Prof G Markets: Google’s Quantum Breakthrough & The World Cup Goes to Saudi Arabia

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0:01:38 Walmart or Shoppers Drug Mart today. Today is number $400 billion. That’s Elon Musk’s record
0:01:44 high net worth as of last week. Power corrupts and absolute power absolutely corrupts. This is
0:01:51 terrible for society and will cause real damage to economies, justice, and democracy around the world.
0:02:07 Welcome to Prop G Markets. Today, we’re discussing Google’s quantum breakthrough
0:02:11 and Saudi Arabia’s World Cup. But first, here with, oh wait, banter.
0:02:15 You can introduce me and then we can do banter. You don’t have to.
0:02:20 Like anyone doesn’t know you? I’m so sick of everyone comes up to me. He’s like, tell Ed,
0:02:25 we said hello. If it’s anyone young, they’re like, I love that Ed Elson. Yeah, I know. Yeah,
0:02:29 he’s great. Love to hear that. He’s great. What are you doing, Ed? Where are you? What’s going on?
0:02:36 I’m in New York and I’m just sort of reeling from that $400 billion net worth start. I don’t know
0:02:43 if you realize this, but since Trump was elected, since November 5th, Elon’s net worth has increased
0:02:50 by 66% and he’s added $4 billion to his net worth every day. Yeah, and I was excited about getting
0:02:58 Zip Recruiter as a sponsor last week. Oh, God. And here I am selling like chewable erectile
0:03:06 dysfunction drugs. Seriously. Oh, wait, they’re going to spend $1,100 on first-time founders.
0:03:13 Sure, I’ll meet with them. Oh, God. It’s a good life. Oh, wait, I’m headed to Riyadh. Let’s talk
0:03:18 about that. Let’s bring this back to me. I’m headed to Riyadh on one on Tuesday. Have you ever
0:03:22 been to Riyadh? You haven’t been to Riyadh, right? No, no. You’re welcome to take me with you.
0:03:28 Yeah, if you were much more interesting and I liked you more, we’d absolutely be rolling together.
0:03:34 That’s not fair. I think you’re both interesting and likeable, but I’ve been to Dubai a bunch of
0:03:38 times. Only been to Riyadh once and I was only there for a conference. I’m curious. I’m taking
0:03:43 a little bit extra time and I’m going to check it out. I’m fascinated by the kingdom right now.
0:03:47 Well, we’ll be discussing that more because we’ve got Saudi Arabia on our docket here.
0:03:50 But let’s start off with our weekly review of market vitals.
0:04:02 The S&P 500 declined. The dollar gained. Bitcoin hit another record
0:04:05 and the yield on 10-year treasuries increased, shifting to the headlines.
0:04:10 A federal judge has blocked grocery store Kroger’s acquisition of Albertson’s.
0:04:15 The judge sided with the FTC, agreeing that the $25 billion deal would hurt consumers
0:04:20 and limit competition. Following the judge’s ruling, Albertson’s terminated the deal
0:04:25 and filed a lawsuit against Kroger, alleging the company didn’t do enough to secure regulatory
0:04:31 approval. Warner Brothers’ discovery is splitting into two units, one for its streaming and studio
0:04:37 business and another for its linear TV networks. The move paves the way for a potential spin-off
0:04:42 or sale of its TV business and the stock popped more than 14% on the news.
0:04:48 And finally, Eli Lilly will begin testing its GLP1 drug Zep bound next year as a treatment
0:04:56 for drug and alcohol addiction. Eli Lilly CEO Dave Ricks described GLP1 drugs as anti-hedonics,
0:05:03 saying they can help reduce the desire cycle. Scott, your thoughts starting with Kroger’s
0:05:10 acquisition of Albertson’s, which was set to be one of the biggest M&A deals in history, called off.
0:05:16 So my gut was that this was populist bullshit and I love antitrust. I love black and mergers.
0:05:21 I’m an even bigger fan of breakups. But my fear was when you look at Albertson’s or Kroger,
0:05:27 it’s not like these guys are lighting up the business world. This is specifically their
0:05:32 existential threat is Amazon. I feel like this is not a great business. It’s low margin. It’s
0:05:37 difficult. I think there’s still quite a bit of competition here. This is populist bullshit
0:05:45 because just as diapers and gas prices kind of weigh on people’s sort of view of the world,
0:05:48 like if gas prices go up, they get angry at the administration and if diapers are more expensive,
0:05:56 they think, oh, this store is a ripoff. Grocery prices have become a very strong indicator for
0:06:01 how the majority of the public feels about inflation and the administration. And so I
0:06:08 thought it was sort of an easy target to say, no, grocery prices need to stay low. But South Dakota
0:06:14 State University found that supermarket mergers can actually decrease prices for customers due
0:06:19 to economies of scale. Albertson’s decreased 4% on the news, Kroger increased 5% after announcing
0:06:24 would abandon the merger and restart stock buybacks. That’s because typically the person on top who
0:06:29 makes the acquisition overpays only one in three acquisitions work. But I think, I don’t know,
0:06:36 I think that the real threat is Amazon and having more formidable competitors to Amazon
0:06:43 would create a healthier ecosystem. Yeah, I’m a little torn on this. I think the really interesting
0:06:51 thing here is you mentioned that they’re kind of the smaller players in the market. And you’ve got
0:06:57 Amazon and you’ve got Walmart who are crushing them. And this was Kroger and Albertson’s argument.
0:07:02 Their argument was that this was basically the only way to compete with all the online retailers,
0:07:06 especially Amazon. And I think they probably thought that that would work with the FTC because
0:07:13 they know that the FTC has been going after Amazon anyway. But the FTC’s response was,
0:07:18 okay, well, you say you want to compete with the online retailers, but you’re actually not
0:07:23 an online retailer. You are a supermarket. And those are two very different things.
0:07:29 And what’s interesting is that this is ultimately what the decision came down to. It was an argument
0:07:36 over what the definition of a supermarket actually is. And the judge made her opinion very
0:07:42 clear. And the first line of the conclusion was, quote, supermarkets are distinct from other grocery
0:07:48 retailers. So in other words, she’s saying, you know, unlike your framing, where you guys are
0:07:53 these little fish in this big, big pond of retail, we believe that you are in fact the
0:08:00 big fish in the little pond of supermarkets and supermarkets and big retail are two different
0:08:07 things. And therefore, to team up like this would be unfair. And I’ve been kind of back and
0:08:14 forth on this because it’s really about framing. It’s like, are they dominating the supermarket
0:08:20 business? Or are they struggling in the retail business? And that’s really what this came down
0:08:26 to. So I’m not sure I have an opinion yet, but I do find it interesting that all of this comes
0:08:32 down to a dispute over definitions. So I think that that argument holds water if the framing is
0:08:38 that they’re not really competing against Amazon, they’re competing against other grocery supermarkets.
