Nvidia Earnings Brush Off AI Bubble Fears — For Now

Ed Elson is joined by Gil Luria, Head of Technology Research at D. A. Davidson, to break down Nvidia’s earnings and whether or not they put the AI bubble conversation to bed. Then Jonathan Kanter, former Assistant Attorney General for the DOJ’s Antitrust Division, returns to the show to explain why Meta’s latest court victory has him worried. And finally, Ed shares his takeaways from the meeting between President Trump and Saudi Arabia’s Crown Prince. Check out our latest Prof G Markets newsletter 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

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 slash 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.

• 1:00Speaker 03

  Welcome to Sephora.

• 1:01Speaker 04

  I'm looking for a perfume that's not too perfumey.

• 1:05Speaker 03

  I got you.

• 1:06Speaker 05

  Serum moisturizer or moisturizer syrup.

• 1:09Speaker 03

  Let's get into layering.

• 1:11Speaker 04

  My concealer is making me look worse.

• 1:14Speaker 03

  Sounds like the wrong shade. Let's get you matched.

• 1:18Speaker 06

  There's only one store that really gets what you're going for. Get beauty from people who get beauty only at Sephora.

• 1:24Speaker 03

  Hi, I. Let's get you a basket.

• 1:29Ed Elson?

  Today's number, 70,000. That's how many dollars the average teacher in Germany gets paid in starting salary. That is 60% higher than what we pay American teachers. However, that number doesn't include what we pay our teachers in thoughts and prayers.

• 1:48Speaker 08

  Money markets met. If money is evil, then that building is hell.

• 1:58Ed Elson?

  Welcome to Prof G Markets. I'm Ed Elson. It is November 20th. Let's check in on yesterday's market vitals. The major indices all climbed for the first time this week ahead of Nvidia's earnings. Meanwhile, the dollar rose after the BLS said it will not release jobs data for October. Traders seem to think that announcement increases the odds the Fed will cut rates in December. And finally, Bitcoin dropped below $90,000 once again.

• 2:25Ed Elson?

  Okay, what else is happening? The world's most valuable company has defied expectations yet again. In a highly anticipated report that kept the markets on edge all week, Nvidia delivered a record $57 billion in third quarter revenue. Data center sales also hit a record up 66% year over year, and the company provided stronger than expected guidance for the fourth quarter. Revenue is now projected to hit $65 billion this quarter. In the earnings report, Jensen Huang put it simply. He said, quote, "Blackwell sales are off the charts and cloud GPUs are sold out." The stock rose as much as 6% in after-hours trading.

• 3:08Ed Elson?

  Okay, joining us to break down these earnings and what it means for the AI economy, we are speaking with Gil Luria, Head of Technology Research at D.A. Davidson. Gil, great to see you again. Happy Nvidia Day.

• 3:23Gil Luria?

  Happy Nvidia Day to you, too. It's the Super Bowl of the quarter, absolutely.

• 3:29Ed Elson?

  So, massive earnings. Nvidia beat expectations. Revenue up to $57 billion is up 62% from last year. This has been kind of a precarious week for AI. We've seen tech stocks sliding. We've seen a lot of concerns. And then Nvidia just comes out of the gates with this crazy quarter. What does this mean for the AI trade?

• 3:56Gil Luria?

  Well, tomorrow, all the AI stocks will be up, but we still have to keep the same level-headed approach that we've had before, which is there's real winners, there's companies that are engaged in real economically valuable activity, and then there's the companies that are engaged in some other unhealthy behavior. They're going to benefit tomorrow, but that doesn't mean the problems are solved. So from Nvidia's perspective, the fact that they have customers that are borrowing a lot to buy chips is great. And that's why Nvidia is doing so well is because they have real customers, Amazon, Microsoft, Google, Meta, Elon, that are buying chips mostly based on their cash on hand and cash flow.

• 4:39Gil Luria?

  But they also have all these customers borrowing money to buy chips. So for Nvidia, that's great. For those companies borrowing money for the financial institutions that are lending them money, this isn't good news. This is just, this just means that that's contributing to Nvidia's growth. So we have to be careful. Tomorrow, we should buy the stocks that are building actual businesses around AI. And then we probably shouldn't buy the ones that are just borrowing money to perpetuate.

