Prof G Markets: The Trump Fold & Tesla’s Brand Death

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Speaker 3 Today's number 283. That's the percentage increase in viewership of the movie Conclave.
The day after Pope Francis died. Ed, what does a priest's scrotum look like? Oh boy.

Speaker 3 I don't know. I don't know.

Speaker 4 What does a priest's scrotum look like?

Speaker 3 Come on, man. Every child knows that.

Speaker 3 Welcome to Prof G Markets. Rest in peace, El Papa.
Rest in peace.

Speaker 3 I just love

Speaker 3 that J.D. Vance killed the Pope.
I absolutely love that. It answers the fuck Mary Kill, right? We got the couch.
We got his wife. Now we got the kill.

Speaker 3 I'm recycling every. I'm a walking meme right now, Ed.
I'm a walking meme. What's going on with you? It's time for banter.

Speaker 4 Let's see. What is going on with me? I hung out with Anthony Scaramucci yesterday, which is very fun.
The mooch?

Speaker 3 Where did you hang out with Anthony?

Speaker 4 I went to his office, went to Skybridge. He took me around, showed me all of his paraphernalia and and his books.
And by the way, I learned that Anthony was a classics major.

Speaker 3 Yeah, he's actually, he has sort of this Long Island feel about him, but he's not that Long Island people aren't well read, but he's very,

Speaker 3 you get the sense he's kind of a blue-collar guy. He's actually very well read and very intelligent.

Speaker 3 I like him a lot.

Speaker 4 I'm a huge fan of his.

Speaker 3 Let me guess. You're starting a podcast.

Speaker 3 The rest is Ed, isn't it?

Speaker 3 The rest is Bobby. The rest is Ed.

Speaker 4 I think you're starting a podcast with him.

Speaker 3 We're actually doing, we're doing something a limited series called The Lost Boys.

Speaker 4 What is that, your 20th podcast?

Speaker 3 What are we at now? Well, look, everyone I do, I make another 10 or 12 bucks in gross margin. So, you know, baby needs new shoes.

Speaker 3 And

Speaker 3 listen how dreamy my voice is. Now look at me.
Listen to my voice. Now look at me.
Enough said. Podcasts.

Speaker 4 Podcasts. The moneymaker.

Speaker 3 You know it. By the way, how was your time with your father? It was great.
I had a great time. And your parents live in the UK? Is there? Oh, no, they live here now.

Speaker 4 No, no, no.

Speaker 3 They're still still in nothing yeah he was just visiting not that i don't know anything about you ed

Speaker 4 what's your last name again wait hold on you see banter for us is just sort of like getting to know each other right yeah we're still not quite there yet been four years but we're we're getting close they live in the uk

Speaker 3 yeah

Speaker 4 they do i'll have to set you up

Speaker 4 You can go get a drink with my dad at Kensington Gardens.

Speaker 3 I can see that. I'm actually sort of, I wouldn't say other, but I'm curious about your dad.
What did your dad do professionally?

Speaker 4 Finance.

Speaker 3 And you went to Princeton. Huh.

Speaker 3 Boy, it's been rough red. It's just amazing you've overcome all this adversity.

Speaker 3 Really impressive.

Speaker 4 The biggest adversity I've had in my life is you, Scott.

Speaker 3 Yeah, I'm here for a reason, my brother, and it's only getting started. Get to the headlines.

Speaker 4 Let's start with our weekly review of Market Vitals.

Speaker 4 The S ⁇ P 500 climbed, the dollar hit a three-year low, Bitcoin rose, and the yield on tenure treasuries declined. Shifting to the headlines.

Speaker 4 President Trump is inviting the top 220 holders of his meme coin to join him for a private dinner.

Speaker 4 That news sent the token's price up more than 60% as investors rushed to increase their holdings and secure a spot.

Speaker 4 Boeing shares climbed 6% after the company posted first-quarter earnings that beat expectations, with revenue up 18% year-over-year.

Speaker 4 The stock also got a boost the day before on a $10.6 billion partial sale of its navigation business.

Speaker 4 And finally, a new report shows that in 2024 alone, the 19 wealthiest households in America added $1 trillion to their net worth. That is the largest single year increase on record.

Speaker 4 Scott, your thoughts starting with TrumpCoin. Trump is inviting the top holders of TrumpCoin to an exclusive dinner and also a VIP tour of the White House.
This is great news, isn't it?

Speaker 3 I think we have hit a new low where we're selling off access to the president in a dinner based on his Swiss, who puts the most money in a Swiss banking account.

Speaker 3 And the reality is these are the amateurs or the people, the cultists who are fascinated by him.

Speaker 3 The most important people in terms of the Trump meme coin would never show up because what they've done is they've bought a bunch of meme coins, probably with his permission or his encouragement, in exchange for geopolitical advantage from America.

Speaker 3 It would never dare thinking of showing up.

Speaker 3 I got to give it to him for being this transparent.

Speaker 3 I think the Democrats have what I call low-grade co-corruption, where Speaker Emericha Pelosi trades stocks for tens or hundreds of thousands or maybe millions.

Speaker 3 And he's like, if you're going to be corrupt, go big and create a vessel. And somebody pitched him on this and he said yes, where you can make billions.
And that's what he's done here.

Speaker 3 And I hope this thing gets a lot of attention and a lot of people start focusing on what is

Speaker 3 easily the greatest financial grift

Speaker 3 in the history of presidents. I can't think of, I mean, it just cracks me up that people were pissed off about Hunter Biden going on a board, which he shouldn't have been on.

Speaker 5 We need to know what he was doing in China and Russia while his father was vice president and/or while his father was preparing to become the president. This is corruption at its core.

Speaker 5 Folks, this is what people hate about the swamp. This is part of how Donald Trump won in the first place, saying that we're going to get rid of these sweetheart deals.

Speaker 5 We're going to make sure that we clean up the axis of power in a place like Washington, D.C.

Speaker 3 And yet we have a meme coin

Speaker 3 and he's inviting people to the White House for the dinner. I don't know.
I find the whole thing, it's verging on comical if it wasn't so tragic.

Speaker 4 I think that's exactly right. I think this is the most egregious act we've seen from this administration so far.

Speaker 4 And we can talk about the tariffs and the deportations and the threats to Jerome Powell, et cetera.

