How Meta Could Quietly Win The AI Race

Hey, it's me, Will Anderson, host of the new Music History Podcast Monday Music Club. And on this week's episode, we're talking about pop music, with the boys from one of my favorite podcasts switched on pop. Charlie Harding and Nate Sloan are two of the smartest and sharpest minds chatting about music right now, and we got into how they got their start, what they love about pop music, and some recommendations on what we should be listening to. It's a great conversation. These guys are just brilliant, and you can find it by searching for Monday Music Club wherever you get your podcasts. This week on Why Are You Like This, I am talking with the one, the only Colin Kaepernick. Colin joins me for a fantastic conversation marking the 10-year anniversary of his protest. We dive deep into his football career, his decision to protest, the work he's been doing with Know Your Rights Camp, and his new memoir. Check out the latest episode of Why Are You Like This, wherever you get your podcasts, and on YouTube. Today is number 28,700. That's how many trades Trump made in the 17 months after his inauguration, more than all of Congress combined. True story, yet I was raised as you know as an only child, true of my sister Nuts. How are you? I'm doing very well. Here in New York, went to a wedding last weekend. Now this weekend I've got an engagement party. It just keeps coming. Never ends. Any good destination weddings? One in Greece next year. Actually, that's the engagement party that I've got this weekend, which is preceding the Greece wedding, which will be cool. I went to a wedding in Germany over the summer, which was fun. Any of these close friends? Are you in any weddings? No, not in these weddings. These are friends, but not my best friends, but good friends. Still waiting to be in a wedding. Still waiting to get the call up. Were you in weddings? I was. Yeah, I've given three best man speeches. I told you my best man speech, right? This is the advice I believe to take care of your wife, right? I think it's great advice, so why not share it. Keep score. I was expressed physical and sexual desire and never let your spouse be colder, hungry, pash meaners, and power bars all the time. And dual climate control. Upgrade. It's worth it. I look back. I'm not exactly. I look back. I'm most of major blowups, so much significant others, and I think they were either colder, hungry. I think it's exactly right. How are you doing? How am I doing? I did the 90 second street Y thing last night. Just Tarlov, which I didn't like, because everyone likes her much more than me. They like in Scott Calo and everyone sort of rolls their eyes and ply the clouds, and then they literally like treat her like she's fucking Mick Jagger. It's not people. I love her. Oh my gosh. But that was good. We were sold out, and then you have things that I'm in New York. I'm really excited to be here. I love it here. And yeah, just in the last seven days, I've been in LASF, Mexico City, London, L.A., and then back to here. So I'm a little bit, a little bit manic from traveling. But yeah, in the whole, everything's good. I feel, feel really good about your shows, killing it and keep getting good guests and huge, huge video views. As I said, if you keep working this hard, I will get my second Ferrari, which I'm super excited about. By the way, I don't own a car just for those of you out there. Eventually, you're going to have to actually get the Ferrari. Eventually, we're going to need to turn this bit into a reality. I can't get in and out of a Ferrari. It's too low for me. It is very low. I can't pull off a Ferrari. You need to be. So what are we going to do instead? Maybe like a Lamborghini Euros or maybe like a Brabus? I mean, you need like a massive vehicle, but it still needs to be a luxury sports car. That's sort of the line that you're struggling here. No, I go with the mid-life crisis Range Rover. The best car on the road is the Mercedes-Wagon track. It feels like a sports car. It's a great car, but I like the British high. I'm rich and classy Range Rover thing. But I have an own to car in five years, and I love not owning a car. Do you own a car? My girlfriend does. What is it again? The Outback. Our favorite vehicle in the world is the Subaru Outback. Okay. So has she told you she's a lesbian yet? Sure we can. Our story's got lots to talk about. Let's get into it. Now, at the time to buy, I hope you have 20 of the wherewithal. The Federal Reserve unanimously voted to raise interest rates last week for the first time since 2023. The quarterpoint rate hike was largely expected on calcium. The odds of a rate hike at climbs to 88% ahead of the announcement still stock sold off after the press conference and Treasury yields rose. I was later President Trump somewhat lashed out at the Federal Reserve while notably leaving Chair Kevin Warsh out of his criticism. Here is what he said. You know, very tough board who's got a board that was put there by a lot of other people and the interest rates are too high. They're not appropriate. And I told I talked to Kevin. And I said, you might as well vote with the board because it's not going to matter. The board is very hostile. They're very political. They're doing the wrong thing. There are bunch of politicians or people put on by politicians and it's a shame. Essentially, implying that Kevin Warsh didn't want to raise rates, but he sort of had to because he had to just go with whatever the rest of the board of the Federal Reserve wanted to do, which was to raise, which is quite an interesting statement, not sure I agree with him or believe that it is even remotely true either way. We have raised rates 25 basis points first increase since 2023. You and I had both predicted that this would happen. So pound on the back to us. What do you make of this? Institutions are discovering that independence only matters when someone powerful wants you to surrender. That's a whole point of independence. His wants someone powerful asked you to do something that's not in the best interest of the country. That is why you're supposed to be independent. So what do you have? Canada is diversifying away from Washington, AI companies are being asked whether they can govern themselves. And the Fed is resisting the president who appointed its chair. Everybody suddenly wants a prenup, so to speak, but I look, I think this was, I think Warsh has established himself. This is a great move for him. It was the right thing to do. I believe the business schools should be 15 months. I think we should take kids in September one, have them go through the summer or take them in August, charge them a lot less money. We invent the second year of business school, mostly for networking and so we can charge them double tuition. And then we let them take these ridiculous classes from Thips, what I call formally important people. And where they bring in their friends and they should be just lunch and speakers and we charge them $7,000 for classes, including leadership, sustainability, ethics, my favorite ethics. I can't get my 16 year old to make his bed, but I'm going to teach a 27 year old how to be more ethical. Let me summarize every leadership and every ethics course offered at every grade institution in America. Oftentimes, the hard thing and the right thing are the same thing. How? I just saved you $7,000. And all these