ChatGPT’s First Victim + The Department of Government Efficiency (DOGE)
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less to fuck.

So what happens? You drink all this. Tokyo is seriously, today's number eighty thousand.

That's how many pounds of about a cosco were called last month after for getting add milk to the ingredient letter. Today's number, eighty thousand, not so many pounds of Better cosco. Recall last month after forgetting to add milk to the ingredients.

Less true story. At one day, my mom caught mastercard in the bathtub. I thought you'd be mad, but instead he just stopped buying margin.

What that means? How are you and how are you?

And very well, we finally got that took a while. Seems that you had a pretty big night last night now.

ohh my god, dia name drop. So do you have a party of friends that you can discard tax at any moment like what you do not describe a dream? And I like to think, yeah, yeah.

So like things, i'll fuck you. Just take my advice. So my friend Scott abi used to be that guy from me in new york anyways, died of a real former came me. We're not to talk about this because I have a story so now I don't have a party of like taxable drinking bodies and i'd like to go text and and so last night um hang IT out I got nothing to do IT I am in new york.

I'm a see less celebrity and I got nothing to do and I know there's something great going on and I also know i'm just not a part of IT and so I text my new friend just in the row of beetle juice fame and am I do, what do you do you want to like? I'm headed to this hand genesis reveal event is like, I know, I know weaker flux in the world, and he is like calm. So I come on my way.

So I went and and saw the new hand genesis, which is lovely, which is lovely. And them were like, okay, my can get free janise here. Why we hear? So I like, let's got a zero bond.

And then we text our body, George, on. I come out and not drink with us. Now i'm trying to be Better about inviting people out to drink with me, even if in recovery is to think that I reds. That not going to be that way in georgia was fun. Georgia was like a little fucked up, even was not. So he roles in and then, and this is totally name dropping care at nine o'clock I know A C three sixty and so I A nine ten I tech sAnderson Cooper am like broken mian rap city planning now at zero born come join us and is in the cards like i'm in the car on my way the four of us SATA zero bond and trying to kila status except for George and we had the best time.

That's amazing. Oh.

it's awesome. And I was the lesson i'm trying to take away from IT is it's easy to think other people are super busy and they are, but you never know if you're not busy to think, start taxing people. What are you doing? And I was IT was great to hang out with them but I loved about IT was for both like all guys is trying to make fine friends and daddy went deepen the paint last night.

I'm switching to to qua, according to Justin, it's a cleaner burn. And I was about to hang over. So I still feel love at slow today. So you're going to have to, you're gna have to do what I do. And basically, every dca you have Carry the show, Carry the right.

Let's start without weekly review of market vitals.

The S M, P one hundred came down from its post election high. The dollar continue to climb. Bitcoins surpassed ninety thousand dollars for the first time, fucking a on the yield on tania treasuries increase. Who doesn't .

known a coin? Raise their hand. Who doesn't a raise your hand .

shifting to the headlines. Spotify monthly active users grew eleven percent to six hundred and forty million in the third quarter. The company is on track for its first year of profitability.

Were they Better than expected forecasts for the fourth quarter and shares rose eight percent. Gambling company flutter reported third quality earnings that beats analyst expectations with revenue up twenty seven percent from year earlier. The company also raised its full year guidance due to strong results outside of the us shares, client almost seven percent.

Following that earnings report, disney stock rose nine percent off for its streaming unit and studio business reported strong growth. Disney plus marked its second consecutive coursey profit, gaining four point four million course subscribers. And the company also issued guidance the projects of jump in profits over the next three years.

And finally, activist investor elliot management has built a five billion doll stake in industrial conglomerate oneyman that's at its largest investment in a single stock. They want honeywell to break up its airspace and automation businesses into two separate companies. Scott, let's start with spotify. Very strong earnings, your reactions.

So it's stock is a one hundred and fifty percent year the day. And theyve raised a tony money massively than to essentially consolidate the streaming music market. Now would argue people say, what about apple? What about amazon? I think if you're in the music, I just think you have to have a spotify subscription. And occasionally people try to act alternative in my guy like apple, let's make you know this.

I know for me, it's just a switching over issue. I know it's a Better platform, but it's just a pain to switch over.

