The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter | Prof G Markets

Today's number: $555,000. That's how much a lifetime membership costs at Miami's new Harbor Club, which offers a private speakeasy and weekly backgammon tournaments. Ed, what's the difference between a garbanzo bean and a chickpea? I think I know this one. What, I'm not going to pay a garbanzo to bean on my face.

The delivery is wrong. To bean on your face? Oh dude, shut the [__] up. Just laugh and tell me how hilarious I am. No, not when the delivery is completely wrong. Wait, it's, I won't pay someone 50 bucks to garbanzo on my bean, but I will pay 50 bucks for a chick to pee on me. You get it? This is our worst opening ever. Your fault. Totally your fault. No, not my fault. Do you not understand the corporate world? When your boss makes a bad joke, you laugh hilariously no matter what. Oh my, oh it's so... it's funny because it's true. My job is to protect my boss. I don't want you to humiliate yourself in front of our audience. Let's talk a little bit about private members clubs, which is my new hobby. You want to know the story of my life? Ed, yes please. I finally get the ultimate hookup. The best room in Europe, I don't know, it's Europe, best room in London is Chiltern Firehouse. They have a bar there that is so well done, the DJ's on fire, and they have total obnoxious face control, and I wouldn't even go there, there was no way I could get in. And I went with some friends, and this nice woman came up and started talking to me, recognized me from the pod, and she's like, I'm starting a podcast, would you be willing to have coffee? And I said yes. We had coffee, we became friendly, and she said, here's my WhatsApp, whenever you want to come in, here's my number. I'm like, oh my God, I [__], I am Charlie from Willy Wonka. I have just gotten the golden ticket. And for about the last six months, whenever I was with friends and they'd be like, oh, wouldn't it be great, well let's go to Chiltern, does anyone know anyone, does anyone have a hookup? And I'm like, oh no problem, I'll handle it, no problem, I'll handle it. And boom, right in. Hello Scott, loved it there, loved it there. Hot people everywhere, which is not easy in the UK. It's not easy. It's not like New York or LA where they just let in a bunch of Uber drivers who are looking for their SAG-AFTRA card and they're hot. No, it's not easy. You are definitely like, you've got some crazy pig hunting for truffles in the middle of some forest somewhere. I don't know about that analogy. Anyway, the best room I would bet in the UK, and I am totally finally [__] hooked up. And you know what happened? It burned down. Yeah, I saw that. I had serious schadenfreude on that because obviously I've never gotten in, and I'm not exaggerating, no less than a dozen people sent me video footage and they're like, are you okay? I'm like, I'm not exaggerating. I think it burned down on a Thursday. So sorry for your loss, Scott. No one died, so we can joke about it, whatever. Andrew Bazzaro is already super [__] rich and the insurance will pay for it. So people, I'm not exaggerating, no less than a dozen people sent me video footage and they're like, are you all right? I was there the night before. I was there at the closing party. We just didn't know it was the closing party. Anyways, the new place is a place called Soho Muse. Yeah, I've heard of this. By the way, we really need to put a moratorium on the members club talks because the problem is both you and I are irrationally obsessed with this stuff in a way that's very unhealthy and strange because of my narcissism. So I mean, I could talk about this with you all day, but you know, we really got to... Well, just let me finish up here. This is why the audience come here. They just can't get enough of Scott. Anyways. So I hear the new hot place is Soho Muse. So I call them, oh no problem, I'm like a global member and I never go. And they're like, oh hello, no, we haven't sent out invites to the, you know. And I'm like, so I can't come tonight? Like, no, Ned, we haven't. So even Soho House has said we have so many non-aspirational members to try and feed the public company earnings call that we've had to create a new Soho House that Soho House members don't have access to. So here I am back to who I really am, and that is not able to get into the hot place. The order of the universe has been restored. I am now again on the outside looking in. Ed, I'm sure you'll get into Soho Muse, but by the time you get in, there's going to be another Soho Muse. Yeah, probably. All right, enough of that [__]. Get to the headlines.

