Prof G Markets: The $6.6 Trillion Sell-off

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0:01:20 Buying a house has long been considered the best way to build wealth
0:01:23 and move into true adulting.
0:01:23 Isn’t it?
0:01:26 I mean, at least that’s what society wants us to think.
0:01:29 Got to get a Birkin, got to get a home, you know.
0:01:33 Okay, the handbag you can probably manage without.
0:01:35 But what about a house?
0:01:39 Surely that’s actually good, right?
0:01:43 We’re going to find out this week on Explain It To Me.
0:01:47 New episodes every Sunday morning, wherever you get your podcasts.
0:01:53 Today’s number, $6.6 trillion.
0:01:56 That’s how much value the U.S. stock market shed
0:01:58 following Trump’s tariff announcement.
0:02:01 A record-breaking two-day wipeout.
0:02:04 Ed, I just came from a necrophiliac’s anonymous meeting
0:02:06 and suddenly I dawned on me,
0:02:08 what happens if I die here?
0:02:20 How are you, Ed?
0:02:21 How are you?
0:02:22 I’m doing okay, Scott.
0:02:23 How are you?
0:02:27 Are you reacting badly to these tariffs?
0:02:28 What’s going on with you?
0:02:32 So I’m an emotional tide pool right now,
0:02:34 not for the reason you probably think.
0:02:40 I lost, I don’t know, mid-single-digit millions,
0:02:43 maybe $10 million on the 48 hours on Thursday and Friday,
0:02:46 but that’s the bad news.
0:02:49 The good news is that means you have a lot of money to begin with.
0:02:49 I’m blessed.
0:02:53 And I could kind of, I don’t want to say I could kind of give a shit,
0:02:55 but the reason I’m an emotional tide pool
0:02:59 is I just finished up a college tour with my son
0:03:00 and it just is sort of this very,
0:03:04 it’s a marker in time, you know?
0:03:06 It’s just, we went to eight schools in five days
0:03:10 and I decided I was going to be totally focused on parenting
0:03:11 and not do any business calls.
0:03:14 And it’s just sort of, you know, it’s just very emotional.
0:03:17 He doesn’t understand it, but he will when he has sons.
0:03:21 But what happened on Thursday and Friday,
0:03:24 for me, it’s like I was much more upset about the Trump coin.
0:03:27 I was much more upset about, you know,
0:03:29 Marines being kicked out of the service
0:03:30 because they’re transgender.
0:03:34 This to me is like so far fucking down the list
0:03:38 of this ass clowns, un-American, bigoted, weird behavior.
0:03:41 I find it just sort of disappointing.
0:03:43 All of a sudden, the most powerful people in the nation
0:03:44 have decided enough is enough
0:03:48 when they lose, when their portfolio goes down.
0:03:51 So, yeah, I’m a bit of a mess today,
0:03:55 but for the right reasons, I don’t, you know,
0:03:58 we know this is stupid, so let’s bust right into it.
0:04:01 You did a fantastic video I thought was really powerful
0:04:04 talking about, you know,
0:04:08 tariffs can play a role in restoring trade symmetry.
0:04:11 Talk a little bit about the asymmetry
0:04:12 as it relates to U.S. tariffs
0:04:13 and our trading partners.
0:04:15 Well, I will get into that.
0:04:17 Never mind.
0:04:18 Get into other stuff, Ed.
0:04:20 You’re clearly the fucking producer here.
0:04:22 Yeah.
0:04:22 Okay.
0:04:23 I’ve got to stick to our structure
0:04:25 that producer Claire…
0:04:26 By the way, that’s super sexy
0:04:27 when you’re not flexible
0:04:30 and have to stick to a script.
0:04:32 Yeah, that’s going to get you laid, boss.
0:04:32 Anyways.
0:04:34 Sorry, go ahead.
0:04:34 Sorry.
0:04:38 No, I’m happy to talk about the asymmetry
0:04:40 and what I brought up in the previous podcast,
0:04:41 which we will get to,
0:04:44 is that the U.S. is not getting screwed
0:04:45 in the way that we think we are.
0:04:47 And we will cover that.
0:04:50 Before that, I just want to go over
0:04:51 what exactly happened.
0:04:56 So, Trump’s 10% tariffs on all exports to the U.S.
0:04:59 and higher rates for roughly 60 countries
0:05:02 are the most severe American tariffs in a century.
0:05:04 The markets offered a swift
0:05:07 and damning condemnation of those policies,
0:05:09 with one of the worst sell-offs in recent memory.
0:05:11 In the two trading days following the announcement,
0:05:13 the S&P 500 dropped 11%
0:05:15 to its lowest level in 11 months.
0:05:18 Meanwhile, the Nasdaq followed the Russell 2000
0:05:20 into bear market territory,
0:05:22 down 20% from its peak in February,
0:05:25 the speed of that drop is rivaled only by the pandemic
0:05:26 and the dot-com implosion.
0:05:28 The Dow closed Friday,
0:05:30 down more than 2,000 points
0:05:31 for only the fourth time in history.
0:05:35 All told, we should probably just reiterate
0:05:37 the number you used at the start of the show,
0:05:38 which is that the U.S. stock market
0:05:43 lost a record $6.6 trillion in two days.
0:05:47 Okay, now that we’ve just gotten the basics out of the way,
0:05:49 there are many places we could start.
0:05:52 I guess the first place that I would start
0:05:54 and that a lot of people are talking about
0:05:58 is how these tariffs were actually calculated, right?
0:06:01 So, I mean, I think most people know by now
0:06:05 the tariff rates that this administration chose
0:06:07 had actually nothing to do
0:06:09 with the existing tariff rates in the world.
0:06:13 Instead, what they did was they took the trade deficit
0:06:14 of each country,
0:06:16 they divided it by the imports,
0:06:20 that’s how they determined the existing tariff rate,
0:06:20 quote-unquote,
0:06:22 and then to get the new tariff rate,
0:06:24 they divided that number by two.
0:06:26 This calculation,
0:06:27 I’m sure you’ve read about it before,
0:06:29 people are covering it,
0:06:31 it actually has no relationship
0:06:34 with the actual tariffs on the U.S.
0:06:37 It’s measuring a completely different thing.
0:06:38 So, you know,
0:06:41 I think that’s a big part of why the markets reacted so badly.
0:06:41 The markets realized,
0:06:42 oh my God,
0:06:45 not only are these people serious about these tariffs,
0:06:50 but they’re also incredibly stupid and misinformed.
0:06:53 And I think that was the big freakout for everyone.
0:06:56 Now, on the point that you asked me to raise
0:06:59 in terms of the trade symmetry,
0:07:03 I think what was really interesting to me
0:07:06 was this recent article that we saw from the Washington Post,
0:07:10 which explains how this whole calculation went down.
0:07:12 What happened was,
0:07:14 Trump asked his team to do the analysis
0:07:16 and to go out and find out,
0:07:20 okay, what actually is the effective tariff rate
0:07:21 on each nation,
0:07:22 which is a difficult thing to do
0:07:24 because, you know,
0:07:24 these tariffs,
0:07:25 they’re not universal.
0:07:28 They’re specific to each item.
0:07:30 And then that rate can change
0:07:32 depending on your relationship with a certain country.
0:07:33 In other words,
0:07:35 determining a number,
0:07:37 a tariff rate is a difficult thing to do.
0:07:39 But his team did it.
0:07:40 They went out,
0:07:40 they did the analysis
0:07:42 and they went to the president
0:07:45 and they brought him a menu of options.
0:07:45 They said, okay,
0:07:48 we did what you asked.
0:07:49 Here is what we could do.
0:07:51 And he looked at the menu
0:07:53 and he said,
0:07:54 I don’t like it.
0:07:56 I want to do something else.
0:07:58 And that’s when he decided
0:08:01 on this new trade deficit formula,
0:08:05 which again has nothing to do with actual tariffs.
0:08:08 And this gets back to what I discussed last week,
0:08:10 which is that if you actually look at the numbers
0:08:12 and you look at our relationship
0:08:13 with all of these countries,
0:08:16 we’re not the victim we like to think we are.
0:08:18 Many countries charge less than we do.
0:08:21 Most of our largest trading partners
0:08:23 charge around the same that we do.
0:08:24 And in fact,
0:08:26 if you look at the last 15 years,
0:08:28 the US has implemented
0:08:32 the most amount of hawkish trade interventions
0:08:33 of any nation.
0:08:35 And so what I think happened
0:08:36 was the Trump team went out,
0:08:38 they found the data,
0:08:39 they did the analysis,
0:08:40 they showed him the data,
0:08:42 they showed him the truth.
0:08:43 And then Trump looked at it
0:08:44 and he said,
0:08:45 I don’t like the data.
0:08:47 I don’t like the truth
0:08:48 because it doesn’t fit with my narrative.
0:08:49 So what we’re going to do now
0:08:51 is we’re going to make up the data
0:08:52 and we’re going to make up the truth.
0:08:54 And that’s what that board was
0:08:56 that he was holding in the Rose Garden.
0:08:59 It was basically a fabricated list.
0:09:00 It was like an imaginary world
0:09:03 of what if the tariff rates were this amount?
0:09:04 And then we will just divide
0:09:06 that what if number by two
0:09:08 in order to make you believe
0:09:10 that America is getting screwed.
0:09:14 So it’s a very interesting dynamic
0:09:15 following what I talked about
0:09:17 on the last episode,
0:09:18 which is, you know,
0:09:19 look, do the numbers,
0:09:20 do the math,
0:09:22 look at the actual tariff rates,
0:09:24 do the hard work of understanding
0:09:26 what is going on in the economy.
0:09:27 And you will conclude,
0:09:29 as is usually the case,
0:09:32 America is not really getting screwed on much.
0:09:34 In fact, we’re the most powerful nation
0:09:36 in the world for a reason.
