Prof G Media: Markets Newsletter

Why Are Markets Hitting Record Highs?

Prof G Markets — Mon, 20 Apr 2026 11:03:46 GMT

100

Sally Ride, the first American woman in space, was asked by NASA engineers if 100 tampons would be enough for her week-long voyage.

If the news is bad, why are stocks at all-time highs?
AI’s newest obstacle is … humanity
The real reason Amazon is buying Globalstar, plus a check-in on Prof G Media’s stock pick of 2026

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Why Markets Are Ignoring the Iran Crisis

Last week, peace talks with Iran collapsed, the U.S. blockaded the Strait of Hormuz, and the International Monetary Fund warned that further disruptions in oil markets could raise the risk of a global recession.

Still, the S&P 500 and Nasdaq both hit fresh all-time highs. With so much uncertainty, why are markets so bullish?

There are a couple potential explanations. First, historically, wars aren’t that bad for U.S. markets. The U.S. is isolated geographically and insulated by having the largest and most liquid financial markets in the world. During times of uncertainty, the American equity and credit markets are seen as safe havens.

The average U.S. stock market decline during 30 major geopolitical events since 1939 was just 4%, and stocks typically bounced back within six weeks.

One year later, outcomes improved even more: the S&P 500 posted double-digit gains in the 12 months following Pearl Harbor, the Cuban missile crisis, the John F. Kennedy assassination, and the start of the Israel-Hamas war.

Second, company earnings are strong. The S&P 500 just posted its fifth consecutive quarter of double-digit earnings growth — the last time that happened was in 2018.

Third, rising gas prices may be affecting big companies and consumer spending less than expected. In the 1970s, spikes in oil prices triggered a recession. But since then, the U.S. economy has grown less dependent on oil: GDP has tripled, while oil consumption has stayed about the same.

Furthermore, consumer spending now hinges more on the wealthy than the middle class, and high-income consumers are less affected by energy costs.

The top 10% of earners account for half of consumer spending, or a third of GDP, and the highest-income quintile spends only 2% of their budget on gasoline. That’s compared with low income households that spend nearly 20% of their budgets on gas.

I’ve been calling this the ketamine economy. Ketamine is dissociative. You leave your body and watch your life from the outside. That’s exactly what the Dow and the Nasdaq do. They give the illusion that society is doing well, but they’re not a measure of prosperity. They’re a proxy for earnings and the wealth of the top 10%.

Think about what’s actually driving this market. Fifty percent of consumer spending comes from the top 10%. Do they care that gas is $6 a gallon? It doesn’t register. Tech dominates the market indexes. What does chaos in the Strait of Hormuz do to Nvidia’s margins? Nothing.

In addition, there’s this phenomenon of buying the dip. If you look at the last four major exogenous events, the Gulf War, 9/11, the Iraq War, and COVID, basically, there was a dip and then the markets ripped back the following year.

We did have a drawdown here in March, but it’s rebounded since. I think what’s happening is the cycle time between fear and uncertainty around a war and the opportunity to buy is compressing. Now people are like, let’s move to the part of the program where we make money.

Let me break down what’s actually happened in the markets. Year to date, the biggest winners were industrials, materials, and energy. That made sense — war in the Middle East, oil prices surge, and energy stocks move higher.

On March 30, we hit the market bottom. Since then, it’s completely reversed. Energy is down 11%. Meanwhile, financials are up 8%, communication services up 10%, tech up 21%.

So what happened? For weeks, investors were doing what you’d expect. They were pricing in the risk of the Iran war. Then something switched. I call it timeline fatigue. The Iran story kept producing plot points with no resolution. Ceasefire, then no ceasefire. Blockade, then no blockade. Trump says negotiations are going somewhere, then they don’t. At a certain point, investors just gave up trying to interpret the headlines.

When investors stopped looking at the geopolitics, they looked at the fundamentals. Earnings are strong, guidance is strong. Microsoft and Nvidia are trading at some of their lowest forward multiples in years. Suddenly the math was simple: Big Tech is executing, multiples are attractive, let’s buy.

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The AI Industry Faces a New Threat: An Angry Public

The AI backlash is turning violent. On April 10, a man threw an incendiary device at OpenAI CEO Sam Altman’s house, and then went to OpenAI headquarters and threatened to burn it down. A few days earlier, a gunman fired 13 rounds into the front door of an Indianapolis councilman’s home. The perpetrator left a note that read “No Data Centers.”

Americans are making it increasingly clear they don’t like where AI is headed.

Data centers, the most physical manifestations of AI, are an obvious target. Last year, 48 data center projects, representing at least $156 billion in investment, were blocked or stalled by local opposition, predominantly in the form of peaceful protests.

Anti-AI sentiment is starting to shape policy: Maine just introduced a bill to ban data centers altogether, joining 11 other states with active bills proposing restrictions or outright bans.

Opposing data centers is one of the few topics popular on both sides of the aisle. Of the elected officials who’ve taken positions against AI data centers, 55% are Republicans and 45% are Democrats.

Another, perhaps surprising cohort coming out against AI is Gen Z. A recent survey found that 44% of Gen Z admitted to having sabotaged their company’s AI rollout in some way.

This isn’t really about AI — it’s about inequality, and AI has become the most visible symbol of it.

The top 19 households in America own 2% of all wealth, up from 0.1% just 40 years ago. We have more private security guards in this country than high school teachers. Now you have this technology that promises to reshape the entire economy, and the people positioned to benefit are the same people who already own everything. Meanwhile, local communities are watching their electricity bills go up to power data centers they had no say in building.

That’s the context for the violence. And when you look at the reaction online, it mirrors the Luigi Mangione response. People sending support, asking about bail funds. That’s not fringe behavior. That’s a signal about where a meaningful portion of the country actually is.

There’s no justifying the violence. Full stop. And I’d push back a little on the idea that this is specifically an AI problem. Historically, public figures have been targets of violence. One in three presidents has been shot at. The difference is, CEOs are now famous. Nobody knew who CEOs were when I was growing up. Now they’re the figureheads of the American economy, and that makes them targets. Oh, and there’s access to assault weapons and guns at every f*cking corner.

But separate from the violence, there’s a real story here about brand collapse. Sam Altman used to be the tech CEO we actually wanted. He spoke in hushed tones to Congress about the dangers of the thing he was building. He didn’t own equity in OpenAI. He was going to save us from AI while building it responsibly.

Then the mask slipped. He started sh*tposting Microsoft. He compared data center energy use to the calories it takes to raise a child, essentially telling critics to stop complaining. Then Marc Andreessen started saying he doesn’t believe in reflection, only forward momentum. These are not people who are winning hearts and minds.

The result is that AI’s brand has collapsed, and it’s self-inflicted.

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Amazon Buys Globalstar in $11.6 Billion Satellite Deal

Last week, Amazon announced it will acquire satellite communications firm Globalstar for $11.57 billion. Globalstar’s infrastructure will help accelerate Amazon’s plans to develop its own satellite network, deemed Amazon Leo.

On news of the deal, Amazon’s shares increased almost 4%, adding almost $100 billion in market capitalization — essentially paying for the acquisition eight times over. Globalstar shares rose almost 10%.

Still, the deal will be Amazon’s second-largest acquisition after Whole Foods, and it wasn’t cheap, especially given the size of Globalstar’s business. Globalstar operates just 24 satellites and has never been profitable.

So, why is Amazon paying so much for an unprofitable satellite company?

Amazon isn’t buying Globalstar for its 24 satellites, but rather the spectrum that Globalstar owns.

Spectrum refers to the invisible radio frequencies that wireless signals travel on. Some spectra carry Wi-Fi signals, some carry broadcast TV signals, some carry our smartphone data.

There is a finite amount of spectra, and the government, specifically the Federal Communications Commission, auctions off licenses for them every few years. But since there’s a fixed amount, they are expensive and hard to get. The last auction was in 2022, and Verizon paid more than $50 billion for its licenses.

Amazon wants Globalstar’s spectrum so that it can create its own private wireless network. In his annual letter to shareholders, Amazon CEO Andy Jassy described the company’s plans to use Amazon Leo to sell Wi-Fi to rural customers, airlines (Amazon already has a contract with Delta), and to integrate it into AWS.

But there’s another, even more important angle. Amazon’s industrial robots and expanding fleet of drones need to communicate constantly, and they will be able to operate more efficiently on a private wireless network. Essentially, Amazon’s purchase of Globalstar is an extension of their investment in their logistics infrastructure.

Prof G Media’s Big Tech stock pick of the year was Amazon. Why? Over the past few years, excitement about AI has made it easy to overlook the importance of hard assets. But this year, the rise of the HALO trade (heavy assets, low obsolescence) has made Amazon the best-performing member of the Magnificent 7.

Amazon’s hard assets are its biggest moat. It has as many airplanes as the Austrian or Norwegian military (110 aircraft), and more industrial robots in operation than all other companies in the U.S. combined.

These investments in automation are expected to boost productivity by roughly 25% at fulfillment centers.

The Allbirds pivot to AI is gonna inspire a bunch of copycats. Think: Kmart AI.

Prof G Markets is going on tour! Join us in San Francisco, Los Angeles, Miami, Chicago, and New York City. Expect special guests, unfiltered conversation, and the jokes that don’t make it on-air… Get your tickets here.

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NASA Is the Most Underrated Brand

Mia Silverio — Mon, 13 Apr 2026 14:56:00 GMT

On Friday, four astronauts returned to Earth after venturing deeper into space than anyone has gone before. The mission, Artemis II, sent a rocket weighing 5.7 million pounds around the moon and back, setting the stage for a future lunar landing. This incredible feat is a timely reminder that American excellence still exists — if only under the NASA logo.

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NASA is a point of national pride, a driver of technological progress, and a reason for top minds around the world to choose America. It is one of the most underrated brands in the world.

What unites humanity more than space exploration? Passion for sport? Love for our families? The list is short. A fifth of the world’s population — 650 million people — watched Neil Armstrong and Buzz Aldrin walk on the moon in 1969. Five decades later, Americans are still excited about it.

In 2019, 45% of Americans said there hadn’t yet been any other national accomplishment that gave them as much pride in the U.S. as the moon landing.

The NASA website gets more site visits than The Economist, twice as many as SpaceX, and almost as many as Tesla. Of all traffic, less than half is from the U.S.

Today, NASA is the most popular federal institution, ahead of the U.S. Postal Service and the Department of Veteran Affairs. That is despite the fact that NASA is vastly less efficient than the privately run SpaceX. Over 118 space missions, NASA saw an average cost overrun of 90%. Over 16 missions, SpaceX saw an average cost overrun of 1.1%.

Yet, as recently as last week, 80% of Americans hold a favorable view of NASA. What other seemingly inefficient government agency do 80% of Americans like?

The NASA logo is so broadly admired that it has become a status symbol. Coach, Balenciaga, Kith, Estée Lauder, Nike, Adidas, and Vans have all collaborated with NASA or used its iconic red branding. Ariana Grande named a song after the agency, and NASA has been mentioned more than 230 times in rap lyrics since the 1990s. How many other icons can claim that kind of cachet?

ROI

NASA may look inefficient compared with SpaceX, but be clear: Its second-order effects on innovation and America’s reputation make it one of the most valuable U.S. assets. President George H.W. Bush reportedly called the Apollo program “the best return on investment since Leonardo da Vinci bought himself a sketchpad.”

For each dollar invested in the Apollo program, the U.S. got $7 back. Today, NASA creates more jobs per million dollars in budget than federal spending on defense, healthcare, or infrastructure.

It is also the launchpad for crucial American innovations. NASA calls the commercial products and services that have emerged from its research “spinoffs.” Most notably, NASA funding kick-started microchip and computer innovation in the 1960s. It is estimated that the Apollo program accelerated computer technology by 10 to 15 years.

Other spinoffs include products as impressive as precision GPS, solar panels, satellite TV, implantable heart monitors, and LASIK surgery, and as mundane as memory foam, golf ball dimples, and invisible braces.

Even more importantly, NASA’s achievements have inspired students and innovators. In the decade following the 1961 launch of the Apollo program, the rate of doctoral degrees in physics conferred in the U.S. tripled. Even as late as 2009, 50% of high-profile scientists named the Apollo missions as a major reason they pursued science.

Elon Musk, one of the most gifted entrepreneurs of this century said, “Landing on the moon was probably the most inspiring thing in history. It certainly inspired me. I’m not sure SpaceX would exist if not for Apollo 11.”

Vivek Ranadivé, a tech entrepreneur and billionaire, decided he wanted to study in the U.S. after hearing the moon landing broadcast on a transistor radio in Bombay. He now owns the Sacramento Kings.

NASA’s future

In many ways, space is Trumpian. It’s full of superlative opportunities — the farthest flight, the most powerful engine, the biggest rocket, etc. Space also provides another frontier — a key ingredient in America’s manifest destiny ideology. Last December, Trump signed an executive order calling for the U.S. to return to the moon by 2028, and establish a permanent lunar base by 2030. (Prediction: Trump names a moon crater after himself.)

Future lunar missions depend on SpaceX’s Starship to transport astronauts to the moon. NASA’s reliance on SpaceX makes the American space program vulnerable to Elon Musk’s whims — but that’s a separate post.

Another motivating factor behind our return to the moon is that China is trying to beat us there. Since 2015, China has increased funding for its space program by over 1,000%, and its robotic space missions have already retrieved samples from the far side of the moon — a feat the U.S. has not achieved.

National treasure

When Americans were asked what our country’s greatest achievement of the 20th century was, the most common answer was our space program. That sentiment doesn’t seem to have faded. Today, nearly 70% of Americans say it is “essential” that the U.S. continue to be a leader in space exploration.

We may be more divided than ever, we may be at war, and the American brand may be tarnished — but the American spirit is alive and well in NASA. In fact, NASA might be the last bastion of American patriotism, and it is undoubtedly a timely reminder of human unity.

Children in Juárez, Mexico, watched the launch livestream of NASA’s Artemis II mission. Source: Jose Luis Gonzalez/Reuters

Nine of 10 biggest S&P gains have been tied to Iran or tariffs

Prof G Markets — Mon, 13 Apr 2026 10:03:12 GMT

28%

Of Americans think they would lose in an unarmed fight with a rat

Markets in review: Trump, Iran, and the worst consumer sentiment on record
Is the $2 trillion tech sell-off a buying opportunity?
Newsletter Exclusive: NASA is America’s most underrated brand

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US-Iran Talks End With No Deal

President Trump said that the U.S. Navy would begin blockading the Strait of Hormuz after peace talks fell through over the weekend. Oil prices spiked more than 8% and major indices fell more than 1% on Sunday night.

In a post on X, Iran’s lead negotiator cited lack of trust in the U.S. as a primary reason for the failure of the peace talks.

News about the conflict has changed quickly. Just last week, President Trump threatened to destroy Iranian civilization unless its leaders reopened the Strait of Hormuz. Hours later, he announced a two-week ceasefire, contingent on Iran reopening the strait.

In response, U.S. crude plunged 16% and the Dow had its best day in a year. But within 24 hours, the strait remained effectively closed, and the deal unraveled over a dispute about scope — specifically whether the ceasefire applied to Lebanon, where Israel had continued to strike Hezbollah. By the following day, stocks were retreating, and oil was climbing again.

Throughout this entire conflict, there’s been one consistent dynamic: Trump promises to end the war and the market rallies, only to fall when his promises don’t materialize.

In fact, since Trump took office last year, nine of the S&P 500’s 10 biggest gains have had to do with Iran or tariff relief. If one were able to perfectly time these nine occasions, they would have earned a 52% return compared with 12% for buying and holding an index fund throughout.

Last week ended with news that the Consumer Price Index, a key measure of inflation, rose 3.3% year over year in March — the largest increase since 2022. The increase was driven by a 12.5% year-over-year rise in energy prices.

Meanwhile, consumer sentiment has dropped to its lowest level ever. In other words, consumers feel worse about the economy now than they did during the depths of the Great Recession.

Josh Brown is the CEO and co-founder of Ritholtz Wealth Management

Paradoxically, the investor who looks least equipped to trade a market like this, the normal guy with a brokerage account, is actually in the best position. A professional hedge fund manager charging two and twenty has made an explicit promise to outperform the market for a significant fee. In normal times, that’s a hard promise to keep. In an environment where markets swing violently on a presidential tweet and reverse just as violently two hours later, it’s close to impossible.

Arguably, the market is less risky now than it was three months ago. I know that sounds insane, but valuations have compressed and earnings are growing across most S&P 500 sectors.

The war — whether it lasts three weeks or three years — will resolve itself. You can’t speed it up, and you can’t fully understand its depth or duration. But if you have earnings growth, which we do, and interest rates that aren’t rising, history says stocks resume their upward trend once the conflict ends.

Now step back and look at a global portfolio. On a rolling one-year basis, developed markets ex-US are up 46%, emerging markets up 55%, and the U.S. is up 27%. The U.S. underperformance reflects political instability and uncertainty around Trump.

But for investors with global portfolios, the answer to how you navigate an environment like this is: You already did.

”Two and Twenty”?

Two and twenty is the standard fee structure that hedge funds charge their clients. Two refers to a 2% annual fee on everything you invest, regardless of performance. Twenty refers to the 20% cut that hedge funds take of any profits above a certain benchmark.

Even if you had perfect insight into the geopolitical situation, it might not help you. Trump’s decision-making is genuinely opaque and erratic.