0:08:42 But even if you say, okay, take Amazon out of the competitive set,
0:08:49 the biggest grocery supermarket in my mind is Walmart. Right. And by the way, just the way
0:08:54 they, their name for Walmart, it’s very interesting, they called Walmart a large format store.
0:08:59 Whatever we call it, Walmart’s biggest category is groceries. There are still a large number of
0:09:04 Walmart customers that primarily go there just for groceries. So call it what you want. It’s the
0:09:11 largest grocery provider or retailer in the nation. They have a 25% share of the grocery market and
0:09:17 combined, this company had the merger gone through or been approved would have had 11%. So okay, fine,
0:09:20 we’re not competing against Amazon, but you’re going to tell us we’re not competing against
0:09:27 Walmart. And Walmart with that scale, based on the most recent earnings call, is kicking the
0:09:34 shit out of Target, much less Kroger’s and Albertson’s. And so their case is that Kroger, people,
0:09:37 people don’t think of Walmart for groceries. They only go to this separate,
0:09:42 this separate category of which you’re dominant players. I just don’t buy that. I think a lot
0:09:47 of people, if Kroger’s- Plus Amazon owns Whole Foods. There you go. It’s the other side of this,
0:09:52 too. I think if people think, oh, Walmart has the lowest prices because of their scale and
0:09:58 their technology, I’m going to buy my groceries from Walmart and not from Kroger’s or Albertson.
0:10:04 So based on the fact, I think they had eight and 3% market share and Walmart,
0:10:12 distinctive Amazon has 25%. And it feels like a pretty robust sector. Let me put it this way.
0:10:17 I think Doug McMillan is really happy to see a Walmart. He’s like, oh, God, we’re going to
0:10:21 roll over these guys. They don’t have the capital to make the types of investments we can in
0:10:28 technology. They don’t have the scale to turn the screws on all of our suppliers like we do.
0:10:32 So I think they got it wrong here. I wonder if actually this one should have gone through.
0:10:37 Yeah. I could imagine a world like 10 years from now where Walmart and Amazon absolutely
0:10:43 dominate the supermarket and grocery business. Prices are high and we’ll look back at this
0:10:47 moment and be like, damn, we really fucked up there. We could have prevented this. I think
0:10:52 that’s very possible. One final note though, Wall Street never thought this was going to
0:10:59 go through from the very beginning. So this deal was pricing Albertson’s at $34 a share.
0:11:03 The stock’s been hovering at around $18 a share basically throughout the,
0:11:09 from when they announced the deal to today, it’s been trading at a discount. So it is
0:11:13 interesting that Wall Street from the get go was like, this is not going to go through.
0:11:22 Let’s move on to Warner Brothers Discovery. This is sort of downstream of your prediction about
0:11:28 how we’re going to see a lot of spins in the media business, specifically cable assets will be spun
0:11:37 off to capture more value. This is a little different though, because unlike Comcast who
0:11:40 did exactly what you said in your prediction last month, where they spun out their cable
0:11:46 assets and do a new company, this is just a restructuring. So the cable assets are going
0:11:50 to have their own operating division. The streaming assets are going to have their own
0:11:55 operating division, but there’s no spin here. At least there’s no spin yet. It’s still one company.
0:12:01 So my question for you is, what does this actually mean for shareholders? Should we be
0:12:08 expecting a spin? And if not, does this sort of relabeling into different categories actually do
0:12:14 much to the company? This is a preview. This is making it, he’s setting the table for a spin.
0:12:20 And that is he’s creating distinct operating units such that the spin will be more elegant and easy.
0:12:24 And the fact that the stock is up 15% now today is basically the market saying,
0:12:31 oh, you’re flirting with a spin will come on over here. This means the spin, in my opinion,
0:12:37 is going to happen. I don’t know if the spin will take some most or all the debt, but they will
0:12:41 probably, I mean, what you have with the cable business is highly profitable businesses that
0:12:47 can probably support a lot of debt because they’re cashflow generative. And this will free up a pure
0:12:53 play around Warner and HBO, which will trade at a much higher stock price. And my two stock picks
0:12:59 or my three stock picks for 2024 were Alphabet because I thought they had more IP and that it
0:13:06 would be Revenge or the Empire Strikes Back around AI. And then Warner Brothers Discovery and Disney
0:13:12 had been oversold. Part of the thing getting in the way of the spin, I believe, was their capital
0:13:17 structure is a bit of a straight jacket. What do I mean by that? They have really good debt. They
0:13:23 have a ton of debt, but it’s that it’s long maturity. It doesn’t come due for a while and it’s an
0:13:28 exceptionally low interest rate. And I wonder if they spin, if it accelerates, all of the bond
0:13:33 holders here want out of this debt. They’re making no money. They’re getting two or three or four
0:13:37 percent. Warner Brothers loves this debt because even though they have a lot, it’s on really friendly
0:13:43 terms. And I wonder if the thing that gets in the way of the spin is that it might accelerate the
0:13:48 bond payments or that they might not be able to just transfer debt. I think that’s the key question
0:13:54 here. But from a shareholder perspective, based on what the market said today, this is Zasloff
0:14:02 pridding up the company for a spin and saying they will be distinct. It will be easy. The operations
0:14:09 will break out the revenues and all this. And we’ll have our cool kid, hot girl, growth,
0:14:16 streaming and Warner Brothers division, and we’ll have the ugly stepchild that still brings home
0:14:24 money, but is not very popular. That will be these cable assets. This is a good move. Comcast led the
0:14:30 way. What’ll be interesting is I wonder if he’s sending a signal to Comcast, speak now or forever,
0:14:35 hold your peace. Because once they spin, it becomes harder for Comcast’s new co, whatever they’re
0:14:42 calling it, to acquire it. I wouldn’t be surprised if at some point, Brian Roberts calls David Zasloff
0:14:51 and says, “We should talk. Should our cable assets join together into one?” Because MSNBC
0:14:57 and CNN having the same backend, same newsroom or similar newsroom, that just makes all sorts of
0:15:03 sense to me. And I’ll also just point out the fact that this happened now, as you mentioned, one of
0:15:10 your stock picks was Warner Brothers Discovery. You were saved by the bell because WBD was in the
0:15:14 red throughout most of the year. And I know people were saying that, oh, Scott, we got it wrong.