0:09:38 We’re actually quite stringent
0:09:39 on other nations,
0:09:40 on many things,
0:09:41 including tariffs.
0:09:44 But Trump,
0:09:45 it didn’t fit with his narrative.
0:09:46 Trump needs to believe
0:09:48 that America is getting screwed by foreigners.
0:09:52 And so it was a miraculous thing
0:09:55 to see him literally make up the numbers.
0:09:57 And I think the most concerning
0:09:58 and disturbing thing
0:09:59 is seeing his team
0:10:03 just playing the sycophanty once again,
0:10:05 clapping at his announcement
0:10:08 and basically pretending
0:10:09 that he’s got it all right
0:10:12 having just told him
0:10:13 these are what the real numbers are.
0:10:14 And he said,
0:10:15 no, I don’t like those numbers.
0:10:16 And they capitulated.
0:10:17 Yeah.
0:10:18 So the first myth
0:10:20 we have to take off the table
0:10:21 is somehow that
0:10:23 America is the victim here, right?
0:10:25 If anyone has been flexing their muscle
0:10:27 and imposing onerous tariffs
0:10:28 that we’ve been able
0:10:30 to figure out a way to pay,
0:10:31 I think some of your data,
0:10:35 25% tariff on Japanese trucks
0:10:36 entering the U.S.,
0:10:39 they charge us 0% tariff.
0:10:42 I think you said 82% for sugar
0:10:43 imported in from Brazil,
0:10:45 they charge us 13%.
0:10:47 Typically, if there’s asymmetry,
0:10:48 we’re on the right side
0:10:51 of the asymmetry, so to speak.
0:10:53 This will likely be
0:10:54 the second largest
0:10:55 or the largest own goal
0:10:59 since our entry into Iraq.
0:10:59 And the biggest was
0:11:00 or the largest was
0:11:01 Nigel Farage
0:11:03 convincing angry Brits
0:11:05 because the economy hadn’t grown
0:11:05 that this would be
0:11:06 our independence day.
0:11:08 And the economy has just
0:11:10 basically gone sideways
0:11:10 since then.
0:11:13 Tariffs make no sense.
0:11:14 They’ve never made any sense.
0:11:15 There are rare exceptions
0:11:16 when they can be used
0:11:19 tactically to restore symmetry
0:11:20 in key areas
0:11:21 where we’re getting a raw deal
0:11:23 or to protect certain industries
0:11:24 that you need
0:11:25 for strategic reasons.
0:11:25 You probably need
0:11:26 a certain amount
0:11:27 of domestic steel production
0:11:29 in case we go to war.
0:11:30 But just to use
0:11:31 one company example,
0:11:32 Apple,
0:11:35 the tariffs that he has imposed
0:11:36 are going to cost
0:11:38 Apple $40 billion.
0:11:39 By the way,
0:11:40 it’s the importer
0:11:42 that pays the tariff.
0:11:43 So they’re going to have
0:11:46 to pay $40 billion, right?
0:11:47 That comes right off
0:11:48 the bottom line.
0:11:50 The P.E. of Apple
0:11:51 was 38.
0:11:52 Now I think it’s 34.
0:11:53 So you’re talking about
0:11:55 a trillion dollars
0:11:57 in shareholder losses
0:11:58 to Apple.
0:11:58 And I want to come back
0:11:59 to shareholder losses.
0:12:01 In addition,
0:12:02 the idea is that
0:12:04 if you kind of
0:12:05 raise the cost,
0:12:06 then it inspires
0:12:07 domestic production.
0:12:09 To produce an iPhone
0:12:09 in the U.S.
0:12:11 would cost $3,500
0:12:12 an iPhone.
0:12:14 So we’re not moving
0:12:15 back manufacturing.
0:12:16 All it’s going to do
0:12:17 is increase the price
0:12:18 of an iPhone
0:12:19 from $1,600
0:12:20 to $2,300
0:12:21 and reduce
0:12:24 the market capitalization
0:12:25 of Apple
0:12:27 by a trillion dollars.
0:12:27 And that is
0:12:28 fairly typical
0:12:29 of what happens
0:12:31 across the board.
0:12:33 So these,
0:12:35 it is difficult
0:12:35 to think of
0:12:36 a more elegant way
0:12:38 to reduce prosperity
0:12:40 than tariffs.
0:12:40 And what people
0:12:41 aren’t talking about
0:12:43 that’s even more damaging
0:12:44 is the uncertainty.
0:12:45 people don’t know
0:12:45 how to plan
0:12:46 their businesses.
0:12:46 If he just
0:12:47 come out
0:12:47 and said,
0:12:48 all right,
0:12:49 10% tariffs,
0:12:50 businesses,
0:12:51 both foreign
0:12:51 and domestic,
0:12:52 could plan
0:12:52 their business,
0:12:54 get on with it.
0:12:55 They don’t know
0:12:56 who they’re waking
0:12:56 up next to.
0:12:57 His sclerotic
0:12:58 epileptic
0:12:59 decision making,
0:13:00 he could cancel
0:13:01 all tariffs
0:13:01 on Monday.
0:13:02 So no one,
0:13:03 no one knows
0:13:04 what to do here.
0:13:05 What they are doing
0:13:07 is the largest
0:13:07 companies,
0:13:08 the largest economies
0:13:09 in the world
0:13:11 are reconfiguring
0:13:12 their supply routes
0:13:13 to excise
0:13:14 American manufacturers
0:13:16 and American services
0:13:17 firms from their
0:13:18 supply chain.
0:13:19 This will take
0:13:21 likely years,
0:13:22 if not decades,
0:13:23 to repair
0:13:24 and reassemble.
0:13:26 The other thing
0:13:27 we’re not missing,
0:13:28 and Josh Brown
0:13:29 brought this up,
0:13:30 and I just think
0:13:30 it was a fascinating
0:13:31 insight,
0:13:32 it’s that if you
0:13:33 look at the products
0:13:34 we export,
0:13:35 a lot of finished
0:13:36 products,
0:13:37 a lot of high-value
0:13:37 manufacturing,
0:13:38 by the way,
0:13:38 we need to
0:13:39 rebuild our
0:13:40 manufacturing base.
0:13:40 No,
0:13:40 we have purposely
0:13:42 traded it off
0:13:43 because the services
0:13:45 jobs we’ve replaced
0:13:46 the manufacturing base
0:13:46 with are generally
0:13:47 higher-paying,
0:13:48 and we are still
0:13:49 the second-largest
0:13:50 manufacturer in the
0:13:51 world behind China.
0:13:52 But we,
0:13:53 for example,
0:13:53 we take an
0:13:54 NVIDIA chip,
0:13:56 very,
0:13:57 very high-value
0:13:57 add,
0:13:59 and we export
0:13:59 those chips.
0:14:01 Those products
0:14:01 probably have a
0:14:03 50 or 60-point
0:14:04 profit margin.
0:14:05 We import
0:14:06 Mercedes.
0:14:08 Mercedes maybe,
0:14:09 maybe has a
0:14:10 10% profit margin.
0:14:12 The products we
0:14:13 generally import
0:14:14 in have a much
0:14:15 lower margin
0:14:16 than the products
0:14:16 we export
0:14:17 because we’re
0:14:18 bigger in services
0:14:19 and high-value
0:14:20 add products.
0:14:20 So let’s just
0:14:21 look at NVIDIA
0:14:22 versus Apple.
0:14:24 NVIDIA has a
0:14:25 price-to-sales
0:14:26 ratio of about
0:14:27 24.
0:14:29 Mercedes has a
0:14:30 price-to-sales
0:14:31 ratio of
0:14:32 0.23,
0:14:33 meaning if you
0:14:34 were to go
0:14:35 pro-rata and
0:14:35 assume we’re
0:14:35 going to
0:14:36 reduce a
0:14:37 billion dollars
0:14:37 because of
0:14:38 these reciprocal
0:14:38 tariffs,
0:14:38 which they
0:14:39 didn’t think
0:14:39 were going to
0:14:40 happen for
0:14:40 some reason.
0:14:41 But let’s
0:14:42 just assume
0:14:42 for shits and
0:14:43 giggles,
0:14:44 a billion less
0:14:45 dollars of
0:14:45 Mercedes coming
0:14:47 in because of
0:14:47 the tariffs
0:14:48 and a billion
0:14:49 less of
0:14:49 NVIDIA chips
0:14:50 going out.
0:14:51 That’s a
0:14:52 reduction in
0:14:52 market cap
0:14:54 of 23 or
0:14:55 24 billion
0:14:56 to NVIDIA
0:14:56 shareholders,
0:14:57 and it’s a
0:14:59 reduction of
0:15:00 23 million
0:15:01 to Mercedes
0:15:01 shareholders.
0:15:02 In other
0:15:03 words, if
0:15:04 we go
0:15:04 peri-passu
0:15:05 and lose
0:15:06 one dollar
0:15:06 for every
0:15:06 dollar they
0:15:08 lose, that’s
0:15:09 not the
0:15:09 analogy.
0:15:10 This is
0:15:11 apples to
0:15:12 aircraft carriers.
0:15:13 The hit to
0:15:14 our stock
0:15:14 market, the
0:15:15 hit to our
0:15:15 market
0:15:16 capitalization,
0:15:16 the hit to
0:15:17 the compensation
0:15:18 via options of
0:15:19 domestic employees
0:15:20 that work for
0:15:20 these amazing
0:15:22 firms will be
0:15:23 much greater,
0:15:24 much greater
0:15:26 than the hit
0:15:27 to foreign
0:15:28 markets.
0:15:28 We’ll hurt
0:15:29 both.
0:15:29 All the
0:15:30 markets were
0:15:31 down, right?
0:15:31 Our market
0:15:32 was down,
0:15:33 Europe stocks
0:15:34 600 fell
0:15:35 8%, UK’s
0:15:36 FTSE fell
0:15:37 7%, the
0:15:38 MSCI Asia
0:15:38 Index fell
0:15:39 5%.
