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Today's number, 66%. That's how much sales of U.S.
alcohol brands in Canada dropped after Liberation Day. Ed,

I've been trying to cut down my alcohol consumption, so I moved to non-alcoholic beer, and it's kind of like giving oral sex to your cousin. It tastes similar, but you just know it's wrong.

How are you, Ed?

Trying to get us canceled. Trying to get us canceled.
Trying really hard. With the same strategy usually, it usually involves sex with your cousin.
I guess people just don't care about that.

That's just fine now. You got to go with what works.
It's getting our numbers up. I think that's the reason people are tuning in.

Not the excellent production, rigorous analysis, or insight, just the profanity. No, no, no, definitely not that.

But specifically, the sex with your cousin jokes. I think that's what people really like about this show.
That's why they're here. We should run some surveys on that and just confirm.

I'm glad it's working because

we can't stop, won't stop. Where are you, Ed? Which is my way of saying I want you to ask where I am.

i'm gonna take five minutes now to explain exactly where i am i'm in new york i'm in the studio i'm always in nothing's really changed yeah

yeah have i bored you yet uh i'm sorry what were you saying ed

Where are you, Scott? So daddy yesterday spoke at the Aspen Institute. You know, I saw that it was live streamed, which is cool.
Oh, wow. I didn't know that.

I kind of just got very self-conscious about

some of the things I said. But you have never seen so many rich men in their 70s with their third wife in athleisure desperately trying to keep their man on the porch.

I mean, it is, it was like a, it was like an aloe reunion. I mean, so much athleisure.
A lot of on-running shoes, I'm sure. Yeah, yeah.

And me and Aspen speaking at the Aspen Institute is maybe the widest thing I've ever done. Who goes to that? Are there is these business leaders?

Who's at the Aspen Institute function during the summer? The honest answers, I don't really know, but Aspen has a group of

people who are just very civic-minded, really into ideas. And the Aspen Institute, which is like 50 years old, does a great job and great programming.
So I was actually really excited to speak there.

And I spoke to a woman who used to be the U.S. editor of the Financial Times.
Anyways, enough of that. I'm bragging.
And last night I came to Chicago, where I am speaking this afternoon.

And then my youngest, my 14-year-old, this is our annual city trip. He gets to pick a city and we go there.

I'm staying at the Sohouse in Chicago, which has the second nicest gym of any Sohouse just behind Berlin. I worked out this morning.
You probably didn't recognize me because of my bulging biceps. But

it was so,

this like handsome 30-year-old dude comes up to me and he says to me, he's like, dude, what do you do to work out? It was like the total like. You're so inspiring.
You're so fucking old.

I'm like, get away from me. What do you, it was one of those things.
Like, dude, I think it's great you're here. And I'm like, why? Why do you think it's great I'm here?

You're an inspiration. Yeah, that's literally.
That's what I'm getting.

I think it's, I think it's great you're here. I'm like, oh, well, I left my walker downstairs, bitch.

Anyway, that's, yeah, that's not good. What do you got planned this weekend? What are you up to? I'm going out to Quog in Long Island.
I'm going to. Quog? Yeah, one of the lesser-known Hamptons.

I like Quog. Let me guess.
That's your in-laws. They have a house in Quog.
That's right. Oh, I got that right.
Yeah.

Oh, lock this shit down. She's got, we like this.

And oh, even better. Hopefully she doesn't have any siblings.
No siblings?

I'm not going to disclose any more information. Yeah, you're choosing your words carefully.
All right, let's move on. You're going to Quog.

You're still in the mating phase. You're still worried about blowing it.
You're still worried about the talk.

I got the talk about five years ago when my partner said, don't ever fucking mention me on any of your work ever again. Don't mention me, don't talk about me, don't reference me.
Anyways.

Should we get to the headlines?

Should we get to the headlines? You are on a heater this morning.

I barely say anything. I've just let you go.

Let you run wild. You're just sitting there.
Get used to it. It's called your in-laws.
Get used to it.

Now is the time to buy.

I hope you'll have plenty of the wherewithal. As second quarter earnings roll in, several companies are reporting significant financial hits tied to the tariffs.

Oil services provider Halliburton saw a $27 million hit to its profits. Stellantis reported $350 million in related costs for the first half of the year.

Toy company Hasbro took a $1 billion charge tied to tariffs. And General Motors said that tariffs cost the company $1.1 billion, slashing its earnings by a third.

And they are warning that the worst may be yet to come.

Tariffs have officially landed, or at least they've landed in earnings reports. There are some more examples that we saw in last week's earnings that I didn't mention there.

Dow, which is the big chemical company, they reported their first loss in five years due to tariffs.

The CEO said, quote, this quarter, the Dow team advanced several aggressive actions in response to the lower for longer earnings environment that our industry is facing, amplified by tariff uncertainties.

Southwest also cut its outlook due to tariff impact. Stock fell 4%.

So in sum, as we discussed a couple weeks ago earnings are coming in for the second quarter and we had questions over will we see the tariff impact yes we are seeing the tariff impact it is starting to show up in earnings reports and it's not showing up in a forward-looking way like we saw in the previous batch of earnings where you had companies saying that you know there's an uncertain tariff environment and you know you we can expect in the future a hit to earnings a hit to profits giving guidance that was ambivalent this is is backward looking.

These are companies saying in the previous quarter, our profits were smaller because of the tariffs. That's what we're seeing.
Your reaction, Scott?

