Markets 2025 Halftime Report

Thumbtack presents Project Paralysis.

I was cornered.

Sweat gathered above my furrowed brow, and my mind was racing.

I wondered who would be left standing when the droplets fell, me or the clawed sink.

Drain cleaner and pipe snake clenched in my weary fist.

I stepped toward the sink and then-Wait, why am I stressing?

I have thumbtack.

I can easily search for a top-rated plumber in the Bay Area, read reviews, and compare prices, all on the app.

Thumbtack knows homes.

Download the app today.

AI agents are getting pretty impressive.

You might not even realize you're listening to one right now.

We work 24-7 to resolve customer inquiries.

No hold music, no canned answers, no frustration.

Visit sierra.ai to learn more.

Avoiding your unfinished home projects because you're not sure where to start?

Thumbtack knows homes, so you don't have to.

Don't know the difference between matte paint finish and satin?

Or what that clunking sound from your dryer is?

With thumbtack, you don't have to be a home pro.

You just have to hire one.

You can hire top-rated pros, see price estimates, and read reviews all on the app.

Download today.

Today's number, $47 million.

That's the low-end estimated cost of Jeff Bezos' wedding in Venice, which took place over the weekend.

And true story: I confessed to my wife on our wedding day that I had slept with a lot of prostitutes, to which she responded, I thought I recognized you.

It wasn't very good, was it?

It was good.

You want to try it again?

Well, you heard that Bezos is asking guests not to bring gifts, but to donate to charity instead, which is like him saying,

we already own everything.

Please make us look less evil.

I can't believe you weren't invited to that wedding.

I think I was close.

You're what's known as a fringe guy.

You're right on the fringe.

I think I was like guest 204, 206.

I had lunch with three guys, really cool guys, and they were all gone.

And I'm like, I'm cooler than these guys.

I think I was right there, right there.

Wow.

Anyways.

How are you doing?

I'm doing really well.

I'm excited about it, it looks sunny out.

I'm going to go to Kensington Roof Gardens tonight.

I was just approved as a member after six months,

which is very exciting.

Another membership.

I'm super excited for you.

What is that?

It's like your 15th, 16th?

Yeah, no, it's just very exciting.

And I have some friends in town

going out with Paul Rabel, the Michael Jordan of La Crosse.

He's this like huge Adonis who's very thoughtful, who wants to talk about love and happiness.

You wouldn't expect it from this guy, but he's very groovy.

And then my friend Pier Paolo Barbieri, who's the head of Walla, who's going to be, he's going to be president of Argentina someday.

Walla.

But so, yeah, going out with those guys.

And they're both in London.

Yeah, yeah.

That makes it easier.

Just to clarify, when you join these new clubs, are you canceling any of them?

No.

Because surely you're not going to Soho House anymore.

You've got like 10 other clubs to go to.

Actually, Soho House, they were smart.

They started a new thing called Soho Muse, which is...

Oh, yes, I forgot.

Which is the high-end Soho House.

They open up the gold tier.

Yeah.

Yeah.

Like it's the VIP.

It's like that.

great that great episode of Frasier where they go to some spa and there's always a VIP room and another room and another room.

So they decided, all right, Sohes has gotten to Hoi Polloy.

They're letting in Ed Elson.

So

we're going to create a new tier.

The Scott Galloway tier.

Yeah, it's no different, except they create the illusion of scarcity.

These members' clubs fascinate me.

So I'm joining everything.

And then in about a year, I'm going to pare down.

I'm going to pare down to no more than six or eight of them.

What else is happening in the world besides joining members' clubs?

You know, not a lot.

It's kind of a slow business week.

It's a slow news news week, Ed.

Well, how about we get into it and we start talking about members' clubs?

Let's do it.

Now is the time to buy.

My hope, you'll have plenty of the wherewithal.

New York is moving ahead with plans for a new nuclear power plant to keep up with a growing demand for clean energy.

Led by the New York Power Authority, the project aims to add at least one gigawatt of nuclear capacity.

That's enough to power a million homes.

It would be the first major U.S.

reactor project in more than a decade.

The push comes as data centers and factories drive up electricity needs.

In fact, Governor Hochul has warned that without new capacity, the state could face rolling blackouts.

So it's got another big development in the American nuclear story, which has been making quite a comeback in the past few months.

Before this, we saw that multi-billion dollar deal between Meta and Constellation Energy, where Meta is going to purchase more nuclear energy for their AI efforts.

We saw a similar deal deal between Amazon and Talon Energy.

And of course, Microsoft struck that deal earlier in the year to reopen the nuclear plant at Three Mile Island.

We covered that in a previous episode.

Many companies and now governments are looking to nuclear

to power themselves.

Nuclear stocks are ripping.

Constellation Energy is up 31% year to date.

Vistra is up 110%.

Centris Energy is up 140%.

And this all kind of foots to your prediction that nuclear would be the technology of the year in 2025.

I have some thoughts on this versus China, but let's just get first your initial reactions to New York building this new nuclear plant and what that might say about the future of nuclear in America.

Well, look, it feels like whenever you have a thoughtful conversation around AI, we recognize that we're going to,

by the end of 2025, we're going to need essentially AI.

It's going to consume twice the electricity of the Netherlands.

So we need kind of nation-state-like additional production of electricity.

And is it wind?

Is it energy?

Is it LNG?

I think the answer is everything.

I think it's all of the above.

And I've just always been a huge proponent of nuclear.

