Harris vs. Trump: The Markets React — ft. Robert Armstrong

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1:41But the good news, Ed, he came quietly.

1:55That makes me happy. I don't care what happens in this show. I see it as a win. And welcome to Prop G Markets. Today, we're speaking with Robert Armstrong, U.S. financial commentator for the Financial Times, who, after listening to this show, will not be on again. But first, here with the news is Prop G media analyst and part-time mime Ed Elson. Ed, what is the good word? I was watching that J.D. Vance performance at the Trump rally. He kind of reminded me of you a little bit. The way he - Me in advance. Someone who attains levels of success they haven't earned. Someone who's out of shape. What?

2:38Someone who's a total fucking kiss ass who can be bought. Yeah, okay. I see it. I see it. Someone who delivers a bad joke and then laughs at their own joke. Laughs at himself. That's what happened. So I'm being serious now. I think one of the keys to having a good sense of humor, you one, either have to be funny. That's not easy. It's hard to be funny. I think actually humor. So let's go back to mating, which I always like to go back to. And you need help here. So listen carefully. The three things, this is true, that make a man attractive romantically to a woman are in reverse order three. kindness.

3:15It's important. Over the long term, people don't want to mate with assholes. The number one reason is your ability to signal resources. We talk a lot about this on the show, but the number two thing is intellect. And there's some nuance here, and that is the quickest way to express intellect is humor. If you can be funny, that was what I tried to develop because it wasn't going to be, I was six foot two, 140 pounds with bad acne, so it wasn't going to be based on my devilish good looks. But this is my imitation of a woman. I'm laughing. I'm laughing. I'm naked. Oh, no. But where I was going, I'm sorry.

3:46I'm sorry. Back to me. Where I was going is the easiest way to have a good sense of humor is it's hard to be funny. But what's not hard is to laugh at other people's jokes. If you laugh a lot, you're nice to be around. I always thought a great way to have a good sense of humor is just to laugh a lot at other people's jokes. I think you basically just described my job description. Yeah, just to laugh at my jokes. And compare me to fucking J.D. Vance. Yeah, that's way to go. And then laugh it off. Way to go. Laugh it off. That's what I do. Me and J.D. Let's get to the headlines. Now is the time to cry.

4:22I hope you have plenty of the well-resolved. 24 hours after entering the presidential race, Vice President Kamala Harris raised more than$81 million. That's a single-day record for fundraising in a presidential campaign, and it nearly doubles the funds she's inheriting from Biden. Netflix memberships rose more than 16 % in the second quarter from a year earlier. That's higher than expected and will be one of the last subscriber updates from the company before it stops reporting quarterly subscriber numbers next year. A faulty software update from cybersecurity firm CrowdStrike caused major technology disruptions on Microsoft-powered systems worldwide.

4:58The IT outage, which some are calling the largest in history, affected airlines, banks, and healthcare systems. And finally, just a week after the deal was announced, Google's$23 billion acquisition of Wiz has been called off. Wiz told employees it would now target an IPO after members of both boards thought regulators would likely block the deal. Scott, your thoughts? Well, so there's kind of one story in the seven doors this week, and that story is Vice President Kamala Harris. Basically, as far as I can tell, being coronated, She is going to be, it looks like, the nominee here. And I was thinking about it.

5:35The analogy I would use is in November, the sun goes behind a cloud in London. And from November to May, you're like, okay, I get it. It's a good city. It's got good food and interesting people and wonderful culture. Okay, it's fine. Okay, it's a little bit depressing. Oh, God. And by February, like, I just fucking hate it here. And this is an awful place. And how can anyone live here? And then sometime in May, the sun comes out on a brilliant day and the whole city comes alive. And you think to yourself, this is the most beautiful, interesting city in the world. You're just so desperate for some sunshine.

6:12And that kind of describes my mood since 2024. And that is, I haven't been a huge fan of Vice President Harris. But when the announcement was made, I was relieved. And in the last 48 hours, just the enthusiasm and the mania around her and the hopefulness and the way the Democratic Party's and potential competitors for the spot immediately kind of fell in line and rallied behind her. And the love she's getting from Gen Z, the love she's getting from social, the record take, the 24-hour take. It is literally for me as if the sun has come out on America and the Democratic Party. It has been, just in terms of how I feel about the world and America, it's been probably the best.

