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0:01:37 Today’s number?
0:01:38 16.
0:01:42 That’s how many hours people spent waiting in line
0:01:45 for Shakespeare in the Park in New York this summer.
0:01:47 One of the longest waits ever.
0:01:52 That is 960 minutes of small talk with theater kids,
0:01:54 or as some people are calling it,
0:01:55 the seventh ring of hell.
0:01:59 Money market’s mad.
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0:02:03 The show goes on!
0:02:06 The folks in there have watched the show!
0:02:07 Show!
0:02:09 Welcome to Prof G Markets.
0:02:10 I’m Ed Elson.
0:02:12 As you can see from my background,
0:02:14 I am not in the studio right now.
0:02:17 I am in what is known as the eighth ring of hell.
0:02:19 I’m in Las Vegas at the moment,
0:02:21 doing a talk tomorrow, which will be very fun.
0:02:23 But lots of news to get into.
0:02:25 So let’s get into the show.
0:02:26 It is September 18th.
0:02:29 Let’s check in on yesterday’s market vitals.
0:02:33 The S&P 500 and the Nasdaq closed slightly lower
0:02:35 following the Fed’s interest rate decision.
0:02:37 Meanwhile, the Dow hit an intraday record
0:02:39 and ended the day in the green.
0:02:42 Treasury yields rose slightly, along with the dollar.
0:02:45 And finally, NVIDIA shares fell nearly 3%
0:02:48 after China banned its tech companies
0:02:49 from buying NVIDIA chips.
0:02:53 Okay, what’s happening?
0:02:55 For the first time in nine months,
0:02:57 the Federal Reserve is cutting rates.
0:03:00 As expected, Jerome Powell slashed interest rates
0:03:02 by 25 basis points yesterday,
0:03:04 citing a weakening labor market.
0:03:07 Fed officials also penciled in cuts
0:03:08 for the two remaining meetings this year.
0:03:11 The lone dissenting vote at the meeting
0:03:14 was the Fed’s newest member, Stephen Myron,
0:03:16 who favoured a 50 basis point cut.
0:03:20 All the other governors voted for 25 basis points.
0:03:22 Markets initially rallied in response,
0:03:25 but ended the day mixed.
0:03:28 So to help us break down what this decision means
0:03:30 for the economy and what we can expect
0:03:31 for the rest of the year,
0:03:34 we have our favourite financial commentator
0:03:36 from the Financial Times.
0:03:38 We have the one and only Robert Armstrong.
0:03:41 Rob, thank you so much for joining us again
0:03:43 on Profit Markets.
0:03:44 It’s great to be here.
0:03:46 Very interesting meeting.
0:03:47 A lot to say.
0:03:48 Yes.
0:03:50 Let’s just start with your initial reactions.
0:03:52 What did you think?
0:03:57 I think there were two things that jumped out at me.
0:04:03 One was, you know, the Fed is stuck between its mandate.
0:04:05 Right at the top of the press release,
0:04:08 they said inflation’s rising, job creation is falling,
0:04:12 they are being pulled in two opposite directions.
0:04:14 And the statement was very clear
0:04:15 and Chair Powell was very clear.
0:04:19 We’re leaning towards the employment side
0:04:21 of our mandate, of our job.
0:04:24 And so that should be a good message for markets, right?
0:04:26 Like we’re, okay, we’re cutting
0:04:29 and we’re kind of more worried about growth
0:04:31 than inflation, broadly speaking.
0:04:33 And that was kind of interesting.
0:04:35 And that message came through much
0:04:38 or a bit more clearly than I expected.
0:04:43 I expected a little bit more of a, you know,
0:04:45 six of one, half a dozen of the other.
0:04:48 The second interesting thing was, of course,
0:04:50 the issue of independence.
0:04:54 So it is not often that the statement
0:04:56 of economic projections,
0:04:59 which is this little folder full of charts
0:05:03 that the Fed hands out before every meeting,
0:05:05 which shows what the different members expect
0:05:09 about this and this, this or that economic variable,
0:05:10 actually makes you laugh.
0:05:13 But this one did make me laugh
0:05:15 because they have what they call the dot plot,
0:05:20 which is one dot on a sort of chart
0:05:24 of expected rate policy at the end of this year.
0:05:27 And so the 19 people on the committee
0:05:30 and the 12 who vote put their dots on there
0:05:32 and all the dots were all like
0:05:34 in this little group together,
0:05:35 like a group of happy children.
0:05:37 But then there was one dot
0:05:39 that was the unhappy, lonely child
0:05:41 that had been rejected by the group
0:05:43 way at the bottom of the chart.
0:05:46 And that dot could only have come
0:05:47 from one person,
0:05:50 which is the new member of the committee,
0:05:51 Mr. Marin.
0:05:51 Exactly.
0:05:53 Representative on the committee
0:05:55 of the White House.
0:05:57 Second day on the job.
0:05:59 Second day on the job.
0:06:00 And in the press conference,
0:06:03 Powell got some very fair questions
0:06:03 from the journalists,
0:06:06 which were along the lines of,
0:06:07 you rattle on no end
0:06:09 about the importance of independence,
0:06:11 but you have somebody
0:06:13 who literally has a job
0:06:14 in the White House
0:06:15 sitting on the committee.
0:06:16 And we all know who’s dot
0:06:18 that lonely little dot is.
0:06:18 Yes.
0:06:20 What do you say about that?
0:06:21 And he said,
0:06:22 basically two things.
0:06:23 One,
0:06:25 independence is good.
0:06:27 I won’t comment on Mr.
0:06:29 Marin’s presence specifically.
0:06:30 And two,
0:06:31 one member of the committee
0:06:33 can’t sway it
0:06:34 because the 12 people vote,
0:06:36 which is,
0:06:36 I guess,
0:06:37 a fair answer.
0:06:38 But what about two people or three?
0:06:39 You know,
0:06:40 that’s the kind of implied
0:06:42 when he says one person isn’t enough.
0:06:42 Well,
0:06:43 you know,
0:06:45 White House trying to get rid
0:06:45 of Lisa Cook,
0:06:46 then you have two,
0:06:47 right?
0:06:49 You know what I mean?
0:06:50 Can two sway the committee?
0:06:51 These are good questions.
0:06:54 Yeah.
0:06:55 I don’t mean to,
0:06:57 I know you might have
0:06:57 different questions,
0:06:58 but there was one other point
0:06:59 relative to this.
0:07:00 Yeah, yeah, please.
0:07:02 Which were the very interesting votes
0:07:07 of the two dissenters last time,
0:07:09 Bowman and Waller.
0:07:10 So last time,
0:07:11 these two Fed governors,
0:07:14 both Trump appointees,
0:07:15 in the last meeting
0:07:16 when they didn’t cut,
0:07:17 they said,
0:07:18 we think,
0:07:19 they dissented and said,
0:07:20 we think the committee
0:07:22 should have cut 25 basis points.
0:07:23 There was a lot of chitter-chatter
0:07:24 ahead of this meeting
0:07:26 that there might be
0:07:28 a three-person dissenting block,
0:07:29 Bowman,
0:07:30 Waller,
0:07:31 and Marin,
0:07:32 right?
0:07:32 Mm-hmm.
0:07:34 But this time,
0:07:35 one dissenter,
0:07:36 Marin,
0:07:38 Bowman,
0:07:39 and Waller
0:07:40 did not dissent.
0:07:41 They were with the committee
0:07:42 at 25 basis points.
0:07:42 Now,
0:07:44 the question that
0:07:46 forces us to ask is,
0:07:46 were they making
0:07:47 a statement there?
0:07:49 Were they saying,
0:07:49 look,
0:07:50 there’s not a,
0:07:51 there’s not a Trump block.
0:07:52 This institution is still
0:07:53 independent of the president.
0:07:54 I mean,
0:07:55 maybe they just thought
0:07:56 25 was the right amount
0:07:57 this time.
0:07:57 Right.
0:07:58 Who knows?
0:07:59 I cannot look into the hearts
0:08:00 of men and women.
0:08:01 However,
0:08:03 it’s impossible not to think
0:08:05 maybe these two
0:08:06 Trump appointees
0:08:08 were making a statement
0:08:09 along the lines of,
0:08:10 you don’t own me.
0:08:12 You don’t own the committee.
0:08:13 Even if you have
0:08:14 three members on it,
0:08:15 we’re not a block.
0:08:16 We’re not with the new guy.
0:08:16 Right?
0:08:17 Yeah.
0:08:18 Which is promising.
0:08:18 Yeah,
0:08:19 that’s promising.
0:08:21 That’s a win for the institution
0:08:22 or the institutional lists,
0:08:23 I would say.
0:08:23 Yes.
0:08:25 So just to quote
0:08:25 the statement
0:08:26 from this Fed meeting,
0:08:27 quote,
0:08:28 job gains have slowed
0:08:29 and the unemployment rate
0:08:31 has edged up.
0:08:33 Inflation has moved up
0:08:35 and remains somewhat elevated.
0:08:36 Yes.
0:08:37 So to me,
0:08:37 so to me,
0:08:37 I read that
0:08:40 and I think that’s sort
0:08:40 of the definition
0:08:42 of stagflation.
0:08:43 It is.
0:08:44 It is.
0:08:45 We’re seeing slowing growth
0:08:47 and we’re seeing inflation
0:08:48 move up
0:08:49 and, quote,
0:08:51 remain elevated.
0:08:53 And the question is then,
0:08:55 why are we cutting rates
0:08:55 right now?
0:08:57 And, you know,
0:08:59 it was assumed
0:09:00 by Wall Street
0:09:00 and by all of us
0:09:02 that we were going to cut,
0:09:04 have a 25 basis point cut.
0:09:06 But, you know,
0:09:07 is that necessarily
0:09:08 the right decision?
0:09:09 I mean,
0:09:10 I read that.
0:09:10 They’re saying,
0:09:12 we’ve got this inflation problem.
0:09:13 It’s going up.
0:09:14 It’s staying up.
0:09:17 And yet we’re going to cut rates.
0:09:18 And I think the question becomes,
0:09:19 okay,
0:09:20 why are they doing that?
0:09:21 Is it, one,
0:09:23 because this employment thing
0:09:24 is such an important thing?
0:09:25 Or then there’s this sort of
0:09:26 more insidious reading,
0:09:26 which is,
0:09:28 maybe the pressure got to him.
0:09:30 Maybe everything Trump
0:09:31 has been saying
0:09:34 actually did influence
0:09:35 this Fed decision.
0:09:35 Okay.
0:09:37 To credit Chair Powell.
0:09:37 Yeah.
0:09:38 He did say,
0:09:39 we’ve got to,
0:09:41 the mandate is pulling us
0:09:42 in both directions
0:09:44 and no path is without risk.
0:09:46 So he acknowledged
0:09:48 the point that you just made,
0:09:49 that this is not an easy decision.
0:09:52 But when pressed on this issue,
0:09:53 I think what he’s,
0:09:55 his view
0:09:58 is that the persistence
0:09:59 of inflation
0:10:02 is due to tariffs.
0:10:02 Yep.
0:10:04 It’s on the good side.
0:10:05 It’s due to tariffs.
0:10:07 And our best guess
0:10:08 is that’s temporary.
0:10:09 Right?
0:10:11 So the reason we can err
0:10:12 on the side of growth
0:10:13 is because we think
0:10:14 the primary cause
0:10:16 of inflation
0:10:17 above target
0:10:18 is something
0:10:19 that won’t last.
0:10:20 And we can have a debate
0:10:20 about that,
0:10:21 but that’s,
0:10:22 that’s his answer there.
0:10:22 Now,
0:10:23 he also said something
0:10:24 that I happen to disagree with.
0:10:26 He also said
0:10:27 there’s disinflation
0:10:29 on the services side.
0:10:30 I don’t happen to believe that.
0:10:31 I don’t see it in the numbers.
0:10:34 I think services inflation
0:10:35 is stuck at three
0:10:37 and maybe even rising
0:10:38 a little bit
0:10:40 in some important categories.
0:10:42 So I don’t feel as confident
0:10:42 as,
0:10:43 as the committee does
0:10:45 about services inflation.
0:10:47 but he did give a coherent answer.
0:10:49 We think the tariff thing
0:10:50 is going to,
0:10:50 you know,
0:10:51 be like the,
0:10:53 the pig that passes
0:10:53 through the snake
0:10:54 eventually.
0:10:57 And if it’s not,
0:10:58 we’ll have to make
0:10:59 that assessment later.
0:10:59 Yeah.
0:11:01 I just want to gather
0:11:03 one of your quotes
0:11:03 because you wrote
0:11:05 an article about this.
0:11:06 It was called
0:11:08 What the Fed Should Do.
0:11:09 And you basically
0:11:11 went through
0:11:12 all of the different arguments
0:11:12 why,
0:11:13 why you would go
0:11:14 with a 50 basis point cut
0:11:15 or a 25
0:11:16 or why you would
0:11:17 keep rates where they are.
0:11:18 Yeah.
0:11:19 And you actually said,
0:11:20 you said,
0:11:20 quote,
0:11:21 we’re with the hawks.
0:11:22 You said,
0:11:23 you’re basically
0:11:23 on the side of
0:11:24 keep rates where they are.
0:11:24 You said,
0:11:25 quote,
0:11:26 resurgent inflation
0:11:27 is the scariest risk right now.
0:11:29 And not just in the sense
0:11:29 that inflation eats away
0:11:30 at purchasing power
0:11:31 and grinds down in sentiment.
0:11:33 We think another bout
0:11:33 of inflation
0:11:35 could cause a market crash.
0:11:37 So I understand you,
0:11:37 you don’t think
0:11:39 that this is like Armageddon
0:11:41 that we have a 25 basis point cut.
0:11:42 No, it’s not.
0:11:43 But you do see,
0:11:44 it seems as though
0:11:44 you,
0:11:45 you would,
0:11:46 you believe that
0:11:47 this isn’t necessarily
0:11:48 the right decision here.
0:11:49 I mean,
0:11:50 I think
0:11:53 his decision
0:11:54 is the,
0:11:56 the 25 basis point decision.
0:11:58 This is a bit hard to,
0:12:00 a kind of subtle view
0:12:00 and it’s hard to express,
0:12:02 but let me give it a shot.
0:12:03 In the center
0:12:04 of the probability curve,
0:12:06 I think a 25%
0:12:08 basis point cut
0:12:09 is probably fine
0:12:11 or even the right decision.
0:12:13 I just see this big,
0:12:16 whopping low probability risk
0:12:17 at the right side
0:12:18 of the curve,
0:12:20 which is markets
0:12:22 overheat even more.
0:12:24 Inflation gets going,
0:12:27 rates rise
0:12:28 and the higher rates
0:12:29 crack the market
0:12:30 and we have a market crash.
0:12:32 That is a low probability
0:12:33 event,
0:12:36 but it’s so awful
0:12:37 that you kind of have to
0:12:39 weight it a bit more heavily,
0:12:41 even though it’s low probability,
0:12:42 just because it would stink
0:12:43 so bad.
0:12:45 And I think
0:12:47 as a markets person,
0:12:48 those are the kind of events
0:12:49 that I worry about.
0:12:51 Economists
0:12:52 think more about
0:12:54 the center of the curve
0:12:55 or the center
0:12:55 of the distribution.
0:12:57 I’m more freaked out
0:12:57 about the tails.
0:12:59 So that might explain
0:12:59 my,
0:13:00 my disagreement
0:13:00 with,
0:13:01 you know,
0:13:02 both the chair
0:13:03 and what the committee
0:13:04 decided today.
0:13:04 Yeah.
0:13:05 So we,
0:13:06 we all got to have this.
0:13:08 If I can just add one thing,
0:13:09 if I can just add one thing,
0:13:11 if you look at the expectation,
0:13:12 that dot plot
0:13:13 that I talked about
0:13:14 earlier,
0:13:15 which says
0:13:16 for each member
0:13:17 of the committee,
0:13:18 what do they think
0:13:19 is the appropriate,
0:13:20 will be the appropriate
0:13:22 level of
0:13:23 the federal funds rate
0:13:24 at the end of the year?
0:13:27 It’s very split
0:13:28 between people
0:13:29 who think,
0:13:30 like almost half
0:13:30 of the committee
0:13:32 doesn’t think
0:13:33 another rate cut
0:13:34 is going to be
0:13:35 necessary this year.
0:13:36 Right.
0:13:37 That’s significant.
0:13:38 There,
0:13:39 about this year especially,
0:13:40 there is significant
0:13:41 disagreement at the Fed,
0:13:42 right,
0:13:43 which tells you
0:13:44 that the stuff
0:13:45 that you’re talking about,
0:13:45 the worries
0:13:46 you just expressed,
0:13:46 Ed,
0:13:48 those worries
0:13:49 are on the mind
0:13:51 of the committee
0:13:51 as a collective
0:13:53 and they have
0:13:54 the upper hand
0:13:55 with certain members
0:13:55 of the committee.
0:13:56 Yes.
0:13:57 We saw the,
0:13:59 the markets reaction
0:13:59 first,
0:14:00 the SP and the NASDAQ
0:14:01 initially popped,
0:14:03 then they fell
0:14:05 as Powell was speaking.
0:14:06 I assume that is
0:14:07 because of
0:14:08 that caution
0:14:09 that we saw,
0:14:10 they decided to cut
0:14:10 but then they said,
0:14:11 but hold on.
0:14:11 Yeah.
0:14:12 I think,
0:14:13 yeah,
0:14:14 I think it was like,
0:14:14 yay!
