Markets 2025 Halftime Report

Scott and Ed break down why New York is pushing ahead with a new nuclear power plant. Scott makes the case for nuclear as a smart long-term investment, while Ed raises concerns about China’s growing lead in energy production. Next, they unpack NATO’s plan to increase defense spending and what that means for the broader global economy. Finally, they review the market’s performance in the first half of the year and discuss why we need better tools to measure economic health. Subscribe to the Prof G Markets newsletter Order "The Algebra of Wealth," out now Subscribe to No Mercy / No Malice Follow the podcast across socials @profgmarkets Follow Scott on InstagramFollow Ed on Instagram and X Learn more about your ad choices. Visit podcastchoices.com/adchoices

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

• 0:00Speaker 00

  Flowing ad budget on metrics that look great till the CFO sees them? That's bull spend and marketers are calling it out in dashboard confessions.

• 0:09Speaker 01

  I remember telling my boss, it'll be good for the brand when leads were slow. Yeah, it it wasn't.

• 0:17Speaker 00

  Cut the bull spend. LinkedIn lets you target by company, job title and more. Advertise on LinkedIn. Spend $250 on your first campaign and get a $250 credit. Go to LinkedIn.com/campaign. Terms and conditions apply.

• 0:30Speaker 02

  Energía baja, falta de concentración, nebla mental? You might be dehydrated. Gatorade Zero powders han sido diseñados científicamente para ayudarte a mejorar el balance de hidratación en el cuerpo. Hechos con la mezcla número uno de electrolitos, sin colores ni sabores artificiales. Shop now online or at retailers nationwide. Gatorade hydrates better than water. Is it in you? Signos de dehidratación leve y moderada. Consulta a tu médico si los síntomas persisten.

• 1:01Speaker 03

  This episode is brought to you by Michelob Ultra. Good times mean competitions between you and your friends. Like seeing who can throw some pigskin the farthest or rush the field the fastest. Winner gets an ultra because it's not just a superior like beer. It's also giving fans superior access to their favorite sporting events. Superior is worth playing for. Visit michelobultra.com/superioraccess to enter. Enjoy responsibly. Copyright 2026 Anheuser Busch InBev Michelob Ultra Beer, St. Louis, Missouri.

• 1:29Scott Galloway?

  Today's number, $47 million. That's the low end estimated cost of Jeff Bezos' wedding in Venice, which took place over the weekend. And true story, I confessed to my wife on our wedding day that I had slept with a lot of prostitutes, to which she responded, I thought I recognized you.

• 1:58Scott Galloway?

  It wasn't very good, was it?

• 1:59Ed Elson?

  It was good. You want to try it again?

• 2:00Scott Galloway?

  Well, you heard that Bezos is asking guests not to bring gifts, but to donate to charity instead, which is like him saying, we already own everything. Please make us look less evil.

• 2:13Ed Elson?

  I can't believe you weren't invited to that wedding.

• 2:15Scott Galloway?

  I think I was close.

• 2:16Ed Elson?

  You're what's known as a fringe guy. You're right on the fringe.

• 2:19Scott Galloway?

  I think I was, I guess, 204, 206. I had lunch with three guys, really cool guys, and they were all going. And I'm like, I'm cooler than these guys. I think I was right there, right there.

• 2:31Ed Elson?

  Wow.

• 2:31Scott Galloway?

  Anyways.

• 2:32Ed Elson?

  How are you doing?

• 2:33Scott Galloway?

  I'm doing really well. I'm excited about, it looks sunny out. I'm gonna go to Kensington Roof Gardens tonight. I was just approved as a member after six months.

• 2:42Ed Elson?

  Woo.

• 2:42Scott Galloway?

  Which is very exciting.

• 2:44Ed Elson?

  Another membership. I'm, I'm super excited for you. What is that? That's like your 15th, 16th?

• 2:50Scott Galloway?

  Yeah, no, it's, it's just very exciting. And I have some friends in town. Going out with Paul Rabel, the Michael Jordan of lacrosse. He's just like huge Adonis, who's very thoughtful, who wants to talk about love and happiness. You wouldn't expect it from this guy, but he's very groovy. And then my friend, Pierpaolo Barbieri, who's the head of Walla, who's gonna be, he's gonna be president of Argentina someday.

• 3:14Ed Elson?

  Hmm, Walla.

• 3:16Scott Galloway?

  But, so yeah, I'm going out with those guys.

• 3:18Ed Elson?

  And they're both in London?

• 3:19Scott Galloway?

  Yeah, yeah. That makes it easier.

• 3:21Ed Elson?

  Just to, when, to clarify, when you join these new clubs, are you cancelling any of them?

• 3:26Scott Galloway?

  No.

• 3:27Ed Elson?

  Because surely you're not going to Soho House anymore. You've got like 10 other clubs to go to.

• 3:31Scott Galloway?

  Actually, Soho House, they were smart. They started a new thing called Soho Muse, which is...

• 3:35Ed Elson?

  Oh, yes, I forgot.

• 3:36Scott Galloway?

  Which is the high-end Soho House.

• 3:38Ed Elson?

  They opened up the gold tier, yeah.

• 3:40Scott Galloway?

  Yeah, like it's the VIP, it's like that great, that great episode of Frasier, where they go to some spa and there's always a VIP room and another room and another room. So they decided, all right, Soho House has gotten to hoi polloi, they're letting in Ed Elson. So we're gonna, we're gonna create a, a new tier.

• 3:59Ed Elson?

  The Scott Galloway tier.

• 4:00Scott Galloway?

  Yeah, i- it's no different, except they create the illusion of scarcity. These members clubs fascinate me, so I'm joining everything. And then in about a year, I'm gonna pare down. I'm gonna go, I'm gonna pare down to no more than six or eight of them.

