Prof G Markets: Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?

Scott and Ed discuss the latest U. S. GDP report, new data on China’s factory activity, and the launch of Amazon’s new internet satellites. Then they turn to Big Tech earnings, breaking down first quarter results from Apple, Amazon, Microsoft, and Meta. Finally, they examine the Trump administration’s decision to resume forced collections on defaulted student loans, discussing the broader implications and potential solutions for addressing student debt. 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 @profgpod: Instagram Threads X Reddit Follow Scott on Instagram Follow Ed on Instagram and X Learn more about your ad choices. Visit podcastchoices.com/adchoices

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

• 0:00Speaker 00

  When you need to build up your team to handle the growing chaos at work, use Indeed sponsored jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit at indeed.com/podcast. That's indeed.com/podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed sponsored jobs.

• 0:30Speaker 01

  This episode is brought to you by Subaru. You know that place your mind always wanders to? The lake, the mountains, the homes of the people you love most? The completely redesigned 2026 Subaru Outback is built to help you get there. With legendary capabilities, standard symmetrical all wheel drive, and the confidence to go further. The 2026 Subaru Outback. Love never looked so good. Visit subaru.com/outback to learn more.

• 0:56Speaker 02

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

• 1:02Scott Galloway?

  Serum moisturizer or moisturizer syrup.

• 1:06Speaker 02

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

• 1:14Speaker 04

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

• 1:21Speaker 02

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

• 1:26Scott Galloway?

  Today's number, $16.6 billion. That's the record amount American consumers lost to scammers and cyber criminals last year. Ed, I just don't have a joke about that, but I heard a lot of young men listen to this podcast, so I have the ultimate pickup line. You ready, Ed? Mm-hmm. You go up to someone you're attracted to and you say, can you take a picture of me? Everyone always says yes, right? No one ever says no to that. Yep. And then you say, can you turn on the mirror function and take a picture of the two of us? And she'll say, uh, why? And you say, because someday I'm going to show it to our kids.

• 2:00Scott Galloway?

  Boom!

• 2:12Scott Galloway?

  Ed, that's how you lose your virginity at 19. No, it isn't.

• 2:15Ed Elson?

  Absolutely not.

• 2:17Scott Galloway?

  Well, hold on, Claire, would that work? That's a good line, no?

• 2:20Speaker 06

  I don't know, it depends how cute he is.

• 2:22Ed Elson?

  Yeah, that'd be very handsome. This guy better be incredibly handsome.

• 2:27Scott Galloway?

  That's a very telling comment, because the difference between romance and creepiness is the perceived attractiveness of the person making the overture.

• 2:36Scott Galloway?

  And it's impossible to know, is this creepy or romantic?

• 2:40Ed Elson?

  Scott, have you ever actually used one of these pick up lines in real life?

• 2:43Scott Galloway?

  I think they're hilarious. I love like the whole, do you believe in love in first sight? Or should I walk by again? Or, you know, I love that shit. But no, my, my current and hopefully future partner,

• 3:00Scott Galloway?

  20, whatever, 21 years ago, I just went up to her at the pool at the Raleigh Hotel and I said, where are you guys from? So that wasn't much of a line. That wasn't that creative, but I was much more handsome then. So I didn't need to be that creative.

• 3:11Ed Elson?

  Right.

• 3:12Scott Galloway?

  I think pick up lines are more for banter.

• 3:14Ed Elson?

  Certainly on this show.

• 3:15Scott Galloway?

  Yeah. How about you? What's, what's been your approach?

• 3:17Ed Elson?

  I've always been where are you from as well? But I, I feel, I feel like it would be cool to, to have an actually good pick up line that's, that's provably worked. But I feel like the, the thing that we're learning, at least in the past two minutes, is that a lot of this has to do with, are you handsome?

• 3:35Scott Galloway?

  I don't know. I, I don't think that's as true or not as true for men. I think women, I think men get turned on with their eyes and women get turned on with their ears. I think if a guy has a good rap.

• 3:42Ed Elson?

  Yeah, but to get in there at the very beginning.

• 3:44Scott Galloway?

  If you can make a woman laugh, you can ask her out.

• 3:47Ed Elson?

  Yeah.

• 3:48Scott Galloway?

  On a date. I think it's, it's all about, I think it's all about the rap. I think women are much more thoughtful in terms of their criteria for mating than dudes.

• 3:56Speaker 06

  Well, by the way, Ed, I didn't say handsome, I said cute.

• 3:59Ed Elson?

  Cute.

• 4:00Speaker 06

  Which could mean funny, charismatic, confident. It's all about the way he says it.

• 4:05Ed Elson?

  That's a good point.

• 4:05Scott Galloway?

  Ed rolls up and dials up the English accent. He's like, I'm from Princeton. I'm from, I went to Princeton. Get to the headlines, Ed.

• 4:14Ed Elson?

  Let's start with our weekly review of MarketVitals.

• 4:23Ed Elson?

  The S and P 500 climbed, the dollar rose, bitcoin jumped, and the yield on 10-year treasuries fell. Shifting to the headlines. US GDP shrank 0.3% in the first quarter, marking the economy's first contraction in three years. A surge in imports as companies race to get ahead of tariffs led to a sharp drop in net exports. The major indices all fell in that news. China's factory activity fell into its worst contraction in nearly two years. New export orders also dropped to their lowest level since December 2022. In response, Chinese officials have pledged support for affected businesses and workers. And finally, Amazon has launched its first internet satellites into orbit in a bid to compete with SpaceX's Starlink.

• 5:06Ed Elson?

  The company's plan, called Project Kuiper, should begin providing broadband service later this year and eventually will deploy a constellation of 3,200 satellites. So let's start here, Scott, with this GDP report. A lot of people are seeing this report and they're saying, look how bad this is, look at what Trump's done, look how bad this is for the economy, the economy is contracting, et cetera. And I just want to point out, before we dig into it, that's not really what's going on here. I think the two things to note. One, this is a measurement of the economy before the tariffs went into effect. This is Q1, so we're not actually seeing the impact of the tariffs themselves. And two, the reason you're seeing this contraction

• 5:51Ed Elson?

  is more of an accounting blip than anything. And I just want to remind us of what GDP actually is, just some macro 101 here. GDP is an equation. I mean, it's a measurement of our economic output, but the way we get to that number is an equation. And one of the elements in that equation is something called net exports, which is basically you take our total exports and you subtract our total imports. And that's supposed to tell you how much stuff we actually made in America. And so what that basically means, if you have a giant increase in imports... Into your country. That's going to mean that the net exports number goes down,

• 6:34Ed Elson?

  which means that the GDP number will go down. And that's what happened last week because everyone knew in Q1 that tariffs were coming. And so everyone scrambled to ship as many products as they possibly could into the US before the tariffs went into effect. And that's why we saw imports into America surge 41%, which ultimately had a negative impact on GDP. This isn't the big tariffs are bad report that you might think it is. It's the next GDP report that we will see in July. That's the one that's going to tell us what's really going on. And that's the one where I think we can have a more honest analysis of what tariffs have done to America. But Scott, your reactions to this GDP report,

• 7:18Ed Elson?

  which made a lot of headlines and a lot of people were quite freaked out about it.

• 7:21Scott Galloway?

  I don't love GDP and also GDP is a bit of a lagging indicator. And I think that the Trump administration can rightfully say this is more about the economic policies of Biden than it is about us. And your analysis around the surge in imports, kind of contaminating the data is the correct one. But why have we had a surge in imports? Because people feel insecure about the economy or specifically these tariffs. And when I look at the uncertainty index, which has hit a new high since like the eighties and consumer confidence, which has hit a new low since COVID. What it largely pretends is that we're going to see a decline in GDP in the next quarter.

