Why Big Banks Are Selling-Off

Ed Elson sits down with Saul Martinez, Head of U. S. Financials Research at HSBC, to unpack bank earnings and the implications of a credit card interest rate cap. Then, Semafor business reporter Rohan Goswami joins the show with the latest on the bidding war for Warner Bros. Discovery, including Netflix’s all-cash offer and Paramount’s proxy fight. Finally, Ed unpacks Delta’s earnings and what they reveal about the broader economy. 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

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• 1:29Ed Elson?

  Today's number 100. That's how many body parts were stolen from cemeteries by a man in Pennsylvania last week. Authorities confirmed this after they broke into his storage unit. When asked what they found, the officer replied, "Remains to be seen."

• 1:59Ed Elson?

  Welcome to property markets. I'm Ed Elson. It is January 15th. Let's check in on yesterday's market vitals.

• 2:08Ed Elson?

  The major indices all ended the day in the red for a second day. The Nasdaq led those declines dragged down by Nvidia after Trump announced new security requirements for H200 chip exports to China. Bank stocks also fell following their earnings. We will talk about that in a second. Oil prices dropped after President Trump signaled an attack on Iran is not imminent. And finally, gold, silver and copper all hit record highs.

• 2:37Ed Elson?

  Okay. What else is happening? Fourth quarter bank earnings delivered a mixed picture, but Wall Street's verdict on bank stocks was quite simple. Sell. Citigroup fell 3%. Bank of America dropped 4%. Wells Fargo slid 5%. That's the most in six months. And JB Morgan fell for a second day. It's down more than 5% since its Tuesday earnings. Let's take a look at the earnings themselves. Citigroup beat estimates but saw profits slide. Bank of America beat on revenue and net income with quarterly profit actually rising 12%. Wells Fargo disappointed with its net interest income and JP Morgan topped expectations. However, profits fell 7% after a one-time hit tied to its Apple Card deal.

• 3:22Ed Elson?

  But mixed results weren't the only thing weighing down these earnings calls. Bank executives also had to contend with fresh political pressure after President Trump floated a proposal to cap credit card interest rates at 10%. On top of that, the sector is still reeling from the news about the DOJ's investigation into Federal Reserve Chair Jerome Powell. A lot here, a lot to unpack. Today, we're speaking with Saul Martinez, Head of U.S. Financials Research at HSBC. He will break down these earnings for us. Saul, thank you for joining us on Prof G Markets.

• 3:57Speaker 09

  Thanks for having me.

• 3:58Ed Elson?

  So we want to get your reactions to this earnings. We've seen earnings from all the big banks here and generally a sell-off. Any initial reactions?

• 4:09Speaker 09

  I think the divergence between what were generally good results and outlooks and negative share reactions is telling of high expectations going into these results. So I characterize these results as Is good, not great. Now, in many respects, the results did really validate the bull case for banks. Net interest income is growing, loan growth is picking up, capital markets revenues have been good, credit quality is good. They're managing their costs effectively. The expectations from the bank sure that profit levels will go up. As you said, though, Ed, the stocks reacted negatively. JP Morgan is down 5% since they reported on

• 4:55Speaker 09

  yesterday, and Citigroup, Bank of America, Wells Fargo were all down 35%. Now, I, I think this, you know, does reflect that the big banks have become, you know, darlings. They've outperformed considerably last year. They outperformed in 2024. Valuations are historically elevated. And I think there's some disappointment that results weren't even stronger. I think that is reflected in the guidance. The guidance that banks gave for 2026 is pretty much in line with where analysts are at and likely doesn't trigger material upgrades from analysts.

• 5:36Speaker 09

  And if you overlay concerns about policy, which I, I expect we'll, we'll probably get into with cards, it, it shifted sentiment a little bit towards the bank. So I think it's a reflection of, of high expectations coming in and the fact that the results were good, but they weren't great and they didn't, and they're not necessarily going to lead to lead analysts and investors to really ramp up their expectations, their baseline expectations for earnings and profitability going forward.

• 6:07Ed Elson?

  Just looking at some of these businesses, I mean, wealth management was a success at Citigroup, Bank of America, Wells Fargo. Some really impressive M and A numbers from, from Citigroup, 84% record deal making. I'm just thinking about what Wall Street is expecting or what they wanted in 2026 and what they didn't get in that guidance. Is there a story that they, that you think that Wall Street was expecting perhaps to do with investment banking revenue, perhaps to do with maybe the IPO market? What do you think they wanted that they didn't see?