• 4:11Ed Elson?

  What else is happening in the world besides joining members clubs?

• 4:15Scott Galloway?

  You know, not a lot. It's kind of a slow business week. It's a slow news week, Ed.

• 4:19Ed Elson?

  Well, how about we get into it and we start talking about members clubs?

• 4:23Scott Galloway?

  Let's do it.

• 4:26Scott Galloway?

  Now is the time to fly. I hope you have plenty of the well at all.

• 4:32Ed Elson?

  New York is moving ahead with plans for a new nuclear power plant to keep up with a growing demand for clean energy. Led by the New York Power Authority, the project aims to add at least one gigawatt of nuclear capacity. That's enough to power a million homes. It would be the first major US reactor project in more than a decade. The push comes as data centers and factories drive up electricity needs. In fact, Governor Hochul has warned that without new capacity, the state could face rolling blackouts. So it's got another big development in the American nuclear story, which has been making quite a comeback in the past few months. Before this, we saw that multi-billion dollar deal between Meta and Constellation Energy, where Meta is going to purchase more nuclear energy for their

• 5:16Ed Elson?

  AI efforts. We saw a similar deal between Amazon and Talon Energy. And of course, Microsoft struck that deal earlier in the year to reopen the nuclear plant at Three Mile Island. We covered that in a previous episode. Many companies and now governments are looking to nuclear to power themselves. Nuclear stocks are ripping. Constellation Energy is up 31% year to date. Vistra is up 110%. Centrus Energy is up 140%. And this all kind of foots to your prediction that nuclear would be the technology of the year in 2025.

• 5:57Ed Elson?

  I have some thoughts on this versus China, but let's just get first your initial reactions to New York building this new nuclear plant and what that might say about the future of nuclear in America.

• 6:08Scott Galloway?

  Well, look, it feels like whenever you have a thoughtful conversation around AI, we recognize that we're gonna, by the end of 2025, we're gonna need essentially AI is gonna consume twice the electricity of the Netherlands. So we need kind of nation-state like additional production of electricity. And is it wind? Is it energy? Is it LNG? I think the answer is everything. I think it's all of the above. And I've just always been a huge proponent of nuclear. I just think in terms of the the amount of energy it produces relative to the waste, this is a relatively safe, low emissions technology that is incredibly powerful.

• 6:51Scott Galloway?

  And Mia pointed out something that was really dramatic. She said, but keep in mind, the lag time here is a decade and the demands are going to spin up much faster. But, you know, as someone who's a little bit older, what I realize is that 10 years goes by a lot faster. 10 years is going to go by no matter what. And the question is, in 10 years, do we want to be getting 10, 20, 30% more of our electricity from nuclear than we are now? So I'm a big fan of these investments. They create high wage jobs for, I don't want to call vocational programs, but I think it creates a lot of like shovel ready jobs. And this felt like a fairly easy prediction that if the friction in AI is where are we going to get all this power?

• 7:34Scott Galloway?

  It's fairly safe bet that a lot of this, you know, nuclear, nuclear is the worst managed brand, one of the worst managed brands in the world. And that is between the China syndrome and Silkwood, everyone was under the impression that nuclear was this dangerous, dirty technology. And the reality is that's just not true. And so it's, it's making a comeback, mostly because of economic, the economic reality and just the, you know, the excitement around AI. But yeah, I think nuclear is going to continue to be a great place to invest and there's all sorts of different innovation, kind of these mini nuclear plants. And then I'll talk to somebody who knows it better than me and they say, you don't know what you're talking about. It's about LNG that the lag time's too great. But my guess is it's all of it, but I'm, I'm excited about nuclear. What are your thoughts?

• 8:17Ed Elson?

  I'm with you that we need all of the above and nuclear is a great step. But one thing that I think helps put this all into context is just the amount of effort that China is putting into energy. I mean, you look at nuclear, you look at their nuclear program, they are ramping it up. They have approved at least 10 new reactors this year, and that's the fourth year in a row that they've done that. They've now got 30 under construction, which is nearly half the global total, on track to beat the US as the largest nuclear producer in the world. So they're crushing it on nuclear. But zooming out from nuclear, if you just look at energy production overall.

• 8:57Ed Elson?

  I just want to point you to a statistic that I find fascinating and also very concerning. So in the past 15 years since 2010, the US has increased its total energy production by around 6%. We produce roughly 4,500, it's 4,400 terawatt hours of electricity today. So around 4,500. In that same time, China has increased its energy production by 140%. And at that time, at 20, in 2010, we were producing roughly around the same amount of energy. China now produces more than 10,000 terawatt hours of electricity, which is more than double the energy production of the US.

• 9:42Ed Elson?

  And that to me is so concerning because I just think one of the most fundamental indicators of an economy and its potential for prosperity is how much energy can you create? And as we've seen with AI, to your point where the demands are just enormous. I mean, basically, every chapter of human history has proven we can never have enough energy. There's just always demand for more, whether it's agriculture or transport or data storage, whatever it is, we need energy. And China is absolutely obliterating us on that front on almost every level, whether it's nuclear or anything else.

• 10:26Ed Elson?

  So I'd like to get your reaction to this because I feel like that is kind of the big geopolitical macro story that no one's talking about. You know, we're seeing the explosion in AI. We're seeing what that's going to demand in terms of energy needs. There are reports saying we're going to need double the energy that we currently produce by 2050. And China's already done that. They've blown us out of the water. So I'm kind of worried about it personally. I was wondering if you feel the same way.

• 10:55Scott Galloway?

