Prof G Markets - Winners and Losers Under Trump’s Second Term

Episode Date: November 11, 2024

Scott and Ed open the show by discussing the end of the Boeing machinist workers strike, Perplexity’s offer to help the New York Times, and Palantir’s earnings. Then Scott and Ed break down the sectors that they expect will see the biggest gains and losses under the Trump administration. They also discuss which regulators will survive the Trump administration and explain what the market is telling us about the future of housing prices.  Check out Prof G Markets in Spanish and Portuguese on Youtube.  Order "The Algebra of Wealth," out now Subscribe to No Mercy / No Malice Follow the podcast across socials @profgpod: Instagram Threads X Reddit Follow Scott on Instagram Follow Ed on Instagram and X Learn more about your ad choices. Visit podcastchoices.com/adchoices

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So now, it's easier than ever to be a marketer. Get started at HubSpot.com slash marketers. Today's number, $446 million. That's the combined payout election bettors will get from prediction sites, Polymarket and Kalshi. Wow. Welcome to Profit G Markets. Today we're discussing winners and losers in the markets under a second Trump term. But first, here with the news is Prop G analyst Ed Elson. Ed, how are you?

I'm doing very well today, Scott. The sun is shining. It's a new day. I'm feeling pretty good. How are you feeling? So, I did, I don't know if I told you, did I tell you about my Peronian Xanax prescription? Panics. I did hear about that. But I didn't hear how the bet fully shaked out. I know you bet on the election, so you're feeling a little more upset than you otherwise would have, right?

Well, no, it's better to be lucky than good. So what happened was I went to Polymarket thinking I had great insight. It was trading at about 60-40, meaning you get a payout of two and a half bucks on what I thought was a coin flip. I was going to go on Polymarket. I started registering and it said, oh, you're not in the US or you're in London. You can't do it. And I'm like, oh, fuck. And so I went to this thing called Bet365. And as you can imagine, I'm really good and have a lot of patience with registering at sites. So I didn't end up doing it. I thought, well, I still want to do this. So I did a collared option strategy, and that is I sold in Donald Trump media a bunch of calls at a strike price of $20, thinking it what I think is referred to as a caller strategy. I got $21 in premium for selling the calls, and it cost me $6 for the insurance on the back end at $60, so a net proceeds of $15. And I also thought that even if he wins, that stock has become a bit of a

meme stock or a prediction vessel for the election. But once the prediction is over and it's obviously wins, we're left with a shitty company. And so I thought there was a decent chance. I knew it would go down if she won, and I thought there was a decent chance it still might go down if he won. Anyways, as we sit here today, I think the stock has fallen up dramatically. I think it's trading at about 28 bucks right now. So I've actually made money on this trade. See above, it's better to be lucky than good. But here's the asterisk here. I'm self-conscious. I like to be transparent about money because I think people should talk about money. This is not investing. This is gambling. I want to be clear. I know I'm gambling. And whenever you write an option, especially if you

write calls, I would say be very careful and think about buying calls that are very upper end such that you don't get hurt too badly. And also, don't ever gamble more money than you can afford to lose. And my personal metric is I can lose enough money that it would ruin my morning or my afternoon, but it couldn't even ruin my day. So, because be clear when you are playing with options, you know, what is it, 80 or 90% expire worthless worthless. So this is a highly risky strategy. This is not investing. This is gambling. But I was so confident that Harris was going to win that I wanted to play this. And I got lucky by doing this option strategy and the fact that Donald Trump media is no longer seen as a bellwether that he's going to win. He's won. Now it's just a shitty company that's got $3 million in revenues and is hemorrhaging money but

we'll see it's there's still time here they don't expire till next friday okay so just quick message to our listeners please do not short squeeze my boss please don't do it we don't we don't want it to go to 60 and with that we'll start with the weekly review of market vitals. The S&P 500 climbed, the dollar strengthened, Bitcoin hit a new record, and the yield on 10-year treasuries spiked. Shifting to the headlines. The Boeing strike is over after workers voted to accept an offer that includes a 43% compounded raise over four years. However, the deal does not restore the pension plan, which was a sticking point for many union members. Perplexity CEO Aravind Srinivas has offered to provide technical infrastructure support to the New York Times