What does help, though, is access. In the prediction markets, three accounts made over $600,000 betting correctly on the ceasefire timing. These were the very same accounts that had already nailed the date and timing of the initial U.S. strikes on Iran.

SEC Enforcement Division Director Margaret Ryan was investigating this but abruptly resigned last month. Apparently she clashed with agency leaders over how to handle cases tied to President Trump and his family.

Markets function because participants believe prices reflect publicly available information. When that faith erodes, and when a generation of investors concludes the game is rigged, they leave. It happened after 2008, and the damage was lasting.

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Is the Tech Sell-Off Creating the Trade of the Year?

Since the start of the year, the Magnificent 7 have lost nearly $2 trillion in market cap. Goldman Sachs told investors in a note last week that this has been one ‌of the weakest periods of relative returns for technology over the past 50 years.

Globally, the technology sector now has a price-to-earnings ratio lower than that of the consumer staples and industrials sectors. Microsoft now trades at a lower forward price-to-earnings ratio than the broader S&P 500.

The tech sector has gotten hammered over fears that AI will disrupt traditional software workflows. Concerns over skyrocketing capex spending and broader macroeconomic uncertainty have pushed investors toward “safer” sectors like industrials, utilities, and materials.

However, earnings projections for the upcoming quarter paint the tech sector in a different light. According to Goldman Sachs, the market consensus is for IT earnings per share to grow by 44%, accounting for 87% of index earnings-per-share growth in the first quarter.

Investors are punishing Big Tech companies for overspending on capex, for plowing money into AI infrastructure with no clear path to profitability.

But here’s what doesn’t make sense: Anthropic and OpenAI are doing the exact same thing, just without the scrutiny. They’re spending enormous amounts with unit economics that don’t add up. If the market is punishing Microsoft for overspending, why aren’t OpenAI and Anthropic facing the same reckoning? Probably because they’re not public yet.

The market has been indiscriminately selling software for months — Salesforce, Microsoft, Palantir, CrowdStrike, Palo Alto. These are some of the best companies in the world, down anywhere from 25% to 50%. And yes, some face real AI disruption risk. But it’s gone too far.

The moment I decided to step in was when I saw a story claiming Anthropic was about to disrupt all of cybersecurity — that companies would rip out their Palo Alto infrastructure and just vibe-code something with Claude.

There’s no board of directors at any public company anywhere in the world that would sign off on that kind of cybersecurity plan. It’ll never happen.

I run a business. I’m a Salesforce customer. I’d love to cut that six-figure expense. But it’s a system of record. It’s the operating system of the firm. Any AI-driven alternative is going to cost money too — it’s not free just because it runs on AI.

The deeper story here is a revaluation that I flagged on February 9: The market has been overpaying for asset-light SaaS companies and underpaying for companies with real, heavy assets. Here’s what that correction looks like year to date — energy up 36%, materials up 10%, utilities up 9%, staples up 7%, industrials up 6%, real estate up 5%. Every one of those sectors owns things a chatbot cannot replace. Metal, steel, timber, bricks. That’s the adjustment we’re watching play out.

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Is NASA the Last Bastion of American Pride?

NASA is a point of national pride, a driver of technological progress, and a reason for top minds around the world to choose America. It is one of the most underrated brands in the world.

In 2019, 45% of Americans said there hadn’t yet been any other national accomplishment that gave them as much pride in the U.S. as the moon landing.

The NASA website gets more site visits than The Economist, twice as many as SpaceX, and almost as many as Tesla. Of all traffic, less than half is from the U.S.

Yet, as recently as last week, 80% of Americans hold a favorable view of NASA. What other seemingly inefficient government agency do 80% of Americans like?

ROI

For each dollar invested in the Apollo program, the U.S. got $7 back. Today, NASA creates more jobs per million dollars in budget than federal spending on defense, healthcare, or infrastructure.

NASA’s future

National treasure

Children in Juárez, Mexico, watched the launch livestream of NASA’s Artemis II mission. Source: Jose Luis Gonzalez/Reuters

Birth rates are falling across the developed world, but the usual explanations miss the point. In this Prof G+ exclusive video, Scott explains why the real drivers are economic: housing costs, stagnant wages, and fewer stable partnerships.

Instead of bonus reads this week, please enjoy a collection of the best X posts about Artemis II.

Is SpaceX Really Worth $2 Trillion?

Prof G Markets — Mon, 06 Apr 2026 10:03:57 GMT

$23 million

That’s how much the toilet in NASA’s Artemis II spaceship cost to develop.

Is SpaceX really worth $2 trillion?
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SpaceX’s IPO Could Make Musk the World’s First Trillionaire

SpaceX has confidentially filed with the SEC for what could be the largest IPO ever. The company is targeting a $2 trillion valuation and could raise up to $75 billion in the offering, which could come as soon as June.

If the IPO prices are as expected, Elon Musk’s 40% stake in SpaceX, in addition to his other holdings, will make him the world’s first trillionaire.

SpaceX is by far the most dominant player in the largest ever addressable market: the cosmos. It controls two-thirds of the satellites orbiting Earth, accounted for 85% of all U.S. space launches last year, and operates at one-fifth the cost of its closest domestic competitor.

Some perspective: NASA’s Space Launch System rocket that jettisoned astronauts on a path around the moon last week has launched twice since its development in 2011; SpaceX’s Falcon 9 rocket has launched more than 640 times. The Falcon also cost half as much to develop.

SpaceX generated $8 billion in profits in 2025 off of roughly $16 billion in revenues, and analysts expect sales to increase 25% this year. A $2 trillion valuation would imply a 125x price-to-sales multiple.

SpaceX’s out-of-this world valuation sent ripple effects through the broader space economy. These only intensified when, on Thursday, the FT reported that Amazon is in advanced talks to acquire the satellite telecom group Globalstar for roughly $9 billion. Satellite services stocks Planet Lab, Viasat, EchoStar, and Rocket Lab closed the week up 29%, 22%, 18%, and 15%, respectively.

Is this an amazing company or is it ridiculously overvalued? The answer is yes.

This man of the people bullsh*t where Elon is reserving 30% of the shares for the retail investors? He’s doing that because retail investors are the only ones stupid enough to pay this price. Institutions weren’t going to cover the allotment here.

Research shows that IPOs that allocate directly to retail investors lose over 60% of their value, on average, within a year, underperforming their peers by about 20%. Why? They’re priced more aggressively, and retail trading platforms push shares and hype companies up, leading to big IPO spikes.

If this thing gets out anywhere near a $2 trillion valuation, you do not want to be in this stock three, six months out. Even Musk and his jazz hands can’t figure out a way to justify anything resembling this valuation.

This company bundles SpaceX, Starlink, xAI, and X. It’s very hard to understand what the right valuation is because there’s a lot of bullsh*t — but also a lot of substance.

That complexity is by design. Musk bundles enough ambitious far-horizon narratives such that investors cannot build a clean model and they just have to trust him. This valuation requires you to believe his whole pitch perfectly, across the longest possible timeline.

When Google went public, it was trading at 10x trailing revenue with revenue growth of 240%. SpaceX is going public at 125x trailing revenue, with revenue growth of 25%. So SpaceX’s revenue growth is almost 10 times lower than Google’s was, and yet its valuation is more than 10 times higher.

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Nike Lost Hundreds of Billions. Allbirds Lost Everything

Two sneaker brands at opposite ends of the market are both running into trouble.

Nike stock tumbled 16% last week after reporting earnings. Net income fell 35%, gross margins compressed on the back of tariff pressure in North America, and management warned that revenue will decline for the rest of the year. Sales in China, one of its most critical markets accounting for 15% of global revenue, will fall 20% next quarter alone.

Investors are disappointed, and so is Nike’s CEO, Elliott Hill. Brought back 18 months ago to turn Nike around, Hill told employees in an all-hands meeting he is “so tired of talking about fixing this business.”

He still has a long way to go. Nike is valued at 1.4x sales — roughly the multiple it was trading at in 2009. Its market cap has fallen from almost $300 billion in 2021 to $65 billion today; Nike is now worth a third of what discount retailer TJ Maxx is.

Meanwhile, Allbirds, the wool sneaker brand that went public in 2021 at a $4 billion valuation, sold off its remaining intellectual property last week for $39 million to a brand management firm. The buzzy company, whose shoes were once deemed part of the Silicon Valley uniform, never turned a profit.

Allbirds was always a bad business. The VC community embraced it, which should have been the tell. It had a fashionable product, expensive retail leases it could never sustain on unit economics, no wholesale infrastructure, and no brand loyalty. When the hype faded, there was nothing underneath it.

Nike is a completely different conversation. This is still one of the greatest consumer brands in the world. Whether you are watching football in Ghana or badminton in the U.K., that Swoosh means something.

Elliott Hill has only been back 18 months, and he should be given three years. But I think he’s got the wrong strategy. Something that Aswath Damodaran told me that always struck me is that we’re obsessed with youth, and growth companies never want to accept that they’re aging into mature companies.

Nike has not recognized that it’s a mature, low-growth company. It’s time to cut costs. For every dollar in expenses you cut, it has the same impact on the bottom line as $5 to $6 in incremental revenue.

Which do you think is easier right now? What investors need to hear is a margin story: flat revenues, costs cut 4% to 6% a year for three years, low-double-digit EBITDA growth. That almost certainly means 10,000 to 20,000 layoffs are coming, and an activist will show up and force this if leadership will not. This is a $70 to $80 stock — if there is an adult in the room.

One thing that has always struck me on Nike’s investor relations homepage is that the first thing you see is “Nike is a growth company” in huge letters. It’s been that way for years. That’s like their main pitch to investors: We’re a growth company. And, well, definitionally, you’re not because your revenue has fallen every quarter for more than a year.

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Can TBPN Make OpenAI Cool?

In its buzziest acquisition to date, OpenAI acquired tech-industry talk show TBPN last week. According to a source familiar with the transaction, the acquisition was valued at approximately $200 million.

Founded just 18 months ago by entrepreneurs John Coogan and Jordi Hays, TBPN has become a media staple for fans of the tech industry, and a platform for CEOs like Mark Zuckerberg, Satya Nadella, and Alex Karp.

The caliber of TBPN’s guests creates a flywheel effect: High-profile guests attract other high-profile guests, which attracts high-profile viewership.

This in turn attracts premium advertising dollars. With only 11 employees, TBPN generated $5 million in ad revenue in 2025 and was on track to exceed $30 million in 2026. They will no longer run ads, but as a house publication for OpenAI, they effectively become a marketing platform.

TBPN’s revenue per employee, assuming $30 million in sales, is greater than Apple’s.

TBPN livestreams from YouTube and X for three hours a day, five days a week. Most episodes get between 4,000 and 10,000 live viewers. Most of its influence stems from clips on X. It’s both a reinforcement of X’s continued cultural gravitas and a reminder that clips are no longer just a marketing requirement. The clips are the content.

OpenAI’s decision to purchase a media company isn’t entirely surprising. There is a long history of tech companies buying or starting media firms as a marketing and customer acquisition strategy. Microsoft and NBC started MSNBC in 1996 to drive traffic to Microsoft’s internet portal, MSN. Bloomberg launched Bloomberg News to sell its terminals, and retail trading platform Robinhood acquired MarketSnacks and launched Sherwood News, a tech-focused media outlet.

OpenAI’s move follows an old strategy, but there is a new lesson we can learn from this deal.

Read the rest on Mia's Substack

America Is Running Out of Doctors. It’s Also Turning Them Away

The richest country on the planet has a problem: It’s running out of doctors.

More than 80% of U.S. counties are medical deserts, meaning areas with too few physicians to meet demand. By 2037, the U.S. will have a shortfall of 87,000 primary care providers. In other words, between 130 and 175 million Americans — almost half the country — could lack a primary care doctor.

But here’s the confusing part: We have no shortage of people who want to become doctors. Every year, medical schools turn away roughly 30,000 applicants, some exceptionally qualified.

Last year, American medical schools rejected about 25% of applicants who scored in the top-10th percentile.

Today, the chance of a premed freshman becoming a doctor is just 6%.

First, Medical School

Before a medical student spends a dollar on tuition, they’ve already spent $7,400 on preparation and admission expenses. Most apply to 16 to 18 schools; some apply to as many as 30. Ambitious students have to, because the most competitive programs’ acceptance rates range from 2% to 10%. Some are even lower. Stanford admitted 1.0% of applicants. NYU? 0.5%.

After four grueling years of medical school, graduates have to apply for residency. Residency is a mandatory, post-graduate training period that lasts between three and seven years. During this period, they work 80-hour weeks and make, on average, $62,200.

The Residency Bottleneck

Over the past three decades, the federal government has increased the number of residency spots by only roughly 1%, while the U.S. population has increased nearly 30%.

Seventy percent of teaching hospitals fund their own residency slots, but they can’t keep up with demand — and disproportionately fund spots for lucrative specialities where they can recoup the cost through billing, not where the shortage is worst (primary care and rural medicine).

This has created a bottleneck where medical schools are reluctant to increase enrollment because there aren’t enough residency slots. It’s not a good look for very expensive schools to be graduating lots of unemployed MDs. The consequence is that they reject thousands of qualified applicants.

Shaheen Lakhan, M.D., Ph.D., explained that this residency gridlock is a policy choice, not an inevitability. “We have, in effect, added more cars to the on-ramp without building new lanes on the highway.”

It’s Expensive to Save Lives

The average medical school graduate has paid more than $370,000 for their undergraduate and doctoral degrees. More than 70% of graduates carry debt; the average owes $223,130. It takes most of them two decades to be debt-free.

On July 4, 2025, President Trump signed the “One, Big, Beautiful Bill Act” into law, enacting sweeping changes to federal loan programs that will impact who can afford to pursue medicine.

Starting July 1, 2026, professional degree students (including medical, dental, and law students) will be limited to borrowing $50,000 per year and $200,000 over a lifetime. Grad PLUS loans — which allow grad students to borrow up to the entire cost of attendance minus federal aid — will be eliminated entirely.

As a result, many students will be forced to bridge the gap with private loans, or not finish at all.

The Surplus That Never Materialized

How did we get here? It all started back in the 1980s, when people weren’t concerned about a shortage of doctors. In fact, they were concerned about a surplus. The Graduate Medical Education National Advisory Committee report projected in 1980 that the U.S. would have 70,000 more physicians than it needed by 1990.

Policymakers responded accordingly: Scholarships were scaled back, residency training requirements were tightened, and medical schools agreed to a voluntary moratorium on new institutions that lasted from 1980 to 2005.

The most consequential legislation came in 1997: Congress passed the Balanced Budget Act, which capped the number of residency slots that Medicare would fund, freezing support at 1996 levels.

The surplus never materialized. The models failed to account for demand driven by population growth, aging, and expanded insurance coverage. By 2005, the Association of American Medical Colleges had reversed course entirely, acknowledging that the U.S. was now in shortage territory.

America’s rapidly aging population only intensifies this crisis. The number of Americans 65-plus is expected to double by 2060. The 85-and-older population, which requires the most intensive care, is expected to triple by 2060.

We are woefully unprepared to care for them: Only 44% of geriatric medicine residency spots were filled in 2025. That’s largely because geriatricians earn half of what cardiologists do. Primary care physicians make even less than geriatric physicians on average.

At the same time, roughly 20% of practicing physicians are 65 or older, and those between ages 55 and 64 made up another 25% of the active workforce. Realistically, more than a third could retire in the next decade.

Geography as a Preexisting Condition

The shortage of doctors is already affecting rural America. In 2020, only 2% of Medicare-funded training slots were in rural areas, despite rural communities representing 18% of the U.S. population.

Part of the problem is student preference: Only 3% of residents finishing their training say they would prefer to practice in a community of 25,000 or fewer.

This asymmetry has lethal consequences. Rural residents face dramatically worse health outcomes across nearly every major disease category.

It’s gotten worse over time: Prime working-age mortality in rural areas was 43% higher than in urban areas by 2019 — a stark increase from just a 6% difference in 1999.

Access to care is a major driver of these disparities. A 2025 Brown University study found that in rural counties, adding just one primary care physician is associated with 1.4 fewer deaths per 100,000 older adults, a benefit 37 times larger than the same addition would yield in urban areas.

Solutions

The physician shortage is not a mystery, nor is it a demographic accident. It’s the downstream consequence of a policy decision that has never been meaningfully reversed.

The political path forward exists. The Resident Physician Shortage Reduction Act of 2025 would add 14,000 new Medicare-supported residency positions over seven years and codify the Rural Residency Planning and Development Program. It has bipartisan support, but it has not passed.

Without action, the shortage of doctors will only get worse — and every year that we fail to address this problem, another class of qualified applicants is turned away from medical school.

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How Do You Make a Good Prediction?

Mia Silverio — Mon, 30 Mar 2026 14:11:31 GMT

In the past two weeks, Mark Zuckerberg shut down the virtual reality platform Horizon Worlds, the foundation of his metaverse project, and OpenAI killed Sora, its video creation engine and social media platform. Prof G predicted both. How?

Some Redditors suspected that Scott had insider information. He didn’t. Scott has been making predictions for years, and while he doesn’t always get it right, he’s pretty good at it. Ten out of his 11 predictions for 2025 came true.

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I’ve made Scott’s annual predictions deck since 2021, so I’ve had some exposure to how he comes up with these bets. The following is my best estimation of the Prof G Media predictions framework.

