Fed Cuts Rates For First Time This Year & Winners and Losers of a TikTok Deal

Ed breaks down the Fed’s interest rate decision with Robert Armstrong, U. S. financial commentator for the Financial Times. They dig into why the Fed cut rates yesterday and what that move means for the rest of the year. Then Ed and Scott discuss the details of the deal to keep TikTok in the U. S. and question who really comes out on top. Check out our latest Prof G Markets newsletter Order "The Algebra of Wealth" out now Subscribe to No Mercy / No Malice Follow Prof G Markets on Instagram Follow Ed on Instagram and X Follow Scott on Instagram Learn more about your ad choices. Visit podcastchoices.com/adchoices

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• 1:29Ed Elson?

  Today's number 16. That's how many hours people spent waiting in line for Shakespeare in the Park in New York this summer. One of the longest waits ever. That is 960 minutes of small talk with theater kids, or, as some people are calling it, the seventh ring of hell.

• 1:53Speaker 04

  If money is evil, then that building is hell.

• 2:01Ed Elson?

  Welcome to Prof G Markets. I'm Ed Elson. As you can see from my background, I am not in the studio right now. I am in what is known as the eighth ring of hell. I'm in Las Vegas at the moment, doing a talk tomorrow, which will be very fun. But lots of news to get into, so let's get into the show. It is September 18th. Let's check in on yesterday's market vitals. The S and P 500 and the Nasdaq closed slightly lower following the Fed's interest rate decision. Meanwhile, the Dow hit an intraday record and ended the day in the green. Treasury yields rose slightly, along with the dollar. And finally, Nvidia shares fell nearly 3% after China banned its tech companies from buying Nvidia chips.

• 2:44Ed Elson?

  Okay, what's happening? For the first time in nine months, the Federal Reserve is cutting rates. As expected, Jerome Powell slashed interest rates by 25 basis points yesterday, citing a weakening labor market. Fed officials also penciled in cuts for the two remaining meetings this year. The lone dissenting vote at the meeting was the Fed's newest member, Stephen Myron, who favored a 50 basis point cut. All the other governors voted for 25 basis points. Markets initially rallied in response, but ended the day mixed. So to help us break down what this decision means for the economy and what we can expect for the rest of the year, we have our favorite financial commentator from the Financial Times. We

• 3:29Ed Elson?

  have the one and only Robert Armstrong. Rob, thank you so much for joining us again on Profy Markets.

• 3:36Robert Armstrong?

  It's great to be here. Very interesting meeting. Lot to say.

• 3:41Ed Elson?

  Yes, let's just start with your initial reactions. What did you think?

• 3:45Robert Armstrong?

  I think there were, there are two things that jumped out at me. One was, you know, the Fed is stuck between its mandate. Right at the top of the press release, they said inflation's rising, job creation is falling, they are being pulled in two opposite directions. And the statement was very clear and Chair Powell was very clear. We're leaning towards the employment side of our mandate, of our job. And so that should be a good message for markets, right? Like, we're okay, we're cutting and we're, we're kind of more worried about growth than inflation, broadly speaking. And that was kind of interesting. And that message

• 4:27Robert Armstrong?

  came through much, or a bit more clearly than I expected. I expected a little bit more of a, you know, six of one, half a dozen of the other. The second interesting thing was, of course, the issue of independence. So it is not often.

• 4:46Robert Armstrong?

  That the statement of economic projections, which is this little folder full of charts that the Fed hands out before every meeting, which shows what the different members expect about this and this, this or that. Economic variable actually makes you laugh. But this one did make me laugh because they have what they call the dot plot, which is one dot on a sort of chart of expected rate policy at the end of this year. And so the 19 people on the committee and the 12 who vote, put their dots on there. And all the dots were all like in this little group together, like a group of happy children.

• 5:29Robert Armstrong?

  But then there was one dot that was the unhappy lonely child that had been rejected by the group way at the bottom of the chart. And that dot could only have come from one person, which is the new member of the committee, Mr. Maron.

• 5:44Ed Elson?

  Exactly.

• 5:45Robert Armstrong?