0:14:15 And then they,
0:14:15 they were like,
0:14:16 you could sort of
0:14:17 see the market
0:14:18 paging through
0:14:18 that statement
0:14:20 of economic projections
0:14:21 and maybe looking
0:14:22 at that page
0:14:22 about,
0:14:23 you know,
0:14:24 2026 rate expectations
0:14:25 and being like,
0:14:25 whoa,
0:14:25 whoa,
0:14:25 whoa.
0:14:28 We don’t love this.
0:14:28 Yeah.
0:14:29 You know what I mean?
0:14:30 But,
0:14:30 you know,
0:14:32 the first day reactions,
0:14:32 Ed,
0:14:33 to these things
0:14:34 are not usually
0:14:35 great indicators.
0:14:37 It takes time
0:14:38 for the,
0:14:38 the,
0:14:39 the market,
0:14:40 it takes a day or two
0:14:40 for the market
0:14:41 to digest this stuff.
0:14:42 Yes,
0:14:42 exactly.
0:14:43 and come,
0:14:44 come to a consensus.
0:14:44 Yeah.
0:14:46 So we will get
0:14:46 this,
0:14:47 this rate cut.
0:14:48 Um,
0:14:50 going back to the dual mandate,
0:14:51 you’ve got this
0:14:52 unemployment problem
0:14:53 and you’ve got this
0:14:54 inflation problem.
0:14:57 And the idea is
0:14:59 you cut rates,
0:15:01 you start to fix
0:15:02 the unemployment problem,
0:15:04 you raise rates
0:15:04 or you keep rates
0:15:05 the same,
0:15:06 you start to address
0:15:07 the inflation problem.
0:15:09 And I think
0:15:10 everyone knows that.
0:15:10 What I think
0:15:11 a lot of people
0:15:12 probably don’t have
0:15:14 sorted out in their head
0:15:14 is like,
0:15:15 why that is.
0:15:17 And could you just
0:15:18 tell us
0:15:19 what the economics
0:15:20 are of this?
0:15:21 why is it
0:15:23 that cutting rates
0:15:25 will help
0:15:26 with the job market?
0:15:27 Why is that?
0:15:27 What is actually
0:15:29 happening in the economy there?
0:15:30 A crucial
0:15:32 element of growth
0:15:34 in any economy
0:15:35 is the ease
0:15:36 with which
0:15:38 both households
0:15:39 and companies,
0:15:39 but especially
0:15:40 companies,
0:15:40 can borrow.
0:15:41 Yeah.
0:15:42 So if at the margin
0:15:44 you make debt cheaper,
0:15:45 you make it easier
0:15:47 for a,
0:15:47 uh,
0:15:48 a company
0:15:50 to borrow money,
0:15:51 to expand its business
0:15:52 or buy a new piece
0:15:53 of equipment
0:15:54 or hire new people
0:15:54 or,
0:15:55 you know,
0:15:56 all of this kind of stuff.
0:15:58 But there is,
0:15:59 you know,
0:16:00 but on that basis
0:16:01 and the,
0:16:02 you know,
0:16:02 the chair acknowledged
0:16:03 this today,
0:16:04 rightly,
0:16:05 a quarter of a point
0:16:06 interest rate change
0:16:07 isn’t going to make
0:16:08 a big difference.
0:16:09 You know,
0:16:10 like it may not
0:16:11 even filter through
0:16:12 to mortgage rates
0:16:13 at all,
0:16:14 which is the main channel
0:16:15 of transmission
0:16:16 to households,
0:16:16 right?
0:16:17 If households
0:16:18 have cheaper mortgage,
0:16:19 they refinance,
0:16:19 they have more money
0:16:20 on hand,
0:16:21 they spend,
0:16:22 they consume more
0:16:23 because their,
0:16:24 their housing costs
0:16:24 are lower,
0:16:25 et cetera.
0:16:27 But there is,
0:16:27 uh,
0:16:28 this very powerful
0:16:30 signaling effect,
0:16:32 which is that
0:16:33 the Fed
0:16:34 almost has
0:16:35 this totemic
0:16:37 or magical status
0:16:38 in financial markets
0:16:39 where people,
0:16:41 when the Fed
0:16:42 is in cutting mode,
0:16:43 people think
0:16:44 kind of good times
0:16:45 are here
0:16:45 and the vibes
0:16:46 are positive
0:16:47 and that
0:16:48 flows over
0:16:49 to,
0:16:49 you know,
0:16:50 greater wealth
0:16:50 effects,
0:16:51 enthusiasm,
0:16:52 animal spirits
0:16:53 and all that stuff.
0:16:54 So that’s
0:16:54 the,
0:16:55 the tricky thing
0:16:57 that the Fed
0:16:57 has to manage.
0:16:58 It’s not only
0:16:59 controlling
0:17:01 this one interest rate,
0:17:03 it’s got this
0:17:04 weird job
0:17:06 managing vibes.
0:17:07 Yes.
0:17:09 And that’s
0:17:09 what makes it
0:17:10 so unpredictable,
0:17:11 right?
0:17:12 Because the vibes
0:17:12 part is actually
0:17:13 more important
0:17:14 than the interest
0:17:15 rate part.
0:17:16 The long run
0:17:17 path of interest
0:17:17 rates,
0:17:17 of course,
0:17:18 matters a lot.
0:17:19 but for any
0:17:20 one cut,
0:17:21 the vibes
0:17:21 are more
0:17:22 important than
0:17:22 the cut
0:17:22 itself.
0:17:23 Yes,
0:17:23 exactly.
0:17:25 You once
0:17:26 described the
0:17:27 position of Fed
0:17:27 chair on this
0:17:28 podcast as
0:17:29 the high priest
0:17:30 of the economy,
0:17:31 which I think
0:17:32 is exactly
0:17:33 right.
0:17:33 Not only are
0:17:34 you in control
0:17:35 of the interest
0:17:35 rates,
0:17:36 you’re also
0:17:37 in control
0:17:37 of the way
0:17:38 people feel
0:17:39 about things
0:17:39 and then you
0:17:39 have people
0:17:40 like us
0:17:40 talking on
0:17:41 this podcast
0:17:42 figuring out
0:17:42 what does
0:17:43 this actually
0:17:43 mean?
0:17:45 The actual
0:17:46 downstream
0:17:47 effects are
0:17:47 almost
0:17:49 less of a
0:17:49 result of
0:17:50 him
0:17:51 switching the
0:17:52 knob
0:17:53 versus him
0:17:54 going out
0:17:54 there and
0:17:54 saying this
0:17:55 is what
0:17:55 we’re doing.
0:17:56 And this is
0:17:57 of course
0:17:57 why the
0:17:58 issues of
0:17:58 Fed
0:17:59 independence
0:18:00 are so
0:18:00 important.
0:18:01 You know,
0:18:01 when the
0:18:02 market is
0:18:03 booming and
0:18:04 the economy
0:18:05 is basically
0:18:05 good,
0:18:05 which by
0:18:06 the way,
0:18:07 it still
0:18:08 basically is,
0:18:09 right?
0:18:09 The economy
0:18:10 is growing.
0:18:11 The unemployment
0:18:13 rate is low.
0:18:13 It’s just
0:18:14 these things
0:18:14 are going in
0:18:15 the wrong
0:18:15 direction,
0:18:16 but they’re
0:18:16 going in the
0:18:17 wrong direction
0:18:17 from a
0:18:18 pretty solid
0:18:18 place,
0:18:19 and that’s
0:18:19 good to
0:18:19 keep in
0:18:20 mind.
0:18:21 But if
0:18:21 things get
0:18:22 ugly,
0:18:25 and the
0:18:26 high priest
0:18:28 and the
0:18:29 high temple
0:18:30 of our
0:18:31 market system
0:18:32 has been
0:18:33 defiled
0:18:33 somehow,
0:18:35 then you
0:18:35 don’t know
0:18:35 what’s going
0:18:36 to happen
0:18:36 with vibes,
0:18:37 right?
0:18:38 And I
0:18:38 think you’re
0:18:39 creating a
0:18:41 risk that
0:18:42 is hard to
0:18:43 predict and
0:18:44 possibly hard
0:18:44 to control.
0:18:48 it’s fine
0:18:50 to do this
0:18:50 Lisa Cook
0:18:51 stuff now
0:18:51 when things
0:18:52 are okay,
0:18:54 but when
0:18:55 the temperature
0:18:56 starts to
0:18:57 rise, I
0:18:57 think this
0:18:57 stuff could
0:18:59 matter, and
0:18:59 I’m worried
0:18:59 about it.
0:19:01 Well, Rob,
0:19:02 we really
0:19:02 appreciate your
0:19:04 time, and
0:19:04 we hope to
0:19:05 have you on
0:19:05 for a longer
0:19:06 episode.
0:19:06 Love being
0:19:07 on the
0:19:07 show.
0:19:07 Thanks for
0:19:08 having me,
0:19:08 Ed.
0:19:10 After the
0:19:11 break, a
0:19:11 look at who
0:19:12 will control
0:19:13 TikTok in
0:19:13 the U.S.
0:19:14 If you’re
0:19:15 enjoying the
0:19:15 show, give
0:19:16 Prof G Markets
0:19:17 a follow-up.
0:19:25 Support for
0:19:25 the show
0:19:26 comes from
0:19:26 Indeed.
0:19:27 Your team is
0:19:27 great, and
0:19:27 they can
0:19:28 take on a
0:19:28 lot.
0:19:28 Anytime
0:19:29 there’s a
0:19:29 new
0:19:29 challenge and
0:19:30 you ask
0:19:30 who has
0:19:30 the
0:19:30 bandwidth,
0:19:31 someone
0:19:31 always
0:19:32 steps up.
0:19:33 But there
0:19:33 comes a
0:19:34 time when
0:19:34 even the
0:19:34 best teams
0:19:35 can’t
0:19:35 take on
0:19:35 any more
0:19:35 work,
0:19:36 and you
0:19:36 simply
0:19:36 need to
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0:19:57 That all means
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0:20:07 more visibility
0:20:07 at
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0:20:09 slash
0:20:09 Prop G.
0:20:11 Just go to
0:20:12 Indeed.com
0:20:12 slash
0:20:13 Prop G
0:20:13 right now
0:20:14 and support
0:20:14 our show by
0:20:15 saying you
0:20:15 heard about
0:20:16 Indeed on
0:20:16 this podcast.
0:20:17 Indeed.com
0:20:18 slash
0:20:18 Prop G.
0:20:19 Terms and
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0:20:21 Hiring
0:20:22 Indeed is
0:20:22 all you
0:20:22 need.
0:20:26 Support for
0:20:26 the show
0:20:27 comes from
0:20:27 Groons.
0:20:28 An apple a
0:20:29 day keeps
0:20:29 the doctor
0:20:29 away,
0:20:30 yada,
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0:20:31 The truth
0:20:31 is that
0:20:32 even if
0:20:32 you enjoy
0:20:33 fruits and
0:20:33 vegetables,
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0:20:44 then some
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0:20:45 fraction of
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0:20:58 and whole
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0:21:11 an apple
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0:21:16 Grab your
0:21:17 limited edition
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0:21:19 available only
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0:21:32 The Twisted
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0:21:34 Amanda Knox
0:21:34 is an
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0:21:36 original
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0:21:46 Amanda Knox
0:21:46 for the
0:21:47 tragic murder
0:21:48 of Meredith
0:21:49 Kircher and
0:21:50 the relentless
0:21:50 media storm
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0:21:52 The Twisted
0:21:53 Tale of
0:21:54 Amanda Knox
0:21:54 is now
0:21:55 streaming only
0:21:56 on Disney+.
0:22:02 We’re back
0:22:03 with Prof G
0:22:03 Markets.
0:22:05 242 days
0:22:06 after the
0:22:07 original deadline
0:22:07 for the
0:22:08 TikTok ban,
0:22:09 a deal to
0:22:09 keep the
0:22:10 app in the
0:22:11 US is
0:22:11 finally coming
0:22:11 together.
0:22:13 According to
0:22:14 initial reporting,
0:22:15 a consortium
0:22:16 of US
0:22:17 companies including
0:22:17 Oracle,
0:22:18 Silver Lake
0:22:19 and Andreessen
0:22:20 Horowitz will
0:22:21 control roughly
0:22:22 80% of
0:22:23 US TikTok
0:22:24 operations.
0:22:24 Meanwhile,
0:22:26 ByteDance will
0:22:26 hold on to
0:22:27 the remaining
0:22:28 19.9%,
0:22:29 making it the
0:22:30 app’s largest
0:22:31 single shareholder.
0:22:32 Still, that
0:22:32 should satisfy
0:22:33 one condition
0:22:33 of the
0:22:34 2024 law
0:22:35 that forced
0:22:36 the ban
0:22:36 or sale
0:22:37 of the
0:22:37 company
0:22:38 in the
0:22:38 first place.
0:22:39 ByteDance’s
0:22:39 share of the
0:22:40 app needs
0:22:40 to fall
0:22:41 below 20%
0:22:42 if TikTok
0:22:42 is to
0:22:42 continue
0:22:43 operating
0:22:44 in America.
0:22:45 But there
0:22:46 is still
0:22:47 one big
0:22:47 question mark
0:22:48 when it
0:22:49 comes to
0:22:49 the most
0:22:49 important
0:22:50 condition
0:22:50 of all,
0:22:51 and that
0:22:51 is who
0:22:52 will
0:22:52 control
0:22:52 the
0:22:53 algorithm
0:22:54 for
0:22:54 TikTok
0:22:55 in the
0:22:55 US.
0:22:55 You’ll
0:22:55 remember,
0:22:56 this
0:22:57 algorithm
0:22:57 was at
0:22:58 the very
0:22:58 heart
0:22:59 of the
0:22:59 TikTok
0:23:00 dispute.
0:23:00 The main
0:23:01 reason the
0:23:01 app was
0:23:02 banned in
0:23:03 the first
0:23:03 place was
0:23:03 because of
0:23:04 these
0:23:04 national
0:23:05 security
0:23:05 concerns.
0:23:06 Our
0:23:06 government
0:23:06 determined
0:23:07 that the
0:23:07 algorithm
0:23:08 could not
0:23:09 be left
0:23:09 in the
0:23:10 hands of
0:23:10 a company
0:23:11 with ties
0:23:12 to the
0:23:12 CCP.
0:23:12 We
0:23:12 couldn’t
0:23:13 allow
0:23:13 ByteDance
0:23:14 to
0:23:15 manipulate
0:23:15 the
0:23:15 minds
0:23:16 of
0:23:16 Americans
0:23:17 with
0:23:17 their
0:23:18 algorithm.
0:23:19 So,
0:23:19 where do
0:23:20 we land
0:23:20 on this
0:23:20 issue
0:23:20 under
0:23:21 this
0:23:21 new
0:23:22 framework?
0:23:22 Well,
0:23:23 according to
0:23:24 a top
0:23:24 Chinese
0:23:25 official,
0:23:26 US
0:23:26 TikTok
0:23:27 operations
0:23:27 will
0:23:27 license
0:23:28 the
0:23:28 algorithm
0:23:29 from
0:23:30 ByteDance.
0:23:31 Again,
0:23:31 this is all
0:23:32 initial
0:23:32 reporting,
0:23:33 and the
0:23:33 White House
0:23:34 said,
0:23:34 quote,
0:23:34 any details
0:23:35 of the
0:23:35 TikTok
0:23:35 framework
0:23:36 are pure
0:23:37 speculation,
0:23:39 but if
0:23:39 we are to
0:23:40 take the
0:23:40 Chinese
0:23:41 official at
0:23:41 their word,
0:23:42 it does
0:23:43 appear the
0:23:43 algorithm
0:23:44 will
0:23:44 remain
0:23:44 in
0:23:44 the
0:23:45 hands
0:23:45 of
0:23:46 China.
0:23:46 The
0:23:46 only
0:23:47 difference
0:23:47 now
0:23:48 is
0:23:48 that
0:23:48 the
0:23:48 people
0:23:49 profiting
0:23:49 off
0:23:50 of
0:23:50 that
0:23:50 algorithm,
0:23:51 those
0:23:51 people
0:23:52 will
0:23:52 have
0:23:52 changed.
0:23:52 It won’t
0:23:53 be the
0:23:53 Chinese
0:23:53 anymore,
0:23:54 it will
0:23:54 be
0:23:55 some
0:23:55 Americans
0:23:56 too,
0:23:56 or more
0:23:57 specifically,
0:23:57 some
0:23:58 American
0:23:58 friends
0:23:59 of the
0:23:59 president.
0:24:00 But,
0:24:00 does that
0:24:01 fix
0:24:01 our
0:24:01 national
0:24:02 security
0:24:02 problem?
0:24:03 We’re
0:24:04 not so
0:24:04 sure.
0:24:05 However,
0:24:06 as we
0:24:06 said,
0:24:06 nothing is
0:24:07 officially
0:24:07 confirmed
0:24:07 yet.
0:24:08 Trump
0:24:08 and Xi
0:24:08 are
0:24:09 scheduled
0:24:09 to have
0:24:09 a
0:24:09 call
0:24:10 on
0:24:10 Friday.
0:24:11 They
0:24:11 will
0:24:11 discuss
0:24:12 this
0:24:12 deal,
0:24:13 so we
0:24:13 will
0:24:13 have
0:24:13 to
0:24:13 wait
0:24:14 and
0:24:14 see
0:24:15 what
0:24:15 else
0:24:15 we
0:24:15 learn
0:24:16 later
0:24:16 in the
0:24:16 week.
0:24:16 In the
0:24:17 meantime,
0:24:17 let’s
0:24:18 bring in
0:24:18 the man
0:24:18 who has
0:24:18 been
0:24:19 calling
0:24:19 for this
0:24:19 ban
0:24:19 as
0:24:20 early
0:24:20 as
0:24:21 2023.
0:24:22 Let’s
0:24:22 get
0:24:22 Scott
0:24:23 on the
0:24:23 phone.
