The Stock Market Is Already Pricing In A Democratic Sweep

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0:38Go to av.vc.gov. Not an offer to sell securities. Venture capital involves substantial risk, including loss of capital invested. See disclosures and fund offering materials for more information. This holiday, switch to the Simplicity Plan from Verizon. It's one plan, one price. Just $30 a line per month for you or the whole family. And on their best 5G network. Switching to Verizon and shopping their best deals makes the holidays simple. Head to Verizon.com or your nearest Verizon store today. Black Friday is around the corner. Your biggest chance to grow sales this year. Don't wait. Realize is Taboola's advertising platform for businesses, letting you launch campaigns on top premium websites beyond search and social.

1:26Add Realize to your media mix and scale this Q4. And as an exclusive offer for podcast listeners, new customers get $700 credit back. Just search Realize Podcast on Google or use the promo code podcast26. Don't miss out on this limited time offer. Terms apply. Today's number 73. That's the percentage of U.S. adults who have a favorable view of the National Park Service, making it the most favorable federal agency in America. And true story. I went to a national park recently and I bitched about it the whole time. And soon after, I was canceled for making anti-Yosemite remarks. How are you doing? I see you're wearing your Virginia shirt. I am. I went to the football game last weekend, parents weekend, I think we talked about it.

2:26I'm super excited. My son's thriving and it's like a huge source of joy for me. You always worry, there's always like, there's non-zero probability your kid's going to head off to college and like not like it and then the whole house freaks out. Is he about the frat life? Is that, is that calling him or no? I think he's pretty social, but I don't know if he's what I'd call a big partier, but he likes being social. And he's not like his dad who's trying to fill a hole that can never be filled in wallpaper over his depression and anger with substances. Well, that's good. That's great. Speaking of which, Halloween. How's your Halloween going? This will be out just after Halloween, but it's going to be good.

3:11Let's hope I'm still around. We are one night into Halloween and I am already hurting. Wow. Actually, I've got five friends from London who are visiting for the weekend. So I've got to go take them out, have a good time. Oh, wow. What are you going to do with them? We're going to go, we're going to have dinner and then we're going to go to one of my friends whose party is having a big Halloween party. It's going to go all night. So we'll do that. And then I think they want to do like a pub crawl on Saturday, which I'm probably not going to join them for because it sounds terrible. And then I'm heading off to London to join the Mooch and Caddy K for midterm elections for their live stream for the rest of politics.

3:53So I leave on Saturday night, which is a shame. I'm still stuck on the notion that you have five friends. I kind of had the sneaky suspicion that you're the Vivek Ramaswamy of whatever high school you went to. Like super smart and everyone hates you. Is that not right? Is that not accurate? That's terrible. Wow. Is that not accurate? I don't think so. Is that unfair? Maybe we'll take a poll, see what they think. That's going to be great. You're going to show them a great time. I hope so. I think we're going to have a good time. More importantly, what are you going as? It's always an important question. Oh, God. I had real trouble with the costume last night. Uh-oh. I got a great costume, Larry David.

4:29It looked impeccable. It was hilarious. Do you have, like, the hair? Are you doing something with the hair or no? Yeah, I had the wig. I had the glasses. I had the khakis. I looked exactly like Larry David. It was genius. And I'm like, I just can't do this. It makes me even more unfuckable than I am anyways. I just can't do this. It makes me even more unfuckable than I am anyways. I just can't do this. I'm just too vain. And so then I put on Darth Vader and it was like this blousy thing. And I looked like Delta Burke from Designing Women. I just looked ridiculous. And then, oh, I was really excited. I bought this amazing Spider-Man outfit, and I've been working out, and I want to show off my body.

5:10And that thing was too tight. I guess I've been gaining weight. And not only that, I'm like, anyway, so zippers were flying and buttons were flying. Sounds quite stressful. I'm glad you recognize that. So I did what I always did that I did done the last, that I did last Halloween. I put on my Deadpool outfit, huge crowd pleaser, except young people keep saying, oh my God, I love Iron Man. And I want to choke them. I'm like, I am not Iron Man. God. Anyways. So you're going to go with Deadpool then? That's the plan? I did last night. I might try the Larry David again tonight if I'm a little bit more secure and in touch with my, like, decide. It's like... That's going to be a hit. And then you can take it off at some point in the night,

5:50but you start out crowd pleaser. You're the funniest guy in the room. Everyone loves it. And then you can sort of take it off and be like, okay, I'm normal now. The key, I think, if I'm wearing the Larry David outfit is to do what I did last weekend at UVA when somehow I ended up renting a white minivan. And that is, as you're driving, you just got to go, I like me. I like me. I feel good about me. By the way, minivan, they're incredible. I totally see why they sell so well. They're incredible. They're so easy to get in and out of. And they got that out of my door thing and a ton of luggage. I don't know. I'm thinking about a minivan. I'm going to be Tony Montana. Really? I like it. Is your girlfriend going as Michelle Pfeiffer?

6:30Correct. Wow. That's a good one. That'll be good. I have a wig. I need to get myself like a cigar or something. I tried to order like a toy gun. No toy guns. I guess it's illegal. Amazon is not happy with that. So we won't do that. But yeah, we'll see. I'll send you a photo. Right. Should we bust into the show? Let's do it. And by the way, if you like the show, please be sure to hit follow wherever you're listening or subscribe to us on YouTube and hit the bell icon to get all of our latest episodes. Now is the time to buy. I hope you have plenty of the wherewithal. September's personal consumption expenditures report showed inflation continuing to climb. Both headline and core PCE hit their highest annual rates since May,

7:20with headline inflation rising 3.6% year over year. That data came in just a day after the Fed decided to hold rates steady. Nonetheless, two officials dissented in favor of a quarter point hike. Chair Walsh also noted that financial and credit conditions have tightened for some businesses and households. So inflation remains a persistent problem. And the Trump administration has faced plenty of blame for the state of the economy. But at the midterms tomorrow, we will get a better sense of how Americans really feel about this administration and how they have handled things. So, Scott, inflation keeps going up. Not really any surprises. PCE rose to 3.6%. Gas prices continue to go up. Diesel prices are up 77% year over year.