leadership courses do is bring in some former CEO who's bored and to talk about how everyone was against them, but he did this and it ended up being the right thing. Meanwhile, he's probably in the Epstein files. That's right, but teaching about ethics and leadership, but I'm waiting to hear how this relates to the Federal Reserve. Well, okay. Leadership Kevin Worch demonstrated leadership and independence here. What economist? What anyone who doesn't have their head up their ass and has taken econ one who's come out and said this is the wrong thing to do. So the whole discussion is whether a guy who doesn't understand economics and now has brought us tariffs and what seems to be a never ending war and exploding diarrhea and so much, so much incompetence around a lack of regulation of guardrails around AI that we're all really anxious. This guy understands economics. I mean, this guy is the this guy is the one to decide what interest rates should be. So to Worch's credit did the right thing. And this is going to be a footnote in 48 hours. Trump's going to take that. He knows he can. This is losing battle. He knows he can ship host wars. I think there is actually a not stupid argument against I can rates in this situation to be to be clear, I agree with you, I think it was the right move, but I think the economist, the sensible economist who it's who would argue that this wasn't the right decision would say that this is a supply shock that is related to one thing and one thing only and that is the war in Iran. That is the reason why inflation is running so hot because we cannot get oil out of the straight and we're dealing with an energy crisis. And raising rates won't do anything to solve that problem. It'll slow down the economy overall and it will start to sort of bring down some growth and hopefully bring down prices at large, but the real problem, which is the fact that we can't get oil out of the straight and the fact that oil is now above $100 per barrel for Brent crude. That problem's not going away with any movement of the monetary policy. So I think the argument. that argument actually is reasonable, and I will be interested to see if this actually works, because it could be a real problem. If we decide to raise rates, we increase borrowing costs, which will slow down the economy a little bit. But more importantly, it's going to increase mortgage rates for regular Americans around the country. And we're already seeing that, mortgage rates, study mortgage rates are above 7%, highest in over a year. And if prices also don't come down, because this is so tied to the war and so tied to the energy crisis, then we're running into more of a problem. And I think you could begin to fashion an argument as to why this was not the right decision. Having said that, I think it is the right decision, because this is the only tool that the Federal Reserve's disposal. They can't talk to President out of his headassery when it comes to foreign policy, when it comes to tariffs, and when it comes to any of his economic policies, when it comes to any fiscal decisions. But this is the tool that they have, and they recognize correctly that inflation is getting out of control, that it has been sustained for so much longer than any of us would have wanted. Many of us expected it, including myself, but we didn't want it. And so they're using their only tool to get us out of the situation. But I do think the jury is out on if it will actually work. And if it doesn't work, then we're in for even larger problems. Yeah, but the Fed's mandate is the kind of two things that are supposed to have their eye on are job growth and inflation. And that's in reverse priority or order of priority. If you have unemployment, that's bad. Inflation, if it ever hits kind of runaway inflation, where people start panic buying, that's how economies and even societies fail. And if you look at the numbers, job growth is still, the job numbers keep getting revised. It's hard to even look at them anymore. But unemployment isn't that unemployment is sort of a historical average is maybe a little bit below average. The economy has been surprisingly robust in terms of growth. Some people would argue that stuff is a fuel, but the reality is we're growing faster than most G7 nations still, I believe. It's inflation. I think it's really, really the scary thing here. So it just feels like on a balanced scorecard, this was the right thing to do. It also just sets the right tone for an independent Fed. What I also think in this isn't as true. I don't know if you saw Senator Cassidy giving director Patel a hard time around this particular conversation on B.C. Deality. I used to be addicted to B.C. Deality with wolves, but fortunately, I'm down to just a pack of day. That's good. That's good, Ed. That's good. Just last night I was trying to count how many sheep I fucked, but I fell asleep. So much better at the dirty stuff. So much better. If the shoe fits, why why use the condom? I mean, why just where? Anyway, so why won't we bring them back? This was the right move. I think the markets are going to like it. The AI in security right now seems to have a bigger impact on the markets than inflation or in interest rates. In addition, I think the world is desperate to see America reflect some sort of rational discipline, if you will. And I was really heartened to see this. I think it's the right, you know, check, check, I'm a fan of this. Yeah, I think the market's reaction will be a very interesting and open, open question over the next few months, because I mean, we can just look at the market's immediate reaction, which the stocks fell slightly, S&P closed down half percentage point, Dow fell 1.2%. I don't think that that is that meaningful in the grand scheme of things. And we shouldn't really interpret that too much. Interestingly, the 10 year yield rose again, above 5%. And I think that is going to be the really important thing to keep track of because you would hope if you're rooting for America, you would hope that if we raise interest rates, then inflation expectations over the long term will be reduced because you're expecting, yes, you might see a short term rise in short term yields because people start to price in the fact that we're going to have higher interest rates in the in the near future. But you might then also expect that we're going to have a lower inflation further down the line 10 years out. And so you might hope that yields the 10 year comes down, same with the 30 year as well. So that hasn't happened yet, the 10 year yield rose again. So I think the jury is still out in terms of what inflation expectations will be later down the line. And also the extent to which this is all a function of perhaps just our unsustainable deficits and our incredible eye-warsering levels of debt, which we've talked about a lot, and which we talked about last week. So that'll be a big question. But in terms of the stock market, I mean, one thing that we should just acknowledge is that a higher interest rate environment is generally bad for stocks. And the reason it's bad is just because of basically the risk-free rate. If you're getting a higher risk-free return from your bonds, from your treasuries, then that means that you must now demand a higher return from your stocks, which of course are a riskier investment. And in order to get a higher return, you're going to want