The Trump Trade & The Vibecession — ft. Kyla Scanlon

What does that mean? if someone lets you have anal sex with them? You owe them a trip to europe and a chanel buy it.

So far.

Welcome to prop g markets. today. We're speaking with kyla. Scanlon, who's becoming a regular on the show. She's the author of in this economy.

She joins us from the white house. She brings the average age of the white house down like 50 years just by her being there. But first, first here with the news, is property media analyst ed elson. ed. What is the good word?

How is? give us a little insight into. you're becoming a bit of a, a celebrity hunkasaurus here. Uh, what what is ed elson up to? in the summer months in new york?

Young people still go to the hamptons. Oh, yeah, tell us about what young people do.

Uh, not, this not on this occasion sometimes. yeah, so this is so. by the way, this is a charitable cause our.

Is this something, um, you want to do, given when this whole thing crashes and burns? I did not know this about you.

I'm not going to interfere with that. That's a new spin on the ed ball. I didn't? I didn't know that I need to invest more in our relationship, learning more every day.

The stock climbed more than two percent to an all-time high. And finally, a look at how the markets reacted to the assassination attempt on former president trump. shares of trump media rose over 30 percent. The price of bitcoin rose four percent. Gun stocks also climbed, with bullet maker ammo rising 18 percent, and energy was the top performing sector as the major indices rose.

Scott, let's start at the top. thoughts on google acquiring wiz for 23 billion dollars.

This deal Is significant. the people for whom this deal is most significant, though, Are the founders and the early employees of wiz, and I just want to point this out. This company was founded in 2020. It's four years old, that's incredible. It is a child of a company, and they're about to receive not A 23 billion dollar valuation, which in itself would have been absurd.

This is a 23 billion dollar paycheck. This is 23 billion dollars in cash. This doesn't really happen, and I think that this is sort of, When you look at it from the employees perspective, This is like the silicon valley equivalent of winning the lottery or going to work at nvidia, right, exactly Yeah, but but even crazier, because I mean, imagine the scenario it would have. it would be for an early employee. imagine it like It's peak covid You.

you recently graduated. You're a software engineer. You're looking for work. They give you you know, let's call it 0.1% equity. Four years later, only four years later, with 0.1% equity, You're now about to receive a check for 23 million dollars.

That's just not how? Careers are supposed to work. This is how Lotteries work. I think this is going to go. In fact, I know this is going to go one of two ways.

either one, The deal won't go through as you've said, we've seen Several major acquisitions blocked by the ftc or the second option is that it will go through, But it's going to take between one and two years, because the amount of scrutiny this deal is going to receive It's going to be so overwhelming. There's there's no chance that this is signed and sealed in less than 12 months. So the best thing you can do, in my opinion, if you work at wiz, turn the news off. Do not pay attention to the deal. I do hope, for your sake, it works out, but this is incredible.

I mean these numbers just are out of scale now where it's hard to wrap your head around them. but a 23 billion dollar Check being cut to the shareholders of wiz if the deal goes through. That's a one percent dilution for the 2.3 trillion dollar market cap company alphabet. so let's go to Goldman. asset and wealth management outperform, with revenues increasing 27, Total revenue increased 17 And net earnings increased 150.

This they've sort of. they're enjoying a little bit of the secret sauce. Uh, of tech, and that is, they have been pretty disciplined and cut a lot of costs specifically, Which is latin for fired people over the last two or three years, So when the cyclical winds returned in investment banking And the reduced exposure to consumer banking, uh, which was a kind of a drag on the company. It's like a slingshot they get a lot of, it hits the bottom line and while investment banking revenues increase slower than rivals, David the ceo, david solomon, noted that the bank's investment banking backlog is up significantly this quarter, Which is signaling that things are pretty strong. He also said that, from what we're seeing, we're in the early innings of the capital markets and m&a recovery in the six-year.

solomon Has sort of capped in the shift, if you will. goldman has increased 122 percent, outpacing the s&p's 593 percent rise, and I think, uh, I think solomon is the kind of the I don't know. He's the ceo that everyone likes to. I don't want to say. Hey, people don't hate him.

