SpaceX IPO and Market Predictions

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Avven Financial Inc NMLS number two zero four two three fourty five, cards issued pursuant to a license from VisaUSA Inc by Coastal commommunity Bank NMLS number four six two two eight nine member FDI SQL housing lender, subject to approval terms apply, visit aven dot com for details Today's number forty thousand Aout how many bottles of wine are in Joseph Stalin's wine vault, which the Georgian government unsealed for the first time last month? I don't know if you heard, but an alien race of women have been abducting men with especially large dicks. You're safe And also, this spaceship is just fucking amazing. Ed, I couldn't find a joke about Stalin that wasn't really, really bad. can imagine. Really bad. You found your way to aliens and Thig size, which is always a good combination. I thought it was good. I think it works. A Little ribbing of the co host. Nothing wrong with that That's what they come here for. My love language is giving people a hard time and then giving them money. That's true That's true. How are you? I'm doing well. You're in Sweden, I understand. yeep. I'm in Stockholm. which is not participated in a war in two hundred years. And that's why it's such a beautiful city. Somet happens when you avoid the most wealth destroying events in history You avoid wars. is it is beautiful. I can see you living here. You look like you'd fit in here. You look very swwedish. one hundred percent. Yeah, I was there a couple years ago for a speaking gig and I just loved it there. It was beautiful. It really is nice. Yeah Is it hot? No, it's like sixty, sixty five degrees and it' what it is is it's light. It's basically never gets really. It kind of feels like From eleven to eleven PM to four AM it just feels like dusk. It's a little weird. I think I'm a little bit manic and know I'm crashing. Wrong day to give up mh E wrrong day to give up mh Well, you're missing some incredible vibes here in New York U I die off for this unbelievable wayait. I mean, this this episode we're recording this before game five So who knows what'll happen by the time this episode goes out U, but Vibes are electric here. I mean, this is a whole ' not reason to be in New York. It's just unbelievable. And if we continue this, if the next continue to be as dominant as they appear to be I really think that this just changes the meaning of summers in New York. I mean, this is like Everyone on the streets on a random Wednesday night until two in the morning you can either be upset about that or you can love it The point is, I mean, this city is on fire right now and it's all because of the Nicks. So You're missing out. I so fucked up. I was supposed to be there this whole week I'll told you this, right I was invited to the Chanel party to the Tribecca Film Festival, to game two or three of the Nicks I was in such a good time and I had all these cool business meetings lined up and then I got a little bit drunk and I saw one of those fucking TikToks saying that ninety percent of the time you spend with your kids is over about the time you're eighteen and I freaked out bombed to the airport wentent home Walked in thinking I was like McArthur returning to his loving family or Phil from Phil Dumphy from modern Fily. I walk in, my two boys are there And literally, this is what I got. That's it. They nodded. They kind of turned their head and looked up like, Hey bro, N have been no Hey bro. Nothing Literally nothing. And then what do you? D you punish them? You gotta punish them for that? I have never punished my kids once. I threaten to punish a I threatened toonun it. That's it. I'm taking your phone away and then I realized they use their phone to order food for me. The order the five guys Yeah, such that I don't starve and and it's how it's it's how they get on the subway with their phone now. anyyways, but Yeah, I don't they didn't they didn't appear to miss. I fucked up. I I would love to be in New York right now. Well, you learned your lesson, basketball and sexy parties over kids every time. hundredundred percent. what am I thinking? And now you know and can take this forward You have some learnings and you can change your behaviors. So there's always a silver lining to messing things up. I'm going to overwhelm my imposter syyndrome with sincere incompetence I likek that. I like that. That's clever. I'm gonna think about that too. All right, well we have a lot to get into here Thatsall we get into our stories? Let's do it The biggest IPO in history has finally arrived. SpaceX began trading under the Ticker SPCX at onear one hundred and fifty dollars An eleven percent jump from its IPO price. And as trading began, shares rose to around one hundred and sixty dollars, which is cllose to twenty percent up from the original IPO price. The debut marks a historic milestone for Elon Musk whose net worth has now supposed One trillion doars Elon is officially The world's first trillionaire as of this It's also a major moment for the broader market. afterfter years of waiting for the private market's biggest winners to go public. investors are finally getting their chance with anthropic and open AI expected to follow. SpaceX is the first in a wave buster IPOs that could define the next era of the public market. So Scott Let's get into this. SpaceX was the IPO price, the issuance price was one hundred and thirty five dollars. We were all wondering if it would pop as soon as it started trading. My prediction, you might remember was that the stock would pop immediately twenty five percent as soon as it started trading. It immediately seemed like that was the case because we were hearing murmurs that the stock was going to go out one hundred and seventy, maybe close to one hundred and seventy five. But then as soon as it officially opened, it opened at around one hundred and fifty dollars. That's an eleven percent jump. a success, but not as much of a success as many of us, including myself predicted, Um, and now we're discussing this during the trading day on Friday and shares are hovering around one hundred and sixty, moving up to one hundred and sixty five. It's incredibly volatile right now Let's just start with your initial reactions. We can get into the valuation too. some interesting new news. alsoso the fact that Elon is now a trillionaire. But let's start with your initial reactions to this stock finally going public Wellve Elon Musk had a dollar for every racist and stupid tweet or thing he's ever said Oh wait he does now He does know E You know, I try to get excited about this because A lot of people You know, you could argue a lot of people have been made up. I've talked to someone here in Stockholm who works for one of the investment banks taking them out And he reminded me, he's like, lookook, this's great for economic growth. There's supposedly More than a dozen or a dozen a half people just in Texas who no one's ever heard of who became billionaires today And they'll go, start companies, make investments, buy things, fuel the economy And you also see, you know people excited about the markets, more capital flowing into the US markets They're going to spend that money, economic growth, GDP The problem I have is where I come back to Earth here is that who is funding all this? and where is that money coming from? And I still would argue this is the greatest transfer of wealth we've seen, at least in a short time from retail investors to a small concentration of people since crypto And U, I'm, you know, I'm a boomer. I just look at this and I think it doesn't make any sense. and what I think we have here and it hasn't got enough discussion is the greatest and Most scaled example of manufactured scarcity. I was walking around Stockholm today and I walked by our mess store And they purposely have a line. I looked in the store, it wasn't that busy, but they purposely create a line to create the sense of scarcity. And then if you go in and try and buy a Birken bag They put you on a waiting list and they tell you, Oh, no, no, no. And these are not complicated things to manufacture But they want to create the illusion of scarcity or manufactured scarcity And what I don't think people are focused enough on here and there's been news on it, but it's really, I think the whole shooting match is that Musk threatened not to go public on the NSDAQ unless they waived the twelve month requirements for him to be included in the NSDAQ one hundred So they backed down. They blinked. The SMP said no The Dow Jones said no, but the NASDAq blinked. and the result is they're immediately included in these indices If it's at two trillion dollars and there's fifty trillionars of market cap in the NASDAQ one hundred. That means all the indices that track the NASDAQ one hundred now have to put four percent of their assets under management into SpaceX stock, creating anywhere between twenty and call it fifty billion dollars in additional demand that no IPO. uh, is, you know, benefits from. In addition, Traditional IPO rules are that you have to issue at least ten percent of your shares. They didn't. They issued five percent. So massive artificial demand or demand that no one else has benefited from from constrained supply that no one else has been able to manufacture And what you have is a pop a twenty percent or twenty five percent pop on what I think is manufactured scarcity. now The question is where do you go from here? And I would argue, someone called me and said, I have access to share. shouldhould I do it? I said I think you should, but I would look at this as a trade, not as an investment. becausecause eventually that manufactured scarcity begins to Leak Yeah. you know, block upps come off after a couple of