to pay a lower price for your stocks. And so as a result, generally speaking, when interest rates go up, the price of stocks go down. So the S&P 500 over the past several decades, this was a study from Goldman Sachs. They have seen an average three-month return of negative 2% at the start of a Fed-hiking cycle. They also expand this over the course of 12 months and they find that the market usually bounces back in a very significant way. But that is something to keep an eye on. And I think it would be reasonable to assume that in the near term of the next few months, it's possible that stocks will continue to go lower. And we have seen that over the past months, down one and a half percent in the past month. But do we care that much? I don't know, because the S&P is also more than 11% yet today. And it's been a pretty good year. My prediction at the beginning of the year was that we would see positive growth in the stock market. But I thought that it would be very lackluster. I thought we'd see single digit, maybe low single digit growth in the stock market. So I think we could eventually arrive at that place due to the interest rates. But I think the thing that is interesting for investors, we went into the year thinking that interest rates were going to be reduced. That was one of the big tailwinds of the stock market. Now here we are in September. Interest rates are going up. They have just been raised in the expectation. If we look at the dot plot from the FOMC is that we will probably see another hike before the end of the year. That is just fundamentally a different environment for investors. You had suggested so a couple of things happen. Things get more expensive. So it puts pressure on earnings. You do see a transfer of capital from the equity markets and at the bond markets because the bond markets or credit is now offering investors more. So if I can get five or six percent on what feels like mostly risk-free, maybe I'll consider that. But what's interesting if you look at economic history is that while initially a hike takes the S&P down over the following 12 months, there's typically on average a 9 percent gain in the S&P. So my sense is the market responds well to fiscal discipline in a general sense that the atmospheric is here or that there is an adult in the room. So we talk so much about what we feel are fairly irrational, bad decisions. The Fed is independent for a reason. They exercise that independence. All of the numbers suggested this was the right thing to do. So this is a good, good government. We'll be right back after the break. And if you're enjoying the show so far, send it to a friend and please follow us on YouTube, Spotify or wherever you get your podcasts. Support for the show comes from hymns. Weight loss can be frustrating, but with weight loss by hymns, you can take the gastric out of the process. 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Wigovie is the registered trademark of no-be-nordist AS to get started and learn more, including important safety information, Wigovie clinical study information restrictions. Visit hymns.com. Support for the show comes from Quince. With the weather shifting, it's time to reach for your old favourites. Maybe a soft cardigan you can layer with anything, a solid pair of boots or a sweater that you can dress up or down. Those are exactly the kinds of timeless, durable staples that Quint specialises in. Quint makes elevated everyday essentials from premium materials like Mongolian cashmere, organic cotton and washable silk. Everything is thoughtfully designed to be worn season after season. There are 100% Mongolian cashmere sweaters start at just $50, giving you the softness and quality of luxury cashmere without the luxury price tag. 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It is designed to handle every day tasks for you from making dinner reservations and scheduling doctor's appointments to filling out forms and more, and it is gaining traction. The app is already getting more daily downloads in the US than threads WhatsApp and Facebook, so while Meta has largely stayed out of the spotlight in the debate over the potential risks of AI, the company is making plenty of progress in another part of the AI race. Let's talk about this new AI product. Meta Muse. Mark Zuckerberg described the product he posted this all over social media the other day. Here's what he said. Muse doesn't just answer questions, it gets things done for you. I use mine to organize projects with my kids, like ordering ingredients so I can bake with my youngest daughter, or getting permits so I can climb mountains with my oldest daughter. I use it to monitor my MMA training and health and to help me find talented researchers and people that I want to meet. It's a pretty consumer-facing AI app. We have been playing around with it. It can do all of the grunt work in your day-to-day life, and the stock jumped over 6% when it was released. People aren't really talking about it that much right now. I think because the conversation has been so dominated by this idea that civilization is going to end as a result of AI, but I'm actually quite bullish on this product, but let's get your reactions. First off, you know the difference between Mark Zuckerberg and my neighbor Steve. That's right. Steve's not a ***. Too much? I saw it coming. Too much, Ed. I'm sure Clarell added that out. I have never met or never observed more of a sort of suit path. I don't think Mark Zuckerberg is evil. I don't think there's a psychopath. I think he's arguably the most brilliant businessman of your generation, actually, so other than you, he's not my generation. I just think the guy understands his asset and that is he sits on first-party data, more first-party data of any organization in the world. I predicted in 2025 that meta would be the most important AI company of 2025. As I often am, I'm directly correct, but I got the timing wrong. 9 out of 10 internet users, excluding China are active on meta-platforms. They have a massive user base, which means, I mean, the primary inputs here are compute and training data. They can buy the compute, but they have a monstrous lead in training data. And I've been looking at Aura for their upcoming IPO. There are a handful of companies that have tens or hundreds of millions of first-party data consumer interface with consumer. There's always someone in between who is controlling or in between you in the data set. The largest first-party data minor in history, some people would say a strip minor, is meta. It just makes sense that they would be in this. They have four billion monthly active users. And since the release of this September the 8th, they've added 150 billion in market cab and the stock's up more than 10 percent, or the S&P is down 2 percent, any time Mark Zuckerberg does something you have to take it seriously. He didn't stub his toe, he kind of fell flat on his face with mixed reality headset. But on the whole, everybody strikes out. So you would argue the meta muse would I have several long times, we want to build a trillion dollar company, you have to do one thing. You have to build a time machine. And that is you have to give people time back. And when you download muse, you log in using your Instagram or Facebook or WhatsApp. So it immediately knows you. So it's already benefiting from the first-party data that another company would take