings from GameStop and Lululemon. Do you have any predictions for us, Scott?

• 1:00:09Scott Galloway?

  Yeah, my prediction is that the flows of capital into Europe begin to infect not just the defence contractors, but start to infect the other sectors in the economy. And that we're going to see, I think so far, European markets are up 13 or 16%. I think they're going to be up 30% plus this year. I think this is a trade, a momentum trade. And I think there's probably a lot of fund managers right now thinking, okay, I missed this, but it's not too late. And you're going to see just an entirely different willingness and promiscuity around allocating big pools of capital to European stocks that haven't been there for 20 years. I, quite frankly, I just think we're getting started.

• 1:00:47Ed Elson?

  To that point, we made the point that US stocks have come down, but they're still expensive. You can make the same case with Europe. European stocks have gone up, but they're still cheap. I think you're probably right there. This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director and Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from the Vox Media Podcast Network. Join us for a fresh take on markets on Thursday.

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