The Trump Trade & The Vibecession — ft. Kyla Scanlon
55:03 Share

Support for this show comes from Mercury. There's an art to making the complex feel simple. Everything should be in sync so that even the smallest part serves a bigger purpose. Simplicity can transform your business operations. That's why Mercury powers your financial workflows from the bank account. So ambitious companies have the precision, control, and focus they need to perform at their best. Apply in minutes at mercury.com.

Indeed is a hiring platform that connects businesses with job seekers, with over 350 million global monthly visitors, according to Indeed data, and a matching engine that helps you find quality candidates right away. And it's not just fast. According to Indeed, 93% of employers found the highest quality candidates on Indeed compared to other job sites.

Indeed.com slash VoxBusiness. Need to hire? You need Indeed.

Today's number, $869 billion. That's the record amount tourists are expected to spend in Europe this year. Ed, it's been named the Chanel economy. What does that mean? If someone lets you have anal sex with them, you owe them a trip to Europe and a Chanel buyout. That was the worst one so far. I couldn't even get through it.

delivery content no shane of economy i think that's all it is i think it's kind of true

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 PropG Media analyst Ed Elson. Ed, what is a good word? Give us a little insight into you're becoming a bit of a celebrity hunkasaurus here. What is Ed Elson up to in the summer months in New York? I used to go to the Hamptons. Do young people still go to the Hamptons? Oh, yeah. Tell us about what young people do. What?

What are you doing? This past weekend, I was in Greenwich, Connecticut, which was interesting. I was DJing my friend's party. That's what I get up to in my free time. Oh, my God. You're a podcaster who DJs? I'm taking off to David Solomon. Oh, my gosh. DJ. DJ Elson. Yeah. I'm also not following your rules of not having a side hustle. Yeah. That's one of your number ones, right? You get paid for this shit? Yeah.

Not on this occasion, but sometimes. Yeah. So this is, so by the way. This is a charitable cause.

- Our head of engineering, our head of technology here, Drew Burrows was a DJ. - Yeah, I've talked about it with him extensively. - Wow, so is this something you wanna do given when this whole thing crashes and burns? I did not know this about you. - Yeah, actually I'm gonna hand my notes in today. I wanna become a DJ full-time. - Yeah, well, it's not gonna be easy to replace you. - We can get Carla Scanlon on. Sure she'll do a better job than that. - There you go. Wow, I had no idea.

But you never have any ideas around music or any of our sound effects or anything like that. No, because Claire's the guru. Right? She's pretty good at this stuff. I'm not going to interfere with that. That's a new spin on the Ed Ball. I didn't know that. I need to invest more in our relationship. Learning more every day. It's funny what happens when you ask a question, right? Well, that hurt. That hurt. Anyways.

Anyways, yeah, my kid, the best one was my kid asked me what his birthday was the other day to test me, and I had to pause and think about it. That was a good look. All right, get to the headlines, Ed. Let's do it. It's time to fly. I hope you have plenty of the wherewithal.

Google is on the brink of its largest acquisition ever. Pending approval, the company will acquire cybersecurity startup Wiz for around $23 billion. Wiz offers security for cloud computing, an area of Google's business that has lagged behind competitors. Profits at Goldman Sachs rose 150% year over year to $3 billion in the second quarter.

The bank sold better than expected trading revenue, as well as strengthened its asset and wealth management businesses. The stock climbed more than 2% 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%, the price of Bitcoin rose 4%, gun stocks also climbed with bullet maker Ammo rising 18%, 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? I think this is Google saying we think there's a better than 60 or 70% chance Trump is going to be elected. And that the scrutiny of this deal will either be obfuscated or just not happen if he gets into office. I think if they thought Trump was going to be, or excuse me, Biden was going to be a lock on re-election, I'm not sure they would have had the confidence to

to close on a 23 or enter into advanced talks on a $23 billion acquisition. And when they say Google's an advanced talks to acquire, what they're signaling is they want to figure out how much pushback they get. We should recognize the scale of this. $23 billion. If this goes through, this will be the fifth largest software acquisition in history. Wow. It'll be Google's largest acquisition by far. I mean...