How to make a good prediction:

Read constantly and let data guide your hunches.
Never underestimate human nature.
Be skeptical when the crowd is certain.
Remember: Greatness is in the agency of others.

Read Constantly and Let Data Guide Your Hunches

If you want to make a good prediction, you need a deep understanding of the subject matter. If you’re making a prediction about the markets, for example, you should be reading, watching, and listening to market-related content all the time.

Continuity is important for pattern recognition. You can’t just be really plugged into financial news for three days. To make a good prediction, you need to treat the markets (or whatever you’re predicting about) like a best friend. You should be close to them for months — years even, to understand how they work and how they react to different situations.

Your reading should be biased toward data-heavy sources. Let that data guide you. Words lie easier than numbers.

We anticipated Sora would fail because we were following the data. The app was released at the end of September, and by December, downloads were decreasing more than 30% month over month. In January, they declined another 45%.

Not only was it unpopular, the economics were mind-bogglingly bad. AI video generation is 2,000 times more energy intensive than text, and more than 150 times more expensive. Forbes estimates that Sora burned $15 million per day. That’s more than Adam Neumann burned every day at WeWork.

In terms of revenue, Sora generated about $2 million from in-app purchases; in other words, its revenue covered the first three hours of its operation.

There was just no way that a side bet that disastrous could continue.

Horizon Worlds was even less popular than Sora. At its peak, it had roughly 300,000 monthly active users. MySpace, a social network popular in 2005, has almost 800,000 monthly visitors.

Never Underestimate Human Nature

Society and technology move faster than evolution. Ten thousand years ago, the most-exciting technological advancements were stone tools and the domestication of cows. Today, we have artificial intelligence in our pockets, but we’re navigating the world with the same controls (genes) as paleolithic humans.

This is all to say: Innate evolutionary tendencies are hardwired into our brains, and they influence us more than we’d like to think. We still have a desire for sugary and fatty foods because our bodies are built to avoid starvation. Negative memories are more salient to us because in our cave days, missing danger was costlier than missing an opportunity.

An understanding of biology and psychology fueled Scott’s prediction that the metaverse would fail back in 2021. Prof G explained that headsets obstruct our peripheral vision, exposing us to stalking predators (real quote), so people have a natural revulsion toward putting them on.

They also look stupid. Everything we put on our bodies is, at some level, about broadcasting attractiveness and value to a potential mate. VR headsets are sex repellant (his words).

Be Skeptical When the Crowd Is Certain

Predictions are trends, and as they grow in prominence, they can also appear to grow in prescience. As more people hop on the bandwagon, they bring with them their own justifications for why ___ is going to happen. Then the size and power of the trend starts to influence the media, which converts even more people.

The problem is that when predictions become trends, it becomes easier to overlook risks or ignore the potential for other possibilities. When everyone is already convinced of something, no one has to actually investigate the specifics.

In his book Mastery, Robert Greene argues that true expertise means developing such a deep understanding of a field that you can detect anomalies and outliers that others haven’t processed yet. Sometimes the contrarian call is just stating what’s plainly in front of you.

This is what happened with Sora. AI-generated videos from the platform went viral on social media, making everyone think this was the next big thing. Case in point: Disney bet $1 billion on this trend. But after the initial hype, no one stopped to consider whether this made it a good business, or if the masses actually wanted to create AI videos of themselves.

A skeptic might have realized that media consumption has long followed the “1% rule,” where a small fraction of people create content and the vast majority consume it.

4% of YouTube videos account for 94% of views on the platform.
3% of videos on Instagram account for 84% of all views.
5% of videos on TikTok generate 89% of the views.

The top 25 podcasts reach nearly half of U.S. weekly listeners.

Consumers don’t want to produce their own entertainment. They want to be entertained.

Greatness Is in the Agency of Others

Scott didn’t have insider information on Sora. The prediction came from Dan Chiolan, a member of our research team.

One of Scott’s superpowers is attracting and retaining top talent. He hires smart young people, and then gives them (us) a ridiculous amount of responsibility. Dan is 22. He made a prediction on a major platform that Scott put his name behind. At 24, Ed Elson, a classics major, became the co-host of a prominent finance podcast. At 26, I produced all of Scott’s slides for his TED Talk, a presentation that has now been viewed more than 17 million times.

Prof G Media exists and works because Scott is great, but also because Katherine, Drew, Claude, MJ, Mia, Ed, Claire, Jenn, Allison, Dan, Bella, Kristin, Laura, David, Erikk, Billy, Jorge, Gil, Corinne, Michael, Kami, Karen, and Lucy … are great.

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Big Tech Just Had Its Big Tobacco Moment

Prof G Markets — Mon, 30 Mar 2026 11:03:13 GMT

$250,000

That was the average bonus for Wall Street bankers and traders in 2025.

It’s the economy, stupid
Are prediction markets gambling? Congress weighs in
Is social media addictive by design? Juries are starting to think so
Newsletter Exclusive: How did Prof G predict the demise of Sora and the Metaverse?

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Prosperity Is Here, It's Just Not Evenly Distributed

There are two economies right now. One lives in spreadsheets and press releases: GDP grew 2.2% last year, the S&P rose 16%, and President Trump brags that he’s secured $21 trillion in investments from foreign nations. The other economy is the one people feel every day, and it tells a very different story.

Nearly two-thirds of Americans are living paycheck to paycheck. In the past month, 28 million Americans skipped a meal to afford medication. Thanks to the Iran war, these struggling families now have to pay 30% more for gas and will have to contend again with rising inflation.

Young people have largely been shut out of the housing market, with first-time buyers now making up just 21% of all home purchases, down from roughly 40% throughout the 1990s.

It’s also a brutal time to find a new job: Fed Chair Jerome Powell said that after adjusting for statistical overcounting, net job creation is “pretty close to zero.”

Consumer sentiment has only been worse 1% of the time in the series’ entire history. This is bad news for Trump, whose 29% approval rate on the economy is now lower than Biden’s worst scores during the post-COVID inflation spike.

Instead of addressing the growing economic crisis, Trump and his cabinet have maintained a faux optimism — not unlike the Biden administration’s decision to tout “Bidenomics.” However, in Trump’s case, the ignorance looks less like a result of political pressure, and more a reflection of their priorities.

When Kevin Hassett, the director of the National Economic Council, was asked how the Iran war might affect regular Americans, he responded that “it would hurt consumers … but that’s really the last of our concerns right now.” That’s it. That’s the quote.

The way I would describe America right now is how William Gibson described the future, and that is: Prosperity is here, it’s just not evenly distributed.

One of my favorite stats is the Gini coefficient. Zero means everyone has the same amount, 1 means one person owns everything. When France hit .83 in 1789, they started cutting people’s heads off. We’re at .85.

There are wealth gaps, and then there are lived experience gaps. When I was a kid, my dad’s boss drove a Cadillac and we had a Gran Torino. We went to the same country club. That’s gone.

If you’re in the 0.1% today, you fly private, skip the TSA, have private health care, private security, and your kids are in schools that bear no resemblance to the rest of America.

People don’t evaluate their lives in a vacuum. They evaluate relative to others. And when you’re reminded 210 times a day via phone notifications that you’re not in the 0.1%, it attacks your emotional well-being. Young people are told constantly that they’re not wealthy enough. The vibecession critique is valid in theory. But you can’t wag your finger at people and say “trust the GDP chart” when they’re telling you, clearly, that this isn’t working for them.

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Bipartisan Bill Takes Aim at Prediction Markets

Prediction markets just got their first serious bipartisan pushback in the Senate. The Prediction Markets Are Gambling Act would ban sports-related betting on CFTC-regulated platforms like Kalshi and Polymarket and block them from expanding into casino-style games.

The legislation cuts to the heart of how these platforms make money: Sports events contracts represent between 75% and 90% of Kalshi’s $1.5 billion in annual recurring revenue. If sports contracts are banned, the company’s valuation could fall from $22 billion to $5 billion.

The bill reflects a tension that has been building for a while. Prediction markets have long argued they are sophisticated financial instruments, more similar to futures contracts than DraftKings. That framing made them subject to CFTC oversight instead of state gambling regulation, allowing them to operate in states where sports betting is technically illegal. This bill is the first real congressional attempt to dispute that classification.

The CFTC

The CFTC is the Commodity Futures Trading Commission. It’s the federal regulator that oversees derivatives markets such as futures, contracts, options, and swaps. It’s like the SEC, but for commodities and financial contracts rather than stocks.

Polymarket and Kalshi both have a not-so-secret advantage. Donald Trump Jr.’s venture capital fund, 1789 Capital, has invested in Polymarket, and Trump Jr. himself serves as a strategic advisor to both Polymarket and Kalshi.

Outside of sports contracts, Kalshi has become an important source of economic and political data. Federal Reserve economists determined that Kalshi is better than professional forecasters at predicting inflation, and the platform maintains a perfect forecast record on Fed rate decisions.

There are three categories here: traditional gambling, prediction markets, and options contracts. The prediction markets are offering what looks, smells, and feels like an options contract. You’re paying for an outcome against someone who believes in the opposite outcome. The distinction between betting on the Green Bay Packers and buying a zero-day option on Apple stock is thinner than people think, and I’d argue zero-day options are functionally gambling. Eighty to ninety percent of stock market purchases are effectively speculation, not long-term investing.

What I’d love to see is consistent regulation across all three. They should all be age-gated at 21. These products can be really damaging, especially for young people. Researchers at USC found that three to four years after states legalize online sports gambling, there is a 28% increase in bankruptcies.

The people who should be most nervous about this legislation aren’t the prediction markets, it’s the options exchanges. They are going to have a hard time arguing that their zero-day options products belong in a different regulatory category.

Where do you draw the line? As the great John Oliver said, you draw it somewhere. Sports betting is gambling, and it should be regulated like gambling. That means it shouldn’t operate in states where sports gambling is illegal. It doesn’t mean you ban it everywhere; if you want to set up shop in Nevada, go for it. But stop pretending you’re an options exchange when you’re taking bets on March Madness.

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A Jury Just Ruled Meta and Google Harmed Kids. Now What?

Last week, for the first time ever, a jury found Meta and Google negligent for designing addictive social media features that are harmful to young people’s mental health. The rulings could mark a turning point for Big Tech.

Meta was ordered to pay $4.2 million in damages, and YouTube $1.8 million. Snap and TikTok settled out of court prior to the start of the trial.

Alphabet and Meta stocks fell 2% and 8%, respectively, on the news.

Earlier in the week, a New Mexico jury found that Meta violated state law by failing to protect its users from child predators and ordered the company to pay $375 million in damages.

Financial penalties at this scale are meaningless for companies worth trillions, but if these cases establish a precedent, the damages could add up. Social media companies face more than 1,600 plaintiffs with similar accusations.

Social media companies have thus far avoided liability by citing Section 230 of the Communications Decency Act of 1996, which protects them from liability for what their users post.

Last week’s case was different. The plaintiff focused on the design of Meta and YouTube’s apps, and how they are engineered to be addictive — not the content posted.

Research supports the argument that features like infinite scroll, constant notifications, and autoplaying videos make social media apps psychologically similar to gambling. Millions of young Americans agree, too. Forty percent of Americans 18 to 22 say they feel addicted to social media.

Tobacco took 30 years to get its reckoning. Opioids took 20. Social media went mobile in 2013, which means we’re right on schedule.

Why is this happening now? Juries.

Judges are trained to strip emotion out of the analysis. Juries are not, and these juries are made up of parents whose kids have struggled with self-harm, addiction, and predatory contact online. They feel lied to. And they rendered their verdict accordingly.

I want to be clear: I think these companies are a net good for society, except for Meta. I think Meta has jumped the shark and is now a net negative.

But Big Tech on the whole is a net positive for society. The problem is with the word net. We’re net beneficiaries from pesticides and fossil fuels, but we still have an EPA and emission standards. We have no regulation around these tech companies.

The people who’ve really paid the price here are low-income households. I have the resources to pay for after-school stuff, to keep my kids off screens. I have the time and attention to be at home to ensure they can’t go into the room alone with a screen. Parents working two jobs can’t do that.

The last interesting feature that my former colleague Maria Petrova highlighted is that the insurance companies are saying that they’re not going to protect against this type of liability, because if they had known Big Tech was intentionally breaking the law, they couldn’t have insured them.

I think this is a big moment. I’ve said that before, and I’ve been disappointed. But I think this is different this time.

The Prof G Media Predictions Framework

Some Redditors suspected that Prof G had insider information. He didn’t. Scott has been making predictions for years, and while he doesn’t always get it right, he’s pretty good at it. Ten out of his 11 predictions for 2025 came true.

How to make a good prediction:

Read constantly and let data guide your hunches.
Never underestimate human nature.
Be skeptical when the crowd is certain.
Remember: Greatness is in the agency of others.

Read Constantly and Let Data Guide Your Hunches

Your reading should be biased toward data-heavy sources. Let that data guide you. Words lie easier than numbers.

In terms of revenue, Sora generated about $2 million from in-app purchases; in other words, its revenue covered the first three hours of its operation.

There was just no way that a side bet that disastrous could continue.

Horizon Worlds was even less popular than Sora. At its peak, it had roughly 300,000 monthly active users. MySpace, a social network popular in 2005, has almost 800,000 monthly visitors.

Never Underestimate Human Nature

They also look stupid. Everything we put on our bodies is, at some level, about broadcasting attractiveness and value to a potential mate. VR headsets are sex repellant (his words).

Be Skeptical When the Crowd Is Certain

A skeptic might have realized that media consumption has long followed the “1% rule,” where a small fraction of people create content and the vast majority consume it.

4% of YouTube videos account for 94% of views on the platform.
3% of videos on Instagram account for 84% of all views.
5% of videos on TikTok generate 89% of the views.

The top 25 podcasts reach nearly half of U.S. weekly listeners.

Consumers don’t want to produce their own entertainment. They want to be entertained.

Greatness Is in the Agency of Others

Scott didn’t have insider information on Sora. The prediction came from Dan Chiolan, a member of our research team.

An activist will take a stake in Nike and force job cuts. Revenue has grown 50% over the past decade, from $30 billion to $46 billion, but the stock is trading at a 10-year low. Head count has grown just 3% since 2020. Expect 10,000 to 20,000 layoffs in the next two to three years.

Prof G+ subscribers: join me (Mia) tomorrow for a live session on the science of better business storytelling.

P.S. Next week, April 6, all Prof G Markets content will live on its own YouTube channel. If you like our video content, head to the Prof G Markets channel and hit subscribe.

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So What Is Private Credit, Exactly?

Kristin O'Donoghue — Tue, 24 Mar 2026 13:47:20 GMT

You’ve probably seen some alarming headlines about a crisis brewing in private credit. In recent weeks, investors have tried to pull their money out of private credit funds including Blue Owl and Blackstone, raising questions about how these vehicles work, and what happens when people head for the exits all at once.

It also raises a more basic question: What exactly is private credit anyway? Prof G Markets exists to inform, entertain, and educate — so in that spirit, this week’s exclusive is a simple guide: private credit for ~~dummies~~ nonfinance bros.

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What is private credit?

When you think of a company taking out a loan, you probably picture the loan (credit) coming from a bank like JP Morgan, Bank of America, Wells Fargo, etc. That’s what happens most of the time.

But in some cases, if companies want faster, more customized loans, they can turn to private credit. Private credit refers to tailored, often higher‑interest loans that specialist investment firms — like Ares Management, Blackstone, Apollo Global Management, and Blue Owl Capital — make directly to companies, instead of those companies borrowing from a traditional bank. It’s a fast‑growing but still relatively small segment of the corporate debt market.

When did this party start?

The modern private credit market expanded in the wake of the Great Recession of 2008. In response to the crisis, regulators raised capital and risk management requirements on big banks, making it harder for them to lend money to less-established borrowers. This created an opportunity in the market for less-regulated lenders.

In 2007, private credit funds had $108 billion in assets under management (AUM) globally. This year, AUM is expected to exceed $2 trillion.

A Quick Guide to Credit Lingo
Direct lending: a loan made directly to a company by a private fund
Floating-rate loan: a loan where the interest rate changes over time (usually every month or quarter) based on a benchmark rate. Payments go up when rates rise and down when they fall. Most private credit loans have floating rates.
Covenant: rule in the loan agreement that the borrower has to follow — like limits on taking on more debt or requirements to keep certain financial metrics in a healthy range.
Business development company (BDC): private credit fund for retail investors: They operate like closed-end mutual funds (meaning that unlike mutual funds, they don’t accept new capital after they’re formed) and are often publicly traded.
Dry powder: uninvested capital committed by investors to private credit funds
Principal: the original sum of money borrowed by a company or investor, excluding interest and fees
Yield to maturity (YTM): the annualized rate of return an investor is expected to earn if a bond is bought at its current price and held until its final due date.

The ecosystem

The private credit ecosystem has three main players: the private credit funds (like Carlyle, KKR, Apollo, etc.), the limited partners (those who invest in the private credit funds), and the businesses (who take out the private credit loans).

Private credit funds

Historically, most private credit borrowers have been small to mid-sized companies, ranging from $3 million to $100 million in EBITDA. But as private credit funds have attracted more capital from institutional and high-net-worth investors, they’ve started to underwrite bigger and bigger loans. This increased lending capacity has helped fuel the growth of private companies; before, if a large firm needed to raise a ton of money, it would go public. Now, it can turn to the private credit markets.

