Pod Insights Prof G Markets Trump Fires BLS Chief, Elon’s $29B Pay Day & American Eagle Stock Soars Again About this episode Ed breaks down Friday’s jobs data and the fallout from Trump that followed. Then Charles Elson, Founding Director of the Weinberg Center for Corporate Governance at the University of Delaware, returns to the show to explain why Tesla’s board approved a proposed $29 billion pay package for Elon Musk. Finally, Ed takes a look at what drove American Eagle’s stock up yesterday, and Kyla Scanlon joins the show to share what the saga reveals about markets today.
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Transcript 4,786 words · 15 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
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1:29 Ed Elson? Today's number? 300. That's how many times the average four-year-old laughs per day. Meanwhile, the average 40-year-old laughs just four times per day, a very sadly low number. According to studies, that number can go even lower depending on your exposure to stress, anxiety, and Scott Galloway's dick jokes.
1:54 Speaker 04 Money markets mad. If money is evil, then that building is hell.
2:04 Ed Elson? Welcome to Prof G Markets. I'm Ed Elson. It is August 5th. Let's check in on yesterday's market vitals.
2:11 Ed Elson? The major indices all rose, bouncing back from Friday's sell-off. The S and P 500 saw its strongest single-day rally since May. Oil fell after OPEC said it will increase production starting in September. And Palantir stock popped in after-hours trading after the company reported earnings that beat expectations and hit $1 billion in revenue for the first time.
2:32 Ed Elson? Okay, what else is happening? Job growth stalled in July, and in response, Trump fired the nation's top labor statistician. The Bureau of Labor Statistics reported Friday that the US added just 73,000 jobs in July and sharply revised the numbers for May and June downward. It was the largest downward revision since 1979, excluding COVID-era adjustments. Hours later, Trump fired the commissioner of that agency, accusing her of manipulating data. On Truth Social, he said it was rigged in order to, quote, "make the Republicans and me look bad." He also claimed that she, quote, "faked the jobs numbers before the election to try and boost Kamala's chances of victory."
3:14 Ed Elson? The markets did not like any of this news, and the latest tariff blitz only compounded the trouble. The Dow fell over 1%, the S and P 500 fell 1.6%, and the Nasdaq more than 2%. More than $1 trillion in value was erased on Friday. It was the stock market's worst day in over two months. So, here we are. It's a new week, and Trump is now set to appoint a new BLS commissioner in the coming days. Now, the funniest part of all of this is that actually the July jobs numbers were not that bad. The real problem was this downward revision to the previous numbers. And what's so ironic about that is that this
3:55 Ed Elson? is the very thing that the Republicans used to accuse the Biden administration of doing, but in the other direction. The Republicans accused the Biden administration of fudging their original numbers and then quietly revising those numbers back down to the real number, which was all thought to be part of this deep state cover up. Well, by that same logic, the commissioner was doing the same thing for Trump, the same thing she did for Biden, that is, come out with these great numbers in the initial report and then quietly revise them down later on. That was the thing that the Republicans complained about. But no, apparently that rule no longer applies. This time it's the revision that is the fake number.
4:39 Ed Elson? And it's the initial number that's real. The revision downward was fake. The real number is the one that was good. Put another way, when the data looks good under Biden, the BLS is lying. And when the data looks bad under Trump, the BLS is lying. So the BLS is only telling the truth when it makes Trump look good. That is what he told us this week. It's not hyperbole. It's not TDS. That is the reality. So we have now officially entered the part where the leader shoots the messenger for bringing the bad news. Oh, my job numbers are bad. You're fired. You think tariffs cause inflation? You want to keep interest rates high? You're fired. This is where we are now.
5:24 Ed Elson? Now, you might be thinking, a lot of people are thinking, this story feels familiar. Where have I seen this story before? And you would be right, because the reality, which I pointed out on MSNBC last week, the reality is that this is a chapter in the story of almost every iconic villain in history. And this is what Cersei Lannister does in Game of Thrones. This is what Commodus does in Gladiator. This is what Voldemort does in Harry Potter. You receive an inconvenient truth from a subordinate. And in a fit of anger, you shoot the messenger, be it through public execution, or through the cruciate's curse, or in this case,
6:06 Ed Elson? through firing. And to be clear, I'm not saying Trump is Voldemort. What I am saying, though, is that there is a reason that this has triggered such a strong emotional response from people and from the markets. And it's because they've seen this before in books and in movies and in cartoons. This is the classic evil dictator gets drunk on power move where you refuse to see the truth and you inflict pain on anyone who tries to put it in front of you. And I apologize for the hot take here, but the president behaving in ways that make him look like a Disney villain, I think that's kind of a bad thing. I think we should try to not have that.