0:15:21 It’s now in the green. It’s up 7% year today. Not huge, but in the green. So I’m going to call it
0:15:24 away for now. Yeah, but I’m going to perform the market. I’m going to perform the market, though,
0:15:30 right? We still got two weeks. Where’s those blue chewables? Anyways. And finally, our third
0:15:39 headline here, Eli Lilly testing GLP-1 drugs for alcohol addiction and drug addiction and tobacco
0:15:46 addiction. I love this new term here from the CEO, anti-hedonics. This is exactly what you’ve been
0:15:54 talking about for a long time. I even saw some data saying that people on Osempic reduced their
0:16:02 drinking by 60%. Diage, the alcohol guys. Oh my God. These stocks, in my opinion, are going to get
0:16:07 absolutely hammered. We could see alcohol really taken on the chin. Your thoughts on this news.
0:16:13 These things are scaffolding on our instincts. They just update our instincts to the institutional
0:16:17 production that our instincts haven’t caught up to. What is an addiction? Addiction is when you
0:16:21 continue to do something despite it having a negative impact on your life, your health.
0:16:28 And this basically tells your brain somehow calibrates it to say, no, you can stop eating now
0:16:34 or no, you don’t need to stay on TikTok for another 11 hours. This is enough. All of a sudden,
0:16:38 I’m looking at these stocks and going to say, okay, if they’re up 30% or 40%, is it still
0:16:42 an opportunity to get in? Because if they’re not only treating obesity, but they’re
0:16:47 treating alcoholism, they’re treating social media addiction, they’re treating porn addictions.
0:16:54 I mean, I think you’re just going to see gambling addiction. Anyway, I’m very excited about this.
0:16:58 Yeah. Our thoughts on what this would do to addiction were based mostly on surveys,
0:17:04 but there is a study out now from Loyola University and it found that people with
0:17:10 opioid or alcohol use disorder who take GLP-1s have a 40% lower rate of opioid overdose
0:17:16 and a 50% lower rate of alcohol intoxication. So the peer-reviewed research is now coming.
0:17:21 What’s happened to the alcohol industry, though, is just fascinating. Here are some stats.
0:17:27 In the past year, Boston beer has fallen 9%. AB and Bev, which owns Corona and Miklo Baltra,
0:17:35 it’s fallen 15%. Brown Foreman, which owns Jack Daniel, has fallen 20%. So the entire alcohol
0:17:41 industry is, I mean, I’m not going to say it’s in free fall, but it feels like it’s approaching
0:17:46 free fall. I think what we should keep tabs on is what is going to happen to all of these alcohol
0:17:52 stocks when that anti-hedonic study from Eli Lilly is released. And when we start to see
0:17:58 just a flood of more peer-reviewed research that says, very conclusively, this is reducing
0:18:03 people’s use of alcohol. There’s just crazy stats. Something like 1% of alcohol drinkers are
0:18:09 responsible for 30% or 40% of all alcohol consumption. There’s a decent percentage of,
0:18:16 I mean, it’s just, it’s staggering. There’s a small number of people that drink like 27 beers a day.
0:18:23 And the alcohol industry is really kind of driven not by social drinkers, but by alcoholics. And
0:18:30 that’s not a great stat to talk about. But if you think about who’s going to get GLP1 first,
0:18:35 it’s the person whose doctor said, if you keep drinking, you’re going to die. And when you take
0:18:45 out those rabid alcoholics, the drinks industrial complex, if it loses the 1% of the alcoholics,
0:18:52 its business is going to be off 20 or 30%, which, which spells restructuring, massive layoffs.
0:18:56 I mean, that’s, that’s going to be a meltdown. And I don’t think that’s happened yet because my
0:19:04 sense of GLP1 drugs is that right now GLP1 is for ladies of lunch and wealthy people who want to
0:19:09 lose that last 10 or 15 pounds. Over time you’d like to think, and I think this will happen, it’ll,
0:19:14 it’ll absorb into the communities that really need it. Some of the lower income communities that
0:19:22 suffer from really damaging obesity. And that’s when the food industrial complex and the drinks
0:19:28 market really start to feel, you know, the, the, the boot on their neck. And I think that’s going
0:19:34 to happen over the next 12 or 24 months. But you could see when you see some stores like a Walmart
0:19:41 that cater to a middle and lower income consumer report that alcohol sales are off 6%, year on
0:19:47 year or 8% or 11%, you’re going to see those companies decline. Those companies are about to
0:19:53 become the next cable assets. And that is they’re still going to be great businesses. They’re high
0:19:59 margin. They’ll cut costs, but you’re going to see consolidation. This is the new cable.
0:20:04 Yeah. What you say about alcoholics there, I think is so true of food too. Like the food,
0:20:09 the food industry relies on foodaholics. And there was this earnings call last week
0:20:16 that I found pretty amazing from the JM Smucker company. And this is the company that makes
0:20:22 Twinkies and Ding Dongs and Uncrustables. It makes like all of the most heinous snacks in America.
0:20:28 And the analysts were asking the CEO, this guy, Mark Smucker, about this stuff. They were asking
0:20:33 him about the threat of GLP One drugs. They were also asking about the political threat of RFK
0:20:38 Jr. and his crusade on processed foods. And the response from the CEO was just amazing. He said,
0:20:45 quote, “As it relates to anything in the political domain, we believe very strongly that snacking
0:20:52 continues. Consumers are going to continue to look for a way to reward themselves at different times
0:20:58 throughout the day.” So he’s just like, do whatever you want. Come up with whatever drugs
0:21:05 you want. You can talk shit about Twinkies and Ding Dongs all day, but we are a country of fat
0:21:11 people and we are going to continue to capitalize on that, which I just thought was kind of incredibly
0:21:17 honest from him. Each year, maybe it’s every other year, I speak to the folks at ABMBEP.
0:21:21 They’re super smart. It’s a great company. They do a great job. They’ve made good acquisitions.
0:21:26 They have a portfolio of amazing brands. And my message this year is kind of be like,
0:21:30 you’re fucked and then you’re fucked even worse because not only do you have GLP One,
0:21:34 but I can’t believe these companies keep paying you to just walk into that boardrooms and tell
0:21:39 them they’re fucked. Oh, dude, they love it. They’re like S&M fetish. They have an S&M fetish.
0:21:44 I show up and go, you’re fucked. And they’re like, hit me again. That guy really does it.
0:21:50 You kidding? Well, but think about it. They’re surrounded by sycophants. It’s like, oh,
0:21:54 you’re a genius. This is amazing. And then someone comes in and goes, I think you’re fucked. And
0:21:58 this is why. And they’re like, they’re shocked. And they think, okay, maybe we should have that guy
0:22:07 back because none of these ass kisses are keeping it real. But the reason they’re doubly fucked is
0:22:13 one of my big consumer observations hanging out with the young people, the young ins, is whenever
0:22:19 I go to these summits or these conferences or Coachella or everywhere, I’m like, no one’s drinking.