I just think in terms of

the

amount of energy it produces relative to the waste, this is a relatively safe, low-emissions technology that is incredibly powerful.

And

Mia pointed out something that was really dramatic.

She said, but keep in mind, the lag time here is a decade, and the demands are going to spin up much faster.

But, you know, as someone who's a little bit older, what I realize is that 10 years goes by a lot faster.

10 years is going to go by no matter what.

And the question is, in 10 years, do we want to be getting 10, 20, 30 percent more of our electricity from nuclear than we are now?

So I'm a big fan of these investments.

They create high-wage jobs for,

I don't call it vocational programs, but I think it creates a lot of like shovel-ready jobs.

And this felt like a fairly easy prediction that if the friction in AI is where are we going to get all this power,

it's a fairly safe bet that a lot of this, you know, nuclear, nuclear is the worst managed brand, one of the worst managed brands in the world.

And that is between the China syndrome and Silkwood, everyone was under the impression that nuclear was this dangerous, dirty technology.

And the reality is that's just not true.

And so it's making a comeback, mostly because of economic,

the economic reality and just the

excitement around AI.

But yeah, I think nuclear is going to continue to be a great place to invest.

And there's all sorts of different innovation, kind of these mini-nuclear plants.

And then I'll talk to somebody who knows it better than me, and they say, you don't know what you're talking about.

It's about LNG, that the lag time's too great.

But my guess is it's all of it.

But I'm excited about nuclear.

What are your thoughts?

I'm with you that we we need all of the above.

And nuclear is a great step.

But one thing that I think helps put this all into context is just the amount of effort that China is putting into energy.

I mean, you look at nuclear, you look at their nuclear program, they are ramping it up.

They have approved at least 10 new reactors this year.

And that's the fourth year in a row that they've done that.

They've now got 30 under construction, which is nearly half the global total, on track to beat the U.S.

as the largest nuclear producer in the world.

So they're crushing it on nuclear.

But zooming out from nuclear, if you just look at energy production overall,

I just want to point you to a statistic that I find fascinating and also very concerning.

So in the past 15 years, since 2010, the US has increased its total energy production by around 6%.

We produce roughly 4,500, it's 4,400 terawatt hours of electricity today.

So around 4,500.

In that same time,

China has increased its energy production by 140%.

And at that time,

in 2010, we were producing roughly around the same amount of energy.

China now produces more than 10,000 terawatt hours of electricity, which is more than double the energy production of the US.

And that to me

is so concerning because I just think one of the most fundamental indicators of an economy and its potential for prosperity is how much energy can you create.

And as we've seen with AI, to your point, where the demands are just enormous, I mean, basically, every chapter of human history has proven we can never have enough energy.

There's just always demand for more, whether it's agriculture or transport or data storage, whatever it is, we need energy.

And China is absolutely obliterating us on that front on almost every level, whether it's nuclear or anything else.

So I'd like to get your reaction to this because I feel like that is kind of the big geopolitical macro story that no one's talking about.

You know, we're seeing the explosion in AI.

We're seeing what that's going to demand in terms of energy needs.

There are reports saying we're going to need double the energy that we currently produce by 2050.

And China's already done that.

They've blown us out of the water.

So I'm kind of worried about it personally.

I'm just wondering if you feel the same way.

Yeah, there's no doubt about it.

The sort of long-term thinking and willingness to invest over the medium and the long term of China around something like this is inspiring and they are ramping up much faster than us.

At the same time, our private sector companies are more agile, have a lot of their own capital.

Meta inked a 20-year deal with Constellation Energy.

Amazon, 17-year power purchase agreement with Talon Energy.

Amazon is planning to spend 20 billion on building data centers in Pennsylvania adjacent to the nuclear power plant.

Microsoft has entered into a 20-year power purchase agreement with Constellation Energy.

So the kind of private sector is, I don't want to say filling in the holes here.

Also,

China still is in a much weaker position from a security standpoint because I think if we were able to blockade China for four weeks, they're basically out of business because they're not energy.

We're self-sustaining.

We're food independent and energy independent.

We import in some like specialized oil or fuels or whatever, but for the most part, we're totally self-sustaining.

And these companies, the private sector, seems to be making massive investments.

So I'm actually, you know, I don't think we're in as dangerous a position as you might think.

I think China recognizes they are very vulnerable and are substantially ramping up their nuclear.

But yeah,

I think it's a great sector.

On a risk-adjusted basis, as I think about it, there's probably few places you could invest with

more certainty, which are famous last words, to get

7% to 10% return for the next 20 years than kind of an index fund around energy.

Yeah, I mean, I think the great thing about energy is there's no question over the value.

I mean, we need it, plain and simple.

We'll be right back after the break.

And by the way, we've expanded property Gmarkets with a new weekly newsletter that breaks down the news every Monday.

Subscribe now at profgymarkets.com.

Support for the show comes from public.com.

You might already use AI tools to refine your emails and streamline your workflow, so why not see if you can optimize your investing as well?

For that, you can check out public.com.

Public.com is the investing platform that takes your money as seriously as you do.

With Public, you can build a multi-asset portfolio of stocks, bonds, options, and more.

You can also access industry-leading yields, including the 4.1% APY you can earn on your cash with no fees or minimums.

But what sets Public apart?

AI isn't just a feature.

It's woven into the entire experience.

From portfolio insights to earnings call recaps, Public gives you smarter context at every touchpoint.

And the best part, you can earn up to $10,000 when you transfer your existing portfolio over to Public.

Go to public.com slash ProvG to fund your account in five minutes.

