Pod Insights Prof G Markets The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings About this episode Scott and Ed discuss why United Health’s stock hit a five year low, Warner Bros. Discovery's latest move to rebrand Max, and Airbnb’s foray into offering bookable services for travelers. They then break down earnings from Alibaba and Tencent, highlighting how the results signal the growing momentum of AI in China — and why they're feeling bullish on the country's tech sector. Finally, they dissect the GOP’s proposed tax bill, explaining how it overwhelmingly favors the wealthiest Americans and threatens to accelerate wealth concentration across the country.
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Transcript 12,881 words · 10 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
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1:24 Scott Galloway? Today's number one. This week is the one year anniversary of the Prof G Markets Feed. Speaking of babies, Ed, when someone hands me their baby, you know what I say?
1:34 Ed Elson? What do you say?
1:35 Scott Galloway? Sorry, I'm a vegetarian.
1:48 Ed Elson? Weird joke and we weren't speaking about baby or I guess one year anniversary. I put it together.
1:53 Scott Galloway? Ed, what what sexual position guarantees the ugliest baby?
1:57 Ed Elson? What?
1:57 Scott Galloway? Ask your father. Ask your father, Ed. Ask your father.
2:02 Ed Elson? That's good.
2:03 Scott Galloway? How are you, Ed? Happy anniversary.
2:06 Ed Elson? I like that. Yeah. Happy anniversary. What what kind of emotions does this bring up for you? We've been doing this for a year now. At least we've been doing this dedicated podcast for a year.
2:15 Scott Galloway? It's just exceptionally rewarding to watch your growth and the growth of the team and.
2:23 Scott Galloway? I'm so used to virtue signaling. I can't even, I can't even like, I'm so used to being full of shit. By the way, I did, the FT is doing a, the FT is no joke doing a profile. Let's get back to me. The FT is doing a profile on me and they can't.
2:40 Ed Elson? The FT really likes us. They, they let me write an article for them a few weeks ago.
2:44 Scott Galloway? Did they really? Oh, and by the way, so anyway, back to me. The fuck cares about you? Stop acting like me and turning it back to you.
2:51 Ed Elson? Something came over me. I don't know what happened.
2:52 Scott Galloway? The FT is doing a profile on me and they came over and they were like taking photos and all this stuff. So I feel like that is literally the closest to British royalty I will ever get. The FT is doing a profile on me. I'm going to be one of these guys that spends a billion, like something like half the lords and the knights are billionaires. Yeah, but it's not, it's not a pay for play thing. Don't think that. But I figure like things are cheaper here. So I'm wondering if like two or three million bucks, I can be like one of these honorary princes that gets.
3:22 Ed Elson? Hundred percent.
3:23 Scott Galloway? Gets a, a title. So I want to be some sort of lord or prince of Wales and I'm going to change my name to Shamu and I'll be Shamu Prince of Wales.
3:34 Scott Galloway? That's worth a few million dollars.
3:35 Ed Elson? I think you could easily, easily get knighted. Just throw your money around, become friends with the right people. That's certainly in your future.
3:43 Scott Galloway? I told you they, right when I moved there, they invited me to 11 Downing Street.
3:47 Ed Elson? Hold on, hold on, hold on. Scott.
3:49 Scott Galloway? Yeah.
3:50 Ed Elson? It's 10 Downing Street.
3:51 Scott Galloway? 10 Downing, 11 Downing? Oh, maybe that's why they didn't invite me back. It's 10 Downing. Thank you. Thank you. It's good to have some local knowledge. Anyways, the, so I went down, uh, first time I went down, they didn't have me on the guest list. Thought I was so important. Went down. They're like, and I, the woman called me, I'm so sorry. We forgot you were coming in. Went in and they wanted to put me on the governing body for UK football.
4:15 Ed Elson? Really?
4:16 Scott Galloway? Yeah. I thought, I know nothing about football, but it sounds like a shit ton of fun and I get to go to games.
4:20 Ed Elson? Oh my God. You didn't tell me that part.
4:22 Scott Galloway? Oh yeah. First they wanted me on the, it's called the OFC, the Office of Communications where you'd regulate, I don't know, you regulate on Facebook and all that shit. And I'm like, oh my God, that sounds awful. And they're like, well, we're putting together a governing body for UK for, for the premier league. And I'm like, I am so in, I'll be hated. The American making bad decisions around UK at the sports past time.
4:42 Ed Elson? Yeah. The Todd Bowley of governance would be good.
4:45 Scott Galloway? I know this is going to come as a shock, but they haven't called me back.
4:49 Scott Galloway? So I think this pod has something to do with it.
4:51 Ed Elson? You didn't look the part, I guess.
4:54 Scott Galloway? I'm not in the British government. Let's talk about us. One year, one year. What are your reflections on the incredible opportunity afforded afforded you?
5:02 Ed Elson? It's been a very good year. I've been sort of been a transformative year for me. One thing I was thinking, we're coming up on four years of me working for you. I started working for you in June 2021. And that to me is really shocking. That feels like a really long time that I've been working for you. Not sure how it feels for you.
5:23 Scott Galloway? Yeah, it's shocking.
5:28 Ed Elson? I thought you were frozen.
5:29 Scott Galloway? I'm dazed.
5:30 Ed Elson? I stopped talking because I thought you were frozen. Your face was so still. Zero reaction or emotion.
5:35 Scott Galloway? I am thinking clear and have migraines. That was definitely shocking.
5:39 Ed Elson? That's a long time, no? It feels like a long time for me.
5:41 Scott Galloway? It has been a while. It's been your, this has been your only job since you got out of college, right?
5:46 Ed Elson? Yep.
5:46 Scott Galloway? Now, it's amazing how fast this comes. So you came to work with a, I again, loved the story about Joanna Coles calling me and saying, I have a gift for you. And I'm like, oh, great. And she's like, Ed Elson. And I'm like, yeah.
6:00 Ed Elson? Remember the name.
6:01 Scott Galloway? She's like, he's my son's best friend and you have to hire him tomorrow. You're welcome. And I'm like, well, what role does it? Doesn't matter. It doesn't matter.
6:14 Scott Galloway? She literally bullied me into hiring you. Anyways.
6:17 Ed Elson? And it panned out.
6:18 Scott Galloway? Prop G Markets is now, it's our fastest growing pod in the Pod Willing franchise, which is the LLC I just invented to put all this shit in so I could engage in massive tax evasion. I mean, just bring some synergies together around the backend and the infrastructure. And because our average age is 34, to reach as many 34 year old males on CNBC, you'd have to run, uh, watch CNBC until 2088 to reach as many young men.
6:47 Ed Elson? By the way, the, I, as I, you, you recognize, I had my very first TV appearance last week.
6:54 Scott Galloway? You were fantastic. They got your name wrong on the Chyron. That's the first thing I noted.
6:58 Ed Elson? They call me Ed Olson. And I said, you know what? Who cares?
7:02 Scott Galloway? I'm like, wow, this Ed Olson guy looks a lot like Ed Elson. You were outstanding. You were measured.
7:09 Ed Elson? Thank you.
7:10 Scott Galloway? And they had all these, you know, the average, I look, by the way, I love Katie Tour.
7:14 Ed Elson? Yeah.
7:14 Scott Galloway? Right out of Central Casting to be a
7:16 Ed Elson? Great host. Yeah.
7:17 Scott Galloway? A great host for seven year old men to be like, oh, where's Katie?
