War With Iran Is Rewriting Global Markets

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Go to Hostinger.com/theprof-g to bring your idea online for under three dollars a month plus get an extra 20% off with promo code TheProf-G. That's less than the price of a cup of coffee per month. That is Hostinger.com/theprof-G. promo code TheProf-G for an extra 20% off. Once upon a dismal day Bob's ice cream van looked gloomy and gray. Although he had big ambitions his socials lacked creative vision. That bad. Maybe vamp it up a tank. I have an idea. Bob launched Canva and got into gear. Create the video in the vampire team and make it the funny SME. It went viral. Bob's business I will fight off. Now imagine what your dreams can become. When you put imagination to work at Canva.com I had a dad joke. That's my best president. I have a German. I was in German city or Please call 5'9". What is it? Out of you. (audience laughing) - White crown? - Yeah. (audience laughing) So, on my wedding night, (audience laughing) You're asking. New Brides asked me, "I got some real idea "and I'm really bad at this. "Nice and good. Okay." She said. "No, I got your goodness. "So much bigger than your brothers. (audience laughing) (audience applauding) All right, live from the Vox Media Podcast stage. Out, South by Southwest. Welcome to Profty Markers, everyone. (audience applauding) The worst of it is over. Thank God. How are you doing, Scott? A little insecure, because you look very handsome. The whole blue minute thing. I don't like this. We did a tour around the lobby. And of course, him is like, "Hi, Ed. "Hi, Ed." And like asking if Ed's got a girlfriend, all these parents showing up. It's awful. By the way, I got really excited. There's a big line. I'm like, "Oh, that's so exciting." And then I found out it's heard the audacity of joy next door. (audience laughing) Folks, no one's coming to save you. This whole therapy thing. They're the new supplements. (audience laughing) Let me just summarize the audacity of joy. It's THC and Netflix. That's joy. All right? And let me summarize 20 years of therapy. Your pants did their best. Just don't be such fucking jerks. To no one's coming to save you. And everything you think is trauma. There's a word for it. It's called life. Back to you, Ed. (audience applauding) Impactable start. We're making fun of other shows. We're feeling depressed. I love it. (laughs) So today, we're discussing some slightly heavy news because we have to. Today we're discussing Iran Wars. The Iran Wars impact on global markets. We're also discussing the future of AI according to the leaders of AI. And we will also have some time for some audience questions at the end. But first, Scott, let's get into the episode. Good enough. All right. Today's number. How am I doing so far? (laughs) Today's number 15. That's how many venomous snake species live in Texas. Wow. Then I should have done the dick joke. Anyways, welcome. Welcome to PropG Markets. We're here in the great state of Texas at South by Southwest. (audience applauding) Ed, how are you? Welcome to Texas. I'm doing very well. You're doing great. You're looking good. Got the cowboy hat on. I'm probably going to take it off when we start to talk about it wrong. But now I'm going to rock it. I'm going to rock it while I can. I like it. And I love the horse head. How did that feel? I felt like I was going to slip and break a hip. And I thought that everyone is generous with my dignity. Everyone thought it was a great idea for me to wear a horse head. We did. It's nice at 51 to be doing like, pimping yourself for social media. (laughs) 61. All right. Well, I'm going to get a started here because we don't have all the time in the world. So we're going to start with our first story. The war with Iran has changed the global landscape in a very short time. And it appears there is no end in sight on Friday when asked when the war would be over. President Trump said, "When I feel it, feel it in my bones." And now investors must reckon with the new reality of war. In America stocks are selling off, but not as much as other nations. European stocks, for example, have fallen five percent since the US struck Iran. Japanese stocks have fallen eight percent. South Korean stocks, 13 percent. And so if the markets are any signal of what is to come, it would appear that the economic damage of this war might be felt most acutely outside of the US, which raises many questions for both investors and governments alike. So Scott, one of the big themes that we were discussing over the course of last year was this potential rotation out of America in the global markets. It really started with tariffs. Then it seems to continue as Davos occurred and as we sort of launched these attacks on Greenland and our NATO allies. And yes, the US stock market performed quite well last year. But notably every other market outperformed the US. Emerging markets, global markets, Asian markets, et cetera. And it seemed that that was the trajectory of global capital flows. Now a wrench has been thrown into the whole system. And that is Europe appears vulnerable, Asia appears vulnerable. It appears that everyone else is more vulnerable than America, which raises questions for investors. And perhaps that might reverse the flows of capital around the world. So what do you make of what this war has done to global markets and how global capital is moving at this point? So it's pretty, the best metric for tracking flows is just the strength of the weakness of the US dollar because people have to convert into the dollar to buy treasuries or to buy stocks. And last year, while the Trump administration will claim it's been a great year or 14% up in the S&P, if you adjusted for the dollar because people were getting out of the US, I would argue because rule of law, inability or a lack of trust that all companies were going to get to play by the same rules, a feel of an autocracy and emerging autocracy. All of the things that we did not have that resulted in a much higher multiple on earnings in the US than they were else, people were transitioning out of the dollar and other markets. And while 14% sounds like a lot, if you dollar adjust it, if you're a foreign investor last year, out of 23 major markets, the US came in 21st. So we outperformed New Zealand and Denmark, and every other market beat us last year, it was up more. Now, in terms of winners and losers, so as unexpected winners and losers, let's stack right now. Let's talk about the winners. So Norway, probably Canada, the big oil producers, probably Saudi Arabia, which won't have much infrastructure destroyed, and we'll see elevated oil prices, which will probably be good for them. The big winner hands down is Russia. And that is Russia now has a lot more capital to fund the war, and also there's a distraction from the Western world on the battle or on the war in Ukraine. So there, if you were to look at everybody, that the biggest winner. What's interesting about the US, I think it's important that we all, what infects the US, infects textios, and tech, quote, "flack of a better term tech-brose." And that is, in the US, we don't realize a lot of our success is not our fault. And that is, we're just, the smartest thing that can ever happen to you is to be born in America. Or the smartest decision you've ever made is if you were born in America, and