6:59And we're going to get a bunch of shit in the comments from the Trumpers. But it's been the nicest 36 hours for me personally that I've had in a while. And I think it's been great for the Democratic Party. What are your thoughts? I'm just going to rain all of your parade now. Go for it. I'm used to that. Wait, let's enjoy it for a moment.

7:23Okay, go ahead. Okay, thanks for that. Look, I agree the fundraising has been phenomenal, and there's just a new sense of energy in the party, 100%. But you used that word coronate, and I think there has been a question. Are they just going to anoint Kamala as the next candidate, or are they going to hold some sort of pseudo-electoral process? Are we going to have a competition? I'll just express my view on this. for the party that has been crying out about this threat to our democracy. Some would say to a sensational degree, the idea that democracy is at stake in this election, that the Republicans are running an anti-democratic candidate.

8:07For that party to then, when given the choice, decide to just coronate their next candidate internally, to me, that is going to look to the American people at the general election that will look at best hypocritical, at worst corrupt. I think that's a really powerful argument. I was a fan of the competition versus the coronation. Just the practical reality is the majority of the people to which she would have been competing against have backed her. They've bowed out. So a debate, it would be her and Manchin and Dean Phillips. It just wouldn't be very interesting. I mean, have at it. The other thing that I would offer up, lending credence to your argument around the benefits of a competition, is I think a competition, A, if she wins it and she'd be the odds-on favorite to win that competition, would bode really well for her.

9:00And she'd be more battle-tested. The other thing I think it would be good for is down-ballot Democrats, because I think a lot of people who go in and aren't sure whether, you know, haven't done the research around local races might think, you know, I'm really impressed with Democrats. I think they might be more inclined to vote blue. I think it would be an amazing commercial that would be run across 60 million people for four or five hours over two weeks for the Democratic Party. So I'm theoretically and from a brand strategy standpoint, totally on board with what you're saying. But the reality is all of the competition has rallied behind her.

9:38It's sort of done. And the other thing is, it reminded me of what you said, that Trump was immediately out with the kind of post verdict boast that they'd raised$53 million. And you pointed out, I thought really interestingly, that 50 million of it came from one person. In the last 36 hours, the Harris campaign has announced that they've raised over$100 million. And it's come from, I think, 1.1 million unique donors. The groundswell support is just really encouraging and shocking right now. Yeah, I saw another stat that 60 % of those donors are first-time donors. Having said that, I would like to see a more detailed analysis of how much of that money is coming.

10:23Because there have been some big-name billionaire donors as well. You know, Soros immediately got behind. We have our billionaires. We have Reid Hoffman. We have, I bet, you know who I bet's going to play a big role in this is Melinda French Gates. Oh, 100%. I think this is the season of the billionaire woman in the donor class. And I will say, I mean, it's ironic to say this. We're two white dudes on a podcast. That's redundant. That's what you call two white dudes, a podcast. But this election in particular, I mean, most conversations are dominated by men. One thing that I have found striking about this election, especially all the conversations going on about the RNC, this election conversation feels particularly bro-y in a way that I haven't really seen before.

11:14Oh, did you see that donor list? The big tech. It was like the worst gay club ever. It was like, oh, my God, I wouldn't want to fuck any of these guys. The nightmare blunt rotation. Yeah. Just for a quick palate cleanser. This is a true story. during the RNC convention in Milwaukee, Grindr crashed. Yeah, I do see that. I mean, you gotta love that, right? Let's take away their rights, but not before I meet some guy in the men's room. That's right. So good. Marriage should be between a man and a woman, but hot, steamy butt sex should be between two men at the Milwaukee Holiday Inn.

11:56Netflix. Netflix. Umbrella Academy. like this company the thing that i think is interesting here and that's sort of a sub story but i think it's interesting i said when they launched ads it was a bad idea i think it's totally contrary to the brand positioning of netflix and that is it's uninterrupted storytelling and i just don't think and their attitude was well why why wouldn't we offer people who are willing to endorse some ads a five dollar offering i don't think it's working i think there's evidence It's not working. And I think that the brand denigration of Netflix, my prediction is within a year or two years, Netflix is going to let their ad-supported model just flow away.