Is it because an old white guy is supposed to be drinking pimm's cups and hanging out at augusta country club, as opposed to djing?

It's almost become sort of an index or an indices tracking or a tracking start for bitcoin Increased 17 percent. Uh, and then the stuff that the republicans hate, like clean energy stocks, slipped. The invesco solar etf fell almost six percent and the iShares global clean energy etf fell almost Four percent. and then tesla was up two percent. By the way, there's a new um Literally parked outside of my house.

I haven't seen one in manhattan. That tesla, what is the suv, the cybertruck, the cybertruck? It looks like something from a simpsons episode. It looks like a parody of what a car is supposed to look like. It's so It's so ridiculous.

Anyways, any thoughts on the the trump bump?

Now, if you agree with josh personally, I do. The message from the markets right now is loud and clear, and the message is that trump is going to win. and you know, as someone who is very concerned about this individual and as someone who Believes that we're not really recognizing the gravity of our situation right now, I just want to repeat that again The markets have spoken, Trump is going to win, And if that isn't a strong enough message to the democratic party that we need a new candidate, then I don't know what is, because the polls are one thing, but for the financial markets to Unanimously tell us right now that the next, who, the next president, will be four months before the election.

it isn't a zero percent probability that biden is reelected, But it appears at this point is getting less and less likely. It's close.

The market seems to like the prospect of a trump presidency and The. we're a market show, I don't. You know, we're always told whenever we delve into politics, the people who don't agree with our politics say You know, it's supposed to be a safe place from politics. Please stop it. but as I referenced, I was in germany and My favorite thing in berlin is this thing called fat tire bike tours, where they take you on bikes Around berlin and obviously berlin has incredible historic relevance.

and they talk about the book burning there. and um, You go to checkpoint charlie And they talk about uh, this guy did an especially good job of talking about germany and precious history. and Um, I don't know if you knew this. I didn't really know it. But germany is actually, if you look at the past couple centuries, been one of the most progressive and tolerant societies in the world, Except for this 12-year period where things went really really dark.

I think people have a certain cold comfort or a dangerous Belief that it can't happen here. It can absolutely happen here and some of the rhetoric, especially around this 2025 proposal And even though the republicans right now or the administration is trying to distance themselves from it, Any level of diligence shows that a lot of these individuals will be likely very closely tied and have pretty strong involvement in a trump administration. I mean it is season seven of the handmaid's tale, And to think that this couldn't happen here, regardless of what the markets say or regardless of the momentum, Is just to ignore history. I I came I don't know if this. I'll ask you this as a my Sample set of one for young people.

I was very much bummed out by. First, the debate really rattled me in the situation and I was angry that democratic operatives Had just fucked up so badly, kind of hiding the situation from us and putting us in this just what feels like an untenable situation And to the assassination attempt really rattled and rattled me and bummed me out both in terms of We came inches from just being so destabilized into that. Somehow it's turned into the ultimate booster shot for the trump campaign amongst you and your friends. Does it rattle you, or is it just kind of? is it interesting?

because when I was your age, I was literally sleepwalking through life. I I wouldn't have given a shit. Yeah, that's a good question. I mean.

You know, in the conversations after this event.

I'm sort of like. Are people really that shocked by this? Like? is it really that crazy? It didn't shock me in a lot of ways.

It's just another thing that happened, And I think that's part of the problem is that this should be something that should concern people. I don't know. I guess my lack of shock at the situation is a point of concern that I should probably be reflecting on so.

But i'm going. i'm going on. I didn't tell you this. i'm going on the daily show tomorrow night. I I heard actually, yeah, and uh, i'm, pretty sure he's going to ask me about the assassination attempt, and I think we're.