  Yeah, there's no doubt about it. The sort of long-term thinking and willingness to invest over the medium and the long-term of China around something like this is inspiring and they are ramping up much faster than us. At the same time, our private sector companies are more agile, have a lot of their own capital. Meta inked a 20-year deal with Constellation Energy. Amazon 17 year power purchase agreement with Talon Energy. Amazon is planning to spend 20 billion on building data centers in Pennsylvania adjacent to the nuclear power plant. Microsoft has entered into a 20 year power purchase agreement with Constellation Energy. So the kind of private sector is, I don't want to say filling in the holes here.

• 11:36Scott Galloway?

  Also, China still is in a much weaker position from a security standpoint because I think if we were able to blockade China for four weeks, they're basically out of business because they're not energy. We're energy, we're self sustaining. We're food independent and energy independent. We import in some like specialized oil or fuels or whatever, but for the most part, we're totally self sustaining. And these companies, the private sector seems to be making massive investments. So I'm actually, you know, I don't think we're in as dangerous a position as you might think. I think, I think China recognizes they are very vulnerable in our substantially ramping up their nuclear. But yeah, I, I think this is, I think it's a great sector.

• 12:20Scott Galloway?

  On a risk adjusted basis, as I think about it, there's probably few places you could invest with more certainty, which are famous last words to get, you know, seven to 10% return for the next 20 years than kind of an index fund around energy.

• 12:37Ed Elson?

  Yeah, I mean, I think the, the great thing about energy is there's no question over the value. I mean, we need it, plain and simple. We'll be right back after the break. And by the way, we've expanded Prof G Markets with a new weekly newsletter that breaks down the news every Monday. Subscribe now at profgmarkets.com.

• 13:02Speaker 00

  Flowing ad budget on metrics that look great till the CFO sees them. That's bull spend and marketers are calling it out in Dashboard Confessions.

• 13:11Speaker 01

  I remember telling my boss, it'll be good for the brand when leads were slow. Yeah, it, it wasn't.

• 13:19Speaker 00

  Cut the bull spend. LinkedIn lets you target by company, job title and more. Advertise on LinkedIn. Spend $250 on your first campaign and get a $250 credit. Go to LinkedIn.com/campaign. Terms and conditions apply.

• 13:32Speaker 02

  Energía baja, falta de concentración, nebla mental. You might be dehydrated. Gatorade Zero Powders han sido diseñados científicamente para ayudarte a mejorar el balance de hidratación en el cuerpo. Hechos con la mezcla número uno de electrolitos, sin colores ni sabores artificiales. Shop now online or at retailers nationwide. Gatorade hydrates better than water. Is it in you? Signos de dehidratación leve y moderada. Consulta a tu médico si los síntomas persisten.

• 14:03Speaker 03

  This episode is brought to you by Michelob Ultra. Good times mean competitions between you and your friends. Like seeing who can throw some pigskin the farthest or rush the field the fastest. Winner gets an Ultra. Because it's not just a superior light beer, it's also giving fans superior access to their favorite sporting events. Superior is worth playing for. Visit michelobultra.com/superioraccess to enter. Enjoy responsibly. Copyright 2026 Anheuser-Busch InBev Michelob Ultra Beer, St. Louis, Missouri.

• 14:35Ed Elson?

  We're back with Prof G Markets. NATO leaders have agreed to raise defense spending to 5% of GDP by 2035, more than doubling the current 2% target. The move is a win for President Trump, who has long criticized European allies for underspending on defense. European defense stocks rose on the news with Italian aerospace firm Avio and Swedish defense contractor Mildeff, both up by around 5%. The European stocks aerospace and defense index rose 1.4%. So Scott, your initial reactions to what happened at that NATO summit and this increase in defense spending in Europe?

• 15:12Scott Galloway?

  I think the Trump administration can take a victory lap here. I think that they have... It's like an entitled kid who always believes his rich uncle is going to continue paying his tuition payments and that he doesn't need to get a job. And then finds out his uncle has gone batshit crazy and has cut off people and gets his shit together. That's how I see Europe right now. And that is, it is healthy and smart for them to recognize they can't count on the military umbrella and the consistency of the US administration, which is not only a poor reflection on the US, but to be fair, Trump has said all along, NATO needs to step up. I think it's going to be great for the European economy. I think there is a spillover of technology.

• 15:52Scott Galloway?

  And also, I think it'll ideally mandate or inspire some coordination across what is the 25 or the 27 member nations of the EU. I like it because I think that pushing back on Russia and arming the incredibly brave and innovative Ukrainian army has been an incredible investment for the West. It's defenestrated, neutered, compromised the fierceness of the Russian army and distracted them from their interface with our economy, which is usually cyber attacks and stealing our IP. I wish we lived in a world where we didn't need to spend this much money on the military, but we do.

• 16:32Scott Galloway?

  And I think this is bringing NATO kind of out of a brain coma, forcing Europe to be a union, and will have economic stimulative effects. So I'm a bit of a, you know, a hawk here. I think it's a good thing.

• 16:44Ed Elson?

  Yeah, just to go over some of these numbers on how much NATO is spending. So the current guideline for NATO for defense spending is 2% of GDP. It does vary across Europe. Eastern European nations spend a lot more. Estonia, for example, spends nearly 3.5% of its GDP on military. Poland spends more than 4%. Over in Western Europe, the numbers are a lot lower. Italy spends around 1.5%. Spain spends even less than that. And you compare that to the US, where we are spending 3.5% of our GDP on defense. That is quite a lot higher than most of Europe, and it appears Europe will now match that. By the way, Russia is sort of far and away the biggest spender.

• 17:29Ed Elson?

