Why Trump’s War Week Didn’t Break Markets

22:21Scott Galloway:I don't think this is different. I think it'll end the same way. I think he's going to have to back down. I think he keeps thinking, wait, I'm a strong man. I'm an autocrat. And then I think America would rather have their neighbors and friends terrorized by mass police than inflation. I think they're comfortable, or I should say, uncomfortable, but so far tolerant. And I want to praise and commend the people who have gone out to protest in Minneapolis and have voiced concerns over a secret mass police terrorizing Americans. but I think Americans will tolerate that, but they won't tolerate inflation.

23:04Scott Galloway:And just to give you a sense of what happens when a strong man enters office and immediately installs a loyalist, in 2023, Erdogan from Turkey installed a loyalist to the central bank, a central bank governor. Within a year, inflation or the consumer price index went from about 18 or 17 % to 86%. When that happens, you have panic. And also, low, middle, and upper middle-income homes don't really own assets. What they have is cash in their earnings. And basically, overnight, they can't buy meat. They can only buy chicken. And those that could only afford chicken can only afford rice. And all of a sudden they can't make tuition payments, car payments, they can't buy food and anything they had in the bank account becomes worthless.

23:56Scott Galloway:And wages never keep pace with inflation. So overnight they go from being having a lifestyle of X to having a lifestyle of 0.4X and it becomes untenable, especially in it. You know, inflation typically leads to countries don't go out of business because they get invaded. They go out of business because they go broke. And one way to go broke fast, theoretically, is inflation. And it also creates wild income inequality because the people who survive inflation are the people who own assets. So the people who own land in Argentina are still very wealthy because they own land. But everybody else who has to live off of current income and cash, a cash-based society, gets crushed.

24:38Scott Galloway:So I think your statistics in the Reddit army is right. And by the way, my sense is he's kind of dialed down the rhetoric because he realizes he can't legally remove the guy and it's a bit of a losing game. I totally agree. It's like inflation is the most important thing. And you look at the polling. That's what matters most to Americans, usually in general. That's what matters most to Americans. But especially right now, given what we saw with inflation coming out of covid, which was which was a real problem. What will be interesting is how is it going to be messaged? Because Trump is out there saying, I'm the guy bringing down inflation.

25:18And he's also saying that Jerome Powell is the guy who is increasing inflation. And this often happens with these populist strongmen who basically just lie to the public about the relationship between interest rates and inflation. And they make it sound like lowering interest rates would reduce inflation, which obviously isn't true. Meanwhile, I mean, we have the issue that we discussed during the week with Mark Zandi, which is we got the slightly moderated inflation print last week of 2.7 percent, but the data is flawed because of the government shutdown, which caused these issues in the way that we survey and find prices on goods.

26:03And he's done his own analysis and he's got the real number and I'm going with his number because he's adjusted for what we didn't see in October and it's 3%. So it's still really, really bad. We went from 2.3 % again before Liberation Day, then we have the tariffs and now we're up to 3%. So I think it'll be interesting. Like I agree, Americans care a lot about inflation, but do they understand the relationship between monetary policy and interest rate policy and prices? And will they be psyoped by this administration into believing that the way to bring down prices is to just blindly follow and believe in whatever dear leader commands?

26:47That's what he's trying to go for right now. And I guess that's why I was almost so heartened to see the collective support for Jerome Powell, because I just feel like people like Jerome Powell usually lose in the cultural conversation. Like usually if you're kind of measured in 2020, in the 2020 specifically, I'd say if you're measured quiet and you predict the data, you stick the numbers, oftentimes I find you lose to Trump trolling you, shouting at you, blaming you, calling you names. Like what we've seen is that Trump generally wins. So I think it'll be interesting to see like What will the American public go with?

27:28Who will they believe? And that is something that I think Trump is definitely very aware of and probably pretty worried about following the reaction that we saw in this argument.

27:40Scott Galloway:What's different here, though, is that 50 percent of America is lined up to hate the person almost always because they're seen as politically partisan. Powell was appointed by or reappointed by Trump. Yeah, it doesn't help. He doesn't feel Democratic or Republican. And he's not a popular public. It's not like if he goes after a Democrat, well, you know, 47 % of America is ready to go along and hate that person and start calling their congressman. And I don't think that's the same with Chairman Powell. I also think there's probably a pretty significant number of Republicans who are calling Suzy Wiles and go, yeah, no, we want to leave.

28:19Scott Galloway:This doesn't make any sense. He's a totally different beast, and it's really remarkable. He's almost impenetrable because, I mean, you saw that interaction where Trump asked someone during an interview who appointed him, and they're like, you did. So it makes him sort of the perfect vessel to expose the lie of this presidency. And then when he's attacked by this presidency, and moreover, attacked by Jeanine Pierro, the former Fox News host who Trump hired to the position this year, like it kind of perfectly illustrates the corruption and the grift that's happening. and he is such a great avatar to be the one to get to come under fire because you really, you can't call him corrupt.

29:10You cannot call him a liar. Like it's completely ridiculous. We'll be right back after the break. And if you're enjoying the show so far, send it to a friend and please follow us if you haven't already.