• 8:03Scott Galloway?

  I believe you're gonna see a dramatic decrease in inventory in stores. If you just look at those incredible kind of heat maps of shipping lanes, there are all these ships in kind of Hong Kong harbor that are just waiting to be loaded and aren't being loaded. And then the port of Los Angeles, which I believe is the biggest port in the Western Hemisphere, there's very little offloading taking place. So at some point, and I don't know if the lag is two weeks or two months, you're just going to see an absence of inventory. In stores and consumers have gotten to the point where if they can't get what they want, they're so used to such a robust supply chain, they're going to think, A, if they're not feeling good about the consumer economy, they don't want to aggressively buy that

• 8:46Scott Galloway?

  new home gym or whatever. And B, if the products they want are available, they use that as an excuse just not to buy. So I think winter is coming. And that is, I would imagine the next quarter, there's going to be, you know, they'll find another reason to blame Hunter Biden or something. But this is, they get a pass on this one, right? But the fact that there's, again, this massive surge in imports is because our economy is making asymmetric irrational decisions based on an unpredictable administration and unpredictable economic policy.

• 9:23Ed Elson?

  That sort of reminds me of one of his latest, Trump's latest truths on Truth Social. I hate that we have to call them truths, but that's what they are. But he basically said, so when the stock market ripped after he was elected, he said, welcome to the Trump stock market. And today, I think last week, he posted this, this truth, this tweet that said, this is the Biden stock market that I inherited. And it was sort of marking his first 100 days in office, which have been the, one of the worst stock market performances for the start of a presidency ever in America. And it is sort of a reminder of how that,

• 10:06Ed Elson?

  basically his strategy to distract us from what is really going on. You mentioned there that GDP is a lagging indicator, and we can't necessarily blame Donald Trump entirely on this contraction, or at least that's not the right argument to make. But when it comes to the stock market, which is not a lagging indicator.

• 10:27Scott Galloway?

  Forward looking.

• 10:28Ed Elson?

  The stock market is live, real time, forward looking indicator. That's the thing to focus on. And that's the part where you cannot say, this is the Biden stock market. The stock market is live, it's real time. This is the Trump stock market, S and P down 4%, and Nasdaq down 8%. Year to date. So that's the argument that you definitely cannot make, which of course he is making.

• 10:51Scott Galloway?

  Okay.

• 10:52Ed Elson?

  Let's move on to this manufacturing data. China had its largest drop in manufacturing activities since 2023. Export orders fell to their lowest level since COVID. UBS, Goldman Sachs are now lowering their GDP growth forecast for China to lower than 4%. And just for some context there, we discussed this earlier this year. China, at the beginning of the year, had a growth target of 5% positive GDP growth. So it looks like, you know, they're not going to come anywhere near that. In fact, I think we actually predicted that, or we at least said that 5% was too ambitious. So this manufacturing data has come out. It's not looking good. Scott, your reactions to this new data?

• 11:35Scott Galloway?

  They likely will be hurt more than us in the short term, but their tolerance for pain is much greater than ours. And I think over the medium and the long term, China is actually a winner because I think they're going to be more aggressive about establishing relationships with new partners that will be more apt or less reticent to engage in business with them. And also, you're already seeing that basically we're thrusting the EU into the arms of China and vice versa. Chinese e-commerce exports to the US fell by 65% last month, but exports to Europe rose by 28%. And also, what we forget is that Europe is actually a bigger trading partner. So that's 28% on a bigger number.

• 12:16Scott Galloway?

  So the big winner in the short term is the EU because you got to think that a lot of these factories want to keep their assembly lines humming. And so they're going to call a lot of potential customers in Europe and say, hey, I can get you a great deal on this widget. I mean, this is effectively the way I would describe it. America's not dead, but it's the equivalent of a death of the kind of existing post-World War II. You know, world order as led by the United States. And that is these traditional trading alliances that were built up over the last 80 years of trust, rule of law, intellectual property. It feels like that is dead. And what we have is the largest yard sale from an estate sale from this rich old lady

• 13:00Scott Galloway?

  down the street who died. And everyone's showing up and trying to figure out, how do they get their piece of a $25 trillion economy? I think our economy is going to shrink and a lot of other nations are going to try and figure out how they fill that void by either trade relationships with each other, making, you know, grabbing market share from US companies that will no longer have the same most favorite nation status that they enjoy with their international partners. And you're going to see a lot, in my opinion, you're going to see a lot of small, medium sized businesses go out of business in the US. And that, that economic activity will be picked up by other people in the economy or when the global economy comes, you know, fills in those holes, if you will. So it's interesting to try and think about who are the winners in the short, the medium

• 13:45Scott Galloway?

  and the long term. Biggest loser in the long run, hands down, the US, both short, medium and long, I think. But I think the EU is actually going to be a big winner here because I gotta think China's showing up and saying, hey, the sale of the century is right now on, on Chinese goods.

• 14:03Ed Elson?

  I think this data, it sort of highlights the point that Ryan Peterson made when he came on the podcast, which was he was really trying to emphasize, which the Trump administration doesn't seem to understand, that trade is a positive sum game. You know, when you make something and I decide to buy it, we're actually both benefiting there. We're both receiving value from the transaction. So when we decide as a nation that we want to get into a trade war with China, it means that we lose out in a lot of ways in America in the form of we have less stuff, which leads to higher prices. And also China loses because they're losing business. They want to make stuff and ship it over to us. And we're now beginning to see that reflected in the data.

• 14:46Ed Elson?

  And that's what this manufacturing activity data tells us. China is losing. It's actually Negatively impacting their GDP. But of course, that's going to be the same story over in America. And your point, I think, is the right one. Who are the winners here? And it is so interesting to see Europe being reflected or proven as a winner in this data. You know, we talked recently about how China is trying to rekindle these relationships. They are sending all these trade delegations to Europe. They went to Hungary and Sweden and Germany. And I was sort of thinking, I wonder if that's going to work. Like, I wonder if Europe buys that. And to me, that those numbers you mentioned, exports to the US down 65%,

• 15:29Ed Elson?

  but exports to the to Europe up 28%. And as you mentioned as well, off a large base. My takeaway is it's working. Europe is also beginning to lift some of these tariffs that they had on China, specifically EVs. They're beginning to open negotiations back up. It does certainly feel that as we close off this relationship with China, we're basically sending China into the arms of all of our allies, essentially.

• 15:58Scott Galloway?

  I think Americans are about to get a very eat a very cold lunch in terms of recognizing just how good they had it past tense. That we had so many amazing trading relationships that resulted in a robust supply chain, really inexpensive products, tremendous opportunities for entrepreneurs. That whatever you start an American company, you have access to global markets. When I started LT, when we got like employee 30, we opened an office in London. And then when we got to employees 60, we started, we started pitching clients in China. And when you go over there as, as an American company, you're pretty well received. And you understand the cultures and it's easy to do payments.

• 16:40Scott Galloway?

  And the contracts, the business contracts were not that difficult. I think that's all about to change.

• 16:47Ed Elson?

  Let's talk about Project Kuiper. We've been hearing about this for a while now. This is Amazon's satellite internet project. It's basically Amazon's equivalent of Starlink. And last week, they launched their very first satellites into orbit. Twenty seven satellites, to be exact. The plan is to eventually increase that number to 3,200. So potentially a big moment for Amazon. Also potentially a big moment for Starlink. But I think it's mainly just a reminder of how far ahead Starlink is in this satellite race right now. I mentioned those 27 satellites that Amazon launched. Starlink has 7,200 satellites in orbit right now.