  They're spending more than 6% of their GDP on on defense. But I want to just point you to this statistic, which is that global military spending last year hit $2.7 trillion. And that is an increase of 10% from the year before, and it's the largest annual increase since the Cold War. And now what we're seeing in 2025 is even more conflict, whether that's Ukraine, Russia, the Middle East, and even more incentive to spend more, where in the US, for example, we actually want to increase the military budget by another $150 billion. We're going to be spending more than a trillion dollars on defence.

• 18:14Ed Elson?

  And now we're seeing increased spending in Europe too. And all of this spells basically tailwinds for the defence sector. And defence has been one of the biggest winners this year. The sector is up 25% year to date. You can bet that to the S and P just as a comparison, which is up 4%. So, I mean, there's a lot in there. One is there's just more violence happening in the world right now, which is kind of scary. But there's another piece of this, which is that the sentiment around defence and defence companies, which used to be, it used to be this sort of old, kind of stuffy, traditional

• 18:56Ed Elson?

  legacy industry, Lockheed Martin, Northrop Grumman, Boeing, these are sort of considered these old, old time companies. But we're now having this moment where the investment community is suddenly coming together and beginning to view it as more of a growth industry. Suddenly there's more violence, more conflict, and there's more upside now and more growth potential in building weapons. And we're seeing that in the stock market, but we're also seeing it in the venture world. Just look at Anduril, for example, which is one of these new defence tech companies. It's been raising a tonne of funding. And I just saw the CNBC disruptor list. This is where CNBC ranks all of the hot new companies.

• 19:41Ed Elson?

  Last year, OpenAI was their number one company on the list. This year, it's Anduril. So it feels like defence is having this moment where suddenly people are deciding this isn't this old legacy industry, building tanks and submarines. This is becoming more of a tech industry. You could look at Palantir as well, which is of course contracting with the US government. And I just wonder what you think of that from an investment perspective. I mean, I think a lot of people are interested in investing in defence and defence tech right now, but also just what it says about. Our economy, the idea that in 2025, what is the hot new sector?

• 20:25Ed Elson?

  Yes, AI, but also weapons.

• 20:28Scott Galloway?

  The thing that's really unusual here is what you said at the very beginning. There were very few kind of more old economy companies than, you know, Northrop Grumman, who was had these, you know, in Connecticut, building these nuclear submarines. And it just felt very old school. And Palmer Lucky, the guy who started, I think he was the founder of Anduril, has sort of brought this tech Silicon Valley ethos. And it's basically said, it's kind of a waste to have all of the brightest, best and brightest in the world trying to figure out the new photo sharing app. Maybe we should be figuring out defense. And also, I like, the thing I like about it is the idea of bringing that move fast,

• 21:09Scott Galloway?

  break things, agility, technology, youth, innovation, thinking outside of the box, willingness to fail, bringing some of that Silicon Valley ethos, and also greed glance. Like, can we make a lot of money here? There's nothing that attracts investment, like greed, right? And also, I'm putting with my pocketbook. One of my biggest investments over the last year has been in a vertical takeoff and landing company in the UK. So A, I want to invest in European stocks, as we've discussed ad nauseam, but also I want to be somewhat directly or adjacent to the defense industry. And I've invested in this company, Vertical Aerospace, that makes this vertical takeoff and landing aircraft.

• 21:53Scott Galloway?

  And I believe that there's probably a lot of military applications for that. And then when you layer on top of that an incremental $200 billion in defense spending that literally didn't exist 12 months ago, I think anyone who's competent at producing this machinery, this hardware, is just going to have these gale force hurricane-like winds in their sails. So I'm actively looking for opportunities to invest, not only in Europe, but potentially in companies that should benefit. I mean, this is, there are very few markets that overnight have an incremental investment of $200 billion.

• 22:26Ed Elson?

  I agree with a lot of what you're saying, but also it's, a lot of it makes me a little bit uncomfortable.

• 22:33Ed Elson?

  You know, the idea of Silicon Valley adopting a move fast and break things approach that is incentivized by money and, as you say, I think correctly, greed to fund.

• 22:49Ed Elson?

  Weaponry, that makes me very uncomfortable. And I think I would actually prefer a world where our investors are more interested in figuring out ways to fund products and services that are conducive to a world where there is not conflict and a world where there is more peace versus funding and being incentivized to build things that kill people. And, you know, I, I, I take your point that, that, you know, there's a lot of money going into photo sharing apps and what use does that have for the world? But what use does a missile killing people have for the world?

• 23:34Ed Elson?

  And I, I mean, clearly it's, it's about protecting people and protecting liberties. Um, but I guess just, I mean, make the case for me as for why I shouldn't feel bad about investing in these kinds of companies.

• 23:54Scott Galloway?

  Uh, we're a competitive species and since the beginning of time, people are willing to deploy violence to try and garner a disproportionate amount of the spoils. There's only a certain amount of prosperity in the world. We're 5% of the world's population and about 30% of the world's economics. And then one of the reasons we've gotten there is not only through innovation and education, but our willingness to deploy violence against other people. And the moment another nation that doesn't share our values, which is many, if not most of the rest of the world, feels that they can deliver more violence against us and take our Netflix and our espresso away, they will in a heartbeat. So just on a defensive measure to not believe that we live in a world where someone will

• 24:35Scott Galloway?

  come for us and willingly and knowingly and unflinchingly kill us and take our shit such that they can have more shit is just naive. So a certain level of defense is just a part of what it means to be the, the most prosperous nation in the world. That's just part of it. And a lot of the freedoms we, in prosperity, we enjoy are because of our ability to deliver violence in a more competent, global way than any other nation in history.

• 25:06Ed Elson?

  Have you always believed that, that that is the case? I, I'm not.