I think there is such a job, but they can to pay out of the networks book and they've overspent. But for the first time, IT appears to be working and they appear to be kind of hitting the same sort of escape elsy the netflix hit about seven, eight years ago or five years ago, where they really are there to false player and subscription music and paid subscribers. Mp, twelve percent to two hundred fifty million.

Profit margin reached thirty one percent. That's up twenty six percent. Knocked spotify with IT was basically a music coa passing through all the revenues to the artist. And now IT appears they have so much power that the probably cutting Better deals in terms of revenue share active of and spotify at this since twenty fifteen last nine years has seen its revenue grow eight fold and IT struggled achieve full year profitability as a keep in investing. But that is change this year.

It's gone into profitability, which is like putting investors slips on a crack pye, and you can take away and to get there again, I think the C E, O took a page from netflix playbook emphasizing tighter costas plan. The company is also cracked down password sharing and race Prices twice than past year. I think basically, they are on fire if this is like networks is still could triple or quintuple from here if they have the kind of market power I think they have because netflix supposedly at other competitors.

But did they really? Did they really? So i've always love spotify.

IT was my stock pick of like twenty twenty one or something. And I went nowhere for three years. I was flat for the longest time.

That's IT. I was early. I wasn't wrong. I was early.

And so my x wife to say, and it's not bad, you're just early all the time on on will be here all we try the veal. Uh, okay, so get on spotify and use their A I D J. IT is fucked and amazing.

IT is so good. IT has figured out that every song information, either be tom pty or tom pty, or yellow, or occasionally calvin Harris, to make me feel like i'm not one hundred years old and I just works. I came my whole thing. This choice is bad thing. I only want things, whether is no choice, and I I love spotify. I because a lot of times when i'm home and i'm on prescription, great pharmacy ticals and I want to dance, I don't know the perfect dance music and spotify figures out, you know, I think at what time of my mood is is really powerful. I'm glad you mention .

A I D J because I think the thing that i've been thinking about the spotify right now and what they're really good at is unlike a lot of other tech companies that just come out with these kind of meaningless product updates that no one really cares about. I feel like every product update from spotify, the users just love. So they have video pod costs now, which they sort of double down on recently to compete with youtube.

And they are now more than three hundred thousand video podcasts across spotify. That's another great product update. They have podcasts comments now based opening up the comments section.

And then I think the best thing they did from a product perspective was spotify wrapped, which was sort of the year and review of all the stuff you have been listening to and you when they did that, IT exploded, IT went viral. Apple music ended up having to copy that. I and they have just a worse version of IT.

Clearly, the engineers, the the product managers that very scrappy, they're constantly figuring out new ways to package and deliver this content. And I think you know the markets now recognizing this, this, as you said, to talks up nearly one hundred fifty percent in the police year. It's starting to look perhaps a little expensive, but in this case, I think it's warrant ted.

This is just a great quarter, and I agree with I think this is a great company. And clearly, they are doing something right from a management perspective. And let's move on to flutter now.

So this is a gambling company. Their own brands like bet fair and sky betting and paddy power. If you're from the U K, you'll recognize those names.

But in the U. S, they also own fan duo. And the story of this earnings report is all about america.

So U. S. Revenue jumped fifty one percent to one point three billion dollars.

A big source of revenue was the nfl. The C. E, O said that betting activity, I found this quite digger's.

Betting activity on some of the nfl games that are happening right now is actually higher than betting activity on last year. Super ball. So sports gambling is absolutely soaring. And if you want to ride that wave, this is the stock flush, your entertainment.

I'm comes up with all of this. But the reality is the fastest way to see your company yet with high margin revenue is to have some sort of tap into some sort of addictive weakness of the species. And this is doing that, having gambling on your phone and having a piece of frictionless is really, I think, really troubling.

But at the same time, it's a great that this is not getting around IT. It's a great business. Fandel has almost fit. They have they control most half the market that forty six percent market share, american meter record hundred and twenty billion on sports wagers, and twenty twenty three thousand twenty percent from twenty twenty two this year. Sports spending is expected to pass one .

hundred and fifty billion, hundred and fifty empty that hundred fifty billion dollars in sports bets. That's a crazy number. now.

Yeah, it's huge people. No, it's fun and mean, really is passing out crack fifty dollars free for your first bad, right? free. Free money for your first bad.

