Tesla’s Terrible Earnings, the FTC’s Noncompete Ban, and 24/7 Trading at the NYSE | Prof G Markets

Summary

This week's episode of Propy Markets dives into a myriad of financial topics, starting with the revelation that Americans discard $68 million in coins annually. The discussion then shifts to Tesla's Q1 earnings, which were below expectations, yet the stock price rose, possibly due to an oversold market and Musk's emphasis on AI and robotics. The analysts also delve into Spotify's revenue increase, Netflix's membership growth, and Meta's revenue surge despite a share price drop after announcing increased AI investment. The show touches on the potential billion-dollar agreement for a new FIFA tournament and the implications of the Biden administration giving TikTok a year to sell to an American company. The conversation also addresses the FTC's ban on non-compete agreements, which is expected to boost wages and create new business opportunities. Finally, they ponder the cultural and financial implications of the potential shift to 24-hour trading at the New York Stock Exchange.

Takeaways

• 💰 Americans discard approximately $68 million worth of coins annually.
• 📈 Spotify reported a 20% year-over-year increase in first-quarter revenue and a record high profit of $180 million, following a challenging year with layoffs and price hikes.
• 📊 Netflix membership rose by 16% in the first quarter from the previous year, but the company plans to stop reporting quarterly subscriber numbers and revenue per user starting next year.
• 📈 Meta's revenue increased by more than 27% from the previous year, surpassing analyst expectations, yet shares fell by more than 15% due to lighter than expected revenue guidance and increased spending on AI.
• 🏆 FIFA and Apple are close to a deal regarding TV rights for a new World Cup-style tournament for club teams, potentially valued at around $1 billion, set to take place in the US in 2025.
• 🛑 President Biden signed a bill giving TikTok until 2025 to arrange a sale to an American company or face a ban in the US, with TikTok's CEO vowing to challenge the law on First Amendment grounds.
• 🚗 Tesla reported a decline in revenue and profits, its first drop since 2020, with the company burning through $2.5 billion in cash. Despite this, Elon Musk committed to launching more affordable vehicles by 2025, leading to a 14% stock rise.
• 🛇 The FTC has banned non-compete agreements, which could increase average annual earnings by over $500, benefiting around 30 million workers.
• 🌐 The New York Stock Exchange is considering a shift to 24-hour trading, seven days a week, potentially increasing trading volume and attracting more global investors.
• 🤔 The discussion suggests that the rise in efficiency and profitability in companies like Spotify and Meta may be due to better economic conditions and consumer spending, despite increased prices.
• 📉 Concerns are raised about the potential negative impacts of 24/7 trading on mental health and work-life balance for financial services employees, as well as the possible increase in market volatility.

Q & A

Why do Americans throw out approximately $68 million worth of coins every year?

The habit of throwing out coins is likely due to a combination of factors, including the inconvenience of carrying change, the low value of individual coins, and a lack of awareness about the cumulative worth of discarded coins.

What is the significance of the ban on non-compete agreements by the FTC?

The ban aims to increase workforce mobility, boost competition, and potentially raise wages by allowing around 30 million workers previously bound by non-compete agreements to change jobs more freely.

How did Spotify's first quarter revenue increase impact the company?

Spotify reported a first quarter revenue increase of 20% from the previous year and a record high profit of $180 million. This came after a challenging year that included layoffs and the first price increase in a decade.

Why did Netflix's stock price fall by 9% after their announcement?

Netflix's stock price fell due to their decision to stop reporting quarterly subscriber numbers and revenue per user, starting next year, which raised concerns about the transparency and future growth of the company.

What is the potential value of the agreement between FIFA and Apple for a new tournament?

The agreement could be valued at about $1 billion, with the month-long tournament set to be hosted in the US in 2025, potentially creating a new and lucrative market for football club competitions.

What was the reason behind President Biden signing a bill that gives TikTok up to 12 months to arrange a sale to an American company?

The bill was signed due to national security concerns over the Chinese-owned social media platform's data collection practices and its potential to be used for foreign influence operations.

Why did Tesla's stock rise by 14% despite reporting worse than expected earnings?

The stock rise could be attributed to the market's reaction to Elon Musk's emphasis on Tesla's AI initiatives and the announcement of a more affordable vehicle lineup by 2025, which may have overshadowed the company's current financial struggles.

What are the potential implications of the New York Stock Exchange considering 24-hour trading?

24-hour trading could lead to increased liquidity and attract more global investors, particularly from Asia. However, it may also increase volatility, affect the mental health and work-life balance of traders, and necessitate more reliance on AI for monitoring the market.

What is the potential impact of the ban on non-compete agreements on innovation and the protection of intellectual property?

While the ban may lead to increased competition and higher wages for workers, there are concerns that it could compromise companies' ability to protect their intellectual property, potentially leading to a decrease in innovation.

Why is the discussion around Meta's increased spending on AI investment causing concern for investors?

Investors are concerned that Meta's increased spending on AI signals a shift from a focus on profitability to a costly investment phase, similar to the company's previous investment in the metaverse, which did not yield expected returns.

What is the potential cultural impact of 24-hour trading on Wall Street and financial services workers?

The shift to 24-hour trading could erode the traditional workweek and weekend structure for financial services workers, potentially leading to increased stress and a blurring of work and personal life boundaries.

Outlines

00:00

📈 Market Vitals and Earnings Reports

The first paragraph discusses various market and corporate updates. It highlights the value of coins discarded by Americans, Tesla's earnings, the ban on non-compete agreements, and 24-hour trading at the New York Stock Exchange. It mentions Spotify's increased revenue and profit despite layoffs and price hikes, Netflix's rise in memberships and their decision to stop reporting certain metrics, Meta's revenue growth and investment in AI, a potential agreement between FIFA and Apple for a new soccer tournament, and the legislation involving TikTok's potential sale to an American company.

