Ed
Appearances
All-In with Chamath, Jason, Sacks & Friedberg
Biden chaos, Soft landing secured? AI sentiment turns bearish, French elections
Wait, hold on a second.
All-In with Chamath, Jason, Sacks & Friedberg
Biden chaos, Soft landing secured? AI sentiment turns bearish, French elections
Wait, no, no, no, no, no. No, wait a minute. Ed, please. A little respect here, please. Every year around the president's physical examination, he sees a neurologist. That's three times, right? So I am telling you that he has seen a neurologist three times while he has been in this presidency. So that is answering that question. No, it's not. No, it is.
All-In with Chamath, Jason, Sacks & Friedberg
Biden chaos, Soft landing secured? AI sentiment turns bearish, French elections
But I just, I also said to you, Ed, I also said to you, for security reasons, we cannot share names.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
Almost a quarter of Harvard and Stanford's job-seeking MBA grads, so these grads are still looking for work, almost a quarter of them, three months post-graduation, are still unemployed today. And that's a record high. And it's just astounding to me because, you know, these are the top schools in the world.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
It's called a conversation. I'm doing very well. It's very nice in New York.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
The idea that you could have graduated with an MBA from Harvard and or Stanford and you're still struggling to find work. To me, that is just unprecedented. So, you know, a lot of people in that position, I'm sure they listen to this program, certainly a lot of MBA students.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
What would be your advice, Scott, to someone who might be in that position right now, who just got their degree, they're going out into the world, and now they can't find any work?
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
We'll be right back after the break for our conversation with Robert Armstrong. If you're enjoying the show so far, hit follow and leave us a review on Prof G Market, wherever you get your podcasts.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
Welcome back. Here's our conversation with Robert Armstrong, US financial commentator for the Financial Times. Robert, thank you for joining us once again. You're kind of our regular at this point. It's good to see you.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
So I think we both know where we're going to start here, which is DeepSeek, which has wiped out more than a trillion dollars in market value so far in basically a couple of days. What is your view on DeepSeek? Is this reaction warranted or is this much ado about nothing, as they say?
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
I just want to go back to what you said there about people not believing that this is... a communist party conspiracy. And by the way, I'm not one of those people. I'm very suspicious of this. And there was one thing that was said by Alexander Wang, and this is the CEO of this company, Scale AI, which is one of these big AI software companies. And he said this at Davos.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
And this is just a slight suspicion that he raised, which is that DeepSeek claimed that they only used 10,000 GPUs. And he made the point that he believes that they actually have access to another 50,000 GPUs. But they're unable to disclose this because those GPUs are H100s and those are banned in China technically because of these export controls in America. So... That was an example.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
And by the way, I don't know how he knows this. I don't know if it's even true, but I sort of latched onto that statement and my reaction was, okay, well, if this guy knows something about this GPU wrinkle, which is probably, if it's true, a little bit more than a wrinkle, then what else don't we know about this company?
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
Yeah, well, I had an engagement party, so I should go be a good friend. But yeah, we'll take it.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
pretty standard party at a bar and we had some music and we celebrated our buddy and he's the first of our friends to get engaged so that was quite exciting so you know I had to be there and I've been to St. Barts I know what it's like so you know the novelty is lost on me well smell you well
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
Two companies that haven't been affected by this are Apple and Meta. Apple's stock actually increased when the market opened. Meta's fell a little bit, but then it interestingly kind of rebounded and climbed back up. Meanwhile, all of the peers in AI and AI-related stocks, they all tanked. Give us the rundown. Why are Apple and Meta not implicated in any of this?
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
And where does this leave Stargate? That was the big news from a week ago, half a trillion dollar investment over four years. Is that now just null?
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
What kind of effect do you think this could have on Chinese stocks and the Chinese stock market? I mean, that market has been pretty lackluster in the past year. We had this little bump in September when we thought we were going to see some serious stimulus. It's kind of since fallen back down a little bit. Does this mean good things for China?
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
Is this going to sort of revive investor interest in China, do you think?
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
Stay with us. We're back with Profit Markets. I'm going to pivot us to what's happening in Washington. We've had Trump talking a lot about interest rates, which is quite relevant as we have this Fed meeting this week. Trump is demanding interest rates come down. He's made some kind of wild comments last week. He said that he knows interest rates better than they do, they being the Federal Reserve.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
Does he have a point in any way? Should interest rates be coming down or should the Fed be holding steady on rates right now?
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
I think this is maybe our worst opening of a show ever, but we're going to bring it back.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
No, no. You're the crazy guy. I'm the straight guy who just reads the headlines now.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
Tech stocks plunged as investors feared that DeepSeek, a Chinese AI startup, could upend US tech dominance. The company says it successfully trained its AI model at a fraction of the cost of competitors. Nvidia shares tanked 17%, erasing almost $600 billion in value, and that's the largest single stock market sell-off in US history.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
I want to get your thoughts on what's happening with immigration. Trump is making good on his promise of this very strict immigration policy. He's suspended the asylum process. He's starting to actually deport people. It's happening. What does that mean for us as investors? What does a large immigration crackdown mean for the economy, and how might that translate to the markets?
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
In other words, groceries and housing.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
Investors sold a record level of private equity stakes last year amid a slowdown in deal-making. Global trading volumes in the secondary markets reached $162 billion. That's up 45% from the previous year. And finally, the unemployment rate for recent college graduates hit its highest level in two years. Meanwhile, MBA grads are facing record unemployment too.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
Robert Armstrong is the US commentator for the Financial Times and writes the Unhedged newsletter. Previously, he was the FT's US financial editor and chief editorial writer. Before becoming a journalist, he worked in finance and studied philosophy. Robert, thank you so much. We always learn a lot when we have you on.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
Only 84% of graduates from the top 15 business schools this year found jobs within three months of graduating. That's down from 92% in 2019. Scott? Your thoughts, starting with this crazy news with DeepSeek, which has just completely roiled the markets. What's your reaction to DeepSeek?
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
We'll let the listeners decide. Okay.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
Exactly. Thanks for joining us. Thanks, guys. Thanks, Robert.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
Scott, you and Robert both expressed this desire to rebalance your portfolios, to look outside of the U.S. for some more balance. More of a practical question. How often do you re-evaluate the overall balance of your holdings? And how often do you think listeners should be doing the same?
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
What are your thoughts? Well, first, we should probably just assess the damage. As you said, NVIDIA down 17%, Broadcom down 17%, Oracle down around 15%. I mean, just huge damage. The total market value lost so far is more than a trillion dollars. And I think it's probably worth just clarifying exactly why everyone is selling.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
You know, this became a story over the weekend when this new AI app, DeepSeek, became very successful and it quickly became the number one app on the App Store. But that's not... the thing that spooked investors. What really spooked investors was how cheap it was to build this model and to run this model. So, you know, as you said, the costs, the savings on cost are enormous.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
They say that it costs them less than $6 million to develop this. You compare that to OpenAI, which is spending $5 billion a year. They also said that they did this with only 10,000 GPUs, which is significantly fewer than the number of GPUs OpenAI uses. And in addition, the GPUs that DeepSeq has been using are cheaper and worse.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
And despite all of that, they are coming out with basically the same results as ChatGPT. And that's a huge problem because, as we've discussed on this show, the whole thesis in the markets right now is this AI CapEx thing. You've got Microsoft spending $80 billion on data centers this year. You've got Meta spending $65 billion.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
You have Stargate last week saying they're going to spend $500 billion. And then suddenly we learn we can just build all of this on the cheap. So what's the point in any of that stuff? So that's sort of the sell-side argument that we're seeing for NVIDIA and specifically all of the AI infrastructure companies. Now, the buy-side argument... I think is more interesting.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
The possibility that actually we should buy the dip here. I'm sort of leaning on that argument because my reaction, and I could be totally proven wrong, but my reaction is that we are basing all of this off of something that a Chinese company said about how much it costs to build their product. And my question is, why are we believing them?
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
Like, why are we assuming that everything they're saying about how much this costs is true? Because what we know about China China lies a lot about a lot of stuff. They lie about their economy. They lie about GDP growth. They lie about inflation. They even disappear economists and whistleblowers who say anything bad about the country.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
We've seen this countless times, even in the past year in China. So why wouldn't they lie about this too? I mean, I'm sure there is a lot of actual innovation here. The fact that it's open source, it's certainly cheaper to run. But in terms of building the thing, $6 million in a couple of months, I just, it's a pretty simple thesis, but like, I just don't really believe them.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
But I'm curious to get your thoughts.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
Yeah, we'll talk more about it with Robert Armstrong in a moment. Moving on to private equity, this is so interesting because last week we were talking about hedge funds and specifically how investors are allocating out of hedge funds in these record numbers.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
And our rough conclusion is that maybe alternative investments are, you know, at least compared to these simple passive ETFs, maybe they're on the way out. And now we're seeing this headline in private equity, where investors are selling their private equity stakes in record numbers up 45% from the year before, up 20% from the previous record in 2021. And it's kind of
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
Perhaps a similar dynamic happening here. So do you think this is similar to what we're seeing in the hedge fund industry where private equity is kind of going out of fashion?
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
I mean, these funds are going to find exits at some point, you know, maybe it's not going to be in the next 12 months, but certainly one, two or three years, the idea that you could go in there, buy these stakes at a significant discount. I mean, that's generally speaking, uh, on the secondary markets, these stakes traded around a 10% discount to the net asset value.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
So you go in there, buy at a discount, give it like a couple of years, we'll probably see some more M&A, we'll probably see the IPO market kind of at least begin to come back over the next year or so. You'll probably make some serious cash. So I see this the same way. I'm kind of like, this is an amazing investment idea, I think. Maybe you should get involved. There you go.
Prof G Markets
Winners and Losers After DeepSeek — ft. Robert Armstrong
This MBA headline, I mean, we're seeing unemployment... among bachelor degree grads as well. But I think the most stark thing that's happening is the unemployment in the MBA graduate scene. And this is the most striking statistic to me.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Are you going to compromise?
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
I just want to make it very clear. I'm not calling for an attack on Ari Emanuel. I've heard that this guy is an absolute bruiser attack dog. He can take anyone down. So I just want to make it publicly clear on the podcast. I have no beef with Ari Emanuel. It's only Scott who wants to pick a fight.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Let's talk about Nike, which has hit a five-year low as of its last earnings call. The market cap is now below $100 billion. Just to put that in context, that means that Nike is now almost three times less valuable than Hermes. And I use that example because just a few years ago, the opposite was true. Nike was almost three times more valuable. So this is a stunning drop.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Much of it a result of these tariffs. Also, the business at large. Scott, your reactions to Nike, their earnings, and the fact that the stock has plummeted five-year low.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Yeah, I mean, I think just to look at the earnings, I mean, it was a massive stock drop. It was around 7% or 8% in a day. It's interesting because the actual results from the previous quarter were not that bad. They beat on revenue. They beat on EPS. The big problem for Wall Street and for investors was the guidance. And this is important because you might remember
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
back when they switched the CEO, they brought in this new guy, Elliot Hill, Nike decided and they publicly announced that they were going to pause their reporting on guidance. And that was sort of a big deal that we talked about on this podcast. So they didn't report the guidance number in the 10Q itself, but they did talk about it on the call.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
And this is the part that really freaked out the market because they said that in the coming quarter, they expect that the year-on-year revenue, the sales number, will decline in, quote, the mid-teens range. So they're looking at a 14%, 15%, 16% drop on the top line. And that's both already very bad and way, way more dramatic than expected.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
And I think the question that people are asking, well, why is this happening? And the answer is what you'd expect. This is because of the tariffs. Because... out of the hundreds of suppliers and manufacturers that Nike works with, guess what? A quarter of them are in China. So they have these two choices now.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
You can either take the hit on the margin, which is going to upset people, specifically investors, or you can raise your prices, which is going to upset consumers who are already not very happy with the product assortment at the moment. And they didn't say which strategy they're going to go with. I think we could maybe expect both. Maybe they'll
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
raise prices slightly and also take a slight hit on the margin. I think what we can definitely expect, though, because they told us, is a significant decline in revenue.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Well, Claire's laughing, so clearly I don't get it.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
We'll be right back after the break for our conversation with Karsten Brzeski. If you're enjoying the show so far, be sure to give Property Market to Follow wherever you get your podcasts.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
It's been a rough week for your retirement account, your friend who imports products from China for the TikTok shop, and also Hooters. Hooters has now filed for bankruptcy, but they say they are not going anywhere.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Last year, Hooters closed dozens of restaurants because of rising food and labor costs.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Maybe in April of 2025, you're thinking, good riddance? Does the world still really need this chain of breasturants? But then we were surprised to learn of who exactly was mourning the potential loss of Hooters. Straight guys who like chicken, sure. But also a bunch of gay guys who like chicken? Check out Today Explained to find out why exactly that is, won't you?
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
I still can't put it together. Take me through it for the low IQ brain.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Welcome back. Here's our conversation with Carsten Brzeski, Global Head of Macro Research and Chief Eurozone Economist for ING, as well as Chief Economist for ING Germany. So, Carsten, we're happy to have you on today to talk about Germany, which we've been discussing a lot recently. Last week, Scott and I discussed this new defense spending package.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
We've also talked about the German stock market. And we'll get to all of that. But first, I would just like to get a general picture of what's happening in Germany. And I think a good place to start would be politics. Germany held an election last month. The Conservative Party won, but not by much. Tell us what happened in the German election.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Give us the state of play in Germany, the political situation, and what has happened since that election.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Oh, got it. Oh, you got it.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Yeah, we hear a lot about the AFD party here in America. Obviously, Elon has expressed support for this party. It's the far right party in Germany. And then you mentioned the rise of the extreme far left party in Germany. Your thoughts on what this says about the situation in Germany right now?
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Very slow this morning, clearly. How are you doing?
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
You mentioned there's five years of stagnation in Germany. And of course, last year, it happened again. The German economy shrank. I think GDP fell around 0.2%. Big picture, what has been going wrong in Germany? When you look at the economy, how it's performed compared to America in the past few years, what are the main issues that are causing that stagnation?
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Thank you. Thank you.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
You're going to join a frat. That's right. One thing I will say is that when I did the whole college tour with my mom, You don't really learn that much is what I found about the schools because you're just being inundated with all of this information and they all look great. But it was a great bonding experience to do that with my mom. I think that was my biggest takeaway. It's just a nice time.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Thank you. Thank you.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
That's nice. That's what I'm looking for. Should we bust into the headlines here?
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
You're welcome.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Apple is reportedly losing $1 billion annually on streaming. Apple TV Plus is the company's only unprofitable subscription in its very fast-growing services unit. Silver Lake is taking Endeavor private in a $25 billion deal. The newly formed entity will be called WME Group, with former Endeavor CEO Ari Emanuel serving as the executive chairman.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
This is especially relevant right now because...
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
sap which is of course the whatever you want to call it the sales force of germany is enterprise sas they just took the crown as the most valuable company in europe they just overtook nova nordisk as of this week now worth 320 billion dollars so i have the same question as scott it looks like maybe german tech is seeing a resurgence but historically it hasn't been
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Emanuel secured a nearly $174 million payout as part of the deal. And finally, Nike stock tumbled to a five-year low after the company projected a larger than anticipated revenue decline for the current quarter. Nike attributed the lower guidance to ongoing challenges, including tariffs and declining consumer confidence. Scott, let's start with your thoughts.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Carlsten, one final question from me. We've discussed many of the downside risks and the upside risks for Europe. We haven't fully gone into the tariffs. Trump has announced these reciprocal tariffs that are supposed to go into effect on April 2nd. We don't really know the details, but it should affect Europe.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Just as we wrap up here, give us a sense of what these tariffs will do to Europe, what Europe's reaction has been, and how impactful they might be.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Karsten Brzeski is the Global Head of Macro Research and Chief Eurozone Economist for ING. He previously worked at the Dutch Ministry of Finance and the European Commission. He is a 2019 JFK Memorial Policy Fellow at Harvard University and member of the Advisory Council on International Affairs for the Dutch Government and Parliament. Karsten, this was very enlightening.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Apple TV Plus is reportedly losing $1 billion annually on streaming.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Really, really glad you could join us today. Thank you for your time.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profity Markets from the Vox Media Podcast Network.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Yeah, I think that's the main point here. It actually goes back to what we were talking about with Southwest and their bag policy and Costco with their hot dogs, the idea that this is intentionally a loss leader. They're losing a billion dollars a year. And perhaps that's worth it to them because they say, well, maybe this is going to get people to buy iPhones.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
We're going to offer three months of free Apple TV Plus if you buy an iPhone or if you buy an iPad or if you buy a Mac laptop. And I think that is the question is how many people are actually buying Apple products because they want to get three months free? of free Apple TV+. I would argue zero people are buying these devices for that.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
And I would also add on to the fact that you have iPhone sales which are flatlining at the moment. I mean, we have seen an increase in laptop sales, but I really doubt that this $1 billion year loss is paying off. And then you just look at the numbers of the platform itself. averaging around $5 billion a year on content since they launched this in 2019, but they only have 45 million subscribers.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
And you compare that to, say, Max, for example, which has 117 million subscribers, and Netflix, which has more than 300 million subscribers. So it's not a very good business. And I just doubt that the upside that you're seeing in the sales of their other devices, I'm not sure that you could justify this as a worthy loss leader in the Apple business.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
And I think what we will probably start to see is Tim Cook getting under a little bit more pressure from shareholders about these issues. And I think we'll start to see that that content budget will shrink and shrink and shrink. Let's move on to Endeavor. and this acquisition by private equity firm Silver Lake. Just a reminder, what is Endeavor?
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
A lot of people know this company as WME, which is, of course, the talent agency that was founded by Ari Emanuel. You might know who that is. He was the guy who inspired the TV show Entourage. He's sort of the star talent agent in Hollywood. And WME, they represent all of the biggest movie stars, all the biggest pop stars. They also, by the way, represent Scott Galloway. But they also have...
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
These other businesses too. So, for example, they own a controlling stake in the WWE, the Worldwide Wrestling Entertainment Company. They also have a controlling stake in the UFC. So now Silver Lake is taking it private. It's been a public company since 2021. They're going to rename it the WME Group. And I think this is to reflect this new focus back onto talent and talent representation.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
They're paying a 55% premium. So $25 billion, that is 55% higher than its market cap before the bid. And it's also the largest take private deal in entertainment history. So Scott, your reactions to this deal? And maybe do you have any inside baseball, given the fact that you work semi closely with WME?
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
I think you are probably on the money here. I mean, he's getting $174 million in cash for the shares that he owns in this transaction. But I think probably the more important statistic here is that last year, for his compensation package, he got paid $84 million. And that's just... so stark in comparison to, as you say, the extremely low pay for the entry-level workers in this business.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
Isn't it? I mean, at least that's what society wants us to think. Gotta get a Birkin, gotta get a home, you know.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
I mean, I know people who work at these companies and the life as a staffer and assistant at one of these big talent agencies is not very good. It's one of those glamorous industries where I think they get to take advantage of the fact that people really want to work in Hollywood, but these people do not get paid very well.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
And then you have the fact that the company, after going public, has done very badly from a shareholder perspective. I mean, Silverlake would say that the common stockholders here did very well here. They got $27.50 per share, which is a 55% premium to the share price that was unaffected by the bid. That's pretty good. But what you have to remember, though... is the IPO price, the issuance price.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
This company went public at $24 a share. So even if you were the very first investor, if you invested directly in the IPO, you have made a lousy return. It's around 14% in the last four years. The S&P in the same amount of time is up 40%. And so, yeah, this is a bad investment. And for a long time, it was even worse. I mean, at one point, the stock was down at $17.
Prof G Markets
Unpacking Germany’s Historic U-Turn on Spending — ft. Carsten Brzeski
So I think you're probably onto something here, but I think the more interesting thing will be seeing what your agents over at WME will say after this episode releases.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I mean, he's learning from his master. So I would predict that by the time he's done with Commerce Secretary, when he's out of office, my prediction, he's going to return to the company and reinstate himself as chairman. And it'll basically be like he never left.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
final headline this new data from moody's the top 10 of earners in america now accounting for 50 of all consumer spending that's up from 36 in 1995 this is basically just another signal of how bad the inequality in america is really getting scott you know you've done a lot of work on this you've done a lot of research on this what are your initial reactions to this new data
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Yeah, we know what the wealth inequality looks like in America. As you said, the top 10% are owning 90 plus percent of the assets. But finally, we're seeing even despite the fact that the wealthy are actually underspending and they're hoarding, they are still driving the real economy. We're now having half of actual transactions in America are being made by... the top 10%.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
So I think it's sort of this double whammy. It's now transitioning into a new thing where, you know, in addition to controlling all of the assets, they now control the real economy itself. And, you know, we were discussing like, what are the second order effects of this? I think just to list them off right now, I think the first thing you'll see is just reduced social mobility.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
You're going to see more economic instability. So you're going to see more debt accumulation, more inflation, higher likelihood of these financial crisis events. You're going to see lower social cohesion, which we're already seeing less trust among your citizenry. And then I think the other thing is that we always see across every unequal society in history is you're going to see more crime.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
You know, crime rates go way up with, you know, general distrust and dissatisfaction with the state of affairs in this country. So our team kind of got together and we spitballed, okay, well, what is a good investment in that society? If that's where we're headed, where do you invest? Bunkers. Exactly. So, you know, just some kind of random ideas we threw out there. Private security.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I think we'll see more private healthcare, more investment in elite healthcare that services the rich. And then one thing that you've mentioned, which I agree with, luxury real estate. So more homes in Aspen, more homes in Palm Beach, more homes in the Hamptons. I think we'll start to see more and more of these siphoned off private bunker communities.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I guess at a certain point, this conversation becomes ridiculous because I'm essentially describing a dystopia and asking questions about how to invest in that dystopia. And I think, by the way, a lot of investors are having this conversation. So I guess my final question before we move on to a conversation with Mike is, at what point do we throw in the towel
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I was trying to imagine you skiing all week. I just can't picture it. That's what you were doing, right? None of us actually really knew where you were or what was going on. You were skiing, right? Yeah, I was in Zermatt.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
and say, okay, none of this is worth it? Like, why are we discussing investing in this world that we don't want to live in? At what point do we decide, okay, instead of playing along with these trends and investing in these trends, we have to reverse them? Like, what is the tipping point? At what point do you think that moment actually comes in America?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
We'll be right back after the break for our conversation with Mike Moffitt. If you're enjoying the show so far, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Are you a big skier? I love skiing. Really? Yeah, my favorite thing is having lunch in the middle of it. I love that you kind of get up early, you're sort of working out, but it's not that intense, but you feel like you've had this big workout and then you all kind of like get together and have this great big lunch and then you head home.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Okay, welcome back. Here's our conversation with Mike Moffitt, founding director of the University of Ottawa's Missing Middle Initiative, and also a former economic advisor to Justin Trudeau. Mike, thank you so much for joining us on the podcast.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I'll just start with this. We've been talking a lot about Canada lately, mostly in relation to Trump. You know, we had this 51st state drama, we had the tariff stuff, we've got this potential trade war. And I've been watching all of this go down, and it's gradually dawned on me just how little I actually know about Canada. And I talk with my friends about this
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
And I talk with my peers and it becomes clear to me they don't really know much either. So I don't think I'm in the minority. I think there are just a lot of well-read, informed Americans out there who don't know a lot about this country, which is why I'm just so glad to have you on today to fix that for us. So I'd love to start with just like an overview of Canada's economy.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
So how big actually is Canada? the Canada economy? What are its strengths? What are its weaknesses? And what makes it different from the American economy?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
That makes me think that this tariff situation is going to be a big, big problem. And we will get there. But just as we... continue to build this picture of Canada. Give us a sense of the political situation in Canada right now. I think most people probably know Trudeau has resigned, but he's still, from my understanding, prime minister for now. What's happening in Canadian politics?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
What's going to happen with Trudeau moving forward?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I didn't realize that until recently. You got Mark Carney, Bank of England and Bank of Canada. This guy's a machine.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
So interesting. And then my final question on this Canada 101 segment is the history of Canada. Could you just give us a very brief history of Canada? How did this country form? What are its cultural roots? How did we get to where we are today?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Scott, I will turn it over to you to get into the economics.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I just want to point out, I'm completely shocked that you know anything about hockey, Scott.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
We won't be able to wipe our house. Okay.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Yeah. And my final Trump-related question, I just have to get your comments on his proposal to make Canada the 51st state. Is there a soul in Canada who thinks this is a good idea? Or is it just completely absurd to everyone in the nation?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
We'll talk more about that revolution in this episode. Shall we bust into the headlines? Let's get on it.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Apple plans to spend more than $500 billion on American innovation over the next four years. The investment will fund the development of a manufacturing facility in Houston, which will build servers to power Apple Intelligence. The company has also pledged to create 20,000 new jobs.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Final question from me, Mike, and thank you so much. This has been informative, enlightening, and really appreciate your time. If America could learn one thing from Canada, what do you think it should be?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I'm more bullish on hockey. Mike Moffitt is an economist, business professor, and the co-host of the podcast, The Missing Middle. Mike is the founding director of the University of Ottawa's Missing Middle Initiative, and devoted to restoring middle-class prosperity to young Canadians.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Mike previously held the role of Chief Innovation Fellow for the Government of Canada, advising on innovation and manufacturing policy, and is a former economic advisor to Liberal leader Justin Trudeau. Mike, this was a pleasure. Thank you so much for joining us. Thanks, Michael.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Following Howard Lutnick's appointment as Secretary of Commerce, his 27- and 28-year-old sons will now help lead his investment bank, Cantor Fitzgerald, in his place. Brandon and Kyle Lutnik will take on the roles of chairman and executive vice chairman, respectively, while three longtime executives will share the CEO position.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
It's going to be flying them into Delray. There you go.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
As you've said before, we're a nation of reformers, not quitters. It's much more noble to reform than quit. That's good. That's very profound, Ed. Well, I didn't come up with it. It was you. I'm going to make you CEO of my investment bank. I can't wait. This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Mia Silverio is our research lead. Isabella Kintzel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profity Markets from the Vox Media Podcast Network. If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday. Lifetime
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
And finally, the top 10% of earners now drive nearly 50% of all consumer spending in the US. That's a record, according to Moody's Analytics, and it's up from 36% three decades ago. Moody's also estimates that the spending from this group alone accounts for almost one third of the nation's GDP.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
very timely considering our conversation just now, but let's start with Apple and Apple's plan to spend more than $500 billion on American innovation. This big spending plan, Donald Trump is very happy about it. He posted about it on Truth Social. Scott, your thoughts on this new investment from Apple?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Your thoughts? 100% in agreement. I think the thing you have to understand here is that Apple was going to spend this money anyway. If you look at the company's financials, you look at the OPEX, you look at the CAPEX, look at the guidance, $500 billion over four years is pretty much in line with expectations. In fact, some would say it's actually below expectations.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
So, yeah, this is not some big, bold, new investment. This is... par for the course for Apple. And I think the question is, okay, well, why would you make such a to-do about this? And the answer is quite simple. As you say, it's to appease Trump. Because you have to remember, Apple, of all the big tech companies, is the most reliant on China by far.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
And they have all of their supply chains are in China. They also, unlike companies like Google and companies like Meta, they also sell products in China. They're allowed to sell iPhones in China. That's a big market for them. So they can't afford to lose China as a supplier or as a customer. And so they need to figure out a way to protect that.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
And so this, to me, is like this genius, cost-effective way of doing that. Instead of investing billions in lobbying, or instead of investing even billions in new investments, they're basically just rebranding their pre-existing investment plan, which they were already going to do, but now it's got this pro-America, pro-Trump feel to the whole thing.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
And there's huge downside potential there. So I'm sort of in support of your move to trim. Let's move on to Cantor Fitzgerald and Howard Lutnick's decision to put his sons in charge of the company. Just some context on how wild this move actually is. You know, You might not have heard of this company because it's a private company, so it doesn't get that much publicity.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
It doesn't get that much coverage because, you know, you can't trade the stock. But on Wall Street, this is one of the biggest names. This is a huge bank. It employs 14,000 people. They have 60 offices across 20 different countries.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
And now this, what is essentially a megacorporation on Wall Street, it is now controlled by a 27-year-old and his brother, who is 28 years old, and who is also a DJ, which is just a... a funny but probably important little side note about the new vice chairman of Cantor Fitzgerald. So I think the two questions people are probably asking here is, one, how is this even allowed?
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
How is this possible? And the answer is, Howard Lutnick controls and owns the company. He's certainly the majority shareholder. To the best of my knowledge, he's the only shareholder. But if you look into the ownership and the governance structure, it's actually not very clear. I think it's probably intentionally obscure.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
But what we do know for sure is he has the power in this company, so he can do whatever he wants. And then the second question I think people are asking is, why on earth would he do this? Why would you hand over a multibillion-dollar corporation to your Gen Z children who have basically no experience? And I have my own theories about this, but I'd first like to start with your take, Scott.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
Why is Howard Lutnick, the new Commerce Secretary— handing this company to his kids? Because he can.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
We got rid of it because it didn't work. We looked through all of world history. I mean, humans clearly love hereditary succession, but what we have found is that it's just a bad model. It's unstable as a form of governance. And I'll just, on this point, from a shareholder perspective, if you look at... corporate history and having family succession plans.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
There's this study that we found that looked at all of the family-owned businesses through history, and it found that when you pass control on to the child, on average, financial performance declines. I think it's like a 5% drop in operating profitability. Another study found that family CEOs work, this is no surprise, on average, family CEOs work 9% fewer hours than parents. other regular CEOs.
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
And another study found that family CEOs are held less accountable to their financial performance than regular CEOs. I don't think any of this is surprising, but I think the takeaway for me with these succession plans is it's almost never a good idea. One point in which I think this is different and which kind of explains this
Prof G Markets
Why Tariffs Could Crush Canada’s Economy — ft. Mike Moffatt
I think that this is Howard's way of not letting go of the company while he's serving in office. So he gives it to his kids and he'll still sort of de facto run the company. All he needs to do is give them a phone call, tell them the instructions. They say, yes, sir. Yes, dad. They execute. And he's still pretty much running the company that way.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
It did double, literally. The shares rose 100%, yeah.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
I think what this is is just sort of a simple distressed asset activist play. I mean, you have this company that has fallen around 90% in the past four years. And I think this is sort of no different from any other activist investment. He sees opportunities, he's looked at the debt, and he sees upside given how Hertz has been beaten down over the last few years.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
What's interesting to me is the way he is positioning this as a tariff play. And I feel that this is...
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
probably going to become a theme now where everyone's going to figure out a way to sort of retroactively justify their investment theses as a response to tariffs and that's sort of what he said i mean his his argument i can just quote him directly he said hers is uniquely well positioned in the current tariff environment where auto tariffs are likely to cause used car prices to rise
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
Hertz owns a fleet of over 500,000 vehicles valued at approximately $12 billion. A 10% increase in used car prices would equate to a $1.2 billion gain on its auto assets. So he's basically saying, you know, we saw what was happening in tariff world and we decided to go in and buy Hertz. But what he's not really acknowledging is the fact that they actually started building this position last year.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
before any of these tariff changes came about. Yes, it was after Trump won, but I don't think he could have known that the tariff environment would be this crazy and that it would be this targeted against cars. And in fact, you see his reaction to Liberation Day, where he was all up in arms on Twitter and he was massively disapproving of it.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
I think to me, that is an indication that Bill Ackman did not expect the tariff policy to play out the way it did. So I think this is sort of him trying to... retrofit this 40-chest tariff move as a way to explain what is essentially just kind of a regular activist investment.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
It almost doesn't matter, though, because the markets like Bill Ackman. And he clearly convinced the markets that, you know, maybe it's a meme stock. I mean, 100% in a day. That's probably what it is. But for now, he's winning interpretive dance or not.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
Yes. Perfect analogy. I love it. We'll be right back after the break for our conversation with Ryan Peterson. If you're enjoying the show so far, be sure to give the Profiteer Markets feed a follow wherever you get your podcasts.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
What if you could make that stop? With LPL Financial, we remove the things holding you back and provide the services to help push you forward. If you're a financial advisor, what if you could have more freedom but also more support? Ready to invest? What if you could have an advisor that really understood you?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
When it comes to your finances, your business, your future, at LPL Financial, we believe the only question should be, what if you could?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
Welcome back. Here is our conversation with Ryan Peterson, the founder and CEO of Flexport, a leader in global supply chain management and one of the largest customs brokers in the United States. Ryan, good to see you again.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
You operate one of the largest supply chain management and logistics companies in the world. I feel that you are kind of in the eye of the storm when it comes to tariffs. So just a very basic question. I mean, just give us the rundown. What are tariffs doing to businesses on the ground that you're experiencing? And how is this all affecting supply chains around the world?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
You always sound depressed when you have to intro this podcast just a little bit. It's like, oh, now I got to talk to this guy, Ed, again.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
It sounds like small businesses are being hurt more so than larger businesses. And the reason they're being hurt is because small businesses are more reliant on China than anyone else. Would that be the right characterization?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
Could you take us through what these tariffs are? actually are at this point? Because it's just so difficult to track. I mean, they go up, they go down, they're canceled, they're uncanceled. What are the actual tariff rates in America today? Not what they're supposed to be in a week or whatever, but what are you actually paying if you're shipping something into the U.S. today?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
I'm not up to much, Scott. I'm in New York. I'm just grinding away, trying to make this podcast the best it can be. But I'm very happy though, because we won the Webby's People's Voice Award.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
That tariff, the 125%. Who actually pays that? You know, who in the transaction is paying it? Is it just, you know, you buy a sofa from Ikea or whatever, they ship it in. Is Ikea paying the tariff or is it split among people?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
Yeah, we won the Webby. It's interesting. There are two awards. One is decided on by the judges or the executive committee of the Webby Awards. And we did not win that prestigious prize. But we did win on the popular vote where the people decide what is the best business podcast ever. So I think that's honestly a greater honor. The elites don't love us, but the people love us. We're the populists.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
You think 80% of companies that get shipments from China will just disappear and millions of employees later?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
And just on that point, I just saw a headline coming into this recording, which is Besant sees de-escalation with China situation unsustainable. So it certainly is pointing in that direction based on what you say. It could be that by the time this episode airs, they have budged.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
Fucking communists, Politburo bitches. Exactly. So for that, we have only our audience to thank. So thank you, everyone who voted. We're very, very excited. I'll be getting my first trophy for anything. And we'll be at the Webby Awards in a couple of weeks. And I hope, Scott, maybe you'll join us. Maybe you'll fly in. No.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
Is there any indication from what you've seen, Ryan, that these trade partnerships are building among the world and trade is increasing for everyone except for America? This idea that if we're going to build this wall around us in the form of tariffs, the world's going to keep on chugging along. People are going to continue to trade goods. It's just that they won't trade with the U.S.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
Is that a trend that you think is actually viable? Is that something that you think we would see?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
I won a prize for my thesis in college. What was your thesis? If I talk about it, you're going to start making fun of me and it's going to bore the hell out of you. But it was on ancient Greek festivals.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
What if you could make that stop? With LPL Financial, we remove the things holding you back and provide the services to help push you forward. If you're a financial advisor, what if you could have more freedom but also more support? Ready to invest? What if you could have an advisor that really understood you?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
All right. As you may know, I was a classics major. Yeah. I won the Keeney Prize for best senior thesis. So that was actually a pretty good prize and I won some money for it. That's a pretty big deal, right? What about you? What was the last, maybe award that people wouldn't know about or that I wouldn't know?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
When it comes to your finances, your business, your future, at LPL Financial, we believe the only question should be, what if you could?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
We're back with Profiteer Markets. You mentioned that if he makes a deal and Trump has said, you know, more than 70 countries have called him to make a deal. Do you have any insight into what the deal is or is supposed to be? Just at like a very basic level, what is your sense of the goal of these tariffs? And, you know, if we're going to swerve out the way, what is the deal?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
I know you won like a Webby and you're the New York Times bestseller and you're the Poets and Quants best business professor of the year, et cetera, et cetera. But maybe some like interesting- Did you have a high school poll?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
So what happened then? How did things change?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
German bonds and the Euro are climbing as investors look to the Eurozone as a safe haven. The shift follows Trump's latest attack on the Fed Chair Jerome Powell on Truth Social, where he called him, quote, a major loser. The post triggered a sharp market reaction. The major indices fell more than 2% and the dollar sank to a three-year low. Chinese state-backed funds are halting investments in U.S.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
Final question from me, Ryan, this has been massively informative. Thank you. Um, We've been talking about the public response from business leaders to the tariffs and to what Trump is doing. And what we have found, or our view, is that the response has been quite muted recently. from CEOs. People are not complaining as much as you'd think.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
And, you know, I just think about the stats that you mentioned or your predictions that this would wipe out 80% of businesses that rely on China. It's massively affecting small businesses. You can see millions of jobs lost as a result of this change. And then I also would reference a tweet you put out.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
You said, quote, thousands and then millions of American small businesses, including many iconic brands, will go bankrupt this year if the tariff policies on China don't change. And you, I believe, are one of the few CEOs, granted you have a real horse in this race, but you're one of the few CEOs that is speaking out about this and saying just plain and simple, this is a bad idea.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
private equity as trade tensions between the two countries intensify. The freeze on allocations is reportedly a direct response to pressure from the Chinese government. And finally, Bill Ackman's Pershing Square has built up a nearly 20% stake in Hertz, citing the company's strong position amid tariffs.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
I'm wondering if you think, based on your experience, the people you speak with and the businesses and the clients you service, do you feel that we are about to see a change in sentiment from our business leaders? Do you think that we're about to see business leaders come out and say, this is a horrible idea and this is stupid and we don't support this?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
Sounds like your view is founder CEOs will speak out and the middle managers won't, which I actually think is a pretty good thesis.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
So just do it. I love that. Well, we, we support you. I'm certainly feeling long Flexport after this interview. Ryan Peterson is the founder and CEO of Flexport, a leading technology platform for global logistics. Prior to starting Flexport, Ryan was the founder and CEO of Import Genius, a premier provider of transaction data for the global trade industry.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
In a post on X, Ackman said higher tariffs could drive up used car prices, boosting the value of Hertz's fleet. Scott, let's start with these German bonds. I just want to frame what's happening here because, you know, last week,
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
He earned a BA in economics from UC Berkeley.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
I'm done. That's the outro. Thank you for joining us, Ryan.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
It's sort of the silver bullet to the questions we've been asking. Fly your freak flag.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
Scott, Ryan painted kind of a dark picture for small and medium-sized business owners in America in that interview. And I believe him. I mean, he has probably the greatest and the most powerful colorful understanding of what is actually happening in our supply chains.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
For any small business owners or even employees at these small businesses who rely on trade and maybe on trade with China, what would be your advice to them? And what would be perhaps a message of optimism?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
We talked about what was happening to the US treasury market and also what was happening to the US dollar, where we saw a sell-off in both categories, which is very rare for that to happen simultaneously. And the question we were asking last week was, okay, well, if there's this giant sell-off here, then where is the money going?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Ms. Silverio is our research lead. Isabella Kinsel is our research associate. Dan Chalon is our intern. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profity Markets from the Vox Media Podcast Network.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
You know, if you're selling your US stocks and you're selling your US treasuries and you're selling your US dollars, then what are you buying? What are you converting that capital into? And so what we're seeing here is, is basically an answer to that in the short term. In the short term, what are investors buying? Where is the capital going? Well, one, it's going to euros.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
And two, it's going to European debt, such as the German bunt here, which is Germany's equivalent of a treasury. So the euro is up 5% in the past month against the dollar. The yield on the two-year German bunt is now 2% lower than the yield on the two-year treasury in America. And so what we're witnessing right now
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
is this very interesting dynamic where it's perfectly symmetrical to what is happening in the U.S. So in the U.S., you have this rare combination of a sell-off in the bond market and in dollars. And then in Europe, you have this very rare combination of a rally in both bonds and in the euro. So I think the answer couldn't be clearer. Right now, the world is selling America. We knew that.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
But as of this week... The world also appears now to be buying Europe. So, Scott, your reactions to what's happening here?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
Exactly right. And by the way, I mean, our next headline here is about private equity and this turn away from U.S. private equity. But you mentioned, before we just move on to that, you mentioned this idea that institutions are turning away from these assets. And I just saw another headline explaining how Yale is completely unwinding its private equity positions right now.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
And I think what we're seeing is large funds, large institutions are trying to figure out a way to slowly get out of America and figure out ways to invest in Europe. And I don't think that means that you suddenly convert overnight. You suddenly buy into the biggest PE funds in Europe. But I do think it means that what they're doing is they're shifting to Europe.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
They're converting into euros in preparation to make these investments. They're converting into the European debt markets. And I think what will happen is that's the preliminary step That's the first part of the rotation, of the transition out of America.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
And I would imagine that what will happen downstream of this, once we sort of emerge from the uncertainty, is while they are pouring into these European safe haven assets, i.e. bonds, I think the next step is they're going to start getting into more risky assets. They're going to start getting into the European stock market.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
Maybe they'll start getting into European alternative assets like European VC, European private equity. Let's just talk about what we're seeing here with China. So China is halting all of its investments in American private equity. And that is... significant when you understand the role that China has played historically in the US private equity markets, which is to say a big role.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
Some of the biggest funds and the biggest names in private equity have taken in big investments from China, funds like Blackstone. The Chinese Sovereign Wealth Fund was one of their biggest investors in the IPO. Funds like TPG, Carlyle, which continues to co-invest with China to this day. And China has said there's no more investing in private equity in America, which...
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
is actually quite a big deal for the private equity industry. And we just saw Blackstone's earnings last week and Schwartzman, who of course was a Trump supporter, he appeared to be quite rattled by these tariffs. He said, quote, tariffs have dramatically impacted investor sentiment. He said, we believe that fast resolution is critical to mitigate risks and keep the economy on the growth path.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
So this could be a real shakeup to the private equity industry in America.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
And you mentioned that China is a significant investor, but not as significant as other nations, which is true. But I think the question is, well, what if other countries start to follow suit? I mean, we have $5.5 trillion of direct foreign investment in the U.S. More than half a trillion of that comes from Canada. A trillion of that comes from Asia.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
But probably most concerningly, almost $3.5 trillion comes from Europe. And for as long as this country has existed, those numbers have gone up every single year. And so I think the big question is, what happens? I mean, clearly, the China number is going to go down. But what happens if the Canada number goes down and the Europe numbers goes down?
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
What if Europe goes from a $3.5 trillion position to a $2 trillion position, a $1 trillion position, even lower? I think those are the big questions here that we need to pay attention to. So again,
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
Yes, China cutting off the funding to private equity funds is not that big of a deal on a pure dollar value basis, but it's a big deal when you consider what it might do and how the other dominoes in the line may fall.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
Okay, let's talk about Bill Ackman and his new 20% stake in Hertz, which he's been tweeting about. He's talked a lot about how this company is uniquely positioned, especially amid these tariff policies. And he's talking about how these tariffs are going to drive up the price of used cars. And of course, Hertz has this massive fleet of used cars.
Prof G Markets
Why Trump Will Back Down on China Tariffs — ft. Ryan Petersen
So, Scott, your reactions to Bill Ackman and this kind of creative investment that he...
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
As we know, Intel has been more focused on this standard computing. He wants to restructure the company, likely in the form of layoffs. So he's going to fire a bunch of people. He wants to, quote, revamp the company's manufacturing operations. I don't really know what that means.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
And I think the big question that remains here, which we do not have an answer to, is whether he's going to break the company up or not. I think a lot of people are expecting that he's going to split it into the chip design business and then also the chip manufacturing business and go for an all-out corporate breakup and operate those two as separate companies. So far, we don't know.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
We can only speculate. So, Scott, your reactions to the new Intel CEO and your thoughts on what might happen under his leadership.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Yeah, I think it's important what you mentioned there about his time on the board of Intel. So yes, he was the CEO of Cadence Design Systems, which is this software company that actually makes the software that NVIDIA uses to design their chips. So he's deep in the AI game. He joined the board of Intel in 2022, and then he resigned in 2024.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
And as you point out, it's because he had these disputes with the CEO, Pat Gelsinger, who he thought was too nice, too bureaucratic, wouldn't lay people off, he thought he was too risk-averse, all of these criticisms that made him very unpopular at the time. But in hindsight, he was totally on point. And so it does certainly feel, to me at least, that he's almost the perfect guy for the job.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
He's been inside the machine, he's seen under the hood, and he was the only one who said, hey guys, none of this makes sense to me. I don't like the way this is set up. And he got ousted, or maybe he resigned, we don't really know what happened. But I think it does make sense to bring him back, because he's the only one who called bullshit when it really mattered.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
We'll be right back after the break for our conversation with Lynn Alden. And if you're enjoying the show so far, be sure to give Profiteer Market to follow wherever you get your podcasts.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Okay, welcome back. Here's our conversation with Lynn Alden, independent analyst, full-time investor, and the author of Broken Money. Lynn, thank you for joining us again.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
So I'd like to start with your reaction to this sell-off that we've seen in the stock market. So the S&P 500, it's down around 10% off of its high. It's officially entered correction territory. We're seeing all of this anxiety around tariffs and...
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
geopolitics and you know people talking about recessions again um i'd like to just start with your initial reaction to the drawdown any thoughts on this correction and perhaps any thoughts on how this compares to previous corrections in in stock market history sure so you know there's been a pretty good uh couple years in the market so 2023 2024 were both good for the market um
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
And I just want to say- Did you have any pets? I did. I had a dog.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
I wasn't a big fan of my dog. He was lame. And he bit other dogs. I think I've said this before. I just want to point out, I tweeted about this. On Twitter. You're still on Twitter. I also posted it on threads. Yeah. I'm going to cast a wide net. Okay. Sorry, go ahead. So I assume you watched White Lotus this weekend. I did, yeah.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Yeah, it does almost feel like all of the truisms of finance and portfolio management are suddenly true again. It's like, you know, you shouldn't just be overweight US tech, you should also invest in dividend stocks and international stocks and treasuries, etc. A lot there that's very interesting that we will definitely get into.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
I do quickly just want to get your take on tariffs and this tariff policy. I'm sure we're all getting bored of it, but... I do want to get your position because I think everyone we've talked to has had the same view, which is this is a bad idea and it's bad execution. And I actually just read a tweet from our friend Morgan Housel. And I love this. I think it's very true.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
He said, nutritionists fiercely disagree on what's the best diet, but all seem to agree that sugar is bad. The same seems true for economists and tariffs. I would like to get your view, because I don't think you're an outside-of-the-box thinker, I would say. I just want to check in. Do you have a different reaction to tariffs? Is there anything positive about this, or is it mostly bad?
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
So the scene that everyone's talking about where Sam Rockwell is talking about— Getting railed by other men as he's—yeah, right?
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Yeah. Okay, so the face that the other guy makes, that's me at the opening of every single show on this podcast.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
And how will those tariffs affect the dynamic you described there, where we have this trade deficit that kind of works because of the dollar status as the global reserve currency, and we've sort of been floating off of this benefit that we didn't necessarily earn, perhaps. I mean, what do implementing these tariffs do to that dynamic?
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Thank you. Thank you. Thank you.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Right now, I feel like the guy on White Lotus. I'm like, oh, oh, really? Hmm. I didn't know that.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Thank you. , , , , , , the P P P P P P P P men實 , , , , , , , , , , , , , , , , , , , , , , , , , , , , the the a and P P P P P P P P P P P P P
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
I grew up on SpongeBob SquarePants and Dexter's Laboratory.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Just want to begin to wrap up here. I'd love to just check in on your portfolio. One thing I admire about you, Lynn, is that you make your portfolio public so everyone can see what you're doing and what kinds of investments you're making. Are there any changes that you've made to your portfolio recently? Are there any investment themes or theses that you are focused on in 2025?
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Scott is rotating out, he's talked about it on the podcast, he's rotating out of US stocks into international stocks. I would say quite aggressively, Scott, you can interject wherever, but... From my understanding, Scott, you are dumping all of your Apple, I think all of your Amazon too, and you're going to put it into international stocks.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
It sounds like, Lynn, you agree it's time to start rotating. For anyone who's listening right now who feels overweight US stocks, how would you do it? How would you rotate out? Would you trim? Is there a certain percentage of your US stocks that you would trim in favor of international? What would the rotation actually look like?
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Lynn Alden is a full-time investor, independent analyst, and the author of Broken Money, Why Our Financial System is Failing Us and How We Can Make It Better. Her work has been featured in the Wall Street Journal, Business Insider, Market Watch, and CNBC. She has also served as a consultant to startup companies, hedge funds, and executive committees. You can find her research at lynnalden.com.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Lynn, always a pleasure to have you on the show. Thank you again for joining us. Thanks, Lynn.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Bye now, pay later, firm Klarna has officially filed for an IPO on the New York Stock Exchange. Analysts estimate its valuation is around $15 billion. That is a sharp decline from its $46 billion peak during the pandemic. Google is acquiring cybersecurity startup Wiz for $32 billion. to strengthen its cloud security offering.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Back in July, the companies were in talks for a $23 billion deal before Wiz walked away from the deal. Now, Google expects to close on its largest acquisition to date next year. And finally, Intel's new CEO, Lip Bu Tan, is just days into his tenure and has already outlined his new plan for the company. His strategy includes revamping chip manufacturing with a focus on chips that power AI servers.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Scott, let's start with Klarna, which is looking to IPO now. This is a buy now, pay later company. I've been pretty critical of buy now, pay later in the past. I think you have too. My view is that this is... basically just a misleading rebrand of a product that already has a very negative reputation in society, and that product is debt or credit. People do not like debt. They don't like credit.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
They don't like these banks that make money off of the people they service defaulting on that debt and that credit. And so companies like Klarna and...
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
a firm which is another bnpl firm and afterpay they came in they said hey we don't like debt either we hate those big mean banks so we have a new product it's called buy now pay later it lets you purchase things now and then you delay your payment of those items in the future and of course this is literally the definition of debt it's just repackaged in a different format with a different brand and a different name to be fair to klana they have sort of cleaned up their act
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
They're a lot more forthcoming now about what they're actually selling. But I'm still a little bit wary of this company because I'm especially wary looking at the language in the prospectus for this IPO, which begins with this tirade against traditional banks.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
The CEO says that Klarna is an amazingly diverse group of people with really one thing in common, and that is their resentment of traditional banks. So I'm still a little bit... iffy on buy now, pay later and Klarna, but the company is doing quite well. Revenue's up almost $3 billion, expected to go public at a $15 billion valuation. What do you think of Klarna's potential IPO, Scott?
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
I think one thing to mention there, you're asking about, you know, proposing the idea that they're targeting young people. That is exactly what they're doing. 70% of their users are Gen Z or millennial. And as soon as you look at the logo, that makes sense. It's sort of this sort of Gen Z-ified, clean logo with a pink background. And some of their marketing campaigns I find quite funny.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
They have partnered with high-profile celebrities, including Paris Hilton, ASAP Rocky, and Snoop Dogg. So this is definitely targeted to young people. Again, I have no issues investing in the IPO. I agree with you. I think this is a very reasonable valuation.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
But I do think if you are a user of Klarna, and if you are someone who's young and you somehow think that you're getting a great deal by paying with Klarna, oh, maybe I'm circumnavigating credit card debt. I just want to remind you again, this is no different from that. This is credit. It's basically the same as using a credit card. It's just packaged differently. You're still borrowing
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
Let's move on to this acquisition of Wiz by Google. This is very interesting because 10 months ago, you and I were discussing this same headline, except it was that they were acquiring Wiz for $23 billion. And we talked about how that was going to be a huge win. You warned Wiz employees, many of whom would have made millions off of this, not to get too excited.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
because we believe that given the situation and from a regulatory perspective, maybe this wouldn't go through. And then a couple of weeks later, the deal was actually called off. Wiz said they were walking away from the deal and they said that they were gonna pursue an initial public offering instead. So here we are 10 months later, It's the same deal, except this time it's for $32 billion.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
It's 40% higher than when we last discussed it. Scott, what do you make of this? And what do you think changed? They tried to do this 10 months ago. They said no, and then suddenly they're down to do it again. Trump.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
I'm in agreement with you that that's why they did this. Where we might disagree, I think they are misassessing the positions of the DOJ and the FTC under Trump. Because as we discussed with Jonathan Cantor, who used to lead the antitrust division at the DOJ, these new heads at both the DOJ and the FTC... These people are not soft on antitrust.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
These are the people who decided to continue the frameworks that were established under Biden. They're very tough, they're very active, and they're very much focused on big tech and on cracking down any and all monopolies that are emerging in that industry.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
So if Wiz has done this under the assumption that they're now in a more lenient environment when it comes to antitrust, I would encourage them to go look at Andrew Ferguson's resume who's leading the FTC. Go look at Gail Slater, who's leading the antitrust division of the DOJ. These are not the big tech sympathizers you think they are.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
It might have seemed that way based on Trump's positioning and having all those guys over for lunch at Mar-a-Lago, but the leaders of these groups agencies themselves are not going to be cozying up. I don't think it's going to be the cakewalk that they think it is, but we'll see.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
If I were to predict, I don't think this necessarily falls through, but I do think we're going to see massive scrutiny and it's again going to be a one or two year ordeal because the other side note to this is that it's Google's largest acquisition by far. So I think this is going to be long and drawn out. But I do agree with you.