amid the Tech Guild strike. That offer comes less than a month after the Times sent a cease and desist to Perplexity, demanding the startup stop using its content to train AI models. And finally, shares of data analytics firm Palantir rose 23% to a record high after its earnings beat analyst expectations. The strong earnings were primarily driven by robust US government spending on its products, with the company securing a $100 million military contract. Shares are up more than 218% so far this year. Scott, let's start with Boeing. And I'll just quickly go over the agreement here. So they're getting an immediate 13% bump, followed by three more bumps over the next three years. So ultimately, over four years, when you factor in compounding, they're going to get a 43.65% increase from their

current wage. They're also going to get a $12,000 ratification bonus. They are not getting that traditional pension plan that many of them wanted. They're going to get the defined contribution plan. If they invest 8% of their salary into their 401k, Boeing will co-invest that same amount into the 401k. So this kind of turned out the way that we expected. The workers got that pay rise that they were looking for. We predicted that. We said it was a reasonable request.

They got it. They didn't get that pension plan. We also predicted that. Scott, your reactions to the end of the Boeing strike? I think you summarized it. This feels right as rain. They clearly, they hadn't had a raise in, I think, five years when inflation was up substantially. 43% is real cabbage. It's a little bit misleading because my understanding is it's over four years, so it's more like 8% or 9% a year, I think,

if it compounds. Right. 13%, 9%, 9%, 7% specifically. There you go. So it's a real raise. That's going to be hopefully much faster than inflation. So their purchasing power will go up. But yeah, this was an easy call around the pension. Companies can't subject shareholders to a pension plan that might end up becoming like an unexploded device within the company where they have all these obligations after the asset has left the company. So good for Boeing, good for Boeing employees, good for the planet. Perplexity, this is a pure publicity stunt, and it's smart because we're talking about it. And he's not going to win a lot of favors with, you know, NYT employees, but what's a little bit misleading or requires nuance to what you're saying, NYT is suing everybody that's using their content. They're not specifically going after,

I mean, they're going after all of them, right? They're saying they're trying to build some IP and they're trying to ring fence their content, which is smart. If they were smarter, they'd be binding together or creating a consortium such that they could speak with a louder voice. Because even as strong as all the NYT or valuable as all the NYT content is, it's still not strong enough to go toe-to-toe with any of these guys. Any thoughts from you on perplexity? I think you're exactly right that this is a publicity stunt. And we should just confirm it worked. This was covered by 13 different news publications. Just the simple act of the CEO going to the New York Times and saying,

hey, you want to use our AI in the midst of your strike. Those publications include the New York Post, they include TechCrunch, several others. And here's the most important statistic, which is that in the past seven days, Google search volume for the CEO, Aravind Srinivas, has increased 70%. So as far as publicity stunts go, this was sort of a smashing success. Yep. And then Palantir. So I got to give it to them. I was very skeptical of this company.

I thought it was very opaque and creating this kind of cloak and dagger feel to create differentiation or deep dark technology where there wasn't any. They're clearly continue to perform, continue to beat expectations. The CEO understands storytelling. So nothing like a company that's kind of got this deep, cool, innovative AI, spy versus spy feel, combined with beating earnings consistently, combined with a CEO who goes on Bill Maher and is really great at messaging. So this company, in my mind, is still incredibly overvalued, but good for them. Stock has tripled in the last year, second best performer in the S&P. Right now, our S&P 500, Vista, an electricity provider that has

benefited from the AI power boom, is number one. But their government revenue was up 40% year-on-year to $320 million, making up about two-thirds of the company's total revenue. They traded a PE of 130, which is more than three times the valuation on a PE basis of NVIDIA. And NVIDIA is growing four times faster than Palantir and has 50% net profit margin compared to Palantir's 20%. So one of two things is true here. Either Palantir and has 50% net profit margin compared to Palantir's 20%. So one of two things is true here. Either Palantir is dramatically overvalued or NVIDIA is dramatically undervalued. It has a ton of short interest, more than its competitors. As a percentage of its float, Palantir's up around 5%, Snowflake's at 4%, and IBM is at about 2.5%. And then people are very

bullish on Palantir because of the incoming administration, thinking that defense spending typically goes up under Republican administrations. And in the first two and a half years of the Trump administration, Palantir's revenue from the U.S. government contracts surpassed its total under President Obama's entire second term. So this is a government contractor, but it's a good business to be in. Yeah, well, the defense spending point is interesting because, yes, exactly, they're still heavily reliant on government revenue, makes up 64% of their overall revenue. Most of that is analytics for the military and for the Department of Defense. And what the market is telling us is, you know, one, they had a great quarter, but at the same time, they're also bullish on the fact that we have a Republican in charge, that Trump is now in charge. And it's going to be an isolationist foreign policy. His whole shtick is that we're going to be pulling back from all of our military exploits.