• 5:07Ed Elson?

  When you look at the earnings that we saw, I mean, there were so many positive signals. Is there anything in particular that investors are most excited about? If you are worried about the bubble, as an example, and then you see these earnings and you decide, no, I'm not worried anymore. What are you citing as your evidence?

• 5:28Gil Luria?

  Mostly the fact that Jensen Huang and Collette, the CFO, are willing to go out further on guidance. This is a company that famously only guides one quarter at a time. And we've gotten used to that in spite of the fact that we know that they have a book of business well past next quarter. But they've been pretty consistent with doing that up until a couple of weeks ago. And then again today, when they talked about $500 billion of Blackwell and Ruben chips that they intend to sell between this year and next year. That gives us visibility five quarters out. That's the first time we've had that since the beginning of the AI era.

• 6:10Gil Luria?

  And that's what really should make investors feel more comfortable, that Nvidia already has all these orders so far out that we're good for next year. What happens after that is it really depends on how good the models get and how quickly we adopt them. But in terms of the data center build out as we speak right now, we're good through the end of 2026. That's the most important thing. It's better than just this quarter and next quarter being good. It tells us that the build out is continuing.

• 6:39Ed Elson?

  You said something interesting there that, you know, this is a great quarter. These are great earnings. We're going to see AI stocks on the up tomorrow throughout the day. But it doesn't necessarily put the AI bubble conversation to bed. That, to me, is the big question mark in the markets right now. Could you say more about why exactly it doesn't put that conversation to bed? Why isn't it the case that we should all be long AI now?

• 7:10Gil Luria?

  We should be long parts of AI.

• 7:12Ed Elson?

  Yeah.

• 7:12Gil Luria?

  Because the models are very performant. They're adding more and more value to our lives every day, to our personal lives as consumers, to our work life as employees. That's the good part. We should continue to invest in that. But we've talked in the past about the round tripping, the closed party transactions, the circular relationships that Nvidia has with a customer like CoreWeave, where they invest a dollar, CoreWeave turns around and borrows nine dollars, and then it has ten dollars and uses eight of those to buy Nvidia GPUs. That's great for Nvidia. They invested a dollar and sold eight dollars of GPUs. But then CoreWeave is stuck paying a dollar a year of interest, and they only make 50 cents of profit.

• 7:57Ed Elson?

  Right.

• 7:57Gil Luria?

  So that increase in leverage, in financial debt, is what we're looking at. And we've probably crossed the $100 billion mark of loans being made to build data centers at mostly high interest expense. That's what's going to come to bite us. If we keep down that path, that's where bubbles burst. When we have hundreds of billions of dollars of debt, and all of a sudden we'll get to a point where we have all the compute we need, which we will get to, and then the price of the compute declines, all these data centers can't pay the interest expense. Not only will they go bankrupt, all that debt will default. And that'll drag everybody down with it.

• 8:41Gil Luria?

  That's what we're trying to avoid. We're not at a bubble, but we're inflating a bubble. And if we don't stop now, and I think the market maybe started being a little more rational the last couple of weeks. What I'm afraid is the exuberance comes back tomorrow. And we lend another half a trillion dollars into this ecosystem, which again, at some point down the road, two, three years down the road, will come back to bite us.

• 9:06Ed Elson?

  Yeah, it's a really interesting point. And just to use CoreWeave as the example, I mean, if we're worried that CoreWeave is borrowing and spending more than it can actually afford, I mean, we're seeing that played out in these earnings. The reason Nvidia is making so much money is because, yeah, CoreWeave is borrowing and spending more than it can afford. And it's landing on Nvidia's income statement. So just to play that out further, it seems as though you believe, and I would agree with you, that this doesn't put the conversation to bed. If we continue to see this level of borrowing from a handful of companies in the future, it could end in not a great situation, certainly for them.

• 9:51Ed Elson?

  But then also perhaps for Nvidia, because if CoreWeave can't keep spending and CoreWeave can't keep borrowing for whatever reason, then that's going to hurt Nvidia's earnings too. Is that something that you would also flag as a concern?

• 10:07Gil Luria?

  It's something to be aware of.