Speaker 4 None of that's good, but you can at least begin to fashion an argument as to why in some version of reality it might be beneficial to the nation.

Speaker 4 You couldn't make a good argument, not a rational argument, you couldn't make a sane argument, but you could try to make the argument. You could try to say we need to reshore jobs, etc.

Speaker 4 There's no argument for this. You can't even attempt to steel man this.

Speaker 4 It is pure grift, pure corruption, using the White House, using the presidency as a vehicle to shake down regular investors, not wealthy political donors, which you can make the argument that maybe the Democrats do, but retail investors in order to raise money.

Speaker 4 Again, not for some greater cause, not even to fund some political campaign, but purely to enrich your friends, to enrich your family, and to enrich your allies. This is completely unheard of.

Speaker 4 And I just want to highlight that lock-up period, which it was a three-month lock-up period. It basically meant that the insiders of the coin can't sell until the the period expires.

Speaker 4 So this is very important. When, and we said this, we need to pay attention to when the lockup period expires.
It expired last week.

Speaker 4 So is it any surprise that this bullshit incentive plan to pump up the price of the coin, which is leading to this rat race where its winner takes dinner with the president that sent the coin skyrocketing up 60% in one night.

Speaker 4 Is it any surprise that this coincided right when the lock-up period expired? Definitely not.

Speaker 4 And I think what we'll find out soon enough is that the insiders, this was their Hail Mary that they threw right before they sell.

Speaker 4 And I would not be surprised if we find out, you know, that they sold, that they profited significantly off of this, not in terms of what they realized.

Speaker 4 in a gain on Trump coin, but in dollar terms. I think they announced the dinner and then we find out they cashed out.

Speaker 4 And I just want to remind you again of the damage that this does to regular investors. Let's look back to a few months ago when the coin was first launched.

Speaker 4 You look at the on-chain data and you will find that there were 31 early traders who made a profit of almost $700 million trading this coin. And you think, boy, that sounds pretty corrupt.

Speaker 4 But then you see the 800,000 other investors who lost cumulatively more than $2 billion dollars. And this is what we have to remember about meme coins, and this is why this is so dark.

Speaker 4 This is a zero-sum game. For every winner, there is a loser.
In fact, more often than not, thousands of losers. And, you know,

Speaker 4 the losers, I hate to say it, are the ones who are dumb enough to buy into this shit. And that's also what I find so disturbing about this.

Speaker 4 It's the fact that the Trump organization actually knows that.

Speaker 4 They know that there is a certain percentage of their fan base that is dumb enough to do whatever they tell them to do, to jump off a cliff if Trump demands it. Not the whole fan base, but certainly

Speaker 4 a percentage of it.

Speaker 4 And in this case, jumping off the cliff means throwing away your savings to bet on this rigged casino game that is disguised as a meet and greet with the president and a VIP tour of the White House.

Speaker 4 I mean, I am just

Speaker 4 still shocked, and I'm with you that it's comical. It is comical because it's so shameless.
But

Speaker 4 that shouldn't detract us from calling it what it is, which is unprecedented corruption. And it is tragic.

Speaker 3 His team also collects fees on each trade, and they've earned roughly $100 million just in January alone.

Speaker 3 And of course, you know, I love in 2016, he was just irate at the conflicts of interest and that Secretary Clinton was getting a quarter of a million dollars for a speech.

Speaker 3 I mean, in this instance, he isn't even asking for donations. It's worse.
He's asking for people to buy a volatile, unregulated coin that enriches him directly.

Speaker 3 And if I were Vladimir Putin, and if I get kicked out of Ukraine, it probably means at some point I get thrown out of a window. I mean,

Speaker 3 people who lose power in Russia, it usually doesn't end well for them.

Speaker 3 And I'm spending $60 to $100 billion a year on this failed war effort.

Speaker 3 I'm losing, I've lost almost a million young men, sending them into this meat grinder, which at some point has got to take a toll on the morale and the popularity.

Speaker 3 Wouldn't he be just stupid to figure out a secure way, maybe using signal on a phone,

Speaker 3 to call the president and say, all right, price discovery is

Speaker 3 dictated at the margin, right? If the Trump coin has a $7 billion market cap, you might be able to take it to $10 or $15 billion with just $100 million, $500 million, a billion in purchases, right?

Speaker 3 What if you said to him, look, I can make this thing,

Speaker 3 I really love the Trump coin, and I'm going to make sure that for at least five years until you're well out of office, that this thing never, you know, or that at some point it's at least worth $50 billion and your stake is 80%.

Speaker 3 So you're about to become the richest man in the world, President Trump, just because I love the coin. And in unrelated news, how do you feel about cutting support to Ukraine?

Speaker 3 Wouldn't Putin,

Speaker 3 one, wouldn't Putin be stupid not to make that call and make that offer? And two,

Speaker 3 wouldn't it be logical? Wouldn't it be the next point in the data pattern in the line for Trump to act on that call? I mean, he started a meme coin.

Speaker 3 What do you think he did it for?

Speaker 3 And the notion that he wouldn't be subject to this sort of influence, it just doesn't look at the corruption and the trail of bankrupt companies, the trail of unpaid subcontractors.

Speaker 3 And I'm incredibly disappointed the Democrats aren't putting up a better fight.

Speaker 3 I can't believe they're not all over the press today talking about all the different scenarios for the Trump coin and how this is nothing but pure grift.

Speaker 4 Let's move on to Boeing. And Boeing's earnings.
They had actually a really good earnings report. Revenue up 18% to $19.5 billion.

Speaker 4 Deliveries up nearly 60%. They've also reduced their cash burn down to 2.3 billion.
A year ago, it was 4 billion. And there was a really big pop in the stock here.

Speaker 4 I think, you know, it was a great report.

Speaker 4 I think what really surprised to the upside, though, and what the markets are pricing in here was how optimistic Boeing was and their CEO was, Kelly Ortberg, about the tariff environment.

Speaker 4 Because, you know, meanwhile, you've got all these other companies that are

Speaker 4 somewhat freaking out about the tariffs.

Speaker 4 40% of earnings calls so far this quarter have mentioned the word recession, which is unbelievable. By the way, 90% of them have mentioned the word tariff.

Speaker 4 And you actually called this, you said that tariffs was going to be the new AI on earnings calls. That is what's happening.
But he did not seem that concerned about these tariffs.