0:22:27 What’s going on here? They’re all high, but they’re not drinking. And I even look at my alcohol
0:22:33 consumption. I love alcohol. I’m a better version of me, a little bit fucked up. One of the reasons
0:22:39 I work out is so I can drink. But as I’ve gotten older, I realize, okay, I need to reduce my alcohol
0:22:43 content. So I do this thing where I take five milligrams. If I’m going out for a big night,
0:22:46 I’m only just started doing this. Daddy’s going to want to have a little rhythm,
0:22:51 be charming, be the charming Scott, not like get angry and upset and go home early.
0:22:58 I take a five milligram edible and I’ll have one or two drinks as opposed to six to eight drinks.
0:23:02 And I got to think there’s a lot of people thinking the same way. And then I go to these
0:23:08 conferences with young people and they got their mix of MDMA and 2C and they’ve got eyedroppers and
0:23:14 they’re doing all this weird shit and drinking, you know, mushroom and fuse muffins and shit. And
0:23:18 I just couldn’t get over it. And I think I told you the story when I went on summit at sea and
0:23:22 they take over an entire Virgin cruise ship. I went up to the barn and I said, can I have
0:23:28 a makers and ginger? And he said, finally, someone drinking and young people, I mean,
0:23:32 not only the future, but they’re kind of the aspirational target. Other people look to
0:23:39 young people for cues. So I think the drinks industry is the next cable network meltdown.
0:23:44 We’ll be right back after the break with a look at Google’s breakthrough in quantum.
0:23:49 If you’re enjoying the show so far, be sure to give Prof. G Market to follow
0:23:50 wherever you get your podcasts.
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0:26:16 We’re back with Prof2Markets. Google has unveiled a new quantum chip called Willow,
0:26:22 which outperforms the world’s most advanced supercomputers. In just five minutes, Willow
0:26:27 can solve a problem that would take a supercomputer 10 septillion years to solve.
0:26:30 That’s longer than the estimated age of the universe.
0:26:35 While some scientists have hailed this as one of the decade’s biggest breakthroughs,
0:26:41 the chip currently has no practical applications. Scott, we’re going to get your thoughts, but I
0:26:48 kind of just want to start here with a breakdown on what is quantum computing. It’s a little confusing,
0:26:56 but just bear with me. The key difference between quantum computing and regular computing is in how
0:27:02 they process information. A regular computer processes information using binary code,
0:27:07 so it’s a zero or a one, and these ones and zeros are known as bits. I think people know that.
0:27:14 A quantum computer, on the other hand, processes information not with bits, but with qubits.
0:27:20 The funny thing about qubits is that they can be a zero and a one at the same time.
0:27:25 This is obviously very confusing and strange, but I think the best analogy to think of this
0:27:29 is to think of it like a coin flip. Imagine you flip a coin.
0:27:36 A classical computer can only tell you whether it’s heads or tails once the coin has landed,
0:27:41 but with a quantum computer, it will analyze the coin as it’s being flipped,
0:27:47 and while it’s flipping, it will calculate the probability of it being heads or tails,
0:27:52 or in the case of computing, a one or a zero. It’s fundamentally a different way of analyzing
0:27:57 information, and that’s the key technical difference you need to know about what quantum computing
0:28:03 actually is. Okay, enough with the nerd talk. Let’s just talk about the practical implications
0:28:11 of quantum computing. There are three important traits in my view. The first is that these
0:28:16 quantum computers are exponentially more powerful than classical computers, and that is
0:28:23 not hyperbole. As you increase the number of qubits, the compute power of a quantum computer
0:28:27 increases at an exponential rate. That is not true of classical computers,
0:28:33 so they’re extremely powerful. Two, and this is really important, is that they make a ton of errors,
0:28:39 and this has been the biggest problem in the field, because it turns out that as that quantum
0:28:45 computer tries to figure out if the coin’s going to land heads or tails, it very often gets it wrong,
0:28:49 which screws up the entire computation, and that’s a huge problem which leads me to the
0:28:55 third important trait, which is it’s highly impractical. Not only in the sense that it gets
0:29:00 things wrong, but it’s also just designed for these drastically complex questions,
0:29:04 as you could probably tell at this point, that just don’t really have a place in our world right now.
0:29:11 Now, the reason this Google announcement is a big deal is because they’ve supposedly solved
0:29:17 for the second trait that I mentioned, which is it makes a lot of errors. With the Willow chip,
0:29:22 this new chip they’ve come out with, the more qubits you add to the computation,
0:29:26 the more accurate the computation gets. In other words, in addition to being crazy,
0:29:33 crazy powerful, this computer, unlike other quantum computers, also gets things right,
0:29:38 and that’s the most important difference. That’s why this is actually a really big deal,
0:29:43 the fact that they have come out with this. We will get to what this might mean for Google’s
0:29:49 business, but I’ll just stop there in my review of what is quantum computing. Maybe you have
0:29:54 some reactions. What’s interesting is the market seems to love it. I think because they thought
0:30:01 this would help supercharge their internal efforts and also that it sort of signals that
0:30:07 alphabets still has … I’ve always said alphabets, the greatest concentration of IQ in history,
0:30:15 since maybe NASA in the ’60s or ’70s. This is sort of them saying, “We still got it,” and the market
0:30:21 seems to like it even though they’re not entirely sure what the applications are. One of the interesting
0:30:27 notes here is someone says, “This is more shot across IBM’s bow than it is across Nvidia’s bow,
0:30:34 but this seems to be a signal.” I would argue this is more of a branding event for Alphabet.
0:30:40 No one’s been able to say which business will this impact. Alphabet has amazing IP and this
0:30:46 should help across their entire ecosystem, but I still don’t understand what are the consumer
0:30:52 applications that launch with this, and how is that going to result in additional earnings?
0:30:57 There are some business use cases that Google hasn’t really talked about,
0:31:01 but the analysts and the people who are interested in this stuff are talking about,
0:31:05 and I can just go through a few of them that I think could be really important.
0:31:14 One is healthcare. Unlike a classical computer, these quantum computers can simulate
0:31:22 molecular development at mass scale. In theory, they could revolutionize the pharmaceutical
0:31:27 industry. At least that is what is being said about quantum computers. It’s something that
0:31:31 classical computers are not good at. The second one, this is the one I find most interesting,
0:31:41 is encryption. This could massively affect Bitcoin, because cryptography is predicated
0:31:47 on binary code. That’s how the Bitcoin mining system works, and that’s what makes it so impenetrable.