Prof G Markets
Searching For Value Outside the U.S. — ft. Lyn Alden
I think they saw a regime change and they said, okay, now is our time to strike. Let's go over the proposed changes for Intel as outlined by their new CEO, this guy Lip Bhutan. So we've been talking about Intel a lot and the issues that have been ailing this company. And here's what he wants to do with Intel now. This was reported by Reuters. He wants to focus more on AI and
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
I mean, the list kind of goes on. I guess what has stood out to you so far and what have been kind of your main takeaways from this presidency so far?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Yeah, you mentioned that term, fafonomics, which I've read about and which I love. Could you just spell out exactly what that means for us?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Yeah, chaos as a strategy sounds about right to me. Why do you think we have reached that point? Why do you think people are attracted to this chaos as a strategy system that we seem to be reverting to right now?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
One of the big themes you talk a lot about is this idea of the vibe session. A lot of people love that term. And basically what that means is this disconnect between the reality of the economy versus the way people feel about the economy. And it was very relevant last year when you had low consumer sentiment, but at the same time, the economic data was actually quite strong.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
It was incredible for us, but we need to make this year even bigger. So we hope you will attend. If you want more info on how to go to the recording, go to voxmedia.com slash SXSW. That's voxmedia.com slash SXSW. And with that, let us get into the headlines.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
I'd just be interested to hear what you think about where we are today. Do you think we are still in a vibe session? Is there still a disconnect between how people feel about the economy versus how the economy actually is going right now? Or do you think we've kind of come to our senses?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
What would you say are the most important pieces of data that we should be looking at? I mean, I feel like, you know, when we say, oh, the economy is doing well, oftentimes we're saying, you know, GDP is expanding or inflation has come down, but... Then you look at the price of houses and the fact that none of our generation is even close to being able to afford a home.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And perhaps that's what we should be looking at. Like, what do you think is most important when it comes to measuring or taking our temperature as a nation and checking in? How well are we doing?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
People are very interested in Gen Z all of a sudden, it feels. I mean, they really want to know how we think, probably because we're now entering the workforce and suddenly we're all a bit more relevant. I'd like to get your view. How do you think Gen Z feels about the economy right now? What do you think is most top of mind for our generation?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Korean shareholders are urging the company to slash its valuation to around $30 billion. That's down significantly from its peak of $100 billion in 2022. According to those familiar with the matter, some shareholders believe the valuation cut is necessary to get the IPO over the finish line. South Korea has temporarily blocked new downloads of DeepSeek over privacy concerns.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Yeah, just some stats we could point to here. I mean, the cost of college has just gotten out of control. And just this stat, for my grandparents, the annual cost of college was 13% of their income. For our generation, it's 43%. And if you look at housing, the average cost of a home for my grandparents' generation was three times their annual income. For us, it's seven times. So it does...
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
just feel as if Gen Z is a lot poorer than our parents and certainly their parents. What do you think our generation can do about this?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
I mean, how are we supposed to navigate a world where we've been told, you know, these are the rules of the game and then suddenly we go out into the world and the rules appear to be completely different and completely irrelevant and certainly not applicable to the lives that our parents led. What do we do about that?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Yeah, I think where you're also headed is you have to completely adjust your expectations. And I think one of the big problems for our generation is that from being online all the time, our expectations have been completely nuked about what we can actually expect professionally and in our lives. This survey that I just saw Which I just found crazy.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
They asked all these different generations what they thought a successful income is. And I just want to read you these stats here. So for baby boomers, the baby boomers believe that a successful income is on average $100,000. For Gen X, it is $212,000. For Millennials, it is $180,000. And for Gen Z, it's $588,000. That's what we believe success is. And this just tells me that, I mean...
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Regulators said the app will be reinstated on Apple and Google app stores once DeepSeat complies with the country's personal data protection laws. And finally, Argentina's president, Javier Millay, is facing lawsuits and potential impeachment after promoting a meme coin on X. The coin briefly soared to a $4 billion market value only to crash within hours of its launch.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
It tells me that something is broken in our brains, certainly about how we think about money. I'd love to get your take on, you know, what do you think is broken? And, you know, maybe to what extent is this a function of the fact that we have lived the majority of our lives, pretty much our entire lives online?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And if you're enjoying the show so far, hit follow and leave us a review on ProfgMarkets. We're back with ProfgMarkets. You've also said that Gen Z can be broken up into three groups, which I found interesting. You said each one having, quote, a differing relationship to digital reality. What are these three groups in Gen Z, in your view, and how do they behave differently?
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
The coin's creators are accused of a rug pull scheme where developers launch and promote a token and then cash out as its value peaks. Okay, so let's start with Shein. Shein is down to $30 billion reportedly valuation. The first thing I can tell you about this, Scott Galloway is not gonna be happy. As many of you probably know, Scott is an investor in Shein.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Yeah, it's almost varying degrees of how online each generation is, and we are becoming increasingly extremely online, which is the technical term for it. And there's also in that term an implication that if you're extremely online, you have a tendency to overemphasize the importance of the digital world, or you see everything through the digital world and it sort of distorts your perspective.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
But, you know, I'm curious from your perspective as someone who has kind of built a career online and achieved a lot of success from posting on TikTok, from posting on social media, which has led to all of these other opportunities. um um
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
I actually don't know how much he invested. I also don't know what the terms were on his investment. I don't know what the valuation was. And we will find out. We'll make sure we ask him when he comes back. What I do know, though, is that the last time Shein was valued, it was worth $66 billion. And the year before that, it was worth $100 billion. So we're now looking at a $30 billion IPO.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
That is a 70% decline in less than three years. This is not good news for Sheehan. Now, why is this actually happening? We've had a lot of people say that it's market conditions, there's supply chain issues, there's issues with the logistics on the IPO. Maybe that's true. But I think most of this is a distraction from the real issue, which is Donald Trump.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And more specifically, Trump's suspension of this tax law that we've talked about known as the de minimis provision.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
So what is the de minimis provision? This is a rule that we have in the US for any shipments that come into the US, if they're worth less than $800, then you don't have to pay taxes. And this was originally designed so that Americans could go on vacation and go and buy souvenirs and bring them back and it would be duty-free.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
But instead what happened is we had all these foreign e-commerce companies who realized, okay, if we can make our products really cheap, if we can make sure that every order is below $800, then we can access the U.S. economy, we can access the American consumer, and not have to pay taxes. And so that is why in the past decade, the total value of de minimis shipments in the U.S.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
has gone from $40 million to $40 billion. And more than 30% of those shipments come from two companies, and those companies are Timu, which you've probably heard of, and yes, Shein. So in other words, this tax law is the backbone of Xi'an's business model. So Trump has threatened to end this. He knows how important this tax exemption is to China. He knows how important it is to Chinese companies.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And if he does end it, it would likely ruin Xi'an's business. So this has always been one of my problems with Xi'an as an investment, is that their key differentiator isn't any form of technological innovation. Their differentiator is their willingness to exploit a loophole in the US tax code.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Now, as we know, exploiting tax loopholes is a great business model until it isn't, until something in the tax code changes. And that's exactly what's happened here. This loophole on which this entire business was built is now under threat.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And until we have clarity on what will happen to the de minimis provision, I don't think this company can go public because we simply can't know what the business is going to look like. So Scott, if you're listening to this right now, I think it's going to be a long time until this company actually IPOs. It was supposed to IPO this April. That was the goal.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
It's now looking like it's going to be delayed a lot longer. And if I had to put my money on it, my bet would be that an IPO is probably going to come in 2026. But maybe I'm wrong. And let me know if you think so. And you can always hold me to account.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
So South Korea has temporarily blocked new downloads of DeepSeek. We don't know if this ban is going to last longer. I think this is the right move from South Korea. And I'm honestly surprised it didn't happen sooner. The reality with DeepSeek is, yes, it's cheap. Yes, it uses fewer chips. Yes, its reasoning capabilities are highly advanced. But it is also unbelievably insecure. as a technology.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
It's one of the most compromised technologies we've ever seen. Its encryption is the weakest in the industry. It is, according to research, four times more vulnerable to hacks than ChatGPT. We've already had multiple data leaks, and Wiz has published some pretty concerning research on this too.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And on top of all of that, their data is stored in the servers of the Chinese government, and DeepSeek has openly said this. So if you're a nation like South Korea that has even a slightly frosty relationship with China, there's practically no reason you shouldn't ban this. It really isn't worth the risk.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
There really isn't any upside in hosting a Chinese chat GBT that threatens the privacy and security of your citizens. And by the way, OpenAI's chat GBT is banned in China. So South Korea is one of the first countries to do this. I think in the next couple months, we're going to start to see a torrent of other countries banning Deep Seek.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And I think the first country we could probably expect this from is America. You know, if Trump wants to go through with this whole reciprocity thing, then Deep Seek is... probably the best place to start. And in fact, we are starting to see some state legislation that is banning DeepSeek on government devices. So Greg Abbott in Texas, he issued a ban. Kathy Hochul in New York, she issued a ban.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And so did Glenn Youngkin in Virginia. So to me, This is sort of a no-brainer. I cannot see any meaningful upside in keeping this app around. But perhaps I'm missing something. And if I am, let me know in the comments and we can have that debate. But as of now, the stance for me is quite simple. DeepSeek is not worth this risk. South Korea has got this right. DeepSeek should be banned.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
a website was launched promoting this project called the Viva La Libertad project. And the mission was, quote, to boost the Argentine economy by funding small projects and local businesses. Now, exactly how this would be accomplished was not clear. It wasn't really mentioned anywhere. And in conjunction with that project, there was a cryptocurrency that launched called Libra or LibraCoin.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And just a side note, It was launched on this platform called FixFloat, which notably does not ask for any personal identification. Everyone is anonymous, and it is most commonly used for scamming and rug pulling. So it's a very shady start to begin with. None of this really mattered, though, until half an hour later,
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
The president of Argentina, Javier Millay, tweeted out the news of Libra and LibraCoin, and he directed his 4 million followers on where they could go online and buy the token. And within 45 minutes, the market cap of Libra went from virtually nothing to four and a half billion dollars.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Now to put that in context, that would make Libra, this cryptocurrency, the ninth most valuable company in Argentina. Within an hour, one and a half billion dollars worth of Libra coin was transacted between buyers and sellers. Then, all of a sudden, the early investors started to sell, and the value of Libra plummeted.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And after one hour, Libra had lost 70% of its value, until eventually President Milley deleted his tweets, and he apologized for what happened. He said, quote, I was not informed of the fine details of the project, and after learning, I decided not to continue spreading it. But by that time, the damage had already been done. 75% of the investors lost money.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And according to the on-chain data, many lost up to $10,000, some lost up to $100,000. So the financial damage here is once again, just enormous. And the winners, of course, there are always winners with these crypto tokens. The winners were the developers of Libra, who sold at exactly the right time. Many of them made millions, and one of them netted almost $9 million in profit.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
So I think what we have here is the same dynamic we had with Trump coin, where the power of a presidency, in this case Argentina's presidency, was abused. to essentially trick people into wiring their money to a handful of anonymous individuals with no financial protection, no recourse, and it's unlikely that these people will ever see their money back. I doubt it will ever happen.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Welcome to Prof G Markets. Scott is out this week. I believe he is in Switzerland or Austria or somewhere. He's skiing. He's not with us. He's slacking. That's basically what's happening. So I'm filling in this week. I'm speaking with Kyla Scanlon, the author of In This Economy, How Money and Markets Really Work.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And this is exactly why I personally don't like crypto. I think it's one of the most useless and the most destructive technologies of our time. And when you put it in the hands of the wrong people, they can levy extreme damage on a lot of people who don't really know what's happening. And I think that's what happened here, probably. I don't think this was a malicious operation by President Milley.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
I don't think he was behind the scenes orchestrating this. I mean, he deleted the tweet. He eventually expressed regret. I think the most likely scenario is that he got tricked. And that's a shame because so far, Milley has actually done quite a good job. He's brought inflation way down. He's brought wages way up. He's expanded the Argentine economy.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
I was with Argentinians this weekend and they were huge fans of President Milley. He's doing everything he really should be doing. But now that this has happened, this is a huge hit to his credibility. Because it basically means one of two things. Either he's a scammer himself, which I don't believe, but it's possible. or he's easily duped by scammers.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And neither of those things reflect very well on him or on Argentina. It's a massive sign of weakness. And so what happened as soon as the markets opened, the Argentinian stock index fell 6%. And this is exactly the kind of thing that rattles investors. So it's now being investigated in the courts. We'll soon find out what actually happened and what he actually knew about this Libra coin.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
But what is clear is that this is going to be a very long road to recovery. And this is certainly the lowest point so far in the Javier Millet presidency. We'll be right back after the break for our conversation with Kyla Scanlon. If you're enjoying the show so far, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
And we'll be talking about the economics of our generation, which is Gen Z. But before we get into the show, Just a reminder, Scott and I will be recording a live episode of Prof G Markets from the Vox Media Podcast stage at South by Southwest on March 10th. We had an incredible time last year. I was just shocked by the feedback and also just how many of you showed up.
Prof G Markets
Why Chaos Has Become an Economic Strategy — ft. Kyla Scanlon
Welcome back. Here's our conversation with Kyla Scanlon, financial writer, video creator, podcaster, and author of In This Economy, How Money and Markets Really Work. Kyla, thank you very much for joining us once again on Profiteer Markets. Thanks for having me. So we're exactly one month into the Trump presidency. A lot has happened. We've had tariffs. Doge, we've had drama with Greenland.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
Great to be here. Thank you for having me again.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
Markets are a confidence game. The financial system is a confidence game. And I don't mean that in a negative way. I mean that in a positive way. It only works if people continue to have confidence in it. The stock market is all about confidence. You generally believe that a stock is going up or else you wouldn't invest in it or you'd short it if you believed it was going down.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
But you have to have confidence that the financial statements are – accurate. And, you know, that's why we have an SEC. We have regulators. You know, that's why they have to file and certify the financial statements. The bond market also relies on confidence. So when the tariffs shenanigans begin, what I call the tariff palooza, began in earnest, there was an initial flight to quality.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
And what I mean by that is People sort of ran from the equity markets because they didn't know what the effect of these tariffs would be on corporate profits and people's confidence in the equity market and in the economy generally, whether we're going to have inflation and a recession or stagflation, whatever it was going to be.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
And so the initial impulse was to run to the safety of the treasury bond market and And when this tariff palooza started, the yield on the 10-year Treasury was around 4%, and the next day or so it rallied, and the yield fell to like 3.85%, which is relatively low, especially over the last few years. And so there was this sense that people were seeking the safety of the Treasury bond market.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
But then once... People began to realize what these exorbitant tariffs were all about and how convoluted it all seemed and how poorly thought out and how much inflation it might result in. The yield on the bond market began to move up precipitously and got to like 4.5%. which was basically the largest and quickest move up in the 10-year treasury in like 37 years.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
So it really shook people's confidence in, you know, what is supposed to be the most sanctified, safest market that there is.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
The whole world runs on debt. I mean, you know, borrowings, you know, and the availability of borrowings, lending money that you can borrow to buy a car, a house. finance an LBO, just finance your business on a day-to-day basis. And as long as there's the debt available at a price you're willing to pay, then, you know, the whole system, you know, works pretty well.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
What happens during a credit crisis or a credit freeze is that that availability of debt capital just dries up. Can't get it. you know, you can get it at exorbitant rates of interest. But, you know, most people won't pay that exorbitant rate of interest. So just pass on the purchase, pass on doing the deal, pass on the refinancing, whatever it is.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
And, you know, the markets, I mean, one of the reasons I love the debt markets is because it shares so much information with you so quickly. And about risk. You know, it's a place where sort of risk hangs out, and you can see it developing on a minute-to-minute basis, like, you know, when it became apparent. And I especially love, you know, the high-yield bond index, because that's
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
where high-yield bonds, junk bonds are issued by companies with less than stellar credit rating, who have real risk to their credit, but can still get access to capital.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
That was the great innovation of Mike Milken at Drexel Burnham, providing capital to companies that otherwise wouldn't have been able to get it, and doing it in the junk bond market by issuing these bonds publicly to a large extent. But they don't have AAA credit ratings. They often don't have investment-grade credit ratings.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
They have below-investment-grade credit ratings, which means that they have to pay a higher rate of interest to borrow the money than, say, Johnson & Johnson would have to pay or the government would have to pay, assuming we don't default on our debt or we lift the debt ceiling or we don't get too crazy, which...
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
We happen to be going through a crazy phase now, which is why everybody gets so nervous. And so when the yields in the junk bond markets spike up, you really get the sense that people are really risk-off, as they like to say on Wall Street, that they'll borrow money or these companies can borrow money, but they really have to pay up for it.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
So what happens in the junk bond market can tell you so much about— how people are feeling about risk. And last week, the yield in the junk bond market, which was already trending up because interest rates had been rising and people were worried about the economy generally, had been about 7.5%, leapt up to 8.5% like in a day or two. I mean, another huge jump in a very short period of time.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
So people are really nervous. And that's just the average rate Some junk bonds are yielding, you know, 20% or more.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
Personally, I think that's what happened because it's a way to quietly fuck with us, if you will. You know, fuck with us. You're going to do these tariffs? Yes, we'll match you tariff for tariff. We'll play that long game. We've been around for 5,000 years. You've been around for 250. We'll play that long game with you. And in the meantime, we'll drive up the cost of money.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
Not only, you know, because if you drive up the cost of the government borrowings, which is exactly the opposite of what the Trump administration was hoping would happen, then it costs more to refinance. It drives up your budget deficits. It drives up the cost of all other borrowings by corporations and individuals because it bonds are priced off of a spread to treasuries.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
And while that spread had narrowed, then in the last few weeks, it's widened again. So that's what I thought happened, Scott. And that and it was also like a signal that, you know, you need to refinance six trillion dollars of treasury securities by June. We may not play in that, you know, Scott Besant, the treasury secretary.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
So, you know, good luck trying to refinance at anything like, you know, four and a half percent rate. It might be even higher. But, you know, the other day I noticed that Besson came out and said that's not what happened. Personally, I'm not sure I believe anything that comes out of the Trump administration, so I don't know that I believe that.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
But something has to account for the largest move up in the 10-year bond in 37 years.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
Yeah, I think they're our third largest creditor, with Japan being, I think, a bit bigger. So the two of them could certainly subtly send a message. And you're right, you know, you don't want to dump your $760 billion worth of Treasury securities because, you know, just like you wouldn't dump, you know, your big position of stock in a company, you
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
without a proper underwriting or dribbling it out over time because that'll drive the price down and you won't obviously get as much for them. But I think it was a very effective signal that Yes, the Americans buy a lot of goods from the Chinese, but look, they just said, we're not going to sell you any more rare earth minerals.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
They control the rare earth mineral market, and we need those rare earth minerals now. for all sorts of things. It's like electric cars, for starters. So that's another way that they can be very effective in getting their message out. So to get back to your original observation, yes, of course, it's Trump. He's overplayed his hand in the most ridiculous, conceivable way possible. I mean—
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
Even if you were like a Hollywood script writer, you could not possibly imagine this kind of scenario that Trump has come up with to, you know, destroy or to begin to destroy the confidence that people have in our capital markets, which is, you know, like you've talked about so often, Scott, you know, with universities are, you know, one of our greatest American assets.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
Another one of our great American assets is our financial markets. you ruin those, you ruin the confidence that people have in those financial markets. You know, it's a self-inflicted wound. We'll be right back.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
you know, honestly, both things can be true. I think both things can be happening. If you look at the 2008 financial crisis, it was caused by a huge flaw in the architecture of Wall Street. This whole idea that depository institutions, whether consumer deposits or institutional deposits, you know, were borrowing short and lending long
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
And, you know, giving creditors, I mean, Bear Stearns at the end was borrowing in the overnight repo market, basically giving their creditors a vote every day, every night, about whether to do business with them anymore. And finally, in March of 2008, they said, you know, enough, I'm not doing this anymore. I'm not rolling over the $75 billion of overnight repo that you want.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
And basically, you know, you're out of business. Same thing happened with Lehman, Merrill, almost happened with Morgan Stanley and Goldman Sachs. So that is an inherent flaw in the fractional banking system, in our banking system generally. We saw it again with Silicon Valley Bank and Republic Bank. So we have a basic flaw in the architecture of the system. So that's why that happens.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
And that's... That's why historically there's been financial crises in this country, usually once every 20 years. As a society, we've said, okay, we can live with a blowup once every 20 years because we like banks and private banks, and if we didn't have them, our economy would basically be tiny, and we wouldn't have the dynamism that we do in the economy, generally speaking.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
In 2020, we had the pandemic, which was an exogenous factor, freaked everybody out. Economies got shut down all around the world. Concern for a recession. The Fed had to jump in and flood the zone again. And then in 2025, April 25, we have...
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
the actions of a single madman who happens to be in the White House who can, by executive order, thanks to Congress's inability to seize back that right to implement tariffs or not. I'm still wondering why they haven't seized it back. But they've ceded this to the executive, and he's just going hog wild with it, loving being the center of attention, as we know. He himself is the one who is causing
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
these fluctuations in the markets, this loss of confidence. So people are like thinking to themselves, this mad king, we don't have a parliamentary system. We can't vote him out of office. We can't have a vote of no confidence. We can't impeach him. We tried that twice. That doesn't seem to work. We're stuck with this guy for four years. So you're asking if this is a longer term situation.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
The answer is, as long as Donald Trump is in the White House, and Congress does not take back the power of the tariffs, which is rightly theirs, which they don't seem to be in any hurry to do, this is, you know, why there's this massive loss of confidence.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
And, you know, once that confidence is lost, especially when it's a factor driven by this kind of a factor, it's going to be very hard to get it back. Not impossible. We got it back after 2008, even with the architectural flaws in the system. But this is such a self-inflicted wound. It doesn't have to happen. A normal person might say, OK, I had this idea. I was wrong.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
And now I'm going to correct it because I've seen the damage I've done. But we're dealing with somebody who never admits that they're wrong. And will never do something without trying to save face. And I don't know how you save face in this situation without just sort of abandoning the whole stupid idea to begin with.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
Now is the time to buy. I hope you have plenty of the wherewithal.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
This is not completely black and white. There's a lot of shades of gray here. I mean, the money isn't leaving our bond markets or even our equity markets. What's happening is everything's being re-rated. Everything's being repriced. So you can still get capital, which is why we're not yet in a credit crunch or credit freeze. You can still get capital. It's just going to cost you a lot more.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
you can still invest in NVIDIA. It's going to cost you a lot less. So, I mean, as Howard Marks said, the great distressed bond investor, he said, you know, if suddenly you go into Bloomingdale's and everything's 25% off, you're not going to run out of the store and say, oh my God, I'm not going to buy anything. Everything's 25% off.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
you're going to say, oh, let me get out my shopping cart here and pull as much as I can that I wanted to buy and put it in there.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
So, you know, the time to back up the dump truck in the equity markets is when there's a major correction, which is, you know, why Warren Buffett moved into cash in such a big way at the end of last year and the beginning of this year, and now has like $350 billion of cash. You know, he's the only—if you look at the billionaire list— uh, the Bloomberg billionaire list, which I love to look at.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
Uh, he's the only billionaire, I think in the top 10, whose, uh, net worth has increased since the first of the year. And he's up like 25 billion because he's sitting on this pile of cash that's earning whatever it's earning four or 5% in the bond market. Uh, so, uh, as usual, he's much more brilliant than everybody else, even though he's 92, 93, 94, not, not being ageist here, Scott. Uh,
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
But I think that, you know, it's just we've got the for sale sign on and you can't catch a falling knife. So you have to be careful. You know, it could go it could get worse. But basically, the message always has been in the past when markets correct. I always say that's a good thing and that's a time to invest.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
Well, I think we're already seeing the reduction in tourism into this country from all over the world. Yeah, it's huge. Huge. It's fascinating, really. I've never seen anything like that. You know, the bankers I talk to, the M&A bankers I talk to who are talking to, you know, gobs of CEOs, they're worried about earnings in the third and fourth quarter.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
Because they see inflation rising, tariffs being on, everything costing more, demand will start to be affected, and their earnings will be affected. People like to say, well, the stock market isn't Main Street, and I get that concept, but it actually is... you know, related to Main Street in the sense that it's related to corporate earnings, which of course is related to Main Street.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
So there is very much a relationship between the two. And, you know, as we know, the market, the stock markets especially, are forward-looking. And I think part of the reason we've lost this 10 or 15 percent so quickly is because investors are saying, hey,
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
You know, these tariffs and the result of them, this loss of confidence and people holding onto their wallets, we are a consumer-driven economy. And if the consumer closes the wallet, you know, we're going to see a decline in earnings in the third and fourth quarter. And that's what I think CEOs are expecting.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
And that's why you're not seeing any M&A business on Wall Street or much financing business. You know, all this anticipated regulatory relief that Trump was going to usher in is all for naught now because, you know, he's screwed the pooch by destroying the confidence that we have. in the markets and that corporate CEOs had in their own businesses.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
And they're just not going to do things when they don't know, you know, where all this is going to settle out.
Prof G Markets
Breaking Down Warning Signals from the Bond Market — ft. William Cohan
Thanks, Bill. Thank you both.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
And I think the question is, you know, is the valuation accurate? Is the valuation fair when you compare it to just how gigantic OpenAI is? My sense is, yes, it is fair. When you look at the numbers, it's very obvious just how far ahead OpenAI is compared to Perplexity. I mean, Perplexity, they're getting 350 million monthly visits. ChachiBT is getting 14 billion visits.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
You look at the monthly unique visitors, Perplexity is getting 17 million, ChatGPT is getting 374 million. You look at the amount of time that people spend on these sites. For Perplexity, it's about six minutes. For ChatGPT, it's seven. So I think on the surface, it might look... possibly undervalued just when you compare it to OpenAI.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
But I think it's a reminder again to look at the underlying numbers, which would tell you that, yeah, OpenAI is miles and miles ahead of perplexity. If you were to read the headlines, you'd get the sense that it's a little bit of a race. that it's open AI versus anthropic versus perplexity.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
But I think what's happening is open AI, as I've said for a long time, I believe they have for years been running away with it. I don't see any real indication that perplexity can catch up. I appreciate your comment that they were early to say this is AI for search, but I think the whole AI game has developed so much since then to the point where everyone now recognizes ChatGPT is taking on Google.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
If I had to invest in one AI startup, it's no question for me, even at 300 billion, it would be OpenAI.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
ChatGPT has that now. I mean, ChatGPT started out with, and it was a big problem, like you couldn't get up-to-date news, but they've solved that now.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
By the way, I don't use Perflexity myself, so I think we just have a difference of use case. If you're using ChatGPT today, I will tell you personally, I use it in the same way I'd use Search. This is a capital race. They're going to win. Let's move on to Coinbase. Last year, it was fighting these investigations by the SEC.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
This year, suddenly the SEC drops all those investigations under the Trump administration. Now it is in the S&P 500. As of this week, it is replacing Discover Financial. Scott, your reactions to this news?
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Which got acquired. So that's why they're doing this reshuffling.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Maybe we're coming to the end of the jokes.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Look, I think it's one thing that we have a market that is predicated on assets that have no underlying or fundamental value. And for the sake of this argument, let's just like, let's ignore Bitcoin. And let's just focus on all the other stuff, the $1.2 trillion worth of non-Bitcoin crypto assets that are floating around out there that are being traded on Coinbase.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
So Ethereum, Tether, Ripple, but also the meme coins, Dogecoin. which is the eighth largest cryptocurrency by market cap, one of the most traded coins on that platform. Trump coin, Pepe coin, Comrocket coin, which I know you love, Fart coin. All of these things exist on Coinbase. And the way Coinbase makes money is it takes a little fee when you trade this crap.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
So look, it's one thing to have a marketplace for these assets, and I don't have a real problem with that. I think it's dumb, but I don't think it's wrong. I don't think it's morally wrong. It's an entirely different thing, in my view, to push that marketplace and those assets into the retirement accounts of practically every investor in America. I mean, no one doesn't own the S&P 500.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Everyone owns the S&P 500, which means everyone owns Coinbase. Not a lot, but a little bit. It's gonna be around 0.1 to 0.2% allocation, which is gonna translate to around $10 billion in net purchases by these index funds. Now, the reason I think this is such a problem
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
It's really reminiscent to me of the 2008 financial crisis, because if you look back at what happened there, the problem wasn't just mortgage-backed securities and these mortgage-backed security derivatives and these CDOs. Those were actually like in real terms, it was just a very small slice of the economy. The problem there in 2008 was the institutional adoption of those bullshit assets.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
We did our first big branded advertisement deal, which was fun, less awkward than I thought it would be. Scott and I talking about some software product. I'm not sure if we're supposed to talk about what the product actually is. But yeah, you and I You and I sold some ads yesterday.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
It was the fact that the banks were embracing them and aggressively marketing these CDOs. And that's what led to the investment world building this giant infrastructure around these shitty assets. And that's what caused all the pain in the end. It wasn't the assets themselves.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
It was the fact that we built all of this up and we got all these retail investors and these regular people tied to these assets. So I look at what's happening here. I look at MicroStrategy entering the NASDAQ, now Coinbase entering the S&P 500. I really see no difference. I mean, these are like highly financialized, highly derivative assets that offer no real value in the real world.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Again, we're just going to exclude Bitcoin for the sake of the argument, still $1.2 trillion in assets there. And now you have these institutions embracing them, which means that the rest of America is coming along for the ride now. So if you own the S&P 500, you now own Coinbase. And that's very similar to 2008.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
I'm not saying we're going to see this 2008 crash, but the dynamics that are at play here are basically the same. So, you know, as you know, as everyone knows, I have my issues with crypto. I've talked about why I don't like it personally. But thus far, it's not been a huge problem for me because thus far it's been opt-in. Like, if you don't want to own this stuff, you don't have to.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Just don't get involved. But that's no longer true now. Like, I don't like crypto. I don't want to own Coinbase, but I now own it. And to me, that's a massive failure of leadership on the part of the S&P 500, who I believe should hold different levels of standards for that portfolio. I think they have a unique level of responsibility in the investment world. This has to be grounded.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
This portfolio has to be grounded in fundamentals. It has to be grounded in value. And you can't just sling these very precarious assets into people's retirement accounts. So... Like, I was against crypto before. I didn't think it was that systemic of an issue. Now that this has happened, combined with microstrategy in the NASDAQ, I believe this is systemic.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
To me, it's now turning into an actual problem.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
People like to smoke. That's actual value in the economy.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Yeah, my issue is that we are now attaching the value of people's retirement accounts to a company that makes money on trading Comrocket and Fortcoin.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Does none of what I say resonate with you? Do you think I'm being pedantic or what do you think?
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Yeah, for me, it's like a combination of that and Beanie Babies. Like, we're just buying and selling Beanie Babies and driving up the price. And again, I don't want to outlaw Beanie Babies, but I don't think Beanie Babies and platforms whose main way of making money is by taking fees off of Beanie Babies being traded... I don't think that should be in people's 401ks.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
What is that, Black Eyed Peas? I don't know.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
We'll be right back after the break for our conversation with Alice Hahn. If you're enjoying the show so far, be sure to give the Profit Markets feed a follow wherever you get your podcasts.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Welcome back. Here's our conversation with Alice Han, China economist and director at Greenmantle.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
But it felt better than I thought it would be. I mean, I really thought I'd feel extremely awkward talking about how great these products are. But I ended up, I think they did a great job. It's a good product. It's a good product, exactly. So I didn't have to lie. And they did a good job of making it feel somewhat normal and natural.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Alex, the reductions that we're seeing on these tariffs, 145% to 30%, there's the US tariffs on China, China bringing theirs down from 125% to 10%, those are supposed to last only 90 days while talks continue. And the thing that I can't really figure out is like, what are we even talking about with China? Like, why? What deal is supposed to be made? What are we trying to get from China?
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
So I was actually pleasantly surprised by how not awkward the experience was. Still awkward, but way less awkward than I would have expected.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
And what is China trying to get from us? Can you give us some color on what these talks are even about and what the goal of these talks would be?
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Could you break down, sorry, I just want to, because the fentanyl thing is so confusing. Could you explain to us, like, what is the actual connection between China and fentanyl? Like, in what sense is China propping that up?
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Does rebalancing the trade deficit really get in the way of those goals for China? I'm just trying to think about what a big, beautiful deal looks like for America, and it sounds like we sort of rebalance the deficit in terms of trade. China just buys more of our stuff. They also get their act together on fentanyl, whatever that would look like.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
In what sense does that get in the way of China's goals?
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Ed. Ed, seriously. It's hard to follow these jokes when they have nothing to do with the preceding conversation.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Yeah, I was going to say, I mean, the way you lay it out, it sounds like a kiss and makeup between the US and China is actually very easy. I mean, based on everything you've just described there, our goals are not really at odds with each other. So I guess my main dumb question is, what's getting in the way? Like, what's the problem? Why can't we just figure this out?
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
If there was some slight link, I might have gotten it. But it sort of just came out of nowhere. Yeah.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Before I do that, I want to remind our listeners, we have a weekly newsletter, Prof G Markets. It breaks down the key market moves with data-driven analysis and crisp visuals every Monday. So a reminder, please go subscribe now at profgmarkets.com. We'll also leave a link in the description of this episode to make it easy for you to sign up.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
If you don't have time to listen to the podcast, this is a good way to sort of get your quick hit. in your inbox in the morning. So please go subscribe to that. And with that, let's get to the headlines. Pharmaceutical stocks dropped after Trump said he had a plan that would significantly slash drug prices in the US.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
We're back with Profiteer Markets.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
However, the stocks quickly rebounded after he signed an executive order that lacked any legal mandate for companies to bring down prices. Instead, the order asked them to lower prices voluntarily. AI startup Perplexity is in talks for a $500 million funding round that would value the company at $14 billion. That's more than 50% higher than its last valuation from just five months ago.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
And finally, Coinbase shares rose more than 20% on news that the company will join the S&P 500. It will be the first digital asset company to be included in the index. So, Scott, let's start with what happened with pharmaceutical stocks. First, they dropped after Trump said that we're going to have this big price decrease plan on drugs in the U.S.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Last question from me, Alice, sort of similar to Scott's question. The predominant theme so far this year has been basically sell America, question mark. And that's sort of the economic geopolitical markets question every investor is asking this year.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
And it just brings up this question, like how is the world order gonna shape up and how do the tariffs going up and then coming down affect all of that? Given everything you've seen this year, The election, the tariffs, the fact that the tariffs just came down, what's happening in the markets.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
If you had to put your money on one country, and we'll call it over the course of like 20 years, between America and China, which country would you bet on?
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
That works for me. Alice is a China economist and director at Greenmantle, a global macro and geopolitical risk advisory company. She graduated in history and economics from Harvard and holds a master's in East Asian studies from Stanford University, where she focused on Chinese political economy and fintech. Alice, always learn so much from you. Thank you for joining us.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Then he signed the executive order and the stocks rebounded again. Your reactions?
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Are you saying we need to cut spending on Medicare and Medicaid? What... What is your suggestion there in terms of how this all relates, how deficits relate to health care?
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Just as an example of how crazy the prices are, there's this diabetes medication I was looking at called Jardiance. One month's supply costs $611 in America. In Japan, it costs $35. It's not as if everyone in Japan is poor in the prices. I mean, that's just an unbelievable... And again, the markets are telling us the true story here.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
I mean, Trump comes out and he says over the weekend that he wants to pursue this most favored nation policy, which basically means that drugs must be priced at their cheapest levels for the US. If that drug costs $35 in Japan, it should cost $35 in America. And it's such a shame because I was actually very excited to see that.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
I mean, he's going after the right issues, which is we need to do something to lower the cost of drugs and the price of drugs in America and pharmaceuticals. And the fact that the market was reacting and getting worried about it and these pharma stocks were hurting as a result of those comments, to me, was a great sign. But then, of course...
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
the whole thing came undone when suddenly he signs the executive order and you learn actually there's nothing to do with this most favored nation policy all he's doing is saying hey guys please reduce the cost of drugs and then all the pharma stocks rip back up because basically wall street's reaction is great that means prices are not going to come down if you simply ask
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
a company to reduce their prices, they won't reduce their prices. This is market dynamics. They're only going to do it if they have to. And the only way you can do that is by pursuing a legitimate legal framework that forces them to bring down their prices. And that's not what's happening. So it was a shame for me because I was about to be very... of Trump and this move and what he's addressing.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
And I was thinking it would be one of the first things where I'm like, yeah, he's got this right. But once again, he just shows that he lacks the competence to actually follow through with these things. And so it's going to continue business as usual.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Let's talk about perplexity, which is raising a round that would value the company at $14 billion. That's up from its $9 billion valuation from just a few months ago. this is the AI company competing with OpenAI. The deal isn't finalized, but I think we can assume it's as good as finalized. I mean, these leaked journal reports are usually pretty spot on.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
So assuming it is, that would make Perplexity the fourth most valuable AI startup. Ahead of Perplexity, we've got OpenAI at $300 billion. We've got XAI at $80 billion, though, as I've discussed, that number is kind of bullshit, but whatever, we'll ignore that. And we've got Anthropic at $62 billion. Perplexity is number four.
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
Scott, any reactions to this new round, this new financing round from Perplexity?
Prof G Markets
Why the U.S. Can’t Break Up with China — ft. Alice Han
I would argue that they already have. I mean, my gut reaction seeing just the $14 billion number was that it actually seemed quite small. I mean, $14 billion for this AI company we keep hearing about, and then I compare that to OpenAI at $300 billion. So OpenAI is 2,000% more valuable than perplexity. My sort of gut reaction was, oh, I wonder if that's small.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Yeah, I think there's a question of, will it be banned? We don't know. And then there's the question of, should it be banned? I think I'm in total agreement with you. I mean, DeepSeek has, according to almost all the research, the weakest encryption in the industry. It's four times more vulnerable to hacks than ChatGPT.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
And then there's the reciprocity perspective, which you point out, which is ChatGPT is banned in China. So it seems if we're going to have this aggressive stance on physical goods. We should probably have it, that same stance on the most important technology of our time, which is AI. But to your point, there's no clarity on what the decisions actually are. We'll be right back.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
But rich, that's the most important part.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
The big banks are forecasting an increased risk of a recession in the next year. A model from JP Morgan estimates a 31% probability. That's up from 17% at the end of November. And Goldman's model also ticked up to 23%. On top of trade war fears, warning signs are flashing across the economy. Unemployment came in unexpectedly high. Consumer sentiment hit a 15-month low.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
And Atlanta's Federal Reserve expects U.S. GDP to contract this quarter. Meanwhile, an increasingly volatile S&P 500 just posted its worst week since September, and the Nasdaq is down more than 7% year-to-date. A lot in there. Scott, I think probably the most alarming piece of that is just this recession forecast from these big banks who are increasing the probability of a recession.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Given what you're seeing in the markets, given what we've seen in, I think we're now on day 48 under Trump, how concerned are you that we're going to see a recession in America this year?
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
I just point out, this is my mentor. This is all I've got. And this is how we start the show. Unpaid internship. Unpaid internship. Career experience. Let's get to the headlines. Let's do it.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
is postponing new AI updates for Siri after engineers failed to resolve bugs in the project. Originally set for release next month, the updates are now delayed indefinitely. Sony has removed more than 75,000 deepfake AI recordings of its artists, including Harry Styles, Queen, and Beyonce. Executives argue these AI songs cause, quote, direct commercial harm to legitimate recording artists.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Yeah. The crowd's going wild. When we look at how the stock market is reacting to these policies so far, it hasn't been good. And what's so interesting is that if you look at the global stock market right now, minus the U.S., So take all of the stocks, exclude all of the American companies, the global stock market is up 7.5% year to date so far.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
So basically, we're having a uniquely American problem in the stock market right now. Now, What's interesting has been Trump's and his administration's response to this. And I just want to read you a quote that he said to Congress in his address to Congress. He said, quote, there will be a little disturbance, but we are OK with that.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
And Scott Besant, the Treasury Secretary, he went on CNBC, he gave one of his first big public speeches on TV, and he said, quote, "...the market and the economy have just become hooked, and we've become addicted to this government spending. There is going to be a detox period." So in other words, the markets are not liking what's happening.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
But, you know, I'm a little surprised that Trump isn't actually pointing fingers and blaming Biden, as I would have expected. Instead, he's actually owning up to what's going to happen. And they're saying, yes, this might hurt. We might feel some pain in the economy, but ultimately it's worth it. This is necessary. This is our medicine and we're going to do it.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
I'd like to get your reaction to that, Scott. Is there validity in that argument? Is it fair to say that America maybe needs this shakeup? They need this pain and will suffer in the short term, but that's worth it.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
And finally, the White House is considering restricting access to DeepSeek over national security concerns. Potential measures include banning the chatbot from government services, removing it from app stores, and limiting how U.S. cloud providers can offer the AI models. Scott, let's start with your thoughts on Apple with this product delay. They are postponing their new AI updates for Siri.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
It's so funny because often the question is, okay, you have the losers and you have the winners. Who are the winners? Who are the losers? It's very, very difficult to identify a single winner in this, but I have identified one and that is options traders. So zero day options trading is exploding right now.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
And this is what a zero day option is basically an options contract that expires within 24 hours and they've reached a record high. I really had to scrape the barrel to find a winner here. But it is striking that on this technical level in the stock market, the people who are being rewarded here are not the value investors.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
It's not the people who are investing long term into the real economy in America. In fact, they're getting burned. The people who are winning in the stock market are the traders, the gamblers, the speculators. It's basically the people who want to make a quick buck off of volatility, because volatility is one of its highest ever right now.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
So I kind of look at what's happening in our economy right now, where we have an explosion in crypto, we are seeing record sports betting. And now I'm looking at what's happening to the stock market, it feels as though we're devolving from an investment economy into a gambling economy. Would you see it the same way? And does that concern you?
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Thank you. Thank you.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Thank you. Thank you.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Thank you very much, Scott. This episode was produced by Claire Miller and engineered by Benjamin Spencer. We got to do the credits. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Big list of people, and they're all over there.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Thank you for joining us. If you liked what you heard, give us a follow on Prof G Markets. And now we've got a little bit of time for some audience questions. I think we have some mics up here. If anyone would like to ask a question, we've got about five, 10 minutes.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Yeah, I think we should point out that this is highly unusual from Apple. I mean, they almost never delay their products after they've been announced. I think it's only happened maybe twice in the company's history. So it's especially bad, especially given the conversation we just had last week about this lack of innovation at Apple.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
I think we could do one more. Yeah.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
where you had i mean the biggest product has been the headset which so far has been a flop You look at the iPhone, which hasn't really changed in the last 10 years. The iPad hasn't changed, nor has the Mac. And now it appears they are falling behind on AI. And supposedly within the company, employees are questioning the management of the AI division.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Apparently there's a bit of a loss of faith there. The question I would pose to you, at what point does that loss of faith move up the chain to Tim Cook? I mean, I think everyone loves Tim Cook and they have done for many, many years now. But we're seeing a lot of questionable decisions. You know, they did not invest in data centers. He canceled the Apple car. He decided to launch this headset.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
I wish we could do more. But we are, unfortunately, way over time. Thank you, South By.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
We'll see if it works. I don't think it will. But at what point, Scott, do you think shareholders and the board will start questioning Tim Cook's leadership? Could we get to that point?
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
This on its own... If you're listening to the podcast and you're not in person, he's holding up an AirPods case. AirPods. Has less gravitas in audio.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Let's talk about this news from Sony. So Sony has taken down 75,000 AI deepfake recordings of their artists. Scott, I'm interested to get your view because last week you yourself were deepfaked. on a mass scale. I don't know if anyone saw this, but on Instagram and TikTok, there were several deepfake videos surfacing of Scott recommending stocks, recommending cryptocurrencies.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
The strangest was Scott recommending a supplement, except it was Sam Harris's voice dubbed over you.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Very strange. That one was the least convincing. You have some experience with this, with being deepfaked. What is your reaction to these deepfakes, and how are you personally dealing with being a victim of it?
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Isn't it? I mean, at least that's what society wants us to think. Gotta get a Birkin, gotta get a home, you know.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
Yeah, there were an estimated 8 million deepfakes, or estimated to be 8 million deepfakes shared online this year. That's up 16x from 2023. Very interesting though, 9 out of 10 deepfakes are used to promote cryptocurrencies. That's the main use case.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
So I agree on the Section 230, but it also seems that we could maybe reduce the deepfake industry or take it down by 90% if we simply regulated crypto as well, because that's the main thing it's being used for. Let's talk about DeepSeek. The US is considering banning DeepSeek. This is coming a few weeks after South Korea made a similar decision. They said no downloading DeepSeek on our app stores.
Prof G Markets
Are We Headed For a Recession? + How Tariffs Hurt Housing (Live at SXSW)
They said it was a security concern. I talked about it on the podcast. I said, I think most countries will follow suit. And my prediction is that the US would be the first to do it. It seems that is probably going to happen, though we don't have confirmation. This is only rumors swirling around. What do you think, Scott? Should we be banning DeepSeek? Is this the right move from government?
Prof G Markets
The State of Trade with China — ft. Alice Han
I'm going to go to Mexico City first, and then we're going to hit Puerto Escondido, and going to go surfing and dancing, and yeah, it'll be a good time. Are you guys really going surfing? That's on the agenda. I'm terrible at surfing. I've done it once, and I sort of decided I was never going to do it again.
Prof G Markets
The State of Trade with China — ft. Alice Han
In fact, I did it for the first time with the Prof G team, and it was a pretty laughable attempt, Claire can attest. So we'll see. Maybe I'll try it again. You're tall. It's hard for tall guys to be good surfers. Exactly.
Prof G Markets
The State of Trade with China — ft. Alice Han
I've been reading a lot about Napoleon. He really reminds me of Napoleon in the sense that he was, you know, so successful, so prolific, the king of the world, got too high on his pride, crowned himself emperor, and then decided to start making enemies with everyone he met. And ultimately, it landed him in a position where as soon as he lost... Everyone turned on him.
Prof G Markets
The State of Trade with China — ft. Alice Han
And the guy died alone of stomach cancer in St. Helena in exile. And it feels like Elon is just going, God, you're so sexy right now with all your history.
Prof G Markets
The State of Trade with China — ft. Alice Han
I did. People hated that movie. I thought it was quite good. I liked it. Yeah, I thought it was quite good. I thought it was a very similar character arc, and I could totally see that happening for Elon.
Prof G Markets
The State of Trade with China — ft. Alice Han
We'll be right back after the break for our conversation with Alice Hahn. And for even more Profiteer Markets content, check out our new Profiteer Markets newsletter. Click the link in the description or go to profiteermarkets.com to subscribe.
Prof G Markets
The State of Trade with China — ft. Alice Han
Welcome back. Here's our conversation with Alice Han, China economist and director at Greenmantle. Alice, it's great to have you back on the show.
Prof G Markets
The State of Trade with China — ft. Alice Han
So it's been three months since we had you on. And by the way, everyone just raved about you. So we're very happy to have you back. When we spoke, China was in a slump, or at least the economy was. And there was this prospect of... government stimulus. There was speculation over whether that would revive the economy or not. Side note, Scott and I made this gentleman's bet.
Prof G Markets
The State of Trade with China — ft. Alice Han
I predicted it would not bring China back to life. He predicted it would. We haven't really talked about China since then. So give us like the 1,000-foot view. Where does China's economy stand right now? What are the issues? What's going well? What is happening in China?
Prof G Markets
The State of Trade with China — ft. Alice Han
Socializing with my friends. It's good stuff. By the way, we should just plug this in really quick. Prof G Markets will be live at South by Southwest on March 10th. Again! Very excited about that. We'll be on the Vox Media Podcast stage. So if you want to learn more about that, go to voxmedia.com slash SXSW, South by Southwest, voxmedia.com slash SXSW. It's going to be epic. Last year was a blast.
Prof G Markets
The State of Trade with China — ft. Alice Han
Yeah, you mentioned deflation there. I'd love to double-click on that because I just find this idea of deflation very strange because the rest of the world is struggling with... this thing called inflation. You know, we've been trying to get prices down. And meanwhile, China has been struggling with deflation. Apparently prices are too low. So two questions. One, what is deflation?
Prof G Markets
The State of Trade with China — ft. Alice Han
Why is it a bad thing? And two, how come China is suffering from what seems to be the opposite problem as basically everyone else in the world?
Prof G Markets
The State of Trade with China — ft. Alice Han
So you've got a country where the economy is trying to stay afloat by basically shipping stuff out to other countries, and the US has slapped these tariffs on. So what does that do to the Chinese economy if we have an additional 10% tariff on everything from China? In addition, you mentioned the steel tariffs and the aluminum tariffs. What does that do to China's economy?
Prof G Markets
The State of Trade with China — ft. Alice Han
I'm very excited. Let's get into the headlines.
Prof G Markets
The State of Trade with China — ft. Alice Han
One of the big moves recently was this suspension of this de minimis provision. And just as a reminder to our listeners, this is this tax exemption, which basically allows shipments worth less than $800, they enter the US duty-free. Thank you. Thank you.
Prof G Markets
The State of Trade with China — ft. Alice Han
President Trump announced a 25% tariff on all aluminum and steel imports to the US starting in early March. He also plans to implement reciprocal tariffs on countries that impose duties on US goods.
Prof G Markets
The State of Trade with China — ft. Alice Han
Trump has also proposed closing the carried interest loophole, which allows investment fund managers to pay a lower capital gains tax on carried interest, which is one of their primary forms of compensation. His plan would tax carried interest as ordinary income, which could reduce the federal deficit, by $13 billion over the next decade.
Prof G Markets
The State of Trade with China — ft. Alice Han
And finally, a group of investors led by Elon Musk has submitted a $97.4 billion bid to buy the nonprofit that controls OpenAI. OpenAI CEO Sam Altman responded to the offer on X. He said, quote, no thank you, but we will buy Twitter for $9.74 billion if you want. Scott, your thoughts, starting with Trump's 25% tariff on steel and aluminum.
Prof G Markets
The State of Trade with China — ft. Alice Han
Two final questions from me. The first is DeepSeq. So my reaction to DeepSeq was quite simple. I didn't really believe them. I didn't believe that they only built it with a handful of chips, that the chips were all worse than the chips that we use in America. There's been some confusion over whether they actually had the H100s or not.
Prof G Markets
The State of Trade with China — ft. Alice Han
I didn't believe that it only took them $6 million to build the thing. I feel like there hasn't been a conclusive answer on that. I got a lot of criticism saying that I'm being unreasonably anti-China, I'm kind of biased against China, which, by the way, might be true. But I feel like I still don't have... I haven't landed on this issue. So I'd just love to get your take on DeepSeek. How real...
Prof G Markets
The State of Trade with China — ft. Alice Han
is DeepSeq and how seriously should we be taking it?
Prof G Markets
The State of Trade with China — ft. Alice Han
Final question. In the most recent JP Morgan earnings call, Jamie Dimon said that there were two main threats to America. First was inflation, and the second was instability. And he said this was the number one risk. And this was what he said exactly, quote, geopolitical conditions remain the most dangerous and complicated since World War II. Do you agree with Jamie Dimon?
Prof G Markets
The State of Trade with China — ft. Alice Han
The steel unions are just incredibly powerful. I mean, you mentioned that lobbying power there. You want to get the steel workers on your side. And this is to the benefit of American metal companies. I mean, we saw this in the stock market. U.S. steel went up. Cleveland Cliffs went up. Steel Dynamics, Alcoa, all of these steel and aluminum stocks in America rose. Why?
Prof G Markets
The State of Trade with China — ft. Alice Han
Because, I mean, pretty simply, they're going to have more demand now. You can have less international metal coming into America, which gives all of these domestic metal companies more pricing power. This is a win for US steel and aluminum companies. Now, who are the losers?
Prof G Markets
The State of Trade with China — ft. Alice Han
Ed, we're going to China. Going to China. I'm down.
Prof G Markets
The State of Trade with China — ft. Alice Han
Alice is a China economist and director at Greenmantle, a global macro and geopolitical risk advisory company. She graduated in history and economics from Harvard and holds a master's in East Asian studies from Stanford University, where she focused on Chinese political economy and fintech. Alice, this was a pleasure. I can't wait to have you back on the show again very soon. Thanks, Alice.
Prof G Markets
The State of Trade with China — ft. Alice Han
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from the Vox Media Podcast Network.
Prof G Markets
The State of Trade with China — ft. Alice Han
If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday. Lifetime
Prof G Markets
The State of Trade with China — ft. Alice Han
Obviously, the international metal companies, and most of those companies that are gonna be affected are in Mexico and in Canada and in China, but there are also some companies in Europe and in South Korea and in Japan that sell us a lot of steel, and those stocks all fell on this news.
Prof G Markets
The State of Trade with China — ft. Alice Han
But the most important loser here, which you kind of referenced, is just the consumer, because this is gonna drive up the cost of steel, it's gonna drive up the cost of aluminum, which we need in order to build houses and cars, and so the prices of houses and cars are gonna go up, but also we need them to just manufacture everything in America.
Prof G Markets
The State of Trade with China — ft. Alice Han
Anything that is manufactured in a factory has an element of steel or aluminum to it. And so if we're going to dramatically increase the price of steel and aluminum, it's just going to increase the price of everything. And the estimation on what it'll do to inflation, the price of all goods, it's estimated this will increase inflation by 0.1%. So it's not huge. It's not a real...
Prof G Markets
The State of Trade with China — ft. Alice Han
you know, issue, but it's still increasing the price. So again, it all sounds very pro-America. It's like got this very America first feel to the whole thing. But as we've done with all of these tariffs, you know, you do the math and ultimately you realize this just hurts us and it's for no good reason at all. Let's talk about the carried interest loophole.
Prof G Markets
The State of Trade with China — ft. Alice Han
You have been pushing for this for a while, actually. Why don't you first just remind us, what is the carried interest loophole?
Prof G Markets
The State of Trade with China — ft. Alice Han
Yeah. I mean, to be fair to Trump, we both agree this is exactly the right move by Trump. He tried to do this in 2017. It was struck down in Congress. And then Joe Biden tried to do the same thing, and it was struck down again. And so Trump is now trying it again for the third time. It's just so fascinating because it's clearly a bipartisan issue.
Prof G Markets
The State of Trade with China — ft. Alice Han
The only people who don't like this are the people in private equity and the hedge fund managers. And I guess the politicians that they pay and that they back. Everyone else, both in government and in just the general public, is for it. So I guess the question now is... Will Congress have the spine to go through with it?
Prof G Markets
The State of Trade with China — ft. Alice Han
Let's wrap up here with this Elon Musk bid for OpenAI. Let's just sort of first address this one detail. There's been some confusion over what he's actually bidding for. Some say it is the operating assets of the business. Others say it is the nonprofit arm that controls the company. As of this recording, we don't actually know.
Prof G Markets
The State of Trade with China — ft. Alice Han
What we do know, though, is that either way, a successful purchase of either of those two things would mean that Elon has control of OpenAI as we know it. So I think the question here is, would the board accept $97 billion to relinquish control of the company? The answer is quite simple. No. I mean, this company was last valued at almost $160 billion.
Prof G Markets
The State of Trade with China — ft. Alice Han
They're currently in talks with SoftBank for a valuation of $300 billion and Elon has offered 97. So he's off by around $200 billion. And that doesn't account for the fact that you're probably going to need an acquisition premium or the fact that Sam Altman just doesn't want to sell. So I think if you account for all of those factors, you know, this is the hottest company in the world.