0:24:27 Scott,
0:24:28 how’s it
0:24:28 going?
0:24:28 It’s
0:24:28 going
0:24:29 really
0:24:29 well.
0:24:29 I’m
0:24:30 in
0:24:30 midtown,
0:24:31 headed
0:24:31 to the
0:24:31 airport,
0:24:32 then going
0:24:32 to
0:24:32 Nashville
0:24:33 for a
0:24:33 speaking
0:24:34 group
0:24:34 tomorrow,
0:24:35 back
0:24:35 in
0:24:35 New
0:24:35 York
0:24:36 tomorrow.
0:24:38 Nashville,
0:24:38 that’s
0:24:39 pretty
0:24:39 exciting.
0:24:40 Yeah,
0:24:40 it’s
0:24:40 a great
0:24:40 city.
0:24:41 Have you
0:24:41 ever been
0:24:41 to
0:24:42 Nashville?
0:24:42 Never.
0:24:43 I can
0:24:43 see a
0:24:44 guy like
0:24:44 you
0:24:45 living
0:24:45 there.
0:24:45 It’s
0:24:45 one of
0:24:45 those
0:24:46 cool
0:24:48 up-and-coming
0:24:50 cities.
0:24:53 I think
0:24:53 you’d
0:24:53 really
0:24:54 enjoy it.
0:24:57 You’re
0:24:57 really
0:24:57 selling
0:24:57 me
0:24:58 on
0:24:58 Nashville.
0:24:58 It
0:24:59 sounds
0:24:59 wonderful.
0:25:01 I’d
0:25:01 love to
0:25:03 explore the
0:25:03 great
0:25:04 state of
0:25:04 Tennessee,
0:25:04 with
0:25:05 U.S.
0:25:08 All
0:25:08 right.
0:25:08 We’ve
0:25:08 got a
0:25:08 lot to
0:25:09 unpack
0:25:09 here.
0:25:09 We’ve
0:25:10 got this
0:25:10 consortium
0:25:11 of
0:25:12 U.S.
0:25:12 investors
0:25:13 who appear
0:25:14 ready to
0:25:14 take over
0:25:15 TikTok.
0:25:18 There’s
0:25:18 also this
0:25:18 larger
0:25:19 question of
0:25:19 who’s
0:25:19 actually
0:25:19 going to
0:25:20 control
0:25:20 the
0:25:20 algorithm
0:25:21 when it’s
0:25:21 all said
0:25:21 and done.
0:25:23 Let’s
0:25:23 get your
0:25:23 initial
0:25:24 reactions to
0:25:24 what we’ve
0:25:25 seen with
0:25:25 this
0:25:25 TikTok
0:25:25 news.
0:25:26 My
0:25:27 initial
0:25:27 reaction
0:25:28 is that
0:25:28 this
0:25:29 used to
0:25:29 be a
0:25:29 capitalist
0:25:30 country
0:25:30 with
0:25:30 rule of
0:25:31 law
0:25:31 where
0:25:31 it
0:25:32 wasn’t
0:25:32 this
0:25:34 cronyism
0:25:34 that
0:25:34 had
0:25:35 become
0:25:35 almost
0:25:35 normalized.
0:25:38 First off,
0:25:40 TikTok or
0:25:41 ByteDance
0:25:42 was banned.
0:25:42 It was
0:25:43 passed by
0:25:43 both houses
0:25:44 of government
0:25:44 and the
0:25:44 president
0:25:45 signed it
0:25:45 into law
0:25:46 and then
0:25:46 the new
0:25:47 president
0:25:47 came in
0:25:47 and said
0:25:48 I’m not
0:25:48 going to
0:25:49 enforce the
0:25:49 law.
0:25:50 So essentially
0:25:51 our laws
0:25:53 if we’re
0:25:53 going to
0:25:54 have a
0:25:54 dictatorship
0:25:55 or an
0:25:56 autocracy
0:25:56 let’s
0:25:56 just save
0:25:57 money and
0:25:57 clear out
0:25:58 send senators
0:25:59 and Congress
0:25:59 home and
0:26:00 stop even
0:26:01 pretending to
0:26:01 have an
0:26:02 SEC
0:26:03 because
0:26:04 this is
0:26:05 pure
0:26:05 when you
0:26:06 get to
0:26:06 take a
0:26:07 company
0:26:07 and we’ll
0:26:07 come back
0:26:08 to how
0:26:08 strong ByteDance
0:26:09 is and
0:26:09 just carve
0:26:10 it up for
0:26:11 your Republican
0:26:11 friends.
0:26:14 another reason
0:26:14 why I want
0:26:15 to get
0:26:16 involved in
0:26:17 Democratic
0:26:17 Party
0:26:17 politics
0:26:18 and help
0:26:19 flip Congress
0:26:20 and get
0:26:20 the White
0:26:21 House back
0:26:21 is in
0:26:22 addition to
0:26:23 returning to
0:26:24 the capitalist
0:26:24 full-body
0:26:24 contact
0:26:25 country of
0:26:26 rights
0:26:26 and
0:26:26 capitalism
0:26:27 that I
0:26:27 love
0:26:28 I want
0:26:29 to get
0:26:29 the
0:26:30 president
0:26:30 and
0:26:30 next
0:26:31 Democratic
0:26:31 president
0:26:32 in office
0:26:32 and convince
0:26:33 him to
0:26:33 ban
0:26:34 LVMH
0:26:34 and then
0:26:35 force
0:26:35 them to
0:26:35 sell it
0:26:36 to me
0:26:36 because
0:26:36 I’m
0:26:36 really
0:26:37 into
0:26:37 Ramoah
0:26:38 super
0:26:39 into
0:26:39 Ramoah
0:26:39 language
0:26:40 and I
0:26:40 would like
0:26:41 to own
0:26:42 LVMH
0:26:42 I’d like
0:26:43 to own
0:26:43 the U.S.
0:26:43 license
0:26:44 to LVMH
0:26:45 so that
0:26:45 is
0:26:46 you know
0:26:46 that sounds
0:26:47 comical
0:26:47 it’s not
0:26:48 that’s what’s
0:26:48 going on
0:26:49 here
0:26:49 he is
0:26:50 carving up
0:26:51 a company
0:26:51 and giving
0:26:52 it to
0:26:52 his
0:26:52 Republican
0:26:53 friends
0:26:54 instead
0:26:55 of
0:26:55 one
0:26:56 it should
0:26:56 have been
0:26:56 banned
0:26:56 and then
0:26:57 he would
0:26:57 have been
0:26:57 negotiating
0:26:58 from a
0:26:58 position
0:26:58 of
0:26:59 strength
0:27:00 and
0:27:00 two
0:27:01 they
0:27:01 want
0:27:02 to
0:27:02 also
0:27:02 put
0:27:03 someone
0:27:04 from
0:27:04 the
0:27:04 U.S.
0:27:04 government
0:27:04 on the
0:27:05 board
0:27:05 what are we
0:27:05 going to
0:27:05 have
0:27:06 cash
0:27:07 Patel
0:27:07 on the
0:27:07 board
0:27:08 I mean
0:27:09 it’s
0:27:12 funny
0:27:12 though
0:27:13 it used
0:27:13 to be
0:27:13 an insult
0:27:14 from the
0:27:14 right
0:27:15 that we
0:27:16 Democrats
0:27:16 are
0:27:16 socialists
0:27:17 this could
0:27:18 not be
0:27:18 more
0:27:19 socialists
0:27:19 this is
0:27:20 well it’s
0:27:21 cronious
0:27:21 first and
0:27:22 foremost
0:27:22 carving up
0:27:23 a company
0:27:23 giving it
0:27:23 to your
0:27:24 friends
0:27:24 instead of
0:27:24 what they
0:27:25 do
0:27:25 in
0:27:25 Russia
0:27:26 and
0:27:27 then
0:27:27 oh
0:27:28 but
0:27:28 we’re
0:27:28 going
0:27:28 to
0:27:29 find
0:27:29 someone
0:27:29 from
0:27:29 the
0:27:30 government
0:27:30 to
0:27:30 be
0:27:30 on
0:27:30 the
0:27:31 board
0:27:31 it
0:27:31 is
0:27:33 it
0:27:33 is
0:27:34 it
0:27:34 is
0:27:35 just
0:27:36 so
0:27:37 anyways
0:27:37 I’m not
0:27:38 a fan
0:27:39 I’m not
0:27:39 a big
0:27:39 fan
0:27:40 of this
0:27:40 deal
0:27:40 I don’t
0:27:40 think
0:27:40 it’s
0:27:41 probably
0:27:41 going
0:27:41 to
0:27:41 happen
0:27:42 I
0:27:42 think
0:27:42 she
0:27:43 is
0:27:43 playing
0:27:44 Trump
0:27:44 like
0:27:44 a
0:27:45 fiddle
0:27:45 and
0:27:46 that
0:27:46 it
0:27:46 probably
0:27:47 I
0:27:47 think
0:27:47 he’s
0:27:47 just
0:27:47 going
0:27:47 to
0:27:48 slow
0:27:48 ball
0:27:48 them
0:27:49 and
0:27:49 at
0:27:59 the
0:27:59 end
0:28:01 of
0:28:02 the
0:28:02 Kremlin
0:28:02 on
0:28:03 CBS
0:28:03 NBC
0:28:03 and
0:28:04 ABC
0:28:04 in
0:28:04 the
0:28:04 60s
0:28:04 in
0:28:04 the
0:28:05 Cold
0:28:05 War
0:28:06 it
0:28:06 just
0:28:06 strikes
0:28:06 me
0:28:07 as
0:28:07 I
0:28:07 don’t
0:28:08 see
0:28:08 the
0:28:08 risk
0:28:08 going
0:28:08 down
0:28:09 all
0:28:09 I
0:28:09 see
0:28:09 is
0:28:09 an
0:28:10 opportunity
0:28:10 for
0:28:11 Trump
0:28:11 to
0:28:11 dole
0:28:12 out
0:28:12 pieces
0:28:12 of
0:28:12 a
0:28:13 very
0:28:13 profitable
0:28:14 company
0:28:15 to
0:28:15 his
0:28:15 cronies
0:28:16 your
0:28:16 thoughts
0:28:16 are
0:28:17 well
0:28:17 I
0:28:18 just
0:28:19 affirm
0:28:19 the
0:28:19 point
0:28:20 about
0:28:20 this
0:28:20 going
0:28:20 to
0:28:20 his
0:28:21 cronies
0:28:22 that
0:28:22 is
0:28:22 actually
0:28:23 exactly
0:28:23 what’s
0:28:23 happening
0:28:23 here
0:28:23 just
0:28:24 to
0:28:24 go
0:28:24 through
0:28:24 some
0:28:24 of
0:28:25 the
0:28:25 participants
0:28:25 in
0:28:25 this
0:28:26 deal
0:28:26 you’ve
0:28:26 got
0:28:27 Oracle
0:28:28 the
0:28:28 chairman
0:28:29 of which
0:28:29 is
0:28:29 Larry
0:28:30 Ellison
0:28:30 we
0:28:30 predicted
0:28:32 earlier
0:28:32 in the
0:28:32 week
0:28:33 that
0:28:33 he
0:28:33 would
0:28:33 be
0:28:34 involved
0:28:34 in
0:28:34 this
0:28:34 deal
0:28:34 in
0:28:34 some
0:28:35 way
0:28:35 indeed
0:28:36 he
0:28:36 is
0:28:36 and
0:28:36 he
0:28:36 is
0:28:37 of course
0:28:37 a
0:28:37 close
0:28:37 associate
0:28:38 of
0:28:38 Trump
0:28:39 you’ve
0:28:39 got
0:28:39 Andreessen
0:28:40 Horowitz
0:28:40 which
0:28:40 is
0:28:41 run
0:28:41 by
0:28:41 Marc
0:28:42 Andresen
0:28:42 Marc
0:28:43 Andresen
0:28:44 publicly
0:28:44 supported
0:28:45 Trump
0:28:46 last year
0:28:46 you’ve
0:28:46 got
0:28:47 Susquehanna
0:28:47 which
0:28:48 is run
0:28:48 by
0:28:49 Jeff
0:28:49 Yass
0:28:50 another
0:28:50 big
0:28:51 ally
0:28:51 of
0:28:51 the
0:28:52 president
0:28:52 donated
0:28:53 a hundred
0:28:53 million
0:28:54 dollars
0:28:55 to
0:28:55 the
0:28:56 campaign
0:28:56 in
0:28:56 the
0:28:56 last
0:28:56 cycle
0:28:57 so
0:28:57 there
0:28:57 is
0:28:58 a
0:28:58 theme
0:28:58 here
0:28:59 you’re
0:28:59 not
0:28:59 being
0:29:00 hyperbolic
0:29:02 the
0:29:02 people
0:29:02 who
0:29:02 are
0:29:03 involved
0:29:03 in
0:29:03 this
0:29:03 deal
0:29:04 are
0:29:04 generally
0:29:05 friends
0:29:06 with
0:29:06 the
0:29:06 guy
0:29:07 now
0:29:08 did
0:29:08 the
0:29:09 deal
0:29:09 go
0:29:09 to
0:29:10 them
0:29:10 because
0:29:11 they’re
0:29:11 friends
0:29:12 with
0:29:12 him
0:29:12 I
0:29:12 guess
0:29:13 we
0:29:13 don’t
0:29:13 know
0:29:13 but
0:29:14 you
0:29:14 could
0:29:14 I
0:29:14 mean
0:29:15 you
0:29:15 could
0:29:15 sort
0:29:15 of
0:29:16 assume
0:29:17 so
0:29:17 that’s
0:29:17 the
0:29:17 one
0:29:18 side
0:29:18 of
0:29:18 this
0:29:18 the
0:29:18 other
0:29:18 side
0:29:18 of
0:29:19 this
0:29:19 is
0:29:20 ownership
0:29:21 this
0:29:21 ownership
0:29:21 problem
0:29:22 I
0:29:22 mean
0:29:22 the
0:29:22 whole
0:29:23 reason
0:29:23 we’re
0:29:23 here
0:29:23 in
0:29:23 the
0:29:23 first
0:29:24 place
0:29:24 is
0:29:25 because
0:29:25 we
0:29:25 were
0:29:25 worried
0:29:26 as
0:29:26 you
0:29:26 say
0:29:27 about
0:29:27 the
0:29:27 idea
0:29:28 of
0:29:29 two
0:29:29 thirds
0:29:29 of
0:29:29 our
0:29:30 youth
0:29:30 spending
0:29:31 one
0:29:31 and a
0:29:31 half
0:29:31 hours
0:29:32 per
0:29:32 day
0:29:33 on
0:29:33 a
0:29:33 product
0:29:33 which
0:29:34 is
0:29:34 designed
0:29:35 and
0:29:35 owned
0:29:36 by
0:29:37 China
0:29:38 and
0:29:38 so
0:29:38 the
0:29:38 idea
0:29:38 was
0:29:39 okay
0:29:39 let’s
0:29:40 get it
0:29:40 out
0:29:40 of
0:29:41 China’s
0:29:41 hands
0:29:42 and
0:29:42 I
0:29:43 originally
0:29:43 thought
0:29:44 that
0:29:44 that is
0:29:44 what
0:29:44 they
0:29:44 were
0:29:45 doing
0:29:45 here
0:29:46 and
0:29:46 by
0:29:46 the
0:29:46 way
0:29:46 I
0:29:46 actually
0:29:47 support
0:29:47 this
0:29:47 I
0:29:47 support
0:29:48 putting
0:29:48 this
0:29:49 into
0:29:49 the
0:29:49 hands
0:29:49 of
0:29:49 Americans
0:29:50 however
0:29:51 supposedly
0:29:53 we’re
0:29:53 not
0:29:54 actually
0:29:54 getting
0:29:54 the
0:29:55 algorithm
0:29:56 supposedly
0:29:57 we
0:29:57 are
0:29:57 licensing
0:29:58 the
0:29:58 algorithm
0:29:59 from
0:30:00 ByteDance
0:30:00 aka
0:30:01 from
0:30:02 China
0:30:02 in
0:30:02 other
0:30:03 words
0:30:03 the
0:30:03 algo
0:30:04 will
0:30:04 still
0:30:04 be
0:30:04 in
0:30:04 the
0:30:05 hands
0:30:05 of
0:30:06 China
0:30:07 and
0:30:07 in
0:30:07 my
0:30:07 view
0:30:08 that
0:30:09 completely
0:30:09 defeats
0:30:09 the
0:30:10 purpose
0:30:10 of
0:30:10 this
0:30:11 whole
0:30:11 deal
0:30:11 again
0:30:11 we
0:30:12 don’t
0:30:12 know
0:30:12 for
0:30:12 sure
0:30:13 but
0:30:13 if
0:30:13 that
0:30:14 is
0:30:14 the
0:30:14 case
0:30:15 doesn’t
0:30:16 that
0:30:16 just
0:30:16 render
0:30:17 this
0:30:17 entire
0:30:18 operation
0:30:19 completely
0:30:19 irrelevant
0:30:21 yes
0:30:21 it
0:30:21 does
0:30:22 and
0:30:23 this
0:30:23 is
0:30:23 a
0:30:23 real
0:30:24 security
0:30:24 thread
0:30:24 as
0:30:24 we
0:30:25 spend
0:30:25 all
0:30:25 this
0:30:26 time
0:30:27 trying
0:30:27 to
0:30:27 find
0:30:28 clues
0:30:28 and
0:30:30 derive
0:30:30 or
0:30:31 somehow
0:30:31 interpret
0:30:31 the
0:30:32 font
0:30:32 on
0:30:33 shell
0:30:33 casings
0:30:33 as
0:30:34 being
0:30:34 a
0:30:34 radical
0:30:35 left
0:30:35 or
0:30:35 radical
0:30:35 right
0:30:36 conspiracy