Private credit has also become a popular source of funding for big public companies that want flexible terms and to diversify their sources of financing.

This is increasingly applicable for Big Tech. Though the biggest tech companies can generally borrow cheaply in public bond markets, there are certain benefits to private credit financing, namely, flexible terms. Instead of traditional corporate debt that would show up on companies’ balance sheets, arrangements with private credit funds can be structured such that most of the debt sits in separate legal entities called special purpose vehicles (SPV).

For instance, Meta announced a $27 billion financing deal with Blue Owl in which most of the debt sits in an SPV.

The largest investors in private credit funds are institutional and wealthy investors, including pension funds, family offices, and sovereign wealth funds.

Investors are drawn to private credit because it has historically offered a higher return than traditional fixed-income strategies like Treasurys or traditional corporate bonds. It can also improve portfolio diversification, giving investors exposure beyond the public markets.

Retail investors are increasingly participating in private credit through business development companies. BDCs represent about 14% of the private credit market.

Private credit firms have gotten crushed recently. Why?

Private credit firms have had a rough 2026.

Over the past few years, lending to software companies has become a significant part of private credit portfolios. Now, investors fear that if AI weakens software firms’ businesses, they could default on their private credit loans. Earlier this month, UBS researchers estimated up to 35% of private credit portfolios faced elevated risk of AI disruption. This could hit retail investors, too: Technology firms account for approximately 24% of holdings at BDCs.

This risk is making investors nervous, and they’re starting to ask for their money back. This creates a whole separate problem. Redemptions are typically allowed on a schedule, but when requests surge all at once, private credit firms aren’t typically liquid enough to return all of their capital (investor money is tied up in long-term loans). If funds refuse withdrawals, that makes investors even more nervous.

That’s what happened late last month at Blue Owl Capital’s BDC: After redemptions spiked, the firm decided to “shut the gates” on the fund, preventing investors from pulling their cash.

Executives claim that these current challenges are merely “hiccups,” not a signal of crisis.

Others warn that investors have good reason to be concerned. “People made choices: If you wanted a higher dividend, you could take more risk,” Mark Rowan, CEO of Apollo, said recently. “That felt really good on the way up. That’s not going to feel so good on the way down.”

Rowan’s quote highlights a vulnerability that isn’t unique to private credit. After almost two decades of most assets going up and to the right, many investors — consciously or not — have come to expect that’s how things will continue. When they’re reminded that risky assets can also go down, the first crack spurs a race to exit doors that nobody thought they’d ever have to use.

READ: Why Is OpenAI Launching a Super App?

Prof G Markets — Mon, 23 Mar 2026 11:03:44 GMT

10

That’s how many grams of protein are in Buffalo Wild Wings’ Espresso Proteini, a cocktail infused with Buffalo Dry Rub.

OpenAI launches super app in bid to reverse Anthropic’s gains
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Newsletter Exclusive: The business of spirituality is booming

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OpenAI Narrows Its Focus Amid Rising Competition

OpenAI is undergoing a major strategy shift. Last week, the company announced plans to merge ChatGPT, its web browser Atlas, and its coding platform Codex into one desktop “super app.” In a post on X, OpenAI CEO of Applications Fidji Simo wrote that the company was refocusing, doubling down on successful products and avoiding distractions.

Over the past year, OpenAI has announced a range of new products, including Atlas, Codex, and video generator and social media app Sora. According to The Wall Street Journal, employees say that this “do everything” approach has created a lack of focus and made it harder to understand the company’s strategy.

Once the clear front-runner in the AI race, OpenAI may be at a vulnerable crossroads. Despite an impressive suite of products, rival Anthropic’s public feud with the Pentagon and deft marketing have made it a more trusted brand. OpenAI has morphed into the kind of AI brand people fear — antihuman and disingenuous.

Anthropic’s lead in the B2B market has soared. It now captures over 70% of all spending among companies buying AI tools for the first time. As recently as December, OpenAI was capturing 60% of that spend.

This is a really good move on the part of Sam Altman and OpenAI. When you become a CEO, the question isn’t what to do — it’s what not to do. Every day you’re going to be pitched great ideas from vendors, investment bankers, employees. Everyone wants to be generous and visionary with your capital.

Whether a side bet works comes down to management. What often happens is a senior person has a vision, and the people who work below them know the way to get promoted is to tell them how amazing their side project is and what a visionary they are. Then the senior person starts ignoring the data.

A CEO’s job is to have the stones to try new things and the backbone to stop when they’re not working.

You need to define success before you start. Put hard metrics around success and failure and keep coming back to them.

You also have to understand sunk costs. The money you’ve spent is gone, the effort is gone. The only question that matters is: From a standing start, right now, would we continue to fund this side venture if we were outside investors with no legacy investment, no affection for it, no skin in the game?

What makes a good side project? When does it work? When does it not work? We discussed this as a team and we came up with three questions leaders should be asking.

Do you have the money for a side project? Amazon was generating hundreds of millions in annual free cash flow from retail before AWS launched in 2006. Meta’s metaverse bet failed, but its $80 billion in losses didn’t tank the company because the core business was strong.

Does it leverage existing infrastructure? In other words, are you the right person/company to be doing this? If you’re a clothing brand, you shouldn’t launch a candy company.

Instagram plugged directly into Facebook’s existing ad infrastructure.
Apple launched the App Store on top of iTunes’ existing billing relationships with tens of millions of paying customers.
Uber Eats plugged into the driver network and dispatch technology already built for rides.

Is it actually a good idea? No amount of capital or infrastructure will save a bad idea.

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Disney’s New CEO Inherits a Company At a Crossroads

Disney has a new CEO. Josh D’Amaro officially took the helm last Wednesday, stepping in at a difficult time for the company. D’Amaro most recently served as chairman of Disney Experiences, which includes theme parks, cruise lines, and merchandising and accounted for 57% of the company’s total profits last year.

D’Amaro’s appointment suggests the company is refocusing on Experiences. Disney has already pledged a $60 billion expansion of the division through 2033, including doubling its cruise ship fleet and building its first Middle East theme park in Abu Dhabi.

But despite Disney’s unbelievable IP and must-visit parks, the stock has struggled. A $10,000 investment in Disney stock 10 years ago would now be worth $8,000, after adjusting for inflation. A similar bet in the S&P 500 would be worth about $20,000.

Part of the challenge is that live events like the Oscars, once advertiser magnets, are in decline. Oscars viewership last weekend fell 9% from a year earlier, and in the 18-to-49 key demographic, viewership fell 14%.

Young people are still watching these events, but they’re not watching on TV, or even on streaming services — they’re watching clips on their phones. Almost 70% of Americans ages 16 to 24 watch clips from shows instead of the full versions.

Even in live sports, roughly half of NFL, NBA, and MLB fans between 18 and 34 say they prefer watching highlights of their favorite sports over full games.

Now just 31% of sports fans ages 18 to 24 watch live full-length matches, compared with three-quarters of fans ages 55 and older.

This trend has given rise to “clippers,” people who break long-form content down into catchy bite-sized clips. They’re typically paid between $1 and $5 per thousand views, so they’re motivated to find the most viral moments. Some are making as much as $30,000 per month, proving that the demise of one industry is an opportunity for another.

The live Oscars on ABC are a Trojan horse. The live event is really just a vehicle for the clips that get put out on social media the day after — that’s where people are consuming all of this content.

If I had to give advice to Disney, they should start investing in the clip economy.

The problem right now is monetization. If you just post clips on Instagram and collect whatever Instagram pays you, Instagram owns the advertiser relationship — not you. You have to get aggressive about owning that relationship — working with advertisers directly and negotiating deals before anything goes live.

You shouldn’t post a clip on social media unless an advertiser is directly paying you for it. The current system is that media companies just do it for free, thinking that it’s marketing. But it’s not. The clips are the content. That’s where all the money is being made.

If you’re watching the Oscars on ABC, it means you’re also at that point where you need an opioid-induced constipation medication. Conan O’Brien, one of the most talented people in the world, summarized it perfectly when he said that the next host is gonna be Mr. Beast. He was joking, but it’s kinda true.

The future for awards ceremonies is bleak. The future is experiential events.

I met with the Board of Governors for the Academy, and they asked for advice. I told them: What you should be doing is running live Oscars-viewing parties all over the world with an aspirational guest list — influencers, actors, etc. Charge brands a sh*t ton of money to sponsor them.

People would pay a lot of money to go to a great viewing party, get dressed up, feel fabulous, and meet interesting people.

The Iran War Is Coming For Your Wallet

Last week, the Trump administration requested up to $200 billion in additional military funding for the war in Iran, a conflict the president promised at the outset would be finished “pretty quickly.” The same day, news broke that the national debt hit a record $39 trillion.

Operation Epic Fury has already cost $23 billion. That’s more than triple the National Cancer Institute’s funding. It’s enough to build more than 72,000 units of affordable housing, provide SNAP benefits to 2.5 million households, or offer free preschool to 1.5 million kids.

On an individual taxpayer basis, the war has already cost you nearly $140. If the additional $200 billion in funding goes through, the cost per taxpayer would be about $1,400. Do you have anything you’d rather spend $1,400 on?

A less obvious, but consequential impact of the war is its effect on interest rates. The Iran shock has pushed inflation expectations high enough that the Fed, which was expected to cut rates twice this year, might not be able to cut at all. This means that borrowing costs across the economy, from mortgages to car loans and credit card debt, will stay elevated.

This increases the risk of stagflation, a dangerous economic condition where slow growth is accompanied by high inflation and unemployment. Inflation already increased 3.4% last month, before the war pushed gas prices higher, and GDP growth for Q4 2025 was revised down to 0.7% from 1.4%.

I was more open to military action than most people. But there’s no denying it: The administration did not do any real scenario planning around what happens when the Strait of Hormuz closes, and Americans, along with the rest of the world, are paying for it across the board.

Contrast that with previous conflicts. The first Gulf War: George Herbert Walker Bush, 35 nations, $70 billion total cost, $62 billion reimbursed by allies, a UN resolution behind it. The second Gulf War at least had a symbolic coalition. This one is officially us and Israel.

This goes to what I think is the fundamental mistake of this administration: the belief that cooperation is not the key to Western prosperity. The American consumer is now absorbing the cost of that miscalculation at the pump, at the grocery store, and on their mortgage statement.

We’re 25 days into a war with Iran, and it’s making everything more expensive. Oil prices are surging because 20% of the world’s supply passes through the Strait of Hormuz. Prices at the pump are up over 30%.

For every dollar increase in gas prices, the average household has to spend an extra $530 per year. For low-income families this is extremely painful, as they already spend roughly a fifth of their income on energy costs.

What are the implications of this, and what should we do about it?

You can read more of my thoughts on the economic impact of the war in tomorrow’s edition of Simply Put. Subscribe here.

For Gen Z, the Horoscope Is Replacing the Hymnal

Gen Z is the least religious generation in American history — yet, they’re the biggest consumers of spiritual services.

Religion used to do three things: give people community, identity, and a framework for navigating uncertainty. Ironically, Gen Z needs all three more than any other generation. They’ve entered a job market that doesn’t want them: Entry-level hiring has dropped 35%. Eighty percent report feeling lonely, compared with 45% of baby boomers. And, they’ve gotten priced out of the lives their parents had: The average down payment on a home is 70% of household income, up from 45% in 2000.

This is a cultural shift, but it’s also an economic one. Organized religion contributes an estimated $1 trillion to the U.S. economy annually — as much as the entire sports industry. As Gen Z moves away from churches, temples, and mosques, their money will flow elsewhere. So far, it’s going to astrological apps and psychic content creators online.

Answers in the Stars

More than 30% of Americans under 50 believe in astrology — that the position of the stars and planets can affect people’s lives. Women are more than twice as likely to believe as men.

Astrophiles take their readings seriously: More than 70% of Gen Z and millennial believers use astrology to make major life decisions, and almost a third wouldn’t date someone with an incompatible horoscope.

Mainstream apps are catching on: Last week, Tinder unveiled a new “Astrology Mode,” which drove a 23% increase in likes.

These services don’t come cheap: Birth chart readings and psychic consultations can cost up to $350. If you want to become a practitioner, the highest-rated astrology certification courses cost $2,000 to $8,000.

The uninformed may also be surprised to learn that there is a thriving market for spells and curses on Etsy. Despite officially banning magical products more than a decade ago, the site has become home to thousands of listings, most under $20 and promising results within 24 hours.

Desperate job hunters buy employment spells, lovebirds buy spells for good weather on their wedding day, and disgruntled shoppers can buy revenge or karma curses. The top five spirituality sellers on Etsy have made nearly $40 million.

A new ecosystem of astrology apps have emerged with relative success. Ukrainian startup Nebula has 30 million global users and $50 million in annual recurring revenue. Starcrossed, which promises to help users find their astrological soulmates, hit $70,000 in monthly revenue within 90 days of launching. Co-Star, billed as an app that “deciphers the mystery of human relations through NASA data and biting truth,” has more than 30 million registered users.

AI Is the New Priest

The psychic industry then figured out what every other content business learned over the past four years: Mediocre content has no moat in the age of AI. Birth charts, horoscopes, tarot readings, and compatibility reports can now be produced algorithmically and delivered in seconds.

Earlier this month, Astro-Seek, one of the most popular free astrology platforms on the internet, went down after being overwhelmed by AI.

The cause: Astro-Seek added a ChatGPT data export tool that allowed users to feed their birth chart directly into AI. The feature became too popular, and the site crashed.

Naturally, Mercury was in retrograde.

Mercury in Retrograde

Three to four times a year, Mercury appears to move backward in the sky due to an optical illusion. In astrology, Mercury governs communication, technology, and travel, so when it goes into retrograde, believers say those systems go haywire: emails get lost, flights get delayed, exes return. Astrology believers attempt to avoid making major life decisions during this period.

There is no scientific evidence that it affects any of this.

Seeing the Future

We make a lot of predictions at Prof G Media, but we have never gotten one from a professional. This week, we asked Carol — @astrostarr4 on TikTok — for her best markets prediction and birth chart reading for Prof G himself. If she’s right, we might just have to bring her in-house.

Saturn and Neptune just moved into Aries. Aries is the first sign of the zodiac — energy, action, beginnings. This is a really good time to make money. That said, Saturn is also telling you to slow down and check every detail before you sign anything. This is not a time to be careless.

On the world stage: The planets are pointing to a period of serious global conflict. A lot of skirmishing and instability. Pluto is in Aquarius for the next 20 years. A smarter, more connected world is coming. We are just in the messy middle of getting there.

OpenAI’s Sora social media app is going to be shut down. Sora is OpenAI’s version of TikTok, but it’s all AI-generated content. Downloads are collapsing — they fell 32% month over month in December and another 45% in January.

This app is not central to OpenAI’s core competencies, it’s not attracting users or revenue, and it’s going to be the first victim of the company’s renewed focus.

Join Scott live on Substack on Wednesday, March 25 at 1 p.m. EDT for a discussion of his latest book, Notes on Being a Man. Bring your questions. Prof G+ subscribers can sign up here.

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The Dirty Secret Behind the Chip Boom

Mia Silverio — Mon, 16 Mar 2026 14:40:21 GMT

Without semiconductors, we would have to entertain ourselves without TVs, communicate without smartphones, research without computers, defend ourselves without high-tech weapons, and boost company earnings without AI. We’re a nation built on technology and sustained by semiconductor chips.

Semiconductors, which are colloquially referred to as chips, are so important that Congress named an infrastructure bill after them (the CHIPS and Science Act). Between that, two other federal laws, and at least a dozen state initiatives, we’ve allocated over $90 billion to subsidizing the American chip industry. That’s about nine years’ worth of federal farm subsidies. Thanks to these initiatives, the U.S. is expected to triple its domestic semiconductor manufacturing capacity by 2032.

However, our need for semiconductors has made us willfully ignorant of their externalities.

Semiconductor factories, known as fabs, are prolific producers of toxic waste — but nobody wants to talk about it.

On the bright side, this collective ignorance has created a compelling investment opportunity.

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The Dirty Details

Semiconductor factories churn out toxic slurries, acid gases, and polyfluoroalkyl substances (PFAS). This hazardous waste spills out into our drinking water.

Samsung’s semiconductor facility in Austin, Texas, spilled hundreds of thousands of gallons of toxic waste, including sulfuric and hydrochloric acid, into the Colorado River in 2022.

But it’s the PFAS, compounds that are essential to producing advanced chips, that are the hardest to get rid of.

PFAS are also called “forever chemicals” because they can take decades to decay in the body. They’re associated with a range of health issues, including hypertension, diabetes, infertility, cancer, obesity, autism, cardiovascular diseases, and kidney and liver disorders.

Their impact on fertility is particularly intense. Mount Sinai researchers found that exposure to PFAS can reduce fertility in women by as much as 40%, and a 2019 meta-analysis of six studies found that female fab workers had a 29% to 43% higher risk of spontaneous abortion than nonfab workers.

But it’s not just factory workers who are exposed. Millions of Americans are exposed to forever chemicals every day.

Conventional wastewater treatment doesn’t remove PFAS, so contaminated water passes through most plants into rivers, lakes, and groundwater that feed drinking‑water systems. Most at-home filtration solutions don’t remove them.