Prof G Markets
The State of Trade with China — ft. Alice Han
They're already extremely well capitalized. Sam Altman doesn't want to sell, and he also just doesn't like him. If you account for all of that, I think a serious offer, I'd like to get your take, would be half a trillion dollars, at least. And then he's come up with 97. So I don't think this is a serious offer. I know you've said this is probably just an attempt to slow him down. I would agree.
Prof G Markets
The State of Trade with China — ft. Alice Han
He's also trying to do that in court, so we'll see where that goes. But more than anything, this is just another example of how far Elon has fallen. And I was just thinking, like, I think back to the Elon Musk of 2010. who at the time was sort of an inspiration to people. This was the guy who built stuff.
Prof G Markets
The State of Trade with China — ft. Alice Han
He was the champion of getting things done, of innovating, of making products that are useful to people. He really captured people's imaginations. And I just think, imagine if you told that Elon that in 15 years, he would be spending $100 billion, not to build a new company, but to tear down the progress and the innovation of someone else's company.
Prof G Markets
The State of Trade with China — ft. Alice Han
A company which, you know, for all of its faults, it has inspired millions of people around the world. It's inspired trillions of dollars of value in the marketplace. It's created arguably the greatest technology of our time. You know, what would he say about that? Like, would he be proud of this? Would he think that was cool?
Prof G Markets
The State of Trade with China — ft. Alice Han
So I feel like we increasingly need to think about Elon and his role in America. We need to think of him as two different people. There was the pre-Twitter Elon and there's the post-Twitter Elon. And those are two totally different characters. You know, one is like an innovator, he's an inspiration. The other is a shit poster. The other one is embarrassing.
Prof G Markets
The State of Trade with China — ft. Alice Han
Isn't it? I mean, at least that's what society wants us to think. Gotta get a Birkin, gotta get a home, you know.
Prof G Markets
The State of Trade with China — ft. Alice Han
Ed Banter, where are you? I'm in New York, as usual. I'm actually heading to Mexico this weekend, which will be fun. Por qué, Eduardo? My friend's doing a big birthday bash, so we're all going, a bunch of me and my friends are heading out to Puerto Escondido. Where's that? I don't know that. It's in Oaxaca, I believe.
Prof G Markets
The State of Trade with China — ft. Alice Han
So, you know, I'm criticizing Elon again, but when I criticize him, I'm not criticizing his past achievements, who he was. I'm criticizing who he is now. And I really believe that the man he is now would be a total embarrassment to the man he used to be. And this is just another example of that.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
if I could just make one amendment to that claim, I would say the rivers are reversing or they're beginning to reverse. And I think it's hard for us to say right now with any certainty they have reversed. We flipped the switch and now it's going in this direction. And I think that's the thing that we're going to have to keep track of over the next few months and over the next year or so is...
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
At what point can we definitively say the rivers have reversed? Because if they have, what we're about to see is just a total flip of the entire world order. And all of the conventional wisdom that we've understood about the stock market and the way markets work, it's all been tied to America and America's ability to dominate.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
I mean, I'm young, I don't have that much experience, but I can tell you that every single investor who is alive today has lived under this paradigm. And this is the only thing we've been used to. And so if this is happening, if the rivers are definitely reversing, then this really changes everything.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And so I think the thing we need to be very careful and wary of is when we definitively make that call.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Yeah, my friend Rick Stengel put it perfectly. He was like, you know, I have a perpetual trade deficit with my barber. Trump thinks that the solution to that is to put a 50% tariff on haircuts. I like that. One topic you brought up when we were discussing this earlier in the week was this idea that people have been floating around that Trump might have used chat GPT to come up with this policy.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Your joke doesn't even make sense.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Because if you ask... ChatGBT for a simple tariff formula that the U.S. could use to match other countries' trade barriers and to protect the American industry. ChatGBT's response I'll just quote what we found here. A basic tariff setting formula could be based on the trade imbalance between the U.S. and a given country.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
I do, I get it. It's just like, it's barely a joke.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And it basically replicates exactly what we saw from the Trump administration. I think it is a legitimately feasible scenario that Trump and his team went on OpenAI and they used ChatGPT to come up with the tariff rate for the nation. I think that's actually possible.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
I think the question is, what are they going to do now? And if we believe that they're using ChatGBT to run the economy, it's an interesting exercise to try to predict their movements based on our own ChatGBT entries. So our research associate, Isabella, put in some of these prompts in ChatGBT. Here's a prompt. Markets are down after our trade announcement. What should we do?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
response from ChatGPT. If markets react negatively, emphasize long-term benefits of the trade action, job creation, national security, independence. Float stimulus measures, infrastructure plans, tax credits to steady investor sentiment. Signal confidence in the economy through strong messaging and selective data releases. Avoid panic.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
That's true. We're never going to have a hostile takeover. I know that. By the way, are you tan? You look quite tan today.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Position short-term volatility as proof that bold change is underway. Keep in mind, overcorrecting or spinning too hard can deepen market distrust. This is essentially what we've seen over the past few days. I think the only thing we haven't seen flat out are these actual stimulus plans. However, he did mention that we're going to allocate a trillion dollars to the Defense Department.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
So there's some stimulus right there. Here's another prompt we put in. What should we do as the administration if the economy goes down 35%?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
ChatGPT, recommended actions, emergency fiscal package, trillions in direct stimulus, cash payments, food aid, extended unemployment, bailouts for critical sectors, monetary and financial stabilization, coordinate with the Fed to cut interest rates, inject liquidity, and backstop credit markets, temporary capital controls or trading holds to stabilize markets, international coordination.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
You know... we could, I think, pretty easily predict what's going to happen. And if you also just look at the history of recessions, what we've also found is that the most fiscally stimulative times in economic history are the times that come right after a recession. So we've been talking a lot about deficits, we need to figure out these deficits, we need to figure out our debt.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
I think one thing that we could certainly expect from this is even more stimulus, even more spending, because if this gets worse, I don't think the administration's going to have a choice but to start spending again.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
You look good. You should do this for every episode, no?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
We'll be right back after the break for our conversation with Gary Stevenson. If you're enjoying the show so far, be sure to give Property Markets a follow wherever you get your podcasts.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Here's our conversation with Gary Stevenson, host of the Gary's Economics YouTube channel. Gary, thank you for joining us on Profiteer Markets.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
I just want to point out before we get going here, Gary, you are, I think, the most sought after guest we have ever had on this program. I look through the comments on our YouTube channel, on our Spotify. Our entire audience has been begging for you to come join the show for maybe a year, maybe two years. So this is like a big moment for all of us. And we're very happy to have you on today.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
So thank you. Seriously, thank you for joining us. Let's start off with just the rundown of who you are. and how you got here. You talk a lot about what's happening to the economy, particularly in terms of inequality. Where did this all begin for Gary Stevenson?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Yeah, well, I think you're looking good today. I like the makeup. Thanks, brother. Thanks for that. You're welcome. I just want to point out before we get into the show, we have been nominated for a Best in Business Webby Award. We're very excited to be nominated. But so far, I am shocked to report we're actually in second place right now. So please go vote for us. Go to vote.webbiawards.com.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Type in Prof G Markets. You'll find us there. Please vote for us. And we're going to leave a link in the description to make it very easy for you. We have to win a Webby. It would be crazy if this show doesn't win a Webby this year. So please, let's make it happen. Go vote for us. Profiteer Markets, that's vote.webbiawards.com. Scott, any other closing thoughts before we enter into this episode?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And yeah, we're excited. We got the Webby Honoree Award last year, but that's not good enough.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Yeah, we went when No Mercy, No Malice won the Webby many years ago. But I want to go back to the party, so please just do it for me. I don't have enough of a social life, and I want to go hang out with the team and put on a coat and tie. Yeah.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
as predicted the markets have whipsawed amid volatility this week on monday the s&p 500 slipped into bear market territory for the first time since 2022 that was the same day the index had surged seven percent after a false tweet claimed that trump was considering a 90-day pause on the tariffs and then the markets came tumbling down again by tuesday
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
kind of what you're saying is that throughout history, inequality is a natural force. Inequality begets more inequality. And the only thing that sort of undoes that is a trigger event that causes a redistribution among our society. And what you're saying is... World War II, that was the trigger.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
That was the redistribution mechanism, where you had this massive crisis which reshaped the world order. And if you look back through previous historical events, often it goes that way, that there's either some sort of global...
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
military event some sort of giant war and oftentimes another mechanism is a revolution i mean you brought up america for example um that that is a moment where you had essentially a revolt and that was the redistribution mechanism it feels as though i mean you say that you're betting on the you're trading and betting on the collapse of society which i think sounds a little bit uh
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
nihilistic, but when we look through history, you're not off the mark there. But I think what we could be striving towards is some sort of redistribution mechanism that doesn't involve death, pain, and suffering. I feel like that's the thing we're working towards. And so I'm just wondering if you see a future in which we can pull that trigger and
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
and not have people with pitchforks killing each other? As you say, we don't have a societal collapse. Is that possible?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
The markets were rallying on hopes for trade deals with select countries, and then the administration confirmed an additional 50% tariff on China would go into effect. That's a threat that the president had made the day before, and the stock market fell all over again. So, Scott, things are moving extremely quickly, up and down, huge volatility.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
We'll be right back. If you're enjoying the show so far, hit follow and leave us a review on Profit Markets.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
I'd love to get your reactions to what's happening in America and particularly what Trump is doing. I think, I would bet that there would be a large percentage of the MAGA base who hears this conversation, who would hear this conversation and say, well, we've got our guy in. This is the guy who's going to break up the world order. He's going to flip the world on its head.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
The stock market is crashing, which means that rich people are hurting. We're going to bring back manufacturing, and then we're going to see the restoration of the middle class, or at least poor people in America are going to get richer. I think that's a conversation that is being had in America. What would be your response to that statement? And what are your reactions to Trump and these tariffs?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
The only thing I can say with certainty is that by the time our audience is listening to this episode, things will likely have changed again. And what do you know, things have changed. Right after we recorded this conversation, Trump announced a 90-day tariff pause on most countries except for China, and the China tariff has been raised to 125%.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
I think what is very clear is that in terms of the gravity... that Trump brings to this presidency, this willingness to turn everything on its head, that might be the part where you and I, I think, Scott, agree that actually the situation is getting quite dire and we need to do something big to switch things up, basically.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
The trouble is tariffs, as you say, won't do that because it's essentially a regressive tax that's going to show up in the form of inflation, which is going to affect poor people. And they've done a very good job to convince the American people that it's only going to affect the rich. In reality, it's going to, I think, affect the poorest hardest.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And what I find whenever we have this conversation about inequality is all roads lead to tax the rich. It's very simple. It's like, I love how you simplify things down, you boil it down. It's like, where did the money go? It went all the way up here into this top 1%, 0.1%. How do we get the money out? You have to tax them. It's a very simple conversation.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
But as you say, this is all in the realm of politics and actually getting to that point is very difficult to do because we're still in the argument phase. We're still trying to convince people, hey, look how unequal things are. You're getting screwed in a lot of ways. So I don't know if it'll happen in my lifetime. Maybe it will.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
But for people who are listening to this and want to think about ways that they can change things or protect themselves at an individual level, maybe you're not going to go see the greatest wealth tax that you've ever seen in the history of our society, but maybe there are things that you can do on an individual level to grow your wealth, to protect yourself, to establish economic security,
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And as I call in right now, I'm looking at the tickers. The NASDAQ is up almost 10%, and the S&P is up almost 8%. So this is a truly insane week for markets. And I apologize that we're not completely up to date on this episode, but this conversation that we recorded before the pause is still relevant.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And I'd love to, as we wrap up here, to hear from you what your advice would be to individual people. How do you deal with this new world?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
It's still very important in terms of how to invest over the next four years and how to tackle these issues. So don't go anywhere, stick around for this conversation and we will get into the tariff pause and what it all means for you on Monday's episode. With that, let's go back to Scott.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Gary Stevenson is a YouTuber and former financial trader known for his economic commentary and activism against economic inequality. He studied at Oxford, worked with economic think tanks and founded a YouTube channel, Gary's Economics, which focused on teaching people about real world economics.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
His first book, The Trading Game, the story of his time as a trader is published by Crown Currency in the US and Penguin in the UK. The paperback has been number one for nine straight weeks and counting. Congrats on that, Gary. And thank you so much. for joining us. Our YouTubers, our YouTube audience is going to be very excited about this.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Scott, it finally happened. We finally got Gary Stevenson on the podcast. What are your reactions?
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Dan Shallan is our intern. Hugh Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Prof2Markets from the Vox Media Podcast Network.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
That 90-day pause that you talk about, this fake headline went around, and it started on Twitter. It said that Trump was going to pause these tariffs for 90 days. And what's so crazy is that within minutes, in the same way that meme stocks moved, the S&P climbed 7%. It added almost $4 trillion in value. off of a fake headline, off of a rumor.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And then suddenly the White House announced that it was fake, Trump was not considering a 90-day pause, and the stock market immediately plummeted again, and that $3.5 trillion in market value was erased again within minutes. So two initial takeaways here. One, your volatility prediction was spot on.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
We've never seen this level of volatility before. And two, it is remarkable just how much the investment community hates these tariffs. The fact that they were willing to go in and start panic buying. because they saw some unsubstantiated rumor on their Twitter feed, that to me is an indication of just how desperate the markets are right now.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
They would do anything to believe and to be told that these tariffs aren't real, that it's all a negotiating ploy. But of course, they were denied that reality and they immediately started panic selling again just a few minutes later. I mean, the stock market has literally turned into like a meme stock market. It's unbelievable.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
I do want to talk about what's happening in the bond market, though, because it shows you just how disastrous these tariffs really are. But to understand that, we need to go back to the arguments the administration made in the first place as to why these tariffs were a good idea. We covered some of those arguments on Monday. It's 4D chess. It's a negotiating tactic.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
It's going to bring back manufacturing, etc., etc. We broke down those arguments. One argument we didn't cover, though, was the argument that has been made by the Treasury Secretary, Scott Besson.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And his argument is that if we implement the tariffs and we, because of that, bring down the stock market, we will also bring down Treasury yields, which in his view will be a good thing because lower yields means lower rates, lower borrowing costs for both consumers and for our country. And it also reflects this faith, not in the US stock market, but in the US debt market and our government.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
Because remember, you know, treasury yields going down is synonymous with treasury prices going up. It basically reflects a demand for US debt. It reflects trust and optimism in our government and in our nation at large. So that was the plan. That was the Scott Besant plan, at least. Now, what actually happened to treasury yields? Initially, as you would expect, they came down.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And that's always what happens when you see a giant stock market sell-off. You see this flight into treasuries instead. And many in the MAGA camp were very quick to point this out. You know, they said, look, the yield's down again. What they didn't point out, though, was that yields bearish. barely came down.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
You look at the 10-year yield, it went just below 4%, which is around where it was a year ago. But at that time, the S&P was at 6,000. Today, we're hovering at around 5,000. So already, it's a huge red flag, the fact that investors are fleeing the stock market and then they're not reallocating into the treasury market in the numbers that we would have expected.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
But then it gets really bad because at the beginning of the week, the yield on the 10-year started to go up again, and then it breached 4%, and then it kept rising, and now at the time of this recording, it's at around 4.2%, which is higher than what it was before the tariffs.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
So basically what this means is, you know, in addition to this exodus out of the American stock market, which, as I said, is usually accompanied by an entry into the U.S. Treasury market as people flock to safety, what we're seeing is an exodus out of both markets, the stock market and the debt market.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
So investors have completely lost their faith in American companies and American debt, the American government. In other words, the entire world is turning itself away from America wholesale. Now we'll see if this continues, and there's a chance that by the time this airs, the yield will have come back down. But if it doesn't, and if this trend does continue,
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
then I believe that what we're witnessing today is probably the most important business story, certainly of the past decade, arguably of the 21st century. Because if you look at the numbers so far, you look at the three-day performance of the S&P, this is worse than COVID and as bad as 2008.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
But what makes this different from those events and from any event ever in America, in American financial history, is that this was done on purpose. This was not a natural disaster. This was an intentional disaster, and we've never seen that before. So we're going to spend, I think, the next three years on this podcast trying to figure out how to navigate this.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
But I just want to recognize up front this is going to be like a wild journey. Like we're going to be tackling issues that have never been tackled before. As you say, we might be witnessing this global rotation, this global reorganization away from the US. This might be the end of American exceptionalism. I don't want to jump to conclusions. I don't,
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
also want to recommend that you sell right now. I don't think we can make those conclusions yet, but I do want to be clear about what is on the table right now. And there is no doubt a restructuring of the world order is on the table. It hasn't happened yet, but it might. And I think our responsibility as investors is to deal with that.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
So my promise today in the midst of this insanity in tariffs is As the host of this podcast, also as a young person who wants to get rich and who just wants to live a good life, I'm going to do everything I can to arm this community and everyone who listens to this podcast. I want to arm you with the tools you need to not just fall off the ship here. And to me, that means accurate information.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
actual insight that is truthful, diverse perspectives, not from these grifters or these conspiracy theorists and these SPAC pumpers whose only real intention is to enrich themselves, but from real analysts who actually understand the issues. Because these are uncharted waters. It's never been more important to understand what's actually happening today.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And we're going to see so much lying in the next few years. And you have to be able to see through it. And if you don't think you can do that, then you have to choose the right people to inform you. And maybe it's not Scott, and maybe it's not me, but you do have to choose, and you have to choose wisely.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And if you are going to go with us, and if you're going to go with Prof G Markets, I just want to say, you know, I appreciate the trust, and I hope we've earned it, because it is going to be a wild ride. But... I just want to say on this podcast now, it is my commitment over the next several years to hold up our end of the bargain. I want to make sure that we are weathering the storm correctly.
Prof G Markets
Tariff Chaos & Trading on Inequality — ft. Gary Stevenson
And I do think that our guest today, Gary, is going to be a great start in our effort to reflect that commitment. Sorry for the rant.
Prof G Markets
The Sell America Thesis — ft. JPMorgan’s Michael Cembalest
And he takes the fat, the fat shot drug. So rude. I'm in London and I just paid for this damn fat drug I take. I said, it's not working.
Prof G Markets
The Sell America Thesis — ft. JPMorgan’s Michael Cembalest
And he takes the fat, the fat shot.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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 Sachs, who is the guy who came up with this whole charade. You know, Elon keeps on talking about how the government is the biggest scam in history. That might be true now.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Yeah. Just to go through the numbers that we can expect, if these remain intact, it's expected prices across the board will rise 0.7 percent, according to estimates. The 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.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
This is our worst opening ever.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Economists are expecting a 0.6% decline. 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 on to the consumers, which is, of course, entirely possible.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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 patriotism. independence. And now the UK has its tail between its legs.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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. So 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.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
We realize we buried ourselves for no good reason at all. We'll be right back after the break for a conversation with Jonathan Cantor. And if you're enjoying the show so far, be sure to give Profiteer Market to follow wherever you get your podcasts.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Welcome back. Here's our conversation with Jonathan Cantor, former Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice. Jonathan, thank you so much for joining us on Profiteer 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.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
What we haven't been hearing that much about, though, is antitrust. It feels like it's been kind of...
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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 ftc he was a partner at several top law firms then he led the antitrust division for the doj under joe biden until he resigned in december of last year so
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Why do you think that health care is such an important priority right now?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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? It's everywhere, right?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
The whole lobbying industry feels so obscure and strange. Yeah. 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 forward?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
I mean, it sounds like, you know, you are fighting against that to the best of your ability. It's possible now that the DOJ will be—have its funding cut with DOJ. I mean, what do you think of that? Do you think that Doge will target the DOJ? And if so, what would that mean for antitrust?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Are there any sectors of the government that you believe actually could benefit? from budget cuts or from at least being inspected by some form of government efficiency oversight?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
It burned down. I saw that. I had serious schadenfreude on that because obviously I've never gotten in.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Thank you. Thank you. Thank you.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Yeah, I've heard of this. By the way, we really need to put a moratorium on the members club's talks because the problem is both you and I are irrationally obsessed with this stuff in a way that's very unhealthy and strange. That's because I'm a narcissist. 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.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
As you look at the state of competition across the US, and I think maybe let's put big tech aside, because I think it's clear what's at stake there. Which sectors would you say are most in need of antitrust enforcement? In other words, where in the economy, aside from tech, is monopolization most problematic or most egregious?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Everything you've said so far feels so bipartisan. Like, I can't figure out how— How you could really take issue with any of your positions that have been explained on this podcast. But I'm going to try, or at least, you know, I want to point out some things that would maybe be said on the Republican side of things.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
I love that distinction. Who, in your view, is on the side of the former? Who, in your view, in America today, or which kinds of people want more monopolization in America? The monopolies.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Buying a house has long been considered the best way to build wealth and move into true adulting.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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 shit. Get to the headlines.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
So it's basically in line with what we're seeing in government right now, which is You know, the tech oligarchy is emerging where we have a few monopolists who are running around trying to convince everyone that we should maintain these monopolies. And now they're getting cozy with the president. What is your view on these people's relationship with Donald Trump and does it concern you?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Jonathan, this has been exceptional and I really appreciate your time. I have one final question for you. If you had to give... a piece of advice to young people who are listening to this program who are interested in government, who are interested in service, and they're trying to figure out how to provide value for our country, what would your advice be?
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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 stock's Europe Aerospace and Defense Index rose 8%, while London's FTSE reached a record high.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Jonathan Cantor is the former Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice under the Biden administration. During his tenure, he brought major antitrust lawsuits against Google, Apple, Live Nation, and Ticketmaster, UnitedHealth, RealPage, American Airlines, the meatpacking industry, and many others.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
He also previously served as an attorney at the FTC and he founded his own law firm, Canton Law Group. Jonathan, this was so great. I really appreciate your time. And I will just say it's very nice to have you out of office because now we get to hear about how things actually work, which is a great benefit. So, you know, there's a silver lining there. All right.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profity Markets from the Vox Media Podcast Network.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday. Lifetime
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
And finally, the 25% tariffs on imports from Mexico and Canada are officially in effect after hopes for a last minute 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.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Let's start with your thoughts on European defense stocks rallying after that rattling meeting we saw between Trump and Zelensky last week.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Okay, the handbag you can probably manage without. But what about a house? Surely that's actually good, right? We're going to find out this week on Explain It To Me. New episodes every Sunday morning, wherever you get your podcasts.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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 and 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.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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%.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Britain's BAE Systems rose 14%. Leonardo, a 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.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
I wouldn't invest in those defense companies myself, because I think the market is reacting a little too over-enthusiastically to this, 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,
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
reconstituting an entire army is not an overnight job but there is no doubt europe will be bolstering its militaries and i do i like the silver lining you point out there and i think i agree with it let's shift to crypto and this new u.s crypto reserve so our government will be buying bitcoin ether xrp solana and cardano in regular installments
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
The fact that these headlines are happening in the same weekend.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Yeah, the person you're talking about there is David Sachs, 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? You mean the All Grifter podcast? Yeah, the All Grift podcast.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
And basically, David and his boys are talking about their positions in Solano, 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.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
David Sachs 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 friend.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
So I just want to get that argument out of the way. But doesn't he have huge investments in crypto-related companies? He has huge investments in crypto-related companies, exactly.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
Well, this is the argument these guys like to make. So I'm just, I'm steel manning their corrupt position. Yeah.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
The delivery was wrong. To bean on your face? Oh, dude, shut the fuck up.
Prof G Markets
The Next Era Of Antitrust — ft. DOJ’s Jonathan Kanter
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 U.S. dollar. So why would the U.S. 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.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Many of you will probably be relieved to hear that. We'll just be getting into the markets today. Later on, I'll be speaking with Tim Higgins, Wall Street Journal columnist covering the automobile industry. We'll cover his thoughts on the winners and losers of the auto tariffs. But before we do that, let's get into the headlines.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
On day one, they were clocking a million new signups every hour. I don't know about you, but my entire social media feed has been filled with these AI-generated images that people have been making on ChatGPT. Everyone's making these Studio Ghibli images. images. Some people are taking images and turning it into the Muppets characters.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Last week, my sister sent me a picture of her and her new dog, except it was an AI-generated image that rendered them as cartoon characters. She said she was playing with ChatGPT all day. This is the kind of creative inspiration that I don't think you can really capture or understand with just numbers. To me, it's so much bigger than that. To me, this is a once-in-a-generation product.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
I think the only thing that stands in OpenAI's way, is the competition. You know, it's not a question anymore of whether AI is going to take over the world. Everyone knows that's going to happen. It's a question of which AI company takes over the world. And the only real competitors you have right now are DeepSeek, Anthropic, and Gemini.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And you look at the user numbers on those platforms, you look at what they're doing in revenue, they are tiny compared to OpenAI. OpenAI is totally running away with it. So I'm really bullish on this company. My prediction, I think OpenAI is the next trillion dollar company. I think the growth potential there is massive. I think the technology is out of this world. I love using it.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
I use the product every day. I talk to my friends, they use it every day. People in all sorts of sectors, people in consulting, people in finance, people in creative industries. And so $300 billion valuation for this company, what I believe is the next big tech company, I think the investors are getting a good deal and I would have liked to be in the deal myself. Those are the headlines.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
We'll be right back for our conversation with Tim Higgins. We're going to be breaking down what is going on in the car industry and what these tariffs are going to do to the car industry. Stay with us.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Welcome back. Here's our conversation with Tim Higgins, columnist for The Wall Street Journal, CNBC on-air contributor, and the author of Power Play, which is a book about Tesla. Thank you for joining me on Profiteer Markets, Tim. Well, thank you. So there are a lot of headlines about cars that are floating around in the news this week.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
President Trump announced reciprocal tariffs on U.S. trade partners, marking the occasion as Liberation Day. He also imposed a 25% tariff on imported vehicles. Elon Musk's XAI has purchased his social media platform X. The all-stock deal values X at $33 billion or $45 billion when you include the debt.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And so we really want to get you in here to talk about this today. For those that don't know, Tim covers media and tech for The Wall Street Journal, but he's also covered a lot of the auto industry as well. And of course, he wrote that book about Tesla. So we're going to focus on the automobile industry exclusively today. And I'd like to start with this new tariff that Trump introduced last week.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
He's putting a 25% tariff on all foreign-made cars and also a 25% tariff on all foreign-made auto parts. So, Tim, break it down for us. One, why is Trump doing this? And two, what does this mean for the car industry and for the economy at large?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Yeah. So, you know, all the car stocks basically dropped across the board after the announcement. And I think that was probably expected for the foreign car stocks. But, you know, then I see stocks like General Motors and Ford, they're also dropping. So why are they dropping as well? Is that because of what you said there, that they also rely on car parts that are outside of the U.S. ?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Are there any winners of these tariffs? I mean, we've been over the losers, of course, the foreign car companies. Sounds like most of the American car companies, too. Are there any winners here that you could identify?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And finally, OpenAI closed a $40 billion funding round led by SoftBank, which values the company at $300 billion. It is the largest private funding round in tech history. Okay, let's start with these reciprocal tariffs. Of course, everyone is talking about it. Liberation Day has come. You know, I think the idea of reciprocal tariffs, reciprocity, I actually think that's a nice idea in theory.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Yeah, there was this quote he said that I wanted to get your take on. The reporters were asking him about the prices and if he was concerned about what this would do to prices, because I think this is one of the main consequences of these tariffs is that prices go up. He said, quote, I couldn't care less.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
I hope they raise their prices because if they do, people are going to buy American-made cars and we have plenty. So his point is, you know, let them raise the prices because it doesn't matter whether Because people will buy American and the American cars, the American companies won't have to raise their prices. I guess my question to you, is that true?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Is that true that we have enough American car makers and, you know, enough American car part makers? Can we do this all on our own such that the price of a truly American car won't actually go up?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
You mentioned Tesla there, that it's a winner, potentially, from these tariffs. I'd like to talk about Tesla more generally, which you've covered extensively. It's been a very bad year for the stock overall. It's down 36% in the first quarter. worst performance for the company in any period since 2022. They've lost almost half a trillion dollars in market cap.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
As you look at Tesla today, what do you think are the biggest obstacles for the company right now? What's gone wrong? And what do you think the next four years look like for Tesla?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
I don't see any issue with saying, you know, you guys charge us this amount and we're going to charge you the same amount right back. Reciprocity, that sounds fair to me. The thing is, if you're going off of what Trump says, you would get the idea that we are the benevolent nation when it comes to tariffs. You'd get the idea that everyone else is screwing us.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Yeah, it seems that the valuation, which is still actually quite high, I mean, yes, the stock's down 36%, but on a price-to-earnings multiple, still trading at 130 times earnings, and then you've got GM trading at 5, 6, 7, Ford at 5, 6, 7, Stellantis in the same ballpark. I mean, it's a totally different situation. It's a totally different valuation.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And it certainly appears that the real story here for Tesla, or at least the growth story, is, you know, the robotaxis and the energy business and the AI and the robots, etc. As you look at all of those other businesses... which I often write off because I say, well, show me when they ship. But when you look at those businesses, which of them is most compelling to you?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
You know, they've been playing hardball. We've been playing softball. So let's play hardball right back. And I would agree with that notion if it were true. And the trouble is, it isn't. The reality is that we are in fact the stringent nation when it comes to tariffs. Most other nations are actually more lenient than we are. And I can give you countless examples of where that is the case.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
If you had to sort of fashion a bull case on Tesla, which of those businesses do you think is going to really drive the value for the company?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Thank you. Thank you. Thank you. Thank you.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
You look at Japan, for example. We charge 25% on every Japanese truck that enters the U.S. Meanwhile, for American trucks that enter Japan, the tariff is 0%. You look at Brazil. We charge them 81% for their cane sugar. They charge us 14%. You look at New Zealand. We charge them 13% for their butter and 10% for their milk, and they charge us nothing. In fact...
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Thank you. Thank you.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Since 2009, we have implemented the highest number of domestically beneficial trade interventions, more than any other nation, three times more than Germany, three times more than Canada, five times more than France. So actually, when you look at the tariff situation, It's not that everyone's playing hardball and we're playing softball. We're actually going pretty hard on everyone.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And I'm fine with the idea of reciprocity. I think reciprocity makes sense. But let's be clear. True reciprocity would mean we're in for hundreds and hundreds of tariffs that are coming right back in our direction. We are not the benevolent nation we think we are. In fact, we are quite hawkish on trade. So we'll see where this goes. I think implementation is going to be a nightmare.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Two companies we haven't mentioned are Rivian and Lucid. I'd say those are the other EV leaders in America, at least. Where do they stand in all of this? How are they faring at the moment? And are they in a similar position? Are they in a similar mess that these legacy car companies are as a result of these tariffs?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
That's at least what many economists are saying. It's very difficult to do this as quickly as Trump is saying we can do it. I don't see those tariff revenues hitting our bottom line anytime soon. But I think the most important consequence of this action is we are going to see extreme retaliation from every other nation around the world when it comes to tariffs.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
We've talked about all of these different car companies, these car stocks. Is there a car stock or a car company that you think that we're not paying enough attention to right now? We talk a lot about Tesla, been talking a lot more about BYD recently, I would say, but there are so many others out there.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Is there a company that you're particularly interested in that you think that we should be paying more attention to, either for good reasons or for bad reasons?
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Tim Higgins is a columnist for The Wall Street Journal. He writes about the worlds of autos, media, and tech. He became a columnist in 2023 after working for more than two decades as an award-winning reporter, covering everything from the bankruptcy of General Motors to the 2016 presidential campaigns. He is also a CNBC on-air contributor and the author of Power Play, a book about Tesla.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
I don't see how this works in our favor. All this is to me, is a reflection of our delusion, our tendency and obsession with thinking that we are the victim in a world where both historically and presently, you look at the numbers, we are in fact, in most cases, the victim. Let's talk about XAI.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Tim, this was great. I'm glad we got the auto update, and I appreciate your time. Well, thank you. This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Thank you for listening to Profiteer Markets from the Vox Media Podcast Network. If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday. Lifetime
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
The first thing you might be thinking here, certainly the first thing I thought when I saw this headline, wow, XAI is valued at $80 billion, X, the social media company, is valued at $33 billion, $45 billion when you include the debt. That's actually really impressive. You think back to just a few months ago.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
when Fidelity marked down their stake in X and they were valuing the company at less than $10 billion. And in those few months since that point, the tech sector has only been in decline. The Nasdaq's down around 11% year-to-date. So I see this headline, I think, well, things must be going awfully well over at X if the company is commanding a $45 billion enterprise value at this point.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
I want to clear this up right off the bat. Both of those numbers are fake numbers. They are totally an accounting trick, and they are an example, in my view, of Elon's incredibly deft understanding, not of how to run and operate a business, but of how to game the markets and inflate the perceived value of his companies way beyond what is even remotely reasonable or logical.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And he's used several distinct strategies to get there here, and I'm gonna explain them now. The first thing you have to understand here This was an all-stock deal, meaning no cash was exchanged in this transaction. What this deal does is it says to the shareholders of X, we're diluting your ownership stake in X, and in exchange, you're going to receive these shares in XAI.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And to the shareholders of XAI, the opposite. We're diluting your stake in XAI. In exchange, you're going to get these shares in X. So to assign any dollar amount to this transaction, to begin with, is a red herring, because... no dollars were exchanged. The only thing that matters here is the ratio in the value between the two companies because that's what determines the dilution.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And what the ratio tells us is that the shareholders in X will own 30% of the combined company and the shareholders in XAI will own 70% of the combined company. But no one got richer and no one got poorer because again, no cash was exchanged. So how did we arrive then at this gigantic valuation? Well, a lot of it has to do with the power of the word AI. XAI is an AI company.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And despite the fact that it has generated almost no revenue yet, investors are willing to overlook that. And they're willing to assume that over the long term, the company is going to make a lot of money. Elon Musk knows this. And that's why he's combining these two companies.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
He believes that if he can rebrand the social media platform as an AI company, he can inflate the perceived value, which will make it a lot easier for him to raise money in the future. And by the way, I'm sure he's right. But again, this doesn't have anything to do with actual dollars. It has no basis in revenue, no basis in earnings.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
This is all a function of his ability to tell a compelling story. Now, everything I've described so far is pretty standard in the world of venture capital. An all stock deal, that's pretty common. Pumping AI, that's common too, we've seen it a lot. Here's where it gets a little dicey though.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
You might remember a few weeks ago, we discussed a headline that X had been valued at $45 billion in the private markets. not with stock, but with cash, meaning someone had actually paid money at that valuation. And I asked the question to Josh Brown, who the hell is paying for this? You know, revenues are down at X 40%. EBITDA is shrinking. It's down to $1.2 billion.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And apparently, by the way, that's a highly adjusted number, which means the real number is even smaller. So how does the valuation add up? Well, I found my answer. According to Bloomberg, the buyer in that private transaction was Elon Musk. Elon invested $150 million of his own money at the ridiculous valuation of $45 billion.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
So when you read that headline, when you read a headline that says X valued at $45 billion, including debt, you're not actually getting the real story here. The real story is that Elon Musk valued X at $45 billion. The whole thing is a charade to make you think the company is more valuable than it really is. So I'm just fascinated by this transaction.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
because it shows you just how good Elon Musk is at gaming the system. You know, he's a master of branding, using the word AI, combining the company, turning this whole thing into an AI company.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
He's a genius in creative accounting, massively adjusting the EBITDA of X, the social media company, and then going in and buying shares in the private markets and not disclosing that it's him buying the shares so that everyone thinks the company is more valuable than it is. But most importantly, He understands more than anyone else that in 2025, all of this is worth it.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Because if you can convince other people that you're more successful than you are, that your company is more valuable than it really is when you go in and look at the revenue and you look at the numbers, if you can do that, you can ride the momentum until you actually are successful. The common term for this is fake it till you make it. But Elon Musk is a champion of this principle.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And this transaction, what we've seen here, XAI buying X for $45 billion, including debt, the numbers are nothing. The numbers are meaningless. This transaction is simply a reflection of his fundamental belief in that principle, that if you fake it, eventually you will make it. And that's what these numbers are. They are fake. Okay, OpenAI, $40 billion in funding, $300 billion valuation.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
This is the largest financing round in history. Actually, the valuation is higher than any IPO in the history of global markets. So this is a huge deal. And I think the question everyone's asking and everyone's going to be asking is, is it worth it? Is this company overvalued? My opinion, I don't think it is. I genuinely believe that this is a once in a lifetime company.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Apple, Microsoft, Google, Berkshire Hathaway, Standard Oil. I think OpenAI is on track to reach a level of influence and a level of value that is comparable to these companies. And if I could have invested in this company at $300 billion valuation, I would have.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
But before we get into the details, I just want to check in on a prediction that Scott made on this deal and the role that SoftBank would play in it.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
Welcome to Prof G Markets. So Scott is out this week. He's on his grand college tour with his son. I believe they are in Chicago right now. They just visited Northwestern and UChicago. Fun time to be in the Galloway family. So I'm flying solo today, which means we're not starting with a joke. We're not starting with a dick joke. Many of you will probably be sad to hear that.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
So that prediction didn't really pan out. OpenAI has secured that $300 billion valuation, but there is an interesting caveat in the deal. And that is SoftBank is leading the round with $30 billion. but they've said that if OpenAI doesn't restructure into a for-profit company by the end of the year, they're going to reduce that investment to $20 billion.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
So to be fair to Scott, we do have a new and fairly significant term here. But in terms of the valuation, we're still at $300 billion. SoftBank was down for that. They did not get the jitters. And as I've said, I think that this is the right valuation. Let's look at the numbers on this company. Let's look at why this is such a strong company. On revenue,
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
The company's on track for $13 billion in sales this year. Huge. On users, they've now hit 500 million weekly active users, not monthly actives, weekly active. So in other words, the population of the entirety of North America So the US, Canada, Mexico combined, they are logging on to ChatGPT and using the product every week.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
This is absurd growth, especially when you consider the fact that ChatGPT launched only 26 months ago. It's only a couple years old. But what makes it so compelling to me, what makes the $300 billion valuation worth it, is the monetization rate at OpenAI. Only 5% of ChatGPT users are paying for the product.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
And as I've said before, this isn't because OpenAI hasn't figured out how to monetize the platform. They're smart people. It's because they've chosen not to. They're sacrificing revenue in exchange for growth. And all it would take if they wanted to 5, 10, 15x their revenue overnight would be to flip a switch. And the switch would be very simple.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
It would be a paywall that says, if you want to continue using ChatGPT, please insert your credit card details here. This is an absurdly strong position to be in. And it honestly reminds me of the early days of Amazon and of Facebook and of Google. The only difference though, is that the customers of OpenAI are already paying for the product. They're not reliant
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
on advertising to supplement the revenue. And by the way, they could take the ad model if they wanted to. That's certainly on the cards for OpenAI, but they have chosen not to. Instead, they're shooting for growth and it's paying off tremendously. So those are the numbers. Now let's just talk anecdotally about the success of this company.
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
I have never seen a product that has captured the imagination of the public like ChatGPT has. And it all started really with the launch, when they launched two years ago. The eureka moment for me was when my mom showed me that she was using ChatGPT to generate a personalized poem that she delivered to me and my family on New Year's Eve two years ago. And...
Prof G Markets
A Nightmare Tariff Scenario for the Auto Industry — ft. Tim Higgins
I really think this is a good rule of thumb in tech. I think if your parents start using a product, a frontier tech product, that means you have something extremely special. Even my grandparents are playing with this. That's just not normal. That doesn't really happen in tech. And since that point, it's only gotten better. It's only gotten more viral. Last week, OpenAI launched image generation.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
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Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
I think the other big macro question that this news implies is like, who is going to be America's next China? Who's going to be the country that adopts this $440 billion per year business that is making cheap products and sending them to America? This news would imply maybe it'll be India, but maybe it could be someone else. Maybe it could be Mexico. And we talked with Ryan Peterson last week.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
He was very bullish on Vietnam. Maybe it could be Vietnam.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
He was great. And something I just never thought of was that the internal river network in Vietnam ends up being this cheap natural infrastructure.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
And he said that India was a nightmare to do business with. He said that logistically their supply chains are a mess, which was quite interesting.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
The other potentially sleeping giant here or stirring giant is Indonesia, which And they're gaining share in EV battery materials, especially nickel and cobalt. And India commands over 20% of global nickel reserves. And companies ranging from Tesla and Ford have signed sourcing deals with Indonesian firms.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
So there might be sort of a new—the problem is they need an acronym such that they can market themselves better for investors— It's sort of like Indonesia and Vietnam, Mexico, and India, like MIV or something. They need something such that they get on people's radar screens. But I think you're going to see a dissemination of market cap, and we've talked about this, away from the U.S.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
And I wonder if some of the tail of the whip and some of the bigger upsides might be in places like Vietnam and Indonesia.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Let's move on to Spotify, which reported earnings. The stock dropped 7%. They missed on profits. Operating income came in at 509 million euro. Wall Street expected 548 million. They also gave guidance that Wall Street considered quite soft. So I think that's certainly part of why you saw this drawdown. But I think this is really just a function of these massive expectations.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
It's still up 20% year to date. I mean, it's one of the best performing stocks in the tech sector. But I look at the company and the fundamentals are still really strong. I mean, you got active users up 10%. You got revenue up 15%. My takeaway here is the market was a little too excited. It's correcting, but net-net, I look at Spotify, to me, the company's still crushing it.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Yeah, there's company performance and there's expectations. And the stock is a function of expectations. You talked about year-to-date. In the last 12 months, the stock's up 103%, even after its decline. That's insane. And it trades at a price-earnings multiple of 93%. So this company's crushing it. Yeah, it's just that the investors – you said something that struck me a few months ago.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
You said the expectation now is that every company will blow away expectations. The stock price has just gotten out too far over its skis is the bottom line, and it'll probably rationalize a bit. My guess is it'll go flat for a while, and then it'll maybe down, and then it'll reignite its growth again because this company – there's nothing here –
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Today's number, 50%. That's how much more often British people apologize than Americans do. So I'd like to apologize to all our listeners that I have not yet offended. It's coming. It's coming. Ed, true story. When I started at Morgan Stanley, I was consistently late. And I thought of an interesting apology in the all hands meeting said, I want to apologize for being late.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
they would indicate anything other than Spotify is now benefiting from what Uber benefited from and some of the big Magnificent Seven have benefited from. And that is, it has made the jump to light speed.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
And that is, it has so much scale and so much capital to reinvest into innovation that slowly but surely, and also it benefits from focus, it's pulling away from Apple and Amazon and the other music streamers. And I can't think of another company that was able to take an entire medium and distill it down to one searchable icon on your iPhone.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
I mean, even YouTube, as much as we talk about YouTube, there's just certain things, a lot of things I cannot find on YouTube. I can find pretty much everything in terms of music and podcasts on Spotify. I think they've been really innovative around the commenting and the video. They're trying to create it into a social platform.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
I just I love the branding. It's basically the best managed company in tech, in my view. I mean, every there have been so many forks in the road for this company. And you look back and they've made every every decision has been the right one. And I think one of their biggest decisions, which we're now seeing reflected, was their decision to get into podcasting.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Now we can make, you know, we can have a conversation about, did they do it the right way? But what is very clear is that this is now a big leader in the podcasting space. That was a decision they decided to go with. And now we're seeing a lot of emphasis on podcasting on the earnings calls and in the earnings reports. And one thing that's so interesting, we're seeing it play out in our business.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
The biggest platform for this show, Profiteer Markets, in the audio, at least, was Apple Podcasts. This week, Spotify actually overtook Apple as our top audio platform for property markets. Our growth on Spotify is way outpacing our growth on Apple. And I've been trying to think about why that is. And it's two main things for me. One, I think Spotify is just attracting a younger audience.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
And I think a lot of that has to do with many of the things you mentioned there. I think their marketing is great. They're leaning into video. They're trying to really focus on engagement by implementing these new comments features. They're doing a lot of stuff that resonates with young people. And you look at this program, This is a largely young audience.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Out of the ProfG Media portfolio, ProfG Markets is the youngest. 36% of our audience is under the age of 34. If you look at Raging Moderates for comparison, that number is 24%. And so that would explain why Raging Moderates, as an example, has 86% more followers on Apple Podcasts versus Spotify. And then you look at this program where Spotify is actually leading.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
So I think that's one explanation there. It's attracting a young base. And the second thing is the recommendation algorithm. I think a lot of people are finding this show because Spotify is recommending it. At least that's what I've heard anecdotally from people who listen to the podcast.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
And this is the real differentiator between Spotify and Apple as an audio platform and the reason it's pulling ahead. The way you find a new podcast on Apple... you kind of just have to find it on the top 10 list. It's basically an entirely editorial recommendation system. It's the same way that traditional media works. Or, you know, like, you look at books. I mean, how do you sell books?
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
You kind of just have to get onto the New York Times bestsellers list. Spotify is really leaning into having an algorithmic recommendation system, not an editorial one. where they're investing in AI, they're learning what you like, and then they're giving you more of it. And I think that's a big reason why this podcast is doing well on that platform, is it's simply allowing people to discover it.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
And I think that's so important in this business, and it's so important for growth. You need to figure out a way to attract new podcasts that have a real incentive to move onto your platform and that have a chance of competing with the bigger shows.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
So the core demo that everybody wants is people under the age of 44. Basically, kind of 23 to 44-year-olds spend money on stupid products. They buy fancy cars, watches, coffee, shoes. They buy high-margin stuff because people are young and in their mating years and want to signal their potential worth as a mate to other people, so they make irrational decisions. They're having babies.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
They're spending a lot of money. They're high-value consumers. And the reason why cable news is just struggling so heavily is the average age of an MSNBC viewer is 70. That's the average. That always fucking blows me away. Well, think about this. You just turned 26. Is that right? Yeah. That means if you turn on, get this, MSNBC, that means someone else who's 114 is watching.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
I mean, think about that. And what do 70-year-olds buy? They buy health insurance, life alert, grifter insurance products because they just sit around worried that someone's going to take their title and own their home, some criminal game from Albania. They just sit around in fear waiting for the ass cancer. Is that too much? Yeah.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Whereas young people like yourself are coming into their prime income earning years, starting to figure out they love alcohol. They love all these great high-margin products. So the core demo, call the core demo, is under the age of 44. For markets, that for us is about 72%. Three-quarters of our demo is under the age of 44 as a core demo. Whereas ranging moderates, it's about 54%.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
I was at home not being miserable. Yeah, it's not very good, is it? I got to come up with something better. All right, you talk. I'll find something better. What do you want me to talk about? I apologize for slapping you twice, but I needed to slap both faces. Get it? Two-faced? This is going nowhere, Ed. This is going nowhere. Keep throwing. See if anything sticks.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
We're just going to get higher CPMs because everyone is chasing the younger person who's irrational, which translates to higher margin and also sets the tone culturally. If you want anyone wearing your product or using your product, you want it to be a 25-year-old, not a 70-year-old.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
And kind of the great white rhino of media is the young American male, because the young American male especially has become totally numb to advertising and is playing video games, watching Netflix, and listening to Spotify. So they have basically extricated themselves from the entire advertising ecosystem. So if you can find those people anywhere... They're gold.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
And the reason why podcasting is garnering more and more revenue, even relative to its listenership, is that it is finding the people that you can't find on cable news any longer. And it's kind of heartening when you think about it. I like the fact that younger people seem more drawn to financial and markets content than political content. I think that's a good forward-looking indicator, actually.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
You sound excited. You sound enthralled.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
It's so exciting. It's intoxicating. We'll be right back after the break for our conversation with Mark Mahaney. If you're enjoying the show so far, be sure to give the Profiteer Markets feed a follow wherever you get your podcasts.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Support for the show comes from public.com. All right. And if you're serious about investing, you need to know about public.com. That's where you can invest in everything, stocks, options, bonds, and more. They even offer some of the highest yields in the industry, including the bond account, 6% or higher yield that remains locked in, even if the Fed cuts rates. Bottom line?
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Thank you so much for having me. Member FINRA and SIPC. Complete disclosures available at public.com slash disclosures. I should also disclose I am an investor in public. Support for the show comes from Grooms.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
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Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
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Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
For example, Grooms has six times the gut health ingredients compared to the leading green powders, like biotin and niacinamide, which help with thicker hair, nails, and skin health. They also contain mushrooms, which can help with brain function. And of course, you're probably familiar with vitamin C and how it's great for your immune system.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
I promise to do a better job at hiding how much you annoy me, Ed. Finally some truth.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
On top of it all, Groons are vegan and free of nuts, dairy, and gluten. Get up to 45% off when you go to groons.co and use the code PROPG. That's G-R-U-N-S dot co using code PROPG for 45% off.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Welcome back. Here is our conversation with Mark Mahaney, Senior Managing Director and Head of Internet Research at Evercore. Mark, thank you for joining us again on Profiteer Markets. Thanks for having me back. So you have, just for those who don't know, you've covered internet stocks for almost 25 years, widely known as one of the top internet stock analysts in the world.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
I'm like Don Rickles minus the talent right now. I do love that statistic. I think it's very true. We apologize way too much. You think? In fact, just before we recorded, yeah, I went to the bathroom and then I came back into the recording session. I was like, sorry. And everyone laughed at me. I shouldn't be apologizing for going to the bathroom.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
So we wanted to have you on to discuss internet stocks, especially with these tech earnings coming out. And you and I were emailing last night and I asked you what your top picks are in terms of internet stocks right now. And you said Amazon and you said Meta. Now we've got Amazon earnings coming out this week. Also Meta earnings.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Unfortunately, those earnings will come out just before this episode airs. But I would like to start with Amazon. Why is Amazon your top pick right now? And what do you think we can expect in this upcoming earnings report?
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
You mentioned the things that are kind of in the way for Amazon. I assume we're talking about tariffs. We also just had this kind of insane turnaround that happened recently where Amazon said, or at least it was reported that Amazon was going to report the tariff cost on each of their products. The Trump administration then said that it was a hostile and political act.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
And then next thing you know, they announced, no, we're not going to put the tariff cost on the website. So just give us your reactions to what happened there and also what these tariffs mean for Amazon. I assume that's what you're talking about when you say Amazon has some struggles ahead, possibly.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
No, they were laughing because as soon as you said, I want to go to the bathroom, I'm like, I said to our technical director, can you make the mic more sensitive? I'd like to hear his stream because I bet it's like a fucking Niagara after a big rain. I'm telling you, Ed, you should literally hold it and then go into the bathroom and literally let that flow run wild, my brother.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Your other top pick there was Meta. Just tell us a bit about Meta and what you think we can expect from these earnings this week.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Mark, always good to see you. So it feels like picking which company will outperform the other amongst these is sort of trying to pick who's going to score more points, LeBron or Kobe here. These companies continue to all just be such well-managed, outstanding companies. It strikes me that Meta may be kind of the unsung hero of AI. Hero is the wrong word.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Make it like the Amazon River. Because I'll tell you, you get to my age and it's like a baby bottle dribbling. It's just so upsetting.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
It has the most unrealized potential around AI, and that is they're the second largest purchaser of GPUs from NVIDIA. And at the same time, they collect more data than any company, four out of five GPUs. Users outside of China are on, or people are on Meta. So they've got the GPUs, they've got the data. It feels like this is the AI company that people aren't talking about. Your thoughts?
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Okay. I'll send you a recording next time. How's that?
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
When I look at the price-earnings ratio, the least expensive is Alphabet. And my sense is that I'm beginning, you know, I ping back and forth, but now just looking at the Alphabet earnings, I now think that Alphabet is the most undervalued of the bunch because 353 times the number of queries is OpenAI, which is a lot of people think is an existential threat.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
I'd appreciate that. I'd appreciate that. But before we do that, let's get to the headlines. Finally, banter is over. You have permission to do what we're paid to do here.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
And I wonder if that's suppressing or unnaturally or unfairly suppressing the stock price. YouTube continues to grow like crazy. And the average, I think, the S&P 500 trades at a P of 25 or 26 and here's Alphabet at 16, which to me is just so far superior than the average S&P company, and has five different businesses of $30 billion plus.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
It feels to me like the most robust of the four and the cheapest. And I'll layer on a second thing. I think the most overvalued is Apple at a P of 34 and isn't growing. Your thoughts?
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Could you explain what exactly paid click growth is? Because, you know, we look at the Google's business and when I look at the earnings report, I see search up 10%. So what is that paid click growth and why does it matter?
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Yeah, it's a really interesting point and important. You can't grow just by raising prices. It's not enough. You need to actually grow the unit economics. One thing they do have going really well for them, Google this is, is Waymo, which they are a majority shareholder in. Waymo's doing a quarter of a million rides a week. up 5x from a year ago.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
I've talked about how bullish I am on Waymo because they have 100% market share in the robo taxi business. I mean, people talk about Tesla and they talk about Amazon is getting into it with this thing called Zoox. But I sort of look at, you know, the revenue, who's making money? It seems to be only Waymo. Do you think that Waymo could be a significant growth vehicle for Google?
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Is that an important thing to consider when you're evaluating the stock?
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Huawei is preparing to test a new AI processor designed to rival Nvidia's H100 chip. This move comes after China's President Xi Jinping pledged to make self-reliance a top priority as China ramps up its AI development. Apple plans to source all US iPhones from India by the end of 2026. The move will double its production output in the country as Trump's tariffs drive Apple out of China.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
You mentioned now that you thought, or at least Uber was your top pick at the beginning of the year. high quality company that was also dislocated. Now there's been some more dislocation post tariffs. Um, but I, I think you've been highlighting Uber for a long time now. I think you've said that it's underrated for at least several months.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Um, give us your thoughts on Uber and also the potential for Uber to get involved in robo taxi land.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
And finally, Spotify's monthly active users rose 10% to 678 million in the first quarter. However, the stock fell 7% after its user forecast for the current quarter missed expectations. CEO Daniel Ek warned that broader economic uncertainty could bring some, quote, noise in the short term. So let's start here with this Huawei news.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
We'll be right back. If you're enjoying the show so far, hit follow and leave us a review on the Profiteer Markets feed.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
I saw a talk you gave at Money Show in February, and you made this point which I thought was spot on, which was that because the valuations are so rich in tech and in the internet sector at large, the only way you're going to get real growth is not going to be from multiple expansion.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
I mean, maybe we'll see a little bit now that we've seen this dislocation as a result of the tariffs, but that if you want to get 20% growth, you're not going to get a 20% increase in the multiple. You need 20% earnings growth. You need top and bottom lines to rise. I look at the internet companies we've talked about thus far.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
It seems as if Uber has the highest probability of a 20 plus percent earnings growth expansion over the next, you know, let's call it five years, something along those lines. Do you see it the same way? And if not, who has the highest earnings growth potential out of all the stocks that you cover?