• 10:08Ed Elson?

  Yeah.

• 10:09Gil Luria?

  That the rules of gravity haven't changed. Semiconductors are a cyclical industry. There's a lot of demand. It goes up, it peaks at some point and it rolls over until you have the next wave of demand. This is no different. All we've learned is that the peak of the cycle is probably more than a year out. But what happens with these cycles is it's one thing when there's natural organic demand that drives the cycle. When you start levering that up, you make the eventual decline worse. So, so instead of just having a gradual ascent and then somewhat of a decline, we're exaggerating the ascent, which will exaggerate the decline.

• 10:50Gil Luria?

  Now, the reason we're not as worried about Nvidia, even with that timeframe in mind, is that its current valuation reflects a cyclical nature. So if Nvidia is trading at forty or fifty times earnings as it has previously, then we'd say, you know, it's trading like this is secular growth and there's never going to be a cycle. Even as, even with the aftermarket price, it's trading at probably twenty-eight times next year's earnings. That's where it has traded in the past, in previous cycles. It's actually more in the middle of the range of their multiple range, which tells us investors have implicitly acknowledged that Nvidia is in a cycle.

• 11:30Gil Luria?

  So we're exaggerating the cycle, but the valuation for Nvidia reflects that it is still a cycle, which is why from the Nvidia investment specifically, we're less concerned. The valuation reflects the fact that there will be a reckoning in two or three years.

• 11:46Ed Elson?

  Yeah. So the concerning companies, just if we could rattle them off, CoreWeave sounds like is one of them. Oracle, I would assume, is one. What am I missing?

• 11:57Gil Luria?

  Uh, Blue Owl is, is, is building the same special purpose vehicles for Meta. And, you know, Meta will get the compute they need, and when they're done getting the compute they need, they'll leave those shareholders and debt holders in the lurch. And, and other companies in the AI trade that are marginal companies like Oclo or some of these quantum stocks that have gotten bitten up on a no to very little revenue or little to very, to, uh, little revenue. So, so those, those are the places where I would, again, I would caution that we don't need to invest in those. Microsoft and Nvidia will do well in a wide range of scenarios. So will Amazon, so will Google. There's a lot of infrastructure software companies that will ramp up with the demand for AI.

• 12:42Gil Luria?

  We talk about Snowflake and Datadog. There's plenty of places to invest that are not companies that are borrowing ninety to a hundred percent of their capital to build what is still a speculative asset and are not generating enough profits to pay the interest expense that they owe.

• 12:59Ed Elson?

  All right. Gil Luria, Head of Technology Research at D A Davidson. Gil, always appreciate your time. Thanks for joining us. Thank you, Ren.

• 13:08Ed Elson?

  After the break, Meta wins its antitrust case. If you're enjoying the show, give Prof G Markets a follow.

• 13:20Speaker 00

  Are your ad campaigns lighting up the dashboard? But not the pipeline? That's bull spend. And marketers are calling it out in Dashboard Confessions.

• 13:30Speaker 01

  My boss asked for results, so I opened my dashboard for the only positive sounding metric I had: impressions.

• 13:37Speaker 00

  Cut the bull spend. See revenue, not just reach. LinkedIn delivers the highest return on ad spend of major ad networks. Advertise on LinkedIn. Spend $250 on your first campaign and get a $250 credit. Go to LinkedIn.com/campaign. Terms and conditions apply.

• 13:51Speaker 02

  Energía baja. Falta de concentración? Nevra 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 síndomas persisten.

• 14:20Speaker 03

  Welcome to Sephora. I'm looking for a perfume that's not too perfumey. I got you.

• 14:26Speaker 05

  Serum moisturizer or moisturizer serum?

• 14:30Speaker 03

  Let's get into layering. My concealer is making me look worse? Sounds like the wrong shade. Let's get you matched.

• 14:38Speaker 06

  There's only one store that really gets what you're going for. Get beauty from people who get beauty. Only at Sephora.

• 14:45Speaker 10

  Hi, I, uh... Let's get you a basket.

• 14:54Ed Elson?