What is interesting is the Trump administration said that they thought this wouldn't result in higher prices, that companies would absorb this hit. And so far, they're right.

General Motors did not feel like they had the competitive positioning or the margin power to pass those costs on to the consumer. So they took a hit to their earnings.

Now, they would have much rather just pass it on to the consumer.

But on a more meta-level, what I see is I think 2000 or 2025 will be seen as the year that late-night TV just went away, and also that the U.S.

auto industry basically entered the eighth or ninth inning of a not a cyclically driven decline such as 08 or the recession in 91 or 92. But I do think this is kind of the end of the U.S.
automobile.

manufacturing, not even dominance, but preeminence. We're one of the two or three best manufacturers in the world, mostly say, by gigantic trucks.

But if you look at a few things that have happened, one, the old guard has announced that these tariffs are now making a material impact on shareholder value, which eventually

snakes through the economy. They have less money to invest in new factories, new models, less employment, fewer people with good jobs, fewer car purchases, and you start this kind of downward spiral.

In addition, our new champion, which has a market cap larger than the rest of the industry combined, Tesla, is really floundering. I mean, there is just the delta between

a trillion-dollar market cap and a PE of 180 and a company whose auto sales have declined 12% year on year. 16%.

Sorry, I just want to correct because overall revenue for Tesla as of this earnings that we just saw last week, overall revenue down 12%, but auto sales down 16%. That's right.

Their services, their charging station was up, which took that 16% number down to 12%.

So to your point, a 16% decline in auto sales has got to be one of the biggest declines in the auto industry globally. And yet this company trades at 180 times earnings.

That cannot, those two things cannot coexist. So you got our old guard in trouble because of tariffs.

You got our new guard trying to create distractions, whether it's a diner with robots or trying to pretend this is an AI company and spend a shit ton of money on AI and put in AI.

Effectively what you have is with Tesla, you you have a guy

who is a genius in terms of the intersection between capital markets and shareholder value and has realized a lot of it is perception.

That 180 PE is a function of your ability to create a perception that you're the market leader and that you're an innovator and disruptor.

So he's saying, look over here, we're going to build AI, and we have a dining company and flamethrowers and tequila, and this is an AI company.

He's doing anything he can because of his $1.4 trillion in market cap across his company, SpaceX, Tesla, Twitter, Twitter, the majority of it is tied up in a company that is about to implode in terms of market cap, and that's Tesla.

So you have GM getting hit hard, Tesla, which in my opinion is the most inflated bubble in the world right now.

And then you have this new agreement, and we talked about this yesterday, where effectively Japan has got, has said, okay, zero tariffs, big win for the U.S. on cars coming in.

And this stat, which we talked about yesterday, just blew my mind. About $50 or $54 billion of Japanese autos come into the U.S.
We purchase about $54 billion of Japanese cars.

They purchase $2 billion of U.S. cars.
So fine. Yeah, no tariffs on your cars.
It doesn't mean anything to us. So what do you have? You have an economic and trade policy that is hurting U.S.

auto companies. You have our champion, Tesla, basically shitting the bed like, no, tomorrow.
And you have the old guard, General Motors, saying, okay, these tariffs are really hurting us.

And then you have Japanese cars just got less expensive for American consumers, which means U.S. companies, U.S.
automobile companies are going to cede share to Japanese automobile companies.

It's so funny how both the old God of the auto industry and the new God of the auto industry are being poisoned by the same thing, which is Trump

for different reasons. So, for example, I mean, Tesla.

We just talked about some of the earnings there, missed on EBIT, missed on EPS, huge miss on free cash flow. This was like an awful, awful quarter for Tesla.
And the stock is down 8%

after they release these earnings. And why is that happening? It's a brand issue because Elon decided to get in bed with Trump.
And you can say that, oh, the market's woke, whatever you want to say.

But the reality is that's why Tesla is getting impacted because it was poisoned by an association with the president. That is just the plain reality of their situation.

Meanwhile, the old God, guard, as you say, General Motors, they are getting impacted by the tariffs. Their net income fell 35%.
They took this more than $1 billion hit because of the tariffs.

And their stock is also down by a similar amount, down 8% after that news. And so they're both being poisoned by Trump.
Meanwhile, as you say, you look at all of the

Japanese car companies, which ripped after the trade deal. 11% for Honda, I believe, up 16% for Mazda, 17% for Toyota.
All of those stocks are ripping.

So it's just so funny this idea of, you know, we're going to implement these tariffs and all these foreigners are going to pay for it. And what we're seeing is like, no, no, no,

that's not the case at all. To your point, GM is eating the tariff here.
They have not released any price increases as of yet.

I would bet that that's going to happen later down the line. But basically what's happened is you've put the tariff up.
It hasn't affected the Japanese companies. They're good.

And meanwhile, who's getting hurt? General Motors, i.e. the shareholders of General Motors.
So shareholders are the ones who are eating the tariffs right now.

Now, the other thing that I would add to this, as you said, These companies are eating the tariffs right now. And I can expect that that's where the conversation is going to go.

And people are going to say, look, Trump is right. You know, we put the tariffs up, but look, General Motors is eating them.
What I would just add is that

there are different things we're talking about here. There's the impact to earnings and there's the impact to prices.

And the first stage of these tariffs, what we're going to see is an impact on earnings. And that's what we're beginning to see this quarter.

But the pricing impact is going to happen later down the line when these companies realize that their earnings have been hit.