6:49 Ed Elson? And by the way, it's not just cartoon villains that do this. It's real villains too. This is what Mao did when his generals told him that his policies were causing a nationwide famine. This is what Stalin did when his aides brought him bad news about the harvest. This is what Putin does today. This is what Kim Jong Un does today. This is what they all do. There is a reason why this is a theme in both reality and fiction. There's a reason why shoot the messenger is this well-known idiom. It's because it happens. It's a very convenient and effective strategy when you're in a position of power, if you need to lie about something. Well, then it helps to have
7:31 Ed Elson? an incentive structure in your organization that promotes the lie. So punishing people who tell you the truth, that helps you. Rewarding people who tell the lie, that helps you too. That's why we see this over and over and over again. Nothing ever really changes. And so why on this occasion would we pretend that this is any different? I mean, seriously, this is getting out of control. And I know the comments are gonna say he has Trump derangement syndrome. He's crying again online. I thought this was a market show. Why isn't he talking about markets? I am talking about markets. We're talking about the jobs numbers, but the president just said the jobs numbers are fake.
8:15 Ed Elson? So, yeah, we can't gloss over this very important detail. If we're gonna talk about the economic data, we have to at least agree that the economic data is real. And the worst part about all of this, once we have Trump's pick for BLS chief, you just know it. All the liberals are gonna say the same thing that the Republicans said. They're gonna say, nope, the data is compromised, the data is fake.
8:44 Ed Elson? That's where we're at. So, look, we were already entering into a post-truth world where, you know, the line between data and narrative was already getting pretty blurry. But as of last week, I'm sorry to say, we have officially been blasted through the door. We're there now. Any data that comes out of the government, that comes out of the Bureau of Labor Statistics or any other government agency, as of now, that data is a matter of opinion. And that is a world that we're actually not familiar with. You know, perhaps Argentina is, perhaps China is, although if you start debating the data and you're an economist, you get disappeared. That's what happens there. But we are not familiar with this in America.
9:30 Ed Elson? Now, I'm not exactly sure what that's gonna mean for this show when we talk about data and economics. I'm not exactly sure what it's gonna mean for the study of economics itself. But what I am sure of is that this changes things. This fundamentally changes things. And in our view, here at Prof G, this is the most bearish signal for truth and veracity in our economy today.
10:05 Ed Elson? Elon Musk may be headed for a $29 billion payday. Over the weekend, the Tesla board approved an interim pay package of 96 million shares. The pay package will vest over two years if Musk stays on as CEO or holds another key role. Tesla stock climbed 2% on Monday. As a reminder, Elon Musk's pay at Tesla has been the center of a years-long legal battle. Back in 2018, the Tesla board approved a record-setting pay package for Musk worth up to $56 billion if certain milestones were met. It was the largest potential compensation opportunity ever observed in public markets. It was also 33 times higher than the nearest comparison, which was, by the way, Musk's prior compensation
10:50 Ed Elson? package. Shareholders approved the plan at the time, but a Tesla investor sued claiming Musk had too much control over the board. Then in January 2024, a Delaware judge ruled that the pay plan was improperly granted and ordered that it be rescinded. The court said Tesla's board wasn't independent and Musk's influence dominates the decision-making process. The board has since appealed that ruling and the case is still pending in Delaware's Supreme Court. So while that legal battle plays out, Tesla has offered Musk this new $29 billion package in order to, quote, "keep Elon's energies focused." With the new shares, Musk would own nearly 16% of Tesla,
11:33 Ed Elson? a stake that would be worth more than $150 billion today. So to help us break down this latest compensation and what it means for Tesla, we are welcoming back Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware.
11:53 Ed Elson? Charles Elson, thank you very much for joining us again on Profty Markets.
11:57 Charles Elson? Great to be with you again, Ed.