0:31:55 With a quantum computer, you could essentially break any encryption system in the world,
0:32:03 including Bitcoin. Now, to be fair, to mine all the Bitcoin in the world today, you’d need a
0:32:10 quantum computer with a capacity of 13 million qubits. The Willow chip has a qubit capacity of
0:32:17 only 105, so we’re not there yet, but theoretically, we could get there. That is also why we saw a dip
0:32:22 in the price of Bitcoin the day this was announced. I think a lot of people in the Bitcoin world
0:32:28 went, “Holy shit, what if this thing could crack into the Bitcoin network in a day?”
0:32:35 It can’t yet, but at some point, it could. I hate to say it. I would enjoy that. I know
0:32:39 that’s an awful thing to say. I would enjoy it, too. If all Bitcoin became hackable,
0:32:45 why does that make me happy? Why does that make me happy? Oh, gosh. I think those are my two
0:32:53 most interesting use cases. My takeaway here, this could be a really big deal,
0:32:59 but major emphasis on could, because it’s not totally clear to anyone what the timeline on this
0:33:04 is. We hear about a lot of powerful technologies out there that could revolutionize industries.
0:33:10 We don’t know when it’ll happen or what it’ll look like. My prediction downstream of that is that I
0:33:15 think quantum is going to become the new corporate buzzword. I think it’s going to become the new
0:33:21 vehicle to make these very, very big promises that could pan out, but similar to crypto and
0:33:27 similar to AI, you’re not accountable to delivering actual results, because it’s so far off in the
0:33:33 future. This, to me, is like a CFO’s dream. If you can just build a little quantum research
0:33:38 lab in your company, you don’t even need to generate revenue from it, you will likely
0:33:42 drastically increase your multiple overnight, and it does not need to be reflected in your
0:33:47 financial results. My takeaway from this, I think this is real. I think this is cool,
0:33:53 but I predict a huge hurricane of corporate bullshit that is going to come rolling in hard,
0:33:56 and I think the name of that hurricane will be quantum.
0:33:59 I don’t know if you knew this, but here at PropG, we raised $7 billion two years ago,
0:34:03 and we’ve been experimenting with quantum computing, and it’s really starting to pay off.
0:34:08 Actually, you’re not a real person. Actually, it’ll be AI. Look, I did what I always do. I turned
0:34:12 to AI, and I said, “Give me the difference between AI and quantum computing,” and they said, “Okay,
0:34:18 AI is the simulation of human intelligence and machines that can learn, reason, and make decisions.”
0:34:23 Example applications, image recognition, natural language processing, autonomous vehicles,
0:34:30 and recommendation systems. Quantum computing leverages the principles of quantum mechanics,
0:34:37 including superposition and entanglement to perform calculations much faster than classical
0:34:42 computers for certain problems. Example applications, cryptography, optimization problems,
0:34:50 material science simulations, and drug discovery. So, yeah, there you go, and they use this word,
0:34:59 cubits all over again. More importantly, how do people invest around this? I heard,
0:35:04 we saw we had in the notes, Rosetti computing. They make chips for quantum computing, much like
0:35:11 NVIDIA builds chips for AI, started by an IBM quantum scientist. That stock is up sevenfold this
0:35:16 year. Another quantum computing bet is INQ is pursuing a different type of quantum computing
0:35:20 than Google, one that could potentially be better for precise measurements in fields,
0:35:26 including aerospace and defense. INQ is already monetizing quantum, secured a $55 million dollar
0:35:30 contract with the United States Air Force Research Lab this year, and offers quantum computing through
0:35:36 Google Cloud, AWS, and Azure. Revenues have increased 90% this year. The stock is up 150%
0:35:46 year to date. So, this feels pretty cutting edge, but I love what you’ve said, that there’s going
0:35:55 to be now quantum washing. But also, I wonder if these guys, as much as their stock has been up,
0:36:00 I wonder if these quantum computing sectors are going to register anything resembling
0:36:07 the kind of AI, Lollapalooza, in terms of value here. We’ll be right back with a look at the
0:36:12 World Cup in Saudi Arabia. If you’re enjoying the show so far, hit follow and leave us a review on
0:36:28 Prof2Mockets. In 100 meters turn right. Actually no, turn left. There’s some awesome new breakfast
0:36:34 wraps at McDonald’s. Really? Yeah. There’s a sausage bacon and egg, a crispy seasoned chicken one,
0:36:39 mmm, a spicy end egg, worth the detour. They sound amazing. That they taste amazing too.
0:36:45 Wish I had a mouth. Take your morning into a delicious new direction with McDonald’s new
0:36:51 breakfast wraps. Add a small premium roast coffee for a dollar plus tax at participating McDonald’s
0:37:02 restaurants. Ba-da-ba-ba-ba. Wolves and dogs are pretty closely related. They actually share 99.9%
0:37:10 of their genetics. But even when they’re just a few months old, even when they’re raised by
0:37:15 human scientists, wolves are pretty different from dogs. They start biting you in the ears when
0:37:20 you’re lying down. If you don’t sit up fast enough and you hear this wonderful noises with little
0:37:27 and then they chomp you in the ear and you’re like, oh. And when they grow up, these differences get
0:37:36 even bigger. Dogs are our friends. Wolves are hunters. If I had a sore shoulder, I wouldn’t go
0:37:41 in with the adult wolves, even if I’d raised them because it could trigger their hunting behavior.
0:37:47 This week on Unexplainable, how did we get the nice, friendly dogs we know and love today
0:37:52 from wolves? Follow Unexplainable wherever you listen for new episodes every Wednesday.
0:38:00 On Wednesday of last week, a man was shot in the United States, but this was not your average
0:38:06 shooting. Almost immediately, people were celebrating his death and not just the people you’d expect,
0:38:13 there were moms on Facebook making jokes about it. There were several of those horny copypasta text
0:38:19 messages circulating around. There was a United Healthcare Shooter Lookalike contest over the
0:38:27 weekend in Manhattan. At least one person got a tattoo of the suspect. On Monday, Luigi Mangione
0:38:34 got arrested and then things really got nuts. He went from a few dozen Twitter followers to 300,000
0:38:41 overnight. People were thirsting for his six-pack. Luigi Mangione is brat. The McDonald’s, where he
0:38:46 was arrested, has been review-bombed. People are saying there are rats behind the counter. People
0:38:51 are saying Popeye’s employees would have helped him get rid of the gun. Someone’s got some explaining
0:38:56 to do, and it’s us. It’s Today Explained. Every weekday, never on the weekends.