• 25:11Ed Elson?

  I think I think history would would argue in your favor. But I sort of have it in my head that if we lived in a world where most people had their basic needs taken care of, then there would not be much incentive to kill people and take their shit.

• 25:28Scott Galloway?

  I think the average prosperity per consumer globally is fifteen or eighteen thousand dollars. Americans have never been satisfied to just have a basic level of housing and food. We want massive prosperity. We want, you know, we just want more stuff, more cars, and we're willing to deploy violence to get it. Now, the argument I think you could make is if we invested all of that money in education and all of that money in technology that focuses on food distribution, you know, we might, we might get there. We might have a society that's just more prosperous, peaceful. But Americans and almost every other nation has made a conscious decision that we want more than our fair share.

• 26:12Scott Galloway?

  If we were to get to a point where we would decide, okay, everybody just needs to get along and the wealthiest nations in the world need to distribute their income to poorer nations and, you know, we need to lift up youth. I mean, you could get there theoretically.

• 26:26Ed Elson?

  I feel like that was, has long been the mission and it feels like in the last few years, as we have veered away from globalism, which, I mean, globalism is all about that. It's about forming diplomatic partnerships and living peacefully and forming trade agreements and trying to make sure we're all friends. And I just, I, I hear you, but I feel like this is a new perspective.

• 26:51Scott Galloway?

  Oh, no, this is as old as time. And the reason that the thing that our economic partnerships are based on is military alliances. And the North Atlantic Treaty Organization is there such that a fierce army with a different value set that will, the moment it feels like it can invade. A neighboring country and take their shit and their populace and their resources and their land away, they will. The moment they feel they can deliver violence to a greater extent, then the violence return to them. And we decide that we need to bind together to ensure that our value system and our economics are protected. And I like the idea. I think youth should always aspire to figure out a way to move beyond this. But until

• 27:34Scott Galloway?

  then, we also have to be realistic that I think there are, you know, a billion plus people that believe America has poor values and that they would in a heartbeat come for our resources, come for our technology, come for our prosperity and would have no trouble killing a lot of us until we acquiesce such that they could take our, you know, just as we have done. And so that is the world. It's not the way the world should be, but it is the way the world is. Does that mean we shouldn't have organizations to try and de-escalate conflict, that invest? I do believe, to your point, more investment in bringing people out of poverty, ensuring that, for example, I think something that Trump lacks in terms of vision, sees the

• 28:19Scott Galloway?

  world as a zero-sum game. And I think if you can lift up, bring more people out of poverty, share more prosperity, they're less likely to develop resentment, weaponize young men who are bored and have no opportunities to become suicide bombers, or you have to, leaders have to invent wars to keep their young men with no prospects. So shared prosperity, lifting everybody up should reduce violence. But you want to do it from a position of strength. And should we be spending $800 billion on our military? Probably not. There's a lot of inefficiency, a lot of waste. But I am very much believe that as long as we want the largest economy in the world, we are going to need the largest military in the world.

• 29:02Ed Elson?

  Yeah, it does feel as though young people, it's been so long. There are just so many of us who have basically zero experience.

• 29:17Ed Elson?

  Very few of us understand what it means to be at war.

• 29:20Scott Galloway?

  When were you born, Ed? What year were you born?

• 29:21Ed Elson?

  Ninety nine.

• 29:22Scott Galloway?

  Okay, so September 11th, 2001. My ex-wife calls me and says, can you come over? There's a bill that one of the World Trade Centers is on fire. I'm like, of course I can. And she was upset. And I roll over to the house and she had this apartment with a big deck. And I saw a plane coming in and then it disappeared behind the second tower. And then it came out the other end in a plume of smoke. I saw the second plane hit. And then the first tower went down and my ex was very upset. And I had a friend who was staying with me didn't want to watch because he found it so disturbing. And at that moment, all cellphone technology went down. And so we turned on like AM radio or something and they said, 27 planes are not accounted for.

• 30:07Scott Galloway?

  Like right then, we knew as we realized that was a terrorist attack. And people were flying planes slamming planes into tall buildings. And this guy came on the radio and said, 27 planes are unaccounted for. And so we immediately thought, are we in one of the 27 tallest buildings in Manhattan? Should we be vacating this building? And what I would offer up is that if Osama bin Laden had the technology, resources,

• 30:29Scott Galloway?

  and planes to basically slam into every building in America that day, he would have. And so our ability to to respond with just an unparalleled level of violence and hunt him down, such that people know that if in fact you do that, and some people would argue, well, that was the response he was looking for. And at the end of the day, he won because we started massive deficits.

• 30:51Ed Elson?

  And eventually that was worth it. Eventually, that was his stated purpose is I just want to drive their economy into the ground.

• 30:58Scott Galloway?

  But where I am is the following, is if he had the resources of an America and the intelligence and the men and women of the military complex that we have, how many buildings would he have slammed into that day?

• 31:11Scott Galloway?

  There are a lot of people out there that would like to take down our buildings and more if they had the resources and we let our guard down. God, I sound like such a boomer. I sound like such a, get off my lawn.

• 31:27Scott Galloway?

  Oh, my God. Pretty soon I'll be showing, I'll be throwing myself a Military Day parade. Tomorrow belongs to me, Ed.

• 31:36Ed Elson?

  We'll be right back after the break to check in on the market's performance in the first half of 2025. If you're enjoying the show so far, hit follow and leave us a review on Profitec Markets.

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• 33:30Ed Elson?