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Huawei, which is the Chinese company, they are building a new chip that will supposedly rival Nvidia's best chip, which is the H100. And Nvidia stock fell more than 2% after that was announced. I just want to point out, We should probably take this with a grain of salt, because Huawei has made these kinds of claims in the past, and so far, none of them have really panned out.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
You mentioned Netflix there. It's pretty remarkable what's happened to the stock so far this year. One of the best performing in tech, if we call it tech. I always think that's a little bit debatable, but I think most people would consider it tech. Up 25% year to date. And then we saw these Netflix earnings a couple of weeks ago. They had this huge beat, revenue up 13%, ripped even more.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
They had the 910C chip, for example, which was supposed to be as good as the H100 as well, and then people started using it, and they started saying, no, actually, it isn't. So here we are again. They're making similar claims. We'll only know if it's true once the chip is actually out. But I think what is...
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
I found it so interesting how unanimous the market's reaction has been to this Netflix is recession-resistant point. You know, it's been... And to me, I think of it as more of a question. You know, a recession is coming. Will people cancel their Netflix subscriptions? To me, that's an open-ended question. The market believes, you know, wholeheartedly, no, they will not cancel their subscriptions.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Or if they do, they'll downgrade to the ad-supported tier. The market is not concerned about people canceling. And I'm just wondering... Is that a new phenomenon? Do you think that maybe three, four, five years ago, had a recession been on the table, do you think that Netflix stock would have reacted in this way?
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Or are we in a new environment where Netflix is so systemic, the content is so important to people, that it's just recession resistant now?
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
more important to focus on were those statements by Xi Jinping, where he stated publicly and officially, he said that self-sufficiency in AI is now a national priority. And this is new. You know, it might have been true before, but it was never publicly stated like this. So I think this is kind of a defining moment in the AI race, where it's been...
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
I'm curious, Mark, do you cover or do you have any generally any thoughts about Reddit? My sense is Reddit might be, I'm always trying to think who's the next, who joins the Magnificent Seven. And I've always thought, just given its sheer scale of traffic, that Reddit is a candidate. Your thoughts?
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
My thesis is that Meta could put Pinterest or Snap out of business in about 12 months and decides not to so they can claim to the FTC and the DOJ they have actual competition. And these guys have just always... It feels like they've just gone sideways for the last five years. And they're always kind of the little engine that could but doesn't. Do you think that the same is true?
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Or I'm curious, you have so much... Expertise and insight around Uber. What happens to Lyft? It strikes me that it's overvalued because people believe someone's going to come in and acquire it and it doesn't happen. Where does Lyft go from here?
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
A few months ago, you said that there were three big wildcards for tech and for internet stocks in 2025, and they were regulation, tariffs, and M&A. A lot has happened since then. Today, what would be your three wildcards? Or perhaps they're the same.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
sort of like a cold war between the US and China. We kind of knew we were in a race, but never really acknowledged it. Now it's acknowledged. The US is shutting down all chip shipments into China, and now you have China, which is publicly coming out and saying we're going to be a self-sufficient and self-reliant AI nation. So the AI race is officially on now.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Mark Mahaney is a senior managing director and head of Evercore's internet research team. Mark has covered internet stocks for over 25 years and has been consistently recognized by institutional investor for his research, including 17 years as a top three ranked analyst and five years as a number one ranked analyst. I want to have that stat. I'm jealous. Thank you, Mark, for coming on.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
It's always good to hear your perspective. Thanks, Dave. Thanks, Scott. Thank you, Mark.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
It was good to see you.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Dan Shallan is our intern. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profity Markets from the Vox Media Podcast Network.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
NVIDIA versus Huawei, AMD versus SMIC, you name it. It's the US versus China. Scott, your reactions to this new Huawei chip and what this means for America.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Your analogy is the right one. And that is a Cold War analogy. First, it was a nuclear arms race. Then it was a space race. My favorite thing about the space race is they put the Russians, it was such a brilliant propaganda move. They put up Something the size of a basketball.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
But what they did is they made the frequency of which it was communicating back to Earth such that anyone, you know, radio ham operators could hear the beep, beep. It was sort of basically the most elegant and rudimentary way of saying, we're better than you. We're better than you. You should fear us. And people were just totally freaked out by the prospect that space...
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
A spaceport vehicle could be over their houses. Everyone was so freaked out. The interesting thing here is that it kind of lends credence to the fact that free trade, that when you restrict trade or free flow of trade, it's not always good for you. You sometimes just create incentives for them to develop workarounds. And I think that might be true here.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Also, the technology is obviously very important. And I believe NVIDIA is going to have the edge from a technology standpoint for a long time, unless that is they can get a bunch of... Chinese nationals who are in business schools across the nation to go to work at NVIDIA and then start transmitting or engaging in espionage and IP theft.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
What people don't realize is that the majority of espionage now is not about James Bond spy versus spy, kill people. It's a lady who's a very, you know, I don't know, normal pedestrian looking person who's the assistant to somebody who just happens to get plans for the latest NVIDIA chip and somehow it gets transmitted to Beijing.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
And we did the same thing to British textile manufacturers in the 19th century. And any economy growing faster than 6% or 8% a year has usually got very, very strong IP theft as part of its core competence. And China's always been really good at that.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
The thing that will, I think, make Huawei potentially an outperformer here relative to NVIDIA is, one, NVIDIA's got an extraordinary market cap right now. But also, I think the worm has turned in terms of people's receptivity or favoritism that was biased towards the U.S., and that is the deepest-pocketed companies and countries in the world.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
No, I wouldn't say unbeknownst to us, but it was taken for granted, or we didn't realize how much goodwill we had. I think you're going to see a lot of European companies take meetings with Huawei and say, we're less freaked out, or we're no less freaked out about Chinese espionage or them having access to our data, but we're much more freaked out about Americans having our data now.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
And we don't feel nearly the allegiance to maintain U.S. prosperity, given that they're no longer guaranteeing our military umbrella, that they appear to be declaring war on us economically. So I think Huawei has the wind at their back right now.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
But I'd love to know the relative valuations, because I would think that Huawei is going to get a lot more meetings with Latin American, Asian, and European companies today.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
to discuss their AI and their chips. This is not a public company, so it's hard to know, but I just want to highlight some statistics that sort of illustrate what we're up against here. China produces 3.6 million STEM graduates every year, and that is more than four times the number that we produce in America.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
They also have produced 13,000 granted patents in AI so far, and we have produced less than 9,000. They're also beating us in terms of public investment into AI. They allocated $142 billion to semiconductor manufacturing last year, compared that to the US where we were at $75 billion. There are a lot of places where China is actually very strong.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
I don't think you could make the case that right now China is beating us. I mean, we have the best chips in the world. We also have the best models in the world. We're also leading by far in terms of private investment into AI, 12 times higher. by dollar value than China last year. So I think if we're in a race, and I believe we are, I think we're ahead.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
But this will be really interesting to keep track of, because you just look at what they're doing in terms of investing in their research institutions, in terms of the innovation that we're seeing in the patent world, they're clearly laser-focused on being the world leader in AI. And this is the thing that could easily define the next generation of technology.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
What I think is going to do real structural harm to America's competitiveness on an economic level are some of the things you're talking about. And that is, if you look at the number of—and Frisa Kari did a great segment on this—if you look at the number of universities in the top 500—
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
In the last 10 or 20 years, China has grown the number of top universities they have by 50%, and in the U.S., it's declined. And then all of this nonsense around sequestering or cauterizing the investment in innovation through universities, which has been this –
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
So arguably the best investment in history is this private-public partnership we've had with universities where the National Institute of Health and different defense departments fund different universities to come up with just amazing technology.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
The most amazing supply chain probably is probably the Apple supply chain in China, but arguably the best or the most important was the supply chain that was developed to get to splitting the atom, right? Right. And since then, we've been doing that around everything from diabetes drugs to chips to LED panels.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
All of these things have flowed through incredible capital to university and our ability to attract unbelievable talent. And essentially, I think, and now the Chinese are going on a charm offensive and saying to the best human capital in the world, the best researchers in the world, the best PhD students in the world, come to China. We have great universities. They're well-funded.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
You may not like us, but you can count on us. We're consistent. So we're experiencing, I believe you could argue, that the biggest structural impact economically on the United States is a gutting of the most successful economic partnership in history, and that's the private-public partnership. between universities and the government. And the weird thing is we won't even know the specific damage.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
It'll just be, and it is right now, China is now responsible for about 50% of the patents that are being filed, per your comments. So this is just, we are in a room of prosperity, but we've decided to open the windows and leak all of the oxygen out to our competitors.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Yeah, if you believe that prosperity and economic growth is mostly a function of technological innovation, which it sounds like both of us agree on this, that it is, then the best forward-looking indicator of your economy is the quality and the strength of your research institutions. I mean, that's the best way we can see into the future. How good are our PhDs? How good are our researchers?
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
I still think we're better than China. But again, our conclusion here is that the trend is not looking amazing. The fact that this other country is actively, our enemy is actively investing into their research institutions. Meanwhile, we appear to be detracting from them. It's just not a great sign when you're trying to model this country out and the economy out 10, 20, 30 years in the future.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
We should probably move on to Apple, though. I mean, they've already been moving their production out of China into India. But this is a new report from the Financial Times, and it clarifies that the plan is to move all of the iPhone manufacturing out of China and into India. And the plan is to get that done by the end of next year. And so this is like a big deal on multiple levels.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
It's a big deal for China, where Apple makes 90% of its iPhones. It's also a big deal for India, which is going to inherit a huge business, making these products, making these iPhones. But I think most of all, it's probably the biggest deal for America, where we were told that the purpose of these tariffs was to reshore jobs out of China and back into the US.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
And instead, what we're seeing, at least in the case of Apple, The jobs are leaving China and they're going to India. They're staying in Asia. And this is going to create 150,000 jobs in India. It's probably going to add some significant percentage of GDP to their economy. So essentially, America is getting no benefit from this.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
And in fact, we get punished because the manufacturing costs in India are 10% higher than they are in China. So sure, the jobs get reshored somewhere else and prices go up.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
It was never realistic that we were going to build a $3,500 iPhone, which is what it would cost to produce it in the United States. And so we've gone from kind of one, not even low cost, but an incredible supply chain, innovative culture, which is China, to India. Well done, Donald Trump. You have taken, you've gotten your pound of flesh. from China, and you've given it to India.
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
Was that the point? And more generally, geopolitically, I think India and the kingdom are going to thrive over the next 10 years because they're now the swing votes. If you think about Team A is the U.S. and Europe, although we seem to be alienating Europe, but U.S. and the West, and then Team B, if you will, are
Prof G Markets
What to Buy When the Tech Sector is On Sale — ft. Mark Mahaney
blue jerseys is North Korea, China, and Russia, and maybe Iran, the swing votes, the really powerful nations that can play each side off of each other are the Kingdom of Saudi Arabia and India. And I think they're going to benefit, and India already appears to be benefiting.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And then they're using the proceeds from the bonds that they sell to buy even more Bitcoin, which they again use to sell even more bonds by using collateral again. So it's just rinse and repeat, rinse and repeat. You buy more Bitcoin, you sell more bonds. You buy more Bitcoin, you sell more bonds. That is a Ponzi scheme. You're using existing investors' money to pay out new investors.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And it would be different if the bonds were secured by, you know, a productive asset, an asset that generates actual cash. But they're not. They're secured by an asset whose value is entirely dependent on more investors entering the ecosystem. And that, to me, is definitionally a Ponzi scheme.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
But I just think that we've been so distracted by the astronomical returns that we've been seeing on these stocks. I mean, we just pointed out GameStop is way up this year, and it increased even more when they announced this treasury strategy. MicroStrategy increased 600% in one year.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
It's so numerically compelling that I think what is happening is what so often happens with Ponzi schemes that we're so excited by it, we turn a blind eye to what's really going on. And I think a lot of other companies are now doing this. You've got GameStop, there's company Semler, Metaplanet, Kula. They're all public companies.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And you even now have the NASDAQ including MicroStrategy in the index fund, meaning we now have millions of dollars of retirement account money and pension fund money going into these things. And I think it's a Ponzi. And all it would take for the whole thing to come crashing down is for the price of Bitcoin to drop. And you made that point to Michael.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
You said, what happens if Bitcoin goes to, say, $40,000, I think? And his response was, well, what happens if a meteor hits us tomorrow? which is clearly a false comparison because the chances of a meteor striking the Earth are infinitely lower than the chances of the price of Bitcoin going down.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
That's good. That is good. I like that joke. That's clever and historical. It's time for banter. What's going on in your life? I'm doing okay. I woke up with a bit of a cold this morning, which isn't ideal, but otherwise doing quite well. You sound fine.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
So, you know, I've been, you know, a little reticent to talk about this aggressively because, you know, I don't want to make an enemy out of anyone, but it's getting to a point now where we're seeing so much adoption of this GameStop, which is owned by so many retail investors, it is the retail stock. And now they're adopting this strategy.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And as I just mentioned, they say, we're going to buy the Bitcoin, but first we're going to sell the bonds to do it. So it's the same strategy that we've seen. And to me, this is really concerning, but perhaps you have a different view.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
I'd agree with you if the underlying asset had any sort of cash yield. Maybe it's... Ponzi's scheme doesn't feel right because he's not actively defrauding people and going and saying, hey, I'm going to take your money and then we're going to put it over here. But what is happening is that the value of the asset is dependent on other investors entering the ecosystem. And the difference is that...
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
those investors are anonymous because it's just people who buy Bitcoin. The whole thing is predicated on, in the same way that your friend was taking other people's money and then paying it out to someone else. This is the same system, it just has more people in the chain, is what I would say. More points of contact, basically.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
I think we can call it an asset. I don't think it's a security. But I think we can call it an asset. But that dynamic that I described, this thing no longer works if people don't keep coming in. The whole thing is predicated on that. So as soon as that stops, as soon as new investors don't enter, The whole thing collapses. My sense of this is pretty simple.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
But he makes the argument that the whole thing is protected because it's a bond. But, you know, I think he picks and chooses different parts of this financial play such that he can say things like, well, what if a meteor strikes us tomorrow? And by saying, oh, it's a bond, you're protected. But then in certain occasions...
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
not pointing out that actually it's a convertible and, you know, this is going to convert to equity. And you could very well lose all your money if Bitcoin goes up tomorrow, but then crashes the next day. Yeah, you're equity now. You're wiped out. Some people are now owning it in their portfolios and they didn't even sign up for it because it's now part of the NASDAQ.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And this is why I'm being aggressive now and not before. It reminds me of 2008 in a lot of ways, where so many more companies and institutions are buying into it, I think because they look at the numbers, look how much it's gone up. And that's the part that concerns me, which is why I want to flag it.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
It was very sexy. Look, he's really – he's an amazing salesman. He has great analogies, but at one moment he compares – He compares it to real estate, and he says this is like buying real estate in Manhattan. And the next moment, he's comparing it to commodities. And the next moment, he's comparing it to Henry Ford and the fire that fueled the car.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
I mean, these are all very different arguments that he's picking and choosing. I think you're a little jelly.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Okay, what I can guarantee, the comments are going to say Ed is jealous of him, for sure.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
We'll be right back after the break with a look at an activist play at Lyft. If you're enjoying the show so far and you haven't subscribed, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Last year, Hooters closed dozens of restaurants because of rising food and labor costs.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
We're back with Profit Markets. Activist investor Engine Capital has taken a 1% stake in Lyft and is calling for a strategic review of the company. They've raised concerns about Lyft's stock performance, their strategic direction and governance, and they're also calling for the removal of Lyft's dual-class share structure, and they've proposed new candidates for the board.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
The stock rose more than 2% on that news, but it is still down more than a third over the past year. I would first like to point out, Scott, which is what an unserious activist play this is, because they're asking to reorganize the shareholder structure and get rid of the dual-class shares. dual-class shares exist so that this doesn't happen.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
They exist so that founders can protect themselves from these activists coming in and trying to change the company. So I don't think this is going to go through. I don't think they're going to get what they want here. Maybe have a different view. But it does raise an important question, which is what can Lyft do to revive itself? It is performing very poorly.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
It's down around 85% since and when public. And you were once an activist investor. And from my understanding, you also know the CEO of Lyft as well. You're friendly with him. So what is your reaction to this activist play? And perhaps if you were the activist yourself, how would you approach this company strategically?
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Thank you. Thank you. Thank you.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Thank you. Thank you.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Yeah, I'm not drinking that much. I drank a little bit last night. My friends took me out to the grill in New York. Have you been to this restaurant? This is like the successor to the famous Four Seasons restaurant. It's in the Seagram building. Fancy. So they went out and bought me a nice dinner. It was very nice. And they forced a martini on me. So I did drink last night.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
I didn't really want to. But, you know, I got peer pressured. But beautiful restaurant. I would highly recommend, yeah, the grill. Apparently it's where Bob Iger goes every lunch.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
A martini. Anyways, get on with the headlines. Let's do it. Let's start with our weekly review of market vitals. The S&P 500 fell ahead of Trump's auto-tariff announcement and struggled to recover. The dollar climbed, Bitcoin was relatively stable, and the yield on 10-year treasuries rose. Shifting to the headlines. Delaware is making big changes to its corporate governance laws.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And this is the, I mean, liberal arts degrees have been in decline and people have been saying, you know, what's the point of these liberal arts degrees? But it is, it does, it's starting to feel that now that we've almost over-indexed so hard on the hard sciences and on the computer sciences that suddenly the economy is seeming to kind of reshift and
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And we're starting to see more emphasis on the soft skills, the ability to communicate, to tell a story, to have a strong sense of history. I mean, maybe I'm being biased because I got a liberal arts education. But there was this interesting quote by this guy, Amjad Massad, who is the CEO of Replit, which is this big software company. And he was talking about this new trend of vibe coding.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And this is this trend that is becoming very big in Silicon Valley, where engineers are basically just prompting AI to build the code for them. And you now have very reputable, even, you know, computer science professors who are teaching people how to vibe code because they recognize this might be the future of coding. You don't need to have a really perfect understanding of computer science.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
You can basically use AI to just push the ball down the line. And he was making the case for vibe coding, this guy, Amjad Mossad. And he even said that he doesn't think people should be learning to code anymore.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
That to me is like a glowing endorsement of liberal arts. But I'm curious to get your take.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
such as restricting shareholder lawsuits against founder-led companies. The move aims to prevent businesses from relocating to states with looser regulations. Waymo is launching its Robotaxi service in Washington DC in 2026. The company currently operates in San Francisco, Los Angeles, Silicon Valley, and Phoenix. And finally, GameStop is officially adding Bitcoin to its treasury reserves.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
I mean, if I were to summarize your advice there, it's to get as good an understanding as possible of other people. And yourself. Right. And the only way that you could do that is through meeting other people and establishing relationships with them. And I do think that is actually great advice because it makes you nimble in any situation economically.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
I mean, the biggest realization for me coming out of college was I thought these companies that I heard about with these big... sort of amorphous conglomerate brands that have all these rules and definitions for, you know, these are the skills that you must learn, and this is the type of person you must be. In fact, it's all just groups of people.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And your ability to get hired is, as you say, a function of whether the person in charge of the hiring decision likes you and wants to work with you. And that was honestly a really eye-opening experience for me, is realizing that Life and work is literally just interacting with people. So if you can be really good at that, then I think you'll be fine. That's the key.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Let's take a look at the week ahead. We'll see the unemployment rate for March and U.S. reciprocal tariffs are set to go into effect Tuesday on what Trump is calling Liberation Day. Scott, any predictions from you?
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kintzel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profiting Markets from the Vox Media Podcast Network.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Its stock initially surged on the news, but it eventually fell 23% after the company announced a $1.3 billion convertible bond sale to fund the investment, which is, of course, exactly what MicroStrategy did. Scott, let's start with your thoughts on...
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
this change coming from Delaware, and just some context, and I mean, this is coming right after this highly controversial lawsuit against Tesla that we covered, where the Delaware court ruled against Elon Musk, they cancelled his $56 billion pay package, and in response, Elon decided, fuck you guys, I'm leaving Delaware, I'm going to reincorporate Tesla in Texas, and we've seen other companies either
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Isn't it? I mean, at least that's what society wants us to think. Gotta get a Birkin, gotta get a home, you know.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
following suit, moving, or they're at least signaling their intention to move one of those companies is Facebook. And so this is Delaware's response to that immigration out of their corporation system. They're loosening their governance laws in favor of founders. They're making it harder for shareholders to sue. They're also narrowing the definition of a conflict of interest.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
These are all the very conditions that made that Tesla lawsuit possible in the first place. And so this is basically their reaction to what happened with Tesla. They're now acquiescing. Scott, your reactions.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
the most important stat you mentioned there is the fact that a third of Delaware's tax revenue comes from these incorporation fees. I mean, people ask, you know, why do all these companies incorporate in Delaware? The answer is that historically, Delaware has been a very pro-business state. You have tax benefits, you know, strong privacy laws.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
This is generally speaking throughout history, throughout corporate history, this has been a good place to incorporate your company. And now we're seeing a reversal of that trend. People are now deciding, due to what happened with Elon, that Delaware is actually anti-business. And so I think to an extent, they don't really have a choice but to loosen up on these laws right now.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Because if they don't, and if they just let companies leave the state, they're going to lose out on a ton of tax revenue. And when you look at the state, this entire state is really reliant on these relationships with these corporations. I don't like it. You know, I don't like that we're seeing, once again, regulators bending the knee to billionaires.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Critics are calling this the billionaire's bill, this decision to loosen the laws. And they're right, because this is specifically designed to appease the billionaires, specifically designed to make the founders of these giant companies, which hold all of the shares and all of the voting power,
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Companies like Facebook, where you've got Mark Zuckerberg and all of his interests, and then, of course, companies like Tesla. This is all to make them feel happier about being in Delaware. And it's a trend that we keep on seeing, where regulators recognize the power of billionaires. They recognize how much we need them in terms of taxes.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
We're so reliant on these rich people and their ability to contribute to government revenue. And so they have to do it. So I don't blame them for doing it. But is this a good thing? No, I don't think it's a very good thing. I don't think it's good that we are seeing a state basically rewriting their laws and rewriting their rules of equity to make the richest people in the world happy.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Let's talk about Waymo. Waymo is currently operational in San Francisco and LA and Phoenix, but next year it will be in DC. So they are scaling very quickly. Scott, your thoughts on Waymo?
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
What do you get angry about?
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Does anyone ever recognize you when you get in the Uber? They're like, oh, you're that guy, Scott Galloway, and try to spark a conversation. That has never happened to me in an Uber. So clearly they're not the target audience. So you can rag on them as much as you want.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
I'm rich. I don't need to be kind. I'm pretty sure that's, yeah, that's definitionally a douche bag.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Should I write children's books? By the way, I kind of agree with you, but I'm trying to work on that. I think I need to be better and more amenable to small talk. You're young. You're still in your mating years. Yeah, exactly. But just to focus on Waymo as opposed to being antisocial, just some data. So Waymo completed more than 4 million paid rides last year.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
What's the difference?
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
That's more than 11,000 autonomous taxi rides every single day. And I just want to compare that to the competitors of Waymo. You mentioned Tesla, which I agree. I think when people say they hear the word robotaxi, they think of Tesla. How many paid robotaxi rides did Tesla complete last year? Zero. You look at the other competitor, Zoox, which is owned by Amazon.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Last year, they completed, wait for it, zero paid rides. Cruise, which is owned by General Motors, they also completed zero rides last year. By the way, they also ended up shutting down that business entirely. In other words... This is one of the most important technologies of our time, or so a lot of people say. And Waymo is the only company in America that has figured it out.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Tesla's been talking about it for 10 years. They've shipped nothing. Meanwhile, Waymo is fully operational in three major metro areas. It's expanding across four more. I think they're even testing in Japan right now. So I think if you had to identify a sector...
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
where there is the greatest disparity between the market leader and the runner-up, I think you would have to say that sector is autonomous vehicles and robotaxis, and you'd have to pick Waymo. And, you know, you mentioned the branding point. I don't think Waymo gets enough credit for this. I mean, this is an incredible company. They're absolutely killing it right now.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
And when you look at the competition, it just proves how difficult it is, both from a technological perspective and also from a regulatory perspective. This is the only autonomous company which is actually supported by regulators because they recognize, yeah, this thing is safe. They've tested it. They've proven that it works. And now they can expand.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
I haven't done the analysis on Waymo individually. But if the robo-taxi market is as big as people say it is, if it warrants the multiples that we're seeing in Tesla, I mean, how else could you justify... the valuation of Tesla right now if it isn't autonomous driving. Fair point. If we're comparing it with that, then yeah, I'd invest for sure.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
Let's talk about GameStop. GameStop is deciding to purchase Bitcoin. They're adopting the same strategy that we saw with Michael Saylor at MicroStrategy. I'll just start off by pointing out that this is This really worries me because GameStop isn't the first to do this. There are other companies that are following suit. We've been over some of those companies in our episode with Josh Brown.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
So this is becoming a thing now. A lot of these companies are buying Bitcoin and doing the same thing that Michael Saylor did. And why is that a problem? You know, we've been friendly with Michael. I know you're friends with him. I think we've been kind of nice, or at least we've gone a little bit easy on MicroStrategy.
Prof G Markets
GameStop Buying Bitcoin, an Activist Play at Lyft, & Gen Z Unemployment
But I think it's getting to a point where this is becoming so popular among companies, you know, not just GameStop, but dozens of other companies. I think we now need to be more candid about what MicroStrategy is doing. I think what they're doing is a Ponzi scheme. They're buying up Bitcoin, and then they're using the Bitcoin as collateral to sell bonds.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
what we're seeing with a lot of these big corporate CEOs, companies like Target, companies like Walmart, companies like, you know, other companies in defense, like GE Aerospace, many of these CEOs are meeting with the White House, they're meeting with the president, and they're coming out of those meetings appearing to be a lot calmer.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
And in fact, this was reported by Charles Gasparino at Fox Business, the administration at the White House is actually actively advocating
Prof G Markets
The Trump Fold & Tesla’s Brand Death
alerting Wall Street executives, they're reaching out and telling them that they are nearing agreements on these trade deals, which is a very interesting dynamic that we're now entering into a market and a world where actually the heads of the largest corporations and the heads on Wall Street, they're getting a heads up and they're able to front run the largest news item of our time.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
Now, you could say, you know, that this has happened in the past, but I don't think at the level that we're seeing today. You know, usually it would be that with very highly sensitive economic data like this, there is a protocol and the White House comes out, and they publicly announce it, and you give markets an equal time, an equal footing to react to what is happening.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
But it appears that there's such a level of disorganization in the White House, and they're so freaked out by how the markets are reacting, it feels as if what is happening is the administration is having no choice but to call the big dogs of the Fortune 500 and say, hey, hey, just don't worry about it. It's gonna be okay. And that's a material information right there.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
I mean, that is ground zero for insider trading. That hasn't actually happened yet, but we all know that the line between fair trading versus insider trading is very blurry. And we're in an incredibly blurry time right now. And we'll talk more about that in our main story when we really focus on these tariffs. Let's just move on to this new data on wealth inequality.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
The top 19 households minting $1 trillion in wealth last year, biggest single year increase in history. They now own, those top 19 households now own 1.8% of the entire household wealth in America. That's up from 0.1% in 1982. By the way, the bottom 50% of Americans, they own 3% of the household wealth. So you've got half of America with 3% and the top 19 households with 1.8%.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
There are now 1,990 billionaires in America, and that number is up 45% since 2021, just four years ago. So we talk a lot about income inequality and also wealth inequality on this podcast. And here we have some new data, which is just telling us the same thing. We are a massively unequal society.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
I hang out with Anthony Scaramucci yesterday, which is very fun. The Mooch? Where did you hang out with Anthony? I went to his office, went to Skybridge. He took me around, showed me all of his paraphernalia and his books. And by the way, I learned that Anthony was a classics major.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
I think the reason that we're talking about this and the reason that this is important and it relates to our discussions of markets, it also has a place in the world of politics. I really believe that this is the defining issue of our time and of this generation.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
I think this is the most important thing that we're going to see and that I'm going to be grappling with for probably the rest of my life. And I was just thinking, you know, you're talking about the 0.1%, the 99% there. You sound a lot like Bernie Sanders. And this is what people used to make fun of Bernie for.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
And I think back to, you know, the Occupy Wall Street days, where actually it was the same issues that were on the table. And it was the same things that people were upset about and that people were protesting against. And you had people like Bernie who talked about the issues, but who over time were kind of written off issues. by the establishment.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
Many sort of wrote him off as a quack or a little crazy or a socialist or a communist. But one stat I would point you to, which blew me away. Last week, Bernie Sanders and AOC held a rally in California and 36,000 people showed up. Just for comparison, a Trump rally is on average around 5,000 people. the Madison Square Garden rally, that was 20,000 people. This was 36,000 people.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
And the message from those two candidates or those two politicians is simply about inequality. That's the whole thing. And it's just so fascinating that 10, 15 years ago when Occupy Wall Street was at its peak, People were saying this is a big problem. It's only gotten worse.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
We'll be right back after the break with a look at Trump's policy reversals. If you're enjoying the show so far, be sure to give the Profiteer Markets feed a follow wherever you get your podcasts.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
What is that, your 20th podcast? What are we at now?
Prof G Markets
The Trump Fold & Tesla’s Brand Death
A clear pattern is emerging in Trump's policymaking. Bold declarations followed by abrupt reversals. After posting on Truth Social that Fed Chair Jerome Powell's, quote, termination cannot come fast enough, Trump later told reporters that he had, quote, no intention of firing Powell.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
Similarly, after implementing a 145% tariff on Chinese imports, he's now saying that the level of tariffs could, quote, come down substantially. He also is planning to exempt car parts from those tariffs and the tariffs on steel and aluminum. On Wednesday, all three major indices initially jumped.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
However, they pulled back from their morning highs when Scott Besson clarified that Trump hadn't offered to remove the tariffs on China unilaterally. Still, the Nasdaq closed 2.5% higher, the S&P 500 was up 3%, and the Dow rose more than 1%. Scott, you predicted that Trump would walk back on many of these issues. It seems like that is happening. What is your take on this?
Prof G Markets
The Trump Fold & Tesla’s Brand Death
Yeah, see, banter for us is just sort of like getting to know each other, right? Yeah. We're still not quite there yet. Been four years, but we're getting close. They live in the UK. Yeah. They do. I'll have to set you up. You can go get a drink with my dad at Kensington Gardens.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
So he's walking everything back, right? And one thing that I think has been interesting has been China's response. You saw this hashtag that went viral in China, which was hashtag Trump chickened out. So however it is positioned by this administration, the message that the public has received and the message that China received is that he blinked, as you predicted.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
He folded, he caved, he chickened out, however you want to call it. And I think the question is, okay, what does it mean for markets that that's how the world perceives us? I mean, initially, the markets reacted quite positively, right? I mean, the Dow rose 1%, the S&P was up 2%, NASDAQ up 2.5%.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
I think they're pricing in some positivity that Trump is walking back the craziness, whether it comes to the tariffs on China, the tariffs on the auto industry, or his threats to the chair of the Federal Reserve. But I do think it's also important to keep in mind the damage that has still been done since Liberation Day, since April 2nd. Since that day, the NASDAQ is down more than 5%.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
The S&P is down more than 5%. The Dow is down more than 6%. The yield has risen more than 20 bps. It's around 4.4% right now. So I think the question is, okay, what are the markets telling us? Yes, the tariffs are likely to be, if not reversed, significantly reduced. But what are they pricing in right now? that is worse than pre-liberation day?
Prof G Markets
The Trump Fold & Tesla’s Brand Death
And I think the answer is probably just the damage that we have done to our brand and our reputation as a safe economy, as a reliable trade partner, et cetera. And there were some comments from Ken Griffin, which I thought were particularly telling. And I think he actually put it quite well. And you remember Ken Griffin, founder, CEO of Citadel. This is a guy who is a Trump supporter.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
He donated a million dollars to Trump's inauguration fund. He donated $100 million to the Republican superbacks in the last election cycle. He's pretty much a MAGA guy. He said, quote, the U.S. is more than a nation. It's a brand. And we're eroding that brand right now. And I think that's right.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
And I think that brand erosion is what's being reflected in the stock markets and the bond markets right now. They had a little bit of a uptick, but ultimately you look since that date, since Liberation Day, we're still way down. And I think the question is, is this reversible? Is it too late? Or is the damage already done?
Prof G Markets
The Trump Fold & Tesla’s Brand Death
The biggest adversity I've had in my life is you, Scott.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
Yeah, I think we're sort of in a race against China to get the world on our side. And I think I'm with you. I think people would be faster to renormalize relations with the US than they would with China. But having said that, China is trying. I mean, they just lifted these sanctions on the EU. They just sent their trade delegations to Sweden, to Hungary, to Norway, to Germany.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
Get to the headlines. Let's start with our weekly review of Market Vitals. The S&P 500 climbed, the dollar hit a three-year low, Bitcoin rose, and the yield on 10-year treasuries declined. Shifting to the headlines. President Trump is inviting the top 220 holders of his meme coin to join him for a private dinner.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
They are certainly trying to rekindle those relationships. And I think for US investors and US companies, the question is, can we normalize our relationships with other nations faster than China can? I think we probably can, but it's four years. So, you know, we're definitely running against the clock here. And that is going to have a massive impact.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
on US markets, especially given what we've seen with the global rotation and the capital flows that are leaving America, and as we discussed last week, entering back into Europe. So that's probably the question. And we'll see. That's all I'll say on that. We'll be right back after the break with a look at Tesla's earnings.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
And if you're enjoying the show so far, hit follow and leave us a review on the Prof G Markets feed.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
That news sent the token's price up more than 60% as investors rushed to increase their holdings and secure a spot. Boeing shares climbed 6% after the company posted first quarter earnings that beat expectations with revenue up 18% year over year. The stock also got a boost the day before on a $10.6 billion partial sale of its navigation business.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
We're back with Profiteer Markets. Tesla's first quarter results fell short across the board, missing expectations on the top and bottom lines. Net income plunged 71% year over year, and automotive revenue fell 20%. Overall revenue dropped 9%. Still, the stock jumped 5% in after hours trading,
Prof G Markets
The Trump Fold & Tesla’s Brand Death
part of the lift came from the broader market rally we just discussed, but investors were also encouraged after Elon pledged to significantly reduce the time he spends on Doge, and he promised to refocus his efforts on Tesla starting next month. Scott, I listened in on the call.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
I have a number of observations, but first, just your take on these quarterly results, as well as Elon's decision to step back from Doge.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
They were saved by the regulatory credits this quarter.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
And finally, a new report shows that in 2024 alone, the 19 wealthiest households in America added $1 trillion to their net worth. That is the largest single-year increase on record. Scott, your thoughts, starting with Trump coin. Trump is inviting the top holders of Trump coin to an exclusive dinner and also a VIP tour of the White House. This is great news, isn't it?
Prof G Markets
The Trump Fold & Tesla’s Brand Death
Yeah, I think I agree with all that. I mean, just some observations from the earnings call. I think my number one takeaway is that if he's trying to convince investors that Tesla is fine, which he needs to do, I think he did a really bad job of it. Having said that, the market appears to disagree with me because the stock jumped. I think a lot of your meme stock explanation might be part of it.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
But what I heard on that earnings call was a CEO who was panicked, who was confused, and who is most importantly in a state of denial. and I will explain what I mean there. But the first thing to note is his opening remarks, which were a monologue about Doge and how important the work he's doing at Doge is.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
And if you're trying to convince investors that you care more about Tesla, your company, than you do about Doge, you should probably start the earnings call by talking about Tesla. Instead, he goes on about Doge and how he's saving America by cutting wasteful spending. Then he addresses the Tesla protests, which... I credit him. He should. It's a huge problem for the company.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
But he makes this wild claim that the real reason people are protesting Tesla isn't because of any of his actions or any of his comments or the fact that he saluted a crowd in what very much appeared to be a Nazi salute. He didn't acknowledge any of that.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
He said the reason that people are protesting Tesla is because they're upset that Elon is, through Doge, restricting their ability to get government handouts I mean, he really said this. He said, those protesters, they're all receiving these wasteful and fraudulent dollars from the government. And it's because of Elon, they're angry.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
They're not going to get this free money anymore, which is just an insane claim that completely disregards what is actually happening to the company and its brand. And it's an extremely important thing to address. I mean, this 20% drop-off in revenue, it's almost... entirely to do with the brand damage. So you have to be upfront about it and you have to engage with that issue honestly.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
He was then asked directly about the brand damage by one of the analysts and asked, you know, what does this brand damage mean or these rumors of brand damage? What does it mean for the company? And on that occasion, He completely deflects, and he starts going on about the macro environment, which didn't make any sense at all.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
He said, I'll quote him, quote, yeah, I mean, Tesla is immune to sort of the macro demand for cars. So when there's economic uncertainty, people generally want to pause on buying. But as far as absent macro issues, we don't see any reduction in demand. Doesn't make sense. And also, it's completely not true. There is obviously a reduction in demand. Your sales fell 20%.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
My favorite line there came when he was trying to assuage investors that Tesla is, in fact, okay. And the way he does that, he's talking about how Tesla has had struggles in the past, how they've faced issues, which is all true. And then he says, quote, we are not on the ragged edge of death. Not even close. And that, to me...
Prof G Markets
The Trump Fold & Tesla’s Brand Death
That tells me that Elon is thinking about this thing called the ragged edge of death. I mean, I knew Tesla's situation was bad. I didn't think it was that bad.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
But if Elon's saying that, if he's thinking about it, or if he at least thinks that other people are saying it, well, now I'm certainly considering the possibility that Tesla is, quote, on the ragged edge of death, because he just put it in my brain. So I thought this was some of the worst investor relations I've seen. Clearly, the market disagrees with me. And fair enough.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
But my takeaway is, yes, Elon's back, kind of. He said he's still going to spend one to two days a week at Doge. So he's kind of back. But he's clearly, in my view, still in a state of delusion and total denial. And I think he did a terrible job of disproving that.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
That's the question. That's the bull case. And those products are, and they said this on the call, it's the Robotaxi and it's the humanoid robot, the Optimus robot. And I think the other explanation for the reaction from the stock market is that they did say that they are on track for the Robotaxi pilot launch in Austin in June, which is what the market has been waiting for. So, you know...
Prof G Markets
The Trump Fold & Tesla’s Brand Death
According to them, it's going to happen. I think I believe them at this point. The question is, what does a pilot launch actually mean? Like, is it a fake PR event like we saw last year in LA with the CyberCab show? Is it just one or two cabs? rolling around and you have to book like months in advance?
Prof G Markets
The Trump Fold & Tesla’s Brand Death
Or does it mean you can actually go to Austin, you can open your phone and order a ride in Tesla, just like you could a Waymo in San Francisco? And that's the question. One thing that made me a little bit bearish is that Elon's response to what it would look like. He said, quote, we're still debating the exact number to start off on on day one.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
But it's like, I don't know, maybe 10 or 20 vehicles on day one. So 10 or 20, I thought that was a pretty low number. And given he has a track record of over-promising and under-delivering, I could see it being even lower than that. You compare it to Waymo, which has 700 vehicles operating on the ground right now. But that's the question.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
It's like, do we think the Robotaxi is going to be legit or not? That's the opportunity. My view, let's just wait and see. I mean, why buy this company if you don't know what you're actually buying? I mean, people say, oh, it's a robotaxi company. It's an AI company. It's a humanoid robot company. Well, okay, show me the robot. Show me one taxi ride. Ship one ride.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
And I'll believe you, but they haven't generated a single dollar off of this yet. And so until they can do that, yeah, I'm not buying. And I'm not going to have an argument with you about whether this is a car company or not. As of today, April 2025, it's a car company whose sales are down 20%. That's what it is.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
His response is it's cheaper, that Teslas are less expensive, and that's their advantage, which I'll take. But even until then, ship the product.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
They asked Elon about the humanoid robot, asking a similar question. They said, could you confirm if it is currently operational? If so, what is the current production rate per week? And Elon said, quote, I want to emphasize Optimus is still very much a development program. So this is sort of the play with this.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
Just talk about it, and then when they ask for the specifics, just sort of delay and obfuscate. That's how he's handling it. But the market likes it. We'll see. Let's take a look at the week ahead. We'll see data on the personal consumption expenditures index for March, and we'll also see earnings from Microsoft, Meta, Apple, and Amazon. Scott, how many predictions?
Prof G Markets
The Trump Fold & Tesla’s Brand Death
So he's incredibly- Probably the best resume of all time in the world, maybe.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
Are we political insiders in Canada then if he wins?
Prof G Markets
The Trump Fold & Tesla’s Brand Death
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Dan Chalon is our intern. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profiteer Markets from the Vox Media Podcast Network.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
I think that's exactly right. I think this is the most egregious act we've seen from this administration so far. And we can talk about the tariffs and the deportations and... the threats to Jerome Powell, etc., none of that's good, but you can at least begin to fashion an argument as to why, in some version of reality, it might be beneficial to the nation.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
You couldn't make a good argument, not a rational argument, you couldn't make a sane argument, but you could try to make the argument. You could try to say, we need to reshore jobs, etc., There's no argument for this. You can't even attempt to steel man this.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
It is pure grift, pure corruption, using the White House, using the presidency as a vehicle to shake down regular investors, not wealthy political donors, which you can make the argument that maybe the Democrats do, but retail investors, in order to raise money, again, not for some greater cause, not even to fund some political campaign, but purely...
Prof G Markets
The Trump Fold & Tesla’s Brand Death
to enrich your friends, to enrich your family, and to enrich your allies. This is completely unheard of. And I just want to highlight that lockup period, which it was a three-month lockup period. It basically meant that the insiders of the coin can't sell until the period expires. So this is very important. And we said this, we need to pay attention to when the lockup period expires.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
It expired last week. So is it any surprise that this bullshit incentive plan to pump up the price of the coin, which is leading to this rat race where its winner takes dinner with the president, that sent the coin skyrocketing up 60% in one night. Is it any surprise that this coincided right when the lockup period expired? Definitely not.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
And I think what we'll find out soon enough is that the insiders, this was the Hail Mary that they threw right before they sell. And I would not be surprised if we find out, you know, that they sold, that they profited significantly off of this, not in terms of what they realized... in a gain on Trump coin, but in dollar terms.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
I think they announced the dinner and then we find out they cashed out. And I just want to remind you again of the damage that this does to regular investors. Let's look back to a few months ago when the coin was first launched. You look at the on-chain data and you will find that there were 31 early traders who made a profit of almost $700 million trading this coin.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
And you think, boy, that sounds pretty corrupt. But then you see the 800,000 other investors who lost cumulatively more than $2 billion. And this is what we have to remember about meme coins. And this is why this is so dark. This is a zero-sum game. For every winner, there is a loser. In fact, more often than not, thousands of losers. And the losers, I hate to say it,
Prof G Markets
The Trump Fold & Tesla’s Brand Death
are the ones who are dumb enough to buy into this shit. And that's also what I find so disturbing about this. It's the fact that the Trump Organization actually knows that. They know that there is a certain percentage of their fan base that is dumb enough to do whatever they tell them to do, to jump off a cliff if Trump demands it. Not the whole fan base, but certainly a percentage of it.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
And in this case, jumping off the cliff means throwing away your savings to bet on this rigged casino game that is disguised as a meet and greet with the president and a VIP tour of the White House. I mean, I am just... still shocked. And I'm with you that it's comical. It is comical because it's so shameless.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
But that shouldn't detract us from calling it what it is, which is unprecedented corruption. And it is tragic.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
Let's move on to Boeing and Boeing's earnings. They had actually a really good earnings report. Revenue up 18% to $19.5 billion. Deliveries up nearly 60%. They've also reduced their cash burn down to 2.3 billion. A year ago, it was 4 billion. And there was a really big pop in the stock here. Um, I think, you know, it was a great report.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
I think what really surprised to the upside though, and what the markets are pricing in here was how optimistic Boeing was and their CEO was Kelly Ortberg about the tariff environment. Cause you know, meanwhile, you've got all these other companies that are, you know, somewhat freaking out about the tariffs.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
40% of earnings calls so far this quarter have mentioned the word recession, which is unbelievable. By the way, 90% of them have mentioned the word tariff, and you actually called this. You said that tariffs was going to be the new AI on earnings calls. That is what's happening. But... he did not seem that concerned about these tariffs. And he was asked upfront, you know, what about China?
Prof G Markets
The Trump Fold & Tesla’s Brand Death
China is your second largest market in aviation. Are you concerned about that? And he didn't seem phased. And if I had to paraphrase his response, it would be, we're watching it, but we'll be okay. And then he had this line where he said that 2025 would be Boeing's, quote, turnaround year. So very optimistic.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
I think what that tells you is that he and Boeing believe that these tariffs, particularly on China, are going away. And we'll discuss more what's happened in terms of tariffs and how Trump appears to be caving. But it is interesting that these earnings came out before we heard those comments from Trump.
Prof G Markets
The Trump Fold & Tesla’s Brand Death
And so it appears that Boeing, in my view, had some sort of inside knowledge, or at least some inside feeling that, yeah, these China tariffs, they look very scary, but ultimately we're not too worried about it. How else would they not be worried about it if they didn't have some inkling or some real sense? that these tariffs wouldn't be going through.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Oh, a joke. Good. How did he break his arm?
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
I think the important thing you mentioned there, though, is legal monopoly. Yeah. And this is the very interesting thing about sports and sports leagues. We have very robust antitrust laws in America and in Europe. We crack down on anti-competitive behavior constantly. I mean, we talk a lot on this show about antitrust and antitrust enforcement.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
There is one exception, both in the US and in Europe, to antitrust laws, and that is sports leagues. They have decided in the courts, both again, both in America and in Europe, that sports leagues are not like regular businesses, that sports leagues actually need monopolization.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
They need these governing bodies to cooperate with each other because their belief is that sports only work if you have monopolization. basically cooperation among the governing bodies such that the teams and the players can compete on an even playing field. In other words, their belief is it needs to be rigged in favor of entertainment.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And this is a long, strange history that goes back all the way to 1922 when there was an antitrust lawsuit against the professional baseball league in America, what is now the MLB. And the Supreme Court decided to make an exemption for the baseball league. And that is why today the MLB is the only entity in the United States that is not subject to antitrust laws.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
That's not even JFK specific.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
So this will be really interesting to see because yes, they make a great case here. Yes, if you look at all of the details, it's 100% a monopoly. There's no question about it. But if you look at the history of antitrust in sports, I think it would indicate that this is probably not going to go through because every time this happens, the courts review it.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
They look at the legislation and they say, yeah, you know, we see where you're coming from, but sports is different. So we can't convict here. So we'll see what happens. I'm kind of rooting for the tennis players. Maybe that's just because I like Djokovic. But if I had to predict, I would say that the PTPA here does not win this case. I would predict that the sports leagues will come out on top.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
You're reaching. You're scraping the barrel. By the way, you know, today is a very special day. Special day.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Let's move on to BYD. Remember, this is the Chinese electric vehicle company, and they've just come out with this new charger for their vehicles, which is four times more powerful than Tesla's supercharger. So it adds 80 kilometers for every minute of charging. There are some technical questions that need to be addressed.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
For example, there are concerns over what this does to the lifetime durability of the battery. It might decrease the quality over time. Supposedly, it doesn't work very well for older car batteries. So there are little questions around it. But the overarching implication here is quite simple. BYD is pulling away from Tesla, both in terms of the vehicle sales. We've talked a lot about that.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
BYD is now the global leader in EV sales as of last quarter. But now, you know, Tesla had this differentiator, this supercharging system that everyone was very excited about. And BYD is now pulling ahead in charging too. So Scott, your reactions to this news and the fact that BYD climbed again, it's now at a record high.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
I'm about to drop a bomb on you. It's my birthday today.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Yeah, it is pretty remarkable, the stock performance of this company so far, up 60% year-to-date. It's up almost 100% in the past year. It's doubled in the past year. And I think there was a great article by Liam Denning at Bloomberg, which I think you shared with us. And it basically just plots the stock prices of these two companies in the past three months, year-to-date, Tesla versus BYD.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And what is so striking is, is that it looks like it's basically a mirror image. I mean, if you listen to the podcast, it's harder to describe. But, you know, for every dollar increase in BYD stock, you see a dollar decrease in Tesla stock. And, you know, you just plot it out. BYD up 50%, 50% to 60%, Tesla coming down 50% to 60%. And basically what it tells you is this isn't just a matter of
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
oh, BYD is doing really well right now. This is a matter of BYD is actively eating Tesla's lunch. Every time Tesla does not make a sale or their sales decline, you're seeing an increase reflected in the sales of BYD. Every time Tesla's stock comes down, BYD's stock goes up. So I think we can only expect this trend is going to continue.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And it does feel like the market is beginning to recognize that this other company in China that has these cheaper cars, it also has cheaper software, it's got these superchargers that are four times more powerful than Tesla's, it's becoming very clear BYD is probably going to be the new Tesla. We'll be right back after the break with a look at Germany's defense spending.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
If you're enjoying the show so far, be sure to give Profiteer Market to follow wherever you get your podcasts.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
We're back with Profiteer Markets. German lawmakers approved a major boost in defense and infrastructure spending. The plan removes borrowing limits for defense spending above 1% of GDP and creates a $533 billion infrastructure fund. It's a major shift for Germany, which is historically cautious on defense spending and on debt. Previous borrowing limits were capped at 0.35% of GDP.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Yeah, not as impressive. Do you have any advice for me as I enter my 27th year on this planet?
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Now, this move could drive up to $1 trillion in investments over the next decade. We've discussed on this show how increased defense spending in Europe may boost their equity markets, right, as investors are looking for an exit strategy from the U.S. It does appear that that rotation is already starting to materialize, and I have some data we can go through.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
But first, Scott, I want to get your reaction to this news from Germany. Massive defense spending, a big increase in infrastructure spending too, and also the German stock market on that news hit a record high.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Yeah, if you just look at the stock market, the DAX, D-A-X, the German stock market, it rose around 2%. It's now up 15% year to date. It's one of the best performing stock markets in the world right now. You compare it to the S&P, which is down 4%. It's outperforming the US. It's also outperforming emerging markets. And, you know, I think the question is, why is it doing this well?
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Because 500 billion in stimulus, it's a lot, but it's not that much. And I don't think it's the sole explanation for why you're seeing this explosion in values. And I think what's really driving this rally right now is the story that this spending decision tells about what is going to happen in Germany. Because we've discussed this before, this is a country that hates debt.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
I mean, they have a 60% debt-to-GDP ratio. It's the lowest of the G7 by far. You look at the UK, it's like 100%. The US, obviously, really high, 120%. And in addition to simply not taking on debt, they also have all of these rules and these controls that prevent them from borrowing in the future. This is just the way their economy works.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And I think a lot of that is sort of a post-traumatic stress from the Second World War, where they realized, we can't really trust ourselves. We need to take extreme measures. We need to make sure we never dig ourselves into these kinds of holes. And one way we can do that is by stringently limiting our ability to borrow money.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
As a result, as we've talked about, their economy has been, eh, you know, fine, but compared to the US, pretty sluggish. And so I think last week was this pivotal moment in the narrative where the government said, by a huge majority, by the way, okay, we're going to dramatically change our approach to spending.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And in addition to that spending bill, they also stripped out these debt limits I talked about, these controls that they have on how much they can borrow, which are literally enshrined in their constitution. So, you know, I mentioned that 0.35% number. It used to be that the deficit was only allowed to hit 0.35% of GDP. That was the max. And last week they said...
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Bulk up. Okay.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Nope, we're going to get rid of that. We're going to make an exception here. So I think a lot of this is also a turning point in the story for Germany. They had this decades-long love affair with balancing the budget, with being fiscally conservative. And they literally just decided, we're not doing that anymore. You know, we're going to have this big fiscal spending package today.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And I think investors are probably believing if they're going to do this now, they're probably going to do similar things in the future. They're probably going to spend even more tomorrow. And all of that government spending, of course, is going to, if we're being realistic, it's mostly going to go to German companies and all of that money is going to flow to their bottom line.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Yeah, I just want to emphasize that Bank of America data you mentioned right there, because it is pretty remarkable, especially in the context of everything you've been talking about. You've been saying for months that you want to rotate out of the U.S. and into Europe. And I just want to emphasize this data. So this is the survey that Bank of America does of all of the fund managers.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
It's a very reliable survey to understand how capital flows are moving in the world. Thank you. Thank you. Thank you. Thank you.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Thank you. Thank you.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Thank you. Thank you. Thank you. Thank you.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
One thing I often think about, Scott, we've addressed what the world looks like when it's ruled by the mega rich. You know, we've seen huge monopolies form. Money and lobbying power starts to take hold in the government. You start to see these populist movements.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
You also start to see the rise in these luxury brands and these luxury items and these businesses that specifically service extremely rich people where you can charge these incredibly high prices. My question is, is what is going to happen when all these billionaires and multimillionaires start dying. Because they're all getting old-ish.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And what's going to happen when all of that wealth is transferred on to, I mean, if we had to guess, their children and their grandchildren. What happens to a society that is dominated by people not who made obscene wealth, but who inherited obscene wealth?
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
So I'll work on getting ripped. I will try to be nicer. And I'll spend more time with my parents. I think that's a good list of to-dos. I'll check back a year from now.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
My question is... What is going to happen when the wealth transfer finally occurs?
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
By the way, this funding round by Armand, they're looking for investors as we speak, and they're specifically looking for high net worth individuals to invest. If you got the call from Armand tomorrow inviting you, say, to an SPV into the new Armand residency, would you invest?
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
That's so brutal.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Let's take a look at the week ahead. We'll see the personal consumption expenditures index for February, as well as earnings from GameStop and Lululemon. Do you have any predictions for us, Scott?