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32:16We're back with Profity Markets. 2026 is off to a strong start for metals, with gold, silver, and copper all reaching new record highs. Copper is up 36 % from a year ago. Gold has gained 72%. Silver has risen 187%. A big driver of the rally is geopolitical instability. Protests in Iran have continued with reports of significant casualties. Just a few weeks ago, Trump ordered the capture of Venezuela's President Nicolas maduro at the same time tensions remain high with denmark over trump's push to acquire greenland so scott let's just quickly run through these insane rallies we've seen on all these different metals i mentioned copper i mentioned gold tin is also up 80 percent on the year lithium is up 112 percent on the year platinum is up 147 on the year uh i mean the obvious question is why i think we should just note that there are some there are various reasons one of them would be supply shortages which we're seeing in all these mining companies another would be just industrial demand because a lot of these metals are used for things like data centers and power grids and electric vehicles and all that.

33:35But it does seem that the main driver right now is instability at the geopolitical stage, because every time a conflict breaks out, the price of these metals goes up. Iran, Venezuela, Greenland, Iran again. Every time it happens, they go up. So metals seem to win when things get dangerous, which I think poses an interesting question for us. If 2026 is going to be the year of geopolitical instability, hostility, military conflict. It seems like it will be. Well, then how do you invest? And do you just invest in metals? And what else do you invest in?

34:18Scott Galloway:Yeah, it's the peanut butter and chocolate of what you said, geopolitical instability. These are now kind of risk-off assets. It used to be treasuries, but now people, I think, worry that the full faith and credit of those supposedly secure assets is now creating a lot of the risk. so people turn to metals. And then the chaser effect is that they have industrial use cases in categories that are growing. Silver is essentially used for anything with an on-off switch, circuit boards, EVs, batteries, you know, a lot more of those. It's also used in solar panels. Silver coating is used in medical devices, more and more old people.

34:54Scott Galloway:Copper is used in EVs, power grids, wind turbines. It's also super important for AI production and it's used in data centers, cooling systems. So you not only have an asset that's seen as a hedge, you have an asset that has enormous wins in its sales because of the fastest growing categories in business require the industrial use case or require these metals. So Ray Dalio was right. Ray's been saying for a long time, and I thought, you know, the guy who started the largest hedge fund in the world is talking about gold. And I thought that seems kind of boring, but he's been talking about this for a few years now, that gold was a really good hedge.

35:31Scott Galloway:Also, this is a moment. I don't want to do what a lot of people on podcasts do and they talk about their wins. I wanted some diversification or a risk-off asset or risk-on, I don't know how to describe it. So I made my first Bitcoin investment about four or five months ago. I invested in one of these Bitcoin treasury companies. It's called Sequence or something, SQNS. A friend of mine was involved in it. And I bought shares at 14 bucks in the IPO. I sold it at the end of December to take the tax loss at$4.50. So, Ed, it is not easy to lose 75 % of your money in about 90 days, but I figured it out.

36:11Scott Galloway:And of course, the day I sold, it popped back. It's now up about$5.50. I literally, I have arguably one of the greatest traders and minds in the world if the object was to lose a lot of money in a short amount of time. But I think it's important that you highlight your losses. So let's be clear, folks. I am so disappointed in you for buying shares in a Bitcoin treasury company. I need some exposure to Bitcoin. We've talked about these treasury companies. They're total, total bullshit. Yeah, but you also told me to stop drinking grain alcohol.

36:47It is fascinating, though, what has happened with Bitcoin over the past basically year. Because, you know, as you say, like, this was the year of risk assets. You're seeing all of these wars and political conflicts breaking out all over the world. Jamie Dimon's saying that we're like at the most unstable time since World War II. All of the metals are rallying. And yet, Bitcoin is down on the year. It's down about 1 % compared to this time last year, which is just fascinating. And I feel like this keeps on happening to Bitcoin, where the doomsday case is being tested. And that is, Bitcoin is supposed to be a hedge against just apocalypse, like in any form.

37:31It's the same, supposed to be the digital gold. That's kind of what gold is. Bitcoin is supposed to be the same thing. And then every time when it's Bitcoin's time to perform and prove that it is indeed the digital gold, I feel like it continues to flop. It happened when Russia first invaded Ukraine. Everyone was waiting for Bitcoin to rally. Didn't happen. And the same has happened here while all of the the precious metals that people go into when they're very scared about what's going to happen in the world when all of those metals rise bitcoin's just been kind of eh um which is certainly a concern for i would say bitcoin maximalists um maybe it was riding on some some momentum because of what we saw with trump when he promised to save the bitcoin industry what do you know it's down one percent um but it is striking what has happened with bitcoin you would have thought that it would have performed.

38:23Scott Galloway:Yeah, there's the notion that Bitcoin is a hedge and serves the same purpose as gold. It just hasn't panned out. It tends to, you know, it tends to follow its own, I don't know, its own supply and demand. I don't really have any insight here. I clearly, if I ever start talking about which way Bitcoin is going to go, take out a gun and shoot me in the face because I clearly don't understand the dynamics of the crypto market. Well, next time you want to invest in a Bitcoin treasury company, just call me, call me. Call that, Elson. I'll tell you not to do it. So one thing to think about here as well, we've got all of these crazy military events happening around the world, which I probably want to get your views on too.