  We're back with Prof G Markets. The first half of 2025 comes to a close today. So let's take the opportunity to check in on how the markets have performed so far this year and what's in store for the months ahead. We'll also look at some of the red flags in the data that suggests the second half of the year may bring new challenges. So Scott, let's just review the markets. Let's look at what happened in the first half of this year and let's start with the S and P and the NASDAQ, which last week hit record highs. They've risen more than 4% so far this year. We obviously saw that momentum at the beginning of the year after Trump's election, then the huge drop off in April because of the tariffs. But since then, the markets have been clawing their way back up.

• 34:15Ed Elson?

  They climbed, they climbed, and now they're up since the beginning of the year and they just hit record highs, which is quite remarkable. Let's look at international markets. European index is up 7%. That's more than the S and P, as you predicted. The German Dax is up 18%. But the big winner of the first half in terms of national performance is actually China. The Hang Seng is up 24%. We could also look at the iShares China ETF, which some would argue is more indicative of Chinese performance. That is up 19%. So still, the winner is China among the big international players. Another big winner has been gold. Gold is up 25% year to date.

• 34:59Ed Elson?

  Also Bitcoin, it's been a big year for crypto in general with the Trump administration being so pro crypto. Bitcoin is up 15% year to date. A ton of winners, to be frank, so far this year. Let's look at the losers. Small cap stocks not doing very well. Russell 2000 is down 3.5% year to date. And then the biggest loser is probably the dollar, which has lost more than 10% of its value so far this year. A lot there. Scott, I'll let you decide where you want to go with this, but let's just get your overall reactions, your takeaways to the first half of 2025.

• 35:42Scott Galloway?

  It was going as I expected, and then I got it wrong. I wouldn't have guessed that we'd be back at record highs six months in. I thought that this tariff policy, which was so inane, insipid, I don't know what the right word is, was going to have really long-term consequences. The only, the only thing that kind of strikes me about all of this is that, well, two things. One, that we probably tend, the political situation and these characters are so interesting and such spectacles that I think we probably overestimate the impact they have on the real economy. And what I have learned from this first six months, one of my takeaways, is that the government and its actions just have dramatically less impact on the markets than,

• 36:27Scott Galloway?

  than maybe we think. That just the economy and the gears just grind on regardless of tariff nonsense, or whether we're bombing nuclear facilities or not, that it just isn't as, doesn't have as much impact as we think. And I think that's probably a good thing. The economy is just much bigger, that the decisions, their decisions to a certain extent, are like gnats flying into a windshield of a Mack truck, that the economy is just so much bigger than some of these decisions, with the exception of, I think, the Fed. I think the Fed really does have a big impact, and I think we have a fantastic chairman. The other observation is that I think that some of the worst metrics ever invented are

• 37:07Scott Galloway?

  the Dow Jones and the NASDAQ, because it creates an illusion of health and prosperity. And while asset values are up, the number of kids graduating from NYU this year that have a job is going down. There's real concerns that some of the entry-level jobs that I had and people had my age had to upskill and learn. I was an investment banking analyst at Morgan Stanley, putting together PowerPoint tests, proving, proofing prospectuses. I think you still need me, but instead of having 18 analysts, they probably need 16 now. So what do smart, ambitious kids coming out of college, how do they pay back their student loans? What kind of work do they do? What are their career tracks?

• 37:48Scott Galloway?

  In a world where AI can keep you glued to your phone, it's great for Nvidia. It's great for Meta shareholders. But what does it mean for 14 year olds who are going to come into the world with sort of a semi addiction to DOPA? And a proclivity to anxiety when they don't get that DOPA hit? So these metrics are are illusory in terms of our health and our prosperity. I don't think everything is okay right now. I think this is actually, the world is in a pretty precarious place. So I worry that we're focused on the wrong things and that these metrics, which are easy to understand and do impact us because we're all so in love with money and we're fascinated by the dollar.

• 38:26Scott Galloway?

  That we're looking at the wrong thing, that we're focused on our garden and we're obsessed with whether the garden is yielding the right fruit and the size of the tomatoes when our house is on fire.

• 38:36Ed Elson?

  I think that's totally correct that that we need different, we need more innovative indices. And I think people have made work by trying to figure out, you know, a happiness index for certain countries. And I'm totally with you, but you know, you mentioned the idea that the underlying economy is not doing that well. What I would say it's like sort of the fundamentals, if we look at the fundamentals of a stock, you know, how is the revenue? How is the profits? I would say the fundamentals of America are not doing well. And I'm talking about the economic fundamentals. And this is what confuses me about what is happening with the stock market right now, where, as you mentioned, we're touching record highs right now.

• 39:18Ed Elson?

  The stock market is fine, but I just want to also go over some of the economic indicators that portray just our general overall health economically as a nation. For example, we just saw the Q1 GDP revision.

• 39:36Ed Elson?

  GDP fell half a percentage point in Q1. And that is down further from what we originally thought. We thought it was a 0.3% contraction. No, the economy shrank 0.5% in Q1 year over year. Consumer sentiment down 5.4 points. We just erased the gains that we saw in May. Tons of layoffs. Get this, 700,000 jobs have been cut through May. And that is up 80% from the first five months of 2024. It also means that we are just 65,000 jobs away from matching the entire year's total in 2024 in terms of layoffs. Meanwhile, we've got these tariffs, which is going to increase inflation.

• 40:19Ed Elson?

  And we've just seen that Fed report where the Fed is predicting that we're going to see inflation rise to 3%. We also have the big, beautiful bill, which is making its way through Congress, which is going to expand the deficit by at least $3 trillion, as we've discussed many times. I mean, I look at all of these numbers. I look at the fundamentals of America. The fundamentals look pretty bad to me right now. And yet the stock market is near record highs. So I don't fully understand what is happening. And it feels to me as if, meanwhile, we've got all these wars blowing up around the world. It feels to me as if the investment community is oddly optimistic.