11:59 Ed Elson? I would love to address you as Uncle Charles, but I'm told that's not professional. So I'm calling you Charles Elson.
12:07 Charles Elson? That's what they call me.
12:11 Ed Elson? I love it. I feel like I feel like Chris Cuomo in 2020.
12:15 Charles Elson? Very true.
12:17 Ed Elson? So Tesla has proposed this new package of $29 billion for Elon Musk. The question I have for you, where does this fit in terms of the legal dispute with the Delaware Court of Chancery? Does this solve the problem?
12:33 Charles Elson? Well, no, it's an in-run around the decision, basically, if you think about it. And the decision said this package was no good. It explained why. And suddenly a new package appears that basically is very similar to the old package. But it's done in a way that it looks like it's a new package. And and and they've said that if the Delaware Court approves the old package, the Supreme Court approves it, then they will they'll drop this and go back to the old. But if the Supreme Court doesn't and strikes it down, then this will be the new package. But remember, they moved from Delaware to Texas. And in Texas, there's a different sort of regime, if you will. In Delaware, any shareholder could sue to block this.
13:17 Charles Elson? In Texas, there's a new rule in Texas that said only a 3% shareholder or above can sue derivative, which what this claim would be. So basically, if the shareholders approve it, it's bulletproof, which is really kind of for the investors who oppose it is really a very problematic. That's really why they should have, I thought, think state in Delaware. But also, if you think about it, if you can simply pick up and move somewhere else to avoid a judicial ruling, there's something really wrong there. Actually, in the end, what it will do is if you go to Texas and you can't bring an action, it just means people who own stock who are unhappy will A, probably not invest
14:01 Charles Elson? in a venture that doesn't respect them, or B, if they do, it will be through debt contract. Because of debt, you can always contract your way to remedies, really, and have it enforced by a court. Can't do that with equity. The court is critical to equity, protection of equity. And that's what Delaware was about.
14:23 Ed Elson? Right.
14:24 Charles Elson? But obviously, someone thinks differently.
14:27 Ed Elson? What would you say to the shareholders who say, no, we, we do want this? And there are many of those shareholders. They voted seventy, seventy seven percent that we want to give him the fifty six billion dollars. And point taken, I'm sure there are investors out there who say, no, that's too much. That's excessive. But I think, you know, the, the, the counter argument to what you're saying is, you know, the shareholders said, we like it, we like that package. The Delaware court says that doesn't make any sense. And I think a lot of people would say, well, why is it up to the, up to Delaware to decide what's reasonable? If the shareholders like it, then they can vote for it.
15:09 Charles Elson? Well, I think the issue was protection of minority capital. Look, some shareholders did like it. A lot of them didn't and voted against it. Quite a few didn't and voted against it. And the danger is if you, if you basically give the minorities money away, next time you won't get minority capital. I mean, critical of the system is protection of all investors. And something like this, where a court has said the process that led to it was, was, was flaw, highly flawed, that they critique the independence or lack thereof of the board. And the, and the some, they said it was problematic because it didn't incentivize someone. This is the same story.
15:51 Charles Elson? Someone who has that much stock in the company doesn't need to be incentivized to stick with it. He's got, at this point, billions of dollars in the company. Why in the world do you have to incent him to stay?
16:05 Ed Elson? Yeah, I just want to read you a quote from, from the board's statement because this was the issue was, how do you incentivize him? And, and the court said, you don't need fifty six billion dollars to incentivize the guy to go to work every day. Here was the board's quote in their new letter. They said, quote, retaining Elon is more important than ever before. We are confident that this award will incentivize Elon to remain at Tesla. So they're essentially saying, this is the amount of money we need just to get him to stay there. That's that's what we need to pay him. So I guess my question to you is, one, do you believe that that is a good faith argument from the board? And two, what do you think is the right number?
16:50 Ed Elson? What's the reasonable number to get a world-class talent like Elon? We got to give him his credit to stay at the company and keep working there.
16:58 Charles Elson? Well, number one, I just find it very unusual that they said, well, this is what will keep him there. Otherwise, he will go, I don't believe he'll leave. I just, I don't think it's in any, it's certainly not in his interest to leave. And frankly, how do you know you're going to get what you pay for anyway? I mean, at this point, Tesla, yes, it hit heights, but we haven't seen such a fantastic Tesla of late. Tesla's got some real issues and everyone knows that. So and some of the issues, it was argued, may have been caused by him, his departure, the political issue.