  Representative on the committee of the White House.

• 5:49Ed Elson?

  Second day on the job.

• 5:50Robert Armstrong?

  Second day on the job. And in the press conference, Powell got some very fair questions from the journalists, which were along the lines of, you rattle on no end about the importance of independence. But you have somebody who literally has a job in the White House, sitting on the committee, and we all know whose dot, that lonely little dot is.

• 6:11Ed Elson?

  Yes.

• 6:12Robert Armstrong?

  What do you say about that? And he said basically two things. One, independence is good. I won't comment on Mr. Maron's presence specifically. And two, one member of the committee can't sway it because the 12 people vote, which is, I guess, a fair answer. But what about two people or three? You know, that's the kind of implied when he says, one person isn't enough. Well, you know, White House trying to get rid of Lisa Cook. Then you have two, right? I mean, can two sway the committee? These are good questions.

• 6:47Ed Elson?

  Yeah.

• 6:47Robert Armstrong?

  I don't mean to, I know you might have a different questions, but there was one other point relative to this.

• 6:52Ed Elson?

  Yeah, please.

• 6:53Robert Armstrong?

  Which were the very interesting votes. Of the two dissenters last time, Bowman and Waller. So last time, these two Fed governors, both Trump appointees, in the last meeting when they didn't cut, they said, we think, they dissented and said, we think the committee should have cut 25 basis points. There was a lot of chitter chatter ahead of this meeting that there might be a three person dissenting block, Bowman, Waller, and Maron, right?

• 7:25Ed Elson?

  Uh huh.

• 7:26Robert Armstrong?

  But this time, one dissenter, Maron, Bowman and Waller did not dissent. They were with the committee at 25 basis points. Now, the question that forces us to ask is, were they making a statement there? Were they saying, look, there's not a, there's not a Trump block. This institution is still independent of the president. I mean, maybe they just thought 25 was the right amount this time.

• 7:50Ed Elson?

  Right.

• 7:50Robert Armstrong?

  Who knows? I cannot look into the hearts of men and women. However, it's impossible not to think, maybe these two Trump appointees were making a statement along the lines of, you don't own me. You don't own the committee. Even if you have three members on it, we're not a block. We're not with the new guy, right?

• 8:10Ed Elson?

  Yeah, which is promising.

• 8:11Robert Armstrong?

  Yeah, that's promising. That, that, that's a win for the institution or the institutional lists, I would say.

• 8:16Ed Elson?

  Yes. So just to quote the statement from this Fed meeting, quote, "Job gains have slowed and the unemployment rate has edged up. Inflation has moved up and remains somewhat elevated."

• 8:28Robert Armstrong?

  Yes.

• 8:29Ed Elson?

  So to me, I read that, I think that's sort of the definition of stagflation.

• 8:35Robert Armstrong?

  It is.

• 8:36Ed Elson?

  Uh, we're seeing slowing growth and we're seeing inflation move up and, quote, "remain elevated." And the question is then, why are we cutting rates right now? And, you know, it was assumed by Wall Street and by all of us that we were going to cut, have a 25 basis point cut. But, you know, is that necessarily the right decision? I mean, I read that they're saying, we've got this inflation problem. It's going up, it's staying up. And yet we're going to cut rates. And I think the question becomes, okay, why are they doing that? Is it one because this employment thing is such an important thing? Or then there's this sort of more insidious reading, which is maybe the pressure got to him.

• 9:22Ed Elson?

  Maybe everything Trump has been saying actually did influence this Fed decision.

• 9:28Robert Armstrong?

  Okay, to credit Chair Powell, he did say, we've got a, the mandate is pulling us in both directions and no path is without risk. So he acknowledged the point that you just made, that this is not an easy decision. But when pressed on this issue, I think what he's, he, his view is that the persistence of inflation is due to tariffs.

• 9:55Ed Elson?

  Yep.

• 9:56Robert Armstrong?