8:09Real wages fell 0.7% in September. That was the sixth straight month of declining earnings. Not great. And on Tuesday, I think it's going to be a referendum on those numbers, how upset people really are. What are your expectations going into Tuesday? Well, that's the correct question. But what's weird is it feels like the mother of all bad things and all the moons are lining up against Republicans and for Democrats. And that is, according to The Washington Post, six in 10 families can't afford the basic costs of living in the battleground districts. In the past three years, rents in Republican-held battlegrounds have risen 9% compared to 4% in Democratic-held ones. So it just feels as if inflation is not only peaking at the exact wrong moment, or not inflation is peaking,

9:20but the people feeling or the impact or the negative sentiment around inflation. But it's especially bad in close races or in toss-up districts. Cal sheet puts the odds of a blue wave as defined by Democrats win at least 218 House seats and at least 49 Senate seats in the November midterms at 82%. What was even interesting is there's now a technical term for tsunami, and that is Democrats get both the House and for tsunami. And that is the Democrats get both the House and the Senate. And that's at about somewhere between, I saw on CalShen, between now 65 and 67%. So there's a two and three chance now that there's a quote unquote tsunami for Democrats. And then they have a new category called super tsunami, where they get 54 seats in the Senate and a massive pickup

10:06in the House. I had on Prop G, Nate Silver, and he pointed that when Democrats last got a bunch of seats mid-cycle 2018, it was D plus seven. Now D is polling plus nine. Typically, as you get closer, whoever is down closes. In other words, it tightens. What's unusual, it's so far, and the polls might be off, so far, it looks like it's not tightening. It's actually the Democrats are expanding their lead. And let's talk about voters in rural parts of America. Six in 10 rural voters disapprove of how Trump is handling the economy. The average Republican constituent drives 26% more miles than a Democratic constituent. So they're feeling the pain of higher gas prices. So this is just, it's like the sum of all fears for the Republican Party. I don't see any,

11:04I don't see any sort of bright spots right now. Do you have any thoughts on this? I'm in total agreement. I mean, you look back to the beginning of the year, if you were to say that the Democrats were going to take the House and the Senate at the midterms, people would say you were nuts. And you can look at the CalSheet data on that, where it was, I think it's doubled over the course of the year. So there has been a massive sea change. And it's obvious what the problem is. It's inflation. And people know how tariffs affected inflation. We saw that immediately. And then he doubled down on higher prices with the war in Iran. And so when you look at Trump's approval rating, you know, yes, because usually when an economy is struggling or when

12:08you're seeing inflation, you're seeing higher prices, usually it's a little bit of a blame game on who's responsible. And it's very difficult to pin down who is actually at fault because economics is complicated and it's nuanced and there are multiple factors. You can never really pin anything down. But that's not the case this time around at all. Like, we know exactly who's responsible. We know exactly what caused this. It's Trump. It's his tariffs and his war in Iran. And everyone knows this. Usually there's debate, but literally everyone on both sides understands what the problem is. And I think your point is an important one, which is the people who are getting most screwed by his decisions are his base.

12:55It's the people who have historically supported him. It's the farmers who have to deal with diesel prices being up nearly 80% over the past year, which of course is a necessary input for fertilizer and therefore for growing crops, which is why farmers are struggling right now. It's as you say, the rural voters who are the frequent drivers, you point out how much more those voters drive compared to democratic districts, and gas prices are up 40%. And then I think the other one is the real crucial demographic, which was so important in 2024, which is young men who have seen their wealth fall over the past four or so years by about 23%. And of course, the boomers have seen their wealth rise by about 37%. And this is going to be a big problem because 55% of young men voted for Trump in 2024. And now the polls are saying that actually this time around, it's going to be really, really has screwed over the middle class and screwed over poor people, unlike any other president, at least in recent memory. But a lot of people say, well, they don't understand that. Like the American people, try getting the American people to like understand the facts. But this time, I think they do because the facts are so obvious. It's so clear what went wrong here.

14:27So I'm, I'm with you. I, I think it's a sweep. Um, I think the Democrats take the house. I mean, certainly take the house question is, will they take the Senate? I think they will. Um, and we can go into some of the state level data here because that's, what's going to matter here. It's going to be the, it's going to basically rest on a few swing states like Maine, like Texas, Michigan. Those are going to be the important states. But I think the Democrats crush it in all of those states, because, again, as you say, they're getting hit the hardest. Yeah, when you see Trump campaigning in Kansas or in South Carolina, that's not the map is tilting. The map is imploding. And they're pulling money out of what usually are battleground states because they've just given up on them.

15:17What's interesting, and you touched on this, it's really fascinating to see which cohorts pivot from one party to the other in between elections or in consequential elections or sequential elections. And one of the biggest pivots from blue to red in 2024 was young people. And now people ages 18 to 29 get this. In 2024, 46% identified as Democrats, 47% Republicans, which shocks me. 18 to 29, the majority in 2024 or more identified as Republican. Today, it's Democrats or 54% of 18 to 29-year-olds, people your age, identify with Democrats and 38% Republican. I love this. It feels like the majority of the pollsters are saying it's a toss-up between a tsunami and a super tsunami. And vested interest in things going the other way, covering its ass by saying, oh, this might go blue.

16:30So this is I mean, I'm still holding my breath, waiting for what he's going to try and do next, whether it's, I don't know, offer people a million dollars if the Republicans hold on to the Senate. I'll be curious what he tries to come up with. But this feels, and again, what's interesting is a lot of the voting, I wonder what it is. I think it's about a third. The voting has already been decided. People are like, have you already voted? I've already voted. I'm going to do it after this. Vivek. That's my new nickname for you, Vivek. Oh my God, we're getting comments for you. All right. Philip, folks, what is the likelihood, is there a non-zero probability that Ed was the Vivek Ramaswamy of his junior class in high school?

17:19What, I think there's a non-zero probability here. I just, I'm putting it out there. Anyways. No. Blue tsunami. Bunami. We're gone. Let's get this done. I mean, just looking at some of these states and how their economies have been specifically affected, like I think Maine is probably the most interesting because you would have expected and the prediction markets did expect that it would be red. But you've got Troy Jackson, the Senate candidate, who's Democrat at 61% right now in Kelshi. And you just look at the way Maine's economy works and what its strengths are and what its weaknesses are. And it all makes sense. Like, for one, they rely on heating oil to heat up their homes more than any other state. It's like 50% of

18:15their homes is fuel oil, heating oil. And the cost of that has gone up 83% in the past year. So you're immediately, that's half of the state is watching their energy prices just explode as a result, a direct result of Trump's policies. Then you have the Canada tariffs as well, which is also an issue because Maine sends 40% of its exports to Canada. And so as soon as the Canada trade war breaks out, suddenly you're putting a huge dampener on Maine's economy. Plus, they also have this giant logging industry, which is a huge part of their economy. And then Trump puts 50% tariffs on all of the logging equipment and all of the wood products, which just decimates the foresting industry in Maine. Like, it's a perfect encapsulation of this is a state that wants to love Trump,

19:07that wants to like him, that identifies with the ethos and the culture of the Republican Party. But he alone has been so economically devastating to thousands of people across the state to the point where, I don't know, I mean, I don't know if they're going to swing blue, but they're probably not going to show up. They're probably not going to show up to the polls. I mean, if they're going to say anything about how gigantic of a disaster the past two years have been in their own lives, this is their moment to say it. So I do think that that is going to be likely. I think the same, we see very similar dynamics in Wisconsin, Texas, Iowa, where as you say, you know, one in five Iowans is employed by the agriculture industry, which has also gotten hit really, really