• 17:30Ed Elson?

  It makes up 62% of all of the active satellites that are currently orbiting the Earth. So even if Amazon were to hit that target of 3,200, and who knows when they'll hit it, they would still be way behind Starlink. Starlink is the undisputed leader in satellite broadband. No one comes even close. So Scott, your reactions to Amazon trying to get in the game here and how they might compete with Starlink?

• 17:56Scott Galloway?

  I think I'm more bullish on Amazon than you. And just to call balls and strikes, we had the internet go out here in London and Drew immediately scrambled the jets and we had someone, this guy came over and he went out and bought a Starlink, a portable, and he hooked it up. And it wasn't as good, but within four hours, we had pretty robust broadband. The product is exceptional. And I just think it's strange and almost kind of weird that we would let one man control two thirds of low Earth satellites, low Earth orbit satellites. That, to me, feels like, almost like a security risk. Where I'm more bullish on Amazon is that I don't think Amazon needs to get to product parity, because I think the vision here, if I were Jeff Bezos, I'd wait till I had

• 18:41Scott Galloway?

  a decent product and then you know what I'd stitch it in with? The Kuiper offering?

• 18:46Ed Elson?

  What?

• 18:46Scott Galloway?

  Amazon Prime. Eighty two percent of Americans. Have Amazon Prime, it's arguably the most successful and largest loyalty program in history and maybe the second largest recurring revenue product in history, maybe behind Netflix or I guess Microsoft Office. Their brand is so deep in terms of trust in a consumer offering. And I think that Musk is beginning to contaminate his brands. Bezos will close the Gap. They have the Gap capital. To your point, I'm not sure they ever actually catch up, but they're talking about, they want to have 3,200 satellites, but I think if they get there, say to 80 or 90% of Starlink, it'll force Starlink's hand and I think our SpaceX and they'll have to go public

• 19:31Scott Galloway?

  for access to more cheap capital. But this is going to be a celebrity death match. Also, one of the things we talk about in brand strategy is one of the keys or kind of pillars of branding is just awareness. And that is if you think about the products you purchase, you're really unlikely to purchase a product you've never heard of, or you're much more inclined to purchase anything you hear of the brand. Oh, I would buy a Toyota. You're just for big purchases, you just don't want to buy anything that you haven't heard of. Think about just on a personal level, people's brands, you're, I think it's something like 40 times more likely to respond to an email from someone you know, or even if, even if you don't know them well, you've just heard of them than someone whose name you don't recognize. So awareness is enormous. And I think Kuiper is about to become

• 20:15Scott Galloway?

  one of the fastest zero to 60 brands in history. And that is, I would bet less than 1% of the US population knows brand Kuiper right now. And I would bet 60 to 80% by the end of the year know it. Because it's gonna, it's gonna be constantly in the news, right? I mean, it ends up that's maybe shooting Katy Perry into space wasn't a bad idea. It was probably a bad idea to bring her back. But maybe this technology, this technology that he's spending all this money on is for a reason, right? Other than sending his girlfriend into space. And Amazon has the capital, they have the technical expertise. I bet they're going to find a lot of people from SpaceX are willing to go to work for them. This could be to Starlink, what Old Navy is to Gap. 80% of the quality for

• 20:59Scott Galloway?

  50% of the price. And there's a market for that. And the moment they stitch it into Amazon Prime, I think the thing gets 10, 15, 20% of households. It made me, you know, I'm in, I'm in. Slowly but surely burning down my US equities. I've been selling Apple and a little bit of Amazon. And I'm actually now thinking about holding on to my Amazon because I think the the kind of railing forces here, speaking of China, two thirds of Amazon's businesses in the US and I think the US can be negatively impacted. But I think this is very exciting for for Amazon. And I just love seeing a company that's as important as SpaceX. Get a competitor. I think it'll make them both better. So I'm actually really excited. Starlink, by the way, so far has projected revenue in 2025 of 12.3 billion.

• 21:42Scott Galloway?

  That's up 57%. 7.6 million subscriptions projected by the end of 2025 is 65% increase. Again, 7.6 million. Keep in mind, Amazon, I think, has about 110 or 120 million households have have Prime.

• 21:58Ed Elson?

  Over 200 million subscribers globally. 180 million adults in the United States are Amazon Prime members. That's like most of them.

• 22:07Scott Galloway?

  Basically, more people have Amazon Prime than have a Christmas tree, own a gun or have kids.

• 22:11Ed Elson?

  You've honestly completely sold me on it. I'm totally with you and it seems to make so much sense for Amazon's business, which they have a history of getting into businesses that are somewhat indispensable. You know, they they get into household products. They get into groceries. They buy Whole Foods. They they get into healthcare, content, all these kinds of businesses where it's like something you just have to have. And then they make it a recurring subscription. And it does feel like the next planet to conquer is broadband and internet. And so I think you're probably right. Just a question of how how it would actually work. What what do you think the the offering would actually look like?

• 22:52Ed Elson?

  Do you think it's like a premium Amazon Prime subscription that gives you some sort of discount on on a on a on a Kuiper satellite dish?

• 23:03Scott Galloway?

  Yeah, it'll be something like Amazon Prime Plus, where it's like, OK, flip the switch on here. Tell us when you're home, give us a window and we're going to come install this cool, elegant, whatever it is. And overnight you have massively blinding internet speeds. And the thing that people underestimate is just how lazy consumers are. I got so excited about Jeff Bezos standing up to Donald Trump and deciding to post tariffs next to every product that I went out, no joke, or I went out, I went on Amazon and I ordered 16 Bose Ultra headphones for the team. And I thought, okay, I'm going to spend $6,400 on Amazon and I'm going to go on threads and Blue Sky and VirtuSignal about how great it is that

• 23:45Scott Galloway?

  Amazon is doing this. And then that motherfucker caved. And so I'm like, I'm threading, good for him. He reached down and despite all the human growth hormone, he found these little, little, tiny, little wee things called testicles and decided to put them into action. Good for him. Good on Bezos.

• 24:04Ed Elson?

  If only he'd known, he would have gotten the backing of Scott Galloway. Maybe he would have stuck with it.

• 24:08Scott Galloway?

  Literally, I'm like, I am literally, I thread, this is what leadership looks like, send. And all of a sudden I get a text from Kara Swisher, he caved. He caved. She, she saw my thread and literally as she saw my thread, she's like, he caved. You're wrong. He caved. He's, he's a fucking wimp and a loser. And I'm like, and so I go back to Amazon and I cancel my order.

• 24:31Ed Elson?

  I was just gonna say, what, do we get the headphones? No, we don't.

• 24:34Scott Galloway?

  No, bitch. Call Amazon, call, call Bezos and tell him to start acting like an American.

• 24:39Ed Elson?

  All right, I'll take it up with him.

• 24:40Scott Galloway?

  But the moral of the story is it is so seamless to add and take things away from Amazon Prime that the moment it pops up and it says, Scott, Amazon Prime Plus includes this blinding broadband. Wow. I, I, I would bet, God, I don't know, I would bet by the end of 27, you, you could very easily see Kuiper have more penetration than Starlink.

• 25:08Ed Elson?

  You've certainly convinced me. I'm, I'm definitely more bullish today than I was yesterday. We'll be right back after the break with a look at big tech earnings. If you're enjoying the show so far, be sure to give the Profty Markets feed a follow wherever you get your podcasts.

