Predictions for Nike and Future Earnings

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Introducing VCX, a public ticker for private tech. Visit get VCX.com for more info. That's get VCX.com. Carefully consider the investment materials before investing, including objectives, risk charges, and expenses. This and other information can be found in the funds perspectus at get vcx.com. This is a paid sponsors hip. Avoiding your unfinished home projects because you're not sure where to start? Thumbtack knows homes, so you don't have to. Don't know the difference between matte paint finish and satin, or what that clunking sound from your dryer is? With Thumbtack, you don't have to be a home pro. You just have to hire one. You can hire top rated pros, see price estimates, and read reviews all on the app. Download today. Today's number one hundred and seventy five. That's how many days OpenAI's Sora app lasted twenty-five days fewer than Quibi. Ed, what did AI say after crossing the road? What? I have no fucking idea, Ed. It's not that funny. Hold on. How does AI identify? How does AI present? How? If then. That's not bad. That's not bad . Alright, bitch, you tell the joke now. I I do. Three days a three days a week. You do a joke? Oh wait, that's right, I've watched the show. Those are jok es. Yeah, those are jokes. Those I thought those were clever British Princeton twists of phrase. Indubitably. My jokes are good. My jokes are and they've gotten bet ter. That's because I spent hours late at night trying to figure out what to say. Have you guys heard about the new AI robot that can take off all your clothes and then give you a whole new outfit? No. I've seen it change people. Thought it was going dirty, but it didn't. Yeah, no, it's good. Clean. I think I like the if then. I think that's good. It's a good nerdy joke. It's a dad joke. It's like kind of slightly, maybe politically incorrect Aaron Powell Well you know male male AI units, their reputation for where when they have sex, they just nut and bolt. So that it's interesting you mentioned that joke because that is the joke that got you canceled from Bloomberg Television. They got me canceled. They got me canceled from Bloomberg Television. Tell the story, Ed. Tell the story. Claire is waving her hand. Everyone's heard the story. Really? Oh that's good. Yeah, that was I I'll give the ver I'll give the five-second summary. That was the joke that Scott told when we were producing a show for Bloomberg. Bloomberg heard it, didn't like it, canceled the show. End of story. That's right. We are who we are. What's going on with you, Ed? Um, let's see. I'm in New York. I'm I'm doing a uh a panel tonight with Chris Evans, who you may know as Captain America, which I'm pretty excited about. He has this new uh organization, and they're gonna have me in to talk about affordability issues for young people. So I'm gonna meet Captain America tonight. I'm very excited. I'm sure but I think I peed next to him at the Oscar party. I'm serious. Ask him. I complimented him on his jacket. I think that was Chris Evans. Handsome guy, movie star? Handsome, very tall. I mean exactly. Yeah. So I'm I'm probably in all seriousness, I think we we peed next to each other at the Oscar at the party. Well that will be my opening line. You peed next to my boss. Say the guy who complimented your coat in the men's room I generally try to try not to initiate a lot of banter in the men's room. Uh but say that's my colleague and my co-host. I will let him know. I'll let you know how he responds to Your job is to bring this panel back to me. Yeah. So how are you doing? What's going on with you? I just did a wonderful podcast. I love Dan Harris from Ten Percent Happier. He gave me therapy. He's like so comforting me. He's like human Xanax. I just feel my blood pressure just comes down. He interviewed me about my book. And um yeah, it was uh uh yeah, what else I did? I had lunch with uh with a someone who's doing a financing and so I advised her. That was rewarding, you know, like to like to give back it. Well we have a lot to get into here but, before we do it, I am excited to announce that starting next week, all of our Prof. Markets YouTube content will go to its own Prof. Markets YouTube channel. So if you watch on YouTube, we're spinning off from the Prof G Pod channel. We're gonna have our own channel. So if you want to go subscribe to that channel, please click the link in the description. Uh, and you will get all of our episodes on that channel starting next Monday. So please do it. Very important that we really smash it uh coming out of the gates here. Otherwise I don't know, Scott's gonna fire me or something something bad's gonna happen to us. He's gonna fire Claire. Unlikely You have any any exciting thoughts on our new YouTube channel? I'd be honest, I didn't know we had a new YouTube channel. But I no, I'm it's gonna be great. Um There we go. Yeah, we're spinning out. So the the whole point is uh I always like to bring this back to business. You want to have diversity of revenue streams, you want to have enterprise value, you want to have multiple assets, and one of the ways you have multiple assets or the ways of creating different distinction between your products is we we put them initially on the mothership on our RSS feed of Prop G, which gives them sort of gets them from A to call it G fast because it gets the if people show up to the YouTube channel in the RSS feed, they automatically get the stuff downloaded or they get it sent to them. And then once something has its own momentum and its own identity, we spin it out and try and create it as a distinct asset. And that's what we're doing here. Uh the now Property Markets has a big enough following such that it should have its own enterprise value, its own branding, its own YouTube channel. That's right. It's very exciting. Really exciting stuff. Okay, well uh I'm gonna move us along to our show here. Today we're discussing Trump's economic problem, prediction markets legislation, and the results of the Meta Google uh social media trial. So let's start with our first stor y. Now is the time to buy. I hope you have plenty of the well-with all. The US economy might look strong on the surface, but that strength isn't translating to how consumers actually feel. There are only so many ways people actually experience the economy, and in most of those areas, the trend is moving in the wrong direction. Just to name a few. People are struggling to buy homes. Mortgage demand fell 10% last week, and refinancing dropped 15%. People are struggling to find jobs. Jerome Powell said that job creation in the private sector was, quote, effectively zero. And just 28% of workers say now is a good time to find a quality job, down from 70% in mid-2022. And even everyday costs are rising, as we've discussed. Gas prices have jumped 30% since the start of the Iran war. So, Scott, I think this is uh quite an important point here, especially when it comes to Trump and his approval ratings and the polling that we're seeing, which is as we will get to, it's sort of tanking right now. But it seems that there are two different ways that you can kind of there are two categories of economic data. There's the economic data that technically matters to economists and to analysts, things like GDP growth, things like stock market growth. And those both of those things are pretty good. GDP grew more than 2% last year, S P rose around 15% last year. And these are things that the administration is really talking about. They're also talking about these investments that they're getting from other nations. It's not actually clear if that's really happening, but those are the kinds of things that the administration likes to brag about right now, the kind of macro stuff. But on the other hand, you've got this real problem, which is that all the ways in which regular Americans and voters actually experience the economy, through their job, through their housing, through the price of groceries, the price of gas, etc. All of those signals are flashing bright red and it is getting quite dark to the