05:01

📊 Streaming Services and Consumer Behavior

The second paragraph delves into the performance of streaming services, particularly Spotify and Netflix. It discusses the potential reasons behind Spotify's increased revenue, including market consolidation, pricing power, and consumer spending habits. The conversation also touches on Netflix's decision to stop reporting certain subscriber numbers and the implications of this decision for transparency and investor relations.

10:04

🤝 Potential FIFA and Apple Tournament

The third paragraph focuses on the potential agreement between FIFA and Apple for a new soccer tournament and its potential impact on the sports and entertainment industry. It discusses the financial and cultural significance of such a tournament, the involvement of multiple European teams, and the possible benefits for Apple TV+.

15:06

📉 Tesla's Financial Performance and Future Plans

The fourth paragraph covers Tesla's financial performance, noting a decline in revenue and profits. Despite the poor financial results, Tesla's stock price increased, possibly due to the company's focus on AI and future affordable vehicle launches. The discussion also addresses the skepticism around Tesla's claims and the importance of focusing on the core automobile business.

20:08

🛑 End of Non-compete Agreements

The fifth paragraph discusses the Federal Trade Commission's (FTC) ban on non-compete agreements, which will allow millions of workers to change jobs more freely. The speakers argue that non-compete agreements are a transfer of wealth from younger employees to shareholders and that their elimination could increase wages and promote a more competitive business environment.

25:10

🕒 Consideration of 24/7 Stock Trading

The sixth paragraph explores the potential shift to 24-hour trading at the New York Stock Exchange. The speakers express concerns about increased volatility, the mental health impact on investors, and the potential erosion of personal time for financial services workers. They also discuss the cultural implications and the need for a balance between accessibility and the well-being of market participants.

30:10

🏆 The Impact of Celebrity Endorsements in Politics

The seventh paragraph speculates on the influence of celebrity endorsements in politics, particularly how Robert F. Kennedy Jr.'s political stance could affect the presidential race. The discussion includes a humorous anecdote about a proposed donation to Kennedy's campaign in exchange for choosing Aaron Rodgers as a vice-presidential candidate.

35:10

📅 Upcoming Economic Reports and Predictions

The eighth paragraph briefly mentions the upcoming economic events, including earnings reports from major companies like Apple and Amazon, the Federal Reserve's interest rate decision, and unemployment data for April. The speaker also shares a prediction about the political impact of Robert F. Kennedy Jr.'s popularity in the upcoming election.

Keywords

💡Non-compete agreements

Non-compete agreements are legal contracts that restrict an employee from working for a competing company or starting a competing business for a specified period after leaving a job. In the video, it is discussed that the FTC has banned these agreements, which could potentially increase average annual earnings and promote a more competitive job market.

💡Spotify

Spotify is a music streaming service that is mentioned in the video for reporting a first quarter revenue increase of 20% from the previous year and a record high profit of $180 million. This is significant as it comes after a challenging year for the company, which included layoffs and price increases.

💡Netflix

Netflix is a streaming service that is highlighted in the video for its 16% increase in memberships in the first quarter from the previous year, which was higher than expected. However, the company announced it will stop reporting quarterly subscriber numbers and revenue per user starting the next year, leading to a stock market plunge.

💡Meta

Meta, formerly known as Facebook, is referenced in the context of its revenue increase of more than 27% from the previous year, surpassing analyst expectations. Despite this growth, shares fell by more than 15% due to lighter than expected revenue guidance and increased spending on AI investment.

💡AI (Artificial Intelligence)

AI is a branch of technology that focuses on creating systems capable of performing tasks that typically require human intelligence, such as visual perception, speech recognition, and decision-making. In the video, AI is discussed as a significant investment area for companies like Meta and Tesla, with the potential to transform their core businesses.

💡TikTok

TikTok is a social media platform that has been subject to regulatory scrutiny due to concerns over data privacy and national security. The video discusses President Biden signing a bill that gives TikTok up to 12 months to arrange a sale to an American company before it gets banned in the US.

💡Stock Market Trading Hours

The video addresses the potential change in the New York Stock Exchange's trading hours, considering a shift to a 24-hour, 7-day a week schedule. This change could impact the financial industry's culture, increase liquidity, and cater to global investors, but also raises concerns about increased volatility and the mental health of traders.

💡Earnings Reports

Earnings reports are releases by publicly traded companies that detail their financial performance over a specific period. In the video, various companies' earnings reports are discussed, including Spotify, Netflix, and Meta, which are significant for investors as they influence stock prices and market sentiment.

💡Investor Relations

Investor relations refer to the relationship between a company and its investors, which includes communication regarding financial performance and future guidance. The video touches on how companies like Netflix and Meta manage their investor relations through earnings calls and data reporting.

💡FIFA and Apple

The video mentions a potential agreement between FIFA and Apple regarding TV rights for a new World Cup-style tournament for club teams. This deal could be valued at about $1 billion and signifies a significant business opportunity in the sports entertainment industry.

💡Tesla

Tesla, an electric vehicle and clean energy company, is discussed in the context of its earnings report, which showed a decline in revenue and profits. Despite the downturn, Tesla's stock price increased following the announcement of a more affordable vehicle lineup and a focus on AI technology.

Highlights

Americans throw out approximately $68 million worth of coins each year.

Discussion on Tesla's earnings, the ban on non-compete agreements, and 24-hour trading at the New York Stock Exchange.

Spotify reported a first quarter revenue increase of 20% from the previous year and a record high $180 million profit.