That's public.com slash provg.

Paid for by public investing, all investing involves the risk of loss, including loss of principal.

Brokered services for U.S.

listed, registered securities, options, and bonds in a self-directed account are offered by Public Investing Inc., member FINRA, and SIPC.

Complete disclosures available at public.com slash disclosures.

Support for the show comes from Quince.

Why drop a fortune on basic, forgettable clothing when you don't have to?

Quince has high-quality fabrics, classic fits, and lightweight layers for warm weather, all at prices that make sense.

Everything with Quince is half the cost of similar brands.

By working directly with top artisans and cutting out the middlemen, Quince gives you luxury pieces without the markup.

Our producer Claire recently tried some Quince products.

Claire, what did you think?

I've been wearing Quince all summer.

It keeps me super cool in the heat.

I'm loving their linen shirts.

I got one for my dad as well.

So yeah, I love Quince.

Super comfortable, great prices, and it looks good.

There you go.

Team Quince, keep it classic and cool with long-lasting staples from Quince.

Go to quince.com slash markets for free shipping on your order and 365-day returns.

That is q-u-in-ce-e.com slash markets to get free shipping and 365-day returns.

Quince.com/slash markets.

This month on Explain It to Me, we're talking about about all things wellness.

We spend nearly $2 trillion on things that are supposed to make us well: collagen smoothies and cold plunges, Pilates classes, and fitness trackers.

But what does it actually mean to be well?

Why do we want that so badly?

And is all this money really making us healthier and happier?

That's this month on Explain It to Me, presented by Pureleaf.

We're back with Prof G Markets.

NATO leaders have agreed to raise defense spending to 5% of GDP by 2035, more than doubling the current 2% target.

The move is a win for President Trump, who has long criticized European allies for underspending on defence.

European defense stocks rose on the news, with Italian aerospace firm Avio and Swedish defense contractor Mildef both up by around 5%.

The European stocks, aerospace, and defense index rose 1.4%.

So Scott, your initial reactions to what happened at that NATO summit and this increase in defense spending in Europe?

I think the Trump administration can take a victory lap here.

I think that they have...

It's like an entitled kid who always believes his rich uncle is going to continue paying his tuition payments and that he doesn't need to get a job and then finds out his uncle has gone batshit crazy and has cut off people and gets his shit together.

That's how I see Europe right now.

And that is it is healthy and smart for them to recognize they can't count on the military umbrella and the consistency of a U.S.

administration, which is not only a poor reflection on the U.S.,

but to be fair, Trump has said all along NATO needs to step up.

I think it's going to be great for the European economy.

I think there is a spillover of technology.

And

also, I think it'll ideally mandate or inspire some coordination across what is the 25 or the 27 member nations of the EU.

I like it because

I think that pushing back on Russia and arming the incredibly brave and innovative Ukrainian army has been an incredible investment for the West.

It's defenestrated, neutered, compromised the fierceness of the Russian army and

distracted them from their interface with our economy, which is usually cyber attacks and stealing our IP.

I wish we lived in a world where we didn't need to spend this much money on the military, but we do.

And I think this is bringing NATO kind of out of a brain coma, forcing Europe to be a union, and we'll have economic stimulative effects.

So I'm a bit of a, you know, a hawk here.

I think it's a good thing.

Yeah, just to go over some of these numbers on how much NATO is spending.

So the current guideline for NATO for defense spending is 2% of GDP.

It does vary across Europe.

Eastern European nations spend a lot more.

Estonia, for example, spends nearly 3.5% of its GDP on military.

Poland spends more than 4%.

Over in Western Europe, the numbers are a lot lower.

Italy spends around 1.5%.

Spain spends even less than that.

And you compare that to the US, where we are spending 3.5% of our GDP on defense.

That is quite a lot higher than most of Europe.

And it appears Europe will now match that.

By the way, Russia is sort of far and away the biggest spender.

They're spending more than 6% of their GDP

on on defense but i i want to just point you to this statistic um which is that global military spending last year hit 2.7 trillion dollars and that is an increase of 10 from the year before and it's the largest annual increase since the cold war and now what we're seeing in 2025 is even more conflict, whether that's Ukraine, Russia, the Middle East, and even more incentive to spend more, where in the US, for example, we actually want to increase the military budget by another $150 billion.

We're going to be spending more than a trillion dollars on defense.

And now we're seeing increased spending in Europe too.

And all of this spells...

basically tailwinds for the defense sector.

And defense has been one of the biggest winners this year.

The sector's up 25%

year to date.

You can compare that to the S ⁇ P, just as a comparison, which is up 4%.

So,

I mean, there's a lot in there.

One is there's just more violence happening in the world right now, which is kind of scary.

But there's another piece of this, which is that the sentiment around defense and defense companies, which used to be, it used to be this sort of old, kind of stuffy, traditional legacy industry.

Lockheed Martin, Northrop Grumman, Boeing.

These are sort of considered these old, old-time companies.

But we're now having this moment where the investment community is suddenly coming together and beginning to view it as more of a growth industry.

Suddenly, there's more violence, more conflict, and there's more upside now and more growth potential in building weapons.

And we're seeing that in the stock market, but we're also seeing it in the venture world.

Look at Andoril, for example, which is one of these new defense tech companies.

It's been raising a ton of funding.

And I just saw that the CNBC Disruptor List.

This is where CNBC ranks all of the hot new companies.

Last year, OpenAI was their number one company on the list.

This year, it's Andaril.