0:15:40 This guy has
0:15:40 figured out a
0:15:41 way to
0:15:42 elegantly take
0:15:43 down the
0:15:44 prosperity of
0:15:45 the global
0:15:46 economy.
0:15:47 And I only
0:15:48 have one of
0:15:49 two scenarios
0:15:49 here.
0:15:50 And one
0:15:51 sounds paranoid,
0:15:51 but it doesn’t
0:15:51 mean I’m
0:15:52 wrong.
0:15:53 The first
0:15:53 scenario is
0:15:54 this guy’s
0:15:54 just a
0:15:54 fucking
0:15:55 idiot.
0:15:56 And nobody
0:15:56 around him
0:15:57 has the
0:15:59 stones to
0:16:00 say, this
0:16:00 is just a
0:16:01 really bad
0:16:01 idea.
0:16:02 And it’s
0:16:02 going to
0:16:03 cost you
0:16:03 a lot of
0:16:03 votes, a
0:16:04 lot of
0:16:04 support.
0:16:05 Farmers are
0:16:06 going to get
0:16:06 hit the
0:16:06 hardest.
0:16:07 Canada and
0:16:08 Europe are
0:16:09 already deciding
0:16:10 to be more
0:16:10 strategic with
0:16:11 their tariffs,
0:16:11 and they’re
0:16:12 going after the
0:16:12 heart and
0:16:12 lungs.
0:16:13 They’re going
0:16:13 after the
0:16:14 red states.
0:16:16 They’re either
0:16:16 all acolytes,
0:16:17 or he just
0:16:17 doesn’t listen
0:16:18 to them.
0:16:19 My second
0:16:20 scenario, and
0:16:21 I know this
0:16:21 sounds ridiculous,
0:16:22 but what I
0:16:23 would ask our
0:16:23 listeners to
0:16:24 contemplate is
0:16:25 the following.
0:16:27 if President
0:16:29 Trump had
0:16:29 received $10
0:16:30 billion, a
0:16:30 commitment of
0:16:31 $10 billion
0:16:32 from both
0:16:32 Putin and
0:16:33 Xi into
0:16:34 his Trump
0:16:35 coin in
0:16:36 exchange for
0:16:37 dividing the
0:16:38 Western alliance,
0:16:40 for driving the
0:16:41 biggest trading
0:16:41 partners into
0:16:42 the arms of
0:16:43 China, for
0:16:44 withdrawing from
0:16:44 Ukraine,
0:16:46 wouldn’t that
0:16:47 just make perfect
0:16:47 fucking sense
0:16:48 right now?
0:16:50 if Xi and
0:16:50 Putin had
0:16:51 called this
0:16:52 guy and said,
0:16:53 all right, I
0:16:53 mean, he’s
0:16:54 either this
0:16:54 fucking stupid
0:16:56 or this
0:16:57 fucking corrupt
0:16:59 because none
0:16:59 of this shit
0:17:01 makes absolutely
0:17:03 any sense
0:17:04 whatsoever.
0:17:05 There is no
0:17:05 evidence, there
0:17:06 is no support,
0:17:07 there is no
0:17:08 empirical argument
0:17:10 for why or
0:17:11 how this does
0:17:12 anything but
0:17:13 reduce prosperity,
0:17:15 throw our
0:17:17 trading partners
0:17:18 into the arms
0:17:18 of our
0:17:18 adversaries.
0:17:19 Japan, South
0:17:20 Korea, and
0:17:20 China are
0:17:21 talking for
0:17:21 the first
0:17:22 time about
0:17:23 closer economic
0:17:23 ties.
0:17:25 So this is
0:17:27 the inconsistency,
0:17:29 the market
0:17:30 capitalization
0:17:31 loss, the
0:17:32 general sort
0:17:33 of reduction
0:17:35 in the
0:17:36 value proposition
0:17:37 of our
0:17:37 products abroad
0:17:38 while increasing
0:17:38 our prices
0:17:39 domestically.
0:17:40 This is
0:17:41 Nigel Farage
0:17:43 on steroids,
0:17:44 but Trump is
0:17:44 going to take
0:17:45 down a bunch
0:17:45 of Western
0:17:46 economies in
0:17:46 the short
0:17:46 term.
0:17:47 The big
0:17:47 winner is
0:17:48 China,
0:17:49 because China
0:17:50 is basically
0:17:50 going to
0:17:50 scoop up
0:17:51 a lot of
0:17:52 these trading
0:17:53 relationships
0:17:53 that we
0:17:54 are throwing
0:17:54 in the dust
0:17:55 bin.
0:17:56 I think
0:17:56 the Brexit
0:17:57 analogy is
0:17:58 the correct
0:17:58 one.
0:17:59 And by the
0:17:59 way, we’ve
0:17:59 been making
0:18:00 that analogy
0:18:01 since the
0:18:01 very beginning,
0:18:02 ever since he
0:18:02 said the
0:18:03 word tariff,
0:18:04 which is, it
0:18:04 was an
0:18:05 extremely
0:18:06 emotionally
0:18:06 compelling
0:18:07 argument at
0:18:08 the time
0:18:08 to tell
0:18:10 everyone that
0:18:10 this sovereign
0:18:11 nation is
0:18:12 being screwed
0:18:13 by its
0:18:13 partners.
0:18:15 And no
0:18:17 one had, I
0:18:17 would say,
0:18:18 the attention
0:18:19 span to go
0:18:19 in and look
0:18:20 at the data
0:18:20 and actually
0:18:21 understand what
0:18:21 was happening.
0:18:22 And it was
0:18:23 more exciting
0:18:24 to assume that
0:18:25 we’re getting
0:18:26 screwed and
0:18:26 that we need
0:18:27 to sort of
0:18:27 batten down
0:18:28 the hatches
0:18:29 and turn
0:18:29 inward.
0:18:30 And we saw
0:18:31 the effects of
0:18:32 that play out
0:18:33 over multiple
0:18:34 years, and
0:18:34 we’ve covered
0:18:35 it in many
0:18:36 episodes before.
0:18:36 the UK
0:18:37 economy is
0:18:38 absolutely
0:18:40 dogshit, is
0:18:41 what I would
0:18:41 say right now.
0:18:42 You know, you
0:18:43 said they
0:18:44 flatlined.
0:18:44 They haven’t
0:18:45 flatlined, they’ve
0:18:45 contracted.
0:18:46 I mean, it’s
0:18:47 been a total
0:18:48 disaster, and
0:18:49 the entire
0:18:50 country recognizes
0:18:50 that now.
0:18:51 They recognize,
0:18:52 oh yeah, that
0:18:52 was a mistake.
0:18:53 So we said
0:18:54 from the
0:18:54 beginning, you
0:18:55 know, this is
0:18:56 the same thing
0:18:56 at play.
0:18:57 We’re getting
0:18:58 very excited
0:18:58 about the idea
0:18:59 that we’re
0:19:00 getting patriotic
0:19:01 and, you
0:19:02 know, we’re
0:19:02 going to sort
0:19:03 of say fuck
0:19:04 you to our
0:19:04 quote-unquote
0:19:05 enemies who
0:19:06 are in reality
0:19:06 our friends
0:19:08 actually, and
0:19:08 we’re going
0:19:09 to be pro-America,
0:19:10 quote-unquote
0:19:10 America first.
0:19:11 And we’ve
0:19:12 said from the
0:19:12 beginning, it’s
0:19:13 not going to
0:19:13 work.
0:19:14 It’s going to
0:19:14 tank the
0:19:15 economy, it’s
0:19:15 going to
0:19:15 tank the
0:19:16 stock market.
0:19:16 I said that
0:19:17 to many of
0:19:17 my MAGA
0:19:18 friends, and
0:19:19 they said I
0:19:19 had Trump
0:19:20 derangement
0:19:20 syndrome.
0:19:20 It’s very,
0:19:21 very simple
0:19:21 stuff.
0:19:23 Now, you
0:19:24 say, what
0:19:25 is the
0:19:26 reasoning here?
0:19:27 I’ll just
0:19:27 tell you what
0:19:28 the reasoning
0:19:28 that I’m
0:19:29 hearing from
0:19:29 the MAGA
0:19:30 base is.
0:19:30 The argument
0:19:31 from Trump
0:19:32 supporters right
0:19:33 now is
0:19:34 basically
0:19:34 twofold.
0:19:36 The first
0:19:37 is that this
0:19:38 is a long-term
0:19:39 play.
0:19:40 They would
0:19:41 point to our
0:19:43 debt load, they
0:19:43 would point to
0:19:44 our deficit, they
0:19:45 would say this is
0:19:47 not sustainable, and
0:19:48 that failure on this
0:19:49 path is inevitable
0:19:51 in the next, call
0:19:52 it, 20 years.
0:19:53 So if we don’t
0:19:54 shake things up
0:19:55 dramatically right
0:19:56 now, we are
0:19:57 essentially admitting
0:19:58 defeat.
0:19:59 And if we do
0:20:00 this, we can
0:20:02 reconstitute a
0:20:03 new economy that
0:20:04 is less dependent
0:20:05 on government
0:20:06 debt, as it
0:20:06 has been in
0:20:07 the past, and
0:20:08 is more
0:20:09 dependent on
0:20:11 revenue, external
0:20:12 revenue as he
0:20:12 puts it, from
0:20:13 tariffing other
0:20:14 countries.
0:20:15 So that’s sort of
0:20:16 the first argument,
0:20:17 that it’s a long-term
0:20:17 play.
0:20:19 The second is
0:20:20 that it’s a
0:20:21 negotiating tactic.