39:11But, you know, this is a market show, this is an investing show. So when we think about how to invest, how to think about it, generally what happens when conflicts breakout is stocks go down and gold goes up, or some equivalent to gold like platinum, for example. And we can see this in the numbers on average when conflicts have emerged over the past 20 years. The four-week return on stocks has been negative 2%. The four-week return on gold has been positive 3%. Gold has gone up 3%. In some cases, it's even been worse. We looked at the start of World War one, for example, where stocks fell 30 % and the markets closed for four months.

39:55So generally what happens in an environment such as the one we're in right now, when things get kind of ugly, when people start shooting at each other, stocks go down, gold goes up. And that appears to be the consensus among everyone. And it appears to be what we are seeing, at least in the past week or so. The more important question is, okay, that's looking at the four-week return. That's looking at the short term. What happens over the longer term? And the longer term is actually a very different story, and that is stocks actually perform quite well during conflicts and after conflicts. You look at World War I, for example, again, when the markets reopened after that four month closure, the Dow actually rose more than 88%.

40:41And this was a JP Morgan analysis. They looked at all of these geopolitical conflicts throughout history. They found that over the course of 12 months, the S &P's returns are on average the same as they are during peacetime. So I think what we're about to see this year is this obsession with the metals. We're obsessing over it right now because these numbers are very striking. I think we have a tendency during conflict, during wartime, to think, okay, sell your stocks, buy the gold. I think one thing that we should highlight is like, long term, you probably don't want to give into that tendency.

41:15Long term, stocks still perform great, regardless of what's happening and who's fighting with whom. And I think that's going to be something for investors to kind of wrestle with. Because, you know, I don't know what's going to happen next. I mean, Trump said Iran, you know, they've stopped killing people, so we're not going to invade. But I mean, who the fuck knows? And as soon as people get the guns out, it seems like all bets are off. I could see gold ripping even higher. And then the question is like, do you have the balls to hold on to your stocks or are you going to sell and buy the gold and put it under your mattress?

41:52Scott Galloway:What I found more interesting is we essentially go through, I don't say invade, but inspire a regime change in Venezuela and oil barely moved. I'm actually very bullish on what the Trump administration did in Venezuela. I think having a satellite and Navy bases for China and Russia in our hemisphere is a really bad idea. Russia is distracted. China is geographically too far to do anything about it. So similar to a Bond film where the opening, they always nail the openings in Bond films. It's just sometimes it goes on to be a great film. Sometimes it goes on to be a shitty film. And so far, this has been executed with such incredible strategy and strength.

42:35Scott Galloway:The Rangers, the Air Force, intelligence assets on the ground, the Navy pulled off in 35 minutes what Putin has been unable to pull off in 35 months. every adversary in the world is remembering what secretary albright one of my heroes said 20 odd years ago our memory is long and our reach is far our reach is not only far it can fucking strangle you i mean that from a brand standpoint i think that was one of the biggest flexes in recent geopolitical history the problem is i worry this bond film is about to be quantum of Solace, and that was a really shitty film. Because rather than capitalizing on this incredible military victory from the best performing organization in history, see above the U.S.

43:23Scott Galloway:military, the playbook here is very simple. The greatest innovation in geopolitical history was the Marshall Plan. The Imperial Navy of Japan was murdering our sailors stranded in the sea, Batonk Death March, you know, just torturous. We had a lot of reason to be angry at these people. And what did we do, Ed? What did we do? What did American taxpayers decide to do with Japan and Germany post-World War II? We rebuilt their fucking nations. And we leveraged our great institutions and we let them immigrate. And we said, I know as punishment, we're going to rebuild incredible societies and democracies.

44:00Scott Galloway:Why? Because you are an incredible society. and it's clear that no matter what we do, you're going to be a force in the world because you've built such incredible society. So here's an idea. Let's, when you're at your weakest, really help you. And who are our strongest allies in the world? One, I would say Canada and Britain, maybe Australia, but a close third, fourth and fifth, third and fourth would be Germany and Japan. They shouldn't be thinking about stealing their oil. They should be thinking, how do we motivate American investors to put a Four Seasons and Urban Outfitters in Chipotle down there.

44:33You don't think that's exactly what they're doing? I feel like that is actually what they're, I mean, they're taking the oil, but he's also saying, okay, let's get all the oil execs around a table and let's figure out how to drill baby drill and just make it a corporate American paradise in Venezuela.

44:47Scott Galloway:Oh, young, young Jedi trainee. You think, therefore you're wrong. Look, you don't want to control oil. You want to control the flow of oil. to invade a nation for oil is so 19th century because the oil coming out of the ground in Venezuela is heavy crude. It costs somewhere between 65 and 70 bucks to pull a barrel of oil out of the ground in Venezuela where they can sell it on the open market for$62. Why do they continue to do it? Because they still have to pay fixed costs. So it makes sense to keep pumping. It makes absolutely no sense to want to own that oil. What's more powerful now, The world isn't being shaped by the ownership of oil.

45:27Scott Galloway:It's being shaped by the control of the flow of oil. And that is whoever controls the flow of this asset. It's like the rationale for invading Venezuela for oil would like me saying, I'm going to invade Costa Rica for sand. No, you know, it doesn't make any sense. What you want to do is potentially control the flow. And there are shadow fleets of tankers going to Russia, Iran, and China. 90 % of Venezuela's oil exports were going to China. And if you can control the flow of oil into China, you get balance, counterbalance against their dominance in rare earths. Because without oil, without energy, if you could cut off China's supply of energy, which is possible militarily for six weeks, they're out of business.