Netflix memberships rose by 16% in the first quarter, substantially higher than predicted.

Meta's revenue increased by more than 27% from last year, beating analyst expectations.

FIFA and Apple are nearing an agreement over the TV rights to a new World Cup style tournament for club teams, potentially valued at about $1 billion.

President Biden signed a bill giving TikTok up to 12 months to arrange a sale to an American company before it gets banned in the US.

The market is consolidating, leading to fewer options and increased pricing power for streamers.

Gross margin for Meta for the quarter was 27.6%, up around 250 basis points from a year ago.

The average US consumer is doing better than perceived, as indicated by increased revenues and costs.

Streaming audio has an advantage over streaming video in terms of lower churn rates.

Netflix's decision to stop reporting quarterly subscriber numbers and revenue may indicate a plateau or decline in US subscriber growth.

The Federal Trade Commission (FTC) has banned non-compete agreements, potentially increasing average annual earnings by more than $500.

The New York Stock Exchange is considering 24-hour trading, seven days a week, to increase liquidity and attract global investors.

The potential downside of 24-hour trading includes increased volatility and negative impacts on the mental health and lifestyle of financial workers.

Earnings from Apple and Amazon, the Fed's next interest rate decision, and April's unemployment data are upcoming economic events to watch.

The influence of RFK Jr. as a political figure and his potential impact on the presidential race is discussed.

Transcripts

this week's number $68 million that's

the value of coins Americans throw out

every year why did Buddha start pulling

coins out of his Butthead because change

comes from

[Music]