• 25:32Scott Galloway?

  Support for the show comes from NetSuite. They say every day your business is late to AI, you might fall two days behind. So how do you keep up with the competition when they're only moving faster? Enter NetSuite Next. You probably know NetSuite, the AI-powered business management suite that securely connects all your data. It's a unified suite that brings your financials, inventory, commerce, HR, and CRM into a single source of truth, trusted by over 44,000 customers. NetSuite Next is the next big leap in how business gets done, because AI is built into everything you do. It automatically surfaces customer insights throughout your day. AI agents work alongside you to solve problems and handle routine work. And anytime you have questions about anything, you can ask, just like you're having a conversation with a colleague.

• 26:16Scott Galloway?

  NetSuite is customized for a wide range of industries, so it supports the way your business truly works. Whether your company earns millions or even hundreds of millions, it's time for NetSuite Next, where your business meets AI. If your revenues are at least in the seven figures, get our free business guide, Aligning for the Agentic Era: How AI is Changing Everyday Work, at netsuite.com/prog. The guide is free to you at netsuite.com/prog. netsuite.com/prog.

• 26:49Scott Galloway?

  Support for the show comes from Upwork. Trying to scale your business? At some point, you're probably going to hit a point where you need some help. Sometimes, the best way to break through that is bringing in the right talent at the right time. Upwork can help. Upwork is a one-stop platform where you can find, hire, and pay expert freelancers across more than 125 categories. Whether you need specialized skills for a single project or extra support to keep up with demand, it's easy to connect with experienced professionals, review their work, and find the right fit. You can move faster without taking on the commitment of full-time hires. And for businesses that need the very best talent, Upwork Business Plus provides access to the top 1% of freelancers on the platform. AI-powered matching connects you with qualified candidates in under six hours, cutting down the time spent searching. Upwork also takes care of contracts,

• 27:34Scott Galloway?

  payments, and other administrative tasks, so you can spend less time managing logistics and more time focused on what's next. Visit upwork.com/prog right now and post your job for free. That's upwork.com/prog to connect with top talent ready to help your business grow. That's upwork.com/propg, upwork.com/propg.

• 28:00Scott Galloway?

  Support for the show comes from Vanta. As AI adoption grows, so does your company's security risks and requirements. New frameworks, audits, and vendors keep piling on, but your team isn't getting any bigger. Most compliance tools promise automation, but you're really stuck doing all the work by hand, chasing screenshots, validating controls, and playing catch-up when audit season comes around again. Vanta works differently. The Regentech Trust platform is built to scale with you, not slow you down. With over 1,400 automated tests across 400-plus integrations, Vanta collects evidence and monitors your controls year round, cutting your audit prep by 82%. Plus, you can access the Vanta agent everywhere you work, whether your team is in Vanta every day or living in tools including Claude

• 28:43Scott Galloway?

  or Cursor. Want proof? Over 16,000 fast-growing companies like Ramp, Ryder, and Harvey save time and resources while scaling fast with Vanta. Learn more at vanta.com/propg and get $1,000 off. That's spelled V-A-N-T-A dot com slash propg for $1,000 off.

• 29:12Ed Elson?

  We're back with Prof G Markets. All right, let's get into big tech earnings. Microsoft, Meta, Apple, and Amazon all reported earnings last week. We're recording this a day later, hence why we're dressed differently, so that we could react to these earnings. We'll start with a look at Microsoft and Meta, whose shares both rose pretty significantly after earnings here. Microsoft posted record revenue and record profits, beat on the top and bottom lines. Shares rose 9%, which now makes Microsoft the most valuable company in the world, ahead of Apple. Meta was also a beat, beat on the top and bottom lines. Revenue rose 16%, shares in Meta rose 6% after hours. Really great quarters for Meta and Microsoft. Scott, your reactions

• 29:57Ed Elson?

  to these two earnings?

• 29:58Scott Galloway?

  Well, Daddy went deep in the paint last night. I'm not, I'm not used to working Friday. I'm used to long walks with the dog and trying to get this newsletter out. As you can tell by the way I'm dressed, yeah, my green juice. Most importantly, the door women from children did a pop up last night at the Broadway Hotel and it was pretty good. It was pretty good. I spilled drinks on all my friends, which at the time was kind of a bummer, but it's brought me real joy today to think about that moment. I mean, literally, I went and got four drinks and not an ounce of it was not on them within about 30 seconds. Anyways, okay. So like, there's just no getting around it. All of these terms have kind of gone from,

• 30:41Scott Galloway?

  it's like good, better, best in terms of the earnings. Revenue up 13%, as you said, what was really impressive is their cloud unit revenue rose 33%. That's, that's just incredible. And then net income up 18%. The CapEx was interesting that you, you highlighted the first thing I noticed and that is CapEx declined for the first time. And I wonder how much of that is deep seek has given them a little bit of pause saying, maybe we don't need to build nuclear power plants and we're not in an arms race. That maybe there is a fork in the road here or a plan B where our AI future may not require the CapEx we'd initially thought. So it feels like they're maybe taking a pause on that. And then its stock is up

• 31:24Scott Galloway?

  13% because people keep saying, all right, if you're, how do I, what is a defensive play? What is a recession proof stock? And Microsoft brings you kind of the peanut butter of a tech company with pretty decent growth with the chocolate of a defensive company, right? Because it really is, it's, it's pretty well diversified, it's global and it's hard to see how. Other than impact on the global economy, how it can, you know, it would be really hurt versus an Amazon by its, by the tariffs. I think it gets about half its revenues from overseas, whereas Amazon gets two thirds of its revenues here. So it has both this recurring revenue stream of the largest corporate recurring revenue base in history with Microsoft Office

• 32:07Scott Galloway?

  that I think, you know, 5,000 of the corporate 5,000 companies use. And then it has the rocket fuel of a nice AI overlay. So it benefits from probably some of this insecurity because it's seen as quality in what is arguably right now a flight to quality. Your thoughts?

• 32:25Ed Elson?

  Yeah, I think that's all right. And I think the most important number was the cloud growth. I mean, I've said this before, but I think if you're, if you're in the AI business today, that's all Wall Street really cares about. You can beat on overall revenue, which they did. You can beat on overall profits, which they did. But the thing that Wall Street really wants to see is are you outperforming in terms of their expectations for cloud growth or in other words, AI growth? And that is what they proved here. Microsoft Azure, which is their cloud unit, and we should just call it the AI unit. That's where they're selling compute to AI companies. That revenue rose 33% and Wall Street's expectations

• 33:07Ed Elson?

  for that business was 29%. Also, the guidance for that unit for Microsoft Azure. They expect the number in this current quarter. So when the next report earnings, they expect growth to be 35%, so even higher. And that also beat expectations. So that's the number that Wall Street really cares about. The opposite effect happened with Amazon, which we'll get to in a second. But yes, the capex that you mentioned, that also jumped out to me. $21.4 billion. That's a lot, but it is a decline from the previous quarter. And it's the first capex decline for Microsoft in more than two years. You pointed out that maybe this is a response to DeepSeek. I think that's, that's definitely a possibility.

• 33:50Ed Elson?

  I was wondering if maybe it's a response to just the tariff environment. I mean, we're just living in a more uncertain economic environment right now. And I wonder if because of that, They were thinking we're going to go all in on AI beforehand and now they're beginning to pare back some of those ambitions, start to play things a little bit safer. Capex is still going to grow, but it's just not going to grow as fast as they said it would last year. So I wonder if that's, it could be deep sea. I wonder if it could be a tariff response too. What's interesting about Meta, moving on to Meta here, Meta had the opposite. They are actually accelerating their capex investment. They raised capex guidance from what was previously a high end of $65 billion to now

• 34:35Ed Elson?