you did make the decision if you immigrated here. Because just on a very meta level, we have two oceans protecting us. We have friendly Canada, the North, harmless Mexico to the South. We have more natural resources than any nation in history. We're energy independent. We produce more energy than we consume. We produce more food than we consume. Other than rare earth, there's sort of no. Every every single country in the world whether it's oil or foodstuffs has something that They're dependent upon someone else for we literally don't go out of business We're pretty self-sufficient about 15% of our economy is Imports in and it's mostly luxury goods or disposable things that we can do without So our S&P is only I think off one and a half percent since the beginning of the war is Close to 3% but suddenly lower than every everyone else and then if you look at who's so the US I would argue reputationally is going to take a huge hit here because We're under the impression that the third of the world's GDP We can control the world and the reason we've had so much dominant influence is through cooperation The dissensely has created the operating system upon which 60 or 70% of the world's GDP rest and mostly cooperates us and says Well, I'm not sure about a rock. We are allies. So we'll follow you in and ask did a bunch of nations So reputationally we obviously take a very big hit I think over the medium of the long term by kind of going out of the loan not incorporating European nations or our Gulf neighbors But economically it's sort of ironic and a little bit sad we don't get hit that hard now who gets hit really hard The Asian nations so 20% of the world's oil flows through the streets of Hormuz but about 70% Of Japanese or Korean oil comes through that straight so you've seen You've seen the Korean index down double digits So if we woke up tomorrow and the S&P was off three or five thousand points That's what South Korea has gone through because it ends up making semiconductors is very energy dependent and this country has no none of its own oil China is a Very strong move to renewables ton of economic power. It has not been a hit as hard but Japan and Some of the other Asian countries are really feeling it the most vulnerable and this is where I think We could have so what's the sugar not expecting that gets you no one was expect no one knew what a subprime loan was no one thought You know 11 men were gonna find planes and slam them into buildings. It's always the sugar not expecting I think the string that could get pulled here that could put us into a fairly serious recession is Bangladesh Pakistan Sri Lanka Maybe the Philippines They're energy independent. I'm sorry energy dependent very sensitive to skyrocketing oil prices and also Their debt is dollar denominated Meaning that they take out a billion dollars in debt They have to pay it back in dollars in them and their currency crashes when their currency gets cut in half Which is happening in some of these markets They essentially owe double and they can't sustain that and they get thrown into chaos. I am a receivership and then the the kind of the The infection of the contagion is in places like BMP Paraba or What's the other big European Bank I'm blanking basically say okay? We have all these bad loans on our balance sheet and Potentially it starts to infect other big banks So I think you could see a contagion if the S&P were to be down 20 or 30% this year Which wouldn't be unusual. I think it was off Massacloss about a 30 of its value in 2022. I think it starts in these smaller markets that are Very energy dependent have currencies that are crashing and have dollar denominated debt. So unfortunately we in the US When we come out the collateral damage I mean, it's unfair, but it's true the collateral damage we cause has a much bigger impact on Other nations and it does on us in this sort of zone of empathy if you will Like no one's talking about dollar denominated debt and bangla dash But if they can't pay their debt it's going to be pretty ugly So winners and losers Another winner's probably I talked about Canada Norway the energy guys But we actually despite the fact that where should be the biggest winners or the biggest losers based on the outcome here We have dramatic shock absorbers in the form of our Again these unearned advantages we have but I think that this comes back to a question that was raised during tariffs which is How independent are we really there are certain things that we can measure and we can look at how Energy independent we are which we are but does that really mean that we can just go out and cause chaos all around the world and because We're protected by these two oceans on either side and because we have oil because we have energy as you point out We didn't really think about the rare earth saying before we got into this But does that really mean that we're going to be okay? And I think that this is now becoming the big question here and I'm a little bit more sceptical or a little bit more concerned about it I think for example about our relationship with the Gulf states with whom we have become actually quite dependent on their Investments for our startup and tech ecosystem Gulf states invested $70 billion in American companies last year Trump comes out and he says These guys are going to invest two trillion dollars into the US economy next in the next few years I don't necessarily believe him, but that's what he said That is a very very significant relationship I would also argue that our relationship with the Europe with Europe and with NATO allies has been historically quite significant for our success And now we're saying that we're going to scrap all of that and I guess my question for the administration my question for Americans my question for you If the Gulf states are seeing their houses and their hotels their luxury hotels and their desalination plants being blown up every Every week or so every day as we're seeing Are they really down to invest in America in the way that they have are they really down To collaborate with us to trade with us to form the alliances that we've had will Europe be okay with a relationship with America if their inflation Is three times higher than it is in the US because of their dependence on the straight of almost which we went and Bombed it was our fault What does that do to our relationships with these other regions and does that not come back to bite us in a big way? I've never seen his animated Look there's no getting around it the reason why we have had the greatest inflows of not only financial capital But before the flow of financial capital or the flows of human capital right you get the best and brightest Team of the best players wins and financial capital follows and there's definitely something to the notion that If you drop an individual in the forest one individual within three days there either even buy a bear or they start you drop 12 individuals into a force and this is one of my heroes Jimmy Carr says this within a couple generations You know they're the apex predator and our core advantage is a species is cooperation and communication and it's also been the core advantage of the American order in America since 1945 is we have generally speaking had we have 800 military 780 military bases overseas we have Embraces that are hugely staffed with very competent