If you look at like YouTube, for example, inflation adjusted, they paid two and a half billion dollars for YouTube. This is $23 billion. 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 valuation, which in itself would have been absurd. This is a $23 billion paycheck. This is $23 billion in cash. This doesn't really happen. And I think that this is sort of

when you look at it from the employee's perspective, this is like the Silicon Valley equivalent of winning the lottery. Or going to work at NVIDIA, right? Exactly. But even crazier, because I mean, imagine the scenario it would be for an early employee. Imagine it's peak COVID, you recently graduated, you're a software engineer, you're looking for work. They give you, 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. 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 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. So I would add on to that. My advice to the employees of Wiz would be to sell the majority of your shares in the secondary market now because they'll trade at...

They'll trade at a discount to the stated acquisition price, but I would take that uncertainty that you referenced off the table and I would sell a bunch of shares in the secondary market and make sure it's a win. And even with a 100% acquisition premium that Alphabet has offered or looks as if they're going to offer if they decide to move forward with the deal,

$23 billion. I mean, these numbers just are out of scale now where it's hard to wrap your head around them. But a $23 billion check being cut to the shareholders of Wiz if the deal goes through, that's a 1% dilution for the $2.3 trillion market cap company Alphabet. So let's go to Goldman. Asset and wealth management outperformed with revenues increasing 27%.

Total revenue increased 17% and net earnings increased 150%. They're enjoying a little bit of the secret sauce 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, which was a kind of a drag on the company, it's like a slingshot. A lot of it hits the bottom line. And while investment banking revenues increased slower than rivals, 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 period,

has sort of capped in the shift, if you will. Goldman has increased 122% outpacing the S&P 500's 93% rise. I think Solomon is kind of the

I don't know. He's the CEO that everyone likes to... I don't want to say hate. People don't hate him. I think that's true, that people do love to hate on him. There was also a headline in New York Magazine, which I don't have pulled up right now, but it was something along the lines of, is David Solomon too much of a jerk to run Goldman Sachs? I'm pretty sure that's exactly what it said. Well, who likes CEOs like David Solomon? Shareholders, right? There's all these articles about dissent among the staff, and obviously the media goes after him for his...

is DJing. I've never understood that. Do they want the guy to play golf or polo? Is it because an old white guy is supposed to be drinking Pim's cups and hanging out at Augusta Country Club as opposed to DJing? I've never, I'm really never understood that. And just to give the context, he was forced to give up DJing a year ago when the company was struggling. So this is what you need. You need to run an investment bank and bring DJing back to popular culture. I agree.

In terms of the Trump bump, firearms and energy stocks were up. Bitcoin was up because Trump and especially his VP, Pig Vance, are seen as very crypto-friendly. Bitcoin hit 63,000, a two-week high. MicroStrategy, which is the largest corporate holder of Bitcoin, it's almost become sort of an index or an indices tracking or a tracking stock for Bitcoin, increased 17%. And then the stuff that the Republicans hate, like clean energy stocks, slipped.

The Invesco Solar ETF fell almost 6%, and the iShares Global Clean Energy ETF fell almost 4%, and then Tesla was up 2%. By the way, there's a new, literally parked outside of my house, I haven't seen one in Manhattan, that Tesla, what is it, 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 Trump bump? Well, I just want to bring up something that Josh Brown said when we had him on a couple weeks ago to discuss the debates. And he said that, you know, he doesn't pay attention to the polls because he doesn't really trust them. He thinks they're inaccurate. What he does trust, though...

are the predicted markets. Because with the markets, unlike with the polls, there's money on the line. So people are actually voting with their feet. 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 who the next president will be four months before the election...