earnings calls, there will be some settling around where the stock you reasonably should be But I think what we saw today was going to go down in the history books for bankers, the NSDAQ backing down Elon Musk's power in the marketplace creating a level of manufured scarcity, the likes of which we have never seen before and just the last thing this This person told me who works at one of the lead underwriters is they did no less than five hundred calls with high net worth investors taking them through um taking them through the deal and why it was a good idea So you have had some of the most talented people in finance basically crawling over anyone with a heartbeat pulse, high net worth, retail, et cetera, to try and create unbelievable demand. So the bankers have done their job here. I think they're going to get about a half a billion dollars In fees. I thought it was a billion, but someone correct me and said it's half a billion. a little more than that around six hundred fifty million dollars in fees. Yeah. There you go. But again, the key to a luxury brand, the key to irrational margins is manufactured scarcity. and we've never seen we've never seen it like this. is the king of the markup. Let's just look at the valuation here. It's currently at around two point one trillion dollars. So that means it's trading at one hundred and twelve times last year's sales. We've pointed this out before, but meta went public at twenty eight times trailing revenue and they were growing revenues eighty eight percent the year before the IPO. Google went public at about ten times trailing revenues Growing revenueues two hundred and forty percent the year before the IPO. This is more than one hundred and it grew thirty three percent last year. And in its most recent quarter, it grew fifteen percent. So it has I mean, massively lower growth than some of these other IPOs. In fact more than an order of magnitude. lower growth in many of these very successful tech IPOs. And then we can just look at the comparison to the price of sales multiples of some of the MG seven companies today. Met is trading at seven time sales, Microsoft is at less than ten time sales, alphabets's at around eleven time sales. I mean, right there, you have your answer. This is wildly valued as a company And the question of course is, why are people down to pay this much. And I think Gil Luria said something really U true and really striking on the show when we had him on last week he said that Elon essentially what he does, he has this trick where he has his business that he sells for today, the business of tomorrow, and then the business that's way out in the future. In the case of Tesla, you have the cause today and then you have the Robotaxis tomorrow and then you have the humanoid robots way out in the future. And in the case of SpaceX, he's done the same thing where you have Starlink today, you have orbital space based data centers tomorrow, supposedly. And then way out in the future, you have asteroid mining and you have building civilizations and populations on Mars. And all of that is a function of storytelling That's basically all he's doing in the same way as you described that Amz can mark up their handbags to these extraordinary prices because they're really good at selling the brand, creating a culture and creating an ethos around the brand. and that's what allows them to do it. Elon is doing the exact same thing here. The question is How long does this last I I predicted. I think you predict. I think many of us predicted that on day one This would be a hit I gott to say 's been a little bit I would say Underwhelmed compompared to what expectations were, I thought it was going to be twenty five percent immediately. and I saw a world in which it could go even higher than that. We looked at an eleven percent jump right at the opening Again, the question becomes What is it going to look like over the next five, six, seven, eight months. What's going to happen as the lockup periods expire? And we could also note that it has some kind of funky lockups compared to traditional IPOs, which usually there's an one hundred eighty day cliff. And instead, SpaceX has opted for this rolling release valve where they essentially let you sell your stock in what is essentially twenty day increments. It starts after seventy days and then ninety days and then one hundred twenty days. It's a kind of complicated setup, which is designed to make it easier to sell your stock over the short term. And my assumption is we're going to see unprecedented selling Because I think everyone knows this thing is very hot right now. It's in demand big day on the IPO and that is somewhat what we're seeing. But then over time, they're going to start to realize, okay, now I want to cash out. now I'm going to sell And so my expectation is that the stock is going to get cut in half over the next six months as the lockup periods expire and as all of the hype and the excitement starts to wear off. There's just so many things here that lead to a transfer of wealth and power from the little guy to the big guy. So for example three point seven five billion They reserved was reserved to give to like friends and family with no lockup So why wouldn't they give those to I don't know, journalists who say nice things about SpaceX or to Don Juni. Hey, we have worked with our bankers. We think there's going to be a twenty percent pop here. You know, wouldould you like an easy two million bucks? putut ten million in? not that I'm recommending this, but you can sell in the first trade if you want. We think there's going to be at least a twenty percent pop. And meananwhile, the retail investor who might be subject to these weird lockups is crazy. What you're effectively doing is creating a different class of stock. You're not supposed to do that. My understanding of securities law is that when one class of stock has different trading rights than another. And you're not an insider, you've created a different class of shares. By the way, I just want to just to clarify, the retail investors actually can sell if they want to via these brokerage apps Supposedly if they do sell, they're banned apparently they're going to be not allowed to buy into future IPOs. So you're allowed to, but the platforms are setting it up to discourage you from doing that. So call it a soft lockup. Soft lock upp. Yeah. But when you trate when you create different conditions on the sale and purchase of a stock, you're creating a new equity unless you're an insider Somehow, I thought that was illegal according to the SEC, but supposedly that's now That's not legal. We don't have much in the SEC anymore. Yeah Yeah, so this is againgain, you know, it just feels like look out below. the thing I wasn't anticipating and I'm curious to hear your thoughts on it. I would have thought that the other guys would have traded up in sympathy. And according to According to Mia here, Rcket Lab, Echoostar and Space moobil have declined ten, twelve and fourteen percent respectively. I would have thought they would have traded up in sympathy . I don't know if that's because people had to sell that stuff to get into this. Correct. What you think that's it? one hundred percent. And this is the thing that we were saying last week in terms of the equity supply. And we've seen this with a lot of the big tech names. We saw this with Microsoft and the Mag seven stocks and some of the chip stocks even, where in order to fund the incredible demand essentially or I guess Given the massive injection of supply that has entered the markets because of the SpaceX IPO, a lot of people didn't have the money to fund that And so what did they do? They decided to sell their positions. And this is what I said to you on the show last week. if you don't have the money available buy the spaceics IO that you want in Do you sell You probably sell your existing tech positions. You don't sell your defensive positions. you don't sell, you certainly don't sell your house but you sell all of your more speculative positions, trim those down so that you can fund this new position. So yes, Virgin Galactic is down, AST Space moobile is down, Rocket Lab is down. And in the build upp to this IPO, we saw the same thing with many of the tech names. So I think and this is exactly what we said I think that when you have open AI going public as well and thropic going public I mean, we'll see when they go public. It seems like they're going to go public very soon, perhaps around the same time. You're going to see the same dynamic. in order to fund that, in order to keep up with supply, as we said, this is econ one hundred one when there is more supply that results in lower prices overall When we see that massive injection of supply, suddenly investors are going to have to think, okay, how do I get in? I'll trim my position in Tesla, I'll trim my position in these tech companies, and that way I can get into these stocks. So that is exactly what we're seeing right now. in the space market itself. You also mentioned the idea of different classes of shares here which I think is very important and is especially important as it relates to Elon Musk who will retain eighty two percent of the voting power of this company, which is now one of the top ten most valuable companies in the world. It's more valuable than Tesla. He owns eighty two percent of the voting power. He picks the board. He cannot be fired by anyone other than himself. He has also required shareholders to unconditionally waive the right to jury trials and class action lawsuits He has PTSD from being sued by Tesla shareholders. And of course, he is also incorporated in Texas. And as we've discussed on the show, the Texas Business Court is famously weak on protecting