0:30:37 we’re
0:30:37 not
0:30:37 focused
0:30:38 on
0:30:38 the
0:30:38 real
0:30:38 problem
0:30:39 and
0:30:39 that
0:30:39 is
0:30:40 that
0:30:40 big
0:30:40 tech
0:30:41 including
0:30:42 ByteDance
0:30:43 is able
0:30:44 to
0:30:45 serve
0:30:45 content
0:30:46 that
0:30:46 enrages
0:30:47 people
0:30:47 and
0:30:48 what’s
0:30:48 even
0:30:48 worse
0:30:48 is
0:30:49 the
0:30:49 CCP
0:30:50 has
0:30:50 an
0:30:51 additional
0:30:52 vested
0:30:52 interest
0:30:53 in
0:30:53 enraging
0:30:53 our
0:30:54 youth
0:30:54 and
0:30:56 continuing
0:30:56 this
0:30:56 trend
0:30:56 where
0:30:57 one
0:30:57 out
0:30:57 of
0:30:57 two
0:30:57 people
0:30:57 might
0:30:58 feel
0:30:58 good
0:30:58 about
0:30:59 America
0:30:59 and
0:31:00 one
0:31:00 out
0:31:00 of
0:31:00 ten
0:31:00 people
0:31:01 your
0:31:01 age
0:31:01 feel
0:31:01 good
0:31:02 about
0:31:02 America
0:31:03 so
0:31:04 this
0:31:04 is
0:31:05 geopolitically
0:31:06 stupid
0:31:08 I don’t
0:31:08 think
0:31:08 Trump
0:31:09 cares
0:31:09 he’s
0:31:09 not
0:31:09 going
0:31:09 to
0:31:09 be
0:31:09 around
0:31:10 that
0:31:10 long
0:31:10 that’s
0:31:11 not
0:31:11 his
0:31:11 priority
0:31:11 his
0:31:12 priority
0:31:12 is
0:31:12 to
0:31:13 reward
0:31:14 his
0:31:15 cronies
0:31:16 he hated
0:31:16 TikTok
0:31:17 until
0:31:17 I’m sure
0:31:17 the folks
0:31:18 at
0:31:18 ByteDance
0:31:19 tweaked
0:31:20 the algorithm
0:31:20 to have
0:31:20 more
0:31:21 pro-Trump
0:31:22 content
0:31:22 his
0:31:23 and
0:31:23 when
0:31:23 Jeff
0:31:24 Yass
0:31:24 got
0:31:24 in
0:31:24 his
0:31:24 ear
0:31:25 that’s
0:31:25 right
0:31:25 and
0:31:25 gave
0:31:26 him
0:31:26 a
0:31:26 bunch
0:31:26 of
0:31:26 money
0:31:27 and
0:31:27 then
0:31:27 his
0:31:27 staff
0:31:28 reported
0:31:28 that
0:31:28 oh
0:31:28 wait
0:31:29 you’re
0:31:29 trending
0:31:29 on
0:31:30 TikTok
0:31:30 and
0:31:30 all
0:31:30 of a
0:31:31 sudden
0:31:31 it’s
0:31:31 very
0:31:32 positive
0:31:32 on
0:31:32 you
0:31:32 and
0:31:32 he
0:31:33 decided
0:31:33 he
0:31:33 liked
0:31:33 it
0:31:34 after
0:31:34 it
0:31:34 had
0:31:34 been
0:31:34 banned
0:31:35 and
0:31:35 was
0:31:35 supposedly
0:31:35 a
0:31:36 law
0:31:36 and
0:31:37 then
0:31:37 just
0:31:37 from
0:31:37 a
0:31:38 capitalist
0:31:38 standpoint
0:31:39 we’re
0:31:39 not
0:31:40 supposed
0:31:40 to be
0:31:40 doling
0:31:41 great
0:31:41 company
0:31:41 these
0:31:41 guys
0:31:42 are
0:31:42 going to
0:31:42 make
0:31:42 a
0:31:42 shit
0:31:42 ton
0:31:42 of
0:31:42 money
0:31:43 this
0:31:43 company
0:31:43 is
0:31:43 an
0:31:44 incredible
0:31:44 company
0:31:44 I think
0:31:44 it’s
0:31:44 a
0:31:45 real
0:31:45 security
0:31:46 risk
0:31:46 but
0:31:46 it
0:31:47 has
0:31:48 they’re
0:31:48 going to
0:31:48 buy in
0:31:49 likely
0:31:49 at a
0:31:49 valuation
0:31:50 ByteDance
0:31:51 Tesla
0:31:52 and Palantir
0:31:52 are probably
0:31:53 the most
0:31:53 overvalued
0:31:54 companies
0:31:54 in tech
0:31:55 ByteDance
0:31:56 hands down
0:31:56 is the most
0:31:57 undervalued
0:31:57 company
0:31:58 because of
0:31:58 this
0:31:59 geopolitical
0:31:59 overhang
0:32:00 it is
0:32:01 trading at
0:32:01 about
0:32:02 two times
0:32:02 sales
0:32:02 versus
0:32:03 Tesla
0:32:04 or
0:32:05 Palantir
0:32:05 at
0:32:06 60 times
0:32:06 sales
0:32:07 and
0:32:07 open
0:32:08 AI
0:32:08 trading
0:32:08 at
0:32:09 what
0:32:09 40
0:32:09 times
0:32:10 sales
0:32:11 this
0:32:11 company
0:32:12 is the
0:32:12 most
0:32:13 undervalued
0:32:13 company
0:32:13 in the
0:32:14 world
0:32:14 it’s
0:32:14 still
0:32:14 a
0:32:15 defense
0:32:15 threat
0:32:15 we can
0:32:16 walk
0:32:16 and
0:32:16 chew
0:32:16 gum
0:32:16 at
0:32:16 the
0:32:17 same
0:32:17 time
0:32:17 it’s
0:32:17 got
0:32:18 operating
0:32:18 margins
0:32:19 of
0:32:20 30%
0:32:20 a
0:32:21 company
0:32:22 similar
0:32:22 trading
0:32:22 at a
0:32:22 similar
0:32:23 price
0:32:23 of
0:32:23 sales
0:32:23 another
0:32:24 amazing
0:32:24 company
0:32:25 Home
0:32:25 Depot
0:32:27 has
0:32:27 operating
0:32:28 margins
0:32:28 of more
0:32:28 like
0:32:29 12
0:32:29 to
0:32:30 15%
0:32:30 so
0:32:30 these
0:32:30 guys
0:32:30 are
0:32:31 going
0:32:31 to
0:32:31 make
0:32:32 so
0:32:33 much
0:32:33 money
0:32:34 and
0:32:52 this
0:32:53 is
0:32:54 still
0:32:54 a
0:32:54 very
0:32:54 big
0:32:55 probability
0:32:55 this
0:32:55 just
0:32:56 doesn’t
0:32:56 happen
0:32:57 well
0:32:57 that
0:32:57 was
0:32:57 the
0:32:57 other
0:32:58 part
0:32:58 I
0:32:58 was
0:32:58 going
0:32:58 to
0:32:58 get
0:32:58 to
0:32:59 is
0:32:59 you
0:32:59 don’t
0:32:59 think
0:32:59 it’s
0:33:00 happening
0:33:01 well
0:33:02 I
0:33:03 mean
0:33:03 hasn’t
0:33:04 supposedly
0:33:04 hasn’t
0:33:04 something
0:33:05 supposedly
0:33:05 been
0:33:05 happening
0:33:05 here
0:33:06 for a
0:33:06 couple
0:33:06 years
0:33:06 now
0:33:08 I
0:33:08 think
0:33:08 she
0:33:08 just
0:33:09 says
0:33:09 okay
0:33:10 the
0:33:10 guy
0:33:11 has
0:33:11 the
0:33:11 attention
0:33:11 span
0:33:13 of
0:33:13 a
0:33:13 cat
0:33:14 on
0:33:15 mess
0:33:15 just
0:33:16 take
0:33:16 the
0:33:16 red
0:33:16 dot
0:33:17 over
0:33:17 here
0:33:19 have
0:33:19 him
0:33:19 do
0:33:19 the
0:33:20 deal
0:33:20 slow
0:33:20 it
0:33:21 down
0:33:21 do
0:33:21 the
0:33:21 deal
0:33:22 slow
0:33:22 it
0:33:22 down
0:33:23 say
0:33:23 no
0:33:23 let
0:33:23 him
0:33:24 try
0:33:24 and
0:33:24 ban
0:33:24 it
0:33:24 he
0:33:25 can’t
0:33:25 ban
0:33:25 it
0:33:25 he
0:33:25 already
0:33:26 extended
0:33:26 the
0:33:26 deadline
0:33:26 until
0:33:27 December
0:33:27 so
0:33:27 they
0:33:28 don’t
0:33:28 have
0:33:28 to
0:33:34 more
0:33:34 disciplined
0:33:35 and
0:33:35 smarter
0:33:36 than
0:33:37 Trump
0:33:37 I
0:33:37 think
0:33:39 Trump
0:33:39 and
0:33:40 Putin
0:33:40 both
0:33:40 feel
0:33:41 very
0:33:41 emboldened
0:33:41 right now
0:33:42 with the
0:33:42 new
0:33:42 alliances
0:33:43 Putin’s
0:33:44 flying drones
0:33:44 into
0:33:45 NATO
0:33:46 countries
0:33:46 and I
0:33:47 think
0:33:47 Xi
0:33:47 is
0:33:48 just
0:33:50 toying
0:33:51 with
0:33:52 Trump
0:33:52 just
0:33:52 absolutely
0:33:53 toying
0:33:54 with
0:33:54 him
0:33:55 I
0:33:55 don’t
0:33:56 think
0:33:56 we
0:33:56 won’t
0:33:56 see
0:33:56 a
0:33:57 deal
0:33:57 at
0:33:57 all
0:33:57 but
0:33:57 I
0:33:57 think
0:33:58 whatever
0:33:58 we’ll
0:33:58 see
0:33:58 will
0:33:59 be
0:33:59 a
0:33:59 symbolic
0:34:00 deal
0:34:00 it’ll
0:34:00 make
0:34:01 Trump
0:34:01 look
0:34:02 like
0:34:02 he
0:34:02 won
0:34:03 but
0:34:04 ultimately
0:34:05 when you
0:34:05 dig
0:34:05 into
0:34:06 it
0:34:06 as
0:34:07 we’ll
0:34:07 see
0:34:07 with
0:34:07 this
0:34:08 algorithm
0:34:09 it’s
0:34:10 not
0:34:10 really
0:34:10 going
0:34:10 to
0:34:10 be
0:34:10 a
0:34:11 win
0:34:11 for
0:34:11 the
0:34:11 American
0:34:11 people
0:34:12 if
0:34:12 the
0:34:12 algorithm
0:34:13 stays
0:34:13 in
0:34:13 the
0:34:14 hands
0:34:14 of
0:34:14 China
0:34:15 then
0:34:15 all
0:34:15 of
0:34:16 this
0:34:17 was
0:34:17 for
0:34:17 nothing
0:34:18 yeah
0:34:19 I gotta
0:34:19 be honest
0:34:20 I want
0:34:20 to be
0:34:20 clear
0:34:20 though
0:34:20 I’m
0:34:21 addicted
0:34:21 to
0:34:21 the
0:34:21 product
0:34:22 I like
0:34:22 watching
0:34:23 videos
0:34:23 on
0:34:23 Great
0:34:24 Danes
0:34:24 seeing
0:34:25 chiropractors
0:34:25 aggressively
0:34:26 adjust
0:34:26 unwitting
0:34:27 patients
0:34:27 and
0:34:28 three
0:34:29 people
0:34:30 ridiculously
0:34:30 hot
0:34:30 women
0:34:31 talking
0:34:31 about
0:34:32 social
0:34:32 issues
0:34:33 that’s
0:34:35 is that
0:34:35 wrong
0:34:36 Ed
0:34:36 is that
0:34:37 right
0:34:37 I’m
0:34:37 going
0:34:37 to
0:34:37 Nashville
0:34:38 Ed
0:34:38 I’m
0:34:38 going
0:34:39 to
0:34:39 Nashville
0:34:41 okay
0:34:41 enjoy your
0:34:42 trip
0:34:42 Scott
0:34:42 all right
0:34:43 brother
0:34:43 I’m
0:34:43 going
0:34:44 Midtown
0:34:44 Tunnel
0:34:44 here
0:34:44 I’m
0:34:44 going
0:34:45 into
0:34:45 Lincoln
0:34:45 Tunnel
0:34:45 I’m
0:34:46 going
0:34:46 to
0:34:46 lose
0:34:46 you
0:34:46 okay
0:34:47 see
0:34:47 you
0:34:47 brother
0:34:51 so
0:34:51 there
0:34:51 you
0:34:52 have
0:34:52 it
0:34:52 TikTok
0:34:53 may
0:34:53 be
0:34:54 changing
0:34:54 hands
0:34:55 Scott
0:34:55 thinks
0:34:55 that
0:34:55 the
0:34:55 deal
0:34:56 won’t
0:34:56 go
0:34:56 through
0:34:57 most
0:34:57 news
0:34:58 outlets
0:34:58 are
0:34:58 reporting
0:34:58 it
0:34:59 probably
0:34:59 will
0:35:00 most
0:35:00 of
0:35:00 the
0:35:01 details
0:35:01 though
0:35:02 are
0:35:03 uncertain
0:35:03 one
0:35:03 thing
0:35:04 though
0:35:05 is
0:35:05 quite
0:35:05 clear
0:35:06 and
0:35:06 that
0:35:07 is
0:35:07 the
0:35:08 investors
0:35:08 who
0:35:08 get
0:35:08 in
0:35:08 on
0:35:08 this
0:35:09 deal
0:35:09 if
0:35:09 it
0:35:10 happens
0:35:10 those
0:35:10 investors
0:35:11 will
0:35:11 be
0:35:12 huge
0:35:12 winners
0:35:13 because
0:35:14 they
0:35:14 will
0:35:14 have
0:35:14 gotten
0:35:14 in
0:35:14 on
0:35:16 basically
0:35:16 the
0:35:16 most
0:35:17 descendant
0:35:17 social
0:35:17 media
0:35:18 company
0:35:18 in
0:35:18 the
0:35:18 world
0:35:19 and
0:35:19 crucially
0:35:20 they
0:35:20 will
0:35:20 have
0:35:20 done
0:35:21 it
0:35:21 in
0:35:21 a
0:35:21 forced
0:35:22 sale
0:35:22 as
0:35:22 we’ve
0:35:23 discussed
0:35:23 before
0:35:24 the
0:35:24 best
0:35:24 time
0:35:24 to
0:35:25 buy
0:35:25 is
0:35:25 when
0:35:26 the
0:35:26 seller
0:35:26 has
0:35:27 to
0:35:27 sell
0:35:28 when
0:35:28 you
0:35:28 have
0:35:28 to
0:35:29 sell
0:35:29 you
0:35:29 lose
0:35:30 all
0:35:30 of
0:35:30 your
0:35:30 negotiating
0:35:31 power
0:35:31 you
0:35:31 lose
0:35:32 your
0:35:32 pricing
0:35:33 power
0:35:33 and
0:35:33 this
0:35:34 appears
0:35:34 to be
0:35:34 what
0:35:34 is
0:35:41 significantly
0:35:41 lower
0:35:42 than if
0:35:43 it had
0:35:43 been
0:35:43 sold
0:35:43 on
0:35:44 the
0:35:44 free
0:35:45 market
0:35:45 say
0:35:45 if
0:35:45 it
0:35:45 were
0:35:46 being
0:35:46 sold
0:35:46 in
0:35:46 the
0:35:47 public
0:35:47 markets
0:35:48 so
0:35:48 in
0:35:49 sum
0:35:50 the
0:35:50 investors
0:35:51 are
0:35:51 the
0:35:51 winners
0:35:51 here
0:35:51 again
0:35:52 if
0:35:52 the
0:35:52 deal
0:35:52 goes
0:35:53 through
0:35:53 the
0:35:53 investors
0:35:53 are
0:35:53 the
0:35:54 winners
0:35:54 and
0:35:54 once
0:35:55 again
0:35:56 it
0:35:56 pays
0:35:56 to be
0:35:57 friends
0:35:57 with
0:35:57 Trump
0:35:59 okay
0:36:00 that’s
0:36:00 it
0:36:00 for
0:36:01 today
0:36:01 this
0:36:01 episode
0:36:01 was
0:36:02 produced
0:36:02 by
0:36:02 Claire
0:36:02 Miller
0:36:03 edited
0:36:03 by
0:36:03 Joel
0:36:04 Patterson
0:36:04 and
0:36:05 engineered
0:36:05 by
0:36:06 Benjamin
0:36:06 Spencer
0:36:06 our
0:36:07 associate
0:36:07 producer
0:36:07 is
0:36:07 Alison
0:36:08 Weiss
0:36:08 our
0:36:08 research
0:36:09 team
0:36:09 is
0:36:09 Dan
0:36:09 Shillan
0:36:10 Isabella
0:36:10 Kinsel
0:36:11 Kristen
0:36:11 O’Donoghue
0:36:11 and
0:36:12 Mia
0:36:12 Silverio
0:36:13 and
0:36:13 our
0:36:13 technical
0:36:14 director
0:36:14 is
0:36:15 Drew
0:36:15 Burrows
0:36:15 thanks
0:36:15 for
0:36:16 listening
0:36:16 to
0:36:16 ProfG
0:36:16 Markets
0:36:17 I’m
0:36:17 Ed
0:36:17 Elson
0:36:17 if
0:36:18 you
0:36:18 like
0:36:18 what
0:36:18 you
0:36:18 heard
0:36:18 give
0:36:18 us
0:36:18 a
0:36:19 follow
0:36:19 and
0:36:19 join
0:36:19 us
0:36:20 tomorrow
0:36:20 for
0:36:20 our
0:36:21 conversation
0:36:21 with
0:36:22 Jagjit
0:36:23 Chadha
0:36:23 professor
0:36:24 of
0:36:24 economics
0:36:24 at
0:36:24 the
0:36:25 University
0:36:25 of
0:36:26 Cambridge
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0:01:37 Today’s number?