So it feels like defense is having this moment where suddenly people are deciding this isn't this old legacy industry building tanks and submarines.

This is becoming more of a tech industry.

You can look look at Palantir as well, which is, of course, contracting with the U.S.

government.

And

I just wonder what you think of that from an investment perspective.

I mean, I think a lot of people are interested in investing in defense and defense tech right now, but also just what it says about our economy, the idea that in 2025, what is the hot new sector?

Yes, AI, but also weapons.

The thing that's really unusual here is what you said at the very beginning.

There were very few kind of more old economy companies than,

you know, Northrop Grumman, who had these, you know, in Connecticut building these nuclear submarines.

And it just felt very old school.

And Palmer Lucky, the guy who started, I think he was the founder of Onderl, has sort of brought this tech Silicon Valley ethos.

And it's basically said, it's kind of a waste to have all of the brightest, best and brightest in the world trying to figure out the new photo sharing app.

Maybe we should be figuring out defense.

And also I like, the thing I like about it is the idea of bringing that move fast, break things, agility, technology, youth, innovation, thinking outside of the box, willingness to fail, bringing some of that Silicon Valley ethos and also greed glands.

Like, can we make a lot of money here?

There's nothing that attracts investment like greed, right?

And also, I'm putting them in my pocketbook.

One of my biggest investments over the last year has been in a vertical takeoff and landing company in the UK.

So, A, I want to invest in European stocks, as we've discussed ad nauseum, but also I want to be somewhat directly or adjacent to the defense industry.

And I've invested in this company, Vertical Aerospace, that makes this vertical takeoff and landing

aircraft.

And I believe that there's probably a lot of military applications for that.

And then, when you layer on top of that an incremental $200 billion in defense spending that literally didn't exist 12 months ago, I think anyone who's competent at producing

this machinery, these hardware, is just going to have these gale-force hurricane-like winds in their sales.

So I'm actively looking for opportunities to invest, not only in Europe, but potentially in companies that should benefit.

I mean, this is, there are very few markets that overnight have an incremental investment of $200 billion.

I agree with a lot of what you're saying, but also it's a lot of it makes me a little bit uncomfortable.

You know, the idea of Silicon Valley adopting a move fast and break things approach that is incentivized by money and as you say, I think correctly, greed to

fund

weaponry,

that makes me very uncomfortable.

And I think I would actually prefer a world where

our investors are

more interested in figuring out ways to fund

products and services that are conducive to a world where there is not conflict and a world where there is more peace versus funding and being incentivized to build things that kill people.

And, you know, I take your point there that, you know, there's a lot of money going into photo sharing apps and what use does that have for the world?

But what use does

a missile killing people have for the world?

And I mean, clearly,

it's about protecting people and protecting liberties.

But I guess just, I mean, make the case for me

as for why I shouldn't feel

bad about investing in these kinds of companies.

We're a competitive species, and since the beginning of time, people are willing to deploy violence to try and garner a disproportionate amount of the spoils.

There's only a certain amount of prosperity in the world.

We're 5% of the world's population and about 30% of the world's economics.

And one of the reasons we've gotten there is not only through innovation and education, but our willingness to deploy violence against other people.

And the moment another nation that doesn't share our values, which is many, if not most of the rest of the world, feels that they can deliver more violence against us and take our Netflix and our espresso away, they will in a heartbeat.

So just on a defensive measure to not believe that we live in a world where someone will come for us and willingly and knowingly and unflinchingly kill us and take our shit such that they can have more shit is just naive.

So a certain level of defense is just a part of what it means to be the most prosperous nation in the world.

That's just part of it.

And a lot of the freedoms we and prosperity we enjoy are because of our ability to deliver violence in a more competent, global way than any other nation in history.

Have you always believed that that is the case?

I'm not.

I think history would argue in your favor, but I sort of have it in my head that

if we lived in a world where most people had their basic needs taken care of, then there would not be much incentive to kill people and take their shit.

I think the average prosperity per consumer globally is $15,000 or $18,000.

Americans have never been satisfied to just have a basic level of housing and food.

We want massive prosperity.

We want,

you know, we just want more stuff, more cars, and we're willing to deploy violence to get it.

Now, the argument I think you could make is if we invested all of that money in education and all of that money in technology that focuses on food distribution, you know,

we might get there.

We might have a society that's just more prosperous, peaceful.

But Americans and almost every other nation has made a conscious decision that we want more than our fair share.

If we were to get to a point where we were to decide, okay, everybody just needs to get along and the wealthiest nations in the world need to distribute their income to poorer nations

and

we need to lift up youth.

I mean, you could get there theoretically.

I feel like that has long been the mission.

And it feels like in the last few years, as we have veered away from globalism which i mean globalism is all about that it's about forming diplomatic partnerships and living peacefully and forming trade agreements and trying to make sure we're all friends and i just i

i hear you but i feel like this is a new perspective oh no this is as old as time and the reason the

The thing that our economic partnerships are based on is military alliances.

And the North Atlantic Treaty Organization is there such that

a fierce army with a different value set that will, the moment it feels like it can invade

a neighboring country and take their shit and their populace and their resources and their land away, they will.

The moment they feel they can deliver violence to a greater extent, then the violence returned to them.

And we decide that we need to bind together to ensure that our value system and our economics are protected.

And I like the idea.

I think youth should always aspire to figure out a way to move beyond this.

But until then, we also have to be realistic that I think there are, you know, a billion plus people that believe America has poor values and that they would in a heartbeat

come for our resources, come for our technology, come for our prosperity, and would have no trouble killing a lot of us until we acquiesce such that they could take our, you know, just as we have done.