shareholders. It's very pro founder, it's very pro CEO. it's very pro insiders. eighty two percent. of the voting power. I mean, Maybe that makes you conffident because you really trust Elon. But if you Don't trust this guy. if you don't trust his judgment entirely, if you think that he's spending the majority of his time on ketamine or whatever you think That's a terrible number to see. And I have noticed that some pension funds are opting out because of that number. What do you make of that From a governance perspective. Well, so corporate governance is based on governance and that is it's supposed to be one share one vote, like one man one vote, right? That's the idea that if you're You want to attach economic sacrifice or risk to authority. So ideally, what you want in a company is that if fifty one percent of the shares vote for a certain action to fire the CEO or to sell the company or to put in place certain initiatives, they given that they've put fifty one percent of their capital at risk that they get fifty one percent of the vote dual class shareholder companies basically separate ownership from authority. and that is and it initially was invented by owners of newspapers and media companies who said, we're worried that a bad person is going to come in and use their economic power to buy a great media company and use it for their bad actor means Google's founders were the first to demand a dual class shareholder company. want to maintain control with a minority position. and it actually, the VC's pushed back, and ultimately Larry and Sergey won out. and that created a flood of new companies with dual class shareholder structures. Everyone from Richmont The Salzbergers own less than one percent of the New York Times and they control it. The Ford family owns, I think, single digit percentage of Ford. They control Ford. I'm not I'm not as excised by that because My sense is buyers you know need to do their own research. and there's a lot of companies that have a similar dual class shareholder structure and they know what they're getting into or they don't. But that's up to them. There's two sides of the trit. If you don't want Elon in charge, don't buy the stock. What I'm more worried about and I think is a bigger existential risk is that we now have one man and specifically this man who has more wealth than any man in history by any ratio And wealth in a capitalist society and in an eetrooric economy is just infinitely more powerful. So this is someone who can turn off and on battlefield technologies And I've already said to you, I think the fix is in. I think that My guess is Donald Trump has had many conversations and open dialogue with Elon Musk And Elon Musk is now Okay, so he's a trillionaire And say he he got say he leaned on Trump I mean, first off, let's talk let's just talk about that wealth That amount of wealth and power, I believe results with Citizens United in an undue amount of political influence. And generally speaking, for example, most elections are kind of You know, forty nine fifty one or forty seven fifty three And when you have someone who basically might say, hey, Donald, you know, put pressure on your SEC chair to wive all these stupid rules in exchange I you know, I'm now a triillionaire. If I put two hundred and fifty million to work in your campaign and had an influence, what if I put ten billion to work now? One percent of my net worth And so I think it's just a very I think power corrupts and absolute power absolutely corrupts. also I don't think Elon Musk has acquitted himself well in terms of judgment So I think I think we're in that dual class shareholder, poor governance That doesn't freak me out. People can decide to sell the stock. What freaks me out? is having someone who doesn't live with other people as far as I know, is strange from you know, one or more of his children and He got a substance abuse issue and sleeps with a loaded gun next to his bed and believes there's a white genocide taking place in South Africa is now the most powerful person to ever exist on the planet. And just to wrap up this word salad, I've now gone to where Gary Stevenson, you know, Gary's economics is and that is He reframed my view of taxes in in a sense that he said Taxes are our protection from corruption, there are protection from people aggregating too much power And as I sit here in Stockholm, where there's higher tax rates We have this false argument in the United States that democracy and, um Socialism can't coexist And that's the wrong argument What they've settled here in Sweden is I walk around and see GDP growth of two percent and no homeless people and really great education. is that You can have billionaires and universal child carere And so this notion that it's one or the other that you have to put up with homeless people and weirdness and corruption h Sweden has produced Spotify, Karna Kang. Erksson they they have the they have the A GDP of seventy five thousand dollars per for an individual with a population of North Carolina and a deficit that is thirty percent of GDP versus ours at one hundred and thirty. And I think that the what I'll call the billionaire classes created this argument that No, you can't have economic growth unless you have this incredibly low taxation rate And obviously I'm a little bit fond of Sweden right now because its summer dayay in Stockholm But I think this country and other places say that that is just a bullshit argument from people who want to aggregate way too much fucking power. So dual class shareholder company, I'm not worried about it. One man with this much power I think that's a risk. Yeah, but it says something about his priorities. despite the fact that he is the richest man in the world, the richest man in America, the richest man in American history And if we want to start figuring out, is he the richest man to ever exist on a relative basis? I'm not sure exactly, but I know for certain that that is true of the history of America where he's worth three point two percent of US GDP and the next richest in history was Johny. Rockefeller who was worth less than half of that on a relative basis. But he still needs that power. He still needs to have more than eighty percent of the voting power of this company And it's just striking the sense in which it is actually never enough for him He has to continue to accumulate more and more wealth more and more power and anyt time that there are any norms placed on him. This is what usually happens. This is usually how Voting power is divvied up when you go public. He has to reject them. He says, No, I'm not doing it unless I have Total control over the entire thing And let's just, I mean, a trillion dollars We should just like into perspective and because we're only a week away from normalizing that. You know, I've been seeing people on Twitter, mostly Twitter, but people on social media Basically getting excited for him that he's now a trillionaire. Like he posted some meme about how he's now a trillionaire. And I see a lot of people retweeting it and being like, let's go Elon. L he crushed it which is such a strange I don't understand it, but it's some strange blend of like sycophancy with this belief that you too will eventually become a trillionaire, or he's kind of sticking it to the man in some way, even though he is now the man because he is literally worth a trillion dollars. I don't really know what the psychology is, but I know that we're about to normalize it. I want to put this in a perspective, this makes Elon now that this company has gone public Richer than the bottom forty six percent of the entire world population combined So he has more wealth Then three point eight billion people in the southern end of the. Yes. Yeah. that is phrase it and it's not socialist or communist to state that fact and to say, wow, that's a lot of power That's a lot of money. There's so much sensitivity about this issue. As soon as you bring it up, people go, oh, so what? you're a communist now? That's you just want to You know, socialize everything, sees the means. I mean, we just need to state the facts here. This guy's worth a trillion dollars. That's absurd crazy. There's no way that that is going to be efficiently allocated throughout the markets. That to me doesn't say that the markets are working as they are intended. So I one hundred percent agree with your point. I have some other stuff in here that we can get into, but Maybe I'll just pause there and see if you have any reactions. There's One of the greatest features of Americans is their optimism Americans think they're going to be rich And it enables them or encourages them to take risks, to move, to quit their jobs, go to where they think their human capital will be better used, do startups. It encourages him to make crazy investments. And as a result, we have one of, you know, the most impressive economy in history. There's a real upside to that optimism The downside is that Everybody believes their lottery ticket is going to be a winner. Yeah And you end up with a trillionaire while forty percent of American households have medical or dental debt. And it just strikes me that we've created this false flag or this false argument that you can't have this type of economic growth while having you know, universal health care Sure you town And but you have to fund it. And this rooting on I think I can understand rooting on SpaceX. I can understand rooting on someone who makes extraordinary wealth I guess what I would ask is Should that person be taxed at a progressive tax, right And do we want, do we want a world in which So many people are having a difficult time making ends meet and one person who if they stack dollar bills or hundred dollar bills gets a third the way to the moon. And