There are still no PFAS‑specific federal discharge limits for factories, and only a minority of states have them. That means that most fabs can still send PFAS‑contaminated wastewater to sewers or rivers.

Across the U.S., public water systems and states have secured $14 billion in PFAS settlements from manufacturers such as 3M and DuPont for contaminating local water sources.

In 2024, the EPA issued the first federal regulations on six types of PFAS in drinking water, scheduled to go into effect by 2029.. However, Trump’s new head of the EPA, Lee Zeldin, dismantled regulations for all but two types of PFAS, and pushed the deadline for compliance back to 2031.

This is curious, as Trump’s first administration was supportive of PFAS regulations. This was before the AI boom though, and before Trump realized that the growth story holding up the stock market was dependent on forever chemicals. God forbid human and environmental health get in the way of shareholder value.

States are moving faster. In 2025, more than 250 PFAS bills were introduced, and dozens of states have now passed regulatory guidelines on forever chemicals in drinking water.

The Investment Opportunity

In this economy, any company with a decent story is one Reddit post or CNBC hit away from becoming an overvalued meme stock. In other words, narrative increasingly drives markets, and the fact that “semiconductor factories are incredibly pollutive” is a doomer story is … well, an opportunity.

If the major AI companies were pop stars, the second-order beneficiaries, like HVAC, utilities, and data center construction companies, would be the backup dancers. Now, four years into the AI boom, all this talent is expensive and tired. The opportunity now lies in the stagehands that clean up every night after the performance is over.

Veolia Environment is one of those stagehands. It’s a $28 billion utility company that provides municipal water and waste services to more than 100 million people; but, more interestingly, it is a world leader in desalination and deals with hazardous waste.

If you own a nuclear power plant, Veolia will take your radioactive waste. If you own a semiconductor factory or municipal water facility and need to eliminate PFAS from your wastewater so you don’t get sued, Veolia provides those services.

Finally, it supplies an essential input to semiconductor manufacturing: ultrapure water. If you thought data centers needed a lot of water, you’re going to hate semiconductor factories.

Margins have been improving, and it is trading below its five-year average price-to-earnings multiple. Disclosure: I bought some Veolia shares back in January, but I’m still optimistic about its prospects. Of the 16 analysts who cover Veolia, 10 rate it a buy, 3 are overweight, and 3 recommend holding.

The Silicon Wave

In 1979, The China Syndrome, a thriller about a fictional nuclear meltdown starring Jane Fonda, came out just 12 days before the actual Three Mile Island disaster. Both the real crisis and the movie, followed by another nuclear disaster thriller called Silkwood in 1983, catalyzed widespread fear and opposition to nuclear power. By 1986, Gallup found that only 23% of Americans were willing to live within five miles of a nuclear plant, down from 42% in 1976.

In 2024, The Silicon Wave came out in China. It was advertised as the country’s “first TV show about semiconductors.” According to IMDb, the CCP-funded show follows a group of “idealistic tech professionals” who return from overseas to join the Chinese chip industry. Unfortunately for President Xi, it doesn’t seem to have caught on.

An American show about the semiconductor and AI wars would probably crush. (Casting note: Jesse Eisenberg should probably play Sam Altman, but Benedict Cumberbatch might work too.) The show would be dramatic, intellectual, and ultimately patriotic. It definitely wouldn’t mention that a side effect of this noble quest is cancer-causing chemicals, because that wouldn’t make for a good story.

But that’s the point: There are often opportunities hiding in what stories leave out. That is exactly why the Veolia opportunity exists.

It’s funny how powerful stories are. You grow up thinking that they’re for kids, and being an adult is about paying attention to “real life.” But actually, making “real life” decisions, like where to work, who to vote for, where to put your money, etc. — requires a continuous parsing of stories — both what you’re being told, and what you’re conspicuously not.

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How the Iran War Is Reordering Global Capital

Prof G Markets — Mon, 16 Mar 2026 11:03:13 GMT

$62.3 billion

YouTube’s revenue last year, making it the world’s largest media company.

How the Iran War is reordering the global economy
Newsletter Exclusive: Semiconductors have a dirty secret — and it’s creating an investment opportunity

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The Iran War Is Reshaping Global Capital Flows

The war with Iran has changed the global landscape in a very short time — and it appears there’s no end in sight. On Friday, when asked when the conflict would be over, President Trump said, “When I feel it — feel it in my bones.” On Saturday, Trump told NBC that the U.S. may bomb targets on Kharg Island, the site of Iran’s main oil export facility, “just for fun”, after U.S. warplanes targeted military installations there on Friday.

The war has already created the largest supply disruption in the history of the global oil market, and capital flows are starting to reorganize around this new reality.

For the U.S. and other oil‑exporting countries, the 47% surge in energy prices means higher export income and higher corporate profits for oil companies.

If prices stay close to $100/barrel, U.S. oil companies could register an increase of more than $80 billion in free cash flow this year.

The benefits are harder to see for taxpayers, who are paying more at the pump and footing the bill for the war. The first 12 days of the war have cost U.S. taxpayers more than $16 billion.

The conflict’s externalities are being felt most acutely abroad. In the Middle East, more than 3 million people have been displaced, and more than 2,100 have been killed.

The war is also rippling through the global economy. Europe and Asia are especially vulnerable because they rely on imported energy.

European markets have already lost more than $1 trillion in value, reversing what had looked like the region’s first real recovery in years. The EU’s economy chief warned that if energy prices stay elevated, economic growth this year could slow to 1.0%, down from the 1.4% forecast last year, and inflation could surpass 3%.

Asia is even more vulnerable, with about 80% of all crude oil transiting the Strait of Hormuz destined for the region. Governments are taking extreme measures to conserve energy:

Thailand’s prime minister urged bureaucrats to take the stairs instead of the elevator.
Bangladesh has closed universities and urged citizens to turn off their lights.
Vietnam is asking citizens to work from home and limit car usage.
Restaurants in India are shutting down for lack of cooking gas.

Just a year ago, global capital was flooding into emerging markets. Now, the war has made many of those investments look too risky. The MSCI Emerging Markets Index has lost over $1 trillion in market cap, while the dollar climbed to a three-month high last week — an early sign that investors are moving back toward the relative safety and liquidity of U.S. markets.

In the U.S., we don’t realize a lot of our success is unearned. We have two oceans protecting us, friendly neighbors on both borders, and we’re one of the most resource-rich nations on Earth. We produce more energy and food than we consume. The U.S. just doesn’t go out of business. Before we make a single decision, the deck is already stacked in our favor.

But those unearned advantages go only so far. We’ve assumed that controlling a third of global GDP means controlling the world. But our dominance wasn’t about size, it was about cooperation. We built the operating system on which 60% to 70% of global GDP runs, and that system works because nations chose to participate in it. That choice was never unconditional.

Our markets will be fine because capital flows are amoral. Money goes wherever it can get the greatest return, and as long as the U.S. remains the center of gravity for entrepreneurship, whether that’s AI, biotech, or space, the capital will keep coming.

The real long-term threat is talent. Young people are more moral than capital. The best and the brightest will start choosing London, Singapore, or Tokyo over the U.S. not because the opportunities aren’t here, but because their values no longer align with ours. That could have huge long-term impacts on our country.

For all the talk of American self-sufficiency, this crisis is raising an important question: How independent are we really? Yes, the U.S. is far more energy secure than many countries, but that doesn’t mean that America can unleash chaos abroad and assume it’s immune to the consequences.

For instance, we’ve become very dependent on global relationships. The Gulf states have become major backers of the American startup and tech ecosystem, pouring tens of billions into U.S. companies and promising even more. Our alliances with Europe and NATO have also been crucial to American economic and geopolitical strength. If Gulf countries are absorbing serious economic damage, are they really going to keep investing in the U.S. at the same pace? If Europe ends up paying a much steeper inflation price for a conflict that the U.S. started, does that strain our relationships? The real risk is not just higher oil prices. It’s that America may be overestimating how immune it is from the blowback.

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The Dirty Secret Behind the Chip Boom

However, our need for semiconductors has made us willfully ignorant of their externalities.

Semiconductor factories, known as fabs, are prolific producers of toxic waste — but nobody wants to talk about it.

On the bright side, this collective ignorance has created a compelling investment opportunity.

The Dirty Details

Semiconductor factories churn out toxic slurries, acid gases, and polyfluoroalkyl substances (PFAS). This hazardous waste spills out into our drinking water.

Samsung’s semiconductor facility in Austin, Texas, spilled hundreds of thousands of gallons of toxic waste, including sulfuric and hydrochloric acid, into the Colorado River in 2022.

But it’s the PFAS, compounds that are essential to producing advanced chips, that are the hardest to get rid of.

But it’s not just factory workers who are exposed. Millions of Americans are exposed to forever chemicals every day.

Across the U.S., public water systems and states have secured $14 billion in PFAS settlements from manufacturers such as 3M and DuPont for contaminating local water sources.

States are moving faster. In 2025, more than 250 PFAS bills were introduced, and dozens of states have now passed regulatory guidelines on forever chemicals in drinking water.

The Investment Opportunity

Finally, it supplies an essential input to semiconductor manufacturing: ultrapure water. If you thought data centers needed a lot of water, you’re going to hate semiconductor factories.

The Silicon Wave

But that’s the point: There are often opportunities hiding in what stories leave out. That is exactly why the Veolia opportunity exists.

Bangladesh, Pakistan, Sri Lanka, Philippines are going to be in the news a lot more. They are highly energy-dependent, which makes them especially vulnerable to a spike in oil prices, and they also carry large amounts of dollar-denominated debt. If their currencies keep falling, that debt becomes even harder to service. If enough of those loans go bad, big European banks won’t be willing to hold them on their balance sheets. The fallout could spread well beyond these countries and tip the global economy into a recession.

Prof G Media is now on Substack. Subscribe for access to ad-free video podcasts, exclusive livestreams, Q&A, and more.

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Is AI Making Us Dumb?

Prof G Markets — Mon, 09 Mar 2026 19:41:22 GMT

Writing will produce forgetfulness in the minds of those who learn to use it, because they will not practice their memory. … You have invented an elixir not of memory, but of reminding; and you offer your pupils the appearance of wisdom, not true wisdom.

— Socrates

Socrates got it wrong. So did the catastrophizers who warned us about radio, calculators, TV, and even search engines. Google didn’t make us that dumb, so the logic follows that AI won’t make us dumb either. This is false comfort. The conviction that history always repeats itself is getting in the way of our realizing that this time is actually different.

Last month, Dr. Jared Cooney Horvath, a neuroscientist and educator, told Congress that since the 1800s, every generation has been smarter than their parents’ — until Gen Z. Specifically, Horvath said, Gen Z underperforms “on basically every cognitive measure” ranging from executive function and literacy, to general IQ, memory, and attention skills.

We can’t fully blame AI. After all, it’s only been with us for the last four years. This decline began with the internet and got worse with smartphones. What happened? Instant gratification and constant multitasking became the new normal, making it nearly impossible for people to concentrate for longer than 47 seconds. Getting smarter requires being able to pay attention, and we’re increasingly distracted.

It’s not just Gen Z. Adults have gotten less intelligent too, and AI threatens to make this worse.

Study after study has shown that when we don’t use skills, we lose them. AI isn’t just a calculator or a search engine — it’s a critical thinking machine that can do pretty much anything we ask it. Consistently outsourcing the process of thinking … will change our brains and change our society — for the worse.

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We need to be talking about this more

More than 90% of college students used AI for schoolwork in 2025. Eighty-four percent of high schoolers use it. Chat volume on OpenAI dropped precipitously when summer break started last year.

AI is as pervasive in schools as backpacks, and it’s not just because the technology is good at writing five-paragraph essays. AI companies know that the pressure to perform makes students sitting ducks.

Anthropic pays “campus representatives” $1,750 for 10 weeks of promoting Claude. During finals season last spring, both OpenAI and Google offered their Pro tiers to college students for free.

Instructors don’t have the tools they need to regulate AI use in school. Schools are spending thousands on AI detection software, but studies show that the detection tools on the market don’t work. If only there were an effective way to determine what has been created by AI and what hasn’t.

Oh wait, there is. OpenAI invented a technology that was 99.9% accurate in detecting AI-generated work years ago but decided not to release it because they were worried it would discourage usage.

As much as we’d like companies to self-regulate, we know they don’t. Our elected representatives need to step in — but they’re not. How many laws have been passed? Only two — Tennessee and Ohio both passed legislation requiring school districts to develop their own AI policies. How much money is being spent on studies investigating AI’s impact on learning?

The state of intelligence today

IQ scores have steadily increased over time — until now. This is known as the Flynn Effect. As society modernizes, nutrition and healthcare improve, children spend more time in school, and people engage in more cognitively challenging tasks … people get smarter.

Scientists didn’t expect this trend would go on forever. In 2007, it was predicted that IQ scores would plateau in the U.S. by 2024. The key word there is plateau. Not decline.

The most recent standardized testing data shows that American students are getting dumber. The reading skills of American high school seniors are the worst they have been in three decades; a third of 12th graders don’t have basic reading skills.

Forty-five percent of 12th graders scored below the “basic” level in math, which means almost 1 in 2 students can’t do the math on how concerning that is.

COVID-related educational disruptions certainly play a role here, but students’ skills were declining before the pandemic. COVID was only an accelerant.

Crucially, key markers of intelligence are on the decline for adults, too. The OECD assessed literacy and math skills of thousands of adults in 31 developed countries. It found that, over the past 10 years, literacy proficiency improved significantly in only two countries (Finland and Denmark), remained stable in 14, and declined significantly in 11.

Of the U.S. data, Andreas Schleicher, director for education and skills at the OECD, said, “30% of Americans read at a level that you would expect from a 10-year-old child.”

What happened?

Attention is predictive of intelligence, and the internet shortened our attention spans.

The problem is that the internet encourages multitasking and normalizes instant gratification.

A review of over 40 studies on media use and attention concluded: “Those who engage in frequent and extensive media multi-tasking in their day-to-day lives perform worse in various cognitive tasks than those who do not, particularly for sustained attention.”

Smartphones only made our attention problem worse by giving us access to unlimited information and reminding us of it 146 times per day, on average. Now, 60% of teens go on their phones while watching TV.

It’s gotten so bad that, according to Matt Damon, Netflix wants writers to “restate the plot” three or four times in movie dialogue to account for distracted viewers.

We’ve become goldfish — constantly flitting between one brightly colored rock and another in pursuit of intentions that we’ve already forgotten.

Fast-Forward to Today

If the internet wrecked our attention spans and contributed to a marked decline in general intelligence, what will AI do?

When we outsource tasks to digital tools, we become worse at doing them ourselves. The more cognitively demanding the skill is, the more decay we experience if we don’t practice it.

AI isn’t like (old) Google — it doesn’t just give you information. It takes stuff that is hard — whether it’s analyzing a problem, writing an essay, or making a website — and does it for you.

Doing homework with AI, one teacher described to 404 Media, is like “going to the gym and asking a robot to lift weights for you.”

Psychologists described the consequences: “Artificial intelligence assistants are designed to mimic cognitive skills. … For this reason, consistent and repeated engagement with an AI assistant is likely to lead to greater decrements in skill.”

There haven’t been enough studies on this topic, but I’ll present a couple that do exist.

No. 1: Is it harmful or helpful? Examining the causes and consequences of generative AI usage among university students

Researchers compared the performance of students who used ChatGPT for college work with those who didn’t. They found that students who relied on ChatGPT were more likely to report procrastination, worsening cognitive skills, and lower GPAs.

They wrote: “Active learning … is crucial for memory consolidation and retention. Since ChatGPT can quickly respond to any questions asked by a user, students who excessively use ChatGPT may reduce their cognitive efforts to complete their academic tasks, resulting in poor memory.”

This isn’t just a collegiate problem. An instructor who teaches 18-year-olds gave a particularly bleak assessment of how AI has affected students: “My kids don’t think anymore. They don’t have interests. Literally, when I ask them what they’re interested in, so many of them can’t name anything for me. …They don’t have original thoughts. They just parrot back what they’ve heard in TikToks.”

The disadvantages of AI will be distributed unequally. Private schools are more than twice as likely to both permit GenAI use and have policies governing it. Among public schools, those serving more low-income students are least likely to have such policies in place. These differences threaten to exacerbate already bad wealth-based achievement gaps.

No. 2: Your Brain on ChatGPT: Accumulation of Cognitive Debt When Using an AI Assistant for Essay Writing Task

When we use AI to write, we literally use our brains less.

Researchers had students write essays using a search engine, a large language model (LLM), or nothing. The group writing with the LLM had 55% reduced brain activity and wrote essays that lacked creativity and were largely judged to be “soulless.”

The study’s authors concluded: “AI tools, while valuable for supporting performance, may unintentionally hinder deep cognitive processing, retention, and authentic engagement with written material.”

But writing isn’t even the most important skill that AI threatens to atrophy.

Large language models are question-answering machines. You can ask them anything, and they will give you a convincing answer.

The problem is, thinking through a problem and coming to what you believe is the best answer is a really important skill. It’s called critical thinking.

According to Wikipedia, critical thinking is the process of analyzing available facts, evidence, observations, and arguments to reach sound conclusions or informed choices. It involves recognizing underlying assumptions, providing justifications for ideas and actions, evaluating these justifications through comparisons with varying perspectives, and assessing their rationality and potential consequences.