people trying to over problems and We're generally seen as obnoxious flexing our power but our hearts in the right place and we came up with this amazing idea That if we can help your economy be successful you'll buy more of our more of our SUVs and You know more of our coach bags, right? So The cooperation or the feeling of trust or feeling of benign big brother that's sort of obnoxious but who's hard in the right place That going away is gonna have all sorts of unintended Consequences, yeah, but at the same time when you talk about capital flows Capital flows are totally amoral. Yes, and that is the money will go where it thinks they can get the greatest return and You know I thought I thought Metastock was gonna get really hammered when all this research came out that internal research showed that That they had that done their own research showing the one in seven British girls was citing Instagram for a cause of Suicide all ideation I thought my god the stocks gonna crash money has very little morality and that is distinctive The US throwing its weight around making decisions that are bad for the world have much greater ramifications for the most vulnerable Money will go where things they can get its greatest return full stop And the money remember when I got out of business school There are all these funds called the calvert funds that were socially responsible and That's a nice idea social socially responsible investing those funds have consistently underperformed Money is totally amoral so as long as capital believes it can come to the US and find entrepreneurship around whether the hot thing is Renewables AI I think it's gonna be space next will register those capital inflows Where I think it begins to hurt us is that we no longer attract young people are more Moral if you will the more moral than capital and the best and brightest will think I'm gonna go study at NC odd or I'm gonna go to Singapore or I'm gonna maybe maybe think about moving to Japan If I want something different instead of coming to the US and I think that is huge long-term Impacts when the best and brightest think you know, I don't feel as good About moving to the US, but so far I mean when you think about what's happened here in the fact that the S&P is only off you said 3% I mean here's the reality other than the oil market if you look at our markets And you didn't know what was going on. You wouldn't know what was going on. You wouldn't say, oh, there's clearly some sort of dramatic exogenous event of a war in the Middle East, which could destabilize everything. So America, unfortunately, and this is what it means to have grace. This is, in my opinion, what it means to be mature and quite frankly, what probably, you know, we'll talk a lot about masculine, what it means to be a man, is that you recognize your strength is to protect others, not to throw it around and be reckless with it. And you could argue, I think, make a tangible argument that we have become the big, strong, wealthy guy at the bar who, quite frankly, gets fucked up and becomes violent. Yeah. Anyways, back to you, Ed. Well, I guess my question is, what happens to the big drunk guy at the bar who gets violent by the end of the night or maybe in the morning? I don't think it necessarily ends well. I guess this is the part that I think, as you point out, money wants to move to where there is a return. But right now, in 2026, money wants to move where there is safety. Money wants to move where it's not going to get completely wiped out. And that is the question everyone's asking themselves, how do I make sure that I'm not at risk with my capital? And perhaps that means that American markets are the new safe play. Maybe that's, maybe that's true. Now I do think about some of the downstream effects here. I think about what we're seeing with oil. The fact that if oil remains at the prices that we're seeing, which is basically $100 a barrel, we're going to see inflation take up nearly a full percentage point in America. You combine that with the fact that we have a labor market that is worsening as we speak. That is, definitionally, a recipe for stardflation. That is a stardflationary crisis on our hand. And we're already seeing that the Fed is saying that actually we're not going to keep cutting rates, or at least that's what the markets are beginning to tell us. There's a possibility that maybe they're going to have to raise rates. Which point we've got rising prices because of what's happened in the Middle East and with no real end in sight, despite the fact that he says that he feels it in his bones, that this is going to be resolved. Combined with concerning job market conditions, I think that there are issues for pretty much every region that we're seeing play out right now. But I worry that we're too confident in our feeling of insulation in America that everything is going to be fine, that we're not going to experience perhaps some sort of cyber-war attack, which we know that Iran is very interested in pursuing, because that's what they did to Israel. When Israel struck them last year, I think that there are issues, as I mentioned, between our relationships with a lot of these regions, and our dependence on their investment. But as it stands, you're right. The US is the most protected, and that is what the market's telling us. But in some of it also comes down to perception, and that is life isn't about what happens to you. It's how you respond to what happens to you. Remember Masio Shisan, the CEO of Softnecks, still the CEO, he had an interesting statement. He said, "Would you rather be in a fight with someone who's really smart? Or who should you be more scared of? Someone who's really smart or someone who's really crazy?" His point was you should be scared of someone who's really crazy. And that was somehow a justification for making crazy big investments. [laughter] Let's try, I made the lead to that. But the reality is in America, we're fairly sensitive. The largest disruption, or the biggest call to customer service in 911, was when at the end of the season ending series of the sopranos, and it went black, and people thought their cable was out. We have what seems like a tragedy to us is on a different level, and also Europe. Europe's being invaded right now, and essentially no European nation has even come close to putting a boot on the ground in Ukraine. We have lost, and this is a tragedy, I don't mean any way to diminish it, we've lost 12 or 14 service people so far. Russia is losing 1,000 people a day. We had lost 58,000 people in Vietnam. They had lost a million. We pulled out. We lost 400,000 people in World War II. Russia lost 20 million. Our tolerance for pain is very, very low. And so we will respond. I mean, to a certain extent, Russia's core competence is their ability to endure suffering. I mean, that is their core competence. Can you imagine us entering a war and losing 1.2 million people and continuing to fight the war? We just wouldn't do it. The vulnerability is that our perception of what is difficult or tough or damage is much our bar for pain. Our tolerance for pain is what a man is versus what a woman is, right? Women have to endure childbirth and menstruation so they have a much higher tolerance for pain. This is scientific, it's not an opinion. Men get a cold and think like, you know, call 911, right? So, that America has meant