people say, well, that's a function of capitalism. No, it's not. There's capitalist countries all over the world where You know kids don't One in five households don't have kids who are food insecure So I actually, you know where I land on this is one distinctiveive offering and you know my feelings about the manufacturer scarcity, but on the social side of things I think it's great that someone can make a trillion dollars What bothers me is that they're not taxed at a decent rate and we don't put the same safeguards or apply the same norms to them, thereby again, reflecting U Elon Musk is probably going to decide who the next president is I think we're naive to think that he doesn't have that power now I think that's right. I mean, it's one thing to play the game and make a lot of money playing the game, but it's a different thing to rig the game and it make a lot of rigging it And that seems to be what the direction we're headed and especially the extent to which And People like Elon appear to be buying our politics. I mean, we've seen how B billionaire spending on political campaigns has just exploded ever since Citizens United, and it does result in these regulations, which makes it easier to make huge amounts of money, particularly with this insider trading stuff, which is why I believe that that is Probably the biggest issue that we're seeing in the current administration right now is just the total collapse of invested protections in the increase of insider trading One final point I just want to point out, related to the circular deal making that we've described in the past, and this is very interesting. and our research assistant, Dan Chalan pointed this out. and it's a really good point After the S one drop for SpaceX, they announced this deal with Google where Google was going to buy nine hundred twenty billion dollars per month worth of AI compute from SpaceX. And a lot of people say, hey, SpaceX has a good business now. like they're figuring it out It was very strange though, because We also have to recognize that Google owns six percent of SpaceX. So once again, we have a situation where the investor is the customer at the same time. And so when you think about it at the current valuation a hundred time sales ish Well do you think about it that way For every dollar that Google spends on SpaceX compute They get about six dollars back. in shareholder value because they own six percent of the company. Now that already is like, that's weird. You're paying for something and then getting something in return in the form of higher returns for your shares Heres where it gets weirder. Google will pay SpaceX eight thousand four hundred dollars per GPU per month Compare that to anthropic And their deal with anthropic was released was announced weeks, within weeks of the Google deal Compare that to the anthropics deal with SpaceX, they're paying three thousand eight hundred dollars per GPU per month. So Google is paying more than double anthropic, supposedly their competitor paying And the deal was announced basically at the same time and you have to wonder why. And I think the answer is they're down to pay a ridiculous price because they are a shareholder and because they know if they pay that amount then they'll get it back. And so I think this is just more evidence of how these circular deals are distorting the AI economy. It's inflating the revenues of various companies. in this case, it's inflating SpaceX's revenues. if that is indeed what is happening, and at the same time, it's inflating the valuation, which are simultaneously inflates. Google's valuation, it's all getting a little bit weird So I just thought that we should just point that out Do you have any final was on SpaceX before we wrap this up. I hope he goes to Mars and then Houston says This is an incredible step for mankind and it cuts off all communication from him I don't know. So the question rather than preaching I think he asks people where are they actually putting their money. I haven't shorted a stock in a long time And I don't think I'm going to short SpaceX because it's a meme stock and it's just, you know, and I wouldn't recommend that to anybody because I shorted a game stop during the meme phenomena and I shorted it at four hundred dollars And the next morning went to six hundred. And I was sitting there going, but it makes no sense. It's like the marketss like hold my beer on what makes sense or what doesn't, right Unfortunately, I had the capital to hold on and end up making money. What I am considering doing is looking at all these other, I thought all these differentnt AI and space companies we're all going to trade up I think there's a lot of crap out there. I think there's a lot of AI companies trading for a billion or three billion that are basically L there's that one food delivery thing that has these little robot. Obuds, the new AI company. Whatever it is, right? I think there's a lot of for the first time, and again, not financial advice, this one I'm getting a list of kind of a dozen a dozen companies that have benefited from this AI You know H pomania And I'm going to create a basket and do some longated long dated puts out of the money puts. Because this does feel I am now confident saying, This absolutely feels like ninety nine again. I mean, this does feel This changed the game. The SpaceX IPR changed the game. percent. Yeah Your thoughts said. No, I think that's I think that's interesting. I personally won't because I'm afraid of shorting, and I just think that it's such a difficult game to win I do want to see your bket and maybe I'll change my mind once you send it to me 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. The support for the show comes from Quince. Wardrobe changes normally coincide with the changing of the seasons, and while it might be tough to put away your favorite cardigan, you're going to be happy you did when you bring out pieces that feel lighter and more breathable That's where Qints comes in. 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That's QuNCE d. com slash markets for free shipping and three hundred and sixty five day returns, quintince d. com slash markets The for the show comes from Zbiotics. Let's face it, none of us bounnce back like we used to, especially after a great night out. One solution pre alcohol by Zbiotics. Zbiotics' pre alcohol probiotic drink is the world's first genetically engineered probiotics It was invented by PhD scientists to tackle rough mornings after drinking. Here's how it works When you drink, alcohol gets converted into a toxic byproduct in the gut It's a build upp of this product, not dehydration that's to blame for rough days after drinking Preree alcohol produces an enzyme to break this byproduct down. Just remember to make pre alcohol your first drink of a night, drink responsibly and feel your best tomorrow I speak about alcohol a lot. I enjoy alcohol. As I get older, I'm trying to moderate it. and so let's be honest, my liver can't process it the way it used to when I was a younger man When I do go out and know I'm going to be drinking, I start the night with zebiotics. and I was doing this before. They were an advertiser on the podcast Go to zbiotics dot com slash profG to learn more and get fifteen percent off your first order when you use profG checkout Zebiotics is backed with one hundred percent money back guarantee, so if you're unsatisfied for any reason, they'll refund your money, no questions asked Remember to head to zebiotics d. com slash prop G and use the code prop G a checkout for fifteen percent off. The for the show comes from Vanta. What's the one thing moving through business faster than AI? AI risk. Every new platform your team adopts, every vendor rolling out AI features, every added integration can create new exposure for your company And most security programs weren't built to move at AI speed. That's where Vanta comes in Vanta is the leading agentic trust platform trusted by more than sixteen thousand fast growing companies including Ramp, Cursor and Harvey to stay continuously audit ready. And now VantA helps companies like Aers track the risks that appear between audits across vendors, AI tools in your broader environment The Vanta agent works like a twenty four seven GRC engineer behind the scenes, identifying issues, suggesting fixes, and cutting vendor assessment time by up to fifty percent Whether you're a fast growing startup or a global enterprise, Vanta is here to help you automate your security and compliance and earn improve trust. Get started today at Vanta. com slash markets. That's vaNa. com slash markets. We're back with profty markets. Inflation rose four point two percent in May from a year ago, marking the highest reading in three years. Meanwhile, real wages fell for the second straight month Meaning Americans are once again seeing prices rise faster than their incomes puts even more pressure on the Federal Reserve ahead of Wednesday's interest rate decision. It'll be the first meeting with Kevin Warsh serving as governor and investors are increasingly betting that the Fed may need to stay aggressive on Calcii. The odds are the rate hike before twenty twenty seven have climbed to roughly fifty percent. And if you remember at the start of the year The odds were in the single digits So Scott This inflation report were up to four point two percent I'll just point out that before we had the tariffs, essentially the inflation that Trump inherited was two point three percent. Then we put on the tariffs and it rises to three percent within a year And then we add this war in Iran on top of that. and a strait that remains blockaded. and we keep on hearing about a deal, but then we also see that we're striking Iran, striking missiles in