• 6:45Speaker 09

  I think it varies a little bit by bank. You're right. You know, some of the elements of the results were good. Um, but again, like the, you know, the out, the expectation, what is in the market consensus? Is that capital markets revenues will be strong, wealth management will be strong. Um, there is an expectation that we may be entering into a super cycle of investment banking activity. So I don't think folks are concerned about investment banking or capital markets related businesses. I think to a large degree, though, there's probably some, you know, some disappointment with net interest income.

• 7:30Speaker 09

  So the traditional business of banks, um, lending, investing in securities. And you, what, part of the bull case, Ed, for banks is that you're, we're now living in an environment where there's positive real rates across the curve. So a lot of the loans, uh, and investments in securities that banks made in a low interest rate environment are effectively repricing to a higher interest rate environment. And you're getting a positive benefit on asset yields that's driving net interest income. And I think the expectation was that banks would be even more positive on net interest income. J P Morgan, um, is, you know, gave some guidance i- in December about net interest income

• 8:15Speaker 09

  growing 30%. I think there was some hope that maybe they would increase that. I think the same story applies to Wells Fargo and Bank of America. So I think there, there was some hope that the traditional revenue driver of banks, uh, net interest income would actually be a little bit better than it, it actually was. But banks are basically saying that what analysts are expecting from that, from, um, for revenues is, is probably just about right.

• 8:44Ed Elson?

  Yeah.

• 8:44Speaker 09

  I think there was some hope that they would raise guidance and, and, and that would, um, you know, be to higher earnings estimates going forward.

• 8:51Ed Elson?

  Yeah. Something that we should also bring up, certainly putting pressure on these stocks. Um, Trump's proposal to put a 10% cap on interest rates on credit cards.

• 9:04Speaker 09

  Yeah.

• 9:04Ed Elson?

  Um, which the banks do not like, Wells Fargo didn't like it, Citi didn't like it. JPMorgan CFO said, everything is on the table to push back against this proposal. Can you tell us a little bit more about the proposal, how it will affect these companies? And if these companies should really be worried about it?

• 9:26Speaker 09

  Yeah, well, first of all, there's a lot to unpack here and there's a lot of uncertainties. You know, right now it's a social media post as opposed to a actual proposal. You know, and there's some questions about how it could even be implemented. I think most policy analysts, legal, legal analysts would tell you it requires legislation. It's very hard to see legislation passing on this by January 20th. And it's hard to see legislation passing that would implement a cap of 10%. And an executive order on this would likely be met by with legal actions. So how this would be implemented is a, you know, is a, is a very big question.

• 10:10Speaker 09

  It would have a devastating effect on credit, the credit card business, though. A 10% interest rate cap on lending would make, you know, large swaths of the credit card business unprofitable, broad swaths of the population would lose access to credit. Banks won't make, banks cannot make money and credit card companies cannot make money given the loss rates on credit cards with an inch with a 10% interest rate. And there would be, you know, so you would have to see a material change to the business models, rewards would be cut, you would see more late fees. And, you know, for JPMorgan and Citigroup, they would be affected, right? These are important business for them.

• 10:52Speaker 09

  It would have a material impact on earnings, but, you know, especially for more pure play credit card companies who do have more exposure to riskier segments of the population, somebody like a Capital One, it would be, you know, have a, you know, it's just a, you know, fairly devastating impact on their earnings and profitability. I think that if I could make one additional point, though, because I think it ties into what we were talking about earlier about, you know, the bull case for banks and what's in the expectations of the market and, you know. Part of what has made the banks, you know, so attractive to investors is the view that they're primary beneficiaries of deregulation, that the direction of travel on policy is a good one.

• 11:34Speaker 09

  You're going to see, you know, capital requirements cut, less stringent enforcement of, from regulators. And I think this was a reminder that policy can cut both ways. It's not a one-way track to, you know, easier, more favorable regulation. And so this really threw cold water on, on an important part of the bank bull thesis. And I think it was a reminder that, you know, there are risks. And this is something we did highlight in the report very recently as one of the key risks for 2026, especially as we head into the midterm election. And if, you know, if you do get a situation where Democrats do really well in the midterm election, investors will be, you know, will start to look to 2028.