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
To that point, we made the point that U.S. stocks have come down, but they're still expensive. You make the same case with Europe. European stocks have gone up, but they're still cheap. I think you're probably right there. This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profiteer Markets from the Vox Media Podcast Network. Join us for a fresh take on markets on Thursday.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
No, I really, I am very inexperienced with loss and death. I will say that.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
I just want to remind our listeners that we have a weekly newsletter now for Profiteer Markets. It's the Profiteer Markets newsletter, which breaks down key market moves with data-driven analysis from me and from Scott and from the Profiteer team, including our fan favorite, Mia Silverio. our research lead at Prof G Media, and that goes out every Monday.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
So I encourage you to go subscribe to that newsletter, go to profgmarkets.com, and you'll have the updates every Monday in your inbox. It's a great newsletter. And with that, let's start with our weekly review of Market Vitals. The S&P 500 climbed, the dollar increased, Bitcoin broke its losing streak, and the yield on 10-year treasuries dipped, shifting to the headlines.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
The Federal Reserve held interest rates steady, but raised its inflation forecast for the year to 2.7%. They also lowered their 2025 GDP growth projection to 1.7%. That's a dip from December's estimates. However, the major indices rose as Fed officials penciled in two rate cuts for the year.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Novak Djokovic's Professional Tennis Players Association is suing the game's governing bodies, alleging that they operate as a cartel. The organization claims that the men's and women's tours, along with the International Tennis Federation, colluded to restrict competition and limit players' earnings.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And finally, BYD shares hit an all-time high after the company unveiled a new technology that fully charges its latest EVs in just five minutes. The charging system will debut in the company's new sedan and SUV, both set to launch next month. Scott, let's start with your thoughts on the interest rate decision from the Fed.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Yeah, I mean, I think you raise rates if inflation is heating up and you cut rates if the economy is slowing down. That's what these rate decisions are about. If you don't know what's going on, if you don't have enough data or evidence to support a move in either direction, you don't do anything. And that's basically what Powell said. He said, quote,
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
uncertainty is remarkably high, so we're not going to be in any hurry to move, and we'll wait for further clarity. And this is the same dynamic we discussed last week in the context of companies and the struggles that they're facing where they can't make decisions because they just don't know what Trump is going to do.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
They don't know what the tariffs are going to look like, and they don't know how supply chains are going to shift. And so what you have now is an economy where, from the bottom, all the way up to the top, from Main Street businesses, then to corporations, and then to Jerome Powell at the Federal Reserve, everyone is stuck in this state of limbo, where, you know, it's kind of like purgatory.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Like, you don't know if you're going to heaven or if you're going to hell, so you just sit around waiting. And I think that's one of the big concerns, that we've gone from this economy that is very active, that does everything, to an economy that does nothing, that has no choice but to basically just sit around and wait for someone else to make a move.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And I think the other thing to remember here, you know, this was unsurprising that he held rates steady. Most economists and most markets and analysts expected this. But if you look back a few months ago, That was not true.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
You know, a few months ago, there were actually a lot of predictions that we would see a rate cut in March, because a lot of people believed that inflation was getting under control. We were moving towards that target of 2%, and we might be able to cut rates earlier than we expected. And...
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
I think the fact that this was so unsurprising to everyone is another indication of where we are from an inflation perspective. We're basically resigned to this notion that prices are going to go up again. And I think you have to feel for Jerome Powell, who has done an incredible job so far getting inflation under control, trying to get to 2%.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
He's been doing this for years now, very diligently, and it's been working. And then, you know, Trump makes all these decisions that move everything in the opposite direction. He has to be incensed about this. Trump has thrown a wrench in this whole operation that he's been working so long to get under control. And it's kind of remarkable the way he handles these decisions.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
press conferences, because you know he's pissed. There's no way he couldn't be pissed. People also about the tariffs. He said, quote, with the arrival of the tariff inflation, further progress may be delayed. He's so neutral and so calm about everything, but he just has to be angry on the inside. But he's done such a good job of just saying, you know, this is what we're going to do.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
We're just going to react to whatever the executive branch decides, and we'll see what happens. So it's sort of a masterclass in I would say objectivity, but also stoicism and not showing your cards. And maybe we have something to learn from that.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Yeah, maybe I'm giving him too much credit.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
That would be way better for us. That would be more fun to cover.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
What would happen to the stock market? Exactly.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
Let's talk about this tennis lawsuit that was filed by Novak Djokovic and his association of tennis players, also strangely funded by Bill Ackman. And I read the complaint that they filed in New York federal court. And I got to say, it is so compelling. I mean... issue after issue. I mean, the first main thing that they address is price fixing.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
The fact that these tennis leagues all collude with each other to suppress the amount that they pay their tennis players. And they have many specific examples. One of them, which is kind of interesting, is that Larry Ellison who bought the BNP Paribas Open, which is one of these tournaments, he actually tried to increase the prize money. He wanted to increase it by $1.6 million.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And the ATP Tour and the WTA Tour said, no, we're not gonna do that because that means we're gonna have to increase the prize money for all the other tournaments. They also have examples of limiting the endorsements that these players can make. Like if you want to compete in these leagues, you have to forfeit your name and your image and your likeness rights.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
They also control the kind of equipment you can use. They control which kinds of sponsors and sponsorships you can accept. And then there's some interesting stuff about the working conditions. which sounds a little ridiculous, like boo-hoo, professional tennis players, but it honestly does sound quite grueling when they lay it out.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
You have to play in every tournament year-round, and if you don't, if you skip a game, you get penalized, even if it's for, like, an emergency. And it's intentionally an extremely packed schedule. They overfill the schedule specifically so that other tournaments that might pay the players more don't compete and so the players don't go play in other tournaments.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
And so what you have here is an extremely vibrant, clear antitrust monopolization situation. But as I think you'll probably bring up, the situation with antitrust and sports leagues is quite precarious, and I can go into that in a second, but I do first just want to get your reactions to this lawsuit.
Prof G Markets
Has a Global Market Rotation Begun? + Inside the Ultra-Luxury Hotel Industry
That's wrong. Dark and gross. Any thoughts on the JFK file, Scott?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
I can't wait to see it. Where are you? You're not in your usual studio.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
I'd love to get your thoughts on Michael Saylor's strategy in general. I look at what he's doing. I'm very skeptical of it. You know, you described the premium to NAV there. And a lot of why that's happening is because he's basically securitizing the value of Bitcoin to issue bonds and then using the bond proceeds to buy even more Bitcoin and just levering and levering and levering. And to me...
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
At a certain point, it starts to look more like a Ponzi scheme than anything else. The whole thing feels extremely unstable, especially when you bring up those historical comparisons of adding blockchain to these companies. It feels very similar to that. And then, add on top of that the fact that the Nasdaq has now decided to include this company in the Nasdaq 100.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
This adds a whole new dimension of concern for me because now you have millions of people in pension funds and people's retirement accounts holding this thing that arguably doesn't have much value or at least that isn't generating real cash flows in a normal, regular way that another company would. Perhaps I'm being too negative. Does this make sense to you?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Very exciting. And we should plug your podcast, The Compound. I know you don't like doing a promotion. Last time I asked you where our fans could go follow you, and you said, don't follow me. So I'm just going to tell the fans straight up, go check out The Compound. Let's just get into The show, we've got a lot to get through. So let's start off with the market vitals.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
We'll be right back after the break with a look at Intel. If you're enjoying the show so far, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
We're back with Prof G Markets. Intel could be headed for a breakup with the help of TSMC and Broadcom. TSMC is exploring taking control of Intel's US factories, while Broadcom is in talks to acquire Intel's chip design and marketing business. Intel stock surged 16% on that news, marking its biggest rally since 2020. So, Josh, this feels quite important symbolically.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
I mean, just going back through history, in the year 2000, Intel was the sixth largest company by market cap in the world. It hit a peak of half a trillion dollars in market value. And since then, it's shed almost 80%. We've seen this AI explosion. Its competitors have exploded in value, chipmakers like TSMC, AMD, Broadcom, NVIDIA.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
And now Intel is not even among the top 10 most valuable chipmakers in the world. And it appears as though it's going to be split up into two and acquired by the two companies it was specifically trying to compete with, which are Broadcom and TSMC. What went wrong for Intel? DEI. DEI.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
The S&P 500 hit a record high. The dollar declined, Bitcoin was flat, and the yield on 10-year treasuries fell. Shifting to the headlines. U.S. housing starts slowed in January, with new residential construction falling 9.8%. Builders scaled back construction due to harsh winter weather, while also grappling with challenges from high mortgage rates, tariffs, and inventory shortages.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Elon Musk's X is in talks for a funding round at a $44 billion valuation. That's the same price Musk paid for it over two years ago. The funds would be used to support new initiatives, including video products, and to help pay down some of the company's debt. And finally, Michael Saylor's move to transform MicroStrategy into a Bitcoin treasury company has inspired a string of copycats.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Just going back to the decision to get into Foundry, and just to clarify for our listeners, Foundry is basically getting into the actual manufacturing of these chips. Most of the big companies we're talking about, NVIDIA, NVIDIA is probably the best example, Broadcom, they're designing chips, which is just a better business, and then they pay someone else to produce it for them.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
And Intel decided they wanted to try to get into the business of actually producing these chips for other companies like Qualcomm. This is the business that TSMC is in. And so they made that decision to go into Foundry. And I think everyone would agree with you, that was a bad decision. They got caught completely flat-footed.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
This AI boom took off, and then suddenly everyone has these GPUs and Intel's operating with a kind of shitty CPU business. And then also they're investing huge amounts of capital into building out this Foundry business. I guess from sort of like a management perspective, What could they have done differently? Should they just not have invested in Foundry to begin with?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Should they have invested more maybe in R&D, trying to predict AI? I mean, I feel it feels very easy to say, oh, what a terrible decision.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
At least 78 public companies have followed suit, including a meal delivery service and a coal mining firm. Also, GameStop shares jumped 20% after revealing it was considering a Bitcoin investment. housing starts data. I will say right off the bat, this is extremely disappointing to me.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Yeah, exactly. Just looking ahead now, so we've got Broadcom, which is eyeing the chip design business, and then TSMC is looking at purchasing the foundry business. There are a lot of questions over how viable any of this really is. I've seen some analyst notes pointing out that TSMC has very different equipment to Intel, so maybe you won't have those synergies that people were expecting.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Maybe it doesn't actually make sense for them. I think the biggest question mark, though, is... Thank you.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Thank you. Thank you. Thank you.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Just given all of the conversations we've had around the cost of housing in America, the median home price today is $420,000 in America. The median age of a home buyer is 56. And Scott and I have talked about this before. Our view is pretty simple. The way we solve this is we build more homes. And so I see this data housing construction actually going down.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
And just as a young person who at some point would like to buy a home, I hope, it makes me a little depressed. So let's just get your reactions to this housing starts data, perhaps any thoughts on why this is happening.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Yeah, it certainly feels very apocalyptic, and it's very interesting that gold has this association with geopolitics and inflation, but really just panic. It's like when the world starts to look like it's crumbling, suddenly people start to be interested in gold.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Exactly. And I would just like to get your final reaction to this, because we had Ray Dalio on the podcast. And it was very interesting because, you know, he was very concerned about the world from a geopolitical perspective. And I think a lot of people are very concerned about the world geopolitically.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
I mean, I think back to what Jamie Dimon said in the most recent earnings call, where he said that we are in the most unstable geopolitical time since World War II. And Ray Dalio basically told us, you know, if I were to put my money into anything, it would be gold. And my reaction, I think, is similar to yours, which is... Is this really worth the panic?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
And if we are to panic to the extent that these people say we should, what is buying gold going to do for us? Is that really going to solve our problems? So I guess I'd be interested to get your view on gold from a geopolitical perspective. You know, does Ray Dalio's view make sense to you?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
I'd rather own a farm and food, yeah.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Let's take a look at the week ahead. We'll see data on the personal consumption expenditures index for January. We'll also see earnings from Salesforce, Dell, Berkshire Hathaway, and Nvidia, which will be a huge one. Josh, this is the part of the show where I ask Scott for a prediction. No pressure, but...
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Do you have any predictions or is there anything that you're thinking about in the next couple months or so that you think that our listeners might want to keep an eye on in the markets?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Josh Brown is the co-founder and CEO of Ritholtz Wealth Management, a New York City-based investment advisory firm managing more than $5 billion in assets for individuals, corporate retirement plans, and foundations. Josh, just an absolute pleasure as always. Thank you so much for coming on.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to ProfgMarkets from the Vox Media Podcast Network.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Join us on Thursday for our conversation with Mike Moffitt, only on ProfgMarkets.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
To what extent do you think tariffs are going to play a role in this? It's good to hear that there's a positive read on this. I think Scott and I have a tendency to just see the negative in everything. But, you know, we've got 30% of softwood lumber coming from abroad, 32% of appliances coming from abroad. There was also this new data from the National Association of Home Builders
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
And they found that homebuilder confidence had its biggest drop since COVID. It fell 13 points. And I think a lot of that we could probably assume is a response to the possibility that the tariffs are about to be slapped on all of these materials. And suddenly the cost of constructing homes is going to go up. Now, I don't want to just blast Trump immediately at the top of the show.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Yes. Let's move on to the X valuation, this funding round that's going to value X at $44 billion, the same amount Elon paid for Twitter.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
It's going to be none for me. How about you? Would you invest in this?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
The other big question here is like, how did they land on this number as the valuation? We basically have no signal into what this thing is actually worth. And this is the big question that we've been asking. And it's very hard to know because we don't see the financials anymore ever since it went private.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
But the best signal that we got was from Fidelity, which owns a stake in X, and they valued the company at $10 billion. And that was just in December. So I guess the thing that I can't really wrap my head around is how could these new investors, whoever they may be, justify a new valuation of $44 billion when just a few months ago it was valued at less than a quarter of that?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
I wonder if this might be... due to Elon's association with Trump, maybe having that connection makes people more excited and more bullish on the company. Maybe it also has to do with XAI, Elon's new AI startup, which is reportedly raising in a $75 billion valuation. Maybe they think that X, the social media platform, can capture some of the value of the AI company, or
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Maybe they've just quadrupled their revenues overnight, but I highly doubt that. So what do you think, Josh? What do you think these investors in this potential round for X are seeing that the guys over at Fidelity two months ago didn't see?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Welcome to Prof G Markets. So Scott is still away. He's still on the slopes. We're beginning to think he's quite quitting, but we're not too worried about that because today we have one of our favorite guests on the show. You've heard him before. We have in the studio, the one and only downtown Josh Brown. Josh, thank you so much for joining me.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Yeah, absolutely. I mean, we certainly saw all of these blue chip advertisers fleeing the platform. And it feels like what might be happening now is they're starting to come back, especially after the election. Do you think we might see that swing back?
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
Let's move on to MicroStrategy. Multiple companies now copying the playbook where you just basically buy up a bunch of Bitcoin. I look at these companies and the common thread I see among all of them is that they're all shitty companies, is what I would say. And I think back to what Michael Saylor said on this podcast, which is that before he got into Bitcoin, MicroStrategy was struggling too.
Prof G Markets
Is Breaking Up Intel The Right Move? + The New Gold Rush
So I'm seeing this Bitcoin strategy. It kind of looks like the get out of jail free card for shitty, struggling businesses. Do I have that wrong or do you think that's sort of what's happening here?
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
Yeah, I think to your point, if you're very worried about China, then creating this all-out ban on sending any AI chips to China is probably reasonable. What's funny just is that this was supposed to be the tech industry's guy. But then we keep seeing these policies that can only spell... just disaster from a supply chain perspective for many of these big tech CEOs.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
And so how is Jensen going to deal with it? Is he going to continue to fall in line and be quite polite and gracious towards the president? Or is he going to start getting upset? And we saw this trip to China. Maybe that's an indication that he's about to move in the other direction. I think that's the thing that we want to keep an eye on. How do you manage your public relationship with
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
with the president. I think at first we saw they all decided we're going to kowtow to him, we're going to show up to the inauguration, we're going to donate to the inauguration fund, et cetera, et cetera, et cetera. But I can see that beginning to change in the next few months or so once they all realize this guy isn't really making through on the promises that he told us.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
I think at a certain point, once your market cap is eviscerated as much as many of these companies are, you don't really have a choice.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
And they're saying the quiet parts out loud. I mean, they know that everyone else agrees with them. And those are usually the people who are rewarded, who are the people who are the first ones to say it.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
Also, enormous risk in being the second, third, fourth or fifth one to come out and say like, yeah, the juice is squeezed.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
But if all the other Ivies start to follow suit, they look weak.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
Absolutely. Let's move on to Jerome Powell, his comments and then Trump's response. I just find this hilarious because you actually look at Jerome Powell's comments. They were incredibly tame. I'll just read you what he said here. He said, quote, these are very fundamental policy changes. There isn't a modern experience of how to think about this.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
The level of the tariff increases announced so far is significantly larger than anticipated. We may find ourselves in the challenging scenario in which our dual mandate goals are in tension. very uncontroversial thing to say, you know, calling it like it is, but calmly and without being aggressive or pugnacious.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
And then Trump goes on this tweet storm, or his truth storm, saying, quote, Powell's termination cannot come fast enough, exclamation point. Essentially threatening that he's going to fire the Fed chair. Now, many people are arguing whether that's even possible, Technically it is, but he needs to have a reason. You can only fire a member of the board of the Fed for cause.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
So he needs to have proven that he's done something legitimately wrong. But beyond that, just kind of remarkable to see the president threatening the chair of the Federal Reserve. Scott, your reactions?
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
Yeah. It really is just inflation 101. Like you look at any society or an economy where you've had runaway hyperinflation, you look at Zimbabwe, you look at... Venezuela, you'll get all these other... Weimar Germany. Weimar Germany. All these other situations. And basically what happens is the central bank loses its independence. It becomes captive to the dictator.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
The dictator says, you know, I want to juice the economy. They start printing money like crazy to meet all these short-term demands. And then suddenly you have runaway inflation. This is... not unlike that. And Trump is literally threatening him and ordering him to cut rates. He's calling him too late Powell.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
And this is coming at a time when inflation is set to explode because of what we're seeing with the tariffs. Like, it's... It's kind of funny how stereotypical the situation is when you look through history and why runaway inflation happens in the first place. Now, we're not at that point.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
Ed, how are you? I'm doing well, Scott. I like your shirt. For those who are not watching on YouTube, Scott is wearing a Harvard Club of New York shirt. I assume this is a political statement.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
And the good news is we have a great Fed chair who is rational, sensible, but most importantly, very strong, clearly. I don't think he's going to reverse any decision just because Trump told him to. But again, the implication here is pretty massive, right? You know, if Trump was successful in removing Powell, it would be a huge hit to the stock market, as you say, also to the treasury markets.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
I mean, what we'd see in the yield, we wouldn't be at 4.5%. We'd be hitting 5%, 6%, probably 7%. I mean, it would totally eviscerate our credibility in the debt markets.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
We haven't even seen the earnings yet, and it's going to be in a few months from now. We haven't even been able to price any of this in yet properly.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
We'll be right back after the break with a look at how the world is pushing back on tariffs. If you're enjoying the show so far, be sure to give the Property Markets feed a follow wherever you get your podcasts.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
We're back with Profiteer Markets. The trade war is officially on and Trump's strategy for the U.S. is clear, shock and awe tariffs. But other countries aren't sitting still. They're responding with strategic moves of their own. China is leading the economic pushback. China's central bank told state-owned banks to cut their U.S. dollar purchases.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
It also ordered its airlines to stop deliveries of Boeing jets and they curbed their rare earth exports to the U.S., But it's not just China. Canada is starting to boycott U.S. goods such as American whiskey. Brazil passed a bill to impose their own tariff countermeasures.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
And in Denmark, the largest grocer in the country is putting Black Star labels on European products to encourage a boycott of American products. So, Scott, the world appears to be coalescing against a common enemy here in the U.S. Any thoughts on how this might all play out and what we as investors should do about it?
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
But, I mean, just as an example here, I mean, we're beginning to see that in very... niche categories. For example, Cote d'Ivoire, which produces 40% of the world's cocoa, they're now throttling their prices on the US and now forming a partnership with the EU.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
So, I mean, just small examples like that where you have little nations that are kind of like, wait, what are these tariffs and why are you trying to hurt us? And the natural response is to go find allies somewhere else. But then you look at China's actions, which are probably the most dangerous to our economy. I mean, I mentioned that boycott of Boeing jets.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
I mean, China has historically accounted for a quarter of Boeing sales.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
Largest exporter. They're also curbing these rare earth minerals. And these are the materials we use to create jets, to create satellites, to create batteries. And they control 90% of the global production supply of rare earth minerals. And it does sort of beg the question, like, can we actually win this war?
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
I mean, even if China is our enemy, even if we do want a trade war, if we decide that's something we actually want, are we actually going to win that? Especially if they start teaming up with everyone else. Is this like even a winnable war?
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
Just on that point that we're sort of declaring war on everyone else and what a ridiculous idea that is, this reminds me, I've been thinking about this amazing joke by one of my favorite comedians, Norm Macdonald, where he's talking about the German strategy in World War I and in World War II.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
Just free falling right there until those drugs.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
But, I mean, is that not what's happening in America right now? We have chosen the world, as Norm puts it, as our enemy?
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
They need a new guy. Are you going to do it?
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
It's slowly, I mean, this is how movements start. It starts as a meme. It's sort of like, that would be kind of funny. But I'm increasingly hearing calls to Scott Galloway for president. I think we need a non-ironic actual response from you on this question right now. Would you ever actually consider running for president?
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
You would not be good at the meet and greets. I agree with you.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
What about if you got offered a position, like a cabinet position? Would you take, like, sort of go the Howard Lutnick route? Did you take commerce secretary, something like that?
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
I love that. We'll be right back with a look at the Meta Antitrust Trial. If you're enjoying the show so far, hit follow and leave us a review on the ProfgMarkets feed.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
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Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
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Global Pushback on Tariffs + Can the FTC Beat Meta?
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Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
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Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
I genuinely couldn't give a fuck. I had no interest in the Blue Origin launch. I love how everyone's shitting on them, but I wasn't watching it when it happened. I didn't watch any of the press releases. I couldn't care less. I just think it's... insane that they still think that just by hawking these celebrities, they're going to win everyone over.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
We're back with Profiteer Markets. After nearly six years of investigation, the Meta antitrust trial is finally underway. The case is focused on whether Meta's acquisitions of Instagram and WhatsApp violated competition laws. Mark Zuckerberg has already taken the stand.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
Potential upcoming witnesses include former COO Sheryl Sandberg, ex-CTO Mike Schroepfer, and executives from rival social media platforms. The trial is expected to last up to two months. I'll just kick this off and highlight what's at stake here for Meta. If the FTC wins this case, and they could, it would be a huge deal for the company and for big tech at large.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
We are increasingly seeing more momentum on the antitrust front. Google, in fact, there was just a judge just ruled that Google was operating a monopoly on the ad market and the server market. And that's the second time that's happened in less than a year. Of course, we covered back in August when Judge Mehta in Washington, He declared that Google was a monopoly in the search market.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
So this is becoming a trend. Now, what would happen to Meta if the FTC won? The most likely remedy that people are talking about is that Meta would have to sell WhatsApp and they'd also have to sell Instagram. And that is a huge deal because WhatsApp is one of their most popular products. They have almost 3 billion users. But also, Instagram now makes up more than half of Meta's ad revenue.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
It was 50.4% coming from Instagram ads in 2025. So this would... essentially dismantle the world's largest social media company. So, Scott, first, just any initial reactions on what's happening with the meta antitrust trial and perhaps what's happening with antitrust at large with this new ruling on Google?
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
I mean, apparently they're planning another one and they've got another batch of celebrities, only it's men this time.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
This is a bad luck. Absolutely. I mean, this is probably the worst celebrity PR event since the Imagine video during COVID. I think that probably, I went back and I watched that again. I was just thinking that.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
Yeah, a lot there. I mean, what would it take for them to win the case? One, they need to prove that Meta suppressed the competition via these acquisitions. And the emails there are incredible, and I'll go over a few of them in a second. And two, they also need to prove that Meta is indeed a monopoly. And those are two different arguments that they need to prove.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
So on the first argument, the case is incredibly strong. And it's all because of these emails that they found from Zuckerberg and Sandberg and all these other executives. I'm just going to read off some of them to you right now. So Mark Zuckerberg in 2012, quote, Instagram and path are nascent, but the network's established. The brands are already meaningful.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
And if they grow to a large scale, they could be very disruptive to us. from an internal executive. Quote, in the time it has taken us to get our act together on this, Instagram has become a large and viable competitor to us, which will increasingly be the future of photos. Sheryl Sandberg, 2012, quote, Instagram was growing so much faster than us that we had to buy them for $1 billion.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
And then this is the best one. Mark Zuckerberg in 2008, in regards to the Instagram acquisition, he says, quote, it is better to buy than to compete. And that is basically case closed right there. That is the FTC's smoking gun, is that email from Zuckerberg in 2008. So they can definitely prove that Meta was suppressing the competition by just buying up these other companies.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
The trouble is proving... whether or not Meta is actually a monopoly. And that is a harder argument to make because, you know, as you mentioned, there are all these other platforms now. There's TikTok, there's Snapchat, there's Pinterest, there's YouTube, even iMessage, which is technically competing with WhatsApp. And Meta shared this number.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
they shared that 20% of the total time spent on social media platforms today, 20% is accounted for by Meta. So at 20%, it is definitely harder to argue that this is a monopoly. And I think if the FTC loses this case, it's going to be on that front. They're going to be able to prove very fair and square. Yes, Meta suppressed the competition by buying these companies, but did they also...
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
do that and successfully become a monopoly. And that's going to be a little bit harder to prove. And one final point here. I just want to quickly highlight this incredible article in The Wall Street Journal that takes you through the negotiations between Andrew Ferguson at the FTC and Mark Zuckerberg. So the FTC actually offered to settle this case with Meta for $30 billion.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
That was the worst I've ever seen. It's actually shocking if you go back and watch it, just how cringeworthy. I mean, it really makes your skin crawl. This was not quite at that level, but it was close. And I think people just need to get into their heads. We don't really care about these celebrities anymore. It doesn't make us like you anymore. that Katy Perry is friends with you.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
But after Trump appointed this new guy, Andrew Ferguson, as the new chair of the FTC, Mark Zuckerberg called him and he gave him a counteroffer. And Mark Zuckerberg's counteroffer was $450 million. So a 99% discount on the original settlement offer. And apparently on that call, Mark Zuckerberg was very confident that Trump was going to back him up.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
You know, he had just traveled to Mar-a-Lago multiple times. He just donated a million dollars to the inauguration fund. He went to the inauguration. He, as you point out, he appointed this former Trump advisor to the meta board, Dana White. He just done this 180 on the content moderation policy. I mean, he had his full-on MAGA rebrand.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
And then Andrew Ferguson, they have the conversation and he says no. So then Zuckerberg goes to the White House and he starts pleading with Trump to drop the case. And Trump was apparently considering it, but it wasn't until April 8th when both Andrew Ferguson of the FTC and Gail Slater of the DOJ, they both go to Trump and they say, no, Mr. President, you have to let this trial go through.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
And Trump was convinced. He gave them his blessing. And now here we are. Zuckerberg is back in court, back in the suit and tie. And it looks as if meta may be broken up at this point. So it's an amazing story of Zuckerberg's failed attempts at... kissing the president's ass.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
But it's also an amazing story of strength from Ferguson, from Gail Slater, who, as we have said on this podcast before, are actually highly competent litigators, highly competent regulators. And I think if there's anything that Trump has gotten right in this administration, it would be hiring those two to run the FTC and the DOJ because they are proving that they are not to be fucked with.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
Let's take a look at the week ahead. We'll see earnings from Tesla, from SAP, and Alphabet. Scott, do you have any predictions?
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Dan Chalon is our intern. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from the Vox Media Podcast Network.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
Bring us back. Get to the headlines. Let's start with our weekly review of Market Vitals. The S&P 500 declined, the dollar struggled to recover from its three-year low, Bitcoin was volatile, and the yield on 10-year treasuries fell. Shifting to the headlines. Gold hit a record high, surpassing $3,300 per ounce for the first time in history.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
Goldman Sachs projected prices could soar to $4,500 by the end of 2025 in a worst-case risk scenario. The Trump administration announced new restrictions on chip exports by Nvidia and AMD, which will cost the companies $5.5 billion and $800 million, respectively. The news sent shares of both companies down around 7%, which dragged the Nasdaq 2% lower. And finally...
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
Jerome Powell called tariffs a challenging scenario for the Federal Reserve, warning they will likely lead to higher prices and rising unemployment. A day later, Trump responded on Truth Social, and he said, quote, "...Powell's termination cannot come fast enough." So, Scott, let's get your thoughts here, starting with gold.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
I just want to quickly highlight some additional data I found here from the Bank of America Fund Manager Survey. They survey all the top hedge funds, all the top pension funds, money managers all around the world, and just some of the results here. So half of fund managers...
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
say they believe long gold is currently the most crowded trade in the world right now, more crowded than long magnificent seven, which has been the top trade for the past several years. And then also 42% of managers said they believe gold will be the best performing asset class in 2025. So quite striking this reversal in the market trends away from tech, away from stocks and towards gold.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
One thing that's quite interesting, though, is what's happening to Bitcoin, because remember, Bitcoin is supposed to be the same thing. It's correlated. Right. Yeah. It's supposed to be, you know, like the ultimate gold, even safer than gold. But you look at the price of Bitcoin, it fell in concert with the S&P right after the tariff. It's down 10% year to date.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
The S&P is down 10% year to date as well. It's basically tracked with the stock market. And then you look at gold, which is up 26% so far. So this really... I mean, there have been so many moments where it's been Bitcoin's big opportunity to step up as the new digital gold.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
I mean, I think the first example I would think of would have been Russia invading Ukraine, where we had another sort of uncertain doomsday global warfare scenario on our hands. The stock market tanked, gold rallied, but then you look at Bitcoin and it was just tracking with the stock market. Here we're seeing the same thing again. I'm not saying... Bitcoin isn't digital gold.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
I think you can make the argument that it could be. But at least right now, today, in 2025, the market does not view it as that. But let's move on here to what happened with these chip makers and this new order from the Trump administration. which is restricting these H20 chips for NVIDIA.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
I want to just clarify what this actually means for NVIDIA because, you know, the headlines are saying that NVIDIA is taking a $5.5 billion hit, which is a little bit misleading. So that $5.5 billion number, that is... the number that NVIDIA cited in this regulatory filing saying this is what we expect to be charged with this new H20 chip restriction.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
But it's a backward-looking number because it's only describing all of the money they've already spent on these H20 chips. What it doesn't include is all of the revenue they're about to lose on not selling all of those chips to China. And that number is closer to around $15 to $16 to $17 billion.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
And so that's why you saw this huge decline in Nvidia stock, which brought the rest of the tech markets down with it. Because this new... order from the administration, it essentially wipes out all of NVIDIA's China revenue. And last year, China accounted for around 13% of NVIDIA's total revenue. And today it's going to be zero.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
So, you know, when you read that headline, you know, or you read the executive order, which says we're putting a restriction on this specific chip. at Nvidia, this specific H20 chip. That's not really what's happening. What they're basically saying is China is now off limits for Nvidia.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
And what I've been wondering in the wake of this order is what on earth is going through Jensen Huang's head right now? Because... You might recall, you know, why does this H20 chip even exist? The reason that that was created was it was Jensen Huang's response to a Biden administration order, which said that we can't be selling our most advanced chips to China.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
And so Jensen Huang and NVIDIA responded by creating this slower, less capable chip, And that was their attempt to fall in line. It was designed specifically for China. And now, two years later, the government is saying, actually, never mind. We're not going to let you sell these chips at all. So this is really a logistical nightmare for NVIDIA.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
And I do find it hilarious to think about how Trump was touted for so long as the pro-business candidate. And all these CEOs believed it, and they were super excited. But so far, what we're seeing is that this is... pretty much the most anti-business president America has ever seen. So it will be interesting to see how Jensen deals with it.
Prof G Markets
Global Pushback on Tariffs + Can the FTC Beat Meta?
I just read recently that he actually just flew to China and met with Chinese officials. But this is definitely a big problem for Jensen Huang. And that's why you're seeing this big devaluation in the stock.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Yeah, but you're making one mistake, which is I don't think he's just going to suddenly stop scrolling on his phone. It's just going to migrate somewhere else now.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
And Sam Harris was like, well, that's kind of ridiculous because the estimates that we're going to have a million deaths, not cases, but deaths in the US. He says, why don't we make it a little fairer? How about I'll take you up on the bet, except let's make it three and a half million cases, not 35,000. And Elon said, no, no, no, no, make it 35,000 cases. So then a week later...
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
I will tie a bow on this conversation with TikTok users have been migrating in mass to a different app called Red Note. And this is this Chinese version of Instagram. Yeah, another Chinese one, right? Exactly. It was the most downloaded free app in the US Apple store last week. And this is the best app. Right as that migration was happening, Duolingo
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
the language learning app, reported a 216% spike in US users learning Chinese. So you got all these people who are on TikTok who are deciding they're going to go to a new platform, and that new platform happens to be another Chinese social media app called Red Note. I don't think this is going to be a lasting thing.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
I think people are mainly doing it as a meme because it's kind of funny to just go to another Chinese app. It's sort of a... metaphorical finger to the US government, I think. And I think these TikTok users are very upset about this ban. But I just find it hilarious that, I mean, they've just substituted one Chinese app for another. The new one is Red Note.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Okay, we'll be right back after the break with a look at UnitedHealth's earnings call. If you're enjoying the show so far and you haven't subscribed, be sure to give Prof G Markets a follow wherever you get your podcasts.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
We're back with ProfgMarkets. UnitedHealth released its first earnings report since the death of executive Brian Thompson. While the company posted record full-year revenue, its quarterly revenue fell short of analyst expectations and the stock fell more than 4%. During the earnings call, CEO Andrew Witte paid tribute to Thompson, reflecting on his dedication to his job at the company.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Witte then pivoted to address larger issues within the healthcare industry, placing significant blame on drug companies for driving up healthcare costs nationwide. So, Scott, we were talking before the earnings call about what we thought might happen. And you made this interesting point that you thought that they would try to, in some way, sandbag the financials, i.e.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
they don't want to be appearing too profitable right now, given everything that's happening in the news with UnitedHealth. And so maybe they'll somehow downplay how well they did. Well, I have one insight to report, Scott. which is that the company hit full year revenue of $400 billion, which was a record for the company. So it was a big year.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
But in the press release and in the earnings call, which we listened to, they actually never called it a record. They just said revenue increased 8% to $400 billion. And in any other situation, you would think that, you know, a company would want to brag about this. They'd want to brag about the fact that they hit record revenues in 2024. They decided not to on this occasion.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
So my question to you, was this an intentional decision by UnitedHealth to downplay their financial results?
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
they find out that there have already been 100,000 deaths, plus several more cases. So Sam Harris reaches out, says, I think I've won the bet. Elon ghosts him and then starts to deride him on social media. And now Sam Harris, because he's shitposting him even more, is dealing with... strangers coming up to his house and making death threats.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
The argument from the CEO, and he addressed this head on. The argument was that UnitedHealth is squarely not to blame for the high cost of healthcare in America. And he said quite clearly on the call, which we listened to, that the ones who are to blame are the drug manufacturers.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
In fact, he argued that UnitedHealth and the pharmacy benefit managers that UnitedHealth runs, like OptumRx, he argued that they are the ones responsible for actually keeping costs down. Now... I don't know if that's true because the industry is extremely complex and I just struggled to wrap my head around it.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
But there is evidence to suggest, and this was laid out in this report by Representative Comer out of Kentucky, that actually pharmacy benefit managers drive costs up. You know, they say their job is to decrease costs, but they also benefit from a dynamic where drugs cost a lot because the higher the price of the drug, the larger the rebate. And the way these...
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
benefit managers make money is through taking a cut of that rebate. And, you know, I was thinking about all of this and just the complexity of the issue. And it brought me back to something that Luigi Mangione said in his manifesto. And I want to be clear, I am not glorifying this guy at what he did. It's terrible. Let's just put it out there. But this is quite interesting.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
He said in the manifesto, quote, these companies have simply gotten too powerful and they continue to abuse our country for immense profit because the American public has allowed them to get away with it. Obviously, the problem is more complex, but I do not have the space, and frankly, I do not pretend to be the most qualified person to lay out the full argument.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
But many have illuminated the corruption and greed decades ago, and the problems simply remain. And... Interestingly, I found that this relates a lot to a conversation we had last week about another big problem in America, which is the cost of housing. You know, I criticized the real estate investment firms, the companies like Blackstone and Graystar and Cushman and Wakefield.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
And you pointed out to me that actually, you know, the issue is probably more nuanced than just these big firms are bad. And my pushback was essentially, well, Scott, I don't care about the nuances. I'm I think the problem is so bad, I'm no longer interested in discussing the finer details. And I find myself at this point again, and I think this is the rift we are contending with now in America.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Because yes, these issues are complex. Yes, maybe UnitedHealth isn't solely to blame for the cost of healthcare in America. But I wonder if there comes a point at which we will just reject the argument of nuance, reject the argument of complexity, and say, you know what? Enough is enough. Maybe we don't understand this. Maybe this is way more complex than us simple, regular folk can understand.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
And it's all because Elon Musk has been shitposting him. So I just thought it was just a powerful indictment of Elon and his character. I think we all know this, but I love that it's coming from one of his former best friends.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
But the outcome is very clear. We are getting screwed, and you must do something about it. So I guess my question to you is, would be, are there ever situations, do you think, where the answer actually isn't to try to understand the nuances, but instead to just wholesale reject the arguments of the other side, in this case, UnitedHealth, and say, you know what?
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
No, we're not listening to this anymore. Something has to change, and we don't care how it gets changed.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
By the way, I was looking on our Reddit page, people talking about what would happen if you ran for president. One of my favorite comments was that Trump would come up with just a great nickname for you. And one of the suggestions was that you would be Mopey Scott. Mopey? And then the other suggestion was that your nickname would be Eeyore and mine would be Tigger. That's good.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
We'll be right back after the break with a look at earnings from the biggest banks in the US. If you're enjoying the show so far, hit follow and leave us a review on Proficy Markets. We're back with Profiteer Markets. Fourth quarter earnings season kicked off with Citigroup, Goldman Sachs, and JP Morgan all beating analyst expectations. Overall profits were stronger than expected.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
JP Morgan had a particularly standout year as the bank reported the largest annual profit in US banking history. As we've seen in previous quarters, a key driver of growth was investment banking. Goldman's investment banking revenue rose 24%, Citigroup 35%, and JP Morgan 46%. So, Scott, really strong quarter.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Can get into some of the more of the specifics, but any just initial gut reactions from these impressive earnings?
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Tell us what we're talking about today, and then I'll get into my job and read us the headlines.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Yeah, I think that's definitely – and just higher net interest income in general with higher rates. I mean, I'll just –
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
go over it really quickly i think there are two main drivers here one is the investment banking revenues which we've seen so we're seeing this increase in deal making more m a which of course is great for the investment banks because their job is to facilitate those transactions and they charge a fee which leads to higher revenues and this is no different from what we saw last quarter
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Investment banking revenues were up by a similar amount. So I think the takeaway here is, you know, people have been wondering, is M&A coming back? It's been in a slump the past couple of years. I think this is our confirmation from these bank earnings. Yes, M&A is officially back. I think we can expect that trend will continue. And that's especially likely under a Trump administration.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
The second big driver of this growth is NUA. And that is the trading revenue, as you mentioned. And this is the money that the banks make for facilitating and executing the trades of their clients, trades for stocks and trades for bonds.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Now, the explanation that you're seeing a lot of in the media, which you also referenced there, is something like market volatility increased trading revenues, which is
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
sort of a true statement, but it's also a little bit of a misdirect, because I think the real reason we're seeing these sales and trading desks making so much money last quarter is that last quarter, trading volumes exploded, not just the volatility, but the volume. So you had more stock trading, more bond trading. And the question, of course, is why did that happen?
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
And the answer is quite simple, is it was the election. And I think this is a reminder here of the power of stories and narratives in markets. Because what this election did is it sparked a flurry of new narratives from investors about what may happen in the future. Who's going to benefit from a Trump administration? Who's going to get burned? What's going to happen to interest rates?
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
And it's all those stories that create this energy in the markets that propel people to make trades, to take bets, to speculate on the future.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Yeah. Exactly. And of course, who benefits? It's the middlemen, which are the banks. So I think that's what really happened here is the banks were the beneficiaries of an environment where quite simply interesting stuff was happening in the markets. And the question now is, will that continue? I would argue probably not, not to the extent that we saw in Q4.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
But having said that, Trump is a very erratic person. He'll probably make some pretty controversial decisions. And I'm sure that will lead to lots more interesting stories that lead to new investment theses and new trades. So that's sort of a breakdown on, I think, why we've seen this explosion in banks in the past quarter.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
something Jamie Dimon said on the JP Morgan earnings call, and this is a bit of a pivot here, but I found this fascinating. He said, this is a fantastic quarter, highest annual profit in the history of American banking, $59 billion, it's just enormous. But then he said, quote, two significant risks remain.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Ongoing and future spending requirements will likely be inflationary, and therefore inflation may persist for some time. Additionally, geopolitical conditions remain the most dangerous and complicated since World War II. Your reactions to Jamie Dimon's comments?
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Let's start with the weekly review of MarketVitals. The S&P 500 rallied, the dollar fell, Bitcoin climbed, and the yield on 10-year treasuries dropped. Shifting to the headlines. The consumer price index increased 2.9% in December from a year earlier and rose just 0.4% month over month. Core CPI also came in lower than expected, providing further evidence of easing inflation.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
So do you take that? I mean, people would say that he's the guy who is most in touch with what is happening in the world. It's his job to understand what is going to happen tomorrow and the next day. I mean, the fact that he's calling this the most dangerous geopolitical condition and the most complicated since World War II, does that make you more concerned at all, or is it just a statement?
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Let's take a look at the week ahead. We'll see earnings from Netflix, Johnson & Johnson, and American Express. Scott, any predictions?
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
That encouraging report drove all three major indices higher. Meta is laying off approximately 5% of its workforce as part of an effort to phase out lower performers. CEO Mark Zuckerberg stated that the cuts are essential to ensure the company maintains, quote, the strongest team possible. And finally, the Supreme Court has upheld the federal TikTok ban, but the app's future remains uncertain.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Jessica Lang is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from the Vox Media Podcast Network.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Join us on Thursday for our conversation with Rich Greenfield, only on Prof G Markets.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Trump has stated that he may issue an executive order to delay the enforcement of the ban for at least 60 days. Scott, starting from the top, pretty positive CPI report, especially the core CPI. Your thoughts on inflation tamping down a little bit?
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
And the reason that we have that is because, as you said, food and energy prices are very volatile. So generally speaking, economists prefer to use the core CPI when trying to understand these trends.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Yeah, I was thinking about that when I was 10 years old.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
We know you're young.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Yeah, I think the most interesting thing here isn't necessarily the inflation data itself, but the market's reaction to the inflation data. And as you point out, the thing that has, I think, been slightly confusing people, or at least grabbing their attention, is the fact that the stock market has been sliding over the past few months, certainly since the election.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
And also, as you say, the 10-year yield is rising, meaning that people are selling off their treasuries. So investors have just been anxious about the economy. And I think the question has been like, what are they specifically anxious about? Are they anxious about Israel? Are they anxious about Ukraine? Is it something to do with Trump?
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
And I think this reaction, where you had the inflation data come in softer than expected, and then suddenly the market ramps up and you see an increased demand in treasuries, that's basically the confirmation that the number one concerns for investors right now is inflation.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
And this is the market trying to tell us, you know, this inflation thing, you might have thought it was over, but we don't think it's over yet. And this is something we cannot forget about.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
And I think the hope for investors would be that Trump, as he swears in for his second term, will be thinking about this and perhaps rethinking some of his fiscal policies that are expected to increase inflation. over the next year or so. So I think it'll be interesting to look at the inflation.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
And also, as you say, very interesting to look at the 10-year yield, because that's sort of the signal, like, how confident are investors in the economy, really, as you said, the adult in the room, which I think is a good way to put it.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Your reaction to Mark Zuckerberg's announcement, yet another announcement, he's laying off 5% of the employees.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Two bombs in a row.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
You mentioned AI there. I think this is especially important given what Zuckerberg said on the Joe Rogan podcast about AI and its use at Meta.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
It's so interesting because he's basically saying that in 2025, this year, mid-level software engineers at Meta will probably be replaced by AI, then follows up with that with this announcement that he's laying off 5% of the workforce, which is 3,600 people. roughly. I think from a business perspective, he's making all of the right decisions. He's cozying up to Trump. He's embracing AI.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Yeah, you've never done that before.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
He's fostering this competitive workplace culture, which is all good news for shareholders. But the thing that I don't fully understand from a more PR perspective is the timing of all this. And that is, these are all controversial things to say. And he has made these announcements in a matter of days.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
And most of them, quite frankly, have made him out to be or look like a dick or, you know, out of touch in some way. I mean, he's totally alienated the left. And meanwhile, on the right, from what I've seen on X, formerly known as Twitter, most Republicans are finding him disingenuous because they think he's groveling to Trump and just doing whatever he can to enrich himself.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
So I think there's two parts of this. There's the business side, which I think is genius. But then there's the public relations and image side, which I feel like it's not the best idea to be making all of these controversial announcements that don't make you out to be the nicest guy in the world within a matter of days.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
True. Maybe it's perfect timing.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Yeah, exactly. I was waiting for that. Let's just touch on TikTok. So we're recording this before we know actually whether it is going to go lights out or not. But let's just... play hypothetical here. Let's just sort of imagine that TikTok does disappear. And let's just think about what that would look like and what would happen in the economy.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
And I'll just start off with an interesting analysis from Bernstein, which is an advisory firm. So they found that Americans watched TikTok in 2024 for a cumulative 3.3 trillion minutes, which is just pretty astounding. And assuming that 100% of those minutes will be migrated to other platforms if TikTok shuts down,
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
Well, you tell me, what is he saying? I know it, but the viewers don't know it. Trying to remember it exactly, but he basically described how he fell out with Elon Musk. And Elon Musk made this bet with Sam Harris where he said, I will bet you a million dollars that we will not see 35,000 cases of COVID in the United States.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
they estimate that 5% of those minutes will go to Snapchat, 25% will go to YouTube, and 60% will go to Instagram and Facebook, and the remaining 10% will go to other platforms. And so when you consider the fact that... that last year TikTok generated an estimated $22 billion in US ad revenue.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
And to be clear, that is an estimation because TikTok is a private company and they don't really release their financials. If we assume that, and if we assume that Bernstein is correct with their analysis, then that means that Meta overnight will add an extra $13 billion in revenue next year, which would increase Meta's annual revenue by almost 10% in one go.
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
So I would like to get your reaction to that statistic, but also just what do you think is going to happen here? What does a media ecosystem look like with no TikTok?
Prof G Markets
The TikTok Showdown, UnitedHealth’s First Earnings Post-Shooting, and a Banking Boom
13 billion in revenue, you think? Assuming all of this goes to plants. So assuming the 22 billion, assuming the 60%. It's all hypothetical, but yes, that is the number.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
But again, it's just, it's company. And this is sort of my point. It's like UnitedHealth has its own set of problems that they're dealing with. One of them being one of the executives of their company got murdered.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
plus the fact that their business is very much tied to Medicare, and what they're dealing with right now is that there are all these old people who didn't get these treatments that they were thinking of getting during COVID, and suddenly they all come now, and they need knee replacements and hip replacements, etc.,
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And this is a problem for United Health because now they have to actually pay for those treatments before they were barely paying for treatments and then still collecting all the insurance. So that's the United Health specific problem. And now you have this investigation. But I think the things that you get out there are important. And I think the question is, how do you fix it?
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And the only way you really fix it right now, it's about getting the cost of drugs down. And the most obvious way you do that is you increase price transparency and you create laws that force these companies and these PBMs to publish what the price is. You wrote a really good, Your No Mercy this week is really good. I read it.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And you cite this presentation by this guy, Brian Lawrence, where he basically says that health insurance today, it's akin to using auto insurance to buy gasoline. Like, it doesn't make any sense that we don't even know what we're paying for when we sign up for these treatments until after the fact, and we can never figure out what these medical bills are.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
So we need more price transparency, which, by the way, Biden worked on, and actually Trump worked on a little bit too, but we haven't really seen that come to any fruition. And then we need Medicare to be able to have the ability to negotiate on prices, which is what every other country has, and we don't have it for some reason. Again, Biden...
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
changed that in the Inflation Reduction Act, but we still haven't seen really any reduction in the price of drugs, I think because it hasn't been properly enforced. And the last thing I will say, I looked back at our conversation with Jonathan Cantor, who's the previous head of the antitrust division of the DOJ,
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Something came over me. I don't know what happened.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And we asked him the question, what is the one industry that most needs regulation and increased regulatory enforcement, specifically from an antitrust perspective? And his number one answer was healthcare.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
He talked about a company like UnitedHealth is placing itself on both sides of the trade in a lot of cases where they're offering the insurance, but then they're also a pharmacy benefit manager at the same time. So they're sort of buying and selling from itself. But I think it was really interesting that he said that. And I hope that what we will see is some increase in regulating this industry.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
But again, I don't see this as totally structural yet because I still look at the money in lobbying and the fact that it's $300 million last year that was spent on healthcare lobbying. I just, I'm not that optimistic at a structural level.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
I would encourage everyone to go look at Senate Bill 3548, which was supposed to address all of this, and it was actually backed by both sides. And you look at what happened, it was proposed, and now suddenly it's just dead. And you try to ask the question, what happened to the bill?
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And everyone says, oh, it just sort of didn't get reviewed, and it just got kind of held up in Congress, and so now it's dead. It's unbelievable. how you just see this happen, how the money in politics actually does just grind these things to a halt. And then you don't really know it because it's such a soft and unceremonious death. Like you sort of forget about the issue.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
But go look up that bill because that addresses everything we're talking about, price negotiations, price transparency. And I just sort of flopped in Congress. Let's move on. very different vibe. HBO is doing another rebrand, their fifth rebrand in five years. We had HBO Go, then HBO Now, then HBO Max, then Max, and we are back to HBO Max.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Scott, our producer Claire has a clip that she wants to play where I'm going to look very foolish.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
I actually like this rebrand. I said I liked it on Twitter. I said I just think it sounds cleaner. And I got a lot of pushback, a lot of unfollows, interestingly. But the way I see it, there are all of these other production companies. They have to now transition getting the Discovery Plus content onto the Max platform. Don't you think that Max is just kind of cleaner now?
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Take it away.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
That's worth a few million dollars. I think you could easily get knighted. Just throw your money around, become friends with the right people. That's certainly in your future.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And it starts with a scene where you have sex with your sister, right? Oh, that's right. Not the greatest education ever.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
One of your first relevant sex jokes. I love it. What's your favorite HBO series? I love Last of Us. Yeah, I watched season one. I thought it was great. I'm watching season two. But I'm not a huge TV consumption guy, and that's part of the issue, I think, why I was wrong about
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
is that the HBO brand doesn't resonate for me in the way it does for you because I'm less of a TV guy, which is why I shouldn't really be weighing in on what HBO Max should be doing in terms of branding because I'm not really the person the target consumer.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
But what is striking to me is it just sort of reverses all of the intention behind the merger in the first place, where the idea was we're going to merge with Discovery, take all of the Discovery product offering and all the Discovery IP, and we're going to kind of try to blend it together. And the way we'll do that is by calling it all Macs.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And this is basically them admitting, wait, all the shows on Discovery suck.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
they're kind of cheap shitty shows meanwhile we have all the shows on hbo which are beloved and high quality and are sort of the luxury brand of streaming media we shouldn't really be meshing or merging these two together so let's sort of walk things back and go back to the hbo max brand and the fact that the architects of max the fact they're giving up on the name
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
I think it shows that you were right and that the importance here is that you maintain the brand positioning that you built up for years in HBO. Let's move on to Airbnb, yeah? Yeah. So Airbnb is getting into services and experiences. This is sort of a complete revamp of the app. It was a place where you book vacation rentals. Now it's much more.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
You can book chefs and tour guides and personal trainers. Basically anything that you'd be offered at a nice hotel, you can now get on Airbnb. Brian Chesky, the CEO, is calling it Airbnb for everything. People are calling it Airbnb's attempt to become the everything app. The stock rose almost 3%. You give us the analysis here. What do you think of this move?
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
My question, that sounds nice, and I agree it would be nice for society. How does it make money?
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
You want friends, I want money. So I'm thinking about how does this company make money? They've kind of maxed out on growth at the moment. They created this category, sort of, which is vacation rentals. They conquered that category. They executed practically to perfection. But the growth of that business is slowing.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And if they want to be a $100, $200, $300 billion company, which I think is what he wants... then they need to go after new businesses. And so their answer to that question here is we're just going to go after all services. You were saying it feels more like sort of they're trying to become a hotel. The vibe I was getting, and by the way, I actually prefer that as a strategy.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
The vibe I'm getting from Brian Chesky and from the announcement is he wants it to be just Airbnb for everything. It's almost like Craigslist meets Uber. If you have any sort of service that you can provide, you just sort of rent out your service on Airbnb. I think it's almost too ambitious.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Like they're kind of, instead of going off to one additional category, they're going off to like 15 to 20 at the same time. But at the same time, it's like, I respect the ambition. And it shows me that they want to be bigger than they actually are right now. It shows me that they're thinking big picture. And I think the market sees it that way too. And that's why you saw the increase in the stock.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
I don't think it will work, but I don't really have a problem with that because they're trying things out. And if it doesn't work, they can just pivot.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And by the way, that story that you're telling me there, I actually think is more compelling than the story that I was hearing from Brian Chesky, which is it's just trying to be... offer hotel services. But the story Brian Chesky is telling is we're going to offer all services.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
We'll start here with like, we'll give you like a tour guide will come and take you to the Eiffel Tower, but ultimately we want to do everything. And that's the story I don't buy as much. Your story, you're telling me, I'm totally with you.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
We'll be right back after the break with a look at Chinese tech earnings. If you're enjoying the show so far and you haven't subscribed, be sure to give the Prof G Markets feed a follow wherever you get your podcasts.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
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The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
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The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Visit Upwork.com right now and post your job for free. That is Upwork.com to post your job for free and connect with top talent ready to help your business grow. That's U-P-W-O-R-K.com. Upwork.com. We're back with Profiting Markets. Chinese tech leaders Alibaba and Tencent reported earnings this week, offering a mixed picture of the sector.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Tencent posted its fastest revenue growth in over three years, fueled by strong performance in its gaming and advertising segments. Net profit rose 14%, while capital expenditures surged 91% year over year, largely due to increased AI investment. Alibaba, meanwhile, missed expectations on the top and bottom lines as it continues to rethink strategies to drive consumer spending.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Still, the company reported a 7% year-over-year revenue increase, with cloud revenue climbing 18%. Despite the growth, shares fell around 5% in pre-market trading. So, Scott, let's start with Alibaba. You predicted the company would beat and that the shares would pop. That did not happen. It was, in fact, a miss on the top and bottom. Shares dropped around 5%.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
I think it's worth asking the question, how bad was this miss? And the answer is not really bad at all. They barely missed on revenue. Net income was a miss, but it was mostly an accounting issue because they got rid of some of their subsidiaries and they had to account for those losses in this quarter. But I think the thing that Wall Street really didn't like...