No. 3: AI Tools in Society: Impacts on Cognitive Offloading and the Future of Critical Thinking

This survey of business school students found a significant negative correlation between frequent AI tool usage and critical thinking abilities, with younger students exhibiting more dependence on AI and lower critical thinking skills.

Over time, continued reliance on AI for critical thinking worsens our ability to do it ourselves. One survey participant admitted as much: “I rely so much on AI that I don’t think I’d know how to solve certain problems without it.”

No. 4: The Impact of Generative AI on Critical Thinking: Self-Reported Reductions in Cognitive Effort and Confidence Effects From a Survey of Knowledge Workers

This study (ironically from Microsoft) found that when knowledge workers were more confident in AI tools, they employed less of their own critical thinking.

Why is critical thinking important? People with strong critical thinking skills are better able to understand complexity, analyze text, construct rational arguments, solve problems, and consider alternative solutions. People who score higher on critical‑thinking measures are reliably better at questioning and evaluating whether information is true.

As a professor at the University of California, Irvine, wrote for The New York Times, “At stake are not just specialized academic skills or refined habits of mind but also the most basic form of cognitive fluency. … This means [students who rely on AI] will lack the means to understand the world they live in or navigate it effectively.”

Variance

I used to use AI more. For the first two years of its existence, I subscribed to the “AI won’t take your job, someone who uses AI will” anthem. Scott and many others have espoused this view. But then I realized that I was focusing on the wrong thing.

NYU professor Sonia Marciano coined the idea of variance: To achieve success, the best strategy is to focus on the areas where there are the biggest gaps between the best and the worst. Scott has written about it multiple times.

The concept of variance instructs us to become really good at things that are both important and hard. As I’ve written about before, using AI isn’t hard. Not using AI is hard. Writing a thesis-driven essay or a scientific report by yourself is hard. Coming up with an original perspective on something you’ve read is hard. Critical thinking is hard.

I’m not a Luddite — I believe that AI is a remarkable and inevitable technology, and everyone needs to understand how to use it. It’s also just a really convenient time-saver. But what’s not being acknowledged is that while AI might technically be free, it has a hidden price. If you want or need to outsource your work to AI, you should at least understand what you’re paying.

The cost of AI is your own intelligence.

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Are Markets Wrong About Iran?

Scott Galloway — Mon, 09 Mar 2026 11:02:30 GMT

2

Cat owners in Sweden are legally required to check on their pets at least twice per day.

What does war with Iran mean for markets?
How did turning down the Pentagon make Anthropic more valuable?
Newsletter Exclusive: A clear guide to what’s happening in private credit

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How Are the Markets Pricing the Conflict With Iran?

The U.S. and Israel launched military strikes on Iran on February 28. The attacks killed Iran’s Supreme Leader, Ayatollah Ali Khamenei, and several high-ranking military officials and damaged government and defense sites. President Trump said the campaign could intensify and last for weeks, while Iran has indicated it is not willing to negotiate with the U.S.

On Sunday, Iran’s Assembly of Experts named Mojtaba Khamenei, 56-year-old son of the former supreme leader, as Iran’s new supreme leader. A mid-ranking cleric with close ties to the Islamic Revolutionary Guard Corps, Mojtaba had long been viewed as a potential successor and is expected to continue his father’s hardline regime. Trump, who said Washington should have a say in the selection, warned the new leader won’t “last long” without U.S. approval.

Iran has retaliated harder than expected. Iranian forces launched more than 500 ballistic missiles and 2,000 drones at the UAE, Jordan, Kuwait, Bahrain, Qatar, Saudi Arabia, and Iraq. Preliminary figures show 1,332 dead in Iran, at least 77 in Lebanon, and 11 in Israel. Seven U.S. servicemembers have been killed.

President Trump campaigned as the “President of Peace.” Polls show most Americans wish he’d lived up to that title.

U.S. equity markets’ response has been relatively muted — the S&P is down 1.5% since the strikes began. However, in the week after the attacks, oil prices spiked almost 12%, spurred a rally in the dollar, and raised inflation expectations, pushing the yield on 10-year Treasurys up 20 basis points last week.

At the open of trading Sunday evening, oil surged past $100 a barrel. President Trump posted on Truth Social that an increase in short-term oil prices is a “very small price to pay” for destroying Iran’s nuclear threat.

The market thinks this is an interruption, not a war. Travel stocks, cruise lines, and luxury stocks have been hit hard, but the markets are not pricing in a long-term conflict.

Markets strip out emotion and tell you the truth. The truth right now is that this conflict hurts certain sectors short term, but the world will return to normalcy. My prediction: A year from now, oil is lower than when this started. If Iran’s nuclear capability and launch infrastructure are truly neutered, the Middle East is actually safer. We could see an economic boom in Iran. There will be a Four Seasons in Tehran, and private equity will start pouring in.

Three-quarters of conflicts since World War II ended with stocks in the green a year later, so the market’s reaction to this makes sense on paper.

What strikes me is investors’ conviction that this doesn’t change much. Steve Eisman, the investor who predicted the 2008 crash, told me this doesn’t change his investment strategy by a single dollar. I’m hearing that everywhere. No one is willing to contend with the downside scenarios.

What if Iran is destabilized even further? What if the nation devolves into something even worse? That is not an unlikely scenario because it is exactly what we’ve seen in most of the regime changes throughout history.

Oil has already passed $100 a barrel. Liquid natural gas prices in Europe increased 70% last week. What does that do to inflation at home and abroad? What if there are cyberattacks on U.S. infrastructure? What if 90 million Iranians flee and trigger a refugee crisis? These aren’t fringe scenarios. Polymarket was pricing a nuclear event this year at 24% before they pulled the market entirely.

Trump built his political brand on saying Iraq and Afghanistan were mistakes. He hasn’t proved this is different. And the incoherence on objectives isn’t a messaging problem. It’s a strategy problem: They don’t know what the plan is. Donald Rumsfeld, the former U.S. Secretary of Defense, said Iraq wouldn’t last six months. It lasted eight years and cost $3 trillion. We’ve seen this before, but the markets haven’t priced in any of it.

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A Turning Point in the Anthropic-OpenAI Race

Anthropic’s Super Bowl ad seemed like the startup’s breakout moment. The ad went viral, racking up 5 million views on X in under 48 hours. But last week, Anthropic’s ad was superseded by a much more consequential event.

Anthropic rejected a $200 million Pentagon contract because it would not allow Claude to be used for surveillance of U.S. citizens or autonomous military strikes. After several back and forth exchanges with U.S. Secretary of Defense Pete Hegseth, the Pentagon designated Anthropic as a supply chain risk to national security and announced that U.S. military contractors must not do business with the company.

Hours after Anthropic rejected the Pentagon contract, OpenAI picked it up. A day later, U.S. uninstalls of ChatGPT surged 295%, and Claude climbed to No. 1 in the App Store.

Taking a stand against the Trump administration has triggered a wave of support — and big bump in revenue — for Anthropic. The company’s annual recurring revenue (ARR) surged to $19 billion, up from $14 billion just a few weeks ago.

For a year, I’ve been waiting for a CEO to stand up to Trump. I said it was a huge commercial opportunity. I thought it was going to be Nike, but the hero we’ve been waiting for was Dario Amodei.

He’s the first CEO who said no. Last I checked, being an American and being incorporated in America means we have to operate by rule of law, but we’re also protected by rule of law, meaning we get to make decisions about who we work with.

What’s so interesting about this is how badly Sam Altman is fumbling the ball from a PR and communications perspective. A year ago, 9% of Americans said they disliked Sam Altman. Today, that number is 20%. If you think about all the things that he’s gotten wrong: his response to that Super Bowl ad, his very awkward Senate hearings, his very awkward interview on Jimmy Fallon where he tried to present as this fun, likable, relatable guy. But then I think the worst moment we’ve seen from him happened a couple of weeks ago, when he compared training an AI model to raising a human.

What do we do about the fact that the leaders and the builders of the technology of tomorrow appear to have a fundamental misunderstanding of the point of life, of the point of why we’re all here, what existence and humanity is actually all about. I mean, what does that mean for us?

What is Private Credit?

What is private credit?

When you think of a company taking out a loan, you probably picture the loan (credit) coming from a bank like JP Morgan, Bank of America, Wells Fargo, etc. That’s what happens most of the time.

When did this party start?

In 2007, private credit funds had $108 billion in assets under management (AUM) globally. This year, AUM is expected to exceed $2 trillion.

A Quick Guide to Credit Lingo
Direct lending: a loan made directly to a company by a private fund
Floating-rate loan: a loan where the interest rate changes over time (usually every month or quarter) based on a benchmark rate. Payments go up when rates rise and down when they fall. Most private credit loans have floating rates.
Covenant: rule in the loan agreement that the borrower has to follow — like limits on taking on more debt or requirements to keep certain financial metrics in a healthy range.
Business development company (BDC): private credit fund for retail investors: They operate like closed-end mutual funds (meaning that unlike mutual funds, they don’t accept new capital after they’re formed) and are often publicly traded.
Dry powder: uninvested capital committed by investors to private credit funds
Principal: the original sum of money borrowed by a company or investor, excluding interest and fees
Yield to maturity (YTM): the annualized rate of return an investor is expected to earn if a bond is bought at its current price and held until its final due date.

The ecosystem

Private credit funds

Private credit has also become a popular source of funding for big public companies that want flexible terms and to diversify their sources of financing.

For instance, Meta announced a $27 billion financing deal with Blue Owl in which most of the debt sits in an SPV.

The largest investors in private credit funds are institutional and wealthy investors, including pension funds, family offices, and sovereign wealth funds.

Retail investors are increasingly participating in private credit through business development companies. BDCs represent about 14% of the private credit market.

Private credit firms have gotten crushed recently. Why?

Private credit firms have had a rough 2026.

That’s what happened late last month at Blue Owl Capital’s BDC: After redemptions spiked, the firm decided to “shut the gates” on the fund, preventing investors from pulling their cash.

Executives claim that these current challenges are merely “hiccups,” not a signal of crisis.

Dario Amodei is going to give corporate America the confidence to say no to the Trump administration. He took Anthropic from $14 billion in ARR to $19 billion with one strategy. Over the next 30 days, I expect to see a half dozen to a dozen CEOs find their nerve and push back.

Scott and Ed are joined by Steve Eisman, investment analyst best known for his role in predicting and profiting from the 2008 subprime mortgage crisis, about long-term risks in the market. They discuss whether private credit will create the next GFC, and how war with Iran is not changing his investment strategy.

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Did Markets Overreact to Citrini’s AI Scenario?

Tue, 03 Mar 2026 15:42:21 GMT

94%

of all cryptocurrency buyers are Gen Z or millennials.

Did markets overreact to Citrini’s AI article?
Trump likes to exaggerate. What is the real state of the union?
Who are the winners and losers of the Warner Bros. acquisition saga?
Newsletter exclusive: The dark horse in the autonomous vehicle wars

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Breaking Down Citrini’s 2028 Global Intelligence Crisis

A science fiction article from Citrini Research erased $300 billion in market value last week.

Set two years in the future, The 2028 Global Intelligence Crisis imagines a scenario where AI has driven unemployment to 10%, consumer spending has collapsed, markets have plunged, and the economy is fundamentally reshaped.

The foreboding piece only intensified fears about software obsolescence, and the State Street Software & Services ETF fell 5% the day after the article was published.

Companies name-checked in the post including DoorDash, American Express, KKR & Co., and Blackstone fell by at least 6%, and Uber, Mastercard, Visa, Capital One and Apollo all fell by 4% or more.
The co-author of the post, Alap Shah, confirmed that his hedge fund had “a set of shorts against businesses that we think are going to be disrupted by AI.”

Later in the week, eBay announced it would lay off 6% of its employees, and Block (formerly Square) announced it would cut 40% of its workforce.

Block CEO Jack Dorsey blamed the cuts on AI, writing: “The intelligence tools we’re creating and using, paired with smaller and flatter teams, are enabling a new way of working.” Block’s stock jumped 25% in response to the news.

U.S. companies announced 108,435 layoffs for January, up 118% from a year ago.

The layoffs made the Citrini article’s claim that AI adoption will cause mass unemployment seem less like science fiction.

At the same time, while AI has, and will continue to destroy some jobs, there is no evidence that it will happen at the pace that the post suggests.

Business leaders surveyed in the U.S., U.K., Germany, and Australia expect AI to reduce employment by around 0.7% over the next three years. This pace should give governments time to react to changes in labor demand.

Furthermore, AI will be a subpar substitute for most human labor until hallucination rates meaningfully decline. In the best case, 80% of AI-generated answers are correct. Would you trust an employee who is wrong a fifth of the time?

The article also ignores Jevons Paradox, which shows that efficiency improvements can actually lead to higher total resource use. If each unit of efficient work gets cheaper, that can expand output so much that demand for labor actually increases.

In fact, it’s already happening. It looked like software engineers would be completely replaced by AI coding tools, but now job postings are on the rise. As it gets cheaper to ship software, it becomes easier to start new companies and launch new products. “Vibe coding” goes only so far when you need to launch a professional product.

There used to be people who would sit in the elevator all day and wear a uniform and a special cap. They would literally stand there and press people’s floors for them. Is anyone like, what happened to all the good elevator operator jobs?

Of course we’re gonna have disruption. Entire categories of jobs will be lost. The thing that people are worried about is that the destruction will all happen at once. The more realistic scenario is that this rolls industry through industry. And as AI destroys jobs across industries, it creates new ones in their wake. The time frame is what matters.

But the fact that a creative blog posted on Substack inspired such incredible selling pressure and value destruction tells me a lot about how investors are feeling right now.

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The State of the Union: Rhetoric vs. Reality

In the longest State of the Union address in history, President Trump painted an optimistic picture of the country, declaring a “turnaround for the ages.” He covered everything from inflation and immigration to health care and voter fraud.

He highlighted some legitimate wins: the Trump accounts, which give every American child born between 2025 and 2028 a $1,000 stake in the stock market, the most-favored nation program for lowering the price of pharmaceutical drugs, and he announced that Big Tech companies will commit to paying the electric bill for their data centers.

But the rest of Trump’s speech serves as a reminder that you can do anything with numbers if you’re morally flexible enough. So, what is the real state of the union?

Foreign investment

Trump: “In 12 months, I secured commitments for more than $18 trillion …”

Reality: A White House website boasts that U.S. and foreign investments under Trump total $9.7 trillion, and even that figure is disputed.

Tariffs

Trump: Foreign countries are paying the tariffs.

Reality: The Fed Reserve Bank of New York found that nearly 90% of the tariff burden falls on U.S. firms and consumers. The Congressional Budget Office puts it at 95%.

Employment

Trump: “More Americans are working than at any time in the history of our country.”

Reality: U.S. had almost no job growth in 2025; it was the weakest year of job creation since 2020. Manufacturing, one of Trump’s main focus areas, shrank as a share of total U.S. workforce to a record low last year of less than 8%.

Market performance

Trump: “... the stock market has done so well, setting all those records.”

Reality: The market may have set records, but its performance lags most other developed markets. The S&P 500 rose 16% in 2025, while the MSCI All Country World Index minus USA rose 29%.

The whole speech was a master class in cherry-picking. To be fair, unemployment is pretty low. Inflation is down from its peak, GDP growth is positive, but it’s especially concentrated around a small number of companies. He’s sort of asking everyone to stare at AI and big company capex and then take off your glasses when you’re looking at your grocery receipts.

At one point, he said we brought in $18 trillion in investment. Where the f*ck is he even getting these numbers? It felt like an earnings call, where the investors are the Republicans and there’s no SEC. You can’t get in trouble. You can just throw out numbers. It’d be like if Jensen Huang said, Our earnings were up 11 million percent. It was the greatest earnings quarter in history.

But anyway, we’re not dealing with the real issue, which is the deficit. Democrats are gonna have to cut spending, Republicans are gonna have to raise taxes. Let’s get to it. Who are the adults in this room? I feel like Congress burns more calories clapping than actually legislating.

Netflix vs. Paramount for Warner Bros. Discovery — Who Came Out Ahead?

Netflix has dropped out of the Warner Bros. Discovery bidding war. The transaction will still need regulatory approval, but for now, Paramount has come out on top.

The Warner Bros. board declared Paramount’s $31/share offer ($111 billion) for the whole company superior to Netflix’s $27.75/share offer ($83 billion) for HBO and the Warner Bros. movie studio.

The combined Paramount-Warner Bros. entity will still be smaller than Netflix in terms of total subscribers (211 million subs vs. Netflix’s 325 million).

Warner Bros. gave Netflix four days to counter, but the company declined, saying the deal was “no longer financially attractive.”

The OG streamer will walk away with a $2.8 billion breakup fee, equivalent to 25% of Netflix’s entire net income last year.

On the news, Warner Bros.’ stock fell nearly 3%, Netflix increased 10%, and Paramount popped nearly 20%.

Let’s talk about winners and losers.

At the top of the list in terms of winners are WBD shareholders and David Zaslav. I think he was a mediocre operator, but he’s an outstanding investment banker. This is a company that’s gone from a low of $8/share six months ago to $31/share, and the business has gotten worse over that period.

A close second in terms of winners is Netflix shareholders. This saga shows that Ted Sarandos is a disciplined operator. Good operators walk away when the deal no longer makes sense.