• 41:02Ed Elson?

  And maybe I'm just a pessimist, but it feels like the stock market should not be touching a record high right now.

• 41:10Scott Galloway?

  There's been about 54 geopolitical events. You know, we go into Iraq or 9/11 or there's a huge hurricane since, I think, 1970. And only one of them has had a sustained impact on the markets. Every one of them, it adds up 53 to 54, have been buying opportunities. We talked about this around 9/11, that the New York real estate market dipped 20% for like 45 days and, you know, the markets were back. So now the market almost looks at geopolitical disasters and says, oh, my God, it's a buying opportunity and the dip is so shallow and snaps back so fast that the market seems somewhat resilient.

• 41:51Scott Galloway?

  By the way, trivia question, do you know which geopolitical or economic happening actually had a sustained impact negatively on the market? It's kind of a boring one. I'll give you a hint, it happened in the 70s.

• 42:01Ed Elson?

  I don't know.

• 42:02Scott Galloway?

  The oil crisis. And the early seventies, it led to stagflation. That that took the markets down for the better part of a decade. But every other thing has been a buying opportunity where the markets have snapped back. But again, there's a term in business, what gets measured gets done. And that if you want, one of the hardest things about management is compensation. And in business, what you want is measurement. And these business intelligence and workflow companies basically give you the ability to sort of measure everything such that you can be better at business and have these benchmarks. And to a certain extent, what you measure is where your priorities are. And so what do we measure about meta platforms? Its stock is up 42%.

• 42:46Scott Galloway?

  That creates unbelievable economic value. I think they're employing thousands of people less than they did last year.

• 42:52Ed Elson?

  They laid off 5% of the workforce so far this year.

• 42:55Scott Galloway?

  Right, so, okay, I don't know, say 5,000, 5,000 fewer households are making an amazing living than they were last year, despite the fact the stock is up 42%. And also, they keep announcing that more people are spending more time on meta platforms. And my sense is that does not add to their emotional well being. So, okay, we have an addictive substance that turns, I believe, adults into dopa monsters, more prone to be involved in other addictive substances later in life, more likely to believe conspiracy theory, more likely to stop getting the news from fact checked organizations, more likely to think that their neighbors are enemy because they have a Trump sign or a Harris sign. That's not a good thing, but what is the thing we focus on?

• 43:40Scott Galloway?

  Stock's up 42%. So as a society, are we just studying to the wrong test here?

• 43:47Ed Elson?

  I want to highlight some statistics as well from this new fund manager survey that came from Bank of America.

• 43:56Ed Elson?

  And this is, we've covered this survey before. They basically just go to all of the biggest institutional investors and they ask them, what are you investing in? What are you thinking about? They ask really great questions and I want to go over some of the insights that they found here.

• 44:13Ed Elson?

  One, when asked what would be the best asset class over the next five years, 54% said international stocks and just 23% said US stocks. So that kind of fits to your prediction about the rivers of capital. Two, fund managers said that they were most overweight Eurozone, emerging markets and banks. Those were their big bets. Three, 31% of them said they were underweight the US dollar, which is the most negative reading in 20 years. I found that pretty crazy. And four, 59% of investors predicted that Trump's spending bill would provide no boost

• 44:53Ed Elson?

  to US economic activity in the next six months. So again, quite negative on America specifically. And more, I mean, more indication that the next six months are not going to be that great. And I'm just, I'm fascinated by how, I mean, the market seemed to register that in April and we saw that massive drop. And then, as you say, they decided, actually, everything's okay and that we've got the taco trade and maybe these things are less impactful than we think.

• 45:34Ed Elson?

  But it does feel as though all of the impacts and all of the consequences of all of the craziness that we've seen over the past six months, I feel like it's all going to come due probably at the end of this year or perhaps maybe early next year. I mean, my view is inflation as the best example, that's going to happen at the end of the year. And then suddenly we're all going to react to it and it'll be, I think, quite devastating. What do you think of that?

• 46:07Scott Galloway?

  Well, again, it goes to what you're measuring. And if you think about, okay, as it goes, the magnificent seven goes the rest of the market. And essentially, the magnificent seven are being driven by AI, addiction and technology. And in addition, it's easy to think, okay, if the Dow and the Nasdaq are up, that must mean the US is doing well. Well, actually, the thing that's driving these markets, 34% of their value is not the 493 stocks representing America, it's these seven stocks. And these seven stocks really represent The global economy's approach to AI and technology. So to a certain extent, these are, these are head fakes.

• 46:50Scott Galloway?

  The US could be doing actually fairly poorly on a ground level and the Dow could continue to go up.

• 46:55Ed Elson?

  Yeah, because AI is doing all of the, all of the heavy lifting here.

• 46:58Scott Galloway?

  As long as every company in the world is trying to figure out how AI is going to impact their business and is either renting cloud services or investing in data storage or buying more Microsoft, using Copilot and their kids continue to spend more and more time on Instagram. These seven companies continue to garner more revenue, which takes the Dow and the NASDAQ up, which people believe is an indicator of the US's prosperity. And it's not. It's, it's essentially a wealth index and it's a global wealth index. It's essentially, what it's really measuring is how the top 10% in the US and the top 1% globally are doing. It's a wealth index. It's an opulence index.

• 47:38Scott Galloway?

  But you could absolutely have a scenario where we go into recession, where you see an increase in diabetes, healthcare costs, depression, anxiety, job loss. You could have the Dow double and have unemployment triple because the market might say, well, that's just efficiency and greater earnings.

• 48:00Ed Elson?

  Good point. Yep.

• 48:01Scott Galloway?