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
I think Wall Street, like you, believes that this company is now kind of an AI company. Similar to Amazon, similar to Google, they're mostly excited about the cloud unit and they're mostly excited about the AI prospects. And that's why they expected, as you did, that the company would beat expectations. They wanted to see the AI business come in and just...
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
pleasantly surprise us give us something really great that exceeded expectations that's not what happened it was strong but not crazy strong cloud revenue up 18 now i'll give you a chance to respond to the earnings but i just want to tell you what i think you missed with this prediction
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
I've been sort of been a transformative year for me. One thing I was thinking, we're coming up on four years of me working for you. I started working for you in June 2021. And that to me is really shocking. That feels like a really long time that I've been working for you. I'm not sure how it feels for you.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
You know, all the global shifts we've been discussing, the turning of foreign nations away from America towards China, increased trade partnerships with China, the turbo boosting of AI self-sufficiency in China, which Xi Jinping's been talking about, you know, the AI chip investments from Huawei and all these other Chinese companies, all of that is so recent.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And if all of that is happening, I just don't think you would have seen it in this earnings report. I think if it's happening, you're gonna see it in the next report, i.e. the current quarter. And even then, you'll only start to see the beginning of it. And if it's all happening, I think really, if it's gonna be really fully and truly reflected, it would probably be the report after that.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And so what I would argue is that your prediction here was directionally correct, but I think the timing was wrong. And I think if you were to make the prediction again for fiscal Q1, this next quarter, I would back that because I do believe we are about to see a transformation in AI in China. And I do believe that will ultimately benefit Alibaba. But for now, I think it's too early.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Yes, but those AI-related numbers, they don't actually break out what the number actually is. So I'm always a little bit, eh, when they say AI-related growth, and it's definitely coming off a very small base. So I think what we should really be looking at is just cloud revenue, which is up 18%, and that's good. But I think it tells more of the story.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
I just think it's early. I think it's a very small base that we're looking at, so we shouldn't take 100% too seriously.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
I thought you were frozen. I'm dazed. I stopped talking because I thought you were frozen. Your face was so still. Zero reaction or emotion.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Yeah. And let's just quickly talk about Tencent. Yeah. missed on profit, but beat on revenue. The stock slipped slightly, but not massively. There's honestly not that much to say with these earnings, but the thing that jumped out to me was their CapEx number, which almost doubled, up 91%. And almost all of that is, of course, AI spending.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
So to me, the takeaway is Tencent is jumping headfirst into the AI race. They're stockpiling up on chips. They're building data centers. They're developing these proprietary models. And they're perfectly suited to do this because it's primarily a gaming company. That's their main business. But it's also an advertising company because remember, Tencent owns WeChat.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And I think what we've seen so far is that the main beneficiary of AI in terms of actual revenue growth is Tencent. If you have great AI, you have better, more accurate ad targeting. And that's what we've seen with Meta, which is why Meta is on such a tear right now. So I think we will probably see the same thing with Tencent. I think it was pretty good earnings from Tencent.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
But the larger story to me is AI... As indicated by what Tencent is doing and Alibaba in terms of their spending and their investment in AI, AI in China is coming. It's coming very hard, very fast. I think this should generally make you bullish on China, specifically the Chinese tech sector. And I should point out just the PE multiples again. China, we got at 15x average compared to the US at 27.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And that's despite the fact that the Hang Seng is up 20% year-to-date. It's been a great year for the Chinese market, but you're still looking at... really low multiples when you compare it to the US.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
So, you know, we've been balancing this US versus China argument all year, and it's beginning to become less clear what's really happening, because now you've got the S&P back up above where it was before Liberation Day. So the whole global rotation thesis, I would say, is on hold for now. I'm not sure if it's dead,
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
It feels like a long time for me.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
But I think just if you look at just pure earnings growth, forget the multiples, I think there's a lot happening in China. I think there's a lot of reasons to be bullish. I agree with all of that. We'll be right back after the break with a look at the Republicans' tax bill. If you're enjoying the show so far, hit follow and leave us a review on the Profiteer Markets feed.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
We're back with Profiteer Markets. House Republicans' new tax plan cleared its first hurdle last week, with the House Ways and Means Committee voting to advance the bill. The plan includes several major provisions, including increased defense spending, cuts to federal Medicaid funding, and a higher exemption for the estate tax.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
The bill is still in the early stages and is likely to undergo changes as it moves through Congress. House Speaker Mike Johnson is aiming to send it to the Senate by Memorial Day. I'd like for us to really investigate this, because, you know, I think about everything that we've talked about over the past few years, and I specifically think about your TED talk.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And it was the most popular talk of the year. We're seeing more and more discussions about these issues. We even had a week ago where Trump said that he was okay with increasing taxes on the rich. But I look at this plan here. This plan basically does the opposite of everything we have advocated for in the past three or four years. And I'm seriously not being political or sensationalist here.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
It genuinely... does the opposite of what everything we've been talking about. I'll just go through a few of them here. For starters, massively increases the deficit. It's going to reduce federal revenue by $5 trillion over 10 years. Does not make up for those losses with spending cuts. There are cuts, but we'll go over them. The cuts are very misguided. So what does that mean?
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Larger deficits, more debt, increased interest payments. We're screwing over the next generation of Americans who are going to have to pay the bill when... Our parents and our grandparents are all dead. The carried interest loophole is staying. Trump talked a big game about getting rid of it. This nonsensical tax break for private equity, it's staying in there.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
We're getting tax breaks for old people. If you're over the age of 65, you're now going to get a larger standard deduction than you did before. The worst part of the plan, in my view, the estate tax exemption. Wealth inequality has gone totally haywire, out of control in America. We've discussed it a lot.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And the question we have all been trying to answer is, how do you redistribute that wealth that has been sequestered into the top 0.001%? How do you redistribute the wealth in a way that is fair, in a way that isn't crazy, and in a way that doesn't mean showing up to rich people's doorsteps with a shotgun and a pitchfork.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
My view on this has always been the easy answer is just tax it when they die. You've got $124 trillion that are going to be passed on in 2048. Greatest generational wealth transfer in history. That's the moment to redistribute the wealth without making everyone upset. And how do you do that? With an estate tax. It's very simple.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
You're not going to just seize all the assets, but you're just going to tax it at a normal rate. So I was... I couldn't believe it when I saw this plan where they are actually going to increase the estate tax exemption, which is already absurdly high in America. They're increasing it to $30 million, which means you can pass $30 million on to your children tax-free.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
In other words, we're deciding we actually like the inequality. We want to maintain it, not just for this generation, which seemed like an anomaly, but for many generations to come. We want the children of rich people and their children to keep on ruling and ruling over many generations of society.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And by the way, the way we're going to do that, we're going to subsidize that by cutting healthcare spending for poor people. What the fuck is going on, Scott?
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
But what about everyone else? I mean, we know he's insane for many reasons, but what about everyone in Congress? Like, I don't understand how anyone would be okay with, we're going to cut Medicaid spending. I mean, that argument alone, I'm willing to have that conversation.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
But then pair that with, oh, and by the way, we need to increase the amount of money that rich people, ultra-rich people can pass on to their kids tax-free from $27 million to $30 million because of inflation. Bridge that gap for me.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
It's unbelievable. And by the way, we're almost talking about it as if the thing that's on the table is just having a total cutoff rate for the amount that a child can inherit from their parents. We're talking about an exemption. It's like you get the $30 million tax-free, and then everything beyond that point is 40% taxed.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
By the way, as you recognize, I had my very first TV appearance last week. You were fantastic.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
So you're still going to make—I mean, these kids are going to inherit literally hundreds of millions of dollars, right? And the question is, why are we increasing the tax-free exemption? Why is that such an important thing? And when you're saying, like, who wins here, it honestly feels like the only ones who win. I agree with you. I don't think the kids win.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
I don't think you win because you got... $10 million more tax-free from your parents. I think you'll probably just become more of a douchebag, less in touch with reality, probably live a worse life, as you put it. I think the only people winning here are the parents who have this perceived sense of, I fucking crushed it. And I worked so hard and I made all these hundreds of millions of dollars.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And because I worked so hard, I need to do everything I can to hoard that wealth and to protect it. And I'm not going to be able to spend it over the course of my lifetime. I've got, what, 20 years left. What am I going to spend $200 million on? So the only other option is to say, oh, well, the last thing left to conquer is to make sure that the most amount possible can go to my children.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
That's the first thing I noted. They call me Ed Olson.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
But they lie about what their intentions are. And I think that's what we're seeing with this tax plan, which is what is so upsetting, is how easy it is to lie and how many people believe you. I mean, the whole... The whole point of this administration from the get-go, or at least the fiscal plan, was fiscal responsibility. The whole thing was, let's balance the budget.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Just look at the fucking plan. It does the opposite of what was intended. Look at Bannon's comments, we're going to tax the rich. Look at Trump's comments, I'm okay with taxing the rich.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And you look at this, all these exemptions here. It's like, in addition to that, they're now lying about it. And... I'm hoping people sort of see through the lie. So that's why I really want to talk about this. It's like, this is just proof here that it's all been lies in terms of what they've been promising and the direction they want to take this country.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
The whole thing with the reshoring, the jobs, and it's all about middle-class Americans. Read this tax plan. This is not about middle-class Americans at all. And it's actually insane the extent to which this is catered to rich people.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Having said all that, there are a few little good things that I will just go over just to end on a positive note. They want to increase the child tax credit from $2,000 to $2,500. I think that's good. Yippee.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
They want to create savings accounts for babies. Newborns will receive $1,000 in a tax-free account. This is actually what we discussed with Brad Gerstner, who wanted those America accounts.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Me too. They also want to eliminate the EV tax credit, which I also agree with. I think the EV industry is well in its way. We don't need to be subsidizing it. If we're having tough conversations about cutting spending, then I agree. Let's get rid of the EV tax credit. And then finally, they want to increase taxes on private colleges with endowments exceeding $2 million per student.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Those colleges will pay 21% on net investment income up from 1.4%. Again, I think that's great. And- It targets what we've talked about. And spend it. Spend your endowment. Spend it. Exactly. Bring it down. The only trouble is they also go after the less wealthy colleges, too. So if you have an endowment of $750,000 per student, your taxes are also going up.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And then the other thing that I think is bad is that for whatever reason, they're exempting religious schools. And I assume they're just kind of throwing meat to the evangelicals where it's like, oh, you guys, we like you. You're not— Harvard and Princeton. So you guys don't have to pay taxes.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Yeah, and we're going to do that so that we don't have to pay taxes. It's weird. Anyway, the outcome I actually think is good, but I think they're probably doing it for the wrong reasons, which is, again, they want to own the libs or own the Ivy League schools. But whatever. The Ivy League schools probably have it coming for them. Those are the good things. Otherwise, terrible plan. My God.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
He's had it. Ed Olson. Let's take a look at the week ahead, Scott. We'll see new and existing home sales for April, as well as earnings from Home Depot and Target. Do you have any predictions for us?
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
I didn't know that. The perfect example.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Dan Chalon is our intern. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profiting Markets from the Vox Media Podcast Network.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Join us on Thursday for our conversation with Scott Goodwin, only on Profiting Markets.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Very... Okay, that's enough.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Hit it! Actually, before that, I have to make one announcement. And this is a big announcement. And that is that Prof G Markets is going to air on the Prof G Pod feed. That's the main feed where you see Scott's face with the turquoise for the final time on June 9th. And after that, this show is going to be exclusively on the Prof G Markets feed. That's the feed.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
If you type in Prof G Markets, it's the green. It's got me and Scott hanging out in a living room. And we're going to be publishing this show every single day of the week. We're going daily. Monday through Friday, you can get your fix for Prof G Markets. It'll be the most up-to-date coverage of the markets from the Prof G team.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
So I would encourage you, if you're listening on the main podcast feed, the Prof G pod, take the opportunity now, go follow the Prof G Markets feed. Wherever you get your podcasts, that's where you're going to be getting this show and you're going to be hearing it every single day because who wouldn't want more of us, right?
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
That's right. And we're taking Josh Brown with us. Your star talent, we're taking him with us. Oh, we love Josh Brown. All right. Let's start with the weekly review of Market Vitals. The S&P 500 rallied on news of US-China negotiations. The dollar jumped before giving up those gains as optimism faded. Bitcoin fell and the yield on 10-year treasuries increased. Shifting to the headlines.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Weird joke, and we weren't speaking about baby, or I guess one year anniversary. I put it together.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
United Health Group had a terrible week, first dropping as much as 18% after the company pulled its guidance and announced its CEO is stepping down. And then two days later, the stock fell 17% on news that the Justice Department is investigating the company for Medicare fraud. At the time of this recording, shares are at a five-year low.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Warner Brothers Discovery announced it's bringing back the HBO Max name. for its streaming platform. The change will take effect this summer. It will reverse the rebrand they introduced just two years ago, and this marks the platform's fifth name change in just five years.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And finally, Airbnb is expanding its offerings by allowing travelers to book services, such as spa treatments and personal training, right at their rental. The company is also re-imagining Airbnb experiences by placing a greater focus on authentic, locally-led activities. Okay, UnitedHealth, crazy dramatic month for this company.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
I mean, first they had that bad earnings report in April, and that was their first miss since 2008. They cut guidance, the stock fell 20%. Then last week, the CEO steps down, they pull their guidance, the stock falls another 18%. Then Wall Street Journal, two days later, reports they're being investigated for Medicare fraud, down another 17%. So we're now looking at, in just one month,
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
a 57% destruction in value for what was one of the top 15 most valuable companies in the world. So I think if anyone's wondering, like, why is the stock falling so much? It's a combination of there are real issues that the company is dealing with, but also these were all surprises. Like the CEO stepping down, that was a surprise. The suspension of the guidance, an even bigger surprise.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And then the kicker, of course, is this Medicare fraud investigation. And as we've discussed, Wall Street hates surprises. But I think the other side of this that is worth thinking about, you know, UnitedHealth is kind of a bellwether for the healthcare industry. So, you know, when it goes up, so do the other healthcare stocks. When it goes down, so do the other healthcare stocks.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
And that's what we saw here, where CVS dropped, Elevents dropped, Humana dropped, lots of other healthcare stocks fell with it. And so I think the question people are asking now is, are the problems that this company is facing, are they specific to the company, or are they industry-wide? And the market appears to believe they're somewhat industry-wide.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
That's good. How are you, Ed? Happy anniversary. I like that. Yeah, happy anniversary. What kind of emotions does this bring up for you? We've been doing this for a year now. At least we've been doing this dedicated podcast for a year.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
That's why you're seeing the devaluations in these other stocks. And I think that probably has to do with what we're seeing in politics. We're seeing talks about lowering drug prices, increasing price transparency, giving Medicare more negotiating power, all these things that would be great for consumers, as we've talked about, but that would hurt the healthcare industry, hurt the bottom line.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
My view is, If history is any guide, healthcare investors have nothing to worry about. Because what history would tell you is that lobbying ultimately wins. And who is the greatest lobbyist in America? It's the healthcare industry. $300 million in lobbying last year, more than any other sector, more than double what oil and gas spent.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
Never underestimate the power of lobbying and what it can do for your stock price. So I look at what's happening with UnitedHealth. I see this as a company-specific problem. They're dealing with internal issues. They have the PR crisis with the shooting of the CEO a few months ago. They're also uniquely exposed to Medicare and these higher costs that are coming with it.
Prof G Markets
The GOP Tax Bill, United Health’s Terrible Week, & Chinese Tech Earnings
So to me, this is a united health problem, not a healthcare problem.
Prof G Markets
The S&P 500 Enters Correction Territory
Maybe he wants something to do. He's just written his book. By the way, respect to Eric Schmidt. I really don't want to just rag on this guy, and I do respect him a lot as an operator and as a businessman. But it feels like he's bored. He sees Bezos and Branson and Musk, and he's like, hey, that looks like fun. I want to do that. They're CEOs of those companies. Why don't I do it?
Prof G Markets
The S&P 500 Enters Correction Territory
Maybe he can run it from St. Bart's and all will go smoothly.
Prof G Markets
The S&P 500 Enters Correction Territory
Take a note out of Scott's book, Eric Schmidt. Let's talk about Neom. This is Saudi Arabia's plan to build a new city. It's gotten a ton of coverage over the years, ton of hype, ton of interest. Yeah. Just for those that don't know, the plan is to build a 105-mile-long glass-domed megacity in the desert of Saudi Arabia.
Prof G Markets
The S&P 500 Enters Correction Territory
It's supposed to house 9 million people with no cars, fully staffed by robots, fully powered by wind and solar. It's supposed to have its own ski resort. And my personal favorite stat, it's supposed to have its own artificial moon. I've thought this is ridiculous for a long time because it's... just unrealistic. And now we're learning they're 55 years away from completion.
Prof G Markets
The S&P 500 Enters Correction Territory
The projected cost is $9 trillion now. And I just want to emphasize the original budget for the city was 500 billion. So they are over budget by 1700%, or in dollar terms, $8.5 trillion. And I think this highlights a problem that I've flagged before about Saudi Arabia and their investment decisions, Quite simply, I think they're childish. I just don't think these are very serious investors.
Prof G Markets
The S&P 500 Enters Correction Territory
The combination of the ski resort and the moon, the obsession with the Premier League, with the World Cup, with golf, with giant AI chips, that company Cerebrus, the obsession with esports and gaming. Just last week, they bought Pokemon Go, for $3.5 billion.
Prof G Markets
The S&P 500 Enters Correction Territory
And I look at what's happening in Saudi Arabia and what they're investing in, the whole thing to me is reminiscent of a rich kid with a billionaire dad who just gave him the keys to the family trust. And by the way, that's pretty much what that country is. The only difference is that it's not a trust fund, it's an oil reserve. So I think these are unserious, frankly, stupid investments.
Prof G Markets
The S&P 500 Enters Correction Territory
But I'm going to brace myself for when you call me racist in the next two minutes.
Prof G Markets
The S&P 500 Enters Correction Territory
I do think there's a difference between a high-speed rail and an artificial moon. And there's somewhere in that difference is where we draw the line. To your point, though, they are attracting a ton of investment. They're attracting especially a lot of consulting businesses and advisory businesses. The advisory business has grown 13% in the Gulf states in the past year.
Prof G Markets
The S&P 500 Enters Correction Territory
What's going on with you, Ed? I'm doing pretty well, Scott, back in New York. And I'm just kind of... I just feel very good about how that South by trip went. I thought that was a great show. Talk about that. That was awesome, wasn't it? So much fun. I think the key detail is that we had 1,500 people outside of the doors.
Prof G Markets
The S&P 500 Enters Correction Territory
Deloitte has nine offices in the UAE alone. And there's this stat that I love, which is that McKinsey, which is consulting on this Neom project, McKinsey is reportedly earning more than $130 million per year to consult on Neom. And my reaction to that is, you got to hand it to McKinsey.
Prof G Markets
The S&P 500 Enters Correction Territory
I mean, they are just exceptional at finding rich people, building them PowerPoint presentations, and then charging them crazy fees. And all I can think is just what a great business consulting is. These huge margins, very little overhead. You were a consultant for many years. Do you have any thoughts on just how the consulting business works?
Prof G Markets
The S&P 500 Enters Correction Territory
So that's what I've been telling everyone when I just come back and brag to people about how successful this show is. That's my big takeaway, that we had to turn away Two-thirds of the audience. What was your takeaway?
Prof G Markets
The S&P 500 Enters Correction Territory
I love it. By the way, I think if you were still doing that today, you would be printing money in the Gulf and kissing ass in Riyadh. But maybe you'll still do that anyway. We'll be right back after the break with a look at the latest on tariffs. And if you're enjoying the show so far, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
The S&P 500 Enters Correction Territory
We're back with Profiteer Markets. The tariff drama has continued to unfold. Last week, so much happened. So I'm just going to take you through a timeline of all things tariffs. So first off, back in February, Trump announced a 25% tariff on all steel and aluminum that comes into the U.S. And the big news is that that tariff officially went into effect last week on Wednesday.
Prof G Markets
The S&P 500 Enters Correction Territory
Then, as we discussed in the previous week, the Premier of Ontario announced a 25% tariff on all electricity that comes out of Ontario. And Trump got very mad about this. And a few days later, he said he would double tariffs on Canada's steel and aluminum to 50%. Now, in response to that,
Prof G Markets
The S&P 500 Enters Correction Territory
Doug Ford backed down, he suspended his tariff, and then after that, Trump also backed down, and he brought the tariff back down to 25%. In other words, a ton of headlines and a ton of back and forth, but nothing actually happened. We're still in the same position we were a couple of weeks ago. Let's just shift to what happened in Europe.
Prof G Markets
The S&P 500 Enters Correction Territory
As I said, that steel and aluminum tariff, which applies to the whole world, that came into effect on Wednesday. So that does affect Europe. Europe's response was, we're going to tariff you right back. They put a tariff on American whiskey, on American jeans, on Harley Davidson motorcycles. It's a pretty hilarious lineup of items. I think they're intentionally cartoonish to make a statement.
Prof G Markets
The S&P 500 Enters Correction Territory
But if you add up the numbers, it does actually make sense, because those tariffs will be $28 billion on America, and that's the same amount Europe will pay on the steel and aluminum. Then in response to that, Trump got angry again. He threatened a 200% tariff on European wine. Okay, now the question is, does any of this actually matter?
Prof G Markets
The S&P 500 Enters Correction Territory
Probably not, because for all we know, the picture will look very different in a few days. There'll be reversed, unreversed, increased, decreased, whatever. And I have to say, Scott, It's beginning to make my job a little ridiculous because the size and scope of these policies and the financial impact they have on our economy, they're too big to ignore.
Prof G Markets
The S&P 500 Enters Correction Territory
I can't simply resign from understanding them and say, I don't really know what happened with tariffs. They went up, they went down, whatever. At the same time, though, this is a complete and utter waste of my time. And for analysts and for investors and for CFOs and CEOs, it's even worse because for those guys, there is actual money on the line. If you're a Jack Daniels or a Levi's or a U.S.
Prof G Markets
The S&P 500 Enters Correction Territory
Steel, you do need to understand the tariffs. You need to write up research reports. You need to model out the economics, analyze the downside, analyze the upside. It's a lot of work. And so these guys probably spent weeks figuring out what will these tariffs actually do to our business. And they woke up one morning, they checked the news and bang, none of it mattered anymore.
Prof G Markets
The S&P 500 Enters Correction Territory
That's not true at all. Yeah. What did you think of that? We went to this Vox Media dinner and it was very cool for me because I got to sit next to Andy Roddick and I was a huge fan of him growing up.
Prof G Markets
The S&P 500 Enters Correction Territory
And that's the thing that I think corporations and executives are going to be most upset about this. And we'll talk about what's happened in the markets. But Scott, first, just your reactions to what happened last week with tariffs.
Prof G Markets
The S&P 500 Enters Correction Territory
Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
Prof G Markets
The S&P 500 Enters Correction Territory
Okay, you got to give Andy Roddick his credit. Fastest serve in history, yes.
Prof G Markets
The S&P 500 Enters Correction Territory
It doesn't sound as good when you're reading the Wikipedia page. Yeah, choose signs you're checked.
Prof G Markets
The S&P 500 Enters Correction Territory
Get to the headlines. Okay, good. Let's start with our weekly review of MarketVitals. The S&P 500 entered correction territory, the dollar snapped its losing streak, Bitcoin fell below $80,000, and the yield on 10-year treasuries dropped on Monday but recovered through the week. Southwest Airlines will begin charging passengers for checked bags.
Prof G Markets
The S&P 500 Enters Correction Territory
I mentioned at South by Southwest, a big winner here are these traders who are trading on the volatility. Let's focus on stocks for this session. I have two groups of winners here. First off, we have the domestic steel and aluminum stocks. That's basically two or three companies. It's like U.S. Steel and its Nucor. There are...
Prof G Markets
The S&P 500 Enters Correction Territory
Very few companies that are actually benefiting from the tariffs from a steel and aluminum perspective. And actually, if you look since inauguration day, they're almost flat. So they're barely winners. But I think we can count them because last week when the tariff stuff happened, they rose a little bit. The second group of winners is what I will call the defensive stocks.
Prof G Markets
The S&P 500 Enters Correction Territory
And these are stocks that are highly unspeculative. No tech. very old, very mature, and crucially, these are the stocks that issue dividends. So companies like Johnson & Johnson and Coca-Cola, they are up since Trump took office. Again, not by that much, It's not a huge win, but they are outperforming. And I think the dynamic we're seeing here is investors are now looking for safety.
Prof G Markets
The S&P 500 Enters Correction Territory
They're not interested in these moonshot AI bets or software plays or anything basically that depends on an optimistic future. Instead, they're going to the stocks that can hand you cash in your pocket today, the dividend stocks. Let's go to the losers. First off, the tech companies. Amazon down 10% year-to-date. Apple down 11%. Google down 12%. Nvidia down 17%. Also, the banks.
Prof G Markets
The S&P 500 Enters Correction Territory
Citigroup, Morgan Stanley, Goldman Sachs. They're all suffering since Trump was elected. Small cap stocks, so these are the small market cap companies, companies in the Russell 2000, they are taking a beating right now. Also Tesla, of course, that's its own story, but it's down 35% on the year. Now, what do all of these companies have in common, all of these losers? It's so interesting.
Prof G Markets
The S&P 500 Enters Correction Territory
They are all the Trump trades. These are the very companies that we talked on this podcast that were supposed to benefit from the administration. You remember we spoke with Tom Lee. He was bullish on these companies specifically. And to be clear, I agreed with him.
Prof G Markets
The S&P 500 Enters Correction Territory
But the market is basically telling us right now, hey, remember everything we said about Trump and who he's going to help and which companies are going to benefit? Forget all of that. No longer true. We misjudged him. We didn't realize. Sorry, our bad. And this is all reminding me of something that Anthony Scaramucci told us nine months ago.
Prof G Markets
The S&P 500 Enters Correction Territory
Beginning in late May, passengers get a free checked bag only with top-tier loyalty status, a business class ticket, or their airline's credit card. Shares rose 8% on that announcement. Former Google CEO Eric Schmidt has acquired a controlling stake in rocket startup Relativity Space, and he will now take over as its CEO. The company is known for its use of 3D printers for rocket production.
Prof G Markets
The S&P 500 Enters Correction Territory
When we were in the middle of the election, no one knew what was going to happen. And Trump was beginning to talk about this tariff thing. And there was this consensus view on Wall Street, and I had many discussions with many investors and many people on this podcast. There was this view that it's all just talk. He doesn't really mean it. He's throwing meat to the base.
Prof G Markets
The S&P 500 Enters Correction Territory
He's not going to go through with this. Think what it would do to the markets. He doesn't want to do that. Why would he do that? Anyway, we had that conversation with Anthony Scaramucci, and I put forward that thesis to Anthony.
Prof G Markets
The S&P 500 Enters Correction Territory
I mean, he completely nailed it. And I think it is very interesting to see what's happening in the markets right now, the fact that the markets are down and Wall Street and corporations are suddenly realizing, oh my God, he was serious. Maybe he's not on our side. And I think that's the vibe shift that is making Wall Street and investors so freaked out right now.
Prof G Markets
The S&P 500 Enters Correction Territory
We thought that Trump was one of us. Maybe he isn't. Let's take a look at the week ahead. We'll hear the Fed's interest rate decision for March. We'll also see earnings from Nike, FedEx, and Five Below. Scott, any predictions?
Prof G Markets
The S&P 500 Enters Correction Territory
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profiteer Markets from the Vox Media Podcast Network.
Prof G Markets
The S&P 500 Enters Correction Territory
And finally, Saudi Arabia has reportedly invested $50 billion in its NEOM project so far, with the total projected cost reaching $8.8 trillion. That is more than 25 times the country's annual budget, and the project's construction is expected to continue for another 55 years. Scott, we will start with this new policy from Southwest Airlines.
Prof G Markets
The S&P 500 Enters Correction Territory
This is very interesting because the whole free bag check thing has been central to Southwest and its brand for years. In fact, they actually trademarked this phrase, bags fly free. So this was their big differentiator. And last year, the company even said that the free bag policy was the third biggest reason why customers choose Southwest Airlines. And now they're scrapping it.
Prof G Markets
The S&P 500 Enters Correction Territory
Now, why are they doing it? It's quite simple. It's because of Elliott Management, the activist firm. You might remember last year, Elliott bought a 10% stake in Southwest. They installed five directors to the board. And this was one of their big arguments in that play. They said, we want to charge fees on the bags. So I'm very interested to get your view on this.
Prof G Markets
The S&P 500 Enters Correction Territory
This feels like almost a classic business school case study. Like there's a fork in the road. Do you charge extra on this thing you know you can make money off of? Or do you forego the additional revenue and maybe you get some more loyalty and maybe some more interest from your customers in the long run? What do you think, Scott?
Prof G Markets
The S&P 500 Enters Correction Territory
I do want to bring up a similar story in Costco, because I think this is one of my favorite stories in business. So Costco is famous for their hot dogs, and specifically the fact that their hot dogs cost $1.50. And they have cost that amount since 1985. They are known for this. Now, of course, this doesn't really make that much sense economically. Inflation has risen almost 200% since then.
Prof G Markets
The S&P 500 Enters Correction Territory
So if they were selling it at the same price, what $150 was in 1985, they should be selling it for $450 today. Several years ago, the then CEO, this guy, Craig Jelinek, he was looking at the situation, looking at the income statement. He said, okay, we need to raise the price of these hot dogs. We're losing money on this. So he goes to the founder of Costco, Jim Senegal,
Prof G Markets
The S&P 500 Enters Correction Territory
And he says, you know, hey, this isn't really working. I know the 150 thing, the hot dogs, it's cute, but I think we need to raise the price. And Jim responded with what I think is the most iconic line in the history of business. He said to him, quote, if you raise the price of the fucking hot dog, I will kill you. And that was it. End of story. To this day, the Costco hot dog is $1.50.
Prof G Markets
The S&P 500 Enters Correction Territory
That happened back in 2009. The stock was around $50 per share at that time. It's now at around $1,000 a share.
Prof G Markets
The S&P 500 Enters Correction Territory
I don't think it's because of the hot dog, but I do think there is something to be said for sacrificing potentially short-term profits in exchange for, in the future, goodwill, a better brand, stronger brand, customer loyalty, all of these things that ultimately over the long-term result in greater profits and more shareholder value. So I think...
Prof G Markets
The S&P 500 Enters Correction Territory
I wonder if Elliott even cares about the long-term value of this company because presumably they're just trying to make as much money as they can in as short a time as possible, and then they sell their position and move on to the next thing.
Prof G Markets
The S&P 500 Enters Correction Territory
Let's move on to Eric Schmidt, the former CEO of Google, who is now taking a new CEO position at Relativity Space, which is this small space startup that builds rockets with 3D printers. I think most notably here, Eric Schmidt bought his way into this. So he made an offer to the company to buy a controlling stake, but that offer was contingent on his becoming the CEO.
Prof G Markets
The S&P 500 Enters Correction Territory
the then CEO who founded the company, this young entrepreneur, he has stepped aside and he will now take a seat on the board. Scott, I don't love this on a personal level. Just the visual of a billionaire who sees Bezos and Musk and Branson all getting involved in the space race, then deciding not to build his own company, but to buy his way into one, combined with the visual of
Prof G Markets
The S&P 500 Enters Correction Territory
this young Y Combinator entrepreneur being swept to the side.
Prof G Markets
The S&P 500 Enters Correction Territory
It just, it all reminds me of this intergenerational wealth dynamic that we so often talk about, where you have all of these old guys who are billionaires with too much money and too much time on their hands, and then they just use the money to install themselves into positions of power where they can play pretend startup or play pretend politics. Maybe that's too harsh.
Prof G Markets
The S&P 500 Enters Correction Territory
As I'm saying it out loud, I actually think maybe I am being a little harsh. But that is where my mind goes.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Let's talk about this new initiative from the EU, Invest AI. This is sort of their version of Stargate. This is a 200 billion euro, which is roughly around 200 billion dollars at this point, to invest in AI across Europe. This seems like a pretty good idea, I would say. I mean, I feel like Europe and the EU generally gets shitposted for investing. not being ahead of the curve on tech or AI.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And just some pretty staggering numbers here to reference. The US raised $209 billion in VC funding last year. Europe raised only $62 billion. So America's share of global venture capital is 57%. This is last year. Europe's was only 16%. If you look at AI VC funding specifically... US makes up 74% of funding. Europe makes up 9%.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
So Europe is way, way behind the puck when it comes to AI and, generally speaking, technological progress. So now it looks like they're trying to rectify that with this AI initiative. Do you have any reactions to what the EU is doing?
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
I'm just surprised that you're making the genetic argument. I'm down to hear it out. It's the first time I've heard this from you, that Americans are genetically predisposed to taking risks, and perhaps that is the explanation behind their vast wealth.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Culturally, I think Europe feels and has felt for generations that they have more to lose. They've basically just rested on their laurels. And it's interesting to see that this is happening only after America did it. It's also happening only after China came out with DeepSeek.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
The fact that, you know, I think everyone is surprised to see, oh, wow, Europe is committing to AI, but they're only down to do it once America did it. And then once China basically showed them, you guys are behind the curve. So they're taking the risk, but after everyone else did.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
We'll be right back after the break with a look at Reddit. And if you're enjoying the show so far, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Yeah, I'm doing pretty well. I'm in Mexico City, heading to Puerto Escondido tomorrow.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Reddit reported fourth quarter earnings that largely beat analyst expectations with sales up 71% from a year earlier. It also posted its second quarterly profit since going public. However, the stock dropped more than 13% after user growth missed expectations.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
CEO Steve Huffman explained that a change in Google's search algorithm led to, quote, volatility in user growth, but assured investors that traffic has since recovered. Scott, you are a Reddit, pretty significant Reddit shareholder. What are your initial reactions here?
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Casa Miraval. It's not that nice. It's okay. It'll do. Yeah, I'm heading out tomorrow. We're going to Puerto Escondido. It's going to be great. I had tacos for breakfast, lunch, and dinner yesterday.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
What's Mexico City like? It's a hot city right now. It's great. I haven't seen that much of it yet. One thing I did notice that was kind of interesting is there are BYD stores and BYD ads everywhere. I haven't seen a BYD vehicle yet, but it is interesting. I mean, I've seen it at least five times. You never see that in America.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
I didn't expect you to say that. I mean, you mentioned the valuation there that perhaps is undervalued. I'm with you. I think this is still undervalued. And I think, you know, Dropping 13% after that quarter, I don't think was warranted. The thing that Wall Street was upset about clearly was the user number. So users grew 39% to 101.7 million. Investors were expecting 103 million.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And I think what really freaked them out was what Reddit said about this change in the Google search algorithm. So you might remember last year,
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
reddit got this big boost because google changed how it ranks search results it was called the hidden gems update and the new google algorithm basically prioritized what they called authentic content so that is content that is user generated that you find on forums that you find on chat rooms i.e reddit so this was a this is a great thing for reddit last year
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Now, according to the CEO, this quarter, or this last quarter, Google changed the algorithm again. And we don't really know why or what exactly changed, but that was why you saw this, quote, volatility in the user growth. And I think that's what upset Wall Street here, this idea that Reddit is too reliant on Google. They're not growing organically on their own.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And so when Google changes their algorithm, suddenly that causes a problem for their growth. I think that's a fair criticism. I think the bigger criticism of Reddit though, and this is a bull case, is they just punch below their weight on everything. Ninth most visited website in the world. It's higher than Netflix. It's higher than Amazon. You've got 100 million daily active users.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
So these are people who are using it every single day. They don't release the monthly active users, but it's estimated to be around a billion. A billion people using this once a month, at least. And yet the company is worth only $35 billion. It's less than a tenth of the value of Netflix. And so we're talking about this as a team. And Mia did this really interesting analysis.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
So we were discussing the cultural significance of Reddit. You know, the idea, how important is Reddit to society? And we landed on this term, mindshare. And we wanted to figure out a way to kind of quantify that for Reddit. Is there a way to come up with a score for the amount of mindshare that Reddit has in people's minds, in their conversations, in society at large? So Mia...
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
did this analysis she looked at website visits she looked mentions on tv wikipedia page views job search volume you know how many analysts track the stock etc etc all these different metrics to kind of get a gauge for this mindshare and then she came out with a weighted average and we called it the mindshare score and what she found is that reddit's mindshare rating is
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
is only four times lower than Google's. But if you look at the market cap, it's more than 60 times lower. So in other words, if you were to look at Reddit as a multiple of mindshare, and let's be clear, this is very non-gap. We came up with these metrics on our own. But if you looked at it as a multiple of mindshare, Reddit is severely undervalued.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
So clearly China's trying to push that in Mexico, which is kind of interesting. But yeah, it's a beautiful city. It's a good time. Going to Contramar later tonight. Apparently that's the great restaurant. Maybe we'll check out the Soho House. It'll be good.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And so this begs the question, like, what does Reddit need to start doing to start punching above its weight, or at least to live up to the expectations that come with the fact that you are a top 10 website in the world, that everyone knows who you are. Everyone who uses the internet is using Reddit in some sense. We use it all the time. And we have our Reddit page
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
which I love, and we love engaging on that. But the company is still very small relative to its peers. So what do you think it would take? I guess you mentioned the podcast there, but what else do you think it would take for Reddit to start punching at least in line with or above its weight?
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
This explains so much. Keep going.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Thank you. Thank you. Thank you.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Over France, over Italy, over Greece, Mexico wins.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
I mean, everything's been crazy cheap.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Glad you're glad. And before we get into the show, I just want to promote the Markets newsletter. So we've expanded this show into a new weekly newsletter. We're breaking down key market moves with data-driven analysis and crisp visuals every Monday. So please subscribe now at profgmarkets.com. I think the newsletter is pretty great.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
It's kind of everything in the podcast and you get to read it in about two minutes. It's sort of exactly what you need on a Monday. I wasn't a big fan of it at first.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
They can already get that on YouTube. They can already get that on Spotify. I also don't think it's whatever the fuck CNN Plus was. Something about that didn't work.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
It's too produced. You lose all of the authentic feel that you get with the podcast and with that relationship with podcasters. What do you think a good Netflix show for a podcaster would look like?
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Can you do that? Can you invest that much, bring in that many people and maintain the level of authenticity that you get online? on podcasts. I would argue, I don't think it's possible to do that. I think the more highly produced you get, the less real things start to feel.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And there's something nice about you being in a hotel and there's a curtain behind you and we can actually see what is happening in your life. Because as I've said, I think the thing that people crave most is connection with people. This is what I wrote about in that blog post, People are the New Brands. They crave connection with real people
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
because of this issue with loneliness that we keep on seeing. And I don't think that a highly produced Netflix series is going to be the kind of thing that addresses that level of connectivity and authenticity that you get with podcasts.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
We'll see earnings from Walmart and Alibaba. We'll also see consumer sentiment data for February. Do you have any predictions for us, Scott?
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
They always find a way to justify it. I mean, I agree with everything you said, and yet I don't think it'll happen because the market always somehow, this company, they just love this company. They always figure out a way to say, no, no, there's still more room to run.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
I think it's a great newsletter. I'm excited about it. Let's start with our weekly review of MarketVisals. The S&P 500 was volatile, the dollar declined, Bitcoin dropped, the yield on 10-year treasuries jumped. Shifting to the headlines. Inflation came in hotter than expected, with the consumer price index rising 3% in January from a year earlier.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from the Vox Media Podcast Network.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Join us on Thursday for our conversation with Kyla Scanlon, only on Prof G Markets.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Who is that? Mike Myers. What's the guy's name?
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Yeah. Speaking of inflation, let's talk about the cost of private schools in America. Yeah.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Prices jumped 0.5% from December, which was the biggest monthly increase since the summer. All three major indices fell on that news. Average tuition at US private schools surged to nearly $50,000 this year. marking the biggest increase in at least a decade. Schools kept tuition steady during the pandemic, but rising teacher salaries and material costs are now pushing prices higher.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And finally, the European Union has committed to mobilizing 200 billion euros for AI investments. 50 billion euro will come directly from the EU, while more than 20 investors, including Blackstone and KKR, have pledged the remaining amount. 20 billion euros will be set aside to fund four AI gigafactories dedicated to training large language models. So let's just start with this inflation read.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Let's just go over the important numbers really quick. So the CPI rose 3% year over year. Core CPI, which strips out food and energy. And as we've discussed, the reason you want to use core CPI as opposed to CPI is because food and energy prices are very volatile. So it can sometimes sort of distort what's really happening. And that rose 3.3%. So even higher. This was not
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
This is not a very good report. The big drivers were shelter, transportation, medical care. But the item that's getting the most attention here is the price of eggs, which has risen 15% in the past month alone and 53% in the past year. So a carton of 12 eggs now costs more than $8 on average. A year ago, it was less than $5. And the reason this is happening is kind of interesting.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
It's because of this outbreak of bird flu, which is a common problem in the industry. But apparently right now, the outbreak we're seeing is one of the worst we've ever seen. And this is a huge problem for farmers, because if you find one single case of bird flu, it means you have to kill your entire flock. So in the past four months...
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
American farmers have killed 15% of all of the chickens in America. So supply is really low, which is why prices are really high. Your reaction, Scott, to this inflation data and perhaps eggs specifically?
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
Certainly going to get worse the way we're headed so far. I housing accounts for nearly a third of the overall CPI rise. And we keep on seeing this with every single inflation print. It's like, it's very high. What was the problem? It was housing. The way we're headed in terms of immigration and tariffs, this is all only going to get worse.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
I think the question is, can Trump sort of vaccinate himself from being associated from this whole inflation thing? Because Biden, we know, I mean, after COVID, you had all these supply chain issues around the world, which sent prices skyrocketing, not just in America, but everywhere in the world. Every single government was dealing with inflation. Biden did a terrible job
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
of making clear to the American people that actually it doesn't really have anything to do with him or his policies. This was a global problem. But it's very hard to convince the American public of that when you go to the gas station and prices are up 10%. And the same might be true here with eggs. I mean, people could be showing up to the supermarket. Eggs are up 53% in the past year.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And usually when something like that happens, the first person you blame is the president. Now, the question for Trump is, is he going to do a better job of pushing the blame somewhere else? And I think the answer is probably yes. I think he's going to be talking a lot about bird flu. By the way, he's blamed this inflation print on Biden already. He said, this isn't my fault.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And I honestly, I think that's actually a fair assessment. I think inflation is, you know, sort of a lagging indicator. But If this continues, it's going to be a big problem for him because this was really the big issue that was on the ballot in November. Speaking of inflation, let's talk about the cost of private schools in America, up to $50,000, up 7%.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
I find this so interesting because you talk a lot about this issue in higher education specifically, where you have Colleges driving down supply with lower and lower admissions rates, at the same time driving up prices, and it's all culminated in what we call kind of the Hermesification of higher ed, where they're basically adopting the same go-to-market strategy as an Hermes or a Louis Vuitton.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
college degrees are becoming increasingly luxury items. Well, now we're seeing that same dynamic, not just at colleges, but in high schools and in middle schools and even elementary schools. And I just want to point out this crazy stat that I saw. In New York,
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And granted, New York is an exception, but in New York, the average tuition for a private elementary school, so this is grades K through five, these kids are like six years old, the average tuition is $22,000 per year. And, you know, then you look across America, the fact that it's now up to $50,000 for private schools from elementary to high school. For boarding schools, it's $73,000.
Prof G Markets
Is Reddit Undervalued? + Netflix Goes After Podcasts
And meanwhile, the admissions rates continue to go down, i.e. there is still incredible amounts of demand. People are still down to pay for this. But it's only a very specific cohort in America who can actually do that. So... What does this say about America? What does this say about our education system? Where is this all headed?
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
What do you think? No comment on that. We were really getting somewhere. We were breaking new ground. I had to bring it back to Alyssa.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
I think what you're saying there is the important point, which is that the bond market was the adult in the room. And you've said that for a while. And Andrew Ross Sorkin said it as well on this podcast.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
If there is any blockade to this administration's efforts and the Republicans to get what they want over the next, call it two years, because we'll see what happens in two years in the midterms. The only... potential governor on them is, oddly enough, the bond market. If, in fact, the investor class around the world says, you know what, we're just not doing it this way.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
We don't like what's going on here. They can vote with their wallet and they can say, we are not going to be buying your bonds unless you're going to pay us a lot more for them, in which case everything becomes a lot more expensive for all of us. And that is the only thing, frankly, that I can even imagine that is a governor on the politics of our country over the next, call it two years.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
That's not what the administration is saying, though. And I think we should clear this up here. The way they are justifying this pause on the tariffs, the pullback, they say it was all this, it was this 4D chess move to put China in a corner, to bring our trading partners to the table.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
And most importantly, they have said this, that it had nothing to do with what happened in the bond markets on Tuesday night, where yields exploded and markets were digesting the very likely prospect of a credit crisis. And so Howard Lutnick, as soon as this happened, he went on CNBC and they asked him point blank.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
Absolutely not. Scott Besson, he also went on CNBC. They asked him the same question.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
But the best interview to me, the most telling interview, was Trump's, where he's standing outside of the White House, and unprompted, he starts rambling about the bond market.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
And by the way, apparently he was watching Jamie Dimon's interview on Fox just a couple hours before he hit send on the tariff pause. And that's the interview where Jamie was saying he was expecting a recession. So this idea that this was all part of the plan and that this was not a reaction to the bond markets, that it was just a coincidence that it happened right after yields went haywire,
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
Total lie. It is absolutely a response to the bond markets. This was the administration realizing the markets are more powerful than they are. The world will only tolerate so much of their craziness. And they were essentially strong-armed by the bond vigilantes, the bond investors, into admitting defeat. Now, of course, they can't say that. We remember who Trump's mentor was, Roy Cohn.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
His number one rule, never admit defeat. So they come out and say, this was a big win for us. But I think the most pathetic thing that I saw was watching all of his backers file into a line and having been genuinely and publicly rattled by what had happened, genuinely frightened by the world's response, they go out and say what a genius Trump is.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
And I'd like to read you some quotes here from Stephen Miller. This is from Twitter. He said, quote, "'You have been watching the greatest economic master strategy from an American president in history.'" From David Sachs, quote, once again, Trump was right about everything. From Bill Ackman, quote, this was brilliantly executed by Donald Trump. Textbook, the art of the deal.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
And my response to Bill Ackman would be, what deal? I mean, seriously, tell me, what is the deal? What did we get here?
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
We'll be right back after the break. If you're enjoying the show so far, be sure to give the Prof G Markets feed a follow wherever you get your podcasts.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
It is interesting how all these, I mean, the response to any criticism has always been Trump derangement syndrome. And I've said, you know, I think probably a month ago that there's a new syndrome, which is TDSDS, which is Trump derangement syndrome, derangement syndrome, where you basically ascribe any criticism of the government as a symptom of Trump derangement syndrome.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
I'll bring us back to what the tariffs mean for our actual economy going forward. But I just want to stay on what happened in the stock market for a second. Because I think what we saw when the markets ripped back up was... Trump and the MAGA base basically bragging that this was a win, that this was a great deal. Of course, that doesn't make any sense.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
I mean, he was literally gloating, oh, wow, we've had one of the greatest stock market rallies in history, after he, of course, brought... one of the greatest stock market crashes in history too. So I think we can all agree that this was not really a win. But I also want to emphasize what a loss this actually was for so many regular Americans.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
You know, if you took our advice, your advice, which was to do nothing, then you were fine, and you're okay for now, generally speaking. But the trouble is, not everyone listens to this podcast, so not everyone listens to you. And there were many people out there in America who actually did so. who got super freaked out. They saw the market was down 10%.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
They thought it was going to keep sliding, and they decided to liquidate. And I would point you to a statistic, which is that April 7th, Monday of last week, was the fifth largest trading day for 401k assets in recorded history. And you look at what happened. What were people doing with their 401ks? They sold their stocks.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
And the money, they either kept it in cash or they moved it into more, quote unquote, stable assets like bond funds and money market funds. And then you look at what's happening to those assets, T-bills and notes, those assets are going down too. But the reality is that these are the stories you don't hear.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
You don't hear about the guy in Pittsburgh or Gary, Indiana, who only has so much in his 401k and his retirement account, who actually sold at the bottom. And hundreds of thousands of Americans did this. And they're looking at their 401ks this week. And they have to digest this now. They have just registered not an unrealized loss, but a realized loss of 10% or more because they sold.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
So I just want to point that out, too, that, you know... For many of us, it was just a wild week, right? It went up, it went down, it went up, it went down. It looks like it's coming down again, and it looks like the long-term trend is down. But for many people, this was a flat-out loss, just pure, unadulterated, down 10%.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
It is funny, this week I have not been hearing any accusations of TDS. I think people have finally gotten it through their heads that that's not really a valid argument you can make anymore. So we'll be getting into all of it today and all of the arguments that the other side has been making as to why any of this could possibly make sense. A few notes from me.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
And no amount of the 4D chess justification or the sycophantry is going to change that. And I just want to point that out, you know, that a lot of people got really, really hurt last week. Now, on investing trends in general, what we're identifying here is a massive fuck-up from the administration who went ahead with this crazy tariff idea.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
The bond market told them that was a bad idea, and then they pulled it at the last minute. We've been talking for a while about this idea
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
global reorganization of the investment economy, where America has benefited from, generally speaking, massive inflows, perhaps unjustified, but at the very least justified by the fact that we had a stable government that was respected by investors around the world. Our thesis has been that we might be witnessing a rotation away from that dynamic, which would be
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
It would massively upend global markets. Given what happened with pulling the tariffs, what do you think that does to this dynamic? What is happening now?
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
My brother-in-law is at business school right now. He went into class last week. The professor came into the class. He said, I just want to apologize to everyone. They said, what for? He said, I don't think any of you guys are going to get jobs next year. So this is already happening.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
One, please go vote for us in the Webby Awards. Yes. Please vote for us. I need a raise. So we need to get this win under our belt. You think that's going to get you a raise?
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
Just some examples of companies that are... on hold or pausing or freezing however we want to call it the reality is they're no longer producing output or contributing to our economy like they used to so you mentioned that microsoft they are now pulling back from ai spending which of course trump was you know on the podium gloating about what a tremendous chip investment the US is going to make.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
So Microsoft, which is going to be the biggest spender, they're now pulling back. Audi, halting shipments to the US. They also froze 37,000 vehicles that were waiting at ports across America. Amazon. canceling their vendor orders across Asia with no explanation. This was reported by Bloomberg. Roughly half a million dollars worth of goods were frozen.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
And this is a signal, not that Amazon will be paying the tariffs as we expected, or as I assume Trump expected, but they're just gonna halt their production entirely from China. So we're gonna see a lower supply of goods in America, which, you know, Econ 101 means we're gonna see higher prices. Hollywood, this is going to massively affect Hollywood.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
So go vote for us in the Webby Awards. Voting ends this week, so please go vote for us at vote.webbyawards.com. Type in Prof G Markets in the search bar. You will find us. Please vote for us. We'll also leave a link in the description to make it easy for you. And the second point I will make, just a bit of housekeeping before we start the show,
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
China is reducing, they've said they're going to reduce their imports of American films. Last year, American films grossed $585 million in China alone. In other words, all of this nonsense is happening in the stock market, and we're all getting flustered about it, and rightly so. But meanwhile, the real economy is grinding to a halt. We're already seeing layoffs. We're seeing order cancellations.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
We're seeing price increases. Walmart just said that we should be bracing for price volatility, and that's Latin for price increases. So, you know, beyond Trump, beyond politics, we're seeing massive effects play out in the real economy right now. And so, Scott, what do you think we as regular people can expect? And is there anything we can do to sort of brace ourselves for this change?
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
Starting in June, we're going to be going every single day on this podcast. And I think the events of this past week have made it very evident to us why we need to do that. We want to stay on top of the ball. We want to be up to date. We want to make sure that everyone is informed as we embark on this unbelievably wild ride over the next several years. So we're going to be doing markets daily.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
Just to interrupt, because you look at the numbers and the swings that we've had, they are at that level. They do rival the largest crashes and crises we've ever seen. Not on a percentage basis. On a percentage basis, yes.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
And the question I think everyone is wondering, and by the way, I'm not disagreeing with your point here, but the question is, are we reaching that point yet? Is it possible that the stock market will continue to slide? Do we have a 2008 or maybe a 2000-type event on the horizon here?
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
And I'm with you that we don't have enough data to make that call yet, and we don't really have the right to start panicking and saying that the sky is falling. But... Are you saying it's just not on the table?
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
We'll be right back. If you're enjoying the show so far, hit follow and leave us a review on the Prof G Markets feed.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
But that's only going to be happening on the Prof G Markets feed. It's not going to be happening on the Prof G Pod feed. And so if you're listening on the Prof G Pod feed, the main feed, the logo is a turquoise symbol with Scott's head on it. I encourage you to go switch over now. subscribe to Prof G Markets.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
I think you look at what has happened over the past 10, 20 years. The reason that we've had all this capital entering the U.S. markets is because it was sort of the only place where you could get these really strong returns and you had a guarantee of relatively low risk compared to other nations. And when you say that the U.S.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
has sort of given up its edge, I think what's really happened is the U.S. has given up its edge in terms of a...
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
relatively risk-free investment there is now all of this associated risk attached to america that didn't exist before and this is the kind of thing that affects the chinese markets i mean those chinese companies that we talk about they do very well but the multiple is contracted because of this government risk that everyone prices in and now we're seeing a reversal of that trend
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
And if you go into Europe, I think a lot of investors are thinking, I can get relatively similar returns at lower risk, but also it's very cheap right now. You just look at the multiples compared to the US, the entire European stock market on a price to earnings basis is cheaper.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
So I think what we're saying, I mean, we have been saying do nothing, which I think is the right call on a weekly basis. just given the volatility we saw last week. But when else would we rotate out than now? I mean, isn't it the time?
