Liberation Day 2.0 Is Here — When Will We See the Tariff Fallout?

Scott and Ed unpack what they think the impact of Trump's new wave of tariffs will be. Scott argues the move could inspire massive deal making that won’t involve the U. S. and Ed explains why he thinks the TACO trade could potentially backfire. Next, they break down the growing backlash against junk food and what a healthier America could mean for the economy. Finally, they preview second-quarter earnings season, questioning whether the tariffs will start to show up in the reports. Subscribe to the Prof G Markets newsletter Order "The Algebra of Wealth," out now Subscribe to No Mercy / No Malice Follow the podcast across socials @profgmarkets Follow Scott on Instagram Follow Ed on Instagram and X Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

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• 1:25Scott Galloway?

  Today's number 70. That's the percentage decrease in time young people spend attending or throwing parties today compared to 20 years ago. Ed, the truth is, when I was 19, I was nothing more than a sad virgin. And now, last month, I turned 60.

• 1:53Scott Galloway?

  Ed, how are you?

• 1:54Ed Elson?

  I'm doing well, Scott. Where are you?

• 1:56Scott Galloway?

  I am at my second home.

• 1:58Ed Elson?

  You look like you're in a hotel, so let me just get... Can I just guess what your second home is? I assume this is like a regular... Are you at the Beverly Hills Hotel?

• 2:05Scott Galloway?

  It's so rewarding when it's obvious you're investing in our relationship. Yes, I'm at Beverly Hills Hotel.

• 2:10Ed Elson?

  So you're in LA? Oh, that's right. You're there for the thumb light, the read.

• 2:14Scott Galloway?

  I'm going into the writer's room today. Not that I even know what that means. With... for the Netflix show. And then I'm having dinner with my... Showrunner, who's this really thoughtful, talented, nice man at San Vicente Bungalows, which I'm super excited about. I'm hoping I get some cred walking through with him. It'll be like walking in with a super hot woman. He's the equivalent of a super hot woman in LA and New York.

• 2:38Ed Elson?

  The producers, Full and Oven.

• 2:39Scott Galloway?

  Well, everyone's gonna be like, ooh, who's, who's that old professor that's, that's with, uh, his name's Scott Burns, who's a really lovely guy. Anyway, so I'm excited to be here and it's spectacularly beautiful. It's just.

• 2:50Ed Elson?

  Oh, wow.

• 2:51Scott Galloway?

  I would live in LA if it wasn't so far from everything.

• 2:53Ed Elson?

  Well, I've got a question for you. What do you do about, cause you, you're just traveling all the time. What do you do about clothes? Cause you've been away for maybe like a month. What are you doing?

• 3:03Scott Galloway?

  To be blunt, money solves all problems.

• 3:05Ed Elson?

  Okay, okay. New wardrobe for each locale.

• 3:08Scott Galloway?

  Yesterday I called a woman I know at the James Purse store here and I said, can you send me three new t-shirts and, and a couple pairs of cool shorts.

• 3:16Ed Elson?

  So glad I asked this question.

• 3:18Scott Galloway?

  Yeah, it's just, uh, so yeah, I buy shit on the road. I, and it's important as you're on the road, like throw stuff off and keep cycling. I mean, look at me now. Like I'm in a, I'm in, it helps when you dress like an aging skateboarder, cause you can kind of throw on anything and it just fits your brand.

• 3:32Ed Elson?

  This is very interesting to hear because I, I, I think, I think it's great how much you travel, uh, and it sounds pretty fun and exciting, but the one thing I'm not jealous of you at all, uh, about is the routine, uh, just the lack of routine and the fact that you have to keep unpacking and getting all these clothes ready. I mean, I, I depend on having my routine. That's sort of what keeps me sane.

• 3:57Scott Galloway?

  Yeah, but there's, I mean, just, there's a big difference. When I was your age, I'd started my first company, Profit, and I'm not exaggerating. Audi would say, hey, we've heard of your firm and we'd like you to come talk to us at a meeting. And they'd be like, can you get here? And I'm like, sure. Travel then, I think travel took 10 years off my life. That alcohol's right up there. Alcohol and travel just took a lot of, cause you eat like shit. If you're working hard and trying to build a company, you take red eyes. But now when I travel. I travel really well. I stay at beautiful places. I show up a day early. I leave a day late.

• 4:30Ed Elson?

  Showing up a day early, that is a good, that is a good innovation there.

• 4:33Scott Galloway?

  I make a conscious effort to maintain friendships, so I'll go out. By the way, if Sam Harris is listening to this, I meant, I meant to reach out and see if you're busy for dinner Friday night, and that's my way of name dropping. So Sam, if you're in town, I'd like to see you.

• 4:44Ed Elson?

  Let me know if he reaches out. I want to know if Sam Harris listens to this podcast.

• 4:47Scott Galloway?

  Oh, Sam digs me. Sam, Sam is like, I think he sees me as his-

• 4:51Ed Elson?

  He digs you, but does he dig me? That's what I'm wondering.

• 4:53Scott Galloway?

  He, he sees me as his younger brother, even though I'm much older than him. He's been raising me through my 50s. But the bummer is in LA, I'm usually with my friend Mike Baruch, who's in like a 40 year arrested adolescence phase, which you can do really well in LA. And he'll dial me in immediately to like great parties. And he's not here. So it's basically me down at the-

• 5:12Ed Elson?

  At the diner.

• 5:13Scott Galloway?

  Polo Lounge Bar. But I did meet a nice Ukrainian woman who took a special interest in me. Found me just charming. Just charming, Ed. Anyways, that's, that's what I'm doing today. But I mean, it is, it is spectacularly beautiful here today. It is just, it's just gorgeous. What are you doing?

• 5:31Ed Elson?

  Um.

• 5:33Scott Galloway?

  You can't match that?

• 5:34Ed Elson?

  I'm recording. I don't think I can match that. I think, I think I'm recording podcasts. Let's see. Yesterday I recorded podcasts, recording some podcasts today. Tomorrow I'm going to record some podcasts and I'm going to go on TV. Oh, you know what? I'm going on TV this weekend. That'll be fun.

• 5:50Scott Galloway?

  Well, let me guess with someone named, something that rhymes with Katie Tour and MSNBC.

• 5:54Ed Elson?