It's also just such a shame that like the most ascendant companies and assets right now are just totally unproductive in terms of the actual real economy. Like I wish that the best performing assets were actually productive. This is not societally productive. Well.

the only thing I wrap up with this people, civil Scott investing, the stark mark, is gambling is no different. Now IT is different. If you the stock market and you know trade over time, you're onna make money when you gamble.

If you enjoy IT fine, just like we enjoy drinking alcohol or buying ten issues, its consumption, this is consumption. It's not investing in. Be clear, keep track of how much psychic enjoyment you're getting because in terms of money, you can walk away .

from the table eventually over time with less money. Not much really jumped out to me apart from the fact that this is the second quarter in a row where the streaming business has been profitable. So last quarter was the first time that streaming was profitable.

And we said, well, maybe you've got this whole streaming thing figured out. I think this earnings report confirms that they have finally figured out streaming, which is essential for disney because the traditional TV business is essentially and free fall. Just this number here from from the underreport Operating profit on that traditional TV business was down thirty eight percent this quarter, and that's despite all of the election spending, and that's despite owning abc. So they need streaming to work out. And IT looks like that's what's happening.

It's doing really well. I think the movies are import, you know, the movies are meaningful, the revenue from the park meaningful. But from the market perspective, the results of the streaming division are profound and the strong division had a great, great quarter. I like IT because I like bob eggers, and this is going to give him a chance, like he was stupid enough to go back to afghanistan. Second, tourists going to get another metal, and on his uniform is going to get to leave this combat zone called traditional media a hero again.

though, ized. This is with well has supported .

media right now point taken .

yeah I mean.

IT is hard to hand combat and think about disney. They're one of the survivors because they have the singular position around family and I believe we do by p and it's starting to pay off and also it's pank off for them because they stood the test of time through what is this this, you know, walking through the desert, if you will, of consolidation. And for the first time in two years, a netflix is no longer increasing their best.

So every the company has doesn't to follow them down this rabbit le of unsustainable. And there's also pricing power. Netflix is kind of creating a elevating the ceiling around pricing and they're raising the Prices, which gives everyone cloud covered to race their Prices.

I think it's good for disney, good for bob arago, good for the planet. I think it's a great company. Hope IT stays independent.

IT was one of my stock pecks last year, disney morning brother. So we'll see. But yeah, I think good for them. congratulations. Great quarter.

Move on to eliot's investment activist investment in honeywell, which is this industrial, I think is interesting for two reasons. One, its Elliott's biggest single company investment ever, five billion dollars. So this is a very high conviction bet.

And to what they are suggesting from an activist perspective. Is right out of the profit markets playbox. Specifically, this is all about the conglomerate tacks, which you talked about a lot on this podcast, which is the conglomerate end to get these slightly depressed valuations because investors currently reward diversification.

What they really care about is focus and growth, and that's a lot hot to do when you when you're Operating multiple businesses. Honeywell is a great example of that because the error space business and the automation business, they're two very different things. And often times when one has performed, the other has lagged and vice versa.

So I think this is a great idea from elliot. Split them up, have an area space company and automation company. The only question I would have is all the partners at a management listening to this podcast because if they are, we deserve some credit and we .

deserve a cut hundred percent yeah that no doubt check come on our way yeah. I like this stuff like sometimes when I stat below a certain amount of the whole is less than the sum of its part. That's the strategy here.

So the stocks have twelve percent year today, but the industrial sector etf is up twenty five percent with under perform the market. And then the kind is one of these teams among all economic government is growing by shrinking in that. As we've talked about this, the market awards d congal erigation gees break up in April.

G R space stock at is more than twenty five percent in g nova shares, a rest more more than twenty percent. Honey well trades to twenty seven times learnings, while G E O space trades at thirty two times learnings. So I wouldn't surprised if they decide to do this themselves or come up with some sort of extra dividend that gives away at the pound of flash. The guy who handed out earlier Better than anyone was marked many off, and they shot up and said, you spend too much money.

And rather than the traditional you know, don't know you, you have insulted me, good serves and circle wagons and higher lawyers and proxy soliciting and comes people to should post the art of, they say, OK we can learn from your mark beney usage as cloud cover to cut cost A I came in and sales force stock is now at an all time high and essentially an active investors. You just show up with the big day and say, we're here. And if the stock goes up on its own and for wrong and the stock up on its own, fine will sell.