That's at least the argument that I've been hearing from my Republican friends. And so, you know, it feels like we're at a bit of a crossroads. It's not really clear what we think is going to happen in terms of defense. He said he's going to cut spending, but the market is telling us, no, we actually think that Trump's going to increase the amount that we spend on the military, which, yes, would benefit Palantir. If he cuts back, it would be harmful to Palantir. So I think that's just an interesting dilemma right now. But I think it's something to keep an eye on. I think Palantir is going to be a good tracking stock for trying to understand where are we headed in terms of our defense spending.

I think the market's got it right. I can't see Trump. First off, Trump is not afraid of deficits. He loves being able to beat his chest. I just can't see the whole affinity testosterone-driven macho bullshit resulting in him ever cutting spending on the military. I think he—I just don't think all the incentives are lined up for it to either keep at best military spending flat. I'd be surprised if it didn't go up.

It's just the kind of guy he is. He wants to be able to say, you know, go to Putin and go to Tim Jong-un and say, yeah, our military continues to spend more than the next 10, nine biggest spenders combined. We'll be right back after the break with a look at the market's winners and losers under a second trump administration and quick reminder prof g markets has its own feed now there you'll get two episodes every week so if you're still listening on the prof g pod move over type in prof g markets wherever you get your podcasts and hit follow We'll be right back. But that doesn't make it any easier to start investing in the technology of tomorrow. Because most of the AI revolution is being built and funded in private markets. That means the vast majority of AI startups are going to be backed and owned by venture capitalists, not public investors. The Fundrise Innovation Fund is trying to change the landscape for regular investors.

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So, Scott, we're just going to look at the market's reaction to Trump's win, and we'll go through some of the winners and some of the losers under this new administration. So we'll start with the winners. Our first winner is the US stock market overall. So the S&P 500 surged, so did the Dow, and this is all in broad expectation of corporate tax cuts. Trump plans to bring down the corporate tax rate from 21% to 15%. In addition,

volatility is down as investors finally know the result of the election. So that has been a help for the stock market too. Going to more specific companies and more specific sectors, our second winner is Tesla. So Tesla rose 14% after the election result. Investors believe that Tesla will benefit from this administration, largely due to likely his relationship, Elon Musk's relationship with Donald Trump. But there are some other more concrete economic explanations. So for example, Trump's China tariffs. As we know, Trump is planning to increase tariffs on China, which will keep Chinese competitors out of the US. And as we've discussed before, one of Tesla's greatest threats is BYD,

a Chinese vehicle maker. In addition, Trump plans to remove subsidies for electric vehicles. You would think that would hurt Tesla, and maybe it will, but more likely is that it will hurt small EV makers in the US, the less established and less profitable EV makers. In other words, it is going to solidify Tesla's position as the market leader. And the final implication, which I'd like to get your reaction to, is that Musk might be able to advise on autonomous driving regulations. That's one of the biggest hurdles for Tesla and the Robotaxi mission. So if Elon Musk has one foot in the White House and the other at Tesla, it could be that he'll be able to fast-track his vision of the robo-taxi fleet.

And that is certainly what investors are pricing in right now. So, Scott, let's get your reactions to Tesla as a winner of this Trump administration. Well, first, in terms of the broader market, stocks represent essentially how corporations and management and the wealthy are doing who control or own 90% of stocks. And essentially, the reason the stock market is rallying is there's an anticipation of a tax cut or an extension of the corporate tax cuts,

which will increase earnings and thereby logically increase the value of the shares. Now, what the Harris campaign was unable to do, which seems fairly obvious to me, is that all that's happening is the following. The stock market has gone up, the credit markets have actually gone down in the sense that the 10-year, the yield has gone up and the bonds on the 10-year have gone down. Why? Because the credit markets look long-term and say, okay, we think that Donald Trump is going to be inflationary. And the dots that I don't think people have connected is the following. This market rally is essentially a transfer of wealth from you to me. Because all that's happening here is Trump is signaled and the market believes him, he's going to cut taxes on corporations.