And so that is the world.

It's not the way the world should be, but it is the way the world is.

Does that mean we shouldn't have organizations that try and de-escalate conflict, that invest?

I do believe, to your point, more investment in bringing people out of poverty, ensuring that, for example, I think something that Trump lacks in terms of vision, C sees the world as a zero-sum game.

And I think if you can lift up, bring more people out of poverty, share more prosperity, they're less likely to develop resentment, weaponize young men who are bored and have no opportunities to become suicide bombers or

leaders have to invent wars to keep their young men with no prospects.

So shared prosperity lifting everybody up should reduce violence.

But

you want to do it from a position of strength.

And

should we be spending $800 billion on a military?

Probably not.

There's a lot of inefficiency, a lot of waste.

But I am very much believed that as long as we want the largest economy in the world, we are going to need the largest military in the world.

Yeah, it does feel as though young people,

it's been so long.

There are just so many of us who have basically zero experience.

Very few of us understand what it means to be at war.

When were you born, Ed?

What year were you born?

99.

Okay, so September 11th, 2001.

My ex-wife calls me and says, can you come over?

One of the World Trade Centers is on fire.

I'm like, of course I can.

She was upset.

And I roll over to the house, and she had this apartment with a big deck.

And I saw a plane coming in, and then it disappeared behind the second tower.

And then it came out the other end in a plume of smoke.

I saw the second plane hit, and then the first tower went down.

And my ex was very upset.

And I had a friend who was staying with me, didn't want to watch because he found it so disturbing.

And at that moment, all cell phone technology went down.

And so we turned on like AM radio or something.

And they said,

27 planes are not accounted for.

Like right then, we knew we realized that was a terrorist attack, and people were flying planes, slamming planes into tall buildings.

And this guy came on the radio and said, 27 planes are unaccounted for.

And so we immediately thought, Are we in one of the 27 tallest buildings in Manhattan?

Should we be vacating this building?

And what I would offer up is that if Osama bin Laden had the technology, resources,

and planes to basically slam into every building in America that day, he would have.

And so our ability to respond with just an unparalleled level of violence and hunt him down such that people know that if in fact you do that, and some people would argue, well, that was the response he was looking for.

And at the end of the day, he won because we started massive deficits.

Eventually, that was what eventually that was his stated purpose is I just want to drive their economy into the ground.

But where I am is the following, is if he had the resources of an America and the intelligence and the men and women of the military complex that we have, how many buildings would he have slammed into that day?

There are a lot of people out there that would like to take down our buildings and more if they had the resources and we let our guard down.

God, I sound like such a boomer.

I sound like such a rip.

Get off my lawn.

Oh, my God.

Pretty soon

I'll be throwing myself a military day parade.

Tomorrow belongs to me, Ed.

Yeah.

We'll be right back after the break to check in on the market's performance in the first half of 2025.

If you're enjoying the show so far, hit follow and leave us a review on property markets.

Support for this show comes from Saks 5th Avenue.

Saks 5th Avenue makes it easy to shop for your personal style.

It's fall and it's time to invest in new arrivals you'll want to wear again and again, like a relaxed Prada blazer and Gucci loafers that are great for work or a weekend rendezvous.

Saks makes shopping feel totally customized to you, whether that's in person with their in-store stylists or online at Saks.com where they show you only what you like to shop.

They'll even let you know when arrivals from your favorite designers are in.

or when an item you've been eyeing is back in stock.

For a personalized, easy shopping experience, head to Saks 5th Avenue for the best fall arrivals and style inspiration.

Support for this show is brought to you by CVS Caremark.

CVS Caremark plays an important role in the healthcare ecosystem and provides unmatched value to those they serve.

They do this by effectively managing costs and providing the right access and personalized support.

The care, empathy, and knowledge that CVS CareMark provides its customers is proven time and time again with their 94% customer satisfaction rating.

Go to cmk.co slash stories to learn how we help you provide the affordability, support, and access your members need.

Support for the show comes from Mercury.

What if banking did more?

Because to you, it's more than an invoice.

It's your hard work becoming revenue.

It's more than a wire.

It's payroll for your team.

It's more than a deposit.

It's landing your fundraise.

The truth is, banking can do more.

Mercury brings all the ways you use money into a single product that feels extraordinary to use.

Visit Mercury.com to join over 200,000 entrepreneurs who use Mercury to do more for their business.

Mercury, banking that does more.

We're back with Profit Markets.

The first half of 2025 comes to a close today.

So let's take the opportunity to check in on how the markets have performed so far this year and what's in store for the months ahead.

We'll also look at some of the red flags and the data that suggests the second half of the year may bring new challenges.

So Scott, let's just review the markets.

Let's look at what happened in the first half of this year.

And let's start with the S ⁇ P and the NASDAQ, which last week hit record highs.

They've risen more than 4% so far this year.

We obviously saw that momentum at the beginning of the year after Trump's election, then the huge drop off in April because of the tariffs.

But since then, the markets have been clawing their way back up.

They climbed, they climbed, and now they're up since the beginning of the year and they just hit record highs, which is quite remarkable.

Let's look at international markets.

European index is up 7%.

That's more than the S ⁇ P, as you predicted.

The German DAX is up 18%.

But the big winner of the first half in terms of national performance is actually China.

The Hang Seng is up 24%.

We could also look at the eye shares, China ETF, which some would argue is more indicative of Chinese performance.

