Wall Street Sinks on Greenland Risk

Ed Elson speaks with Justin Wolfers, professor of public policy and economics at the University of Michigan, about how U. S. markets reacted to President Trump’s tariff threats after the long weekend. Then, Semafor business reporter Rohan Goswami joins the show to explain why Netflix shares fell after earnings and what’s next in the bidding war for Warner Bros. Discovery. Finally, Ed closes the episode with his take on Trump’s proposed affordability plans. Check out our latest Prof G Markets newsletter Follow Prof G Markets on Instagram Follow Ed on Instagram, X and Substack Follow Scott on Instagram Send us your questions or comments by emailing [email protected] 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.

• 0:01Speaker 00

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• 1:15Ed Elson?

  Today's number? 25. That's how many years old Wikipedia turned last week. That means it can no longer date Lear DiCaprio.

• 1:26Speaker 05

  Money markets mad. If money is evil, then that building is hell.

• 1:35Ed Elson?

  Welcome to Prof you Markets. I'm Ed Elson. It is January 21st. Let's check in on yesterday's market vitals. The major indices sold off in their worst session since October. Bitcoin dropped below $90,000. The dollar weakened, and the yield on 10-year Treasuries jumped to its highest level since August.

• 1:58Ed Elson?

  Okay, what's happening? The S and P plunged 2% yesterday, erasing its gains for the year as Wall Street reckoned with President Trump's escalating threats to acquire Greenland. Volatility spiked with the VIX, the market's so-called fear gauge, hitting its highest level since November. And you guessed it, gold hit another record high as investors ran for cover. The drama is playing out in Davos right now as business and political leaders gather for the World Economic Forum. President Trump arrived yesterday and he agreed to meet with officials to discuss Greenland. But he says, quote, "There can be no going back" on his plan to seize the territory.

• 2:39Ed Elson?

  Meanwhile, Greenland's prime minister is urging the island to prepare for an invasion, which is still unlikely but no longer unthinkable.

• 2:48Speaker 06

  How far are you willing to go to acquire Greenland? You'll find out.

• 2:53Ed Elson?

  Okay. Joining us now to discuss everything that is happening here, we're speaking with Justin Wolfers, professor of public policy and economics at the University of Michigan. Justin, welcome back to Prof G Markets.

• 3:07Justin Wolfers?

  Would you believe me if I told you I was coming to you live from Greenland?

• 3:11Ed Elson?

  I'm not sure I would. I'm not sure I would. It looks the same. Looks like you're, you're, you are in Ann Arbor right now. Is that right?

• 3:21Justin Wolfers?

  It's as cold as Greenland, mate. And we have been taken over by federal authority as well.

• 3:26Ed Elson?

  Right, right. It's, it's not, it's not too, not too dissimilar. Well, what's happened in the markets is quite astounding, really. Stocks are plunging, yields are rising, all the safe haven assets like gold are hitting record highs. I guess let's just start with your initial reactions. It's kind of remarkable what we're seeing here, at least to me. Do you feel the same way?

• 3:55Justin Wolfers?

  Look, the thing that's more remarkable than what's happening in the markets is what's happening in the world.

• 4:01Ed Elson?

  Right.

• 4:02Justin Wolfers?

  The president woke up and decided the United States needed Greenland, which had never been part of the US, well, not never, in recent years hadn't been part of the US security planning at all.

• 4:15Justin Wolfers?

  And he's saying he wants to buy it, take it, something it, rename it. No one's quite sure what.

• 4:24Justin Wolfers?

  And he's putting tariffs on countries who've sent vast forces of up to dozens of troops to defend Greenland from American hostile aggression. That is astonishing on its face. I know that your podcast is called Markets. Mate, sometimes we've got to pause on the world. The world's where the action is. So, yes, markets have responded to this.

• 4:48Ed Elson?

  I guess the reason that the market's response seems relevant to me is we see a lot of crazy stuff from the president. We saw crazy stuff in the past few weeks. We saw the Powell investigation. We saw the invasion of Venezuela and the capture of Maduro. We saw what happened in Iran. And so I find that the markets help to give us a sense of what's maybe real and what isn't. And it seems that the markets are telling us right now, this one's real. This one is different. This one is actually giving us pause. And it feels almost like we're back in April 2025. Everyone's deciding to sell.