point where we are seeing real issues in terms of polling. It's gonna have ramifications probably in the midterms, perhaps in the next election cycle too. What do you make of what's happening here in the economy, specifically the the economic touch points that consumers and voters are actually experiencing. Aaron Powell The way I would describe it is how William Gibson described the future, and that is prosperity is here, it's just not evenly distributed. And that is the top 1 percent now owns 32 percent of total U.S. wealth. And that's roughly equal to the bottom 90 percent combined. So the top 1 percent versus the bottom 90 percent. And my favorite stat that I keep talking about is a genie coefficient. When it's in zero, it means everybody has the same amount. When it's at one, it means one person owns everything. And when France was at 0.83, they started separating people from their heads, and we're at 0.85. So GDP growth, yeah, it's strong. There's prosperity. We've had what is still historic gains in the stock market. I still think we're only about four or five percent off of highs, which means it's incredi ble. But uh in the top 1 percent since 2016 have captured 33 percent of the total wealth gains, and the bottom 50 percent have only captured 6 percent. So they ha have they they aren't even beating inflation. And essentially the top 1 percent have gained more than 100 times more wealth than the median household, and the top 0.1 percent gained nearly 1,000 X more than the bottom 20 percent. And the problem is the bottom 99.9 are reminded 210 times a day via notifications on their phone that they're not in the.1. And look how amazing the life is for the.1. And And also I think there's just a disparity in life now in a capitalist society, and that is when I was a kid growing up, my dad's boss had a, you know, he had a uh like a Cadillac and we had a grand torino. We had a three-bedroom house, he had a five-bedroom house, but it was in the same neighborhood, and we were all members of the same country club and they used to golf together, went to the same schools. Now if you're in the 0.1% , you have your you have first you live in a different planet. You're not subject to uh uh health care or health care debt because you can afford it and you have a private concierge that maybe comes to your house. You don't have you have your own security. You probably have a doorman and live in an area that is over policed or that has security cameras everywhere. You're not subject to the fears around teachers not getting paid enough and the eroding quality of our public education system because your kids are in private school. There really is a substate of America that is the most prosperous country offering the most unbelievable services in history. And essentially the bottom 99%, I don't I wouldn't describe the bottom 99% are nutrition for the 1 percent. So the top 10 U.S. billionaires gained $700 billion in a single year last year. And effectively what we have is that in 1989, the top 1 percent used to have 23 percent of wealth globally. Now it's 31 percent, and it's even more skewed in the U.S. And even when we talk about not even about assets but income, the top 1 percent income is up 162 percent since 1980, it's only up 36 per cent. N ow, uh so the it leads a notion, or a very real notion that the system is rigged, and w what the incumbents will claim is that it's network effects and our most talented. No, these are decisions that we have consciously made through legislation. Mortgage tax, interest rate deduction, capital gains, favor treatment are all conscious decisions we have voted through, or that have been voted through by a passive minority ruled by special interest groups who get one or two centers to block legislation, and money has uh here's a stat. 300 people, 300 billionaires are now responsible for for 20 percent of all political giving. And not only that, they can be that doesn't even tell the story because that twenty percent has way more influence because uh PAC representing unions or services workers, they have to give their money to certain people who are focused on certain issues. Whereas billionaires can be much more flexible with their money and give it strategically on a specific issue for a specific vote coming up. So what we've lost is that lawmakers used to take very seriously the following truth, or punctured they they'd never bought the myth that the far right or the right will tell you, and that is that the middle class is a self-healing organism, and if you just let the market run, the middle class will be fine. No. When the market is left to its own devices, a middle class goes away. It is the greatest innovation in history, but it requires constant investment, and let me use the R word, it used constant, it requires constant redistribution. And wealthy people and corporations have gotten in the way of that wealth redistribution, and we are actually moving back to the general law of the jungle, the way the majority of societies have been through the majority of time, and that is more and more capital and opportunity aggregates to the top 1%, and then at some point the bottom 99, see above, 0.83, Gini coefficient, rise up and get very, very angry. Trevor Burrus, Jr. I think that this is indicative of the problem here, which is you have the people who are in power right now, the fact that they are bragging about things like GDP growth right now is an indication that they don't understand the severity and the significance of those economic touch points that most Americans are actually experiencing. Like, you know, uh housing prices continuing to rise, the fact that mortgage demand is falling. Those are things that the very wealthiest who are generally in power at this point, I think this is the kind of the point you're mak ing, those are economic touch points that they don't really feel because they're generally price insensitive. Gas prices rising 30%, again, not really a problem for the people in power. Airline tickets rising 20%. That's what the United CEO told us because of what we're seeing in the price of oil. Again, that's not going to be a real problem. The TSA line lasting four and a half hours, which is the highest wait time in TSA history, if you're extremely wealthy, if you're someone like Trump, then that's probably not going to be a problem for you because you're going to fly private and you're going to fly Air Force One. And you made a a very important point yesterday, which I think is worth mentioning, which is if all private air travel were forced to be grounded today, this TSA funding issue would probably be resolved within 24 hours. You'd figure out some way to get the funding to the DHS such that we could reopen air travel once again and figure out this TSA problem. But the trouble is there are two different classes of people. And it seems that the people in power don't really experience all of the things that the rest of Americans actually experience. And this is true of many, I mean we're just talking about TSA lines because it's a very obvious example. We're literally experiencing it on the ground right now. But inflation is another important one, like grocery prices, which have risen faster than pretty much every other category over the past year. That's another thing that the people in power don't really feel. So they're probably not going to get that worried about it. And I want to play you uh a clip from an interview with Kevin Hassett, who is the director of the National Economic Council. He's really ch in charge of a lot of the economic policy under President Trump. This is what they were asking him about what this war does to the economy and how it might affect American consumers, basically just regular American people. And he essentially said the quiet part out lo If it were to be extended, this it wouldn't really disrupt the US economy very much at all. It would uh hurt consumers and we'd have to think about you know if if that continued what we would have to do about that. But that's like really the last of our concerns right now because we're very confident that this thing