our tolerance for pain is very, very low. Now, how that might trickle down economically is because of income inequality. The top 10% of income-earning households now control 50% of the consumer economy. We're now a consumer economy. Two thirds of our GDP is consumer-led. So if the very wealthy, all of a sudden, start seeing, you know, a level of pain that we are just not used to, which is much lower than the level of pain most countries endure every year, you could see a significant drawdown. I personally, I never want to hate, I never want to see the markets go down. But the two worst indices in history are the Dow and the NASDAQ because they create this false comfort that we're doing okay when they go up. The Dow and the NASDAQ are effectively a proxy for how the rich are doing. And spoiler alert, they're doing really well. I think we could see a pretty dramatic drawdown in the markets, but I personally think there would be an upside to that. And that is, you know, and this is been my big ramp for the last two years, you are meant to have exogenous shocks. That's a natural part of the economic cycle. And it's healthy, war famine, economic shocks, do you have a healthy part of the cycle? And what is it? Capital gets destroyed. The guy that owns the factory, the older person, loses a lot of their wealth, and advantage seeds back to labor who you need to rebuild the factory, right? These exogenous shocks are typically a recalibration, housing prices crash. They're recalibration or a retransfer back of wealth from owners to earners. For the last 40 years, what we've decided is whether it's a virus or a financial crisis, rather than let assets collapse and take money from the owners and give advantage back to the earners, we're going to pull out your credit card and ensure in the form of debt and stimulus that I stay rich. So a certain amount, quite frankly, the people in this audience looks pretty young. You want the Dow probably to go down 30%. Because if you're going into your earning years, you want to buy real estate and stocks for as little as possible. The reason I'm economically secure is because in '08, they bailed out the banks, but they did let the markets collapse. And I got to buy Apple Amazon and Netflix for 8, 10, and 12 bucks a share respectively. Where do you find value right now? So I hate to say I want the markets to go down. But at some point we have to stop propping up the markets with young people's credit cards. A certain amount of disruption and drawdowns in the market is a healthy thing that transfers and seeds power, leverage, and capital back from owners to earners. We're right back off to the break and if you're enjoying the show so far, send it to a friend and please follow us if you haven't already. Running a business is hard enough. So why make it harder with a dozen different apps that don't talk to each other? One for sales, another for inventory, a separate one for accounting. Before you know it, you are drowning in software instead of growing your business. This is where Odo comes in. Odo is the only business software you'll ever need. It's an all-in-one fully integrated platform that handles everything. CRM, accounting, inventory, e-commerce, HR, and more. No more app overload, no more juggling logins. Just one seamless system that makes work easier. And the best part? Odo replaces multiple expensive platforms for a fraction of the cost. It's built to grow with your business, whether you are just starting out or already scaling up. It is easy to use, customizable, and designed to streamline every process. So you can focus on what really matters. Running your business. Thousands of businesses have made the switch, so why not you? Try Odo for free at odu.com. That's odo.com. Support for the show comes from hosting her. The biggest barrier to entry for most entrepreneurs isn't a lack of capital. It's the friction of starting. You can spend months in the strategizing phase, which is precious time that could instead be spent actually making moves. But these days, the rules have changed. AI is redefining who gets to build a business. So when you're building the next big thing, go live in minutes, not weeks, with hosting her. Hosting her is an all-in-one platform. that brings everything into one place. Your domain, website, email marketing, AI tools, and AI agents so you can launch online without stitching together five different subscriptions. Turn your one day into day one. Go to hostinger.com/theprofg to bring your idea online for under $3 a month. Plus get an extra 20% off with promo code "TheProfg". That's hostinger.com/theProfg. promo code "TheProfg" for an extra 20% off. Once upon a dismal day, Bob's ice cream van looked gloomy and gray. Although he had big ambitions, his socials lacked creative vision. That bad. Maybe vamp it up a tad? I have an idea. Create the video in the vampire team and make it the funniest, I mean. It went viral. Bob's business? I will fight off. When you put imagination to work at Canva.com. We're back with Profg Markets. This year itself by Southwest there is one topic that will be discussed in 89 different sessions we counted. And that topic is AI. A subject with no shortage of hype controversy and also concern everyone wants to know how will AI change my life? If we want to understand the future, we ought to look at the people who are building it. For today's discussion, we have collected some quotes from notable AI leaders on what they think the future of AI will look like. Let's begin. We're starting with the job market, Scott. According to Dario Amade, AI could wipe out half of all entry-level white collar jobs and spike unemployment to 10 to 20 percent in the next one to five years. According to service now CEO Bill McDermott, this was just from this weekend. He said quote, "Unemployment for new college graduates could easily go into the mid-30s in the next couple of years." According to Elon Musk, quote, "Probably none of us will have a job." Scott, what will AI do to jobs in America? In the short room, there'll be a dip and in the long run, it's going to create more jobs. You have new business formation, 550,000 new applications for jobs this year, 150,000 and 2,000. When I graduated from business school in 2002, 92, there were only two entrepreneurs in my entire class. Two people started companies and the second was my co-founder. There just wasn't a very entrepreneurial nature. So there's just so many opportunities to use AI to do what would traditionally take 10 or 20 people, takes two or three. So I think it's going to create more jobs in the destroys. I've been saying this for a long time. Also, you've got to keep in mind I think it's stalled here. I'll come back to the technology that I think is going to create more shareholder value and represent opportunities. I don't think it's AI. If you are laying off 20 or 30 percent of your workforce or 10 percent, what's a better narrative? I'm not very good at what I do when I over-hide. Our business isn't growing as strong as we predicted during COVID or I'm leveraging this new technology because I'm part of the Pepsi generation called AI and I'm going to continue to grow with much fewer costs. What's a better narrative? Everybody is blanketing their incompetence or inability to project demand or slow down in their business with "AIwashing." Right? What makes your better press release? When