19:55hard by the increasing oil prices. So it just doesn't look good for the Republicans in any of these key swing states. I think the next question is like, what are the market implications of various outcomes? Like if the Democrats sweep, what happens? I think the first two things that we have been seeing already in the markets is that healthcare stocks could rise because you might see that a lot of these Medicaid cuts will be reversed. But again, that's already seemingly getting priced in right now because the healthcare sector is up more than nine percent over the past three months defense stocks as well could fall again that also happened over the summer maybe you see a rise in clean energy stocks maybe there is a

20:37slowdown in the ai boom maybe it could be the democrats are going to get a bit more stringent on data centers that could be one of the directions they go. So I think those are some of the things that we might see. But again, the fact that we're already beginning to see it in the stock market is indication further that investors really believe that come Tuesday, Democrats are going to win this thing. What do you think? I think it's already been priced in. And I think if you look at the markets, so first off, the polls, in Maine, the polls don't seem to matter. So we don't know what's going to happen in Maine. But in places like South Carolina that I think the last Republican or the last Democrat they sent to Washington resigned in 2002.

21:20But Darlene Graham is now at 78%. And what is her name? Her name is Annie Andrews is now at 28%. She was at 10% just a couple months ago, and she's gaining right now. So it's a sweep is the base case, right? So the most exposed to getting hurt are probably pharma with undisclosed pricing deals with the White House. The company has assigned administration pricing agreements. And House Democrats have floated the idea, if they have the power, if they now run these committees, of subpoenaing drug makers for the terms of those deals. I think it's going to hurt the oil majors. Democrats are tying high energy prices to broader cost pressures and plan oversight of corporate pricing and market concentration. I think oil is going to come down, which is going to hurt them

22:16more. And there's already investigations over energy exploration in Venezuela, which matters most for a company like Chevron. I think defense contractors get hurt. Maybe the AI tech and data center build out. There'll probably be more pauses, if you will. Private equity and single family rent, rental owners. The private equity is probably gonna face more scrutiny. And companies close to the administration, ongoing democratic investigations and some of his cronies that he's been carving up, TikTok and giving to drug pricing deals, tariff refunds. A Senate majority adds a second chamber issuing subpoenas. Some of the beneficiaries, the tariff exposed retailers, if we roll back the tariffs and there's more certainty around the tariffs going away or being reduced, folks like Walmart, Target, Nike, Best Buy, I think actually benefit of the Democrats' sweep.

23:18And then ACA marketplace insurers like Centene, Oscar, Molina, making health subsidies permanent, would just be good for those guys. So some winners and some losers. I just, the question is, has it already been priced in? I think sports betting companies are also very worried about this. And the number that I have to back that up is the fact that they spent $72 million on this midterm election cycle. DraftKings spent $34 million. FanDuel spent $27 million. You have to just think that these guys are desperate for the Democrats not to get in there and start regulating this gambling stuff. But the key word there is spend. What's so staggering about this race, obviously the outcome is going to be the most interesting thing. But post-election, I think what we're really going to, there's going to be a couple of big

24:10stories, but one of them is going to be that we have now spent more on this Senate race, this off-cycle midterm Senate race, than we've spent on the presidential election in terms of money spent. So this isn't even a tail wagging the dog. This is a tail is wagging the dog so furiously it's got its own weather system. I mean, and when you think about just how insane it is, I think about $800 million is going to go into the Senate race in Texas, $800 million, and 330 of it or 370 of it is coming from one man. And I think, you know, generally speaking, I think November 4th marks a lot of things. It marks a lame duck president, but I also think it kicks off a new era in America where we spent the last 40

24:51years talking about how do you get wealthy? And we're going to spend the next 10 years with a lot more discussion around what are the obligations of wealth. And when one man, you know numbers, but you can't really grasp the numbers. So Elon Musk has put, call it $400 million into the Texas race. 366 is the number. I would even think at some point the Supreme Court is going to go, Jesus, this is out of control. We have to do something about this. By the way, when you're with Katty Kay and the Mooch, my guess is that'll be topics one, two, and three is campaign finance reform. That is, I was with Senator Mark Kelly in Arizona and I asked him what is the first thing he would do if elected president.

25:31And a lot of them are saying that the number one issue is campaign finance reform. It's ridiculous. $366 million. He has now spent, Elon has now spent more on this cycle than George Soros has spent his entire life. So it's gotten completely out of control. And you mentioned like the next, I mean, we talked a lot about how to build wealth and the next sort of era of politics and policy is going to be about how to keep it if you're already a billionaire. I mean, one of the big things to watch out for in this election will be Prop 40 in California. And talk about spending a lot of money on politics. Sergey Brin has spent $102 million to fight Prop 40, which is the wealth tax. So, I mean, these midterms are weirdly important on so many different levels. And you

26:30can see it in the amounts that people are spending, especially the amounts that billionaires are spending. They are very, very worried about how this election might turn out. We'll be right back after the break. And if you're enjoying the show, send it to a friend and please follow us on YouTube, Spotify, or wherever you get your podcasts. Support for the show comes from Upwork. You've built every part of your business yourself from the ground up. That also means your operation might still be running on various spreadsheets Thank you. business fast access to over 170,000 freelancers, all with deep expertise. With their help, you can fill critical skill gaps, launch projects faster, and scale support up or down without

27:29committing to a full-time headcount. You can find experts in everything from software development and AI implementation to marketing design and business operations. Browse profiles, review past work, and get help scoping the role. There's also Business Plus, which lets you access the top 1% of talent on Upwork. And when it comes to operational stuff, such as contracts and payments, Upwork takes care of it all. Visit Upwork.com right now and post your job for free. That's Upwork.com to connect with top talent ready to help your business grow. That's U-P-W-O-R-K.com. Upwork.com. As soon as autumn rolls around and you swap your iced lattes for pumpkin spice, that's your signal to start thinking about the holidays.