is going ahead of schedule. He essentially says, I mean not essentially, he does say, if the war hurts consumers, that will be the last of our concerns. Which seems to be literally the policy from this administration right now. Don't worry about all this stuff that's affecting your life. Don't worry about the gas prices. Don't worry about the food prices. Don't worry about any of that. The stock market's up and GDP grew because we're building a shit ton of AI data centers. Meanwhile, we're all sitting here like who who cares? I can't afford anything. What did you make of that clip? Oh that was just plain stupid. We don't care about consumers. We're in a consumer economy. Two thirds of our GDP is from if consumers aren't doing well, the consumer economy isn't doing well. I think if I think he'd have a lot more credibility if the Dow went down ten thousand points and he said, look, the majority of 10 percent of the stockholders own 90 percent, the bottom sixty through ninety own 10 percent, and the bottom fifty own debt. So a recalibration of the markets and the wealthiest among us and corporations losing some equity, that's not a big deal. But to say that we don't care about consumers. And just going back to the point of this kind of vibe session, if you will , the way people evaluate or feel their own success or lack there of, it's relative versus absolute. And that is people don't evaluate their lives in a vacuum. They ask themselves, how am I doing relative to others? Not relative to how I was doing ten years ago, not relative to a twenty six year old Princeton grad in nineteen forty-five, right? That they say, how am I doing relative to others? And I think we underestimate the impact when everybody has an incentive to vomit a faux, much wealthier fake version of their life out to everyone 24 hours a day. It's just impossible not to think, wait, how on earth did she get to my nose on a private jet and I'm struggling to figure out a way to get, you know, to to RonCon Concoma for a weekend at the beach on the subway. So you don't people don't think that way. Telling people GDP is up, you actually things aren't that bad, what they see is my success relative to others is just it is it feels like I'm failing. Even though my life might be you could argue that young people's lives have tangibly increased over the last couple of decades, certainly over the last several decades, but they don't see it that way. They see it as they should relative to other cohorts. And when they look up and they see that people, a lot of the people in their 40s and fifties own a home. And they're like, uh, there's no way I can own a home. I'm killing it and I still can't own a home, right? That one relative to previous generations has gotten worse, just flat out. I mean, previous generations of my age were able to or approaching being able to buy a home. That's not the case now. The average uh age of a first time buyer is now forty. It was literally th thirty one just ten years a Aaron Powell I'll use a personal example. When I got out of business school in 2002, 92. I was offered a job for $100,000 at a consulting firm, and I bought my first house with my partner in Petrero Hill, San Bruno in 18th, for $285,000, 2.85 times first year salary out of business school. Now the kids at Haas, average first year salary is around two hundred grand. That's an exceptional living. The average home in San Francisco is two point one million. So ten it's gone from two point eight to ten point one in San Francisco. And I think that's largely indicative of what's happened And what's interesting is that I did a deep dive on our Substack around declining birth rates. For every increase in housing prices of 10 percent, birth rates decline 1%. And that is, it ends up that increasing home prices are effectively birth control. And think about it: if you you and Claire are in relationships, you don't realize how powerful a means of connection and path towards commitment, monogamy, and children, saving for, buying a home, painting a room blue or pink in case a little one comes along, getting a dog, you get on a path towards commitment and forced savings. And when you're saving for a house, you stop doing stupid shit like going to Vegas or or or spending money on a a new pair of shoes. No, you know what I mean. Yes. It creates a saving for a home is a fantastic motivator and guardrail. And I I worry that a lot of people your age have just given up, just totally given up on that notion. There's like there's no way I can find the 20% I'm going to need. And also, not only is it a an incentive, it's like a a prerequisite for having a kid. If you're gonna need you're gonna need a place to live and it's gonna need to have a another room or not. But that's I mean, it's it's I mean it's it seems very, very simple and logical. Like not only is it a motivator, it's like you need to have the ability to get your hands on property and make your life make it easier to actually build a family. The other thing you mentioned there is like this idea of the vibe session, which has been a really interesting point that Kyla Scanlon came up with, our friend Kyla, um, and it's become very popular. And it it points to this idea of like there's a divergence between the way that the economy is actually doing versus the way that people feel about the economy. And that is an interesting and fair point. But where it gets into trouble, I think, is when people start s to say to to voters and to consumers, like, you you you just have high standards. Like I you think that your life is bad, but your life is actually good. Trust me, I'm looking at this data here and I can tell you, and I'm gonna wag my finger at you and tell you, your life is actually good. And in the world, I mean, i i if we're talking about the world of politics, which we are here, that doesn't work. Like you can't just tell someone that their life is actually great and then point at a at a GDP growth chart and then point at, you know, the the price of a smartphone today versus the price of a smartphone 30 years ago and say, see, your life is good actually. Because that's not giving nearly enough credit to the person themselves who's probably evaluating all the things in their life and they're making the call themselves. Actually, this isn't working out for me. This doesn't work for me. And you know, you can make the argument, yeah, but you can order uh Uber Eats and you couldn't do that 30 years ago. It's like, well, is that really changing fundamentally the way people feel about their lives? The fact that they can order food and it gets delivered to their door at a slightly cheaper price than 10 years ago? Or do we need to think about the more fundamental things? The ability, as you say, to be able to get your hands on a home and build a family? The idea that you could really build up a career that can build an actual asset base from which you can then launch your life. Like these are the things that actually matter. So I think it gets it's it's not gonna work, essentially is my point, when the administration says, Yeah, but look at GDP growth, look at the stock market. That's not gonna fool people into being convinced that actually their life is the way they want it to look. When they're literally telling you, no, it isn't. Yeah, people don't optimize for GDP growth. They optimize for security, progress, emotional health, and and also in relative standing. I also think there's something to the notion that I don't think young people just have as much fun and joy in their lives. I don't think they have a sense of community. They're not going to religious church attendance is in an all-time low, sports, being outdoors, being in the being in the company of strangers, drinking is at an all-time low. Um I I just don't think quite frankly people of your generation are having that much fun. And then when they do have fun, they feel as if they need to like work and post it. And you know, think, okay, let's let's show how much fun we're having. Let's not eat the food. Let's take pictures of it. And uh so I'm I d and then constantly being reminded that