  Actually, not Katie Tour this time. We're going with Catherine Rempel.

• 5:57Scott Galloway?

  I love Catherine Rempel. I think she's a great talent. I think you and her, um, I think you and her will be a really good mix. But MSNBC, by having you on, is trying to reduce their average age.

• 6:09Ed Elson?

  Diversify.

• 6:10Scott Galloway?

  Yeah, well, they're trying to reduce their average age from 70 to 69 and 15 16ths of viewership. You'll, you'll literally bring in their 11th viewer under the age of 40 in 20 years.

• 6:20Ed Elson?

  Can't wait to shift to TV from podcasts. Cause that's what you're kind of encouraging me to do, right?

• 6:26Scott Galloway?

  Especially ad-supported cable news. There's a big future in that. That's absolutely where you want to allocate your capital. But more behind the music here, I got a call from Catherine, who is both our, both of our boss. And she's like, I'm worried about Ed and Claire. Claire, by, by the way, is like the substance behind all of this Joey Bagadonuts operation.

• 6:44Ed Elson?

  That's exactly right.

• 6:45Scott Galloway?

  And she said, since markets went daily, by the way, you guys are killing it. She said, I'm worried about these guys. I think they're gonna get burnt out. I'm like, that's what you're supposed to do in your twenties. You're supposed to get burnt out and hate your job and hate your life. I'm like, they're exactly where they should be. Do you feel burnt out? Let's, I'm being serious. You feel burnt out right now?

• 7:03Ed Elson?

  Not at all. Full of life.

• 7:06Scott Galloway?

  Yeah, I think you're lying to me. I think you're lying to me.

• 7:09Ed Elson?

  No, I'm, I'm loving it. I'm loving it. So long as things are going well, which they are. As soon as things start to fall, fall off a cliff, that's when I'll start to really feel the burnout.

• 7:18Scott Galloway?

  Eighty percent of our viewers are under the age are in the quote unquote core demographic. You're getting more people in the core demographic who are stupid and buy high margin products so advertisers love them than I would say every CNBC but MSNBC show except for maybe two or three. So yeah, you're doing, you're doing well. And as I said to you, if you continue this good, good work, I'm going to be able to buy my second Ferrari. So

• 7:41Ed Elson?

  Number two.

• 7:42Scott Galloway?

  I'm very excited about this. Anyways, as you can tell, I'm over caffeinated. Should we get to the headlines?

• 7:47Ed Elson?

  Yeah, let's get into our episode longest, longest banter section of all time. But you know what? It's been a while. It's been a while. So I, I forgive us.

• 7:58Scott Galloway?

  Good.

• 8:01Speaker 06

  Now is the time to fly. I hope you have plenty of the well at all.

• 8:07Ed Elson?

  Trump has launched a new wave of tariffs. So here's what we know so far. Last week, he extended his tariff pause from July 9th to August 1st citing slow progress on trade negotiations. He followed that announcement with a barrage of letters posted to social media, laying out a fresh round of tariff threats, including a 50% tariff on copper imports. Late Thursday night, Trump also announced a 35% tariff on Canadian goods, claiming that they had, quote, financially retaliated to earlier levies. Additionally, he floated the idea of 15 to 20% blanket tariffs. In total, Trump has notified at least 23 countries that their exports will face tariffs of up to 50% unless they strike

• 8:51Ed Elson?

  new trade deals with the US. So Scott. Let's just go through some of the tariffs here. We've got 25% on Japan, 25% on South Korea, 30% on South Africa. We've got 35% on Canada, 50% on Brazil, a ton of tariffs this week. And then, of course, we also got that 50% tariff on copper. So we haven't really gotten your tariff take yet. So let's just hear your reactions to what has been going on in terms of tariffs this week.

• 9:23Scott Galloway?

  So when I was growing up, I can literally remember some total of three vacations. One,

• 9:31Scott Galloway?

  my dad and his third wife took me to Hawaii because he got some gold circle, like he sold more shit, literally shit. My dad sold fertilizer from Scott than anyone in the West Coast. So as a reward, he got to bring his family to Maui, where he disappeared and played golf, 36 holes of golf, and I hung out at a resort. And that is the closest my dad has ever come to violence as against me, because I'd never had, and we talked about this, I had never seen something called a minibar before, and it was full of amazing drinks and food. And I decided one night that I should try everything. So I just opened every bottle and took a sip, unwrapped everything and took a bite. And when my dad walked in and saw that everything in the minibar had been sampled, I'd never seen him that enraged.

• 10:15Scott Galloway?

  So that was vacation number one. Vacation number two was my mom's boyfriend took us to La Paz, and it was amazing. He had a boat, and I went deep sea fishing, and he had like a plane, not a jet, but a prop plane. I'm like, oh, my God, this is the most impressive man ever. Unfortunately, he had a family in Arizona and failed to tell my mom that. So that relationship ended. And then my third vacation that I remember was my mom took me to Niagara Falls to visit a friend of hers, and we stayed at this camp that had these little cabins. And it was a ton of fun, because I think I was like 14 or 15, because there was a bunch of kids there. And I met this girl from Alberta, and we spent some time together. So as soon as I got back to high school, I told

• 11:00Scott Galloway?

  everyone that I had a really hot Canadian girlfriend. My hot Canadian girlfriend was much more real than these tariffs. I mean, he announces 20 and 25% tariffs against Japan and Korea and their markets go up. Because deep in the weeds of these tariffs, they all said, oh, by the way, we're excluding X, Y, and Z products. And they calculated that the actual tariff increase, if this goes through, which it won't, was from 15.6% to 16.6%. And this guy is literally, no one, the markets and countries no longer take this guy seriously. And the markets have yawned. Basically, they've done a sum total of two kind of non-deal deals with Vietnam and the UK, which aren't even deals. They're agreements to discuss

• 11:45Scott Galloway?

  a new construct.

• 11:46Ed Elson?

  They're not deals. We need to be really rigid, I think, about have the deals happen. It's not a deal. It's, these are letters that are being posted online. That's not a deal. You have to sign something. You have to have something actually agreed upon that changes things. And we don't have that yet. So I just want to say that because I just want to be very careful with tracking the deals because we're going to see all these deals this year and this week. We haven't seen any.

• 12:12Scott Galloway?

