Wall Street's Big Gamble

Summary

Podcast Summary: Everybody's Business

Episode: Wall Street's Big Gamble

Date: July 31, 2026
Hosts: Max Chafkin & Stacey Vanek Smith (Bloomberg Businessweek)

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Episode Overview

“Wall Street’s Big Gamble” tackles the latest shake-ups in the U.S. economy, delving into the evolving landscape of tech stocks (“Magnificent Seven”), the Federal Reserve’s latest decisions, a frontline perspective on how new tariffs impact small business, and the heated debate over prediction markets and their role in politics. With top-notch interviews and pointed discussion, Max and Stacey break down how policy, technology, and market trends ripple through American life.

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Key Topics & Takeaways

1. The Market Seesaw: The Magnificent Seven and AI

Guest: Eric Weiner (Bloomberg Senior Editor)
Segment Start: [02:50]

• What’s Happening:
  • The so-called "Magnificent Seven" tech stocks—Microsoft, Apple, Amazon, Nvidia, Tesla, Alphabet (Google), and Meta—have fractured as AI investments split winners and losers.
  • Eric Weiner: "The Mag 7...is no longer really a coherent group. AI has messed the whole thing up." ([03:53])
• Standouts:
  • Apple, with less AI exposure, is thriving, while heavy AI spenders are diverging.
  • Meta lags due to skepticism in its AI and metaverse ventures.
  • Microsoft surges on robust cloud/AI revenue.
• Implication:
  • The former monolithic tech group is now fragmented; investors and analysts can no longer treat them as a package deal.

Notable Quote:

“Meta is getting killed because, well, really nobody believes in Mark Zuckerberg because their AI stinks.”
—Eric Weiner ([03:53])

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2. Interest Rate Uncertainty and Fed Drama

Segment Start: [07:46]

• Fed Holds Steady:
  • The Federal Reserve, under Chair Kevin Warsh, held rates, but dissent within the board rattled markets.
  • A split vote (three in favor of raising rates) is unusually high, signaling potential increases to come.
  • Market reaction: confusion and frustration due to lack of clear guidance.
  • “They’re calling it a hawkish hold.” —Eric Weiner ([09:17])
• Why It Matters:
  • Interest rate volatility can choke off liquidity, especially critical for high-growth/AI-heavy firms dependent on capital markets.
  • Higher rates risk stalling economic growth, drying up investments, and slowdowns in sectors indirectly reliant on tech spending (like construction for data centers).

Notable Quote:

“If interest rates get to a point where they can't raise cash and stock prices [fall]...liquidity dries up and the market goes crazy over that...”
—Eric Weiner ([07:25])

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3. End of Money? Tech Abundance and Skepticism

Segment Start: [11:58]

• Elon Musk’s Claim:
  • Predicts “by 2036, we will have no need for money” because of AI-driven abundance.
• Realistic?
  • Treasury Secretary Scott Besant (in interview with Sean Hannity): Musk is visionary but “normally early. He's just so far ahead of the curve…”
• Skepticism in Practice:
  • Companies still cutting staff and worrying about profits, belying their public optimism.
  • “If they did believe the things they were saying, they'd be doing different things.” —Max Chafkin ([13:45])
  • Long-term bond market signals that money, and traditional financial infrastructure, aren’t going away soon.

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4. Tariffs and the Small Business Squeeze

Guest: Ori Zohar (Co-founder, Burlap & Barrel)
Segment Start: [18:04]

• Context:
  • Multiple “generations” of tariffs have whipsawed U.S. businesses since Liberation Day. Emergency tariffs expired, new rounds repeatedly imposed by Trump administration—some repeatedly struck down by courts and reinstated.
• Burlap & Barrel’s Fight:
  • Specialty spice importer facing hundreds of thousands in tariffs, even on products not produced in the U.S.
  • “I don’t know why it’s up to small businesses to hold the government accountable...” —Ori Zohar ([20:01])
  • With legal help, company has twice sued over tariffs and won at lower courts, with continued litigation.
• Broader Impact:
  • Tariffs force small producers to cut domestic investments (like hiring and innovation), without decreasing overseas purchases—an outcome Zohar calls “backwards.”
• Consumer Backlash?
  • Zohar reports broad support from industry and customers but some pushback to “keep politics out of my spices.”
  • “We’re really trying to not split the audience or go one way or the other.” —Ori Zohar ([27:41])

Notable Quote:

“We made kind of two promises to our customers. We're not going to pass the tariff cost onto our partner farmers and we're not going to increase costs to Americans… We saw this as the right moment. Internally, we kind of discussed this as a kind of like, Patagonia moment…”
—Ori Zohar ([24:51])

---

5. Prediction Markets: Democracy’s “Can of Worms”

Guest: Denitsa Secova (Bloomberg Reporter)
Segment Start: [32:03]

• Background:
  • Prediction markets like Kalshi and Polymarket allow betting on election outcomes, now facing regulatory disputes in Wisconsin.
  • Wisconsin warns: betting on a political outcome you’re voting on could disqualify your vote, based on a law from 1849.
  • Kalshi claims this is “voter suppression” and vows to fight back, arguing that prediction markets increase civic participation.
• Risks and Evidence:
  • Manipulation and insider trading concerns, especially in small or thinly traded markets (e.g., Romania, California governor's race).
  • Denitsa Secova: “Adding money to that equation...completely complicates the future of how we contest elections...” ([44:18])
• Are Prediction Markets More Accurate?
  • Some cite 2024, where market odds outperformed polls, as a rationale for treating them as a “truth machine.”
  • But mainstream news partnerships (displaying betting odds on CNN, subway ads in NYC) raise questions about influence and normalization.
• Crypto/Populist Parallels:
  • The same organizing tactics and political alliances (often pro-Trump, pro-crypto) are visible in the prediction market world.