they're that they're falling behind on a relative basis. I just think it just attacks their emotional well being. And the thing that there's this study that came out that when daughters hear their mother's voice on the phone almost immediately their blood pressure goes down . It's it like when do when do young people's blood pressure go down? When are they in the company of strangers? When they when are they with friends? When when do they unplug from a cycle of dopha hit from their phone such that they can just sort of relax and experience joy and fun. I I think it's um I think it's tough. And and to tell them that wait, but you actually on a lot of levels have a better life than most people, I get it. Everyone's freaking out about a 10 percent youth unemployment rate. That's not actually historically, that's about average. But again, that's not how people think. People think in relative terms, not in absolute terms. Aaron Powell And I think it would explain the approval ratings, which are now for Trump some of the worst approval ratings we've seen. His approval rating has hit a 36% low. And most of it is about the economy. Only 29% of Americans approve of his handling of the economy. That's one of the lowest ratings ever. It is now lower than the really bad lows that we saw during the Biden administration when we saw that historic inflation coming out of COVID. And his worst issue is inflation and prices. Net approvals down to negative 39. It continues to decline. Seven in 10 Americans say the cost of living is not very affordable or not affordable at all. 61% say the economy is not working for them personally, and that is up from 57% in May. So people, I mean, we can tell people, oh, your perception's wrong, but their perception is all that matters here. At least if you're trying to get votes. If you're trying if you're trying to win uh a political body, you can't just tell them don't don't trust your own thoughts. You you have it wrong. Things are great. Uh they will decide that for themselves and they've decided that things are not working out right now. We'll be right back. And for an exclusive live stream on the science of storytelling from our research lead, Mia Silverio, sign up for our Substack at profitmedia.substack.com. She will be going live with paid subscribers tomorrow. It is an excellent presentation. Don't miss it. Subscribe now. Support for today's show comes from Framer. Let's say your marketing team wants a new landing page, so the design team locks it up, and then your engineering department who's already got too much on their plate responds with yeah we'll get to it. Thousands of businesses from early stage startups to Fortune 500s are choosing to build their sites in Framer where changes take minutes instead of days to solve this very problem. Framer's Enterprise Grade No-Code website builder are used by teams at companies including Perplexity and Miro to move faster. With real-time collaboration, a robust CMS with everything you need for great SEO, and advanced analytics that include integrated A-B testing. 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It didn't matter whether you were a factory worker in Detroit or a farmer in Omaha. Anyone could own a piece of the great American companies. But now that's changed. Today our most innovative companies are staying private rather than going public. The result is that everyday Americans are excluded from investing and getting left further behind while a select few reap all the benefits until now. Introducing VCX, a public ticker for private tech, VCX by FunRise, gives everyone the opportunity to invest in the next generation of innovation, including the companies leading the AI revolution, space exploration, defense tech, and more. Visit get VCX.com for more info. That's get VCX.com Carefully consider the investment material before investing, including objectives, discharges, and expenses. This and other information can be found in the funds prospectus at getvcx.com. This is a paid sponsorshi p. This is advertiser content brought to you by Virgin Atlanta Ged. A couple weeks back. I got you a birthday gift, not to pat myself on the back, but it was a pretty good one. It was indeed. You surprised me with Virgin Atlantic upper class tickets to London. So uh tell us all about it. It was pretty incredible. From the moment I entered that upper class cabin I have to tell you I felt like a VIP. Anything I needed, a drink, snack, assistance with the seats. Flat seats. Flat seats. That's okay. Flat seats. Exactly. Had the four-course meal, got my champagne, very delicious, enjoyed the food. And the journey home? The journey home was great. I went to the Virgin Atlantic LHR Clubhouse. That's the Heathrow Clubhouse. Heathrow Clubhouse was awesome. Got myself a coffee, headed over to the meditation pod that they call the soma dome. Kind of felt like a sort of spaceship where you relax and and uh think think nice thoughts so I did that for a little bit. Then we went over to the wing which are these acoustically sealed booths where you could do some work, uh, you could even record a podcast. I didn't do that, but maybe I should have. It was a very enjoyable experience. So, Ed, the real question here is: what are you planning to get me for my birthda y? See the world differently with Virgin Atlantic. Flying should be more than just transport. It is part of the adventure. Go to VirginAtlantic.com to learn more. Tickets and lounge access provided by Virgin Atlanti c. We're back with ProfG Markets. A new bipartisan bill could shake up one of the fastest growing corners of finance, prediction markets. Two senators introduced legislation that would ban sports-related betting on CFTC-regulated platforms such as Calcian Polymarket. It would also prohibit them from offering casino-style games in the future. That includes everything from slots and blackjack to video poker and bingo. Notably, this is the first bipartisan Senate effort aimed at regulating prediction markets. So, Scott, this new proposal that it's called the Prediction Markets Our Gambling Act, just a quick summary of what it would actually do. It would essentially just ban all forms of sports betting on these prediction markets. That's the main event. It also says it's it's banning the these prediction markets platforms from hosting games like casino style games like poker and blackjack, bingo, all this stuff. I think that's a misleading provision because none of these platforms actually host those games. You can't play blackjack on on Calci or any of the other uh platforms. But they're basically saying you can't do that in the future. So the the real uh meat of this proposal is no more sports betting, which has become a very significant market on these platforms. So I guess we'll just start with your reactions here to this proposal that is bipartisan. So first off I should disclose uh just before uh uh I make my comments, the Calci is a data provider for ProfG. We absolutely love their data on economics and earnings predictions and geopolitics. With respect to this legislation, this is a tough one because putting the opportunity for wagering in a more risk-aggressive, less developed prefrontal cortex, we've seen how that can go wrong. I think the challenge is parsing between these different segments. There's gaming, quote unquote traditional gambling, there's the prediction markets, and then there's options contracts. And effectively what the prediction markets are doing is they're offering what feels, sm smells, and looks like an options contract. And that is, you're paying for a certain amount uh uh on an outcome against someone else who believes in another outcome. So So what will be interesting is if I mean my viewpoint is whatever legislation they should have should apply to all of it, right? Something I would like to see. You can't my fifteen year old is dying to go to Vegas with me. I'm not sure it's gonna be that much fun for him because you can't be on a casino floor if you're under the age of twenty one. I would like to see age gating across all these things. I'm not sure a nineteen year old needs