European defense stocks hit their highest level in four years after President Trump's meeting with Ukrainian President Zelensky put pressure on European leaders to boost defense spending. The Stoxx Europe Aerospace and Defense index rose 8%, while London's FTSE reached a record high. Trump is planning to create a national crypto reserve that would include Bitcoin, Ether, XRP, Solana, and Cardano. It's the first time he's proposed actively buying crypto in regular installments rather than simply stockpiling the assets. Bitcoin and Ether jumped more than 10% on that news. And finally, the 25% tariffs on imports from Mexico and Canada are officially in effect after hopes for a deal fell through. Trump said there was, quote, no room left to negotiate with the two countries. All three major indices fell on that news, with the S&P 500 suffering its worst day of the year. Okay, Scott, we have three Trump headlines. I know we said we were going to try to talk a little bit less about Trump, but the trouble is politics and markets, they are simply connected, and these are the biggest stories that are moving the markets right now, and they all have to do with Trump. And I think that's probably by design. Let's start with your thoughts on European defense stocks rallying after that rattling meeting we saw between Trump and Zelensky last week.

Russia is a fairly small economy. Russia's economy is smaller than Canada. So you want to kiss the ass, you want to give a lap dance to a small economy and alienate these dependable, prosperous relationships with economies in Europe that combined are 15 to 17 times the size of the gas station posing as an economy called Russia. So this is incredibly stupid. Now, what could go right? I love what Josh Brown said, what could go right, when he co-hosted with you. These nations are bigger than Russia. Spain is almost as big as Russia. Combined, they are a bigger economic force. And quite frankly, they've become lazy and dependent upon a rich uncle who is no longer, who's gone [__] senile, has become emotionally and mentally unstable. And them recognizing they have to fight their own fights, but also waking up and realizing, you know what, I'm pretty goddamn strong and dangerous myself. If they massively increase their military budgets, which I think they're going to do, and start taking leadership cues from their own leaders, and they unify, get rid of all the arguing and the [__], and they become a union again, there is absolutely no reason why they can't push back on Russia themselves. In addition, I think this is a starting gun, and this was one of our predictions at the end of last year, before I even knew this, for European stocks. If you look at military spending, it's expensive in the short run, but there is the potential for dramatic technology spillover that realizes or is registered in huge economic gains in the markets. Apple and Google are basically adjunct or thick layers of innovation put on top of innovation that was developed during military or war spending. GPS, Apple is basically GPS technology with a consumer layer on it that was developed during the Cold War such that we could put an ICBM in Putin's pocket within 10 feet of its designated target. If you look at the internet, for God's sakes, it was the US military decided, a defense department decided we needed a means of nodeless means of communication for after the nuclear attack from Russia. That was DARPA, which became the internet. So I believe Europe is going to be a union again. I believe they will massively increase the military spending, which will result in stimulus and possible technology spillover. So I think there is a real silver lining here, and I am super excited about Europe getting the jolt it needed to move out of the house and realizing that they've got, they should start commanding the space they occupy.

I'm completely with you on the silver lining here. And just if we look at the numbers, so last year Russia spent, if you adjust for their purchasing power in defense, they spent $462 billion on defense last year. All of Europe, meanwhile, spent only $457 billion, so less than Russia. And if you look at that as a percentage of their GDP, the difference becomes even more stark. So Russia spent 7% of their GDP on defense. That number is expected to increase this year to 7.5% or higher. And then on average, Europe spent 2.2% of its GDP. So yeah, Europe can spend more. Trump wants them to go to 5% of GDP. He wants to make that a minimum. That's very unlikely. I think for a lot of these countries, it's just not possible for them economically. But I think Europe has gotten the message loud and clear. They're on their own now. I think we're going to see double-digit percentage growth in defense spending from all of the major European governments, which means that these defense companies will be in very, very high demand. We saw shares in Rheinmetall, which is Germany's largest defense company, those rose 15%. Britain's BAE Systems rose 14%. Leonardo, the defense company from Italy, that rose 17%. So the markets are basically telling us European governments are going to significantly increase their defense spending, and that's going to benefit these defense companies. I wouldn't invest in those defense companies myself because I think the market is reacting a little too overenthusiastically to what happened last week. I think they're expecting these budgets to transform overnight, but in reality, these transitions happen quite slowly and quite steadily. They have to get through governments. They have to figure out these supply chains. I mean, reconstituting an entire army is not an overnight job. But there is no doubt Europe will be bolstering its militaries, and I do like the silver lining you point out there, and I think I agree with it. Let's shift to crypto and this new US crypto reserve. So our government will be buying Bitcoin, Ether, XRP, Solana, and Cardano in regular installments. I find this quite ironic because, you know, you think about the conversation we just had about Ukraine, where America's position is, sure, you need help, but we can't afford it. We've got our own problems. Meanwhile, we can afford buying up billions of dollars of useless cryptocurrencies that provide no benefit to the real economy whatsoever, which I find ridiculous.