And this is a market show and we I promise, folks, we will get back to the markets in a moment. but I think what we're missing here is that I think that this is a simple, a simple story of what is going on in america, and that is This I knew who this person was. I knew who the shooter was before. I knew who the shooter was. I knew it was going to be a young man who was socially isolated, who was lonely, Who had few guardrails, wasn't attaching to work, wasn't attaching to school, wasn't attaching to relationships And was trying to recapture social status and has access to weapons of war.

And to think that we can have 300 mass shootings year to date and that eventually we're not going to have a mass shooting at Political events is just naive. We don't want to talk about the real issue. and the real issue is unless we offer Young people and I actually think especially young men greater hope, greater attachment to institutions, a greater infrastructure to identify and inject Opportunity and mental health resources. and specifically, don't give these people during episodes just ready access to ar15s. We're just going to have more and more of it.

And the problem is, these are not. these are expensive, hard solutions that involve social programs, economic policy and also gun control, which no one You know, of course no one in jazz hands The republicans will pretend to give a flying fuck about the mental health of young men as any sort of misdirect away from the real problem, and that is, America does not have a monopoly on struggling young men. It does not have a monopoly On mental illness. It has a monopoly on struggling young men with mental illness, their access to weapons of war.

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Well, let's just get right into it. you're not, um, you're not a political analyst, but you are something of a financial analyst, um, and this Assassination attempt on trump is all we can really talk about. it is having an effect on the markets. What's your reaction? To what happened over the weekend and perhaps maybe what happened during the debates?

You're seeing a rotation away from tech stocks and into small caps for the first time, Seemingly ever. Um, it's a pretty big deal. Um, and so i'd say the market's more so, responding to that, the media cycle moves so quickly that, um, Stuff just doesn't stay in the news that long. The other thing we've been seeing from trump.

And if so, why?

all of a sudden you're going to be paying more for that. Um, and so I think you know, number one is just economically Not very feasible, and that's, you know, just an objective statement based on the numbers. and then number two It's going to hurt people more than it helps them. Um, it could really disrupt international trade, you know, There's talk about devaluing the dollar in order to make exports more competitive, Which is also maybe a questionable economic policy, just mechanically, um, and so there's there's a lot of things to be said about what Constitutes good economic policy, and there's a lot to talk about with reforming Tax code, but you know, just a blanket tariffs would be.

um, and so it's just. it's a time of immense uncertainty, with a lot of really important economic decisions, because we haven't really won the Inflation fight and if we, you know, slap 10% tariffs on everything and have tax cuts.

Um, so I think you know the two things that the tech sector is going to have to focus on moving forward Is cyber security. at&t just had a huge breach, a huge data breach, you know, phone numbers were released on the dark web. That is catastrophic. It's something that should have never happened. investing in cyber security Is the one way to combat that, and so it's good that google's doing that now, and it's probably going to be A value add long term.

Um, but then the tech companies are going to have to think about investing in energy. Um, so sam altman, himself the ceo of open ai, has said that we can't keep on producing these models Because they're using too much energy. We're going to have to have something like nuclear fusion in order to keep these things running. Um, and so I think, for tech like just to focus on the real world And then ensuring that the technology isn't released on the dark web is going to be how they continue to add value, Moving forward, because investors have already placed so much faith and hope In these companies that they're going to have to show them that there's a world beyond, you know, apps and monetizing search.

what's happening in energy. Like? there's a lot of innovation In hydro, there's a lot of innovation and wind. for the first time ever, the u.s Is actually an energy producer rather than an energy importer. So we're exporting more than we import, which is really great, Um, and there's a lot of government money going towards, you know How do we sort of rotate away from fossil fuels?

and so I think energy is just. you look at the situation in texas, and it's obvious that We have to do something like. those. people have no electricity and there has to be backups. Um, so I think energy is just very fascinating and it's something that we should spend a lot more time thinking about.

wow, But sorry, I didn't mean to interrupt you.