  It's on the good side. It's due to tariffs and our best guess is that's temporary. Right? So the reason we can err on the side of growth is because we think the primary cause of inflation above target is something that won't last. And we can have a debate about that, but that's, that's his answer there. Now, he also said something that I happen to disagree with. He also said there's disinflation on the services side. I don't happen to believe that. I don't see it in the numbers. I think services inflation is stuck at three and maybe even rising a little bit in some important categories. So I don't feel as confident as, as the committee does about services inflation. But he did give

• 10:39Robert Armstrong?

  a coherent answer. We think the tariff thing is gonna, you know, be like the, the pig that passes through the snake eventually. And if it's not, we'll have to make that assessment later.

• 10:52Ed Elson?

  Yeah. I just want to gather one of your quotes because you wrote an article about this. It was called What the Fed Should Do. And he basically. Went through all of the different arguments, why you would go with a 50 basis point cut or a 25, or why you would keep rates where they are.

• 11:10Robert Armstrong?

  Yeah.

• 11:11Ed Elson?

  And you actually said, you said, quote, "We're with the hawks." You said, you're basically on the side of keep rates where they are. You said, quote, "Resurgent inflation is the scariest risk right now, and not just in the sense that inflation eats away at purchasing power and grinds down sentiment. We think another bout of inflation could cause a market crash."

• 11:29Robert Armstrong?

  Yeah.

• 11:29Ed Elson?

  So I understand you don't think that this is like Armageddon, that we have a 25 basis point cut.

• 11:34Robert Armstrong?

  No, it's not.

• 11:35Ed Elson?

  But you do say it seems as though you would, you believe that this isn't necessarily the right decision here.

• 11:42Robert Armstrong?

  I mean, I think his decision is, the 25 basis point decision, this is a bit hard to, a kind of subtle view, and it's hard to express, but let me give it a shot. In the center of the probability curve, I think a 25% basis point cut is probably fine, or even the right decision. I just see this big, whopping low probability risk at the right side of the curve, which is markets overheat even more, inflation gets going, rates rise, and the higher rates crack the market, and we have a market crash.

• 12:24Robert Armstrong?

  That is a low probability event, but it's so awful that you kind of have to weight it a bit more heavily, even though it's low probability, just because it would stink so bad. And I think, as a markets person, those are the kind of events that I worry about. Economists think more about the center of the curve, or the center of the distribution. I'm more freaked out about the tails. So that might explain my disagreement with, you know, both the chair and what the committee decided today.

• 12:57Ed Elson?

  Yeah. So we are going to have this.

• 12:59Robert Armstrong?

  If I can just add one thing, if I can just add one thing, if you look at the expectation, that dot plot that I talked about earlier, which says, for each member of the committee, what do they think is the appropriate, will be the appropriate level of the federal funds rate at the end of the year? It's very split. Between people who think like almost half of the committee doesn't think another rate cut is going to be necessary this year.

• 13:28Ed Elson?

  Right.

• 13:29Robert Armstrong?

  Right. That's significant. There about this year, especially there is significant disagreement at the Fed, right? Which tells you that the stuff that you're talking about, the worries you just expressed, Ed, those worries are on the mind of the committee as a collective. And they have the upper hand with certain members of the committee.

• 13:49Ed Elson?

  Yes. We saw the the markets reaction first, the S and P and the Nasdaq initially pop, then they fell as Powell was speaking. I assume that is because of that caution that we saw. They decided to cut, but then they said, but hold on.

• 14:04Robert Armstrong?

  Yeah, I think, yeah, I think it was like, yay. And then they they were like, you could sort of see the market paging through that statement of economic projections and maybe looking at that page about, you know, 2026 rate expectations and being like, whoa, whoa, whoa, we don't love this.

• 14:21Ed Elson?

  Yeah.

• 14:21Robert Armstrong?

  You know what I mean? But, you know, the first day reactions, Ed, to these things are not usually great indicators. It takes time for the the market. It takes a day or two for the market to digest this stuff.

• 14:34Ed Elson?

  Yes, exactly.

• 14:35Robert Armstrong?

  And come come to a consensus.

• 14:37Ed Elson?