28:21The decor, the gifts, the shopping lists, but more importantly, the holiday treats. Cheesecakes, cookies. Is there anything better? And when the recipe calls for cream cheese, there's only one option. Philadelphia, the original cream cheese made with fresh milk and real cream. This holiday season, whether you're going all out or keeping it simple, make it really Philly good. Find your favorite holiday recipe at creamcheese.com. getting every detail right. Prompt, inspect, edit, and publish in one place at a whole new pace. Agents and humans work in tandem. Agents bring speed and scale, while people bring taste, judgment, and control. Agents solve the gap between AI-generated ideas and production-ready

29:15website work. The agent works in the same place, where the real site is designed, managed, reviewed, and published. It lands on the canvas, stays editable, and can be published when the team is ready. Here's everything that can happen when your team and agents collaborate. You can build custom code components, create and manage CMS content, optimize SEO settings, audit for issues, and ship everything all in one place. Learn how you can get more out of your side from a Framer specialist or get started building for free today at framer.com slash markets for 30% We're back with Prof G Markets. Last week's earnings reports from Microsoft and Google gave investors a look at how two of the biggest players in big tech are performing, and the market's reaction could

30:09not have been more different. Microsoft shares jumped as much as 5% after the company beat expectations with revenue up 19% year over year. It also disclosed Azure revenue in its earnings statement for the first time, revealing that its cloud business grew 48% from a year earlier. Google shares meanwhile dropped more than 13%, wiping out $500 billion for its worst market cap loss ever. That pain came despite reporting 25% revenue growth in the third quarter. Investors were disappointed by weaker than expected search and advertising revenue and negative free cash flow. Scott, really interesting week for the hyperscalers because we have the Anthropic S1, which came out, which has polarized a lot of people as to whether that was great or whether

30:58that was bad or something in the middle. But then also we have these big tech earnings coming out. Microsoft was great. Investors were very happy about it. Google's on the surface, like not terrible, I thought, at least from a revenue perspective. But investors were very, very freaked out about this idea that search revenue growth is beginning to decline. And all of the fears that we were hearing about, I would say, two years ago, basically when ChatGPT was starting to gain steam, suddenly those fears have come back where investors are saying, oh, my gosh, AI is going to kill Google search. That plus the fact that free cash flow is negative and they're plowing more and more money into the AI data center, something we're also seeing from Meta, something we're also seeing from Amazon. What do you make of this week in

31:51big tech land? I thought it was pretty shocking. And it's sort of a tale of two cities. It's the same AI arms race, but entirely opposite verdicts. Microsoft was up 5% on cash flow discipline and Alphabet down double digits on cash burn. And the way I would describe it is both companies had amazing year-on-year revenue growth and really outstanding businesses. But I think it's two things that punished... Microsoft was able to thread the needle here. And that is, they said, we're going to surprise to the upside on the top line and the bottom line. And what I think really excited people is their CapEx looked fairly disciplined. Now, granted, it's still unbelievable. It's still out of control,

32:33but it looks fairly disciplined. Compared to the alternatives. Yeah, and compared to Alphabet. And when Alphabet's executive admits on the earnings call that AI mode generates few ads, it's like the company confessing its flagship product cannibalizes its core business. So AI is a profit center that needs to be managed well for Microsoft in terms of CapEx. AI needs to be a profit center for Alphabet that needs to be managed well. It doesn't look like the CapEx was managed in its disciplined fashion. In addition, AI is an existential threat to alphabet because the world's most profitable, largest tollbooth in history, Search, it appears like is kind of under attack. I don't know about you, but I think there's probably a lot of analysts listening and

33:19hearing the numbers. They see the CapEx of a company growing its AI business. But what they don't see, or what they also see, is that AI is an existential threat to their ability to generate the cash flow they need for CapEx for the arms race. And the anecdotal evidence, I don't know if you find this, I am now doing basic search on Claude. And at some point, that's just going to show up in the numbers. But Microsoft data was unbelievable. Microsoft renovated with cash on hand, and Alphabet appears to be taking out second mortgages for the same renovation, which is going to result in kind of a different call from the bank, if you will. So really two divergent results here and the largest market cap erosion, single day market cap erosion in the history of the company. That's

34:12a big deal. I'm less worried about the search revenue because I see the fact that it's growing and it grew less than investors had expected. And I think that the reason there was such an allergic reaction on that front is that this is the boogeyman for the markets. This is the thing that they're obsessed with. Will chat GPT kill Google? And we saw them have a premature reaction several years ago, which is when we went in and said, this thing's gotten overpunished. And so they've been, they've just, their antennae are up on this big question. And so as soon as they see even an inkling of a sign that maybe something bad is happening, suddenly they freak out and they panic about the whole situation.

34:55For me, I'd want to see, I would want to see more concrete evidence that that's actually happening. Like, I'd want to see their search revenue flatline or even decline. That's something that would make me more confident in this idea that ChatGPT is going to eat Google's lunch. But then again, at the same time, Google also has Gemini. And so I think they've actually kept up on this AI race quite well. But I do think that the real problem, my view is that negative free cash flow. And to be clear, Google is not alone there, because we also know that Oracle's free cash flow is negative. Meta's free cash flow is negative now. Amazon's free cash flow is negative now. All of the hyperscalers have now entered into negative free cash flow because of how much

35:43money they're spending on the data centers. It's nearly $700 billion on CapEx in the past 12 months. That's up nearly 90% from a year ago. The only hyperscaler with positive free cash flow is Microsoft, which is great, but it still came down 27%. So the thing that worries me is the fact that these businesses can no longer use their profits to finance their goals, which is, in this case, to build data centers and build the AI revolution. And so you think about, okay, well, what can they do then if the most profitable companies in the world can't even use their profits to do whatever it is that they want to do? Well, then you'd say, OK, they can go to the cash on their balance sheet. And that's what a lot of people have pointed out.

36:31And to be fair, these guys have a lot of cash on hand. If you look at their cash and cash equivalents and their short-term investments, you've got Amazon with more than $120 billion. You've got Google with more than $120 billion. You got Google with more than $250 billion. If you add all the hyperscalers together, it's nearly $600 billion, which is great. But then you look at how much CapEx is going to rise next year and the year after that. And if you add it all up among the hyperscalers, the five of them, Oracle, Microsoft, Meta, Amazon, Google, over the next two years, it's estimated to be more than $2 trillion. So basically what you have is like a $1.5 trillion gap between how much money they're going to spend and how much money they actually have.

37:19Because remember, they can't use the profits anymore or the cash flows because those cash flows are negative. So they have to get the money from somewhere else. And so then you think, okay, where is that money going to come from? And the answer is they have to go to the capital markets and raise money. And that's why I was really like, it felt really powerful that literally the day after Microsoft reports their earnings, they also announce a $25 billion bond sale. And that's just a week after Meta said, we're going to go raise $95 billion in the equity markets. So what was so great about these companies is how independent they were for so long. They were so strong, so profitable, they could do whatever they want. Who gives a shit about the market conditions?

38:07They don't need our money. But that has now completely changed. They need money from the capital markets. They need money from us, the investors. And if we decide that we don't want to give them that money, then they're screwed. They're just in a systemically more vulnerable position. And that, to me, is the real shift in what's happened here for big tech. There used to be these independent companies do whatever they want, but now they have to go out there and they have to please investors and they have to convince them, don't worry, give us the money, we'll pay it back, we can raise it through the bonds, we can raise it through the equity, but just play the game with us. They're dependent on the capital markets now.