And graduates, if IT does not, then you need to do we say, are we going nominate directors? So you get a little bit of a free call option of the stock is cheap enough. So I like these things.

I think they go through recycle where they can globalize and the d conglomerate way, the airspace and automation do. They need to be the same umbrella in its spic notion of ceos slept diversify by having bigger company and diversifier smooth out, the earnings went again. Investors don't need CEO to be that form. They can diverse around. So I like this.

We will be right back after the break. But the look at one of ChatGPT s first victims, if you're enjoy the show so far, be sure to get property markets to follow wherever you get you on costs.

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We're back with property markets. More than a year ago, ChatGPT took a bite out of a leader in the end tax space. Check G, A textbook and homework help provider, was a big winner during kova.

As learning moved online, then the AI hype cycle began, and check was one of the first companies to say that was stiffing its growth. Eighteen months later, the company is telling the same story. Checks earnings last week showed revenue, subscribers and web traffic all fell by double digits in the latest quarter.

The company is also laying off twenty one percent of its workforce, its second round of big job cuts this year. Scott check was still blaming ChatGPT for its problems on its latest earnings call. IT has lost half a million pages grab us since the launch of that product.

Shares IT down around ninety nine percent from twenty and twenty one a racing fourteen and a half billion dollars in value. And according to the wall street journal bonds, traders doubt this company will be able to pay its death. Is IT safe to say that ChatGPT has claimed its first victim?

It's really interesting. So if you look at the industries that refuse be disrupted by A I, i'm in predicting be health care. IT was supposed to be education IT hasn't happened in education.

Actually, the top hundred universes are a strong than they ever ban. And so confident about disruption. I started an attack company quite flying.

I just thousand pound out check came in. People that was a copa darling. People, a lot of people trapped indoors taking courses, but it's of ninety nine percent.

And some of this is not there are fault or in the market, market DNA ics for trump and individual performance. But this company was going to a get cut in half now, wise man, cut by nine, nine percent. I just think that comes here is terrible.

I think to blame chat P T is to say, ChatGPT is our enemy. Okay, you're fighting an enemy. This is the albanian army taking on the third right right now. So if you identify the ChatGPT is coming for us and there are animals like OK, that's too bad and we understand and your right is their foot.

But you're thought because if if in fact, you're right in there, your enemy and they ve identify this is the space they want to go after all that consumers are using agents to help them uh, with their studies or or essentially find the same utility they were finding for you to higher Price. We seen no reason why that problem get. Just more interesting thing here is what you said about the debt.

I'd love to know what the data strating that because I believe someone is going to make real money here. And who is that? I think a distress credit investors is going to come and buy the bonds.

And if they do, in fact a blow their convenience and the thing goes in a bankrupcy, I think whoever owns the bonds will come in, cut a lot of cost um say this is no longer a growth company, this is a distress asset. But they do have revenge of fall in eighteen percent subscribers of on twenty percent which means they still love eighty percent of their subscribers. So this is probably still a pretty decent company is just that somebody's going to come in here massively cut costs and recognize where no longer a growth company were um a company decline. But if we cut cost faster than the decline, we're still gone to have something here and they probably have invested a massive amount of money. I don't know what the market cap is, but if it's off ninety nine percent.

I mean, to five hundred.

one hundred and seventy million OK, i'd be curious how much debt they have. But I would think distress credit investors are looking those bonds and saying, okay, can I own this company for, you know, tens or hundreds of millions of dollars and say it's probably worth a couple billion dollars to someone else? They have a subscriber base. We are still paying you come is are going to zero.

The best investments I have ever made have been pulling bankrupt companies out of bankrupcy at a very low Price in things like consumer products or the yellow pages and then consolidating or think there's other acquisitions of either distress companies in the space cut in cost faster than the revenue and you can even pick them up really chilly and then you know you can make a lot of money. And the analogy was uses that in one thousand, nine hundred and ninety nine people think blockbusters was going away. So you could buy a blockbusters franchise for two and half times.

It's cash flow. They did go away, but they take another twelve years. So if you buy companies to two and times casual and they went another twelve years, you made a lot of money.