to be playing options, zeroy-da options. Zero-day options are gambling. I, you know, 80% to 90% of stock market purchases and sales are effectively speculation. You're not investing for the long term. And then there's no getting around it. If you're on bet MGM or in certain instances on these prediction markets, you are essentially trying to get a dope a hit on a belief that you want to have insight into something and you're trying to make money and the risk of winning or losing creates a hit. The question is, should there be legislation disparate by market? Because I don't think the options market s would want uh age gating at twenty-one. I think you'd see I think you'd see um stock exchanges or stock market platforms try and fight against that. So the question is do what I'd love to see is are look at those three categories. What is the ramifications on the mental health and the rates of addiction across those three categories? And does it warrant distinct or different levels of regulation? And if not, why wouldn't you just have one set of regulation around age gating, certain limits on how much you can spend, or, you know, not being able to use your parents' credit card, whatever it might be, or have certain AI-driven prediction algorithms that say, you need to take a break, or we've shut down your account, whatever it might be. But they this is definitely going to be a very interest ing Period, because you know who's most scared of the regulation of prediction markets is the options markets . Because the options markets are looking at this and going, okay, how are they going to be regulated? And then and then how are we going to say we're different? Because our contracts look shockingly similar. Which everyone's been talking about, which is, I mean, the question is where do you draw the lines? Like how do you categorize these different things? But you did that, and in my view, you did that correctly . Uh, and that is you said there's sports betting, which is a form of gambling, and there's options in futures trading, which you could maybe say is kind of like gambling, but we both probably agree it's different from betting on the outcome of sports games. And you know, th this is the I I think some of the f slightly facetious pushback that we've gotten from the prediction markets players is they say, How are you supposed to draw the line here? Where do you draw the line? And my favorite line from John Oliver, the great John Oliver, he said, Where do you draw the line? You draw it somewhere. So what we've done here, and what you've just done, is you've drawn a line, which I completely agree with, and that is that there is sports betting, which has its own form of regulation and it has its own federal framework. It mo most of the regulation does happen at the state level. And depending on what state you're in, there are different laws. In some states, there is an age requirement. You have to be 21. In some in other states, you can be 18. Most of the states have similar rules around how to gamble safely. You have safe advertising rules, you have rules on displaying resources for problem gamblers. There there are all of these different rules, but the you need the framework, you need the lines and the boxes to be drawn in order to start regulating this stuff, which we have done with sports betting, and it doesn't work totally, but it gets us somewhere. Then there's options and there's futures trading. And currently, we treat that legally as a different thing. This is where you bet on the price of stocks going up and down. You bet on the price of commodities. It's regulated by the CFTC. The minimum age, as you mentioned, is 18. Maybe you could have an argument as to why it might, you might want to make it 21, but the point being, the framework is there and it's in place and it is different from sports betting. And so I think what we have here is actually a good piece of regulation. I was thinking that maybe regulators would go overboard and say, ban prediction markets entirely. They're all bad. It's all gambling. No. Instead, what they've decided is they said, hey, a lot of people are betting on sports on these things. That looks a lot like gambling, and it does look a lot different from the stuff that we actually like on this program, which is the financial events contracts. The contracts and the prediction markets which say what's going to happen to interest rates, what's going to happen to inflation, what's going to happen to gas prices? To me, that's basically options trading. That's basically futures trading. Yes, it's risky. And yes, you could make arguments that it's similar to gambling, but it is far and away a different thing from betting on the outcome of the Super Bowl or the World Cup or trying to figure out who's going to be in the Sweet 16. Those are two separate things. So I think this is actually sensible here. It's like, look, keep trading these financial contracts because what we've learned is they're actually really great for predicting things about the future, better than Wall Street in a lot of cases. They're also really helpful for understanding the news. That's why we use that data all the time, because if we want to understand how did this big event affect what is going to happen in the future, we often look to a market, a platform like Calci, and we say, Okay, yeah, the probability of of interest rates coming down or going up has gone up X, Y percent. And that's a useful thing, but you have to start drawing the lines and figuring out what is the category of each different thing. And once you do that, then you can start to reach some semblance of sensible regulation. But if you keep saying, oh, it's all too blurry, it's all gray zone, you're never going to get anywhere. There's two ends of this. There's the end consumer and then there's I don't know the B2B side. We so uh Federal Reserve economists have said that Calci is better than professional economic indicators of predicting inflation and Fed fund rate decisions. This data has real value to media companies and analysts like ourselves. Calci has a perfect forecast record on Fed rate decisions. Perfect. So far, they're batting 100 percent on Fed rate predictions. And also it's not just macroeconomic data. Calci's earnings predictions are as accurate as Wall Street's. Now the question is, all right, uh on the sports side, we don't care, nor do we talk about what the odds are of you know the Rams winning the NFC playoffs, right? We don't we don't care. That's not the business we're in. Should it be more difficult for a twenty-one year old to bet in Las Vegas or bet on a prediction market on a sporting event than it is to go to Vegas or a Native American reservation and bet on sports there. Or I mean w why are these guys and maybe it's they're just being subject to the same things, but it strikes me I I struggle with the the the line between infantilizing people and and also recognizing there's real potential for harm here. And I imagine that's what the regulators were struggling with. But when you were in Vegas, you could bet on sports, right? Oh yeah. For sure. So w what's the argument? I'll just straw man this what's the argument or steel manus, what's the argument for why you shouldn't be able to do that on the predictions markets? Aaron Powell I think you should, but it should be regulated like gambl er. I mean that's that's basically it. If it's gambling, regulate it like gambling. So, I mean, I think the real problem for these companies is the the workaround that is beneficial is that if you're regulated not like gambling and you're regulated like options, which is what the current laws are, then you're not subject to any gambling regulations, which means that you can operate in states in which sports betting is illegal. So that's a problem. That's a fair point. So for me, it's just like, okay, the stuff that's gambling, regulate that like gambling. You shouldn't be trading sports events contracts in states in which they've decided that sports gambling is illegal. That shouldn't be happening. But in states where it is legal, let them have it. Right. You're