They sort of digest that price, that impact, and then they decide, okay, do we want to pass this on to the consumer? And what we've seen from Goldman Sachs is that 70%

estimated of those costs are going to be passed down to the consumer, but it's going to be on different timelines.

If you're selling cars, which are very expensive, then you're probably going to do it later. But if you're selling, for example,

cheap consumer products, if you are Walmart, for example, you're probably going to pass the costs on earlier. And in fact, that's exactly what we've seen.

Walmart is already raising their prices because of tariffs. We've seen the same thing from Best Buy.
They've both publicly talked about it.

And then Amazon has also been raising their prices, though, of course, they're not announcing that. They're trying to pretend that this has nothing to do with the tariffs.
So

many things happening here. But I guess what I would emphasize is you have a hit to your earnings, you have a hit to your bottom line.
Management then assesses the impact.

And then we see the price increases later. So I think we're still going to see that with GM.

It'll probably be a mix of the two, but at a very basic level, what you have with the tariffs in the automobile industry is that essentially you've transferred stakeholder value from General Motors to the government.

But it's as if the government just said, okay, we're raising taxes on General Motors. And you can either pass along those additional costs to consumers or you can eat it in terms of your earnings.

And tariffs, generally speaking, are innovation killers because the government isn't great at when it's not systemic.

If you need to raise taxes on companies across every company to make them equally, you know, they all take the same hit, that increases competition. You need to have taxes, fine.

But when you start punishing certain key industries unwittingly, you know, the manufacturing industry

People would argue is important because they're generally good middle-class jobs and they're labor-intensive and we have a history in manufacturing and also people say it's important that we have factories that we can can convert to making tanks if need be, that we need to actually make stuff.

But these tariffs, I mean,

somebody has to pay. And right now, what you would see is that the losers are GM shareholders.
So far, consumers don't appear to be losing.

Japanese companies in the next two quarters will announce market share gains at the cost of U.S. automakers.
And then you would say, well, the government's winning. They're getting tariffs.

Over the long haul, haul, almost

every economic study is that the decrease in competitiveness

and the destruction in economic activity means lower tax revenue over time because the economy shrinks.

Show me GDP growth and a budget surplus, and then we can have a conversation about the government's winning.

We'll be right back after the break with a look at Oracle and OpenAI's new partnership. If you're enjoying the show so far, be sure to give Prof GMarkets a follow wherever you get your your podcasts.

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We're back with Profit Markets. Oracle and OpenAI are dramatically scaling up their AI infrastructure with an additional four and a half gigawatts of new data center capacity.

The move builds on the Stargate initiative, which is a $500 billion project that they announced back in January.

With the addition of this new capacity, OpenAI says it will soon operate more than five gigawatts total, powered by more than 2 million AI chips.

For context, 1 gigawatt is enough to power roughly 750,000 homes in the US.

So, Scott, I mean, the headline here is OpenAI has a contract with Oracle and they're going to pay Oracle $30 billion a year, which, by the way, is three times OpenAI's ARR.

They're at $10 billion in ARR per year.

They're about to pay $30 billion a year. How are they going to pay for it? I mean, funding, but it's unbelievable.

And that's going to give them four and a half gigawatts of capacity per year, which is the equivalent to two Hoover Dams. So just unbelievable capacity.

That's the headline. The larger story here is just this mass acceleration and investment in data centers.
We just saw the Google earnings last week. They just reported their earnings.

They raised their capex guidance to $85 billion for the year. We also saw the same thing with Meta, where Meta previously reported their earnings.
They raised their capex to 72 billion.

We'll see if it goes even higher in the next earnings report. Also, Meta is now building a data center in Louisiana, which will be the size of Manhattan.

And then if you combine the CapEx investment of Meta, Google, Microsoft and Amazon, it adds up to $340 billion this year, which is more than the GDP of Finland. So

there was this story of

big techs getting into data centers. They're starting to build these things out and they're starting to raise their capex.
And what we're seeing now is like all of that is happening times 10.

They're only scaling up even faster. And this is yet more proof of that between OpenAI and Oracle.
Your reactions to that deal and what we're seeing with data centers in general?

This is an arms race for the ages. And I mean, there's a few things here.
The first is

Larry Ellison probably doesn't get the credit.

He's sort of a first ballot Hall of Famer in business, and that is he pivoted from a different capital strategy to the benefit of his shareholders.

When he took the company public, I think he owned 27% of the company, and now he owns 41%. Now, how did he do that?

When Oracle became this database company that was mature and not growing that fast, but spending off a lot of cash, they, i.e., Larry, who I think controls the company, made the decision to use that cash flow to buy back shares, and now he owns 41%.

And then

he saw AI and he decided, okay, it's time to pivot our CapEx strategy and go really hard and take profits way down and invest massively in the infrastructure.

Because essentially what this deal is, is Oracle is going to provide OpenAI the tools it needs to train and run its AI models faster.

And that includes access to GPUs, storage, high-speed networks, and custom systems to manage all their data efficiently.

And their Oracle's cloud infrastructure business is now 43% of their total revenue and grew by over 50%

last quarter and is expected to accelerate to 70% this year.

And as a result, Oracle, the stock is up 45% year to date and trades at a PE ratio of 56X, which is about the same as NVIDIA, which is far above its five-year average of 27X. And this is visionary.

This is a company saying, all right, we used to be this mature company that returned money to shareholders. Fuck that.
We're going all in on AI.

It's worth, it was probably a couple pretty uncomfortable earnings calls where they said we're taking down our profits.