Notable Quotes:

“If in fact I’m a foreign agent… and I have access to prediction market, how important my actions might be… It just opens a big network of people that may profit from that.”
—Denitsa Secova ([43:18])

“It's kind of funny that Kalshee's like... 'this is voter suppression. They're trying to take the vote away from, you know, hardworking gambling Americans who just want to gamble on their election.'”
—Max Chafkin ([40:43])

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Notable Quotes & Moments

• “Nobody buys what Zuckerberg is selling.” —Eric Weiner, on Meta’s struggle ([05:06])
• “We are building this incredible economy that we can't even imagine. Sean, 25% of the jobs that exist today did not exist in 2000.” —Treasury Secretary Scott Besant ([13:03])
• “So during Liberation Day, we made kind of two promises to our customers. We said, we're not going to pass the tariff cost onto our partner farmers and we're not going to increase costs to Americans.” —Ori Zohar ([24:51])
• “Gambling market for politicians more than we already have seems problematic and would discourage working class people from participating and voting...” —Street Interviewee ([33:46])
• “Adding money to that equation and adding to chances of manipulation, insider trading...complicates the future of how we contest elections.” —Denitsa Secova ([44:18])

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Timestamps for Key Segments

• Magnificent Seven/A.I. Stock Shakeup: 02:50 – 07:46
• Fed Decision & Market Implications: 07:46 – 11:38
• AI, Musk's "End of Money" Claim: 11:58 – 15:15
• Tariff Lawsuits & Small Business Impact (Ori Zohar): 18:04 – 28:36
• Prediction Markets Controversy (Denitsa Secova): 32:03 – 44:22

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Tone and Style

The conversation is sharp, irreverent, and deep—balancing economic insights with humor and skepticism. Hosts and guests don’t shy from critique or candor, especially when dissecting hype cycles (AI), bureaucratic inertia (Fed, tariffs), or the unintended consequences of financial and political innovation.

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For Listeners/Newcomers

This episode is essential listening if you want a smart, entertaining, and up-to-the-minute understanding of what’s really happening on Wall Street, how Washington’s economic gambits affect real businesses and consumers, and the tangled intersection of markets and democracy. Whether you’re spooked by stock volatility, confused by tariffs, or just trying to make sense of the new game of betting on politics, “Wall Street’s Big Gamble” explains it all—critically and with a dose of fun.

Transcript

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[Bloomberg Audio Announcer]

Bloomberg Audio

[Stacey Vanek Smith]

Studios Podcasts Radio News Max Jaffkin Stacey Vanek Smith hello. Hello. It is another week, another giant set of confusing data from the US Economy.

[Max Shavkin]

Every big company has reported earnings or is about to report earnings. That's sending the markets all over the place.

You got the Federal Reserve, you got

GDP numbers, you got inflation Consumer the

economy is kind of teetering maybe, and

we're going to talk about that.

[Stacey Vanek Smith]

Yes, we are. In addition to that, we are talking about tariffs. We are talking to a company that is suing the Trump administration over this latest rounds of tariffs. And of course, prediction markets. It's your right to vote.

[Max Shavkin]

We are going to talk about the

brave prediction market traders who are having their franchise threatened by some Wisconsin bureaucrats.

[Stacey Vanek Smith]

Ah, the spice of life.

[Max Shavkin]

Or maybe you shouldn't bet on elections, I don't know. But we will get into it on our this week in Prediction Market segment.

[Stacey Vanek Smith]

This is everybody's business from Bloomberg Businessweek, I'm Stacey Vanek Smith.

[Max Shavkin]

I'm Max Shavkin. We got the economy, we got tariffs, prediction markets. It's all there.

[Stacey Vanek Smith]

It's all there. Stick around,

[Max Shavkin]

Stacey. We've had just a ton of economic news, some of it related to the Fed, some of it related to stock market. We've got a great person to talk about this. It's Eric Weiner, Bloomberg senior editor, author of the Shadow Market and what Goes Up. Hey, Eric.

[Eric Weiner]

Hi, how you doing?

[Max Shavkin]

Okay, so here's where I want to start. I feel like this has been going on so long that I forgot when it started. But there was a point where we started saying like, all of the stock

market gains are related to the Magnificent Seven. There were these seven stocks.

Microsoft, Apple, Amazon, Nvidia, Tesla. I forgot, I forgot.

[Stacey Vanek Smith]

Alphabet, Google.

[Max Shavkin]

Yeah, okay, all those stocks. They are basically these sort of AI powerhouses in one way or another. Everyone's excited about AI and you know, everyone's excited about Trump and the way he's managing AI and all. And, and for like about a year or maybe even longer, Eric, I don't know, these stocks just kind of ripped. They were driving so much wealth creation. And we're kind of seeing that break right now, right, Eric?