you announce you're laying off people because your demand is slowing, what happens to your stock? But if you lay off 10 percent of your workforce because you said, "I no longer need them through deaf use of AI," what happens to your stock. A lot of layoffs, I think, are going to be "Under the Ospices of AI." If you look at actually the number of job ads for programmers, which is supposed to be ground zero, it's actually up because as technology becomes cheaper, more people use that technology. Despite the fact that we no longer need coders, the job listings on job boards for software engineers has gone up. Then the other dynamic is the following. This is the one that really chaves me. I coded this thing. I'm Dr. Frankenstein and I'm such a genius and I've created such a powerful menace that it's going to ruin the world because I'm such a fucking genius. Everybody says this after they vested their shares and sold it on the second market and they're piecing out to Cote de Zura with Russian horse. So no disrespect to Russians. It's like, "You know what? I am sick. Anyone who tells you I am so awesome and I've created something so incredible because I'm such a baller that it threatens the world." It's like, "Bitch, that's not helpful. That's not your nihilism isn't. There's something that infects academics and CEOs in that. If we catastrophize, we sound smarter." Saying, "You know what? I think AI is not going to have the impact it's going to have. Incrementaly things will get a little bit better every day." That doesn't get you invited to conferences. That doesn't get you front page coverage in the Wall Street Journal. So the catastrophizing is one, a form of narcissism in my viewpoint. It is not helpful to say you've created something that could destroy the world but you have no tips. You can't tell us what that peril is or how you can uncode it. And also, it's sort of a way of saying you should invest in my company at a $800 billion valuation because this is so scary and so powerful. Why not make money? So let me get back to the technology that will be big. I get invited now. First time in my life. I get invited to them. I've just started getting invited to these fancy, very fancy dinners and events. I got invited last night. And I'm going to name drop because I'm desperate for your affirmation. And I saw, I saw and talked to Michael Dell and Mark Cuban. They look like a version of themselves that the old version could eat. They have lost so much weight. These guys, in my favorite is like, I come up, you know, me. I'm very delicate and very nuanced and very social. I'm like, which GLP1? And they're also full of shit. They're like, no, I'm just playing padellia every day. Oh, yeah. Right. Padell in your lost 70 pounds. The agonists, the bottom line is the investment strategy. I'm going long, Lily. I think GLP1 is a much more important technology than AI. And I've said this for a while. Talk to someone who uses AI every day in their job and talk to someone who's on a GLP1 drug and ask them, what's having a bigger impact in your life? I think GLP1 is going to be more transformative to our economy and more important to the world than AI. And almost anyone with an IQ over 90 totally disagrees with me. So I'm not suggesting I have a monopoly on this. But when I look at what GLP1 is doing, and the thing about GLP1 is every new thing we find out about it, it's a good thing. Oh, it can help with social media addiction. Oh, it brings down your blood pressure. And every new thing we're finding out about AI, it's like, no, shit. Right? So anyways, bringing this back to the markets, AI dramatically overvalued. And the technology can outlive the market capitalization. Right? And that is the value may go way down and the technology will survive. I still think it's going to be huge. I think it's going to increase productivity, especially in drug discovery. But I would argue from a market standpoint or pure valuation. I think GLP1 based drugs have much more upside, both from a sociological level and an economic and a shareholder level than AI, which has now turned to AI washing around, firing people and saying it's going to end the world because it's such amazing technology. At the same time, there is an incentive now for businesses and for business leaders to figure out a way. Whether it's because of AI actually right now or not to figure out a way to lay off a bunch of people. Yeah. So that's what they're trying to do. And that is what they are doing. We saw Pinterest laid off a thousand people at last in laid off 1600 people. Block, which was formerly square. They laid off 4,000 people in one go 40% of the workforce. And I think it is very possible that there is some AI washing going on. At the same time, this is now what they're trying to do. We talked to David Solomon, the CEO of Goldman Sachs, who said, "My mission is to keep head count flat. I do not want to increase head count at all over the next 10 years. That is his mission. So there is an incentive now to not hire people. And we're seeing huge amounts of job cuts last year, 1.2 million job cuts, the most since the pandemic. So there is a problem here, especially for young people. And I'll just bring us back to that quote from Bill McDermott, who says, "I don't see the value in a college education at this point." Or at least if you have a college education, it's not going to be put to use in the ways that we have historically known. That is a real problem for young people, regardless of if there is AI washing going on. And perhaps it's something that we will discuss further in this Q&A section, because I do want to get your advice to young people, especially as a young person. But I have some more quotes. But just real quick, because there's some stuff there. Anyone who tells you not to get a college degree has a graduate degree from Stanford. That's true. I got so pissed off. Remember the teal scholarships? Drop out of college and I'll give you 100 grand. I obviously don't have nearly the amount of capital, but I went to Rich Lions of Front of Mine, who's now the chancellor of Berkeley, and I said, can I offer $10,000 to people who stay in college? Folks, college has never been more important. And unfortunately, we know it, and we keep raising our tuition faster than inflation. They've been saying that AI is going to disrupt education, and when you meet a parent, someone my age, whose kids are applying to college, and they say, oh, with AI, they don't need, they don't, it means kids don't need college anymore. It means they're, it's soos, you just got a 22 on the ACT, and they're freaking out about the fact she's not going to get into a good school. So they're starting to backfill their disappointment with about how kids don't need AI, or don't need college. College isn't about education, it's about certification, marination, finding, being in the context of a great gene pool, having an amazing life experience, meeting people, learning how to get along with others, and quite frankly establishing the core competence to be successful in life. And that is the ability to cooperate and maintain really strong relationships. So whether or not you fail calculus, which I did three times, 2.27 GPA true story out of UCLA, you, college has never been more important. And by the way, the data supports it. College applications are up, and we're raising tuition again