Something Has Broken In The U.S. — ft. Katie Martin

Scott Galloway

Professor of Marketing at NYU Stern School of Business and serial entrepreneur who has founded several companies including Prophet, Red Envelope, and L2. He's also the host of multiple podcasts and a bestselling author focused on technology, business strategy, and economic policy.

Ed Elson

Co-host of Prof G Markets and Scott Galloway's podcast partner. He provides analytical insights on market trends and economic developments, often serving as a counterbalance to Scott's more provocative positions.

Katie Martin

Markets columnist and editorial board member at the Financial Times who writes the weekly Long View column on market trends and appears on the Unhedged podcast. She previously served as the FT's markets editor and spent eleven years at Dow Jones Wall Street Journal Group before joining the FT in 2015.

Strategic Economic Resistance Through Targeted Consumer Action

Scott Galloway proposed a "national economic strike" targeting specific AI and big tech companies like OpenAI, Amazon, and Apple through subscription cancellations and purchase delays. (05:23) His thesis is that Trump only responds to market pressure, not traditional protests, making targeted consumer action the most effective political weapon in a capitalist society. The strategy focuses on companies that are "fragile" in terms of growth metrics - where any decline in subscriber numbers would have to be disclosed to investors and could create a chain reaction across the entire tech sector, which represents 40% of the S&P 500.

Practical Example: Cancel two of your three AI subscriptions, delay that new iPhone purchase by two months, or reduce streaming services from seven to one platform.

Global Market Rotation is Real and Accelerating

European and global fund managers are systematically reducing US exposure due to institutional credibility concerns and currency risk. (13:34) Katie Martin revealed that while US-based investors see a beautifully performing market, foreign investors experienced significant losses when accounting for dollar weakness. European managers are describing a fundamental breakdown in trust regarding US political and institutional stability, leading to a durable shift in global asset allocation that could persist long beyond the current administration.

Practical Example: A UK investor in the S&P 500 saw only 7% returns versus 30-50% in European markets after currency adjustments, making the "America First" trade actually a losing proposition for international investors.

AI Productivity Claims Show Dangerous Disconnect

Survey data reveals a massive gap between C-suite executives and workers regarding AI's actual productivity benefits. (33:35) While 45% of executives claim AI saves them more than eight hours per week, 40% of workers report AI saves them no time at all. This disconnect suggests potential overvaluation in AI markets, as the people actually using the technology aren't seeing the promised efficiency gains that justify current valuations.

Practical Example: Companies require "maniac" level enforcement to get employees to use AI tools, contrasting sharply with naturally adopted technologies like email or smartphones that don't need forced adoption.

Japanese Bond Market Volatility Signals Broader Shifts

The historically boring Japanese bond market is experiencing significant volatility due to persistent inflation, marking the end of decades of deflationary conditions. (21:31) This could disrupt global capital flows as Japanese institutions might stop investing overseas if domestic yields become attractive enough, potentially reducing demand for US Treasuries and other foreign assets that have benefited from Japan's "carry trade."

Practical Example: Japanese life insurance companies that previously invested in US assets for higher yields might keep their money domestic if Japanese government bonds start offering competitive returns.

Federal Reserve Independence Under Serious Threat

Katie Martin warned that markets aren't focusing enough on the Trump administration's plans to fundamentally reconfigure the Federal Reserve beyond just changing leadership. (52:22) The combination of Trump's criticism of Fed Chair Jerome Powell as a "numskull" and other institutional attacks represents a tail risk that could permanently damage US institutional credibility with global investors, regardless of who the next Fed chair is.

Practical Example: Unlike typical Fed chair transitions that markets adapt to easily, this situation involves questioning the Fed's basic independence and institutional framework, which global investors view as foundational to US asset safety.