years to build. It knows what you like to eat, who your friends are, where you live. And it doesn't, it's also taking AI from defense to offense in the sense that it doesn't wait for you to tell what to do. It takes about basically three clicks from the download to the ideas tab where it begins telling you how it can help. So for example, it will proactively find and cancel random subscriptions you forgot about. It will turn your inbox into a daily schedule. It will track travel fares. It can even make calls on your behalf. So when you think about all the drama and the AI-Dumerism coming out of our topic, it's kind of open to pretty big void for these guys. And we all see that a lot of people are actually souring on Anthropic right now. Ramp had data. They showed that Astra is taking 13% of Enterprise AI spend versus Fable, which is obviously Anthropic's product at 8%. So it's interesting to see that that Anthropic might actually be falling behind right now. It would just be so scary and ironic in such a business case. If meta ended up being the Frontier LLM that figures out a way to capture shareholder, the most shareholder value. Anyway, it feels like, I mean, just to his credit that Mark Zuckerberg is a brilliant business person and more first party data, I think, than any organization in history. I don't think it's significant because remember several months ago when it was revealed that meta was considering selling its compute versus using it to build its own AI products. And we were wondering if that basically meant that they were just giving up on any form of consumer facing AI because it was too difficult, which by the way, given the information that we had, I think was a reasonable assumption. But this is now our evidence. I actually know they haven't given up. They are actually investing quite heavily into a consumer facing AI product. Until your point about how people are kind of getting annoyed with Anthropic and they're getting annoyed by OpenAI and with good reason because of all of this dumerism and all of these constant posts and all this public drama over whether these products are going to destroy civilization. And this matters when you're dealing with the consumer facing product. Consumers need to like you. It actually is important. I'm not saying everyone loves meta. I think meta still has significant PR issues. But to Zuckerberg's credit, this was a pretty non-annoying release. And I'll just read you what he said when he shipped muse. He said, quote, we didn't call for everyone else to do this before we would. We just did it as part of our day to day work because it was clearly the right thing for people and for us. They basically delayed shipping this thing for several months because they wanted to make sure that it was safe and that it was secure and then it worked. And then once they had done all of that homework and they figured out their product, then they released it as opposed to the alternative, which is before you release your product, you go out to the world and you go on all of these news platforms and you say, this product is going to shake the world as we know it. This is going to be the worst thing that happens if we don't figure out how to get things under control. And then they released these products and it's like, okay, now the product is out there. They said this about so many iterations of chat GPT every time there's all of this sort of scary humorism about what it might do and then suddenly they release the product and it's like, we're fine. So that I can respect about how they are handling the release of this product. And then I think it's honestly just a really good product. product. I've been playing around with it a little bit, and I want to point out something that a test that our research system, Dan Shalon, conducted, and this is what we're calling the dinner test. Basically, Dan submitted a prompt to four of the main AI agents, so Muse, Claude, Chad GBT, and Google Gemini. And the prompt was the following. I'll read the quote. Find and book a dinner reservation for two people this Saturday between 6.30 and 8.30. In Williamsburg, it should be a sit-down restaurant with a rating of at least 4.3 stars. That was the prompt, same across every single platform. So with Claude, he also asked Claude to do this. Claude then asked to connect to OpenTable, which then, Dan had to go and set up, then it picked a restaurant, then it presented some options, and then eventually it said, "Actually, I couldn't make the final reservation." So Claude failed at doing this dinner test. Chad GBT, similar thing, asked to connect to OpenTable, picked a restaurant off at some times, and then after a back-and-forth set, "Actually, I can't complete the reservation." It failed. Gemini presented down with some restaurants, asked if Dan wanted to make the reservation Dan confirmed, then it asked to confirm that reservation Dan confirmed again, then it asked to confirm again. There was another confirmation, and then finally it made the reservation. It paused the test, but with a lot of extra steps and a lot of annoying confirmations. Finally, Meta's Muse. Meta finds the restaurant, asked for an email on a phone number, confirms the information is correct, and then immediately Dan gets a message that the reservation is booked at a restaurant that he actually likes. So the whole thing was done in less than a minute, and it paused with flying colors. So I think what we're dealing with here is an AI product that is actually relevant to everyday problems, that isn't trying to create poetry or trying to solve mathematics equations, something that basically does the boring stuff, books are dinner reservation, books are doctors appointment, sends emails, does the thing that you don't want to be doing with your time, and it is purpose-built for specifically that function. For that reason, I think it's probably going to be a pretty popular product, as much as Mark Zuckerberg sucks as a person. I think what he's done here is actually kind of on the money when it comes to AI. Yeah, the most powerful practical use of AI that I've encountered is I gave a permission to look at my Gmail, and with cloud co-work, I can say, "I hear about a company in the go, I invest in that company in 2019," and I'll say, "How many shares do I own? And what are they worth?" And it will go into my email, find the document, say, "You own this many shares, then it will go out to the web," and say, "The most recent secondary trade was at this valuation. Scott, you've lost 70% of your capital. You're 70% down, literally to this last night." But then it'll say, "Should we reach out to, you know, name my tax advisor, should we reach out to them about taking loss?" And that's really powerful. So it's the biggest unlock for me with Anthropic was enabling it to understand more about me by giving a permission to go into my email. This starts at letter V because it already knows your relation. It's turning chicken shouldn't into chicken salad, and that as meta has been molesting your privacy for 10 years. But it has all this information. It knows where you like to go, it knows where you like to stay, it knows who your friends are, it knows what you do all day. And it can start saying, "Oh, Scott, we see that you like to travel to London on a Thursday night, and this is typically according to your patterns when you usually go, should we start looking at