38:50I think of an historical analogy here around the AI arms race is impacting everyone. And I think of, so basically we were in an arms race, an actual arms race with the Soviet Union, and we had the economy and the growth and the capital to win. And we basically, the Soviet Union imploded on itself because it couldn't keep up with this type of military or defense mending and poor leadership and an autocracy, et cetera. And it collapsed on itself. And that resulted in kind of a 40-year run as the world of hegemony, where basically the US was the only game in town. Everyone is in an arms race right now. And the companies are starting to say, all right, who's going to survive? Who has the underlying capital to survive? Now, to your earlier point about Alphabet, every time in Alphabet's history, you've had this sort of check back,

39:46it's been a buying opportunity. And kind of pregnant with your comments is a really interesting question. And that is, is this a buying opportunity? Because if you look at Alphabet's PE right now, it's 14.6 versus the S&P at 19.5. Take your average S&P company, Caterpillar, P&G. These are great companies, whatever it is. They're not alphabet. YouTube is on fire. Google search, every time we keep rumors of its death, it's always been greatly exaggerated. I don't know what it was up. It's always up double digits. They have a booming cloud business. They have, if there's an agentic layer that emerges, they have relationships with millions of businesses and billions of consumers to start bridging the gap

40:34and start eating open AI or Anthropx launch. And it's trading at a lower P multiple than your average S&P company. And obviously when you look at how robust this business is, how diversified it is, how well run it is, the concentration of IQ there, I don't know, this to me feels like a buying opportunity. Your thoughts? One thing that I would just point out about the PE is that now that Alphabet has invested all this money in Anthropic, those mock-ups on its private stakes are being reflected in their income. So you have to take those PEs with a grain of salt. That's a great point. But still, it has, I mean, after the adjustment, my expectation is that it would be maybe like in line with the S&P,

41:21which still isn't expensive. So I think that I'm not fully sold. I'd want to look more into Google as a buying opportunity at these prices. But I don't think it's a sell. Like, I don't think that the way that the market is treating it, especially when it comes to the search revenue, is necessarily warranted. But like, you make an important point about big tech stocks and the hyperscalers right now, which is like, these stocks, despite being systemic to the economy, have been unbelievably volatile this year. And, you know, as I've told you before, as we've talked about on the show, like I bought Meta this year and I bought Microsoft this year and both of those investments have done extremely well but if you were to look at those stocks on over the past year they look

42:14kind of lackluster and it's because they've been going up and down so erratically throughout the course of the year because the reality is that there is so much uncertainty when it comes to tech right now because of the amount that they're spending on the AI data centers that like investors are completely polarized as to what the actual reality is. And that wasn't the case for a very long time. It used to be that you could have a pretty strong understanding of what these businesses would look like this year and the next year and even five years out. And that's what Wall Street loved about it, is it was so reliable, it was so dependable, you knew exactly what the businesses are. But those days are over. And what that means now

42:54is that the most valuable companies in the world are incredibly volatile, which means that if you are invested heavily in these companies, which you are, because everyone is, because they're systemic to the S&P, you're riding out quite a lot of volatility, specifically in those names. But it also means that if you want to be a bit of a trader and get out there and get active and start doing some stock picking, there are some serious opportunities. Like you can go in and buy these dips and you can get paid really handsomely for doing so. And that, which is exactly what happened for me with those two names, Meta and Microsoft. Could be, I mean, Meta's down this week. Investors are very worried

43:38about that equity sale, which I think is completely reasonable. The fact that they need to keep on raising more money is concerning. You would think that because they're one of the most profitable businesses ever, they don't have to do that, but they do now. But these are really, these are jumpy names. Investors do not feel confident. There is very, very low levels of conviction. And when that happens, that usually means that there is both great opportunity to lose a lot of money, but also to make a lot of money, too. So I think it's a good time to be a stock picker mean, three. If you're on the audit committee, just make sure there's not fraud. So let's assume you're able to do that. But the two or three most powerful people on the board, which is usually the largest shareholder and two voices that everyone kind of nods because I've spent a lot of time trying to suss out what are

45:05the attributes and behaviors of great CEOs. And one of the most underrated attributes, and I think core to a great CEO and a great leadership team is the following. It's not only what they decide to do, it's what they decide not to do. Do they have the discipline to say, this is a great idea, it's a great market? It's not the right idea, the right market for us at this moment. And of the Mag 7 to this point, of the Mag 7, who has decided not to engage in the AI arms race? And who has the strongest year-to-date stock performance? I think it's Apple. Ding, ding, ding, ding. Apple has significantly outperformed the other six that are either the arms race or engaging in the arms race. And Apple does not

45:55get enough credit. They're constantly second-guessed. Why don't you have a cheaper computer? Why aren't you in AI? Why aren't you in search? They have more discipline around what not to do than any company of that size. They put one chip down on VR. I think they spent a billion dollars on it. Meta spent 60 on it. They are better at saying no. They pulled the plug on the car. I wanted them to have the car. I'm like, you got to grow, do the car. And they're like, you know what? This isn't working out. We don't like the numbers here. We don't like the shit. Kill it. The only MagSavvy company that has not decided to plan traffic in the AI arms race is significantly outperforming the others who are in this AI arms race. In any other world, I would be instinctively agreeing with you on this because I'm such a sucker for discipline, risk management, but I still think they've got this one wrong.

46:54You think staying out of this race was a bad idea for Apple? I do. And as I've said about Apple, then what? What are you pursuing instead? That's what I want to see from that company. How is it that you're going? Because to be clear, they've been very handsomely rewarded for their decision not to go into this. And I like that investors are rewarding them for that. I like that investors are saying, let's not all become too swept up in the hype and too deluded about this AI future. Let's be reasonable. And investors are rewarding them for that. But the thing that I want to see from Apple is like, okay, you're not taking that money to do the AI thing. What are you doing instead? And when it was

47:37the headset, I'm like, that's a dud, which it was. And the next thing appears to be the iPhone Duo. And I don't know if you've seen some of these reports, but those duos are breaking left and right. And not just because people are doing these breaking tests, but like a lot of customers are reporting trying to open up that iPhone Duo and the screen just immediately cracks and they go to the Apple store and they say, hey, can you replace this? And Apple says, sorry, no, because our inventory currently is zero. So I'd want to see Apple saying, here's what we're going to do instead. But to me, I don't see that vision from them. Maybe John Ternus will turn it around and he'll come up with an amazing product.

48:16And to be clear, he hasn't had nearly enough time to come up with a new strategy. But that is what I want to see from Apple. Because I mean, there's risks in everything. There's risks in deciding to do something and also deciding not to do something. And I do think that there is some significant downside risk in not participating in AI if AI turns out to be a huge revolution that creates huge amounts of profits for these companies. So, you know, the futures are so uncertain for all of these companies. The thing that they have on their side is the fact that each of them have unbelievably good existing businesses. They all, I mean, Meta's got the ad business, Google's got search, Apple's got the iPhone.