0:20:22 And they would
0:20:23 say, you know,
0:20:24 these tariffs, they’re
0:20:26 probably not here to
0:20:27 stay, but what it
0:20:28 does is it freaks
0:20:30 everyone out, it
0:20:30 shows all these
0:20:31 other nations, we’re
0:20:32 serious, we’ll
0:20:33 actually do this
0:20:34 stuff, and it
0:20:36 will allow us to
0:20:37 bring them to the
0:20:38 table and make
0:20:39 them do whatever
0:20:39 they want, whatever
0:20:40 we want.
0:20:43 So that would be
0:20:44 their argument.
0:20:45 My issue is, those
0:20:46 two arguments are
0:20:46 completely
0:20:47 contradictory.
0:20:48 Because it’s
0:20:49 either a real
0:20:50 policy that has
0:20:51 long-term benefits,
0:20:53 or it’s like a
0:20:54 pump fake and a
0:20:55 negotiating tactic.
0:20:56 It can’t be both.
0:20:58 So I would like to
0:20:59 get your response to
0:21:01 their response.
0:21:01 You know, what
0:21:02 would be your
0:21:03 reaction to their
0:21:04 arguments?
0:21:06 Either, one, that
0:21:07 we have to do this
0:21:08 because America is
0:21:09 screwed on this
0:21:10 long-term debt
0:21:12 path, or two,
0:21:13 this is 40
0:21:13 chess, it’s a
0:21:14 negotiating tactic.
0:21:16 Yeah, the
0:21:17 trope or the
0:21:18 weirdness here.
0:21:19 Whenever no one in
0:21:20 the administration
0:21:21 can justify, explain,
0:21:22 or rationalize a
0:21:23 decision he’s making,
0:21:24 they claim he’s
0:21:25 playing 4-D chess,
0:21:26 that this is so
0:21:27 stupid or crazy that
0:21:28 it’s crazy genius and
0:21:29 you just aren’t
0:21:30 privy to his
0:21:31 genius yet.
0:21:32 Enough already,
0:21:32 that’s just fucking
0:21:33 stupid.
0:21:33 There’s a lot of
0:21:34 smart people out
0:21:34 there, tell us what
0:21:35 you’re thinking, and
0:21:36 you know, this notion
0:21:39 that, oh, all will
0:21:40 be revealed, his
0:21:40 genius will be
0:21:41 revealed.
0:21:42 That argument
0:21:43 doesn’t hold.
0:21:46 I think the best
0:21:47 argument from an
0:21:48 optics standpoint is
0:21:48 it is true that
0:21:49 we’ve lost a lot of
0:21:50 manufacturing jobs,
0:21:51 and at least
0:21:52 theoretically, if you
0:21:54 raise the price of
0:21:55 imports, our
0:21:56 domestic manufacturers
0:21:58 should be more
0:21:58 competitive,
0:22:01 theoretically, and
0:22:02 you should increase
0:22:03 manufacturing jobs.
0:22:05 The problem is
0:22:07 they impose
0:22:08 reciprocal tariffs.
0:22:09 I mean, just as
0:22:11 an example, 88%
0:22:13 of toys under the
0:22:13 Christmas tree are
0:22:14 from China.
0:22:16 Tariffs on toys, I
0:22:16 think, are going from
0:22:19 3% to like 33 or
0:22:19 something.
0:22:21 So a 20% increase in
0:22:22 the cost of toys.
0:22:24 90-plus percent of
0:22:25 Americans are on a
0:22:26 fixed budget for
0:22:27 Christmas gifts.
0:22:28 They just can’t spend
0:22:29 whatever it takes.
0:22:32 So just to bring it
0:22:33 home, this Christmas,
0:22:34 90% of households
0:22:35 are going to have
0:22:37 20% fewer gifts under
0:22:38 the tree for their
0:22:38 kids.
0:22:39 Instead of 10 gifts,
0:22:40 they’re going to
0:22:40 have eight.
0:22:43 So the notion it’s
0:22:44 going to bring back
0:22:45 manufacturing doesn’t
0:22:46 really hold.
0:22:48 I do believe you
0:22:49 could say, all right,
0:22:51 we’re going to give
0:22:52 massive subsidies to
0:22:53 the chips industry
0:22:53 because it’s
0:22:54 strategic, it’ll
0:22:55 create good jobs.
0:22:56 We’re going to spend
0:22:56 a lot of money on an
0:22:57 infrastructure bill,
0:22:58 which will create
0:22:59 shovel-ready jobs
0:23:00 for people here who
0:23:01 don’t have college
0:23:01 degrees.
0:23:03 I’m sympathetic to
0:23:03 the argument that we
0:23:05 need more on-ramps.
0:23:06 But the notion that
0:23:07 tariffs are going to
0:23:08 somehow restore
0:23:09 American
0:23:11 manufacturing, it
0:23:13 doesn’t pan out
0:23:14 that way.
0:23:15 As a matter of
0:23:15 fact, almost every
0:23:17 example, this is
0:23:18 essentially the
0:23:19 policies of Latin
0:23:20 America from the
0:23:21 kind of the 50s to
0:23:22 the 80s, and it
0:23:22 didn’t work.
0:23:23 It was a disaster
0:23:24 for them.
0:23:25 And then a lot of
0:23:26 people think that
0:23:29 essentially China
0:23:30 had all of this
0:23:31 kind of cultural
0:23:32 backlash, and
0:23:33 basically they said
0:23:35 Mao Zedong, his
0:23:36 strategies didn’t work,
0:23:37 so they’ve totally
0:23:40 embraced kind of, I
0:23:40 don’t want to say
0:23:41 open trade because
0:23:43 they, in fact, are
0:23:43 not open in terms of
0:23:45 media, but let’s just
0:23:46 use that as an
0:23:46 example.
0:23:47 And to be fair, we
0:23:48 should tariff the
0:23:49 shit, i.e.
0:23:50 ban TikTok because
0:23:51 they don’t allow
0:23:52 Meta into their
0:23:52 country.
0:23:53 That’s an example
0:23:54 where I think you
0:23:54 could have tariffs
0:23:56 or basically a
0:23:56 ban.
0:23:57 But essentially,
0:23:59 Meta trades at
0:24:01 eight times sales.
0:24:03 ByteDance trades at
0:24:04 three, despite the
0:24:05 fact it’s growing
0:24:05 faster.
0:24:07 Now, why do our
0:24:08 companies trade at a
0:24:09 much higher multiple
0:24:10 than their analog
0:24:11 abroad?
0:24:12 It’s because, one, we
0:24:12 have rule of law
0:24:14 here, we have higher
0:24:15 growth, we have more
0:24:16 innovation, great
0:24:17 universities, more
0:24:18 risk capital, more
0:24:19 risk-aggressive people,
0:24:20 more flexible
0:24:20 companies.
0:24:23 We also are seen as
0:24:24 consistent, and that
0:24:25 is good trading
0:24:25 partners.
0:24:27 Now, all of a
0:24:27 sudden, in a matter
0:24:28 of a few short
0:24:28 months since
0:24:29 inauguration, we’ve
0:24:30 gone from the rule
0:24:31 of fair play or rule
0:24:33 of law being a huge
0:24:33 attribute.
0:24:35 I mean, you can’t
0:24:35 overestimate.
0:24:36 When I speak to
0:24:37 people who’ve come
0:24:39 here, who’ve immigrated
0:24:40 here, they say the
0:24:40 rule of fair life.
0:24:42 I have a close friend
0:24:43 who runs a lot of my
0:24:43 money from El
0:24:44 Salvador, and he’s
0:24:45 like, the bottom
0:24:45 line is you can be
0:24:46 successful in El
0:24:47 Salvador, and someone
0:24:48 might just show up and
0:24:49 take your money.
0:24:51 With the government’s
0:24:51 backing.
0:24:53 I have another good
0:24:53 friend who came from
0:24:55 Russia, said, you
0:24:56 get the wrong, the
0:24:57 wrong person makes a
0:24:59 call about you, you’re
0:24:59 done.
0:25:00 You get as much
0:25:01 money as you can, and
0:25:02 you get out.
0:25:03 The rule of fair
0:25:06 law is no longer a
0:25:07 given here in the
0:25:08 U.S.
0:25:10 Consistency, being a
0:25:11 good trading partner,
0:25:12 no, that’s no longer
0:25:14 rule, you know, a
0:25:14 rule here.
0:25:15 We’re doing used car
0:25:16 sales on the White
0:25:17 House lawn.
0:25:18 So what you’re going
0:25:19 to see here, and the
0:25:20 reason why I’m
0:25:22 transitioning out of U.S
0:25:24 stocks, is even
0:25:26 after this route, we
0:25:27 traded a P, the S&P
0:25:28 trades at a P of
0:25:29 around 24, 25, it
0:25:30 was 28.
0:25:32 Germany is around
0:25:34 21, Japan 16, China
0:25:34 14.
0:25:36 A lot of that is
0:25:38 directly correlated to
0:25:38 what I’ll call the
0:25:41 separation of business
0:25:43 and state, and that is
0:25:45 business embraces rule of
0:25:46 law and competition, and
0:25:47 the government stays out
0:25:47 of the way.
0:25:51 And that is not true in
0:25:52 China.
0:25:53 The CCP can weigh in,
0:25:57 and you can’t rely on
0:25:58 the Chinese government
0:25:59 to not meddle with
0:26:01 competition, and that’s
0:26:02 one of the reasons it
0:26:04 trades at a much lower
0:26:05 multiple.
0:26:06 You are about to see
0:26:09 dramatic contraction in
0:26:11 the multiple across the
0:26:13 S&P, because a lot of
0:26:14 the features that created
0:26:15 a flow of capital into
0:26:18 the U.S, consistency,
0:26:20 rule of law, are no
0:26:22 longer attributes that
0:26:23 people can rely on.
0:26:25 This will take, I
0:26:25 mean, think about it.