• 5:32Ed Elson?

  So I guess that's why it's kind of interesting to me or seems important. I guess my question to you would be, why is this different? Or at least, why do markets maybe believe that this is different?

• 5:45Justin Wolfers?

  I'm not sure I'd give exactly the same explanation that you would add.

• 5:49Ed Elson?

  Okay.

• 5:49Justin Wolfers?

  So here's the problem, right? The bloke comes up with a harebrained idea every day. Nine out of 10 times he tacos, Trump always chickens out and the world moves on. And so if you're a trader, you want to discount these. Because if you responded to each and every one of them, you'd sell off. And then the next day, the markets would rise as it became clear it wouldn't happen. And then you lost a lot of money.

• 6:11Ed Elson?

  Yeah.

• 6:12Justin Wolfers?

  So you've got to scale your response to the likelihood that Trump will actually follow through. If Trump follows through.

• 6:23Justin Wolfers?

  In the short run, the obvious is he launches a trade war with the European Union. Because remember, he's talking about 25% tariffs by June. You can't just, you know, it's not, as much as he's picked out Germany that he wants to go after, the United Kingdom, you don't just declare a trade war on particular members of the EU, the entire union responds. The EU plus Norway plus the United Kingdom collectively is 22% of American exports. So that's a big economic threat right there. There are two other things you learn if he's serious. One is if he follows through with a trade war, there's actually a chance he follows through with a war war.

• 7:02Speaker 05

  Hmm.

• 7:03Justin Wolfers?

  That then is the end of NATO.

• 7:06Justin Wolfers?

  And the end of the post-war world order. That in turn is the end of American military leadership. We move into some complicated world and you can get one of these guys who likes to point at the globe and tell you how complicated that gets. All I know is that, Ed, in the brief time you and I have been alive, we haven't seen fighting on our shores. And that's not true for our grandparents. And so even if you don't like what we've had, it's been remarkably successful relative to the rest of human history. That we've grown up without wars on our shores. So there's some chance that that's the end of that.

• 7:48Justin Wolfers?

  For the United States, the world economic productive activity, it would be catastrophic.

• 7:57Justin Wolfers?

  One war is a lot of wars. Walking closer to one war is a lot of problems. And then the other part is, so he's launched a trade war, a new trade war with you. The other part is you've then learned tariff, McTariff face

• 8:13Justin Wolfers?

  wants to tariff everyone at will, deals don't mean anything. The idea that we'd get through 2025 and that was the end of tariffs because we would have done deals is clearly hopeless and we just have trade wars and trade uncertainty for the next three years ahead of us as well. Those are really, really big generational shifts. I know I wrote a study years ago looking at the stock market effect of the invasion of Iraq. We found that if the stocks were valued 15% lower if the US invaded Iraq relative to if it didn't.

• 8:48Justin Wolfers?

  So if you thought something like that, if you thought Greenland were Iraq.

• 8:53Justin Wolfers?

  There's lots of reasons to think it's not, right? You would expect stocks to fall on the order of 10 to 20%. Today, they fell on the order of 1 to 2%. So my interpretation is they've built in a 1 in 10 chance the guy is serious. In some sense, markets are really useful here that are a wake up call. It's not about the probability he follows through. It's about the consequences if he follows through, which is they're screaming, this is terrible. But they're not screaming screaming. If you remember Liberation Day, they screamed, they howled.

• 9:23Ed Elson?

  Right.

• 9:23Justin Wolfers?

  We weren't quite used to the Trump two step of two steps forward and an immediate back down. If we're in a world in which he never followed through on anything, of course, markets would react to nothing.

• 9:34Justin Wolfers?

  The problem is that the president actually does sometimes do things. You could ask the Venezuelans about that. And the problem is we couldn't tell before the fact if he was serious about Venezuela. And then we learned after the fact he was. And I would like to think he's not serious about Greenland, but I don't want to wake up tomorrow. And all of a sudden, discovery he was.

• 9:53Ed Elson?