0:01:38 16.
0:01:42 That’s how many hours people spent waiting in line
0:01:45 for Shakespeare in the Park in New York this summer.
0:01:47 One of the longest waits ever.
0:01:52 That is 960 minutes of small talk with theater kids,
0:01:54 or as some people are calling it,
0:01:55 the seventh ring of hell.
0:01:59 Money market’s mad.
0:02:02 If money is evil, then that building is hell.
0:02:03 The show goes on!
0:02:06 The folks in there have watched the show!
0:02:07 Show!
0:02:09 Welcome to Prof G Markets.
0:02:10 I’m Ed Elson.
0:02:12 As you can see from my background,
0:02:14 I am not in the studio right now.
0:02:17 I am in what is known as the eighth ring of hell.
0:02:19 I’m in Las Vegas at the moment,
0:02:21 doing a talk tomorrow, which will be very fun.
0:02:23 But lots of news to get into.
0:02:25 So let’s get into the show.
0:02:26 It is September 18th.
0:02:29 Let’s check in on yesterday’s market vitals.
0:02:33 The S&P 500 and the Nasdaq closed slightly lower
0:02:35 following the Fed’s interest rate decision.
0:02:37 Meanwhile, the Dow hit an intraday record
0:02:39 and ended the day in the green.
0:02:42 Treasury yields rose slightly, along with the dollar.
0:02:45 And finally, NVIDIA shares fell nearly 3%
0:02:48 after China banned its tech companies
0:02:49 from buying NVIDIA chips.
0:02:53 Okay, what’s happening?
0:02:55 For the first time in nine months,
0:02:57 the Federal Reserve is cutting rates.
0:03:00 As expected, Jerome Powell slashed interest rates
0:03:02 by 25 basis points yesterday,
0:03:04 citing a weakening labor market.
0:03:07 Fed officials also penciled in cuts
0:03:08 for the two remaining meetings this year.
0:03:11 The lone dissenting vote at the meeting
0:03:14 was the Fed’s newest member, Stephen Myron,
0:03:16 who favoured a 50 basis point cut.
0:03:20 All the other governors voted for 25 basis points.
0:03:22 Markets initially rallied in response,
0:03:25 but ended the day mixed.
0:03:28 So to help us break down what this decision means
0:03:30 for the economy and what we can expect
0:03:31 for the rest of the year,
0:03:34 we have our favourite financial commentator
0:03:36 from the Financial Times.
0:03:38 We have the one and only Robert Armstrong.
0:03:41 Rob, thank you so much for joining us again
0:03:43 on Profit Markets.
0:03:44 It’s great to be here.
0:03:46 Very interesting meeting.
0:03:47 A lot to say.
0:03:48 Yes.
0:03:50 Let’s just start with your initial reactions.
0:03:52 What did you think?
0:03:57 I think there were two things that jumped out at me.
0:04:03 One was, you know, the Fed is stuck between its mandate.
0:04:05 Right at the top of the press release,
0:04:08 they said inflation’s rising, job creation is falling,
0:04:12 they are being pulled in two opposite directions.
0:04:14 And the statement was very clear
0:04:15 and Chair Powell was very clear.
0:04:19 We’re leaning towards the employment side
0:04:21 of our mandate, of our job.
0:04:24 And so that should be a good message for markets, right?
0:04:26 Like we’re, okay, we’re cutting
0:04:29 and we’re kind of more worried about growth
0:04:31 than inflation, broadly speaking.
0:04:33 And that was kind of interesting.
0:04:35 And that message came through much
0:04:38 or a bit more clearly than I expected.
0:04:43 I expected a little bit more of a, you know,
0:04:45 six of one, half a dozen of the other.
0:04:48 The second interesting thing was, of course,
0:04:50 the issue of independence.
0:04:54 So it is not often that the statement
0:04:56 of economic projections,
0:04:59 which is this little folder full of charts
0:05:03 that the Fed hands out before every meeting,
0:05:05 which shows what the different members expect
0:05:09 about this and this, this or that economic variable,
0:05:10 actually makes you laugh.
0:05:13 But this one did make me laugh
0:05:15 because they have what they call the dot plot,
0:05:20 which is one dot on a sort of chart
0:05:24 of expected rate policy at the end of this year.
0:05:27 And so the 19 people on the committee
0:05:30 and the 12 who vote put their dots on there
0:05:32 and all the dots were all like
0:05:34 in this little group together,
0:05:35 like a group of happy children.
0:05:37 But then there was one dot
0:05:39 that was the unhappy, lonely child
0:05:41 that had been rejected by the group
0:05:43 way at the bottom of the chart.
0:05:46 And that dot could only have come
0:05:47 from one person,
0:05:50 which is the new member of the committee,
0:05:51 Mr. Marin.
0:05:51 Exactly.
0:05:53 Representative on the committee
0:05:55 of the White House.
0:05:57 Second day on the job.
0:05:59 Second day on the job.
0:06:00 And in the press conference,
0:06:03 Powell got some very fair questions
0:06:03 from the journalists,
0:06:06 which were along the lines of,
0:06:07 you rattle on no end
0:06:09 about the importance of independence,
0:06:11 but you have somebody
0:06:13 who literally has a job
0:06:14 in the White House
0:06:15 sitting on the committee.
0:06:16 And we all know who’s dot
0:06:18 that lonely little dot is.
0:06:18 Yes.
0:06:20 What do you say about that?
0:06:21 And he said,
0:06:22 basically two things.
0:06:23 One,
0:06:25 independence is good.
0:06:27 I won’t comment on Mr.
0:06:29 Marin’s presence specifically.
0:06:30 And two,
0:06:31 one member of the committee
0:06:33 can’t sway it
0:06:34 because the 12 people vote,
0:06:36 which is,
0:06:36 I guess,
0:06:37 a fair answer.
0:06:38 But what about two people or three?
0:06:39 You know,
0:06:40 that’s the kind of implied
0:06:42 when he says one person isn’t enough.
0:06:42 Well,
0:06:43 you know,
0:06:45 White House trying to get rid
0:06:45 of Lisa Cook,
0:06:46 then you have two,
0:06:47 right?
0:06:49 You know what I mean?
0:06:50 Can two sway the committee?
0:06:51 These are good questions.
0:06:54 Yeah.
0:06:55 I don’t mean to,
0:06:57 I know you might have
0:06:57 different questions,
0:06:58 but there was one other point
0:06:59 relative to this.
0:07:00 Yeah, yeah, please.
0:07:02 Which were the very interesting votes
0:07:07 of the two dissenters last time,
0:07:09 Bowman and Waller.
0:07:10 So last time,
0:07:11 these two Fed governors,
0:07:14 both Trump appointees,
0:07:15 in the last meeting
0:07:16 when they didn’t cut,
0:07:17 they said,
0:07:18 we think,
0:07:19 they dissented and said,
0:07:20 we think the committee
0:07:22 should have cut 25 basis points.
0:07:23 There was a lot of chitter-chatter
0:07:24 ahead of this meeting
0:07:26 that there might be
0:07:28 a three-person dissenting block,
0:07:29 Bowman,
0:07:30 Waller,
0:07:31 and Marin,
0:07:32 right?
0:07:32 Mm-hmm.
0:07:34 But this time,
0:07:35 one dissenter,
0:07:36 Marin,
0:07:38 Bowman,
0:07:39 and Waller
0:07:40 did not dissent.
0:07:41 They were with the committee
0:07:42 at 25 basis points.
0:07:42 Now,
0:07:44 the question that
0:07:46 forces us to ask is,
0:07:46 were they making
0:07:47 a statement there?
0:07:49 Were they saying,
0:07:49 look,
0:07:50 there’s not a,
0:07:51 there’s not a Trump block.
0:07:52 This institution is still
0:07:53 independent of the president.
0:07:54 I mean,
0:07:55 maybe they just thought
0:07:56 25 was the right amount
0:07:57 this time.
0:07:57 Right.
0:07:58 Who knows?
0:07:59 I cannot look into the hearts
0:08:00 of men and women.
0:08:01 However,
0:08:03 it’s impossible not to think
0:08:05 maybe these two
0:08:06 Trump appointees
0:08:08 were making a statement
0:08:09 along the lines of,
0:08:10 you don’t own me.
0:08:12 You don’t own the committee.
0:08:13 Even if you have
0:08:14 three members on it,
0:08:15 we’re not a block.
0:08:16 We’re not with the new guy.
0:08:16 Right?
0:08:17 Yeah.
0:08:18 Which is promising.
0:08:18 Yeah,
0:08:19 that’s promising.
0:08:21 That’s a win for the institution
0:08:22 or the institutional lists,
0:08:23 I would say.
0:08:23 Yes.
0:08:25 So just to quote
0:08:25 the statement
0:08:26 from this Fed meeting,
0:08:27 quote,
0:08:28 job gains have slowed
0:08:29 and the unemployment rate
0:08:31 has edged up.
0:08:33 Inflation has moved up
0:08:35 and remains somewhat elevated.
0:08:36 Yes.
0:08:37 So to me,
0:08:37 so to me,
0:08:37 I read that
0:08:40 and I think that’s sort
0:08:40 of the definition
0:08:42 of stagflation.
0:08:43 It is.
0:08:44 It is.
0:08:45 We’re seeing slowing growth
0:08:47 and we’re seeing inflation
0:08:48 move up
0:08:49 and, quote,
0:08:51 remain elevated.
0:08:53 And the question is then,
0:08:55 why are we cutting rates
0:08:55 right now?
0:08:57 And, you know,
0:08:59 it was assumed
0:09:00 by Wall Street
0:09:00 and by all of us
0:09:02 that we were going to cut,
0:09:04 have a 25 basis point cut.
0:09:06 But, you know,
0:09:07 is that necessarily
0:09:08 the right decision?
0:09:09 I mean,
0:09:10 I read that.
0:09:10 They’re saying,
0:09:12 we’ve got this inflation problem.
0:09:13 It’s going up.
0:09:14 It’s staying up.
0:09:17 And yet we’re going to cut rates.
0:09:18 And I think the question becomes,
0:09:19 okay,
0:09:20 why are they doing that?
0:09:21 Is it, one,
0:09:23 because this employment thing
0:09:24 is such an important thing?
0:09:25 Or then there’s this sort of
0:09:26 more insidious reading,
0:09:26 which is,
0:09:28 maybe the pressure got to him.
0:09:30 Maybe everything Trump
0:09:31 has been saying
0:09:34 actually did influence
0:09:35 this Fed decision.
0:09:35 Okay.
0:09:37 To credit Chair Powell.
0:09:37 Yeah.
0:09:38 He did say,
0:09:39 we’ve got to,
0:09:41 the mandate is pulling us
0:09:42 in both directions
0:09:44 and no path is without risk.
0:09:46 So he acknowledged
0:09:48 the point that you just made,
0:09:49 that this is not an easy decision.
0:09:52 But when pressed on this issue,
0:09:53 I think what he’s,
0:09:55 his view
0:09:58 is that the persistence
0:09:59 of inflation
0:10:02 is due to tariffs.
0:10:02 Yep.
0:10:04 It’s on the good side.
0:10:05 It’s due to tariffs.
0:10:07 And our best guess
0:10:08 is that’s temporary.
0:10:09 Right?
0:10:11 So the reason we can err
0:10:12 on the side of growth
0:10:13 is because we think
0:10:14 the primary cause
0:10:16 of inflation
0:10:17 above target
0:10:18 is something
0:10:19 that won’t last.
0:10:20 And we can have a debate
0:10:20 about that,
0:10:21 but that’s,
0:10:22 that’s his answer there.
0:10:22 Now,
0:10:23 he also said something
0:10:24 that I happen to disagree with.
0:10:26 He also said
0:10:27 there’s disinflation
0:10:29 on the services side.
0:10:30 I don’t happen to believe that.
0:10:31 I don’t see it in the numbers.
0:10:34 I think services inflation
0:10:35 is stuck at three
0:10:37 and maybe even rising
0:10:38 a little bit
0:10:40 in some important categories.
0:10:42 So I don’t feel as confident
0:10:42 as,
0:10:43 as the committee does
0:10:45 about services inflation.
0:10:47 but he did give a coherent answer.
0:10:49 We think the tariff thing
0:10:50 is going to,
0:10:50 you know,
0:10:51 be like the,
0:10:53 the pig that passes
0:10:53 through the snake
0:10:54 eventually.
0:10:57 And if it’s not,
0:10:58 we’ll have to make
0:10:59 that assessment later.
0:10:59 Yeah.
0:11:01 I just want to gather
0:11:03 one of your quotes
0:11:03 because you wrote
0:11:05 an article about this.
0:11:06 It was called
0:11:08 What the Fed Should Do.
0:11:09 And you basically
0:11:11 went through
0:11:12 all of the different arguments
0:11:12 why,
0:11:13 why you would go
0:11:14 with a 50 basis point cut
0:11:15 or a 25
0:11:16 or why you would
0:11:17 keep rates where they are.
0:11:18 Yeah.
0:11:19 And you actually said,
0:11:20 you said,
0:11:20 quote,
0:11:21 we’re with the hawks.
0:11:22 You said,
0:11:23 you’re basically
0:11:23 on the side of
0:11:24 keep rates where they are.
0:11:24 You said,
0:11:25 quote,
0:11:26 resurgent inflation
0:11:27 is the scariest risk right now.
0:11:29 And not just in the sense
0:11:29 that inflation eats away
0:11:30 at purchasing power
0:11:31 and grinds down in sentiment.
0:11:33 We think another bout
0:11:33 of inflation
0:11:35 could cause a market crash.
0:11:37 So I understand you,
0:11:37 you don’t think
0:11:39 that this is like Armageddon
0:11:41 that we have a 25 basis point cut.
0:11:42 No, it’s not.
0:11:43 But you do see,
0:11:44 it seems as though
0:11:44 you,
0:11:45 you would,
0:11:46 you believe that
0:11:47 this isn’t necessarily
0:11:48 the right decision here.
0:11:49 I mean,
0:11:50 I think
0:11:53 his decision
0:11:54 is the,
0:11:56 the 25 basis point decision.
0:11:58 This is a bit hard to,
0:12:00 a kind of subtle view
0:12:00 and it’s hard to express,
0:12:02 but let me give it a shot.
0:12:03 In the center
0:12:04 of the probability curve,
0:12:06 I think a 25%
0:12:08 basis point cut
0:12:09 is probably fine
0:12:11 or even the right decision.
0:12:13 I just see this big,
0:12:16 whopping low probability risk
0:12:17 at the right side
0:12:18 of the curve,
0:12:20 which is markets
0:12:22 overheat even more.
0:12:24 Inflation gets going,
0:12:27 rates rise
0:12:28 and the higher rates
0:12:29 crack the market
0:12:30 and we have a market crash.
0:12:32 That is a low probability
0:12:33 event,
0:12:36 but it’s so awful
0:12:37 that you kind of have to
0:12:39 weight it a bit more heavily,
0:12:41 even though it’s low probability,
0:12:42 just because it would stink
0:12:43 so bad.
0:12:45 And I think
0:12:47 as a markets person,
0:12:48 those are the kind of events
0:12:49 that I worry about.
0:12:51 Economists
0:12:52 think more about
0:12:54 the center of the curve
0:12:55 or the center
0:12:55 of the distribution.
0:12:57 I’m more freaked out
0:12:57 about the tails.
0:12:59 So that might explain
0:12:59 my,
0:13:00 my disagreement
0:13:00 with,
0:13:01 you know,
0:13:02 both the chair
0:13:03 and what the committee
0:13:04 decided today.
0:13:04 Yeah.
0:13:05 So we,
0:13:06 we all got to have this.
0:13:08 If I can just add one thing,
0:13:09 if I can just add one thing,
0:13:11 if you look at the expectation,
0:13:12 that dot plot
0:13:13 that I talked about
0:13:14 earlier,
0:13:15 which says
0:13:16 for each member
0:13:17 of the committee,
0:13:18 what do they think
0:13:19 is the appropriate,
0:13:20 will be the appropriate
0:13:22 level of
0:13:23 the federal funds rate
0:13:24 at the end of the year?
0:13:27 It’s very split
0:13:28 between people
0:13:29 who think,
0:13:30 like almost half
0:13:30 of the committee
0:13:32 doesn’t think
0:13:33 another rate cut
0:13:34 is going to be
0:13:35 necessary this year.
0:13:36 Right.
0:13:37 That’s significant.
0:13:38 There,
0:13:39 about this year especially,
0:13:40 there is significant
0:13:41 disagreement at the Fed,
0:13:42 right,
0:13:43 which tells you
0:13:44 that the stuff
0:13:45 that you’re talking about,
0:13:45 the worries
0:13:46 you just expressed,
0:13:46 Ed,
0:13:48 those worries
0:13:49 are on the mind
0:13:51 of the committee
0:13:51 as a collective
0:13:53 and they have
0:13:54 the upper hand
0:13:55 with certain members
0:13:55 of the committee.
0:13:56 Yes.