betting against someone who thinks they're going to lose and you think they're going to w in. Zero day options. I'm betting Apple stocks going to go up. You're betting it's going to go down. You're writing, you're writing the contract, I'm buying it is one more or less gambling than the other? Yeah. I believe that the sports gambling is more more gambling than than the other. I think the other I think the the zero day option m makes a case. It has a it's pretty close to gambling. But again, if we're drawing lines, which I'd like to do, I think that's a pretty easy line to draw. One is about a financial product. I I don't see the difference. I don't I I I I see zero-day options by that definition as gambling. Then we just throw our hands up and say, okay, let them all have it. I mean, we we have drawn a line already in our regulation where we say if you go on DraftKings and you bet on the game that's gambling. If you go on your uh Robin Hood and you bet on options, that's something else. When I saw Zero Day Options and I went on a platform to look at it, to me it was just it was Vegas with a a strong Reddit comp onent. And and so I don't see much of a difference. Totally agree. The people who are actually the most nervous here, the prediction markets are phenomena, they're they're exploding, right? Across a number of dimensions. I think the people who are most nervous here are whatever it is, the CFTC, the governing body of options contracts, because where they have gone with zero day options, it's getting awfully close to gambling. And I think they're going to have a difficult time saying why why we should be subject to different regulations and other things deemed as gambling. What I think we need more of is research on the effect and the impact this is having on people. You know, there's some there's some research saying that gambling once gambling is legalized in a state, bankruptcies immediately go up, right? That's that's a negative. What's happening specifically to young people? What's happening to their mental health, what's happening to their financial well-being. So look, I I it feels like there needs to be more research across these categories and a really solid justification for if and how we create distinction that warrants different legisl ation across these categories. Aaron Powell I don't think we need to complicate things that much. Like just by saying yes, that's gambling doesn't mean that you're just saying you're not allowed to do it anymore. All it's saying is you should be regulated like gambling now, which means yes, you won't be able to operate in this number of states where this thing is illegal. But you of course you go go set up camp in Nevada and and do your do the sports sports betting there but let's just regulate the things for what they are one thing is more similar to options trading one thing is more similar to sports bett ing. We'll be right back after the break. And if you're enjoying the show, please follow our new Prof. Markets YouTube channel starting next week. That is where you will find our content on YouTube. 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To learn more about SoFi Plus, head to sofi.com slash so fi There's basically been one guy in Republican politics who's argued for a regime change in Iran for years and for America to take a proactive military role in making it happen. Ambassador John Bolton, President Trump's former national security advisor. But now even Bolton says Donald Trump is messing it up. Iran. No coordination, no effort to uh see what they would do, no effort to support them, to provide resources, money, arms if that's what they wanted, telecommunications, just no coordination at all. And uh they don't seem prepared for it. How Trump lost the Republican Party's biggest arad war hawk today explain every weekday and on Saturdays to o. Hi, I'm Brene Brown. And I'm Adam Grant. And we're here to invite you to the Curiosity Shop. A podcast that's a place for listening, wondering, thinking, feeling, and questioning. It's gonna be fun. We rarely agree. But we almost never disagree, and we're always learning. That's true. You can subscribe to the Curiosity Shop on YouTube or follow in your favorite podcast app to automatically receive new episodes every Thursda y. We're back with Prof. Markets. Two major court rulings last week could mark a turning point for social media companies. First, a New Mexico jury found Meta had violated state law by failing to protect its users from child predators. Meta was ordered to pay $375 million in damages. Later in the week, a Los Angeles jury found Meta and YouTube liable in a social media addiction case, concluding that their platforms were intentionally addictive and contributed to a young user's mental health issues. Meta has to pay $4.2 million dollars in damages and YouTube must pay one point eight million dollars. The trial is the first in a wave of more than sixteen hundred related cases brought against these social media companies. Many are calling the decision a bellwether saying it could open the door to a surge of new lawsuits focused on user well-being. Scott, this is basically the first ruling we've seen of its kind against big tech, a subject you have been railing against for many, many years. It was literally the subject of your first uh major book. And they ruled in favor or they ruled against What do you make of it? Aaron Powell is a big deal. And it's it's not the beginning of the end, but it's the end of the beginning, is the way I would describe it. And that is typically with harmful substances or practices that have an externality that really damages the public, it takes we usually figure it out. It took 30 years of tobacco, it took 20 years with opiates, and if you look at when social went on mobile in twenty thirteen, it looks like it's going to take about twenty years. I do think that uh these companies are now facing juries, and these juries have children who have gone through uh phones, smartphones with social media, and they've seen firsthand just how damaging it is, and they feel lied to. When I wrote the four in twenty seventeen, the argument was over whether these companies were bad or not, it was who was going to be president, Jeff Bezos or Shell Sandberg. I mean the the the affection for these companies, these innovators and these tech executives was extraordinary. And social media was helping connect parents of kids with um childhood, you know, strange childhood diseases. It was reconnecting your friends from from coll I mean it was all like rainbows and unicorns. And when I initially started writing the book, it was like it was a love letter to these companies. And then as I really started looking at the data, I'm like, okay, this doesn't something's wrong here. This feels this feels dangerous. And slowly but surely, and over the last nine years, they have weaponized government, created unbelievable tactics around delay and obfuscation, leveraging citizens united, and exceptionally stark PR people, exceptional comps people, exceptionally charming and likable executives, from Nick Clegg to Cheryl Sandberg, to, you know, um I forget his name, Evan, he's super likable. Um I had a snap, I forget his name. Um and the reality is our kids started self-harm ing. And we started not liking each other. And we started believing that the enemy wasn't Russian troops pouring over the border in Ukraine. It was our neighbor with the wrong presidential sign. And we started attacking each other online. And then outside actors with who couldn't beat us economically or kinetically took advantage of a porous shareholder-driven platforms to start planting incendiary content that got us divided. I don't think Americans are actually divided, but we have people dividing us. And these companies are the agents for it. And now there's this an enormous economic incentive to create a series set of content, much of which is useful, much of which is benign, but some of it just gets you angry at yourself, angry at others. And going back to the last story about why young people feel bad, even though maybe they've made