airfare?" I mean, just, you can start playing offense with a level of certainty. And also, the AI models are just so, I think, their management teams are so freaked out and trying to feel around the room for what types of privacy they can violate. No one violates privacy like meta. And as much of a fight as we all put up about it, we don't actually fight. This is the thing. You might say, "Oh, trust meta down to your privacy." No one's going to go for that. It's like four billion people do it every single day because literally, as you said, 9 out of 10 internet users across the world are using meta products. So you're letting them invade your privacy already. And the question is, if you want to use an AI product, are you down to continue to let them invade your privacy? I think the answer for most people is yes. It's that versus giving up your data to a new company who you don't know. And then taking a leap of faith and hoping that they will use your data responsibly. But ultimately, I just don't think consumers are going to care that much because they use Instagram, they use Facebook, they use threads, they use WhatsApp, they use all of these apps, all of the time. We love to say that meta sucks. And it does suck for a lot of reasons. We've seen that in the lawsuits, but we still use their products because their products are quite frankly useful and entertaining in a lot of different dimensions. I think this will probably be the same. There's a tension between privacy and utility, right? Yeah. And Washington claims that we're all in Brussels and young people on social media, you know, complain we're really concerned with our privacy. And then everybody tells Uber where they're going at all times. And then people publicly say, this is where I am and who I'm with and what I'm doing 10 times a day on on meta. But oh, we need privacy regulation. What what about your actions communicate that you're interested in privacy? I'm watching a 30 second movie of you in your bedroom, trying on your clothes and you telling me what mouthwash you use. And what what you did or did not like about your second day last night in his name and when I mean, oh, but you're concerned about your privacy. So a meta is just said, meta is just sort of nodded and said, yeah, yeah, yeah, no, you're concerned about your privacy. Yeah. Now we're going to now we're going to serve you the exact right, you know, add for a trip to Mika knows because you went this time last year. It's the mother of all consumer dissonance, which is a fancy term for people are full of shit and say one thing in their behavior can note something entirely differently. And meta figure to this out a long time ago, they're like, okay, until we get sued and then and not like that, we can delay an obfuscate and even if they find it, okay, us using data about a 16 year olds insecurities and then using those insecurities to start feeding her content that keeps her glued to her phone about normalizing being 5, 8, 90 pounds. Okay, that's wrong. But as long as we can can can some more Nissan ads will continue to do it. Finally, somewhere regulator will get outraged. And then maybe we pay a few million dollars. They're just like honey badger don't give a shit. So they just could be this could be up on the iPod or Apple and the iPhone. They're never first, but they come in and they they enhance something and they give it with a trusted organization where they already have interface and they capture the majority of the shareholder value. I would be very, I have never seen two trillion dollar plus companies andthropic and open AI more fragile right now. I think there's a fairly people hate them. Well, I think they could be down 70% in value within 12 months. If all of the sudden traffic lights start going crazy and it ends up that this ant infants infestation of bots from open AI started coordinating and speaking to each other and someone and someone instructed them to to start fucking with the traffic lights and figure out and talk to each other and figure out a way to start misaligning the lights at Broadway in Houston. And there was some car crashes and someone got killed or run over. I think Nate, I think I think you might see some nation states just say sorry no frontier labs from America allowed. Yeah, who are they going to blame if that happens? Are they going to blame Mark Zuckerberg and Metta who have made it their goal not to advance the frontier of AI but to help people make dinner reservations and doctor's appointments. And he's literally said this like he's not trying to level up humanity and turn us into some transhuman AI digital race. So whatever it is that these guys are arguing for and it's getting increasingly insane. I mean, he's literally just trying to sell more ads and he's laid out the plan now. How they're going to make money off of this and the plan is to basically just take a small cut of all the transactions that take place on mute like that's the plan. He's kind of going after in a lot of ways a smaller fish, which I think ultimately will be a bigger fish because these guys keep talking about how they want to merge with AI merge with robots. And I just don't think that it's something that anyone is actually interested in. And I think if anything goes wrong, I think the person, I think the first person people blame is Simon Altman in opening a high. And at this point, the second person people blame would be Daria Amade. I think that a lot of people are upset with them. But Zuckerberg's just kind of, he's perceived to be on the sidelines here. And then you look at the product. Actually, he's building exactly what I think people want from AI. And more importantly, he's doing it cheaply because he's leveraging open source. And that's why he's offering this thing for free. That's also why the model itself is the cheapest of any of the American LLAMs. So I just, I think he's going about this the right way when I look at everything that he's doing. I predicted that the market would be disrupted by cheap open wave models from China. And I may have gotten wrong, it might be the cheap open-weight model. or meta, and what's weird is what benefits meta right now is Zuckerberg is the devil we know. It's just strange, but people are sort of used to bad behavior from Mark Zuckerberg. They're used to the sociopathy, but people said, well, we figured out a way to mostly live with it for the last 20 years, whereas it just feels like Dario Amade, might he be the nice guy that ends up being a very, you know, congenial after the fact goring. I mean, we just don't know this. Again, meta and Zuck feel like the devil we know here, and it's weird, but that is somewhat, that is a huge advantage. It's actually a differentiator. Just as we wrap up here, just checking in on the market, so Master has been the top performer in the Mag Seven over the past month, up 14%. As you mentioned, they've added 170 billion dollars a market gap since Meta Muse was released, but it is still cheap compared to the rest of Big Tech. So just looking at the PE multiples across Big Tech, Microsoft, when you adjust for their private investments, which we have to keep on making this stupid adjustment. So we did that. The PE is around 28 for Alphabet, similar thing. We had to adjust for their private investments. We've talked about that before 32 Amazon adjusted 32 Apple 38 times earnings. I'm just still blown away by