And I think that's the case here. So I look at this and I think, okay, that's interesting. First kind of public ChatGPT victim, although that's probably others not as obvious. But I actually think a distress credit investor is probably looking at the bonds right now.

Yeah, you mentioned there are probably others. I mean, I looked into this. I I really couldn't find many, and i'd be interested to know maybe our listeners can identify some companies that have really gotten crushed by AI.

But I do find IT interesting because there was all of this catastrophes and speculation around how A I was gonna all of these companies out of business that was going to take all these jobs. And here we ought, two years into this revolution. And the big victim of A I is chic, which is just like a kind of relevant company bail any employees at all. I mean, they got twenty person of the workforce, but that's only around three hundred employees who are losing their jobs to A I, I guess. And so I just it's interesting to me in a little surprised at how on destructive A I has proven to b um so I guess the question that I would post to you, which companies or which sectors do you think I am going to get hit by A I as hot as treg just has? Or is the AI catastrophes just to have a blood will first .

love anything? Anyone a customer service right gets hit pretty hard. But if I were to look a large sectors of companies, there are software as a service.

And we decided that as a pangea with services, a software so travel agencies, public to travel agencies, I wonder how realist agent, real state entries are going to fair in a world of an eye. I don't know that that's a super interesting question around who our chat G P. S. Next next victims yeah I mean.

IT feels like the entire economy has figured out a way to get A I on that site. Or at least the very least they made IT seem that way. And I guess the big mistake by chez was saying where A I is not on our side, as you said, A I is our enemy. But I mean, I look at the rest of these companies and no one's been taken to the wood shed by AI. The way, we thought, unless i'm just missing something massive here.

what I find is if you're really worried about something that usually doesn't happen because you prepare for IT, it's when you don't see the comment coming. You know no dinosaur thought I am really freak out bt about a media hitting, eating earth that was in their biggest worry. I don't know how anxious dinos with mental health .

yeah yeah right being .

being the prospect of being eaten while you're sleeping or wire drinking from um that is still my favorite tiktok is the little cheater comes up to the watering home a little freshman and it's such a peace for little water hole until eighteen foot crock takes that bitch into the water and I mean, I just never get sick of that and whenever I seen an animal drinking at a waterhole on my go, okay, here we go anyways um I was going to that crocodile is the stuff you don't see coming what do you think what you think? What sets do you think are going?

My point, I I don't think anyone be I don't think anyone going to be hurt in the same way that checked did is my view. I just I think what's gna happen is gna be slow and we're going to figure out away to make A I work for us. So I mean, I just thought to me, it's telling the the fact that we're here and the big loser is this tiny company that no one cared about anyway.

But you know, maybe I eat, my words will say one, did I did find interesting now that I want to bring up? So apparently the employees of check a couple years ago actually asked for an A I budget because they felt that A I would be helpful to the business that would help with automating their answers. And supposedly, the leadership denied that request.

And so I feel like there are some big questions here for leaders and for managers of companies around how to innovate because in this case, the leadership said, no, we do not need to do that and they look stupid now, obviously. But i'm sure there are many other situations where an employee has come to leadership and said, hey, there's this new technology we have to do IT and the manager has said, you know, thanks, but no thanks. We're going to focus on this other stuff.

And I probably ended up being the right decision. And the example that comes to mind for me is like the metaverse. I mean, how many employees three years ago were going up to the manager and saying, you don't understand media is the next big thing we got to do IT.

And the guys who said, no other ones who look smart now. But you know, in this case, if you if you check, you really screw over the entire company by not embracing A I so I guess my question to you would be what is some of the learnings here for leaders is essentially an innovative delima question. How do you correctly allocate your resources? Well, not you know, risking falling away behind as check has done well.

I mean, I just hearing you you talk what I think is it's not sectors. It'll be the losers. It'll be the companies in every sector that done a corporate eye into the business Operations.

It'd be like saying we knew that the middle revolution was going to a huge impact on the economy, but IT wasn't like pcs took out the auto industry or took out the restaurant business. IT was the companies that didn't adapt in a corporate technology into their everyday business Operations were beaten by the companies in their sector that dead. I think the same is probably true here.

I don't think again, I think they'll be winners and losers in every category. But will there be like five or six industries go away? I know back off the break with a .

look at the new department of government efficiency. If you're enjoying the show so far, kit, follow and leave us through review .

on property markets.