modest gains, they they're told every day that they're failing, that they're not hot enough, they're not wealthy enough, they're not impressive enough. And these firms, what came out in this trial, which was so incredibly disturbing, is the New Mexico Attorney General created an account posing as an 11-year-old girl. And almost instantly the 11-the account got bombarded with explicit images from known sexual uh abusers, from kids praying on kids. So let me get this. You can serve me, you can tell when I'm at a Beyonce concert and serve me an ad for a ride home from that location, or you know when my kid's about to turn get his learner's permit and start serving me ads for auto insurance for a kid in in Florida. But you didn't know this? You didn't know this was going on. And what this shows, the discovery here is going to be so horrific for these companies. Because the reality is they knew what was going on. But anything that introduced friction to the business model, they ignored. And I want to be clear. I think these companies are a net good for society, except for Meta. I think Meta's jumped the shark and is now a net negative. But big tech is a net positive for society. The problem is with the word net, and that is we're net beneficiaries from pesticides and fossil fuels, but we still have an EPA and emission standards. We have no regulation around these companies. And they have fought, they pretend to give a flying fuck about children with child safety features that are impossible to navigate and figure out. And then, of course, the people who've really paid the price here are low-income households because I have the resources to try and make my kids try and keep my kids off screens. I have the money to pay for after-school stuff. I have the time and attention to be at home to ensure they can't go into the room alone with a screen, which is a rule we have . W when I was growing up, you know, my mom was out of the house before I got up. Sometimes didn't get home until after I was asleep or later. If I'd been at home bored with an iPad and and you know YouTube and Instagram and UPorn and Reddit and Discord, I'm not sure I would have ever left left the house. And then my brain being rewired as I'm going through puberty around a constant need and access to dopa right away, whenever I wanted to squeeze it. I think this generation, unfortunately, my kids at 15 and eighteen had to endure this bullshit. I don't think your kids, I think we're gonna f I think we're figuring it out. And I think in three to five years, it wasn't the fines that are the big deal. It's the fact that now other the other thousands of lawsuits against these companies have legal precedent to go after them. And last interesting feature that our uh old colleague Maria Petrova highlighted to me is that the insurance companies meant to ensure these companies against this type of liability are saying that they're not going to pay, that they're not covered because they intentionally did this. They knew they were doing it and they intentionally did it. And if the insurance companies had known they were intentionally breaking the law, they couldn't insure them. Now, far be it for any insurance company to actually, you know, insurance companies are famous for trying to get out of when you actually call on them to pay for it. But this is this is that big tobacco moment. I forget it was 1991. I forget when it was, but this is that moment. So again, I I don't think social media is going away. Uh so I'm I think this is a big moment. I'm excited about it. I've said that before and been disappointed. But I think it's I think this is different this time. And the fact that both these cases came down with the same verdict within hours of each other also says something. This is a pattern here. And it's going to give a lot of plaintiff's attorneys and a lot of parents And by the way, the market agrees, and that was the big standout moment for me. The meta actually fell on Thursday down more than five percent, ten month low. So that's the market telling you actually, yes, this does have teeth. This is a big deal. Um and I just want to go back to a point you made at the beginning there about the fact that this was a jury trial. So both of these trials were ruled by a jury, and and that was and it was decided in both cases that uh what big tech was doing was illegal. But most of the major big tech cases that we've seen have been decided, they've been bench trials, they've been decided by a judge. So the in the FTC versus Meta trial, that was a bench trial. The judge ruled in favor of Meta. We had the DOJ versus Google trial, which was decided on again by a judge, Judge Amit Meita, said that Google actually was a monopoly. They were operating this monopoly. But when it came time for the penalties and the remedies, he said, actually, we're not going to issue any remedies, we're not going to issue a penalty because open AI is coming up and coming and it's going to start to eat Google's lunch. And so that would be unfair to Google. And then what do you know? Google starts to crush OpenAI with Gemini. So that argument didn't make any sense, but too late. The decision is made. We had the same thing coming up in 2026 in the FTC versus Amazon case, which will also be decided by a judge. So usually these cases haven't been decided by a jury. They've usually been decided by a judge. And I think that is something that big tech really likes because I think that they would prefer to not have these issues adjudicated by the democracy, by the people. By parents. By parents. It's basically the judge's job to remove all of the emotion out of the equation. This is literally what they get trained to do. And get really into the the minutiae of of all of the statutory elements. And that's what you have to focus on overwhelmingly. But when you open it up to the people, as you say, who've ch whose children have gotten addicted, whose children have engaged in self-harm. All of that starts to build up, and it means that eventually you're gonna say, you know what ? I'm not going to go lenient on you guys. I'm not going to give it. I'm not just going to play it so easy and roll over so easily here. I'm going to be very, very harsh because the things that you have done to my life, the things that you have done to our society at large are egregious and they need to be punished. And that's something that I think these big tech companies really don't want to see, which is why I think it is so notable that it was a jury in both cases. I believe one of them, the decision was unanimous across all of them because there is so much pent-up anger and frustration among the American people right now against big tech. And that actually matters. It actually is important to have a moment of catharsis where you can actually express look at all of the wrongs that you have done to us over many, many years. And yes, this we are going to use this moment and this trial as our moment to express that to you and say, actually, this isn't okay. So I hope that we will see many more jury trials. And I think that what we'll find is that the more jury trials that we have, the more they're going to be ruling against big tech. Whenever anyone says the time on screens is about bad parenting or good parenting, that's a tell that they don't have children . They get their homework on their screens now. This is how they communicate with their friends. An Adam Alter uh colleague at NYU doesn't get nearly the recognition because he's overshadowed by Jonathan Haidt and and and anyways, other other profs that are more retail whores that start multiple podcasts, but um he wrote a book called what was it called? Addicted or relentless? Anyways, he wrote a great book about the addiction of these products. And he said that the really sad thing is if you don't have a collective ban, if you take your kid, if you tell your kid you can't be on Snap and you can't be on Instagram, they're more depressed because they're isolated socially. And so unless there's collective bans, unless there's I mean, for God's sak es, these these comes will claim that it's hard