12:35They won't cancel it, but they're not going to put any money behind it. But I think deep buried within these great numbers was evidence that their ad-supported memberships are not. I mean, they say they rose 34 % from last year, but I think that's off a tiny base. It's just not, I would have thought it would doubled or tripled. Anyway, any thoughts from you, Ed? their share of the ad market is still minuscule. I think it's like less than 1 % of the TV ad market. And that, yeah, agreed. That 34 % number seems good until you realize it's barely any ad subscribers to begin with. Having said that, they added 8 million new subscribers.

13:13That's 65 % higher than what Wall Street was expecting. They expected 5 million. So just off of the subscriber base, Netflix is crushing it. They are winning the streaming wars. The question now is, have they won? And the stat I will leave you with is the following. Apple TV +, which has spent$20 billion on content since it launched,$20 billion. Apple TV +, currently receives fewer views in one month than Netflix receives in one day. As far as the streaming wars go, I believe they've won. I believe it's somewhat over. The next question now is, can they take on the streamer that no one is talking about, which is YouTube?

13:57Or TikTok. Or TikTok, yes. Both of those platforms, if you look at it numerically, YouTube is still, if you count it as a streaming service, and I would argue you should, the most popular platform in the U.S. today as measured by TV viewing time. Not tablets and phones and TVs put together, just TVs. People watch YouTube on TVs more than they watch Netflix. So as we've said before, YouTube is the elephant in the room here. I think it is interesting, this ad challenge that Netflix is facing, as you've mentioned. But I think the next big challenge for them is YouTube. We wrote a post, and my idea was that Netflix should partner with a cloud-based company to figure out the algorithm, and they should put a bid in for TikTok to divest it, or once it's forced to be divested, which I think it will be.

14:44and I wrote up this thing and Ted Sarandos, the co-CEO, called me and said, let's grab coffee. I've known Ted sort of loosely for a couple of years now. And I kind of explained my thesis and he just wasn't buying it. He's like, TikTok's this incredible free marketing tool for us and we have so many growth prospects internationally. Why would we take that kind of risk on a market in a format we don't understand? But my idea was that they could take their original, their base, their massive base, arguably the biggest library in the world right now of kind of current topical content and start slicing it in different ways and even crowdsource, you know, take season one, episode three of The Last of Us and have added creators and see what you can do on TikTok.

15:25And I thought it would just be, I thought, I thought the idea was genius. But he wasn't, he was like, he kind of said, no, that's not, I'm much smarter than you. And you haven't had lunch with him since. He hasn't called me back. He hasn't called me back. He's like, okay, I don't know who on my team. I don't know what 22-year-old suggested I meet with this Yahoo. Well, maybe you could solve CrowdStrike's problems. Thoughts on CrowdStrike? What this says to me is that this is not a robust industry. What do I mean by that? If McDonald's goes out of business, the fast food industry is fine. There's a bump in the road, but you can still find cheap, high-caloric food on your path to obesity.

16:01Too much? Anyways, Anyways, but so the fast food market or the restaurant market is a robust market. If Jamie Dimon called Janet Yellen or Chairman Powell and said, I have some rogue trader in Singapore and he got past compliance and somehow he lost$95 billion. And if you don't give me a hundred billion in liquidity tomorrow, that is bail us out, we have to declare bankruptcy. And the implicit threat would be global economy. I come down, boss. That's the definition of an industry that is not robust. And I wonder if technology, because of essentially acquisitions and a few companies performing so well that they have access to cheap capital and can invest at a rate that others, you end up with a small number of players creating sort of a fragile industry or an anti-robust industry.

16:49And for me, it's another reason why, A, they should either be broken up, or some people, they'll argue there's benefits to scale. Okay, if there's benefits to scale, but it creates this sort of systemic risk that the term for that is utility and it needs to be more thoughtfully and stringently regulated but for me this is just another example of how concentrated the tech industry is and the dangers it presents moving on to our final headline which is google google's acquisition of whiz for 23 billion dollars we talked about this last week it is now called off um in fact whiz was the one that is pulling out of the deal thoughts i think it's directly related to CrowdStrike.

17:30And that is, I mean, a couple of things have happened. One, as of today, it's no longer a fait accompli that it's going to be Trump as president. And I think, I thought this acquisition or them plotting this acquisition by Alphabet was essentially them betting that it was more likely than not that a business-friendly, non-antitrust administration would take control of the White House, specifically the Trump administration. And I think as of this morning, now it's kind of a toss-up, and I would argue it even maybe leans a little bit to the vice president's advantage. And I may be biased here, but I think more than anything, this concentration of power that results in a cybersecurity firm essentially taking down big parts of the economy, that is not the time to present to the FTC and the DOJ, an acquisition of a cybersecurity firm.