We're back with brushing markets. Donald trump has named elon mask and vague ramsa me as the heads of a new entity called the department of government efficiency. In a statement, trump said the department will dismantle bureaucracy, slash regulations and expenses, and restructure federal agencies. He also called IT, quote the manhattan project of our time, Scott, initial reactions to the department of government efficiency, also known as D O G E A K A dodge.

Well, I think the fact that they have two heads of a department on efficiency can says at all, and that is, this makes no fucking in sense. So first of budget cuts armed within a president's constitutional power, only congress controls federal spending and mayor may not act on outside advice. And all of these congress people have districts that are all making money from federal contracts and have a lot of employees that work for the government.

So, you know, you may want to slow your role here. The an official government agency cannot be created without an active congress. So it's unclear if doa would exist within the government.

Are outside of IT. And effectively, this efficiency group air quotes is more bureaucracy, not less. And you look, every single administration has had something similar talking about how to eliminate your auto racy indian efficiency in government.

But let's let's just be real Mandatory spending, including those security, medicare and federal, that interest consumes two thirds of the budget. So they're going to try and make fine squeers blood from a turn nipt. That is, one third of the budget iron must claimed at a trump row in october that the federal budget could be cut by at least two trying dollars.

That is not true. Uh IT cut to train doors must could have to eliminate both social security and national defense spending. And also, if you did that kind of cut, you would send the economy into immediate recession because, you know, we have what is about a third of our GDP center.

Actually thirty eight percent is total government spending that's actually less than japan, which spent forty two percent U K. At forty three and german and forty eight. So we're spending less on government and other places.

Now granted, they would argue they get more services for their employees. So we may be, in fact, more inefficient. The U. S.

Public sector employees, one in seven workers for four teen percent of workers, not more than germany, thirteen percent of s twelve percent, but less than twenty one percent. So I don't I find this kind of a lot of jazz hands. And just to be clear, when we're talking about the person running are the coral quote efficiency, uh, department.

Let's look at his track record, right? So if you look at the auto n industry, you have B M W IT about one point one million dollars per employee, right? You have formed in nine hundred eighty thousand per employee.

General motors, one point or two million per employee. Mercedes, nine hundred and fifty thousand per employee. And who brings up the rear at seven hundred and forty thousand dollars per employee, the least efficient automation company.

Tesla, so a granted, he was able to maintain a minimum viable product with twitter by one of eight percent employees, but he also registered an eighty plus percent decline in revenue. So anything resembling a reasonable conversation would go like this. We have to put a cap or start reducing or means testing entitlements.

Not everyone should be entitled to entitlements. I should not get social security. Um i'm not sure I should be eligible for medical because I have the money.

We are going to have to raise revenues, which is lattin for taxes, corporate taxes. Are there the lowest rates since one thousand nine hundred and thirty eight, the twenty five wealth est? Americans are paying summer between an effective tax rate, depending on who you talk to, between seven and sixteen percent.

But they're paying less than most middle income workers. But the notion that musk with vacuum swan, I are onna, come in and find two trillion dollar savings. Good luck with that.

And I just also like to, I mean, I know if you saw with the new secretary of the interior is David hassle half and jane lunches character from glee is the news secretary for health and human services. I mean, this is like, this isn't even a cabinet. It's fucking dancing with the stars.

My with this is I can't tell how serious IT is about the problem. And the the feeling that I get is that this is mostly just a way to kind of put up a finger at the establishment, and that by putting elon in charge and putting the vague in charge, this is less about addressing the deficit and more about like owning the limbs. And that, to me, is a shame, because this is a massive, massive problem.

And everyone agrees IT like everyone agrees that the deficit needs to be solved, and everyone agrees that IT would be great to have a more efficient government. But to your point, this has been tried several times in the polls. Clinton tried to do IT.

Regan tried to do IT. Bush tried to do IT. Obama tried to do IT. On the other side to IT, which you also brought up, is that we need to raise tax revenue, like if you want to get back in the Green as a government, that we need to figure out away to raise more taxes as a percentage of all GDP.

And the reality is that has one of the lowest tax revenues as a percentage of GDP among all developed nations. In addition, like the vae, vake has talked about getting rid of all of these to these government agencies, like he wants to go to the D, L, V in the D. J.