That's unprecedented. Yeah, I mean, just to be fair, the markets get it wrong all the time, right? The markets, it isn't a 0% probability that Biden is reelected, but it appears at this point it's getting less and less likely. It's close. I just want to point out, it's getting close. You think it's getting pretty close? Yeah, yeah. The narrative is just so overwhelming right now. The momentum is so...

just so striking in his favor. But the market's reaction is really interesting. The market believes that, I guess he'll cut taxes, deregulate, and the market, you know, there's just no getting around it. The market seems to like the prospect of a Trump presidency. And 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 you go to Checkpoint Charlie and they talk about, this guy did an especially good job of talking about Germany and Prussia's history.

And I don't know if you knew this, I didn't really know it, but Germany's 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, I

is just to ignore history. I came, I don't know if this, I'll ask you this as 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 two, the assassination attempt really rattled me and bummed me out, both in terms of we came inches from just being so destabilized, and two, 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 wouldn't have given a shit. Yeah, that's a good question. I mean...

It's just another thing that happened. It's just, we're so used to these events. I kind of, I see where you're going and I, 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, as I always do, I want to take your story and insert me into it because I think it'll be more interesting. But I'm going on—I didn't tell you this—I'm going on The Daily Show tomorrow night. I heard, actually, yeah. And I'm pretty sure he's going to ask me about the assassination attempt. And I think we're—

And as the markets show me, 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, 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

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 AR-15s, we're just going to have more and more of it. And the problem is these are expensive, hard resources.

solutions that involve social programs, economic policy, and also

We'll be right back with Kyla Scanlon.

Support for this show comes from Mercury. Financial operations are needlessly complex. With Mercury, you can simplify them with banking and software that power your critical financial workflows all within the one thing every business needs, a bank account. And with new bill pay and accounting integrations, you can pay bills faster, stay in control of company spend, and speed up reconciliation.

Apply in minutes at Mercury.com. Mercury, the art of simplified finances. Indeed is a hiring platform that connects businesses with job seekers. With over 350 million global monthly visitors, according to Indeed data, and a matching engine that helps you find quality candidates right away. And it's not just fast. According to Indeed, 93% of employers found the highest quality candidates on Indeed compared to other job sites.

Indeed.com slash VoxBusiness. Need to hire? You need Indeed.

Welcome back. Here's our conversation with Kyla Scanlon, financial writer, video creator, podcaster, and author of In This Economy, How Money and Markets Really Work. Kyla is coming directly from the White House. What are you doing at the White House, Kyla?

I do a lot of economic policy work, so talking about housing, talking about inflation, and I get to have the opportunity to interview policymakers to translate their ideas to the public. So this last year I was having interviews with the Council of Economic Advisors as well as the National Economic Council. Wow.

And now you're on the Profit Tree Markets podcast. What an upgrade. Yeah, exactly. Well, let's just get right into it. You're not a political analyst, but you are something of a financial analyst. 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

to what happened over the weekend and perhaps maybe what happened during the debates. What's your reaction to how Wall Street is digesting all of this? Yeah, I mean, definitely the Trump trade is strong. I mean, I think markets are more so responding to the Federal Reserve right now. So Jerome Powell came out yesterday, basically hinted at the idea of a rate cut potentially happening in July. And of course, you know, the stock market is extremely excited about that. You're seeing a rotation away from tech stocks and into small caps for the first time this

seemingly ever. It's a pretty big deal. And so I'd say the market's more so responding to that. The media cycle moves so quickly that stuff just doesn't stay in the news that long. The other thing we've been seeing from Trump, we've been discussing a lot of these tariff proposals. He wants to propose a 10% tariff on all incoming goods into the country, 60% on all goods coming from China.

