Prof G Markets - U.S. Takes 10% Stake in Intel, Powell’s Jackson Hole Speech + OnlyFans’ $7B Boom

Episode Date: August 26, 2025

Ed is joined by Justin Wolfers, professor of public policy and economics at the University of Michigan, to unpack the U.S. government’s deal to become Intel’s largest shareholder. Then, Ed breaks down the key takeaways from Fed Chair Jerome Powell’s Jackson Hole speech. And finally, he dives into the latest annual report from OnlyFans, and the dark side of its growth. Check out our latest Prof G Markets newsletter Order "The Algebra of Wealth" out now Subscribe to No Mercy / No Malice Follow Prof G Markets on Instagram Follow Ed on Instagram and X Follow Scott on Instagram Learn more about your ad choices. Visit podcastchoices.com/adchoices

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The show you never watch the show. Welcome to Property Markets. I'm Ed Elson. It is August 26th. Let's check in on yesterday's market vitals. The major indices all fell, retreating from last week's rally following Jerome Powell's speech in Jackson Hole. We'll talk more about that later. The yield on 10-year treasuries and the dollar rose. Meanwhile, Elon Musk's ex-AI sued Apple and Open AI, accusing them of an anti-competitive scheme. Apple's stock was unmoved by that threat, and it ended the day in line with the NASDAQ. Okay, what else is happening?

The US government just made perhaps its biggest move in corporate America since the financial crisis. President Trump announced the government is taking a 10% stake in Intel worth nearly $9 billion. That makes Washington the chipmaker's largest shareholder, though it won't have a board seat or any governance rights, apparently. Intel shares jumped more than 6% on this news. Now, a lot here. What does this mean, first off, for Intel? I mean, the answer is who really knows? And perhaps they'll get some form of preferential

or special treatment from the government. I think that's certainly what the markets are pricing in right now. And, you know, to be fair to Intel, in the age of Trump, that's kind of a good thing to have. I mean, that's exactly why Tim Cook and all these other tech CEOs are literally bringing gifts made of gold to the king, a very similar setup, by the way, to what Henry the 8th had back in the 1500s, because, you know, they know there is an ROI to this. There is an ROI, there is a return

on your investment to kissing the feet of the emperor. It can actually yield returns. That's at least what Apple is betting. So, you know, perhaps there is some upside here for Intel now that they are in bed with the White House, now that the administration owns 10% of them, perhaps. The more interesting question, though, is what does this mean for government? I mean, this is a Republican president. This is the party of small government and deregulation, and they've just gone and seized a 10% stake in a private sector company. That's what the CCP does.

I'm sorry to go there, but that's basically ground zero for communism. By the way, can you imagine the reaction if a deal? Democrat did this? Can you imagine if a Democrat had looked at a flailing American company and decided, oh, the solution to your problems is for the government to own you? Can you imagine what would be happening on Fox News if a Democrat did that? Now, of course, the defense for many people has been that this is nothing new. And to be fair, they're kind of correct on that. America does have a history of taking strategic stakes in key industries. It happened during World War I, when the railroads were nationalized,

along with telegraph and telephone systems. It happened in the 50s when Truman temporarily seized the steel mill industry to avert a strike, and it happened after the 2008 crisis when Fannie Mae and Freddie Mac were bailed out and placed into conservatorship and controlled by the federal government. It's happened before. But you may notice that all of these examples have one thing in common, and that is they were a response to a crisis. without some sort of intervention, there would have been some form of imminent economic collapse.

At least that was the argument. And that is the problem with this deal, is there is no crisis here. The economy is doing just fine without intel. The AI economy is ripping. We are home to Nvidia, which is alone worth 44 intels. And if this really were a crisis, as the administration is seeming to suggest, If the problem is that we're too reliant on Taiwan or China to get our chips, that's what some people are saying. Well, then why are you off brokering these deals between Nvidia and AMD to sell more chips to China?

I mean, none of that really makes sense. And the only justification that I can come up with here is that Trump basically just wants to throw his weight around and, you know, get some deals done. I mean, that's the only thing here that makes sense to me. But who knows? Maybe there are some other answers. Let's check in with our friend, Professor Justin Wolffers. He is a professor of public policy and economics at the University of Michigan. Let's see if he can make some sense of this deal.