7:22 Scott Galloway? Where's that young whipper snapper Katie?
7:26 Scott Galloway? Where's my oxygen tank?
7:32 Scott Galloway? One year, one year.
7:37 Ed Elson? You're just emulating yourself at this point.
7:43 Scott Galloway? I'm telling, I got this new, I got this new brand of edibles and it's working. It's working. I did it last night and I called a friend out and talked to him about three years and she went, are you all right? I could not stop talking. I could not stop talking.
7:59 Ed Elson? This is fun, but we should really, we should really get to the show, right?
8:03 Scott Galloway? That's my line. I'm sorry. Just tell me a little bit more about your parents on MSNBC.
8:07 Ed Elson? Very.
8:08 Scott Galloway? Okay, that's enough. Let's get to the headlines.
8:13 Scott Galloway? Hit it.
8:15 Ed Elson? Actually, before that, I have to make one announcement and this is a big announcement. And that is that Prof G Markets is going to air on the Prof G Pod feed. That's the main feed where you see Scott's face with the turquoise for the final time on June 9th. And after that, this show is going to be exclusively on the Prof G Markets feed. That's the feed. If you type in Prof G Markets, it's the green. It's got me and Scott hanging out in a living room. And we're going to be publishing this show every single day of the week.
8:44 Scott Galloway? We're going daily.
8:45 Ed Elson? So Monday through Friday, you can get your fix for Prof G Markets. It'll be the most up to date coverage of the markets from the Prof G team. So I would encourage you, if you're listening on the main podcast feed, the Prof G Pod, take the opportunity now. Go follow the Prof G Markets feed. Wherever you get your podcasts, that's where you're going to be getting this show. And you're going to be hearing it every single day because who wouldn't want more of us, right?
9:10 Scott Galloway? All I gotta say is it's, we're doing this because it's rewarding and we're CNBC, we're coming for your bitch ass.
9:15 Ed Elson? That's right. And we're taking Josh Brown with us. Your star talent, we're taking him with us.
9:20 Scott Galloway? Oh, we love Josh Brown.
9:21 Ed Elson? All right. Let's start with the weekly review of market vitals.
9:31 Ed Elson? The S and P 500 rallied on news of US-China negotiations. The dollar jumped before giving up those gains as optimism faded. Bitcoin fell and the yield on 10-year treasuries increased. Shifting to the headlines. UnitedHealth Group had a terrible week, first dropping as much as 18% after the company pulled its guidance and announced its CEO is stepping down. And then two days later, the stock fell 17% on news that the Justice Department is investigating the company for Medicare fraud. At the time of this recording, shares are at a five-year low. Warner Brothers Discovery announced it's bringing back the HBO Max name for its streaming platform. The change will take effect this summer. It will reverse the rebrand they introduced just two years ago, and this marks the platform's
10:15 Ed Elson? fifth name change in just five years. And finally, Airbnb is expanding its offerings by allowing travelers to book services such as spa treatments and personal training right at their rental. The company is also reimagining Airbnb experiences by placing a greater focus on authentic, locally-led activities. Okay, UnitedHealth, crazy dramatic month for this company. I mean, first they had that bad earnings report in April, and that was their first miss since 2008. They cut guidance, the stock fell 20%. Then, last week, the CEO steps down, they pull their guidance, the stock falls another 18%. Then, Wall Street Journal, two days later, reports they're being investigated for Medicare
11:00 Ed Elson? fraud, down another 17%. So we're now looking at, in just one month, a 57% destruction in value for what was one of the top 15 most valuable companies in the world. So I think if anyone's wondering, like, why is the stock falling so much? It's a combination of there are real issues that the company is dealing with, but also these were all surprises. Like, the CEO stepping down, that was a surprise. The suspension of the guidance, an even bigger surprise. And then the kicker, of course, is this Medicare fraud investigation. And as we've discussed... Wall Street hates surprises. But I think the other side of this that is worth thinking
11:41 Ed Elson? about, you know, UnitedHealth is kind of a bellwether for the healthcare industry. So, you know, when it goes up, so do the other healthcare stocks. When it goes down, so do the other healthcare stocks. And that's what we saw here, where CVS dropped, Eleventh dropped, Humana dropped, lots of other healthcare stocks fell with it. And so I think the question people are asking now is, are the problems that this company is facing, are they specific to the company? Or are they industry wide? And the market appears to believe they're somewhat industry wide. That's why you're seeing the devaluations in these other stocks. And I think that probably has to do with what we're seeing in politics. You know, we're seeing talks about lowering drug prices, increasing price transparency,
12:26 Ed Elson? giving Medicare more negotiating power, all these things that would be great for consumers, as we've talked about, but that would, you know, hurt the healthcare industry, hurt the bottom line. My view is, if history is any guide, healthcare investors have nothing to worry about. Because what history would tell you is that lobbying ultimately wins. And who is the greatest lobbyist in America? It's the healthcare industry. $300 million in lobbying last year, more than any other sector, more than double what oil and gas spend. Never underestimate the power of lobbying, and what it can do for your stock price. So I look at what's happening with UnitedHealth. I see this as a company specific problem. They're dealing with internal issues. They have the PR crisis with the shooting of the
13:11 Ed Elson? CEO a few months ago. They're also uniquely exposed to Medicare and these higher costs that are coming with it. So to me, this is a UnitedHealth problem, not a healthcare problem.
13:26 Scott Galloway? I agree with you, and I hate to say this, this is probably a buying opportunity for this stock to get cut in half. Yeah. Yeah, it's probably because, to your point, there's so much regulatory capture. I mean, these are American companies donating money to American politicians such that they can implement laws such that we have to pay more for drugs that were invented and manufactured here than they pay in Mexico or Canada, such that these American companies and their CEOs and their shareholders can get rich through incremental price gouging of American households, where we have ended up with 40% of American households have some sort of medical or dental debt.
14:06 Scott Galloway? And in America, we pay $13,000 per capita, per consumer, for our healthcare. The UK, Canada, Australia, all the other G6 nations average around 6,500. So we're paying $6,500 more per person, and we're more obese and die earlier and have more diabetes and more anxiety and depression. So we pay double for a product that is worse. If you were to figure out a way to bring those costs in line with the rest of the G6, who have better outcomes, 355 million people times $6,500, I think it's somewhere around 2.2 or 2.4 trillion dollars. And those costs flow through our entitlements and drive up the cost of government.
14:50 Scott Galloway? In addition, the amount of money and misery that of people who have to work too hard, people who can't go to work because they're unhealthy, all of this bullshit around make America healthy again is nothing but a distraction to talk about dyes and vaccines is a distraction from the real problems, the thing that is hurting America is income inequality. If you really wanted to make America healthier again, raise minimum wage to 25 bucks an hour. You know, there are just too many people who are obese, and the reason they're obese is because they work so damn hard, they don't have time to get to the gym, and they don't have enough money, so they have to stuff themselves with the cheapest form of calories, which is fast food. But we don't want to have those difficult conversations. So we have to go after healthcare.
15:34 Scott Galloway? And the only way you're going to go after healthcare is through figuring out Citizens United and getting lobbyists out of the picture here because they are literally raping and molesting the US consumer and creating 40% of America has dental or medical debt. Can you imagine the tax that puts on people's psyche and their levels of just prosperity and wellbeing and mental wellness? And then you come back, I think what's happened is I think people are so pissed off at these companies that anytime someone in the DOJ or the FTC or whoever raises their hand and says, should we investigate these guys? I think they're very inclined to investigate these guys. I think they are pissed off at these companies. So there's two ways to look at it.