0:39:09 We’re back with Prof. G. Markets. Saudi Arabia will host the 2034 World Cup, marking a key step
0:39:14 in the country’s plan to establish itself as a global leader in sports. Through its sovereign
0:39:18 wealth fund, the country has invested billions in a range of sports, including golf, boxing,
0:39:24 e-sports, and Formula One. The fund is also close to finalizing a $1.5 billion deal
0:39:31 for a 6% stake in the PGA Tour. Finally, we can stop talking about quantum computing,
0:39:37 Scott, and get back to what we’re really good at, which is football. We’ve talked a lot about
0:39:42 Saudi Arabia on this podcast. It’s expanding influence in the sports world. Your reactions to
0:39:48 Saudi Arabia, I’m not sure anyone thought this wouldn’t happen, but Saudi Arabia is officially
0:39:53 the host of the 2034 World Cup. Well, first off, there are a few organizations
0:40:00 that have this veneer of credibility that are more corrupt than these international sports
0:40:04 organizations because they operate in this sort of Nether-Netherland, the International Olympic
0:40:09 Committee, and FIFA really takes the crown. If you were going to have countries bid,
0:40:17 you would want to avoid some sort of conflict? Well, no. FIFA announced a $400 million sponsorship
0:40:23 deal with Saudi Aramco, Saudi Arabia’s national oil company, the most profitable firm in the
0:40:33 world, earlier this year. My guess is that was kind of a down payment. The rest of the world
0:40:40 said, okay, when you show up and you’re bidding on a piece of art and Bill Gates shows up and says,
0:40:43 “Oh, it’s my dream to own this piece of art.” You might as well go home.
0:40:50 This is what’s happened here. I think this may be the first time that there was only one nation
0:40:57 bidding. I think every other nation that was thinking about bidding thought, we’re not going
0:41:01 to pull 1,100 people together and former governors and get everyone Jonesed up to put
0:41:08 together the ultimate bid and then host you first class. The FIFA corrupt committee that comes over
0:41:12 and they get all these great dinners and they’ve said, “No, we’re just not going to bid.”
0:41:18 And also, realistically, it’s worth more to the kingdom than any other country in the world,
0:41:24 because these are coming out events. This is a way of highlighting where for real you should come
0:41:31 here. I remember the Olympics when it was the opening ceremonies in Barcelona, and I had never
0:41:36 heard anything about Spain or Barcelona. And then they had this brand new beautiful stadium,
0:41:40 and they had this runner, the lighting in the Olympic torch, and it was this ridiculously
0:41:46 hot guy wearing no shirt, and he’s running and he stops outside of the stadium, and you see this
0:41:54 amazing stadium, and the guy picks up a fucking bow and arrow, and then he pulls it back and you see
0:42:02 his unbelievably ripped torso, and then he looks at the camera and then he nods and he detenses the
0:42:07 bow and arrow, and he puts the arrow down, and he inflames it, and then he pulls it back,
0:42:15 and he pulls the thing back for dramatic effect, like it’s about to snap, and he fires the thing,
0:42:23 and this fucking flaming arrow flies from outside of the stadium over the top of the stadium
0:42:32 into like this six foot semi-circle of incendiary, lights it, and then it runs up to the Olympic
0:42:40 flame, torches it, and I’m like, I’m going to fucking Barcelona. I mean, it was just so amazing,
0:42:46 and then most recently the Paris Olympics have brought kind of new riz to Paris. I remember
0:42:50 watching some of the sports and at the Olympics and thinking, it’s time for me to get back to Paris.
0:42:57 Those people just, they just understand style and grace and romance. These are coming out parties.
0:43:04 I don’t think, I would bet 97% of the world’s population hadn’t heard of Qatar until the World Cup,
0:43:10 so Saudi Arabia has all of these immense projects coming online. They want to transition to a
0:43:17 knowledge-based economy, educational institutions, tourism services, and this will be their way of
0:43:24 bringing the wealthiest people in the world and the eyeballs of the rest of the world to the
0:43:30 kingdom, and that’s worth a lot of money to them, and it wasn’t, everybody knows about the United
0:43:36 States. Most people know about Germany, so while they might be willing to spend 10, 20, 30 billion,
0:43:40 I mean, I gotta think, if Qatar spent a quarter of a trillion dollars or 250 billion, I wouldn’t
0:43:44 be surprised that the kingdom spends half a trillion dollars on these games. All I know is
0:43:51 we are going at, and it’s going to be amazing. It’s going to be amazing, and I’m betting on,
0:43:54 I think Team England is finally going to have their deal here.
0:43:56 It’s definitely going to happen. Cole Paul, not at home.
0:43:57 It’s coming home.
0:43:58 It’s going to come home.
0:43:59 It’s coming home.
0:44:05 What you’re describing there is, I mean, you said being on the world stage like that is worth a lot
0:44:10 of money to them. I think this is the interesting question here. It’s like, what is this worth?
0:44:16 Is it worth it to do this? If you look at the actual ROI, the return on investment
0:44:21 of these global sports tournaments, there’s a study from the University of Lausanne,
0:44:27 which looked at every Olympic Games and every World Cup between the years 1964 and 2018
0:44:34 to answer that question. What they found is that 95% of the time, you lose money. The average ROI
0:44:40 for the Olympics and for the World Cup was negative 38%. There were only three competitions
0:44:46 in history that turned out to be profitable, and those were the 1984 LA Olympics, the 2010 Vancouver
0:44:51 Winter Olympics, and the 2018 Russia World Cup, and every other tournament lost money.
0:44:58 Now, to be fair, this is only focusing on the revenues that can be directly attributed to the
0:45:02 tournament. It’s the ticket sales and the broadcasting rights and the sponsorships, etc.
0:45:06 What it doesn’t measure is what you’re talking about, which is the soft power,
0:45:11 the idea that you’re seeing these countries, and then maybe you want to go there and you want to
0:45:18 spend some money there. I don’t know what it is. My question to you is on soft power, because
0:45:26 I’m naturally a little skeptical of soft power because of the fact that it is so hard to measure,
0:45:33 and I get the feeling that we get a little carried away with the glitz and the glamour and the fame of
0:45:42 it all. My question to you is how does being on the world stage actually translate into legitimate
0:45:48 economic activity and long-term GDP growth? I get the sense that you believe this is actually a
0:45:53 very good idea economically for Saudi Arabia. Oh, it’s enormous. The last time I was in Riyadh,
0:45:58 what I noticed was they put on a lunch and invited me, and they had all these entrepreneurs, and I
0:46:05 thought I’m going to meet all these Saudis. I did meet some domestic entrepreneurs, a bunch of kids
0:46:11 who had gone to US schools and then come back to Saudi. What I was shocked by, I met hundreds of
0:46:17 entrepreneurs who were like, “Yeah, I started a specialized glass company, glass that goes on
0:46:24 components and iPhones in Seoul, and I moved here,” because I thought the quality of life would be
0:46:28 better, and basically the kingdom guaranteed me that they would buy everything I could produce.