He kind of designed the company into, you know, A selfie with the, with the models company versus a company that's focused on perhaps producing good clothing. And so abercrombie has really benefited from the wave of the 1990s, like sort of this nostalgia core Where people want low-rise baggy jeans, um, they've really invested abroad too. So they focused on Gathering sales overseas. They've also focused on influencer marketing, which is kind of You know what you have to do in this day and age invested online. almost 50 percent of their net sales Come from online.

and they've also focused on women. Uh, women are Tremendous spenders, and that's in the data. I'm, not just saying that Um, and all of that has really created a really strong Brand strategy where their margins are up, net sales are up, um, and they've been able to sell clothes and.

Now nicotine is, uh, quite popular again. So you have these companies that have been able to weather The winds of time, and I think those companies tend to get oversold because people are like, oh, they just can't keep on doing it and.

any thoughts?

like, where's ai going to get 500 billion? Dollars, and I think it's going to happen like you can look at the patterns of the tech bubble. Um, Where there was like an early version of airbnb That failed because it was just too early. And so I think, with any sort of bubbly scenario, Which ai is? there are going to be applications that are too early and they're going to lose out on money.

Um, but eventually they'll sort of gain steam again.

It's like, you know, for whatever reason it just keeps on. um, Continuing. investors see a lot of hope in the united states. Obviously, they see a lot of excitement in the tech companies. and now the small caps.

Um, so, yeah, I think it's overvalued, but I don't. I don't think that necessarily means That it has to go down. I think in the post-pandemic, you know, stock market economy situation, um, a lot of our metrics have Stopped, meaning what we thought that they meant same with, like yield curve inversion. Like, it doesn't necessarily mean that a recession is coming. It's just something to take into Account with other metrics, and I would consider buffett's metric in a similar light.

you coined this term.

the perception of the economy has somewhat recovered, according to sentiment surveys, but You know, we just had an assassination attempt on The man who appears to be our next president. um, What are the vibes like right now?

So they were doing, like, you know, phone call surveys, and then they switched to web-based. And when they switched to web-based surveys, uh, all of a sudden the answers got a little bit weird. Um, Yeah, like people were predicting like 15 inflation on on the web-based survey and so like, that's a mess, Um, and so the vibes were improving. but now we have, like this weird data collection thing where there's something like to talk about Within, that like, why did it get so weird? when we switched to the web and that has shown that the vibes are Declining, they were going up a little bit, but people are still feeling quite worried.

Whenever I talk about the vibe session, I always make sure to point out structural Affordability problems. like we do have a housing crisis. We do have elder care costs that are ten thousand dollars a month. on average, Child care costs are up thirty two percent since 2019, And so all of those are going to impact how people feel about their economic circumstances And, of course, they're going to feel bad. We also have media headlines that are, you know, trending negative.

Of course, people are going to feel about about that and, as you're seeing, you know, There's an assassination attempt on a former president and a current, you know, presidential candidate. Uh, yeah, it's, it's hard not to not to feel bad.

um, Because they're, they're scared. And so I think, just during times of uncertainty. It's important to Hold on to investments that you believe in, to continue investing, Because the stock market does go up 53 percent of the time And the stock market is essentially a bet on america Continuing to grow. and so, if you believe in those two things, It makes sense to hold your money into stuff that you believe in.

We're back with frosty markets.

Um, they don't have a lot of business ownership. They own homes. And so I think for young people there is an expectation that one day you're going to be a homeowner, you're going to achieve the american dream and everything's going to be perfect and Wonderful, and and that's how you're going to build wealth, right? And even when you talk to policymakers like they're like, part of the reason that we focus so much on housing Is because that's the way that middle america builds Well, and so the more that i've talked about housing and the more that i've talked about, you know economic circumstances for middle america. How we can we help people right?