0:13:57 We saw the,
0:13:59 the markets reaction
0:13:59 first,
0:14:00 the SP and the NASDAQ
0:14:01 initially popped,
0:14:03 then they fell
0:14:05 as Powell was speaking.
0:14:06 I assume that is
0:14:07 because of
0:14:08 that caution
0:14:09 that we saw,
0:14:10 they decided to cut
0:14:10 but then they said,
0:14:11 but hold on.
0:14:11 Yeah.
0:14:12 I think,
0:14:13 yeah,
0:14:14 I think it was like,
0:14:14 yay!
0:14:15 And then they,
0:14:15 they were like,
0:14:16 you could sort of
0:14:17 see the market
0:14:18 paging through
0:14:18 that statement
0:14:20 of economic projections
0:14:21 and maybe looking
0:14:22 at that page
0:14:22 about,
0:14:23 you know,
0:14:24 2026 rate expectations
0:14:25 and being like,
0:14:25 whoa,
0:14:25 whoa,
0:14:25 whoa.
0:14:28 We don’t love this.
0:14:28 Yeah.
0:14:29 You know what I mean?
0:14:30 But,
0:14:30 you know,
0:14:32 the first day reactions,
0:14:32 Ed,
0:14:33 to these things
0:14:34 are not usually
0:14:35 great indicators.
0:14:37 It takes time
0:14:38 for the,
0:14:38 the,
0:14:39 the market,
0:14:40 it takes a day or two
0:14:40 for the market
0:14:41 to digest this stuff.
0:14:42 Yes,
0:14:42 exactly.
0:14:43 and come,
0:14:44 come to a consensus.
0:14:44 Yeah.
0:14:46 So we will get
0:14:46 this,
0:14:47 this rate cut.
0:14:48 Um,
0:14:50 going back to the dual mandate,
0:14:51 you’ve got this
0:14:52 unemployment problem
0:14:53 and you’ve got this
0:14:54 inflation problem.
0:14:57 And the idea is
0:14:59 you cut rates,
0:15:01 you start to fix
0:15:02 the unemployment problem,
0:15:04 you raise rates
0:15:04 or you keep rates
0:15:05 the same,
0:15:06 you start to address
0:15:07 the inflation problem.
0:15:09 And I think
0:15:10 everyone knows that.
0:15:10 What I think
0:15:11 a lot of people
0:15:12 probably don’t have
0:15:14 sorted out in their head
0:15:14 is like,
0:15:15 why that is.
0:15:17 And could you just
0:15:18 tell us
0:15:19 what the economics
0:15:20 are of this?
0:15:21 why is it
0:15:23 that cutting rates
0:15:25 will help
0:15:26 with the job market?
0:15:27 Why is that?
0:15:27 What is actually
0:15:29 happening in the economy there?
0:15:30 A crucial
0:15:32 element of growth
0:15:34 in any economy
0:15:35 is the ease
0:15:36 with which
0:15:38 both households
0:15:39 and companies,
0:15:39 but especially
0:15:40 companies,
0:15:40 can borrow.
0:15:41 Yeah.
0:15:42 So if at the margin
0:15:44 you make debt cheaper,
0:15:45 you make it easier
0:15:47 for a,
0:15:47 uh,
0:15:48 a company
0:15:50 to borrow money,
0:15:51 to expand its business
0:15:52 or buy a new piece
0:15:53 of equipment
0:15:54 or hire new people
0:15:54 or,
0:15:55 you know,
0:15:56 all of this kind of stuff.
0:15:58 But there is,
0:15:59 you know,
0:16:00 but on that basis
0:16:01 and the,
0:16:02 you know,
0:16:02 the chair acknowledged
0:16:03 this today,
0:16:04 rightly,
0:16:05 a quarter of a point
0:16:06 interest rate change
0:16:07 isn’t going to make
0:16:08 a big difference.
0:16:09 You know,
0:16:10 like it may not
0:16:11 even filter through
0:16:12 to mortgage rates
0:16:13 at all,
0:16:14 which is the main channel
0:16:15 of transmission
0:16:16 to households,
0:16:16 right?
0:16:17 If households
0:16:18 have cheaper mortgage,
0:16:19 they refinance,
0:16:19 they have more money
0:16:20 on hand,
0:16:21 they spend,
0:16:22 they consume more
0:16:23 because their,
0:16:24 their housing costs
0:16:24 are lower,
0:16:25 et cetera.
0:16:27 But there is,
0:16:27 uh,
0:16:28 this very powerful
0:16:30 signaling effect,
0:16:32 which is that
0:16:33 the Fed
0:16:34 almost has
0:16:35 this totemic
0:16:37 or magical status
0:16:38 in financial markets
0:16:39 where people,
0:16:41 when the Fed
0:16:42 is in cutting mode,
0:16:43 people think
0:16:44 kind of good times
0:16:45 are here
0:16:45 and the vibes
0:16:46 are positive
0:16:47 and that
0:16:48 flows over
0:16:49 to,
0:16:49 you know,
0:16:50 greater wealth
0:16:50 effects,
0:16:51 enthusiasm,
0:16:52 animal spirits
0:16:53 and all that stuff.
0:16:54 So that’s
0:16:54 the,
0:16:55 the tricky thing
0:16:57 that the Fed
0:16:57 has to manage.
0:16:58 It’s not only
0:16:59 controlling
0:17:01 this one interest rate,
0:17:03 it’s got this
0:17:04 weird job
0:17:06 managing vibes.
0:17:07 Yes.
0:17:09 And that’s
0:17:09 what makes it
0:17:10 so unpredictable,
0:17:11 right?
0:17:12 Because the vibes
0:17:12 part is actually
0:17:13 more important
0:17:14 than the interest
0:17:15 rate part.
0:17:16 The long run
0:17:17 path of interest
0:17:17 rates,
0:17:17 of course,
0:17:18 matters a lot.
0:17:19 but for any
0:17:20 one cut,
0:17:21 the vibes
0:17:21 are more
0:17:22 important than
0:17:22 the cut
0:17:22 itself.
0:17:23 Yes,
0:17:23 exactly.
0:17:25 You once
0:17:26 described the
0:17:27 position of Fed
0:17:27 chair on this
0:17:28 podcast as
0:17:29 the high priest
0:17:30 of the economy,
0:17:31 which I think
0:17:32 is exactly
0:17:33 right.
0:17:33 Not only are
0:17:34 you in control
0:17:35 of the interest
0:17:35 rates,
0:17:36 you’re also
0:17:37 in control
0:17:37 of the way
0:17:38 people feel
0:17:39 about things
0:17:39 and then you
0:17:39 have people
0:17:40 like us
0:17:40 talking on
0:17:41 this podcast
0:17:42 figuring out
0:17:42 what does
0:17:43 this actually
0:17:43 mean?
0:17:45 The actual
0:17:46 downstream
0:17:47 effects are
0:17:47 almost
0:17:49 less of a
0:17:49 result of
0:17:50 him
0:17:51 switching the
0:17:52 knob
0:17:53 versus him
0:17:54 going out
0:17:54 there and
0:17:54 saying this
0:17:55 is what
0:17:55 we’re doing.
0:17:56 And this is
0:17:57 of course
0:17:57 why the
0:17:58 issues of
0:17:58 Fed
0:17:59 independence
0:18:00 are so
0:18:00 important.
0:18:01 You know,
0:18:01 when the
0:18:02 market is
0:18:03 booming and
0:18:04 the economy
0:18:05 is basically
0:18:05 good,
0:18:05 which by
0:18:06 the way,
0:18:07 it still
0:18:08 basically is,
0:18:09 right?
0:18:09 The economy
0:18:10 is growing.
0:18:11 The unemployment
0:18:13 rate is low.
0:18:13 It’s just
0:18:14 these things
0:18:14 are going in
0:18:15 the wrong
0:18:15 direction,
0:18:16 but they’re
0:18:16 going in the
0:18:17 wrong direction
0:18:17 from a
0:18:18 pretty solid
0:18:18 place,
0:18:19 and that’s
0:18:19 good to
0:18:19 keep in
0:18:20 mind.
0:18:21 But if
0:18:21 things get
0:18:22 ugly,
0:18:25 and the
0:18:26 high priest
0:18:28 and the
0:18:29 high temple
0:18:30 of our
0:18:31 market system
0:18:32 has been
0:18:33 defiled
0:18:33 somehow,
0:18:35 then you
0:18:35 don’t know
0:18:35 what’s going
0:18:36 to happen
0:18:36 with vibes,
0:18:37 right?
0:18:38 And I
0:18:38 think you’re
0:18:39 creating a
0:18:41 risk that
0:18:42 is hard to
0:18:43 predict and
0:18:44 possibly hard
0:18:44 to control.
0:18:48 it’s fine
0:18:50 to do this
0:18:50 Lisa Cook
0:18:51 stuff now
0:18:51 when things
0:18:52 are okay,
0:18:54 but when
0:18:55 the temperature
0:18:56 starts to
0:18:57 rise, I
0:18:57 think this
0:18:57 stuff could
0:18:59 matter, and
0:18:59 I’m worried
0:18:59 about it.
0:19:01 Well, Rob,
0:19:02 we really
0:19:02 appreciate your
0:19:04 time, and
0:19:04 we hope to
0:19:05 have you on
0:19:05 for a longer
0:19:06 episode.
0:19:06 Love being
0:19:07 on the
0:19:07 show.
0:19:07 Thanks for
0:19:08 having me,
0:19:08 Ed.
0:19:10 After the
0:19:11 break, a
0:19:11 look at who
0:19:12 will control
0:19:13 TikTok in
0:19:13 the U.S.
0:19:14 If you’re
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0:21:02 their Groony
0:21:03 Smith Apple
0:21:03 flavor just
0:21:04 in time for
0:21:05 fall.
0:21:05 It’s got
0:21:05 the same
0:21:06 snackable,
0:21:06 packable,
0:21:07 full-body
0:21:07 benefits you’ve
0:21:08 come to
0:21:08 expect,
0:21:09 but this
0:21:09 time,
0:21:10 these taste
0:21:10 like you’re
0:21:11 walking through
0:21:11 an apple
0:21:12 orchard in
0:21:12 a cable
0:21:13 knit sweater,
0:21:14 warm apple
0:21:15 cider in
0:21:15 hand.
0:21:16 Grab your
0:21:17 limited edition
0:21:17 Groony Smith
0:21:18 Apple Groons
0:21:19 available only
0:21:19 through October.
0:21:20 Stock up because
0:21:21 they will sell
0:21:21 out.
0:21:22 Get up to
0:21:23 52% off when
0:21:23 you go to
0:21:25 gruns.co
0:21:26 and use
0:21:26 the code
0:21:27 markets.
0:21:32 The Twisted
0:21:33 Tale of
0:21:34 Amanda Knox
0:21:34 is an
0:21:35 eight-episode
0:21:36 Hulu
0:21:36 original
0:21:37 limited series
0:21:38 that blends
0:21:38 gripping
0:21:39 pacing with
0:21:40 emotional
0:21:40 complexity,
0:21:41 offering a
0:21:42 dramatized look
0:21:43 as it
0:21:44 revisits the
0:21:44 wrongful
0:21:45 conviction of
0:21:46 Amanda Knox
0:21:46 for the
0:21:47 tragic murder
0:21:48 of Meredith
0:21:49 Kircher and
0:21:50 the relentless
0:21:50 media storm
0:21:51 that followed.
0:21:52 The Twisted
0:21:53 Tale of
0:21:54 Amanda Knox
0:21:54 is now
0:21:55 streaming only
0:21:56 on Disney+.
0:22:02 We’re back
0:22:03 with Prof G
0:22:03 Markets.
0:22:05 242 days
0:22:06 after the
0:22:07 original deadline
0:22:07 for the
0:22:08 TikTok ban,
0:22:09 a deal to
0:22:09 keep the
0:22:10 app in the
0:22:11 US is
0:22:11 finally coming
0:22:11 together.
0:22:13 According to
0:22:14 initial reporting,
0:22:15 a consortium
0:22:16 of US
0:22:17 companies including
0:22:17 Oracle,
0:22:18 Silver Lake
0:22:19 and Andreessen
0:22:20 Horowitz will
0:22:21 control roughly
0:22:22 80% of
0:22:23 US TikTok
0:22:24 operations.
0:22:24 Meanwhile,
0:22:26 ByteDance will
0:22:26 hold on to
0:22:27 the remaining
0:22:28 19.9%,
0:22:29 making it the
0:22:30 app’s largest
0:22:31 single shareholder.
0:22:32 Still, that
0:22:32 should satisfy
0:22:33 one condition
0:22:33 of the
0:22:34 2024 law
0:22:35 that forced
0:22:36 the ban
0:22:36 or sale
0:22:37 of the
0:22:37 company
0:22:38 in the
0:22:38 first place.
0:22:39 ByteDance’s
0:22:39 share of the
0:22:40 app needs
0:22:40 to fall
0:22:41 below 20%
0:22:42 if TikTok
0:22:42 is to
0:22:42 continue
0:22:43 operating
0:22:44 in America.
0:22:45 But there
0:22:46 is still
0:22:47 one big
0:22:47 question mark
0:22:48 when it
0:22:49 comes to
0:22:49 the most
0:22:49 important
0:22:50 condition
0:22:50 of all,
0:22:51 and that
0:22:51 is who
0:22:52 will
0:22:52 control
0:22:52 the
0:22:53 algorithm
0:22:54 for
0:22:54 TikTok
0:22:55 in the
0:22:55 US.
0:22:55 You’ll
0:22:55 remember,
0:22:56 this
0:22:57 algorithm
0:22:57 was at
0:22:58 the very
0:22:58 heart
0:22:59 of the
0:22:59 TikTok
0:23:00 dispute.
0:23:00 The main
0:23:01 reason the
0:23:01 app was
0:23:02 banned in
0:23:03 the first
0:23:03 place was
0:23:03 because of
0:23:04 these
0:23:04 national
0:23:05 security
0:23:05 concerns.
0:23:06 Our
0:23:06 government
0:23:06 determined
0:23:07 that the
0:23:07 algorithm
0:23:08 could not
0:23:09 be left
0:23:09 in the
0:23:10 hands of
0:23:10 a company
0:23:11 with ties
0:23:12 to the
0:23:12 CCP.
0:23:12 We
0:23:12 couldn’t
0:23:13 allow
0:23:13 ByteDance
0:23:14 to
0:23:15 manipulate
0:23:15 the
0:23:15 minds
0:23:16 of
0:23:16 Americans
0:23:17 with
0:23:17 their
0:23:18 algorithm.
0:23:19 So,
0:23:19 where do
0:23:20 we land
0:23:20 on this
0:23:20 issue
0:23:20 under
0:23:21 this
0:23:21 new
0:23:22 framework?
0:23:22 Well,
0:23:23 according to
0:23:24 a top
0:23:24 Chinese
0:23:25 official,
0:23:26 US
0:23:26 TikTok
0:23:27 operations
0:23:27 will
0:23:27 license
0:23:28 the
0:23:28 algorithm
0:23:29 from
0:23:30 ByteDance.
0:23:31 Again,
0:23:31 this is all
0:23:32 initial
0:23:32 reporting,
0:23:33 and the
0:23:33 White House
0:23:34 said,
0:23:34 quote,
0:23:34 any details
0:23:35 of the
0:23:35 TikTok
0:23:35 framework
0:23:36 are pure
0:23:37 speculation,
0:23:39 but if
0:23:39 we are to
0:23:40 take the
0:23:40 Chinese
0:23:41 official at
0:23:41 their word,
0:23:42 it does
0:23:43 appear the
0:23:43 algorithm
0:23:44 will
0:23:44 remain
0:23:44 in
0:23:44 the
0:23:45 hands
0:23:45 of
0:23:46 China.
0:23:46 The
0:23:46 only
0:23:47 difference
0:23:47 now
0:23:48 is
0:23:48 that
0:23:48 the
0:23:48 people
0:23:49 profiting
0:23:49 off
0:23:50 of
0:23:50 that
0:23:50 algorithm,
0:23:51 those
0:23:51 people
0:23:52 will
0:23:52 have
0:23:52 changed.
0:23:52 It won’t
0:23:53 be the
0:23:53 Chinese
0:23:53 anymore,
0:23:54 it will
0:23:54 be
0:23:55 some
0:23:55 Americans
0:23:56 too,
0:23:56 or more
0:23:57 specifically,
0:23:57 some
0:23:58 American
0:23:58 friends
0:23:59 of the
0:23:59 president.
0:24:00 But,
0:24:00 does that
0:24:01 fix
0:24:01 our
0:24:01 national
0:24:02 security
0:24:02 problem?
0:24:03 We’re
0:24:04 not so
0:24:04 sure.
0:24:05 However,
0:24:06 as we
0:24:06 said,
0:24:06 nothing is
0:24:07 officially
0:24:07 confirmed
0:24:07 yet.
0:24:08 Trump
0:24:08 and Xi
0:24:08 are
0:24:09 scheduled
0:24:09 to have
0:24:09 a
0:24:09 call
0:24:10 on
0:24:10 Friday.
0:24:11 They
0:24:11 will
0:24:11 discuss
0:24:12 this
0:24:12 deal,
0:24:13 so we
0:24:13 will
0:24:13 have
0:24:13 to
0:24:13 wait
0:24:14 and
0:24:14 see
0:24:15 what
0:24:15 else
0:24:15 we
0:24:15 learn
0:24:16 later
0:24:16 in the
0:24:16 week.
0:24:16 In the
0:24:17 meantime,
0:24:17 let’s
0:24:18 bring in
0:24:18 the man
0:24:18 who has
0:24:18 been
0:24:19 calling
0:24:19 for this
0:24:19 ban
0:24:19 as
0:24:20 early
0:24:20 as
0:24:21 2023.