0:46:37 I met all these entrepreneurs from Germany. The bottom line is money and growth are a flame,
0:46:43 and human capital, especially young human capital, is a moth. What you said about soft power is that
0:46:50 companies that demand specific attribution oftentimes just shouldn’t be in the business
0:46:55 of brand building, because the thing about brand building is that Philip Morris was never really
0:47:02 able to directly, they knew that convincing people that if they smoked marble reds, that they could
0:47:08 relate to and were more like a man with a deeply chiseled jaw, riding an apple loose,
0:47:17 but they could never reverse engineer a specific billboard to 95 point gross margins on a pack
0:47:23 of cigarettes that people were paying $4 for that cost $0.20 to produce. Brand building,
0:47:29 quite frankly, is a little bit about taking a leap of faith, believing that if the intangible
0:47:35 association surrounding a product, a service, or even a nation will create more awareness,
0:47:41 more trial, because you can bet MBS looks at Dubai and what they’ve built there and says,
0:47:46 “Fuck, how did we let that happen? We’re a bigger economy. We have more money.”
0:47:52 I’m pretty sure that the mandate he’s given to his ministers of infrastructure or development is
0:47:59 like, “I want Dubai to seem like a fucking cow town after we’re done. I want everyone coming
0:48:05 here.” The good news about the Kingdom of Saudi Arabia is they have what feels like infinite
0:48:09 capital right now. The bad news is it’s running out in 30 or 40 or 50 years, and they’re smart,
0:48:16 they know it. They’re like, “We need to transition from a fossil fuels-based economy
0:48:21 to a services tourism-based economy.” That’s the bad news. We need to do it. The good news is
0:48:28 you have a blank check to get it done, but branding is all about taking a leap of faith
0:48:34 on these intangible emotions. All bet the year after the World Cup, you’re going to see tens of
0:48:40 thousands of small and big businesses, and the key to all this, the secret sauce, human capital,
0:48:48 go, “Honey, would you be willing to move to Riyadh?” and people go for the first time,
0:48:54 “Yeah.” At the bottom, when you’re worth billions of dollars spending money on whatever it is,
0:48:59 a finely tailored suit, it doesn’t mean anything. Even if that finely tailored suit is 10,000 bucks
0:49:05 and no one would pay for that, it doesn’t matter. They have the money. What they need is to transition
0:49:13 their economy. This is probably going to be a good investment, distinct of how much it costs.
0:49:19 I think the distinction there is I agree with you when you have a lot of money. It’s not a big
0:49:25 deal to buy a $10,000 suit, but it would be a little crazy to buy a million-dollar suit,
0:49:28 and we have no idea how much they’re going to spend on this thing.
0:49:38 If you look at how much Qatar spent, they spent $220 billion. I would bet that Saudi Arabia’s going
0:49:45 to spend way more than that. I think the way you frame it there is totally accurate. It’s like
0:49:52 they know that this is immediately going to be in the red from an expenses perspective,
0:49:58 but they’re looking at the long-term payoff and the long-term benefits. Let’s say they spend
0:50:02 like a quarter of a trillion dollars on this. I think they’ll spend more, but let’s say they spend
0:50:09 that much. That is a quarter of a trillion-dollar billboard, essentially. Basically, it’s a giant
0:50:19 ad. I think the question is, is that ad worth it? I feel pretty somewhat convinced that it might pay
0:50:23 off, that it might be worth it based on your analysis there, but I think the key takeaway for
0:50:32 me is this is no more than an ad. No more than an ad? That’s everything. That’s awareness,
0:50:39 unearned margin. Let me just go back to brand building. I don’t know what Russia spent on the
0:50:45 World Cup, dramatically less than $220 billion, but I went to games in Moscow and St. Petersburg.
0:50:49 I remember thinking St. Petersburg was arguably one of the most beautiful cities I’d ever been to,
0:50:54 walked around, there’d be squares where old people were dancing, and I just had such a positive
0:51:01 impression of Russia and specifically St. Petersburg. Now, them incarcerating Americans on
0:51:07 trumped-up charges, that’s sort of like, okay, I’m not going back to Russia for a while.
0:51:11 That sort of ruins the ad, exactly. These actions on a political stage
0:51:16 can wipe out a quarter of a trillion dollars in branding.
0:51:20 Yeah. Well, let’s just take a moment to talk about the controversies around this,
0:51:24 because that’s important to the brand here, too. I mean, if people think that this was
0:51:30 rigged, as many people do, or they think that Saudi Arabia is an unethical country,
0:51:33 that’s important to this conversation, too. But I’m just going to start with this
0:51:38 bid evaluation report from FIFA that they released, which I just found so funny.
0:51:45 It’s this report where they assess all of the viability of all the possible host nations.
0:51:53 So, first off, they gave Saudi Arabia the highest viability score ever, which is hilarious.
0:52:00 They said that from a commercial standpoint, the bid is, quote, “very good.” But my favorite
0:52:07 was their evaluation of the human rights risk, which they determined was, quote, “medium,”
0:52:10 which is also hilarious.
0:52:14 Human rights risk of the games or human rights risk of KSA?
0:52:16 Of the World Cup, of them hosting the World Cup.
0:52:17 The medium?
0:52:24 Human rights risk, medium. That was their analysis. But they ultimately landed on the greatest score
0:52:27 ever given in the FIFA bid evaluation report.
0:52:29 Yeah, it’s called money, the greatest score.
0:52:30 Exactly.
0:52:39 I’ll go. 100% I’ll go. I can’t wait. I literally can’t wait. And also, I actually quite like
0:52:40 the kingdom and think they’re doing good things.
0:52:48 But people hear your views on Saudi Arabia, and they get upset when you defend them.
0:52:52 And the reason they, I mean, the things that people focus on, there’s one,
0:52:57 the killing of Jamal Khashoggi. We’ve talked about that. There’s migrant worker conditions.
0:53:02 I would argue that that’s in basically any country.
0:53:04 But you’re leaving out treatment of women.
0:53:07 Yeah. There’s discrimination of women, which they are improving on.
0:53:13 But still not great. But then there’s also the discrimination against gays,
0:53:15 which they are definitely not improving on.