within little dad joke thread the needle

there pretty well today on propy markets

we're just discussing Tesla's earnings

the ban on non-compete agreements and

24-hour trading at the New York Stock

Exchange here with the news pulling data

out of his ass is propy Media analyst Ed

ellson Ed what is a good word I'm very

well Scott I enjoyed all photo shoot

yesterday that was fun oh I bet you did

you you little attention I liked

how uncomfortable you were on the camera

that was kind of cute yeah I know I was

but I like when they started telling you

to wear my clothes cuz yours look so bad

that was my favorite part you told me to

wear your clothes which as I think

everyone else wanted me to wear my

clothes yeah which as the boss that

qualifies as them it's Collective we

right yeah apparently what my my clothes

aren't form fitting and yours are right

no yeah mine mine accent my my uh my

human growth hormone at the age of 49

get to the headlines Ed let's start with

our weekly review of Market vitals the

S&P 500 was volatile the dollar fell

Bitcoin dropped and the yield on 10year

treasuries climbed shifting to the Head

headlines Spotify reported a first

quarter Revenue increase of 20% from a

year ago and a record high $180 million

profit these earnings come after a

trying year for Spotify where it laid

off more than a quarter of its Workforce

and raised prices for the first time in

a decade Netflix memberships Rose 16% in

the first quarter from a year earlier

substantially higher than predicted

however the streaming company announced

it will stop reporting quarterly

subscriber numbers and revenue per user

starting next year the stock plunged to

9% on that news that's its worst

performance in 2 years meta's Revenue

increased more than 27% from last year

beating analyst expectations but shares

fell more than 15% after the company

issued lighter than expected Revenue

guidance and also announced that it

would increase spending on AI investment

FIFA and apple are nearing an agreement

over the TV rights to a New World Cup

style tournament for Club teams the deal

could be valued at about $1 billion and

the monthlong tournament will be hosted

in the US in 2025 and finally President

Biden signed a bill into law that gives

Tik Tok up to 12 months to arrange a

sale to an American company before it

gets banned in the US Tik Tok CEO said

it would challenge the law on grounds

that it violates the First Amendment

Scott your thoughts so in order Spotify

first quarter Revenue increase of 20% it

feels like the year of efficiency is

that people are doing more with less

which obviously impacts the bottom line

in a very positive way but also I wonder

if a lot of this can be reverse

engineered to a couple industry Dynamics

the first is that the market is

consolidating and there's fewer options

so people are you know and they're

cracking down on password so it is given

the streamers not only across video but

across music pricing power and they it's

no longer about as much about growth as

it is about profit ability but the tail

the Wags The do here is Netflix and

Netflix has given everyone cloud cover

to raise their prices because they have

pretty aggressively raise their prices

and I wonder if this is I mean Spotify

is really the kind of the it's almost I

would imagine as dominant in their

Medium as Netflix is

in video so good for them my guess is

they're I don't know if they're also

cracking down on password sharing or

what's what's going on but I would

imagine this is they're going to have

some of the same champagne and cocaine

of increased revenues and costs yeah I

think that's exactly right and it's the

same thing we saw with meta a year ago

they increased the revenue which is a

combination of price increases as you

mentioned as well as a jump in usership

plus they reduce costs they're they're

spending Less on content and they've

also brought head count down around 20%

from a year ago so the result is and the

thing that Wall Street is so excited

about is just this

dramatic margin expansion gross margin

for the quarter was 27

.6% that's up around 250 basis points

from a year ago I think the question for

me would be how have they been able to

increase monthly active uses by 20%

despite increasing prices my best guess

would just be that the average US

consumer is doing better than we think I

mean we saw Bank earnings the other week

which showed that consumer spending is

actually accelerating hence the increase

in their credit businesses we've been

seeing similar stories coming out of the

FED data so I think maybe the story

behind the story here is that consumers

are generally doing fine maybe better

than fine and the advantage that

streaming audio has over streaming video

is the churn because pretty much every

streaming video player has I think

between like four and 8% churn which

means every year you have to almost

replace a third of your customer base

except for Netflix because of the

absolute volume of content always seems

to be something you're kind of looking

forward to watch whereas a lot of people

download the entire season at Ted and

then cancel Apple television whereas

with music it's different right there's

something you want to listen to every

day because it has everything so it

seems that after kind of five or seven

years of underperformance Spotify is

finally getting their day in the Sun and

I I'm actually a big fan of Spotify it's

hard to imagine one

app could distill an entire medium down

to an icon so Spotify has done I think a

pretty pretty impressive job Netflix

memberships up 16% I thought that was

amazing I mean that's a huge number the

thing that was most interesting though

was that they their decision to stop

reporting quarterly subscriber numbers

and revenue it's like buying clothes

that accentuates your the positive like

me if I were a womaned I would wear a

lot of miniskirts cuz I for I have

fantastic legs if I were a woman so I

would be like hiking up the skirts I'd

be in a lot of Dad would show up Daddy

has more legs than a bucket of chicken

if Daddy was a mommy I'm sure that's a

hate crime but anyways my point is you

want to accentuate Brunello Cinelli a

size too small that's it right anyways

size too small that hurts that hurts

that's of you said that my clothes are

too big well yeah you look you literally

look like an old man that takes no pride

in your appearance size too small that

hurts my feelings okay anyways they're

all trying to come up with the right

words that will that will make their

company and numbers seem the strongest

so alphabet doesn't break out by

division its numbers because people

would figure out that it's essentially

search in the Seven Dwarves that almost

everything loses money YouTube makes

really good money by most standards but

they have this Juggernaut the world's

largest toll booth ever constructed in

the history of mankind called search so

they'd rather just report one kind of

lumpsum and I'll break it out they also

don't want to give too much information

to their competitors the only thing

that's a little bit scary here is is

that if I tried to read into the te

Leeves here what they probably realized

is that they're going to have pricing

power in international growth but that

everyone in America is already signed up

and they may in fact have a few quarters

where they have flat or negative

subscriber growth in the US and that'll

be the lead in every headline in NE

Netflix could report great Revenue

growth great profitability growth but if

their largest market begins to Plateau

or even decline in terms of subscriber

growth that'll be the lead and investors

will take it down so imagine they've

said our numbers are going to be um fine

we'll have good growth but that growth

will be an international which will

likely have lower Revenue because you

can't you don't have the same pricing

power in markets where they don't have

the same disposable income this is me