And they said, okay, there needs to be more than one infrastructure company other than NVIDIA training these LLMs and providing the back end.

It also says that Sam Altman, who I think is brilliant, has said, okay,

we want to focus on the white meat, the kind of the technology, the design, and the front end and becoming like Kleenex or Xerox. We want to become the default term for AI searches.

And so far it's working, despite the brain drain in Mark Zuckerberg offering people hundreds of millions of dollars in a date with Lauren Sanchez if they come work at his firm.

I don't know where I got that one. Anyways,

essentially, open AI is still every day seems to garner more and more market share. It feels like right now they're running away with it.

And Sam has said that the key to maintaining that leadership is focus, and he is going to outsource much of that back-end infrastructure.

And he is so confident in the acceleration in their revenues that they're willing to commit to a contract with one vendor that's equivalent to, as you pointed out, three times their current annual revenues.

And also,

I mean, there's just no getting around. People consistently ask me, living in London, what's the difference between London and the U.S.? I'm like,

what tech company is nearly exciting enough that people are just going to throw hundreds of tens of billions of dollars at a prospective speculative investment around this company.

So I think it's just super exciting that, A, not only are these companies executing so well, but America continues to be the place that's like, oh, we are not afraid to take enormous risks.

So I, I, one, Ellison is a genius who is probably not mentioned enough in terms of how iconic a business person is in the strategy. Open AI is focusing on the front end.

And I think it's inspiring that America continues. Where the fuck else is anyone doing anything like this? Anything remotely like this? I agree.

And by the way, because of this, Larry Ellison is now the second richest person in the world. He's worth $293 billion

ahead of Mark Zuckerberg, who's at 251, ahead of Bezos, who's at 249.

Still behind Elon. You can bet Bezos is not going to introduce Lauren

to Larry.

He knows better. He knows better.
But

I want to take a quick victory lap for myself because this was one of my picks last year

for exactly this reason that we're seeing.

This was, here's a clip.

I love this. You're learning.
Patting yourself on the back. You're learning.
Ah, the student becomes the master. Here's a clip of me being right.

There you go. Let's listen to it.

Earlier this year, I said I was bullish on Oracle. My thesis here was that Oracle is kind of the fourth musketeer when it comes to cloud computing.

The options are basically Amazon, Google, Microsoft, or Oracle.

And my view was that Oracle is a really attractive company for AI companies, especially AI startups, because Oracle is the only one that isn't actively developing its own LLM.

So if you're an AI company and you want to compete with the likes of Microsoft, who's developing Copilot and working with OpenAI and ChatGPT, or Google with Gemini, you probably don't want to be also paying them to keep your lights on.

You'd probably rather go with a compute provider who you ultimately won't be competing with. In this case, that would be Oracle.

So

that was last year. Stock is up 45% year to date.
It's up 75% in the past year. And since I first made the prediction about Oracle and its role,

and

just my bullish position on its role in... cloud computing, it's up more than 100%.

What was interesting and that what we've seen is I wouldn't have expected that OpenAI would go to Oracle, but they are ultimately, I think, going to Oracle for the same reasons which I predicted, which is that OpenAI is now having issues with Microsoft.

And they kind of regret that they sort of signed their soul away to be owned by Microsoft and ultimately controlled by Microsoft. And now it's becoming this very tenuous and difficult relationship.

We obviously saw OpenAI buying that company, Windsurf, and then they couldn't buy them in the end because Microsoft said they wanted to have all the rights to the IP, which didn't make sense because Windsurf was supposed to be a competitor to co-pilot, et cetera, et cetera.

We have this issue arising where OpenAI is realizing, oh, wow, we sold ourselves to someone who is a competitor, or at least who will be a competitor if we really want to play ball here.

And so I think that is a big reason why they are switching over to Oracle because they're realizing, okay, we need to kind of get away from this sort of adoptive parent relationship we have with this big tech company.

Let's go to someone else who we don't want to compete with. Let's go to Oracle.

And I think that's definitely the dynamic that is playing out for many other AI startups as well, which is why you're seeing this massive increase in Oracle's cloud revenue, as you said, up 50%

year over year, their fastest growing business.

So a couple of things. I asked Dan Shallan, our analyst, to pull together a brief explainer because I I said I'm having trouble discerning between a data center and an AI data center.

So data centers are giant computer warehouses that store, process, and send information for all types of things, including cloud storage, apps, and sites.

AI data centers are specialized versions of these warehouses that contain GPUs to train and run artificial intelligence models. So they're focused on

the specified or specific compute to train these models. They're much more, as it ends up, energy energy-intensive.
Data centers provide processing power referred to as compute.

The more GPUs a data center has, the more compute it can deliver. And then at the very beginning, are power plants that generate the electricity that keeps data centers running.

AI data centers, as you can imagine, use huge amounts of energy.

What's interesting about the infrastructure side, and now Oracle basically wants to be, I would imagine Larry Ellison, his dream is he wants to be on stage next to Jensen Huang, right?

He wants to be, He wants to be

the John Oates, was it Daryl Hall and John Oates of AI compute infrastructure, right? He wants to be the Ginger Rogers, right? Okay, fine.

You can be Fred Astaire, or I'll be Jerry Lewis, and you can be Dean Martin. I'm trying to think of great duos, but I'm not doing a very good job here.
Jed Elson. There you go.

No, but you're number one.

He's willing to be Scottie Pippen to Jensen Huang's Michael Jordan.