Netflix stock increased 10% on the news, adding $36 billion in market cap, and they get another nearly $3 billion for the breakup fee. So if you consider the price they were going to pay — $83 billion — plus the $40 billion free gift with purchase, they’re basically getting $120 billion to not do this deal. I think Netflix is probably a buy right now.

The biggest loser is the creative community. Paramount has paid so much for this company — there is no vision that’s going to increase revenues to the extent to justify the price they paid. They are gonna have to focus on the expense side (Latin for layoffs).

You’re going to see a destruction in human capital that’s going to make Jack Dorsey’’s announcement look soft and cuddly.

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Newsletter Exclusive: The Autonomous Vehicle Race Has a New Rivalry

The conventional wisdom is that the autonomous vehicle war is a two-way race between Tesla and Waymo. That’s wrong.

The real race is Waymo versus Uber.

Waymo is expanding into four new U.S. cities, bringing its total to 10, with testing underway in another 20 and a confirmed expansion to London this year. In California, it’s doing 1.2 million rides per month — a 22x increase over two years — and has already surpassed Lyft in San Francisco, despite it costing nearly 30% more.

Waymo’s newest generation system addresses cost concerns. It uses 42% fewer sensors than the previous version, and is expected to cost $20,000 per unit (on top of the vehicle cost) — a more than 50% reduction from the fifth-gen system. Tesla CEO Elon Musk has said that the company’s robotaxi will cost less than $30,000.

Uber is taking the “toll booth” strategy: trying to partner and take a cut from every piece of the value chain. It has partnerships with nearly two dozen autonomous companies, and, in a major shift from Uber’s traditional asset-light business model, the company is starting to invest in owned physical assets. The company is building fast charging stations for AV vehicles in San Francisco, LA, and Dallas, and is working with Wayve and Lucid to manufacture robotaxi vehicles.

Meanwhile, Tesla is still struggling. For over a year, Elon Musk has said Tesla is just months away from launching a fully driverless robotaxi service in California. But Tesla’s fleet of over 1,000 vehicles in SF all require safety monitors behind the wheel, and most of its “autonomous” vehicles operating in Austin also require a safety monitor.

Rollout isn’t the only problem. Tesla’s robotaxis have been involved in crashes at 8x the rate of human drivers. Waymo, by contrast, estimates that its vehicles get into injury-causing crashes 80% less than human drivers.

In the face of his public robotaxi failures, Musk’s focus has shifted to Optimus robots. For investors counting on Tesla’s robotaxi vision paying off (and for a stock trading at nearly 400x earnings), that’s not a good sign.

Uber has gotten crushed in the software apocalypse. It’s off more than 25% from its peak in September, and its forward PE multiple is now about 20, slightly lower than the S&P average. I mean, Uber’s just a better company and growing faster than the average S&P company. Because of the catastrophizing around AI, there’s more opportunity right now in the markets than I’ve seen in a while.

I believe SaaS is a great buy right now because people underestimate how lazy consumers are. If you have an Uber account, Uber has your credit card; you’re used to the interface. Uber has a huge advantage in that it has custody of 200 million consumers. Uber going vertical and partnering is really smart. Dara Khosrowshahi has proved himself to be one of the more deft leaders of big tech.

Tesla is in trouble. Not only is Tesla years behind Waymo in terms of their commercial robotaxi service, but their vehicle sales are falling off a cliff. Last year, Tesla lost its spot as the world’s top EV maker to BYD after posting its second-straight year of sales declines. Despite all of this, Tesla still trades at a price-to-earnings ratio that is more than 20x higher than most auto companies.

Many have ascribed Tesla’s rich valuation to something called the “Elon premium,” a phenomenon that describes Tesla investors’ willingness to pay outlandish sums in exchange for Musk’s “charisma and vision” at the helm of the company.

With SpaceX’s IPO on the horizon, Tesla’s “Elon premium” will finally disappear. Investors will no longer need to pour money into a pig with lipstick on — a declining car company masquerading as an AI business, a robotaxi business, a humanoid robot business — just to get exposure to Elon. SpaceX will offer a far cleaner way to do that: a genuine high-growth, cutting-edge space and AI company, without the theater.

The private credit providers, Blackstone, Blue Owl, TPG, Apollo, etc., are going to outperform the market.

The best thing about the Citrini paper is that it inspired an enormous drawdown, and now the market is pricing risk more aggressively than current earnings trends justify. That presents an opportunity.

The news cycle is faster than ever, and it’s harder than ever to find political coverage you can actually trust. That’s why Scott Galloway and Jessica Tarlov are bringing Raging Moderates to you five days a week — breaking down the stories that matter, without the partisan theatrics. Find new episodes here, or wherever you get your podcasts.

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How the Rotation Into "Safe" Stocks Gone Too Far?

Prof G Media — Mon, 23 Feb 2026 12:00:00 GMT

In partnership with

38,000

That's the number of references the New York Times counted to Donald Trump, his wife, Mar-a-Lago, and other related words and phrases in the latest release of the Epstein files. That’s more times than Jesus is mentioned in the Bible.

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Newsletter Exclusive: Is AI making people dumb?

Is 2026 the Year of “Boring” Investments?

Last year, investors were obsessed with AI. The Magnificent Seven rose 23% in 2025 alone, adding $4 trillion in market cap.

But the vibe has shifted, and the tech sector has become the ugly duckling. Software stocks have undergone the largest nonrecessionary 12-month drawdown in over 30 years, shedding more than $1.3 trillion in market value.

Investors have piled into traditionally “boring” sectors. Consumer staples are up nearly 14%, materials are up 18%, and energy is up 22%.

Specific winners include Walmart (+9% year to date), Costco (+14%), Coca-Cola (+14%), Johnson & Johnson (+18%), and Caterpillar (+32%).

Amid unprecedented AI spending, these stocks now look more appealing for their conservatism.

Big Tech will spend an estimated $660 billion on AI-related capex this year — that’s more than the entire EU spent on defense last year, and five times what Russia has spent on the war in Ukraine.

But now the market has rotated so fast into safe stocks that even old stalwarts start to look expensive and, well, less safe.

Investors are now paying a premium now for “AI immunity,” companies that sell toothpaste and detergent and have razor-thin margins. Meanwhile, SaaS companies that have 80% gross margins, recurring revenue models, real pricing power, and network effects that create moats are trading at a huge discount.

There are real opportunities in these fallen angels. Let’s talk numbers. Generally speaking, the valuation of a company should be roughly the asset value plus the present value of the growth opportunity. The key word there is growth. Growth has a tendency to solve all problems. If you look at the price/earnings-to-growth (PEG) ratio for the “safe” sectors versus tech, you’re paying three to five times more per unit of growth for toilet paper than you are for enterprise software.

When wisdom becomes conventional, it’s no longer wise. There’s this trope that people will always need toothpaste and shampoo and that therefore these companies are recession proof. That is total BS.

You know what is more recession proof? Enterprise software that runs mission critical operations in a company. When a recession hits, consumers stop buying lattes, companies stop buying new office chairs, but companies don’t stop using Salesforce to manage their customer pipeline.

The price/earnings-to-growth (PEG) ratio is a stock’s price-to-earnings ratio divided by its expected earnings growth rate. The PEG ratio is a more nuanced way of looking at a stock’s value than PE ratio because it takes growth into account.

For example:

Company A: P/E = 20, expected EPS growth = 20% → PEG = 1.

Company B: P/E = 20, growth = 40% → PEG = 0.5.

Despite having the same P/E, Company B is cheaper relative to its growth; you’re paying the same $20 per $1 of earnings, but you’re getting twice the growth.

The most underhyped, overpunished software category is cybersecurity. Here’s why:

AI is making cybersecurity threats worse, and companies aren’t just going to vibe code their own protection. In the same way that AI can make a bad coder pretty good, AI can turn mediocre cybercriminals into very effective cybercriminals, and make the good ones even better.

According to Help Net Security, the fastest 25% of intrusions now steal data in 1.2 hours — down from 4.8 hours just a year before.

AI can write and launch a sophisticated phishing campaign in just five minutes — a task that used to take a team of humans 16 hours. Since the launch of ChatGPT, phishing attack volume has increased more than 4,000%.

Sidenote: Whoever is phishing Prof G Media employees, please continue using the following signoff; it’s super effective:

Two-thirds of organizations globally are planning to increase their investment in cyber risk prevention over the next 12 months to address this risk.

The second factor: The Trump administration is preparing to include private cyber companies in offensive cybersecurity for the first time. This would open up companies to billions in new government contracts.

That brings me to the most obvious choice in the category: Microsoft. The most underappreciated story about the stepfather of OpenAI is that it is also a cybersecurity company.

In fact, it’s the largest cybersecurity vendor in the world. It made an estimated $37 billion from its cybersecurity products in 2025 — at least three to four times larger than any pure-play competitor.

Also: More than 85% of the Fortune 500 uses Microsoft 365 software, it has the second-largest cloud business in the world, it’s the third-largest gaming company in the world, it has the world’s largest professional network (LinkedIn), it owns 27% of OpenAI and is entitled to 20% of its revenues through 2032.

It’s currently down 18% year to date and trading at 25 times earnings, the lowest it’s been since 2022.

America Wants to Tax the Rich. The Rich Have Other Plans.

Wealth taxes are back in the spotlight.

In the Netherlands, lawmakers just approved a plan to tax unrealized gains on assets like stocks, bonds, and crypto. Back in September, a French economist proposed a 2% tax on French residents with over €100 million in assets.

In California, a proposed 2026 ballot measure would impose a 5% one-time tax on individuals worth more than $1 billion. That proposal in particular has sparked a lot of debate. Kalshi briefly priced the odds of the measure passing at 45% after Bernie Sanders headlined a support rally last week; since then, they’ve dropped back to 34%.

Wealth inequality in the U.S. has never been higher. The top 19 households control roughly 2% of all household wealth in America — up almost 20 times in the past 40 years. The bottom 50% of Americans control just 3% of household wealth, which means that 19 households have roughly two-thirds as much money as 65 million households.

Taxing the rich is politically popular; 60% of likely California voters back a one-time wealth tax, even as a majority of those same respondents admit the move would spark a business exodus and cost local jobs.

However, it’s unpopular among the voters who have the most influence: the ultrawealthy.

The richest Americans can pay to influence elected representatives, and if that doesn’t work, they can hire tax experts who take advantage of loopholes in America’s overly complex tax laws.

The tax code is now 16 million words long, 27 times longer than War and Peace and 15 times longer than the entire Harry Potter series.

The problem with wealth taxes is that billionaires will immediately hire the best tax attorneys and argue their assets are worth 40% of what the government says they are. Valuations would be an absolute nightmare. How do you value a Picasso? Is it worth $3 million or $30 million? How would they value my stake in Prof G Media?

You would literally need 10 times the budget of the IRS to administer a wealth tax, and most of the money would go to paying lawyers to argue about yacht valuations.

In addition, wealth taxes don’t work. In 1995, there were 12 developed countries with wealth taxes — now, only three remain. The uberwealthy are the most mobile people in the world, and they can just leave.

There’s an important difference between being right and effective. The super rich are not paying their fair share. That’s true, and we’ve got to do something.

Here’s an idea. Get rid of the carried interest loophole and get rid of the lower capital gains tax. There’s no reason I should be paying 21% when I sell my stocks while you pay 37% when you make money. There are much more pragmatic and enforceable means of raising taxes on wealthy people.

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AI Has a Popularity Problem

AI is quickly becoming one of the defining political issues of the decade. What once looked like a breakthrough technology with broad upside is now drawing scrutiny over its real-world costs, from energy demand and infrastructure strain to concerns about jobs and economic disruption.

Data centers in particular are becoming political flashpoints. Construction workers benefit in the short term when a data center comes to town, but these facilities generate only about 100 jobs permanently — that’s about a third of the number of people that work at an average Walmart.

The real problem is that they strain the power grid, making electricity a lot more expensive. The Stargate Project’s main data center in Texas sits on a plot of farmland bigger than 1,000 football fields and will use as much electricity as all the homes in Philadelphia.

Electricity now costs as much as 267% more for a single month than it did five years ago in areas located near significant data center activity.

Protests are stacking up. Grassroots organizers have blocked $64 billion worth of data center projects in just two years. There are now at least 142 activist groups across 24 states organizing against data center construction, six states have bills to pause it entirely, and residents in Wisconsin are trying to recall their mayor for allowing an OpenAI data center to get built.

Millions of households have seen their electricity rates go up 67% because there’s some empty building down the road full of computers and chips, not employing anybody and sucking all the energy off the grid. If AI isn’t going to make the economic lives of ordinary people easier, it at least can’t raise their prices. Simple legislation would be to start taxing data centers, at least to the incremental cost of the energy and the price increases they’re causing.

This is rapidly becoming the biggest issue in American politics right now. Every elected official is trying to decide their stance on AI, and my prediction is that you’re going to see a lot more politicians coming out against it.

Wall Street is underestimating the potential impact of this. What if most Americans decide they don’t want a data center in their backyard? If that happens, what does that do to the future cash flows of a Google or an OpenAI? Does that hurt future revenue growth? I would argue yes.

The Supreme Court Just Struck Down Most of Trump’s Tariffs

In a 6-3 decision announced on Friday, the Supreme Court ruled that Trump exceeded his authority by imposing sweeping tariffs under a 1977 law called the International Emergency Economic Powers Act.

The ruling invalidates his “reciprocal" country-by-country tariffs and the fentanyl-related 25% tariffs on Canada, China, and Mexico, but leaves intact tariffs imposed under other laws, like those on steel and aluminum.

Trump called the decision a “disgrace” and said he’ll impose a new 10% global tariff using a different law that limits tariffs to 150 days, unless extended by Congress. The following day, Trump said he wants a global tariff of 15%.

The questions we’ll be watching as this plays out:

Do tariff payers get their money back? The court didn’t rule on refunds, leaving that to a lower court. If fully allowed, refunds could total as much as $170 billion, larger than the GDP of Kuwait. Even dissenting Justice Kavanaugh called the refund process “likely to be a mess.”
Does this actually change anything? Trump has already said he’ll reimpose tariffs temporarily, and there are at least four other laws he can use to impose them over a longer time period.
Will businesses and consumers feel any relief? The ruling could cut the U.S. average effective tariff rate by more than half, from 13.6% to 6.5%. But for businesses that have already restructured entire supply chains, the damage might already be done.

Is AI Making US Dumb?

— Socrates

Last month, Dr. Jared Cooney Horvath, a neuroscientist and educator, told Congress that since the 1800s, every generation has been smarter than their parents’ — until Gen Z. Specifically, Horvath said, Gen Z underperforms “on basically every cognitive measure” ranging from executive function, and literacy, to general IQ, memory, and attention skills.

It’s not just Gen Z. Adults have gotten less intelligent, too. AI threatens to make this worse.

Psychologists described the consequences: “AI assistants are designed to mimic cognitive skills. … For this reason, consistent and repeated engagement with an AI assistant is likely to lead to greater decrements in skill.”

I'm not a Luddite — I believe that AI is a remarkable and inevitable technology, and everyone needs to understand how to use it. It’s also just a really convenient time-saver. But what’s not being acknowledged is that while AI might technically be free, it has a hidden price. If you want or need to outsource your work to AI, you should at least understand what you’re paying.

In the full article on Substack, I break down the cost using research-based studies on how AI impacts writing, learning, and critical thinking. (Hint: It’s not good.)

Why Does It Feel Like Everyone Under 30 Is a Founder?

Prof G Markets — Mon, 16 Feb 2026 14:49:52 GMT

Prof G Media research analyst Kristin O’Donoghue asks: Why does it feel like everyone under 30 is becoming a founder?

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Elon Musk once said that “running a startup is like chewing glass and staring into the abyss.”

For a growing number of young people, that bloody abyss looks less terrifying — and somehow more compelling than a 9 to 5.

What’s Happening?

Entrepreneurship is surging. The number of U.S. professionals adopting the title of “founder” on LinkedIn increased 69% in 2025 and is up 300% since 2022.

Gen Z is leading the charge. Fifty percent of Gen Z adults plan to start a new business or side hustle in 2026, compared with 44% of millennials and 31% of Gen X. The median age of a Y Combinator founder is 24, down from 30 in 2022, and the number of accepted applicants between 18 and 22 increased 110% last year.

Three forces are driving the uptick in young entrepreneurs.

AI gives younger, inexperienced workers foundational competence across a range of skills needed to launch a business (coding, writing, marketing, etc.), making ideas easier to test, and startups easier to launch.
A cooling job market has made traditional jobs harder to get.
Gen Z grew up seeing the founder lifestyle glorified in the media, markets, even politics. The AI boom has only brightened the spotlight.

The AI Advantage

Despite a handful of exceptions from the dot-com era (Zuckerberg, Dorsey, Marc Andreessen), the conventional wisdom was that the best founders had decades of experience. In 2018, Harvard Business Review found that the average age of a successful startup founder was 45.

But AI might change that.

AI lowers barriers to experimentation, meaning that demos, pitches, and previews that used to take months are now buildable in days. AI coding tools allow college students to make working apps in hours, and LLMs can spin up marketing videos in minutes.

One founder I spoke with, Chirag Kulkarni, told me that “Your first idea probably won’t be the one you take to scale. But you can iterate, test, and move quickly with AI.”