  Right.

• 9:53Justin Wolfers?

  So I think this is the markets putting in only a small chance, but it's a small chance of a big bad outcome.

• 10:02Ed Elson?

  Just looking at what he's said recently, it does seem that he's somewhat serious from what he's been saying. That's a hard question to answer, but he's at least trying to present as serious. He also sent that text to the prime minister of Norway, saying that he wouldn't be doing this if he had won the Nobel Peace Prize.

• 10:27Ed Elson?

  This is maybe like a hyperbolic question, but I don't think it is. At what point do you think it's fair to say that he's actually lost his mind? I mean that like very legitimately and not in the sense that, oh, he's has dementia and he's just totally crazy. But, I mean, he's clearly operating on a different level of reality. He's decided that the world order as, as it is now is unacceptable, that, that globalism, this is the end of it. And we're kind of going back to the 1800s.

• 11:06Ed Elson?

  I mean, it appears that he might have gotten, I don't know, so drunk on power, so deluded by something that he might have actually like lost his mind here.

• 11:18Justin Wolfers?

  Is that too far? I've had the same thought and look, I like to speak to my expertise. I'm a PhD economist. And so there are many questions where, and I've increasingly had to do this, say, I think you should talk to a psychiatrist, not an economist. What's striking is that the most important economic question of the day is best answered by a psychiatrist. That's your point. Right. And it's a profoundly important point. There are actually ethical reasons why psychiatrists are not meant to. You're not meant to speak up about someone whom you've not examined. Yeah. I hope you don't mind. I might take your idea a little deeper because I've been thinking about this quite a lot.

• 11:55Justin Wolfers?

  I certainly don't think if the president, as he currently is acting as rational, or at least we should put a high probability on that. And that worries me and I'm like, oh, well, what happens if once every hundred years we have a leader, a world leader who is bonkers? Right. We've certainly had people who were bonkers. I think Adolf Hitler was bonkers. Yeah. I don't want to draw that comparison, but the point is. It's happened. Yep. Then I got to thinking about it. Indulge me for a moment here. You would have, what sort of person would want to run for president of the United States?

• 12:32Justin Wolfers?

  Who wakes up in the morning and thinks, I know I should run the free world.

• 12:40Justin Wolfers?

  I, and I alone, am uniquely qualified

• 12:46Justin Wolfers?

  to run this country and this country is the largest economy with the largest military in the world. Yeah. I think if you ran a survey of Americans, people with profound personality disorders would be much more likely to say yes than people without profound personality disorders. That's just, it's an obvious statement. Yeah. You could say, Justin, run for president tomorrow. And I'd be like, are you kidding? I'm going to teach econ 101 tomorrow and I'm worried I've got too many students. I'm not qualified. I hope you'd say the same, Ed.

• 13:23Ed Elson?

  I don't know, this pod's going pretty well.

• 13:28Justin Wolfers?

  Well, you give a bloke thirty under thirty and all of a sudden he thinks he can walk on water. But it's actually a really interesting point because if that point is correct, it says the amount of mental illness among world leaders is likely exorbitantly high.

• 13:43Ed Elson?

  Right.

• 13:45Justin Wolfers?

  That in turn changes how we ought to think about institutions. It says that we basically need to design our political institutions so they're lunatic proof.

• 13:55Ed Elson?

  Yeah.

• 13:56Justin Wolfers?

  And in some sense, you go back and you read like, you know, the Federalist Papers, you get a sense of this. They would often talk about good versus evil instead, but I think actually just batshit versus not.

• 14:09Justin Wolfers?

  And maybe, you know, after Nixon, we had a whole cleansing of like, how do we corruption proof the US government? And I wonder whether people all around the world ought to be thinking about how do we

• 14:23Justin Wolfers?

  mental health proof

• 14:24Ed Elson?

  Yeah.

• 14:25Justin Wolfers?

  our governments. And, you know, we are meant to have checks and balances and our biggest problem right now, of course, is Mike Johnson, which is we do have checks and balances, they just refuse to play. And they refuse to play because the guy with potentially the mental health problem is also the most charismatic figure in the country. And maybe that's what a mental health problem allows you to do.