  Yeah. So we will get this this rate cut. Going back to the dual mandate, you've got this unemployment problem and you've got this inflation problem. And the idea is you cut rates, you start to fix the unemployment problem, you raise rates or you keep rates the same, you start to address the inflation problem. And I think everyone knows that. What I think a lot of people probably don't have sourced it out in their head is like, why that is? And could you just tell us what the economics are of this? Why is it that cutting rates will help with the job market? Why is that? What is actually happening in the economy there?

• 15:22Robert Armstrong?

  A crucial element of growth.

• 15:26Robert Armstrong?

  In any economy is the ease with which both households and companies, but especially companies can borrow.

• 15:34Ed Elson?

  Yeah.

• 15:34Robert Armstrong?

  So if at the margin, you make debt cheaper, you make it easier for a company to borrow money to expand its business or buy a new piece of equipment or hire new people or, you know, all of this kind of stuff. But there is, you know, but on that basis, and you know, the chair acknowledged this today rightly, a quarter of a point interest rate change isn't going to make a big difference. You know, like it may not even filter through to mortgage rates at all, which is the main channel of transmission to households. Right? If households have cheaper mortgage, they refinance, they have more money on hand, they spend, they consume more because their, their housing costs are lower, et cetera.

• 16:18Ed Elson?

  Yeah.

• 16:18Robert Armstrong?

  But there is this very powerful signaling effect, which is that the Fed almost has this totemic or magical status in financial markets where people, when the Fed is in cutting mode, people think kind of good times are here and the vibes are positive. And that flows over to, you know, greater wealth effects, enthusiasm, animal spirits and all that stuff. So that's the, the tricky thing that the Fed has to manage. It's not only controlling this one interest rate, it's got this weird job managing vibes.

• 16:59Ed Elson?

  Yes.

• 17:01Robert Armstrong?

  And that's what makes it so unpredictable. Right? Because the vibes part is actually more important.

• 17:06Ed Elson?

  Yes.

• 17:07Robert Armstrong?

  Than the interest rate part. The long run path of interest rates, of course, matters a lot, but for any one cut, the vibes are more important than the cut itself.

• 17:16Ed Elson?

  Yes, exactly. I, you once described the position of Fed Chair on this podcast as the high priest of the economy, which I think is exactly right. Not only are you in control of the, the interest rates, you're also in control of the way people feel about things. And then you have people like us talking on this podcast, figuring out what does this actually mean? The, the actual downstream effects are almost less of a result of him switching the knob versus him saying, going out there and saying, this is what we're doing.

• 17:48Robert Armstrong?

  Yeah. And this is of course, why the issues of Fed independence. Are so important, you know, when the market is booming and the economy is basically good, which by the way, it's still basically is, right? The economy is growing. The unemployment rate is low. It's just these things are going in the wrong direction, but they're going in the wrong direction from a pretty solid place. And that's good to keep in mind.

• 18:13Ed Elson?

  Yes.

• 18:14Robert Armstrong?

  But if things get ugly and the high priests and the high temple of our market system has been defiled somehow, then you don't know what's going to happen with vibes, right? And I think you're creating a risk that is hard to predict and possibly hard to control. So I think it's a very, you know, it's fine to kind of do this Lisa Cook stuff now when things are okay. But when, when the temperature starts to rise, I think this stuff could matter.

• 18:51Ed Elson?

  Yeah.

• 18:52Robert Armstrong?

  And I'm worried about it.

• 18:53Ed Elson?

  Yeah. Well, Rob, we really appreciate your time and we'll, we hope to have you on for a longer episode.

• 18:59Robert Armstrong?

  Love being on the show. Thanks for having me, Ed.

• 19:01Ed Elson?

  After the break, a look at who will control TikTok in the US. If you're enjoying the show, give Prof G Markets a follow.

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• 20:51Ed Elson?

  We're back with Prof G Markets. 242 days after the original deadline for the TikTok ban, a deal to keep the app in the U.S. is finally coming together. According to initial reporting, a consortium of U.S. companies, including Oracle, Silverlake and Andreessen Horowitz, will control roughly 80% of U.S. TikTok operations. Meanwhile, ByteDance will hold on to the remaining 19.9%, making it the app's largest single shareholder. Still, that should satisfy one condition of the 2024 law that forced the ban or sale of the company in the first place. ByteDance's share of the app needs to fall below 20% if TikTok is to continue operating in America.