  We're back with Prof G Markets. Big Tech just won yet another major antitrust battle. On Tuesday, a federal judge ruled that Meta's acquisitions of Instagram and WhatsApp did not create an illegal monopoly in social media. As a reminder, the FTC sued Meta five years ago, accusing the company of anti-competitive behavior. In this week's ruling, the judge explained that the social media market has continued to expand since those acquisitions and cited its competitors like YouTube and TikTok. Okay. For the latest on this ruling, we are speaking with Jonathan Kanter, former Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice. Jonathan, great to see you again.

• 15:37Jonathan Kanter?

  Always a pleasure.

• 15:38Ed Elson?

  So we want to get your reactions to this antitrust decision on Meta. Meta is not an illegal monopoly. That is according to the judge, James Boesberg. Give us just like a summary of the case here before we dive into the details. What was the FTC's argument? What was Meta's argument? And where did the judge end up landing?

• 16:03Jonathan Kanter?

  Yeah. So the FTC, the case when it was initially filed in the first Trump administration was a bit broader. It involved the acquisitions of Instagram and WhatsApp and documents that Facebook created essentially saying that they were buying them to eliminate potential competitive threats. And so the evidence here was pretty devastating for Facebook at the time. There were also a bunch of things known as API restrictions, essentially allegations that Facebook was making it difficult for Vine and other smaller players to compete. And all of this kind of goes back over 10 years, like 2012, 2014.

• 16:44Jonathan Kanter?

  So in 2020, the FTC files a case essentially saying that Facebook broke the law through the acquisitions in addition to those API restrictions. The court cut back the case, said that the API restrictions claim was no longer valid. And so really, by the time it got to trial, it was about whether Facebook broke the antitrust laws, entrenched its monopoly power by acquiring these nascent

• 17:10Jonathan Kanter?

  Threats at the time in Instagram and WhatsApp. Facebook said, wait, we don't have a monopoly. TikTok and YouTube. And so the court essentially said, okay, I'm going to hear that evidence. Even though TikTok and YouTube didn't exist in there, or at least TikTok didn't exist in 2012. And YouTube was a very different company back then. And ultimately, what happened here is the court listened to the evidence and said, well, I have to look at the world as it exists now, not as it existed when the anti-competitive conduct took place, or for that matter, when the case was filed. And today, looking at the evidence, I think TikTok and YouTube are competitors.

• 17:54Jonathan Kanter?

  Therefore, Facebook doesn't have a monopoly. Therefore, they didn't violate the antitrust laws.

• 17:59Ed Elson?

  So it's so interesting because it sounds like what you're saying is similar to what we saw with the Google case, where there's this recognition of, yeah, you were a monopolistic entity at one point, but now things look a little bit different and it's harder to say that. I mean, as you say, the evidence was devastating. I remember reading those texts from Zuckerberg to employees basically saying outright, yeah, we need to buy up the competition, otherwise they're going to outcompete us. So, I mean, does this basically mean that you can be monopolistic in the past so long as you're not monopolistic in the present? Like, how does that make sense?

• 18:39Jonathan Kanter?

  Well, that's one way to read it, but it doesn't make sense. So in comparing it to the Google case, the first thing I'd say is there is a big difference, which is that, at least in the search case, the DOJ won, right? The court found that Google had an illegal monopoly and then it had a monopoly power and it violated the law. The court declined to go big on remedies because it said that AI was disrupting the market and wanted to wait and see what happened.

• 19:05Ed Elson?

  Right.

• 19:06Jonathan Kanter?

  That's different than saying. Facebook never violated the law in the first place, or Meta, as we, as the artist formerly known as Facebook is now called. So there is a significant difference there, but it also, I mean, it's a head scratcher, right? Because this case was filed five years ago, and the court waited five years to reach a decision, and then said, oh, well, maybe five years ago was illegal, but now it's not. And I think there are a number of lessons here. First of all, the FTC should have blocked both of these deals in 2012 and 2014, respectively. All the devastating evidence was there for the FTC when they reviewed those transactions. Instead, and this was in the Obama administration, they waved those deals through. And one of

• 19:48Jonathan Kanter?

  the lessons is, okay, we need to block deals in real time. And I think that's an important lesson to learn now, when we see all these circular investments in AI, waiting down the line and trying to deal with it, you know, 10 or 15 years later is probably not the smartest move. The second is, we need to push these cases to go to trial faster. And so at DOJ, when we filed our ad tech case, we were in court in the Rocket Docket, and by the time we got, you know, it was under two years by the time we got to trial. And so it was a much faster, more than half, in less than half the time, or more than half the time. So, you know, it was under two years, whereas it took five years for

• 20:31Jonathan Kanter?

  the Facebook and Google search cases. So these cases need to move faster. And I think courts need to give us justice faster in these cases.