• 14:45Justin Wolfers?

  Anyway, that was more about politics than markets. Let's come back to markets. I think the threat here is utterly dire.

• 14:49Ed Elson?

  Yeah.

• 14:50Justin Wolfers?

  What I haven't had a chance to do today is if I wanted to make the case that it was what I said, a small probability of a horrible outcome, rather than it being a moderately large probability of a moderately bad outcome, which I think is what you were suggesting. I think the way to tell the difference between our two stories would be to look at what was happening to way out of the money options. I haven't had a chance to look. So maybe some bright spark is, is in our audience has looked at way out of the money options and can tell us how they're behaving and, and drop a note in the comments.

• 15:21Ed Elson?

  Yeah, I think that would be good advice. Okay, we're going to let you go here. I, I assume we're going to be discussing this again, probably, maybe tomorrow, who knows? Justin Wolf is Professor of Public Policy and Economics at the University of Michigan. Justin, really appreciate it as always.

• 15:38Justin Wolfers?

  Great pleasure.

• 15:41Ed Elson?

  After the break, a look at Netflix's earnings. And for even more markets content, you can subscribe to my new weekly newsletter, simply put, at edwardelsin.substack.com.

• 16:00Speaker 00

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• 17:18Ed Elson?

  We're back with Profty Markets. Netflix's stock fell as much as 5% after its forecast for the first quarter came in below expectations. That reaction overshadowed an otherwise solid quarter. Revenue and earnings per share both beat estimates, up 18% and 31% year-over-year. And full year revenue came in at $45 billion, up 16% year-over-year. The company also hit a major milestone, reaching 325 million paid global subscribers. Earlier in the day, Netflix also officially revised its bid for Warner Brothers Discovery.

• 17:55Ed Elson?

  Moving to an all cash offer of $83 billion instead of the previous mix of cash and stock. Here to discuss these earnings and also what this new bid actually means, we are speaking with Rohan Goswami, business reporter at Semaphore. Rohan, thanks for joining us on Profty Markets.

• 18:14Rohan Goswami?

  Ed, happy to be here.

• 18:15Ed Elson?

  So let's start with the earnings. Netflix just reported earnings. The stock sunk in after hours as much as 5%, which is kind of interesting because they beat on earnings, they beat on revenue. What do you make of the earnings and what do you make of Wall Street's reaction?

• 18:34Rohan Goswami?

  So, look, they did beat on both those fronts and they guided to around their midpoint for the full year next year. And they also had, you know, decent subscriber number, 325 million. That's a milestone for them. But, look, there's an overhang on this stock. And as you and I have talked about, Netflix is down, I think, 30 or 40% since rumors first started circling about their interest in Warner Brothers. For a simple reason, they are great builders. They are unproven buyers. They've never done a big deal like this before. And their investors, who have counted on them for steady, reliable earnings growth, are kind of in a wait and see mode. So the call is going on right now. Ted Sarandos and his co-CEO are expected to sort of preview and give us a little bit more information

• 19:16Rohan Goswami?

  on their thinking around this. But it also comes as they've made up, they've doubled down on their Warner Brothers bid, right? You know, they've, this morning, announced what we've all known was coming. They've flipped to all cash. Warner's board has approved it. We got a lengthy 500-page proxy statement today, which you know I spent my entire lunch hour reading. And, and, and, look, there's, there is no doubt, these guys, right now, are telling the world they're in it, they're in it to win it, and they could give a damn about the Ellison's.

• 19:45Ed Elson?

  Yeah. What's new about this bid? I mean, we know that it's, it's all cash now. Is that the only thing that's new? What have we learned about this new bid that was just announced on Tuesday?

• 19:55Rohan Goswami?

  In terms of the actual bid, that's it. That's the only new thing. It lets us have a cleaner, although not perfect, apples-to-apples comparison between Paramount and Netflix's bid. The interesting thing, there are some details that have come out in this proxy filing. And as you know, when companies are trying to combine, they make their case to shareholders through a formal document called a proxy statement, right? That lays out all the financial analysis that their bankers have done, the potential legal risks, and the most fun for reporters, a detailed lengthy background to the solicitation, which is a fancy way of basically saying the storyline of how these two companies came together. Thankfully, a lot of the reporting out there was confirmed by this background of the solicitation, which is always good news for reporters.