0:26:27 If we go from a
0:26:28 multiple of 25 to, say,
0:26:30 where Japan is at 16,
0:26:33 Meta, Ford Motor, P&G
0:26:34 could increase their
0:26:36 earnings 60%, and the
0:26:37 stock would be flat over
0:26:38 the next four or five
0:26:38 years.
0:26:40 You can’t outrun
0:26:42 multiple contraction.
0:26:43 If you’ve invested in
0:26:44 Latin America over the
0:26:46 last 10 years, you’ve
0:26:47 been fucked, and you
0:26:48 might have picked great
0:26:50 companies that
0:26:52 outperformed increased
0:26:53 earnings, increased
0:26:53 revenues, and
0:26:54 But the stock hasn’t
0:26:55 gone up because the
0:26:57 multiple contraction has
0:27:00 vastly outpaced the
0:27:01 individual earnings or
0:27:02 revenue growth of that
0:27:03 company.
0:27:04 And that is what, in my
0:27:05 view, we are about to
0:27:06 experience here in the
0:27:06 U.S.
0:27:07 through this
0:27:08 inconsistency.
0:27:09 All of a sudden, the U.S.
0:27:11 brand is about
0:27:12 kleptocracy and
0:27:14 sclerotic decision-making.
0:27:17 We’ll be right back after
0:27:18 the break.
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0:29:51 It’s been a rough week for
0:29:52 your retirement account,
0:29:54 your friend who imports
0:29:56 products from China for the
0:29:57 TikTok shop, and also
0:29:58 Hooters.
0:30:00 Hooters has now filed for
0:30:01 bankruptcy, but they say they
0:30:02 are not going anywhere.
0:30:04 Last year, Hooters closed
0:30:05 dozens of restaurants because
0:30:06 of rising food and labor
0:30:07 costs.
0:30:09 Hooters is shifting away from
0:30:10 its iconic skimpy waitress
0:30:12 outfits and bikini days,
0:30:14 instead opting for a family
0:30:15 friendly vibe.
0:30:16 They’re vowing to improve the
0:30:18 food and ingredients, and
0:30:19 staff is now being urged to
0:30:21 greet women first when groups
0:30:22 arrive.
0:30:23 Maybe in April of 2025, you’re
0:30:25 thinking, good riddance?
0:30:27 Does the world still really
0:30:28 need this chain of
0:30:29 restaurants?
0:30:32 But then we were surprised to
0:30:33 learn of who exactly was
0:30:36 mourning the potential loss of
0:30:36 Hooters.
0:30:38 Straight guys who like chicken,
0:30:41 sure, but also a bunch of gay
0:30:42 guys who like chicken.
0:30:44 Check out today, explain to find
0:30:46 out why exactly that is, won’t
0:30:47 you?
0:30:56 We’re back with Prof G Markets.
0:30:58 You know, an argument I keep
0:31:00 seeing and which Scott
0:31:02 Besant made, you know, he has
0:31:03 that quote that people are
0:31:05 citing a lot.
0:31:07 This is a MAG-7 problem, not a
0:31:08 MAGA problem.
0:31:10 And I think that’s worth
0:31:11 addressing because his point
0:31:13 is that, yeah, sure, we’ll see
0:31:16 multiple contraction, but the top
0:31:19 10% owns almost 90% of the stock
0:31:21 market, which means that the only
0:31:23 demographic that this sell-off is
0:31:25 really going to affect is rich
0:31:25 people.
0:31:28 And I just want to clarify the
0:31:31 truth of this point, which I
0:31:34 think has been seriously
0:31:35 perverted over the past couple of
0:31:38 years, because there is truth to
0:31:38 that point.
0:31:40 You know, it is true that the
0:31:43 stock market is primarily owned by
0:31:43 rich people.
0:31:45 And you made that point during
0:31:48 COVID where we were artificially
0:31:50 pumping stimulus into the economy
0:31:53 such that we could maintain the
0:31:54 multiples that we were, we had
0:31:55 gotten used to in the stock
0:31:56 market.
0:31:58 And your point was, like, the
0:32:00 stock market falling isn’t a
0:32:02 catastrophe because this isn’t
0:32:03 mainstream.
0:32:05 You know, this will largely affect
0:32:05 rich people.
0:32:07 It won’t affect poor people as
0:32:08 much.
0:32:11 But that argument has now been
0:32:13 perverted and advanced into a
0:32:15 total untruth, where they make the
0:32:18 claim that the stock market has no
0:32:20 correlation with the real economy,
0:32:22 that the idea that the stock
0:32:24 market falling has no effect on
0:32:28 poor people at all, which is not
0:32:30 true at all, because actually the
0:32:33 stock market is a reflection of the
0:32:33 real economy.
0:32:35 Yes, it’s not one-to-one.
0:32:38 But if you see a contraction in
0:32:40 earnings, if you see an increase in
0:32:42 tariffs, which means that the burden
0:32:43 is going to be shouldered by the
0:32:45 companies who are importing those
0:32:46 goods, then what we’re going to
0:32:48 start to see is, one, an increase
0:32:49 in prices.
0:32:51 We’re expected to see above 4%
0:32:52 inflation this year.
0:32:54 And two, we’re going to see
0:32:54 layoffs.
0:32:56 This is going to massively affect
0:32:57 the job market.
0:32:59 So whenever I see that argument
0:33:01 that a lot of people seem to be
0:33:02 making right now, well, this is
0:33:04 only going to affect rich people.
0:33:05 That’s actually not true.
0:33:07 Yes, it does affect rich people.
0:33:09 Yes, it affects multiples and people
0:33:11 whose assets are largely held in the
0:33:11 stock market.
0:33:13 But it also is going to affect poor
0:33:14 people.
0:33:15 If you have a recession in the stock
0:33:17 market, eventually it does trickle
0:33:19 down into the real economy and
0:33:21 you’re going to see massive job
0:33:22 losses, massive layoffs.
0:33:25 It’s going to be so hard to enter
0:33:26 this job market if you’re just
0:33:28 graduating from college in the next
0:33:29 year or two.
0:33:31 So I just think we need to dispel that
0:33:34 myth because what started as an
0:33:36 important point about who really
0:33:38 owns the stock market has been
0:33:41 twisted and perverted into some weird
0:33:43 justification into tanking the economy
0:33:45 at large, which is going to affect
0:33:47 everyone in the U.S.
0:33:49 But I would also like to get your
0:33:49 thoughts on that.
0:33:52 The stock market, the Dow and the
0:33:54 Nasdaq are not the real economy.
0:33:56 There are a reflection on components of
0:33:58 the real economy, but there is some
0:34:01 truth to the notion that essentially
0:34:02 the Dow Jones and the Nasdaq are
0:34:05 essentially the PSA or the blood
0:34:07 pressure reading of the top 10 percent,
0:34:08 if not the top 1 percent.
0:34:10 And what do you know, they’ve been on a
0:34:14 record tear for 15 years and until, you
0:34:17 know, until a month ago, 72 highs in the
0:34:19 previous 24 months, what have you.
0:34:23 And I’m actually a fan of programs that
0:34:26 would probably take, not purposely, the
0:34:27 stock market down.
0:34:31 If you were to say that the alternative
0:34:33 minimum tax on corporations who have
0:34:35 enjoyed, now enjoyed the lowest tax rates
0:34:39 since 1939, if you were to say corporations
0:34:41 aren’t paying enough taxes, we’re going
0:34:44 to have an AMT of 30 percent, that seems
0:34:46 reasonable, but it’d be an enormous
0:34:48 hike in corporate taxes because many of
0:34:50 them, including the biggest names in
0:34:52 business, don’t pay any because of the
0:34:53 tax code.
0:34:55 The stock market would go down because
0:34:56 they would have lower earnings.
0:34:57 I’d be in favor of that.
0:34:59 I think people of your generation need
0:35:01 disruption, maybe even if that means
0:35:03 hopefully getting a chance to buy real
0:35:05 estate and stocks at a lower price.
0:35:07 Disruption and churn is a key component
0:35:10 of transferring wealth back from the
0:35:12 incumbents to the entrance on a regular
0:35:13 basis.
0:35:14 And as I’ve said, we’ve done everything we
0:35:17 can, specifically run up your credit card
0:35:19 to smooth out disruption such that I can
0:35:20 stay rich.
0:35:23 If we were to raise minimum wage to $25
0:35:27 an hour, McDonald’s and Walmart stock
0:35:28 would go down substantially.
0:35:31 I’d be in favor of that.
0:35:31 I think it’s worth it.
0:35:35 This is a double whammy.
0:35:38 This goes from bad to worse in that it’s not
0:35:42 only does the stock market go down, but 98%
0:35:47 of companies that export products are small
0:35:48 and medium-sized businesses.
0:35:54 43% of U.S. agricultural exports go to our
0:35:56 free trade partners who have agreed to have
0:35:57 lower tariffs.
0:35:59 That’s up from 29% in 1990.
0:36:04 40 million American jobs depend on trade.
0:36:06 And that you’d think, well, out of 355 million,
0:36:07 that’s not a lot.
0:36:09 Only 150 million Americans work.
0:36:13 So you’re talking about a quarter of our jobs
0:36:16 are dependent upon trade and we’re going into
0:36:19 a voluntary, unnecessary trade war.
0:36:22 So there are certain components.
0:36:25 They’re playing, they’re trying to play the everyman.
0:36:28 Well, it just impacts the rich.
0:36:30 Well, okay, that’s a fair argument.
0:36:34 But when you go after policies that reduce prosperity,
0:36:38 reduce economic growth, reduce the demand for products
0:36:40 across every company, including those that are not
0:36:44 publicly traded, everyone’s going to feel this.
0:36:46 Everyone’s going to feel this.
0:36:48 So that just doesn’t hold water.
0:36:52 What I will say, and I just find it, I go back to this notion,
0:36:54 look what money has done to us.
0:37:00 A friend of mine went to a wedding and his niece is
0:37:02 marrying a woman who’s in the Marines.