16:19 Scott Galloway? Is this the chickens coming home to roost? Or is this just a temporary blip where they're, the Americans will move on to something else and the lobbyists will figure out a way to continue to charge Americans double what they pay anywhere else in the world for worse health outcomes such that their shareholders and the management of these companies can continue to soak America? And the story that brings it all home for me, I read the most heartbreaking story. So the New York Times has this section called Recent Weddings. Have you seen it? And it's just this lovely section where they have a nice picture of two people in Central Park and it talks about, it talks about their nuptials.
17:00 Scott Galloway? So they bended the rules for the first time and they did a wedding announcement of a young woman and a man and did the whole full write-up and she was in her gown and they weren't getting married. And the reason they made an exception is this woman has a glioblastoma. She has an incurable brain cancer, right?
17:20 Scott Galloway? And she's decided that they're gonna get married, they're gonna have the ceremony, but they they're not gonna get legally married because she's worried he would inherit her medical debt. And I mean, you hear this shit and you're just like, Jesus Christ, this is the most prosperous nation in the world? And we're allowing that like, that kind of misery on people? Anyways, that brings home, the the American healthcare system is not only making us sicker physically, it is allowing so much strain and and pressure on people. And I just love that these companies are getting kicked in the nuts.
17:54 Ed Elson? But again, it's just, it's company. And this is sort of my point. It's like, United Health has its own set of problems that they're dealing with, one of them being, one of the executives of their company got murdered, plus the fact that their business is, they're very much tied to Medicare. And what they're dealing with right now is that there are all these old people who didn't get these treatments that they were thinking of getting during COVID. And suddenly, they all they all come now, and they need knee replacements and hip replacements, etc. And this is a problem for United Health, because now they have to actually pay for those treatments. Before, they were barely paying for treatments and then still collecting all the insurance. So that's a United Health specific problem.
18:39 Ed Elson? And now you have this investigation. But I think the the things that you get out there are important. And I think the question is, how do you fix it? And the only way you really fix it right now, it's about getting the cost of drugs down. And the most obvious way you do that is you increase price transparency. And you create laws that force these these companies and these PBMs to publish what what the price is. You wrote a really good, your No Mercy this week is really good, I read it. And you cite this presentation by this guy, Brian Lawrence, where he basically says that, you know, health insurance today,
19:21 Ed Elson? it's akin to using auto insurance to buy gasoline. Like, it doesn't make any sense that we we don't even know what we're paying for when we sign up for these treatments until after the fact. And we can never figure out what these medical bills are. So we need more price transparency, which, by the way, Biden worked on, and
19:40 Ed Elson? Actually, Trump worked on it a little bit too, but we haven't really seen that come in to come to any fruition. And then we need Medicare to be able to have the ability to negotiate on prices, which is what every other country has, and we don't have it for some reason. Again, Biden changed that in the Inflation Reduction Act, but we still haven't seen really any reduction in the price of drugs, I think because it hasn't been properly enforced. And the last thing I will say, I looked back at our conversation with Jonathan Kanter, who's the previous head of the of the of the antitrust division of the DOJ. And we asked him the question, what is the one industry that most needs regulation and increased regulatory enforcement, specifically from an antitrust perspective?
20:25 Ed Elson? And his number one answer was healthcare.
20:28 Speaker 06 You talk about Medicare, for example, there have been studies by the Wall Street Journal and reports about massive billions upon billions of dollars in overcharging due to things called upcoding, which is when an insurance company goes in, they take someone on Medicare, make them look really sick, and then they get to bill for all that, but then they don't necessarily reimburse for all that, and they keep the money in between. These are the kinds of areas you would focus if you were actually trying to make government less expensive and more efficient.
21:00 Ed Elson? He talked about a company like UnitedHealth is placing itself on both sides of the trade in a lot of cases where they're offering the insurance, but then they're also a pharmacy benefit manager at the same time. So they're sort of buying and selling from its own from itself. But I think it was really interesting that he said that. And I hope that what we will see is some increase in regulating this industry. But again, I don't see this as totally structural yet, because I still look at the money in lobbying and the fact that it's $300 million last year that was spent on healthcare lobbying. I just am not that optimistic at a structural level.
21:39 Scott Galloway? So I think over time, the only way to really do that, I think, and I hate to say it because I always have this gag reflex, well, I'm not a man, I'm not macho, I'm not capitalist. If I recommend socialized medicine, for God's sakes, we need socialized medicine.
21:52 Ed Elson? Yeah.
21:53 Scott Galloway? The only way to solve the deficit, in my opinion, is move to socialized medicine. And the only way we do that is to figure out a series of executive actions, or some sort of legislation, or the right Supreme Court justices to overturn Citizens United, because money has just. I mean, the the greatest investment, return on investment in our economy is when these healthcare companies give money to politicians.
22:14 Ed Elson? I would encourage everyone to go look at Senate Bill thirty five forty eight, which was supposed to address all of this, and it was actually backed by both sides. And you look at what happened, it was proposed, and now suddenly it's just dead. And you try to ask the question, what happened to the bill? And everyone says, oh, it just sort of didn't get reviewed and it just got kind of held up in Congress. And so now we're not, now it's dead. It's unbelievable how you just see this happen, how the money in in politics actually does just grind these things to a halt. And you don't really know it because it's such a soft and unceremonious death, like you sort of forget about the issue. But go look up that bill because that that addresses everything we're talking about, price negotiations, price transparency, and it just sort of flopped in Congress.
22:59 Ed Elson? Let's move on. Very different vibe. HBO is doing another rebrand, their fifth rebrand in five years. We had HBO Go, then HBO Now, then HBO Max, then Max, and we are back to HBO Max. Scott, our producer Claire has a clip that she wants to play where I'm gonna look very foolish.
23:22 Scott Galloway? HBO Max, this will go down in history as a first ballot Hall of Fame, head up your ass, brand strategy move. There's something in brand strategy, we spend two sessions in my brand strategy course at NYU called brand architecture. HBO, a brand is a series of intangible associations that result in a rational trial or margin. You could have infinite capital and you couldn't build a brand like HBO in two, three, five, maybe even 10 years. And they're taking that brand and immolating it so they can call it Max? I mean, this is just, this is an outrage, Ed.
23:59 Ed Elson? I actually like this rebrand. I said I liked it on Twitter. I said I just think it sounds cleaner. And I got a lot of pushback, a lot of unfollows, interestingly. But the way I see it, there are all of these other production companies, they have to now transition getting the Discovery Plus content onto the Max, onto the Max platform. Don't you think that Max is just kind of cleaner?
24:25 Scott Galloway? Well, well, first off, let's let's nod to your logic and let's change the name of your educational institution to Prince because it's cleaner, Ed.
24:34 Speaker 07 It's cleaner.
24:34 Ed Elson? Take it away.
24:35 Scott Galloway? Wow, this is my one year, this is my birthday, you admitting you were wrong and I was right. That doesn't happen very often here. HBO has developed such, it is the artisanal brand. It is the Hermes, it is the Ferrari, it is, you know, it is the Beverly Hills Hotel of hotels. What it just, it is the premier artisanal brand in media. And their ability to attract the best talent and they've been able to maintain this culture that attracts the best talent has resulted in a streaming network that is, if there's people talking about a zeitgeist cultural moment, it's usually because of a show on HBO.