The fact that these headlines are happening in the same weekend, the idea that we are going to increase our deficits such that we can artificially raise the prices of an asset class, the majority of which is controlled, like every other asset class, by very wealthy people, including the head of a VC fund that is the advisor to Trump. This is pure corruption in its most naked form. And people will say, and I got to give it to them, well, the Democrats have just been doing this slowly, more elegantly, and more covertly with lobbyists. Trump has just decided [__] that I'm just going to steal right in the light of day. But it is insane that we have an individual who is the AI of the cryptocracy encouraging the president to spend your money in the form of deficits, increased deficits, such that he can dramatically increase his wealth and the wealth of other people in my age that have the money or have already invested in these assets. This is kleptocracy meets intergenerational theft.

Yeah, the person you're talking about there is David Sacks, of course, who is the AI and crypto czar. He is a significant crypto investor, both individually and through his VC firm. And I do want to just play you a clip from the All-In podcast. And this was recorded, I think, a couple of years ago, really. I mean, the old grifter podcast. Yeah, the old grift podcast. And basically, David and his boys are talking about their positions in Solana, which is one of these cryptocurrencies that is going to be included in the national crypto reserve. I'd like to get your reaction to this.

You better clear that Solana position. What's your lockup? 24 months? [__] no. He's trying to sell it to me on text message. Yeah, of course. We're negotiating discounts. I just had the F. Hey, you're [__] the whole thing up, bro. You don't, you don't think I'm hling? I'm hling you. You think I buy hundreds of millions of dollars of anything without a discount? Everything is a discount. Everything's discounted. You want to clear that position? An LLC? Are you saying I got a billion dollars of Solana? No, bro. I'm saying I have one, but you know, I bought it at a discount. But you're holding? Correctish. Yes. Okay. Yeah, me too.

David Sacks did sell his individual crypto position before he joined the government, so he doesn't own Solana anymore. But his VC still owns stakes in these crypto startups, and of course, all of his friends are big crypto investors. So yes, he's not enriching himself directly with this move, but he is certainly enriching himself indirectly, and he is for sure enriching his friends. So I just want to get that argument out of the way. It doesn't, he have huge investments in crypto-related companies? He has huge investments in crypto-related companies. Exactly. That is a direct enrichment. That's like saying I don't buy Google keywords, but I own Google, so I'm not directly benefiting off of the government buying $10 billion. Well, this is the argument these guys like to make. So I'm just, I'm still manning their corrupt position.

I think David is an intelligent guy. I, you know, when I've seen clips of him on YouTube, I think he makes interesting points. He and I have different politics, but I think he's at least intellectually honest about his politics. But he's essentially part of this kleptocracy that, wink, wink, I'll become your AI czar and I'm going to use the taxpayer purse to enrich myself, and that used to be not allowed. The more existential stupidity here is that you are essentially trying to come up with another default currency, and the carrier strike force that is the invisible carrier strike force that is probably more devastating than even the USS Gerald Ford carrier strike force is the US dollar. The fact that we contract the flows and control the flows of the default currency globally, and it is very difficult for anyone to do business when we put sanctions on them, and we get to see where money is going and coming, is such an incredible advantage, and we are purposely ourselves trying to undermine the acceptance and ubiquity of the default currency by creating a second with crypto. I mean, okay, Meisel, surrender, and just [__] stupid is the new American brand. Your thoughts?

I think that applies specifically to Bitcoin, and you know, I'm willing to hear the Bitcoin argument out, but yeah, it is ultimately a bet against the US dollar. So why would the US government be betting against its own currency? This is completely different, though, because this is a ton of other cryptocurrencies in addition to the Bitcoin. So now we have our government actively recommending individual tickers to the public, and these aren't even companies. These are assets that generate no revenue, no cash flows, no profits. Assets whose value is entirely dependent on the greater fool theory. I mean, this is literally the equivalent of the US government creating a national Beanie Baby reserve. There is literally no difference, and it benefits no one other than the people who already own Beanie Babies. And in this case, those are the people who are crypto investors, most of whom are in Silicon Valley and who are good friends with David Sacks, who is the guy who came up with this whole scheme. You know, Elon keeps on talking about how the government is the biggest scam in history. That might be true. Now, this might actually be the biggest scam in history. Let's move on, finally, to tariffs. Your thoughts, Scott? This has been, I guess, a long time coming, but it is finally in effect. 25% tariffs on Canada and Mexico, and an additional 10% tariff on China. What happens now, Scott?