[Eric Weiner]

It is breaking down in a very strange way. The Mag 7, for lack of a better term, is no longer really a coherent group. AI has messed the whole thing up. And what you're seeing now is within the Magnificent Seven. Four of them are huge spenders on AI. That's Alphabetical, Amazon, Microsoft and Meta. Then you have Tesla, which isn't a tech company and is trying to get into AI but isn't spending very much on it. You have Nvidia, which is the chip maker for these guys. And then you have Apple, which isn't spending at all. So this year Apple is dominating the Magnificent Seven because they don't have the AI risk that the others do today. Microsoft is ripping higher because they had this great cloud revenue, which means that they're getting a lot of traction in their AI sales. And Meta is getting killed because, well, really nobody believes in Mark Zuckerberg because their AI stinks.

[Max Shavkin]

They've spent a fortune on these potentially game changing, but still unproven sort of augmented reality technologies. They don't have like a clear AI revenue stream.

[Eric Weiner]

There's a bigger problem and it's the Metaverse. Nobody buys what Zuckerberg is selling. And then so like you look at Google and, or well, Alphabet and they're all over the place. At this time last year they were considered kind of an AI afterthought. And then all of a sudden Gemini takes off and then people realize, oh my God, they're the search engine for all of this. So they're diversified and all of these companies, which we all had lumped together into one kind of group have fallen apart the same way that like they always do bricks or whatever else. Pick your, you know, your name. And this happens.

[Stacey Vanek Smith]

Well, to back up a little bit here, we've been getting earnings from a lot of these companies that had been really not only driving the stock market, but really driving a lot of the economic growth. Like Max was saying, I mean, just really seeping into all these parts of the economy. Now that there's a more mixed picture maybe within these companies. What does that mean for the economy? What does that mean for us?

[Eric Weiner]

So the economy is actually doing pretty well. When you look at the overall, the top line numbers.

[Stacey Vanek Smith]

Yeah.

[Eric Weiner]

When you look underneath, it's not so great. The whole idea is predicated on a linear growth pattern. And if you look at the history of technology, that just isn't what happens. So right now you are looking at trying to price AI as if it's going to happen tomorrow. And that's just not the way technology evolves. So the concern about the economy is interest rates. Are these companies going to be able to continue to raise money at the levels that they were raising them at before stock prices? Because if they can't sell their stock, they can't offer, you know, can't do more issuance, that means they're not gonna be able to get the capital. And if they can't do that, then all those, those chip makers, they don't get their money. And then all of this, that money that filters down into the economy, that creates growth. I mean, right now we're seeing booming growth in construction because who's gonna build the data centers? You know, all of these things flick off in different ways when markets tighten up. It's always because of a li People can't get money. And so this is what I'm describing right now is the fear is that if interest rates get to a point where they can't raise cash and stock prices get to a point where they're not issuing stock, then where are they going to get the money? So now they have to raise money. And if that money isn't there, suddenly liquidity dries up and the market goes crazy over that because it means that money isn't flowing and all of commerce just slows down when that happens.

[Max Shavkin]

Enter Kevin Warsh. Right.

[Stacey Vanek Smith]

And Kevin Warren.

[Max Shavkin]

And that is one of the reasons why this Fed meeting, which, which happened yesterday as we're recording this on Thursday, was so interesting. So just. Stacey, you follow this more closely than I do. You're more of a Fed watcher than me. Give us the Kind of top line on what happened. And you know what you found interesting.

[Stacey Vanek Smith]

So people were not sure quite what to expect. Everybody kind of thought the Federal Reserve Board would hold interest rates where they were because inflation is higher than we want. But also the job market is a little sluggish.

[Max Shavkin]

Well, and also Donald Trump sat Kevin

Wash down and was like, I really

do not want you to raise interest rates.

[Stacey Vanek Smith]

Actually, he was like, we want you to cut interest rates. And then Kevin Wash got into the job and was like, I really care about inflation.

[Max Shavkin]

Right.

[Stacey Vanek Smith]

I feel a little bit for Trump in that way. So, yeah, so worship basically came out and they held interest rates steady. But I think what rattled is part of what rattled the markets this week, along with some of the mixed earnings, is that there were they show you how people vote. There are 12 voting members of the Federal Reserve Board and three people voted to raise interest rates. So this is sort of maybe hinting that interest rates are going to go up.

[Max Shavkin]

And just for not. That's a lot for this board. Three people who stand up raise their hand and disagree with the Fed chair.

That's unusual.

[Stacey Vanek Smith]

That is. Yeah, they like used to like unanimity. So I'm so curious, like, how did the markets see this moment?

[Eric Weiner]

Well, they're angry, traders are upset. And the reason is, well, they're calling it a hawkish hold. That is the terminology that they're using, which means that they are leaning toward hiking rates and they're pointing toward raising rates. But they held. And to your point, Max, the idea that three people disagreed. So on the prior Fed, you had one member who was decidedly against Powell. So he was there to dissent. But there was one meeting where he dissented and then two people dissented the other way. And we had headlines all over the place, Fed in crisis or Fed in chaos. That we're not getting Fed in chaos.

[Max Shavkin]

It's very mute.