Most economists are saying this would be a bad thing. Give us your view. Would this be a bad thing? And if so, why? Oh, yeah. We just don't have enough tariffs, right? So we collect about $2 billion a year in income tax, and we have $3 billion total in tariffs. So you'd have to have like a 70% tax on tariffs to even begin to recoup what we...

you know, collect in an income tax world. Tariffs are also a tax on consumers. And so this can really be thought of through the lens as a tax on middle America, because that's who it's going to get passed off to is people that, you know, purchase things overseas. All of a sudden you're going to be paying more for that. And so I think, you know, number one, it's 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. 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. And so 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

pretty catastrophic. How concerned were those policymakers and economic policy advisors at the White House about

Trump presidency and the economic implications of that? I mean, I think tensions are tight everywhere. I think, you know, you can go out on the street and sort of feel it. Most people are living daily lives. But, you know, what happened over the weekend with the attempted assassination is terrifying. And so I think a lot of people are just digesting sort of the uncertainty that we're going to be facing over the next few months.

I think for the Federal Reserve specifically, who I did not speak to today, you know, they're trying to balance when they begin their rate cuts so that doesn't get politicized. 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 percent tariffs on everything and have tax cuts, both of those are going to be inherently inflationary.

As you probably know, Google is looking to buy this cybersecurity firm Wiz for $23 billion. It would be the largest acquisition in Google's history.

I was wondering if you have any thoughts on that deal and what it might mean for the overall tech industry. Yeah, I mean, I think a focus on cybersecurity is really key. You know, it's interesting. I think it's the right thing to do with Google. One of the firms just released a buy rating on Google and a sell rating on Meta because they're saying that Google is going to gain steam again. And I think this acquisition could be a sign that Google is like,

finally moving in the right direction and thinking about the long term. So I think the two things that the tech sector is going to have to focus on moving forward is cybersecurity. AT&T just had a huge breach, a huge data breach. Phone numbers were released on the dark web. That is catastrophic. It's something that should have never happened. Investing in cybersecurity is the one way to combat that. And so it's good that Google is doing that now. And it's probably going to be

a value add long term. But then the tech companies are going to have to think about investing in energy. So Sam Altman himself, the CEO of OpenAI, has said that we can't keep on producing these models because they're just using too much energy. We're going to have to have something like nuclear fusion in order to keep these things running. And so I think for tech, just to focus on

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 surge do you think investors should be focusing on energy stocks as well i mean you mentioned this this ai demand will lead to a high demand in energy

Is that a sector that you're looking at right now? Yeah. So like nothing I say is impossible advice, obviously. But yeah. We relate. Yeah. But I think energy is something really important. There's a lot of startups in the hard tech space that

Where they're like, okay, how do we solve these real-world problems that we've kind of ignored over the past few years as we focused on data collection, as we focused on advertising, as we focused on sort of monetizing apps, right? I think that it's really exciting what's happening in energy. Like, there's a lot of innovation happening.

There's a lot of innovation in 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. 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.

So I think energy is just very fascinating, and it's something that we should spend a lot more time thinking about. So this podcast could probably be fairly accurately called the NVIDIA Celebration Hour. We talk about NVIDIA so much, but there has been one stock that has outperformed NVIDIA, and that is Abercrombie & Fitch. It's up 350% in the past year.

And it really is an incredible case study. Can you walk us through how Abercrombie has resurrected the brand and pulled off this comeback? Yeah, Abercrombie has been one of my favorite companies to talk about because I think that they've done a really great brand turnaround. And when you're thinking about like a company like NVIDIA, like they sort of have like these sectoral things that they're benefiting from. But Abercrombie is really just benefiting from a consumer that they've managed to age with, which is like

you know, the millennial. And so Abercrombie was once known as this company that was like a little bit scary to go to. Like if you went to the ball, it was really dark and the music was really loud. And the models, which is what they called their employees, were oftentimes meant to be intimidating. Like they were not meant to be friendly. They were meant to kind of scare you away. You can't tell me you never took a photo with one of those guys. Oh, I never did, but I'm sure people did. Yeah.

That was the thing back in the day. I remember my sisters would go to these Abercrombie stores and they'd take selfies with the male models. Are you serious? Yeah. Oh, wow.