That is up 19%.

So still, the winner is China

among the big international players.

Another big winner has been gold.

Gold is up 25% year to date.

Also, Bitcoin, it's been a big year for crypto in general with the Trump administration being so pro-crypto.

Bitcoin is up 15% year to date.

A ton of winners,

to be frank, so far this year.

Let's look at the losers.

Small cap stocks not doing very well.

Russell 2000 is down 3.5%

year to date.

And then the biggest loser is probably the dollar, which has lost more than 10% of its value so far this year.

A lot there.

Scott, I'll let you decide where you want to go with this, but let's just get your overall reactions, your takeaways to the first half of 2025.

It was going as I expected, and then I got it wrong.

I wouldn't have guessed that we'd be back at record high six months in.

I thought that this tariff policy, which was so

inane, insipid, I don't know what the right word is,

was going to have really long-term consequences.

The only thing that kind of strikes me about all of this is that, well, two things.

One,

that we probably tend,

the political situation and these characters are so interesting and such spectacles that I think we probably overestimate the impact they have on the real economy.

And what I have learned from this first six months, one of my takeaways is that the government and its actions just have dramatically less impact on the markets than than maybe we think.

That just the economy and the gears just grind on, regardless of tariff nonsense or whether we're bombing nuclear facilities or not, that it just isn't as

doesn't have as much impact as we think.

And I think that's probably a good thing.

The economy is just much bigger, that the decisions, their decisions to a certain extent, are like gnats flying into a windshield of a MAC truck, that the economy is just so much bigger than some of these decisions.

With the exception of, I think, the Fed.

I think the Fed really does have a big impact.

And I think we have a fantastic chairman.

The other observation is that I think that some of the worst metrics ever invented are the Dow Jones and the NASDAQ, because it creates an illusion of health and prosperity.

And while asset values are up,

the number of kids graduating from NYU this year that have a job is going down.

There's real concerns that some of the entry-level jobs that I had and people at my age had to upskill and learn.

I was an investment banking analyst in Morgan Stanley putting together PowerPoint desks,

proofing prospectuses.

I think you still need me, but instead of having 80 analysts, they probably need 16 now.

So, what do smart, ambitious kids coming out of college, how do they pay back their student loans?

What kind of work do they do?

What are the career tracks?

In a world where AI can keep you glued to your phone, it's great for NVIDIA.

It's great for meta shareholders.

But what does it mean for 14-year-olds who are going to come into the world with sort of a semi-addiction to DOPA and a proclivity to anxiety when they don't get that DOPA hit?

So, these metrics are are illusory in terms of our health and our prosperity like i don't think everything is okay right now i think this is actually the world is in a pretty precarious place so i worry that we're focused on the wrong things and that these metrics which are easy to understand and do impact us because we're all so in love with money and we're fascinated by the dollar that we're looking at the wrong thing that we're focused on our garden and we're obsessed with whether the garden is yielding the right fruit and the size of the tomatoes when our house is on fire I think that's totally correct that we need different,

we need more innovative indices.

And I think people have made work by trying to figure out

a happiness index for certain countries.

And I'm totally with you.

But

you mentioned the idea that the underlying

economy is not doing that well.

What I would say it's like sort of the fundamentals.

We look at the fundamentals of a stock,

how is the revenue?

How is the profits?

I would say the fundamentals of America are not doing well.

And I'm talking about the economic fundamentals.

And this is what confuses me about what is happening with the stock market right now.

Where, as you mentioned, we're touching record highs right now.

The stock market is fine.

But I just want to also go over some of the economic indicators that portray just our general overall health economically as a nation.

For example, we just saw the Q1 GDP revision.

GDP fell half a percentage point in Q1, and that is down further from what we originally thought.

We thought it was a 0.3% contraction.

No, the economy shrank 0.5% in Q1 year over year.

Consumer sentiment down 5.4 points.

We just erased the gains that we saw in May.

Tons of layoffs.

Get this.

700,000 jobs have been cut through May, and that is up 80% from the first five months of 2024.

It also means that we are just 65,000 jobs away from matching the entire year's total in 2024 in terms of layoffs.

Meanwhile, we've got these tariffs, which is going to increase inflation.

And we've just seen that Fed report where the Fed is predicting that we're going to see inflation rise to 3%.

We also have the Big Beautiful Bill, which is making its way through Congress, which is going to expand the deficit by at least $3 trillion, as we've discussed many times.

I mean, I look at all of these numbers.

I look at the fundamentals of America.

The fundamentals look pretty bad to me right now.

And yet the stock market is near record highs.

So I don't fully understand

what is happening.

And it feels to me as if, meanwhile, we've got all these wars blowing up around the world.

It feels to me as if the investment community is oddly optimistic.

And maybe I'm just a pessimist, but

it feels like the stock market should not be touching a record high right now.

There's been about 54

geopolitical events.

You know,

we go into Iraq or 9-11 or

there's a huge hurricane since I think 1970.

And only one of them has had a sustained impact on the markets.

Every one of them, it ends up 53 of the 54 have been buying opportunities.

We talked about this around 9-11, that the

New York real estate market dipped 20% for like 45 days and the markets were back.

So now the market almost looks at geopolitical disasters and says, oh my God, it's a buying opportunity.

And the dip is so shallow and snaps back so fast that the market seems somewhat resilient.

By the way, trivia question.

Do you know which

geopolitical or economic happening actually had a sustained impact negatively on the market?

It's kind of a boring one.