  I'm trying to think of something more optimistic. Did I tell you I was going to the Roof Gardens tonight? That's the thing, Ed, when you're my age, long-term, you know, it just long-term effects take on a different meaning. There's a certain comfort in knowing that the ass cancer is getting here soon and I don't need to worry about this shit. This is your problem, Ed. Figure it out. Figure it out.

• 48:22Ed Elson?

  Now, I'm going to solve all of these problems with just more podcasts. That's what I'm, that's my contribution to society. Let's get, let's get maybe a grade on first half of 2025.

• 48:33Scott Galloway?

  The markets get an A. They've, they've been really resilient and it's nice to see some diversity in some other markets doing well. I don't know how well, I don't know, what, what, it's hard for me to evaluate how we're doing from a US or an American standpoint. And I, you know, I don't think we're worried enough about young people. And I, what I see in this, the primary legislative effort of 2025 will be remembered as this big, beautiful tax bill, which will probably go through. And I just see this, this is a continuation of this virus where we continue to transfer money from the entrance to the incumbents. And I think it's just horrible. I don't, and

• 49:15Scott Galloway?

  I sound like a broken record, and I'm prone to being a cynic because I'm depressed. But I don't think there's any way to look at this other than what it is. And that is a transfer of wealth from young to old, from poor to rich, or from the future to the past. And the fact that we don't seem to learn here, and the fact that we don't, I am somewhat inspired, and let me just bring this back to local politics, like Zohran Mondani, this is not good news for the majority of my peers. And I got to be honest, I'm inspired by it. And I'm inspired by it because what I see is your generation rising up, and that you're

• 49:56Scott Galloway?

  saying, what, what has gotten you rich, what has given you prosperity, what has given you the ability to have kids, is not working for me. And I love the fact that a lot of the people I know and hang out with gave a shit ton of money to Cuomo, and young people, and their command of technology, and a charismatic candidate just fucking rolled over them. I find that inspiring. It is time to shed the skin of an environment in the United States where the incumbents and the wealthy continue to come up with very rational reasons for why we should transfer more money to us. Do I believe his policies are a good idea?

• 50:37Scott Galloway?

  Some of them, yes. $30 minimum wage, I love that. Universal childcare in New York, I love that. Most of these ideas don't make any sense, but you know what? This says something. This says, this is a, this is a passing of the baton, or what I would like to think. And young people in New York have taken the reins and said, no, we don't want a 73 year old who was kicked out of government or had to resign in disgrace to use the city for 24 months as he announces his bid for president. We're going to take someone younger who has a series of fresh ideas. I just, I think it's really inspiring. I hope it inspires a wave of change and of youth

• 51:16Scott Galloway?

  across the nation because we keep coming up with rational reasons why we should run up your credit cards such that, again, I can go to the roof gardens and get in trouble. And it's just enough already. So my friends will be really disappointed in me because of, you know, their disdain for this guy. But it's your time. Tomorrow belongs to you, Ed. And so I'm excited that as a New York resident, I'm hoping, even if some of the policies make no fucking sense, I'm happy that you guys are grabbing the reins and saying, sorry, boss, we got this.

• 51:50Ed Elson?

  I totally agree. And I, just to wrap up here, like, in terms of grading the first half of the year, as you say, according to the markets, it's been close to an A. Maybe not an A because we're seeing actually way more, way stronger performance in international markets. So maybe like, maybe the S and P would give this first half of the year like a B plus or like an A minus is what I would say. But what we've seen with just, you know, the election in New York as an example, is increasingly young people who don't have much of a stake in the stock market, they're giving this an F grade, maybe a D grade.

• 52:34Ed Elson?

  And I think that is important because a lot of what we're seeing

• 52:40Ed Elson?

  In terms of, as I said, the fundamentals of the economy, the idea of adding another three to five trillion dollars to the deficit, and the fact that that's happening and the market's going, eh, okay, that's probably fine. I mean, again, we've seen some spikes in the yields, and that is promising to me. But as we've discussed many times, it's the spikes have not been that big. We had a huge one after tariffs, and that to me was the bond market doing its job, doing the bond vigilante job of saying, that's a terrible fucking idea. But now we've got this bill, and the market seems to say, oh, I think it's okay. And I just don't buy, I don't buy that. I don't buy that it's okay to explode the deficit like this.

• 53:25Ed Elson?

  And I think that's where I really agree with you on the Mamdani point, which is, I'm glad that there is a cohort of people. By the way, I think it's a huge deal that we had record turnout among young voters in that election. Because I think it's finally, young people are kind of putting their, getting their act in and say, no, no, no, this isn't a B plus, or an A minus, or an A, this is an F.

• 53:52Ed Elson?

  Let's take a look at the week ahead. We'll see the unemployment rate for June, and we'll see if Congress gets the GOP tax bill to Trump's desk before the July 4th deadline. Any predictions for us?

• 54:05Scott Galloway?

  Defense stocks, they're just getting started, and both in Europe and in the US, because if they're talking about going from 1.9%, I was thinking to 3%, if they go to 5% on a $19 trillion economy, which is the EU, what is that, 3% on 19 trillion? That's 570 billion in incremental spending a year. And if they will pass legislation that says we have a preference for spending it on European companies, there's just not enough places to put that money. Any competent aerospace company, or aerospace, or defense company, or defense adjacent company, is just gonna, you know, it's gonna be like selling that reflected glass into neon. They're like, basically, if you make it, we'll take all of it.

• 54:50Scott Galloway?

  So I think defense stocks in the US, and especially in the EU, are just getting started in terms of their run.

• 55:02Ed Elson?

  This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producers are Alison Weiss and Dan Shalon. Mia Salvario 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. Tune in tomorrow for a fresh take on the markets.

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