  $72 billion. So Microsoft meanwhile is playing it safe. Meta appears to be actually leaning into the uncertainty. The number that really jumped out to me was 3.43 billion. That's the number of users who use a Meta app every single day. That's the daily active user number. It's up 6% year over year, which means that more than 40% of the entire world population is getting on a Meta app, whether it's Instagram or Facebook or WhatsApp. They're using it every single day.

• 35:09Scott Galloway?

  I find the most interesting application of AI from a shareholder standpoint is actually pretty boring and that is it's Meta's ability to increase the targeting of their products. So they are not only increasing their revenue, I think their revenue or the way they monetize their traffic has gone up, their CPMs have gone up, are they able to charge more? Because, but not only that, their AI, which feeds into the recommendation engine or the recommendation systems contributed to a 35% increase in time spent on threads, 7% increased in time spent on Facebook. That's amazing. That's like getting younger people to watch MSNBC, right?

• 35:51Scott Galloway?

  If you can get more people to spend more time on Facebook, that's not easy at this point. 6% increase in Instagram. And then. If you think about, you know, one of the predictions we have for this year was that Meta was going to be the AI company at 25 because they're the second largest purchaser of GPUs from Nvidia. And I personally, I don't know if you've noticed this, I have found that Instagram reels is increasingly taking time from TikTok for me. And I noticed a tangible difference in the quality of the algorithm, of TikTok's algorithm, to serve me content that was relevant. And it feels to me

• 36:30Scott Galloway?

  like Instagram reels has somewhat closed that gap. And I think that's leveraging AI and all this back and forth and nonsense between Trump and China over banning TikTok, not banning it, and the fact that Meta has such a built-in user base already. I think it's start, I think there's, quite frankly, I think they're actually starting to pull back or clawback some of that share from, uh, from TikTok.

• 36:54Ed Elson?

  Let's move on to Apple and Amazon. So Apple, they had better than expected sales, up 5% overall. They missed their sales estimates in China, falling more than 2%. They also warned about tariffs. They said tariffs will add $900 million to its costs this quarter. Shares fell 4% in after hours. And then we also saw earnings from Amazon, which was also a beat, same as Apple. But they gave guidance that Wall Street considered cautious, and they also missed slightly on their AWS growth, and shares in Amazon fell more than 3%. So both companies, actually, when you just

• 37:33Ed Elson?

  look at the earnings compared to expectations, pretty solid quarters at face value. But there were just some, some signs of weakness in there that Wall Street didn't like, and both, both stocks fell. Your reaction?

• 37:46Scott Galloway?

  I thought Apple had the least impressive earnings of the bunch, although I was surprised that they, I think last quarter they were, their revenue was basically flat year-on-year, which is weird for a company, or unacceptable for a company trading at a price earnings multiple of 34. And even 5% isn't sort of tech, is, it's no longer really considered a growth company. And I think, was it Catherine Rampell? Or I forget who was on the pod and summarized it perfectly, or maybe it was Kyla Scanlon, who said that Apple is a mature company trading as if it's a growth company.

• 38:19Ed Elson?

  I think that was me.

• 38:20Scott Galloway?

  That was you? What is it about you that reminds me of thoughtful women in economics?

• 38:28Scott Galloway?

  Anyways, Edwina.

• 38:33Scott Galloway?

  The services, the services revenue was the highlight. It grew 12% to 27 billion, even though that has slowed down. It's a saw since 2023. It's still double digit growth. Wearables fell 5% missing estimates. So that's kind of, that's not good. The other thing that kind of shows an unusual operational misstep. I was really excited about Apple Intelligence. I thought that if anyone could sort of consumerize other people's massive capex around AI, I thought it was going to be Apple, that they would just organize my photos and come up with sort of very useful ways to speak to my AirPods and say, oh, we're out. It's loud. I'm taking the volume down. They do that a little bit, but I would have thought there would be a bunch of cool things,

• 39:17Scott Galloway?

  little features that they would be able to leverage.

• 39:19Ed Elson?

  Totally dropped the ball on that.

• 39:21Scott Galloway?

  And they branded it brilliantly. They call it Apple Intelligence, the AI features, but they've been delayed again. And it's kind of, it's unusual. Apple usually kind of under promises and over delivers. So that they don't appear to have the same depth of human capital around AI. Some of, some of the other guys, I still feel that I still own some Apple. I've been selling it down. I think it's overvalued at a PE of, you know, it's net income growth in 2024, negative 3% versus Microsoft at up 21, Alphabet up 36, Amazon up 95, Meta up 65, and Nvidia up 145%.

• 40:02Scott Galloway?

  And yet, Apple trades at the same PE multiple as Microsoft at 33, more than Amazon. It's at 31 and Alphabet's at 18. I mean, if you just look at these things from a pure valuation bottoms up standpoint, it looks like Alphabet's the least expensive and it looks like Apple is the most expensive.

• 40:20Ed Elson?

  Yeah, absolutely. And that was just another red flag in terms of this idea that Apple is this mature company that's trading as if it were a growth company. They announced another buyback program.

• 40:31Scott Galloway?

  Yeah.

• 40:31Ed Elson?

  A hundred billion dollars in buybacks. They also boosted the dividend by four percent. If you're trading at thirty to thirty-three times earnings, you're you're you're you're trading as a growth company, which means that the market should be expecting that you're investing in growth. You're investing in new products, you're investing in new services. Instead, they're just using all of this capital and all this cash to just repurchase shares. And I was asked what the motoring says. I mean, this is sort of the bread and butter of of the corporate life cycle. That's what you do when you're in the mature stage. That's what you do when you're a middle aged company and you're on the way out. You start buying back shares. So I I mean, it it I was I was a little surprised by how the stock pulled back

• 41:15Ed Elson?

  because I thought overall the earnings compared to expectations were pretty solid. But I wonder if people are starting to realize that actually the multiple here doesn't really make sense. This is not the growth company that we thought Apple was, you know, ten, fifteen years ago, when it was on the cutting edge of technology and innovation. Because what we're seeing here is that, I mean, every time I see a buyback, I'm like, oh, you're running out of ideas. Understood. You're being sensible about it, but you you are running out of ideas. And that's sort of the the vibe I get from Apple right now. And I wonder if if Wall Street's getting the same same message.

• 41:51Scott Galloway?

  This is, I think, Apple is ground zero for what I call the great, you know, reversal of flows in the rivers. And that's what I'm writing about in today's No Mercy, No Malice. And that is, I think, Apple could increase its earnings by twenty or thirty percent over the next five years. And I think the stock's still going to go down because trading at that multiple, I just don't think it can outrun the multiple contraction that it's about to experience. I bought Apple in two thousand, I think, in ten or eleven, and I bought it. It was growing much faster. I think it was still growing high single or low double digits. And I think I bought it at a P E of ten. So the company could continue to perform, and I still think the stock is going to struggle because I just think that it's it's the most, I think, it's the most wildly held stock in the world.

• 42:32Scott Galloway?

  It kind of it kind of identifies or marks American tech. And I think as these rivers of capital begin to reverse flow, there's just no way that won't come out of what is the most valuable iconic company in America. When people look at it and say, a great company, we love it. But if it's really, if it's growing low single digits, does it really connote a growth like valuation?

• 42:55Ed Elson?