46:12Scott Galloway:Whereas in the U.S., we're energy independent. We can keep producing tanks in planes. So controlling the flow of oil and where it goes to is fine. But taking a nation that is so economically indentured that over the last 20 years, there's been 8 million refugees flowing out of that country, putting huge pressure on their neighbors, and then further economically indenturing them is just fucking stupid. That's going to lead nowhere good. It's also going to create resentment within the general public. We have an opportunity. Venezuela, people say, oh, you're talking about nation building, Scott, like in Iraq or Afghanistan.

46:44Scott Galloway:There's a big difference here. Those nations were a series of tribes encapsulated in a geography with lines drawn erroneously by the British 100 years ago. Venezuela is a great culture, a nation of mostly homogenous people and values. And it's been a democracy for much of the last 100 years. For us to go in and say, we want to help you. We're going to invest. The oil is yours. Now, if you decide to figure out a way to ship it expeditiously to the U.S. for our incredible refining capacity, we'd really appreciate that, right? But we need to build a great nation and have it be an example, a bright, shiny beacon of democracy and capitalism in Latin America.

47:28Scott Galloway:Not us showing and basically putting a gun to their head and say, give us your fucking oil. So this is a Bond film. It started really well, and it's already coming off the tracks. I think the administration would argue that what they're doing is exactly what you just described. They're not, I mean, who knows what the true intentions are, but from what I'm seeing, they're more interested in the flow of oil versus the oil itself. And they've talked about the fact that it's going to cost, you know, tens to hundreds of billions of dollars to build the infrastructure to make the oil actually usable.

48:01So I feel like the danger of all of this, if there's something, I guess, from my view, that they're getting wrong, it's sort of the long-term consequences not of going after oil, but of deciding to pursue the Don Road doctrine of we own the entire Western Hemisphere. and at the same time, in the same week, threatening military intervention into Greenland, which is owned by an ally in Denmark. So to me, it's sort of like that he's communicating to the world. He figured out, we were talking about this the other day, we were comparing the use of military force to tariffs. Someone showed Trump that there's this thing called tariffs that you can do, and you can slap a tariff on, and you can do it.

48:49It's executive power, and it's a way to kind of screw anyone else. So if anyone fucks with you, put a tariff on them. He figured out this shiny new weapon, and he just decided to spam it as much as possible because he had so much fun using it. It almost seems as though with Venezuela, he's learned in the past week or two weeks that the next best, shiniest weapon you can use is actual weapons. It's guns, it's grenades, it's missiles, it's attack helicopters. and he's decided, oh my God, this one's even more fun. I can actually just drop a flashbang into Venezuela, get SEAL Team 6 in, kidnap Maduro, and I'll be the man, which he kind of has appeared to be in the past week.

49:35And then it seems like he wants to do it again with Greenland. And I think that the concern is that he's going to keep on doing this because he loves how powerful he feels when he does this. And the trouble is going to come in the long term when we overplay our hand, thinking that we can just solve anything, solve any conflict by just pointing a gun at someone. And then eventually these relationships that we have with our allies, with Europe, with Denmark, etc., become extremely frayed, become non-existent, at which point everyone hates America. and then that's sort of the downfall of America.

50:14I feel like he's very, we were talking about this as well, Chris O'Donoghue made the point, like he's extremely short-termist. He has almost no conception of the long-term consequences, whether it's invading Greenland or even forcing the Fed to lower interest rates. There's no real understanding of what's going to happen after the next election cycle. It seems to be not even on his radar.

50:36Scott Galloway:Look, they're all very different here for different reasons. So the analogy, I'll stick with the movie business, the analogy of Venezuela being a Bond film. If we look at the other two, let's talk about Iran and let's talk about Denmark, potential military action against Iran and Denmark's, I'm going to call it. Territory. Protectorate territory, yeah, Greenland. One is the sequel to Star Wars. And that is, I think the ROI to Greenlight, The Empire Strikes Back from 20th Century Fox in 1978 was like, we're really confident this movie will do really well. by the way probably the best sequel in the history maybe the exception of aliens the sequel to aliens starring sigourney weaver but aliens was outstanding first james cameron of the franchise but we know one is an amazing idea one is a one is heaven's gate or just the bit i don't know what the biggest cinematic flop in history is but i'll start with the flop and that is invading or forcing Denmark to sell Greenland is like me showing up to Chipotle today with an AR-15 and demanding they give me a burrito bowl with pork, extra guacamole, and charge me$14.85.

51:47Scott Galloway:And someone might point out, well, boss, we'll do all of that for you without the gun. And rare earth minerals. There are huge strategic reasons to have an alliance with Greenland and Denmark. They have rare earths. They have supposedly somewhere between 12 and 17 percent. That's huge. They are in geographically one of the most strategic positions in the world regarding our ability to attract Russian naval vessels and submarines. It's hugely strategic, has huge economic potential. Everything we want to leverage those things, Denmark has already provided. Come on in, get your burrito bowl. We like you guys.