[Stacey Vanek Smith]

It's the opposite of love. I know.

[Eric Weiner]

Yes, exactly. We're now having a good family.

[Stacey Vanek Smith]

Three respectful dissenting votes. Chaos.

[T-Mobile Customer]

Yeah.

[Eric Weiner]

Well, so before the next meeting, we're going to have a couple of readings on inflation. We're going to have the Feds meeting in Jackson Hole where they'll be speaking and we should have somewhat of a better idea. But the concern among traders is that they're not getting any guidance on where things are going. So how do you come out of this meeting when they are looking at trying to price any asset, whether it's stocks, bonds or whatever, they are looking at what is going to happen in the future. Where is where are things going down the line? And you don't know, like, so in when they were giving guidance, you would have a sense that, like, okay, we're looking probably at two or three hikes, or when inflation really got out of hand in 2021, 2022, it was like, we're going to be going 75 basis points or, you know, 3 25.

[Stacey Vanek Smith]

They were like, this is what we're doing this time. This is what we're probably doing next time. And Warsh is like, none of that.

[Eric Weiner]

Right. And the market like that. Speaking in normal English, we need to communicate with the market frequently. We need to kind of let people know so we don't have wild swings. So we don at volatility, which is where traders make money. However, when things break the other way from what they were betting on, they get really angry.

[Max Shavkin]

All right, so we're talking about the threat that interest rates go up and

there's a cash shortage, and all of

a sudden all these AI bets, they're not generating revenue and their companies have not enough money to keep it going. And we have some kind of crisis, either a stock market crash, even an economic crisis. But there's one thing that I think

we may not be considering, Eric, which

is that if the AI happens, we will have all the money we possibly need. And I bring this up because Elon Musk, in an interview with the Economist,

I believe it was last week, said

that by 2036, that's like 10 years from now, we will have no need for money.

And you know what?

Elon Musk, he's obviously a bit of a carnival barker. He's selling. He's selling AI. He has an incentive perhaps to exaggerate the timeline here. But you know, who doesn't or who

should not have an incentive to do that?

It's Scott Besant, the Treasury Secretary. And I bring this up because in an interview with Sean Hannity. Let's just give a listen to Scott Besant's take on the end of money curveball.

[Sean Hannity]

Question at you. Elon Musk gave an interview, I believe, to the Economist, and he said that in five to six years, we'll have five times the size of the economy we have now. And he talked about abundance. He talked about every American having every need, and there won't be even a need to save, you know, for your retirement like we have historically because of this, quote, abundance that he believes I will create. Do you believe that?

[Treasury Secretary Janet Yellen]

I think I would change the timeline that I've seen Elon speak for a long Time. And his record speaks for itself both in terms as an inventor, as a venture capitalist, you know, as a great American. But he's normally early. He's just so far ahead of the curve. He sees things that no one else sees. But I do think we are building this incredible economy that we can't even imagine. Sean, 25% of the jobs that exist today did not exist in 2000.

[Sean Hannity]

That's. That's an amazing thing.

[Max Shavkin]

I love how he's like Elon's track record. Great innovator, not so good on timelines.

[Eric Weiner]

Well, so look, he's going to Mars. He's competing with NASA.

[Max Shavkin]

But do you think there is an inconsistency here? Like you have all these guys who are saying we are mere years away from complete abundance. Meanwhile they're doing layoffs. One of the things that I've felt watching this whole AI boom play out is that the people who are participating in it don't really believe the things that they're saying because if they did believe the things they were saying, they'd be doing different things.

[Eric Weiner]

I feel like that actually is the big difference between this bubble and the Internet bubble, where people actually did believe all of that stuff. They did believe that pets.com was a technology company rather than a pet store that was online. Like you didn't really understand where things were. The point on all of this is technology advances the economy. It dislocates workers, automobiles, put buggy whips out of business. You know, like all of that's real. But the idea that we are going to reinvent the economy, the entire economy, because of one area of technology, seems quite hyperbolic. And to the bond market's perspective, they're expecting the long bond 5% in 30 years. So they're still expecting there to be money. They're expecting to be paid in 30 years. It's not like, well, we're done. But I mean, just in case money's still around, that'll be 5%, sir.

[Max Shavkin]

Eric, thanks for being here. Come back soon.

[Unidentified Speaker (Audience or Caller)]

Thanks, Eric.

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[Stacey Vanek Smith]

So max Stacey tariffs.

[Max Shavkin]

Wait, which tariffs?

[Stacey Vanek Smith]

Stacey which tariffs is right? Because we have been through many iterations of tariffs since Liberation Day. We are on I think tariffs 3.0. Now the tariffs that were in place, the emergency tariffs expired. I think there was 180 days and now there is a new set of tariffs in place.

[Max Shavkin]

Yeah well what keeps happening is courts keep saying no these are not allowed.

You need an act of Congress and

the Trump administration making good on its promise keeps coming up with new tariffs to replace the old tariffs and then we do it all again. Meanwhile no one knows what anything costs. It's very confusing. The thing that I've wondered or that I have been wondering is who are these people who are like challenging the businesses that are that are challenging the Trump's tariffs. Like what are they going through?