But if he can be the number two infrastructure player here, he's going to do really well because the infrastructure, if you look at NVIDIA, NVIDIA's top customers, their capex has grown one and a half times as fast as revenue.

So their customer base is not only the customers or the companies that have the fastest growing top line revenues in the world, but they're spending 50% more than the revenue growth on

infrastructure. And just let me go back to Oracle.

When I moved to New York, when I thought I was going to be rich, I moved to New York and thought, okay, I'm going to be a professor. And I joined the faculty of NYU.

And do you know what my first year's salary was at NYU as an adjunct professor? I'm going to guess

$30,000. $12,000.

But anyways,

how I got here and how this is relevant. The universities have exceptional benefits and they'll take up to, they'll match up to 10% of your salary in your retirement plan.
And I picked two stocks.

I picked Oracle and I picked Nike. And this is back in 2002.

And I always put, and this is my advice to young people, the first thing you do when you get a job anywhere, anywhere, you go to HR and you say, what tax advantage investment programs do you have here?

And you max them out.

Max them out. And ideally, it comes right out of your check.
So that money never floats through your hands.

And the Nike investment has not paid off.

I've owned Nike stock for 22 years. It was great for about 10 or 15 years.
The stock is at kind of a 10-year low now. And Oracle was a fairly mediocre performer.

And then the last 10 years, it's just skyrocketed. Anyways, I have Nike and Oracle in my 401k.
So thank you. Thank you, Larry Ellison.

Just going back to what you said about what actually is a data center,

I think it can be confusing to people because one thing that we've seen in the media and the way that this has been reported on, this deal between OpenAI and Oracle, is that a lot of people are calling it an AI power plant.

Like people people are thinking of it as this is literally a place where you generate power.

And I think it is confusing because, as I mentioned, they are, they're going to rent out four and a half gigawatts of power, which makes you think Oracle is in the business of like building, I don't know,

electricity generators or dams or nuclear power plants. That's not what's going on here.
This is a data center.

And just to sort of remind you of what is the AI supply chain, what happens when you type in a prompt on on ChatGPT, what is the supply chain of events that leads to that prompt showing up on your screen.

The first thing you've got is the power generation by the energy companies and a variety of energy companies.

You use that power to power the chips that are made by NVIDIA that are in the data centers. And the data centers, those are owned and operated by Oracle and by AWS and by Microsoft, et cetera.

And their job is basically to manage all of the computing power in those chips and to turn it into a menu of options that is easy for OpenAI to basically plug in and say, we want to host our software services on your server.

So that's sort of the difference. You've got the power being generated.
The power goes into the data center. Oracle, Amazon, they operate those data centers.

They operationalize, manage it, scale it, and then they rent it out to people. And so that's what's really happening here.
And so when we hear that term four and a half gigawatts, basically

that's another way of saying Oracle is renting out four and a half gigawatts worth of computing capacity to open AI.

So I just think it's a good reminder of what is actually happening in the AI world and what actually is a data center. Final Final point before we move on here.

Trump last week announced his AI action plan, which happened at

an event that was hosted by the all-in podcast.

Let's just go through what the plan is. First off, he just got rid of Biden's AI executive orders.
He said that that was bad and he's issuing a new plan. Okay, what is he going to do?

He said he's going to withhold funding from any states that impose any AI regulations. This was a big question.
States wanted to get their act together on AI.

And he's saying, no, if you do that, you're not going to get any funding. So that's the first thing.
And that actually is pretty substantive.

He also said he's going to launch, quote, creative approaches to export control enforcement, which is basically like a non-answer to the question of what are we going to do with these NVIDIA chips, which China wants.

There's been all these questions. What are we going to do with all of these exports? Are we going to limit the export controls? He gave no clarity on that.
So that was the other thing that happened.

He denounced the U.S. permitting process, saying that it is, quote, impossible.
to build data centers, which, by the way, is false. The U.S.
has more data centers than any other country, over 5,000.

The second best is Germany, which has just 529. So we have a permitting problem in terms of housing.
We don't have a permitting problem in terms of data centers.

And I think Meta is proof they're about to build a data center the size of Manhattan in Louisiana. So another sort of distraction.
But the final, and I think this is what it's really all about.

And I think this is really what he cares about. The final plan.

Well, I'll let you guess. What do you think is the number one

mission of the new AI plan? under the Trump administration?

To transfer wealth from Los Angeles, New York, and the rest of the nation to his buddies in San Francisco by violating having absolutely no guardrails or having kind of the Wild West in terms of their ability to crawl, pervert, and monetize other people's IP.

Yeah, I think that's probably the subtext.

That's the reality of the plan. That's not the thing that I was thinking of.
Go ahead. What is? It's to get rid of wokeness.
Oh, God.

So

the plan is to, quote, revise the AI risk management framework to eliminate references to misinformation, diversity, equity and inclusion, and climate change.

So, you know, social, the definition of socialism is that when the government decides they should control the means of production outside of systemic regulation, so deciding you need a golden share because you know how to run a steel company or to decide what is woke or not woke or decide if, you know, who Columbia should or should not be admitting, this is all socialism.

This is the government, this is so anti-Republican that the government knows better than the private sector. By the way, we should call it...
not his AI policy, but his AI-Epstein policy.

All of this is a distraction from the real story that he's trying to distract from. But anyways, anyways, Roseo-Epstein,

the Epstein tariff policy, the Washington Epsteins, not the Commanders. Anyways,

the thing I take away from this is this is that moment in time when we passed 230, which at the time made sense, but now no longer makes sense, where this effectively is a transfer of wealth from old media companies to AI.