and my favorite is when Mark Zuckerberg claimed to give a flying fuck about a fourteen-year-old's First Amendment rights. Yeah, I bet he wakes up at night thinking fourteen-year-olds need free speech. I mean he literally used that as an excuse that they were worried about their First Amendment rights in ninth grader . But unless I I don't see why we hadn't I mean a simple one, age gating. I think that's coming. I I don't think there's got to come. I don't under the age of 18 should ever be on a social media platform. And I get it. Maybe they can learn from YouTube. Maybe they can learn how to do algebra. It's not worth it. Or you have the cleanest G-rated version. And what Jonathan Heid says is just go to China and see what they're serving up on their social media platforms. It's like kids running around and doing dances in front of the flag about how much they love China and the C C P and but you know and then the other example Jonathan uses is if you go to the wealthiest high schools in Silicon Val ley, they literally have no screens. They don't. And so i it is it is nearly impossible to keep your k id off of this stuff. And there have been so many horrific stories about self-harm and kids, and that and that Meta knew about this stuff. The discovery here is going to be a horror film. When they see the emails and the research and when we find out what we knew, you know, what we knew was going on. And I always go back to I don't think these are I do think Mark Zuckerberg and Shell Sandberg have made more money while damaging more young people's lives than arguably any people in modern history. Uh but we're the ones that are ultimately culpable because we have to elect people who have the backbone and the domain expertise to regulate these companies. And General Motors would still be pouring mercury into the river if we didn't have regulation, because if they didn't, they would be at a cost disadvantage to Ford and Stellantis, who continue to pour mercury into the river. So we need to remove Section 230 for algorithmically elevated content. We need to age gate and, we need to break these companies up and we need in this this fourth leg of the stool, if you will, of the chair has happened, is civil liability. Um because these cases if these cases stopped, if this was it, nothing would change. Because this amount of money is chump change for these guys. This really is an incentive. I also think we need to move to a civil penalty construct where it's a percentage of market cap. So when Elon Musk is found guilty of market manipulation for saying I'm, you know, funding secured to take the company private, he's fined. I figured it was two or three hundred million dollars. That's like you or me being fin ed eight dollars. It's not a disincenti ve. Right? If you have a parking meter in front of your house, the ticket is 25 cents and it costs 10 bucks a day, you're gonna break the law. My first boss, Morgan Stanley, Carter Corner, used to talk about occasionally, you know, you're always commuting in your car. And a lot of time back then cars broke down. Cars were not very good. And a car would break down and you'd either traffic would be backed up on the four or five and you'd go by and you'd see a car with its hood up and steam would be coming out of it because cars were shitty back then, mostly American cars. And his idea was any time you break down on the road, you're charged 10% of the value of your car. And you watch, you're gonna see maintenance standards go way up. So I think we have to start finding these companies a percentage of their market capitalization or their revenues. Otherwise, the incentive is just to continue to break the law and throw lawyers at the problem until there are so many lawsuits that represent so much capital that they finally have to, you know, they have to change their ways of doing business. But let me finish where I started. This is a big moment. Trevor Burrus But a good place to start is just charge them anything. And I think that is kind of what's striking here. I mean, the the penalty for Meta here is four million dollars. That's l literally like a fraction of a percentage of what they pay uh AI engineers these days. Like that's literally nothing. And yet the stock fell more than 5% on the news. So I think what that is telling you is like this is the beginning of a very large chain of lawsuits that are coming. And it also shows regulators and it shows uh uh prosecutors that actually like you can do something if you simply apply a penalty. As opposed to what we saw with Google, where you say, Yes, you did something illegal, but we're not gonna gonna we're we're not gonna punish you for it final stat I just want to mention here because it blew me away I learned this from a former meta employee um uh on a on a CNN program. He said that one in eight children on Instagram have received unwanted sexual advances. And this was, I think, the the point that you made that the attorney general m ade. This is like an unbelievable level of exposure and just I mean, it's hard to put words to it. How bad it's gotten. there and you've made this analogy before which I think is a very good one. I mean, how would we feel if a bunch of kids were playing around in a playground and then a bunch of old men , in some cases just showed up naked and started looking at them and trying to talk to them. That's literally happening every single day on these platforms. It's happening to one in eight children on Instagram today. Like I don't think that we fully appreciate how bad it's gotten. It's not just that kids are lonely and they're spending too much time on their phones. It's like we're literally exposing them to sexual predators every day and it's now become normalized. Well it's worse than that. What if you what if the park said, Hey, uh you'll be really popular at this park and your friends will be impressed if you show up in a thong and a bathing suit. Yeah. We're going to sexualize you. Oh, and then strange men can speak to you. Or uh, hey, I'm gonna talk to you. I'm the algorithm. Oh, you're not feeling good about yourself? Why aren't you feeling good about yourself? Oh really? You're wow, you are you you're thinking about self-harm? Well, this is how you do it. Th this is he here's what a razor looks like. Do you know a r this do you know how to cut yours elf? Oh wait, you know that mom's pills? H here's some images of Noose's razors and pills. That's what was sent to a 14-year-old girl who started talking about suicidal ideation. They she got an email saying, Here are some images on self-harm we thought you might find interesting. I'm not suggesting someone at Meta, I think it was Pinterest , said, uh, I want this girl to self-harm. What they did is said, no, we have a business model where when we pick up on certain words, we just automatically send images and we put we haven't put in any safeguards because that would slow us down and get in the way of our profitabil ity. So we Jonathan Heights got this perfect. We overprotect our kids off line. My kid, I used to leave my mom's house at 8 a.m. or 9 a. 14 hours. You know, rabid dogs, fourteen year olds who'd beat me up, break into the school because for some reason we thought it was cool to break into the school on a Saturday. You know, just all kinds of havoc and whatever . My kid's 10 minutes home, 10 minutes late from school, we call MI6. We're guilty of this. But what w what is happening on a screen? And we install all these monitors and everything, and then my kid figures out a hack around them. But we vastly underprotect them online because we don't understand these technologies. But the key here is that we now have juries that are going to be made up of parents or people who know people whose kids have really struggled here. And our biggest regret, I still think our biggest regret isn't i I mean, I think Trump is a stain on the American experience, but my thesis is in twenty years, our biggest regret isn't going to be income inequality or climate change. We're just going to look back and go, how the fuck did we let that happen to our children around social media?