He is not going to fund that. My prediction will be it'll be deficit funded, meaning the stocks I already own are up substantially the last two days, Ed, on anticipation of a bigger deficit, which will increase your interest rates and lower your stock returns when you're my age and own stocks. So all the market is saying right now and doing right now is transferring wealth from people your age to people my age. And the credit markets recognize this, and yields have gone up. So I think the Harris campaign was totally incapable of connecting the dots and saying we need to stop the transfer of wealth from young to old. In terms of Tesla, my understanding is he spent about $120 million on the Trump campaign, and his wealth increased, I think, something like $15 billion. The best investment, the best trade of this year was Elon Musk participating, going all in, and giving $119 million to the Trump campaign. He's already got $15 billion back,

because people assume that he's all in. Trump loves him. Trump is a kleptocrat, and Trump will give Tesla government contracts, and this will just be really good for Elon, who's going to get to say, I like this regulation because it hurts BYD. I don't like this one because it would hurt me. Basically, the market says Tesla is about to become a recipient on the good end of a kleptocrat here known as the Trump administration. I'm just waiting for all the comments to say that you have Trump derangement syndrome. But, you know, please, if you're going to make an argument against that, I just hope that people ground it in like an actual argument that's based in facts. Because I think what you've said is completely fair. And like And that's exactly what the

market is pricing in right now. Well, just let me add to that. In the last two trading days, I have made a fuck ton of money. Yeah. And by the way, everyone says, why are you complaining? You're going to get richer. It's like, yeah, I know we're going to get richer for now if we own a bunch of stocks. I'm getting richer on your credit card. Yes. Nothing has fundamentally changed about the R&D or the education or innovation or anything that's actually fucking sustainable in this country. We're not going to produce smarter kids or fewer depressed young adults or create R&D for our universe. None of that is here. This is simple. He's going to run up your credit card to reduce the taxes on companies I own shares in presently. Great. poverty, increased incarceration, and exceptional interest rates when the Chinese don't show up or do show up and say, we want 10%, 15%, 20% yield if you want us to continue buying your treasuries,

which is going to crowd out all investments and forward-leaning investments, technology, R&D, education, because basically our entire budget by the time you are my age and have any real money is going to go two places, to seniors who are unproductive through entitlements or to paying the interest on our debt. This is nothing but pulling prosperity forward from younger people to me. So yeah, it feels good. I'm going to enjoy it. It is bad for America. Exactly. Let's move on to another winner of this new Trump administration, which is the bank stock. So shares of JP Morgan, Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley all soared

on the election news. Goldman Sachs and Morgan Stanley rose as much as 13%. In addition, private equity firms rose, such as KKR and Blackstone. Blackstone hit a record high. So in other words, this was a big win for banks and for financial services. Why? Because again, the expectation is that Trump will significantly roll back financial regulations. And as we've discussed, M&A has been down over the past few years. There are likely a lot of factors contributing to that, but many believe that the biggest one is because of regulation from people like Lina Khan at the FTC. Many believe that Lina Khan, who we had on this podcast, will be out of a job in this administration. So in sum,

looser regulation leading to more M&A, leading to larger investment banking fees, and so more revenue for the big banks. I assume you're going to have a similar take to what we just said, but what's your reaction to the soaring market values of the bank stocks? A move of 12 and 13% among JP Morgan and Wells Fargo is much more dramatic than a 20 or a 30% move in a tech stock. These companies' volatility or their Sharpe ratios are much lower. These are huge moves for these companies because it's the perfect storm for them. One, less regulation. We can go buy small banks and become even bigger and bigger and become way too fucking big to fail, which is bad

for the economy. So less regulation. I probably won't have the same stress tests that Elizabeth Warren and Sarbanes-Oxley might roll back some of that shit so I can make more loans with less scrutiny. I can start acquiring more companies. And with interest rates going up because of an inflationary presidency with Donald Trump and the anticipated deficit spending such that I get richer or the incumbents get richer, the spreads on loans will go up. So if you're loaning out money on 8% mortgages, you get to borrow at 5.5%. Your spread is 250 basis points, whereas three years ago, when you were taking out loans at 2.3% and borrowing money at 1.5% for them, you're only getting 84 bps of spread. So this is the perfect storm. Less

regulation, we get bigger and bigger, too big to fail, more spread on our loans. This is, I mean, this is nitro meet glycerin for banks. Yeah. And then our final winner here, we have small cap stocks. So these are public companies with smaller market caps, generally speaking, a market cap below $2 billion. These stocks ripped off the election result. The Russell 2000, which includes many of those smaller companies, rose 6% to its highest in nearly three years. So what is the market expecting here? Well, one, Trump is reducing the corporate tax rate, so that benefits all American corporations, at least in the short term. As for small caps in