[Stacey Vanek Smith]

I am so glad that you asked this question. Obviously the tariffs have been incredibly hard on all kinds of businesses, especially small businesses. And we're very lucky to have Ori Zohar with us. He is the co founder of Burlap and Barrel, a single origin spice company. Ori, welcome.

[Ori Zohar]

Hey, great to be here.

[Stacey Vanek Smith]

Now we invited you on the show because in fact there are a couple of small businesses that are suing the Trump administration over this latest round of tariffs. And one of those businesses is your business is Burlap and Barrel.

[Ori Zohar]

Yeah, this is actually our second lawsuit against the tariffs so far. So as you mentioned, there have been kind of three kind of waves, three regimes of tariffs. The first one, the IPA tariffs where, which, which got refunded and we just got a kind of refund for all the tariffs that we paid plus interest.

[Max Shavkin]

Because those, Ori, were the tariffs on the big board. Right. Where were the penguins? We're going to get tariff, tariff and every. That was the round one.

[Ori Zohar]

And the penguins got their tariffs back. As long as they filed with immigrants,

[Stacey Vanek Smith]

they're not great with paperwork.

[Ori Zohar]

But we got those tariffs back with interest, which was just like a very expensive exercise for the American tariffs and things that really increase prices. And the government ended up having to pay it all back with interest. The second round came the same day the Supreme Court struck down the IPA tariffs. The Section 122, which was based on a 1974 kind of bill around America, moving off of the gold standard and all that stuff, said in some cases the President can push through tariffs. We sued on that and we won at the Court of International Trade. And now that's going through the appeal process. And then as soon as these temporary six month tariffs expired, the government introduced the 301 tariffs. And so we sued on those also. So we just, we're a small business. I don't know why it's up to small businesses to kind of hold the government accountable with all the kind of enterprise in America. But it was really important to us to kind of take a stand against these tariffs that didn't make any sense to us, made things more expensive for American customers and just seemed to not go through any of the right channels for passing tariffs and for actually managing economic policy here in the US So

[Stacey Vanek Smith]

you are a spice company. I am imagining you import a lot of what you sell. Can you maybe run down some of the things that you sell and how they've been affected by the tariffs and what that Kind of meant for you.

[Ori Zohar]

Yeah. So we are a 10 year old social enterprise. Burlap and barrel. We import spices directly from smallholder farmers all around the world. Our best selling one is our Royal Cinnamon that comes from Vietnam, a true Vietnamese cinnamon. But we import spices from about 30 different countries, all based on where they grow. So we have herbs de Provence from Provence, we bring in really incredible garlic and onion powder from central Vietnam. It's kind of ancestral home, so. And cumin from Afghanistan and all over the world. So that's been. Our business is working with smallholder farmers to bring in spices directly from the farm and bring them to American home cooks. We bring in about 10% of our spices from the U.S. we bring in really great chilies from California, actually salt from upstate New York, wild ramps and all that. So we do import everything that we need to import, but we also buy domestically, everything that grows domestically. And yet we're still kind of paying this like broad ranges of tariffs on things that there really is no domestic industry here for.

[Stacey Vanek Smith]

Can you talk a little bit about the cost of the tariffs for your business since Liberation Day? Like what does this cost you?

[Ori Zohar]

Yeah, so we've paid hundreds of thousands of dollars in tariffs so far. And. And it's on things that, that don't grow in the US So initially tariffs we were paying on cinnamon and black peppercorns, both of which don't grow in the US since then there's been about 471, I believe carve outs of the tariff, which just shows you this is kind of a shoddy framework.

[Unidentified Speaker (Audience or Caller)]

Okay.

[Sean Hannity]

Right.

[Ori Zohar]

It's for all this stuff. So now we don't pay tariffs on cinnamon and black pepper anymore, but we still do pay on herbs like herbes de Provence, which. Yes. Do herbs grow in America? Absolutely. Can you get herbs de Provence in America? Not exactly. We bring in our Vietnamese cinnamon from Vietnam, we bring in garlic also from Vietnam, and we do bring some stuff in domestically. But the tariffs are still this kind of very broad instrument that are kind of increasing cost for us. And as a small business, we can't bring in herbes de Provence, not from Provence, we can't bring in all these spices, not from their kind of origin. And so we find ourselves in this kind of ironic kind of tough spot where the only place where we can cut costs is domestically. How can we kind of save money on our like, innovation, on our hiring, on our shipping speed, on our corrugate cost for our boxes. So it's had this kind of backwards impact on our business, has been pulling investment domestically while we're still kind of doubling down on. On our partner farmers abroad, because that's our only option.

[Max Shavkin]

Or how do you wind up being the one who sues? Like, are there groups that are fighting these tariffs that are going out looking for plaintiffs? Or like, did you go seek somebody?

Like, how does this.

How does this kind of thing actually happen?

[Ori Zohar]

So that's a great question. We have a legal partner here called the Liberty Justice Center. They are the ones that are actually bringing the legal might for this and also footing the bill because, you know, taking a court, a case of the Supreme Court, as they did with the IPA tariffs and won is literally millions of dollars in litigation for that case. We actually saw, we looked at suing. We said, we don't know what we're doing here. We're not legal experts. We ended up filing an amicus brief, a kind of friend of the court docum to which the Liberty justice center said, who is this company and what's their deal? And so we got in touch with them, and then when the 122 tariffs came out, they said, hey, are you willing to actually step up and be the plaintiff here? And then again for the 301 tariffs? So we found this really lovely partnership, us being able to do what we do best, which is being a small business that kind of is showing the impact of the tariffs on everyday Americans and kind of talking about the legal frameworks and the hoops that we have to jump through, and then with their kind of legal expertise and might being able to actually litigate this case properly to the highest extent, which we have no business doing ourselves.