0:53:21 So the penalty for homosexuality in Saudi Arabia today is still, in some cases, death.
0:53:29 And in combination with the fact that a lot of people think this voting system was rigged,
0:53:34 which it probably was, they were the only bidder, I think a lot of people are saying,
0:53:42 there’s foul play here. What I would say, I think we all agree there is foul play here,
0:53:49 in some sense. The question is, how bad is it? Like, how bad are the human rights abuses,
0:53:54 and how bad is the corruption? And is it bad enough that we will start to see
0:54:00 mass boycotting of this World Cup? Because on this podcast, we’re not going to evaluate
0:54:03 the ethics of things. We’re going to evaluate the economics of things.
0:54:07 And so what I’m interested in, and I’d like to get your view, is do you think
0:54:15 the human rights stuff and the corruption stuff is bad to the point that people are actually
0:54:19 not going to go to this thing, and they’re not going to watch it? Or is this another one of
0:54:23 those situations where we talk about it a lot online? Maybe we see some protests,
0:54:26 but at the end of the day, everyone shows up and everyone makes money.
0:54:36 Oh, entirely the latter. And also, this stuff’s important, and public pressure and international
0:54:45 pressure is important. And I worry one of the things I don’t like about the most recent election,
0:54:50 I have trouble waving my finger in anyone’s face around women’s rights right now.
0:54:56 We’re the only nation that’s taken away a women’s right. Typically, every other nation in the world
0:55:02 when they grant women rights, they get to hold on to them. And the kingdom right now, in my opinion,
0:55:06 is reforming faster than any nation in the world. And every six months,
0:55:13 MBS rolls out new reforms. Women in the kingdom used to need the permission of their husbands to
0:55:18 travel. They’ve done away with that. They couldn’t drive. They can now drive. That may not sound
0:55:22 like a big deal, but I’m looking at the slope of things. In addition, I want to be clear,
0:55:28 I think they murdered Khashoggi. The question is, all right, they did it. I think they paid a huge
0:55:34 price for it. Does that mean we’re never going to do business with them again? And let me go even
0:55:38 further. I think there’s less antisemitism in the kingdom right now than there are pockets in the
0:55:44 United States. I think the kingdom is probably going to normalize relations with Israel. This
0:55:49 is a complicated issue. I don’t want to pretend to have moral clarity around this. The question is,
0:55:54 do I think people are going to go and corporations are going to headquarter there?
0:56:00 Absolutely. This will be the most successful World Cup in history. Because at the end of the day,
0:56:04 Ed, and this isn’t the way the world should be, the way the world is, money wins.
0:56:11 And they’ll put on an amazing show and they will clean up their act or they will try to. And also,
0:56:15 it begs a bigger point, are human rights going to be better or worse
0:56:22 if the World Cup is in the kingdom? I would argue they’re going to be better. I would argue when
0:56:30 they are on a global stage that they have more motivation and incentive to improve, to continue
0:56:36 to improve and head in the right direction. I’m more around engagement than sitting and waving
0:56:44 your finger as a 15-year-old in Mississippi who’s raped, doesn’t have access to terminate a pregnancy.
0:56:48 We have gotten so far afield here, Ed. Let’s go back to talking about quants. Cubits.
0:56:53 Cubits. Yeah, I think just to summarize what you’re saying there, it’s like
0:56:59 they are trending in the right direction. You cannot argue that. They definitely are on the
0:57:05 right trajectory when it comes to human rights. Are they doing that for ethical reasons? Probably
0:57:10 not. But I think they’ve looked at the rest of the world and they’ve seen that, generally speaking,
0:57:15 a nation that has strong human rights laws and that treats its people fairly,
0:57:20 generally speaking, those countries get rich. I think that’s pretty much the play here.
0:57:27 100%. Okay, we want to participate in this economy. We’re going to go lean into human rights,
0:57:33 not because we necessarily want to for our people. I genuinely think that. I think we’re
0:57:38 going to do it because it’s going to make us some good money. That’s worth it. I think that’s what’s
0:57:43 going to happen here. Let’s take a look at the weekend. We’ll hear the Fed’s interest rate decision
0:57:48 for December and we’ll also see earnings from Nike and FedEx. Scott, do you have any predictions?
0:57:52 Well, my prediction is that Metta’s next earnings call, which isn’t until February,
0:58:01 is going to be just blow away again expectations because that notion that if you put a frog in
0:58:06 a boiling water, jumps out. If you put a frog in water and then turn the heat up, it doesn’t know
0:58:13 it’s being boiled to death. I don’t think we realize just how bad the rage has become in the
0:58:20 United States. As someone, I only spend probably two weeks every two months there. It’s like when
0:58:25 you come home, Ed, and you haven’t seen your kids for a while, and this was one of the most
0:58:28 rattling things that happened to me when I used to go on business trips for two or three weeks,
0:58:33 I could notice, I would always poke my head in and when they’re sleeping and a couple of times,
0:58:38 I’m like, “Oh my God, he’s grown.” That would rattle me that I was spending too much time on
0:58:42 the road, whereas when I’m with them every day, I don’t perceive them growing because it’s incremental.
0:58:47 The interrupted cadence of living in London and only being in the US
0:58:52 once every couple of months, I have noticed a dramatic increase in what I’ll call
0:59:00 community rage or public rage. Everyone is pissed off. Everyone is dissatisfied with each other,
0:59:10 with policies, with government, with the world. I think that is the primary signal for profitability
0:59:15 at Metta because Metta has figured out that it’s not sex itself in the world of marketing,
0:59:23 it’s rage. The amount of rage that has been fomented and monetized by Metta has hit a new
0:59:29 high, I believe, around the election. The proxy or the litmus test or a decent
0:59:36 blood pressure test for rage in the US is the profitability of Metta and it is fucking off
0:59:41 the charts right now in their largest market in the US, which I believe means they are going to
0:59:47 report a just staggering quarter in their next earnings call in February. My prediction,
0:59:54 another massive beat from Metta based on the fact they have figured out a way to not only
1:00:01 incent but monetize rage at discord and polarization in the United States, which is at record levels.
1:00:07 This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate
1:00:10 producer is Alison Weiss, Mia Silverio is our research lead, Jessica Lange is our research
1:00:16 associate, Drew Burris is our technical director, and Catherine Dillon is our executive producer.
1:00:20 Thank you for listening to ProfG Markets from the Vox Media Podcast Network. Join us on Thursday
1:00:24 for our conversation with Morgan Housel only on ProfG Markets.
1:00:54 Lifetimes. You help me in kind reunion as the world turns. And the dark flies.
1:01:00 And love, love, love, love.
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