• 21:34Ed Elson?

  But there is still one big question mark when it comes to the most important condition of all, and that is, who will control the algorithm for TikTok in the U.S.? You'll remember, this algorithm was at the very heart of the TikTok dispute. The main reason the app was banned in the first place was because of these national security concerns. Our government determined that the algorithm could not be left in the hands of a company with ties to the CCP. We couldn't allow ByteDance to manipulate the minds of Americans with their algorithm. So where do we land on this issue under this new framework? Well, according to a top Chinese official, U.S. TikTok operations will license the algorithm from ByteDance.

• 22:20Ed Elson?

  Again, this is all initial reporting and the White House said, quote, "Any details of the TikTok framework are pure speculation." But if we are to take the Chinese official at their word, it does appear the algorithm will remain in the hands of China. The only difference now is that the people profiting off of that algorithm, those people will have changed. It won't be the Chinese anymore. It will be some Americans too, or more specifically, some American friends of the president. But does that fix our national security problem? We're not so sure. However, as we said, nothing is officially confirmed yet. Trump and Xi are scheduled to have a call on Friday. They will discuss this deal. So we will have to wait and see what else we learn later in the week.

• 23:05Ed Elson?

  In the meantime, let's bring in the man who has been calling for this ban as early as 2023. Let's get Scott on the phone.

• 23:16Ed Elson?

  Scott, how's it going?

• 23:17Scott Galloway?

  It's going really well, Ed. I'm in Midtown, headed to the airport, then going to Nashville for a speaking room tomorrow, then I'm back in New York tomorrow. And yeah, so everything's good.

• 23:27Ed Elson?

  Nashville? That's pretty exciting.

• 23:28Scott Galloway?

  Yeah, it's a great city. Have you ever been to Nashville?

• 23:31Ed Elson?

  Never.

• 23:32Scott Galloway?

  I can see a guy like you living there. It's one of those cool, kind of up and coming cities. Anyways, I think you'd really enjoy it all.

• 23:46Ed Elson?

  You're really selling me on Nashville.

• 23:47Scott Galloway?

  I think you'd really like it. I'd love to. I'd love to explore the great state of Tennessee with you, Ed.

• 23:57Ed Elson?

  All right, well, we've got a lot to unpack here. We've got this consortium of US investors who appear ready to take over TikTok. There's also this larger question of who's actually going to control the algorithm when it's all said and done. But let's just get your initial reactions to what we've seen with this TikTok news.

• 24:15Scott Galloway?

  Well, my initial reaction is that this used to be a capitalist country with the rule of law, where it wasn't this cronyism that had become almost normalized. I mean, this is. Okay, first off, this TikTok or ByteDance was banned. It was passed by both houses of government and the president signed it into law. And then the new president came in and said, I'm not going to enforce the law. So essentially, our laws, I mean, let's just say, if we're going to have a dictatorship or an autocracy, let's just save money and clear out, send senators and congress home and stop, stop even pretending to have an SEC. Because this is pure, when you get to take a company, and we'll come back to how strong

• 24:57Scott Galloway?

  ByteDance is, and just carve it up for your Republican friends. Another reason why I want to get involved in Democratic Party politics and help get, flip congress and get the White House back is in addition to returning to the capitalist full body contact country of rights and capitalism that I love. I want to get the president and next Democratic president in office and convince him to ban LVMH and then force him to sell it to me because I'm really into Ramoa, super into Ramoa luggage and I would like to own LVMH. I'd like to own the US licensed LVMH. So that is, you know, that sounds comical, it's not. That's what's going on here.

• 25:38Scott Galloway?

  He is carving up a company and giving it to his Republican friends instead of, one, it should have been banned and then he would have been negotiating for a position of strength. And two, they want to also put the, someone from the US government on the board. What are we going to have, Cash Patel on the board? I mean, it's, it's literally, it's so funny though. It used to be an insult from the right that we Democrats were socialists. This could not be more socialist. This is, well, it's cronyist first and foremost, carving up a company, giving it to your friends.