Because old media companies have to spend a lot of money putting Anderson Cooper on the ground in

Iran or wherever. They take huge risks.

They spend a lot of money fact-checking and making sure that Stephanie Ruhl has the right language and looks great and has a cool studio and I mean this shit's expensive traditional media writing books producing producing music videos it's really expensive and hard and basically what they've opted here is they said you can just steal all of it process it, figure out a way to make, slice it up and make, take a one pound block of cheese and turn it into 16 slices that are worth more, and we don't mind.

And now I'm of two minds on this. America has a tendency to be kind of ready-fire aim, and that is error on the side of a lack of regulation.

And I do think there's a solid argument that America's economic growth could largely, one of the many factors could be that we let our horses run.

And that's what they're doing here. They're saying, don't get in the way of AI.
AI is driving the markets. 40% of the SP, SP is 50% of the world equity markets.
Let our thoroughbreds run.

And I actually found this policy more thoughtful than a lot of the policies they've been put out.

I think David Sachs or whoever's advising him has said, okay, let's at least touch on the key points and

let's pretend we're good at governance and we've actually been thoughtful about this.

I thought this was actually one of the more thoughtful releases from the company, but they have said, effectively, like we did in 97 with Section 230, we are opting for the new guys.

Now, the economic argument would be: okay,

if you fuck over Penguin Portfolio, Ramden House, Simon Schuster, Warner Brothers,

basically every traditional old media company, and we take money from them, we take their $1, which they get 50 cents for on the market, and we turn it into $6.

But you're going to see a continued erosion in original IP and the creative, you know, the people who want to go into journalism, people who want to go into the arts.

It's a transfer of wealth from the creative community to the technology community in San Francisco. And just one final point on the wokeness.

The market can decide what's to woke for itself.

Like, if the people decide that the algorithms are too woke, then they will decide that and they'll go for the algorithms that are less woke. They'll go for Grok or they'll go for Chat GBT.

So, the idea that we're still going on about this woke thing, and we need the president to come in and say, We got to end the wokeness in AI. It's just, I'm just getting so tired of this stuff.

It's like wokeness was a thing

half a decade ago. Like, do we really need to keep on rehashing this and hitting the nail on the head? And to your point, it's just

a fun talking point that he knows kind of hits for people. It gets them annoyed and riled up against the annoying libs.

Meanwhile, it sort of distracts from all of the other issues with the tariffs and with Epstein and with Epstein and with Epstein. And so

that's why he's hitting on it. But again, it's just,

it's a waste of time is what I would say. Agreed.

We'll be right back after the break with a look at a resurgence in meme stocks. If you're enjoying the show so far, hit follow and leave us a review on property markets.

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We're back with Profit Markets. The meme stock craze has returned.
Krispy Cream, GoPro, Beyond Meat, and 1-800 Flowers all skyrocketed in volatile trading sessions last week.

Shares of Open Door jumped as much as 121%,

and Kohl's stock more than doubled. None of these rallies were tied to earnings or to any actual news with the company.

Instead, they were fueled by social media chatter, especially on Reddit's Wall Street Bets page.

It's funny. Just after this happened, you know, everyone was talking about the meme stock craze is back.

um and then suddenly american eagle announces this new ad campaign with sydney sweeney everyone starts talking about it online gets a ton of social media buzz and then within a day meme stock movement happens shares in american eagle rise more than 20

which was more than 200 million dollars in market cap added to the company just because of this sydney sweeney ad so basically what we have is meme stocks are back obviously the game stop craze happened in 2021.

That was a huge deal. There were sort of questions over,

is this a once-in-a-lifetime thing? Is this a one-off? Or are meme stocks here to here to stay? This is our proof. Meme stocks are here to stay.
This is just a systemic part of the market now.

And we're seeing this resurgence that really

hit kind of a boiling point this week. So, Scott, your initial reactions to what we saw in terms of meme stocks this week.

I think it goes back to the financial crisis, and that is, or the great financial recession, and that is up until

really up until COVID,

we had this natural cycle in our economies where

capital aggregates more and more power, and then there's an exogenous event, a war, famine, a recession, and there is a natural and healthy redistribution of capital back from the owners to the earners.

What do I mean by that? There's a war, the factory gets bombed, the guy who owned the factory loses a shit ton of money, but you still need people to build a factory.

They have more margin power, and there's a redistribution back in wealth.

When the 2008 recession, great financial recession happened, We bailed out the banks, but we didn't bail out the entire economy.

And guys like me who were coming into the prime income earning years back then had a chance to buy Apple, Amazon, as I've said, and Netflix for $8, $10 and $12 a share.

But since then, since COVID came along, we said, no, we're not going to let the natural cycle of exogenous events take the incumbent's wealth down and give entrants such as Ed Elson an opportunity to buy Brooklyn real estate for $1,000 a foot instead of $2,000 a foot or a chance to buy stocks at a PE of $12,000 instead of $30,000.

We're going to use young people's credit cards to prop up the value of incumbents' assets. And young people are smart.
They said, you know what? Fuck this. I can't buy a home.

Stocks are crazy expensive. So what am I going to do? I'm going to create my own asset classes and I'm going to to create my own volatility.

And I'm also going to weaponize mediums such as Reddit to try and inspire huge spikes in stock prices such that I can make money.

And you also collapse it with what I'll call this DOPA monster generation. And that is

buying and holding a Vanguard fund, it just doesn't really get your generation excited.