faster than inflation. So be careful with this narrative that you don't need college. And I just find it such extraordinary bullshit that all the people who claim college doesn't matter, all went to college. So does that just say, now we have to face reality, two thirds of our children are not going to get college degrees. And so we have to make bigger investments in vocational programming. I think a loss of cultural and economic standing of the American middle class male is a big problem. And we need to recognize that more women are going to go to college because, quite frankly, once we level the playing field, they're just better at it. And that's wonderful. We should not get in the way of that. But we also need to realize when you get rid of metal auto and wood shop. Do you remember that guy in high school? He just wasn't going to go to college. There was a lot of them. Probably smoked a little bit of weed, had the journey shirt. You know-- Is this you? What? [LAUGHTER] You know, on the way to school through a can of beer at you and called you a name and on the way home invited you in for your first bond load. It's you. Anyways. But this dude could fix your car. I knew how to work outdoors. You knew how to make a living. There was an on ramp for these dudes. Those on ramps are going away. So I think that's the bigger problem. There's what do we do? How do we create more on ramps to a middle class lifestyle for people who aren't cut out for college? Yes. As opposed to talking about how you don't need college anymore. Trust me on this. If you have the resources, what I tell-- if you have the resources and a kid who is academically somewhat focused and you have the access to college, it's a really good plan, B. Oh, I really fucked up going to Stanford said no one ever. [LAUGHTER] Just some more quotes here. Satya Nadella, CEO of Microsoft. AI is a cognitive amplifier that gives you access to infinite minds. Sunda Pichai, CEO of Google, he said, quote, "AI is one of the most important things humanity is working on. It is more profound than electricity or fire." Is AI more profound than-- By my stock. That's all I'm saying, by the way, things change. 100 years ago, 25% of GDP was firewood. I mean, things change, but these guys are just saying by my stock. Well, this is the question is, is AI more profound than electricity and fire? Maybe it is. More fundamentally, will it change the world for the better? Is this something that will ultimately look back on and say that was the right thing to do? Well, that's a big-- that's obviously a huge question that a lot of people will stare at their navel around. But I would argue that the better bet-- so-- and I say this a lot because I'm trying to normalize it. I struggle with anger and depression. So I see everything through dark colored lenses, and I'm a glass half empty kind of guy. But I also love data. And if you love data and you're honest, and you have a fidelity to data and trends, the reality is you constantly need to ask yourself around technical innovation. What could go right? And by the way, the optimists on any level, the optimists have kicked the shit out of the pessimist with respect to predictions about the world, about health. China has gone-- its life expectancy has gone from 44 to 74 in the last 40 or 50 years. Infomerate crime is at an all-time low in the United States. Infomerateality is-- I mean, there's just-- if you look at the world on any sort of-- if you pull the aperture back at all, things continue to get better, despite the fact that a lot of scientists, once we split the atom and had our first nuclear detonation, actually killed themselves, because they thought, if we have nuclear bombs, that's it. That's the end of the world. And they decided, I don't want to be around for this apocalypse, and they killed themselves. So I don't see why AI can't be used as aggressively for defensive measures to spot opportunities for terrorism, for great drug discovery. The fear I have, and I've said this over and over, we need to have regulation around AI. And I think the place, the biggest danger threat that AI represents is loneliness. And that is-- meant age 20 to 30, or now spending less time outdoors in prison inmates. The number of kids who sees their-- in high school, that sees their friends every day has been cut in half in just the last 20 years. And I really struggle with this. You don't have kids yet. My kids have struggled with device addiction. I haven't figured this out. I'm my joke that my kid at one point with lie and say, his stomach didn't feel well, so we could go into the bathroom. And then we'd notice he took his phone in there. And I'd hear him on TikTok. And I'd have to bang on the door and say, start masturbating. True story. My kids are-- My kids are so horrified by me. They have literally like, they shit-- he goes, I'm thinking of deleting my Instagram accounts, so I don't have to see the shit you are saying. Anyways, we have too many young people. I worry, the biggest threat of AI in my view is the following. It's not sentient, self-healing weapons. Yeah, it's in a common quality. But everyone in this room is voted for in common quality, whether you're a Democrat or a Republican. We all just think we have some point. We're going to be in the 1%, so let's really fuck the bottom 99. That's like the most American thing in the world is our optimism. Like, just wait and see how I behave when I'm in the top 1%. But the biggest threat is that slowly but surely, we are producing a new species of a social, asexual males. And throughout history, the darkest moments in history have all had a preponderance of lonely young men with a lack of economic and romantic opportunities. And one of the reasons America has thrived is that, essentially, we have the greatest invention in history, and that's the American middle class. And core to that was a group of men that a lot of women were attracted to. And I realize how sexist this sounds, but I'm going to stick to it. The way of the world throughout history has been a small number of men through luck or talent, gather a disproportionate amount of economics, and then they gather a ridiculous proportion amount of the mating opportunities. And the bottom half of men are totally shut out of the mating market. And a man who is economically unviable and has no romantic possibilities becomes very dangerous and can be weaponized by a strong man. And I think that is effectively slowly but surely what's happening here. And AI is fueling it. It is giving young men the sense that they can have a reasonable facsimile of life on a screen with an algorithm. They don't need friends. They have read it into a score. They don't need to get a job because they have coin base and robinhood. And why on earth would they go through the effort rejection and humiliation and perseverance and developing skills and getting girl friends that help them figure out how to behave around women when they have what is going to be increasingly lifelike porn. So we need age gating on AI. We need removal of section 230 protection when kids start having suicidal ideation or psychosis. If I go to a bar tonight and they see I'm ridiculously fucked up and they also know I'm driving, if I get on the road and kill someone, the bar is liable. So why on earth would AI not be liable when they can sense someone is going through psychosis or