Speaker 4 And he was asked up front, you know, what about China? China is your second largest market in aviation.

Speaker 4 Are you concerned about that? And he didn't seem phased. And if I had to paraphrase his response, it would be, we're watching it, but we'll be okay.

Speaker 4 And then he had this line where he said that 2025 would be Boeing's, quote, turnaround year. So very optimistic.

Speaker 4 I think what that tells you is that he and Boeing believe that these tariffs, particularly on China, are going away.

Speaker 4 And we'll discuss more what's happened in terms of tariffs and how Trump appears to be caving.

Speaker 4 But it is interesting that these earnings came out before we heard those comments from Trump.

Speaker 4 And so it appears that Boeing, in my view, had some sort of inside knowledge, or at least some inside feeling that, yeah, these China tariffs, they look very scary, but ultimately we're not too worried about it.

Speaker 4 How else would they not be worried about it if they didn't have some inkling inkling or some real sense that these tariffs wouldn't be going through it?

Speaker 3 I mean, one of two things has happened. Either he called the Boeing CO and said, you know, don't worry.
Don't worry, boss. Hey, do you want to come to my crypto meeting?

Speaker 3 Don't worry, right?

Speaker 3 We know you're a great company. Don't worry.
And, you know, let me put out a press release saying you're hiring more people. Just don't, don't be critical of your earnings call, obviously.

Speaker 3 Or the Boeing COs just said, this guy's full of shit. Nothing's going to happen here.
Could be that. We make great planes.

Speaker 3 Airbus, I mean, the thing about this is a duopoly controlled by two companies, Airbus and Boeing.

Speaker 3 And even if Airbus, for a time being, makes a better plane, you know, as the global economy grows and demographics grows, there's always a need for more commercial aircraft, and no one of them can produce enough.

Speaker 3 So it really is a duopoly. And they have incredible pricing power, and these are just, these are just incredible companies.
And I think what he's decided is,

Speaker 3 okay, this is a fucking distraction. And his earnings

Speaker 3 seem to cement that.

Speaker 3 And while China's threatened to reduce their order book, I would bet the order book that the Chinese, the CCP, and the people at Boeing, who are very smart and hire former ambassadors, have all said to each other, look, there's a non-zero probability, a most likely opportunity that the order book and the way we do business is going to stay exactly the same.

Speaker 4 What we're seeing with a lot of these big corporate CEOs, companies like Target, companies like Walmart, companies like other companies in defense, like GE Aerospace, many of these CEOs are meeting with the White House, they're meeting with the president, and they're coming out of those meetings appearing to be a lot calmer.

Speaker 4 And in fact, this was reported by Charles Gasparino at Fox Business.

Speaker 4 The administration at the White House is actually actively alerting Wall Street executives.

Speaker 4 They're reaching out and telling them that they are nearing agreements on these trade deals, which is a very interesting dynamic that we're now entering into a market and a world where actually the heads of the largest corporations and the heads on Wall Street, they're getting a heads up and they're able to front run

Speaker 4 the largest news item of our time.

Speaker 4 Now, you could say, you know, that this has happened in the past, but I don't think at the level that we're seeing today, you know, usually it would be that with very highly sensitive economic data like this, there is a protocol and the White House comes out and they publicly announce it.

Speaker 4 And you give markets an equal time, an equal footing to react to what is happening.

Speaker 4 But it appears that there's such a level of disorganization in the White House, and they're so freaked out by how the markets are reacting.

Speaker 4 It feels as if what is happening is the administration is having no choice but to call the big dogs of the Fortune 500 and say, hey, hey, just don't worry about it. It's going to be okay.

Speaker 4 And that's material information right there. I mean, that is ground zero for insider trading.

Speaker 4 That hasn't actually happened yet, but we all know that the line between fair trading versus insider trading is very blurry. And we are in an incredibly blurry time right now.
And

Speaker 4 we'll talk more about that in our main story when we really focus on these tariffs. Let's just move on to this new data on wealth wealth inequality.

Speaker 4 The top 19 households minting $1 trillion in wealth last year, biggest single year increase in history. They now own, those top 19 households now own 1.8%

Speaker 4 of the entire household wealth in America. That's up from 0.1% in 1982.
By the way, the bottom 50% of Americans, they own 3% of the household wealth.

Speaker 4 So you've got half of America with 3% and the top top 19 households with 1.8%.

Speaker 4 There are now 1,990 billionaires in America, and that number is up 45%

Speaker 4 since 2021, just four years ago. So we talk a lot about income inequality and also wealth inequality on this podcast.
And here we have some new data, which is just... telling us the same thing.

Speaker 4 We are a massively unequal society.

Speaker 3 Well, to stick to the moral argument, it's bad for the economy. And that is when all of that prosperity is being crowded into the 0.01%.

Speaker 3 One, I don't think they have as much of a vested interest in public infrastructure and the well-being and prosperity of America. Do they have a vested interest in our health care system? No.

Speaker 3 Do they even have a vested interest in our national security? Because at the end of the day, they can peace out to New Zealand or Dubai or London. So you're essentially creating

Speaker 3 a superclass of people that control so much economics and have so much power over our government, but don't exercise the power in a means that affects all of America because they've basically become sequestered from America and what's good or what's bad about it.

Speaker 3 They're literally behind gilded gates. And, you know, at some point, and I don't think they believe this, at some point people show up with pitchforks and lanterns, right?

Speaker 3 But if you think about third world nations that never able to get out of the way and ultimately end up in revolution, They have what's a common feature across all of them? Crazy income inequality. So,

Speaker 3 this is not only bad for the economy, it's bad, it's really damaging for our culture. And what you see here is that young people are increasingly disillusioned with America.

Speaker 3 More than four in 10 young Americans today under 30 say they're barely getting by financially, while just 16 percent, one in six

Speaker 3 young people say they're doing well or very well. One in six young Americans, the wealthiest country in the world, say they're doing well or very well.

Speaker 3 Now, some of that is probably a benchmarking problem where they think if they're not on a Gulf Stream or in St. Bart's, they're failing.
But still, some of that is real. They have less money.

Speaker 3 Fewer than half feel a sense of community, with only 17% reporting deep social connection. That is really sad.

Speaker 3 Now, is income inequality driving all of this?

Speaker 3 No, but I've said on this show for a long time that the majority of what ails America can either be reverse engineered or partially correlated to massive income inequality.