• 26:13Ed Elson?

  That's what they do in Russia.

• 26:14Scott Galloway?

  Yeah, that's what they do in Russia. And then, oh, but the, we're going to find someone from the government to be on the board.

• 26:20Ed Elson?

  That's what they do in Russia.

• 26:22Scott Galloway?

  It is, it is just, uh, so anyways, I'm not a fan. I'm not a big fan of this deal. I don't think it's probably going to happen. I think she is playing Trump like a fiddle and then it probably, I think he's just going to slowball him. And at the end of the day, the the real risk here is that two thirds of American youth spend one and a half hours a day on TikTok. So this is equivalent to would we have let the Kremlin own CBS, NBC and ABC in the sixties in the midst of the Cold War? It just strikes me as I don't see the risk going down. All I see is an opportunity for Trump to dole out pieces of a very profitable company to his cronies. Your thoughts, Ed?

• 27:06Ed Elson?

  Well, I just I found that the point about this going to his cronies, that is actually exactly what's happening here. Just to go through the some of the participants in this deal, you've got Oracle, the chairman of which is Larry Ellison. We predicted earlier in the week that he would be involved in this deal in some way. Indeed, he is. And he is, of course, a close associate of Trump. You've got Andreessen Horowitz, which is run by Marc Andreessen. Marc Andreessen publicly supported Trump last year. You've got Susquehanna, which is run by Jeff Yass, another big ally of the president, donated a hundred million dollars to the campaign in the last cycle. So there is a theme here.

• 27:48Ed Elson?

  You're not being hyperbolic. The people who are involved in this deal are generally friends with the guy. Now, did the did the deal go to them because they're friends with him? I guess we don't know, but you could, I mean, you could sort of assume. So that's the one side of this. The other side of this is ownership, this ownership problem. I mean, the whole reason we're here in the first place is because we were worried, as you say, about the idea of two thirds of our youth spending one and a half hours per day on a product which is designed and owned by China. And so the idea was, okay, let's get

• 28:29Ed Elson?

  it out of China's hands. And I originally thought that that is what they were doing here. And by the way, I actually support this. I support putting this into the hands of Americans. However, supposedly.

• 28:42Ed Elson?

  We're not actually getting the algorithm.

• 28:44Scott Galloway?

  Yeah.

• 28:45Ed Elson?

  Supposedly, we are licensing the algorithm from ByteDance, AKA from China. In other words, the algo will still be in the hands of China. And in my view, that completely defeats the purpose of this whole deal. Again, we don't know for sure, but if that is the case, doesn't that just render this entire operation completely irrelevant?

• 29:09Scott Galloway?

  Uh, yes, it does. And this is a real security spread as we spend all this time trying to find clues and, and derive or somehow interpret the font on shell casings as being a radical left or radical right conspiracy. We're not focused on the real problem, and that is that big tech, including ByteDance, is able to serve content that enrages people. And what's even worse is the CCP has an additional vested interest in enraging our youth and continuing this trend where one out of two people my age feel good about America and one out of 10 people your age feel good about America.

• 29:51Scott Galloway?

  So this is geopolitically very stupid. I don't think Trump cares. He's not going to be around that long. That's not his priority. His priority is to reward his cronies. He hated TikTok until I'm sure the folks at ByteDance tweaked the algorithm to have more pro-Trump content. His.

• 30:12Ed Elson?

  And when Jeff Yass got in his ear.

• 30:14Scott Galloway?

  That's right. They gave him a bunch of money. And then his staff reported that, oh, wait, you're trending on TikTok. And all of a sudden, it's very positive on you. And he decided he liked it after it had been banned and was supposedly a law. And then just from a capitalist standpoint, we're not supposed to be doling out great company. And by the way, these guys are going to make a shit ton of money. This company is an incredible company. I think it's a real security risk, but it has, they're going to buy in likely at a valuation. ByteDance, Tesla and Palantir are probably the most overvalued companies in tech. ByteDance, hands down, is the most undervalued company because of this geopolitical overhang. It is trading at about two times sales versus Tesla or Palantir at sixty times sales and OpenAI trading at what forty times sales?