0:37:06 And one of the Marines that was there is this transgender male
0:37:07 who’s been in the Marines 14 years.
0:37:12 I think he repairs, he works on aircraft carriers
0:37:12 or something, repairing things.
0:37:14 He’s been a Marine for 14 years.
0:37:15 He’s transgender.
0:37:18 He’s just gotten noticed that he can no longer be in the Marines.
0:37:24 I mean, it’s just, why would we, when 70% of American males
0:37:28 who show up to a recruiting office can’t qualify for the armed services
0:37:30 because they’re either mentally unfit or obese,
0:37:37 why would we risk our national security for a right-wing hateful trend
0:37:38 through the current administration?
0:37:43 When we hear about people being arrested
0:37:49 because they didn’t narc on people who were planning a pregnancy,
0:37:54 when we hear about women in emergency rooms being turned away
0:37:57 and risking sepsis in the parking lot.
0:38:01 But the only thing that gets the most powerful Democrats
0:38:04 or quote-unquote Democrats down to fucking Mar-a-Lago
0:38:06 is when the stock market goes down.
0:38:10 So look, whatever it takes for people of power
0:38:16 to begin recognizing that Ben Shapiro isn’t upset about anything
0:38:20 until he frames this as a tax increase.
0:38:23 Now he’s like, okay, this is the largest tax increase in history.
0:38:24 No, it’s not, Ben.
0:38:29 The largest tax increase in history is trading off tax cuts
0:38:33 for increased taxes on young people in the form of deficits.
0:38:39 Deficit-funded tax cuts are essentially a tax increase on young people
0:38:40 and they’re inefficient.
0:38:41 Trickle-down just doesn’t fucking work.
0:38:43 It doesn’t work, boss.
0:38:46 But the Republicans are now outraged
0:38:49 because they say this is an unconstitutional tax increase
0:38:51 in the form of tariffs.
0:38:56 But if this is what it takes to get people’s attention, fine.
0:39:01 For me, this is like number 15 on the list of shit
0:39:03 that just outrages me.
0:39:07 But if this is what it takes to get the attention of powerful people, fine.
0:39:11 Well, but there are ways to do it without making poor people poorer.
0:39:16 There are ways to extract the obscene wealth
0:39:18 that we’ve been seeing accumulated among the rich.
0:39:23 And it appears that that’s the justification that they are using for this policy.
0:39:27 But there’s a way to do that which doesn’t also make poor people poorer
0:39:32 in the form of layoffs, a tighter job market, and of course, inflation.
0:39:34 That’s the most important impact we’re going to see.
0:39:36 This is going to be massively inflationary.
0:39:38 It’s going to hit poor people the hardest.
0:39:44 And the way you do that is, as you say, you get your act together on taxes.
0:39:45 That’s how you do it.
0:39:49 And so I think the double whammy, as you say, is the right way to put it.
0:39:53 Yes, this is going to affect rich people negatively,
0:39:56 but it’s also going to affect poor people negatively.
0:40:03 And there is a way to implement policy that can address the massive wealth inequality
0:40:04 that we’ve seen over the past few years.
0:40:09 But to suddenly, after making this insane policy, then say,
0:40:12 oh, this was all part of the plan, because look how rich everyone is.
0:40:16 Having enriched those same people for many, many years,
0:40:20 to me, it’s just they’re completely fumbling the ball here.
0:40:24 But I want to move on to what people can actually do about this.
0:40:30 So, you know, we lost more than $6 trillion in value in the stock market.
0:40:32 The dollar shed 6% of its value.
0:40:37 The odds of a recession, according to JP Morgan, have now risen to 60%.
0:40:41 So in all likelihood, we can expect a recession in 2025.
0:40:44 I’d just like to get some advice from you.
0:40:49 And let’s start with young people.
0:40:50 Let’s start with me, for example.
0:40:54 This could be the first real recession of my professional career.
0:40:58 What would be your advice for a young person like me?
0:41:00 What should I be doing with my money?
0:41:05 And what exactly should I be worried about if a recession is coming this year?
0:41:07 So action absorbs anxiety.
0:41:08 And there’s two components to this.
0:41:11 But at the same time, you don’t want to make decisions from an emotional
0:41:16 position or from an emotional complexion.
0:41:17 So a couple of things.
0:41:22 In terms of your own personal activity, I never think it’s a bad idea to say, where could I save money
0:41:27 and dollar cost average in and start investing more?
0:41:31 Because quite frankly, this might be, it might be an opportunity.
0:41:33 You always want to be in the market.
0:41:40 I’m not, I think it’s always a great time to say, how could I cut my expenses as a young person
0:41:42 and invest more?
0:41:44 So ignore the markets for the moment.
0:41:48 The first question in terms of real action, what could I do to reduce my costs, get one
0:41:54 of those apps to look at my subscriptions, one glass coffee, downgrade my gym from Equinox
0:41:57 to whatever, a boxing, whatever it might be.
0:42:00 Partner with my boyfriend or my girlfriend to try and save a little bit money.
0:42:05 But we’re going to get, in case the shock comes, we’re ready or more ready.
0:42:09 And if it doesn’t, any incremental savings we have, we’re going to invest in the market.
0:42:11 I think you always want to be invested at your age.
0:42:12 It is impossible.
0:42:16 In the last three years, we’ve had up 24, up 27 and down 10.
0:42:18 You couldn’t pick which of those years came sequentially.
0:42:23 So don’t try and believe you can time the market.
0:42:27 Your action is to think, how can I be more financially responsible and free up more money
0:42:28 to invest?
0:42:33 In terms of your investment strategy, and this is the email and the text I got, what should
0:42:33 I do?
0:42:34 What should I do?
0:42:34 I’m freaking out.
0:42:35 What should I do?
0:42:37 This is what you do as it relates to investments.
0:42:38 Nothing.
0:42:45 Because when something traumatic happens to you, and for this, I was shocked how many people
0:42:47 I know saw this as a traumatic event.
0:42:51 They were watching, you know, glued to their phones, watching their net worth go down 10,
0:42:52 20, 30%.
0:42:56 You never want to make a decision from an emotionally fragile standpoint.
0:43:02 When you get divorced, girlfriend breaks up with you, lose your job, someone in your life
0:43:02 dies.
0:43:06 You do not want to make any big life decisions in that moment.
0:43:07 You aren’t thinking straight.
0:43:09 And you want to take action.
0:43:11 You want to try and do something.
0:43:13 Don’t.
0:43:14 Wait a while.
0:43:15 Talk to people before you do anything.
0:43:18 Because say you sold everything yesterday.
0:43:23 The worst piece of advice in financial history was probably Jim Cramer at the depths of the
0:43:27 Great Financial Recession saying, if you can’t stand the volatility, then you should sell your
0:43:27 position.
0:43:30 Can you imagine if you sold your position in 2008 at the lows?
0:43:31 Within 14 months, they were back.
0:43:33 You want to talk about a hit to your mental health?
0:43:35 I panicked.
0:43:35 I sold.
0:43:36 And it came ripping back.
0:43:37 Because this is what could happen.
0:43:42 Say at the end of Friday, Americans, not Americans, humans will do almost anything to avoid pain.
0:43:44 They just thought, shit, everything’s so far down.
0:43:48 If you’re in tech stocks, you might have been down 20, 30 percent in 48 hours.
0:43:49 I can’t handle anymore.
0:43:50 I’m just going to cash.
0:43:52 You do that Friday at 3 p.m.
0:43:57 Because this guy is so inconsistent, because the market is now volatile, volatility, the
0:44:01 VIX has gone way up, there’s a non-zero probability on Monday, Ed.
0:44:03 He says, just kidding.
0:44:03 I’ll tear us off.
0:44:05 And the market goes up 2,000 points.
0:44:08 And then what happens to your mental health?
0:44:10 I perfectly timed this fucking wrong.
0:44:17 And your emotions are your enemy in the market, because your emotions are rational in the sense
0:44:23 that other people are having the exact same emotion and are doing things in unison as a
0:44:26 herd, which creates alpha on the other side.
0:44:32 And that is, if at 3.30 p.m., a lot of people were thinking, I just need to sell like everyone
0:44:37 else, those people generally don’t do well, because everyone’s selling or everyone’s buying,
0:44:38 right?
0:44:39 So you do nothing.
0:44:46 Now, over the medium and long term, I think it’s a decent idea to say, okay, I want to avoid
0:44:48 some of this mental trauma.
0:44:54 I want to avoid what I believe is probably maybe a signal that the American run or the historic
0:44:55 run might be coming to an end.
0:45:01 I think potentially saying, okay, after things have settled a bit, if I have some losses,
0:45:07 maybe harvesting some losses for tax reasons, if that makes sense, or thinking about diversifying
0:45:10 out into low-cost ETFs geographically.
0:45:17 Should I be looking at some ETFs in Latin America, in Asia, in Europe, recognizing that
0:45:23 over the long term, demographics and innovation and productivity take the markets up and to the
0:45:24 right over the long term?
0:45:25 I want low fees.
0:45:31 But to just be in the S&P, even if it’s the SPY, you think you’re diversified with an index
0:45:31 fund?
0:45:32 No, you’re not.
0:45:36 So I do think it might be time to think over the medium and the long term.
0:45:41 Should I be diversifying into other markets that might recognize more growth in the next
0:45:48 five years, given that we look in America to be developing a reputation for a less ideal
0:45:53 place to invest, meaning the flows of the rivers of capital that have been one way into the
0:45:56 U.S. for the last 15 years are about to reverse.
0:46:03 And we might experience that insurmountable foe of multiple contraction.
0:46:08 I think you think about this, you start talking to people about it, but you don’t start selling
0:46:10 everything and going into cash.
0:46:13 When you’re your age, and I think even when you’re my age, you want to be diversified.
0:46:14 You always want to be in the market.