And I just, I wish he would be have a sober conversation about the numbers here. If you had to get rid of every government agency apart from the department of defense, which is huge, you to get rid of all of them, you would only reduce our spending by at less than a tense. Like these numbers are tiny, that what we spend all of our money on is, as you said, defense and social security and health care. IT adds up to seventy five percent of our entire budget.

So let's talk about the department of education. IT has about a about two hundred and twenty billion doll budget. Some other things they do with that money, they find title one of the elementary and secondary education act, which provides supplemental funding to high poverty case to twelve school districts.

They have the head. They find the heads star program, which provides vital childcare services for many low income and rural communities across the country. The department also administers pile grants.

Who is here speaking to you right now um because of pilgrims yours truly ah these are investments in lower calm households. They could not go to college, which I could not have done without pilots and by the way, those are investments. They are not entitlements.

Their investments, a lot of the money that goes to seniors as welfare, a lot of things like pages, ants and department of education or investments. Because you stop making this investment is a very credible argument that I end up you continuing to live with my mom instead of paying a shit on attacks, which I do. These are four leading investments, or you increase governments spending on police, fire, rehabilitation, mental illness, diabetes, you know, incarceration.

I would argue the problems we can connect IT as quickly as i'd like. I would argue the department of education is probably one of those departments were over the medium and long term, we see a really strong return on investment. You know the project twenty twenty five is talking about eliminating the department of education, which they describe as a one stop shop for the wk education .

cartel like just an unserious proposal. So like is not even about politics. It's like can we actually have like a legitimate conversation about the problem?

I I know where I see with all of this, whether it's roy weed being overturned um or this ridiculous tion that efficiency he's going to get is here's who's going to get hurt kind of praise on the most vulnerable, right?

My kids don't need the department of education either were years, but a middle class family, a family in rural america, kids who couldn't afford to go to college or junior college or need student loans, poor school districts, they don't cut the funding they need because they they don't have rich parents showing up in biding five thousand dollars for lunch without all stare, whatever these stupid charity auctions. You know, this is again, if you reverse engineer to who really gets hurt with these policies is the most vulnerable. And do we need a more efficient government? Other places cut spending hundred percent.

But what I would do if I were a democrat is I am a democrat. As I luck, we'll go one for one, you you, or one for two. For every dollar you increase or you we find in cuts, you're going to raise two dollars in tax.

There's been an explosion and wealth and prosperity. We keep coming up with reasons to save businesses and stimulus and ppp. Oh my god, what if business what if death actually goes out of business? But then when they're printing money, you want a lower taxes on them.

So look, uh, we need government. I do believe government is too big. When he gets to this point or even bigger than this point, IT starts to crowd out private investment.

I do think there's something that the notion that we shouldn't be whatever is thirty eight percent of GDP, we should be under thirty percent. I get IT. But the only way realistically, we're going to a serious conversation is to cap increases in spending, cut in areas where we can.

But also you got to talk about the revenue shade. I mean, what's next? I going nominate mag gates to be a tony gentle away, away. Anyway, i'm all right up bed.

I'm gonna take the other side of this. Now though there is a positive to this that elon, the vae, heading up this new department. And to me, it's exemplified by a tweet that was put out by the new official account for the department of government efficiency that was post on x.

And I really like this. I said, quote, we are very grateful to the thousands of americans who have expressed interest in helping us. We don't need more part time idea generators.

We need super high I Q, small government revolutionaries willing to work eighty plus hours per week on unglamorous cost cutting. If that you this account with your cv, elon and vague, will review the top one percent of applicants. I love this and I love the language they're using here.

And there was an incredibly popular post. I mean, people were liking IT. They were commenting on IT. They were saying, let's fucking go, you know? And it's a very boy, a comment section.

But what IT has done clearly by putting elon in the vae in charge is that these great marketing tools for attracting talent because I think previously, one of our biggest issues in amErica has been that it's not cool to work for the government. But clearly, what's happening here is, you know whether you're like elon in the vehicle or not. They're clearly making IT sexier to work for the government on that tweet.

You know, the way that they sort of making IT exciting, that we're gna be cut in costs in an unglamorous way. But we need the small test people in amErica to help us do IT. That to me is the right direction. And if using elon of the vake are the ways to do IT, i'm actually all for IT. I like that.