I'll give you a hint it happened in the 70s.

I don't know.

The oil crisis.

In the early 70s, it led to stagflation.

That took the markets down for the better part of a decade.

But every other thing has been a buying opportunity where the markets have snapped back.

But again,

there's a term in business, what gets measured gets done.

And that if you want, one of the hardest things about management is compensation.

And in business, what you want is measurement.

And these business intelligence and

workflow companies basically give you the ability to sort of measure everything such that you can be better at business and have these benchmarks.

And to a certain extent, what you measure is where your priorities are.

And so what do we measure about meta platforms?

Its stock is up 42%.

That creates unbelievable economic value.

I think they're employing thousands of people less than they did last year.

They laid off 5% of the workforce so far this year.

Right.

So, okay, I don't know.

Say

5,000 fewer households are making an amazing living than they were last year, despite the fact the stock is up 42%.

And also, they keep announcing that more people are spending more time on meta platforms.

And my sense is that does not add to their emotional well-being.

So okay, we have an addictive substance that turns, I believe, adults into dopamsters more prone to be involved in other addictive substances later in life, more likely to believe conspiracy theory, more likely to stop getting their news from fact-checked organizations, more likely to think that their neighbor is their enemy because they have a Trump sign or a Harris Harris sign.

That's not a good thing.

But what is the thing we focus on?

Stocks up 42%.

So as a society, are we just studding to the wrong test here?

I want to highlight

some statistics as well from this new fund manager survey that came from Bank of America.

And this is the, we've covered this survey before.

They basically just go to all of the biggest institutional investors and they ask them, what are you investing in?

What are you thinking about?

they asked really great questions and i want to go over some of the insights that they found here um

one

when asked what would be the best asset class over the next five years 54 said international stocks and just 23 said u.

stocks so that kind of flits to your prediction about the the rivers of capital two fund managers said that they were most overweight eurozone emerging markets and banks those were their big bets.

Three, 31% of them said they were underweight the US dollar, which is the most negative reading in 20 years.

I found that pretty crazy.

And four,

59% of investors predicted that Trump's spending bill would provide no boost to US economic activity in the next six months.

So,

again,

quite negative on America specifically.

And more, I mean, more indication that the next six months are not going to be that great.

And I'm just, I'm

fascinated by how

the market seemed to register that in April.

And we saw that massive drop.

And then, as you say, they decided actually everything's okay.

And that we've got the target trade.

And maybe these things are less impactful than we think.

But it does feel as though all of the impacts and all of the consequences of all of the craziness that we've seen over the past six months,

I feel like it's all going to come due probably at the end of this year or perhaps maybe early next year.

I mean, my view is inflation as the best example, that's going to happen at the end of the year.

And then suddenly we're all going to going to react to it.

And

it'll be, I think, quite devastating what do you think of that well again it goes to what you're measuring and if you think about okay as goes the magnificent seven goes the rest of the market

and essentially the magnificent seven are being driven by ai addiction and technology and in addition it's easy to think okay if if the dow and the nasdaq are up that must mean the u.s is doing well well actually the thing that's driving these markets 34 percent of their value is not the 493 stocks representing America.

It's these seven stocks.

And these seven stocks really represent

the global economy's approach to AI and technology.

So to a certain extent,

these are head fakes.

The U.S.

could be doing actually fairly poorly on a ground level.

And the doubt could continue to go up.

Yeah, because AI is doing

all of the heavy lifting here.

As long as every company in the world is trying to figure out how AI is going to impact their business and is either renting cloud services or investing in data storage or buying more Microsoft and using Copilot and their kids continue to spend more and more time on Instagram.

These seven companies continue to garner more revenue, which takes the Dow and the NASDAQ up, which people believe is an indicator of the U.S.'s prosperity.

And it's not.

It's essentially a wealth index and it's a global wealth index.

It's essentially...

What is really measuring is how the top 10%

in the U.S.

and the top 1% globally are doing.

It's a wealth index.

It's an opulence index.

But you could absolutely have a scenario where we go into recession,

where you see an increase in diabetes, healthcare costs, depression, anxiety, job loss.

You could have the Dow double and have unemployment triple because the market might say, well, that's just efficiency and greater earnings.

Good point.

Yep.

I'm trying to think of something more optimistic.

Did I tell you I was going to the roof gardens tonight?

That's the thing, Ed.

When you're at my age, long-term, you know,

just long-term effects take on a different meaning.

There's a certain comfort in knowing that the ass cancer is getting here soon, and I don't need to worry about this shit.

This is your problem, Ed.

Figure it out.

Figure it out.

Yeah, I'm going to solve all of these problems with just more podcasts.

That's my contribution to society.

Let's get maybe a grade on first half of 2025.

The markets get an A.

They've been really resilient, and it's nice to see some diversity in some other markets doing well.

I don't know how well, I don't know,

it's hard for me to evaluate how we're doing from

a U.S.

or an American standpoint.

And

I don't think we're worried enough about young people.

And what I see in this, the primary legislative effort of 2025 will be remembered as this big, beautiful tax bill, which will probably go through.

And I just see this is a continuation of this virus where we continue to transfer money from the entrants to the incumbents.

And I think it's just

horrible.

I don't, and I sound like a broken record and I'm prone to being a cynic because I'm depressed.

But I don't think there's any way to look at this other than what it is.

And that is a transfer of wealth from young to old, from poor to rich, or from the future to the past.

And the fact that we don't seem to learn here and the fact that we don't,

I am somewhat inspired.