Speaker 4 I think the reason that we're talking about this and the reason that this is important and it relates to our discussions of markets, it also

Speaker 4 has a place in the world of politics. I really believe that this is the defining issue of our time and of this generation.

Speaker 4 I think this is the most important thing that we're going to see and that I'm going to be grappling with for probably the rest of my life. And

Speaker 4 I was just thinking, you know, you're talking about the 0.1%, the 99% there. You sound a lot like Bernie Sanders.

Speaker 4 And this is what people used to make fun of Bernie for.

Speaker 4 And I think back to, you know, the Occupy Wall Street days, where actually it was the same issues that were on the table and it was the same things that people were upset about and that people were protesting against.

Speaker 4 And you had people like Bernie who talked about the issues, but who over time were kind of written off by the establishment.

Speaker 4 Many sort of wrote him off as a quack or a little crazy or a socialist or a communist. But one stat I would point you to,

Speaker 4 which blew me away. Last week, Bernie Sanders and AOC held a rally in California and 36,000 people showed up.

Speaker 4 Just for comparison, a Trump rally is on average around 5,000 people. The Madison Square Garden rally, that was 20,000 people.
This was 36,000 people.

Speaker 4 And the message from those two candidates or those two politicians

Speaker 4 is simply about inequality.

Speaker 4 That's the whole thing. And it's just so fascinating that 10, 15 years ago when Occupy Wall Street was at its peak,

Speaker 4 people were saying this is a big problem. It's only gotten worse.

Speaker 3 Yeah, it's gotten much worse. It's gotten way worse.
Which says to me we need a new framing. And that is, I think it's inspiring that AOC and Bernie are able to turn out these many people.

Speaker 3 There's definitely a groundswell of dissatisfaction. I think it was more inspired by some of the

Speaker 3 illegal seizure of constitutional power, the idea that people are being rounded up effectively,

Speaker 3 some of the corruption,

Speaker 3 people being fired in sort of a reckless and cruel manner. I don't know if this was directly about income inequality, but that's sort of Bernie's talk track.

Speaker 3 I would reframe it because sometimes I think he comes across, I think the class warrior rap hasn't really resonated. Per your comments, it continues to get worse.

Speaker 3 I think the framing should be something along the lines of the following, and that is.

Speaker 3 The greatest innovation in history was not the iPhone or the semiconductor. It was the American middle class.
It's created more tax revenue. It's fought wars.

Speaker 3 It's funded everything from the iPhone to vaccines. The American middle class is the greatest innovation in history.
Now, how did it happen?

Speaker 3 It happened because 7 million men returned from war and they demonstrated heroism, they were fit, and we put a bunch of money in their pockets.

Speaker 3 We had the National Highway Transportation Act, we had FHA loans, we had the GI bill, and we made them very attractive to women. So they mated,

Speaker 3 had the baby boom, and then we took a lot of that money and that prosperity from these households that were very productive.

Speaker 3 We taxed it at a fair rate, including corporations that were sometimes sometimes paying 40 and 50 percent, the super wealthy that were sometimes paying 70, 80, and 90 percent.

Speaker 3 And we not only reinvested continually in the middle class, but we said we need to invite more people who've been sequestered from this prosperity into the fold.

Speaker 3 And we had legislation that advanced the rights of women and of non-whites, and we built the greatest society in history. And it all started from a really robust middle class.

Speaker 3 And it's like, well, okay, that's fine. You got me there.
Most people would agree, Republicans and Democrats.

Speaker 3 Where sometimes we differ in opinion is that Republicans or the super wealthy will try and convince you that the middle class is a self-healing organism that happens on its own, or that if you let the most productive people in the world, i.e., the super rich, do their thing unfettered, that the value they create will trickle down to the middle class.

Speaker 3 We have so much data showing that just doesn't work.

Speaker 3 And I think we need to come out of the closet and say you have to redistribute income from corporations and from the wealthy to the middle middle class in the form of education, child tax credit, a truly progressive tax system.

Speaker 3 Maybe young people under the age of 40 or anyone that makes less than $100,000 plays 10%, anyone that makes over a million, an alternative minimum tax of 40%. And here's the thing about taxes.

Speaker 3 You wouldn't need to, you could lower the tax rates if you enforce them. It's the tax code where everybody gets fucked.

Speaker 3 And until we acknowledge that the middle class is not a self-healing organism and there needs to be redistribution from corporations and the super wealthy to the middle class.

Speaker 3 It's just going to continue to go sideways and wither. And actually, the middle class

Speaker 3 hasn't declined, if you will, but it's been static relative to the unbelievable prosperity that's been crammed into the top 1%.

Speaker 3 And then you lay on top of that social media, which is basically an orgy of the life of the top 0.1%. So that's the new benchmark.

Speaker 3 And what you end up with is people who see prosperity everywhere, but aren't participating in it unless they're in the top 0.1%, which leads to an obese, angry, depressed, anxious, younger generation.

Speaker 3 So all of this is on a downward spiral focused on not only prosperity being crammed into the 0.1%,

Speaker 3 but that prosperity being rubbed in everyone's face.

Speaker 3 And if people under the age of 40 in the most prosperous nation in history don't feel confident enough that they can form a household and have a kid, then none of this matters.

Speaker 4 We'll be right back after the break with a look at Trump's policy reversals. If you're enjoying the show so far, be sure to give the Profit Markets feed a follow wherever you get your podcasts.

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Speaker 4 We're back with Prof G Markets. A clear pattern is emerging in Trump's policymaking.
Bold declarations followed by abrupt reversals.

Speaker 4 After posting on Truth Social that Fed chair Jerome Powell's quote termination cannot come fast enough, Trump later told reporters that he had, quote, no intention of firing Powell.

Speaker 4 Similarly, after implementing a 145% tariff on Chinese imports, he's now saying that the level of tariffs could, quote, come down substantially.

Speaker 4 He also is planning to exempt car parts from those tariffs and the tariffs on steel and aluminum. On Wednesday, all three major indices initially jumped.

Speaker 4 However, they pulled back from their morning highs when Scott Bessant clarified that Trump hadn't offered to remove the tariffs on China unilaterally.

Speaker 4 Still, the NASDAQ closed 2.5% higher, the SP 500 was up 3%, and the Dow rose more than 1%.