It's simple. Our economy shrinks, our costs go up, our exports go down. I mean, tariffs are taxes on the consumer. So whenever Donald Trump makes a really [__] stupid decision, they're like, oh, no, no, no, we can't defend it intellectually, so we're just going to say it's 4D chess and he gets it and we don't. Yeah, exactly. And that latest argument is, oh, it's a negotiating ploy. This is just dumb, and it costs money to spin up these tariffs and then spin them down, and we lose credibility. It's economic warfare against unbelievably big economies that have been great allies. I think in economic history, we're going to say our entry into Southeast Asia, our invasion of Iraq, Brexit, and these tariffs will be seen as the biggest self-inflicted wounds in history, unless they are immediately rectified. And even then, it's just like, you look stupid. Well, I'm leaving you. I'm leaving you. Just kidding. I'm back. Well, okay, that takes a toll on the relationship.

Yeah, just to go through the numbers that we can expect if these remain intact, it's expected prices across the board will rise 7% according to estimates. Price of certain other goods will be even higher. For example, fruits and vegetables, which we largely get from Mexico, also smartphones, they're expected to increase in price by more than $200. GDP growth is expected to fall. Economists are expecting a 6% decline in interest rates are expected to remain higher for longer as expected. Corporate profits are expected to fall, unless of course corporations just pass all of the costs onto the consumers, which is of course entirely possible. All of this in concert, that is why the S&P and the Dow and the Nasdaq all had certainly one of their worst days in a long, long time, and basically all of the gains that we saw in the stock market since the election, it's all been erased because of this decision. What's the upside in all of this?

I don't know. I mean, as I've said, it's very much like Brexit. You shoot yourself in the foot and you label it patriotism because you decide, oh, we're better off alone. But every economic study said Brexit would be a disaster. But people just loved the emotional argument. It was so compelling. They loved this sort of fake reboot version of independence. And now the UK has its tail between its legs. Most of the country agrees it was a giant mistake. And I think, as you say, I think a similar thing is happening here. All the ingredients look the same to me. My prediction is quite simple. Sounds like it's the same as yours. This is Brexit 2.0. People feel very patriotic, and then we turn around and we see all the damage that we did to ourselves. We realize we buried ourselves for no good reason at all.

We'll be right back after the break for a conversation with Jonathan Kanter. And if you're enjoying the show so far, be sure to give Property Markets a follow wherever you get your podcasts.

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SLRG, welcome back. Here's our conversation with Jonathan Kanter, former Assistant Attorney General for the Antitrust Division of the US Department of Justice. Jonathan, thank you so much for joining us on Property Markets. Great to be here. So we are nearly 50 days into Trump's second term. We've had a lot of attention on tariffs, on foreign policy, on immigration. What we haven't been hearing that much about, though, is antitrust. It feels like it's been kind of outshined by these other issues. So I'm really excited that we can discuss this with you today. For those that don't know, Jonathan is probably the number one expert in America on antitrust. I mean, he worked for a number of years at the FTC, was a partner at several top law firms, then he led the Antitrust Division for the DOJ under Joe Biden until you resigned in December of last year. So Jonathan, give us the state of play of antitrust under Trump at the moment. What has happened thus far, and how have things changed since you left?

And what is like the other side of the argument? I mean, so it sounds like where you land is tough in terms of antitrust, tough on regulation and enforcement. These new picks are probably in the same camp, and that's for the benefit of the public, basically. What is the other side of it? What could he have gone with otherwise?

So if you had to outline the top priorities for this administration when it comes to antitrust, maybe one or two things they definitely want to accomplish, when you look at what they've done so far, what do you think those priorities would be?

Interesting. Why do you think that? Healthcare is such an important priority right now.

I think one of the other big issues that a lot of people are talking about is just the power of lobbying. That's certainly important in the cultural conversation around healthcare, the idea that politicians are basically being paid off, or at least, you know, these healthcare companies are investing millions, maybe billions into lobbying such that these regulations can work in their favor. You served in government for three or four years. You can now speak freely, I assume. How bad is lobbying in government? Is it something that you experienced yourself?

The whole lobbying industry feels so obscure and strange in a lot of ways. I just don't really understand how it actually works. So just at a very basic level, what does lobbying actually look like? Is it a meeting with someone and they present all the arguments as to why something...

should or should not be done? Why is it so compelling, and why does it push politicians so far in either direction?