guessing but the choice of words is

surprisingly deliberate and strategic in

earnings calls and the way they report

data doesn't that just annoy you I mean

one because you know one of the central

issu ues of these Hollywood strikes was

transparency around data and viewership

and what Netflix promised sag aftera and

then delivered on for a second was you

know we're going to be more transparent

we're going to start reporting these

detailed statistics about subscriptions

and so the idea that they would now walk

back that

transparency to me is just a betrayal of

of what they agreed on and then the

other reason that I don't like this is

just as an analyst I want more data I

want a better

you know more comprehensive accurate

understanding of the company and this is

a subscription business I want to know

how many subscribers they have Netflix

is saying actually we don't we don't

want you to see our business in full we

don't want you to have a comprehensive

understanding likely because they think

you know we we don't think you'll like

what you see but doesn't this just kind

of annoy you as as an analyst and and as

an investor well Ed there's a lot of

things that annoy me um

look the question is should a company in

a certain sector be required to have

certain

disclosure around certain top if you're

a subscription business you are

described as a media company with a

subscription component should they say

you have to report average revenue per

user churn you know should there be

recording requirements just as they have

a definition of iub the bottom line is

companies have kind of been just musling

around analysts and the investor public

for a while and my friend Richard

creamer calls it most analysts sick of

Fant and stenographers they the only

analysts that get access to the company

and the CEO are people who are willing

to basically you know smear smear

Vaseline over the lens and make them

look good no matter what I I agree they

should be um there should be some sort

of I don't know standard metrics meta

Revenue increase more than 27 from last

year that's incredible a company of this

size up this much shares falling 15%

similar to Netflix I think a lot of that

the market will always look for excuses

around why the stock got taken down I

think a lot of times it's just it's kind

of aams Razor I think it's just that the

the stocks got out a little bit over

their skis I mean these stocks have had

such incredible growth I think the

market was just looking to let a little

air out and also the AI investment thing

it basically kind of connotes that we're

entering a new arms race called AI which

is exceptionally

expensive and I wonder if if investors

thought okay the year of efficiencies

that we really loved is coming to a

close and we're going back into this

investment phase in Ai and while AI

holds great promise the the one thing

that's guaranteed the reality is it just

costs a ton of money and so they

took the stock down any thoughts I would

bet that a lot of investors were having

flashbacks to a few years ago when the

company decided that they were going to

spend 10 billion a year on the metaverse

and as we've discussed and as you

predicted many years ago that was a

terrible idea that's been proven as

measured by VR headset sales or or lack

thereof the difference to me here is AI

is not the metaverse and unlike the

metaverse which had basically no

relation to meta's underlying business

which is advertising AI can do a lot for

meta's ad ad business it can optimize

the algorithm it can boost engagement

it'll improve targeting which will

increase increase usage by advertises

it'll also allow meta to increase prices

on their ad sales I mean the upside on

AI for meta to me is huge and it's right

there for the taking so when I look at

this my initial reaction is that

investors have probably unfairly

punished meta here and I think it's

because they're conflating spending on a

terrible business which is metav with

spending on a great business which is AI

yeah no AI AIO um

like uh I really hope this AI think pays

off because you amount of money and hype

around this is just or that it

destroys Humanity I mean our

expectations are just so big one way or

the other uh yeah yeah we'll see I think

everyone's

wondering at some point we're going to

have to get to the show me part of the

show where the just the Staggering

amount of money that's going into this

thing is going to they're going to have

to show signals or start reporting hard

metrics around how this starts to pay

off I think they'll get another sort of

year of leeway but at some point people

might go is there a lot of jazz hands

and cuz the the the Investments they're

making here are pretty are pretty

extraordinary FIFA and apple are nearing

an agreement basically FIFA and apple

want to recreate the World Cup I'm super

excited about this I wonder how many

games these young men can play and they

are young men um because between the FA

Cup the the you know the Euros the

whatever you call the thing I'm going to

in Germany the domestic leagues La Liga

the Prem

Etc how many how many tournaments can

they support but when you have apple and

FIFA behind

you it's pretty valuable and FIFA has I

mean apple has a reputation for doing

things in a very high quality way FIFA

has a reputation for being corrupt

hiding in between the

nether Netherland of international law

or what or the lack thereof but Apple SD

pockets they need something to really

kind of ignite Apple TV plus so to speak

I think it's a great idea go what do you

think I think it's a really good idea I

mean I I find it strange that the the

headlines are reporting it as a new

tournament there's it's it's a reframing

of a tournament that already exists

which is the club World Cup and that's a

competition that basically takes the

best team from each continent and has

them play and then we find out who the

best team in the world is what's

interesting is that it's not a very big

deal among football fans compared to say

champions league and I think the reason

for that is because it includes all

these teams from outside of Europe and

those teams just aren't any good like

last year the final was between Man City

and this no-name Brazilian team flu man

now what's different about this

tournament is that it's now going to

take multiple teams from each continent

which crucially means it's going to take

multiple teams from Europe so now you're

going to see Man City versus you know

Arsenal Chelsea Barcelona Real Madrid

those are the games that make all of the

money so I think this is a huge deal for

Apple if it goes through because it's

possible that this new reframing of an

existing tournament could become the

most culturally relevant competition in

all of football besides the

international World Cup so I think if

this works it would be hugely profitable

I was also wondering just as a brand guy

if it represented a seating or a

transfer of brand equity and passion

from National Brands to Club brands in

other words do you have more people more

passionate about Liverpool Man City and

Chelsea than you do about team England

yeah I think that's a great that's a

great point and I I'll bet there's

there's a lot more money in it plus

they'll be doing it every year I mean

the World Cup's only every four years

same with the Euros Champions League

generates more than $2 billion do per

year if this is the ultimate

tournament I don't know maybe it'll be

generating double this Deal's worth a

billion also just I think about it the

cost to put it on is probably less

because it can't be inexpensive both

from a capital and a human capital

standpoint to pull you know bukay Saka

from Arsenal and have him train with the

team England and get to know the Players

new uniforms new coach like a new kind

of operating dynamic as opposed to all

right Arsenal just head to Atlanta for

the game so this to me feels like a

winner Ed yeah tick Tok hello ladies I I