25:16 Scott Galloway? Whether it's Succession, whether it's The Last of Us, I mean, or Game of Thrones, or The Sopranos. Or The White Lotus, featuring Scott Galloway. Thank you very much. You're welcome. They have figured out a way to capture lightning in a bottle more often than any other firm on two and a half billion dollars in content budget versus Netflix at 18 billion. To take that brand and fuck with it like this shows that you are a terrible fiduciary for shareholder value. It means no one on the board, a board kind of has three jobs. One, if and when to sell the company. Two, hiring and firing the CEO, make sure you have the right guy or gal. But also, three, you should have some domain expertise on the board such that you can save the CEO from him or herself.
26:00 Scott Galloway? You can occasionally weigh in and go, you may want to think this through. Or they call on you if you have a really good relationship, they call you and say, what are your thoughts around this? The fact that they did five brand changes in five years and they decided to do away with one is what is one of the greatest brands in the history of media, shows there is no one on the board that has any sense of marketing or branding. What is even worse about all of this is that this is probably the worst board in media. Warner Brothers, Discovery, since the merger, the stock is down 62%. All right, that's bad. They faced a lot of headwinds.
26:41 Scott Galloway? Despite shareholders losing almost two thirds of their value, the board has decided to pay their CEO, David Zaslove, $387 million over the last four and a half years. So shareholders.
26:57 Scott Galloway? You give us a dollar, we'll give you back, we'll give you back 38 cents. And but we're going to give our CEO who oversaw this destruction in shareholder value, a third of a billion dollars. This is a absolute destruction in shareholder value. It shows that the people who, some of the most creative people in the world can't save themselves from themselves. And I, when, I will say this, a step back from the wrong direction is a step in the right direction. So good for them. They probably realized they really needed HBO. I'm triggered by this because HBO has, has literally garnered some, in my opinion, has
27:38 Scott Galloway? inspired some of the most incredible moments in creative history. When, you know, when, when Jon Snow and Ygritte, when Ygritte is, comes to her end in Game of Thrones, I think there's some incredible love stories in there. Plus, Game of Thrones, hands down, everyone always said, what about a porno? If it was a really good story with high production values? Congratulations, that's called Game of Thrones. My son, true story, my son did not refuse to have the sex talk with me. I'd said, okay, it's time for your sex talk. He screamed out, no, and started running from me. He literally just refused to have the talk. I said, okay, we don't have to have this talk, but you're watching Game of Thrones with me for eight seasons. That's basically sex education for any 15 or 16 year old.
28:19 Ed Elson? And it starts with a scene with, where you have sex with your sister, right?
28:23 Scott Galloway? Oh, that's right.
28:24 Ed Elson? Not the greatest education.
28:27 Scott Galloway? Yeah, but if there's one, if there's one message from Game of Thrones, if there's one moral, it's that family comes first.
28:34 Ed Elson? That's good. That's good. One of your first relevant sex jokes, I love it.
28:39 Scott Galloway? What's your favorite HBO series?
28:41 Ed Elson? I love Last of Us. Um, I, yeah, I watched season one, I thought it was great. I'm watching season two, but I'm not a huge TV consumption guy. And that's part of the issue, I think, why I was wrong about all of this is that I don't, that the HBO brand doesn't resonate for me. In the way it does for you, because I'm less of a TV guy, which is why I shouldn't really be weighing in on what HBO Max should be doing in terms of branding, because I'm not really the target consumer. But what is striking to me is it just sort of reverses all of the intention behind the merger in the first place, where the idea was, we're gonna, we're gonna merge with Discovery, take all of the Discovery product offering
29:24 Ed Elson? and all the, all the Discovery IP, and we're gonna kind of try to blend it together. And the way we'll do that is by calling it all Max. And this is basically them admitting, wait, all the shows on Discovery suck. They're kind of cheap shitty shows. Meanwhile, we have all the shows on HBO, which are beloved and high quality and are sort of the luxury brand of streaming media. We shouldn't really be meshing or merging these two together. So let's sort of walk things back and go back to the HBO Max brand. And the fact that the architects of Max, the fact they're giving up on the name, I think it shows that you were right. And that the importance here is that you maintain the brand positioning that you built up for years in HBO.
30:13 Ed Elson? Let's move on to Airbnb, yeah?
30:14 Scott Galloway? Yeah.
30:14 Ed Elson? So Airbnb is getting into services and experiences. This is sort of a complete revamp of the app. It was a place where you book vacation rentals. Now it's much more. You can book chefs and tour guides and personal trainers. Basically, anything that you'd be offered at a nice hotel, you can now get on Airbnb. Brian Chesky, the CEO, is calling it Airbnb for everything. People are calling it Airbnb's attempt to become the everything app. The stock rose almost 3%. You give us the analysis here. What do you think of this move?
30:48 Scott Galloway? I would imagine they have figured out that there's a target market of pretty wealthy consumers with a lot of disposable income, specifically corporate travelers who like the amenities of hotels. And so they're, they're starting to add them. I think it's a great idea. I bet it's high margin revenue. I talked to Brian on a semi regular basis and brainstorm. This was not my idea. The idea I had for Brian is if you're in Munich and you say you're 29 and you're working for Salesforce and you're on London Sales Team and you're in Munich meeting with, you know, I don't know BMW or whoever, you can turn on a switch that says you're visible and there's groups or coordinators, almost like a Reddit page
31:30 Scott Galloway? manager, that says we're all meeting at the Hofbra House tonight and everyone's welcome. Because what I found when I was your age, Ed, and you don't do as much business travel as I did, when I was your age, it was literally already molesting the earth, trying to sell brand strategy services. I would find myself in an amazing city, at staying at an amazing hotel with a little bit of money and I had nothing to do. And sure, I could walk around the city on my own, but I would have loved to have gotten together with a like-minded group of people. And Airbnb, I think it's a really nice community. The people, you know, my sense of people who engage in Airbnb are professionals, are culturally interesting people in their twenties and thirties. That's my sense of the populace. I don't know if that's true. That's right.
32:13 Scott Galloway? But to give them another reason or to create an added feature where when I travel with Airbnb, I get stitched into this really cool community of people where I can make friends, find professional contacts. I mean, that's what you should be doing. Create a community. My question, that sounds nice and I agree it would be nice for society. How does it make money? I think it's just another feature. I don't, I don't think it's a money-making thing. I think what, or what you could do is turn it into Airbnb Plus and it creates the ability to go visible and you'd charge, I mean, if you want. I didn't see this as a moneymaker. I saw it as another feature that creates a more sticky brand where people go, I always go. It, what it does also is it takes advantage of their scale because I bet at any given time, there's four, seven, 1100 people staying in Berlin that night
32:57 Scott Galloway? at an Airbnb and no one else can do that. Anyways, that was, that was my idea, but he didn't do it. That's why he's a billionaire and I'm here stuck with you celebrating our one-year anniversary.
33:08 Ed Elson? You want friends, I want money. So I I'm thinking about how does this company make money? They've kind of maxed out on growth at the moment, like they they created this category sort of, which is vacation rentals. They conquered that category. They executed practically to perfection. But the growth of that business is slowing. And if they want to be a one hundred, two hundred, three hundred billion dollar company, which I think is what he wants, then they need to go after new businesses. And so their answer to that question here is we're just going to go after all services. You were saying it feels more like a sort of they're trying to become a hotel. The vibe I was getting, and by the way, I actually prefer that as a strategy.