• 20:38Ed Elson?

  Yeah. Just going back to the decision itself. So he says, it isn't illegal. They didn't do anything illegal because TikTok's here. I still don't fully understand that because it doesn't seem to make sense to say, you never did anything illegal because of what's happening in the present. Am I getting that right? Is that?

• 20:59Jonathan Kanter?

  No, I agree with you. It doesn't make sense. The court is saying that, okay, for, since 2012, you have illegally monopolized the market. But because 10 plus years later, somebody else came along, that happens to be owned by China, we're not, you're going to say you're not a monopoly, a monopolist, and you're not going to be held accountable for what you did wrong back then. I think that's an inaccurate and incorrect reading of the law. The FTC could try to appeal that, but it also defies common sense. It also defies common sense to suggest that TikTok is the answer. One, Notwithstanding the act of Congress, it's still run by the Chinese government.

• 21:38Jonathan Kanter?

  And so the alternative for friends and families is going to a platform that essentially is spying on you. And two, like it's just, if you actually use the products, Facebook's different, right? You interact with your family and friends in a more personal way on Facebook.

• 21:56Ed Elson?

  Yeah.

• 21:56Jonathan Kanter?

  Whereas you consume video and you're entertained by celebrities and sometimes family and friends on TikTok. And so while those differences to a boomer might seem insignificant, I think to people who actually use the product, the differences are quite significant.

• 22:13Ed Elson?

  Just as an observer of what is happening here, we've seen two separate cases in the same year against Big Tech, where there was overwhelming evidence that illustrated in great detail how these companies are running monopolies. And in both cases, the judge looked at it, seems to recognize all of the illegal behavior, but then said in so many words, eh, it's not really a big deal. Or we're not gonna, we're not gonna deal with that right now because, you know, it's different now than it was before. As an observer, it appears that these judges have maybe compromised in some way.

• 22:51Ed Elson?

  Maybe it's that they're corrupt or maybe Big Tech has an influence that is distorting their judgment. I'm not making those claims. I'm just saying, I'm watching what's happening. And as a consumer of the news, that's kind of what it looks like. What would be your reaction to that?

• 23:09Jonathan Kanter?

  Yes. So I, both Judge Boesberg and Judge Meda are decent people. They're well-intentioned judges. They're not corrupt. They're doing what they believe is right, even if what they said is wrong. So I think both can be true at the same time, and I want to be very clear about that. They are, they are noble jurists who are trying to do the right thing. And they, you know, I think they both fucked it up. But but they are good, well-intentioned judges and and it's not a function of corruption. It's a function of a process. Okay. That has been corrupted. And the process is that there's this, you know, massive deference to companies and markets in ways that average individuals don't have.

• 23:53Jonathan Kanter?

  The you don't see criminals on the street or getting the same kind of deference as companies or white collar criminals. And I think that's a big problem in our system. And it's broken. And unless there's accountability, we're never going to see the kind of compliance with the antitrust laws or any other trust law for that matter. And so I think it is up to courts to stiffen up their spine a little bit and and hold these companies accountable, especially when they've clearly broken the law. Again, the Google case is a little different. There are two of them. There's the search case where court found they broke the law, but said, hey, I'm not going to do much about it because of AI. And then there's this case that said, I'm going to ignore what I saw for 12 years and

• 24:38Jonathan Kanter?

  then just rely on the presence of TikTok today. I think we need to do better. I think courts need to do better. And, you know, but I'm cautiously optimistic. The state of the law today is better than it was 10 years ago, five years ago. And I think the agents needs, the agencies need to keep bringing these cases. The thing they should learn from this is don't wait 10, 15 years to bring the case, right? Google search behavior could have been addressed in 2012. The Instagram and WhatsApp acquisitions could have been addressed in 2012 and 2014. The acquisition of DoubleClick by by by Google could have been addressed in 2007, 2008. Live Nation Ticketmaster could have been addressed over 10 years ago.