• 30:59Scott Galloway?

  This is this company is the most undervalued company in the world. It's still a defense threat. We can walk and chew gum at the same time. It's got operating margins of thirty percent. A company similar, trading at a similar price of sales, another amazing company, Home Depot, has operating margins of more like twelve to fifteen percent. So these guys are going to make so much money. And this is cronyism. This is all of the calories of cronyism and socialism with none of the great taste of the government actually doing their damn job and preventing a tragedy of the commons through the increased security risk of having a neural jack implanted in the wet matter of our youth.

• 31:40Ed Elson?

  Yep.

• 31:41Scott Galloway?

  The good news is I think there's still a very big probability this just doesn't happen.

• 31:46Ed Elson?

  Well, that was the other part I was going to get to is you don't think it's happening?

• 31:49Scott Galloway?

  Well, I mean, hasn't it supposedly, hasn't something supposedly been happening here for a couple of years now? I think she just says, okay, the guy, the guy has the attention span of a cat on, on mess. Just take the red dot over here, you know, have him, you know, do the deal, slow it down, do the deal, slow it down, say no, let him try and ban it, he can't ban it. He's already extended the deadline until December, so they don't have to do anything for three months. And I just, I don't know, I think she is just so much more disciplined and smarter than Trump. I think, I think Trump and Putin both feel very emboldened right now with the new alliances.

• 32:32Scott Galloway?

  Putin's flying drones into, into NATO countries. And I think she is just, is just, is just toying. With Trump, just absolutely toying toying with him.

• 32:43Ed Elson?

  Mm hmm. I don't think we won't see a deal at all, but I think whatever we'll see will be a symbolic deal. It'll make Trump look like he won. But ultimately, when you dig into it, as we'll see with this algorithm, it's not really going to be a win for the American people. If the algorithm stays in the hands of China, then all of this was for nothing.

• 33:07Scott Galloway?

  Yeah, I gotta be honest. I'm I want to be clear, though. I'm addicted to the product. I like watching videos on Great Danes and chiropractors aggressively adjust unwitting patients and three people ridiculously hot women talking about social issues. That's.

• 33:24Scott Galloway?

  Is that wrong, Ed? Is that right? I'm going to Nashville, Ed. I'm going to Nashville.

• 33:30Ed Elson?

  Okay, enjoy your trip, Scott.

• 33:31Scott Galloway?

  All right, brother. I'm going into the Midtown Tunnel here. I'm going into Lincoln Tunnel. I'm gonna lose you.

• 33:35Ed Elson?

  Okay.

• 33:36Scott Galloway?

  See you, brother.

• 33:40Ed Elson?

  So there you have it. TikTok may be changing hands. Scott thinks that the deal won't go through. Most news outlets are reporting it probably will. Most of the details, though, are uncertain. One thing, though, is quite clear, and that is the investors who get in on this deal, if it happens, those investors will be huge winners because they will have gotten in on basically the most ascendant social media company in the world. And crucially, they will have done it in a forced sale. As we've discussed before, the best time to buy is when the seller has to sell. When you have to sell, you lose all of your negotiating power, you lose your pricing power. And this appears to be what is happening. China has

• 34:25Ed Elson?

  to sell. Put another way, the price on this asset is likely to be significantly lower than if it had been sold on the free market, say, if it were being sold in the public market. So in sum, the investors are the winners here. Again, if the deal goes through, the investors are the winners. And once again, it pays to be friends with Trump. Okay, that's it for today. This episode was produced by Claire Miller, edited by Joel Patterson and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Our research team is Dan Shalan, Isabella Kinsel, Kristin O'Donoghue and Mia Silverio. And our technical director is Drew Burrows. Thanks for listening to Prof G Markets. I'm Ed Elson.

• 35:07Ed Elson?

  If you like what you heard, give us a follow and join us tomorrow for our conversation with Jagjit Chadda, Professor of Economics at the University of Cambridge.

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