33:47 Ed Elson? The vibe I'm getting from from Brian Chesky and from the announcement is he wants it to be just Airbnb for everything. It's almost like Craigslist meets Uber. If if you have any sort of service that you can provide, you just sort of rent out your service on Airbnb. I think it's it almost too ambitious, like that they're kind of instead of going after one additional category, they're going after like fifteen to twenty at the same time. But at the same time, it's like, I respect the ambition. And it shows me that they want to be bigger than they actually are right now. It shows me that they're thinking big picture. And I think the market sees it that way, too. And that's why you saw the increase in the stock.
34:32 Ed Elson? I don't think it will work, but I don't really have a problem with that because they're trying things out. And if it doesn't work, they can just pivot.
34:40 Scott Galloway? I I think a lot of hotels live and die by this ancillary revenue. And that is when I stay at a hotel, I bet I spend, you know, probably fifty, say the hotel costs a thousand bucks a night. I bet I spend, you know, another four or five hundred dollars on food, services and stuff. Is it that much? Maybe, I don't know, maybe not that much, but hotels, thirty percent of the revenue comes from ancillary. And I bet at high end hotels, it's more than that.
35:07 Ed Elson? And by the way, that that story that you're telling me there, I actually think is more compelling than the story that I was hearing from Brian Chesky, which is it's just trying to be.
35:19 Ed Elson? Offer hotel services, but the story Brian Chesky is telling is we're going to offer all services. We'll start here with like, we'll give you like a tour guide will come and take you to the Eiffel Tower, but ultimately we want to do everything. And that's the story. I don't buy as much. Your story you're telling me, I'm totally with you.
35:38 Scott Galloway? Yeah, for me, I would start, I would just say, okay, are you looking to cook dinner? We have a service where we have a chef or we have someone just get your groceries. Tell us what you want. We get your groceries, right? Do you want us to make restaurant reservations for you? Actually, we should bring in, I think Claire and Mia did one of these services when they were at an Airbnb. Claire, do you want to tell us about it?
36:00 Speaker 08 Yeah, Mia and I were in Mexico City a few years back and we did a tour of the temples right outside of Mexico City with this local guy who lived nearby. He also had a home where he was making chocolate. So he took us over to show us how he makes chocolate. We got to meet a bunch of other tourists who were there kind of doing the same thing, just checking out the city for the first time. And then he took us underground into this cave. It was a very kind of magical, unexpected experience. And it was nice because we actually got to interact with other people, even though we were kind of traveling solo.
36:41 Scott Galloway? I'm in awe of the fact that you are literally a different species. If someone said to me, you have to go with a strange man to his apartment and see how he makes chocolates, and then he's going to take you to a cave, but you have to pay $10,000 not to do it. I'd be like, I'll pay $11,000 not to do it. Your generation is so different than mine. That's incredible. I mean, it sounds very kind of hip and millennial and free to be you and me. You guys weren't doing mushroom chocolates or anything?
37:10 Speaker 08 Not on this trip.
37:12 Scott Galloway? You decided to do this sober. It wasn't, you weren't, wow, that's super interesting. Anyways, that's why Brian Chesky is a billionaire. He probably did a focus group with Claire and Mia and figured out what it is they're looking for. I think that sounds, I mean, it sounds, I'm being serious. I think that sounds really, really cool.
37:29 Speaker 08 It was. And thank you, Alejandro, if you're out there. I still remember the guy's name.
37:35 Ed Elson? We'll be right back after the break with a look at Chinese tech earnings. If you're enjoying the show so far and you haven't subscribed, be sure to give the Prof G Markets feed a follow wherever you get your podcasts.
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39:21 Ed Elson? We're back with Profty Markets. Chinese tech leaders Alibaba and Tencent reported earnings this week, offering a mixed picture of the sector. Tencent posted its fastest revenue growth in over three years, fueled by strong performance in its gaming and advertising segments. Net profit rose 14%, while capital expenditures surged 91% year over year, largely due to increased AI investment. Alibaba, meanwhile, missed expectations on the top and bottom lines as it continues to rethink strategies to drive consumer spending. Still, the company reported a 7% year over year revenue increase, with cloud revenue climbing 18%. Despite the growth, shares fell around 5% in pre-market trading. So Scott, let's start with Alibaba.
40:07 Ed Elson? You predicted the company would beat and that the shares would pop. That did not happen. It was in fact a miss on the top and bottom. Shares dropped around 5%. I think it's worth asking the question, how bad was this miss? And the answer is not really bad at all. They barely missed on revenue. Net income was a miss, but it was mostly an accounting issue because they got rid of some of their subsidiaries and they had to account for those losses in this quarter. But I think the thing that Wall Street really didn't like. I think Wall Street, like you, believes that this company is now kind of an AI company. And similar to Amazon, similar to Google, they're mostly excited
40:49 Ed Elson? about the cloud unit and they're mostly excited about the AI prospects. And that's why they expected, as you did, that the company would beat expectations. They wanted to see the AI business come in and just pleasantly surprise us, give us something really great that exceeded expectations. That's not what happened. It was strong, but not crazy strong. Cloud revenue up 18%. Now, I'll give you a chance to respond to the earnings, but I just want to tell you what I think you missed with this prediction. You know, all the global shifts we've been discussing, the turning of foreign nations away from America towards China, increased trade partnerships with China, the turbo boosting
41:32 Ed Elson? of AI self-sufficiency in China, which Xi Jinping has been talking about. You know, the AI chip investments from Huawei and all these other Chinese companies. All of that is so recent. And if all of that is happening, I just don't think you would have seen it in this earnings report. I think if it's happening, you're going to see it in the next report, i.e. the current quarter. And even then, you'll only start to see the beginning of it. And if it's all happening, I think really if it's going to be really fully and truly reflected, it would probably be the report after that. And so what I would argue is that your prediction here was directionally correct, but I think the timing was wrong.
42:13 Ed Elson? And I think if you were to make the prediction again for fiscal Q1, this next quarter, I would back that because I do believe we are about to see a transformation in AI in China. And I do believe that will ultimately benefit Alibaba, but for now, I think it's too early.
42:30 Scott Galloway? Yeah, I got this wrong. I think that I'm still seriously considering buying the stock because.
42:37 Scott Galloway? I think that they're making the same transition, but they're sort of three, four years behind that Amazon made. Essentially, Amazon is a cloud company now with a retail unit and it trades. It's experienced multiple expansion because it's now considered a cloud company with much better margins. So it's just a much better business. I have in the data here that their AI cloud-related product revenue grew over 100% for the seventh consecutive quarter. Is that accurate?
43:00 Ed Elson? Yes, but those AI-related numbers, they don't actually break out what the number actually is.
43:06 Scott Galloway? Right.
43:06 Ed Elson? So I'm always a little bit eh when they say AI-related growth and it's definitely coming off a very small base. So I think the thing that the, what we should really be looking at is just cloud revenue, which is up 18% and that's good. But I, I think it's more, it tells more of the story.