• 25:22Jonathan Kanter?

  A lot of the problems that we're trying to clean up now in antitrust were addressable back then. We have now the present right before us. We're seeing these massive mag seven companies with incredible interlocks and circular investments, creating the same kind of trust that gave rights to the antitrust laws over 100 years ago. There's an opportunity to intervene now while it's meaningful to do so.

• 25:45Ed Elson?

  Do you think that the FTC or the DOJ will intervene?

• 25:49Jonathan Kanter?

  We will see. I think there I'm hopeful somebody along the way, whether it's the federal feds or the states will do so. But I think this administration seems to be very enamored of of the big tech companies.

• 26:06Ed Elson?

  Yeah.

• 26:06Jonathan Kanter?

  They seem to be selling the naming rights of the White House to big tech companies. And and I don't know that they have the will to do it.

• 26:14Ed Elson?

  Yeah. The judge said, you know, maybe there was monopolistic behavior in the past, but now it's not a monopoly because of TikTok that Meta does not have a monopoly on social media. Just as an expert in the field, do you think that Meta has a monopoly in America right now?

• 26:31Jonathan Kanter?

  Yeah, I mean, I think it's self evident in terms of their, you know, personal, social networks that they do. I mean, the the the power of Meta or Facebook product at least is declining. But, you know, Instagram and personal social networks, yeah, they do. I think, you know, the bigger problem and or simultaneous problem is, you know, we're dealing with tobacco companies with data. And they're incredibly harmful to society. And we have no rules. And I say this, whether it's in AI or in social media or in tech generally, but it's like we've invented cars and trucks and railroads, but we have no lines

• 27:12Jonathan Kanter?

  on the road, stop signs or traffic lights. And we need some basic rules of the road so that we can operate safely and predictably. And right now, we have none of the above.

• 27:23Ed Elson?

  Just before we let you go here, we always like to get kind of your update on on what else is happening in antitrust. What are the other cases that you think we should be really paying attention to? I mean, even if you're just an observer, what are the really important cases that are happening right now?

• 27:40Jonathan Kanter?

  Yeah, I think there are a couple of really big and important cases taking place right now. One is the closing arguments in the remedies phase of the Google advertising case is going to take place on November 21. I think is the latest schedule. For to determine whether they will have to break up the Google ad tech stack. I think it's really important to watch that. That's different than the search case. And the DOJ already won that case like it did in search. And so now the question is, what will be the the consequence? The other case that's coming up that I think has captured the hearts and minds of people around the country is the Live Nation Ticketmaster breakup case.

• 28:17Ed Elson?

  Yeah.

• 28:17Jonathan Kanter?

  Which is going to court in New York in March. And it's very, you know, I think a very important case, one that has tremendous amount of popular support and backing. And I think it also has, you know, a lot of state attorneys general. And so even if the Trump administration tries to settle it, I just don't see the states going along. And so I think the likelihood that that case gets to trial is very high. And I think there's going to be a great deal of interest in it and a great deal of support for decisive action.

• 28:46Ed Elson?

  All right. Jonathan Kanter, former Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice. Jonathan, always appreciate your time. Thank you so much.

• 28:55Jonathan Kanter?

  Okay, thank you. Take care.

• 29:00Ed Elson?

  The Crown Prince of Saudi Arabia met with Trump yesterday, and he got an extremely warm welcome. It was Mohammed bin Salman's first visit since 2018. Trump said, quote, "We are more than meeting, we are honoring Saudi Arabia." The trip included a red carpet welcome and a black tie dinner that featured various business leaders. And it wrapped up yesterday with the U.S. Saudi Investment Forum. So MBS and Trump meet once again, this time at the White House. Plenty of fascinating elements in this story. One is the people who showed up. We saw Elon Musk, we saw Tim Cook, Jensen Huang, even Cristiano Ronaldo was there.

• 29:42Ed Elson?