  Yeah, I agree. It's also quite telling that. The day that the company, the day that a company announced a $100 billion share buyback program was the same day that that same company was ousted as the most valuable company in the world. Like, that's just not a good, you would not expect those two things to be true at the same time, but they were last week. Let's just quickly go to Amazon. They also beat on the top and bottom lines. Pretty strong quarter, actually. The ad business was a big beat. Ad sales grew 19%. But the stock fell almost 4%. And why did that happen? As I mentioned earlier, what Wall Street cares about is AI and AWS,

• 43:37Ed Elson?

  which we could also just say is their AI unit, their cloud unit, their compute unit, that actually slightly missed on revenue expectations. Still, it grew 17%. Pretty good. $29.3 billion. But Wall Street wanted more. They wanted 29.4. And if you're in the AI business, it's the dynamic we've discussed. Beating expectations here means you need to blow expectations out of the water. Even a slight miss on that one business unit, that's a big problem for Wall Street, which is why I think the stock fell so significantly. Any thoughts on Amazon, Scott?

• 44:13Scott Galloway?

  Well, Amazon is the most vulnerable, probably the magnificent seven to tariffs. One, two thirds of this business is in the US versus most of big techs is somewhere between half and one third. Meta only gets a third of their business domestically. And obviously, they import a lot of products that will have tariffs on them. In addition, as goes AWS, goes Amazon. I mean, Amazon is essentially a cloud provider now with a retail unit. And when you don't beat expectations on what is considered the white meat of your business, that your stock's going to get hit. Also, and this is a prediction, and I'm, as, as everyone who listens to this podcast know, I am rotating out of US stocks in my Amazon position into European and Asian holdings. And I'm about

• 44:55Scott Galloway?

  to sell down some Amazon and put it in Alibaba, because I think what you're going to see over the next year is that Alibaba's cloud unit will get an unnatural surge from European purchasers who are fed up with always defaulting to American companies for their cloud and infrastructure needs. And I think a year ago, if you'd showed up to the CEO of Mercedes or LVMH, As the CEO, as Joe Tsai would probably, or the head of the cloud unit for Alibaba, and said, we'd like to handle your data, like China, no fucking way. Now, I don't think they're seen as much more mendacious as the US. So I think Alibaba's cloud unit is going to get more meetings across Europe and Latin

• 45:39Scott Galloway?

  America than they would have before this nonsense from the US.

• 45:44Ed Elson?

  Yeah, and plus, if you've got China investing heavily in AI, if China's made it their mission of AI self-sufficiency, that's certainly going to be a win for Alibaba if they can just start selling more compute to Chinese companies. Just one clarification before we finish up here on this story. I just want to clarify, like, this quarter, it was very strong, and I've seen people, probably not very smart people, but people saying like, oh, things are going well. Look, look at the tech earnings, like, maybe things aren't all so bad when it comes to tariffs. I just want to clarify, this is the quarter ending March 31st.

• 46:25Ed Elson?

  So this doesn't, none of these earnings reflect anything about the tariffs. The only thing that they might reflect, which is what I was kind of looking for, and which we sort of covered when we discussed the GDP report, is it could reflect this pull-forward dynamic, which is this effect where, you know, consumers know that tariffs are coming, they knew that, they know that prices are about to go way up, and so maybe they're actually rushing to buy in big numbers in this quarter, in this, in this previous quarter that was just reported. And so I was, I was interested to see, like, you know, especially with Apple, for example, where we saw all these headlines of how iPhone prices are going to go way, way up.

• 47:07Ed Elson?

  We would have seen that reflected in this, in this previously reported quarter. We would have seen, if that was really what was happening, people are sort of panic buying an iPhone, or if you want to upgrade your iPhone, you do it right before tariffs happen. That's what we would have seen in this quarter. And actually CNBC asked Tim Cook about this specifically. They said, you know, did you, is this pull-forward? Are you seeing pull-forward in the earnings? And he said that he saw, quote, "no evidence of pull-forward." And I just, I don't know, I wonder about that. Like, I wonder. One, what would evidence actually look like? Like, how would you know that that was what was happening?

• 47:51Ed Elson?

  And two, if we're seeing signs of pull forward everywhere else in the car industry, in the clothing industry, even in those GDP numbers where you saw this massive influx of imports, you know, why wouldn't we see it with the iPhone? And why wouldn't we see it with all the rest of these tech earnings? So on that aspect, I'm a little bit hesitant or just suspicious of how strong these earnings were across the board. And I do wonder if the dynamic that we're seeing is everyone rushing in to buy right before prices go way up with the tariffs. And it'll be interesting to see in the next quarter. That's when we're going to see the real tariff effect. Be interesting to see if we see a drop off in demand there.

• 48:33Scott Galloway?

  It's really insightful. It's sort of the AR 15 effect that whenever a Democrat would get elected, people go out and buy more guns for fear that gun legislation is actually going to get some traction. But Apple really doesn't have anything that interesting right now or new or fresh, so to speak. And that's really, I would have, I would have guessed that they would have been flat. And I think you're absolutely right that there was probably some pull forward. And also, there is no way that Tim Cook would acknowledge that. Because what that's saying is, oh, it's not our products. It's not our marketing. It's not the quality of our offering. It's an unnatural sugar high that's going to suppress product sales in the following quarters, because a lot of people have pre-purchased things that we're going to purchase the next or subsequent quarter. So I think that's really interesting.

• 49:17Scott Galloway?

  I hadn't thought about that, and I think you're absolutely right.

• 49:20Ed Elson?

  We'll be right back with a look at what's happening to student debt. If you're enjoying the show so far, hit follow and leave us a review on the Prof G Markets feed.

• 49:38Speaker 00

  When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit at indeed.com/podcast. That's indeed.com/podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs.

• 50:08Speaker 01

  This episode is brought to you by Subaru. You know that place your mind always wanders to? The lake? The mountains? The homes of the people you love most? The completely redesigned 2026 Subaru Outback is built to help you get there. With legendary capabilities, standard symmetrical all-wheel drive, and the confidence to go further. The 2026 Subaru Outback. Love never looked so good. Visit subaru.com/outback to learn more.

• 50:34Scott Galloway?

  Support for the show comes from Nutriful, the number one dermatologist-recommended hair growth supplement brand used by over one and a half million people. When you get to the stage of life where you start to notice hair loss, you have a few options. You can shave it all off and enjoy your new look, or you can commit to a new team whose logo you wouldn't mind constantly spotting on a hat, or you can actually restore some of your hair's former glory with Nutriful. Nutriful has formulas built for men at different life stages, such as Nutriful Men for guys aged 18 to 49, or the new Nutriful Men 50 and older. It's the first product of its kind specifically made for men over 50. You can address the key root causes of thinning wherever you are in life. Grow visibly thicker, fuller hair in three to six months. Start Nutriful today and make the hat optional.

• 51:19Scott Galloway?

  Visit nutriful.com and enter promo code PROVGE for $10 off your first month subscription and free shipping. Find out why Nutriful is the best-selling hair growth supplement brand at nutriful.com, spelled N-U-T-R-A-F-O-L dot com, promo code PROVGE. That's nutriful.com promo code PROVGE.

• 51:46Ed Elson?

  We're back with Prof G Markets. For the first time in five years, the Department of Education is restarting forced collections on borrowers who have defaulted on their federal student loans. The move affects 5.3 million people who were in default before the pandemic and could put millions more at risk. Although federal loan payments resumed in October 2023, forced collections had remained paused until now. Borrowers who have fallen behind are already seeing their credit scores drop, and the White House has warned that it can and will seize wages, tax refunds, and even pensions to recover unpaid debts. So, Scott, I just want to clarify what's really happening here and where things stand.