look you nailed it I said on billah two

years ago I like to name drop uh did I

tell you I'm going on B Mar tomorrow by

the time this say you'll have already

been on it that's right get get this get

this back to me I'm going on with Don

Lemon and wait hold on RFK Jr RFK what

should I ask RFK or we're going to be in

the overtime panel discussion together

what should what should what would you

say to RFK Jr on the overtime panel on

Bill Maher what's your workout routine

he's in good shape he's 7 years old and

he's in really good shape yeah yeah no

I'm gonna ask him that you and RFK yeah

me and RFK junr do you have a plan for

what you're gonna ask him I guess I

would ask him like

is your radical

narcissism and Reckless views on um

vaccines a uh going to accidentally

elect a fascist and um create tremendous

unwarranted death disease and disability

among children MH there's that that's

probably where I would kick it off

I don't know and then Don Lemon me and

dmon the Very handsome Don Lemon um

anyways I'm excited about that oh any

I'm sorry Tik Tok Tik Tok like I'm

thrilled about this I think people get

it wrong I think that this they're not

going to lose their Tik Tok I think this

is smart I think we're going to look

back and across a bunch of things we uh

regret about big teac one of them will

be letting the ultimate propaganda tool

in to create a frame through which our

youth views America and the rest of the

world I think it's stupid I think

Americans are easier to fool than

convinced they've been fooled and I

think that's what's going on here we do

need systemic wide privacy legislation

but there's no reason why we can't walk

and Sho gum at the same time and the

thing that I think the media people Miss

is that it's framed as a ban and you

know it's all or nothing and I just

don't think that's accurate I think

we're probably going to see an actual

divestment once they're forced to divest

they got 12 months to negotiate with the

White House to figure out some sort of

accommodation and figure out is there a

way we could make you comfortable and

continue to operate here Saturday was

literally the be one of the best days

this is how old I'm getting I couldn't

break away from C-SPAN and I started

calling people saying this bill might go

through and what the are you

calling me for uh but in one Fell Swoop

we passed a bill for Aid to Ukraine Aid

to Israel and uh forc divestment with

any year of Tik Tok and I was just I

thought all three of those things are

really important I think speaker Johnson

deserves credit so but yeah I've wanted

this for a couple years or and I thought

it was going to happen I'm glad it is

but again I don't think anyone's going

to lose their Tik Tok we'll be right

back after the break with a look at

Tesla's

earnings we're back with profy markets

Tesla reported worse than expected

earnings for the first quarter with

Revenue falling for the first time since

2020 and profits dropping more than 50%

year-over-year the company also burned

through $2.5 billion do that's its

largest free cash outflow ever however

Elon Musk also vowed to launch their

more affordable Vehicles as soon as 2025

and the stock Rose

14% Scott this was by almost every

metric a pretty awful quarter why do you

think the stock Rose I don't know maybe

it was the opposite to date it's been

the worst performing stock in the S&P so

maybe there's some people who felt it

was oversold and came in musk has

you know obviously reputation is someone

who just has a incredible insight into

how to leverage technology or new

technologies so right now the company is

playing a serious game of jazz hands and

they're like let's talk about our energy

revenues and the margins there let's

talk about AI let's talk about

autonomous robot taxis let's do anything

but talk about our Core Business which

is an automobile business which is like

any other automobile business getting

increasingly shitty and hard to maintain

profits in and you're seeing that at

Tesla and the market seem to really like

the conversation around going all in on

AI I think it's sort of a couple things

that people felt maybe the stock was

oversold although I don't think that's

the truth at all I think it's when you

look at it relative to other big tech

companies it trades at a higher multiple

than big Tech and if you look at it

relative to auto companies it trades in

an

insane multiple so they want to pretend

they're anything but an automobile

company and it seems like he emphasized

in the call that he wants to really

highlight or pimp out the fact that

they're buying so many of these gpus

and says they're going to buy more it's

like don't look at don't look at the

automobile side of the company we're AI

right so he's also talking about a new

more affordable EV I just think that's

crazy I don't think he's going to win a

war in affordability against China uh

with byd I mean byd is trading it an

eeve to eitaa of get this of six and

Tesla trades at 35 I mean Google meta

and Microsoft are 2021 26 so Tesla which

whose business appears to be in

structural

decline uh trades at a higher multiple

than these amazing companies with IP and

you know yeah the real AI companies yeah

meta is growing at 27% And Trades at 21

so I just think I think the market on

this day at least seemed to think that a

was either oversold or that uh musk plus

massive investment in AI is chocolate

and peanut butter yeah Elon said I mean

his his quote was if you value Tesla

just as an company you fundamentally

have the wrong framework and he also

said we should be thought of as an AI or

robotics company the auto business as

we've said did terribly deliveries down

8% also seen price cut so revenues down

13% gross margins down from 19 to 16%

the list goes on and it makes up 80% of

the total

business do you buy this Tesla is more

than a car company argument no and I

want to identify as a giraffe I mean it

just look it's an amazing automobile

company it deserves to trade at the

upper range of what automobile companies

trade at but this is what they do they

wrap steel around a battery and four

tires and they do an amazing job of it I

think it's an amazing car but he wants

you to believe it's anything but what it

is he actually his track record in AI is

pretty I don't know pretty disastrous he

was involved to his credit he had he's a

Visionary on AI got involved very early

in open AI but he doesn't know how to

manage it or turn it I mean arguably the

stupidest decision in business over the

last 10 years from a well standpoint not

that he needs it was Elon Musk leaving

in a huff from open Ai and I I get the

feeling Hees goes home every day and

twists the legs off his Barbie doll or

kicks a dog and thinks I could have

owned 20 or 30% of open AI if I just

wasn't such an he playing

catchup in Ai and there's just no doubt

about it so I

don't again you know look over here

don't look at my core business because I

want to pretend I'm something I'm not

we've also been hearing a lot about Robo

taxis um you earlier this month Elon

tweeted that the robot taxi would be

unveiled in August August 8th was his

date and then he also said on the

earnings call that this Robo taxi Fleet

could be quote the biggest asset value

appreciation in

history but the report gave us no

details on the roll out it gave us no

details on any regulatory approval it

didn't really give us details on

anything so as it stands if you were an

investor would you be taking the

robotaxi business seriously at all I

think he's lost a ton of credibility we

he said in

2017 I think within two years there'd be

a million autonomous Teslas on the road

well 2019 kind of came and went let me

think five years ago and I can prove

that I mean I think you wearing Bruno

Kelli will result in the largest asset

appreciation in history that has about

as much

credibility yeah okay big words big

words how and

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why the FDC has banned non-compete