  To just go more meta, Nvidia hit, for the first time, hit $4 trillion in market cap. First company to hit $4 trillion. An incredible, an incredible feat. And let's look at a great American company, Nvidia. By the way, started by a guy who's a Taiwanese immigrant who went to Oregon State or the University of Oregon. I can't forget, I forget which one.

• 12:31Ed Elson?

  Oregon State.

• 12:32Scott Galloway?

  Oregon State. And then to, is that the beavers or the ducks, bitch? Which is it? Which is it? Beavers or ducks? Do you know?

• 12:38Ed Elson?

  I'm gonna go beavers. Is that right?

• 12:41Scott Galloway?

  Oregon State is the beavers. Yeah.

• 12:42Ed Elson?

  Let's go.

• 12:44Scott Galloway?

  Nice. Yeah, Oregon's the ducks. By the way, both great universities, Pac-10 universities, Rhode Island's both of them. Anyway. Okay, so we have, let's take another amazing European company. Let's take Mercedes. Amazing products. $100,000 Mercedes that comes into the US. I'm making a point about global trade here and how it has massively accreted benefits to the US disproportionately versus other nations who Trump believes have taken advantage of us. Say they sell $100,000 S-Class into the US. The operating margins on Mercedes are about 10%. So they get about $10,000 in operating profit. They traded a multiple on EBITDA, I think about eight. So it creates $80,000 in stakeholder value for a great German company that's spread across investors, employees in the community in Germany, and

• 13:27Scott Galloway?

  obviously their global network. When we sell $100,000 worth of Nvidia chips,

• 13:33Scott Galloway?

  Nvidia has 60 points of operating margin. So we get $60,000 to the bottom line. It trades now at a PE of about 40. So we get $2.4 million. They get $80,000 in stakeholder value. We get 2.4 million. And we are fucking with that relationship. I mean, it is just, we've decided, okay, we're threatening a construct and relationships here that we disproportionately benefit from. And on every metric of prosperity, with the exception of some unemployment in certain sectors that have been hit hard in the US, global trade has been nothing but a creeps disproportionate

• 14:17Scott Galloway?

  advantage to the higher margin, more innovative, more IP-driven nation that is the US. So what's going to happen here? You know what's going to happen here? A bunch of empty threats, a bunch of extended deadlines. And we're about to go into what I call the ultimate jazz hands phase. And that is you'll have Scott Bassett go on CNBC and announce a breakthrough trade agreement with Paraguay, who someone will do the analysis and go, okay, they've agreed to sell us or talk to us about copper imports. And they'll announce that that's a big victory. That in the remnant of this, the real outcome here is that this will inspire massive deal making. I'll give Trump that.

• 15:02Scott Galloway?

  Unfortunately, the massive deal making is being made between countries that aren't the US to reroute their supply chain and relationships around us.

• 15:11Ed Elson?

  And likely involve China. I just want to go back to the market reactions there. You're saying he's not going to go through with this, which you might be right. I just want to present a different possibility.

• 15:23Scott Galloway?

  Sure.

• 15:23Ed Elson?

  As you said, we barely saw a reaction from the markets last week. I mean, we saw the increase in copper. But aside from that, so it seems like the market takes the copper tariff seriously. Aside from that, the major indices, they barely reacted. They kind of retreated a little bit, and then they ripped back up. And then the Nasdaq goes and hits a record high, all in the same week of announcing these insane tariffs that if they were to go through, should have a seriously significant impact on American corporations. So in other words, the taco trade was hard at work this week. Okay. There might be an interesting dynamic here where that taco trade actually backfires.

• 16:07Ed Elson?

  Because you remember, the reason that Trump rescinded all of these insane tariff policies is because of how the market reacted. Liberation Day happened, the stock market tanked, bond markets went into turmoil, and then he suddenly rescinded all of the tariffs. And he said, oh, this was my independent decision. We all know the reason he rescinded is because the markets went crazy. He got freaked out, that was when he chickened out, that was where taco really came from. But now that the taco trade is so systemic to the markets, it's almost like we've lost the adult in the room. The markets aren't reacting to the crazy tariff policies, which might actually embolden him to think, oh, this is okay.

• 16:50Ed Elson?

  I'm going to go through with it now because the markets agree with me, the markets are fine. So what do you think of that possibility? That actually, the taco trade backfires because we don't see any reaction. He says, okay, the tariffs are fine, and he plows ahead and he goes through with it.

• 17:08Scott Galloway?

  Okay, so let's talk specifically about whether this shit's going to go through. Trade agreements take, on average, 18 months to hammer out. They just don't call the bat phone in at Mar-a-Lago and go, 17%. He goes, no, come down for golf, I want 19%. And they settle at 18% and he thinks he's gotten a deal. It doesn't work that way. They are so fucking complicated and involve so much nuance around enforcement and what qualifies for a tariff. So on average, they take 18 months just to hammer out. And then beyond that, they take 48 months to implement. Because how do you even track and identify what's supposed to be tariff? How do you notify your border operations? And how do you even figure out?

• 17:52Scott Galloway?

  Remember how the United States Postal Service basically called the president and said, if you want to implement immediate taxation on Xi and Timu, you got to delay it because we don't even know how to do this right now. So what's going to happen in less than? I don't know what it is now, 15 or 13 months. We're going to, I believe, have a democratically controlled Congress. And a lot of the shit he's doing is illegal. It's Congress that is supposed to ratify or amend trade agreements, which we have agreed to sign these global trade agreements where the president can unilaterally change them. So what do we have? Based on what we know, based on movements you've seen.

• 18:34Scott Galloway?

  So no one's taking him seriously anymore, except the copper market took him seriously. So where potentially is the alpha here right now, Ed? I'm not sure. I'm not sure where you're headed. Copper markets spiked. The price of copper skyrocketed. What's the trade right now? You want to go short copper? Is that where you're headed? Hundred percent. If, if every piece of data so far around one, this guy is all bark, no bite, and is playing with a hand that he doesn't even control. He doesn't even, I'm not even saying he doesn't have a good hand. I'm saying he doesn't even have the fucking cards. He can't, even if people agree to these agreements, I'm not sure he's going to be able to ram them through or get them through in time before a democratically controlled Congress goes, bitch, you're not even allowed to do this with our congressional approval.