• 12:20Speaker 09

  And it will be a reminder that maybe the very favorable regulatory policy that you've seen may not always be that way. But we got that reminder, I think, a little bit earlier than expected with, with the social media post last Friday.

• 12:35Ed Elson?

  Hundred percent. It is fascinating the extent to which Trump is influencing everything, including the markets and the businesses of these businesses. I mean, as you say, it's like, it was all about deregulation. That was the idea and then that, and that's what the, the market was getting excited about. Now it appears that maybe the banks aren't friends with the White House, who knows? But the point being, this is what is moving the markets. This is what, uh, this is, this is what decides the whole, the whole game. Just before we end here, I, I'd love to hear what we learned from the banks about Trump's investigation or the DOJ's investigation into Jerome Powell.

• 13:17Ed Elson?

  We were discussing this earlier on in, in the week and one of our guests said, you know, it'll be very interesting to see what these titans of finance, what these leaders say about one of the most cataclysmic events that we've seen when it comes to the Federal Reserve in the past few years. What did we hear from, from the CEOs? Did they speak about it?

• 13:38Speaker 09

  Yeah, I mean, it wasn't a topic of conversation that was, you know, front and center. I think it did come up in the JP Morgan earnings call. I think that, you know, I think the view of the banks, and I think Jamie did express this, was central bank independence is important, and it's important for, you know, for, you know, pretty obvious reasons.

• 14:05Ed Elson?

  Yeah.

• 14:06Speaker 09

  So I think banks, you know, bank CEOs, you know, will express that view. I think, you know, I think it is fair to say that, you know, bank CEOs have to be, you know, they represent the bank and they have to be, you know, pretty, you know, they have to be, you know, very judicious with what they say and how they say it. And, but in the current, you know, political environment, but I think they did express the view and they will to express the view that, you know, central bank independence is an important part and having those safeguards are important to, are important for the US

• 14:48Speaker 09

  economy and important for, you know, the central bank's ability to, you know, to carry out its mission of maintaining inflation under control. So, you know, but I don't think we necessarily learned anything for, you know, bank CEOs, you know, stuck their necks out in one direction or another during their earnings calls.

• 15:12Ed Elson?

  Yes, absolutely. Okay. Saul Martinez, Head of US Financials Research at HSBC. Saul, really appreciate your time. Thank you for joining us.

• 15:21Speaker 09

  Yeah, anytime.

• 15:25Ed Elson?

  After the break, an update on Warner Brothers Discovery's bidding war. And if you're enjoying the show, give Prof G Markets a follow.

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• 17:12Ed Elson?

  We're back with Prof G Markets. Netflix is reportedly preparing an all-cash bid for Warner Brothers Discovery as the company moves to fast-track a potential sale. This news comes shortly after rival bidder Paramount launched a proxy fight on Monday. The company is also suing Warner Brothers Discovery and its CEO David Zasloff for failing to disclose information about its sales process. Netflix, and Warner Brothers, and Paramount stock all closed down on this news. Here to break it down for us and also to give us a fresh scoop on this bidding war, we are speaking with Rohan Goswami, business reporter at Semaphore. Rohan, welcome back to Prof G Markets.

• 17:54Rohan Goswami?

  Ed, great to be back with you. Hope you've been doing well since we've last spoken.

• 17:58Ed Elson?

  Absolutely, and we do want to get an update since we last spoke. I mean, last time we spoke, we saw that Warner Brothers Discovery had told its shareholders to reject the Paramount bid. They were encouraging shareholders to go with Netflix. That was three weeks ago. We're going to hear about your scoop, but just before that, can we just get an update on what has happened since we last spoke in these past three weeks?

• 18:23Rohan Goswami?

  Yeah, you know, setting the scene in the last three weeks somehow, Paramount came back again and said, look, we've made some changes. We've made our money a little bit more certain. Like you and I talked about, remember, I, we talked about how their money wasn't totally shored up. Jared Kushner had just left. There were some concerns about the sovereign wealth funds. So Larry Ellison, right, David Ellison's old man, actually stepped in and personally guaranteed $40 billion, a huge portion of this, of this check, and basically said, I'm good for it. I'm here for it. It, it really must be wonderful and nice. And Paramount said, all right, Warner, let's, let's give this another go. You want to come to the negotiating table, talk with us? And Warner, over the holidays, sat around, thought about it for

• 19:06Rohan Goswami?