particular, many of these companies are very US-centric. So their supply chains are not as global as some of these larger corporations. They're not multinational in the same way that a company like Amazon is. They do the majority of their business in the U.S. And the expectation is that with Trump and his more isolationist policies, in addition to these global tariffs that we've talked about, we're going to see more investment in companies who do their business in America and America alone. So that, generally speaking, should benefit small caps. Scott, your reaction to the increase in small cap stocks? It's a really interesting point. I understood that, okay, lower tax is good for

these companies. Tax cut puts more money in people's pockets, so stimulus, or at least short-term stimulus. I hadn't seen what you just saw, and it's absolutely correct, and that is small-cap companies tend to probably get the disproportionate, if not all of their revenue domestically. They're less hurt by tariffs, because what happens in a tariff, if we put 60% tax on consumer goods coming in from China, they respond. And if I'm selling a lot into China, I get really hurt. But if I'm just a domestic producer, I'm not insulated from tariffs, but I'm not as badly hurt by a multinational in terms of a trade war. Yeah. And just to be clear on my opinion here, this is an outcome that I actually

like. I think this is, generally speaking, a good thing. The amount of concentration of capital and power to the top few companies as reflected in their market cap, I don't think has been a good thing. Let's just do one more winner here. It's probably worth mentioning, which is cryptocurrencies.

So Bitcoin just hit a record high. The expectation is that Trump is going to have a lot looser and more lenient or kinder regulation to cryptocurrencies. Scott, your reaction to that final winner, particularly Bitcoin? I wouldn't have been surprised if the following conversation took place. He said to the crypto brothers and Andreessen Horowitz, like, you guys figure out a way to raise me a billion dollars. I'm going to fire Gensler and I'm going to announce not only would be less regulation, but on the demand side, I'm going to announce a trillion dollar, I don't know, hundred billion dollar fund that invests in, you know, I'm going to do something that puts not only limits regulation, but creates more demand for this for cryptocurrencies. So I can just see him saying, guys, you raised me a

billion dollars, I'll take Bitcoin to a million, and this is how I'm going to do it. I'm going to fire that pain in the ass Debbie Downer Gensler. And wouldn't you like it if all of a sudden Bitcoin became one of the default currencies, or we tried to give it some sort of dollar backing, or I don't know, something that makes it... I'm sure the crypto community has thought of all kinds of things that would be great to legitimize this market. So what are you going to see? I think you're going to see Bitcoin go up substantially. You're going to see venture capital firms start deploying capital against blockchain and crypto companies. And unfortunately, the downside will be a lot of tiers in an unregulated market that attracts a lot of maverick cowboys, which has a fair share of grifters in it.

And the grift is going to be grifting with a lack of oversight from the SEC. There will be some innovation here. There is a lot that can be done. And a lot of intelligent people said it was overregulated and we needed to kind of let these horses run a little bit more. I think that's a valuable argument or a legitimate argument. But you're just going to see with the total absence of regulation, which is what I think you're going to see here, you're just going to see the Miami coin again or the Ed Elson coin. There's just going to be all kinds of shit. That's a good idea, actually. You like that? I'll work on that. Yeah. As you know, I'm an investor in Ledger, which is a cold storage hardware wallet. 12% of all crypto is stored on, actually. You like that? I'll work on that, yeah. As you know, I'm an investor in Ledger, which is a cold storage hardware wallet.

12% of all crypto is stored on these things. You can also trade on it. I would imagine the value of that company went up 30% in the last two days, even though it's a private company. So this is a big win for that community. Gary Gensler, do you think he's around in 12 months? He's absolutely gone. He's on the green mile. The more interesting question is whether Lena Kahn survives, because she actually has fans on both sides of the aisle. And my prediction is

she actually survives. Yeah, I think J.D. Vance quite likes her, right? So does Matt Gaetz. Now, she is an antitrust. She's a trust buster. But I think this issue is so complex that I think Trump's going to get bored of it and just say, oh, fuck, leave her in place. And also having, I just don't think he has the patience to deal with this. And everybody who advised Trump or everybody who was close to him, when someone would come in and talk to Trump, they would say the following, fewer words, more pictures. You were literally told on some of the most complex issues, he likes pictures and very few words that the guy literally doesn't read with supposedly going after them, I think she survives. And she's one of the few people that has something resembling bipartisan support. So I think it's going to be chairperson con for a while.