52:31Scott Galloway:But for some reason, we've decided we don't want an alliance. We want compliance through force. It's like something I learned early. When you're trying to get something from someone, you know, people talk about a carrot and a stick. If you're ever going to use a stick, make sure it's almost veiled and they just figure it out on their own. I find the moment you threaten people, especially successful people, because successful people tend to have big egos, all business goes out the window. They're like, fuck you, I'm taking the other side because I don't back down to threats. And we're actually contemplating threatening and going to war with other members of an alliance we're in, which has been the strongest alliance in the world, which has created more prosperity in the last 80 years than we've had in the last 800.

53:20Scott Galloway:This is arguably the lowest IQ moment of the Trump administration. We get everything we want without owning it, without paying for it. So this makes no sense. Now, the highest ROI military action, the sequel, The Empire Strikes Back, by the way, that snow battle, I think that's one of the greatest battle scenes in the history, cinematic history. Have you seen The Snow Battle? I'm always underwhelmed by the old Star Wars movies. You're going to hate me for saying that. I always find the special effects. I mean, I understand they were awesome in that day, but I'm just sort of like, I actually think that the, you know, one, two, and three better fights.

53:59You're going to hate me for saying all this.

54:00Scott Galloway:Well, in new news, the new co-host of Property Markets is Kyla Scanlon. Ed, that is literally sacrilege. That is, you are now an apostate from the religion of the dog. I'm a contrarian. Oh, my God. Okay, take your—you're 1976. You're in seventh grade. You get your first date with Paula Brubaker. And you—I'm sorry, Paula—not Paula Brubaker. Paula Kumnock was her name of all things. And you take her to that film, and you watch Star Wars for the first time. Can you imagine what that was like? Fair enough. At the time— And THX has just come out. It was like the audience is in a galaxy far, far away, a long line.

54:42Oh, God, that shit is genius.

54:44Scott Galloway:Absolutely. Anyways, and then George Lucas, that incredible filmmaker, followed up with Howard the Duck. Anyways, but the best ROI for our military right now would be to use intelligence and also our air force over the skies which we now own to suppress civilians or to bomb and strike civilian suppression centers in Tehran and Iran. The unlock of 95 million people and the unlock and the victory for women's rights and women who have been enormously oppressed in this regime, the ability to bring stability to the Middle East and turn Iran into a great ally is the highest ROI used to the government and the military right now.

55:33Scott Galloway:because everyone, unfortunately, is under the cold comfort that it's over. No, we've been here before. There was a green revolution or whatever it was, I think in 2019. The government comes in and is brutal and it goes back and it starts to, it goes from a boil to a simmer and we're back with the Islamic Republic, which has been the largest sponsor and coordinator and catalyst of terror across the Middle East for the last 50 years. This is such an enormous opportunity for women's rights, for geopolitical stability. I think this is a fantastic use of military power. So let's review. We have our Bond film.

56:08Scott Galloway:Started great. Don't know how it's going to go. We have the biggest flop in history. And at some point, someone has to get some sanity and say, let's shut down production and even discussion of this idea. And that is invading a NATO member. And then there is The Empire Strikes Back or The Greatest ROI in History or Raiders of the Lost Ark or Indiana Jones, whatever the most successful sequel was in history. It's probably something fucking awful like Smurfs 2 or something. This would be, in my opinion, one of the greatest ROIs for the U.S. military would be to stand behind and finish the job for the incredible, brave Iranian people.

56:48Scott Galloway:Also, Ed, don't call yourself a feminist unless you agree with me and think we should absolutely be supporting Iran. Ooh, that was hard. I'm just amazed that we compared the Iranian regime to Smurfs 2. There you go. There you go. That's my tea. We'll be right back. And for even more markets content, sign up for our newsletter at profgmarkets.com slash subscribe.

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1:00:54We're back with Prof G Markets. Two major developments drove the AI conversation last week. First, Apple announced it will use Google's Gemini model to power an upgraded version of Siri. The partnership sent Google shares higher and pushed the company to a$4 trillion market cap. That makes it just the fourth company in history to reach that milestone. Meanwhile, we saw Anthropic with another big move. The company rolled out Claude Cowork, a new consumer-focused version of its coding agent. The launch generated massive buzz, including 17 articles and an intro video that drew 46 million views on X.

1:01:35So, Google and Anthropic dominating the headlines in AI this week. But there is obviously one major player that has not been in the headlines, and that is OpenAI. We have not seen much major news coming out of OpenAI. So, Scott, I think the first thing I'd want to start with is probably this Google and Apple partnership. I mean, what Apple has told us is that they're going to use the Gemini model for Apple intelligence. We don't actually know what that means or how it will actually work. We should also acknowledge that Apple does already have a partnership with OpenAI. So it's kind of unclear how that changes the agreement.

1:02:17But the market told us that Google's a winner here. the stock rose 3%. And by the way, Google's up 70 % in the past 12 months. I still believe that was kind of our greatest call that we've ever done on this show. There are some rumors that we don't really know about. We don't know if it's true. One is that Apple is going to pay Google$1 billion per year to use Gemini, which seems significant. Another is that Apple is paying OpenAI nothing to use chat gbt so i think that's our first clue here i mean what do we know apple's now using both google google's gemini and chat gbt but it appears that google's the only one who's actually getting paid for it which tells you something about open ai's ability to make deals and as i've said before i mean the guy who they've got running these deals they're not even getting legal counsel on their deals they've got their head of product figuring out the paperwork on these things and then what do you know?