  a little bit and said, nah, we're good. We like what we've got with Netflix. And shareholders got pissed off, truly furious, because from their perspective, we're talking about $30 a share for a whole company in cash. Everyone loves cash, versus 2177, uh, 21, 2775 for part of the company. So less money for less of the company. It was more complicated. It was more muddled. Warner rejected it again. Paramount said, well, okay, fine. If you don't want to do that, Warner Brothers board, we're ready to fire you. We're going to mount a proxy fight. We're going to try to take control of your board, because we think shareholders are pretty pissed off about this and, and want a chance to get their hands on all our cash. So they did that earlier this week. Now it's come out. Bloomberg first broke this

• 19:49Rohan Goswami?

  news. We've confirmed it. Several other outlets have confirmed it as well, that Netflix is pretty close to making its bid all cash. So it's trying to solve for some of the problems that shareholders have pointed out. Mostly, they don't really want to own Netflix stock, right? They want to own, they don't want to own Netflix at all. They want, they want cash in hand. Who doesn't want cash? That's where we are today. And as we reported earlier, right before we, you know, we're getting on to talk about this right now, both Paramount and Netflix have been making their case to regulators in Europe, but also in the US, trying to sort of say, look, we are the pro-competition deal here, even though, remember Paramount, as we know, doesn't have its own bid yet, it hasn't been approved. So that's sort of where the lay of the land is as we stand today.

• 20:32Ed Elson?

  So, so much in that. I think one of the most important pieces is the fact that Paramount comes back and gives a better offer. I mean, they said before, oh, we don't trust that you have the money. Then dad comes along and says, no, no, I have the money. And we know that he does. They make the offer again. And then Warner Brothers says no.

• 20:56Rohan Goswami?

  Yeah.

• 20:56Ed Elson?

  And this is interesting because one thing that we saw from David Ellison before all of this unfolded, before Netflix was getting involved, before we even knew that Netflix had made the offer, is he wrote this letter to Warner Brothers saying, hey, I think you guys are biased against me.

• 21:12Rohan Goswami?

  Mm hmm.

• 21:13Ed Elson?

  And something that you reported is that you've been speaking with shareholders. Shareholders think there is a, quote, inexplicable personal animus between Zasloff and David Ellison. This is what you wrote.

• 21:25Rohan Goswami?

  Yep.

• 21:26Ed Elson?

  So it sounds like maybe David Zasloff and the board actually are biased against David Ellison. I thought it was kind of a ridiculous statement, but it sounds like maybe it's true. What do you think?

• 21:38Rohan Goswami?

  I'll be honest. Look, remember when we first spoke, I thought Netflix had it. I thought that Paramount had not done enough to solve the problems, the real problems that Warner Brothers has. But time has gone on. They've stepped up the certainty of their financing. They've said, look, we're willing to negotiate. Please just come to the table with us and talk to us. And Warner, again, this is Warner's board. We can't all put it at David Zasloff's feet, but David Zasloff is also the CEO of this company and has a lot of influence over this board, has just said no, time and time again, no, I might add, in kind of an insulting way.

• 22:11Ed Elson?

  Hmm.

• 22:11Rohan Goswami?

  I mean, their last response, as you know, Ed, was to compare it to a leveraged buyout, which is not something that sits well with If anybody, when you're trying to talk about how much you care about a brand, how much you care about these assets, how you want to steward these assets. When we think LBOs, we think, you know, what private equity used to do. Let's buy an asset up with someone else's money. Let's strip mine all the good stuff out of it and let's make a ton of cash for ourselves. Screw the shareholders, screw the employees. That's what Warner Brothers compared the Ellison's offer to. And as we reported, it was super insulting to these guys. So, yeah, some shareholders really do feel, and certainly my reporting hasn't gotten to the bottom of this. I would love, David Ellison, if you want to pick up the phone and let me know what you're thinking here.

• 22:53Rohan Goswami?

  I would love to understand this, but certainly the shareholders I spoke with said, look, it makes no sense. These guys have all the money in the world. And if that wasn't enough, they've got three friends, right? These sovereign wealth funds who have all the money in the world. Why aren't they picking up the phone and talking unless Zaslov has some beef with Ellison? Remember, these guys went out to dinner together. They went on walks together, had all these conversations leading up to this auction. Ellison even offered to make him co-CEO, that's David Zaslov, co-CEO of the combined company. That's not a joke, that's a real offer and that was in a lot of the merger documents. As it stands, you know, Zaslov will make a ton of money off this either way. So it's left to, you know, it's left to our imaginations what we think. But this is what M and A bankers call the social issues of a deal. The price might be right, the structure might be right.