Speaker 4 Scott,

Speaker 4 you've predicted that Trump would walk back on many of these issues. It seems like that is happening.
What is your take on this?

Speaker 3 The only thing, two things you have to remember in a negotiation are: one, not to make it personal. Don't make it win-lose.
Don't create emotion on either side that's going to,

Speaker 3 you know, if you act like an asshole, people don't want to do a deal with you. They want to hurt you in the negotiation.
They're not inclined to cut you a break or want to get a deal done.

Speaker 3 And

Speaker 3 then the second thing is always show a credible willingness to walk away.

Speaker 3 He imposed in what was the ultimate Little Dick Energy move, they raised their, they keep matching and he keeps going and he went to 145. And then

Speaker 3 he says

Speaker 3 those tariffs are too high and will clearly come down.

Speaker 3 Okay,

Speaker 3 you raise them to this point and then a week later say they're clearly too high and they need to come down. You're the one that put this shit in.

Speaker 3 So

Speaker 3 my prediction all along is going to be that, or has been, that after all of this noise and damage to our brand is done,

Speaker 3 the global tariff system, other than world trade, that'll be inspired across strange bedfellows because we've got them to start speaking and cooperating, but the U.S.

Speaker 3 tariff complex or structure across the world will look strikingly similar to the way it looked before we started this bullshit nonsense.

Speaker 3 And all we have done is alienated people and massively reduced our goodwill and our brand equity. The weird thing is this guy is such a fucking toxic narcissist.
I think he enjoys this shit.

Speaker 3 He doesn't care because he's going to make a billion plus dollars in his Trump meme coin and he just wants to be the center of attention every day.

Speaker 3 It's like when my youngest used to act out and be a total asshole and you realize, okay, they're acting out because they want attention.

Speaker 3 I mean, this guy is acting out every day.

Speaker 3 I think he would threaten nuclear war if he were out of the news cycle long enough and want to desperately back in, regardless of the damage.

Speaker 4 So he made, he's walking everything back, right? And one thing that I think has been interesting has been China's response. You saw this hashtag that went viral in China,

Speaker 4 which was hashtag Trump chickened out.

Speaker 4 So however it is positioned by this administration, the message that the public has received and the message that China received is that he blinked, as you predicted.

Speaker 4 He folded, he caved, he chickened out, however you want to call it.

Speaker 4 And I think the question is, okay,

Speaker 4 what does it mean for markets that that's how the world perceives us? I mean,

Speaker 4 initially, the markets reacted quite positively, right? I mean, the Dow rose 1%, the S ⁇ P was up 2%, NASDAQ up 2.5%.

Speaker 4 I think they're pricing in some positivity that Trump is walking back the craziness, whether it comes to the tariffs on China, the tariffs on the auto industry, or his threats to the chair of the Federal Reserve.

Speaker 4 But I do think it's also important to keep in mind the damage that has still been done since Liberation Day, since April 2nd. Since that day, the NASDAQ is down more than 5%.

Speaker 4 The S ⁇ P is down more than 5%.

Speaker 4 The Dow is down more than 6%.

Speaker 4 The yield has risen more than 20 bips. It's at around 4.4% right now.
So I think the question is, okay, what are the markets telling us?

Speaker 4 Yes, the tariffs are likely to be, if not reversed, significantly reduced.

Speaker 4 But

Speaker 4 what are they pricing in right now

Speaker 4 that is worse than pre-Liberation Day? And I think the answer is probably just the damage that we have done to our brand and and our reputation as a safe economy, as a reliable trade partner, etc.

Speaker 4 And there were some comments from Ken Griffin, which I thought were particularly telling. And I think he actually put it quite well.
And you remember Ken Griffin, founder CEO of Citadel.

Speaker 4 This is a guy who is a Trump supporter. He donated a million dollars to Trump's inauguration fund.
He donated 100 million. to the Republican superbacks in the last election cycle.

Speaker 4 He's

Speaker 4 pretty much a a MAGA guy. He said, quote, the U.S.
is more than a nation, it's a brand, and we're eroding that brand right now. And I think that's right.

Speaker 4 And I think that brand erosion is what's being reflected in the stock markets and the bond markets right now.

Speaker 4 They had a little bit of an uptick, but ultimately you look since that date, since Liberation Day, we're still way down. And I think the question is, is this reversible? Is it too late?

Speaker 4 Or is the damage already done?

Speaker 3 Well, I was thinking, you listen to this show, we've been talking about the long-term damage here is to the erosion in our brand equity, which decreases our margin

Speaker 3 in millions of different ways that we'll never know directly. I think our allies are just less likely to share information with us.
I think

Speaker 3 someone who is asked to deliver weapons to what might be a terrorist cell is less likely to call the American embassy and say, hey, I saw this.

Speaker 3 I think people are less likely to send their best and brightest to the U.S. when PhD students are being sent errant emails asking to self-deport.

Speaker 3 And those types of injuries,

Speaker 3 it's like having a high blood pressure. It's just at some point, it creates an opportunity set or a corpus that is just more prone to bad things to happen to that person.

Speaker 3 And that's what's essentially he's giving us. really high cholesterol or high blood pressure, making us more vulnerable to opportunistic infections.
Can it be repaired? Sure.

Speaker 3 I mean, we've had really dark moments in our history.

Speaker 3 I think a Democratic or a different Republican in the White House, and maybe even some learning that comes out of this, and seeing Americans kind of rise up and realize that their rights are not foregone conclusions,

Speaker 3 and then leveraging the Democratic process to change direction. You know, I think our allies will forgive us.
I think we have a longer history with them than that. And that's the real damage.

Speaker 3 The damage and the opportunity is that to tear up 80-year alliances and erode that goodwill is just stupid. And it's sort of been something we've taken for granted.

Speaker 3 The good news, the good news is, I think a lot of that ill will has been ring-fenced to one man.

Speaker 3 This guy will go down as the stupid presidency. It used to be coarseness and cruelness, but he had a certain feel for the markets.
People thought he was a good business person.

Speaker 3 The markets did do well during his first term. You know, a lot of people from different cohorts did well.
Now, granted, did we spend $7 trillion in additional deficits or $8 trillion?

Speaker 3 Yeah, but it would be hard to punch too many holes in the economic record of his first administration. Now, this one just seems like, okay,

Speaker 3 how do we go out is just really stupid.