Professor Wolfers, thank you very much for joining me again on Profi Markets. Great to have you. It's so exciting. How many days do we get to talk about nationalizing the means of production? I've been waiting for this all my life. I'm glad you just got right to it, because that's what I want to get your reactions to, the administration, the government, taking up 10% in Intel, nationalizing the means of production, as you call it, just your initial reactions. What does this mean? What does this say about the state of business and possibly the state of America right now? There are so many ways I could have fun with this right now, and it's so hard for me not to. So I'm not going to, Ed. No fun. Mate, here's, I just want to start by teaching the economics of this, and then we can talk about the broader issues.

What the federal government has done is it's taking a bunch of stock certificates, stock in Intel, and they're in someone's safe. I don't know if they're in my mutual funds or if they're actually still sitting at Intel HQ, but they're taking a bunch of stock certificates and they're moving in from that safe to another safe, safe stored at the federal treasury. That's it. Nothing's changed. So if this is about helping Intel, the physical location of stock certificates seems like a very weird way of doing it. So the CEO hasn't changed. The corporate strategy hasn't changed. Intel's line of business hasn't changed.

Where it stands in the line for government procurement contracts hasn't changed. Its list of strategic advisors might have gotten smaller because those stock certificates were sitting in someone safe and maybe those folks are activist investors. Now sitting in the federal government safe, the federal government has said that they're not going to be active investors. So one fewer, if you believe the government, one fewer group looking over the board's shoulder. So once you understand what's happened, you're left wondering, What problem is solved by moving stock certificates? Are you posing the question to me? Yeah, to everyone, to the federal government, to President Trump, to Howard Lutnik, to the CEO of Intel.

There are lots of arms to industrial policy and lots of debates about industrial policy and lots of ways of doing industrial policy, but you have to understand a problem that you want to solve before you come up with a solution. Right. You know, I don't know what problem they're trying to solve, but I do know I'm a pretty creative guy. I cannot think of a single problem

that is solved by the relocation of stock certificates, which is what the government's claiming it's doing. Right. So until someone can explain that, I'm left to conclude this is stupid. Or they're not being honest. So go into the honesty because the way I, if I were to answer that question right now,

I would say the difference between the stock certificates now being in the hands of the government is that now those stocks and the company as a whole are perhaps subject to preferential and special treatment. Why? Because the government owns it now. because Trump is in bed with Intel. So when we talk about actual ROI, real business returns, perhaps the returns here are,

well, now you're part of the club. And now you're going to get special treatment. I don't know what that special treatment looks like, and I'd like to get your opinions of what it might look like. But perhaps that's the upside, and that's the difference between having it in a different safe. So we're in this totally unusual and bizarre world

where if we take the government at its word, we're left with the implication that it's an incoherent policy. So you and I have to make up rational rationales. So let me tell you how I was taking the government in its word. There are a bunch of things the government could do. It could be that what it's going to do is now we own 10% of Intel. We're going to use that. We're going to use intel chips throughout the federal government, for federal procurement.

It could be that the president's going to call the CEO of Apple and tell Tim Apple that has to use Intel chips, or he could be about to call Prof G markets and suggest that all future podcasts have to be produced with Intel chips. And it could be the government's going to use its enormous leverage to rescue Intel, except Secretary Besant said literally, we are not going to do that. It could be that there's a bailout here, except they said they're not going to do that. It could be that the White House understands how to run a chip company better than the CEO, and they will put pressure on Intel to make smart decisions rather than dumb decisions. But, A, is this a White House whose ability to execute business plans is one you particularly

trust? And B, they've said they intend to be passive investors. Right. So I'm not being funny when I say, when you believe what they're saying, then all they're doing is transferring stock certificates. Yes. So that means we're left with, if you believe what they're saying, they're doing nothing helpful for anyone. So you and I now are left with a game of if they're only lying in this part or this part or this part, what does it all mean? And in fact, the president has shown a tremendous interventionist urge.