• 23:37Rohan Goswami?

  But if two CEOs don't like each other, if two boards don't like each other, it's the same as real life. It becomes hard to get anything done.

• 23:44Ed Elson?

  Ultimately, this looks like maybe a shareholder lawsuit. I mean, Zaslov has a fiduciary responsibility to get the best price, to get the best offer. If the shareholders are saying, we think the best offer is from Paramount and he's not doing it because, because I don't know, because he doesn't like him, because he doesn't like his dad, because they're buddies with the president, I don't know what it is. But doesn't that seem like a lawsuit?

• 24:14Rohan Goswami?

  Shareholders are always going to sue. In fact, shareholders already have in San Francisco. I think the very week this deal was announced. Shareholders always want more money, and if they don't get the money, they're always happy to complain.

• 24:23Ed Elson?

  Yeah.

• 24:24Rohan Goswami?

  What has happened, right, is this proxy fight, right? So this board fight that Paramount has threatened to kick off. And that is the easiest way for shareholders in the short term to express how unhappy they are. Now, one big shareholder, that's a shareholder called Pentwater, already went on CNBC and has said, "Look, this is insane. This is crazy that they're not talking. We're going to block the Netflix deal. We're going to vote to block the Netflix deal because we feel like it's absolutely crazy to turn down 30 bucks for this company." Because remember, before we talked, when we talked, the closest comp to the planned spinoff of Warner Brothers Discovery was a company called Verset. That's my former employer CNBC, MSNBC, a bunch of grab-bag assets that were leaving Comcast. That company hadn't started trading yet. And everyone kind of thought, "This company is going to be a better play than Warner Brothers Discovery's spinoff."

• 25:09Rohan Goswami?

  That hasn't been the case. That stock is in the tubes. It's terrible. And so when that happened, a lot of shareholders went, "Well, Verset has less debt than Warner Brothers' planned spinoff. Theoretically, it's a better, higher-performing, higher-end collection of assets, and it's trading like crap. No one wants to touch this thing." If that thing, that quote-unquote "quality asset," it's all relative because it's TV, but if that quality asset is trading so badly, what chance do I have of making up for my $2.75, or sorry, $2.25 off this spinoff? I'd rather go with something more certain. So, you know, we'll see how this proxy fight shapes out, if they even need to do it. But it's certainly shareholders are not happy, not in the slightest.

• 25:48Ed Elson?

  Something you said earlier, "We'll leave it to the imagination why he's not going with Paramount." You've been studying this for a while. You've been reporting on this. You're speaking with sources. Let's use our imagination. Why do you think he's saying no? Why do you think David Zaslove doesn't want to take the deal?

• 26:06Rohan Goswami?

  That's a tricky one. If I had to guess, look, Warner Brothers, the combination of Warner Brothers and Discovery, it was supposed to be a crowning achievement for Zaslove and John Malone, who helped orchestrate this deal. And that was almost, that was five years ago. No, it's 2021. You were going to marry these two assets and you were going to build something better and bigger than the sum of their parts. And to do that, they took on a lot of debt, a lot of debt. And to his credit, David Zaslove has managed to pay down a tremendous amount of that debt. The company is far healthier financially than it was when it merged, but that wasn't reflected in the stock price, right? The stock ticked down and down and down, really, until this bidding war started, which, by the way, created tens of billions of dollars

• 26:49Rohan Goswami?

  of value for shareholders. So kudos to Zaslove for that, in all seriousness. And then you have this guy, you've got Larry Ellison, and you've got his kid, David, who have all the money in the world. And they go and they pick up one of the most storied studios in the planet. They pick up Paramount, just like that, because they want it, because it's nothing to them. And now, you're David Zaslove, you're sitting there, there's been a lot of reporting about his, his sort of, his, the way he approaches the job as CEO. And there's a great story in New York Magazine about this, I think it was New York Magazine, about how he actually has and uses the desk of Jack Warner, right? The father, the creator of Warner Brothers. So there's some implication that he actually thinks of himself as a modern day movie mogul. And yet, he hasn't

• 27:31Rohan Goswami?