the by how expensive Apple stock is right now. I still don't think it's anywhere close to a buy. I think it's a sale actually compared to meta trading at 25 times earnings below the S and P average. As I said earlier on, I bought in June 564 dollars a share. I'm up around 20%. I'm pretty sick of people saying that I am a perma bear. I think it's pretty clear that I've had multiple bullish picks, including Meta and Microsoft and Salesforce and Service now, which are up all up more than 20% at this point. But I still think it has room to run because it's cheap. And I think that this, I mean, we'll see with this product, but I think it's actually quite compelling as much as I dislike Mark Zuckerberg as a person. We'll be right back. And for even more markets content, sign up for our newsletter at profgmarkets.com. Support for the show comes from BCX, the public ticker for private tech. For generations, American companies have moved the world forward through their ingenuity and determination. And for generations, everyday Americans could be a part of that journey through perhaps the greatest innovation of all, the US stock market. It didn't matter whether you were a factory worker in Detroit or a farmer in Omaha, anyone could own a piece of the great American companies. But now that's changed. Today our most innovative companies are saying private rather than going public. The result is that everyday Americans are excluded from investing and getting left further behind while they select few reap all the benefits. Until now introducing BCX, the public ticker for private tech, now available wherever you buy stocks. VCX by Funrise gives everyone the opportunity to invest in the next generation of innovation including the companies leading the AI revolution, space exploration, defense tech, and more. Visit getvcx.com for more info. That's getvcx.com. Carefully consider the investment material before investing, including objectives, risks, charges, and expenses. This and other information can be found in the funds perspective at getvcx.com. This is a paid sponsorship. So like any good millennial, I have a love hate relationship with Gen Z. It's the phenomenon rattling millennials. They just look at you. They want something bigger themselves, lifestyles of priority. Motivation is being inspired. But regardless of how you feel about Gen Z, it's undeniable that they're changing national politics. Generation Z is increasingly showing less loyalty to traditional political parties. Many now more likely to identify as independent. So what is going on with the kids? I think the biggest misconception about Gen Z's politics right now is that all of a sudden they're all socialists. That is just not the case. They are embracing candidates who are offering new bold ideas in the absence of those ideas from establishment Democrats. This week on America actually, Gen Z researcher Rachel Jamfaza joins us to separate Gen Z fact versus fiction. It's not rocket science. And this is, you know, I keep saying like young voters aren't that complicated after all. It's pretty simple. Catch us every Saturday on YouTube or wherever you get your podcasts. If you dig into the numbers, one trim becomes completely undeniable. Latino voters have turned on Donald Trump. Almost half of Latino voters across the country supported Trump in 2024. Now they have turned against him in massive, massive numbers, causing some concern among his supporters because you really can't talk about American elections without talking about the importance of the Hispanic vote. So what's driving this drastic shift? And how is our understanding of the Latino electorate changed over the last few cycles? Latinos often get given the title, the sleeping giant. We should be called the swinging giant based on how much shift we have seen election to election. This week on America actually, I talked to Stephanie Valencia who breaks down what we know about the Latino electorate. And later Democratic Colorado congressional candidate, Manny Routino, on what to politicians get wrong about Latinos. Folks tell me all the time, Manny, I feel like I've been like to catch us every Saturday on YouTube or wherever you get your podcasts. We're back with Prof. Markets. The European Union just invited Canada to become its first associate member. The proposal came from European Commission President Ursula von der Leyen during her state of the union address. It's still unclear exactly what associate membership would mean for Canada. But President Trump said the move is a quote, hostile act and threatened the EU with additional tariffs. So Scott, let's first take a look at Fonda Leyen's comments, this union between Canada and the European Union. Canada might be the first associate member never happened before, here's what she said. We want to bring the relationship with Canada to the highest level possible. And dear Mark, I said we must urgently reimagine our partnerships. So I would like to work with you on opening the door for Canada to being the first associate member of the European Union. I just love the fact that Trump might be taken down by someone in Ursula von der Leyen. It's like a CS Lewis novel. And then Ursula von der Leyen stabbed the devil. Like the most powerful person in the world right now is Donald Trump. Number two might be Mark Harney. And if you see a kid being abused, you hear a lot about a lot of wonderful families. In this case, the EU have adopted the kid. And this is, so I've been thinking a lot about how we have elegantly figured out a way to do a Tim Snyder's called super power suicide. Given the lead we had, given the institutions, the human capital, the capital formation on a financial level are academic institutions. And what Donald Trump fails to realize, and the real flaw that is going to set our nation back generation, decades of not generations, is that chroma going to be Neanderthals with cooperation. Neanderthals are stronger, smarter, meaner. And the key, whether you you've all know a hurry on sapiens, the key to our progress is cooperation. And if you look at the modern economy, our treaties, our settlement, our free navigation enforcement by the world's largest military, our trading agreements, rule of law, respect for each other's borders, that cooperation moving from conquest to cooperation, in the last 80 years has resulted in infant mortality being cut by 90% and GDP up, you know, 17 fold. Nothing has created more prosperity than a recognition by the, by the chromagnum man that cooperation is the ultimate gangster move. Donald Trump has decided to regress the species known as the United States. And just to go, and again, in my next life, I'm coming back as a Navy SEAL of Broadway dancer and anthropologist, but let's assume I come back as an anthropologist. I'm not kidding. I actually think I'm really good for them. I actually believe you. That's why I find hilarious. I think it's probably true. And I'm fascinated with adjusting people. Anyways, so if you have any pain, come over. I think I can get rid of it. I go away. So there's a wonderful anthropologist named Robin Dunbar, who famously estimated that humans can maintain roughly 115 meaningful social relationships. But the wonder of the modern world is that we coordinate millions of relationships via money, corporations, laws, markets, religion, nations, norms. Norms are essentially technologies for getting people who