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
It's a green logo with Scott and I bantering together in his living room because that's where the action is going to be happening. And it's going to be happening in a couple of months. So please, if you haven't done so already, go subscribe to Prof G Markets because soon enough, we're going to be doing this five days a week. It's going to be epic, but we won't be on the Prof G Pod feed anymore.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
And that is my housekeeping. I'm now going to get into the headlines.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
Yes, and I also want to emphasize something you point out there, which is that this has been a months-long venture for you. It wasn't that you woke up one day and you decided, okay, I'm rotating out. This has been something you've been doing over the course of several months, which makes sense because the entire bet that we're describing here is a bet based on capital flows.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
We're not betting that some... massive crisis event is going to trigger a reversal that's going to happen within a day, we're describing a bet that involves large institutions and large investors gently and gradually re-steering their investment into a different locale. And that is something that we're going to see play out over, let's face it, years.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
So, if you're going to make this play, I think what you want to do is what Scott is describing here, which is drag it out. You don't have to do it all in one go. You can make it a months-long play. You could even make it a years-long play, because the bet is that those returns are going to come not within a day, but within several years. Let's take a look at the week ahead.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
We'll see earnings from Goldman Sachs, Johnson & Johnson, Bank of America, US Bank, TSMC, UnitedHealth, and Netflix, i.e. earnings season has begun. Scott, any predictions?
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kintzel is our research associate. Dan Shallan is our intern. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profiteer Markets from the Vox Media Podcast Network.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
I'm like, I see her lips. What's her name? Alyssa?
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
That's very exciting. Should we talk about what matters?
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
The trade war has officially reached a boiling point. President Trump announced a 90-day pause on tariffs for most countries Wednesday while simultaneously raising tariffs on China. The selective reprieve ignited a wave of investor euphoria. Minutes after the announcement, the major indices skyrocketed. The Dow was up nearly 8%. The S&P rose by almost 10%.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
That was its sharpest gain since October 2008 and the third biggest since World War II. And the Nasdaq had its best day in 24 years, climbing 12%. The Magnificent Seven alone added $1.5 trillion in value. By mid-afternoon on Thursday, though, stocks gave up half of that rally.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
As Trump raised the tariff rate on China again to 145%, the Dow ended the day down 1,000 points, and the S&P and the Nasdaq closed down around 4%. Then stocks headed back up on Friday. Scott, your reactions to the turbulence that we've seen in the markets in this last week? Where do you stand on tariffs today?
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
Well, you said you predict or you believe that that happened. I can tell you right now the evidence is that it did happen. There was someone who bought a huge number of zero-day call options on the S&P hours before he released that tweet and released that announcement saying that he's pulling and pausing the tariffs. And so this is basically a bet
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
that the S&P would rise by a huge amount within one day. They expire at the end of the day. And those options, we don't know who this was, but those options exploded by more than 2,000%. So this person, whoever it is, made millions. And of course, the only rational implication is that this individual knew what was gonna happen,
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
and they were insider trading again we don't know who that was the democrats are now calling for an investigation into this and the big question is did trump tip someone off i don't see any way that it that it couldn't have been that or maybe it was sloppiness and word got out among his close group of friends that this is what he was going to do but there is evidence that
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
in the markets that someone was doing this, someone was insider trading. So I think you're almost calling the prediction too late in that we know it actually happened. But all of your points there align with the first thing that I've been thinking coming out of this insane week.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
where you had these unbelievable swings in the stock market, in the NASDAQ, in the S&P, in the Dow, the entire US stock market. And essentially what's happened is the president has turned our economy or our stock market into a meme stock. you know, falling or rising 10 or more percentage points within a day for six days straight, those are the characteristics of a meme stock.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
That's something like a GameStop or an AMC or a cryptocurrency like a Fartcoin or a Cumrocket. And that might sound funny or hyperbolic, but it was plainly true last week. The price movements of the S&P resembled those of a meme stock. which makes me ask the question, okay, well, what does it mean for us that our stock market has itself become a meme stock? I think there are a few implications.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
One, we're gonna see a huge surge in options trading, as evidenced by you. People are gonna be making and losing huge amounts of money based not on the cash flows and the earnings of our economy, but on the words and the tweets of the spearheader of the movement, which is the president.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
I think we're also going to see a massive influx of young investors who have grown up in an era of crypto and meme coins and who are just more excited by this short-term upside of volatility versus the long-term upside of actual investment, value investment. And three, and I think this is the most important consequence, I think our creditworthiness is going to collapse. Because lending...
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
far more so than investing, is fundamentally dependent on certainty and stability and reliability. And that's why you look at every mean stock in existence, they all have a junk rating. Look at GameStop, AMC, MicroStrategy. Yes, those stocks can at times outperform, but over the long term, the underlying default risk is way too high, which makes their debt essentially uninvestable.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
And now we are putting the entire economy in that position. And this is the dark side that I don't think people are paying enough attention to right now. Because on Wednesday, stocks went up and people said, great, we're back to normal. We're not perfect pre-tariffs, but we're back on track. And what they seem to gloss over, though,
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
which is now appearing to us in the form of the 10-year yield, they were not paying attention to the bond market because the yields came down a little bit from those insane highs that nearly tilted into a full-on credit crisis, but ultimately landed higher than where they were before the tariffs. And now they're rising again.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
And what that tells me is that over the course of a few days, we essentially kneecapped our ability to borrow. We damaged our reputation as an investable economy. We damaged other leaders' ability to believe what we say. We damaged this global assumption that the US, generally speaking, knows what it's doing.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
And beyond the politics and the embarrassment and the ridiculousness of it all, I think the numerical consequence of all of that is a massive long-term increase in our borrowing costs, which, as Trump has correctly pointed out, is something our nation is overly dependent on, and which, by the way, he has not made a plan to wean us off of. So that's the point I'd like to begin here.
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
It's just what a dark week this actually was for America. I mean, the way to summarize it, I would say, is that last week we officially fired the starting gun on this global rotation away from America, which you have been talking about for more than 90 days now. And that's not to say we can't come back. I don't think we're necessarily doomed. But in the same way that a landslide is triggered...
Prof G Markets
What to Do in the Wake of Trump’s Tariff Pause
not by the buildup of pressure at the top of the hill, but by someone stumbling on the rock and releasing that pressure and causing the slide. That's what I think happened last week.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Also, we don't even know. I mean, there are so many accounts, like all these accounts are anonymous. So like we don't really know if they haven't sold.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
The thing that infuriates me, I totally agree. We need to actually take action. We can talk about how it's a big grift, but how are we actually going to address this? How will we see justice for what is clearly, you just look at it, it's like criminal behavior. The thing that really frustrates me This is all in the domain of the SEC.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
It's the SEC's job to regulate insider trading and to prosecute it. And the trouble is, everything he's doing because of the fact that we have not established any proper regulation on crypto, so far it's legal. And that's why they're doing it. And this is why I've always called the crypto industry legal crime. This is criminal behavior.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
How are you, Ed? I'm doing pretty well. Did you come up with that joke? Did you find that joke? Nothing I do is original, Ed. Really? Okay. It's an interesting joke to be floating out there in the ether. Very specific to our business.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
However, our legislation, as of now, we don't have words to describe it. So it exists outside of the domain of the law. And, you know, the... justification for why people will say, oh, this is legal or the legal justification is these aren't securities. These are memes. So, you know, it falls outside of the purview of the SEC because the SEC is supposed to be regulating securities.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
And my response is like, okay, it's not a security. It doesn't pass the Howey test because it's not actually buying into a business. It's a meme. It's like Beanie Babies, whatever. I don't really fucking care. All I know is that people's money is being stolen through this financial grift. So do whatever you have to do.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Why not just create a new bucket, create a new legal bucket, call it meme coins and say, you're not allowed to do this. You're not allowed to insider trade on these meme coins. But the trouble is we're not going to see any of that. We barely saw it with Gary Gensler's SEC, where I actually think he didn't go hard enough on crypto. He just sort of sat there.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
And then everyone said, oh, Gary Gensler's against the crypto industry because there's no regulatory, it's all regulatory uncertainty. But if he were to get real with it, he'd say this shit is fucking illegal. The trouble is the new head of the SEC, Paul Atkins, he's an outwardly pro-crypto guy. He founded a crypto advisory firm.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
He was the chair of this crypto advocacy group under the Chamber of Digital Commerce. Like he was literally hired. to let all of this happen. That was the whole point of his appointment.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
So I wish we could get our act together, but I gotta say, the way things are trending, and when you look at who's in charge of the SEC, and their total lack of action so far, I mean, this guy should be speaking out. He should be up in arms about this. If he cared about regulating, if he was a proper SEC chairman, he'd be... all over the news talking about how terrible this is.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
But he isn't because his job is to not talk about it.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Yeah. Pro-business. Let people grift each other. Yeah.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
And I'd like to see some people confront him on it. I mean, the lack of confrontation on Trump on this issue specifically, which, as I've said, is completely inexcusable. You can't steel man it. No one's asking him questions. Like, I've seen maybe one reporter when Trump coin was announced who asked him a little bit about it. Like, what is it? And he basically said, oh, I don't really know.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Like, he just didn't really have a response. Like, oh, I launched it. I think it went well, right? I think it went well. Yeah, I don't really know what's going on with that. Like, why aren't people fucking confronting this guy?
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
It's unbelievable. I'm so done with the crypto industry. And I'm also so done with the argument where they say, well, this isn't the real crypto industry. Actually, it is the real crypto industry. If you look at the crypto industry, this is where all the action is taking place. It's happening in the meme coins. It's happening in the Trump coin. It's the dinners at the White House.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
It's the VIP tours of the Capitol. Like, this is the crypto industry. So enough with this argument where you say, oh, this isn't really us. It is you. And you're the same guys who donated to this guy to make sure that these guys wouldn't be regulated. It's 100% the crypto industry.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Exactly. It's a winning strategy. There you go. You're back in New York, right?
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Maybe we'll make some concessions for Bitcoin, but we need to stop using that as an excuse to let people do illegal things. It's just, it's so bad and it's so shameless. And I'm just so shocked that people aren't more upset about it.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Yeah, because it's terrible and it's so obvious. There you go. We'll be right back after the break with a look at Apple's Safari shift. If you're enjoying the show so far, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
We're back with Profiteer Markets. Google stock fell 9% after Apple SVP Eddie Cue testified that Apple may begin integrating AI search engines like Perplexity into Safari. Speaking during the DOJ's antitrust case against Google, Eddie Cue revealed that Safari saw a decline in search volume for the first time last month, a shift that he attributed to users turning to AI-powered search tools.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
While he said Google should remain the default for Safari, Cue believes AI search tools will eventually replace traditional search engines. So this is a huge deal in terms of what it did to Google stock. Google stock fell 9%, wiped out around a quarter of a trillion dollars in market value.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
And let me just, I just want to clarify, like, what are the implications of what this random dude at Apple said in this testimony, in this antitrust case? So the first is that, according to him, Google searches are declining for the first time on Apple devices as measured by search entries on Safari, which of course is the default app browser on Apple devices. So that's the first thing.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
The second thing, he said he thought that AI tools like OpenAI and Perplexity and Anthropic, that they are eventually going to replace Google and that Apple is now focusing on AI-based search.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
And the third thing is that he seems to be signaling that this $20 billion per year contract between Google and Apple, remember, Google pays Apple $20 billion a year to be the default option when you search things on your Apple device, when you're searching for things on Safari.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
But did you stick around to see him? I stuck around for like 10 minutes. I was whacked. Do you like that kind of music? That's the kind of music I listen to.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
He seems to be signaling that after, when it's all said and done in this antitrust trial, that that contract will be outlawed, that the Google $20 billion per year contract with Apple will no longer exist. So many implications that are happening here as a result of these comments, and Wall Street really did not like it.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
I mean, 9% drop in Google stock, that is a huge drop when you're looking at a $2 trillion plus company. So Scott, any reactions to what's happened here to Google? Any reactions to Eddie Q's comments in this testimony? What do you think of this news?
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
I'm hard agree with you on this. Just when I like, I mean, first, it might be worth asking, like, why exactly is Wall Street selling? And there are so many different reasons. I mean, is it because they believe Google will be broken up? Is it because they believe Google needs this partnership with Apple to dominate in search? Is it because they believe
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Or because they learned that the search volume on Safari is going down? Is it because Apple is moving into AI and maybe that's evidence that AI-based search is going to kill traditional search? I mean, all of these questions, and my guess is it's sort of this... combination of all of these things. And I like what you said, like momentum has momentum.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
It's almost like all of the uncertainty around those questions kind of turbocharged this pessimism surrounding Google. And that's why you saw this massive devaluation of the stock. But I do want to like step back and look at the valuation And more specifically, look at it vis-a-vis the sum of its parts.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
And I just want to clarify, this is sort of a very quick, rough and dirty evaluation, but I think it's helpful in understanding what's going on here. So Google Cloud is a $43 billion business. If we were to apply a comparable multiple, say, of Oracle, which trades at eight times sales, then you're looking at $350 billion in market cap. You look at YouTube. $54 billion business.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Give it a Netflix multiple of 12x, that's a $650 billion market cap. Then there's all of the other stuff that Google makes money off of, like Google One and Google Health and Waymo and the Google phone. But for the sake of this argument, let's just not even include them. So let's just be very conservative. Let's look at cloud. Let's look at YouTube.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Those businesses, you're looking at a market cap of a trillion dollars, which means that under those assumptions, the search business, which generates $200 billion in revenue per year, that business is trading at the current price at around probably less four-time sales. Because I remember I didn't even include all those other businesses and the other bets that Google's getting into.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
And granted, this is a quick and dirty analysis, but my sense is that when you look at the company, when you do a sum of parts analysis, I think the search business here is massively undervalued. What I think is happening, I think the market's gotten a little too carried away with this whole AI is replacing Google thesis. I mean, you look at how the market reacted to this news.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
They're basically saying that Google search is doomed. And what they seem to be ignoring is, one, the fact that Google search is actually still growing when you look at revenue. And two, Google is also investing heavily in AI. Like, they're not out of the AI race. And so the idea that you hear these comments from some Apple executive, and then you suddenly decide...
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Google searches over, to me, that is exuberant, bordering on irrational. And it seems also to ignore all of Google's other growth investments. So I think Google is way undervalued right now. If you're thinking about buying Google, I would argue the time to buy is right now. It's gotten crushed year to date, down almost 20%. It's trading at its cheapest levels in a decade, 17 times earnings.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
to the S&P, which is trading at like 25, 26. You know, Google, it's a juggernaut tech company, and yet it's being valued today like it was like a dying industrials company.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
I'm a big Black Coffee fan. You were a fan of Rufus DeSole for a while. That's sort of like the other Britney Spears figure in DJ world, but I'm a huge Rufus DeSole fan as well.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Just one other implication that I want to get your take on. You know, I think one of the reasons Wall Street's freaking out is just the possibility of a breakup. You've made this point before, but I just think it's worth highlighting again that, like, Breakups can actually be really good for shareholders.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Like I feel like there's this feeling in the investment community that if you break up a company, it's like you're almost seizing people's shares in the company. Like you're just making them poor overnight. And they're sort of not acknowledging that actually, no, all it means is you're separating out these business segments into different companies. You're still going to keep your shares.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
It's just the shares are going to be spread across multiple companies. And you've made this point, and Matt Stoller has made this point in his newsletter, that this can actually be value accretive for shareholders. You look at Standard Oil, right? which got broken up, it ended up creating Exxon and Mobil and Conoco and Chevron, all these other companies.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
And Rockefeller, he ended up quintupling his wealth. Like the shareholders of Standard Oil did incredibly well after that breakup. And it feels to me that maybe The market's sort of forgotten that, and they're not really considering that. They're considering this breakup concept to be this existential threat that would just kill Google overnight. I'm not considering that.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
There's actually like, there's upside risk here too. It could be value accretive for the company.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
There we go. You've talked me into it. There we go. Coming back to America. We'll be right back after the break with a look at Uber's earnings. If you're enjoying the show so far, hit follow and leave us a review on ProfitGMarkets.com.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
We're back with ProfgMarkets. Uber's first quarter earnings largely beat expectations, but the stock dropped more than 2% as revenue and gross bookings fell short of forecasts. Still, CEO Dara Khosrowshahi noted there are no signs of weakening consumer sentiment. He also highlighted efforts to lower prices and said autonomous vehicles are, quote, the single greatest opportunity ahead for Uber.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
I'll give some of my initial reactions to these earnings here. You know, they missed on revenue, but barely. It was $11.5 billion versus what Wall Street wanted, which was $11.6 billion. But it was still up 14% from a year earlier. I think that's fantastic growth.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
I think the real highlight to me, which was honestly a little surprised to see the stock drop, was the bottom line where they had 83 cents per share in EPS versus 50 cents expected. And that was a big beat. And, you know, I think this is the most important piece of the Uber business right now. I mean, for years, it was all about growth, growth, growth, revenue, revenue, revenue.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
But the question now is, can this company, or at least the question in the past two or three years, can this company figure out a way to get profitable? That was the big concern. Now, they had their first ever profitable year in 2023. They followed it up again in 2024. But what we're seeing is that in 2025, it's only getting better.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
You look at every line item on the income statement, costs are going down across the board. And you look at the operating profitability, adjusted EBITDA is up 35% year over year. It's really, really strong on the profitability front. So I think what I'm learning about Uber is, yes, still a growth company. Yes, still a tech company. It's still got significant expectations to live up to.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
But now that it has the scale, it feels like the model actually makes sense. And it's not this speculative bet anymore. It feels like they've kind of stripped out the risk here. And again, I'm going to be bullish on this one too. 19 times earnings. I think that's quite low. I was bullish at the beginning of the year. It's up 30% year to date. I'm still bullish.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
I think there's a lot of room to grow here. And I was very impressed by those profitability numbers. This feels like a very solid, safe company that is also betting big on some growth vehicles.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
You might be alone there. I'm not sure I do.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
The S&P 500 rose, the dollar climbed, Bitcoin breached 100,000 for the first time since February, and the yield on 10-year treasuries was relatively stable. Shifting to the headlines. President Trump announced a framework for a trade deal with the UK that will lower tariffs on British cars while maintaining the broader 10% tariff on imports. The two countries have not finalized a deal,
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
It's interesting you say, I mean, I don't think you're the average consumer. I don't think most people are spending $3,000 to $5,000 a month on their Uber. But where you might be indicative of the average consumer is, or at least this is what the market is telling us, you know, this is a pretty tariff-insulated business. I mean, certainly in terms of first-order effects.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
I mean, they're not getting tariffed on anything. But I think the question that the market, that investors should be asking is like, what are the second-order effects from tariffs? what actually happens to the consumer? If prices are going up and affordability is difficult for the consumer, will Uber be impacted by those price increases in everyday items?
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
If you're strapped for cash, are you still going to be taking Ubers? I think that's a question that I'm not sure I could answer, but The market seems to believe, at least so far, up 30% year-to-date, the market seems to believe, yeah, people will still use Ubers.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
It's such a systemic part of, for those who take Ubers, it's such a systemic part of their lives that in the same way that the market believes people aren't going to cut back on their Netflix The market seems to believe people aren't going to cut back on riding around in an Uber. I think that's probably not going to be true of food delivery.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
I think if there's one place you start cutting, it's you decide, okay, I'll probably walk to Chipotle versus having a taxi deliver my burrito to my doorstep. But it is interesting, that question, like it does seem that this is becoming so endemic to the human experience, the American human experience. At least if you live in a city, I don't want to speak for rural Americans.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
But if you live in New York, as an example, like, yeah, you're Ubering around a lot.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Well, he's going to send you like a Honda Accord is what he's going to send you now. Maybe you go for the Uber Lux.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
I think the jury's still out on that question. I think the market might be being a little too optimistic. I'm cautious of how they're pricing this in terms of Netflix as well. I'm just not sure, I guess because we haven't seen how bad the tariff impact would be.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
but will supposedly work to do so in the coming weeks. The Federal Reserve kept interest rates steady but cautioned that rising tariffs could fuel both higher inflation and increased unemployment. Jerome Powell said he won't rush to cut rates without greater clarity on trade policy. Nonetheless, all three major indices closed higher on that news. And finally,
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
But it is certainly an interesting question, and it's interesting to see the market take a position, it sounds like, in agreement with you. Let's talk a little bit about autonomous because that was a big focus and Dara stated that it's a huge priority. I mean, just some context, as we've discussed, Uber has entered this partnership with Waymo.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
They've now got 100 autonomous Waymo vehicles operating in Austin that you can just order on the Uber app. on the earnings call, he said that those vehicles are now more productive than 99% of drivers in the city. They said the program has exceeded expectations. I think the autonomous program is very exciting. I think it's a big deal. I think that's where you're going to get this growth from Uber.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
The only question mark I have here on Uber and its role in autonomous, as we know, Uber was developing their own vehicles. They wanted to make their own robot cars, essentially. And then they decided to scrap that. And instead, what they're doing is they are entering these contracts with Waymo. Waymo has the cars. Uber has the network. Waymo pays Uber to use the network.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
And it's great for Uber because it means they don't have to invest any upfront capital. They can just sort of leverage their existing technology. It's also great for Waymo because Waymo needs to focus on the hard stuff. They need to manufacture the cars and create the software. They need to make sure that these cars are actually safe and people aren't crashing.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
So it works right now and Uber has that leverage. My question though, just from a long-term perspective, what happens down the line? What happens if Waymo perfects the technology and then suddenly they decide, actually, we're going to build our own network. We don't want to pay these fees to Uber. I don't think we're anywhere close to that.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
But, you know, if that does happen and Uber loses that leverage, suddenly you're out of the AV race, which, as you said, the race is on now. So that's sort of the long-term question I'm thinking about. I think it poses a real incentive for Uber to maybe get back into building these vehicles in-house.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Because if autonomous is the future of mobility, and I think it is, if you're Uber, you don't want to lose out on that market, right?
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Or even maybe another analogy would be like Boeing versus Delta. Like Boeing's going to make the plane, but Delta developed the network and the customer base. You're going to book your flight with Delta.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
A handful of traders made nearly $100 million buying Melania Trump's meme coin, MelaniaCoin, just before its launch. They then quickly offloaded their positions, with 81% of their sales occurring within the first 12 hours. Okay, well, we'll start with this UK trade deal that Trump announced. It was kind of a lot of pomp and circumstance around this.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
They certainly made that decision independently, yeah.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Let's take a look at the weekend. We'll see earnings from Walmart, from Toyota and Alibaba. We'll also see the consumer price and producer price indices for April. Scott, do you have any predictions?
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Salverio is our research lead. Isabella Kinsel is our research associate. Dan Chalon is our intern. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profity Markets from the Vox Media Podcast Network.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Join us on Thursday for our conversation with Alice Hahn, only on Profity Markets.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
What do you think of Uber earnings? Are you going to rotate out of the business world and just get a full send into the comedy world? You need to start hanging out with comedians.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
And then the trade deal came out and they had this press conference that Keir Starmer was featured on. And my sense is they haven't really ironed anything out. I mean, from what I understand, from what I gather, we're going to reduce the auto tariffs on the UK from 25% to 10%. The standard 10% tariff that we have in all these other nations, that's going to remain in place.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
It's hard to know when you're sort of, we're not even hearing the audience. We're sort of on a podcast.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
But there are a lot of things that actually there was just disagreement on. I mean, for example, the UK... They thought that the US was going to drop these steel and aluminum tariffs to zero. And then the US came out and said, no, we're negotiating an alternative arrangement.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
There was also confusion over this tax that the UK charges on social media companies and whether that was going to go away or not. And that's not ironed out either. There's also talk about expanding access to beef and having this reciprocal trade agreement on beef. All of these details that I was trying to just understand and be like, okay, what is the deal? What is the UK getting?
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
And what is America getting? I couldn't really glean much. And maybe that'll change over the next few days. Maybe they'll actually iron something out. But from everything I can understand about this quote unquote trade deal, this agreement, nothing's really been determined.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
It almost seems like the art of the deal here. I mean, I keep on asking the question, like, what is the deal? What are we getting in return? We've gone through all of this ridiculous pain and confusion, putting these tariffs out. And I keep on trying to figure out, okay, when do we win? What is the win for America? And I was unable to find a win in the terms of the deal itself.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
I mean, there's expanded access on beef, which is not even ironed out. It's not clear what the win is there. There was talk about the UK is going to buy $10 billion worth of Boeing planes. which you'd think, oh, maybe that's a good thing, but then you realize, actually, this is nothing new. The UK has been one of Boeing's largest European customers for years now, so nothing's changed there.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Then there's the potential reduction of that 2% tax on the big tech companies. You know, it's a win for big tech if that goes through. Apparently, it's not going through, but then you think, okay, well, how is that going to benefit the American people? It won't. And I'm starting to think that the only win, the thing that Trump really wants...
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
like the outcome of the art of the deal, it's ultimately just a press release. Like he starts all this chaos. He does all this stuff. And I mean, we're seeing it with this UK trade agreement here. They haven't even reached a deal. What he mostly wants though is to go out to the public and say, hey, look, we have this big, beautiful deal. What's the deal? Oh, don't worry about it.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
But all you need to know is it's big and beautiful. And he did the same thing with the stock market where he tanked the stock market after Liberation Day. And then a few days later when he pulled the tariffs back, And the stock market ripped. He said, look, out of the deal. Look, it's a fantastic day. One of the best days in the history of the stock market.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
So I'm starting to think that all he really wants is a symbolic and visual win in the form of a press release.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Yeah, let's talk about this Fed decision. Jerome Powell is keeping interest rates steady. Just the backdrop and the context here, Trump has been calling for Powell to cut rates. He obviously threatened to fire him and then he walked that back. But then on Sunday, before the interest rate decision, which came out on Wednesday, on Sunday, Trump said, quote, we have a stubborn Fed.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
He should lower them. He being Powell and them being interest rates. What do you know? He didn't lower them. Jerome Powell also highlighted his concerns about what these tariffs will do to economic growth, and more specifically, what it will do to inflation, which is obviously the thing he's trying to get under control. I think probably the most interesting to me, though,
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
was that the expectations for a rate cut, which most traders believe will happen in July, that actually came down a little bit. There was an 80% probability of a rate cut coming in July, and that came down to 70%. So the net-net is there is less of an expectation that we will get rate cuts soon in the summer, but it's still sort of a high probability. They think 70%.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
That's what the markets believe. I'm going to take the other side of this. The vibe I got here was that Powell is extremely cautious. He said the words wait and see 11 times in the press conference. And I think what he's doing is he's clearly waiting to get the data. He wants to see what is the actual impact of these tariffs, and we haven't seen that yet.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
So my prediction after this press conference, I think we're not gonna see a rate cut until September, because I think Jerome Powell is waiting for more data. Specifically, I think he wants to see the Q2 GDP report, and that's not gonna come out until the end of July. And my view is only then
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
will he decide that he has enough data to actually make a decision, which would mean that the next time that he could potentially cut rates, if that's all true, would be September. Could be possibly even later, but my prediction, this isn't going to happen. We're not going to get any cuts until September, at least.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
Let's talk about MelaniaCoin. So the Financial Times did this great analysis. I'm so glad that journalistic institutions are doing this because it's so important to 24 anonymous accounts purchased Melania Coin before Melania Coin was announced. And per this analysis from the FT, those guys made $100 million.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
There was one wallet that bought $681,000 worth of Melania Coin 64 seconds before the project was announced. And within 24 hours, that account had made $39 million selling those coins. It then made another $4.5 million selling the rest of the coins over the next three days. Just... Unbelievable historic levels of grift.
Prof G Markets
Is Google a Buy? + Is Uber Recession Proof?
We've been saying from the very beginning, since the beginning of Trump coin and Melania coin, how awful this is. We're now seeing the data coming in and showing us numerically what's so bad about this. Scott, what more is there to even say about Melania coin or Trump coin?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
You're right. I'm setting you up for failure. How about let's set you up for success here and just talk about this aspiration situation. Because you wrote about this... four years ago.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Yeah, we think it's you.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And I remember calling her. This is probably why Walgreens failed. They lost her.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
This is, by the way, one of my first jobs at Prof G Media, was you were talking about this company, Aspiration, and it was my job to go in and do the research because you had this feeling that this company, which was selling credit cards, but also positioned itself as helping with climate change, you said, this is definitely a bullshit company. You had the team look into it.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
I'm glad we learned that. Yeah, we learned a lot about hiring decisions on this show. Let's talk about Ontario and their decision to cancel the contract with Starlink. I think you predicted something like this would happen, or you at least kind of warned about it, that Starlink, you know, one big problem for Elon Musk would be if people start canceling Starlink contracts. Kind of...
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
an incredible move. The premier of Ontario, Doug Ford, had some interesting things to say about this, and we've got a clip. So let's take a listen.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Your reaction, Scott?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
I think you say, I mean, the domino theory of cowardice. I think this is basically showing that we're about to see the domino theory of revolt. I mean, this guy's the first one to do it, and it's only $100 million, which is not a big deal for Starlink, which did $8 billion in revenue last year. But Canada overall is Starlink's second largest market behind the US.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
They've got half a million Starlink subscribers in Canada. And I think what this shows is this guy's the first to do it, but we're going to see a domino effect. And I think all of these other provinces follow suit. I don't think you want to be a leader in Canada who looks weak up against Donald Trump.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
I looked into it and we determined, yes, this company is fake. We have a clip from what you said about this company on the Prof G pod.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And what we're seeing is that the entire nation is sort of coming together and rallying against a common enemy. And there's just this one stat I found fascinating from YouGov. 82% of Americans say they consider Canada to be an ally. In Canada, that number is now 33%.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
It's what happened with Twitter. And then you saw all those Twitter competitors rise up and now Threads is... Threads, Blue Sky, Post.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
I mean, some of them...
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
That was what I was hinting at.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Okay. We'll be right back after the break with a look at BlackRock's investment in the Panama Canal. If you're enjoying the show so far, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
We're back with Profiteer Markets. A BlackRock-led consortium has acquired two major ports on both sides of the Panama Canal for nearly $23 billion. The ports were previously owned by a Hong Kong-based conglomerate, but the deal still requires approval from Panama, which retains control of the canal.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
BlackRock CEO Larry Fink personally pitched the deal to Trump after the president expressed interest in having the ports and the canal controlled by the U.S. Scott, your initial reactions to BlackRock buying those ports from this company, C.K. Hutchison?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Banger. And now the guy's been arrested for fraud. By the way, it never went public because I think investors eventually caught on to this. But he's now been arrested. You called it.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Yeah. I think we should just like remind ourselves of the context here. I mean, I think everyone probably knows a couple of months ago, Trump said he wanted to reclaim the Panama Canal. He said the Panama Canal had been taken by China and that America needed to take it back. And then there was that notorious moment where
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
where he was asked if he would use military force to take it over, and he didn't rule it out. Now, of course, it's not true that China owns the Panama Canal, but it is true that there are companies with ties to China which own and control many of the ports that are in the Panama Canal.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And one of those companies is this company we're talking about, CK Hutchison, which is this company based in Hong Kong. It's owned by this billionaire, Li Ka-shing. And now they are selling those ports that are on either side of the canal to BlackRock. Now, there's been some questions around how much does this have to do with Trump? How much does this have to do with geopolitics?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And one of the heads of C.K. Hutchinson, which owns the ports... He said it has nothing to do with Trump. He said, quote, I would like to stress that the transaction is purely commercial in nature and wholly unrelated to recent political news concerning the Panama Ports. I just want to get this out of the way. That's totally a lie. No question about it. This had everything to do with politics.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
It's been extensively reported that that this company only started looking to sell right after Trump made those comments about Panama and about China. So let's just be clear from the get-go, this is 100% a geopolitical response. There's no doubt about it. Having said that, I think what the guy at CK Hutchinson is trying to get at
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
is that from a commercial perspective, this was an amazing deal for them. The origins of the deal were political, but the result was a success because the value of those ports that they sold, as determined by analysts, was $13 billion. they sold it for 23 billion. So they got a nearly 80% premium on those assets. That is huge.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And by the way, 23 billion is more than the entire market cap of the company before the deal. And as a result, shares in the company skyrocketed. They were up 20%. So it's a huge success for this company, CK Hutchison. And I think that begs the question, okay, they sold it for 80% above market value. Why was BlackRock down to pay?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Why were they down to splurge that much in what is now the largest infrastructure deal in the company's history? How did that make sense to them? And I have some initial thoughts, but I'll throw it back to you. What do you think was the draw for BlackRock here?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
No, I think what's in it for BlackRock and what made this worth it is what it does to their relationship with the president. Because he looks excellent now. You know, he was... talking about how he wants the U.S. to control the Panama Canal, and people were ragging on him, saying, this guy doesn't know what he's doing. And he pulled it off, and at no cost to the government.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
The whole thing was paid for by BlackRock. And there is no denying this only happened because of him. So he looks like a genius now. He gets to brag about it in his speeches. In fact, that's exactly what he did in his address to Congress. And most importantly, I think he is now grateful to Larry Fink and to BlackRock, who are officially in his good books now.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And that's so important because for a long time they weren't. This is the company that spearheaded the ESG movement, that told investors that DEI is central to everything they do. This is the company that... just generally speaking, the Republicans hated. And so I think Larry Fink saw this opportunity. There was a chance to get on Trump's good side, to make him look like the hero.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And it only cost him, you know, a few billion dollars. So in my view, it was probably worth it.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Don't you think that is an economic decision at this point? I feel like what we're seeing with these companies is actually it is. Yeah, that's a good point. Your fiduciary obligation to suck up to the president.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Thank you. Thank you. Thank you.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Thank you. Thank you. Thank you. Thank you.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Few people actually knew what Aspiration was, which I think is why it was so prescient of you to point it out. I just want to point out what some of the red flags we found with this company were. So the first... The first red flag was that they were trying to SPAC, and there were just a bunch of kind of bullshit companies that were SPACing. They did have a giant celebrity investor list.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
One of those investors was Leo DiCaprio. That was kind of a red flag. And then as we looked into it, it started to get worse and worse. So they had this ESG fund that they called the Redwood Fund, and they charged these exorbitant fees on it. But when we looked at the actual portfolio, what we found is that it was just a regular portfolio.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And they even had positions in Southwest Airlines, which, of course, burns through fuel, and also a fracking company, which was hilarious. Their worst crime, though... was this thing called EBITDAM.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
and get out of us growth and tech well next time i'm going to need to hear what those actual european companies are because i look at the european i'm going to go into an index i might go into a levered index from direct sound but i'm going to go into a diversified mix etf or index around eu value stocks and are there any companies in there in the index or any any companies that you're seeing in europe that you think oh yeah they're doing well well i mean i just like a lot i think
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Exactly. This was earnings before interest, taxes, depreciation, amortization, and marketing. And according to this company, they were EBITDAM profitable. But then you look at the fine print and you realize they were spending 150% of their revenue on marketing.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Let's take a look at the week ahead. We'll see the consumer and producer price indices for February, and we'll also see earnings from Oracle, Adobe, and Williams-Sonoma. Scott, do you have any predictions?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
My prediction would be that Apple is sub $200 in the next six months. I think that their numbers are flatlining, their hardware revenue is down, and they've been leaning on a narrative. And I think that narrative is fizzling out because you can just look at their products and you can look at their ads. It's becoming very clear this is a very mature and increasingly uninteresting company.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
I'm not sure how I feel about you selling all of your Apple. I'm also not sure how I feel about you going totally out of US growth entirely. I think there's still a lot of value in US tech in companies like Nvidia and Google, for example, I'm pretty bullish on. But Apple, I think that's probably a good idea to trim.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profiteer Markets from the Vox Media Podcast Network.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
So they're trying to position themselves as a profitable company, but they're saying, oh, this marketing thing, we're spending basically all of our money on marketing, but don't worry about that. We're profitable. And that was sort of our, that was, I would say our biggest red flag. This company is bullshitting their investors. And so it never spacked. And now the guy's going to jail.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
I can't wait. Let's get into our weekly review of MarketVitals. The S&P 500 declined, the dollar slid, Bitcoin was volatile, and the yield on 10-year treasuries climbed. Shifting to the headlines. Disney is laying off nearly 200 employees, or 6%, of its workforce in its ABC News Group and Disney Entertainment Networks divisions.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
As part of the cuts, the company is also shutting down political and data journalism site FiveThirtyEight, which it acquired in 2013. Walgreens is officially going private after closing a $10 billion deal with Sycamore Partners, The private equity firm is expected to keep Walgreen's core US retail business while potentially selling off or spinning out other parts of the company.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And finally, Ontario canceled a Starlink contract worth 100 million Canadian dollars after US tariffs on Canadian imports took effect. Scott, let's get your thoughts, starting with Disney deciding to lay off 200 employees, nearly 6% of the workforce, at ABC and their entertainment networks.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Yeah, I find this interesting because I visited the ABC studio last week. One of the producers on ABC News took me around and it was really cool. And I was just kind of struck by how impressive this operation was. Like the office looks like a cross between like NASA... airspace control, and also like the trading floor of Goldman Sachs.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And it's filled with people like gaffers and technicians and coordinate. I was asking him like, what do all of these people do? He's like, oh, this guy's on this team, this guy's on this team. I mean, it's thousands of people, literally. It's actually 3,300 people.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
But in the back of my mind, the whole time as I'm walking around, I'm like, this is amazing, but there is no way this makes any sense economically. The fact that you have, as you said, revenues down 9%, operating income down 16%, 6 million people canceling their cable subscriptions in 2024, and yet... The operation looks like it's the headquarters of the CIA.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
So I was sort of walking around like, okay, something has to give here. And that's what we're seeing. In this case, the thing that's giving is the workforce. And as you say, this isn't the first time we've seen this headline. And yeah, I don't think it's the last time we'll see this headline. I think we're going to see many, many more headlines like this.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Well, it hasn't happened yet, and they'll probably counsel on me again.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
It's not doing very well. Agreed.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
I'm doing very well. I'm in New York. I'm excited for South by Southwest. We're going to be heading over this weekend. Of course, this episode will be out by the time we're there, but I think it's going to be great. You know what I'm really excited for, though, is the flight back. Why is that? Flying with you. Oh, I'm sorry. I meant to tell you that there's just not enough... Not enough seats.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
Let's talk about Walgreens, which is going private, being bought out by this private equity firm, Sycamore Partners. This is kind of a big moment for this organization. very iconic American company. This company has been around for 120 years. It's been a public stock for almost 100 years. It's been public since 1927.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And now you have this icon of American consumerism, and it's being bought out by a PE firm for a tenth of what it used to be. Ten years ago, this company was worth $100 billion. The price tag today is $10 billion. Your reactions to this news, Scott?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
I think it's a whole confluence of things. And the way I would summarize it is just bad management. I think probably one of their worst mistakes is just their inability to modernize their pharmacy business, which they really depend on. Those Walgreens pharmacies were incredibly traditional when you compare it to the pharmacies at somewhere like CVS.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
And I think they woke up one day and telehealth had taken off and reimbursement rates had come way down. And they just got crushed, especially against CVS, which was establishing itself in the pharmacy benefit manager business too. They also bought Village MD, which was a disaster. They were just too late to the party. They bought that company after COVID. It didn't work.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
They ended up taking a $6 billion impairment charge. And then I think the final thing...
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
were these lawsuits they just got a ton of lawsuits and most of them they settled on and just this year a couple months ago they got sued by the doj for essentially selling opioids illegally so i think just it's kind of simple from a management perspective it's been a disaster i think the question is what does sycamore do with this company where do they go from here
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
It's expected they're going to split it up into three units, where you have Walgreens Pharmacy, they also own Boots in the UK, which I'm sure you're very familiar with now, which is their UK pharmacy, and their healthcare unit, which is called Shields Health. And Sycamore did a similar thing to Staples, which they bought back in 2017.
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
One interesting stat from the team that I'd like to get your reaction to, one in five private equity-owned companies go bankrupt within 10 years of acquisition, and that is 10 times higher than the rate of publicly-owned companies. So I guess the question I would pose to you is, what does Sycamore do with this company? And could they just bankrupt the company, possibly, based on that stat?
Prof G Markets
Has Apple Lost Its Mojo? + BlackRock’s $23B Bet on the Panama Canal
There's only seven seats on the plane. How many seats are on the plane?
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I mean, some people say, you know, Waymos are more expensive to build. They're more expensive to operate, which is probably a fair point. But I think the larger point still stands. Waymo is the only one that has figured it out. And now they're going to market with the biggest ride-sharing company in the world, Uber. Meanwhile, Tesla has shipped nothing. So I think this is a pretty big deal.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I think full-scale commercialization is still a long way away. But to me, this signals Uber's actually kind of leading the pack in autonomous. And I get the sense it's probably very undervalued at this point.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
No, I don't care at all, actually. And this is the first year I've decided I'm just not watching. I feel like I'm always watching because I feel like I have to. But I've just decided, you know what? I'm not interested in the NFL. I'm not going to watch this year.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Or a boy or a scared 16-year-old boy.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
And by the way, Uber had their own autonomous vehicle unit, which they scrapped in favor of this. And I think the market said, oh, they don't know what they're doing. Actually, it's a smart move for exactly the reason you said.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I'm excited. I'm going to track you down. I'm going to make sure I see Scott on ketamine.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
We'll be right back after the break for a look at Spotify's earnings. If you're enjoying the show so far, be sure to give Profiteer Market a follow wherever you get your podcasts.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Spotify posted its first full year of profitability ever, with gross profits rising 40% year over year. The streaming platform also added a fourth quarter record of 35 million monthly active users. That's a 5% increase from the previous quarter. Spotify Wrapped was one of the top drivers of user engagement, fueling double-digit growth. Shares surged 13%. after that earnings report.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I'm just going to point out, I made one prediction on our 2025 predictions episode, and that was that Spotify would be the media platform of the year, in addition to YouTube, which I'm also really bullish on. But I am just... consistently impressed with this company, the innovation, their integration of video, the integration of comments and polls, their transition to profitability now.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I think if there's one platform that can rival YouTube in this new digital age, I think it's Spotify. And we're starting to see it in the numbers here. Scott, your reactions to Spotify's earnings?
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Well, they didn't connect it to revenues, but they connected it to user engagement, which that's what it's all about. It just creates heat and excitement. And I think possibly— I mean, full disclosure, I don't use Spotify because I've always used Apple Music and I've never wanted to go through the cumbersome process of transporting everything over.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
But when Spotify Wrapped came out, it was the first time I was like, maybe I should switch because this just sounds fun to have this little... presentation about me and all of my music habits. So I think that would be the answer.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I thought you used to be a big NFL fan, Scott, no?
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I know it's coming. I know it's wrong.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I would love that invite. Well, let's just go over some of the numbers here because I think they're pretty incredible. So Spotify's monthly active users hit 675 million. beat estimates by 10 million, which means that one in 12 people on Earth is on Spotify. Premium subscribers grew 11% year over year. That was despite the price hikes. Average revenue per user up 5%.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
First profitable year in the company's history, which I think is a very big deal, and stock is now at an all-time high, $620 per share. We should probably think about what could go wrong for Spotify. I think one potential issue is this growing public resentment towards Spotify and specifically towards Spotify and how they pay their artists.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
So a lot of people say that Spotify squeezes their artists. They don't pay them enough. They reward the top 1% and the other 99% get screwed. And that's timely because Chapel Roan, who just won the best new artist award at the Grammys, she actually called this out. She didn't call out Spotify specifically, but she called out the whole music industry of which, of course, Spotify plays a huge role.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
So let's just listen to what she said.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
No, I completely agree with you. And I think this just, it reminds me of all the dynamics that we've seen in Hollywood. And the reality is, artists have been getting screwed since the dawn of time. And, you know, historically, it's been the record labels that have screwed their artists. And I think back to the 1950s, this is probably the most famous examples, we had all of these
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
incredible black musicians who are suddenly dominating the charts and then none of them got rich because they signed these shitty deals that ultimately rewarded the owners of the record labels so you know this is this dynamic of artists getting screwed to an extent is nothing new but i don't think i mean a lot of people are blaming spotify for this saying that they just don't pay them enough and blaming the business model i really don't think you can blame spotify for this
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Because all you have to do is look at the financials. You have to remember, this is Spotify's first ever year of profitability. So for the 16 years before this, Spotify was losing money. They were losing money to pay employees and to pay for technology. And yeah, to pay their artists. And so I'm not trying to like... make a sob story for Spotify.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
But I think all I would say is this is a business and the business has to make money. And this year was the first time they ever did that. The other side to this... You know, one other way that they could have paid their artists more, or they could pay their artists more, would be to massively raise prices for the consumer. But actually they haven't done that.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
And in the past 16 years, the price has gone from $9.99 to $11.99. So actually on an inflation-adjusted basis, Spotify actually got cheaper. And then you compare that to things like Netflix, Netflix has more than doubled its prices in that same amount of time. So, you know, I'm sure someone's being greedy here. I'm sure, you know, the record label has screwed some artist here or there.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
But the fact that Spotify is getting wrapped into this, like, as the big bad company that's just sort of ruining the music industry, I just don't think... That is true. And I think ultimately what this is, is that, as you say, being a struggling artist is a bad business. It just doesn't really work. And in almost all industries, It only starts to make you real money when you hit the 1%.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
And finally, Chapel Roan has done that. And I don't think she's going to be giving her money away to the other 99%. I think she's going to be, you know, claiming her check from whichever record label she's signed to. So I have a very boomery outlook on this. Sounds like you do too, and it sounds like we're just in fervent agreement.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Yeah, a good amount of my friends do ketamine. I can't tell if you're serious. You know it's illegal to just do it.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Okay. Just making sure you're clear.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
And they'll keep making music.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Thank you. Thank you. Thank you. Thank you. Thank you.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
And, you know, the way people do it is they snort it. You're really going to go out and... Oh, really?
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Well, I'm excited to see you in a couple of hours. I'm going to come over and hang out at your house.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Thank you. Thank you. Thank you.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
You excited to see me?
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Let's start with our weekly review of Market Vitals. The S&P 500 inched up throughout the week. The dollar declined, Bitcoin was volatile, and the yield on 10-year treasuries dropped. Shifting to the headlines. Disney earnings beat expectations on the top and bottom lines. However, Disney Plus lost 700,000 subscribers with another modest drop expected in the current quarter.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Thank you. Thank you. Thank you.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
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Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
The stock fell 4% following that earnings report. Novo Nordisk saw strong fourth quarter demand for its weight loss drugs, with Wegovy sales more than doubling and Ozempic sales rising 12% year over year. Profits also exceeded analyst expectations, up 29% from a year earlier. The stock rose on that news. And finally, Uber's fourth quarter revenue beat expectations, rising 20% year over year.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
We could beat the Ramsey network, surely. Yeah. We got to do that.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Profity Markets from the Vox Media Podcast Network.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I don't want to promise anything. Your face gets like sullen. You start looking down at the floor. I just know it's coming.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
However, Operating income was lower than expected, and the company issued weak booking guidance for the current quarter, and Uber's stock fell 7%. Scott, your reactions, starting with Disney's earnings. A beat, but the stock did fall.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Yeah, I think these earnings, I mean, Wall Street did not react well to these earnings, and I think rightly so, because I think this was just unimpressive on so many levels. I mean, Disney Plus subscribers declining, not by much, it was around 1%, but still a decline. And Disney Plus' response, or Disney's response, was, well, you know, we rose prices, so this is expected.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
and by the way, that's kind of what you said too, but you look at Netflix, Netflix also raised prices last year and they still added 19 million subscribers. So I don't fully buy the, you know, we're raising prices and therefore subscriptions are going to fall off. We've seen it with Spotify too. Spotify raised prices and their subscriptions are still continuing to climb.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
You also mentioned the churn rates. I just see this as... such a big issue in all of streaming that it makes me believe that streaming is in a lot of ways, uninvestable over the long term. Apple TV's churn rate is 8%. Peacock's churn rate is 9%. Disney's churn rate is on the low end, but still it's really high, it's 5%.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
So if you just wanna stay flat in any given quarter, you basically have to grow your subscribers by 5% every single quarter, which is just, insane. I mean, I just don't see how that is a sustainable business model. And then the second thing that makes me concerned about Disney was their box office results, which were exceptional, but it was all because of this one movie, Moana 2.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
And that was kind of what saved these earnings. Without that movie, this earnings report would have been pretty terrible, which again begs this question, like, how sustainable is this business where you're basically riding on your growth vehicle, which is Disney+, is pretty stagnant, and then... you're also relying on these sequels every single year.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I mean, Moana 2, Inside Out 2, Deadpool and Wolverine. At what point are people just going to get bored of these sequels? Who's going to watch Moana 3 and Moana 4 and Moana 5? How much longer can this go on for?
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
But if you want to keep that business going, you've got to also be creating original and persuasive and compelling intellectual property, which they're not doing. No one's going to ride the Moana 3 ride.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
By the way, just before we move on here, when is your Netflix show coming out?
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
We need to get you on camera here. Is that part of the plan? I hope so.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Let's talk about Novo Nordisk. This was a pretty important earnings report for this company because they, simply put, have not had a good year. The stock's down 30% in the past 12 months. They tried making this new GLP-1, this drug called Kagrisima, and the trials failed. They've been outclassed by Eli Lilly, who have been showing from their studies that their drugs are just more effective.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
So Novo Nordisk is not in a great place. They needed a really strong showing, not from the insulin business or the glucagon business or any of their other medicines, but from the GLP-1 business, because that, as we know, is the only thing Wall Street cares about with this company. And rightly so. That's where all the growth is coming from. The results were pretty good.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
Wegovy sales more than doubled. If you look at that in combination with Ozempic, the obesity drug business is up more than 50%. So the GLP-1 business is doing quite well. I think the question here is a larger question, which is, will this whole GLP-1 thing live up to the hype that we had about 16 months ago? And that's sort of up for debate.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I mean, I've seen market size predictions saying this is a $100 billion market. Some say it's a $500 billion market. No one really knows. So I kind of look at this company, I look at these earnings, and I don't really have an answer. The only thing I can conclude with Novo Nordisk is, you know, wait and see.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
To his point, the only company that actually innovated this drug that didn't stumble its way into it was Eli Lilly, who created their own versions, of course, after Novo Nordisk figured this whole thing out accidentally. So I think if you're thinking about, okay, how do I get exposure to GLP-1s? Yes, Novo Nordisk is the market leader. It has the greatest market share in the US and in the world.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
But I think in terms of culture and innovation, all that stuff that Aswath talks about, I do think Eli Lilly is probably a better bet from that perspective. Let's move on to Uber. Uber reported earnings. Revenue grew 20%. They had this kind of soft guidance, $42 billion in gross bookings expected in the quarter coming up. And the stock did not react very well.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
I thought the most interesting part with these earnings was that Uber is officially launching a wait list for its Waymo partnership. So... This is going to happen in Austin first and later in Atlanta. Uber and Waymo are teaming up and self-driving taxis are coming in 2025. And I think the most important thing here is the autonomous taxi fleet, it's not coming from Tesla. It's coming from Uber.
Prof G Markets
Spotify’s First Year of Profitability + Is Google Losing its Edge?
And I think that's notable because it just highlights this market bias that we keep on seeing towards Tesla, where Tesla will go out and talk very vaguely about full self-driving and autonomous taxis and the stock rips. Meanwhile, Uber does it and the stock declines. People just don't take it seriously for some reason. And I can't really wrap my head around it.
Prof G Markets
The $6.6 Trillion Sell-off
How are you, Ed? How are you? I'm doing okay, Scott. How are you? Are you reacting badly to these tariffs? What's going on with you? So I'm an emotional tidefall right now, not for the reason you probably think.
Prof G Markets
The $6.6 Trillion Sell-off
Well, I will get into that. Never mind. Get into other stuff, Ed. You're clearly the fucking producer here.
Prof G Markets
The $6.6 Trillion Sell-off
I didn't know you were short. I love that. That's amazing. When did you go short Palantir and Tempest?
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Auch vielleicht ein großer Moment für Starlink. Aber ich denke, es ist nur ein Erinnerung darauf, wie weit vor Starlink ist. in this satellite race right now. I mentioned those 27 satellites that Amazon launched. Starlink has 7,200 satellites in orbit right now. It makes up 62% of all of the active satellites that are currently orbiting the Earth. So even if Amazon were to hit that target,
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
von 3.200, und wer weiß, wann sie es erreichen. Sie wären immer noch weit hinter Starlink. Starlink ist der unverzweifelte Führer der Satelliten-Broadband. Niemand kommt noch näher. Also, Scott, deine Reaktionen auf Amazon, die versuchen, hier im Spiel zu kommen, und wie sie mit Starlink kombinieren könnten.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Yeah, better be very handsome. This guy better be incredibly handsome.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Over 200 million subscribers globally. 180 million adults in the United States are Amazon Prime members. That's like most of them.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
You've honestly completely sold me on it. I'm totally with you. And it seems to make so much sense for Amazon's business, which... They have a history of getting into businesses that are somewhat indispensable.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
You know, they get into household products, they get into groceries, they buy whole foods, they get into healthcare, content, all these kinds of businesses where it's like something you just have to have. And then they make it a recurring subscription. And it does feel like the next...
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Scott, hast du jemals eine dieser Pick-up-Lines in der Realität benutzt?
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
planet to conquer is broadband and internet and so i think you're probably right just a question of how how it would actually work what what do you think the offering would actually look like you think it's like a premium amazon prime subscription that gives you
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Wenn er nur wusste, dass er den Backen von Scott Galloway bekommen hätte, dann hätte er es vielleicht mitgebracht.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
You've certainly convinced me. I'm definitely more bullish today than I was yesterday. We'll be right back after the break with a look at big tech earnings. If you're enjoying the show so far, be sure to give the ProfitMarkets feed a follow wherever you get your podcasts.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Certainly on this show.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
What's been your approach? I've always been, where are you from as well? Aber ich glaube, es wäre cool, eine wirklich gute Pick-up-Line zu haben, die wirklich funktioniert. Aber ich glaube, das, was wir in den letzten zwei Minuten gelernt haben, ist, dass viel davon zu tun hat, ob du hansom bist.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Wir sind zurück bei Profit-Markets. Okay, lasst uns mit den großen Technologie-Ernehmungen sprechen. Microsoft, Meta, Apple und Amazon haben letzte Woche alle Ernehmungen veröffentlicht. Wir werden das ein Tag später aufschreiben, weshalb wir anders gekleidet sind, damit wir auf diese Ernehmungen reagieren können. Wir fangen mit der Beobachtung von Microsoft und Meta an.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
whose shares both rose pretty significantly after earnings here. Microsoft posted record revenue and record profits, beat on the top and bottom lines. Shares rose 9%, which now makes Microsoft the most valuable company in the world ahead of Apple. Meta war auch ein Wettbewerb. Wettbewerb auf der Ober- und Unterseite. Revenue rose 16%. Shares in Meta rose 6% after hours.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Really great quarters for Meta and Microsoft. Scott, your reactions to these two earnings?