  Two is the fanfare that we saw offered to the Crown Prince, a 21-gun salute, a fighter jet flyby, a performance from the Marine Corps Band. And three, probably the most fascinating, was what happened when Jamal Khashoggi came up in this meeting. Basically, a reporter asked a question about the now infamous murder and dismemberment of Jamal Khashoggi, the journalist for The Washington Post, to which Trump actually defended MBS. And he said, quote, "Things happen." And he also said that a lot of people don't like Khashoggi, which was an absurd way to defend a literal murder and kind of striking in terms of his deference

• 30:25Ed Elson?

  towards Mohammed bin Salman. Outside of that, though, there were also some updates as it relates to markets, which is what we talk about. And that is, we learned that Saudi Arabia is committing to invest $1 trillion into the United States. That is what we heard from Mohammed bin Salman. That was the number that Trump was very excited about. We got a big press release from the White House. We saw several articles about this. In sum, the big news from the meeting is Saudi Arabia is now investing $1 trillion into America. Now, you might be feeling a little bit of deja vu here. You might be thinking, actually, this sounds kind of familiar. I think maybe I've heard this

• 31:08Ed Elson?

  before or seen this before. Well, I'm here to tell you, you have seen this before. In fact, six months ago, you heard this exact same announcement when Trump was over visiting the Middle East. And it was during that trip that the White House announced this deal with Saudi Arabia, where Saudi Arabia was going to invest, wait for it, $1 trillion into the US. So why are we here again? Why are we getting the same headline? Well, there were some caveats to that original deal back in May, because the number changed several times and quite drastically. It was originally $1 trillion, and then it was, no, no, it's actually $300 billion. Then it was,

• 31:50Ed Elson?

  no, it's not 300, it's actually $600 billion. That's supposedly where we landed. But now I guess we're changing it again. So the new number is a trillion, which means we're basically back to where we started. And that's what we are supposed to be celebrating. That is our big deal with Saudi Arabia. Now, I have some questions about this deal, and they are the same questions I've asked when we've seen every other deal in this administration, and they are the following. One, is there a treaty or is there a contract? Two, are there any written terms of agreement? And three, has anything been signed? And once again, the answer to all of those questions is

• 32:31Ed Elson?

  no. And so we are left to conclude the same thing we concluded with every other deal. And that is that this isn't really a deal. This is a press release. This is a marketing stunt and it doesn't actually mean anything. And we've seen this over and over with Trump and I'm honestly getting sick of it. I mean, we saw it with the $550 billion of investment from Japan, which never actually materialized. And then we later learned, actually, it's only $5 billion in investment and the rest of it's debt. We saw it with the $600 billion from Europe, which everyone was up in arms about, which never seemed to materialize either. Before that, we had the $200 billion investment from China, which we never actually saw.

• 33:13Ed Elson?

  And in fact, during his first term, Trump made almost the exact same announcement with the Saudis. He said that Saudi Arabia was going to invest $450 billion into the US. They ended up investing less than a fifth of that. So here we have the same thing. Big number, big headline, no substance, nothing that actually means anything, nothing that'll actually happen. And if you don't believe me about that, well, then I would just encourage you to simply pull up a Google tab or pull up Chat GPT and type in the following question. Ask, what is the total value of Saudi Arabia's entire sovereign wealth fund? The whole thing. Ask Google that question.

• 33:57Ed Elson?

  I'll give you a hint. It's less than a trillion dollars. So what did we learn from this meeting? We learned that Trump still really likes MBS. We learned that Elon Musk and Trump are probably getting along better than they were a few months ago. We also learned that Cristiano Ronaldo is probably a Trump fan. And these are all interesting, fun things. But did we learn anything of actual economic substance? Did we learn anything that an economist would want to know? Not really. This deal is a lot like the other deals and that is, it probably isn't one. Okay. That's it for today. This episode was produced by Claire Miller, edited by Joel Patterson and engineered by

• 34:42Ed Elson?

  Benjamin Spencer. Our associate producer is Alison Weiss. Our research team is Dan Shalan, Isabella Kinsel, Chris No Donahue and Mia Silverio. And our technical director is Drew Burrows. Thank you for listening to Prof G Markets from Prof G Media. If you liked what you heard, give us a follow. I'm Ed Elson and tune in tomorrow for our conversation with Michael Semblist.