Iran. Trump is now saying that he wants to take Karg Island and so add that war on top of it You add on the inflation in oil prices And we are now at four point two percent. We are above four percent. We're more than two full percentage points above the Feds target rate. There's a lot to say here about this inflation report. Where would you like to start? So let's just for a reference point, let's compare it to some other G seven countries or neighbors. Mexico, we're at four point two. Mexico is at three point nine The eurozone is at three point two. Canada our neighbor to the north put these ridiculous tariffs on. despite that, and seventy percent of their export market being to the US, their inflation is at two point eight The UK, two point eight, Japan, one point four and China, kind of our economic rival, their inflation one point two percent And the problem is that most people don't understand the power of compounding. So they hear four point two and they think, oh, that's nothing. My mortgage is six percent. My auto loan is eight percent. My interest rate on my credit card is fifteen percent. So just to do some math, if you were If inflation were to stay like this and you had a baby When that kid was ready to go to college, and that may sound like a long way away, but trust me, it goes faster than you think. you know, see above they're indiffere when you file the fucking way home and miss the next game. But anyway All of a sudden, the tuition, if inflation were to just keep compounding the way it is now and you had a baby, when that kid goes to, say USC with a tuition is sixty eight thousand dollars. That means tuition is going to be one hundred thirty six thousand dollars if We in academia don't continue to raise tuition fas than inflation, which we've done for the last forty years People have a tough time imagining anything in eighteen years. So let's just go out, your kid starts at USC as a freshman If inflation were to continue going at four point four percent, that means a new car, which usually costs forty nine thousand dollars, by the time they graduate from college, it would be sixty thousand dollars People don't realize that this number may sound innocent. It's not. I think that's important point, but it has a very big if in the statement, which is if this remains at above four percent for the next several years What I can tell you is Most people do not think that that will happen Most people on Wall Street do not think that would happen. if that did happen it would be Basically a gigantic disaster for the entire U S. economy, especially if we see that the wage growth continues to be lower than the Price growth So I take your point, but there are a lot of big ifs there. And so I guess my question that I would follow up with to you is, do you believe that this is going to last You said yes. I don't. But if Trump had his way, we risk inflation go eight percent to twelve percent because he would vote to cut interest rate for a short term bump in his popularity, which could create panic buying in an upward spile of inflation. I mean, it's not it's not unthinkable to think inflation could go to eightcent or ten percent It's not an I mean, inflation starts can the fear, the real panic is that people start thinking, I got to get rid of my cash because asset prices are going up so fast. So whenever people get cash in Argenta they don't hold onto it. They either transition it to Bitcoin or they buy something And To think that that can't happen here is to ignore what's happened with every fiat currency in history, that eventually the political pressure to print more money and not be fiscally responsible outweighs any see about fiscal responsibility and end up with too much moneying chasing too few products. So will it likely happen? No? Could it Absolutely. and What people also don't recognize is that inflation is yet another transfer of wealth from earners to owners Inflation has been out of control in Argentina since the end of World War two, but the same wealthy families are still wealthy because If you own land, if you own assets, I'm hedged against inflation becausecause I own a bunch of real estate and I own a bunch of stocks. And as inflation goes up, so does the price of rent, so does the price of buying an iPhone So my Apple shares in my house goes up in value. Who gets fucked Is you and everyone else on this podcast who's wages do not keep pace With inflation So again, inflation is especially difficult on earners versus owners and it's yet another transfer of wealth emersed owners thereby increasing income inequality. When you talk about dissatisfaction and anger, U again, I love that basic premise that revolutions aren't started by people who are unemployed. It's started by people who are working two jobs and are still hungry. So inflation, the Fed's job, you know, Fed is to keep employment at a certain level or unemployment below a certain level and to ensure inflation never gets out of control. But that is the wrong order. They know that Inflation is the thing that brings down nations, not unemployment. Yeah. I mean, just looking through some of the increases in prices here. uh I mean, obviously airfares are way up twenty seven percent UVA gasoline, all types of gasoline up forty one percent fuel oil, up fifty nine percent year over year, but it isn't just oil prices that are closing the home here. I think is I mean, there are some downstream effects and it's kind of this awful combination of the tariffs combined with the war blocking the Strait of Hamuz. So you've got non alcoholic beverage prices up almost six percent, fruit and vegetable prices up more than six percent and meat prices up seven and a half percent. So what we have here are exploding grocery prices which, as you say, is really a tax on lower and middle income households in America, generally speaking, the richest households aren't all that worried about the price of groceries going up, but it really eats at your purchasing power if you are in the lower cointile of earers. So That is a real problem I think the question, I mean You say inflation could get to eightight of nine percent. like I agree But I think anything can happen in general. I think what we want to be doing and thinking about is what is the most likely scenario I think that a lot of people believe or the sort of the consensus is that this is temporary and it's going to come down And the reason for that belief is that they believe Trump is going to resolve the issues in Iran and that we're going to come to some semblance of a deal with Iran and all of the oil that's being blocked up in the Strait of Hormuz is going to flow again, and then prices are going to come back down That is generally the consensus when you look at prices and also when I speak with people on Wall Street, when I speak with Wall Street analysts, when I speak with economists, like that is the general belief I'd be curious to get your views. and I know you have some updated views on Iran, which I find interesting I'd want to hear from you your thoughts on that My view is win nowhere close to being done here And I've been saying this since it started Um I mean, when he launched the attacks, he said Trump said that it was going to take four weeks. I think he then pushed it to maximum five weeks. As soon as this began, the first thing I did is I went back and I found that Donald Rumsfeld quote, saying that the Iraq war would be eight weeks and pointed out a very simple fact, which was that it was eight years And then we had the same thing with Afghanistan where they said it would be a few months and it ended up being two decades. So my view from the beginning was this is going to be way longer and way more drawn out than anyone would expect. Why? Because wars are extremely difficult and we have a very, very a strong substantive track record of saying it's going to be this amount of time and then it ends up being way, way longer. So as of Today, we're into week fourteen So we're in month three now And still, we have this assumption, oh, it's going to resolve in some way. Trump's going to kind of figure it out, or he's going to talkaco on the war, which I personally think is a lot more difficult to talkaco on warfare versus tariffs I just don't see it happening. So This goes back to expectations for what inflation is going to look like over the long term. I think we're going to stick around here for a long time And I can expand on that But I want to hear from you and your views on what this means and what it'll look like going forward over the next few months and then we can get into inflation expectations longer term. You made a compelling argument. You kind of broke down loosely speaking that we're at four percent and we'd be at two if it wasn't for the war and Iran and these tariffs that literally our inflation is up from what is a target inflation rate of two percent to four percent based on self inflicted injury And as it relates to Iran, There's two concepts. The first is when officers are evaluating subordinates in terms of decisions, and they spend a lot of time analyzing decisions that were made. What they do is they say, it it's not the outcome that determines whether the officer made the right decision. they go back and say, at that moment, given the information available, did the officer make the right decision and Go back to So first off in Iran, you at the very beginning said this is a quagmire. It's bad idea. This will go longer than anyone expects I said I think this could be a good idea. You were right, I was wrong And going back The idea of toppling a wobbling regime neeutering the Navy. furthther further defenonestrating their missile capabilities, further staunching the flow of capital and resources to their proxies I