Speaker 3 But I absolutely think we can repair this. And I think the upside is that a lot of the ill-will is not towards America.
It's towards one individual. Yeah.

Speaker 4 I think we're sort of in a race against China to get the world on our side. And I think I'm with you.
I think people would be faster to renormalize relations with the US than they would with China.

Speaker 4 But having said that, China is trying. I mean,

Speaker 4 they just lifted these sanctions on the EU. They just sent their trade delegations to Sweden, to Hungary, to Norway, to Germany.
They are certainly trying to rekindle those relationships.

Speaker 4 And I think for US investors and US companies, the question is, can we normalize our relationships with other nations faster than China can? I think we probably can, but it's four years.

Speaker 4 So, you know, we're definitely running against the clock here. And that is going to have a massive impact on U.S.

Speaker 4 markets, especially given what we've seen with the global rotation and the capital flows that are leaving America and, as we discussed last week, entering back into Europe.

Speaker 4 That's probably the question. And

Speaker 4 we'll see.

Speaker 3 That's all I'll say on that.

Speaker 4 We'll be right back after the break with a look at Tesla's earnings. And if you're enjoying the show so far, hit follow and leave us a review on the Prof G Markets feed.

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Speaker 4 We're back with Profit Markets. Tesla's first quarter results fell short across the board, missing expectations on the top and bottom lines.

Speaker 4 Net income plunged 71% year over year, and automotive revenue fell 20%. Overall revenue dropped 9%.
Still, the stock jumped 5% in after-hours trading.

Speaker 4 Part of the lift came from the broader market rally we just discussed, but investors were also encouraged after Elon pledged to significantly reduce the time he spends on Doge, and he promised to refocus his efforts on Tesla starting next month.

Speaker 4 Scott, I listened in on the call. I have a number of observations, but first, just your take on these quarterly results, as well as Elon's decision to step back from Doge.

Speaker 3 First off, let me just go to how incredibly cynical it is for Elon Musk to show up to the government with a chainsaw.

Speaker 3 The chainsaw for bureaucracy.

Speaker 4 Chainsaw.

Speaker 3 And then shut off $75 billion in USAID going to people struggling with malaria in Myanmar or soup kitchens in war-torn Ukraine. And his company would have been unprofitable had it not been for

Speaker 3 him reselling carbon credits.

Speaker 4 They were saved by the regulatory credits this quarter.

Speaker 3 I mean, get this. It's automotive revenue declined 20% year on year.
I don't, I can't name an automobile company. Maybe

Speaker 3 at some point Jeep or I think Jaguar had a rough couple years that has declined 20% year on year. Staggering.
So this company is declining faster than any automobile company in America.

Speaker 3 You know, I bet, I don't know, Ford was probably at 4% or 6%, I'm guessing single digits. These guys are down 20%.

Speaker 4 While reducing prices.

Speaker 3 Their talk track has always been, we're really not a car company, we're a software company, we're an energy company.

Speaker 3 But even if you, okay, fine, if we're a car company, because we're all EVs, we have dramatically fewer parts.

Speaker 3 We're able to have a much more robust supply chain, much more efficient production and assembly schedule. And we're the most American-made company.
We're the most vertical. We own our dealerships.

Speaker 3 We don't have this weird thing with the local billionaire, the local, the guy who used to bake a quarterback for Alabama or whatever, opening a bunch of dealerships.

Speaker 3 And it's Teslas, to their credit, are actually the most American-made product. The majority of products or parts, which was dramatically fewer to go into a Tesla, are sourced in America.

Speaker 3 All of this adds up to operating margins that were remarkable for the industry of 20%.

Speaker 3 But the automobile industry is a business of scale. When you buy a Porsche Cayman, is that the SUV, an Audi Q7 or a Volkswagen Toureg, you're buying the same car.

Speaker 3 They're off the same platform. These platforms are so expensive to build and maintain that you have to shove a ton of throughput across these assembly lines.
And then in the case of the Torig,

Speaker 3 the Q7, and the Kayan, the last 10% of the assembly line, they take three different routes and they put in nicer finishes and nicer leather and nicer badging.

Speaker 3 And they charge different prices and different, they market them differently and different

Speaker 3 ad campaigns, different value propositions, right?

Speaker 3 But if you don't have the scale,

Speaker 3 it is an impossible industry.

Speaker 3 As evidenced by Rivian, that makes a great car. They have to sell for $80,000, even though it's costing them $120,000 to produce these things.

Speaker 3 And until they produce 3x the number, they're never going to get to profitability. So when Tesla's automobile revenues decline 20%,

Speaker 3 it's exponentially bad to descale in the automotive industry because those assembly lines are

Speaker 3 not registering a decrease in costs, even though you have less throughput. As a result, their operating margins have gone from 20% to 2.1%.

Speaker 3 So their operating margins have declined 90%, yet the stock was up 5%.

Speaker 3 And this is a company that is technically unprofitable. They've also lost their leadership position.
Volkswagen overtook Tesla as a top EV seller in Europe.

Speaker 3 And registrations for VW EVs increased 150%, while Tesla registrations dropped 38%.

Speaker 3 And yet, he is able to take the stock up 5% by saying, I am going to focus more on Tesla. We still have this idolatry of innovators.

Speaker 3 We're still under the belief that him spending more time at Fremont at Tesla is somehow going to turn this company around.

Speaker 3 So I just think it's a case study in meme stocks and how storytelling and our idolatry of innovators has resulted in an irrational market where the stock price begins to absolutely disassociate from the fundamentals, which I guess is the definition of a meme stock.

Speaker 3 What are your thoughts, Ed?

Speaker 4 Yeah, I think I agree with all that. I mean, just some observations from the earnings call.

Speaker 4 I think my number one takeaway is that, you know, if he's trying to convince investors that Tesla is fine, which he needs to do,

Speaker 4 I think he did a really bad job of it. Having said that, the market appears to disagree with me because the stock jumped.
And I think a lot of your meme stock explanation might be part of it.

Speaker 4 But what I heard on that earnings call was a CEO who is panicked, who is confused, and who is most importantly in a state of denial. And I will explain what I mean there.

Speaker 4 But the first thing to note is his opening remarks, which were a monologue about Doge and how important the work he's doing at Doge is. And

Speaker 4 if you're trying to convince investors that you care more about Tesla, your company, than you do about Doge, you should probably start the earnings call by talking about Tesla.