[Stacey Vanek Smith]

Why did you decide to do this? Because this does take time and energy away. I think you're. You're quite a small business. You have a lot on your plate. Like, why devote some time and energy to lawsuits?

[Ori Zohar]

So during Liberation Day, we made kind of two promises to our customers. We said, we're not going to pass the tariff cost onto our partner farmers and we're not going to increase costs to Americans. Costs are already high. Inflation is already out of control. And we got a really strong reception from that. People were really looking for somebody to step into this void and make a statement. Everybody else has been kind of worried, scared. There have been boards of directors and public shareholders and all of that stuff. There's been a really big void. And I think people are worried about retaliation and are worried about their businesses getting hurt. We saw this as the right moment. And internally, we kind of discussed this as a kind of like, Patagonia moment where we've seen a lot of other companies that were really inspired by use legal action to kind of shape policy not just for themselves, like we're not going to get any punitive fees from this. We're going to change the law. And so this is something we've been really proud of. We got the win on the 122 tariffs at the Court of International Trade and that only emboldened us to bring a second lawsuit once the 301 tariffs were kind of introduced.

[Max Shavkin]

Or you brought up prospect of retaliation as maybe one of the reasons why the business community in general kind of went along with this without speaking up too much. You know, the fear is if you're a big company, if you're an investor, maybe you're a tempt to a merger or something like that and you're worried like, oh, is, is when the FTC goes to evaluate this merger, are they going to get a call from somebody and you know, whatever, some kind of, some somehow this will hurt some other part of their business. There's this other area of retaliation that I'm wondering about, I'm wondering if you thought about which is kind of consumer backlash to fighting the Trump administration. You know, we saw especially towards the end of the Biden administration and then even in the beginning of the Trump administration, Trump has power to direct consumer rage and so on. He's, he's gone after the NFL. You know, he will periodically sort of truth social about some company. And I think a lot of big companies, like big consumer facing companies, really live in fear of that, of, of Trump going out and saying this company is bad, they are woke and, and then, you know, half of America, the MAGA part of America, will basically boycott them. And we'll have, you know, what happened to Bud Light. And we saw this happen a bunch of times last, I don't know, five years or so. What, how did you think about the consumer reaction to that?

[Ori Zohar]

So if that leads us into a true social post like welcome it, we're happy to have the conversation. We're a crunchy liberal business. You know, just for me and my co founders, like personal beliefs, this is really an across the aisle issue that we kind of both align on. And so it's been also really lovely to find people that, that the head of the Liberty justice center voted for Trump three times, we voted for Trump zero times. But we both kind of agree on this issue that this is worth fighting for and worth kind of standing up for on behalf of small businesses and American consumers.

[Stacey Vanek Smith]

Have you heard from your customers about this at all?

[Ori Zohar]

We have gotten a lot of kudos's from other folks in the industry because there's so many other small food companies that are doing this because businesses are really struggling with this and there's some existential kind of questions for a lot of businesses that are being caused caused by these tariffs from our customers. We've also gotten a lot of kudos and wins. We've gotten also some messages saying hey, keep politics out of my spices, I don't care about this. And we've tried really hard to be like if you love America and want to buy American spices, guess what? We work with a bunch of American spice farmers and here are their spices. You can do that. So we're really trying to not kind of split the audience or go one way or the other. We're trying to say what's going to help Americans eat, eat well, bring in ingredients from all over the world. And by the way, spices love tropical and subtropical environments. We have so many amazing things that we can grow in America. Spices are not one of those things.

[Stacey Vanek Smith]

Thank you so much for talking with us Orey, and good luck please. We hope you can come back and talk with us again about how things are going.

[Ori Zohar]

Thank you. I'm looking forward to it.

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[Sean Hannity]

network

[Max Shavkin]

Stacey it's been a while, but it's that time for our recurring segment

this week in Prediction markets. I know you love the sting.

[Stacey Vanek Smith]

I've been waiting for the sting.

[Max Shavkin]

But you know what? We've got a lot to talk about

because Kalshee is the big prediction market

company is fighting with Wisconsin. There's also just so much news around

this space and politics.

But before we even get there, we

often go out into into the world and ask people how these kind of abstract economic concepts we've been talking about on this show affect them in their real life. We hadn't actually done that for prediction markets yet.

[Stacey Vanek Smith]

Yes, well, Jasmine J.T. green remedied that. She went out onto the mean streets of New York and talked to people about what their relationship is with Kalshi Polymarket and all of the betting markets of the world.

[Max Shavkin]

Do you use prediction markets? Why do you use them?

[Street Interviewee 1]

I'm more well versed in pop culture than I am in like terms of like crypto and finance betting on who's gonna win. Love island is more plausible for me because it's easier for me to analyze.

[Max Shavkin]

So I'm curious, like, what are your thoughts on prediction markets entering in the election process?