We'll be right back. And if you're enjoying the show so far, hit follow and leave us a review on ProfitGMarkets. Fox Creative. This is advertiser content from Zelle. When you picture an online scammer, what do you see? For the longest time, we have these images of somebody sitting crouched over their computer with a hoodie on, just kind of typing away in the middle of the night. And honestly, that's not what it is anymore. That's Ian Mitchell, a banker turned fraud fighter. These days, online scams look more like crime syndicates than individual con artists.

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Published by Capital Client Group, Inc. We're back with ProfitG Markets. Let's move on to the losers. So our first loser on the list here is clean energy stocks. So solar stocks plummeted, wind energy stocks plummeted. Basically all the renewable stocks tanked after this result. Why? Pretty expected. Trump wants to put these renewable energy projects on hold. He wants to leave the Paris Climate Agreement. He wants to repeal the Inflation Reduction Act. He wants to scrap our offshore wind projects. That obviously harms the revenues of clean energy companies. It helps fossil fuel companies. So we've seen stocks like ExxonMobil up, natural gas companies like EQT and Antero, they also rose pretty sharply. I think most people understand this, so let's not dwell on it, but perhaps you have a brief thought on the fact that clean energy is getting a little bit taken to the woodshed right now. I woke up on November the 5th and I thought, let me get this, two really qualified women

have been beaten by a man who is a convicted felon, inspired an insurrection, and has been found guilty of rape. I feel like there's just no getting around it. The misogynist tendencies, and I don't use that word lightly, in the U.S. still runs pretty deep. And strangely enough, I think it's affected here, and that is anything associated with estrogen, anything that's seen as feminine in its energy quality, wind, solar, oh, you pussy ass bitch. I'm not interested in wind and solar. However, I actually think in a strange way, this is going to be really good for nuclear because nuclear, for whatever reason, is seen as badass. Wait, didn't that fry a bunch of Russians in that whole Chernobyl? For some reason, nuclear has a macho

feel to it. And that's, I realize how ridiculous this election was won on a very manosphere impression of masculinity. When I look at the results, who showed up, who didn't? No one gave a shit about bodily autonomy. And I know that's hard to say, but they didn't believe President Trump was that pro-life. Five of the seven referendums on bodily autonomy passed, fears about how young people are doing, and an embrace of the manosphere. That you Democrats are too fucking sensitive. Stop lecturing us. Stop acting so high and mighty. Stop being such snowflakes and so offended at everything for us. Stop being so feminine. It's like this giant fear and upset that we're like this, our society is becoming feminized. I think that's a really good point, especially when it comes to certain companies and people.

Like the thing that Elon Musk cracked was that he figured out a way to make electric vehicles feel macho and masculine. And as soon as he did that, suddenly the people like Trump were on board. I think that's definitely true of nuclear. I'd love to somehow create like a rubric of which companies and which products are more feminine versus masculine. And I bet we could figure out a perfect line between Democrat and Republican support for those initiatives, right? I like that. Yeah. My next podcast is just going to be called Gorilla Semen.

That'll win them over. Suddenly we'll stop being beta snowflakes as soon as we call it that. The new government contract podcast, Gorilla Semen. I really like that take. Let's move on to our second loser, which is companies that are exposed to this new tariff policy. So these are companies whose businesses are reliant on importing goods into the US. So that's a very broad category. There are many types of companies who fall into that category. So in retail, you've got companies like Williams-Sonoma, you've got Best Buy, Nike. These are companies that have highly international supply chains. And so when the tariffs come about, or if the tariffs come about, it'll just make everything they do more expensive.

We're also, people said we were going to see it in tech. So there was some concern that these tech companies that import their chips from abroad would be affected. That was a big concern. We actually haven't really seen that yet. Some tech companies dropped a little bit on the election result, but broadly speaking, they're bouncing back. So the jury is still out on whether this administration and the tariff policies will benefit or harm tech. What is clear though, is that if you are an American company and you rely heavily on an international supply chain, you are very nervous right now. You are trying to bring all of your supply chain, you're trying to bring everything

back to the U.S. So, Scott, your reaction to tariff-exposed companies being a loser in the Trump administration? Republicans are supposed to be the more fiscally-, or better on business, right? And I can see at least a handful of Republican senators and or representatives saying, you know, 88% of our gifts under the Christmas tree that good consumers work all year to be able to afford come from China, and we don't need to raise costs. I think there will be tariffs. The ones in place will either stay or get increased. I don't think it's going to be anything near what he's proposing because anyone who can do math is going to be able to find five or seven Republicans to say, would hurt the good people of Alabama and raise their costs for whatever, tires or tractors, by 22%. And the farmers in Iowa, it would raise the cost of whatever it is, feed imported from, name it, Ecuador, by 15%. As soon as people actually do