0:46:19 The markets could go up 1,000 or 2,000 points on Monday.
0:46:21 They could go down another 1,000 or 2,000 points.
0:46:26 So you just want to think, you want to start thinking about how you make yourself more bulletproof,
0:46:28 set yourself up for success.
0:46:32 But you do not want to make big decisions from a position of emotion.
0:46:33 Yeah.
0:46:37 I think the worst thing that you could do right now is panic sell.
0:46:42 And I just want to make clear for everyone who’s listening to your advice right now.
0:46:49 You’re not saying sell your S&P and go buy the euro stocks.
0:46:56 You’re saying hold your S&P, take what cash you have, and go diversify into other markets.
0:46:58 And I think that makes a lot of sense.
0:47:03 The other thing that a lot of people are talking about right now, though, which I’d like to get
0:47:05 your thoughts on, is buying the dip.
0:47:13 You know, hedge funds, they sold over $40 billion in stocks on Thursday, which is the
0:47:15 highest net sell-off from hedge funds since 2010.
0:47:23 Meanwhile, retail investors bought almost $5 billion worth of stocks on Thursday, which
0:47:27 is the highest net purchase from retail investors in the past 10 years.
0:47:33 In other words, institutions are selling and retail investors are actually buying.
0:47:35 They are leaning into it.
0:47:36 They’re buying the dip.
0:47:40 So what are your thoughts on buying the dip right now?
0:47:42 Do you think this is a good time to buy the dip?
0:47:45 Or do you think we should be waiting a little longer?
0:47:47 It’s impossible to know.
0:47:54 The only strategy I’m comfortable recommending or actions I’m comfortable recommending is if
0:47:58 you find that you’re 90% in U.S. stocks or 95 or 100, there’s a lot of people that are
0:48:02 100% in U.S., real estate in U.S., and their entire net worth is tied up in the U.S.
0:48:09 Because of innovation in the financial markets, you can now buy a low-cost ETF in Brazil or in
0:48:11 China or Vietnam or all of Europe.
0:48:14 What I’m suggesting is you look at your portfolio.
0:48:18 You don’t do anything in the immediate term because who knows what’s going to happen with
0:48:19 this volatility.
0:48:22 And you think about diversifying.
0:48:24 And also, I always think it’s a great idea.
0:48:31 If you have cash or you can figure out a way to get some extra money together, I love investing.
0:48:39 But I think this notion of buying the dip, shit, we don’t know if this is, if we’re going to
0:48:39 look back.
0:48:42 It’s not as if the market is cheap right now.
0:48:45 It’s not like, oh, everything’s on sale.
0:48:53 And I remember I worked, I was an advisor to a kind of Phil Falcone at Harbinger Capital.
0:48:55 And Phil made one of the great bets in history.
0:48:56 He bet on the subprime crisis.
0:49:00 He went from $300 million in AOM to $22 billion.
0:49:06 And I remember coming in in March of 2009 or saying, I’m like, oh my God, we got to buy
0:49:07 Williams-Sonoma.
0:49:08 It’s at five bucks a share.
0:49:08 We got to buy.
0:49:12 And I remember him saying to me, what do I sell to buy this?
0:49:13 Everything’s on sale right now.
0:49:15 Everything’s on sale.
0:49:18 We are so far from that.
0:49:23 If you didn’t know what had happened on Thursday and Friday, you wouldn’t look at a lot of S&P
0:49:26 stocks and go, oh my God, they’re irresistible.
0:49:31 Now there’s probably some value, like Nike I was watching, it’s just gotten the shit beaten
0:49:31 out of it.
0:49:33 It’s at a 12 or a 15 year low.
0:49:36 You know, Intel, there’s probably some good companies.
0:49:38 I wouldn’t say they’re on sale.
0:49:43 I would say they’re slightly marked down from what was historically high prices.
0:49:47 So this notion that you should lever up or margin up, no.
0:49:50 If you have some money and you want to be in the market, I think you really want to look
0:49:53 at how diversified you are geographically.
0:49:57 And I love the idea of freeing up money to invest.
0:49:59 I think that’s a great idea for a young person.
0:50:01 Okay, I’m going to figure out a way.
0:50:03 I have some cash.
0:50:06 I want a dollar cost average in, but I think it’s about diversification.
0:50:12 But the notion somehow that the markets are on sale right now versus what versus Wednesday
0:50:13 night, true.
0:50:14 That’s it.
0:50:15 They’re not on sale.
0:50:18 I’ll be right back.
0:50:22 If you’ve enjoyed the show so far, hit follow and leave us a review on Profit Markets.
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0:52:23 By the way, I absolutely love Vivian too.
0:52:24 I think she does a great job.
0:52:35 We’re back with Prof G Markets.
0:52:43 I would like to pivot to advice for older people, someone say closer to retirement age, someone
0:52:44 who has been…
0:52:45 Get a colonoscopy.
0:52:50 Someone who’s been…
0:52:51 You’re going to be dead soon.
0:52:51 Forgive yourself.
0:52:52 Be nicer to people.
0:52:54 Be kinder.
0:53:00 Order the good wine as Bill Bixby from The Incredible Hulk and The Courtship of Eddie’s
0:53:01 Father, someone you probably don’t know.
0:53:01 Nope.
0:53:05 When he was dying of cancer, he used to say to everybody, buy the good wine.
0:53:10 But on a serious note, I mean, there are people who have been building their retirement accounts
0:53:12 for a long time.
0:53:15 They’ve just seen the value of that account slashed more than 10%.
0:53:20 I’m sure a lot of people are legitimately panicking right now.
0:53:24 I think for young people, it’s actually a lot less stressful because as you’ve made the point
0:53:28 before, we actually, for a lot of us, we don’t really own assets.
0:53:33 It’s kind of a nice thing when the stock market’s on sale, we’ll just earn our income in cash
0:53:37 and then convert that into assets when we buy the stock market.
0:53:41 And hopefully, it goes down a little bit, and then we can see it grow over a lifetime.
0:53:47 But for someone who is, say, in their 60s, who has been building up the asset base, and
0:53:51 this is the asset base they are ready to live off of, what would you say to them?
0:53:54 Well, I’ll talk about them, and then I don’t like to give financial advice.
0:53:57 I’ll say what I’m doing.
0:54:01 And I’m in a much more blessed position than a lot of people for a lot of reasons.
0:54:07 I got lucky, and I’m talented, and I’ve been very open about my wealth on this program.
0:54:11 So first off, same advice, don’t panic sell.
0:54:13 The markets could rip back up.
0:54:20 Work with someone, talk to some people, and say, am I too invested in the U.S. market?
0:54:29 And how can I thoughtfully and rationally and in a mature manner start to diversify away from a geographic concentration?
0:54:31 I think that same advice goes.
0:54:38 And also, are there opportunities to perhaps maybe ramp up my investing through consuming less, right?
0:54:43 And you don’t like to tell people to consume less if they’re already living close to the bone.
0:54:47 But are there opportunities to make a few cuts here and there?
0:54:50 It’s basically the same advice, almost the same advice for young people.
0:54:54 Diversification is even more important for old people because they don’t have the time to make it back.
0:54:56 So diversification is your Kevlar.
0:55:01 So this should be the impetus to try and figure out if you would benefit from diversifying.
0:55:10 Now, what I am doing or what I’ve done, I’m doing nothing over the next few days because I think the market could go up two or three.
0:55:13 This guy could announce all tariffs are off on Monday, and we’re off to the races.
0:55:24 What I’ve been doing over the last three months is I have been doing, I have been slowly but surely selling out of U.S.-based assets and buying European.
0:55:28 I made my biggest private investment of the year was in a European defense company.
0:55:37 My other one was I invested in a friend’s company, Alena Partners, that manages special sits in Latin America and Europe.
0:55:38 I love that.
0:55:43 It’s mid-cap and small-cap and basic value.
0:55:47 I want to get away from tech, what I thought was just – now, I also want to be clear.
0:55:51 I’ve been planning to sell Apple and Amazon down, and I waited too long.
0:55:52 So I don’t get it right.
0:55:53 I’m not a genius.
0:56:03 I still – I lost a shit ton of money Thursday and Friday from Apple and Amazon because I know I’ve been thinking about it, but I just thought, well, maybe when Apple hits $250 again, right?
0:56:03 And it didn’t.
0:56:04 Now it’s back at whatever.
0:56:11 By the way, my prediction was right, not for all the right reasons, but I said Apple would hit – go below $200 in the next six months.
0:56:11 You did.
0:56:11 It did.
0:56:12 You did.
0:56:14 So chalk it up as a win.
0:56:18 So what I have done, though, or what I did was I went short.
0:56:21 I thought this thing’s just too expensive, specifically AI.
0:56:24 I lost – I don’t know.
0:56:25 I haven’t even really looked.
0:56:38 I think I lost somewhere between $5 million and $7 million on Thursday and Friday in just my U.S. equities, but I got 30% of it back because I’m short Palantir and Tempest AI.
0:56:40 I think AI is overvalued.
0:56:42 I think Palantir is crazy overvalued.
0:56:43 So I’ve been short those companies.
0:56:44 I didn’t know you were short.
0:56:46 I love that.
0:56:46 That’s amazing.
0:56:49 When did you go short Palantir and Tempest?
0:56:56 Just a couple weeks ago, I thought AI’s gone apeshit crazy and they went up dramatically, got hurt, but now they’re well down.
0:57:04 So I’ve got – I’m never perfectly matched in terms of net exposure short long because I do think the market’s general trajectory is up and to the right over the medium and the long term.
0:57:07 So I always want to have and do have a long bias.
0:57:16 So I didn’t get my full whatever it was, $7 million in losses back, but I got two or three back, which quite frankly kind of – it kind of softens the blow.