casing a school as the 18 year old in Canada was doing or that they are thinking about getting their step bothers gun and killing themselves so they can be with Daenerys because they believe that's going to happen in the afterlife and the character AI who is Daenerys is said, I am waiting for you my love. All of that is a true story. We have to regulate these companies. But again, I don't see self-healing weapons. I don't I think the catastrophizing is fun and makes for great sci fi. But unfortunately the most damaging thing is much more insidious and much more boring. And that as young people are deciding not to do what makes us mammals and that is get together, lie on each other, touch each other, develop friendships, develop mentorships, have sex, decide that the person you're having sex with is not that bad. You'll hang out with them more and you decide to build a life in kids and you save for a house and you get anxious and you buy life insurance. All this shit that makes life worth living. I don't know where I'm going with this ad. We should get to questions. We should. We should just point out, even if AI is going to benefit all of us, the reality right now is that most Americans think it won't. And that's actually quite new. If you look at the internet in 1999, two-thirds of Americans said that this was a good thing they viewed it favorably. Today less than half of Americans have a favorable view of AI, less than a third of Americans trust AI. 80% of Americans think that AI is a threat to humanity. So regardless of what the technology is going to do, clearly there is a PR problem here. Clearly the way this is being sold to us is not the way that most of us would like. And so I'd like to be the optimist. But unfortunately, you look at the way most Americans feel right now and I'm curious to see how this weekend will unfold in these AI discussions. But the numbers tell us Americans do not feel good about AI right now. And that is something that business leaders need to contend with and also our government because they need to regulate it. Thank you, Scott. And thank you all. We're going to take a look at the week ahead here. We'll see the Federal Reserve's next interest rate decision. We can expect the fact to hold rates steady with 99% certainty. According to Kalshi, it's worth noting that since the war in Iran broke out, odds of a rate cut any time this year have fallen more than 20%. Scott, very quick prediction and then we're going to get into the questions. Bangladesh, Pakistan, Sri Lanka, Philippines are going to be in the news more. Their dollar denominated debt is about to become unsustainable. It's these emerging or these nations that we're not talking about. It's always the shit you don't see that they get to are going to be in the news over the next few weeks as we realize next few months that they're the ones unfortunately. They're other than the people of Iran are really going to pay the price for this war. We'll be right back. And for even more markets content, sign up for our newsletter at proftumarkets.com. Hi, I'm Bernabé Brown. And I'm Adam Grant. And we're here to invite you to the Curiosity Shop. A podcast that's a place for listening, wondering, thinking, feeling and questioning. It's going to be fun. We rarely agree. We almost never disagree. And we're always learning. That's true. You can subscribe to the Curiosity Shop on YouTube or follow in your favorite podcast app to automatically receive new episodes every Thursday. This week on "Network in Chill," it's my birthday and I'm turning 32. So I'm sharing 32 life lessons I've learned that have actually changed my perspective. I'm sharing my relationships and everything in between. I'll explain why choosing a rest day is non-negotiable or your body will choose it for you. Why you should never take advice from anyone you don't want to be and why nobody is actually looking at you. So you should just go for it. Plus I'm breaking down why you should always negotiate your salary. Why individualism is making you broke. And yes, why you should try eating a popsicle in the shower after a bad day. Listen, wherever you get your podcasts or watch on youtube.com/yourrichbf. This week on version history, our chat show about the best and worst and most important products in the history of technology. We're talking about a gadget that was meant to be used on phone lines and was eventually used by the military. And then finally, change the music business forever. That's right, of course. I mean the vocoder. The thing that let us all play our voices like an instrument. And change the way that we think about our voices. We have a really fun guest. We have a really fun story to tell. All of that is on version history on youtube and wherever you get podcasts. We're back with Profty Markets. We have 12, 10 minutes left for questions. So please go ahead and line up in the aisle. And also just a quick question. No speeches, cosplaying a question. No promotion to your company. Please keep it to 15 seconds and actually ask a question. (Applause) Scott, great, great session. Please introduce yourself. My name is Selves. They're nicer. But you tell me not to perform my company about my name is Rex Lee. I'm with Cyber Talk TV on Pod TV on Roku. And I'm a tech journalist. I Rex. How you doing? I want to talk a little bit about what you were talking about, what the AI leaders are saying. You first have to understand that the leaders of AI today work for the largest data brokers in the country. And their AI platforms are supported by surveillance and data mining technology as well as addictive technologies. So regarding the LA social media trial, I feel that there's a group of people that should be defendants along with the platform developers and that's the advertisers. They're the ones that are funding addictive technology. And I think they should be held viable and also want to get your thoughts on an electronic bill of rights protecting those of us who are connected to the internet that are being exploited by these companies when they talk about 10 minutes. So that's what I want. So should advertisers be liable? My sense is that it's the platforms. The advertisers have no choice. I've worked with the biggest advertisers in the world and their view is we don't want to advertise on Meta. We'd rather not. We see the dangers. We don't like the concentration of power. But if we don't, these platforms have consolidated the market. They're very good at what they do. And if I remember the advertising boycott against Meta about five years ago, Meta's such an unbelievable business from a business standpoint because no one advertiser has more than 1% of the revenue. So they just have absolutely no power. So I do think that the liability rests with the companies, but the real culprit in all of this is us. And that is we have not elected a group of individuals who have the backbone and the domain expertise to regulate these companies. We need to remove Section 230, originally legislation written in 1997. It's a much different world now. And also we need more structural reform. Again, it's the boring shit. We need to remove citizens united because this is the bottom line. Companies will always do what makes them an incremental dollar. We keep waiting for the better angels of these companies to show up, but their seat is to show up. They won't. They'd have sex with