0:24:22 Let’s
0:24:22 get
0:24:22 Scott
0:24:23 on the
0:24:23 phone.
0:24:27 Scott,
0:24:28 how’s it
0:24:28 going?
0:24:28 It’s
0:24:28 going
0:24:29 really
0:24:29 well.
0:24:29 I’m
0:24:30 in
0:24:30 midtown,
0:24:31 headed
0:24:31 to the
0:24:31 airport,
0:24:32 then going
0:24:32 to
0:24:32 Nashville
0:24:33 for a
0:24:33 speaking
0:24:34 group
0:24:34 tomorrow,
0:24:35 back
0:24:35 in
0:24:35 New
0:24:35 York
0:24:36 tomorrow.
0:24:38 Nashville,
0:24:38 that’s
0:24:39 pretty
0:24:39 exciting.
0:24:40 Yeah,
0:24:40 it’s
0:24:40 a great
0:24:40 city.
0:24:41 Have you
0:24:41 ever been
0:24:41 to
0:24:42 Nashville?
0:24:42 Never.
0:24:43 I can
0:24:43 see a
0:24:44 guy like
0:24:44 you
0:24:45 living
0:24:45 there.
0:24:45 It’s
0:24:45 one of
0:24:45 those
0:24:46 cool
0:24:48 up-and-coming
0:24:50 cities.
0:24:53 I think
0:24:53 you’d
0:24:53 really
0:24:54 enjoy it.
0:24:57 You’re
0:24:57 really
0:24:57 selling
0:24:57 me
0:24:58 on
0:24:58 Nashville.
0:24:58 It
0:24:59 sounds
0:24:59 wonderful.
0:25:01 I’d
0:25:01 love to
0:25:03 explore the
0:25:03 great
0:25:04 state of
0:25:04 Tennessee,
0:25:04 with
0:25:05 U.S.
0:25:08 All
0:25:08 right.
0:25:08 We’ve
0:25:08 got a
0:25:08 lot to
0:25:09 unpack
0:25:09 here.
0:25:09 We’ve
0:25:10 got this
0:25:10 consortium
0:25:11 of
0:25:12 U.S.
0:25:12 investors
0:25:13 who appear
0:25:14 ready to
0:25:14 take over
0:25:15 TikTok.
0:25:18 There’s
0:25:18 also this
0:25:18 larger
0:25:19 question of
0:25:19 who’s
0:25:19 actually
0:25:19 going to
0:25:20 control
0:25:20 the
0:25:20 algorithm
0:25:21 when it’s
0:25:21 all said
0:25:21 and done.
0:25:23 Let’s
0:25:23 get your
0:25:23 initial
0:25:24 reactions to
0:25:24 what we’ve
0:25:25 seen with
0:25:25 this
0:25:25 TikTok
0:25:25 news.
0:25:26 My
0:25:27 initial
0:25:27 reaction
0:25:28 is that
0:25:28 this
0:25:29 used to
0:25:29 be a
0:25:29 capitalist
0:25:30 country
0:25:30 with
0:25:30 rule of
0:25:31 law
0:25:31 where
0:25:31 it
0:25:32 wasn’t
0:25:32 this
0:25:34 cronyism
0:25:34 that
0:25:34 had
0:25:35 become
0:25:35 almost
0:25:35 normalized.
0:25:38 First off,
0:25:40 TikTok or
0:25:41 ByteDance
0:25:42 was banned.
0:25:42 It was
0:25:43 passed by
0:25:43 both houses
0:25:44 of government
0:25:44 and the
0:25:44 president
0:25:45 signed it
0:25:45 into law
0:25:46 and then
0:25:46 the new
0:25:47 president
0:25:47 came in
0:25:47 and said
0:25:48 I’m not
0:25:48 going to
0:25:49 enforce the
0:25:49 law.
0:25:50 So essentially
0:25:51 our laws
0:25:53 if we’re
0:25:53 going to
0:25:54 have a
0:25:54 dictatorship
0:25:55 or an
0:25:56 autocracy
0:25:56 let’s
0:25:56 just save
0:25:57 money and
0:25:57 clear out
0:25:58 send senators
0:25:59 and Congress
0:25:59 home and
0:26:00 stop even
0:26:01 pretending to
0:26:01 have an
0:26:02 SEC
0:26:03 because
0:26:04 this is
0:26:05 pure
0:26:05 when you
0:26:06 get to
0:26:06 take a
0:26:07 company
0:26:07 and we’ll
0:26:07 come back
0:26:08 to how
0:26:08 strong ByteDance
0:26:09 is and
0:26:09 just carve
0:26:10 it up for
0:26:11 your Republican
0:26:11 friends.
0:26:14 another reason
0:26:14 why I want
0:26:15 to get
0:26:16 involved in
0:26:17 Democratic
0:26:17 Party
0:26:17 politics
0:26:18 and help
0:26:19 flip Congress
0:26:20 and get
0:26:20 the White
0:26:21 House back
0:26:21 is in
0:26:22 addition to
0:26:23 returning to
0:26:24 the capitalist
0:26:24 full-body
0:26:24 contact
0:26:25 country of
0:26:26 rights
0:26:26 and
0:26:26 capitalism
0:26:27 that I
0:26:27 love
0:26:28 I want
0:26:29 to get
0:26:29 the
0:26:30 president
0:26:30 and
0:26:30 next
0:26:31 Democratic
0:26:31 president
0:26:32 in office
0:26:32 and convince
0:26:33 him to
0:26:33 ban
0:26:34 LVMH
0:26:34 and then
0:26:35 force
0:26:35 them to
0:26:35 sell it
0:26:36 to me
0:26:36 because
0:26:36 I’m
0:26:36 really
0:26:37 into
0:26:37 Ramoah
0:26:38 super
0:26:39 into
0:26:39 Ramoah
0:26:39 language
0:26:40 and I
0:26:40 would like
0:26:41 to own
0:26:42 LVMH
0:26:42 I’d like
0:26:43 to own
0:26:43 the U.S.
0:26:43 license
0:26:44 to LVMH
0:26:45 so that
0:26:45 is
0:26:46 you know
0:26:46 that sounds
0:26:47 comical
0:26:47 it’s not
0:26:48 that’s what’s
0:26:48 going on
0:26:49 here
0:26:49 he is
0:26:50 carving up
0:26:51 a company
0:26:51 and giving
0:26:52 it to
0:26:52 his
0:26:52 Republican
0:26:53 friends
0:26:54 instead
0:26:55 of
0:26:55 one
0:26:56 it should
0:26:56 have been
0:26:56 banned
0:26:56 and then
0:26:57 he would
0:26:57 have been
0:26:57 negotiating
0:26:58 from a
0:26:58 position
0:26:58 of
0:26:59 strength
0:27:00 and
0:27:00 two
0:27:01 they
0:27:01 want
0:27:02 to
0:27:02 also
0:27:02 put
0:27:03 someone
0:27:04 from
0:27:04 the
0:27:04 U.S.
0:27:04 government
0:27:04 on the
0:27:05 board
0:27:05 what are we
0:27:05 going to
0:27:05 have
0:27:06 cash
0:27:07 Patel
0:27:07 on the
0:27:07 board
0:27:08 I mean
0:27:09 it’s
0:27:12 funny
0:27:12 though
0:27:13 it used
0:27:13 to be
0:27:13 an insult
0:27:14 from the
0:27:14 right
0:27:15 that we
0:27:16 Democrats
0:27:16 are
0:27:16 socialists
0:27:17 this could
0:27:18 not be
0:27:18 more
0:27:19 socialists
0:27:19 this is
0:27:20 well it’s
0:27:21 cronious
0:27:21 first and
0:27:22 foremost
0:27:22 carving up
0:27:23 a company
0:27:23 giving it
0:27:23 to your
0:27:24 friends
0:27:24 instead of
0:27:24 what they
0:27:25 do
0:27:25 in
0:27:25 Russia
0:27:26 and
0:27:27 then
0:27:27 oh
0:27:28 but
0:27:28 we’re
0:27:28 going
0:27:28 to
0:27:29 find
0:27:29 someone
0:27:29 from
0:27:29 the
0:27:30 government
0:27:30 to
0:27:30 be
0:27:30 on
0:27:30 the
0:27:31 board
0:27:31 it
0:27:31 is
0:27:33 it
0:27:33 is
0:27:34 it
0:27:34 is
0:27:35 just
0:27:36 so
0:27:37 anyways
0:27:37 I’m not
0:27:38 a fan
0:27:39 I’m not
0:27:39 a big
0:27:39 fan
0:27:40 of this
0:27:40 deal
0:27:40 I don’t
0:27:40 think
0:27:40 it’s
0:27:41 probably
0:27:41 going
0:27:41 to
0:27:41 happen
0:27:42 I
0:27:42 think
0:27:42 she
0:27:43 is
0:27:43 playing
0:27:44 Trump
0:27:44 like
0:27:44 a
0:27:45 fiddle
0:27:45 and
0:27:46 that
0:27:46 it
0:27:46 probably
0:27:47 I
0:27:47 think
0:27:47 he’s
0:27:47 just
0:27:47 going
0:27:47 to
0:27:48 slow
0:27:48 ball
0:27:48 them
0:27:49 and
0:27:49 at
0:27:59 the
0:27:59 end
0:28:01 of
0:28:02 the
0:28:02 Kremlin
0:28:02 on
0:28:03 CBS
0:28:03 NBC
0:28:03 and
0:28:04 ABC
0:28:04 in
0:28:04 the
0:28:04 60s
0:28:04 in
0:28:04 the
0:28:05 Cold
0:28:05 War
0:28:06 it
0:28:06 just
0:28:06 strikes
0:28:06 me
0:28:07 as
0:28:07 I
0:28:07 don’t
0:28:08 see
0:28:08 the
0:28:08 risk
0:28:08 going
0:28:08 down
0:28:09 all
0:28:09 I
0:28:09 see
0:28:09 is
0:28:09 an
0:28:10 opportunity
0:28:10 for
0:28:11 Trump
0:28:11 to
0:28:11 dole
0:28:12 out
0:28:12 pieces
0:28:12 of
0:28:12 a
0:28:13 very
0:28:13 profitable
0:28:14 company
0:28:15 to
0:28:15 his
0:28:15 cronies
0:28:16 your
0:28:16 thoughts
0:28:16 are
0:28:17 well
0:28:17 I
0:28:18 just
0:28:19 affirm
0:28:19 the
0:28:19 point
0:28:20 about
0:28:20 this
0:28:20 going
0:28:20 to
0:28:20 his
0:28:21 cronies
0:28:22 that
0:28:22 is
0:28:22 actually
0:28:23 exactly
0:28:23 what’s
0:28:23 happening
0:28:23 here
0:28:23 just
0:28:24 to
0:28:24 go
0:28:24 through
0:28:24 some
0:28:24 of
0:28:25 the
0:28:25 participants
0:28:25 in
0:28:25 this
0:28:26 deal
0:28:26 you’ve
0:28:26 got
0:28:27 Oracle
0:28:28 the
0:28:28 chairman
0:28:29 of which
0:28:29 is
0:28:29 Larry
0:28:30 Ellison
0:28:30 we
0:28:30 predicted
0:28:32 earlier
0:28:32 in the
0:28:32 week
0:28:33 that
0:28:33 he
0:28:33 would
0:28:33 be
0:28:34 involved
0:28:34 in
0:28:34 this
0:28:34 deal
0:28:34 in
0:28:34 some
0:28:35 way
0:28:35 indeed
0:28:36 he
0:28:36 is
0:28:36 and
0:28:36 he
0:28:36 is
0:28:37 of course
0:28:37 a
0:28:37 close
0:28:37 associate
0:28:38 of
0:28:38 Trump
0:28:39 you’ve
0:28:39 got
0:28:39 Andreessen
0:28:40 Horowitz
0:28:40 which
0:28:40 is
0:28:41 run
0:28:41 by
0:28:41 Marc
0:28:42 Andresen
0:28:42 Marc
0:28:43 Andresen
0:28:44 publicly
0:28:44 supported
0:28:45 Trump
0:28:46 last year
0:28:46 you’ve
0:28:46 got
0:28:47 Susquehanna
0:28:47 which
0:28:48 is run
0:28:48 by
0:28:49 Jeff
0:28:49 Yass
0:28:50 another
0:28:50 big
0:28:51 ally
0:28:51 of
0:28:51 the
0:28:52 president
0:28:52 donated
0:28:53 a hundred
0:28:53 million
0:28:54 dollars
0:28:55 to
0:28:55 the
0:28:56 campaign
0:28:56 in
0:28:56 the
0:28:56 last
0:28:56 cycle
0:28:57 so
0:28:57 there
0:28:57 is
0:28:58 a
0:28:58 theme
0:28:58 here
0:28:59 you’re
0:28:59 not
0:28:59 being
0:29:00 hyperbolic
0:29:02 the
0:29:02 people
0:29:02 who
0:29:02 are
0:29:03 involved
0:29:03 in
0:29:03 this
0:29:03 deal
0:29:04 are
0:29:04 generally
0:29:05 friends
0:29:06 with
0:29:06 the
0:29:06 guy
0:29:07 now
0:29:08 did
0:29:08 the
0:29:09 deal
0:29:09 go
0:29:09 to
0:29:10 them
0:29:10 because
0:29:11 they’re
0:29:11 friends
0:29:12 with
0:29:12 him
0:29:12 I
0:29:12 guess
0:29:13 we
0:29:13 don’t
0:29:13 know
0:29:13 but
0:29:14 you
0:29:14 could
0:29:14 I
0:29:14 mean
0:29:15 you
0:29:15 could
0:29:15 sort
0:29:15 of
0:29:16 assume
0:29:17 so
0:29:17 that’s
0:29:17 the
0:29:17 one
0:29:18 side
0:29:18 of
0:29:18 this
0:29:18 the
0:29:18 other
0:29:18 side
0:29:18 of
0:29:19 this
0:29:19 is
0:29:20 ownership
0:29:21 this
0:29:21 ownership
0:29:21 problem
0:29:22 I
0:29:22 mean
0:29:22 the
0:29:22 whole
0:29:23 reason
0:29:23 we’re
0:29:23 here
0:29:23 in
0:29:23 the
0:29:23 first
0:29:24 place
0:29:24 is
0:29:25 because
0:29:25 we
0:29:25 were
0:29:25 worried
0:29:26 as
0:29:26 you
0:29:26 say
0:29:27 about
0:29:27 the
0:29:27 idea
0:29:28 of
0:29:29 two
0:29:29 thirds
0:29:29 of
0:29:29 our
0:29:30 youth
0:29:30 spending
0:29:31 one
0:29:31 and a
0:29:31 half
0:29:31 hours
0:29:32 per
0:29:32 day
0:29:33 on
0:29:33 a
0:29:33 product
0:29:33 which
0:29:34 is
0:29:34 designed
0:29:35 and
0:29:35 owned
0:29:36 by
0:29:37 China
0:29:38 and
0:29:38 so
0:29:38 the
0:29:38 idea
0:29:38 was
0:29:39 okay
0:29:39 let’s
0:29:40 get it
0:29:40 out
0:29:40 of
0:29:41 China’s
0:29:41 hands
0:29:42 and
0:29:42 I
0:29:43 originally
0:29:43 thought
0:29:44 that
0:29:44 that is
0:29:44 what
0:29:44 they
0:29:44 were
0:29:45 doing
0:29:45 here
0:29:46 and
0:29:46 by
0:29:46 the
0:29:46 way
0:29:46 I
0:29:46 actually
0:29:47 support
0:29:47 this
0:29:47 I
0:29:47 support
0:29:48 putting
0:29:48 this
0:29:49 into
0:29:49 the
0:29:49 hands
0:29:49 of
0:29:49 Americans
0:29:50 however
0:29:51 supposedly
0:29:53 we’re
0:29:53 not
0:29:54 actually
0:29:54 getting
0:29:54 the
0:29:55 algorithm
0:29:56 supposedly
0:29:57 we
0:29:57 are
0:29:57 licensing
0:29:58 the
0:29:58 algorithm
0:29:59 from
0:30:00 ByteDance
0:30:00 aka
0:30:01 from
0:30:02 China
0:30:02 in
0:30:02 other
0:30:03 words
0:30:03 the
0:30:03 algo
0:30:04 will
0:30:04 still
0:30:04 be
0:30:04 in
0:30:04 the
0:30:05 hands
0:30:05 of
0:30:06 China
0:30:07 and
0:30:07 in
0:30:07 my
0:30:07 view
0:30:08 that
0:30:09 completely
0:30:09 defeats
0:30:09 the
0:30:10 purpose
0:30:10 of
0:30:10 this
0:30:11 whole
0:30:11 deal
0:30:11 again
0:30:11 we
0:30:12 don’t
0:30:12 know
0:30:12 for
0:30:12 sure
0:30:13 but
0:30:13 if
0:30:13 that
0:30:14 is
0:30:14 the
0:30:14 case
0:30:15 doesn’t
0:30:16 that
0:30:16 just
0:30:16 render
0:30:17 this
0:30:17 entire
0:30:18 operation
0:30:19 completely
0:30:19 irrelevant
0:30:21 yes
0:30:21 it
0:30:21 does
0:30:22 and
0:30:23 this
0:30:23 is
0:30:23 a
0:30:23 real
0:30:24 security
0:30:24 thread
0:30:24 as
0:30:24 we
0:30:25 spend
0:30:25 all
0:30:25 this
0:30:26 time
0:30:27 trying
0:30:27 to
0:30:27 find
0:30:28 clues
0:30:28 and
0:30:30 derive
0:30:30 or
0:30:31 somehow
0:30:31 interpret
0:30:31 the
0:30:32 font
0:30:32 on
0:30:33 shell
0:30:33 casings
0:30:33 as
0:30:34 being
0:30:34 a
0:30:34 radical
0:30:35 left
0:30:35 or
0:30:35 radical
0:30:35 right
0:30:36 conspiracy
0:30:37 we’re
0:30:37 not
0:30:37 focused