will never meet to cooperate, right? You don't bump into people. you don't take their shit, you sit, you, if someone older than you comes into the subway, you sit up and you let them sit down, a pencil. The simplest thing, 20 cents. No one person can make a pencil. It takes cedar, graphite, metal, rubber, mining, shipping, machinery, finance, retail. Your breakfast this morning, Ed, was a multinational joint venture. Coffee was from Columbia, the machine was from Italy, Wheat, and fertilizer from the Midwest and Qatar respectively. Before 9 a.m., you've depended and had relationships with more strangers than a medieval king encountered in his lifetime. And the fact that we decide to alienate so many relationships and abuse our largest consumer, they've said, I have an idea, I'm not giving up on cooperation, I'm just going to start cooperating with a 300 million second largest regional economy in the world. That is the EU. What happened yesterday? Wasn't the EU letting Karningen, it was them crowning Karni president of the EU. And right now, essentially, Europe has found the leader it needed and that is Mark Karni. And this should send shivers down the spine of America, because we've gone from a 60 or 70 percent control of shareholder value globally to 30 percent. And the other 40 percent now has the crisis they needed for cloud cover around things like what I call backset. I think the UK is going to figure out a way to go back to the EU and the EU will forgive like bygones be God bygones. I advise a hedge fund, it came to me, had a lunch with them in LA, he said, give me alpha, give me ideas. I said, the only real idea I have right now is $130 billion is the amount of goods and services Canada buys from the EU. They buy $870 billion of US goods. That $740 billion in business is looking for a new supplier. I think any finished company that calls a Canadian company that's getting its supplies from a Minneapolis company has a really good shot at getting that business right now. So this is geopolitically continues to provide evidence of the greatest leakage of power and prosperity in history. And that is from America to the other democracies, but specifically to China longer conversation and how we could give up this much power and prosperity comes back to a very basic flaw in one member of our species. And that is an inability to recognize that the reason our species has been so successful is because we cooperate where as he takes this weird business aggressive conquer intimidate coerc. But this is a big moment, this is a big moment for Canada and more specifically, it's a really big moment for what I call the great, the great, you know, pivot. And that is a incredible transfer of power from the biggest democracy to other democracies and unfortunately, more specifically to China. And I think that that's something that Mulconi is actively addressing that he actively, actively addressed in his speech to the European Union. Is that difference between conquest versus cooperation or some would say positive, some thinking versus zero, some thinking? And this goes back to it is a fundamental aspect of our economy and of markets. You talked about the pencil, which I think is a perfect analogy. Milton Friedman talked about this a lot of the time that markets are a positive some game, that the more that we reach out to other nations and the more that we tread with other nations, the more as possible within our own, I was very interesting because Mulconi used exactly that language in his address here is what he said. We are not fair weather allies. We do not pursue zero sum deals. Our commitment to the rule of law and our unyielding defense of human dignity, individual freedom and democracies share the same deep roots, the same unwavering dedication. So I think this is really coming down to a dispute over what actually is the driver of prosperity. And I mean, the economists, even the old school economists were just, they'd say it plan, the Donald Trump has it completely wrong. This is not the way that you build wealth for a nation. And to your point about Canada looking to other countries and looking for other trade partners, I totally agree that that is going to continue, but I would also point out it's already started. We look at Canada's trade with other countries so far this year, it's already increased 17%. So you have huge amounts of trade that is certainly going to be rerouted away from the US and towards other nations, things like critical minerals, which actually America does depend on Canada for in a lot of ways, uranium, nickel, all of these minerals and materials that are required for technology infrastructure, for military equipment, and which of course we also rely on China for and look where that got us in our trade war with China. So suddenly this means that America is going to have less diversification available to them for some of the most important materials in the world. And then also crude oil, Canada makes up more than half of America's crude oil imports. And usually I'd say no big deal, but here we are in the middle of an energy crisis and we're depleting our emergency oil reserves by the day. And so yeah, we are in a situation where Canada actually does have some leverage here. And I think that the most important thing, I mean, Canada isn't that much of a threat on its own, but when you combine it with Europe and when you treat them as the same entity, suddenly you're talking about a 25 and a half trillion dollar economy, which is actually larger than the economy of China. And it is creeping up on the economy of the United States, which is roughly 32 trillion dollar economy. So suddenly there's there's real leverage here. And I think that this is something that Mark Carney understands. He seems to really understand it, especially in his targeting of swing states in America where he is specifically putting tariffs on materials that are going to affect various swing states throughout the US like Wisconsin, like Pennsylvania. And he sees how leverage actually works and how he can use it to get what he wants. And I could not agree with you more on this. I do think that this is a very important shift in the way the global order and the global economy is actually set up. Yeah, I was come back to Churchill. The only thing worse than fighting with your allies is fighting without them. And Timothy Snyder summarized it perfectly. We're in the midst of superpower suicide. Imagine having wonderful friends that did everything from hid your kids from people looking for your kids to planning to do harm to them. That's what Canada did when they hit our diplomats. And then they returned to the embassy putting themselves a huge huge risk. You do with a lot of trade, 70%. They're totally economically dependent upon us. And we've decided, okay, you couldn't have been a better friend. We couldn't have had a better relationship. You followed us into Afghanistan. No questions asked. I know. Let's talk with you. It's just, it's just so, you wouldn't you wouldn't never be friends with this person. You would think this person had lost their, their shit. And when I say this person, I mean the United States. And the silver lining here is I think this might be the crisis that helps that you get it shit together. And it says, all right, we need to have one, we have to have a multilateral technology investment regulation policy that creates capital formation. The whole is greater than some of its parts. I do think I had a conversation yesterday with the presidential candidate. I said there's a big opportunity to talk about going the other way if you're elected and having the mother of all multilateral trade agreements and get basically take NAFTA and the EU and the UK in massively lower tariffs and say we're going to unlock massive growth through what is the largest world's largest trading block in history. Yeah, because we're going the wrong way. We're going back to being the anti-toss. I think there's a real political value there. I agree with you because I mean we obviously know how the Canadians feel about Americans right now and that is America. And that is they hate us. And we're seeing that in the polling days of 41% of Canadians now consider the United States an enemy to the country. 