1:03:16Apparently, again, unconfirmed, but apparently they're not even getting paid to be the model for Apple. Then you've got Claude Cowork, which was a big deal basically because it looks incredibly useful. It does everything you want AI to do. It organizes your calendar, it tracks your meetings, it creates transcripts, it automates them, then it creates action items from the meetings. It communicates between your email and your calendar. The reason this product launch went viral is because everyone's like, holy shit, this thing looks like it's going to be incredibly useful, which again is a problem because ChatGPT hasn't released anything like this yet.

1:03:57And so it is striking. One of the things that we said at the beginning of the year is that Anthropic, if you had to bet on an AI winner, it's probably not going to be OpenAI, it's probably going to be Anthropic if you had to bet on one of the two. It appears that -

1:04:12Scott Galloway:Wait, hold on. You mean it's going to be Gemini, not OpenAI? Well, I'm looking at the startups. I would actually say that I think Google, I mean, what I would say is we called Google. I think Gemini is going to continue to grow. But if I'm looking at the startup race, the AI startup race, and I feel like it's Anthropic versus OpenAI, those are the two private companies that are really making the headlines. OpenAI was the whale for years, and we talked about that. I do think that Anthropic is going to dethrone OpenAI in 2026. And it appears we're beginning to see that. There's a third and a fourth.

1:04:48Scott Galloway:And that is, and it makes sense, no company can hold 80 % market share in a market that's lucrative. But, and then Anthropic and Claude, which we use, or Claude, excuse me, we have someone who works for us on Claude. Claude is their LM. I actually like a little bit more. I use both all the time. Actually, I like them both. I can't figure out. I go back and forth. Anyway, and they're just incredible technologies, incredible companies. The third and the fourth are Gemini. When you have a fire hose of a billion people who use your search every day, and I don't know if you've seen, but the AI summaries at the top are getting better and better, and they can integrate it into their products, and they have just so much IQ over there.

1:05:33Scott Galloway:You just do not want to count Gemini out. And then the fourth that will be the most disruptive will be name your Chinese open way to LLM. And we've said that we believe that China's going to engage in AI dumping, and you already have companies ranging from A16 Ventures portfolio companies to Airbnb using Chinese LLMs because they're a fraction of the cost. And also, if you look at these things, they're reaching technical parity. Now, what I got wrong was last year, I thought Apple deciding not to enter the search wars, capital wars, and just saying, look, if you want access to the billion most important people in the world, iOS users, you got to pay us five, 10,$20 billion a year, and we'll put Google in front of everybody.

1:06:13Scott Galloway:I thought they were going to be able to negotiate the same thing. I thought Tim Cook staying out of the AI wars was actually a good move and that he would just leverage access to his billion. You know, the billion consumers that have iOS are probably responsible for 50 % of the world's GDP because I think 80 % of e-commerce in the U.S. is from Apple, which doesn't have anywhere near that market share, right? And when you're using an Android phone, you're kind of saying to the world, you know, things just really haven't worked out for me the way I'd hoped. If you have real money or real influence, you have an iPhone.

1:06:46Scott Galloway:They command incredible licensing fees for that access to that. What's interesting, as far as I understand about the Gemini deal, is that Apple, it's either flat or Apple may be paying them a billion dollars. for this. So it's kind of flat. That's nothing for them. And there might even be, I'd love to see the details of the agreement. There might be a royalty agreement. I thought Apple was going to be able to get billions and billions to shove, you know, name your LLM in front of the most valuable consumers in the world. That does not look like it's happening, which really strikes me. I need to rethink the power dynamics in this.

1:07:16But they did, again, rumors, it appears that they were able to do that with the OpenAI and ChatGPT. They're not paying a dollar to use ChatGPT. So, again, says something about the power dynamics there and the fact that they have ChatGPT for free, and yet they've decided in the past week, actually, we would prefer to pay Google a billion dollars to use their AI model.

1:07:40Scott Galloway:So I think whoever runs strategy at Apple is probably very smart and is doing game theory and has thought, at some point, we are going to be able to charge for access. So how do we get that number to be as big as possible? The way we get that number to be as big as possible is to ensure that this is a robust market with more than one player, more than two, ideally three or four, who all show up and bid and make irrational bids for access to be the exclusive or the preferred provider of AI to our billion consumers. So I think what they've decided is we'd be better off continuing to put wind in the sails of Gemini, which has, I don't know, 8%, 12 % share, than further create dominance across open ai now i also think this is just pure pure speculation but what we forget is that these people are human and they have egos and these people are men all of them are men and they all really big fucking egos and by the way some of that's good a dude with a big ego will sacrifice his health his relationships sometimes his reputation to just drive a company and create a ton of value and shareholder value and tax revenue.

1:08:51Scott Galloway:There's something, there's very, I say ego in both positive and negative ways. I think Tim Cook is pissed off that Johnny Ive and Sam Altman are talking about their plan to produce products. And that his old head of AI that was kind of in the Steve Jobs era is putting out these bro-y films about the future of AI and how they're clearly, they are clearly planning to put out some sort of product. They want to put out the equivalent of the AI phone, right? That's why Johnny Ive is there. That was the most ridiculous acquisition in history. We're coming up upon a year now. I think Johnny Ive is a genius.