43:26 Scott Galloway? I think until 100 days ago, the idea of being a Western company in Canada, Australia, or Germany and using cloud-based products from a Chinese company was unthinkable. I think as of today, it's, it's less unthinkable because it's now choosing between the lesser of two evils. And the thesis I'm trying to figure out a way to make money off of is the following. And there's always one piece of data that just blows my mind. And I'm like, this is going to have huge ripple effects to the economy. And I try and think about, how do I make money from this? And that is the following. For the first time in history, global consumers or global citizens on average believe that China is a better force or a
44:08 Scott Galloway? bigger force for good in the world than America. And I think that means, how I drill down to that is I think there's going to be a lot of Western companies or companies in Latin America who are going to decide to use cloud services from a firm like Alibaba and not immediately defer to AWS or Azure cloud services or Google's cloud. So I think that these Chinese companies or specifically Alibaba.
44:35 Scott Galloway? I'm disappointed in that 18% number. I don't know what that 100% year-on-year number was. I took it and extrapolated it out and said, this will be a cloud company pretty quickly if you can maintain that growth. But your deeper analysis is the better one.
44:45 Ed Elson? I just think it's early. I think it's a very small base that we're looking at, so we shouldn't take 100% too seriously.
44:50 Scott Galloway? But there's some issues here. The domestic economy isn't very strong. Your analysis is the correct one, that the impact or the slowdown from exports is probably not going to show up until next quarter, but maybe the market's already anticipating that. I just, I get the sense that I think these companies are going to find a lot more foreign buyers contemplating and doing meetings with them than would have, would have four months ago. But there's just no getting around it. I missed this one, but I still might. I thought, well, if I liked it yesterday, why wouldn't I like it now that it's off?
45:21 Ed Elson? There we go. There's the Warren Buffett in you.
45:23 Scott Galloway? Five or 7%. Yeah, there you go.
45:25 Ed Elson? Yeah. And let's quickly talk about Tencent.
45:29 Ed Elson? Missed on profit, but beat on revenue. The stock slipped slightly, but not massively. There's honestly not that much to say with these earnings, but the thing that jumped out to me was their CapEx number, which almost doubled, up 91%. And almost all of that is, of course, AI spending. So to me, the takeaway is Tencent is jumping headfirst into the AI race. They're stockpiling up on chips. They're building data centers. They're developing these proprietary models. And they're perfectly suited to do this because it's primarily a gaming company. That's their main business. But it's also an advertising company because remember Tencent owns WeChat. And I think what we've seen so far is that the main beneficiary of AI in terms of actual revenue growth is advertising.
46:14 Ed Elson? If you have great AI, you have better, more accurate ad targeting. And that's what we've seen with Meta, which is why Meta is on such a tear right now. So I think we will probably see the same thing with Tencent. I think it was pretty good earnings from Tencent, but the larger story to me is AI. As indicated by what Tencent is doing and Alibaba in terms of their spending and their investment in AI, AI in China is coming. It's coming very hard, very fast. I think this should generally make you bullish on China, specifically the Chinese tech sector. And I should point out, just the PE multiples again, China, we got at 15x average compared
46:54 Ed Elson? to the US at 27. And, you know, that's despite the fact that the Hang Seng is up 20% year to date. It's been a great year for the Chinese market, but you're still looking at really low multiples when you compare it to the US. So, you know, we've been balancing this US versus China argument all year, and it's beginning to become less clear what's really happening because now you've got the S and P back up above where it was before Liberation Day. So the whole global rotation thesis, I would say, is on hold for now. I'm not sure if it's dead. But I think just if you look at just pure earnings growth, forget
47:38 Ed Elson? the multiples, I think there's a lot, a lot happening in China. I think there's a lot of reasons to be bullish. I agree with all of that. We'll be right back after the break with a look at the Republicans' tax bill. If you're enjoying the show so far, hit follow and leave us a review on the Prof G Markets feed.
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48:58 Speaker 03 This episode is brought to you by Welch's Fruit Snacks. Back to school season can be tough on parents. But choosing a snack you and your kids can both get behind doesn't have to be. Stock up on Welch's Fruit Snacks. Made with whole fruit and now made with no artificial dyes. It's a snack kids already love and one you can feel good about giving them. Go back to school with Welch's Fruit Snacks. Now made with no artificial dyes.
49:31 Ed Elson? We're back with Prof you markets. House Republicans new tax plan cleared its first hurdle last week. With the House Ways and Means Committee voting to advance the bill. The plan includes several major provisions, including increased defense spending, cuts to federal Medicaid funding and a higher exemption for the estate tax. The bill is still in the early stages and is likely to undergo changes as it moves through Congress. House Speaker Mike Johnson is aiming to send it to the Senate by Memorial Day. I'd like for us to really investigate this because, you know, I think about everything that we've talked about over the past few years. And I specifically think about your TED Talk.
50:08 Scott Galloway? Okay. I start us with a question. Do we love our children? Sounds like an illegitimate question, right? Well, I'm going to try and convince you otherwise. Essentially, as we go down generations, we're seeing that for the last two generations, people are making less money on an inflation adjusted basis. In addition, the cost of buying a home, the cost of pursuing education.
50:28 Ed Elson? And it was the most popular talk of the year. We're seeing more and more discussions about these issues. We even had a week ago where Trump said that he was okay with increasing taxes on the rich. But I look at this plan here. This plan basically does the opposite of everything we have advocated for in the past three or four years. And I'm seriously not being political or sensationalist here. It genuinely. Does the opposite of what everything we've been talking about. I'll just go through a few of them here. For starters, massively increases the deficit. It's going to reduce federal revenue by $5 trillion over 10 years. Does not make up for those losses with spending cuts. There are cuts, but we can, we'll go over them.
51:13 Ed Elson? The cuts are very misguided. So what does that mean? Larger deficits, more debt, increased interest payments. We're screwing over the next generation of Americans who are going to have to pay the bill when our parents and our grandparents are all dead. The carried interest loophole is staying. Trump talked a big game about getting rid of it. This nonsensical tax break for private equity, it's staying in there. We're getting tax breaks for old people. If you're over the age of 65, you're now going to get a larger standard deduction than you did before. The worst part of the plan, in my view, the estate tax exemption.
51:50 Ed Elson? Wealth inequality has gone totally haywire, out of control in America. We've discussed it a lot. And the question we have all been trying to answer is, how do you redistribute that wealth? That has been sequestered into the top 0.001%. How do you redistribute the wealth in a way that is fair? In a way that isn't crazy? And in a way that doesn't mean showing up to rich people's doorsteps with a shotgun and a pitchfork. My view on this has always been the easy answer is just tax it when they die. You've got $124 trillion that are going to be passed on in 2048. Greatest generational wealth transfer in history.
52:31 Ed Elson? That's the moment to redistribute the wealth without making everyone upset. And how do you do that with an estate tax? It's very simple. You're not going to just seize all the assets, but you're just going to tax it at a normal rate. So I was. I couldn't believe it when I saw this plan where they are actually going to increase the estate tax exemption, which is already absurdly high in America. They're increasing it to $30 million, which means you can pass 30 million on to your children tax-free. In other words, we're deciding we actually like the inequality. We want to maintain it, not just for this generation, which seemed like an anomaly, but for many generations to come.
53:12 Ed Elson? We want the children of rich people and their children to keep on ruling and ruling over many generations of society. And by the way, with the way we're going to do that, we're going to subsidize that by cutting healthcare spending for poor people. What the fuck is going on, Scott?
53:28 Scott Galloway? The most powerful in America have formed a coalition where their rights are a function of their wealth and their rights are respected anywhere in the world. I can get access to family planning, lawyers, healthcare, good schools for my kids, because there's now kind of a different class of oligarchs that consists of both Democrats and Republicans. And as a result, the most powerful people don't feel a vested interest in the long-term success of America. And it's from both sides. Now, it took Republicans to be the vessel to do it, but it's been a slow creep of both Democrats and Republicans. Just to be clear, during the Biden administration, taxes were lowered.