the math and see what's going to happen in terms of impact at a ground level, you're going to see all sorts of constituents pop up and say, basically, what the fuck? And it's going to stiffen the backbone of some Republicans to say, I am not down. And the margins, even if they get control of all three branches, the margins here are going to be so narrow that on a topic like this, I think that Democrats will be able to find a few defectors to kind of cross their arms and hold firm on tariffs. I don't think tariffs are going to be nearly at the scale that he's threatening. Some companies that are being hit a little harder related to this tariff issue, foreign stocks, emerging market stocks, so companies in Europe, in Mexico, in China,

they're down. Many of these companies rely on selling stuff to Americans. So let's just focus on Germany as an example. BMW is down, Porsche is down, Mercedes is down, Volkswagen is down. 13% of Germany's cars are exported to the US. So this is not great news for foreign car makers. If we look at Europe as a whole, the US accounts for one fifth of their exports. They shipped half a trillion euros worth of goods to America last year. That number should come down under Trump. So you just sort of think of every foreign staple that we enjoy in America, whether it's beer from Mexico or computers and smartphones from Japan or even GLP-1 drugs from Denmark. If you're in that business and you need to ship it over to America, you are hurting at least a little bit right now based on the market's

reaction. Scott, your reaction to what's happening to foreign stocks right now? Well, I think you have to discern the difference between kind of foreign supplies, if you are foreign suppliers, and then foreign competitors. And that is, I think there will be, he'll see a political win in showing up to Michigan and Detroit and saying, we're going to increase demand for Ford because the trade relationship with Germany is asymmetric, so I'm announcing a 15% tax on all cars coming from Germany. Whereas if he were to announce new tariffs on metal coming in from Canada that's just going to increase the cost for Ford, I think that will be more politically unpalatable, despite the fact they both kind of end up in the same place,

and that is an increased cost on U.S. consumers. But again, I don't know if it would be much easier for him to put a tariff on a product where there's an American substitute, at least in the short run, not recognizing over time all that that means is that American companies have less competition, take advantage of that, and increase their prices, thereby raising prices and creating inflation on American consumers. But I think in the short run, it's just much easier to tax a competitive product than it is feed coming in from Ecuador that raises the price, raises the cost of goods for farmers. It's sort of a question. It feels very similar. It is very similar to what happened

with Brexit, where the UK was like, we can do this all on our own. So let's just cut off ties and we're going to be fine. And the question here is that. It's like, okay, I'm down with the idea of bringing everything to America. And the question that we're asking right now is, can we do everything truly on our own? Can we just sort of put a giant tax on everything that comes from abroad? Or do we actually need these countries and do we rely on them to sustain our society? And I think it's a more, it certainly was not a valid question to be asking in the UK. The UK was completely dependent on the rest of Europe, and that's why it's struggling so much right now. And I think it is a more valid question when it comes to the US, but that is

certainly the direction we're moving in here. We're basically saying, we don't need all you guys, we can do it on our own. I think what we're about to find out is whether that is indeed true. Our final loser that I've got here, this is the most interesting in my opinion, the housing market generally, and specifically so real estate stocks. So you've got real estate brokers like Redfin, like Zillow, Compass, they're all in the red right now. They all reacted quite badly to the election result. You've got real estate services, companies like CBRE and Cushman and Wakefield, they all fell. You've got home building stocks. So companies like D.R. Horton, which constructs houses, the largest American house construction company. And a company like Lena. All of the home builders are down right now.

And this is the most interesting to me because basically what the market is saying, the expectation, despite Trump's promise to bring down housing costs, is that buying a house is about to get even more expensive. So we've seen yields rise in expectation of higher inflation as a result of the tariffs that we've just discussed. And when yields rise, that means that rates rise. And when rates rise, that means you're paying a larger mortgage payment. So that's sort of an accepted principle in the markets right now. We're going to see higher mortgage rates. So to counteract that, Trump needs to figure out a way to significantly reduce housing prices. He's laid out some plans,

you know, he wants to make it easier to build, which I think we both agree with is a good thing. However, the tariffs are expected to increase the cost of goods needed to build houses. That's one problem. And the deportation and immigration crackdowns are expected to make the construction labor market even tighter, which means it'll be even more expensive to build a home. So what the market is telling us right now is that mortgage rates are going to go up and housing prices are going to go up,