1:09:26Scott Galloway:They paid, I think, $6 billion for his cute little company. I think they overpaid by about$5.999 billion. That's going to be a write-off. At some point, someone on an accounting committee on the board is going to go, you know, I need to write this thing down. So I think it's one, ego, and two, they want a really robust ecosystem of AI players such that they can command the greatest licensing fee, which at one point I think they'll be able to extract. Just looking at where we are in the AI race right now, ChadGBT is still winning. So we can look at the monthly visits on all the different AI platforms.

1:10:00So for Claude, 183 million per month. Perplexity, 196 million. Gemini, 1.4 billion. It is amazing how Gemini has grown. ChatGBT is the winner by far, though, at 5.8 billion monthly visits. I think something we should also recognize is the brand recognition of ChatGBT, which is still far and away the winner. If we look at the amount of mentions it got on TV last year, it had 4 ,000 mentions. Gemini got less than half of that. Claude got a fraction of that. 80 % of adults have heard of ChatGBT. And this is something that Claire brought up, which you brought up in the past too, is ChatGPT is the only one that is a verb at this point.

1:10:41I mean, you talk about this in relation to Google, just Google it, or Uber, you should just Uber there. You ChatGPT things, you don't Gemini things, you don't Claude things, and I think that is probably pretty relevant in terms of the brand recognition of ChatGPT. We shouldn't underestimate it. On the flip side, it does appear that the tides are beginning to turn. If you look at traffic last month, in the month of December, traffic to ChatGPT went down. Traffic to Gemini went up. And then the other thing that I find really interesting is if you look at who is using ChatGPT, a lot of kids are using ChatGPT more so than the other platforms.

1:11:20And what's also incredibly fascinating, during the summer, search interest for ChatGPT got cut in half. And people are suggesting that maybe the reason this is happening is because kids are using it to do their homework. And so suddenly the summer comes and they're not using it to do their homework or to cheat on their homework anymore or to write their essays. And I'm sort of, I can't tell if that's a bullish or a bearish signal. I mean, it's not great if your use case is just kids cheating to do their homework. At the same time, it's kind of good to get some stickiness and some usage from the next generation of consumers.

1:11:57What is very clear to me, and I think this has been a huge mistake, I thought that they were going to get on this about two years ago. I predicted, I think it was beginning of 2024, that ChatGPT would pivot into enterprise. They'd focus less on the consumer. That's not what they've done at all. And I think it's been a real problem because Anthropic has completely leapfrogged them in terms of enterprise usage. 80 % of Anthropic's revenue comes from enterprise customers. For ChatGPT, it's 30%. And, you know, you think, okay, well, what's the big deal? That's fine. I think the more telling statistic is that OpenAI has 32 times more users than Anthropic.

1:12:37They've got a huge consumer base, but they generate only two times more revenue. The reality is enterprises, businesses just pay more money. It's just a better business and it's got stronger modes. So that's another reason why I'm just generally more bullish on Anthropic. They seem to have leaned heavy into the enterprise play. Meanwhile, yes, everyone's using chat GPT, but only 5 % of the users pay for it. And then, I mean, what's going to happen when they really ramp up the monetization? What is the price that consumers are actually going to be willing to pay? I'm not so sure.

1:13:12Scott Galloway:Yeah, to your point. So Greg Shove, who's the CEO of Section AI, which upskills corporations for adoption of AI, he has said, I was on the phone with him a couple weeks ago, and he said something that really struck me or resonated with me. And he said that he effectively echoed your comments. And that is, he said, look, there might be one to 2 billion potential users of ChatGPT. And he quoted, he was like, maybe 40 million will pay for it. He's like, that's optimistic. That in no way gets them anywhere near the valuation they already have. He said, there's two forks in the road here. There's two doors, door one and door two.

1:13:51Scott Galloway:Door one is that open AI inspires really quickly massive enterprise adoption or door two is bankruptcy. He's like, if they don't figure out a way to get enterprise adoption, like humming on 12 ,000 cylinders, they're going out of business. Because there is no consumer model, consumer adoption model that gets anywhere near the valuation they have in the markets right now. And I thought that was really interesting. And to your point, Anthropic has gone B2B. And it's not to say that having the best B2C company isn't worth a lot of money. It's just not going to be worth one and a half trillion dollars.

1:14:29Scott Galloway:So it's, yeah, I love the way he framed it. Massive enterprise adoption or bankruptcy? I think there's a very, very tiny and unlikely door three, which would be the ad model. But again, they haven't proven that. And yes, they're beginning to start to build out the ad business. but I mean I'm with Greg if the if the goal is we're just going to have a b2c business and we're going to charge people a monthly fee that's not going to work you're not going to become a trillion dollar one and a half trillion dollar company we have seen tech consumer tech companies that have reached those valuations by just completely doubling down tripling down on advertising Meta would be the best example of that.

1:15:14I think that's their only lifeline. Unless, as you say, I think enterprise would be the other option too. I think the other, just before we end here, the other thing that we should just think about is the labor market impacts. I know we've talked about this a lot, but if you look at that Claude Cowork product release, one thing that becomes very clear when you watch this video is like, this is doing the entire job of any entry-level worker at any information services company. Like all of the tasks that it's doing, figuring out the emails, creating the PowerPoint decks, figuring out what was said in the meetings, writing it up in a document, simplifying things like this is all stuff that I was doing for you in my first year out of college.