0:30:38 on
0:30:38 the
0:30:38 real
0:30:38 problem
0:30:39 and
0:30:39 that
0:30:39 is
0:30:40 that
0:30:40 big
0:30:40 tech
0:30:41 including
0:30:42 ByteDance
0:30:43 is able
0:30:44 to
0:30:45 serve
0:30:45 content
0:30:46 that
0:30:46 enrages
0:30:47 people
0:30:47 and
0:30:48 what’s
0:30:48 even
0:30:48 worse
0:30:48 is
0:30:49 the
0:30:49 CCP
0:30:50 has
0:30:50 an
0:30:51 additional
0:30:52 vested
0:30:52 interest
0:30:53 in
0:30:53 enraging
0:30:53 our
0:30:54 youth
0:30:54 and
0:30:56 continuing
0:30:56 this
0:30:56 trend
0:30:56 where
0:30:57 one
0:30:57 out
0:30:57 of
0:30:57 two
0:30:57 people
0:30:57 might
0:30:58 feel
0:30:58 good
0:30:58 about
0:30:59 America
0:30:59 and
0:31:00 one
0:31:00 out
0:31:00 of
0:31:00 ten
0:31:00 people
0:31:01 your
0:31:01 age
0:31:01 feel
0:31:01 good
0:31:02 about
0:31:02 America
0:31:03 so
0:31:04 this
0:31:04 is
0:31:05 geopolitically
0:31:06 stupid
0:31:08 I don’t
0:31:08 think
0:31:08 Trump
0:31:09 cares
0:31:09 he’s
0:31:09 not
0:31:09 going
0:31:09 to
0:31:09 be
0:31:09 around
0:31:10 that
0:31:10 long
0:31:10 that’s
0:31:11 not
0:31:11 his
0:31:11 priority
0:31:11 his
0:31:12 priority
0:31:12 is
0:31:12 to
0:31:13 reward
0:31:14 his
0:31:15 cronies
0:31:16 he hated
0:31:16 TikTok
0:31:17 until
0:31:17 I’m sure
0:31:17 the folks
0:31:18 at
0:31:18 ByteDance
0:31:19 tweaked
0:31:20 the algorithm
0:31:20 to have
0:31:20 more
0:31:21 pro-Trump
0:31:22 content
0:31:22 his
0:31:23 and
0:31:23 when
0:31:23 Jeff
0:31:24 Yass
0:31:24 got
0:31:24 in
0:31:24 his
0:31:24 ear
0:31:25 that’s
0:31:25 right
0:31:25 and
0:31:25 gave
0:31:26 him
0:31:26 a
0:31:26 bunch
0:31:26 of
0:31:26 money
0:31:27 and
0:31:27 then
0:31:27 his
0:31:27 staff
0:31:28 reported
0:31:28 that
0:31:28 oh
0:31:28 wait
0:31:29 you’re
0:31:29 trending
0:31:29 on
0:31:30 TikTok
0:31:30 and
0:31:30 all
0:31:30 of a
0:31:31 sudden
0:31:31 it’s
0:31:31 very
0:31:32 positive
0:31:32 on
0:31:32 you
0:31:32 and
0:31:32 he
0:31:33 decided
0:31:33 he
0:31:33 liked
0:31:33 it
0:31:34 after
0:31:34 it
0:31:34 had
0:31:34 been
0:31:34 banned
0:31:35 and
0:31:35 was
0:31:35 supposedly
0:31:35 a
0:31:36 law
0:31:36 and
0:31:37 then
0:31:37 just
0:31:37 from
0:31:37 a
0:31:38 capitalist
0:31:38 standpoint
0:31:39 we’re
0:31:39 not
0:31:40 supposed
0:31:40 to be
0:31:40 doling
0:31:41 great
0:31:41 company
0:31:41 these
0:31:41 guys
0:31:42 are
0:31:42 going to
0:31:42 make
0:31:42 a
0:31:42 shit
0:31:42 ton
0:31:42 of
0:31:42 money
0:31:43 this
0:31:43 company
0:31:43 is
0:31:43 an
0:31:44 incredible
0:31:44 company
0:31:44 I think
0:31:44 it’s
0:31:44 a
0:31:45 real
0:31:45 security
0:31:46 risk
0:31:46 but
0:31:46 it
0:31:47 has
0:31:48 they’re
0:31:48 going to
0:31:48 buy in
0:31:49 likely
0:31:49 at a
0:31:49 valuation
0:31:50 ByteDance
0:31:51 Tesla
0:31:52 and Palantir
0:31:52 are probably
0:31:53 the most
0:31:53 overvalued
0:31:54 companies
0:31:54 in tech
0:31:55 ByteDance
0:31:56 hands down
0:31:56 is the most
0:31:57 undervalued
0:31:57 company
0:31:58 because of
0:31:58 this
0:31:59 geopolitical
0:31:59 overhang
0:32:00 it is
0:32:01 trading at
0:32:01 about
0:32:02 two times
0:32:02 sales
0:32:02 versus
0:32:03 Tesla
0:32:04 or
0:32:05 Palantir
0:32:05 at
0:32:06 60 times
0:32:06 sales
0:32:07 and
0:32:07 open
0:32:08 AI
0:32:08 trading
0:32:08 at
0:32:09 what
0:32:09 40
0:32:09 times
0:32:10 sales
0:32:11 this
0:32:11 company
0:32:12 is the
0:32:12 most
0:32:13 undervalued
0:32:13 company
0:32:13 in the
0:32:14 world
0:32:14 it’s
0:32:14 still
0:32:14 a
0:32:15 defense
0:32:15 threat
0:32:15 we can
0:32:16 walk
0:32:16 and
0:32:16 chew
0:32:16 gum
0:32:16 at
0:32:16 the
0:32:17 same
0:32:17 time
0:32:17 it’s
0:32:17 got
0:32:18 operating
0:32:18 margins
0:32:19 of
0:32:20 30%
0:32:20 a
0:32:21 company
0:32:22 similar
0:32:22 trading
0:32:22 at a
0:32:22 similar
0:32:23 price
0:32:23 of
0:32:23 sales
0:32:23 another
0:32:24 amazing
0:32:24 company
0:32:25 Home
0:32:25 Depot
0:32:27 has
0:32:27 operating
0:32:28 margins
0:32:28 of more
0:32:28 like
0:32:29 12
0:32:29 to
0:32:30 15%
0:32:30 so
0:32:30 these
0:32:30 guys
0:32:30 are
0:32:31 going
0:32:31 to
0:32:31 make
0:32:32 so
0:32:33 much
0:32:33 money
0:32:34 and
0:32:52 this
0:32:53 is
0:32:54 still
0:32:54 a
0:32:54 very
0:32:54 big
0:32:55 probability
0:32:55 this
0:32:55 just
0:32:56 doesn’t
0:32:56 happen
0:32:57 well
0:32:57 that
0:32:57 was
0:32:57 the
0:32:57 other
0:32:58 part
0:32:58 I
0:32:58 was
0:32:58 going
0:32:58 to
0:32:58 get
0:32:58 to
0:32:59 is
0:32:59 you
0:32:59 don’t
0:32:59 think
0:32:59 it’s
0:33:00 happening
0:33:01 well
0:33:02 I
0:33:03 mean
0:33:03 hasn’t
0:33:04 supposedly
0:33:04 hasn’t
0:33:04 something
0:33:05 supposedly
0:33:05 been
0:33:05 happening
0:33:05 here
0:33:06 for a
0:33:06 couple
0:33:06 years
0:33:06 now
0:33:08 I
0:33:08 think
0:33:08 she
0:33:08 just
0:33:09 says
0:33:09 okay
0:33:10 the
0:33:10 guy
0:33:11 has
0:33:11 the
0:33:11 attention
0:33:11 span
0:33:13 of
0:33:13 a
0:33:13 cat
0:33:14 on
0:33:15 mess
0:33:15 just
0:33:16 take
0:33:16 the
0:33:16 red
0:33:16 dot
0:33:17 over
0:33:17 here
0:33:19 have
0:33:19 him
0:33:19 do
0:33:19 the
0:33:20 deal
0:33:20 slow
0:33:20 it
0:33:21 down
0:33:21 do
0:33:21 the
0:33:21 deal
0:33:22 slow
0:33:22 it
0:33:22 down
0:33:23 say
0:33:23 no
0:33:23 let
0:33:23 him
0:33:24 try
0:33:24 and
0:33:24 ban
0:33:24 it
0:33:24 he
0:33:25 can’t
0:33:25 ban
0:33:25 it
0:33:25 he
0:33:25 already
0:33:26 extended
0:33:26 the
0:33:26 deadline
0:33:26 until
0:33:27 December
0:33:27 so
0:33:27 they
0:33:28 don’t
0:33:28 have
0:33:28 to
0:33:34 more
0:33:34 disciplined
0:33:35 and
0:33:35 smarter
0:33:36 than
0:33:37 Trump
0:33:37 I
0:33:37 think
0:33:39 Trump
0:33:39 and
0:33:40 Putin
0:33:40 both
0:33:40 feel
0:33:41 very
0:33:41 emboldened
0:33:41 right now
0:33:42 with the
0:33:42 new
0:33:42 alliances
0:33:43 Putin’s
0:33:44 flying drones
0:33:44 into
0:33:45 NATO
0:33:46 countries
0:33:46 and I
0:33:47 think
0:33:47 Xi
0:33:47 is
0:33:48 just
0:33:50 toying
0:33:51 with
0:33:52 Trump
0:33:52 just
0:33:52 absolutely
0:33:53 toying
0:33:54 with
0:33:54 him
0:33:55 I
0:33:55 don’t
0:33:56 think
0:33:56 we
0:33:56 won’t
0:33:56 see
0:33:56 a
0:33:57 deal
0:33:57 at
0:33:57 all
0:33:57 but
0:33:57 I
0:33:57 think
0:33:58 whatever
0:33:58 we’ll
0:33:58 see
0:33:58 will
0:33:59 be
0:33:59 a
0:33:59 symbolic
0:34:00 deal
0:34:00 it’ll
0:34:00 make
0:34:01 Trump
0:34:01 look
0:34:02 like
0:34:02 he
0:34:02 won
0:34:03 but
0:34:04 ultimately
0:34:05 when you
0:34:05 dig
0:34:05 into
0:34:06 it
0:34:06 as
0:34:07 we’ll
0:34:07 see
0:34:07 with
0:34:07 this
0:34:08 algorithm
0:34:09 it’s
0:34:10 not
0:34:10 really
0:34:10 going
0:34:10 to
0:34:10 be
0:34:10 a
0:34:11 win
0:34:11 for
0:34:11 the
0:34:11 American
0:34:11 people
0:34:12 if
0:34:12 the
0:34:12 algorithm
0:34:13 stays
0:34:13 in
0:34:13 the
0:34:14 hands
0:34:14 of
0:34:14 China
0:34:15 then
0:34:15 all
0:34:15 of
0:34:16 this
0:34:17 was
0:34:17 for
0:34:17 nothing
0:34:18 yeah
0:34:19 I gotta
0:34:19 be honest
0:34:20 I want
0:34:20 to be
0:34:20 clear
0:34:20 though
0:34:20 I’m
0:34:21 addicted
0:34:21 to
0:34:21 the
0:34:21 product
0:34:22 I like
0:34:22 watching
0:34:23 videos
0:34:23 on
0:34:23 Great
0:34:24 Danes
0:34:24 seeing
0:34:25 chiropractors
0:34:25 aggressively
0:34:26 adjust
0:34:26 unwitting
0:34:27 patients
0:34:27 and
0:34:28 three
0:34:29 people
0:34:30 ridiculously
0:34:30 hot
0:34:30 women
0:34:31 talking
0:34:31 about
0:34:32 social
0:34:32 issues
0:34:33 that’s
0:34:35 is that
0:34:35 wrong
0:34:36 Ed
0:34:36 is that
0:34:37 right
0:34:37 I’m
0:34:37 going
0:34:37 to
0:34:37 Nashville
0:34:38 Ed
0:34:38 I’m
0:34:38 going
0:34:39 to
0:34:39 Nashville
0:34:41 okay
0:34:41 enjoy your
0:34:42 trip
0:34:42 Scott
0:34:42 all right
0:34:43 brother
0:34:43 I’m
0:34:43 going
0:34:44 Midtown
0:34:44 Tunnel
0:34:44 here
0:34:44 I’m
0:34:44 going
0:34:45 into
0:34:45 Lincoln
0:34:45 Tunnel
0:34:45 I’m
0:34:46 going
0:34:46 to
0:34:46 lose
0:34:46 you
0:34:46 okay
0:34:47 see
0:34:47 you
0:34:47 brother
0:34:51 so
0:34:51 there
0:34:51 you
0:34:52 have
0:34:52 it
0:34:52 TikTok
0:34:53 may
0:34:53 be
0:34:54 changing
0:34:54 hands
0:34:55 Scott
0:34:55 thinks
0:34:55 that
0:34:55 the
0:34:55 deal
0:34:56 won’t
0:34:56 go
0:34:56 through
0:34:57 most
0:34:57 news
0:34:58 outlets
0:34:58 are
0:34:58 reporting
0:34:58 it
0:34:59 probably
0:34:59 will
0:35:00 most
0:35:00 of
0:35:00 the
0:35:01 details
0:35:01 though
0:35:02 are
0:35:03 uncertain
0:35:03 one
0:35:03 thing
0:35:04 though
0:35:05 is
0:35:05 quite
0:35:05 clear
0:35:06 and
0:35:06 that
0:35:07 is
0:35:07 the
0:35:08 investors
0:35:08 who
0:35:08 get
0:35:08 in
0:35:08 on
0:35:08 this
0:35:09 deal
0:35:09 if
0:35:09 it
0:35:10 happens
0:35:10 those
0:35:10 investors
0:35:11 will
0:35:11 be
0:35:12 huge
0:35:12 winners
0:35:13 because
0:35:14 they
0:35:14 will
0:35:14 have
0:35:14 gotten
0:35:14 in
0:35:14 on
0:35:16 basically
0:35:16 the
0:35:16 most
0:35:17 descendant
0:35:17 social
0:35:17 media
0:35:18 company
0:35:18 in
0:35:18 the
0:35:18 world
0:35:19 and
0:35:19 crucially
0:35:20 they
0:35:20 will
0:35:20 have
0:35:20 done
0:35:21 it
0:35:21 in
0:35:21 a
0:35:21 forced
0:35:22 sale
0:35:22 as
0:35:22 we’ve
0:35:23 discussed
0:35:23 before
0:35:24 the
0:35:24 best
0:35:24 time
0:35:24 to
0:35:25 buy
0:35:25 is
0:35:25 when
0:35:26 the
0:35:26 seller
0:35:26 has
0:35:27 to
0:35:27 sell
0:35:28 when
0:35:28 you
0:35:28 have
0:35:28 to
0:35:29 sell
0:35:29 you
0:35:29 lose
0:35:30 all
0:35:30 of
0:35:30 your
0:35:30 negotiating
0:35:31 power
0:35:31 you
0:35:31 lose
0:35:32 your
0:35:32 pricing
0:35:33 power
0:35:33 and
0:35:33 this
0:35:34 appears
0:35:34 to be
0:35:34 what
0:35:34 is
0:35:41 significantly
0:35:41 lower
0:35:42 than if
0:35:43 it had
0:35:43 been
0:35:43 sold
0:35:43 on
0:35:44 the
0:35:44 free
0:35:45 market
0:35:45 say
0:35:45 if
0:35:45 it
0:35:45 were
0:35:46 being
0:35:46 sold
0:35:46 in
0:35:46 the
0:35:47 public
0:35:47 markets
0:35:48 so
0:35:48 in
0:35:49 sum
0:35:50 the
0:35:50 investors
0:35:51 are
0:35:51 the
0:35:51 winners
0:35:51 here
0:35:51 again
0:35:52 if
0:35:52 the
0:35:52 deal
0:35:52 goes
0:35:53 through
0:35:53 the
0:35:53 investors
0:35:53 are
0:35:53 the
0:35:54 winners
0:35:54 and
0:35:54 once
0:35:55 again
0:35:56 it
0:35:56 pays
0:35:56 to be
0:35:57 friends
0:35:57 with
0:35:57 Trump
0:35:59 okay
0:36:00 that’s
0:36:00 it
0:36:00 for
0:36:01 today
0:36:01 this
0:36:01 episode
0:36:01 was
0:36:02 produced
0:36:02 by
0:36:02 Claire
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0:36:03 edited
0:36:03 by
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0:36:04 and
0:36:05 engineered
0:36:05 by
0:36:06 Benjamin
0:36:06 Spencer
0:36:06 our
0:36:07 associate
0:36:07 producer
0:36:07 is
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0:36:08 Weiss
0:36:08 our
0:36:08 research
0:36:09 team
0:36:09 is
0:36:09 Dan
0:36:09 Shillan
0:36:10 Isabella
0:36:10 Kinsel
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0:36:11 O’Donoghue
0:36:11 and
0:36:12 Mia
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0:36:13 and
0:36:13 our
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0:36:16 Markets
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0:36:17 Ed
0:36:17 Elson
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0:36:24 of
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Ed breaks down the Fed’s interest rate decision with Robert Armstrong, U.S. financial commentator for the Financial Times. They dig into why the Fed cut rates yesterday and what that move means for the rest of the year. Then Ed and Scott discuss the details of the deal to keep TikTok in the U.S. and question who really comes out on top.
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