• 19:18Scott Galloway?

  Every market is slowly but surely learning this is all jazz hands. The copper market freaked out and spiked. So the trade is to go short copper right now. And here's, we'll just make this prediction for fun and we should see what the price is. Copper will be down again in the next week as people realize when they look at the mechanism of these tariffs and how to enforce them, they realize this guy is neutered. He is so flaccid. He's literally, what is he? He's a, he's your drunk uncle at the family barbecue without a shirt on, trying to show off, practicing karate moves and threatening to kick people's ass. And all the family have decided to start a WhatsApp group and not include him. And they're talking to each other. Every nation is talking to, talking to each other and doing deals.

• 20:04Scott Galloway?

  And they're just saying, wow, Uncle fucking crazy. That's really cool. Can you show us that move? Well, you got your purple belt. Wow, can you show us that move again? And then they all look at each other and say, all right, let's, let's talk about getting actual deals done. The two remnant things here that come out of this bullshit will be, one, a huge erosion in our credibility, some inflation, because a lot of these nations will decide not to trade with us, which will take our inflation up. And two, you're going to see a flurry of global deals inspired by the crazy uncle.

• 20:36Ed Elson?

  It's hard to understand where we are in terms of tariffs right now, but where we are right now is basically 10% reciprocals on kind of everyone. And that that exists right now. Yes, it is a possibility, as you say, that it could be rescinded at some point. We have these lawsuits that are happening, saying that Trump isn't even allowed to do this. And, you know, maybe when we get that, get to the midterms, everything will stop being rescinded. But that's where we're at right now. We've got the 25% on the steel and aluminum. And then supposedly on August 1st, all of those numbers, that 10% is going

• 21:13Ed Elson?

  to spike up to in the 20s, 30s, and 40s for most of these nations. Let's say, six months from now, where do you think the tariffs are? Are we at zero? Are we at 10? Or are we at like Liberation Day 20, 30, 40?

• 21:32Scott Galloway?

  Look at what it is now.

• 21:33Ed Elson?

  10.

• 21:34Scott Galloway?

  There have been really talented people in our Commerce Department, in our State Department, that have figured out these deals over years, some of which, by the way, are bad. We have an asymmetric trade relationship with China. They steal our IP, and then they sell shit back to us for less money. And it has it has gutted many US industries. It is unfair. It is stupid. He was right to put on those tariffs. And not only did Biden keep those tariffs, he increased them. President Trump deserves some credit for recognizing and calling out the asymmetric trade relationship with China. But if he was serious about bringing that asymmetry in line, he would have partnered with other nations to present a united front against China. But to believe that every nation in the world has taken advantage of

• 22:17Scott Galloway?

  us does not mean a total naivete and ignorance of the benefits we have accreted from global trade. And also, he's acting as if he can just sort of show up and say, I love to bring this back to me. I show up to the board at Gateway Computer and say, "We need to sell the company tomorrow. I'm smarter than you. Here's why we need to sell it." They listen patiently and they go, "Scott, we've been trying to sell the company for two years and we also have certain bond covenants."

• 22:44Ed Elson?

  A great analogy.

• 22:47Scott Galloway?

  If we sell the company and we sell the company, there's a change of control. This incredible debt we have goes from 4% to 10%, which has effectively created a poison pill where we can't be acquired. You know, I swoop in like a fucking hero, thinking that because I'm the largest shareholder, I'm now in charge and can dictate terms without actually looking at how this business operates. And he has brought in a bunch of business people who haven't taken the time to understand this is how global trade and tariffs and trade agreements actually work. Because here's the thing, it's really boring and hard work and requires talented, thoughtful people who decide that they don't want to be managing director at Allen and Company or at JP Morgan,

• 23:30Scott Galloway?

  and they want to serve their country, and they're willing to spend two years doing ridiculously hard, boring work figuring out a trade relationship with Ecuador. He thinks he can just kind of come in with a magic wand and say, "Oh, have Scott Bessent go on CNBC and say, 90 deals in 90 days. Okay, good luck with that. Good luck with that. And by the way, Ed, my Canadian girlfriend is so hot. Oh, my God. Wait till you guys meet her. Wait till you guys meet her."

• 23:59Ed Elson?

  That highlights what is kind of amazing about what is happening right now with his tariff policy, which is he thinks that going in and being the strong man and just stiff arming all these people. I mean, it's not that, it's not that the problem with doing that, isn't that it's like mean and that we don't like that he's being a jerk to everyone? That's, that's a different problem. The real problem is, and that what we're seeing right now, it doesn't work. Like he's trying to do the whole strong man thing and he's literally gotten nothing done.

• 24:34Scott Galloway?

  Nothing.

• 24:35Ed Elson?

  He's only put up these 10% tariffs, which is just going to shave away revenues for Americans. I mean, we're the ones who are paying that tax. We have zero deals. He thinks he's being this great negotiator. He's got nothing done. So, I mean, that's what's pretty, I find kind of remarkable about what we're witnessing right now in terms of this policy and the fact that he keeps on extending it. Like he's actually a terrible negotiator is what we're seeing.

• 25:03Scott Galloway?

  I'm serious now. I'm really serio- okay, we'll extend it another 30 days, but this is it. This is it.

• 25:10Ed Elson?

  We'll be right back after the break with a look at the push to make America healthy again. If you're enjoying the show so far and you haven't subscribed, be sure to give Prof D. Marcus a follow wherever you get your podcasts.

• 25:30Speaker 00

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• 25:40Speaker 01

  I remember telling my boss, "It'll be good for the brand", when leads were slow. Yeah, it wasn't.

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• 26:31Speaker 03

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• 27:01Ed Elson?

  We're back with Prof G Markets. There is a growing push for health and wellness sweeping across the country, and consumers, corporations, and the government are all getting on board. Starbucks just announced it is switching from canola oil to avocado oil. Snack sales are down. Alcohol consumption is falling. And RFK Junior is leaning into the movement with his Make America Healthy Again campaign, which takes aim at everything from processed foods to artificial food dyes. So it is clear that Americans are thinking more about their health. And Scott, I just want to start here with some key data that sort of prompted us to want to cover this story. This is from Nielsen IQ. It just came out this week.

• 27:45Ed Elson?