But sorry, I didn't mean to interrupt you. Go ahead. No, that's a fun fact. But that was just not probably a great long-term plan. And what I really love about Abercrombie is they have been around for a long time. So they outfitted Teddy Roosevelt. So they've been sort of this company that has managed to navigate the waves. But they experienced a lot of backlash. When their former CEO took over, Mike Jeffries,

He kind of designed the company into, you know, a selfie with the model's company versus a company that was 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, jeans.

They've really invested abroad too. So they focused on gathering sales overseas. They've also focused on influencer marketing, which is kind of what you have to do in this day and age. Invested online, almost 50% of their net sales come from online. And they've also focused on women. Women are tremendous spenders, and that's in the data. I'm not just saying that. And all of that has really created a really strong relationship

brand strategy, where their margins are up, net sales are up, and they've been able to sell clothes and outperform NVIDIA. Yeah, it really is an incredible example of kind of running into the fire because, I mean, there was a non-zero probability Abercrombie was going to go bankrupt.

And that so there was real risk investing in this company a few years ago. Does anything else out there remind you of Abercrombie? I think there's a lot of companies that have kind of this really good turnaround story. Domino's Pizza is another good example. Like they're basically an e-commerce company.

That sells pizza. One of the best performing stocks of the last decade. And they've had an incredible turnaround story too. Perhaps some of the tobacco companies, like they got pretty beat up when nicotine wasn't so popular. Now nicotine is 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 somehow they do.

So what about, there's now more and more articles looking at the AI space saying that just the revenue, the expectation of revenues to support the current valuations in the sector are just sort of untenable. Any thoughts? Yeah. No, it makes sense that you all were in NVIDIA, what did you call it, cheer podcast or something? NVIDIA Celebration Hour. Because that's kind of what you've had to do for the past couple of months. It's like, oh yeah, NVIDIA is just what I'm going to pin on

my hopes and dreams on. But with any bubble, which is what we are in with AI, there is a moment of reality where people are like, oh, you know, what actually is this going to do for the average consumer or the average business? And with AI, there's like a $500 billion gap between, as I'm sure you all have talked about, between like what they've spent and what they're expected to make.

And so I think it's really good that people are looking at this and saying, well, where's all that money going to come from? Where's AI going to get $500 billion? And I think it's going to happen. You can look at the patterns of the tech bubble.

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. But eventually they'll sort of gain steam again. Are you familiar with this Buffett index where he looks at the ratio of the total market cap of stocks relative to GDP? And right now it's at sort of a historic high, like the same rate.

Types of ratios we saw in 2007 and 1999. Any thoughts on this ratio and whether that indicates we're in for a correction? Yeah, maybe. I think numbers have to be taken into context with other numbers, right? And I think the market has been considered overvalued for quite a long time.

I was listening to Goldman Sachs' podcast about markets this morning, and the person they were interviewing was like, yeah, the market's overvalued, but it won't stop going up. And I think that's what I think as well. It's like, you know, for whatever reason, it just keeps on 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. So, yeah, I think it's overvalued. But I don't think that necessarily means...

that it has to go down. I think in the post-pandemic stock market economy situation, a lot of our metrics have stopped meaning what we thought that they meant. Same with a yield curve inversion. 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 vibe session, which we love and I think a lot of people love, which

basically describes this disconnect between the actual economy versus our perception of the economy. And the reality over the past few years is that the economy has actually been quite strong, but we have perceived it, or the public has perceived it to be weak, unless we have been in a vibe session. The vibes have been off, not the actual data. I'd love to get your read on the vibes right now. The economy is still quite strong.

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. What are the vibes like right now? And why do you say that he appears to be? Just out of curiosity. Based on prediction markets? Yeah, I mean, I think that...

So there's a way to quantify vibes, which is the consumer sentiment surveys. Like UMich, UMichigan releases a consumer sentiment survey. And what's really tough about that is that they've changed how they collect data. So they were doing phone call surveys, and then they switched to web-based. And when they switched to web-based surveys, all of a sudden the answers got a little bit weird, right?