thought there was a real opportunity And had we, I believe signed up some European allies, done a better job of analyzing the threats to our Gulf neighbors, securing the Straits of Formz before they had an opportunity to start wreaking havoc there. And quite frankly, going in, having very strict narrow military objectives and then leaving I still holded the fact that there was an argument for this. Now the second concept is what I call or Hillary Clinton teaches a class. and one of the concepts is the dominion of failure And that is When you're in an argument with someone and you make a point And then they come back aggressively at you It's human nature to double down. And then once you double down on your argument, you're sort of invested and you're in too deep And you keep and you can, I know this has ever happened to you but you find yourself arguing a point where' like, I don't even agree with what I'm saying, but it's too late cross the chasm You've staked your reputation in that moment at dinner on whatever your point was, right The problem is when you're supposed to be a leader, you're supposed to be able to have the maturity and be a fiduciary for other people's responsibility to basically not f under the trap of the dominion of failure and go, you know what I fucked up I was wrong. And my intentions were good, but I was wrong we need to change policy. a step back from the wrong direction is a step in the right direction There is no getting around that anyone like myself that was supportive of military action in the beginning based on how this has played out and the incredible incompidence and lack for coordination of our allies, lack of respect for briefing Congress, our inability to trust that Trump would understand anything about game theory and basically saying I'm at a dodge, but you better do it you better do what I say as he's leaving, realizing that not only does he have no cards, but his cards are turned upside down and they can see our cards This has been a fucking disaster And anyone advocating for it has to like myself. I remember having Friid Zeakaria on and Friid and I agreed that this was worth the risk Looking back on how this has been executed This has been a mistake of proportions that has left us with literally no good options at this point. I understand the calls too withdraw immediately, takeake our liicks My attitude is at this point It's it's quite frankly It's hard to leave right now. and this is the clagmire because We're going to end up We're going to end up with less than nothing if we don't show a willingness to at least go some distance. at the same time, I understand the calls of like Let's just take our licks and get out And just to summarize here This has been an unmitigated disaster. and one of the One of the unfortunate thing about our politics and our systems and quite frankly, the public is that the public appears to want leaders that will double down on something wrong rather than ever say everver acknowledge Yeah, you think we made the right decision given the information we had at the time? It was the wrong decision and we're changing course No politician ever gets rewarded for that type of maturity right now And so what do we see? Everyone just doubles down, doubles down and goes further down into the dominion of failure percent and This is Trump's philosophy is all about. that his his slogan orr at least from reporting. And if you go watch the movie The Apprentice, you know this, his slogan is never admit defeat. The Roy Kohn method of communications. That was who he learned it from. And now it does appear that that phhilosophy is governing global geopolitics and as a result, the entire economy of America And I think it's such an important un good point, this dominion of failure point because We should I think it's such a respectable thing to change your mind. and to decide that and have the courage to say, I think actually There is a different path forward and I'm going to go back on my decision. I think that I was wrong That is like a very, very difficult thing to say especially today, especially in a world of social media where everyone's tracking what everyone's saying and especially in a Trump era of politics. And it's something, it's a lost art form heood literally be the erasa of trillions of dollars and could mean Altering the life trajectory of millions of Americans is our unwillingness to say, specifically from the Trump administration here, to say I was wrong He's never going to do it And that is going to be such a problem. And again point this is why my belief is that this is going to go on a lot longer because he's never I mean, he's unwilling to admit defeat on small issues. This is the most important, difficult issue in the world. Do we really believe that he's going to be okay with saying, actually, we're going to pull everyone out and we're going to call it a day and admit that we were wrong on this so that we didn't execute properly. I mean, maybe he'll try to do it and he'll lie about it and say actually it was a win for these reasons. I then the rest of us will know. But I mean, when you're dealing with troops on the ground, when you're dealing with missiles, when you're literally dealing with people's lives, it becomes very, very difficult to do that. And so My expectation I don't think that he's going to make a deal with Iran or resolve it anytim soon because I don't think that he is willing to reverse course this is his entire principle. He never ever wants to do this So I think that the oil is going to remain blocked for the foreseeable future. I will note When you look at the amount of oil that is blocked up right now and this was research from the Institute of Energy Research, it comes out to around six percent of global oil supply So it's actually lower than you might expect. And the reason for that is yes, the Middle East accounts for nearly a third of the global oil supply But about a quarter of it takes alternative routes around the strait, which leaves around twenty percent of it at risk and a third of it currently is fully blocked. My expectation is that that amount will remain blocked for the foreseeable future. So my view is, I don't think we're going to hit eightcent ninecent, ten percent inflation like we did in twenty twenty two. But I do think that inflation is going to continue to rise two reasons. One, I think these Oil prices that we have already seen are still they still need time to funnel through the rest of the economy. And two, I think as this goes on, you're going to see higher oil price expectations, which will lead to higher oil prices outright. And so I don't know if you remember, but my prediction earlier in the year was that we would hit four point a fivealf percent inflation by the end of the year. A lot of people said that I had Trump Drangement syndrome for saying that. Well, now we're at four point two percent. And I think it's pretty confident that that prediction is going to come true. I will now update that prediction, given what we're seeing today. I think we will hit probably at least five percent inflation, but more importantly, I think we'll remain there. for at least six months. I think that this is going to be extremely drawn out, extremely problematic. There are then all the other implications that come as a result of that. For example, rate hikes I think rate hikes are inevitable. markarkets seem to think it's a coin flip I don't see any world in which you don't raise raise rates at this point, especially with the unemployment data, which came in better than expected, which means that the Fed has one target now, which is inflation. u two landslide victory for the Democrats at the midturns. I just think price thing. is such a problem for so many Americans. They're so angry about it. They were already so angry about it. And I think that they understand that there is one person that is responsible for all of it, as you said, self inflicted injuries. and that one person is Donald Trump. And that's going be their message, their moment to send that message to Trump to send that message to the Republican party And I do think it's going to be a landslide. What that will mean for markets I'm not so sure I haven't quite thought that far in the future, but there are a very, very scary sequence of events that I think you can pretty much game out. We'll see That's where I stam in it at the moment We'll be right back. and for a recap of everything ProfGee Media covered last week, check out our new podcast The Wek over on the ProfG Pod feed Support for the show comes from Odu Running a business is hard enough So why make it harder? with a dozen different apps that don't talk to each other Introducing Odu It's the only business software you'll ever need. It's an all in one fully integrated platform that makes your work easier CRM, accounting, inventory, e commerce and more And the best part, Odu replaces multiple expensive platforms for a fraction of the cost That's why over thousands of businesses have made the switch. So why not you Try Odoo for free at odoo. com That's O d oo d. com Study and play ome together on a Windows eleven PC. And for a limited time, college students get the best of both worlds. Get the unreal college deal, everything you need to study and play with select Windows eleven PCs. 