  You look at total, and this is tracking total sales at checkout across the country. Total salty snack sales over the past year have declined 1.2%. Total chocolate candy sales have declined 6%. Sweet treat sales have declined 6.1%. We are also seeing alcohol sales in decline. Constellation Brands, they just saw a 14% drop in their sales in wines and spirits. Let's look at the stock performance of all of these snack companies, these food companies. JM Smucker, year to date, down 5%. Hershey, down 11%. PepsiCo, down 17%. Campbell's, down 33%.

• 28:30Ed Elson?

  So basically, what we are seeing is the junk food industry is in structural decline. And it's not just the stocks. I mean, clearly, people are less bullish on big snack stocks than they used to be. But it's the fundamentals, too. What we are seeing across the country is people are eating less bad food, which makes a lot of sense when you see what's happening in terms of GLP-1s. And then also, as I mentioned, in terms of just this general interest in the Maha campaign, Make America Healthy Again. So lots to get into there. But Scott, just your initial reactions to what is happening to junk food.

• 29:14Scott Galloway?

  Well, so let's take a victory lap. I think it was two years ago when we were making our, doing our predictions deck. And we talked about, we said that the most seminal technology wasn't AI, it was GLP-1.

• 29:26Scott Galloway?

  I think this is going to have all sorts of impact. And the diabetes or the obesity economy is $1.7 trillion. It's, I mean, what is that? That's like 8% of the economy. And if you look at McDonald's, PepsiCo, General Foods, if you look at Coca-Cola, they're literally obesity indices. As obesity has gone from 30 to 40%, as morbid obesity has gone from 5 to 10% in the last 10 years, these company's stocks are up 7, 10, 20-fold. And when you see a decline in obesity and morbid obesity, I think you're going to see the same type of deceleration in these stock prices. I don't think we've even scratched the surface in terms of companies that are,

• 30:11Scott Galloway?

  you know, kidney dialysis companies, medical equipment manufacturers. I think it's just going to be enormous and there's going to be all sorts of benefits and weirdness and we're going to see from these drugs. Tech of the year, GLP-1 drugs. I think the biggest thing we could do to bring down cost, death, disease, and disability in the United States would be two things. One, Figure out a way to put more money in the pockets of the lowest quartile of households, whether it's for universal childcare, increased food stamps, Medicare. If you want America to be healthier again, give them the ability not to have a second job, give them the ability to eat well, figure out where there are food deserts, create incentives around taxation, around sugary shitty food and fast food such that people make better

• 30:56Scott Galloway?

  health choices. And then two, give everyone that needs it access to GLP-1 drugs. I think these things are just a phenomena, and I'm also open to the fact that there's no free lunch, and that at some point, you know, we might find that there's some downside. There's, you know, there isn't a free lunch, right? But these things do seem to be remarkable. And if you look at the fact that America, 70% of America is obese or overweight, and 40% are actually obese versus 4% in Japan, and you look at the fact that our, our healthcare costs are $13,000 per person versus 6,500. I mean, there's just, there's just such a huge opportunity here.

• 31:36Scott Galloway?

  Now, the make America healthy, again, I like the notion, I think RFK Jr. gets some things right, our industrial food complex is not there to make us healthier, it's there to make, you know, to get people addicted to sugary shitty fatty food so they can hand them over to the diabetes industrial complex and they spend $10,000 to $20,000 a year on statins, dialysis, and knee and hip replacements. So there is, he does get that right. What he gets wrong is this notion that somehow vaccines, or you shouldn't trust the experts, or it's all about certain oils or certain dyes. No, that's not, that's not the problem. If you are really serious about health, more money in the pockets of people who don't

• 32:17Scott Galloway?

  have money to be healthy, and two, I think universal distribution of GLP-1 drugs would be an absolute game changer for us. And I just hope, I think you're going to see a direct correlation between the decline in costs of GLP-1 drugs and accessibility, and a longer term, and this is what the government's supposed to do over the next one, two, three decades, in healthcare costs, based on the penetration of GLP-1 drugs and things like...

• 32:46Scott Galloway?

  You know, better free lunch and more nutritional incentives and education amongst young people. But the Maha movement is, it's sort of like, let's set up conspiracy theory. Let's create a bunch of influencers talking about how this oil is bad for you and you can buy. You know, I don't know if you've seen these TikTokers, these housewives going into Home Depot saying, finding some sort of wax or

• 33:11Ed Elson?

  All over my social media.

• 33:12Scott Galloway?

  Saying, this is in your food right now. And it's like, well, you're, you're A, the only thing I know about you is you clearly aren't a doctor or don't know what you're talking about. You're trying to scare people. And at the end of this ad, you're going to try and sell me something stupid. So, and by the way, we're not going to make good decisions on Make America Healthy Again by firing anyone who has a degree or expertise. One of the scariest things that RFK Jr. said is, we need to stop trusting the experts. Okay, boss, so get your mechanic to do your heart transplant. Of course, we want to trust experts here. So I find the Maha movement more about conspiracy and creating fear where there doesn't need to be any. And also, again, allocating capital to the wrong things that won't move the needle.

• 33:56Ed Elson?

  It's definitely born out of an anti-expert class feeling. And I think that's why it's become so politicized for no real reason at all. Like, why on earth is canola oil and seed oil? Why is that a political subject right now? It's kind of ridiculous. But, I mean, irrespective of the politics, I think that there are two main ways that the junk food industry is under attack right now. And the first is GLP-1s. Just some data, more than 4% of the nation is using GLP-1 drugs today. The usage rate has increased 600% in the past six years. One study found that GLP-1s have already caused US grocery

• 34:38Ed Elson?

  volume losses of 3%. And households with at least one GLP-1 user cut their grocery spending by approximately 5% in the first six months of starting medication. So that's the one thing that the junk food industry has to deal with, is suddenly there's this drug where

• 34:56Ed Elson?

  It means you don't want to eat drunk food anymore. And that's a problem. The second is the make America healthy again thing. And the reality is artificial food dyes and processed foods and seed oils, et cetera, et cetera. They are under attack by the government. So, you know, you look at Pepsi, for example, forty percent of their products use artificial food dyes. So now these companies kind of need to scramble to get rid of those products. General Mills, Kraft Heinz, they're trying to get rid of artificial food dyes. Starbucks is getting rid of canola oil, as I said, that they're replacing with avocado oil. That is the reality of the junk food industry right now. Now, the question that I would pose to you.