49:04I mean, all of these companies are in a really, really strong position. And I think if we're trying to pick out like winners versus losers, I could see a correction coming. I mean, I just don't see how the boom and bust cycle doesn't play out as it always does in this case. But none of those companies are going to go bankrupt. They're not going to go bust. They're going to have their multiples reduced, probably. I don't think it'll be dramatic, but I think it'll happen. The people who are going to get screwed are the companies whose only business is data centers and AI, i.e. the neoclouds. And I think we're already starting to see that. Like if there's an AI bubble, it's already popping for CoreWeave,

49:44for Iron, for Nebius, for all of these random data center names that people only started to hear about over the past one, two, or three years. And we're already seeing that in the credit default swaps, which are skyrocketing, the stock prices, which are plummeting. So, I mean, I think those names are going to get caught, especially as they become more and more reliant on sentiment in the capital markets because of their need market is behaving in terms of parsing winners from losers is the D word. It's discipline. We referenced Apple. They're like, fine, have at it, guys. Kill each other. We'll come in and we'll be the second mouse or a license. We'll pick a preferred AI provider and we'll do what we did with search,

50:39just get 98% gross margin licensing fee or whatever. The other company that's been rewarded lately is Microsoft. Of the five hyperscalers, Microsoft is the only one that doesn't remain cash flow positive. They're doing it right, I think. Yeah. Well, they've thread the needle, right? Whereas Google or Alphabet appears to be on the wrong side of the needle. But basically, the markets have already priced in except an expectation of exceptional growth from these businesses and they're all delivering against that exceptional growth but where it's parsing the winners from the losers is does there appear to be an adult with both hands on the capex wheel here or not driving down this highway at all but the two companies right now that the market likes the most are the

51:25one that's not playing in traffic, it said, I'm out. And two, the other one that appears to, it's the only one that's CapEx was lower than projected, right? The markets seem to like that right now. The markets need to say, we need to see the R on the I here. And part of that is not only about top line growth, but managing cost discipline. And I think on this one, the markets are right. Like, you know, I always love when I think the markets are wrong because it means I can have a very hot contrarian take on things. But I think that they're, I mean, I don't think they're right about Apple personally, but with Microsoft and the way that the things that they're prioritizing about CapEx and about discipline,

52:05I think is the right thing to be caring about. And I think Microsoft is a good example of that. I think Microsoft has done a good job here in terms of managing playing in the game, but also not betting the farm on this game. And I think investors are rewarding them for that. And I think that's what should be happening. I mean, what'll be interesting to see is how they respond to Anthropic, because jury's still out on that one. I want to put some numbers. The research team put together a great chart and we'll put it up here. The average annual infrastructure spending is a percentage of GDP for some other kind of transformative technologies. Canals were a transformative technology, and 0.7% of GDP was allocated to that innovation over a five-year

52:51period on average. Railroads is the one we always talk about, 1870 to 1890, 20-year period. On average every year, 2.2% of GDP. Electrification, 20-year period, 1905 to 1925, a half a percent of GDP. Electrification, 20-year period, 1905 to 1925, a half a percent of GDP. Highways, from 56 to 73, 1.13 percent. Telecom and fiber, Latin for the internet, from 1996 to 2003, 1.1 percent. AI, so far, the AI era, so to speak, 3.6% of GDP. So this just feels like- It's big. I mean, the railroads did transform the world. They really did. But along the way, there was a ton of bankruptcies. Now, the good news is, or asking yourself what could go right, are we in for a crash or what I'd call a measured decline that gives everyone, in other words, the V

53:48looks like a slope, not a severe down. I mean, are we starting, is some air in a healthy way starting to come out of the bubble a little bit as opposed to a pop? If you were to look at just the, you know, extremely levid AI names, like if you were looking at the neoclouds, like the bubbles popped, those names are crashing. Like that's what a crash looks like. But the difference is that with this AI build out, it's not just these new names that are participating in this whole thing. It's the big names, which might sound like, oh my God, that's really dangerous. But at the same time, it's like, actually it's less dangerous because those big names already have extremely strong pre-existing businesses. So, you know, we're not seeing this gigantic crash that you

54:36might see as people start to get very worried about the bubble because you have this sort of support mechanism where you've got a giant search business and you've got a giant ad business. I mean, it's an interesting, the dynamics are very interesting because it's almost as if there is more downside protection on this boom bust cycle than in previous ones, which is less dramatic and exciting and sensational, but ultimately better because it means less pain if things go wrong. I know I'm gonna get a lot of shit for that, for saying that, but it is what I believe. There are two scary things here that the media I think is mostly missing. The first is that, so we didn't even mention it. The most, I thought the most interesting number and what would have been the headline number

55:34from the Microsoft earnings call. Any guesses? We're not even talking about it. And it's a staggering number. Any guesses? Compute growth? Cloud revenue growth? I'll give you a hint. 60,000. I don't know. That's the number of buyouts that people that are offering buyouts do. I mean, this is the fear. I've never, again, going back to trying to sound more important than I'm on, I've never been on a board where it's like, oh, our revenues are up 20% or 12%, and we just offered buyouts to 60,000 people. You've never heard that before. This is the frightening part about AI, is you can massively grow your top line, beats on top and bottom, and the CEO says, oh, and try and reduce our headcount by 60,000 people?

56:28I mean, if you have any doubt that we have become shareholder nation, that the only thing that matters is earnings per share and year-to-date stock performance, 30 or 40 years ago, it would have been frontline news, Microsoft to offer buyouts to 60,000 people? Nearly a third of the workforce. Barely even mentioned. The other really frightening thing is I believe NVIDIA has agreed to purchase or participate in the debt offering of Meta. So these deals. There we go. And by the way, some of that money will be used to wait for it, be used to buy NVIDIA chips. So NVIDIA is not only selling the picks and the shovels, they're financing the mine, and they own the bank that's loaning the money to finance the mine of all circular deals here. And I used to do this in the 90s. We all kind of knew each other in the Valley to FDX in their heyday and how Sam Bankman Freed was investing in everything crypto and propping up the entire ecosystem, it feels like NVIDIA is, in terms of financing and related party

58:07transactions and circular deals, that kind of, I would have thought that that would start scaring people. 60,000? I think it has, which is why the multiple has contracted. And, you know, that's why I don't think I can buy NVIDIA, is for that reason. Like, even though the multiples come down. Don't tell that to Josh Brown. Yeah, exactly. Those are fighting words with Josh. But that's why I can't do it because of that. I mean, this is just classic bubble behavior. And the FTX comparison, I think, is a good one because what was it that brought FTX down? It was a change in market sentiment. As soon as you leave yourself that exposed and then suddenly the music stops, that's when the problems start to arise.

58:49And so, you know, again, it would be different if you were financing all of these operations independently, but that's not what's happening. They're becoming increasingly dependent on fundraising as you point. If Meta needs NVIDIA to go out and buy its equity or buy its debt, that tells you something about market sentiment and demand, which leaves you a lot more exposed. So that, yeah, that's the problem. We'll be right back. And for even more markets content, sign up for our newsletter at Thank you. to see it all in one place. But in actuality, your compliance data is all over the place. Controls in one tool, vendor risk in another, and customer commitments buried in contracts. Your team has to spend more time stitching it together and less time running the program.