• 52:29Ed Elson?

  Just a reminder, Trump paused these student loan payments when COVID hit. And so if you had student loans at that time, you weren't getting billed. Now, that was supposed to expire in Biden's term, but then Biden decided to extend this student loan freeze. He actually tried to go even further, tried to cancel $340 billion worth of student debt, but it was struck down by the Supreme Court. So he ended up only partially forgiving these student loans, and then these payments resumed in 2023. But what didn't resume, and what will resume today, is this forced collection of student loans. This is where the government comes in and they just start taking the money if you are in default. And what is being in default actually mean here?

• 53:12Ed Elson?

  It means that you have missed your payments for 270 days or more. So for people in that position, if you haven't made your payment in 270 days, those are the people from whom the government is now going to start collecting these payments. So Scott, your reactions to this news and what it might mean for our economy?

• 53:32Scott Galloway?

  There's a lot of moral hazard here, and that is my understanding is most student debt, most people with student debt haven't made a payment in five years. And keep in mind that people who have student debt are the most fortunate third of Americans who got to go to college. And also debt is, it sucks to be a grown-up, but if you take out debt, you're supposed to pay it back. And also, there's a bit of a mythology here, or semantics, or incorrect nomenclature, and that is payments have been stalled. No, payments have been made, but they're being made by all taxpayers because someone has owed this money and someone needs to collect interest on it. And so it's the US government or US taxpayers, all of us who are registering now

• 54:14Scott Galloway?

  the, the, the financial imposition of these student loans not being paid back. And I think it sucks to be a grown up. I think you take out this debt, you gotta pay it back. The same way if you took out an auto loan or a mortgage and you weren't paying it, they'd come for you or they'd come for the asset. And in this case, they can't repossess your degree. The real issue is that the cost of higher education is just too high and it's just kind of much faster than inflation. That's the culprit. So then the question is, well, how does it come down? And one of the reasons it continues to accelerate faster than inflation, similar to any other bubble, is because of cheap credit. And that is you go into a university and there's a nice lady in a pantsuit with a big college logo over her head saying, always invest in yourself, you're gonna be fine. And then you get a

• 54:56Scott Galloway?

  degree from a Joey Bagadonuts university that is part of the cartel where we all raise our prices exactly the same amount. And then you get out and find out you can't get a job and end up as a barista and you have $150,000 in student debt. And the issuing university of that debt, or the sponsoring university is not on the hook for any of that debt. Whereas Toyota does some diligence. Toyota says, okay, if there's no way this person can pay back the money, we're not gonna loan them the money. Because if we have to repossess the Toyota, it's gonna cost us money. We're not gonna be able to resell it for as much. Whereas the incentive for any university with government backed student loans and accreditation, and by the way, the people accrediting these universities are the incumbents, is just to encourage people to take out more and more student

• 55:37Scott Galloway?

  loans regardless of the credit risk. And until consumers start shopping around or holding their university accountable and saying, this fucking sucks. I brought a lot of money and I can't pay it back and it's your fault. There's no pressure on these, on these universities to lower their tuition and they still have access to cheap credit. The real solution here would probably be to put these universities on the hook for a portion of that bad student debt. Such that they would say, okay, we have found that forty percent of people with philosophy majors have a difficult time paying back their student debt. So if you're a philosophy major, we're going to limit the amount of student debt you have to X.

• 56:18Scott Galloway?

  And because they want to have as much cheap free capital, they won't be able to raise tuition as fast as they have. So I'm really mixed here because I feel for younger people who I think have gotten a raw deal on so many levels. I like the idea of programs where some sort of, you know, working in, working in industries where you don't, that traditionally aren't that high paying, whether it's education or practicing medicine in rural areas or national service, you should have your student loans, debt repayment, delayed, lower interest, whatever, forgiven. But the idea of a generation of people just believing that debt doesn't really count for them, I don't think that ends up anywhere

• 56:58Scott Galloway?

  good either. But net, net, we got to go after the problem here. And the problem is skyrocketing higher education costs.

• 57:05Ed Elson?

  Yeah, but I think that highlights a big problem, which is that for all these people going into college and taking on this debt, the trouble is that a lot of these young people don't really understand what the debt is because no one's fully explained it to them. And just some statistics here, one in five student loan borrowers say they borrowed more than they needed just because it was offered. One in five also say they don't even know their current loan balance. And then you throw into the mix the fact that the president, the previous president, said, don't worry, it'll all be forgiven. And then suddenly we have a turnaround. It's, it's not going to be forgiven. And actually,

• 57:45Ed Elson?

  it's business as usual, starting today, starting May 5. And I think Trump criticized Biden actually correctly here and said, he sort of made you a false promise that he couldn't make good on. And that is what happened. He made a false promise. The Supreme Court struck it down. And what I worry about is that there is now a generation, my generation, who believes that maybe it'll be canceled in the future. Maybe something will happen. Maybe this Is actually on the table. And so the consequences of that are going to be really bad. Because I think there are going to be a lot of people who say, you know what? I'm just not going to pay it because who knows, maybe in a few years, Congress will vote on this.

• 58:29Ed Elson?

  And I won't have to pay the debt. And what is that going to do? That's going to absolutely obliterate my generation's credit scores. I mean, we can talk about the forced collections and what that'll do to people. But to me, the big downside is what it's going to do to credit ratings. And Liberty Street did this analysis. They found that each time you miss a student loan payment, if every, every delinquency on your, on your student loan debt, your credit score drops by around a hundred and fifty points. And I think this is the real concern for young people and the part that they don't take seriously. And I just want to paint a picture of what a bad credit score can do to you in case people don't really realize. I mean, for, for starters, you pay higher interest rates.

• 59:14Ed Elson?

  Two, it can affect your employment. And a lot of employers actually check your credit. And if you have bad credit.

• 59:19Scott Galloway?

  I was just gonna say that.

• 59:20Ed Elson?

  Yeah, it can cost you a job. It affects your ability to rent. I mean landlords check your credit. If you have a low score, you pay a higher security deposits. In many cases, you're flat out rejected from, from getting that apartment or that home. And then four, and this is probably like the worst of it. Is it just completely hamstrings your ability to access credit? I mean, you can get rejected for mortgages. You can get rejected for auto loans. You could even get rejected to have a basic credit card. It just completely cripples your financial freedom. And with, with long, long term consequences that aren't necessarily your fault.

• 1:00:02Ed Elson?

  And I just worry that these young people don't understand that. Or they don't take it that seriously. And they're going to sort of hedge their bets on this very unlikely scenario where it's all just forgiven overnight. I don't think that's going to happen. You need to pay these loans. You can't just go into delinquency. You can't go into default. It's going to completely ruin you for a long time.

• 1:00:27Scott Galloway?

  I know someone who got a job at a prestigious bulge bracket investment bank and literally showed up the first day. And they said, we need to speak to you. And so we have to rescind the offer. We did a credit check and you have terrible credit and we can't have you. Selling or structuring securities when you can't, when you have a low credit score. Also, if you really want evidence that we are fucking your generation. One of the only forms of debt that's not dischargeable in bankruptcy is student loan debt. So if I declare bankruptcy, I can get out of almost every piece of debt. Now granted, I have to give up all my assets. Actually, that's not true. If I own a home in Florida, I can homestead it and I get to hold on to my home, even if I declare bankruptcy and clear out all my debts. But except for student debt. So if you think about the one person who, if they hit hard times,

• 1:01:11Scott Galloway?

  deserves kind of a do-over button, it should be young people in student debt. It's a very upsetting situation, but and also I think it it calls up the need for what I call in high school adulting classes.