I think that's really insight ful. And you're absolutely right. We need to make government jobs aspirational.

And if we can use two aspirational, you know, very successful men to create that aspiration around government, I, I, I love how you are calling balls and strikes. And I think that's true. I think that is a positive. And anything that attracts brighter human capital into government service, that is the silver lining here.

Yeah, they just need to be honest about what this is all four. And if this just becomes a giant talking point to own the libs, this is not productive.

And no one knowns me and my woman. I'm fuck very Tyler more and mini applying my head into the air you're gonna make IT after all, ask your parents said ask you your parents.

I do that.

Do you take you?

Let's take a look at the week ahead. We'll see earnings from a video target, walmart and lows and will also see consumer sentiment data for november. To have any predictions for .

a scope minus kind of weird. Uh, so a bunch of company is smart companies thought of this cheap. It's closely dying local news stations. If do you ever watch .

local news ilaria.

it's a litter. Hilarious guy. The weather man is like constantly predicting hail the size of golf laws.

And it's usually some older guy with good hair who makes you feel comfortable, and some hot Young woman who's hoping, you know, she's going to get katty current job, or, I don't know, savana guz job some day. And the two have a nice, pleasant banter. And basically they do the weather.

They do local sports. In between them, they have a much of segments called this is what stupid people did in our neighborhood today. But these companies have merge money for twenty months, you uh, every two years and for four months, they have a sunni of money that washes over them in the form of political advertising because the general consensus today has meant that old people vote and old people watch local news.

And so they quint tupple their out rates and they just break in money. The four months leading up to the election, I think those local T, V. Stations and their owners are about to get disrupted as I think one of the extremities or realizations of the selection is that TV generally does not work.

If you want to influence seven year old White women, which is the viewer of emison bch, go on in your reach, million people. But if you want to reach fifty five million thirty four year old males, go on, rogan, I think you're going to see you tsunami of capital election spending, capital transition out of local broadcast new stations or local broadcast tions into podcasts. And I think we're about to see this cute little anomaly in the markets be dislocated or slash disrupted, and in local T, V, stations are about to get the ship kicked out of them.

In the capital election spending, which is only getting bigger and bigger, is about to flow. I already see this happening. All these people are clearly planning, run for president, are calling me and seem to be very interested in me right now in expressing their viewpoint and telling me how much they love our work on Young men, which they do.

These are good people, but they're also interested in starting to come on our podcast because everyone has noticed that the technology that doesn't work is knocking on doors, and that the person with the most money is not unlike the past necessarily. The winner here commonly raise more money is the person is smartest about media and going after media that attracts old people who voted, made up their mind doesn't work. But Young men who are more persuadable people go to cable T V people, local news um or go to cable cable news to sanctify their religion or their positions.

And their religion is their political use. People, Young men got a podcast, actually learn there are more open there. And then if you look at the numbers anyways, my prediction is the following local news stations loss is gonna podcast gains.

And we're going about to see these kind of tired, non innovative companies that have had the sugar high from political spending. I think that's about to come to a fairly above. And yeah.

and I would also just add, I think you've got to throw social media into the mix two because what you just described about local news channels, like here's a compilation of stupid things people did in neighborhood this week that's tiktok, except with presenters. So you can get the same product on tiktok. That's what tiktok is for.

That's where the Young people are. And it's pretty staggering how much more money this campaign spent on T, V. Ads versus social media ads.

They should be on tiktok and they should be on instagram reals, which to me is onna translate to even greater profits for bite, dance and matter. This episode was produced by car Miller and engineer by Benjamin penser. Are socially producers, awesome vice messel various or research jasa as a research associate.

Drew birds is our technical director and Katherine Dylan is our executive producer. Thank you for listen to property markets from the vox media podcast network. Join us on thursday for a conversation with gig shaw. Only on profit markets.

I'm so bullish on podcasting. I said I think next year you could make know fifteen, eighteen box an hour if you keep this up. This could get yeah if you keep add just a little motivation, a little motivation if you keep working as hard and my predictions come true, i'm going to be get to buy two for aries.

I can't wait. I cannot wait.

Uh, right? Secretary of transportation joey's.