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1:01:31It fosters understanding. It expands horizons. It connects people and communities to each other and to their own potential. Those are the values that drive Delta. With up to 5,500 daily Delta and Delta Connection flights to more than 300 destinations on six continents, Delta is committed to helping you explore your world. Whatever gives you the travel bug, Delta is here to help you get there. Visit delta.com for more info. Delta, wherever the journey takes you. This puts Instagram in more direct competition with YouTube, but there is one key difference. Unlike YouTube, Instagram won't share its ad revenue with creators. So Scott, this is just fascinating, especially for us, considering we are a podcast that posts our show to YouTube.

1:02:36It's a big part of our business. Met is essentially saying, do it on our platform. Do it on Instagram. 90-minute videos, podcasts, vlogs, interviews, all of that kind of media. I don't see a reason why we will not do that. This is not a zero-sum game. Our business is built on ads, selling ads, selling impressions. The more impressions we can make, the more influence, the more money we make. That's the way it works for most media businesses today. This, to me, seems like a good move by Meta that will genuinely cause problems for YouTube and for every other media company. What do you think? I think this is big. And this is how one small company is thinking about this. So the rub on this is they're not sharing

1:03:31any revenue, right? YouTube pays out, I think, about 50% of its revenue to creators. It's worked really well for them. Thus far, I think Instagram and their features has not said they're going to share any of the revenue. But at the same time, if you're profiting media, what we're going to do, we're going to go hard at this because we can embed ads in our content, right? We can do host readovers as part of the show. And that will, I believe, be in there. And if we can get another 100, 200, 300,000 views on Instagram features, then we can sell that into our advertisers, right? Because, so Instagram isn't gonna run ads and then do a revenue split, but I don't see any reason why we wouldn't be able

1:04:11to embed some sort of, you know, some sort of host read overs. Mark Zuckerberg is the best thief of IP in history, and he's clearly coming for YouTube. And just to give you a sense of the ecosystem, when you're talking about television, 49% of it or half of it is streaming. Cables, 19% broadcast is 18%, others 14%. And then let's break down the streaming ecosystem. It used to be YouTube, low double digits, Netflix, high single digits. That delta has broadened dramatically. YouTube now sits at 16, Netflix is at eight. Disney's at five, Prime Video at four. Roku, interesting, 3%, which I believe News Corp just purchased. Paramount at 2.3, Tubi at 1.9, Peacock Plus, 1.6. Warner Brothers Discovery, this was shocking to me because this includes HBO, is at 1.4%.

1:05:05It truly is artisanal at this point. And I think meta is absolutely coming for that 16% that YouTube commands right now. And the reason why we'll do it and go hard at it, at least initially, is that you got to think that meta with 3 billion users is going to game the algorithm and significantly over- over reward early adopters of features, right? Yes. So true. They're going to, all of a sudden you're going to have Ed Elson droning on for 70 minutes in your- And you will see it whether you like it or not. Right. And you're thinking like, where are the great Dane puppies? And where's the woman talking about social justice who also happens to be really hot? That's in my feed. All of a sudden, I'm going to have Ed.

1:05:50Move over. Ed Elson's here. experiment, but also you just got to think they're going to juice the first decent content, the first 10,000 creators that put up a reasonable 60 minutes of content or repurpose good content. Meta's going to, Meta's going to like, they're going to, they're the drug dealer passing out free crack to third graders, right? They're going to say, okay, would you like a little taste of hundreds of thousands of views for the early adopters? So as just one business, one small media business, we're going to go hard at this. I think this is the perfect encapsulation of what the problem is for a company like Netflix, because it says a lot that we are immediately down to do this.

1:06:47It tells you something about the way the media ecosystem works today, which is that it's not about contracts. We're not inking deals with Netflix or even YouTube. We're just trying to get our stuff out there. Wherever there are eyeballs, wherever there's attention, that's where we're trying to go. And we're not alone in that. That is the way most of this works. And so to me, this is an indictment of the traditional production budget model and honestly, the traditional streaming model. And this shows you where things are headed, which is that it's all going into a user-generated content direction. Like you've got Netflix's production budget of $20 billion. Compare that to Meta's production budget of literally zero because it's the users that are making the content. And I think that,

1:07:36you know, that might sound counterintuitive. Like why? I mean, Meta doesn't pay its creators. That's a striking thing. How is it that there is literally billions of hours of content that is being produced every day on that platform, despite the fact that Meta isn't paying them? The reason that that is happening is because people think of media differently, and the reality is people on Instagram, people on Reels, people on TikTok too, they want to get famous and they want to get followers and they want to get likes. And that in and of itself is a market, that is an ecosystem that drives more production, more user-generated content. And it's something that Meta has been able to exploit. In addition, they're basically telling people like us, you guys figure out how to make

1:08:26money yourselves. We're not going to pay you an ad share program. You guys go figure it out, figure out your third party agreements. You can negotiate your own deals by yourself. You guys are adults, handle it yourself. That's exactly what we are doing, is what we've done with our YouTube model as well. And I think it's what a lot of other creators are going to be doing as well. And all of this means that that viewing time number for Netflix specifically, which has been falling quite precipitously over the past several years, average viewing time per member on Netflix has fallen 26% in the past three years. That's going to keep going down. And I think it's really, really tough considering that Netflix stock is already down 44% in the past year. We know that

1:09:12they're getting killed by YouTube in terms of TV viewing time. And I think this really begs a very important question for Netflix, which is, what are you going to do about this? What is your plan? Because you're living in a very, very different world from what the world was five years ago. You used to be competing with HBO Max. You're competing with Meta, TikTok, YouTube. This is a very, very different media ecosystem. And I'm not totally sure what the answer is. I have been noodling on some ideas, but if you're on the Netflix board and you see this headline, what do you think and what do you do? that gets commenced two times sales in the marketplace versus it's at five now. And it used to be at eight or 10 because it was considered a tech company. They have to find either acquire,

1:10:11you know, I initially thought, why wouldn't they merge with NBC universal? They can go into parks. And I thought they don't want to be in the media business. They want to be seen as a tech company with a media platform. I think it's gotta be something around trying to, um, as you put it, start to own or get into the clip economy. And that a short form video that plays well to a phone. You know, my idea was open source kind of TikTok with their 99 percent long tail content. But they're they're in a difficult spot. I think that they're basically saying we need better content that we haven't had our K-pop demon hunters. I actually think the content is really strong. I'm watching East of Eden, I think it's fantastic. They're saying when they fired