AI makes experimenting easier — and experience less essential. Before, you needed years in an industry to understand how to build products, a network to find talent and customers, and domain expertise to avoid obvious mistakes. Now, you can access baseline competence in many of these areas with just a few prompts.

This doesn’t make experience irrelevant, but it dramatically levels the playing field.

Sequoia Capital partner David Cahn has argued that AI is a structural advantage for young people, allowing young builders to reach competence quickly.

“No one has more than five years of experience with ChatGPT and LLMs, so a 24-year-old who has spent the last five years deep in the weeds of AI may actually have more relevant experience than someone who has been working for much longer,” Cahn wrote. He’s backed several companies started by young entrepreneurs, including Flapping Airplanes and Juicebox.

Baseline abilities are now table stakes, so the competitive advantage in entrepreneurship has shifted to skills that young people are naturally good at: executing quickly, tolerating risk, and approaching problems without preconceived notions.

Andreessen Horowitz, which allocated roughly 18% of all U.S. venture capital dollars last year, put out a specific call in March for young technical founders. They observed that young entrepreneurs approach problems with “an infinite canvas,” a creative freedom that prioritizes innovation over experience.

Today, the average top AI founder is 29, five years younger than the average SaaS founder in the 2010s.

Alexandr Wang was 28 when Meta bought half of Scale AI for $14 billion in 2025. Cursor’s founders were MIT graduates in their early 20s; four years later, their company is valued at almost $30 billion. Perplexity was founded by Aravind Srinivas at 28, and Harvey’s founding team was also composed of late 20-somethings.

“If you’re young and lack priors, it’s easier to throw yourself in and learn the tools,” Matt White, co-founder of Propolis, told me.

White said he felt like an old man when he was at the startup accelerator Y Combinator. He’s 30.

AI tools allow young founders to experiment and grow while keeping their companies small. Early-stage tech startups in the U.S. are raising more money than equivalent firms did five years ago, but they’re employing 16% fewer workers.

Brian Geiger, co-founder of edtech company Scholarships360, decided not to hire any front-end developers for his startup, because he could use Claude Sonnet to do the work himself. “Agents have infinite stamina,” Geiger said. “You can just keep asking them to do more.”

White said that the quality assurance tool his team at Propolis built in the last nine months would have taken an “order of magnitude” more talent and time without AI tools.

The Economic Push

Entrepreneurship is increasingly viewed not just as a moon shot but as a hedge. If entry-level roles can be automated or outsourced, then “safe” jobs look less safe. Starting your own company begins to look like a stable path — or at least a path forward.

Entrepreneurship is becoming more common for new college graduates. One in five millennials and Gen Z small-business owners were unemployed or students before starting their businesses, compared with just 3% of Gen X and baby boomer founders.

The calculus makes sense: New grad hiring was down 16% in 2025 and continues to slide. Even for the young people who were hired, inflation-adjusted salaries for new grads are down more than 20% since 2022.

Climbing the career ladder is increasingly difficult. Promotions have declined across the board, but young people have been hit hardest. The promotion rate for workers ages 20 to 34 has dropped nearly 4% since 2019, while the rate for workers 35 to 54 has stayed relatively stable.

Startup FOMO

Gen Z grew up immersed in America’s obsession with entrepreneurship. Shows like Silicon Valley, Billions, Succession, The Bear, Industry all dramatize the formidable task of creating a business from scratch.

The drum beats even louder on social media. Zoomers overindex on entrepreneurship whenever we consume content. Watching viral success stories on YouTube, tracking the rise of TikTok influencers and Twitch streamers, and reading curated announcements of funding rounds on X create an echo chamber that makes the startup life look alluring — almost easy.

As Livia Pinzari, founder of digital advertising firm NoLie Communications, told me, “You wake up feeling like someone starts a new business every other day.”

Of course, the media’s portrayal of entrepreneurship obscures the harsh reality that 90% of startups fail. Scrolling through LinkedIn, you’d never know it. Enter survivorship bias: the tendency to judge one’s own chances of success based on visible successes.

When One Door Closes…

The unemployment rate of new college graduates is the highest it’s been in a decade (excluding COVID). The Wall Street Journal called it an “employment crisis.” This is a problem that deserves the attention of policymakers.

But the way that young people have responded — many, by starting their own companies — is worth celebrating.

Starting a business is an inherently optimistic endeavor. Being a founder, as Elon said, might sometimes feel like staring into an abyss, but the whole thing is anchored in a radical hope that what you’re doing will pay off.

One young founder I spoke to, Anna Monaco, started her company Paradigm at 22. She made it to Y Combinator and built a tool that now serves over 10,000 users.

“I think that anything is possible,” she told me. “Is that ridiculous? Maybe.”

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What the Newest Research Says About Money and Happiness

Prof G Markets — Mon, 09 Feb 2026 15:50:29 GMT

Elon Musk has broken four wealth records in the past four months. Specifically, he is the first person to be worth more than $500 billion, $600 billion, $700 billion, and now $800 billion.

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Though his fortune is mostly illiquid, if he could convert it to cash, his current net worth would be enough to

End world hunger;
End homelessness in the U.S;
Make public college free in the U.S. for four years;
Cover three years of universal pre-K.

Yet, if his tweets are to be believed, he’s miserable.

Is Elon right? Is it true that money can’t buy happiness? A much-cited study from Daniel Kahneman and Angus Deaton in 2010 found that happiness increased up to a point — $75,000 per year — and then leveled off. Then, a study in 2021 found that more money did increase happiness with no plateau.

But the most recent research, a collaboration between both studies’ authors, found that the reality is more complicated.

Money increases happiness for everyone up to $100,000 per year.

But past the $100,000 threshold, the effect changes. For people who are persistently unhappy, earning more money doesn’t make them happier. In the words of the paper’s authors: “The suffering of the unhappy group diminishes as income increases up to 100k but very little beyond that.”

However, among people who already experience a lot of positive emotion, additional income continues to increase happiness, even past $100,000, and it does so faster than it did at lower income levels.

The chart below helps clarify.

The different lines represent people grouped by their average happiness level. The people in the 85th percentile are more consistently happy than those in the 15th percentile.

The slope of the lines represents change in happiness. The yellow lines from 0 to $100,000 show that for all groups, happiness increases until $100,000.

The green lines show the change in happiness for incomes higher than $100,000. For the folks in the least-happy group, the 15th percentile, the rate of increase in happiness (green line) is basically flat — meaning their increase in happiness is statistically insignificant past $100,000.

Small Influences and Big Influences

Money impacts happiness and even increases it substantially for some people. However, as the authors of the study noted, “The relationship is weak, even if statistically robust.” Not even $850 billion will buy happiness for someone who is persistently unhappy.

If money can’t reliably buy happiness, what can? The longest scientific study of happiness ever conducted tells us the answer: relationships. All relationships matter: friends, acquaintances, family, coworkers, and neighbors. The stronger our relationships are with others, the happier we are, and the longer we live.

At the End

Musk’s tweet about happiness was seen by over 100 million people and received over 100,000 comments in 48 hours.

There’s something ironic and deeply sad about the most well-resourced man in the world confessing his unhappiness to 100 million IP addresses, when we know that the key to happiness is real relationships. If only he would get off his phone.

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The AI Branding Wars Intensify

Prof G Markets — Mon, 09 Feb 2026 15:48:47 GMT

Anthropic used the Super Bowl to take a shot at OpenAI, and it worked. The company dropped a series of ads early; one, titled “Violation,” pulled in 5 million views on X in under 48 hours. The tagline: “Ads are coming to AI. But not to Claude.”

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It was a direct jab at OpenAI, which recently announced it would begin testing ads on ChatGPT. That news caused a stir online, given that Sam Altman once called ads “a last resort for us as a business model.”

The irony is that AI companies have been pouring money into traditional advertising while publicly positioning themselves as skeptical of the ad business model. Last year Anthropic, Google, Microsoft, OpenAI, and Perplexity collectively spent more than $330 million on broadcast TV ads for their AI offerings, up 43% from the year before.

They’ve still got a ways to go. Only 17% of American adults think AI’s impact on the country will be positive over the next two decades.

Prof G Markets wrote about Anthropic’s excellent marketing back in October. Check it out here.

Sam Altman put out a pathetic, 400-word tweet trying to argue that the ad isn’t accurate, that they’re not going to surreptitiously insert ads while you’re doing therapy. Maybe that’s true. But no one cares.

Anthropic’s ad was good. They nailed the voice of ChatGPT — that awkward, monotonous, sycophantic voice everyone has gotten sick of. They have their finger on the pulse.

To me this ad has parallels to the 1984 Apple ad, regarded as one of the greatest commercials of all time. It aired during the Super Bowl and took a direct shot at IBM, suggesting they were Big Brother trying to control the world while Apple would liberate you. Was it all technically true? Not exactly. But it resonated. That’s exactly what Anthropic has done.

I said a few months ago that Anthropic’s going to be the heavyweight champion of AI in 2026. This is the moment everyone realized it’s actually happening.

This is the moment that Anthropic begins its valuation ascent past OpenAI.

In my course on brand strategy, I teach something called laddering. You say we are this and the competition is that. You find points that pass three hurdles: differentiation, relevance, and sustainability.

Anthropic’s differentiation is clear: no ads. It’s relevant because the number one use case for AI is therapy. People are revealing their most intimate questions and concerns. The thought that OpenAI is going to take all your personal information and start saying, “You seem to be suffering from depression; have you thought about Lexapro?” It’s frightening.

I’m totally blown away by Anthropic’s execution. They registered 10x the ROI on this Super Bowl commercial before it even ran.

Altman’s response was a mistake. When you’re the market leader, you don’t reference the competition. You never talk about them. Hertz never referenced Avis. Coke never referenced Pepsi. If he’d been asked about it, he should have said, “I’ve seen it. It’s a great ad. Good for them.” Anything beyond that looks defensive.

This is a seminal moment. When we look back on this, this will be seen as a big moment in the AI wars.

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Entertainment Roundup

Prof G Markets — Mon, 09 Feb 2026 15:47:18 GMT

It was a busy week in the entertainment industry. Disney finally named its next CEO: Josh D’Amaro, the head of its Experiences division. He’ll take over from Bob Iger next month.

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The announcement came on the heels of Disney’s Q4 earnings report. Disney beat expectations and reported record revenues in its Experiences division. Streaming had a strong quarter too, with profits surging more than 70%. But the stock still dropped as much as 7% on concerns about softening international tourism, ballooning sports rights costs, and continued weakness in traditional entertainment.

Meanwhile, Netflix and Warner Bros. Discovery executives were on Capitol Hill defending their planned merger. What started as an antitrust hearing quickly devolved into a political circus. Sen. Eric Schmitt accused Netflix of producing “the wokest content in the history of the world.”

Every Disney earnings call follows the same playbook. Parks? Unbelievable business with an incredible moat. Film studio? Doing well, creating IP that feeds into the parks. Disney streaming? Getting leverage with singular positioning around family. All of it’s great.

Then they have to apologize for their linear platform, which declined 12% last year.

The moment they shed the linear TV business and focus entirely on parks, experiences, cruises, streaming, and the studio, this company will go up substantially in value. Right now, the overhang of these linear networks creates confusion around the business strategy.

The antitrust hearing was completely ridiculous.

These Republican senators default to talking about “wokeness” because they don’t know where to land on the antitrust argument.

The hearing was supposed to address what happens when an extremely large entertainment company buys another one, creating legitimate monopoly concerns.But that’s boring. They don’t understand it. They’d rather talk about LGBTQ actors in children’s shows because that’s what gets their supporters riled up.

Will any of this affect the transaction or change monopolization in America? No. But it doesn’t matter. It’s all for the clips, the drama, and the show.

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Did AI Kill Software?

Prof G Markets — Mon, 09 Feb 2026 15:45:33 GMT

Software stocks got pummeled last week. The S&P 500 Software and Services Index declined 8%, dragging the Nasdaq 100 into its biggest three-day slide since last April. Though stocks recovered on Friday, Salesforce, ServiceNow, and Atlassian are still down 25%, 30%, 40%, respectively, so far this year.

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The sell-off was triggered by a wave of new AI tools that spooked investors. Anthropic rolled out industry-specific products for legal, finance, and customer service. OpenAI launched a more powerful, multi-agent version of its coding tool and a new platform to help companies deploy AI agents.

To top it off, OpenClaw, a new, open-source AI assistant, exploded on social media. Self-dubbed “the AI that actually does things,” it can execute tasks on its own and remember past interactions, allowing it to learn user preferences and perform personalized actions.

Unlike ChatGPT or Claude, users tell OpenClaw what they’d like it to do via tools they already use daily — WhatsApp, Telegram, Discord, Slack, iMessage, and over a dozen other messaging platforms.

The sell-off reflects growing concern that AI agents could disintermediate the entire software-as-a-service industry. If companies can build their own software with AI, why would they keep paying for traditional SaaS products?

There are signs that software company revenues are already softening. So far this earnings season, just 71% of software companies in the S&P 500 have beaten revenue expectations. That compares with 85% for the overall tech sector.

Robert Armstrong, the Financial Times’ U.S. financial commentator and frequent Markets guest, observed that last week’s carnage was part of a structural shift out of the tech sector and into lower-growth, more defensive categories. While the S&P 500 is down almost 1% so far this year, the equal weight S&P 500 is up nearly 4%, and “unsexy” sectors like household and personal care, discount stores, and construction machinery are up 10%, 16%, and 24%, respectively.

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This is panic selling. It’s very similar to what happened when ChatGPT came onto the scene. Everyone decided that search was dead, and Google stock cratered. But since then, Google has risen 280%. They learned from ChatGPT, they invested in AI, and their search revenue is up 50% since ChatGPT was released.

The same thing is happening here. Software isn’t dead. Nothing is stopping these companies from integrating AI into their existing products.

The other point that people aren’t recognizing is that switching costs are huge for enterprises. It takes on average more than half a year to find a new service provider. Executives need to sign off on the decision. It also costs money. If you’re going to terminate the contract, then you can expect to pay 100% of the remaining fees.

The other thing they’re counting out is trust. They don’t have those same relationships with the newer startups. As the old saying goes, “Nobody ever got fired for going with IBM” — in this case, it’s Salesforce or Adobe.

But everyone started selling because they’re nervous, and they can’t tell what’s going to happen in the future. Markets hate uncertainty. That’s when you want to dive in.

You can read more about the opportunities I see in the market after the software sell-off in my latest edition of Simply Put, out tomorrow. Subscribe here.

What's Behind the "No Hire, No Fire" Job Market?

Prof G Markets — Mon, 02 Feb 2026 18:36:08 GMT

Corporate America is pulling back on hiring. Just last week, three major companies announced layoffs: Amazon said it will cut about 16,000 corporate roles, UPS plans to eliminate up to 30,000 jobs this year, and Pinterest is laying off roughly 700 employees, about 15% of its workforce.

These layoffs are happening against the backdrop of an already cooling labor market. Last year was the worst year for job creation since 2009 (excluding 2020).

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Many companies are actively citing AI in their layoff announcements. But is AI the real cause of layoffs, or just a good buzzword? The mainstream media continues to report conflicting narratives:

Whether it’s the uncertain economic environment, AI, or old-fashioned cost cutting, what is clear is that entry-level workers are being hit the hardest. Postings for entry-level jobs in the U.S. overall have declined about 35% since January 2023, and one survey found that 66% of global enterprises expect to slow entry-level hiring.

Those numbers point to a simple conclusion: Policymakers need to do real scenario planning, preparing now for near-term labor shocks. Proposed solutions include expanding tax credits for reskilling workers, and building paid, apprenticeship-style pipelines, like Brookings’ Molly Kinder’s “medical residency” model.. Others suggest a broad corporate tax that would support retraining programs. More-ambitious options include piloting four-day workweeks and exploring universal basic income.

When the CEO of an AI company says my technology is so tectonic that it’s going to destroy 50% of jobs, that’s them saying my company should be worth a trillion dollars. When Sam Altman says he’s worried about the future, what he’s saying is I’m your new god reshaping the world, and I am worth $850 billion. The catastrophizing from folks in AI is fundraising.

Look at the data: Only 5% of all layoffs last year were attributed to AI. AI is not the great grim reaper of employment yet. Catastrophist headlines get clicks, but the reality is the economy is just slowing down.

Pinterest is trying to position their layoffs as a feature not a bug. I would argue the real answer is AI is enabling Meta to such an extent that advertisers are opting for Meta and TikTok instead of Pinterest. The reason they’re laying off people is because of AI, but specifically because their competitors are doing a better job of deploying it.

AI will take and create jobs. Like every major economic shift, it will move workers toward higher-skilled, better-paying information economy jobs. But it’s going to happen much more slowly than people think.

The idea that AI isn’t taking jobs is completely untrue.

Dow Chemical laid off 4,500 people and said the reason is AI. Pinterest laid off nearly 1,000 people and said the reason is AI. Amazon said they need to be more lean due to the effects of AI, which is pretty much saying this is AI. Companies are telling us outright that AI is taking jobs.

And we’re only a couple years into the AI transformation. This is going to play out over five to 10 years.

But what’s crazy is the fact that the people in the White House have basically decided that the AI policy of the United States is going to be no AI policy. They’ve decided that any form of AI regulation is stifling innovation — and that to me is insane.

It’s going to be a huge problem, especially if this whole conversation gets hijacked by the false notion that AI isn’t having any impact.

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