• 20:39Rohan Goswami?

  The big thing that we finally, as reporters, as investors, got to look at was how Warner Brothers has decided to value their spinoff business. Now, remember, we've talked about this. This is the business that they say is worth anywhere from $3 to $5 a share, which Paramount says is worth a buck generously, and which Netflix has said, we don't want anything to do with that. Don't give it to us. We don't want to touch it. Spin it off. We don't care. So we finally got a valuation for that business, underpinned and justified by some financial analysis that Allen and Company and other bankers have done for Warner Brothers. That was really the big thing out of this.

• 21:13Ed Elson?

  Yeah. Just your point earlier that the Netflix stock has slid like 30, 40% since the rumor started getting going. Talk a bit more about why that's happening. We've also seen, obviously, today, some selling activity. But what's so bad about buying another company like Warner Brothers? I mean, what are investors so worried about here?

• 21:36Rohan Goswami?

  It's the uncertainty, right? This is what executives and bankers call execution risk, right? The ability for a company to actually do something with the assets they're picking up. And M&A is littered. Generally, most big M&A doesn't work. Keep in mind, Warner Brothers Discovery itself is a child of two and a half decades of crappy M&A, going back to AOL Time Warner, which was the worst deal of all time by any account, right? So it's literally genetic with this company. There's never been a good deal for this company. Anyone who's bought this thing has almost immediately regretted it. AT&T picked it up and immediately dumped it, right? So it's not a good asset. It's kind of cursed, and investors aren't superstitious, but it is kind of cursed.

• 22:21Rohan Goswami?

  It's also a big bite at an apple for, as we were talking about earlier just now, a company that has chosen to build, right? Starting with House of Cards, but now, you know, a multinational, multi-language content business. Netflix has been really good. At coming up with hits, executing on those hits, spending a lot on those hits, but executing on those hits. Now they're picking up a content library which has existed for decades from, you know, decades here. And while there's no question it's a valuable content library, investors are a little confused about why these guys who have steadfastly, time and time again, when they've been asked, would you buy this company? Would you buy that company? Why this time is different, right? Why Warner Brothers is so compelling to them? Now, they've laid out the case. They think that the streaming business is going to be a four and a half billion dollar business, I think, by 2030, which is meaningful

• 23:06Rohan Goswami?

  for a company like Netflix, which did $50 billion of revenue, or is expecting to do around $50 billion of revenue next year. But still, at the end of the day, it's a big bite. Shareholders have to pay for that. And if they don't see the results immediately, you know, these guys are skittish. These guys are skittish in the best of times. And it is not the best of times right now in the markets.

• 23:23Ed Elson?

  So interesting. It's almost like the Netflix shareholders don't seem to want this deal. Warner Brothers shareholders don't seem to want this deal, or at least they've been pushing for the Paramount deal instead. I'm kind of wondering, who even wants this? Is it, is it literally just Ted Sarandos and David Zaslove? Like, who's decided that this is, this is a good idea? Why is this even happening at this point?

• 23:47Rohan Goswami?

  History is decided by the victors. So you know what? If two years from now, you and I are talking about this and they've done a wonderful job, we'll be saying, you know, they were so prescient. Who were we to doubt them? But it is kind of true to your point, that nobody seems particularly thrilled about this process, with the exception, yes, of Warner Brothers board and of Netflix. The one interesting thing I should have mentioned earlier, is we actually do have an explanation for why Warner Brothers went completely dark on Paramount. And it actually helps explain and answer your question of who really wants this. Ted Sarandos really wants this. We know this because in his lawyer's final message before the deal was signed, his lawyers basically said, look, Warner Brothers, we're prepared to move on this right now. And if you don't get back to us by tonight,

• 24:29Rohan Goswami?

  we're walking. We're done. It's a move called, you know, you go pencils down. You basically walk out, you explode the deal. And Warner Brothers, just rather than risk losing Netflix, said, all right, all right, all right, fine. We'll go with you. They've got an executed merger agreement out. But it's clear that Ted Sarandos and You or I are both pretty smart people. We're not Ted Sarandos smart. Ted Sarandos thinks there's a lot of value for shareholders here. I don't know if he's actually going to get it in the end, but if history is any guide, patience with that guy usually is rewarded.