• 35:40Ed Elson?

  You've been a consultant, you've been an activist. If you were speaking with, let's say, the board of Pepsi right now.

• 35:51Ed Elson?

  One, what do you do about the business? How do you respond to it? And two, what do you do about the comms? And this is something I've been very interested in because, you know, I've been looking at how these junk food companies have been talking about GLP-1s. And their strategy right now is they just don't talk about it. Like, you know, you look at J M Smucker's earnings, their most recent earnings call, where, you know, they own Hostess and Jif. All of their crappy foods just fell off a cliff and they didn't mention GLP-1s once. Not a single time in the earnings call, which seems a little crazy. And then you look at the stock and it's down. So I guess a two-pronged question.

• 36:34Ed Elson?

  What do you do about the business if you're in the fast food industry? And two, how do you talk about this from an investor relations perspective?

• 36:42Scott Galloway?

  So PepsiCo was a client and they're smart people. They have been solely but surely investing in more healthy drinks and food products. They're not dumb. They see the future. You know, they do a lot of work, but the reality is Pepsi will go where the puck is. And what I mean by that is where they can make the most money. That's their job. And if it's figuring out a way to encourage fast food restaurants to have a 48 ounce barrel of Pepsi that is more calories than most people eat in three days in emerging nations, they'll go there because their job is to make money. It's our job to price sugar and wheat and corn and soy to the actual outcomes and externalities

• 37:26Scott Galloway?

  and to create subsidies around a plant-based diet, which we have not done.

• 37:31Ed Elson?

  I think the point is they're not making money off of selling the barrels of Coca-Cola to the fast food restaurant anymore.

• 37:36Scott Galloway?

  Oh, they're making, no, no, no, no. The way I would describe it, they're making a shit ton of money. It's just not growing.

• 37:40Ed Elson?

  It's falling is what is happening. The sales are in decline. And so, yeah, and so they need, they need to figure out some way to pivot to something else. And as you point out, they are, they are pivoting to some healthier products, like they just acquired Poppy, which is that probiotic drink. And it's funny, when you look at the financials of all of these food companies, it's always a decline in the processed sugary bad food. And then you see a massive growth, a big double-digit percentage increase in the healthier options. Oftentimes, it's like water or coffee that is growing for these companies. So there's a possibility that, you know,

• 38:22Ed Elson?

  they are doing their job of pivoting, but perhaps they should have done it earlier. Perhaps they should have done it quicker and perhaps they should have invested more in this pivot because what is happening right now, those stocks are, they're not just underperforming, they're literally falling off of a cliff right now. I mean, the S and P is up, what, six, seven percent this year? You got Campbell's Soup down 33%.

• 38:47Scott Galloway?

  Incredible.

• 38:47Ed Elson?

  I mean, I credit, credit to them for, you know, making the pivot. But I think you could also make the argument like, this is a little bit late. I think you probably could have gotten to this a little bit earlier and maybe you should have been taking these GLP-1 innovations a little bit more seriously. But just as we wrap up here, I just want to give you some data on just this question of like, what would a healthier America look like? Because that is. Where we're headed right now, just a study here that showed that improving public health could add $3 trillion to the US GDP by 2040. Corporate profits could rise by $763 billion due to a more productive and a more present workforce.

• 39:31Ed Elson?

  Up to 5 million fewer people would exit the workforce early due to illness or due to premature death. I mean, all of the numbers basically say if you make Americans healthier, if their bodies aren't ailed by diabetes and obesity, you generally speaking have more productive citizens who can live and work longer, which means that the economy does better. So I mean, I just think of this story as it's great for for many reasons, and one of them is also the economic reasons too.

• 40:05Scott Galloway?

  So the only way you can treat an illness is to diagnose it. And I'm just going to try and summarize in the norm that arguably the biggest industry in the world, the US healthcare industry. Essentially, America hasn't lost its health, it's sold it, right? Everything here is about money. America's about shareholder value. Post-World War II, you know, essentially the industrial food compass recognized that shelf life equals profits and enter processed garbage. Essentially, you add sugar, call it breakfast, cue the obesity crisis and Uncle Sam, essentially

• 40:43Scott Galloway?

  essentially helped by subsidizing soy and high fructose corn syrup became essentially a food group. And then healthcare followed the money. We pay doctors to treat sickness, not prevent it. And you're worth more with stents and, you know, a prescription than with running shoes and broccoli. And then pharma, you know, built to medicate, not to heal. One pill for cholesterol, another for sleep, and a third for the side effects from the first two. You know, the opioid epidemic is capitalism doing what it does when it's at scale and unchecked. And then tech was kind of the final nail.

• 41:27Scott Galloway?

  And that is they monetize your time and attention by keeping you sedentary, addicted and isolated. And the result is we spend more on healthcare than anyone and the younger, you know, fatter and sadder America. Bad health isn't, it's not a failure of the system. It is the system and it's a reflection of our values. And that is we've decided to monetize the health of America. And even our election system doesn't pay people to say, all right, the electorate, we need you to focus on the long term. We need you to implement incentives and constructs such that in 20 or 30 years,

• 42:07Scott Galloway?

  a kid was never obese, was never depressed, never got a knee replacement, never had a stent, never had a bypass, never had dialysis, never had statins. That is what the government is supposed to do. The government is here to like, save a shit ton of money that they never get thanked for. We've essentially said, okay, let's monetize US health. There's a way to monetize it.

• 42:30Ed Elson?

  We'll be right back after the break with our second quarter earnings preview. If you're enjoying the show so far, hit follow and leave us a review on Profite Market.

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• 44:19Ed Elson?

  We're back with Prof G Markets. Second quarter earnings season kicks off next week, so let's take a look at some of the key reports to watch. Major banks like JP Morgan, Wells Fargo, Bank of America, Morgan Stanley and Goldman Sachs are all reporting. And we'll also get results from Netflix, TSMC and ASML. So Scott, this is basically the moment where we're finally going to see what on earth has been happening in the past quarter. And we've seen just wild swings in the stock market. We saw what happened in April. I mean, it feels like it was years ago, but it was literally in this quarter. And then it came back up. We've seen all this tariff stuff.