It really is about having a conversation about investing, which is what you all are Are doing such a great job at. it's like how do we educate people about the stock market? And so I think that's what young people really struggle with is like that barrier to entry in the market. Like there are apps like robin hood, but that feels like gambling, right? There are apps like public, but it's just confusing, like where do you begin?

And so I think it's just sort of getting your foot in the door, Like how do you take that first step towards becoming an investor? I think that just can be quite overwhelming for people. and there's always tomorrow, right? Like it can always start tomorrow, um, and so we also don't teach people this in school, like we just send them out in the world and.

It's a, it's a means of forced Investing, and that is, people have a tendency to make their mortgage payment And there's a lot of psychological benefit or psychic impact. But it's like buying a stock you have to you have to look at it opportunistically, right. buying homes Out of foreclosure in miami in 2011,, which is an incredible way to build wealth, Believing you have to own real estate no matter what. so you lever up and borrow and cash out everything to buy. Spent three million dollars on, you know, a one bedroom in brooklyn.

Probably not a great idea right now. Isn't it sort of like every other asset class and that it just requires? Hard work and discipline around the individual situation. I just, it's. it's so weird to categorize.

It's almost like when we talk about europe, It's like well, you're talking about greece or ireland. and when we say housing is a good or a bad investment, Aren't we being too reductive? and it's, it's really about the specific asset we're talking about. Yeah.

They're not super expensive. Uh, rates are a little too high right now, But they should be coming down soon. um, depending on what the federal reserve does, and so there is opportunity to buy a house, but In a place like sf, which might be on the decline. Maybe that's not a good place to buy a house. So there is specificity to location.

There's specificity to circumstances. But I also think you're right that a lot of the boomer and this is something you do a great job talking about. Um, A lot of the older people have tax incentives to stay in their home, And so there's a lot of supply that's sort of trapped between generations That normally would have passed on at this point, like boomers own Most of the three and four bedrooms, when at this point it should be probably millennials and gen x, who we always forget to talk about.

I feel as if I know you because I follow you on all these different video platforms. but you've talked about the importance of um, Better kind of zoning, or breaking down zoning regulations and subsidies to encourage development of housing, And I think you even talked specifically about. is it true that you talked about specifically what minneapolis is doing?

Uh, so, minneapolis was like, okay, we can rethink zoning like. we can probably build more affordable housing in these areas. So we're going to do that. Burlington vermont was like listen, we can build more of the missing middle of housing, which is, you know, duplexes, triplexes, townhomes. So, you know, we don't have to have just apartment buildings and single-family homes.

We can have more dense homes that are being built. Um, austin, texas reformed their zoning. It just keeps on Approving housing across the board. san diego has also approved, like, I think, a record high of housing. um, because of you know zoning, because of you know funding from the government, whatever it ends up being, and so zoning can be really restrictive towards building new homes, because, For example, I think it's 90 of los angeles is zoned single family.

And so that means you can just build like little houses everywhere, which is great because who doesn't want a little house? But, um, you also have to have apartments. So you have to have sort of this transitional housing as well, or housing that lasts people their whole lives, you know, Spending a whole life in apartment is totally okay, But you have to have choices. Um, and so zoning reform is a way to achieve that. It's also a way to redesign our cities.

Um, in those four cities that I talked about have done a really good job. montgomery, county, Maryland. the government has begun to intervene in the bidding process. Um, and so developers have to have a 20 margin in order to build, because they're developers like. they have to make a Profit and they're not going to build if, like, they don't see the profits coming through, which is just a business model.

But montgomery, county, maryland, was like, okay, Well, we can help out, like we can. you know, Take these projects, we can bid um, and then we can sort of help the developers get to the finish line. And so they've built, I think, 800 units of housing. Uh, for people, just sort of intervening in the bidding process.

Okay. So add, you're younger than kyla, right?

we make the incredibly dumb decision to allow someone this.

Do you think it takes to succeed professionally in 2024?