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Then, after you wrap up It turns everything into clean, structured, actually useful nodes Granola also works through your device's audio, which means it integrates seamlessly into the video conferencing tools you already use It's your standard meeting setup but enhanced You get to actually listen and contribute instead of trying to capture every word or summarize in real time You can walk away knowing exactly what was decided, who's involved, and what comes next If meetings are eating up your day, granola is a no brainer. You can try it totally free for three months. Just head to granola. ai slash markets That's granola. ai slash markets to get your time back. Get three months free at granola. ai slash markets We're back with prorofperty Mets. The World Cup is finally here. Over the next six weeks, millions of fans will travel across North America to watch the world's most popular sporting event. But before a single trophy is lifted, one thing has already grabbed the headlines and that is prices, the cheapest seats For the final at Met Life Stadium, I' selling for more than seven thousand dollars. In several U.S. host cities, the cheapest tickets for the tournament's later rounds cost more than the average monthly mortgage payment. So Scott We gott to just acknowledge how excited we are about the World Cup, of course Um, but This has been a really interesting issue here You've said that FIFA is one of the most corrupt organizations in the world, which I one hundred percent agree with. I think many people would agree with that too And now it's sort of on display what they're doing to get and make the most amount of money profit as possible. And Some would say kind of grifting U peopleeople who are attending the cup, I'll just give you some numbers here. FIFA expects to generate three billion dollars in ticket revenue this year. That's compared to nine hundred million dollars at the last World Cup. So they've increased their revenue by two hundred thirty percent Adjusted for inflation, ticket prices are up roughly a thousand percent since the last time the US hosted the World Cup in nineteen ninety four Ticket historically accounts for around ten percent of World Cup revenue this year. It will account for twenty seven percent and the average resale ticket price today for the World Cup is more than one thousand dollars. There are many questions as to why Prices are up so much And one of the big reasons, which I'd love to get into here is that FIFA for the first time ever is employing dynamic pricing And what does that mean? They used to sell tickets at a fixed price Now they are changing it and they're basically algorithmically adjusting the price based on supply and demand dynamics. That's one thing. And then two They're also launching their own resale platform. where they sell all of the tickets. And then if you want to resell your ticket, you can go on FIFA's website and you can resell your ticket and FIFA will take a fifteen percent cut from the buyer and the seller on every sale So some really interesting pricing strategies here. This dynamic pricing thing has also become a huge political issue So much to get into here. I will start with your thoughts on FIFA's pricing strategy and what you make of it. If you look at FIFA as an organization, they have the right to price tickets and there's two sides of the trade. don't if you don't want to pay the money then don't go the World Cup. This will be my Fourth World Cup, I was a guitar, where tickets were a quarter the price that they are now. Before that, I was in Moscow, or Russia and Moscow and St. Petersburg. I don't remember. And I went to the nineteen ninety four World Cup in the US. And every time I go or every World Cup, I take my boys, I take a ton of pictures and it's a nice marker at a time. I'm absolutely going to go this time I make a very good living And the tickets to the final in New York where I was really excited about and I want to go I went to the final the last two times were um, The cheaper ones with seven thousand dollars ones, as far as I know when I check are sold out good seats, like there's three categories, tier one, ter two and tier three. tier one seats to the final, grounded. notot everyone has a birthright nor should go to the final. They're thirty eight thousand dollars. And just to give you a sense for that, when I last when the first time I went to the World Cup in nineteen ninety four An average ticket costs fifty eight dollars and the most expensive ticket for the final was four hundred and seventy five dollars. So if you adjust it, you say, well, Scott, what about inflation? Okay, That's one hundred and thirty one dollars average and the most expensive tick inflation adjusted in nineteen ninety four dollars one thousand and sixty nine dollars. Now it's thirty eight thousand What it represents more than anything distinctive of whether you think FIFA is corrupt or not, fine, they get to do what they want in terms of dynamic pricing It's that the one percent, who goes to the World Cup Super fans and the one percent because it is expensive to go, you know, to fly to Monerey or Mexico or Vancouver to see a soccer game, that's a luxury item And the reality is the one percent and you can even argue the ten percent have garnered all of the gains. And that's why you've seen no one like to talk about it, but inflation at high end hotels has gone crazy. Yeah Rich people inflation. If you have an asset that appeals to rich people, And you can create a sense of scarcity. pricing power is out of control because one The rich have exploded their wealth, right? Tw. There's a change in Zidgeist where people realize rich people are generally older. They just got through COVID and they're like, I'm going to be dead soon Why wouldn't I pay thirty eight thousand dollars to go to the World Cup? I'm going to be dead soon and I have money. Why wouldn't I So you have this kind of yolo versus massive demand from people from the rich who have a lot more money. And then you have FIFA who's made the following strategic choice and they get to make this choice Traditionally they have price their tickets below the market price because eighty to ninety percent of the revenues come from TV And essentially the fans in the stadium were a feature of creating electricity that would come through the TV screen. And so they would save tickets in the less aspirational places for all the Croatians that actually got on a fucking plane and came to Qatar. Because seeing those crazy Croatians in the semifinals of the World Cup. I can't tell you how much electricity they brought to the game and that did come through on the TV. So what they've decided to say because here's the bottom line Anyone buying those thirty eight thousand dollars tickets, they're not gonna to paint their faces. They're just not. They're going to be like Trump at the N game. They're going to fall asleep halfway through and then they're going to leave in the third quarter. They're going to be wearing suits and sucking down Pims cups and saying Sing what an interesting game. The atmosphere is awesome And like who is this Ronald O character? I mean, these are not fans. These are people who get invited by corporations, right? Y. And so you're substituting what FIFA has done is they've made a choice. We're gonna go out to the efficient frontier. We're going to take every dollar off the table and we're going sacrifice vibe Easy for me to say, but I don't think that's what a nonprofit should be doing and what is kind of the beautiful game I think they should be getting. I mean, so for example Rock bands do a really good job of this. What they do is they say, if you sign up to be a super fan So I think I'm an official fan of Empire of the Sun. and they go out initially to Empire the Sun fans and say, we've reserved a certain number of tickets for you because they want hardcore fans in the audience for the vibe So this is any anyways, a long winded way of saying tradeing. FIF has made a strategic decision to trade off vibe that that used to come through the TV where they get most of their revenues to maximize ticket revenue. I hope they get stuck with a lot of tickets. I know that's a terrible thing to say But similar to F one in Vegas with a vastly overestimated demand and like sold forty percent of capacity. kind of like to see them eow a little bit here. I think they'll just drop the prices and probably sell out. Well, here's the thing. they've already sold out on the first round. They've sold all of their tickets. I mean, there was the headline that you might have seen that there are almost one hundred eighty thousand tickets that are still to be sold, which by the way is true They've yet to be ressold What we've seen happen is that FIFA crushed it in terms of navigating supply and demand dynamics and people some people are saying they artificially sort of miscstrued what the demand would look like They sold all of those tickets And now there are one hundred eighty thousand tickets that other people who have already bought those original tickets are trying to now resale And so the resale price has fallen twenty percent over the past month. But the most important point here is that that doesn't matter for FIFA very much because they already sold the ticket Now what's going to happen is because they have their resell portal They're going to sell it twice and they're going to take the fifteen percent cut of whatever that now discounted ticket price is. but FIFA iss going to be fine from this perspective. So in terms of how they've navigated extracting the most amount of profits possible from this system, they've really done a good job here. They have crushed it for their bottom line. The question now is Which parts of this were legal Which parts of this do we think should be illegal if they're not currently illegal? And now we're seeing a lot of investigations into FIFA. So there were sixty nine Congress members that signed a letter to Gianni Infantino, who's the president of FIFA. and they were criticizing his pricing strategy. They said that it was, quote, the most financially exclusion areary and inaccessible World Cup to date That doesn't