1:16:01That's going to be done by AI now, or at least it appears that that will be done by AI. And this just is, it's going to be an ongoing conversation this year. Like, what does this mean for entry-level workers where we're already seeing like the numbers are not, they're not great. I mean, young, young employment or young employment among young people is, is lower than it's been in years. There was this other data we just saw 76 % of employers reported hiring the same or fewer entry-level employees last year compared to 2024. Like, it seems that AI layoffs are already happening. This, to me, makes it seem like it's only going to accelerate.

1:16:40Scott Galloway:We're talking to David Solomon from Goldman Sachs, the CEO there, next week. And that's one of the questions I want to pose to him. Because to your point, a place like Goldman has such growth opportunities that they can find new things for people to do. But I got to think small services firms or just the traditional on-ramping of information economy talent, I got to think that just what's strange is supposedly the blue chip law firms have not decreased their freshman classes, which I just find shocking because I am already uploading. We got a payment from Vox yesterday for pivot. And I'm like, what is this for?

1:17:16Scott Galloway:When did it get here? And I immediately, and I thought, what are the payment terms? And I immediately just uploaded the agreement and said, what are the payment terms? What is this? And within a second, Now, what would I usually do? I started typing an email to who? Your lawyer, your tax person. My lawyer, my lawyer to say, can you look at the agreement on the pivot relationship and when we are supposed to get payments? And I would ask a series of questions. And right away, this really talented, talented kid would do it. And my guess is charge me an hour, two hours, 400 bucks, 800 bucks, you know, not a big deal.

1:17:54Scott Galloway:but i did it in about 60 seconds i uploaded the doc to both i do it to both clode and chat gpt because i want to cross-reference because they occasionally hallucinate and say buy fucking a bitcoin treasury company scott that's a good idea um but yeah i i just don't see any way around how it's not gonna it's not gonna hurt a lot of traditional entry-level on-ramps for the information employee if you look at the history of technology though over the medium and long term It should create more opportunities, more margin, more profit, and new business ideas that not only replace or supplant or compensate for that labor destruction, but actually exceed it.

1:18:35Scott Galloway:And I'm still sticking to that. I don't like the catastrophizing that we're all going to be sitting on a couch getting checks from the Bezos-Altman Foundation such that we don't engage in revolution. I think employment over the medium and the long term is still going to be strong for different reasons. You're ready to rise up. You're going communist. It's because you're going to MSNOW all the time. Oh, my God. All right, let's take a look at the week ahead. We'll see delayed inflation data from the Personal Consumption Expenditures Index for November. We'll also see consumer confidence for January.

1:19:09Meanwhile, Netflix, Johnson & Johnson, P &G, Charles Schwab, Capital One, and Intel are all reporting. Scott, first week back, any predictions?

1:19:21Scott Galloway:Disney is going to be put into play. There are so many players, bankers, golf financiers, lawyers, executives who have figured out, wow, we probably could buy companies for$100 billion. dollars, they're going to start thinking, well, why couldn't we take a majority stake or potentially put a company in play that's worth$200 billion? And the prettiest dude or the most handsome dude at the wedding who doesn't have a dance partner right now is 100 % Disney, whose stock is flat over the last 10 years versus the S &P, which is quadrupled. And also, typically what you find And it might be an activist, not an acquisition author, but typically what you find is activists like to come in in the midst of leadership transition because it creates an ability for them to have more impact.

1:20:13Scott Galloway:And they've been talking about succession for a long time at Disney. And Bob Iger isn't a villain. He's even worse. He's someone who can ruin something politely in a cashmere sweater, which I find especially mendacious. But that creates an opening. And, you know, Peltz has already been in there, the ability to come in. And also, what you have at Disney is really unusual for a media company. And that is the great movie Wall Street with Michael Douglas and Charlie Sheen. Charlie Sheen saying, why are you bothering? Why are you going after and trying to acquire this company? Why are you trying to break this company?

1:20:49Scott Galloway:And he goes, because it's breakable. Disney is breakable. Disney does not have dual class shareholders. It doesn't have staggered boards. There's a board meeting or a board election, director election every year. One class of stock, no poison pills. It is highly breakable. And then if you want to talk about intrinsic value, my God, talk about the IP, Marvel, Star Wars, Pixar, ESPN, their parks business. Someone might have a vision for coming in, breaking it up and spinning out the parks business. It's much less Hulu and all this different stuff. And going back, though, I think a lot of people have spent a lot of time figuring out how to take over a$100 billion company, and they're not going to win here.

1:21:35Scott Galloway:And I'm like, I know. Let's see if we can raise$200 billion and go after Disney. I am shocked Disney's stock has not gone up in sympathy with Warner Brothers because Disney's actually a much better company with even more singular assets. And there's just – we're running out of steam here. I mean, we're running out of dance partners here. Anyways, my prediction, sometime in 2026, sooner probably than later, Disney's going to be put in play. This episode was produced by Claire Miller and Alison Weiss. Mia Silverio is our research lead. Our research associates are Isabella Kinsel, Dan Shalon, and Chris O'Donoghue.

1:22:11Benjamin Spencer is our engineer. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from Prof G Media. Tune in tomorrow for a fresh take on the markets.

1:22:52And the dark flies In love

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