54:09 Scott Galloway? For all the railing of Senators Warren and Sanders, when we controlled all three houses of government and President Biden was president, taxes went down. So there are a lot of co-conspirators here, including many of my friends who claim to have democratic ideals and clutch their pearls about, you know, how awful it is what's going on. But this really is, this is another extension of it. And as you know, I was supposed to be on Bill Maher with Steve Bannon, and I decided to back out because I couldn't figure out a way to not confront him about a Nazi salute without grandstanding. And so I backed out. And he said on that show-
54:46 Speaker 07 Trump and the MAGA movement will raise taxes on the wealthy.
54:49 Scott Galloway? All right. I was watching it.
54:53 Scott Galloway? With my 17 year old and I said, he's lying. There's no way Donald Trump is not going to cut taxes on the rich. That's just what he does. And he is not a good business person. His attitude to debt is anyone who's willing to loan you money is a fucking sucker. I generally think there's a decent chance that Trump in the back of his mind is just not that worried about America going bankrupt. He's come bankrupt a bunch and he's still a billionaire.
55:19 Ed Elson? But what about all the, what about everyone else? I mean, we know he's insane for many reasons, but what about everyone in Congress? Like, I don't understand how anyone would be okay with, we're gonna cut Medicaid spending. I mean, that argument alone, I'm willing to have that conversation. But then pair that with, oh, and by the way, we need to increase the amount of money that rich people, ultra rich people can pass on to their kids tax free from $27 million to $30 million because of inflation. Bridge that gap for me.
55:56 Scott Galloway? The way the Democrats should frame this, and it's the truth, is people of my generation who are wealthy are asking your generation to loan us $24 trillion. And we're not going to pay it back. You're going to assume the loan. That's what we're asking right now. That is, and that's how the Democrats should be positioning it. Now, as it relates to trusts, as someone who has a trust, the trust has gone from, I think it was a maximum of 11 million, then it went to 23 or 24. And now they're talking about raising it to 30, meaning you can shield from all taxation $30 million. But it's even worse than that because the way estates work is if you put money in and it grows, it grows tax deferred and it grows.
56:41 Scott Galloway? You might end up with a trust, it ends up being worth a quarter of a billion dollars. But my understanding is as long as it's worth less than 30, when you put the assets into the trust, it can grow and then you can pass it along tax free. What's the point of all of this? The point is to have a purpose, have purpose in your life and to have a good life and to be happy and to have reward. And I would argue that most of that is around relationships and potentially finding the right partner and maybe deciding to have a family with that partner. I think that's the whole shooting match. And money plays a big role in that because middle income people are happier than lower income, upper income people are happier than middle income. Money does buy happiness.
57:21 Scott Galloway? But as Daniel Kahneman, the Israeli-American psychologist, proved, above a certain point, there's no incremental happiness. And I can validate this firsthand. As someone who has worked really hard and been very lucky and aggregated some wealth, I believe that I have the right to pass on some of that good fortune and wealth to my kids. Okay, fine. But above a certain amount, much less than $30 million, my kids are going to get no incremental happiness. And so if the whole point is prosperity and happiness and purpose and meaning, then there really isn't a reason to increase the cap on the estate tax. You should be lowering
58:03 Scott Galloway? it and even increasing the tax rate, which I think now is 40%, because nobody loses. And that is, if you redistribute that income for things like a child tax credit, for a great public school system, for K through 12, such that kids grow up and can be a little bit more critical thinkers and maybe think, am I voting for people that have my best interests at heart? All of these wonderful things, right, can be taken from estates, and there's no degradation in happiness or purpose among your offspring. But no one wins here. No one wins. The only people that lose are the future generations that need that tax revenue, because what we have to come to grips with is the reality that there
58:48 Scott Galloway? has been a myth fomented in America that the middle class is a natural self-healing occurring organism. It isn't. If you don't massively invest in it, let me use the R-word. If you don't redistribute money from corporations and rich people to the middle class, it starts to wither and die. Look, if you want to give your kids $10 million tax-free, and I'm one of those people. I get it. I want my kids to have a certain amount of economic floor. I've worked too hard for my kids to go through. And a lot of people, a lot of parents will say, I want my kids to make it like I did. I don't. I work so fucking hard. I don't want my kids to be fearful about money. I don't want, if someone in their life is sick, I don't want them to have the same fears I had when I had someone in my life sick. I want to
59:32 Scott Galloway? give them that. If it makes them spoiled, so be it. But they don't need more than $30 million. That's not going to do anything for them.
59:40 Ed Elson? It's unbelievable. And by the way, it's, we're almost talking about it as if the thing that's on the table is just having a total cutoff rate for the amount that a child can inherit from their parents. We're talking about an exemption. It's like, you get the 30 million tax-free, and then everything beyond that point is 40% taxed. So you're still gonna make, I mean, these kids are gonna inherit literally hundreds of millions of dollars. And the question is, why are we increasing the tax-free exemption? Why is that such an important thing? And when you're saying like, who wins here? It honestly feels like the only ones who win. I agree with you. I don't think the kids win. I don't
1:00:21 Ed Elson? think you win because you got $10 million more tax-free from your parents. I think you'll probably just become more of a douchebag, less in touch with reality, probably live a worse life, as you put it. I think the only people winning here are the parents who have this perceived sense of, I fucking crushed it. And I worked so hard and I made all these hundreds of millions of dollars. And because I worked so hard, I need to do everything I can to hoard that wealth and to protect it. And I'm not going to be able to spend it over the course of my lifetime. I've got, what, 20 years left? What am I gonna spend $200 million on? So the only other option is to say, oh, well, the last
1:01:04 Ed Elson? thing left to conquer is to make sure that the most amount possible can go to my children.
1:01:10 Scott Galloway? The thing that summarizes America right now is what Bill Gates said.
1:01:16 Scott Galloway? And it's the following, and it was such a rattling statement. I thought, oh my God, that's so accurate and so puncturing and so upsetting. Bill Gates said, "The world's richest man is killing the world's poorest children." And that's what we're doing here. America is tolerating the world's wealthiest man worth $400 billion, cutting massive amounts of aid to literally the poorest children in the world. And America seems to be okay with it. There is a lack of a value system in America where people are deciding what makes me feel good, what gets me richer, as opposed to any resemblance or any semblance of values.
1:01:57 Scott Galloway? And this runs so deep in America, and it's, I think it's because we have had such prosperity, and we have been so divided by social media algorithms that we don't recognize how fortunate we are. We don't recognize that we should be serving in the agency of each other, and that we're Americans first, before we're gay, before we're Republican. We are Americans first. And that the whole idea of America is that once you make it, you are absolutely going to start investing in the fertile lands behind you, such that as many people as possible can enjoy the same blessings you registered. Instead, everyone's like, "No, I just want the shit in front of me to be laced in cocaine fields and see if I can figure out a way to create clouds that rain champagne." I mean, it has gotten out of control.
1:02:40 Ed Elson? But they lie about what their intentions are. And I think that's, that's what we're seeing with this tax plan, which is what is so upsetting, is how easy it is to lie and how many people believe you. I mean, the whole, the whole point of this administration from the get-go, or at least the fiscal plan was fiscal responsibility. The whole thing was, let's balance the budget. Just look at the fucking plan. It, it does the opposite of what was, what was intended. Look at Bannon's comments, "We're going to tax the rich." Look at Trump's comments, "I'm okay with taxing the rich."