really hold that much water. They're just complaining so that they can kind of impress their constituents We have seen atttorneys genereneral in New York. and in New Jersey and in Texas who are opening investigations into FIFA's pricing strategy. Texas is investigating whether they violated the Texas Deceptive Trade Practices Act and the concerns that they cite are pricing, artificial scarcity, and dynamic pricing that quietly raises rates All of that to me sounds super valid. It sounds like that is exactly the kind of strategy that they. It's also what the airlines do. That's the thing. And Infantino said, well, if this is the problem with me, then this is a problem across the rest of America. And so this is why I think this is a really important story here because this dynamic pricing thing is becoming a huge political issue now notot just in the world of sports, but across everything. Grocery stores is now the big concern because a lot of these grocery stores like Togget and Walmart and Whole Foods They're all experimenting with these digital price labels, which allows them to adjust the price instantaneously. and they're now employing that strategy. And all of these state legislatures across the US are now thinking, do we need to fundamentally rethink the way that we regulate dynamic and instantaneous pricing? Because with AI, with algorithms, you can essentially just jack up the prices even based on your personal consumer data. I mean you could essentially realize that there's a rich person who walked into the store, let's change the price because we know that they will be down to pay more really interesting regulatory questions here emerging and it's almost as if the World Cup is kind of the case study for this larger economic debate. I'm convinced a grocery store could dynamically raise the price of a box of tampons to forty bucks if it's dude buing. I'm just say like, yeah, that's fine. put it in the back. I' just goo ahead, go ahead But what you're talking about is most service contractors walk into a home. If it's a nice home, I mean not that they shouldn't do this What do you think their price estimate is when they walk into a multimillion dollar home to hang curtains or do landscaping There's dynamic pricing everywhere. The story that's been under reported I like to talk a lot about brand management. When I went to the World Cup in Russia, First off You're supposed to get a visa to go to Russia. Even back then we had very tense relationships with Russia. And you know what they said, they said, takeake a picture of you with your ticket. That's your visa Take a picture with you Next your ticket and we send you a visa I'm telling you, they work. I don't know if they threat to imprison people or not, or they're just a very friendly people You could not go fifty feet without someone saying, Welcome to St. Petersburg, whereere are you from And they it was such a great and they handled it so well and it was such a great event. The Nation of Qatar. I'm not a big fan of Qatar. fourteen billion dollars in international funding to US universities, four have come from Qatar. I think it's a very important question. what do they want in exchange I had an amazing time in Doha and it couldn't have been produced better managed and I have warm feelings or less cold feelings towards Qatar We are Harassing incredibly well respected football officials from Somali and turning them back to Istanbul. We are pulling bullshit on Iranian managers and not granting them visas I mean, we are acting like just such Assholes. while the world's eyes are on us people again, this administration fails to realize soft power is the real power here people feel about you. And I think a lot of people are just saying, fuck it, do I really want to go to a nation that does People when I went to Russia, people said, know, aren't you worried? Isn't it dangerous? I have never felt safer You could just tell word came down Treat tourists like there Treat them really well And I imagine a guitar if you've ever fucked with a tourist, you might they might, you know, youre might not be heard from again And instead in the US, we've decided, oh, no, let's start harassing people at the border including really esteemed otball officials people on teams and coaches and players from nations were We are at not war at military action, whatever you want to call it these moves ninety eight percent of people in the world are never going to come to America. ninety percent of them are never going to be an American So their decision to send their kids to a school here to invest in US stocks, to maybe alert the embassy about terror cell they've heard is being formed here that has plans to harm us or our troops. All of those things come down to how do people feel about the American brand. And it used to be the strongest brand in the world. Yeah they'renoxious, ye they're aggressive but their heart's in the right place. And we are losing We are losing that goodwill through d Anways, I'm I'm Beside myself and saving thirty eight thousand dollars. And by the way, it's reflected in prices. If you look at the FAir prices, which have obviously gone way up in combination with gas prices and also the World Cup The prices that are exploding aren't the transatlantic prices to the host cities. The prices that are exploding are the domestic flights between different host cities. That's interesting. So what we're seeing there is' the Americans are going to be showing up And it might be that we see a lot less of the foreigners showing up for many of the reasons point out J just one final point just thinking about the economic impacts of this World Cup. And I think it's going to be enormous. like we saw that in the job recent jobs report that Leisure and hospitality services exploded and really carried that number. A lot of people think it's because of the World Cup and all the jobs that it might create But then there are also the costs, I mentioned the airfare prices, also the hotel prices in the h cities that have Really, really skyrocket up eighty percent year of a year in thirteen of those locations. But then also really interesting Transportation cost, specifically public transportation costs A New Jersey transit ticket from Penn Station to Met Life It usually costs About thirteen dollars for the World Cup They hiked it up to one hundred and fifty dollars. They got a lot of pushback and they reduced it back down to around one hundred But this has become a real problem for a lot of people. We're seeing it in a lot of cities And a lot of people are now thinking and talking about genuinely about walking to the stadium as opposed to taking public transportation. And this was a clip that we saw On our social media feeds, this was a guy who was talking about this strategy. Let's play this clip and get your reaction. Is it possible to just walk from New York City to Met Life Stadium in New Jersey? I'm gonna find out. So I went on Google Maps and I found a route that was eleven miles long and would only take four and a half hours to walk. But it was all on sidewalks. So I grabbed a pair of shoes that turns out have no art support and headed off across the George Washington Bridge, which is the only way to get from Manhattan into New Jersey. This is the only walkable bridge across the Hackenssack River, and given that you can't park at Met Life Stadium and the shuttle bus is going to be eighty dollars round trip, I think a lot of fans are going to try to make this sllog So Affordability is now such a problem that we're going to walk along the highway to get to Met lifeife from New York City to Met Life Stadium What do you make of this c When my dad got divorced for the Third or fourth time He was living alone in Oala, Florida on a mattress And he got half the furniture in the divorce and he had a little one bedroom and there was furniture everywhere. like he couldn't move around Like there was furniture stacked on furniture And he was using as a blanket my NFL sleeping bag from when I was eight years old 't see him in a wild and I was excited to see him and And he's like, let's go grab a few drinks.. so And he's like, you know, we're going to be responsible. We don't want to drink and drive. We're gonna walk. And I'm like, we're walking. I'm like, let's just take a cab dad and he's like, no, no, no We walk Three miles to the local red onion to drink with some of the most unfortunate people and then walk home to where my dad went to sleep under m NFL sleeping back from when I was eight and I literally thought to myself, I talk to myself God, I just I'm so impressed. He's like not really depressed right now. I remember thinking, you know, I was like twenty two, twenty three at the time. I remember thinking, I need to think about this. What series of bad decisions led my father to walking three miles From the red onion after two for one night to his apartment that was jammed. It was jammed full of furniture He wasn't willing to give up in the divorce God I mean It is truly insane. Things got better though when he decided to move in with three other guys who were all prison guards at the local Okala penitentiary. I'm like You know when you realize your dad, your dad doesn't make great decisions all the time Yeah, mild too onn the way to the red onion. do you have a do you have a question? did you have a question him? likeike, hey, I don't know if we like maybe we shouldn't do it likeike what do you kind of just go with it? No, I don't know. I just I should have. I didn't. I didn't see Like my dad was not, I could tell my dad was not doing well. I don't know if he Fortunately, my dad was too self absorbed and non thoughtful to really recognize in a sober fashion the life he was leading Like he just thank God he did not have Instagram.