• 45:02Ed Elson?

  And now we're going to see the earnings. And I think one of the big questions here is, are we going to see an impact from the tariffs or from just Trump's policies more generally? There's been some preliminary data that would suggest we might. According to this survey in May, nearly 60% of US firms reported a decrease in gross margins due to tariffs with roughly a quarter. Seeing drops greater than six to 10%. But then you've also got the the stock market kind of telling you a different story where you've got the Nasdaq hitting a record high and Wall Street says, no, we're okay. So just any general broad reaction as to what what we can expect

• 45:46Ed Elson?

  for Q2 earnings, which kicks off next week and which we will be covering over this next several weeks.

• 45:53Scott Galloway?

  The companies that drive the market now are global companies and they have such incredible points of differentiation that they continue to churn on. And then on the whole, you're going to see more outstanding earnings. The one I'm most interested in is Netflix and that is, I think Netflix has baked into its stock price now so much growth. And I can't help but wonder when the rise of YouTube and TikTok begins to take a toll. And also the DOPA culture where my kids are now incapable of watching a 90 minute or two hour movie. Of when all of these people, I came back from Spain yesterday, five kids on the plane and they're all laying down on their sides.

• 46:38Scott Galloway?

  Like those opium addicts in those Chinese dens in the last century, just on their sides, just watching TikTok. And I wonder when at some point that starts to take a toll on Netflix. So I'm just very curious to see the Netflix earnings. I wonder, and I think they'll continue to announce subscriber growth, but I'm now of the mind that Netflix needs to. And you know, my theory is that Reed Hastings going on the board of Anthropic is going to lead to some sort of TikTok like offering. And one of the takeaways for me at least, and I don't know if you feel this way, is that the President of the United States, especially President Trump.

• 47:20Scott Galloway?

  Essentially, the whole world is saying, put the fat ugly kid in the corner and ignore him. I mean, they're just, and just keep, keep on keeping on. And it feels like the economy is doing that and these companies are so exceptionally well run, have such strong IP. I just don't see any reason why. You know, it's like they say, two thirds of the mass of an iceberg is below the surface. I kind of believe at this point, ninety eight percent of our economy is below the insanity and asinine threats of the administration now. I have been shocked at how resilient the economy seems, not only to the president, but also to like wars. And it just feels

• 48:00Scott Galloway?

  like the economy has become so productive and technology has become so resilient that it just continues to churn on.

• 48:10Ed Elson?

  Yeah, I mean, you said the economy has been extremely resilient to what's been happening. I would amend that to the stock market has been extremely resilient.

• 48:18Scott Galloway?

  Great point.

• 48:18Ed Elson?

  To what has been happening. And I think what we're about to see, and I guess the thing I can't really wrap my head around is, are we going to see the impacts of what I'll just generally call turmoil, both in terms of geopolitical turmoil and also tariff policy turmoil. I think that's a fair thing to say. Are we going to see that reflected in the fundamentals of the economy and in the fundamentals of the financials that are going to be reported in this next week or so? Is that going to be reflected? And, you know, the stock market would tell you no, but the reality is, we just don't, we actually

• 48:59Ed Elson?

  don't really know yet. And so I think, you know, it'll be interesting to see how certain companies do on an individual level. But I think the bigger question is like, how is corporate America doing? How is the consumer doing? And for that, we're going to have to look at the retail earnings. We're going to look at Walmart, Target, Amazon, and that's going to come a little bit later. We also might want to look at Netflix as an indication of that. One of the most interesting things that I found is that everyone seemed to agree with those last Netflix earnings, that Netflix is inflation resistant, that people love Netflix so much that even if inflation happens, they're not going to cancel their Netflix

• 49:42Ed Elson?

  subscription. Or at the very least, maybe they'll just downgrade to the ad supported tier. And that'll be an interesting thing to see as well. Is Netflix inflation resistant? And also? Meanwhile, is all of America inflation resistant? You know, in other words, did this policy that has been so insane, did it have an effect on the bottom line of America? And that's what we're going to find out.

• 50:08Scott Galloway?

  But what you said resonated. You said, I think in an episode a couple of weeks ago, that all of these shocks, whether it's an inability to plan your business or tariffs deciding, encouraging nations not to or to reroute supply chains, not to be as dependent on the US, that the ramification of that, the ramifications of that wouldn't.

• 50:29Ed Elson?

  Takes a while.

• 50:30Scott Galloway?

  Yeah, wouldn't gestate or, or come to fruition or have an impact for a good three to six months. So, and I believe your prediction was we, we would see a slowdown in some inflation, but it probably wouldn't hit until Q3 or Q4.

• 50:44Ed Elson?

  That's right.

• 50:45Scott Galloway?

  And, and so we're talking late summer, fall is when we would expect to see somewhat of a slowdown.

• 50:51Ed Elson?

  My prediction for this, based on that, is I think these earnings are going to be fine because I don't, I don't think we're going to see any impact yet. And I think that what we'll probably see is that everyone's going to get super optimistic because they're going to take the Q2 earnings as the, the total evidence that everything's going swimmingly, when in reality, we should actually be waiting for Q3 and then maybe even Q4.

• 51:16Scott Galloway?

  But what you said about Netflix is really interesting and that is, I don't know if you remember this, but when I was a graduate student instructor in, in economics, we used to talk about this concept called a giffen good. Do you know what a giffen good is?

• 51:27Ed Elson?

  No.

• 51:28Scott Galloway?

  So in Ireland during the potato famine or in nations where, that were struggling with food insecurity, when the economy went into the shitter, the sales of potatoes, when the price of potatoes went up, so many people were dependent upon potatoes. And when the price went up, they had less money and they ended up buying more potatoes because it cut into their discretionary budget for every other type of food stuff like meat or fish.

• 51:49Ed Elson?

  Wow.

• 51:49Scott Galloway?

  So as the economy got worse, they were not only recession proof, but it actually benefited them. And I wonder if to a certain extent. You know, is Netflix a given good? And that is if you start feeling insecure about the economy, like, you know, honey, we're not going to eat out as much. We're not going to go to Disneyland this year. But for God's sakes, we can't give up Netflix because we're spending more time at home and we need cheap entertainment.

• 52:14Ed Elson?