Right. He wants to tell Coke what recipe to use, how much to use sugar versus corn syrup. He wants to tell Harvard how to teach and hire. So it could be that's what we're going to get. Maybe not. It could be that the government is, in fact, going to bully other people into using until chips. Right. That's a different form of intervention.

Do you want the White House deciding what sort of chip will be in your next computer, or would you like the freedom to decide for yourself? Would you like to use Intel or another great American company, AMD, who are not getting this special government interest? Do you think that the president is the optimal tech advisor for choosing what should be inside your laptop? I happen not to. It could be the president's decided he is now our stock picker in chief,

and he understands that Intel is currently undervalued. Wall Street does not. And he's just wisely investing our money. But honestly, I would prefer to make my own stock picks and not have the White House do it for me. Yeah. The question now becomes, is this a precedent for the future?

And I would like to quickly play you a clip from an interview with Kevin Hassett, who is the director of the National Economic Council. He seems to sort of answer the question for us. Let's get your reaction. The president has made it clear all the way back to the campaign that he thinks that in the end, it would be great if the U.S. could start

to build up a sovereign wealth fund. And so I'm sure that at some point there'll be more transactions, if not in this industry, at other industries. So I think we're going to see more of this. I mean, we already saw it with US Steel and the golden share. Now we're seeing with Intel, probably going to see some more of this. Your thoughts? Okay, there's so much there. So I know you want to be quick.

I want you to come back and ask me about sovereign wealth funds. Okay, and then I'm going to go elsewhere first. Is this the bleeding edge? So if the question is, is this the bloating edge of government intervention? Yeah, it's already gone. Right, this is the most interventionist government of my lifetime, whether it's Coke, whether it's Harvard, whether it's, by the way, this is so weird. The beginning of August, the bloke tweets, posts on truth social, we must, Intel must fire its CEO. Then the Intel CEO visits the White House.

And then he tweets, we're buying 10% of Intel. Yeah. I have no idea what that means, but like, wow. That now means we are. What did he do in there? It means you want to let us. In a company run by a guy, the president thinks shouldn't be CEO. Yeah.

I tend to buy stock in companies run by good CEOs. That's just me. I'm old-fashioned. So, look, are we on the way to interventionism? Absolutely yes. We're already there. Government ownership of the means of production or of private companies, arguably nationalizing. So it's very unclear what's happened here.

If you, I watched an interview with Howard Lutnik. Lutnik says his claim is, He said, he sat down with the Intel CEO. The Intel CEO, according to Lutnik says, you're scheduled to write me a $10 billion check. I don't want it. If that's true, I definitely want to fire the guy. That's a $10 billion mistake right there.

And then he says, he have 10% of my company. If this is true, then Lutnik sat down and basically threatened the guy with something, something, something. And the guy said, have 10% of my company. Right. I don't want to invest in creating capital if we're doing that form of capital taxation. Right. So if you believe them, they didn't buy it, they nationalized it. Yeah.

And I'm saying if you believe them, I don't actually know what to think anymore. But that's like through the looking glass. And so now let me come back to, you said this is going to be the first of a whole lot. So basically what just happened was Kevin Hassett made up a fancy set of words for, we're going to keep doing this. And I think it's, by the way, every third world dictator does this. Right. They decide that they're going to have national champions.

That's why these tiny little countries that have airlines. And these countries that can't run a currency have their own currencies. And they all do it because that's how they show their might. And one would have thought the US already had plenty of might without needing our own, and indeed plenty of chip companies without needing this. But apparently that's where we are. So has to come up with some language for this. So the language is this is going to be part of a sovereign wealth fund.

well if it were a sovereign world fund first of all there'd be a pile of money and we would have used some of it to buy 10% of intel that part's completely unclear secondly i just want you to understand this is a country that owes the rest of the world a lot of money so if we're creating a pile of money for the president to buy stock with that must mean over here we're borrowing more so my advice to my friends if you don't have a lot of money to lose don't go into debt to gamble. Yeah. That's literally what it would be. A sovereign wealth fund would be, we're going to borrow money in the global market to have the stock pickers in the White House hopefully make money on that.