agreements which prevent employees from

working for or founding their own

competing companies after they leave

their job according to the FDC one in

five American workers are subject to

non-compete agreements so once the

ruling goes into effect 30 million

people will be free to change their jobs

at will The Only Exception will be made

for existing non-competes with senior

Executives but all told it's estimated

this will increase average annual

earnings by more than

$500 Scott you've been advocating for

this for for a while you've actually

wrote A A No Mercy No Malice blog post

about it why do you think this is a good

idea it's simple the more people bidding

on your labor the more potential people

who want to rent your labor the higher

the rents you can charge and non

competes do nothing but reduce the

number of biders on your labor this is a

straightforward transfer of wealth from

employees who tend to be younger to

shareholders who tend to be older yet

again another transfer of wealth from

young and middle class earners to

wealthy senior Executives who have

reason I mean if if el2 is purchased but

for $160 million and they don't want me

to compete with them or they for

whatever 6 or 12 months and they can

Define what the competition is I I don't

even think you can justify that but at

least I can empathize with it but

telling a hairdresser that they can't

walk ACR they're non-competes in

hairdressers now and in chefs what's

next non-competes for baby

sitters again this is just this is just

so wrong and let me just say Lena Khan

is could potentially replace Margaret

best year as my new Brain Crush I like

that she's doing this I think it's great

and what do we have in America do we

have a a dirth of corporate profits no

they're at all-time highs what we have

is as a percentage of the economy wages

continue to not be not outpace inflation

they did the last quarter but look for

the last 30 or 40 years the tension

between capital and labor capital is

beating the out of Labor which

means we need more laws that that

transfer back some of that capital from

shareholders to employees and this is

one of those things I love this what do

you think well I just think the startat

that really supports your point about

hair stylists and cashiers and security

guards Etc is that onethird of minimum

wage jobs are subject to non-compete

agreements a third which is kind of

insane but you know the US Chamber of

Commerce and all these other big

business lobbying groups are suing the

FDC to block this they believe it is

quote unnecessary and unlawful and their

big complaint is that this is going to

compromise their ability to protect

their IP could you take us through what

that means exactly why they're concerned

about that and why Banning non-competes

might affect intellectual property and

and the protection of that IP yeah

you're the AI team the like deep BS AI

team at Snowflake and there's 18 of you

and you all walk across the street to a

competitor that's the fear that those

people take that IP now there are laws

that are distinct from non-competes that

say if you use our IP and people have

been fired and arrested and some even

gone to jail if you take a disc with the

code that's illegal I don't think you

can I don't think you can basically make

employees and dentur servants I think

they should go where they should go and

your job is to create compensation and

IP that people decide to stay with you

out of you know personal decision you

could argue that at a senior level

because trade secrets are so important

that you might have Garden leave

policies or you might have some sort of

non-compete for a certain amount of time

not very long but when you have

non-competes at every other level it's

just simply put I mean the data that

struck me it's estimated that this that

this law or this change would increase

average annual earnings by more than 500

bucks how the can you be against

that how are people saying oh Labor's

making too much money the average the

average earner is making too much money

and corporations aren't doing well

enough I mean come on this is this feels

like a no-brainer I'm really I'm really

happy about this I trust it'll hold up

in the courts I think God I just it just

is so shocking and exciting to me that

America keeps getting it right lately

yeah just some statistics about what a

good thing it is I mean it's in 2008

Oregon decided to ban non-competes for

hourly workers and that increased

average wages by

3% Hawaii made a similar move back in

2012 for Tech workers and that increased

wages 4% and then I think the biggest

piece of evidence for me that this is a

good idea is that California has banned

non-competes basically forever I mean

since the 19th century they've banned

them and despite that it remains the

largest state economy in the US it

contributes $4 trillion do in GDP every

year it's home to the largest companies

in the world and in fact a lot of people

and scholars believe that it's because

of the non-compete ban that Silicon

Valley ever happened in the first place

because you know it promoted competition

between Engineers between companies

which led to this highly productive and

highly competitive business environment

I guess the only thing I would ask you

is you know is there anything we're

missing is there any downside that we're

not factoring in here the

catastrophizing will be that there will

be chaos and that you have you'll have

full

teams right before product's about to

launch go to the highest bidder and take

all of their human capital and their IP

over to the competitor next door and

it'll create a lack of innovation and

Chaos across companies that just is not

born out as a matter of fact the FTC

estimates that an additional 8,500 new

businesses will be created each year and

we have the case study and you just

brought it up but a bear is repeating

just AI alone in the Bay Area has

recreated by value the entire Global

automobile industry in just several

weeks or increase the market the market

cap creation of these companies it

Rivals the entire market cap of the

entire Auto industry and guess what

they've been operating with this with

this Banning of not beete so are are the

other 49 states for some reason more

susceptible and I mean it's just this is

an easy one this is an easy one yeah

does it make it a little bit harder for

companies are they going to have to pay

employees more might it hit their

bottomline earnings when they can

basically sequester an individual from

the rest of the market in terms of

renting out his or her labor yeah

probably and guess what that's a good

idea we need we need to give restore

more leverage to workers from from

employers we'll be right back after the

break with a look at 24-hour Trading

we're back with Prof G markets since the

1870s the New York Stock Exchange has

kept regular trading hours allowing

stocks to trade from morning to

afternoon schedules have shifted through

the years for example the exchange was

open for business on Saturdays until

1951 but today trading hours are Monday

through Friday 9:30 to 4: however that

might change

the New York Stock Exchange is now

considering 24-hour trading 7 days a

week this move could legitimize Round

the Clock trading a trend that's grown

alongside cryptocurrencies and platforms

like Robin Hood Scott what do you make

of this news well you could argue this

is an attempt to keep up in terms of

innovation you know I would argue it's

probably the exchange is wanting more

money because it would it's hard to

imagine there won't be more trading if

it's 24 by7 versus what is just what 35

hours a week right now and this what

this potentially does is it opens to a

stock market to more Asian investors the

thing I don't like about this is that I

like the idea of having a cooling off

period and that if something happens on

a Friday the stock goes crazy if it goes

too crazy they have circuit breakers

they shut it down until people can kind

of take a breath but what we also have

is something happens on a Friday you

have the weekend to take a beat and wrap

your head around it and one of the

reasons we had this run on Silicon

Valley Bank

is that there was a lack of friction