And And let me just bring this back to local politics.

Like Zoran Mandani,

this

is not good news for the majority of my peers.

And I got to be honest, I'm inspired by it.

And I'm inspired by it because what I see is your generation rising up and that you're saying, what

has gotten you rich, what has given you prosperity, what has given you the ability to have kids, is not working for me.

And I love the fact that a lot of the people I know and hang out with gave a shit ton of money to Cuomo and young people and their command of technology and a charismatic candidate just fucking rolled over them.

I find that inspiring.

It is time to shed the skin of an environment in the United States where the incumbents and the wealthy continue to come up with very rational reasons for why we should transfer more money to us.

Do I believe his policies are a good idea?

Some of them, yes.

$30 minimum wage, I love that.

Universal child care in New York, I love that.

Most of these ideas don't make any sense, but you know what?

This says something.

This says

this is a passing of the baton or what I would like to think.

And young people in New York have taken the reins and said, no,

we don't want a 73-year-old who was kicked out of government or had to resign in disgrace to use the city for 24 months as he announces his bid for president.

We're going to take someone younger who has a series of fresh ideas.

I just, I think it's really inspiring.

I hope it inspires a wave of change and of youth across the nation because we keep coming up with rational reasons why we should run up your credit card such that, again, I can go to the roof gardens and get in trouble.

And it's enough already.

My friends will be really disappointed in me because of their disdain for this guy.

But it's your time.

Tomorrow belongs to you, Ed.

So I'm excited that as a New York resident, I'm hoping even if some of the policies make no fucking sense, I'm happy that you guys are grabbing the reins and saying, sorry, boss, we got this.

I totally agree.

And just to wrap up here, like.

In terms of grading the first half of the year, as you say, according to the markets, it's been close to an A.

I mean, maybe not an A because we're seeing actually way more,

way stronger performance in international markets.

So maybe like a, maybe the S ⁇ P would give this first half of the year like a B plus or like an A minus is what I would say.

But what we've seen with just, you know, the election in New York as an example is increasingly young people who don't have much of a stake in the stock market, they're giving this an F grade, maybe a D grade.

And I think that is important because

a lot of what we're seeing in terms of, as I said, the fundamentals of the economy, the idea of adding another $3 to $5 trillion to the deficit, and the fact that that's happening, and the market's going, eh, okay, that's probably fine.

I mean, again, we've seen some spikes in the yields, and that is promising to me.

But as we've discussed many times,

the spikes have not been that big.

We had a huge one after tariffs, and that to me was the bond market doing its job, doing the bond vigilante job of saying, that's a terrible fucking idea.

But now we've got this bill and the market seemed to say, oh, I think it's okay.

And

I just don't buy, I don't buy that.

I don't buy that it's okay to explode the deficit like this.

And I think that's where I really agree with you on the Mamdani point, which is I'm glad that there is a cohort of people.

By the way, I think it's a huge deal that we had record turnout among young voters in that election.

Because I think it's finally young people are kind of putting their, getting their act together and say, no, no, no, no, this isn't a B plus or an A minus or an A.

This is an F.

Let's take a look at the week ahead.

We'll see the unemployment rate for June.

And we'll see if Congress gets the GOP tax bill to Trump's desk before the July 4th deadline.

Any predictions for us?

Defense stocks, they're just getting started, both in Europe and in the U.S., because if they're talking about going from 1.9%,

I was thinking to 3%, if they go to 5% on a $19 trillion economy, which is the EU,

what is that, 3% on $19 trillion?

That's $570 billion in incremental spending a year.

Any NFA will pass legislation that says we have a preference for spending it on European companies, there's just not enough places to put that money.

Any competent aerospace aerospace company or aerospace or defense company or defense adjacent company is just going to,

you know, it's going to be like selling that reflected glass into NEOM.

They're like, basically, if you make it, we'll take all of it.

So I think defense stocks in the U.S.

and especially in the EU are just getting started in terms of their run.

This episode was produced by Claire Miller and engineered by Benjamin Spencer.

Our associate producers are Alison Weiss and Dan Shallan.

Mia Silverio is our research lead.

Isabella Kinsel is our research associate.

Drew Burroughs is our technical director and Catherine Dillon is our executive producer.

Thank you for listening to Profit Markets from the Vox Media Podcast Network.

Tune in tomorrow for a fresh take on the markets.

You have

in kind

reunion

as the world turns

and the love lights

in love.

Support for this show comes from Salesforce.

Today, every team has more work to do than resources available.

But digital labor is here to help.

AgentForce, the powerful AI from Salesforce, provides a limitless workforce of AI agents for every department.

Built into your existing workflows and your trusted customer data, AgentForce can analyze, decide, and execute tasks autonomously, letting you and your employees save time and money to focus on the bigger picture, like moving your business forward.

AgentForce, what AI was meant to be.

Learn more at

slash agentforce.

Thanks to Smartsheet for their support.

What would you do if you had more time in the day, even just one hour more?

In reality, we actually all do have more time than we think, but that extra time is sucked up by distraction.

Jumping from window to window and application to application to get a simple task done creates endless pockets for distractions to slip in.

That's why Smartsheet lets your team manage all your workflows in one seamless platform so you can clear the clutter and find that elusive extra time every single day.

Smartsheet, work with Flow.

Learn more at smartsheet.com/slash Vox.

That's the sound of the fully electric Audi Q6 e-tron and the quiet confidence of ultra-smooth handling.

The elevated interior reminds you this is more than an EV.

This is electric performance redefined.