Yeah. I don't have a great deal of faith. I have a great deal of faith in markets. I don't have a great deal of faith that the White House is a great set of stock pickers. Yeah, exactly. Well, Professor Wolfers, I think we could talk for hours about this, and I think we probably should soon for a full interview on our interview episode. But for now, we're going to thank you for joining.

Really appreciate your time. Great pleasure, Ed. That was Professor Justin Wolfers, Professor of Public Policy and Economics at the University of Michigan. Well, you heard it from him, and you heard it from Kevin Hassett. We've had a lot of interventionist policies. we've seen the golden share at U.S. Steel. Now we're seeing it at Intel. I think we can only assume that this is going to continue.

We'll be right back after the break with Jerome Powell and his speech at Jackson Hall. And if you're enjoying the show so far, hit follow and leave us a review on Profty Markets. 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 it can optimize your investing as well? For that, you can check out public.com.

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Visit flyporter.com and actually enjoy economy. We're back with ProfiMarketer Markets. All eyes were on Jerome Powell last week as he gave his final speech as Fed Chair at the annual Jackson Hole Conference. While he stopped short of explicitly backing a rate cut at the Fed's next meeting, he did send his clearer signal yet that rate cuts are on the way, markets rallied on the news, sending stocks higher, and pushing the Dow to its first record close of the year. In a speech, Powell said, quote, the shifting balance of risks may warrant adjusting our policy stance. What is that shifting balance he's referring to? Well, you may remember

July's employment data came in much weaker than expected, and when the labor market shows signs of deterioration, the Fed typically cuts rates to stimulate hiring. Meanwhile, on the inflation side of the equation, Powell said the effects of tariffs on prices are, quote, clearly visible, but the impact may be short-lived. Okay, so Jerome Powell has spoken. He said a lot of stuff, but more interesting than what he said is really what he didn't say. No mention of his dealings with the president. No mention of the dissent and division that is growing within the Fed right now. No mention of the accusations of fraud against Lisa Cook, who, of course, sits on the Fed Board of Governors. And no mention of Trump's call for her to resign. No mention of any of that. And that's not really surprising that he didn't mention these things. But these are the elephants in the room right now when it comes to the Federal Reserve.

And the speech that he gave, it was distinctly apolitical. It is quite evident, as Josh Brown predicted in our previous episode, that Jerome Powell is trying to take the temperature down. He's been called a moron by the president. He's been called dumb, a num skull. He's been threatened to be fired. But none of this showed in this Jackson Hole address where he was basically just as neutral as the last one. I mean, you would never have known that this is the guy who is getting absolutely berated on a week to week basis by the commander-in-chief. Now, in terms of policy, there were some developments. In some, the position from Jerome Powell, despite the fact that inflation is still way out ahead of the Fed's target of 2%. The position is rate cuts are on the table and we might see rate cuts in September. In fact, we can look at the rate cut probabilities for the Fed's next meeting on September 17th. Before the address, Wall Street had it at 73%, 73% likelihood of a rate cut. After the address, it's up to almost 85%. So right now, the money is certainly on a 25 basis point cut in September.

So lots to think about here. Let's get some more analysis. I'll producer Claire spoke with Aditya Bavé, who is a senior U.S. economist at Bank of America Global Research. So I think Chair Powell was definitely more dovish than markets were expecting. The key passage in his speech was when he said it may be appropriate to adjust policy rates. Our takeaway was that the onus is now very heavily on the data to disprove the case for a cut in September. You would need, in particular, a rather strong August jobs report.

So decent job growth for August, unemployment rate of 4.2% or less. And importantly, minimal downward revisions or preferably upward revisions to July in order to prevent a cut. Otherwise, the Fed seems inclined to cut. And if they do go in September, it's probably not. not going to be a one-off because if you think about the economic impact of just doing 25 basis points of red cards, it's basically zero. So if you're going to go, you're probably going to do more than 25, I would guess, you know, maybe 50 basis points or kind of a mini-cutting cycle and then reassess. But I would point out that our call is still that they don't cut in September.