• 24:56Ed Elson?

  Yeah. Just looking at the Netflix business, what they're doing here. So they doubled their ad revenue in 2025, which is interesting. It seems like they're going to be leaning more and more on advertising going forward. Another thing that we've been seeing recently, they're getting into podcasting, just announced their first original video podcast with Pete Davidson. My question is, what's the difference between a video podcast and a talk show? Maybe there isn't one. And then I guess this isn't relevant necessarily to Netflix, but Disney also announced recently they're going to get into vertical video on Disney Plus. So a lot of interesting product announcements happening in the streaming world. It's kind

• 25:41Ed Elson?

  of moving to an audio slash social media economy, it seems. What do you make of these moves? And just before we let you go, what do you think 2026 is going to look like in terms of streaming? Is it just going to be kind of, is it going to look like YouTube, I guess, is my question?

• 26:00Rohan Goswami?

  I mean, look, everything is TV, right? That's, that's what we're seeing. Podcasts for radio and now they're TV. Everything is TV. For Netflix specifically, it's not, they've been making this move for some time and the driver has been the consumer is a little weaker, right? We're paying for a lot of things. We don't really have a clean bundle yet, no matter how hard the legacy cable companies are trying here. Ad supported makes sense for them at this point because you've got a weak consumer, you've got an uncertain economy. Yes, the thinking is gone. People always spend money on content. How much money they'll spend and for what content is the bigger question, which again ties into why they want to buy Warner Brothers, right? They've got some iconic franchises. They've got a lot of great content and that's what Netflix is paying for. They don't care about HBO Max necessarily. They don't care about the actual infrastructure of it all because Netflix

• 26:44Rohan Goswami?

  is the pioneer in this space. For the space writ large, it's a harder question to answer, right? The content, the big, you know, buffalos in the room, the apples, the Netflix's, the HBOs have shown in recent years, even before the economic slowdown, a sensitivity to the kind of blank check Yellowstone style productions that cost hundreds of millions of dollars and have crazy perks for the talent and the directors. They're a little more sensitive to that now. They've realized there actually needs to be measurable ROI. So if there's one thing from a business perspective that I think will change for Netflix, whether it's because of this deal, because of antitrust, because investors just expect it, I expect, I hope I should say, for more clarity that they'll offer to the street on the actual

• 27:25Rohan Goswami?

  underpinnings of their business. Remember, this is a company that has kind of steadfastly refused to divulge pretty elementary information, viewing time, engagement, things that analysts and investors have expected from legacy streamers, from cable companies for decades. So I would hope that this process, this big bite of the apple, forces Netflix to talk to shareholders a bit more and say, look, here's what we're doing, here's what we're seeing from consumers around the world. There's no question they've got a great product. The trick will be explaining why what they're doing is going to make this product better. And really, the only way to do that is going to have to be some more transparency.

• 28:01Ed Elson?

  All right, Rohan Goswami, business reporter at Semaphore. I guess, just before I let you go, Rohan, who's going to get WBD? I forget if I've already asked you this, but if you had to lock in a prediction, who wins?

• 28:15Rohan Goswami?

  You asked me this, and I actually, the first time I said Netflix, then I said Paramount.

• 28:19Ed Elson?

  Yep.

• 28:19Rohan Goswami?

  Now I'm going to say Paramount with an asterisk, okay? And here's why, hear me out.

• 28:23Ed Elson?

  Wow, I'm glad I asked you, okay.

• 28:25Rohan Goswami?

  They've got to bump their price. They've got to bump their price. It's getting ridiculous now. You know, if they want this thing so badly and they need this thing, they got to pay more. They know that too, but they just got to pay more. It's that simple.

• 28:39Ed Elson?

  Yeah.

• 28:39Rohan Goswami?

  The money talks.

• 28:40Ed Elson?