17:39 Charles Elson? His actions hurt not just his own stake, but everyone else's. I just don't believe it takes something like that. And no one's that good. Let me ask you this. What happens if tomorrow he was crossing the street and gets hit by a bus? Does the whole world stop? Will Tesla stop if he's hit by a bus? Let's say he wakes up tomorrow and says, I just want to live on an island and I really don't care about anything. I'm going to go bring some coconuts and sit there. Goodbye, world. The world isn't stopped. No human being is so vital to the world that everything stops. I believe this approach is rather foolish.
18:22 Charles Elson? And frankly, if someone says to you, I'm threatened to leave or else, they're going to do it again.
18:28 Ed Elson? Exactly. It seems as though that there is a cult, there is a cultish vibe around him, which the markets seem to agree is acceptable. And no one can imagine this world of a Tesla without Elon. And so they're willing to pay $30 billion to avoid that. But just to go back to the original question, you know, you've had a lot of experience on a lot of different boards. You've worked with many CEOs. Again, what do you think? Is reasonable.
19:01 Charles Elson? I think it has to be negotiated. You have to have, you have to have, it has to be a board that's independent of him that represents the shareholders, period. And I think she found this board wasn't independent. And listen, it resulted in a negotiation, a fair negotiation where both sides are trying to maximize their own position, usually get to the right place. And there's no set number.
19:25 Ed Elson? Right.
19:25 Charles Elson? I doubt a real negotiation would produce numbers like this. Put it that way.
19:29 Ed Elson? Yes. Well, we really appreciate your time, Charles. I hope to have you on again, again soon.
19:34 Charles Elson? Always fun and good to see you. Take care.
19:37 Ed Elson? Bye bye.
19:37 Charles Elson? Bye bye.
19:42 Ed Elson? That was Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware. I asked Charles what he thinks is a reasonable compensation package for Elon Musk. We got his answer, but we'd be interested to hear what you think too. What do you think is the right pay package for Elon? Let us know in the comments.
20:04 Ed Elson? After the break, American Eagle takes flight again. Stay with us.
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21:17 Speaker 02 Hey, Bose here. When your next track starts, listen for the decisions that the artist makes. The vocal pushed right up front, the bass that waits half a beat, that sample from a 70s underground gem. Every choice deliberate. With Bose, you'll hear it all. Your music deserves Bose.
21:38 Ed Elson? We're back with Prof G Markets. Trump's praise for a controversial ad has sent a retailer's stock soaring. Shares of American Eagle surged more than 23% yesterday after he applauded the brand's campaign featuring Sydney Sweeney. He wrote on Truth Social, quote, "Sydney Sweeney, a registered Republican, has the hottest ad out there. It's for American Eagle, and the jeans are flying off the shelves. Go get him, Sydney." End quote. And why is he even talking about this?
22:19 Ed Elson? Well, I'm sure you know, but as a reminder, American Eagle launched this ad campaign titled Sydney Sweeney Has Great Genes.
22:28 Speaker 08 Genes are passed down from parents to offspring, often determining traits like hair color, personality, and even eye color. My genes are blue.
22:39 Speaker 09 Sydney Sweeney has great genes.
22:42 Ed Elson? The ad got some backlash online. It prompted yet another culturally and racially charged debate. And then when Trump learned about Sydney Sweeney's political affiliation, apparently she's a Republican, he obviously had to get involved. Now, I have to be honest, I don't care about this debate at all. I think it's dumb and I think it's a waste of time. However, I do care about the way in which the markets are now playing a role in this debate and debates like this. The fact that American Eagle can accrue over $400 million in market cap in one day just because it is the subject of this cultural controversy, that is new.
23:25 Ed Elson? And I don't know exactly what to make of it, but I do know that it says something about this current moment in the markets. So to help us unpack this, our producer Claire spoke with Kyla Scanlon, author of In This Economy: How Money and Markets Really Work.