This is a generation all hopped up on TikTok and snaps and streaks that is used to a media dopa.

They carry around an arcade, a porn site, a casino in their pockets, and they're used to on-demand dopa. So a combination of one,

they think the game is rigged, so they're not going to play the boomer's game of investing in the market of real estate because they can't afford to, creating their own asset classes.

And also, quite frankly, this is just straight-up gambling. This is a huge DOPA hit.

And then the algorithms love shoving in your face 210 times a day a screenshot from some douchebag in Miami that has made a million dollars buying cum Rocket.

And also on the Democrat side, when Nancy Pelosi leaves Congress with a quarter of a billion dollars in wealth based on insider trading, young people naturally think the game is rigged.

I'm not going to participate in your game. Yeah, I think that's exactly right.
Just to go through the performances of these stocks in the past week, GoPro is up 99%.

Kohl's is up 30%. Opendoor up 20%, but it's up over 390% in the past month, and then it came back down.
So just an example of how these things can kind of go wrong. And Krispy Kreme up 40%.

And I think it's definitely true that this is a young man's game. And I think that is exemplified in the fact that what's the meme stock that we saw rip at the end of the week?

It was the company that paired up with Sidney Sweeney, who has become just sort of like the icon of the kind of young male incel movement in a lot of ways.

And so, yeah, she's driving hundreds of millions of dollars worth of

value for this company within a day. And it's just unbelievable.
And to your point,

I think the reason that this is happening

is because it's fun and it's, you know.

It's a distraction and it involves social media and it's social, et cetera. But as you say, young people have such a small menu of legitimate investment options.

I mean, as you say, you've got the SP trading at around 25 times earnings. When my parents were my age, it was trading at 11 times earnings.
We just saw the home price data last week.

Average price of a home hit another record high, $435,000 for the median

home in America.

And then also, we can't really invest in startups either because as we've discussed a lot, these startups, these really successful startups like OpenAI, SpaceX, they're not going public.

And so young people and retail investors are gated out. So you can barely even invest in AI.

Or if you do want to invest in AI, you got to invest at these high, high PE multiples with these big tech companies that are sort of consuming AI. So

to your point,

we invent new asset classes, we invent crypto, and we invent meme stocks. And we have a lot of fun doing that.

But I think the big warning that I would clarify, I feel like my generation has this feeling that these meme stocks and these crypto movements, that it's a very sort of us versus them mentality where we're taking on the big bad banks and we're taking on the big bad institutions.

But what we're forgetting is another big part of the story, which is by definition, it is actually us versus us.

Because when you're entering a casino,

it is a gambling game and there's a loser on the other side. Because remember, we're not investing in cash flows.
We're not investing in real businesses.

We're playing a game of musical chairs where the only way you can get rich off of this is if you sell at the peak.

And the thing you got to remember, last year, MemeStock investors lost $13 billion in one week. You look at GameStop.
GameStop is down 70% since its peak during the Reddit saga.

So the thing you got to remember, okay,

retail owned the institutions, they owned the banks, they owned Melbourne Capital, they also owned themselves. A lot of people lost a lot of money here, and the same is true of crypto.

And I think that's the part of the story that people kind of whisper. They love this dynamic of the young people taking on the old people, and it's really fun when the old people get screwed.

But let's be very honest, a lot of young people are getting screwed too. It's just that you're not hearing those stories stories because they're less exciting to report on.

We've said in the algebra of wealth, we know how to get you rich. That's the good news.
The bad news is it's slowly and it's boring.

And this notion that you can get rich quick, you're right. Anyone, this notion, this bullshit notion,

you know, stick it to the man, right? When anyone tells you to stick it to the man, that means you're about to get a spear in your chest. And the person telling you to stick it to the man is the man.

So, you know, these things are fun. You know, what I would say is I love to gamble if you get some dope ahead, but take at least 70, 80, 90% of your hard-earned dollars that you work so hard to

spend less than you make and save money and put it into the most boring, low-fee shit ever.

And if you talk to people who are wealthy and economically secure and can focus on the relationships, they got there through really boring means.

And just keep in mind, if you're doing this, you're gambling. And not only only is it the capital risk, it's the amount of time you're spending.
I mean, it's just,

I'm still working on how much time I check my stocks. I'm like, okay, that is not a good use of my time.
The final thing I would add on this,

just in terms of the us versus them, retail versus institutions dynamic, the other thing you have to keep in mind now

is that a lot of institutions are in on the meme stock thing.

And a lot of institutions are actually spending money hiring these smart social media save young people to help them figure out how to make all these arbitrage plays on the meme stocks.

And in fact, 40% of hedge funds are now using social sentiment analytics for their trading strategies in 2025, compared to three years ago when it was 10%.

In other words, hedge funds see what's happening. Their job actually is to trade.
And so they're investing in figuring out, okay, how do we take the money from these meme stock pops?

They're hiring people who are tracking Google search and tracking Twitter and

tracking Reddit

voraciously. And that's now who you're up against.
You might not have been up against that in 2021 when this first started happening.

But now that this is part of the markets, this is just the way of the world now. Yeah, the quant trading firms, the hedge funds are now figuring out how to do this really, really well.

So another way to sort of burst this bubble that you're one-upping the institutions. It's probably not what's going to happen here.

The happiest countries in the world are not a function of what they have. They're a function of what they don't have.
Specifically, they have an absence from stress.

When you find out in Norway that your wife has lung cancer, it doesn't mean you're also going bankrupt.