56% say Canada has more in common with the EU than with the US. And we can look at Marconi's approval rating, which was 55% at the beginning of the summer, which was already pretty high. And then after this whole tariff thing blows up, it's now at 70%. So he's at an all-time high. So this is like the best thing to happen to Marconi and Canadians are pretty much unanimously rallying behind him. But what's really interesting to me is the way Americans feel about this. Americans are really upset about this on behalf of the Canadians. They oppose these tariffs against Canada more than two to one. Nearly four times more Americans say the trade war with Canada is America's fault, not Canada's. And so it is a really interesting situation where you have our own nation is turning against itself. And arguing, yeah, we are the bad guys. We are the bully. We do not condone the actions that we ourselves have taken. And you have to wonder what what, how much that's going to matter in terms of actual economic policy here. Will it be a case where Trump realizes, okay, the majority of the population thinks that what I'm doing is bad, ridiculous, unproductive, aggressive, hostile, you name it and then decides to walk it back. Or will he just continue going down the path because of his pride and because of his ego and because he just can't get enough of this? I'm actually not sure what the outcome would be. What do you think? I think everything comes back to high school and that is we used to be the cool kids at the cool table but we were nice and sitting at our table meant you had, you did better at school, you got help with your homework, you were more economically prosperous, you got the hottest dates, you got to do the coolest things and slowly but surely we're now alone at that table. And it just, and also again with the metaphor of high school, they did that study on who are the most popular kids in high school. And you think, well, it's the most handsome or the best looking. No, it's not. Oh, it's the most intelligent or it's the best app? Nope. The kids who are the most popular in high school are the ones that are the nicest. The ones that have the confidence to say, hey, Lisa, you did amazing at the game on Friday night. Hey, Bob, I love your shirt. The kids who like the most other people are the most popular kids. And what are we right now? Using high school as a metaphor, where a kid who's had a growth spur and has, you know, underarm hair and is big and we're decided to start beating up everybody. At some point, the kids, right, the other kids rise up. So I don't, I mean, who's at our lunch table right now in the high school cafeteria, North Korea, Russia, and Argentina? How's that going to work out? Yeah, that's the kids we wanted, Param. I mean, I don't know, Tango and vodka, I probably might for a pretty good part of it. What we have here is on a fundamental level, the poorest decisions. Let me just move to it. This is a market show. We're not supposed to be political. If you're like me in two things, one, you've benefited the way I would describe my economic life in America's the following unprecedented prosperity, unfair advantage that let me leverage my formidable talents to live a life that few people will ever experience or before me. But I had to pay the lowest taxes in history, right? Never drafted. Never really in harm's way. Crime has consistently gone down. I mean, oh, let's give him free education at the world's greatest institutions. They got four of the five Nobel prizes last year. University of California, where 53% of the kids don't pay tuition and 67% graduate with no debt, right? All of this unbelievable prosperity, standing on the shoulders of great Americans and great leaders before me. So easy to bitch into the microphone. I hope all of these tick tockers and all of these virtue signalers complaining about fucking Sydney Sweeney. I hope that a third of the bitching and virtue signaling from the left from people like me who have registered a lot more than we put back into the system, get out and canvas and vote and remove the stain that is the Trump administration or at least start to remove this stain. And this is a market show, but there is no way to ignore that the worst thing for the markets and prosperity of Americans in a century is a narcissist, a psychopath, and a criminal. So I'm kind of I'm going to be announcing I'm going to be doing a bit of a tour where I'm going to be canvassing with some candidates. If you're out there and you're like me and you're thinking I'm you know any honest assessment as I my generation and I have benefited more from America than I'm given. This is our moment. I really do believe that it is time for Americans to match their actions to their bitching into a mic or on social media about how outrage they are. Okay, there's a lot of that. Let's see how many of us turn out because this is a big opportunity coming up in a few weeks not only for America, but but for the markets. Yeah, I believe the markets will soar. You have similar to what quite frankly would Fed share washed it. I think the markets in the world really need to see a step step up and go, okay, we got a little out of control. We make mistakes. The arc of America is jagged, but it bends toward the righteous. Let's take a look at the weekend. There are no major earnings or economic dates releases next week, but one thing we'll be watching is the result of the Nasdaq 100's costly rebalancing, which will more than double SpaceX is waiting in the index. That will take effect when the market opens on Monday morning. Could trigger significant passive buying. We will see Scott, do you have any predictions for this week or in general? Easy times man of the year is my car. I think you're probably right. I think I would agree. My prediction, I think that Metamuse will see significant adoption. I think it'll be rivaling charge, CBT and Claude in the next six months, specifically on the consumer side. I think this product is pretty powerful. I'll make another one in the next 90 to 180 days. A country or trading block is going to ban US frontier models. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Jorge Cardi. Our research team is Dan Chilan, Cristina Donahue, and Measel Vario. Jake McPherson is our social producer, Drew Burrows is our technical director, and Catherine Dillon is our executive producer. Thank you for listening to Profty Markets from Profty Media. If you liked what you heard, give us a follow and tune in tomorrow for a fresh take on the Markets. [Music]