23:41 Kyla Scanlon? All the meme stocks have been on a big tear recently, like any sort of attention toward like Krispy Kreme or Go Daddy and the stocks are ready to roll. It seems like there is some excess capital in the markets that is able to go into these meme stocks. And with the American Eagle situation, I'm not surprised because Trump, President Trump is such a good attention harvester that essentially whenever he touches, you know, it's gonna go up in price. Trump coin is a key example there. And so it makes a lot of sense that this happened and that people would see him tweeting about it as a catalyst for the stock.
24:20 Speaker 11 Do you think American Eagle planned for this kind of reaction? Do you think they saw it coming at all? Or did they sort of just stumble into this attention economy and play it well?
24:31 Kyla Scanlon? Controversy is a commodity. And so if you can make a lot of people mad, you're probably going to have some elements of success because everybody's so polarized that you're going to please one side, probably. And so I don't know if it was intentional on American Eagle's part. It doesn't seem so. There's a lot of debate online deciding if it is or not. And essentially, I think anyone can attach their own answer to that. But they, even if it wasn't intentional, it definitely did a job.
25:00 Speaker 11 It's almost like controversy is this cheat code in the attention economy. But my question is, will it actually translate to a sustainable strategy and convert into brand equity for American Eagle? I mean, Trump was saying jeans are flying off the shelves. I don't know if any of that's true. But do you think it could? You know, translate into actual sales for them.
25:25 Kyla Scanlon? They lost almost seventy million dollars in their first quarter of twenty twenty five as a company. Um, so I don't know if that a controversial ad is going to help them gain seventy million dollars. I think that when we look at stocks that kind of play or companies that play this controversy line, like maybe Rumble, for example, they don't tend to do that all. Um, and so I think it kind of works as a short term boost, but it often doesn't translate into any real business fundamental. Like, I think what's going on with American Eagle right here is a great example of a stock not necessarily reflecting the underlying company.
26:09 Kyla Scanlon? The stock market is divorced from everyday experiences increasingly, like just does not reflect underlying fundamentals at all, um, for a lot of companies. And I think just this American Eagle situation is case in point to that.
26:22 Speaker 11 Final question, what do you make of the market's reaction to um, the latest with Trump throwing his support behind the ad? Do you think the market's saying, yes, we're into this anti-woke moment? Or is it more like traders are saying, this is ridiculous, hilarious, weird? We just want to make it even crazier and run the stock up?
26:44 Kyla Scanlon? I mean, it's interesting because I I don't even know if it was an anti-woke moment. Like, the campaign was supposed to support a domestic violence charity, right? And so it seems like everybody just skewed the narrative totally out of control. But I think that for finance people, they see an opportunity in it. Um, and there's a meme about it, you know, Trump is tweeting about it. And so there's a lot of power behind that. Uh, and so I think the market is just looking for any sort of catalyst.
27:10 Ed Elson? That was Kyla Scanlon, author of In This Economy, and also a frequent guest on Prof G Markets. Whatever you think of the ad.
27:20 Ed Elson? I think it's important to simply observe what it has done to the stock price. To Kyla's point, it is just indisputable the extent to which attention has taken on a life of its own in our economy. Attention isn't just noise in the economy, it is the economy. And in a lot of ways, it doesn't really matter how you get it. It could be through controversy or through outrage or even a simple meme. It doesn't really matter. All that matters is that you obtain it. That's what matters today. We saw it with GameStop. We saw it with many of the stocks that Kyla mentioned.
28:00 Ed Elson? We saw it more recently with Astronomer and that whole Coldplay concert CEO debacle. And we're seeing it again today with American Eagle and Sydney Sweeney and now Trump. Now, does that mean American Eagle is a good investment? No, not at all. And in fact, I'm waiting for the stock to come crashing back down. But it also doesn't mean that the stock couldn't rip another 50% this week. All it would take is another tweet from the president or another meme from the White House and you could see another several hundred million dollars in market value created overnight. That is genuinely possible. And that is just the world we live in.
28:40 Ed Elson? And the question is whether you really want to participate in that as an investor. Me personally, I'm good. I have no interest in participating, but it is certainly true, the world of meme stocks is expanding. And this, combined with everything we've seen over the past few months, is proof that the world of meme stocks is not going anywhere. Okay, that's it for today. Thank you for listening to Prof G Markets from the Vox Media Podcast Network. I'm Ed Elson. I'll see you tomorrow.
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