You don't have to worry about your kids' education. You know that good education is free and available.

And one of the things you want to think about as a young person is you want to clear out opportunities for real downside depression and anxiety.

And when you sign up and you start spending any money other than what you could lose all of on something like a meme stock, you're setting yourself up for some really ugly moments

that could trigger, you know, a fairly serious mental health episode. And that is...

It's tempting when you're boring and you're bored and you don't have a lot going on and you get a little bit of money to think, okay, I'm going to believe Roaring Kitty or someone on Reddit and I'm going to go all in on GameStop.

And you might lose 70% of your money that you were planning to use to re-enroll in

junior college. And you really, it's really mentally taxing.
It's really upsetting.

And the upside there, unfortunately, as a species, we don't get as much joy from the upside as pain we get from the downside.

So what you want to do is find stocks that will invest in the market, be diversified, and let the economy and demographics take over and focus all of your energy on building unique skills and relationships and then wake up when you're my age and realize you're economically secure.

You are setting yourself up when you play this game to have a mental health episode. It's really, as someone who this has happened to a lot of times,

I have

stupidly set myself up for months, not years, because I think I'm fairly resilient, of real mental health episodes and anxiety and disliking myself and seeing the world through a dark colored lens because I decided, oh, I'm smarter than everybody.

I'm going to borrow money against my red envelope stock because we're clearly going public. And then when it didn't happen, I'm really upset at myself.
And it's not worth it.

And you think, well, you could have been worth a lot of money if you'd gone all in. Yeah, but the upside, that potential upside was not worth the downside of that emotional hit to my well-being.

So if you want to have some fun, fine, have at it. But be clear.
It's like when I go down to the casino, I expect to lose all of it.

and I only gamble the money, a maximum amount of money that if I lose all of it, it, you know, doesn't matter. It doesn't fucking matter.

Let's hit, let's go to Cirque de Soleil and then the strip clubs or whatever and I'm fine. I don't remember it.
I don't do either of those things. Anyways, but you

really want to be thoughtful, not only about the return on your investment and the loss of capital, you want to protect the downside of yourself emotionally because,

you know, we're sentient beings and your emotions and how you feel every day are oftentimes more a function of your chemistry but these things can trigger really dark depressive episodes so I don't like these things I think they're bad for the mental health of America I think they undermine confidence in the markets and they're an externality and an indication of just how fed up your generation is with mine

let's take a look at the week ahead we'll see earnings from spotify microsoft meta Amazon, and Apple. It's also a huge week for economic data.

On Tuesday, we'll get a read on consumer confidence for July. On Wednesday, we'll get the U.S.
GDP report for the second quarter.

And the Federal Reserve will also meet for its next interest rate decision. A day later, we'll see the personal consumption expenditures index for June.

That is the Fed's preferred measure of inflation. And finally, on Friday, we will see the U.S.
Employment Report for July.

Any predictions, Scott? Alphabet is going to outperform

the market over

the rest of the year. And

if you look at its earnings, supposedly AI is this existential threat. Search was up 13%.

YouTube was up, I believe, 12%.

It has five amazing distinct units that have over, you know, 100.

This thing is just a juggernaut and it continues to perform. Its cloud unit is growing like crazy and it trades at a P of 23 versus 26 for the broader market.

And I always say that let's take two average S ⁇ P companies and I always pick Dow and PNG, which are amazing companies. Would you rather own Dow or PNG?

Would you rather have Tide or Waymo, the leading autonomous driving unit? So they've also increased their capex to 80 billion, which is more than Meta and just behind Amazon at 100 billion.

Microsoft's at 80 billion and Alphabet's going to be at 85.

They're trading. Again, I just think they're relative to the S ⁇ P, this existential overhang of the threat of AI does not appear to be bearing out here.

So look, I think this company, I think Alphabet for the rest of the year is going to outperform the rest of big tech. I totally agree.
So undervalued. There's just no question.

I would love for us to get maybe a Google bear on the program because I don't understand

what the market's view is on this. I mean, it's just, it seems so obvious to me.
And we've been saying it for so long.

And every time we keep seeing earnings and they keep on outperforming, I just don't understand who are all these Google bears. Why do these earnings reports come out?

They crush earnings and then the market shrugs. Like this is, this has to end at some point.
And so I would, yeah,

violent, violent agreement with you on that. Five separate businesses that do 30 billion or more in annual revenue, Google search, their Display Ad Network, YouTube, subscriptions,

and seven products and platforms with over 2 billion users, Search Maps, Gmail, Android, Chrome, Play Store, and YouTube, and Waymo, which is hands down the market leader that's logged over 100 million total miles.

All those growth vehicles, you've got AI, leader in AI, you've got data centers, you've got cloud, you've got digital media, the most ascendant streaming platform and the biggest, and somehow still growing.

And then if you want to get into RoboTaxis too, you've got a monopoly on the U.S. RoboTaxi market.
And it's cheaper than the SP.

I always say to people when you're talking about the upside to a stock, we spend 90% of our time talking about its potential.

You need to spend 50% of your time talking about it relative to its valuation. And that's where Alphabet is the buy here.
Its valuation, it's trading at a lower multiple than the average SP company.

This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss.
Mia Severio is our research lead.

Our research associates are Isabella Kinsel and Dan Shillan. Drew Burroughs is our technical director.
And Catherine Dylan is our executive producer.

Thank you for listening to Property Markets from the Vox Media Podcast Network. Tune in tomorrow for a fresh take on the markets.

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