Really? Yeah. People were predicting 15% inflation on the web-based survey. And so that's a mess. And so the vibes were improving, but now we have this weird data collection thing where there's something to talk about within that. 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. We do have a housing crisis. We do have elder care costs that are $10,000 a month on average. Child care costs are up 32% 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

We also have media headlines that are, you know, trending negative. Of course, people are going to feel about that. And as you're saying, you know, there was an assassination attempt on a former president and a current, you know, presidential candidate.

yeah, it's hard not to feel bad. You said the toughest part about investing is holding on. Can you say more about that and how investors should be thinking about holding on during this economic and political environment? Is that essentially, you know, don't time the markets, don't sell? Yeah, I mean, what do they say? Like, it's

Time in the market is better than timing the market. There it is. And so I think that's key. And I think during times of uncertainty, people have a desire to sell.

because 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% 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. Stay with us. We're back with Profit Markets.

So one of the reasons we started the podcast was to try and increase or improve financial literacy for young people. What do you think are the greatest barriers to wealth creation for young people? It's the idea that you have to own a home. I think. That's interesting. Yeah.

So if you look at the distribution of financial assets from the Federal Reserve, which is a chart that I talk about quite a bit, you can see that the bottom 50 percent, and this is more income versus age, but they have all of their wealth tied up into housing. They don't have a lot of equity ownership. 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 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 wealth.

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 can we help people, right? It really is about having a conversation about investing, which is what you all 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 Robinhood, but that feels like gambling, right? Yeah.

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. And so we also don't teach people this in school. Like, we just send them out in the world and hope they figure it out. Housing is an interesting one because, and I'm of two minds of this.

you know, a disproportionate amount of wealth among baby boomers is in their house, right? And I totally get that if you look at sort of too many young people fall into the illusion that they have to own a home and they end up being kind of house poor and it ends up decreasing mobility and almost being kind of an anchor, whereas if they'd put the money and the maintenance and all the taxes into just an index fund, they would have been better off. Having said that, it's also...

I found at least, I think for a lot of people, young people, 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 look at it opportunistically, right? Buying homes out of foreclosure in Miami in 2011 was just 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 $3 million on a one-bedroom in Brooklyn, probably not a great idea right now. Isn't it sort of like every other asset class in that it just requires hard work and discipline around the individual situation? 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 really about the specific asset we're talking about? Yeah, I think every conversation is usually too reductive. It's real tough. The economy is so personal and everybody has such a personal experience with it.

But I think to your point about like, you know, how do we have this conversation and like, what does it mean? I think for a lot of young people, there are times like if you're in Nevada or where I'm from, Kentucky, like you probably should buy a house. They're not super expensive. Rates are a little too high right now, but they should be coming down soon.

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—

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.

Thank you. I think that's... I feel seen. Well, we do. We go right to millennials and it's like Gen X. Yeah, I know. We're obsessed with millennials for some reason. I don't know if their media is better, their music is better. But anyways, I've seen a couple of... 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 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 well to encourage housing development? Can you speak more to that? Yeah, no, Minneapolis and Montgomery County, Maryland. Also Burlington, Vermont has done a good job and Austin, Texas.

And so those are four cities that have reformed their zoning. 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 there.

that are being built. 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 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 you also have to have apartments. You have to have sort of this transitional housing as well or housing that lasts people their whole lives. Spending a whole life in an apartment is totally okay, but you have to have choices. And so zoning reform is a way to achieve that. It's also a way to redesign our cities. And 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.

And so developers have to have a 20% margin in order to build because they're developers. They have to make a profit and they're not going to build if 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. We can take these projects, we can bid, 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 there.

I want to shift to career advice as we wrap up. You're the youngest guest we've had on this show. Oh, cool. You're 26, 27? I just turned 27, yeah. Just turned 27, okay. So, Ed, you're younger than Kyla, right? I am younger, yeah.