which is just a total nightmare for someone like me who, one, wants to buy a house, and two, who believes that the cost of housing is basically one of the biggest issues, at least in the country right now. So, Scott, your thoughts on what this new administration could do to the housing market? Well, just as we said, this is the perfect storm of good things for bank stocks. It's the perfect storm of bad things for housing because his fiscal policy, what we know about it, is it could be inflationary. The credit markets have already predicted that interest rates are going to go up. The 10-year is already going up. So one of the things that has made housing increasingly unaffordable is a massive increase in interest rates, right? And

mortgage rates. And then if you, I remember during COVID, I was building a house and the guy said, we can't get garage doors. He said, and he looked at the pulley on the automatic, you know, when you press it and there's an engine and a chain, the pulley between the chain and the door, he goes, that thing's made in Czechoslovakia and it's all closed because of COVID. If that thing, I mean, your washing machine, so many parts, even the lumber, so many things in your house come from foreign entities that the idea that he's gonna do anything

resembling this level of tariffs. So let me get this, my mortgage, my interest rate on my mortgage is gonna go up and the cost of build is gonna to go up. Something's got down any further because of Trump's tariff policy or because inflation starts to send mortgage rates up, I think he's going to get a very swift message back from the American people that, look, boss, housing is a crisis. We need all hands on deck, more permits, more housing. And again, in addition to supply, the cost of building and the mortgage rate are really important.

So this is the perfect storm of bad things for housing. I don't believe a lot of this. If you look at the markets, the markets have sort of said it's going to be a divided government, that he's not going to be able to push through other than maybe extending the tax cuts, that's how I read it, that will continue to favor rich people and corporations. But a lot of this stuff is not going to happen at nearly the scale that he's threatened. Yeah. That's all I've got for the winners and losers here. I also just do want to point out that what we have said about this has been based on the market's reaction. So what we're explaining right now, like your take on the idea that mortgage rates and housing prices are going

to go up, that's not like our hot take. That's what the market is telling us right now. We don't know what's going to happen. Like I hope, and I would be really happy if Trump figures out a way to get the cost of housing down. And I'm so for it. I'm 100% in support of that happening. I'm in support of him bringing inflation down. I mean, I want things to work out. Do you have any final thoughts or takeaways from this winners and losers session? What I would say across a lot of this stuff is I think it'll modulate. Nothing's ever as good or as bad as it seems. I think the market tends to, you know, the pendulum's never kind of the bottom. I think it's probably overreacting one way or the other. So I would think the stocks that have been hammered the most are probably buying opportunities. And I think the stocks

that are up the most, you know, I don't know, I'd be careful going into them. I think we're going to find that the intransigence, the multiple branches of government, the slow grinding gears of our, I don't even call it our democracy, but our capitalist system, and the fact that you're going to have a president that I'm not sure is going to have the attention span to enact a lot of this. I mean, to a certain extent, what's strange is kind of a month in, he's the lame duck president. So I don't think the winners are going to win as much here, and I don't think the losers are going to lose as much as we think. All right, let's take a look at the week ahead. We'll see the consumer price and producer price indices for October, and we'll also see earnings from Disney, Alibaba, and Home Depot. Scott, do you have any predictions for us? few firms that have fallen further faster than Intel. And this sector has added a ton of market

capitalization, except the leader, the market leader, the dominant player, the one that was held up as the icon of great management, has consistently thrown up on itself for the last 20-odd years. And I think the stock's gotten to the point where there's so much IP, so many supplier relationships, so few companies that can produce this type of very complex capital-intensive product, heavy design product. And it's trading at, I think, 1 30th the value of NVIDIA, that if this thing shows any pulse, it will triple, except I think the changes in investments it needs to make would be more easily done outside of the purview of the public markets. So if it's not acquired,

I think that somebody shows up and takes it private. and Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from the Vox Media Podcast Network. Join us on Thursday for our conversation with Josh Brown. He's back only on Prof G Markets. You have me in kind reunion As the world turns and the dark flies in the night Hold on one second. Yeah, buddy, come on in. Yeah, it's all right. Do you want wings or burgers? Wings or burgers? Oh, I love it when mom's gone.

What do you want? I can't decide. Burgers from where? Either five guys or shake shack uh let's do let's do when's mom gonna be home is she gonna find out what we ate no she's fine oh then burgers and shake i want a black and white shake and shake shack i want a burger and a and a black and white shake. Five-match or Shake Shack? Shake Shack. I want a burger and a black and white shake. Great. Okay. Don't tell mom. Don't tell mom. She knows.

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