0:57:29 And I don’t think it’s a bad idea when you’re like me and fully almost kind of overinvested in the U.S. because of real estate and equities and the fact that I make small investments and the fact that our business, quite frankly, and you need to take this into account, is very dependent upon the U.S. market.
0:57:33 So I said, all right, I want to short the U.S. market.
0:57:35 I want to short AI.
0:57:42 So I went short on Palantir and Tempest, which I just think are just trading at crazy multiples.
0:57:43 So I got some of that back.
0:57:55 But what I am doing over the medium slash long term is I’m saying, okay, I’m probably – I was probably six months ago 95 percent, 90 percent U.S. assets.
0:58:06 I’m now 70, and I’m going to try and go somewhere between 40 and 50 over the next three or six months because these cycles take a while to play out.
0:58:10 It’s not like you think, well, it’s too late to diversify.
0:58:10 Guess what, folks?
0:58:16 If you want to diversify into Latin American or Asian or European stocks, they got whacked on Friday.
0:58:29 So you might be actually – if you had some tax losses to harvest and you wanted to diversify, you’re not really getting punished because while those markets didn’t go down as much, they went down nearly as much.
0:58:33 So it’s still actually a decent time to diversify.
0:58:34 So what am I doing?
0:58:41 I’m trying to reduce my exposure to U.S. assets because I do think we’re going to experience multiple contraction.
0:58:42 No way to outrun it.
0:58:47 I’m at an age where I can’t make it again or I can’t make as much back again.
0:58:51 I have been wealthy three times, which means I have gone broke twice.
0:58:53 I’m not broke, but I’ve lost most of it.
0:58:56 There’s a saying that any fool can make money.
0:58:58 It takes someone smart to hold on to it.
0:59:00 I am that fool, right?
0:59:01 I was not smart.
0:59:09 I did not diversify because I started believing I was good at investing and going all in on NASDAQ stocks all the time because I understand technology better than anyone.
0:59:11 Yeah, what a fucking idiot.
0:59:14 Anyways, now I’m trying to learn.
0:59:21 I’m like, okay, okay, I can maybe, you know, I can diversify a bit.
0:59:23 I’m going to, that’s my Kevlar.
0:59:25 I’m not going to swing for the fences.
0:59:28 I’m going to be more thoughtful this time and diversify.
0:59:30 I believe in innovation.
0:59:32 I believe in Europe.
0:59:34 I believe in Latin American stocks.
0:59:39 I hate to say it, but the Chinese, I think, are making a big comeback.
0:59:42 So, look, that’s what I’m doing.
0:59:43 I’m diversifying.
0:59:45 I’m going more global versus just the U.S.
0:59:48 I’m trying to pull in my chin.
0:59:51 I’m trying to pull in my horns a little bit.
0:59:53 And I don’t think that’s a bad idea when you’re a little bit older.
0:59:54 I think you want to be diversified.
0:59:59 I would like to just make, as we wrap up here, one point about America.
1:00:04 Because I think a lot of people, they are panicked about what’s happening in the U.S. stock market.
1:00:07 They’re panicked about what Trump is doing.
1:00:09 And there’s no doubt about it.
1:00:12 I mean, what he’s doing is, quite frankly, insane.
1:00:17 And both commentators on the left and the right agree on all of this.
1:00:20 And this is why we’re seeing this unbelievable reaction in the stock market.
1:00:26 What I would say, though, about America and investing in America, I mean, Buffett has that
1:00:28 great saying, never bet against America.
1:00:41 If this were happening in China or some autocratic nation, I think it would probably be a good idea to sell everything you have.
1:00:47 Because what it means is that the government is taking us in the complete wrong direction.
1:00:55 And I think you could expect that would happen and play out over 10, 20, 30 years.
1:01:01 I mean, Xi Jinping, as an example, has installed himself as the indefinite leader of China.
1:01:02 He’s never coming out.
1:01:08 The great thing about America is that we live in a democratic system.
1:01:22 And what we’re seeing happen and what we’ve seen over the last week or so is the markets and the world is kind of coming to its senses that what this guy’s doing doesn’t really make any sense.
1:01:43 And we’re one of the few nations in the world where when we install someone who’s crazy into the office, and this was written up in the Constitution, the Constitution was built with all of these checks and balances and all of these designs that was specifically meant to brace for the impact of installing someone stupid.
1:01:44 And that is what we have right now.
1:01:50 We’ve seen from these tariff policies, I mean, this is a stupid leader that is making stupid policy decisions.
1:01:53 The wonderful thing about America is that we’ll vote him out.
1:01:59 I mean, if this continues and things get really, really bad, we’ll just vote him out.
1:02:02 And we’re one of the few nations in the world that can do that.
1:02:09 And I think the reality is, yes, the stock market’s down today.
1:02:12 It’ll probably be down tomorrow and the next week.
1:02:23 But if you take a longer term view, we have the luxury of knowing that if things get really, really bad, we will just take action and decide to change them.
1:02:27 And we can change the trajectory of both the economy and the stock market.
1:02:32 And so for those reasons, you know, I agree.
1:02:33 I think it’s good to diversify.
1:02:36 But I definitely don’t think that it’s time to sell.
1:02:41 I don’t think this is a moment where the U.S. is doomed and it’s doomed forever.
1:02:49 The great thing about the U.S. is the fact that it is democratic and we can get ourselves out of holes every four years.
1:02:53 And so if things continue in this trajectory, that’s exactly what will happen.
1:02:55 He’ll be voted out and we’ll make things right again.
1:02:56 I love that.
1:02:59 I love hearing it from someone with a British accent.
1:03:01 Yeah, you’re right.
1:03:03 You don’t want to bet against America.
1:03:09 I would argue some of the damage here is structural, not cyclical, that he’s undertaking.
1:03:11 See above.
1:03:17 What would Putin and Xi do differently if they wanted to just cede advantage from the U.S. to China and Russia?
1:03:19 What would they do differently than what he’s doing right now?
1:03:25 And so I and unfortunately, I do believe and, you know, this is trying to manifest.
1:03:30 We are going to elect somebody else after even red states realize.
1:03:35 I mean, how many TikToks are we going to have over the next few weeks of I voted for Donald?
1:03:37 You know, I voted for President Trump and I regret it.
1:03:39 We’re going to see a lot of those videos.
1:03:41 It’s going to be unbelievable.
1:03:43 I mean, no doubt about it.
1:03:50 The problem is there has been a world order and a consistency in a playbook.
1:03:54 And America has been seen, and we’ve taken a bit for granted, that we were seen as the stalwart.
1:03:56 We were seen as the base.
1:03:57 We were the pillar.
1:04:01 We were the mortar inside of all these bricks of wonderful democracies.
1:04:06 And I think he’s literally ripping at the fabric of the world order.
1:04:19 And a lot of nations, even if we bring in someone who’s seen as responsible and an adult from the Republican or the Democratic side, I’m not sure the world order is going to say, you know, we’ve reconfigured our supply chain through Mexico.
1:04:21 We’re buying more products out of China.
1:04:25 We’re doing a lot more trade with Germany than we are with the U.S. now.
1:04:28 We’re getting our agricultural products from different nations.
1:04:31 If they’re going to say, oh, OK, game on again, we’re back in the U.S.
1:04:34 I think some of this damage will last for a while.
1:04:39 I think the hangover here is going to outlive the Trump presidency.
1:04:41 And that’s what’s so awful about this.
1:04:47 I don’t think that this is I think this is going to do long lasting damage just as the way we had a 15 year bull market run.
1:04:58 I think you could argue this might be the beginning of a multi year, not not three and a half, but five, 10, 12 year reversal of those flows.
1:05:03 And even if companies, even if they get their act together, the American economy is like no other.
1:05:06 People are so innovative here, so risk aggressive.
1:05:08 The gears turn on.
1:05:19 But the thing I don’t think they’re going to be able to turn around is I think the momentum now is dramatically around multiple contraction for the S&P and the NASDAQ.
1:05:23 And I think that is going to I think that is just going to be a vicious hangover.
1:05:24 That’ll be several years.
1:05:29 Well, we will definitely be continuing that conversation over the next several years.
1:05:32 So I’m glad everyone will join us for the ride.
1:05:33 Let’s take a look at the week ahead.
1:05:37 JP Morgan and Wells Fargo will kick off first quarter earnings season.
1:05:43 We’ll certainly be listening to what Jamie Dimon has to say about the tariffs and what’s happened in the markets.
1:05:47 We’ll also see inflation data for March from the Consumer Price Index.
1:05:49 Scott, do you have any predictions?
1:05:50 Volatility.
1:05:53 That’s the only thing I’m comfortable predicting.
1:05:58 I, you know, it’d be fun to say the market’s off another 5,000 points next week.
1:05:59 Market could go up 3,000 points.
1:06:03 This is the only thing I’m fairly certain on is volatility.
1:06:09 And don’t try this at home, but you’re going to see a lot of traders make money buying and selling options because we’re about to see the VIX go crazy.
1:06:20 And traders love volatility because they can spot anomalies and panic selling and panic buying and weigh in with, you know, good bets on volatility.
1:06:24 Anyways, long-winded way of saying my only prediction next week is volatility.
1:06:29 This episode was produced by Claire Miller and engineered by Benjamin Spencer.
1:06:30 Our associate producer is Alison Weiss.
1:06:32 Mia Silverio is our research lead.
1:06:34 Isabella Kinsel is our research associate.
1:06:36 Dan Shallan is our intern.
1:06:37 Drew Burrows is our technical director.
1:06:39 And Catherine Dillon is our executive producer.
1:06:43 Thank you for listening to Prof G Markets from the Vox Media Podcast Network.
1:06:49 Join us on Thursday for our interview with Gary Stevenson, only on Prof G Markets.
1:06:54 Lifetimes
1:07:02 You have me
1:07:04 In kind
1:07:06 Reunion
1:07:11 As the water
1:07:19 And the dark flies
1:07:22 In love, love, love, love