Yeah. So I get this acting like, yeah, this is just incredible. We'd have someone, we'd make the incredibly dumb decision to allow someone this young on the podcast. You've been featured in Bloomberg. You've been featured in the New York Times. You've been featured in the Financial Times. You have written a massively successful book. I'd love to get your view as a fellow, very young person. What

do you think it takes to succeed professionally in 2024? Guts. I think you have to be brave. Yeah. I think that's like something I've had a hard time with is like...

how do you balance bravery and like what does bravery look like in this context? And so for me, like, you know, I produce stuff online. And so what do I talk about and 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, or producing content online for people. And I can talk like broader as well, but it's,

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, I've dated a backup

whatever your opinion is. But I think broadly, in order to succeed in 2024, you have to tune out

noise, there's a lot of stuff going on. And it's really easy to get wrapped up in it and to lose focus and to 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 belief's

I'm surprised to hear you say that because the majority of the comments in my social media feed are just so thoughtful and kind. People are just so really loving and really supportive. Me too. I'll bet her comment section looks a lot different. Just a last question here. What do you think a lot of times when we talk about

Things are just financially, quantitatively, the data is just crystal clear that young people are facing headwinds for the first time that previous generations haven't faced. And what I get back a lot is, Scott, all this wealth that you're claiming is 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? Maybe. Yeah.

Sure. I mean, I think that that is a very long-term view. And normally, I am such an advocate for the long-term. I think long-term thinking is key. But I think that there's immediate solutions to some of the problems that we're facing. And I would say that, yes, the wealth will get passed down eventually. But what we're about to see is the greatest wealth transfer in history ever.

And it's going towards people's children. Rich people's children. Really rich people. And so it's going to create more wealth inequality because we don't really have an inheritance tax that works. Right.

And so for people like me, who I'm not going to inherit much of anything, that is going to exacerbate inequality in a really big way. And so, yes, like the boomers will pass on the wealth eventually. Perhaps they'll pass on the torch of power one day. We'll see. But

I would say that just thinking that it'll happen and we shouldn't worry about it is not the best way to think about it because it's just going to exacerbate the inequality that we already have. So you don't think it's healthy for young people to not focus on their careers and to give up and just wait for their parents to die? No, I don't think so. And I think a lot of people are kind of trapped in that right now. Yeah. And the problem is they're not dying soon enough. That's what I'm saying. Yeah.

That's right. Ed can relate. All right. Read us out, Ed. Kyla Scanlon is the founder of a financial education company, Bread, and a creator. She writes a weekly newsletter, makes YouTube videos, hosts the Let's Appreciate podcast, and posts almost daily short-form videos about the economy and markets. Her first book, In This Economy, How Money and Markets Really Work, is available now. Kyla, thank you for coming on. Thanks for having me. We love Kyla Scanlon. Oh, thank you. Algebra of Wealth.

Scott, we talked with Kyla about the importance of being brave in your career. In your book, The Alder of Wealth, you said, quote, courage is cheaper than Chanel and it works better. Can you talk about a moment when being brave has helped you in your career? After I left Morgan Stanley, I didn't know what to do. I moved back in with my mother. I was thinking about graduate school, but I didn't think I had the grades to get in. So I started something called Stress Busters Video.

I went and bought $6,000 of VHS tapes from a video store that had been discovered was engaged in money laundering. 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

And I accidentally shut the door on my hand 'cause 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, living at home with a fucking 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 $70,000 into the business.

That is not fun. And 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 put yourself out there and talk about economics and the markets in a public format is

you are 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 has helped me. I've developed thick skin early on. I think I've told you I ran for every office in high school and lost every election, and I was fine. And I developed a lot of calluses, which was actually quite helpful for me. But also,

atheism in the sense that I know how fast time is going 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.

This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Our executive producer is Jason Stavis and Catherine Dillon. Mia Silverio is our research lead and Drew Burrows is our technical director. Thank you for listening to Prof G Markets from the Vox Media Podcast Network. We'll be back with a fresh take on markets on Monday.