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Ja, ich denke, das ist alles richtig. Und ich denke, der wichtigste Punkt war der Cloud-Wachstum. Ich meine, ich habe das schon gesagt, aber ich denke, wenn du in der AI-Business bist heute, das ist alles, was Wall Street wirklich kümmert.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Du kannst auf den overallen Revenue, den sie hatten, schlagen, du kannst auf den overallen Profit, den sie hatten, schlagen, aber das, was Wall Street wirklich sehen möchte, ist, ob du in Bezug auf ihre Erwartungen für Cloud-Wachstum oder in anderen Worten AI-Wachstum ausmachst. Und das ist, was sie hier beurteilt haben.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Yeah, but to get in there at the very beginning.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Microsoft Azure, das ist ihre Cloud-Unit, und wir sollten es einfach die AI-Unit nennen. Dort verkaufen sie Computing an AI-Firmen. Das Revenue steigte um 33 Prozent. Und Wall Streets Erwartungen auf diese Firma waren um 29 Prozent. Auch die Guidance für diese Unit, für Microsoft Azure.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
They expect the number in this current quarter, so when they next report earnings, they expect growth to be 35%, so even higher. And that also beat expectations. So that's the number that Wall Street really cares about. The opposite effect happened with Amazon, which we'll get to in a second. But yes, the CapEx that you mentioned, that also jumped out to me.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
21,4 Billionen Dollar, das ist viel, aber es ist ein Verlust von der vorigen Quartal. Und es ist der erste KAPEX-Verlust für Microsoft in mehr als zwei Jahren. Du hast gesagt, dass vielleicht das eine Antwort auf DeepSeek ist. Ich denke, das ist definitiv eine Möglichkeit. Ich wusste nicht, ob es vielleicht eine Antwort auf den Tarif-Environment ist.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Ich meine, wir leben gerade in einem mehr ungewissenen ökonomischen Umfeld. Und ich wundere mich, ob es dadurch ist, Sie dachten, wir würden vorher alle auf AI investieren, und jetzt fangen sie an, diese Ambitionen zurückzuhalten, um die Dinge etwas sicherer zu spielen. Capex wird immer noch wachsen, aber nicht so schnell, wie sie es letztes Jahr gesagt haben. Es könnte also Deep Seek sein.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Ich frage mich, ob es auch eine Tarif-Response sein könnte. Was interessant ist bei Meta, wir gehen jetzt zu Meta. Meta hatte das Gegenteil. They are actually accelerating their CapEx investment. They raised CapEx guidance from what was previously a high end of $65 billion to now $72 billion. So Microsoft, meanwhile, is playing it safe. Meta appears to be actually leaning into the uncertainty.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
The number that really jumped out to me was 3.43 billion. That's the number of users who use ein Meta-App jeden Tag. Das ist das tägliche aktive User-Nummer. Es ist um 6% pro Jahr, was bedeutet, dass mehr als 40% der ganzen Weltpopulation ein Meta-App bekommt, ob es Instagram, Facebook oder WhatsApp ist. Sie benutzen es jeden Tag.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Sie hatten besser als erwartet Verkäufe, um 5% insgesamt. Sie verletzten ihre Verkaufsestimaten in China, die mehr als 2% fallen. Sie haben auch über Tarife gewarnt. Sie sagten, Tarife würde 900 Millionen Dollar an ihre Kosten dieses Quartier hinzufügen. Die Verkäufe fielen um 4% in einer halben Stunde. Und dann haben wir auch von Amazon gesehen, was auch ein Wettbewerb war, ähnlich wie von Apple.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Aber sie gaben Beweis, dass Wall Street vorsichtig ist. Und sie verletzten auch ein wenig an ihrem AWS-Wachstum. I thought Apple had the least important part.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Lass uns mit unserer wöchentlichen Review von Market Vitals beginnen. The S&P 500 climbed, the dollar rose, Bitcoin jumped, and the yield on 10-year Treasuries fell. Shifting to the headlines. US GDP shrank 0.3% in the first quarter, marking the economy's first contraction in three years. A surge in imports as companies raced to get ahead of tariffs led to a sharp drop in net exports.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Ja, absolut. Und es gab noch eine andere rote Flagge in Bezug auf die Idee, dass Apple eine mature Firma ist, die sich als eine Wachstumsfirma handelt. Sie haben ein weiteres Bidestandprogramm eröffnet. 100 Billionen Dollar in Bideständen. Sie haben auch den Dividenden um 4% erhöht.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Wenn du 30 bis 33 Mal die Wachstumskosten handelst, handelst du als Wachstumsfirma, was bedeutet, dass der Markt erwartet, dass du in Wachstum investierst. Du investierst in neue Produkte, du investierst in neue Geräte. Stattdessen verwenden sie all dieses Kapital und all dieses Geld, um einfach wieder Steuern zu verkaufen.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Und wie Aswath Damodaran sagt, ich meine, das ist das Brot und Butter des korporativen Lebenszyklus. Das ist, was du tust, wenn du in der maturity-Phase bist. Das ist, was du tust, wenn du eine mittlerjährige Firma bist und du auf dem Weg raus bist. Du fängst an, Steuern zurück zu kaufen.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
So, I mean, I was a little surprised by how the stock pulled back, because I thought overall the earnings compared to expectations were pretty solid. But I wonder if people are starting to realize that actually the multiple here doesn't really make sense. This is not the growth company that we thought Apple was 10, 15 years ago, when it was on the cutting edge of technology and innovation.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Because what we're seeing here is that Every time I see a buyback, I'm like, oh, you're running out of ideas. Understood. You're being sensible about it, but you are running out of ideas. And that's sort of the vibe I get from Apple right now. And I wonder if Wall Street's getting the same message.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
The major indices all fell in that news. China's factory activity fell into its worst contraction in nearly two years. New export orders also dropped to their lowest level since December 2022. In response, Chinese officials have pledged support for affected businesses and workers. And finally, Amazon has launched its first internet satellites into orbit in a bid to compete with SpaceX's Starlink.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Yeah, I agree. It's also quite telling that the day that a company announced a $100 billion share buyback program was the same day that that same company was ousted as the most valuable company in the world. That's just not a good... You would not expect those two things to be true at the same time, but they were last week. Let's just quickly go to Amazon.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Sie haben auch auf den Top- und Bottom-Linien gewonnen. Ein ziemlich starker Quartier. Die Ad-Business war ein großer Gewinn. Die Ad-Sales sind 19% gestiegen. Aber der Stock ist fast 4% gestiegen. Und warum ist das passiert? Wie ich vorhin erwähnt habe, was Wall Street sich um AI und AWS kümmert,
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Was wir auch sagen können, ist, dass ihre AI-Unit, ihre Cloud-Unit, ihre Computing-Unit, die Revenue-Voraussetzungen ein wenig verpasst haben. Aber es hat trotzdem 17 Prozent erhöht. Das ist ziemlich gut. 29,3 Billionen Dollar. Aber Wall Street wollte mehr. Sie wollten 29,4. Und wenn man in der AI-Business ist, das ist die Dynamik, die wir besprochen haben.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Beating expectations here means you need to blow expectations out of the water. Even a slight miss. Well, Amazon is the most vulnerable, probably the magnificent seven to tariffs.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Yeah, and plus, if you got China investing heavily in AI, if China's made it their mission of AI self-sufficiency, that's certainly going to be a win for Alibaba, if they can just start selling more compute to Chinese companies. Just one... Bevor wir hier auf diese Geschichte zu Ende kommen, möchte ich nur klarstellen, dass dieses Quartal sehr stark war.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Ich habe Leute gesehen, die wahrscheinlich nicht sehr klug waren, aber Leute, die sagten, oh, alles geht gut, schau, schau, schau, schau, schau, schau, schau, schau, schau, Ich möchte nur klarstellen, dass dies der Viertel ist, der am 31. März endet. Also reflektieren sich keine dieser Einkommen über die Tarife.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Das Einzige, was sie reflektieren könnten, was ich gerade nachgefragt habe, und was wir, wie gesagt, besprochen haben, als wir über den GDP-Report diskutiert haben, ist, dass es diese Führungsdynamik reflektieren könnte, nämlich diesen Effekt, wo... You know, consumers know that tariffs are coming. They know that prices are about to go way up.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
And so maybe they're actually rushing to buy in big numbers in this quarter, in this previous quarter that was just reported. And so I was interested to see, like... Besonders mit Apple, zum Beispiel, wo wir all diese Headlines sahen, wie iPhone-Preise weit, weit hoch gehen werden. Wir hätten das in diesem vorgeschlagenen Quartier gesehen.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
The company's plan, called Project Kuiper, should begin providing broadband service later this year and eventually will deploy a constellation of 3,200 satellites. So, let's start here, Scott, with this GDP report. A lot of people are seeing this report and they're saying, look how bad this is, look at what Trump's done, look how bad this is for the economy, the economy is contracting, etc.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Wir hätten gesehen, dass, wenn das wirklich passiert wäre, die Leute paniken, ein iPhone zu kaufen. Oder wenn du dein iPhone upgraden willst, machst du es direkt bevor die Tarife passiert. Das hätten wir in diesem Quartier gesehen. And actually CNBC asked Tim Cook about this specifically. They said, you know, did you... Is this pull forward? Are you seeing pull forward in the earnings?
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
And he said that he saw, quote, no evidence of pull forward. And I just... I don't know, I wonder about that. Like, I wonder... 1. Wie würde die Beweise eigentlich aussehen? Wie würdest du wissen, dass das passiert ist? Und 2.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Wenn wir Anzeichen von Vorhersagen überall anders sehen, in der Autoindustrie, in der Kleidungsindustrie, sogar in diesen GDP-Nummern, wo man diesen riesigen Influx von Importen gesehen hat, warum würden wir es nicht mit dem iPhone sehen? Und warum würden wir es nicht mit all den anderen Tech-Earnings sehen?
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
On that aspect, I'm a little bit hesitant or just suspicious of how strong these earnings were across the board. And I do wonder if the dynamic that we're seeing is everyone rushing in to buy right before prices go way up with the tariffs. And it'll be interesting to see in the next quarter. That's when we're going to see the real tariff effect.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
It'll be interesting to see if we see a drop off in demand there.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
We'll be right back with a look at what's happening to student debt. If you're enjoying the show so far, hit follow and leave us a review on the ProfitMarkets feed.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Wir sind zurück bei Profit-Markets. Für das erste Mal in fünf Jahren startet das Departement der Bildung wieder verschlossene Kollektionen auf Betroffene, die auf ihre federalen Studentenlohne ausgestattet sind. Die Bewegung beeinflusst 5,3 Millionen Menschen, die vor der Pandemie ausgestattet waren und Millionen mehr riskieren könnten.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Although federal loan payments resumed in October 2023, forced collections had remained paused. Until now, borrowers who have fallen behind are already seeing their credit scores drop, and the White House has warned that it can and will seize wages, tax refunds, and even pensions to recover unpaid debts. So, Scott, I just want to clarify... What's really happening here and where things stand?
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
And I just want to point out, before we dig into it, that's not really what's going on here. I think the two things to note, one... This is a measurement of the economy before the tariffs went into effect. This is Q1, so we're not actually seeing the impact of the tariffs themselves. And two, the reason you're seeing this contraction is more of an accounting blip than anything.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Just a reminder, Trump paused these student loan payments when COVID hit. And so if you had student loans at that time, you weren't getting billed. Now that was supposed to expire in Biden's term, but then Biden decided to extend this student loan freeze. He actually tried to go even further, tried to cancel...
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
340 Billionen Dollar an Studierendenlohnen, aber es wurde von der Supreme Court unterbrochen. Sie haben also nur teils diese Studierendenlohnen verabschiedet, und dann sind diese Bezahlungen im Jahr 2023 zurückgegangen. Aber was nicht zurückgegangen ist, und was heute zurückgehen wird, ist diese verschlossene Kollektion. of student loans.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
This is where the government comes in and they just start taking the money if you are in default. And what does being in default actually mean here? It means that you have missed your payments for 270 days or more. So for people in that position, if you haven't made your payment in 270 days, Das sind die Leute, von denen die Regierung jetzt diese Bezahlungen starten wird.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Also, Scott, deine Reaktionen zu dieser Nachricht und was es für unsere Wirtschaft bedeuten könnte.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
And I just want to remind us of what GDP actually is, just some macro 101 here. GDP is... Ich meine, es ist eine Messung unserer ökonomischen Ausgabe, aber die Art und Weise, wie wir zu diesem Niveau kommen, ist eine Äquation. Und einer der Elemente in dieser Äquation ist etwas, was wir als Net-Exporte nennen. Das heißt, du nimmst unsere totalen Exporte und du subtraktierst unsere totalen Importe.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Yeah, but I think that highlights a big problem, which is that for all these people going into college and taking on this debt, the trouble is that a lot of these young people don't really understand what the debt is because no one's fully explained it to them. And just some statistics here, one in five student loan borrowers say they borrowed more than they needed just because it was offered.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
One in five also say they don't even know their current loan balance. And then you throw into the mix the fact that the president, the previous president, said, don't worry, it'll all be forgiven. Und dann haben wir plötzlich einen Umgang. Es wird nicht verabschiedet. Und eigentlich beginnt es, wie es normal ist, heute, am 5. Mai.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Und ich denke, Trump hat Biden hier tatsächlich korrekt kritisiert und gesagt, er hat dir einen falschen Versuch gemacht, den er nicht gut machen konnte. Und das ist, was passiert ist. Er hat einen falschen Versuch gemacht. Der Supreme Court hat ihn runtergezogen. Und was ich mich überrascht habe, ist, dass es jetzt eine Generation, meine Generation ist,
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
who believes that maybe it'll be cancelled in the future. Maybe something will happen. Maybe this is actually on the table. And so the consequences of that are going to be really bad. Because I think there are going to be a lot of people who say, you know what, I'm just not going to pay it.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Weil, wer weiß, vielleicht in ein paar Jahren wird der Kongress darauf votieren und ich werde die Schuld nicht bezahlen müssen. Und was wird das tun? Das wird die Kreditschritte meiner Generation absolut abschleppen. Ich meine, wir können über die Forstkollektionen sprechen und was das für die Leute tun wird. Aber für mich ist der große Nachteil, was es zu Kreditwertungen tun wird.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Und Liberty Street hat diese Analyse gemacht. Sie fanden, dass jedes Mal, wenn man einen Studentenlohn-Betrag verpasst, wenn jede Verletzung auf den Studentenlohn-Betrag steht, Your credit score drops by around 150 points. And I think this is the real concern for young people and the part that they don't take seriously.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
And I just want to paint a picture of what a bad credit score can do to you in case people don't really realize. I mean, for starters, you pay higher interest rates. Two, it can affect your employment. I mean, a lot of employers actually check your credit. And if you have bad credit... I was just going to say that. Ja, es kann dir einen Job kosten. Es beeinflusst deine Rente-Fähigkeit.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Ich meine, Landwirte checken deinen Kredit. Wenn du einen niedrigen Wert hast, zahlst du höhere Sicherheitskosten. In vielen Fällen wirst du einfach von diesem Apartment oder diesem Zuhause verabschiedet. Und dann vier, und das ist wahrscheinlich das Schlimmste davon, ist, dass es deine Fähigkeit, Kredit zu erzielen, komplett zerstört.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Ich meine, du kannst für Kredite entgegenkommen, du kannst für Autos entgegenkommen, du kannst sogar entgegenkommen, um eine Basis-Kreditkarte zu haben. Es krippelt einfach deine finanzielle Freiheit. Und mit... with long, long-term consequences that aren't necessarily your fault. And I just worry that these young people don't understand that or they don't take it that seriously.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
And they're going to sort of hedge their bets on this very unlikely scenario where it's all just forgiven overnight. I don't think that's going to happen. You need to pay these loans. You can't just go into delinquency. You can't go into default. It's going to completely ruin you for a long time.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Und das soll dir zeigen, wie viel wir in Amerika gemacht haben. Und also... Was das im Grunde bedeutet, wenn man einen riesigen Aufstieg in Importe in deinem Land hat, wird das bedeuten, dass der Nennexportnummer runtergeht, was bedeutet, dass der GDP-Nummer runtergeht. Und das ist das, was letzte Woche passiert ist. Denn alle wussten im Q1, dass Tarifen kommen würden.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
We need to make sure that young people understand the rules. We need to make sure that young people understand what debt is, what they're signing up for by taking on debt. And then the other thing I think that this brings up, which we need to... für junge Leute zu überlegen. Was ist eigentlich der Wert einer College-Erkundung? Ist es wirklich wert für dich?
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Und für viele Leute, für verschiedene Leute wird es eine andere Antwort geben. Ich meine, wir wissen, dass es zu höheren Waren führt. Wir haben die Daten über höhere Behandlungsrate gesehen, bessere Gesundheitsaufgaben. Also, wir wissen einige der Daten. Aber ich frage mich, ob wir die Konversation ändern müssen, anstatt von Ist College wert?
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Wir müssen mehr spezifisch sein und sagen, ist die Schule wert, wenn man Geld nimmt? Wenn man nicht Geld nimmt, wenn deine Eltern dafür zahlen, ist es ein absoluter No-Brainer, weil du eigentlich gratis gehen sollst. Natürlich solltest du zur Schule gehen. Aber wenn du zu gehen leverierst, denke ich, ist das eine völlig andere Frage.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Und es gibt dieses eine Statement, das unser Team gefunden hat, das ich hier sehr illustriert finde, nämlich, dass es für College-Graden, die an Studentengeld gehalten haben, ein Drittel davon sagt, dass die Schule nicht wert ist. Für die Schülerinnen und Schüler, die das nicht getan haben, sind das 16 Prozent.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Es gibt also einen riesigen Gap in der ROE auf der Schule, abhängig davon, ob man sich dafür bezahlen muss, was natürlich Sinn macht. Wenn du das Produkt gratis bekommst, gibt es nur Vorteile. Das ist großartig. Aber wenn du dich in ein Loch setzt, ist es eine völlig andere Sache. Also, ich glaube... One, we should reframe the question and two, I will pose it to you.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Is college worth it if you're going to take on significant student debt?
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Und so haben alle gezwungen, so viele Produkte wie möglich in die USA zu schicken, bevor die Tarifen in Effekt gingen. Das ist der Grund, warum wir 41% der Importe in Amerika gesehen haben, die im Endeffekt einen negativen Einfluss auf den GDP hatten. Dies ist nicht der große Tarif ist ein schlechtes Bericht, den Sie vielleicht denken. Es ist der nächste GDP-Bericht, den wir im Juli sehen werden.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
But this is the thing that's so tough. It's their kids. I mean, you're describing this and you're describing the... die Habits eines sehr sophisticateden und erfahrenen Negotiator, der genau weiß, was an der Stelle ist, all die Dynamiken, die sie spielen, genau weiß, was zu sagen ist und was das Wachstum ist. Ich meine, die meisten älteren Ältesten verstehen das nicht. Ich verstehe das kaum.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Es ist tatsächlich eine sehr schwierige Sache. Und ich denke, es ist sehr wichtig, was du sagst. Und ich hoffe, es gibt junge Leute, die in die Universität kommen, die das hören können. Aber ich denke, was so falsch ist und so erschreckend ist, ist, dass wir Kindern sagen, dass sie das tun.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Kinder, die keine Erfahrung haben, die keine Verständnis davon haben, was all das bedeutet, die nicht wirklich verstehen, was Interestrate sind oder was ein Lohn ist. Und das ist für mich das, was so erschreckend ist. Die Standards, die wir ihnen halten, um sie zu evaluieren.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Ed, alles, was wir in unserer Gesellschaft tun, ist ein subtiles Veränderung von Wachstum und Möglichkeit von dem Jungen zum Alten. Und wir lieben junge Leute, wir lieben sie mehr als das.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Das ist der, der uns erzählen wird, was wirklich los ist. Und das ist der, wo ich denke, wir können eine mehr ehrlichere Analyse haben, was die Tarife auch gemacht haben. Aber, Scott, deine Reaktionen zu diesem GDP-Report, der viele Headlines gemacht hat und viele Leute darüber überrascht waren.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Let's take a look at the week ahead. We'll see earnings from Palantir, AMD, Novo Nordisk, Uber, Disney and Shopify and the Federal Reserve will also meet and announce its next interest rate decision. Scott, any predictions for us?
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Yeah, change that and then I think the prediction comes true. This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mir Silverio is our research lead. Isabella Kinsel is our research associate. Dan Chalon is our intern. Drew Burrows is our technical director. And Catherine Dillon is our executive producer.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Thank you for listening to ProfG Markets from the Vox Media Podcast Network. Join us on Thursday for our conversation with Michael Semblist, only on the ProfG Markets feed.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Das erinnert mich an eine von Trumps neuesten Wahrheiten auf Truth Social. Ich hasse es, dass wir sie Wahrheiten nennen müssen, aber das sind sie. Er sagte also, als der Stockmarkt nach der Wahl zerriss, sagte er, willkommen zum Trump-Stockmarkt. And today, I think last week, he posted this truth, this tweet that said, this is the Biden stock market that I inherited.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
And it was sort of marking his first 100 days in office, which have been one of the worst stock market performances for the start of a presidency ever in America. And it is sort of a reminder of how basically his strategy to distract people Das ist nicht der richtige Argument zu machen. Aber wenn es um den Stockmarkt geht, der nicht ein laggierender Indikator ist …
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
The stock market is live, real time, forward looking indicator. That's the thing to focus on. And that's the part where you cannot say, this is the Biden stock market. The stock market is live, it's real time. This is the Trump stock market. S&P down 4%, the Nasdaq down 8%. So that's the argument that you definitely cannot make, which of course he is making.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Let's move on to this manufacturing data. China had its largest drop in manufacturing activity since 2023. Export orders fell to their lowest level since COVID. UBS, Goldman Sachs are now lowering their GDP growth forecast for China to lower than 4%. And just for some context there, We discussed this earlier this year.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
China at the beginning of the year had a growth target of 5% positive GDP growth. So it looks like they're not going to come anywhere near that. In fact, I think we actually predicted that or we at least said that 5% was too ambitious. So this manufacturing data has come out. It's not looking good. Scott, your reactions to this new data?
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Ich denke, diese Daten, es zeigt den Punkt, den Ryan Peterson gemacht hat, als er auf den Podcast kam, dass er wirklich versucht hat, zu bemerken, was die Trump-Administration nicht versteht, dass der Handel ein positives Game ist. Wenn du etwas machst und ich es verkaufe, sind wir eigentlich beide da, wir haben beide Wert auf die Verkaufszeit.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
So when we decide as a nation that we want to get into a trade war with China, it means that we lose out in a lot of ways in America in the form of we have less stuff, which leads to higher prices. And also China loses because they're losing business. They want to make stuff and ship it over to us. And we're now beginning to see that reflected in the data.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
And that's what this manufacturing activity data tells us. China is losing. It's actually negatively impacting their GDP. But of course that's going to be the same story over in America. And your point, I think, is the right one. Who are the winners here? And it is so interesting to see Europe being reflected or proven as a winner in this data.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
You know, we talked recently about how China is trying to rekindle these relationships. They're sending all these trade delegations to Europe. They went to Hungary and Sweden and Germany. And I was sort of thinking... Ich wundere mich, ob das funktioniert. Ich wundere mich, ob Europa das kauft.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Und für mich sind die Zahlen, die du erwähnt hast, die Exporten nach den USA 65 %, aber die Exporten nach Europa 28 %, und wie du auch erwähnt hast, auf einer großen Basis. My takeaway is it's working. Europe is also beginning to lift some of these tariffs that they had on China, specifically EVs. They're beginning to open negotiations back up.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
It does certainly feel that as we close off this relationship with China, we're basically sending China into the arms of all of our allies, essentially.
Prof G Markets
Blockbuster Week For Big Tech Earnings + Can the U.S. Fix Its Student Debt Crisis?
Lass uns über Projekt Kuiper sprechen. Wir haben es schon lange gehört. Das ist Amazon's Satelliten-Internet-Projekt. Es ist im Grunde Amazon das Äquivalent von Starlink. Und letzte Woche haben sie ihre ersten Satelliten in den Orbit gestartet. 27 Satelliten, um es genau zu sagen. Der Plan ist es, diese Zahl zu erhöhen bis zu 3.200. Also vielleicht ein großer Moment für Amazon.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
You're going to have to elaborate. It's the final part that I'm really intrigued in.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I also think that there is something to be learned from Warren Buffett just being happy to pay his taxes. Like, that's just on a personal, emotional level. I think if we can—you know, we clearly need to raise more tax revenue. If there is any way for—
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Americans or people anywhere really to feel a little bit less resentful when they when they make their tax payments and to feel that feeling of actually having pride and it being a bragging point how much you contributed to the U.S. government which it seems like that's you know everyone who pays their taxes is like fuck this I don't want to pay my taxes but
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I do like that Warren Buffett is kind of changing the sentiment there. And I will also shout out Andrew Yang, who one of his great policy proposals when he was running for president was that we should basically have the government send out videos, including local governments, to taxpayers telling them, here's everything we did with your money this week or this month or this year.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
And I think if you could sort of just change the mentality when it comes to paying taxes. I mean, it's a little bit of a soft point, but I do appreciate that Warren Buffett is leading that movement of, okay, paying a lot in taxes is not necessarily a bad thing. You're doing a service to your country.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I guess you have to start off believing in your country and liking your country to begin with, which is... becoming rarer and rarer in America. Let's talk about BP. They're deciding to shift away from renewables, investing more in oil and gas.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I guess the first question I had reading this headline is, how much did Elliott Management, the activist investment firm, how much did Elliott have to do with this? Because... Two weeks ago, it was leaked that they had this stake in BP, roughly 5%. They wanted to clearly address BP's underperformance. It's down 8% in the past year.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Meanwhile, Shell is up 7%, and all the other energy companies are doing a lot better. And then suddenly, two weeks later, we see this turnaround in strategy. So I guess my first question for you, Scott, to what extent do you think this was Elliott's doing?
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
So, sir, you think that you basically think that they believe that the world wanted them to be a renewable company. So they said, oh, we're a renewable company. And now the world wants them to be an oil and gas company. So they're saying we're an oil and gas company.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
They are putting $10 billion a year additionally into oil and gas. So I think, I mean... I think I'm sort of half with you in that this is probably what they thought the market wanted because the way the pendulum is sort of swinging back away from ESG.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
But I would also put forward the possibility that a lot of this has to do with AI and just the fact that they couldn't really predict what was going to happen in terms of how AI was going to explode over the next few years. And you've got billions of dollars being plowed into these data centers, which are already... one of the biggest strains on power in our economy.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
And it's expected to double in just a couple of years, quintuple in maybe the next 10. So I do think at the same time, I'm sure there's probably a marketing element to it. I think at the same time, these energy companies are realizing like,
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
shit, we've been investing in these renewables, which are probably pretty exciting over the long term, but the short-term demands of AI are way higher than we thought. And the reality is these renewables that we've been investing in, they won't cut it. And if we want to meet demand, we do need more oil and we do need more gas, especially gas. Liquid natural gas is ideal for data centers.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
So I think I'm sort of half with you there, but I do think there is some substance here in the fact that Power demand is just going up. And we're not going to power these data centers with windmills and solar panels. We're going to do it with oil and gas.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
And so if you're not investing in that, or at least maybe to your point, showing Wall Street that you're trying to invest in that and that you're being realistic about the demands of AI in the next few years, then you're going to get punished. And that's why we've seen BP down, or at least kind of flat. over the past year or so. It's up 37% in the past five years. Chevron's up 109%.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Exxon is up 183%. So they have been getting crushed. And I don't like to be the big energy guy, but I do support this move.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
That is crazy.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
We'll be right back after the break with a look at NVIDIA. If you're enjoying the show so far and you haven't subscribed, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Yeah, you didn't do anything wrong. I mean, you shouldn't have pursued this woman specifically, clearly.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
We're back with ProfgMarkets. Nvidia reported fourth quarter earnings that beat expectations with revenue up 78% from a year earlier. The company also forecasted higher than expected first quarter revenue with the CFO confident in a quote, significant ramp in sales of Blackwell, which is its next generation AI chip.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
However, Nvidia also warned that profit margins would be tighter than expected as it accelerates the rollout of the Blackwell chip. After fluctuating between gains and losses, the stock actually fell slightly in extended trading. Scott, just your headline initial reactions to NVIDIA's fourth quarter earnings and perhaps the market's reaction to those earnings.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I think what the market wants from NVIDIA now is...
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
they need a home run to be fine they need to consistently hit a home run and only if they knock the ball literally out of the park will will they get a bump in the stock but you know we can just look at the numbers here so sales up 80 to 39.3 billion net income up 80 to 22.1 billion beat on revenue by three percent beat on guidance by five percent i think the most important stat here is their data center revenue beat
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
They beat data center revenue expectations by 6.3%. And that's, as we know, the most important thing for Wall Street right now. I think they did $115 billion in data center revenue in 2024. It's just unbelievable. So it was a great quarter. But as you say, great isn't good enough. And so they kind of flatlined. But in my book, that's kind of a win for NVIDIA.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
What happened in the basement, water under the bridge. Let's start over.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I think a lot of people are expecting at this point that NVIDIA, they're looking for anything to bring the stock down. And so the fact that they were able to maintain themselves is kind of impressive. We should probably talk about DeepSeek and what Jensen Huang said about DeepSeek. He mentioned it pretty much first thing on the call. He said, I'll just quote what he said.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
He said, quote, So he kind of sounded bullish on DeepSeek in a way. He then went on to say, that DeepSeq is, quote, an excellent innovation, but even more importantly, it has open-sourced a world-class reasoning model. Nearly every AI developer is applying R1 or techniques like R1 to scale their model's performance.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
So if I were to translate what he's saying about DeepSeq, it's that DeepSeq can only be good for NVIDIA. He says, you know, it can consume more computing power, and I'm not totally sure about that, and I don't really believe him, given what we saw in the research paper where DeepSeek said, no, we consume less compute.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
But he also said that it's democratizing AI, which will ultimately lead to even more demand for computing power. And on that point, I do agree with him. I think that, you know, if DeepSeat can make this stuff more accessible, then we're going to see more people accessing it and more people using this stuff, which is only going to lead to more demand for compute, which can only benefit NVIDIA.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
This is... We've talked about this before. I think this is Jevons paradox. A lot of tech bros talk about this. This paradox that the cheaper and more efficient a product gets, the more it is consumed in the real economy. And so Jensen's comments at the start of the call were, this is what's going to happen. It's more accessible. It can only benefit us. I'm sort of with him.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I think the 100 times more compute power comment was probably a little bit misleading, but I look at this and I think, okay, NVIDIA's crushing it. Keep going.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I couldn't believe when he said that. By the way, we were wondering, how much do you think he put in?
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Which is the most important thing in the wealth management business.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I prefer the real stories.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
It was interesting. I mean, I was watching CNBC the night before the earnings, and CNBC had probably every single analyst on their roster come on to talk about this topic and specifically to make a big, bold prediction about it. And it was really interesting seeing all of these analysts getting so fired up.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
This isn't CNBC. Agreed. Let's start with our weekly review of Market Vitals. The S&P 500 declined, the dollar rose, Bitcoin fell, and the yield on 10-year treasuries hit its lowest level since December. Shifting to the headlines. Tesla's market cap has fallen below $1 trillion, erasing nearly all of the stock's post-election gains.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
By the way, they had Aswath Damodaran on. And his prediction was NVIDIA is going to beat, but the stock's going to come down a little bit. Aswath absolutely nailed it, as he often does. But I guess the big takeaway for me from watching that and from seeing all of the memes online on Twitter, on Instagram, on threads, this is basically like... the Super Bowl for nerds now, for business nerds.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Oh, it's a new sport, 100%. And there was this great data from the team. Google search volume for NVIDIA beat out at 4 p.m. the day of the earnings. It beat out searches for the New York Times, for Wikipedia, for Instagram, and for ChatGPT. So this really is like... Yeah, it's the business Super Bowl.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
It's one of those moments where the entire business community is coming together and they're making predictions. And it's a ton of fun. It's a ton of fun for CNBC, too. And as someone who's trying to make business news more interesting, I kind of love it.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I think you should become an activist and maybe you can pitch that next time. There you go. We'll be right back after the break with a look at the new American gold card. If you're enjoying the show so far, hit follow and leave us a review on Proficy Markets. We're back with Profiteer Markets.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Trump is launching a new gold card program offering residency and a path to citizenship for wealthy investors, but it comes with a steep price. Thank you. Thank you. Thank you. Thank you.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Shares are down more than 25% so far this year, as investor concerns mount over growing competition and Elon Musk controversies. Warren Buffett announced that Berkshire Hathaway paid nearly $27 billion in taxes in 2024. That is the largest tax bill ever paid by a US company, accounting for roughly 5% of all corporate income taxes collected in the country that year.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
And finally, BP announced it is shifting back to fossil fuels and scaling down investments in green energy. The company plans to spend around $10 billion a year on oil and gas to win back investors after its fourth quarter profit hit a four-year low. Despite that move, BP shares closed down about 1.5%. Scott, we'll start with Tesla, and I'm bracing myself for your victory lap here.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Thank you. Thank you. Thank you. Thank you.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
You predicted on February 13th.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
It was trading at $356 a share then. We're not below $200, but we're now at $286. So it's down 20% since your prediction. Take it away.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead. Isabella Kinsel is our research associate. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from the Vox Media Podcast Network.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Join us on Thursday for our conversation with Jonathan Cantor, only on Prof G Markets.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Really?
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Yeah, I mean, I think the question that we've been trying to ask is like, what started this slide with Tesla stock? I mean, it's pretty dramatic what happened. It's down around 20% in five straight days, falling below a trillion dollars. It's now down 34% since its peak in December. I think the thing that really triggered this is this data that came out from Europe.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Tesla's vehicle sales are down almost 50% across Europe. Meanwhile, overall EV sales across Europe are up almost 40%. So clearly, people just hate Teslas. And it's not very surprising why. I mean, you just look at the UK, for example, where, you know, Elon is talking about how he wants to put
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
the British Prime Minister Keir Starmer in jail, it's not very surprising that the British public is now saying, hey, we're down with electric vehicles, but we're not going to buy Teslas anymore. And so it's finally being reflected in Tesla's financials.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I think the thing that I've been thinking about a lot when it comes to Elon and when it comes to Tesla, I've been waiting for what I would call his Wellington moment. And I'll explain what I mean by that. As I've said to you before, I think the similarities between Elon Musk and Napoleon Bonaparte, and you're going to call me a history nerd, but I don't care. Just a nerd.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I think the similarities are very striking in that you have Napoleon, who was this like miraculously successful guy who took over all of Europe and tried to take over the world, and at the same time was also pretty universally disliked. But people never really did anything about it because they thought, you know, this guy is so talented. He's so powerful.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
He conquered the Russians and the Prussians and the Spanish. He installed himself into office. He crowned himself emperor. Like, how could we ever bet against Napoleon? You never bet against Napoleon. And that's basically why people went along with this guy who was acting... honestly, very irrationally and kind of insane.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
But it was only when he suffered this crushing defeat at Waterloo against the Duke of Wellington that people realized, actually, maybe this guy isn't untouchable. Actually, maybe he isn't a god. And the whole world turned on him at the exact same time, including the French, by the way. And he was banished to this remote island where he died sad and alone.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
And I believe that that moment is coming for Elon. I believe it's going to take some big loss and suddenly all of this mystique and this intrigue and all of our glorification of his leadership abilities and his character and his genius, it's all just going to disintegrate in a second. And... At that moment, I think the citizens start to turn on him. We've seen that happening already.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
But more importantly, I think the markets will turn on him too.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Agreed. But this is what people believe and this is what the markets believe. And so this is what I mean. I think you need a moment. You need to see that the God fall from grace. You realize he's mortal. You realize that actually he's not all he was chalked up to be. And suddenly that's when the world collapses in on itself. But... We've been talking about Elon for way longer than we should have.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
So let's just move on to our second headline here, which is Berkshire Hathaway paying $27 billion in taxes last year. I think the thing that's interesting is what Warren Buffett said about this tax bill. Specifically, he was talking in his shareholder letter, in his annual letter to Berkshire Hathaway shareholders. He was explaining how proud he was
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
of paying this tax bill and contributing this revenue to the US government. And I'll just quote one part of this, because I'm supportive of what he said, but I also take some issue with it. So in the letter, he's describing the beginnings of Berkshire Hathaway and how they were struggling at the beginning. And then he says, quote,
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
Fast forward 60 years and imagine the surprise at the treasury when that same company, still operating under the name of Berkshire Hathaway, paid far more in corporate income tax than the US government had ever received from any company, even the American tech titans that commanded market values in the trillions.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
So he's basically saying, look how far we've come, look what we're contributing to the government. But at the same time, he's kind of taking a shot at big tech. and accusing them of not paying taxes, which is true and fair, and I agree with it, but I do find it a little bit rich coming from Warren Buffett, who has done a very good job of avoiding taxes himself.
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I mean, if you look at the history of Berkshire Hathaway, they have a long list of tax avoidance strategies, and they've had no problem taking full advantage of them. We could go through some of those examples, but what I would summarize this as is,
Prof G Markets
Nvidia Earnings are the Super Bowl of Business + Trump’s $5 Million Gold Card
I respect the point, but I don't love this holier-than-thou attitude from Warren Buffett, who's kind of presenting himself as like the Jesus of taxes, which isn't necessarily true. But... Let's hear what you think of this. I assume you're a supporter of this.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Yeah, it's, the market's basically reacting to him saying, addressing the elephant in the room, which is that Starbucks is no longer a nice place to hang out. And I think that's basically the entire game plan. It's like, we're going to make Starbucks a nice place to hang out again. We're going to do free refills for our customers.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
We're going to make sure that we don't have homeless people hanging around. We're going to make it sort of nice and just an enjoyable environment to be in. And that suddenly solved all of Starbucks' problems, at least from a stock perspective. But Your point about he is the new Jesus Christ, I just want to point out, they have awarded him $96 million in compensation.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
He's been on the job for four months. So the market thinks he's Jesus, and so does management. $90 million in stock awards, a $5 million signing bonus, plus buyouts from his former company, Chipotle. So he has some serious expectations going into this that we hope he'll meet.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
We need a mic drop. Blinding insight. Really rocked my world. Should we move on to T-Mobile?
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
We'll just go over the quarter really quickly. They beat on earnings, beat on sales. Sales grew 7% to $22 billion. Most important number, though... was their guidance for new customers in 2025. So T-Mobile expects to acquire 6 million new customers this year, and that is their largest projection for net new customers ever, which I think is kind of remarkable. I mean, T-Mobile is sort of a...
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
old, slow conglomerate, and then 2025 is, for whatever reason, going to be this breakout year for them in terms of net new customers. Why do we think that's going to happen? I think the answer has to be Starlink. I mean, T-Mobile suddenly has this incredible competitive advantage this year, and that they will be the only mobile network carrier that offers Starlink's new direct-to-sell service.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Now, I don't know that much about the product i've never tried it but you know supposedly starlink is the greatest thing since sliced bread you've said it scott i've heard other people who've used it they've said it supposedly with starlink you will never not have coverage you could be in the middle of the desert you could be flying on a plane and you will always be connected so i
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
You know, I look at this and I'm really excited. And then I see that new customer guidance number. I'm like, okay, maybe this makes sense.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Let's see. I got my sister visiting this weekend. That'll be pretty fun.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
$12 billion in revenue this year, which is a 50% year-over-year increase, you got to think that number is just going to keep exploding. I mean, they've barely even started yet. This is hardly in the hands of consumers, and they're still printing money. I mean, most of it is just like military demand at this point.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
One loser, I will say, from this whole thing is going to be like Ryan Reynolds and Snoop Dogg, because from my understanding, the only point of differentiation in the mobile carrier service industry is which celebrities you can hire to be in your Super Bowl ads. And suddenly T-Mobile has Starlink versus having Snoop Dogg like dancing on camera.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Yeah, I've gotten really close with her in the past couple of years. I've always been pretty close, but gotten really close with her over the past couple of years. So she's visiting. And why do you think that is? I think maybe I'm just mature, or maybe we're both more mature. I used to feel kind of competitive with her. I think that was probably a problem.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
We'll be right back after the break for a look at earnings from Microsoft, Meta and Tesla. If you're enjoying the show so far and you haven't subscribed, be sure to give Profiteer Markets a follow wherever you get your podcasts.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
We're back with Profiteer Markets. Meta, Microsoft, and Tesla kicked off big tech earnings last week with investors watching how they addressed DeepSeek's AI advancements and the impact of Trump's new policies. We will start with Meta, which posted record fourth quarter revenue, also issued weaker than expected forecasts for the current quarter.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Mark Zuckerberg framed DeepSeek's rise as validation of Meta's open source strategy. He also said that 2025 will reshape the company's relationship with the government. Shares were up more than 2% in after-hours trading. Just a few little statistics that stood out to me. Sales up 21% to $47 billion. I'm always just shocked at how big the numbers are for Meta's revenue.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Operating margins expanded 700 bps to 48%. And when you look at the family of apps, which is their main business, the operating margins are even stronger. It's 60%. So this was another really strong quarter. I'm just so bullish on Meta. I have been for a while. Scott, your reactions to Meta's earnings?
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
And I feel like when you're just more secure about yourself... It's just easier to kind of get along with people or something. I don't know. I feel like we just have a very mature, nice relationship. So I hope that continues because I think relationships go up and down as well. Does she have kids? No, she does not. But she got married a year ago. So she's definitely thinking about it.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Have you tried those, by the way, those new Ray-Ban Meta glasses?
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Yeah, I think that's kind of a bullshit statistic because, I mean, I don't know how many people are actually actively using the Meta AI tool on those platforms. I think they're probably saying that when you search something into the search bar on Instagram, Meta AI is being used.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
I'll just point out, when you recommended Meta, or you chose Meta as your stock pick at the end of 2022, the stock was at $90 per share. It's up to $690 now. So if you would have followed Scott Galloway's advice, and never mind some of his other advice, but just this one stock pick, you'd be up 7x, almost 8x. It's just insane, this comeback they've searched.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
You'll be a great uncle. You're kind of central casting to be an uncle. I feel like I'm going to be kind of awkward with kids. I think I'm not very good with kids already.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
um just a few more things to go over here on these meta earnings and we should probably talk about threads which has grown to more than 320 million monthly active users i find that astounding when you just consider the number of companies that have tried to create their own twitter alternatives and the meta does it and then within about a year he's at 320 million maus just to put that in context
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Last year, we don't know the official number, but last year Elon said that X had 550 million monthly active users. So Metis says they're adding a million MAUs per day. So assuming that growth continues, threads could very well be bigger than X. from a user perspective by the end of the year. So I just think we should just give credit to Threads as well.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Their AI play is paying off incredibly well. You mentioned that you're getting those great PSG ads. They're saying the ad quality has dramatically increased because of this new AI-powered ad ranking system. In addition, they are putting out these Gen AI tools that they offer to their advertisers. Six months ago, there were roughly 1 million advertisers that were using Meta's Gen AI tools.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
I see it differently. I think I can sort of fake my way through being normal with adults, but when it comes to kids, I'm going to be kind of fumbling about what to talk about.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Today, that number is 4 million. So when we just think about the use cases of AI, examples where AI is providing real demonstrable value in the marketplace, Meta is capturing all of that. You know, they're building value in AI, they're building the data centers, they're building models, but they're also receiving the value of the AI in the form of their really high quality ad targeting.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
So I just think Meta is absolutely crushing it. Aside from Zuckerberg's Adventures on Joe Rogan, where he's kind of ruining his reputation, in my opinion. I think Meta is just doing an incredible job. I will move on to Microsoft, unless you have anything else you want to add? Nope.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
So Microsoft's cloud business saw slow growth last quarter due to limited data center capacity during the owner's call. Satya Nadella said DeepSeek's innovations will benefit Microsoft in the long run. Despite beating expectations with a 12% revenue increase, that growth was the slowest since 2023 and shares fell nearly 5% after hours.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
I was a little bit surprised to see the market's reaction to this. I mean, they did beat on revenue. They beat on guidance. They beat on earnings. But the stock fell significantly. I think what investors are mostly concerned about here is the cloud revenue, which missed by about 1%. That's Microsoft's Azure revenue. Scott, do you have any initial reactions to Microsoft's earnings?
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Very different tone from before.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
I think one of the big questions we were definitely asking following the DeepSeek saga, and this is a conversation we were having with Robert Armstrong, was will all of these big tech companies keep investing as much money into AI and into AI infrastructure? And if we just look at these earnings from Meta and Microsoft, The answer appears to be yes.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
I mean, CapEx or the CapEx guidance remains on course. Satya Nadella said that thing about how we're going to be measured about it, but the investment plan is still the same. And Meta has said it's going to keep its plan to spend $65 billion this year. That's the same number we've seen before.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
And so I think this is a really important thing for us to unpack because this big tech AI capex thing is basically what's driving the entire market value of all the big AI stocks. I mean, we've said this before, but roughly 40% of NVIDIA's revenue comes from big tech. So even a slight change in these CapEx plans could completely transform NVIDIA's business.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
So it's something that investors and we as analysts really need to dig into. The question I would have for you, you know, they've said the plan's going to stay the same. $65 billion last year was the plan, same thing this year. Is there a possibility, though, that DeepSeek happened too recently for companies like Meta and Microsoft to report any changes in the spending plan.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
So in other words, could it be that this earnings report, they're reporting something, a plan that they baked weeks ago, maybe months ago, And, you know, if DeepSeek does change their approach, we're not going to see it in this week's earnings. We're going to see it in the next earnings report. Is there a possibility, essentially, that the pullback in spending will come next quarter?
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
The S&P 500 spent the week recovering from Monday's drawdown. The dollar rose. Bitcoin crashed below 100,000, but then rebounded by Thursday, and the yield on 10-year treasuries declined. Shifting to the headlines. President Trump is adopting a corporate-style buyout strategy, offering federal workers the option to resign by February 6th in exchange for pay through the end of September.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Right. Well, I think he has every incentive to want disruption and to back insurgents. Having said that, I'm pretty sure Andreessen has a somewhat decent stake in OpenAI. I don't think it's huge. Andresen's funding all of them. They're funding all of the startups. So they just want disruption.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
They've all gone away. We'll be right back. If you're enjoying the show so far, hit follow and leave us a review on Profiteer Markets. We're back with Profiteer Markets. Let's move on to Tesla. Tesla missed profit expectations but expects sales to grow after a tough 2024. Tesla's CFO acknowledged that Trump's proposed tariffs would, quote, have an impact on business and profitability.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
The White House expects 5% to 10% of federal employees to accept the offer. Starbucks same-store sales fell 4% for the fourth straight quarter. However, revenue beat expectations, and CEO Brian Nicol shared more details from his back-to-Starbucks strategy, emphasizing a renewed focus on customer experience. The stock was up 8% on that news.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Shares climbed more than 4% after hours, and they're up more than 80% since the last earnings report. I'll run through the financials that jumped out to me. Revenue up 2%. It was a miss. They also missed on auto revenue by 9%. They did beat on EBITDA, but they missed on earnings. Overall, I look at this. This is an incredibly disappointing quarter.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
However, the stock opens up the next morning up 4%. I'm trying to think like, okay, well, what are people excited about? I think we can at least attribute some of that excitement to the full self-driving outlook. Elon said, quote, unsupervised full self-driving will launch in Texas in June. He also added, quote, this is my favorite quote, this is not some far-off mythical situation.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
It's literally, you know, five, six months away. And I guess that's enough to get the market excited. Scott, your reactions?
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
It has to. It's so annoying. I mean, it goes on and on and on. But I'm still with you on it. I still think it's just so, so overvalued. Can we also just talk about how the Tesla is actually just a bad car, in my opinion? You don't like Teslas? I think the Tesla is a bad, cheap car.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
And finally, T-Mobile's fourth quarter revenue exceeded expectations, up nearly 7% year-over-year. The company also issued its strongest start-of-year guidance to date. That earnings beat coincided with the beta launch of its Starlink program, where it'll be offering its customers exclusive access to Starlink for the first year. So Scott, let's start with this federal buyout here.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
ugly car and i used to think it was cool because it was so novel but you know i get in a tesla like every other uber now in new york is a tesla and i'm always disappointed to get in the tesla it feels cheap uh it's jerky you start to get car sick like i genuinely think it's a bad car and the worst is when i sometimes i'll order an uber black when i'm trying to feel sexy and a tesla shows up and i'm like this is a joke
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Like this is not a luxury vehicle by any stretch of the imagination. This is like a bad, cheap and cheap feeling car. I'm wondering if you share the same views. I know you used to have a Tesla.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Crypto bros and Uber drivers is my take.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
I don't know why everyone's so excited about full self-driving like it's this massive new thing. It's here. Waymo's already done it.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Let's also talk about quickly the role Bitcoin played in this quarter for Tesla. So net income hit $2.3 billion this quarter, up from just over $2 billion last quarter. But $600 million of that net income
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
was because of the rise in tesla's bitcoin holdings so if you get rid of the bitcoin their net income would have been significantly lower than last quarter's what's interesting is actually tesla played by the rules here there's this new accounting rule from the financial accounting standards boards which mandates that companies now mark their crypto assets to market each quarter
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
And it used to be that you had to report the lowest value recorded during your ownership of your digital assets. But now you update them each quarter, and that is reflected in your net income. I'd like to get your take on all of that. My view, just quickly, I hate this.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Because it feels like once again, the actual earnings of companies that is supposed to be showing us how is the fundamental business doing, suddenly it's being corrupted again. And it's now skewed by these wild swings in the value of crypto. So even if you have a shitty quarter, which is what they had, if Bitcoin goes up, you can come out and say, actually, you had a pretty good quarter.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
So what are your thoughts on this Bitcoin wrinkle?
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
And before we get accused of the Elon derangement syndrome, I just want to point out, I genuinely think I'm calling balls and strikes here. I think Tesla is way overvalued. I think SpaceX, particularly because of Starlink, is going to absolutely destroy. If I could put my money in any startup right now, it would probably be SpaceX. So I do not think this is us just railing against Elon.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Just to be clear, this is not the same as a corporate buyout or a leverage buyout where you're buying out the investors in a company to control the company. This is what's known as an employee buyout. And the reason companies usually do this is to cut down on costs. Basically, you essentially offer your employees a voluntary severance package They can take it or leave it.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
That was great. Let's take a look at the recap. We'll see earnings from Palantir, Google, Amazon, Disney, and Uber. The big earnings season continues. Do you have any predictions for us, Scott?
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Only on Prof G Markets. Lifetime
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
And the idea is to incentivize your employees to leave the company with that severance package. So Trump is doing this, except he's doing it with the US government. Good idea or bad idea, Scott?
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Is there ever a situation where a buyout makes sense? I guess your argument here is that it's sort of the quickest way to cut down costs, but it's not the most effective. I think the other side to this would be, well... Do we really want to build an entire apparatus and do this entire review that's going to cost a lot of money?
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
And we're going to figure out all of these ways to understand which of our employees are delivering the most amount of value versus the others. It sounds like a lot of bureaucracy versus this very quick and easy way of just shaving down costs and also just shaving down your employee base. So is there ever a situation where it does make sense?
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Here we are. Just an observation.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Yeah, it's one thing to offer an employee buyout. It's another thing to insult all of your employees, call them lazy, and half of them are DEI hires, and then offer them a buyout. Those are two very different things. And just some statistics to look at here.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
I think when we think about, you know, this bloated government trope, we're sort of thinking of like, you know, a Gen Z DEI hire who's working at like the DOJ or, you know, the Department of Education. But when we think about just the actual demographic makeup of the federal employee base, actually half of them belong to one of these three agencies, the Department of Defense,
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
Department of Veterans Affairs and the Department of Homeland Security. So that's not really the people that you would think Trump is targeting with all of his rhetoric. In addition, the average federal employee is 47 years old. A fifth of federal workers are already eligible for retirement. Only 7% are under the age of 30.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
So I just think the narrative that we're telling ourselves about the government and who works for the government, particularly driven with this DEI or anti-DEI obsession, doesn't really tell the true story of who actually works for the government. The most likely candidate to get cut is a 50-year-old middle-aged white person who works for the Department of Defense.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
That's the most likely candidate. So I just think it's worth keeping in mind. Let's look at the numbers, and then we can compare it to the narrative we're being told. Let's move on to Starbucks and their earnings. I think the biggest... change here, the most important thing coming out of these earnings was this reversal of Starbucks' open-door policy.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
And basically, the open-door policy said, anyone can come in and anyone can use our amenities and, you know, come in, hang out, it's free for all. And this gets back to something that I said on this podcast a while ago. which is, you know, Starbucks used to be the premium coffee chain in America.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
You think about the premium brands today, you think La Cologne or Blue Bottle or in New York, we have Irving Farm, these sort of nice, cool coffee chains where you hang out. That's what Starbucks used to be. Over time, it has devolved into what looks like a fast food chain. And I think a lot of that is, quite frankly, the fact that it has become almost like a halfway house for homeless people.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
I mean, practically every Starbucks you enter, you're either seeing homeless people around the side or homeless people sometimes inside of the stores. And this is not... a very comfortable thing to talk about, but I find it so interesting because this new policy is directly addressing that. They now say that you can only use the bathroom if you're buying an item.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
You can only use the Wi-Fi if you're buying an item. They're gonna train the baristas on how to handle loiterers, which is gonna be very uncomfortable, but I think it's actually quite important. And the most interesting development I saw was a statement made by this guy Donald Whitehead, who is the executive director of the National Coalition for the Homeless.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
And he said he was, quote, very concerned about this new Starbucks policy. He said, flat out, Starbucks functions as an important buffer for homeless people. So this is going to be really controversial. I think it's going to get kind of ugly. This is not a comfortable topic to be talking about, but it does get to the heart of Starbucks' issue.
Prof G Markets
Meta & Microsoft Brush Off DeepSeek + Starbucks Stages a Comeback
You cannot have a premium specialty coffee brand that is also highly associated with the homelessness crisis in America. Well, my first question, Ed, is why do you hate the homeless? I'm kidding. I'm kidding.