Speaker 4 Instead, he goes on about Doge and how he's saving America by cutting wasteful spending. Then he addresses the Tesla protests, which

Speaker 4 I credit him, he should. It's a huge problem for the company.

Speaker 4 But he makes this wild claim.

Speaker 4 That the real reason people are protesting Tesla isn't because of any of his actions or any of his comments or the fact that he saluted a crowd in what very much appeared to be a Nazi salute.

Speaker 4 He didn't acknowledge any of that. He said the reason that people are protesting Tesla is because they're upset that Elon is through Doge restricting their ability to get government handouts.

Speaker 4 I mean,

Speaker 4 he really said this. He said, those protesters, they're all receiving these wasteful and fraudulent dollars from the government.

Speaker 4 And it's because of Elon, they're angry, they're not going to get this free money anymore, which is just an insane claim that completely disregards what is actually happening to the company and its brand.

Speaker 4 And it's

Speaker 4 an extremely important thing to address. I mean, this 20% drop off in revenue, it's almost entirely to do with the brand damage.

Speaker 4 So you have to be upfront about it and you have to engage with that issue honestly.

Speaker 4 He was then asked directly about the brand damage by one of the analysts and asked, you know, what does this brand damage mean or these rumors of brand damage? What does it mean for the company?

Speaker 4 And on that occasion, he completely deflects and he starts going on about the macro environment, which didn't make any sense at all.

Speaker 4 He said, I'll quote him, quote, yeah, I mean, Tesla is immune to sort of the macro demand for cars. So when there's economic uncertainty, people generally want to pause on buying.

Speaker 4 But as far as absent macro issues, we don't see any reduction in demand. Doesn't make sense.
And also, it's completely not true. There is obviously a reduction in demand.
Your sales fell 20%.

Speaker 4 My favorite line, though, came when he was trying to assuage investors that Tesla is, in fact, okay.

Speaker 4 And the way he does that, he's talking about how Tesla has had struggles in the past, how they've, you know, faced issues, which is all true.

Speaker 4 And then he says, quote, we are not on the ragged edge of death, not even close.

Speaker 3 And that to me.

Speaker 4 That tells me that Elon is thinking about this thing called the ragged edge of death. I mean, I knew Tesla's situation was bad.
I didn't think it was that bad.

Speaker 4 But if Elon's saying that, if he's thinking about it, or if he at least thinks that other people are saying it, well, now I'm certainly considering the possibility that Tesla is, quote, on the ragged edge of death, because he just put it in my brain.

Speaker 4 So I thought this was some of the worst investor relations I've seen. Clearly, the market disagrees with me, and fair enough.
But My takeaway is, yes, Elon's back, kind of.

Speaker 4 He said he's still going to spend one to two days a week at Doge. So he's kind of back, but he's clearly, in my view, still in a state of delusion and total denial.

Speaker 4 And I think he did a terrible job of disproving that.

Speaker 3 Yeah, I mean, this just calls on so many themes we've sort of beaten to death. Poor governance.
No CEO would be allowed to do this. And just, I can't help but take the bait.

Speaker 3 If Doge was an attempt to audit a $7 trillion enterprise, I can't think of a single enterprise of $1 trillion that would be issued such a clean bill of health as Doeschees accidentally, unintentionally, much to their disappointment, issued around the federal government.

Speaker 3 First, they said they were going to save $2 trillion, then $150 billion. It looks like it's about $60 to $65, although that can't be verified.
And they just, and

Speaker 3 where's the fraud? You know, Pam Bondi is ready to take a call-in from Elon Musk and go after some federal employee who's been stealing. They're all ginned up to do that and announce it.

Speaker 3 This This is a clean bill of health or as clean a bill of health as you could hope for.

Speaker 3 Now, some people would say that's incompetence on the part of the auditors, but his board, if he had a real board, they would have called him and said, look, if you want to go plant traffic as an advisor to the president, that's your business, but you can't be CEO of this company.

Speaker 3 And also, why are you doing this? You're really hurting us.

Speaker 3 So I don't, this is just sort of new territory here.

Speaker 3 The market seems to believe that he's going to be able to create some of that magic pixie dust. You know, how does Tesla come back?

Speaker 3 A lot like America, I think the rumors of Tesla's brand death have been greatly exaggerated.

Speaker 3 I think if they came up with two or three amazing products in the next three to five years, it's like, we love you again.

Speaker 3 I think Americans still value product over, you know, great value products over anything else. Agreed.
So it could absolutely come back. Whether they have those in the pipeline, I don't know.

Speaker 4 That's the question. That's the bull case.
And those products are, and they said this on the call, it's the Robo-Taxi and it's the humanoid robot, the Optimus robot.

Speaker 4 And I think the other explanation for the reaction from the stock market is that they did say that they are on track for the Robo-Taxi pilot launch in Austin in June, which is what the market has been waiting for.

Speaker 3 So, you know,

Speaker 4 according to them, it's going to happen. And I think I believe them at this point.
The question is, what does a pilot launch actually mean?

Speaker 4 Like, is it a fake PR event like we saw last year in LA with the cyber cab show?

Speaker 4 Is it just one or two cabs rolling around and you have to book like months in advance?

Speaker 4 Or does it mean you can actually go to Austin, you can open your phone and order a ride in Tesla, just like you could a Waymo in San Francisco? And that's the question.

Speaker 4 One thing that made me a little bit bearish is that Elon's response to what it would look like, he said, quote, we're still debating the exact number to start off on on day one,

Speaker 4 but it's like, I don't know, maybe 10 or 20 vehicles on day one. So 10 or 20, I thought that was a pretty low number.

Speaker 4 And given he has a track record of overpromising and under delivering, I could see it being even lower than that. You compare it to Waymo, which has 700 vehicles operating on the ground right now.

Speaker 4 But that's the question. It's like, do we think the robotaxi is going to be legit or not? That's the opportunity.
My view, let's just wait and see.

Speaker 4 I mean, why buy this company if you don't know what you're actually buying? I mean, people say, oh, it's a robot taxi company. It's a, it's an AI company.
It's a humanoid robot company.

Speaker 4 Well, okay, show me the robot. Show me one taxi ride.
Ship one ride.