  really been successful in those ambitions, right? He hasn't managed to give the company the financial relevance that he sought. David Ellison, on the other hand, has an unlimited checkbook. And so you kind of have this interloper, this guy, to be fair, he's been a producer for a long time, but this guy who's never run a major studio, who's certainly never run a media conglomerate, who suddenly is buying up everything for sale. In other words, is doing exactly what David Zaslove wanted to do, but was never able to get done. That's just a guess. I haven't talked to Zaslove, I haven't talked to Ellison about their psychologies, or how they feel. I would love to. That's never going to happen. So that's my best guess. But it also makes sense. It's human nature, right? You try to do something, you don't succeed at it, and then you watch someone just waltz in and do it instead of you. You might feel a little resentful. Again, totally guess, no sourcing

• 28:15Rohan Goswami?

  here. But if I had to put money on something, I would, I'd put a couple bucks on that.

• 28:23Ed Elson?

  Fascinating. I think we could talk about this for hours. We're gonna have to let you go here. Rohan Goswami, business reporter at Semaphore. Rohan, really appreciate it. Thank you.

• 28:31Rohan Goswami?

  Ed, always a pleasure. Thanks so much.

• 28:37Ed Elson?

  Well, the past few days have been extremely busy. We had the situation in Iran. We had the fight between Trump and the DOJ and Jerome Powell. We had this controversial inflation report. And all of this has made it a little bit difficult for us to focus on what we usually focus on, and that is earnings. And as a result, there was a pretty interesting report that we didn't cover yesterday, and that was Delta's earnings report. So before we end today's episode, we're just going to quickly cover it now. So Delta had a pretty decent quarter. They reported record revenue. They also beat expectations on earnings. But that is quite surprising because when you dig into the numbers,

• 29:20Ed Elson?

  what you'll find is that their main cabin sales actually fell by 7%, which raises the obvious question, how is it that they had a pretty good quarter despite the fact that main cabin sales were down? And the answer lies in the growth of premium cabin sales, i.e. first-class tickets. That business grew by 9% year over year. And in fact, for the first time in Delta's history, the premium cabin business is now larger than the main cabin business. Premium tickets generated $5.7 billion in revenue. Regular tickets generated $5.6 billion in revenue.

• 30:04Ed Elson?

  Put another way, Delta's growth is now being kept alive by rich people. Now, if you're a regular listener, you know this is a theme we talk about a lot, this divide in America between the rich and the poor, the K-shaped economy, as people are talking about it, and the extent to which that divide is actually driving the real economy. The most important data point that we flagged last year was this data from Mark Zandi, which found that the top 10% of earners in America are now responsible for half of all the consumer spending. That number has never been higher. And this shocked us, not because it was necessarily surprising to us, but because it was just such a vivid illustration

• 30:46Ed Elson?

  of something that we already kind of suspected but weren't fully seeing. Well, now we're seeing it at the company level. Now we're seeing it reflected in the earnings of some of the most iconic companies in America, in this case, Delta. And in fact, CEOs are now outwardly acknowledging this. Delta's CEO, Ed Bastian, said, quote, "There's a lot of discussion about the K-shaped consumer. Our consumer happens to sit right at the top end of that K." And it's striking, the extent to which the K shape is now openly being recognized. It's no longer some theory that people talk about on podcasts. It is an actual reality.

• 31:26Ed Elson?

  It is a law of business that companies are expected both to understand and also to capitalize on. And that is exactly what Delta has done here in this earnings report. And it's also why they are talking about it, because they know investors feel better if they see that your business is specifically catering products to the nation's very richest people. Those are the consumers that matter. So those are the consumers that you need to own, and that is what Wall Street wants to see. Now, to be honest, I'm not sure if this is better or worse than what we had before, when people would theorize about this inequality problem. They'd talk about the K-shaped economy.

• 32:09Ed Elson?

  They'd discuss it intellectually versus what we have now, where people and CEOs seem to simply throw their hands up and accept it as some principle of the universe. Yeah, the K-shaped economy. Oh, yeah. That's just the way it is. I actually don't know what is worse. Either way, what is clear now is we have gone from theory to reality. We've gone from bargaining to acceptance. The gaffe is getting bigger. The rift is getting wider. And we are now watching this play out in earnings.

• 32:47Ed 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 Shalan, Isabella Kinsel, Chris O'Donoghue, and Mia Silverio. Thank you for listening to Prof G Markets from Prof G Media. If you like what you heard, give us a follow. I'm Ed Elson, and tune in tomorrow for our conversation with Scott Nations.

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