  It would really be a given good if they said, you know, we can't go to Disney World, we can't go on vacation, but we can upgrade from the ad-supported tier of Netflix to Netflix Premium. That would be like the perfect given good scenario.

• 52:27Scott Galloway?

  But we can't watch Umbrella Academy over and over.

• 52:30Ed Elson?

  That is really interesting. I could, I could totally see that happening. But that will, so we'll see that. We'll also see, we're going to have CPI, which will be out on Monday. It'll be right out immediately at the start of the week. And then we've also got these bank earnings this week. And I'd be interested to hear what you think is going to happen there. I mean, I think most people agree that the earnings are going to be pretty subdued just because you've got still a very slow M and A market. IPO market also very slow. IPO listings down 40% from the first six months of last year. One thing I think, I was thinking we could probably expect also is massive trading revenues again.

• 53:14Scott Galloway?

  Yeah, I think that's right.

• 53:15Ed Elson?

  Because of just the insane volatility that we've seen in the stock market, which basically just means a ton of people were trading stocks. Again, you've got to remember Liberation Day happened in this past quarter. So I was thinking we'd probably see massive trading revenues and that'll probably balance out a kind of slow, a slow quarter for banking and investment banking. Not a very bold prediction because that's basically what we saw last quarter too. But I guess I would, I would assume that what's going to happen is it's just going to continue on.

• 53:47Scott Galloway?

  I think that's right. I don't think there's any reason why it would, and an elevated interest rate environment plays to their strengths because they, the, the, the increase in rates that they offer to depositors lags what they're able to charge their clients. So I think, you know, you have additional margin there. The trading volatility plays to the, I think you're exactly right. I think we're going to see more of the same. I don't see any reason why. It wouldn't, you know, earnings don't continue to chug on and be strong.

• 54:11Ed Elson?

  So we'll have JP Morgan, Wells Fargo, Citi on Tuesday, then we'll see on Wednesday, Bank of America, Morgan Stanley, Goldman Sachs. And then I guess the final thing is, you know, inflation out 8:30 a.m. Monday morning. And it's expected that it's going to rise, but, you know, I'm not going to make any predictions about the CPI, but it will have a pretty significant impact on the interest rate environment and what's going to happen with the interest rate decision. And just before we wrap up here, I just want to give you this hilarious post from Donald Trump that he posted on Truth Social that I'm just going to read out to you because I think it kind of just describes the current moment quite well.

• 54:55Ed Elson?

  He said, quote, "Tech stocks, industrial stocks, and NASDAQ hit all-time record highs. Crypto through the roof. Nvidia up 47% since Trump tariffs. USA is taking in hundreds of billions of dollars in tariffs. Country is now back a great credit. Fed should rapidly lower rate to reflect this strength. USA should be at the top of the list. No inflation." In other words, Trump is basically saying, because crypto and tech stocks are at record highs, we saw Bitcoin, it breached 112,000 last week, because we're at record highs

• 55:38Ed Elson?

  in all these extremely risk-on assets, we should now lower the interest rates. That's now the time to do it. It's just baffling to me that this guy who runs the country has no understanding of how interest rates work. Like NASDAQ and crypto record high, okay, maintain rates. That's your indication, or even raise them. Jamie Dimon was talking about maybe we should even raise rates. I just want to get your reaction to that because I just found that pretty remarkable.

• 56:09Scott Galloway?

  I'm where Jerome Powell is. Jerome Powell, Chairman Powell, who I just admire so much, said at a recent conference, he's like, we got to wait and see how the inflation data comes in. We don't know if we're going to cut rates.

• 56:23Scott Galloway?

  I don't think he's planning to raise them, but we're supposed to be in a rate-cutting cycle, which would have decreased the costs across every household, credit cards, student loans, auto loans, mortgage payments. And he said, we would be in a rate cutting cycle right now if it wasn't the insecurity and the lack of information around the impact tariffs are having. And if the guy with access, Chairman Powell has access to more information than any individual on the planet. And if he doesn't know where this shit is headed, I'm not comfortable making a prediction. He's basically said, we don't know. He's like, I need to see, we need to see where the data takes us. It's hard for us. It's hard for us to know where this is going and we need more information and then we'll, we'll decide where we're going from there. All humans have an ego or most, not all of them do. I think Chairman Powell's just

• 57:08Scott Galloway?

  loving sticking up the middle finger to Trump. I think he's, I think he's, if it's a coin flip on whether to raise or lower rates, when you shitpost someone of that credibility who's worked so fucking hard for you instead of being chairman of Bridgewater and making $20 million a year and instead is like cleaning up your, your fucking soiled diapers everywhere? And you try to start intimidating that person? If it's a coin flip on whether or not you should cut rates, if I'm Chairman Powell, I'll just leave them where they are.

• 57:38Ed Elson?

  Yeah, Robert made a great point last week where it's like, we're all worried about the independence of the Fed. And in a, in a pretty funny way, this is actually underscored and emphasized the independence of the Fed.

• 57:49Scott Galloway?

  How important it is.

• 57:50Ed Elson?

  Exactly. And how strong it is because we've got this guy who, who just will not let up. Okay, let's take a look at the week ahead. We'll see the Consumer Price Index and the Producer Price Index for June. And we'll also see earnings from banks, as I said, and also from Netflix and from some of those chip stocks, TSMC and ASML. Scott, any general predictions as we wrap this up?

• 58:16Scott Galloway?

  My Canadian girlfriend, we're going to read on this show, a bunch of press releases from the administration over the next 30 days and we're going to find them and read them on the show, that basically create the illusion of victory, the illusion, trying to impress people with something that doesn't exist. We are going to see the mother of all Canadian girlfriend press releases out of the administration over the next 30 days and we are going to find them and read them on this show. By the way, she's super hot and has an amazing body and is really into me and really into me. And she's definitely coming down and I'm going to bring her to prom. Super into me. We talk every night.

• 58:57Ed Elson?

  She sounds lovely.

• 59:01Ed Elson?

  This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss, Mia Saverio is our research lead, our research associates are Isabella Kinsel and Dan Shalane, Drew Burrows is our technical director and Catherine Dillon is our executive producer. Thank you for listening to Profitec Markets from the Vox Media Podcast Network. Tune in tomorrow for a fresh take on the markets.