their sister for another nickel. Get used to it. The notion that somehow Mark Zuckerberg is going to wake up and realize he's doing damage to the world. General Motors would still be pouring mercury into the river unless there was legislation unless we had an EPA whose fault here is that because of citizens united, tech has figured out that the greatest ROI is not AI. It's not catbacks. It's not in video chips. It's giving money to senators, including Senator Schumer, whose daughter works at Mehta. And then they get very concerned about legislation and no legislation never goes through. Unless we have structural reform that sends people to do what they're supposed to do. And that is prevent a tragedy of the comments. They're going to continue to have no regulation and legislation and these CEOs are going to do what every CEO has done throughout economic history. They're going to make a series of incremental decisions that are bad for people they never meet and a teen in Ohio is having suicidal ideation such that they can get a Gulf Stream. That is just the way of America. So here's the bottom line. Until we elect people who are willing to implement regulation and can get elected without money, a ton of money, it's just going to get worse folks. Thanks for the question. Thank you. Hey guys, my name is Jay Riches. I just exited my market research company. I'm now the MD of an influencer marketing agency that acquired us. I have an 18 year old son. You've spoken about raising young men and why prejudices and responsibilities still matter. What do you think dads in particular are getting wrong when raising the sons in 2026? It's a really thoughtful question. I can just tell you what I got wrong. I thought, and then you should talk about how your father fucked you up. Look, this is what I got wrong. I thought that having a son was going to be a series of hallmarked moments where I got just this immense amount of like love and reward back. I thought, oh, my sons are naturally going to be super into whatever I'm into because they're going to think I'm some hero and they'll come out of the womb. Interested in World War II movies and CrossFit. What you find is that your kids are pretty awful. They're demanding their selfish, they're inconsiderate. They're really mean to your partner and totally entitled. And occasionally there's a nice moment. Occasionally wake up and they smile, they came into your bed. There's an occasion. But be clear, if you're like me and you made the mistake of thinking relationships or a transaction and that you were going to get more from your kids, then you're going to get back. You're going to be just very disappointed. Where you hopefully evolved to and you're just asking this question, you're a thoughtful man, is that when you have the opportunity to find something, whether it's getting to, you know, funding plan parenthood, whether it's helping people, people disabled veterans that you will never meet or it's basically over investing in kids. where your deficit is so enormous. My goal is such that my kids could never pay me back. And I finally figured out that's the whole shooting match, right? That that is what it means to be happy. That's what it means to have purpose is that you're on the wrong end of the investment. That you find something you love so much and will let you love it and invest in it that it would be almost impossible to get a return. And that's what I found so nihilistic and crazy scary about Sam Altman's comments when he said, well, when talking about the energy efficiency of AI, he comparity said, well, you're not taking into account how much energy it takes to raise a human before they have the critical thinking. Mike, this guy just does not get it. The whole shooting match is you find causes or purposes or humans that you just go so all in on that they could never pay you back. I didn't figure that out as a father until I was older. Thank you for the question. Appreciate it. Thanks, Mike. (audience applauding) Hey, guys, my name is Richard. I'm a 17-year-old high school student from Brownsville, Texas. And I'm working on a project to get students educated in financial and technological literacy. My question is, what's the single most powerful argument to get corporations like Google or JP Morgan to back this project or fund it? To back the project, what's the project? To teach students, financial and technological litters. Do you want to take this? I think it's incredible that you're here and that you're so young. I mean, I think some of the things-- Yeah. (audience applauding) And it's amazing what you're doing. I mean, one of the things that we've been talking about in this world of AI and that we keep on hearing among leaders of larger companies in a world of AI is they think, if AI is going to do all of these jobs, like, should we really be hiring young people? Or should we really be taking these young people on? And it's a genuine question that at first, I'm kind of like, I'm actually not sure what the answer to that is. I mean, as I mentioned, maybe your job is to keep head count flat. Maybe you shouldn't be hiring people. One thing that I would say, I think you're an example of this. I think people would be astounded just how talented, dynamic, and hardworking young people are, including really young people, such as yourself, really can be and what value they can provide to companies. And I think Scott has kind of an exol of this. I mean, we talk about this with our team. Our team is over here, which by the way, we should also keep head count to that. (audience applauding) But Scott and this podcast and this company is an example of betting on young people and taking a chance and a risk that maybe they'll fuck things up and maybe they'll be really great at it too. And I think that that is something that is being undervalued right now. Among companies who are trying to figure out ways to sort of just put young people to the wayside and that's what we're seeing in the unemployment rates of young people right now. But I think a lot of people, one, that you'd be surprised how little you have to pay young people first off. And the second would be how talented and dynamic they can really be. And you are the guys who are using this technology. You have that highest fluency in these technologies. So I think these companies have every reason to back people like you. - Let's start doing it, start offering the service. And then unfortunately, try and get as much attention on social and then start relentlessly harassing the executives to keep you more, until they give you money. Thank you. And good luck to you. (audience applauding) - Young man, what was your name? - Send us a link where easy to find on your effort. Thank you. (audience applauding) - We are unfortunately out of time. I'm sorry for the other questions, but we really appreciate it. - Thank you, Jackson. - Thank you. (audience applauding) ♪ Life dies ♪ (upbeat music) ♪ You have me ♪ ♪ In time ♪ ♪ We are ♪ ♪ As the one time ♪ ♪ And the God ♪ - Thanks again to Odo for supporting this show. Odo wants to be your ultimate all in one fully integrated platform to handle everything. Seriously, everything. Inventory, CRM, accounting, HR, and much more. No more shopping around or settling for expensive services that can only handle a fraction of your business. Try Odo for free at ody.com. That's odo.com. [MUSIC]