[Street Interviewee 1]

Definitely something that is like a can of worms we do not want to open. Not only will it influence people on who's more popular during an election, it can sway votes for sure. Especially if you have money on the line.

[Stacey Vanek Smith]

People would just not not be thinking for themselves.

[Street Interviewee 1]

On Kaushi, you're not putting your bid on who you want to win. It's on who you think will win.

[Unidentified Speaker (Audience or Caller)]

People who maybe would have the money to be gambling are sometimes people who don't feel as inclined to vote anyway. Maybe in a political context I think that it would discourage voting, which I think is really important and we should be encouraging that in any way shape and form a gambling market for politicians more than we already have seems probably part like problematic and would discourage working class people from participating and voting more than maybe they already feel.

[Street Interviewee 2]

I just see the ads on the subway and on YouTube. I don't use them. I don't gamble at all. That seems like it would open the space for some sort of corruption. What's it called in boxing when somebody takes a fall? I mean, it seems like you could set up something like that for an election. Right.

[Max Shavkin]

You know what my favorite boxing term is, is like, is tomato can. Which is like the person who, if you're like, if you want a boxer to win about and beat somebody up, you get a tomato can to get beat up.

Oh, sorry.

[Stacey Vanek Smith]

Okay.

[Max Shavkin]

Apropos of nothing, I feel like the people that Jasmine talked to were in on this. They were all over the main point of this segment, which is all about the. In which prediction markets might affect the

political system, might even manipulate the political system.

And we have a great person to talk to about this. Bloomberg reporter Denitsa Secova. She is here right now. She covers prediction markets Here, here with us. Denitza, great to have you.

[Denitsa Secova]

Thanks for having me. So what happened is Wisconsin, in Wisconsin is that the Wisconsin election officials warn voters in the state that they cannot bet on prediction market on the same vote they cast their ballot on and that may disqualify the vote. So obviously that raised a lot of issues. We have one of the biggest platforms, Kalshi, they have a very strong social media presence. They're really advocating for a lot of the topics. They took on social media saying that this is not good for Voters and there's some kind of voter suppression. The reasoning behind Wisconsin election officials were pretty simple. They were like, there is this wall. It's been written 170 years, referring to an 1849 law.

[Max Shavkin]

Basically says a bunch of things of who is ineligible to vote, Felons are not. Are not eligible to vote in Wisconsin. You got to be 18 to vote in Wisconsin. But one of the, one of the 1849 provisions of this is that if

you have placed a bet on the vote that you are going to cast, you are not allowed to vote. That's like a conflict of interest. And Wisconsin basically just put out an

advisory saying, hey guys, we've seen a lot of ads for this thing called like these things called prediction markets. Just a little reminder, do not bet

on the Wisconsin election if you hope

to vote in Wisconsin. And Kalshee has basically gone to the mats. What are they saying, Denise? Election suppression, Voter suppression.

[Denitsa Secova]

Voter suppression. They're saying that your vote might be disqualified. What their stance is first, Election. Prediction markets and election bets are regulated by the federal government, is in their case, the cftc. So they're like, it's not up to states to decide. There is a massive legal battle about that. It's mostly about sports. We can talk about it for hours, but that's their first thing. The second thing they say is like, oh, actually, young voters placing bets on prediction markets is good for us. It means that a lot of those people who are maybe not interested in elections will be a lot more interested now. And we are encouraging voter turnover. You can judge whether this is true or not, but this is the case. They're federally regulated and they're doing nothing bad because they're encouraging young people to care about politics.

[Stacey Vanek Smith]

Is there evidence that having prediction markets involved in an election does mess with the election? I mean, we've talked about a lot on the show, as with sports, with athletes maybe doing certain things or not doing certain things because they had money on the line. Is there evidence that could possibly enter into the equation with an election?

[Denitsa Secova]

I mean, majority of the cases we've seen on prediction market that have been connected with elections, that can be connected with manipulation, that can be connected with insider trading, have been all about politics. We saw obviously Trump's teleprompter person being blamed for insider trading. This case is currently being under jurisdiction. But then we also have the famous case of the US Soldier betting on Maduro's Ulster. We have Kalshi specifically banning political candidates for betting on their races. There have been three people. It was kind of simple cases. I bet $500 on my campaign, I filmed the TikTok, and then eventually you got banned. And we also have a great story in the Bloomberg terminal about Romania and how One trader placed 1 million in the span of six days over one presidential candidate and really boosted their own odds. So clearly in smaller markets that are less liquid, we have seen the case that indeed people place big bets that really change the odds. And then that obviously follows a lot of social media news and other coverage that can influence the vote.

[Max Shavkin]

Yeah, that story also on, of course, bloomberg.com by Liam Vaughn. Super interesting. Also, Stacy, not just this Romanian election that Denitza is talking about, but the governor's race in California. There were suggestions that, you know, sort of one of the fringier candidates that some ally or somebody looking to boost one of these candidates had placed, you know, tens of thousands of dollars worth of bets as like instead of like buying advertising. To answer your question, I think the answer is, yeah, it could have an impact. I think there's some question about, like, how big that impact would be.