  Money talks. Okay, thank you. Rohan Goswami, Semaphore, business reporter. Appreciate your time. Thank you.

• 28:47Rohan Goswami?

  Thanks, Ed.

• 28:52Ed Elson?

  Well, with everything happening in Greenland, it's hard to remember that things are still happening in America. And one of those things is a slate of affordability plans that have been put forward by the president. One of them is to implement a 10% interest rate cap on credit cards. We touched on that last week. Another is to ban institutional investors from buying single-family homes. Another is to buy up $200 billion worth of mortgage bonds. Another one is to issue a tariff refund. Another is a healthcare plan that Trump is calling the Great Healthcare Plan. And the stated goal of all of these plans is to address affordability, to bring costs down.

• 29:33Ed Elson?

  Now, when I read these plans, I see good news and I see bad news. The good news is Trump seems to now be recognizing that this affordability thing is a big deal. And if he wants to get votes, he needs to address it. The bad news is, I don't think he's actually taking it seriously at all. And across each of these proposals, each of these plans, that is the main theme. They are unserious proposals. Take the credit card interest rate cap, for example. You know, as Saul Martinez told us last week, if this were actually implemented, it would decimate the business models of all the big banks and all the big credit card companies, which is why

• 30:15Ed Elson?

  it's strange that when he announced this plan, those stocks declined, yes, but they didn't crater. And the reason they didn't crater is because Wall Street recognizes this isn't a serious proposal. It's a little too ridiculous, a little too absurd. It isn't going to happen. Same thing is true of the great healthcare plan. Trump announces his plan to reinvent healthcare, although he doesn't really provide any details on how he'll actually do that. And once again, Wall Street doesn't really have a reaction to it. Why? Because they don't think anything is actually going to happen. One healthcare analyst from Vida Parton said it best. He said, quote, "We think the plan is intended to demonstrate that the White House is doing

• 30:56Ed Elson?

  something about affordability, but we believe the policies either stand little chance of being enacted or will have a minimal impact if enacted." I could go on about all the other ideas too. I could talk about the mortgage bond idea and the institutional home buying idea. I'll just cut to the chase. I don't think that those are serious proposals either. But even if they were, even if they did make sense, I would add that it would still be hard to take any of it seriously when we're still living under a regime that has implemented one of the worst affordability plans in the history of America, and that is the tariffs. I would remind you that before the tariffs, inflation had come down to 2.3%.

• 31:41Ed Elson?

  After the tariffs, they went up to 3%. And that makes perfect sense because as we've discussed, it's Americans that pay the cost of the tariffs, not foreigners. The importer pays the tariff and they pass that on to the consumer with price increases. In fact, a new report from the Keel Institute has confirmed this. They found that Americans are absorbing 96% of the tariff costs. Foreigners, meanwhile, are only taking on 4%. Even Andy Jassy, the CEO of Amazon, made this point yesterday at Davos. He literally said that sellers are passing on the tariff costs to American consumers. So all of these affordability proposals, which are already unserious,

• 32:24Ed Elson?

  they are especially unserious when you also consider the fact that we have tariffs. And if we're in the business of suggesting proposals, if the idea is to come up with a plan that will bring costs down, the idea is to come up with a plan that will address affordability. I have a really easy one that the administration could implement right now. And that is they could just get rid of the tariffs. It would be quick. It would be doable. It would be effective and it would bring costs down by probably a percentage point. Of course, that won't happen because Trump has doubled down on this and he doesn't want to look foolish. But this is all just to highlight what a foolish situation we find ourselves in.

• 33:07Ed Elson?

  Here we are pretending to care about affordability and at the same time, actively making our lives less affordable. So until we get rid of the tariffs, I don't think there's any other reasonable response to these proposals than what Logan Roy said to his kids. And that is you are not serious people.

• 33:33Ed Elson?

  Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss, edited by Joel Patterson and engineered by Benjamin Spencer. Our research team is Dan Shiloh, Isabel Kinsel, Chris O'Donoghue and Mia Silverio. Thank you for listening to Prof G Markets from Prof G Media. If you liked what you heard, give us a follow. I'm Ed Elson. I will see you tomorrow.

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