around transferring your deposits

because everyone can now transfer

deposits off their phone and I just

wonder if it creates more volatility

when at 300 in the morning there's some

sort of bad news or a strike in Iran and

people can go on and start selling like

crazy and then people feel like they

can't go to sleep or they need alerts on

their phone and the other thing I don't

like about this is I do not think it is

good for people's mental health I have

paired my Holdings in publicly traded

stocks to probably 15 or 20% of my n

worth because I just hate checking my

phone and what's crazy is because I have

a

scorecard the the number I get every day

from my stocks has a a

disproportionate impact on my psyche you

know because the other stuff doesn't

have a a number on it so I don't I don't

know it just feels like the

financialization of everything I think

it was coming it's hard to argue against

it but I don't personally I don't like

it well I wanted to get your thoughts on

sort of the cultural implications of a

move like this I mean I know my friends

who work on Wall Street and you know

sales and trading and even guys who work

in hedge funds the only thing that

protects their weekend really is the

fact that they can only make their

trades from 9:30 to 400 P p.m. Monday

through Friday and then they get to take

the weekend off so I'm wondering what

what you believe this might do to the

culture of Wall Street and how it how it

could impact the lifestyle of basically

any Financial Services worker who might

be listening to the podcast right now I

mean the bottom line is this just going

to be harder just going to be I remember

um I have a close friend of mine worked

for a hedge fund and he would have to

wake up really early to like look at the

European markets you know it's just it's

just like that the markets never rest

means that a lot of these people are

never going to get the rest themselves I

also wonder if it's going to

expedite the incorporation of AI that

will kind of ser as Bots going out there

and monitoring everything and looking

for

you know keeping tabs around okay if

there's this level of volatility you

need to wake me up or I don't know it

just feels like a lot of this is going

to I wonder how much of this additional

human coverage that's needed is going to

be accomplished with Bots and I think

one of the things that prompted this was

crypto which is you know can be traded

24 by7 but also there's this startup

that's backed by Steve Cohen of of

point72 and it's this startup called 24

exchange and they recently applied for

SEC approval to launch the very first

247 Stock Exchange so I think this is

also kind of a reactionary move maybe to

fend off competition from crypto and

also from this new proposed Stock

Exchange but just a thought

experiment you know if it were up to the

market and the 24x7 exchange and the

current 930 to 4m exchange both had were

at a similar position in terms of

liquidity

who do you think would win what do you

think the market would decide it prefers

because there's you know the mental

health benefits of the current framework

but then there's also the possibility of

just increased liquidity and as as you

mentioned increased interest from

investors around the world like in Asia

so what do you think the market would

say is the best system you mean Will the

Market opt for increased

financialization and liquidity and

additional trading volume fees or a

concern for the mental well-being of

Americans let me think let me think I

Ponder I Ponder we're going to 24 by7

and it's not going to go back you know

and Traders will like it if Traders are

consumers it's like probably

having I mean there was probably some

benefit to having linear TV where if you

didn't watch channel 7 at 8:00 pm on

Friday nights and 1972 you missed the

Brady Munch that might have been better

for us than having it accessible all the

time

this is the equivalent of streaming

video versus linear right it says you

can have ond demand trading at any time

and you can binge trade if I mean I just

think like what happens when Traders

start getting ridiculously high

and they can trade at 2

a.m.

because who knows they might do better

they might outperform the

market some of the trades I've made have

definitely been feel like they're

inspired by Meth we will look back on

the 9:30 to4 trading day with nostalgia

we'll look back on it think oh you know

Florence Henderson we're just going to

feel good about it and not know why like

how we ever put up with it let's take a

look at the week ahead we'll see

earnings from Apple and Amazon we'll

also hear the fed's next interest rate

decision as well as the unemployment

data for April do you have any

predictions for us well my predictions

as I started thinking about RFK Jr

because U as I said I'm going to be on

with him on on Bill Mah and my

prediction is the following we talk

about so many things that impact the

presidential rate

whether it's immigration or bodily

autonomy or the Middle East what we're

not talking about is I think the thing

that's going to decide the who wi's

president is RFK Jr he's already pulling

significantly into the double digits and

what people forget is the reason why

Bill Clinton won an unknown Governor

from Arkansas was because of Ross perau

Ross perau I think got about I don't

know 15 or 18 points and 2third of it or

60% of it came from Bush which was

enough to put Clinton over the top Ralph

nater handed the presidency to George

Bush over Al Gore everyone that voted

for nater would have gone to gore the

majority of them and RFK Jr now has a

big enough base and if he stays in the

race and I think he will because I think

he's a total narcissist he'll stay in

the race and with those sorts of numbers

it really just comes down to who he

pulls from and so far it looks like he's

pulling more

from Trump then then I don't know if I

told you this I actually talked to a

friend of mine and we actually got not

fairly down far down the road but we got

the money together and I said let's

offer the RFK campaign a million bucks

if they pick Aaron Rogers is the VP or

at least say a million dollars don't

even say why we love Aaron

Rogers and we'll give you a million

bucks in the campaign because he needs

money to get on all these ballots we

need a million bucks we'll give you a

million bucks if you put Aaron Rogers

cuz I thought you put Aaron roggers on

the campaign

he's this big broy stupid great like

conspiracy guy who believes in that you

know vaccines were were human guinea

pigs right I think that would help pull

from Trump yeah and I thought this is

how we get Biden in office let's just

give a bunch of money to RFK if he gives

if he picks Aaron Rogers instead he

picked a so's wife ex-wife yeah he

picked an his Serge's ex-wife who

believes that you can solve infertility

by getting more Sunshine well you know

why I picked her well 15 million reasons

why isn't she going to give isn't she

going to give him money she's got the

money she's got the money yeah exactly

it wasn't for her understanding of uh

geopolitical issues and her deep

understanding of the six Fleet in the

Indian Ocean Jesus how stupid is

that I mean really really maybe that's

what you should ask him yeah what the

are you thinking tell us about your

running M that's yeah anyways uh but

what happen what happened to the Aaron

Rogers fund we circled the money it was

pretty easy and and we thought okay

what's the best Outreach to the campaign

and then he announced that he was going

I thought when the rumor was he was

going to pick this ex-wife of Sergey

who's sounds like a you know a modestly

talented lawyer I thought I I didn't

think that was real I thought he's crazy

but he's not stupid ends up he's both

anyways I'd save me a million bucks but

look it on November the 5th or whenever

the day is after the election what we're

going to realize is that RFK J

specifically who voted for him

determined who won president thank you

for watching this version of propy

markets check out our pod feed for

office hours on Wednesday and we'll be

back with a fresh take on markets every

Monday

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