18:23So I think their lobbyists came back to him and said, you know, while we'd love for you to pay us a lot of money to try and get this through, let's be honest, we think this is fucked. We think that we go into Congress and try and get support and they say, well, I'm sorry, my flight was canceled. There's too much concentration of power here. We need to head the other way. So I have a story here. My firm, L2, was acquired by Gartner. We hired a banker and said, all right, go out. I sent some letters out to people saying, we've been approached. Are you interested in speaking now or forever holding your piece?

19:00And we had like seven firms sign an NDA, put together a data room. They came in. I think we ended up with four offers. And we ended up, we picked three. We picked Accenture, corporate executive board and Gartner and really liked the guys from Accenture. I thought they were super smart. And they said to me, we've got great news. We're going to, we're going to basically, we service 400 of the 500 biggest corporations in the world. We're going to position you as a central thought leader, and we're going to have you meet with all these CEOs around the world, and you're going to get to have such an impact and so much influence.

19:36And the idea of spending the next 10 years of my life on a plane, it sounded like a fucking nightmare to me. And so I just politely said, no, this isn't the right partnership. So we're down to two, right? Corporate executive board and Gartner. And I wake up on a Monday morning and I hear the news, Gartner acquires corporate executive board. So in a matter of a week, I've gone from three bidders to one. And then I call the guys at Gartner and I'm like, okay, you just made a$2 billion acquisition. Are you going to still want my shitty$160 million acquisition? Like, oh yeah, no problem. We're still on board, not to worry.

20:16Two days later, they call me and say, if it's okay, we'd rather, we'd like to wait and close in six months just so we can get this thing digested. And I'm like, in as polite a manner of possible, I said, go fuck yourself. You want a free option on my company, want me to stick around for six months, see how high I perform over the next two quarters, and then decide if you're going to close on the same price. I'm like, if you want to acquire us in six months, you have my number, call me and I'm going to ask for more money because we're doing really well and the firm will be more valuable in six months.

20:47But I need you to send me a letter saying that we are no longer in this due diligence period. And I basically said I'm walking. And anyways, the CEO called me the next day and said it will close in the next 30 days. And I think other than all my stories, which make me look good. It isn't true. I'm pretty good at open about my failures. But the learning here is the following. In any negotiation, you have to show a willingness to walk away. You don't make it personal. You don't make it win-lose. And obviously, it was much more delicate with my words. But I basically said, no, that doesn't work. We're exiting these discussions.

21:20Anyways, and we ended up closing. And I ended up leaving 14 months later because I wanted to put a gun in my mouth every time I thought about going into work. But anyways, too much, Ed? Too much? not a not a great cultural fit not a great cultural fit uh by the way great firm and i think their stock has outperformed every other stock in the i think their stock has literally been the nvidia of of services anyways i don't know where we are where am i ed bring me back to the story what am i talking about what am i talking oh we're talking about m &a yeah we're talking about google and whiz willingness to walk away um yeah i mean i it sounds like that's a kind of what happened here with these with the founders of wiz is that they looked at the regulatory environment they actually looked at what was possible and they were like yeah we don't want for this to get shut down or we don't want to go through even if it does go through we don't want to go through the process uh which is going to be long and grueling and just for lack of a better word shitty um i will shout us out last week i warned wiz employees that they should not get their hopes up.

22:28This is why you recommended that Wiz employees sell secondary shares so they can take some money off the table. I would love to know if any Wiz employees were listening and actually went ahead and did that. If you did, let us know. And you owe us dinner, bitches. Yeah, exactly. Take us out. Take Daddy and little Ed out for a little, like a little beef and a little strip club, as I like to call it a Tuesday night. We'll be right back after the break with our conversation with Robert Armstrong.

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25:23Welcome back. Here's our conversation with Robert Armstrong, U.S. Financial Commentator for the Financial Times. Robert, thank you so much for coming on. Pleasure. So I just want to start this interview by letting you know that we have been trying really hard to not talk about politics. recently. Me too. But sometimes the universe insists. So that's exactly where I'm headed here. It feels unavoidable at this point. Yes. It is having an effect on the markets and it's dominating the news. So we're just going to dive in and we'll try to be as apolitical as we can. But let's start with this. Biden has dropped out of the race.