[Stacey Vanek Smith]

Well, I do remember this conversation coming up, not around prediction markets, but around polling. And polling results in Trump won when the polls showed Hillary Clinton winning by such a huge margin. And there was a lot of speculation that maybe voters stayed home because of that or it did affect voter actions. I remember thinking a lot about that and how influential polls are. And it does make sense, especially in smaller elections, if you could sway the polls enough to get reported on that, you could potentially at least get people talking about you. And you know, in politics, that can make a big difference for sure.

[Denitsa Secova]

And those platforms are everywhere. Like you can see it on the subway. It was a big thing in the New York City mayoral election. And another important aspect is that those companies have big partnership with medias. So you're going to turn on tv, watch CNN and potentially see Kalshi odds or polymarket odds, depending on the partnership. They're entering our mainstream just daily lives and that changes everything. And also like the 2024 election was a big turning moment for them because, because both of the prediction market platforms were giving a lead to Trump winning the election. And I feel as though a lot of people are saying they were more accurate than polls when it comes to the election. So there is also like the truth machine accurate polling prediction market angle as well as just like it's probably exciting for a lot of people to put their money and say I was right.

[Max Shavkin]

It's kind of funny that Kalshee's like

this is voter suppression. They are trying to take the vote away from, you know, hardworking gambling Americans who just want to gamble on their election.

[Stacey Vanek Smith]

It's the American dream. They just want to vote and place their bet on who's going to.

[Max Shavkin]

Okay, yeah, but I do think like in the context of the way that Kalshee and also as, as Denita knows, many of these crypto companies are trying to kind of create a voting block of like young pro crypto, pro prediction markets and so on. Like they see this as a political force. And I'm kind of curious, you know, having followed the sort of crypto industry and the way that they kind of, you know, got behind Trump during the 2024 election, are there any of the same dynamics at play here with prediction markets? Are there like prediction market enthusiasts who feel passionate about this? Are there people like threatening to leave Wisconsin or demonstrate at the state capitol or do anything, you know, in response to this?

[Denitsa Secova]

I haven't seen this particular case, but I know in previous because there are similar, similar lawsuits about sports betting in different states and I've seen people threaten to leave states. So they use prediction markets if something happens. So indeed I can see how if this case evolves, people might be, might be talking about it more and more. But I think the comparison to crypto is very important, very similar. Of course, we have a lot of people from the Trump's family getting involved in both platforms, both Polymarket and Kalshi. We even had Trump media look into launching a prediction market. So there are a lot of political parallels here, a lot of things we should think about. And obviously the current CFTC and the general White House administration has been very supportive of prediction market. A big part of why those lawsuits are so contested and take so long is because the CFTC is standing behind those firms and in this case Kalshi, because Kalshi is the big CFTC US based one and is saying we regulate this. These are our markets and we're going to take care of them. It's not up to the states to decide. So the political force of this is very important. Politics are important. Elections are the essence of this. It's what you tell people. It's what they've been telling for ages, that we were right about 2024 and we to be the best aggregator of information for elections, economy and other important topics.

[Stacey Vanek Smith]

So, Denita, I just have one last question I want to make sure to ask you, which is you've been covering this for a long time looking at this issue, how serious is this if you were deciding Wisconsin v. Kalshee like what would you, what would you call

[Denitsa Secova]

wow, that's a great honor of my career. It's a complicated case. I think there are two aspects. There are the aspect for manipulation whether if in fact I'm a foreign agent or in fact someone wants to interfere in election if I have the money and desire to do that and I have access to prediction market how important my actions might be if also I have some other partisan reason to boost a candidate, maybe perhaps that's giving me means to do that. And the second big thing is insider trading. What if I have information about this which obviously election rules are very, very strong. There are a lot of protections about ballot counting but. But if I have an incentive to do that I may benefit a lot of money and maybe I have information, maybe I pass it on someone. It just opens a big network of people that may profit from that. And the last thing is just elections is very complicated topic. There are so many contested topics and just adding money to that equation and adding to chances of manipulation, insider trading. I think it completely complicates the future of how we contest elections and talk about this topic.

[Max Shavkin]

We're going to keep following this. We'll have to have you back for a future segment of this week in prediction markets. Really great having you.

[Public.com Sponsor Announcer]

See you soon.

[Denitsa Secova]

Thanks for having me.

[Stacey Vanek Smith]

And also if you have thoughts on this, please send us an email. I feel like this is an interesting one.

[Max Shavkin]

If you're.

If you have been disenfranchised by this, please send us.

[Stacey Vanek Smith]

If you feel like your voters rights have been suppressed because you could not place your bet on cowsheet or you already placed it.

[Max Shavkin]

It's too late now you're. Now you're looking at.

[Stacey Vanek Smith]

You're a fountain.

[Max Shavkin]

Well, you have to. You just wouldn't be able to vote.

I'm not sure what the enforcement mechanism.

[Stacey Vanek Smith]

Yeah, I was gonna say.

[Max Shavkin]

This show is Produced by Jasmine J.T. green and Stacey Wong. Magnus Henriksen is our supervising producer. Sam Rogich handles engineering and Dave Purcell fact checks. Special thanks to Jeff Muskus, Julia Rubin and Martin Maria Ling. If you have a minute, please rate and review the show. It'll mean a lot to us. And if you have a story that should be our business, email us@everybody's bloomberg.net that's everybody with an slumber.net thank you for listening and we will see you next week.

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