1:03:09 Speaker 09 I would love to do it, frankly, but what we'll do is that, you know, they'll go around saying, "Oh, this is so terrible." What you do it is you're giving up something up top in order to make people in the middle income and the lower income brackets save more. So it's really a redistribution. And I'm willing to do it if they want.
1:03:29 Ed Elson? And then you look at this, all these exemptions here. It's like, in addition to that, they're now lying about it. And
1:03:37 Ed Elson? I'm hoping people sort of see through the lie. So that's why I really want to talk about this. It's like, this is just a proof here that it's all been lies in terms of what they've been promising and the direction they want to take this country. The whole thing with the reshoring, the jobs, and it's all about middle-class Americans. Read this tax plan. This is not about middle-class Americans at all. And it's actually insane, the extent to which this is catered to rich people.
1:04:05 Scott Galloway? Just a few details. If the changes from this tax cut pass, about 8.6 million people stand to lose their health coverage in the next nine years. And by the way, Medicaid provides healthcare coverage to 1 in 5 Americans, including 40% of all children. It's also the largest funder of mental health and substance use disorder care. You want to cut that funding? That just means you're going to pay more for incarceration, folks. Oh, but guess what? There's a private company with shareholders waiting to incarcerate people at $17,000 to $90,000 a year.
1:04:36 Ed Elson? True.
1:04:37 Scott Galloway? Look, you want to cut Social Security for the wealthiest quartile of seniors? Or you want to extend the age qualification from 65 to 68 to 70, 72 to recognize that people are living longer and working longer? That should make sense. But when you start cutting costs on things like SNAP, you're just going to end up paying more in other ways.
1:04:56 Ed Elson? Having said all that, there are a few little good things that I will just go over just to end on a positive note. They want to increase the child tax credit from $2,000 to $2,500. I think that's good.
1:05:09 Scott Galloway? Yippee.
1:05:11 Ed Elson? But, you know, you know.
1:05:12 Scott Galloway? It's something. Okay, let's take it. The tax, the estate tax exemption is going from 15 million to 30 million, but we're increasing the child tax credit from 2,000 to 2,500. Okay, that's something.
1:05:21 Ed Elson? They want to create savings accounts for babies. Newborns will receive $1,000 in a tax-free account. This is actually what we discussed with Brad Gussner, who wanted those American accounts.
1:05:31 Scott Galloway? And Bill Ackman's idea, and Alex von Furstenberg's been proposed something similar. Australia has, I think it's the Superfund. You give, I love this idea. I would give every kid $7,000. That'd be 40 billion. And then in 30 years, you'd start to see it crashing interest rates because you would announce in the next 30 years, we're not going to have social security because every kid's going to have approximately a million dollars. And I wouldn't let them sell it. I'd treat them, I'd be very paternal and say, no social security on your 65th birthday. You get a million bucks, get, put in an account at four, six percent, you get 40 or 60 grand. If you want to blow it, sucks to be stupid. That's up to you. But I like this, I like this idea a lot.
1:06:08 Ed Elson? Me too. They also want to eliminate the EV tax credit, which I also agree with. I think the EV industry is well in its way. You don't need, we don't need to be subsidizing it. If we're having tough conversations about cutting spending, then I agree, let's get rid of the EV tax credit. And then finally, they want to increase taxes on private colleges with endowments exceeding $2 million per student. Those colleges will pay 21% on net investment income, up from 1.4%. Again, I think that's great and it targets what we've talked about.
1:06:40 Scott Galloway? And spend it, spend your endowment, spend it.
1:06:42 Ed Elson? Exactly. Bring it down. The only trouble is they also go after the less wealthy colleges too. So if you have an endowment of 750K per student, your taxes are also going up. And then the other thing that I think is bad is that for whatever reason, they're exempting religious schools. And I assume they're just kind of throwing meat to the evangelicals where it's like, oh, you guys, we like you. You're not Harvard and Princeton, so you guys don't have to pay taxes.
1:07:07 Scott Galloway? That'll create some really unnatural acts. So it's like, what are, what are we going to do? Like before, before algebra at sophomore year at UCLA, we're going to go praise Jesus? And then we're a religious institution?
1:07:18 Ed Elson? Yeah. And we're going to do that so that we don't have to pay taxes. It's weird. Anyway, the, the outcome I actually think is good, uh, but I think they're probably doing it for the wrong reasons, which is again, they want to own the libs or own the Ivy League schools. But whatever, the Ivy League schools probably have it coming for them. Those are the good things. Uh, otherwise terrible plan. My God.
1:07:41 Scott Galloway? Ed Olson has had it.
1:07:44 Scott Galloway? He's had it.
1:07:46 Ed Elson? Ed Olson. Let's take a look at the week ahead, Scott. We'll see new and existing home sales for April as well as earnings from Home Depot and Target. Do you have any predictions for us?
1:07:57 Scott Galloway? I have predictions, it's kind of boring. I was thinking, I'm just so triggered by this plane, being given this $450 million plane. I think that's so embarrassing that the wealthiest, the president of the wealthiest nation in the world needs to have someone else pay for a plane manufactured here. It's not going to happen for a very mundane reason, and that is, it would take, I think, very little C4 planted somewhere with a pretty sophisticated and small detonation device to put kind of, you know, I won't call it Air Force One, but Qatar's bitch two, whatever you want to call this plane. You could sabotage this plane. You could put in, I mean, these, a 747,
1:08:41 Scott Galloway? Supermax, or whatever it's called, is basically like a small city in terms of wiring and electronics and fuselage and paneling. There would be so many places to hide, listening devices, espionage devices, or even worse, some sort of detonation device. And to think that Qatar would have the ability to take down Air Force One means the only way the NSA, the Secret Service, who's charged with the president's safety, would get comfortable with this is if they disassembled the plane down to every bolt and screw and then reassembled that. And the cost of that is estimated to be $2.1 billion.
1:09:25 Ed Elson? And you don't think Trump would have an ability to say, shut up, it's fine?
1:09:29 Scott Galloway? I think they're going to sit him down and I say, look, boss, we can't have you flying on something, I mean, that the Qataris could have easily weaponized. I think, I think they're just going to say, we can't guarantee your safety on this thing. So, we were stupid enough to let Russia build our embassy in Moscow. And when they opened it, a couple reporters went in there with like just a sledgehammer and into one of the unfinished rooms and just did a little bit of sledgehammering and they found like seven listening devices every square foot.
1:10:03 Ed Elson? I didn't know that. It was a perfect example.
1:10:05 Scott Galloway? Oh, yeah, it was hilarious. And they basically said, they basically said demolish the thing. We can't, we, we have to bring in our own contractors and we have to build it. We can't have the Russians build our embassy. That really isn't any different. Anyway, so a long-winded way of saying my prediction is that the 747 gif is not going to happen.
1:10:27 Ed Elson? This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Allison Weiss. Mia Salvario is our research lead. Isabella Kinsel is our research associate. Dan Shalane is our intern. Drew Burris 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 on Thursday for our conversation with Scott Goodwin, only on Prof G Markets.
1:11:28 Scott Galloway? The FT is doing a profile on me and they can't, there's someone outside. Home invasion. Here they come. At this point, just, just, just do me in the ass. Just take me. Anyway.
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