We still think that they are risking a policy mistake by cutting rates just because the economy might be re-accelerating, and inflation is headed towards 3%. Are you worried at all that that September rate cut might be politically motivated and that he, Powell, might want to just get Trump off of his back? Or do you think that this is still a data-driven decision? I won't really get into the politics of this. Just in terms of the data, Powell is really quite concerned, it seems, about the labor market. And our concern, again, is that May and June might just have been a blip, in which case

the labor market could recover. We had a similar phenomenon last year, so maybe there's some seasonal effects around the summer. And if the labor market picks up again into the fall, I think they're going to look worse than they did last year. Last year looked like a policy error. This year is going to look worse because inflation is even higher. And when I say policy error, we're not in the business.

telling the Fed what it should do, I'm thinking more in terms of how markets will respond. And markets will say it's a policy error if the long end sells off. Because ultimately, the transmission of monetary policy happens through long-term rates, through borrowing rates, right, mortgage rates and so on. So if the long end sells off, they've wasted ammunition and they basically achieve nothing, which is kind of what happened with the cuts last year. When do you think it would be appropriate to begin cutting rates? I think they need to see pretty decisive evidence that inflation is headed back towards 2%

unless the labor market is showing signs of a recession. If the labor market looks recessionary, then of course it's a different story. You have to cut and you have to cut aggressively. But in a slag-flationary outlook, it's better to be late than wrong. And this is something that Cleveland Fed President Hemek has said repeatedly, we're probably closest to her in terms of our views of the tradeoffs. with inflation, it's not just the tariffs. This is another point that we've been making a lot of focus on how transient transitory or not the tariff impact will be, how large it will be.

But even underlying inflation acts of tariffs, we think that's stuck around 2.5%. That was Aditya Bave, senior U.S. economist at Bank of America Global Research. Let's just rewind a second to when Scott and I last discussed this question of rate cuts. many, many months ago, towards the beginning of the year, I made this kind of contrarian prediction that we would not get rate cuts until September. My view was that Jerome Powell understands how economics works, and he knows that if you raise tariffs in April,

you're not going to see the effects on prices for a long time, probably the fall at least, because it just takes a long time for these tariff impacts to funnel through. That prediction was a good one. It turned out to be correct. Later on, I made another prediction. And my next prediction was that we wouldn't even get a rate cut in September, because my view was that the data is still too murky,

and Jerome Powell still wouldn't be comfortable adjusting his position. Well, according to Wall Street, based on Jackson Hole, that prediction will likely not be correct. We've heard Aditya's view, but Wall Street is saying, no, no, no, we're going to get rate cuts. That's what people expect right now. And maybe we will. We'll see. But let me just remind you of the very basic premise

that informed both of those predictions because the premise remains intact. And it's very simple. The premise is Jerome Powell will not cut rates until he knows what the data is telling him. It is as simple as that. And what we heard from him at Jackson Hole is that basically the data is now beginning to tell him a story.

That's why he sort of softened his stance. It's beginning to tell him that, yes, tariffs are affecting prices, but at the same time, you've got this employment thing. Employment is becoming a concern. And we are now reaching a point where we need to balance those two issues. And if it means taking a little bit of risk on the inflation front, then he's not necessarily going to take that risk, but he's certainly going to consider it. That's what he told us in Jackson Hole last week.

It's on the table now. But remember, he's still not going to do it. until the data tells him the full story. It's beginning to tell him the story, but we still don't have the full picture. And we've got two more incredibly important reports on the way before the Fed meets again in mid-September. We've got the August jobs report,

which is out September 5th, and we've got the CPI report, which is out September 11th. And those reports are going to be so important because if the jobs report tells him the markets that the employment market and the labor market is doing just fine. And the CPI report tells him that, you know, tariffs are pushing prices up even more than they already are, then I can guarantee you he's not going to cut rates.