Speaker 4 And I'll believe you. But they haven't generated a single dollar off of this yet.
And so until they can do that, yeah, I'm not buying.

Speaker 4 And I'm not going to have an argument with you about whether this is a car company or not. As of today, April 2025, it's a car company who sales are down 20%.
That's what it is.

Speaker 3 Waymo is, I think, going to be in 10 or 11 cities, including Tokyo by the time Tesla hits Austin. So what is the competitive? Okay, we'll believe you this time.
You said in 2017 it was a year away.

Speaker 3 That didn't happen. We'll believe you this time.

Speaker 4 And 2010.

Speaker 3 What is your advantage when you have Waymo is out there with cars and they're launching in the biggest cities and then launching globally what how are you going to compete or is this just going to be a race to the bottom or is there his response is it's cheaper that teslas are are less expensive and that's their advantage which i'll take but

Speaker 3 even until then ship the product okay but that's one of two things that's either you have scale uh

Speaker 3 software that's better i don't once the fixed investment is made i don't i it's all about and software, it's about they're driving the same goddamn cars, approximately the same dollar volume.

Speaker 3 How would it be cheaper? It would have to be scale, which means they would take a penetration strategy and lose a shit ton of money. And Alphabet has a much bigger balance sheet.

Speaker 3 I just don't, I don't see how they're going to sustain,

Speaker 3 I mean, Alphabet or Waymo will match their price,

Speaker 3 whatever Tesla claims they're saying. And given that Tesla does not have the most profitable toll booth in the world, i.e.

Speaker 3 Google, to subsidize that market share or penetration strategy, I just, they're going up against, they're a squirt gun against a bazooka when they're talking about capital and scale. Exactly.

Speaker 3 Unless Alphabet says, after all of this money and all this time and establishing market leadership, we're just going to give it up because Elon's decided to engage in a price war.

Speaker 3 They're going to say, fuck you, bring it on.

Speaker 3 And then these robots.

Speaker 3 God, I mean, everybody has to put something crazy out there, I think, to get people excited. Fine.
The concept cars you see at auto shows, none of them are going to be in the showroom.

Speaker 3 And I'm personally really excited to get home from work and ask my Tesla robot if it took the meat out of the freezer. I just can't wait for that moment.

Speaker 3 But

Speaker 3 robots, I just don't,

Speaker 3 I mean, robots have huge commercial applications. It's called robotics and automation, but I don't, what is the use case for the robots? I just find the whole thing kind of

Speaker 3 comical.

Speaker 4 They asked Elon about the humanoid robot, asking a similar question. They said, could you confirm if it is currently operational? If so, what is the current production rate per week?

Speaker 4 And Elon said, quote, I want to emphasize Optimus is still very much a development program. This is sort of the play with this.
Just talk about it.

Speaker 4 And then when they ask for the specifics, just sort of delay and obfuscate. That's how he's handling it.
But the market likes it.

Speaker 3 We'll see.

Speaker 4 Let's take a look at the week ahead. We'll see data on the personal consumption expenditures index for March, and we'll also see earnings from Microsoft, Meta, Apple, and Amazon.

Speaker 4 Scott, you have any predictions?

Speaker 3 Essentially, Donald Trump is about to get Mark Carney elected as Prime Minister of Canada. This was a foregone conclusion that he was going to lose.

Speaker 3 I'm not sure I'm saying his name correct, but the Conservative candidate, Poly Evre, I believe, I'm terrible at this,

Speaker 3 he was going to win. Trudeau was so unpopular.

Speaker 3 And entering into this trade war, and who Mark Carney as current prime minister has been very kind of forcefully idignified, this will be the greatest comeback in probably political history.

Speaker 3 25 points down at the turn of the year, and it's all because of Trump.

Speaker 3 So, anyways, my prediction, and I interviewed Prime Minister Carney on the Prop GPod, has almost a million views, I think, on YouTube. And he's very likable.

Speaker 3 He's very, he comes across as incredibly thoughtful, schooled in the U.S., went to work for Goldman Stacks, was the first non-Brit to head the Bank of England. So he's incredibly...

Speaker 4 Probably the best resume of all time in the world, maybe.

Speaker 3 Yeah, it's just hard to argue with his credentials.

Speaker 3 And he's tall, he's handsome. You know, he's out of central casting, and he's just handled this.

Speaker 3 He's what you would want from us. You would want someone forceful and dignified and not having an emotional reaction, but, you know, saying this is not adequate for us.

Speaker 3 We look forward to reestablishing relations. But until that point, we're obviously going to stand our ground.

Speaker 3 Anyways, prediction is Trump is about to elect a guy who was 25 points down just four months ago. The next Prime Minister of Canada will be Mark Carney.

Speaker 4 Are we political insiders in Canada then if he wins?

Speaker 3 I expect to be invited to at least a hockey game.

Speaker 3 Good. I want to tag along.

Speaker 4 Just CC me on the email.

Speaker 3 He grew up in Edmonton, so he's an Oilers fan, so we're going to have to go all the way out there. Maybe we'll go for their Calgary Stampede or something.

Speaker 3 But yeah, he and I are good, good friends now. We're very close.
Very close.

Speaker 3 I'm going to be the secretary of something in Canada. Secretary of hockey.
There you go. How's that? I like it.
I'll take it.

Speaker 4 This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss.
Mia Silverio is our research lead. Isabella Kinsel is our research associate.

Speaker 4 Dan Shallan is our intern. Drew Burroughs is our technical director.
And Catherine Dillon is our executive producer. Thank you for listening to Profitty Markets from the Vox Media Podcast Network.

Speaker 4 Join us on Thursday for our conversation with Mark Mahaney only on Profit Markets.

Speaker 4 as the world turns

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Speaker 2 Support for this show comes from Volkswagen. As the U.S.

Speaker 2 gets ready to host soccer's biggest moment on a worldwide stage, Volkswagen is helping people discover new turfs and new ways to play the beautiful game right here in the U.S.

Speaker 2 From deaf and power wheelchair soccer to beach and futsal, Volkswagen is actively supporting all the communities and teams within the U.S. soccer ecosystem.

Speaker 2 They're supporting talent from across the U.S. soccer extended national teams and are focused on helping to give these less widely known forms of soccer a platform moving forward.

Speaker 2 From the pitch to the sand and everything in between,

Speaker 2 welcome to our turf.