How do I explain it and how do I make sure that what i'm talking about is serving the most people? And I also think one thing that you know, and this is specific to, like being online. So i'll, they're producing content online for people. um, and I can talk like broader as well, but How? we talk a lot about problems and we don't oftentimes talk about opportunities.

And when you talk about opportunities, there's opinion that is involved, because some people Will disagree on whatever solution that you're proposing or backing? And so you kind of have to be brave about, like advocating for certain policy positions, For certain things that you think should be implemented. like, i'm a big advocate for housing, A lot of people disagree with that, and so you kind of have to be brave in what you're saying And then, of course, have data to back up whatever your opinion is. and but I think broadly, in order to succeed In 2024, you have to tune out the noise. There's a lot of stuff going on.

Um, and it's really easy to get wrapped up in it and to lose focus and to Like, let fear kind of dictate whatever path you're going on, And so it's important to listen to people that you believe and to also consume Outside of that, but know what is true and what isn't, and to know where your beliefs.

Quantitatively, that the data is just crystal clear, that young people are facing headwinds, that pre for the first time that previous generations have been faced. And what I get back a lot is, scott, all this wealth that you're claiming is, You know, prevalent among older people, that eventually these young people are going to get it. So it's really their money and you shouldn't be this worried. What are your thoughts on this argument?

We'll see. uh, but I I would say that just thinking that it'll happen and we shouldn't worry about it is is not The best way to think about it, because it's just going to exacerbate the inequality that we already have.

That's right ed. ed can relate. All right.

kyla. Thank you for coming on. Thanks for having me. We love kyla. Scanlon.

So I got to buy these tapes for like two or three bucks a pop. So I bought a thousand tapes, put them in This rubbermaid cart and I started going around each of the offices in century city and the kind of the twin towers there and offering people Rentals. that was my first Business. And so I got from morgan stanley, where I was wearing hermes ties and flying business class, And I would have to sneak past or pay off the security guard to get in with my cart in the elevator. And I remember walking into a law firm.

And this woman, this receptionist, stood up and said get the hell out of here And started screaming at me. and I turned around And I accidentally shut the door on my hand because I was so rattled. And so I had to use one left hand to pull this heavy cart out. And i'm sitting in the lobby or the elevator bank with, like one hand nearly broken, You know, living at home with a fucking, You know, laundry cart of vhs tapes. And that's the kind of risk and public humiliation You have to be willing to take if you want to be really successful.

And the reality is 99% of people aren't willing to take those risks. People talk a big game about being entrepreneurs and the first thing I ask them is Are you willing? to go to work? And as a reward for working 60 hours a week at the end of the month, You get to sign the front of a check, not the back of a check? when I started l2 for the first 14 months, I would have to go home at the end of the month and my mother of my two babies would Complain that I wasn't home enough and she was right.

And then I would have to say well, okay, Also, just fyi. I need to put seventy thousand dollars into the business. That is not fun. And you're, it's, it's, it's ugly. It's scary.

So, I don't know what you want to call it. risk aggressiveness or courage. But if you're not ready to take those sorts of risks, risk public humiliation, risk losing really hard-earned money. You're not going to punch above your weight class and you're not cut out to be An entrepreneur. and I think what kyla was saying is that to to put yourself out there and talk about economics and the markets in a public format, You are going.

you're risking public humiliation. a, you might be wrong, and even if you're not wrong, People are going to try and shame you. people are going to say rude things about you. So there's just no getting around it. Now, let me move to what.

what has helped me? I've developed thick skin early on. I think i've told you I I ran for every office in high school and lost every election, and I was fine, and it developed. I developed a lot of calluses, which was actually quite helpful for me, but also um atheism, in the sense that I know how fast time is going and everyone i'm, And everyone i'm, worried about what they think of me and being embarrassed in front of. they're all going to be dead soon, as am I, And I find it's actually quite liberating and gives me a lot of confidence, but 100, If you want to score above your weight class, you're going to have to get comfortable taking uncomfortable risks.

We'll be back with a fresh take on markets on monday.