• 1:01:23Ed Elson?

  Yes.

• 1:01:24Scott Galloway?

  I think that there should be a class. It's just like basics, like what does the interest rate on my credit card mean? Right?

• 1:01:31Ed Elson?

  Yep.

• 1:01:32Scott Galloway?

  Basic adulting, what is required to get an apartment? When you want to rent an apartment, what do you need to do and possess and have? And what's a general ratio for how much you should be spending?

• 1:01:42Ed Elson?

  We need to make sure that young people understand the rules. They need to, we need to make sure that young people understand what debt is, what they're signing up for by taking on debt. And then the other thing I think that this brings up, which we need to have young people to really think about is like, what is actually the value of a college education? Like, is it really worth it for you? And for many people, for different people, there's going to be a different answer. I mean, we know it leads to higher earnings. We've seen the data on higher marriage rates, better health outcomes. You know, so, you know, we, we know some of the data, but I wonder if we need to sort of change the conversation to instead of is college worth it?

• 1:02:24Ed Elson?

  We need to be more specific and say, is college worth it if you're taking on debt? If you're not taking on debt, if your parents are paying for it, it's an absolute no brainer because you're essentially going for free. Of course you should go to college. But if you're levering up to go, I think that's a completely different question. And there's this one stat that our team found, which I find very illustrative here, which is that for college grads who took on student debt, one third of them say that college is not worth the cost. For college grads who didn't, that number is 16%. So there's a massive gap in the ROI on college, depending on whether you are taking

• 1:03:06Ed Elson?

  on debt for it, which of course makes sense. If you're getting the product for free, there's only upside.

• 1:03:12Scott Galloway?

  It's great.

• 1:03:12Ed Elson?

  Yeah. But if you're putting yourself in a hole, it's a totally different thing. So I guess, one, we should reframe the question, and two, I will pose it to you. Is college worth it if you're going to take on significant student debt?

• 1:03:26Scott Galloway?

  There's no yes or no answer there. It's a function of nuance. That is one. A lot of it comes down to the university you get into. If you get into MIT and you are cut out and feel like you can get three, four years at MIT, I don't care if you have to borrow a quarter of a million dollars. It's worth it. For the rest of your life, you're taken seriously. For the rest of your life, people have an inclination to hire you. And the scary thing, and the thing that's, it's good in some ways and bad in others, is your school, Princeton, if you have any economic hardship, they have so much money, they'll give you financial aid. So what happens is really good kids, because of this bullshit rejectionist exclusivity LVMH strategy that every elite university has adopted, such that they can raise tuition faster than inflation, and the faculty and the alumni feel good

• 1:04:10Scott Galloway?

  about this luxury brand they have, and it makes the value of the degree go up because it's harder and harder to get them. We've been able to raise tuition faster than inflation. The alumni love it. They give us a bunch of money. And anyone who gets in, who needs economic help, gets it. So, but the problem is, is a lot of kids don't get into an elite school, and they get arb down to a second tier school. So my strategy with these kids is always, I need you to get into more than one school. And once you get into the school, the university, all of a sudden, it goes from they're a seller to a buyer, in the sense that they really want you once you get in, because they have something called yield. And their ranking is largely determined by a variety of factors, including what percentage

• 1:04:51Scott Galloway?

  of people who are admitted actually end up going. So ideally, what you want to do is to get admitted to more than one university, and ideally competitive universities. So for example, if you get, I don't know if that's the way any longer, but it used to be, if you got admitted to both Duke and UVA, and UVA saw you got into Duke, UVA would give you a full ride if you went to UVA, because they were direct competitors with Duke. So the key is, you need to be a consumer. You need to get into more than one university, and then start calling them and saying, You know, finances are a struggle for me. What do you offer in terms of financial aid? I'm into several universities, including your closest competitor, this university. What can you offer me? But students don't take a consumer. They're much more likely to negotiate on a hotel room or shop every store in the world.

• 1:05:36Scott Galloway?

  But once they get into the university, they kind of sit back and just take. They're price takers. They shouldn't be.

• 1:05:41Ed Elson?

  But this is the thing that's so tough. It's they're kids. I mean, you're describing this and you're describing the habits of a very sophisticated and experienced negotiator who knows exactly what's at stake, knows all the dynamics at play, knows exactly what to say and what the leverage is, which is actually, I mean, most grown adults don't understand that. I barely understand that. It's actually a very hard thing to do. And I think it's very important what you're saying, and I hope there are young people applying to college who could hear this. But I think what's so unfair and so upsetting is like, we're telling children to do this. Children who have no experience, who have no understanding of what any of this means,

• 1:06:26Ed Elson?

  who don't even really understand what interest rates are or what a loan is. And that, to me, is what's so upsetting. The standards that we are holding them to, to evaluate these actually quite complex and nuanced economic issues are just unbelievably high. And we don't seem to hold regular functioning adults to those same standards. And to me, it's just so unfair.

• 1:06:48Scott Galloway?

  Ed, everything we do in our society is a subtle transfer of wealth and opportunity from the young to the old. And we used to love young people. We used to, more than that, when I was your age, we used to love unremarkable young people. Right? I mean, think about it. I got Pell Grants. I had access to a world-class university that had a 74% admissions rate. And once I got there, my tuition every year was $1,300 and I could work my ass off over the summer and have part-time jobs and show up the next year, despite the fact I wasn't getting any financial assistance from my parents. And that, for me, started an upward spiral of prosperity where I got to engage in the economy, I got to find a mate, I got to have children, I got to build a business.

• 1:07:31Scott Galloway?

  And all of that reverse engineers to America used to love young, unremarkable people. And now it no longer does. Now it feels America's about trying to identify. The children of rich kids and a freakishly remarkable one percenters and try and turn them into billionaires. And higher ed is the tip of that spear in terms of losing the script. We've become hedge funds that offer classes at the elite side and the mid-tier are basically terrible value for kids that puts a lot of them into debt that they can't discharge and starts them with this anchor around their neck. And what a shocker, we have the most obese, anxious and depressed generation in history. So that question around whether college is worth it, it's a nuanced conversation.

• 1:08:14Scott Galloway?

  What is an easy question to answer is are we fucking young people? That's an easy one, 100%.

• 1:08:22Ed Elson?

  Let's take a look at the week ahead. We'll see earnings from Palantir, AMD, Novo Nordisk, Uber, Disney and Shopify. And the Federal Reserve will also meet and announce its next interest rate decision. Scott, any predictions for us?

• 1:08:36Scott Galloway?

  Well, I made it. I think by the end of 27, Kuiper is, it'll be hard to suss out because it'll be in a larger Amazon umbrella, but the Kuiper will be worth more than Starlink and will have greater penetration in the United States as it'll be stitched into the Amazon Prime plus plus program.

• 1:08:53Ed Elson?

  They should change the name first. Kuiper is not a very good name.

• 1:08:56Scott Galloway?

  It kind of sounds like the, the AI villain in a Bond film, Kuiper. What does Kuiper say?

• 1:09:02Ed Elson?

  Yeah. Change that and then, and then I think the prediction comes true.

• 1:09:07Ed Elson?

  This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Dan Shalane is our intern. Drew Burrows is our technical director and Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from the Vox Media Podcast Network. Join us on Thursday for our conversation with Michael Semblist, only on the Prof G Markets feed.