Put another way, despite what people want to believe, this doesn't have anything to do with politics. This has nothing to do with Trump. It has nothing to do with Lisa Kirk. This has everything to do with the data. It's the data that matters to Jerome Powell. And we've got more data to come. And that's exactly how it should be. online creator platform only fans is continuing its hot streak with the company posting another year of impressive growth in its latest annual report which was released just a few days ago gross revenue climbed nine percent in twenty twenty four topping seven billion dollars net revenue rose eight percent to nearly one and a half billion creator accounts surged thirteen percent to more than four point six million and fan accounts climbed twenty to more than 377 million. So almost 400 million users on this platform. Now, I don't think people really comprehend

just how gigantic this company has become. I mean, $7 billion in global payment volume, one and a half billion in net revenue. Nearly half of that was turned into profit. And they did all of that, by the way, with just 46 employees. and that makes OnlyFans, on a revenue per employee basis, one of the most efficient and profitable companies on Earth.

Nvidia makes about $2.1 million per employee. Apple makes $2.4 million. Netflix makes $2.6 million. OnlyFans makes $30 to $35 million per employee. Unbelievable. I mean, while you've got nearly 5 million creators and more than 377 million users on the platform. And in 2024 alone, the owner, Leo Radvinsky,

received $700 million in dividends. Dividends. That is way higher than the take-home pay of any Fortune 500 CEO. Now, we've talked before about how this company is in talks for a potential sale. There are some questions about that. We don't have anything new to report on that front. The only update we have right now are these financials that just came in, and they highlight how dominant this company has become.

And it's worth highlighting. Because, you know, 20 years from now, when we look back at the 2020s, when we look back at this time, I really think there is a good chance that the company that we point to that defined the era, the company that defined the 2020s, I think it may well be only fans. I mean, consider those financials I just told you. And then at the same time, just consider the state's

of America, of young people in America, specifically young men in America. You know, the fact that 93% of boys today are exposed to porn by the age of 13. The fact that two-thirds of young men are regularly consuming porn, and one in ten are saying they have an actual porn addiction. The fact that a quarter of young men say they are struggling with loneliness, the fact that a third of us aren't having sex, 40% of us no longer interested in dating, the fact that a quarter of young men are struggling the fact that the number of young men with no close friends at all has quintupled in the past three decades. This is all telling of a very, very dark chapter in the story of the internet, which has essentially eviscerated our capacity to establish connections and genuine relationships

with other people. And there is no company that is more emblematic of that chapter than Onlyfans, where hundreds of millions of... of men are paying women for online sexual content and to basically pretend that they have a relationship, that they have some girlfriend relationship. I mean, that's the big difference between OnlyFans and outright porn. On OnlyFans, there is a semblance of a relationship. It doesn't just address the sexual desire. It also addresses this issue of loneliness. It makes the man feel like they know the woman. They have this exclusive access. They have a conversation. It makes them feel for that moment a little less lonely. And as I've said and

written before, this loneliness thing, this is the biggest issue of our time. Now, when we look back on the winners and the losers of this era, we are going to bucket them into two categories. It'll be those who capitalized on loneliness and those who didn't. And there is no company in America that has capitalized on loneliness more aggressively and more effectively than OnlyFans. They didn't create the loneliness epidemic, but they did build a business around it. And in so doing, they quietly became one of the most lucrative and successful platforms in the world, not by selling ads, not by selling hardware, but by selling intimacy at scale. There are 377 million users, up 24% from last year, more than the population.

of the United States of America. But I'm sorry to say, I think that number's only going to keep growing. Because we are still an addicted and sexless and unprecedentedly lonely society. And as it stands, there is just nothing getting in the way of that. So we've gotten our confirmation.

2024 was a banner year for OnlyFans. And I'll end this show with a very easy prediction. 2025 is only going to be better. Okay, that's it for today. This episode was produced by Claire Miller, edited by Joel Patterson, and engineered by Benjamin Spencer. Our associate producer is Alison Weiss.

Our research team is Dan Chalon, Laura Jaina, Isabella Kinsel, and Mia Sovereo. Our technical director is Drew Burroughs. Thanks for listening to Profti Markets from the Vox Media Podcast Network. If you liked what you heard, give us a follow. I'm Ed Elson, and I'll see you tomorrow.

Thank you.