1:10:51Bella Bajaria, they're saying we have the wrong cook and no one's eating at a buffet. And my analogy is I wonder if everyone's gone vegan and that it's just fewer and fewer people are willing to sit down. I won't invest an hour in anything that doesn't have 90 plus percent on Rotten Tomatoes. I mean, the bar is just becoming so high for what you're actually willing to spend that time on. Also, and this is just anecdotal, but I think it does show up in the earnings of Meta. I find that the best use of AI to date that people aren't really talking about is one that's invisible behind the curtain. And that is, I believe Instagram Reels literally deploys AI to turn your brain inside out. It's as if it knows what I want before I want it. And I'm just, I can't get over,

1:11:44I felt that way five or seven years ago, the first time I was on TikTok. I'm just, I can't get over, I felt that way five or seven years ago the first time I was on TikTok. I'm like, how did it figure out I like Great Danes? Like, how did it find some weird economist in South Africa talking about income inequality that I would be interested in? Like, how did it pick up on this? I believe the algorithm, everyone said, oh, TikTok, it's about the algo, right? I believe the algorithm now at Instagram, courtesy of the CapEx and AI, is dangerously addictive. I think it is so good right now. And when they apply that to content that competes against YouTube, wow. I just, I'm really curious to see how these wars

1:12:27play out. But Netflix, I was actually looking at Netflix as a buy because I think the management team is so strong and a built-in user base, but they don't want to consolidate with another media company because it just cements them as having the same problems as everybody else. They have to serve up a different type of food here. They have to get into short form that is really mobile friendly. Because the other thing that's just hard to ignore is that things are going really well in the sense that the flow of capital has been pretty much one way. And that is, it's been from a bigger screen to a smaller screen to the smallest screen, right? In general, I know movies will pass $10 billion for the first time, fine.

1:13:11It's a dead cap bounce. Movies is a shitty business. Television, still a huge business. Maybe not growing, flat, fine, whatever. Any great content on a phone, champagne and cocaine, right? What's interesting is the biggest screen is actually doing really well right now. And that is the, champagne and cocaine, right? What's interesting is the biggest screen is actually doing really well right now. And that is the screen of IRL, right? Going out, concerts, meeting people in real life. That's actually picking up, which is a really encouraging sign. But this ecosystem, I think that I'm summarizing, but I think meta doesn't even look at Netflix. Meta is going to go after YouTube. And in general, just what this is showing is that our brains, we are evolving a new species of people who just don't have the attention to justify, to create the consumption, to justify the amount of money that's gone into content. We were saying this two or three years ago, like how can they sustain this investment in content

1:14:07and original content? And the answer is they can't. So I think it's only a matter of time before Netflix one announces innovation acquisitions, developments of new things that give people a different type of food. Also, I think what's coming, they're gonna announce they're gonna reduce their content budget. They just can't, They're in the arms race and they've probably gone out too far. $20 billion. Anyways, I don't. So the answer is I don't know what they do other than trying to get into short form content and start to cut the content budget. You said something which I think is really interesting, which is like Netflix has always wanted to be seen as a tech company. And I think they have been successful in presenting themselves that way up until lately, where it's become clear that

1:14:56actually, no, you're basically like very similar to NBC Universal, very similar to Warner Brothers Discovery, Disney. You're not really a tech company. And I think what this comes down to, they are at this very important fork in the road, which is like, what actually are you? Like, are you a media company or are you a tech company? And I think they're struggling because I don't think they know what they are. I don't think they've figured that out. I think that they're sort of dabbling with this idea of let's get billion on production, and we're going to have high-quality premium content. We're going to become the sort of the luxury product of streaming. But then also they're doing the ads as well, which was a new introduction a couple years ago.

1:15:56So it's almost like they haven't figured out what it is that they actually are. And it makes me think of Aswath Damodaran, who's like, you know, you're dealing with a bit of an identity crisis as a company right now. And I think for me, what do they have to do? They have to decide what they are. Because currently Wall Street is not buying this, this idea that, oh, we're both at the same time. We're kind of interested in TVs, but also we're interested in the phones. We're interested in everything altogether. That's not working from both a cosmetic perspective in terms of the perception, but also from a business perspective. So in my view, it's like, you need to decide. I honestly don't think that the tech company angle is going to work.

1:16:41I think it's going to kind of look like old guy wants to be young. Like, oh, we're into the streaming. We're like YouTube. I think that ship has sailed, and it was a mistake. They should have kept up like YouTube. They should have invested heavily. But I think they should have done that two or three years ago, which is what we were suggesting two or three years ago. But I think if they try to enter that game now, it's going to be way too expensive, way too much competition. And it's going to be, they're kind of going to look like the meme, like, how do you do fellow kids? And it's not going to really work. So I'm starting to think maybe they just need to go all out media company, brand themselves as luxury premium. Maybe

1:17:21that boosts the multiple. Maybe they can charge higher prices. We have the greatest content in the world. It's a shittier business for sure, but it's something that I think they could pull off. But again, there is an identity crisis for Netflix and they have to decide who actually are we. Do you agree? They can never be a niche premium provider like HBO. They have to be mass. But yeah, I was looking at Netflix as a buy. I'm now thinking there's more pain there because I think it's going to be difficult to do any of this as quickly as the market wants. They need to figure out the story. If they figure out their story, everyone's going to be ready to buy, but they're in purgatory right now. Yep. Agreed.

1:18:07Let's take a look at the week ahead. We'll see earnings from Apple, Palantir, AMD, Pfizer, Novo Nordisk, Uber, Arm, and Qualcomm. We'll also get the employment report for October at the end of the week. But of course, the main event will be the midterms. Scott, any predictions? Yeah, my prediction is that Palantir beats and the stock falls. Palantir is trading at roughly 50 times sales, 50 times forward sales. In May, Palantir and Nvidia lost 120 billion in market cap the day after beating estimates. And at that multiple, a beat is the minimum. Anything short of a blowout is a sell on this thing at this price. I mean, essentially Palantir is the minimum. Anything short of a blowout is a sell on this thing at this price. I mean,

1:18:46essentially, Palantir is the student who, even if they get an A, the expectation is that they're supposed to get an A+. I just don't think they can... I don't think that... The market has become used to such incredible beats for a company trading at a PE of 16, much less a company trading at a forward price sales of 50X. In sum, I think some air is going to come out of Palantir. So the prediction is Palantir beats and the stock takes a fall. Okay. My prediction is going to bore you, but it's that the Democrats take the House and the Senate, sweep, blow out. Predicted it earlier in the year, but doubling down today. Your lips to God's ears, my brother. Bring on the blue. Oh my gosh. And to think that we don't believe in the gun show

1:19:37just is inaccurate. Hello, ladies. Daddy's going as Deadpool tonight. I've decided, I've decided. Looking big, looking big. I'll give you that. It's all the testosterone I've decided. I've decided. Looking big. Looking big. I'll give you that. It's all the testosterone I'm taking. There we go. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our video editor is Jorge Corte. Our research team is Dan Chalon, Chris Nodonohue, and Mia Silverio. Jake McPherson is our social producer. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profiteer Markets from ProfitG Media. If you liked what you heard,

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