Prof G Markets: Episode Summary
Title: Trump Unveils Steep New Tariffs, TikTok Develops App for U.S. & CoreWeave’s $9B Acquisition
Release Date: July 8, 2025
Host/Author: Vox Media Podcast Network
1. Market Overview
Ed Elson opens the episode by discussing the recent downturn in major stock indices following President Trump's announcement of new tariffs. Specifically:
- Dow Jones and NASDAQ each declined by approximately 1%.
- S&P 500 fell by 0.8%.
- The U.S. dollar strengthened, and the 10-year Treasury yield increased.
- Tesla's stock plummeted nearly 7%, resulting in a $68 billion loss in market value after Elon Musk announced the formation of a new political party.
2. Trump’s New Tariffs
President Trump revealed a new array of tariffs affecting multiple countries as the 90-day tariff pause nears its end. Key points include:
- Tariff Rates:
- 25% on South Korea and Japan
- 30% on South Africa
- Additional tariffs on Malaysia, Kazakhstan, Indonesia, and Myanmar
- These tariffs mark the end of the Liberation Day tariffs, initially enacted on April 2 and later paused by Trump.
- Trump stated, "I am pleased to announce that the United States tariff letters and ordeals with various countries from around the world will be delivered starting Monday, July 7th." (Timestamp: 04:30)
- The tariffs significantly impact major U.S. trading partners, with Japan and South Korea alone accounting for over $380 billion in annual trade.
3. Expert Analysis: Barry Appleton
Barry Appleton, co-director of the Center for International Law at New York Law School, provides insight into the implications of Trump’s tariff strategy:
- He likens Trump’s approach to a real estate mogul charging for access: "If they want to come to my club, they have to pay." (Timestamp: 05:46)
- Appleton suggests that the tariffs are a strategic move to extract payment rather than seek free market access, disrupting previous trade agreements.
- He emphasizes that market uncertainty stems from the unpredictable and staggered implementation of these tariffs, leading to negative market reactions.
- Appleton predicts that tariff revenue is a primary goal, stating, "No one's getting in for free. Everyone pays something." (Timestamp: 08:15)
4. TikTok’s New U.S. App and Potential Sale
The podcast transitions to the developments surrounding TikTok and its efforts to align more closely with U.S. regulations:
- New App Launch: TikTok is developing a new app for American users, scheduled for release on September 5. The existing app will remain operational until March 2026.
- This move is part of TikTok’s strategy to make the platform more attractive and transferable to a U.S. buyer, following previous threats of a ban unless sold by its Chinese parent, ByteDance.
- Alice Hahn, China economist and director at Greenmantle, suggests that this app development could serve as a bargaining chip in ongoing trade negotiations with China. She notes, "The biggest question mark is Beijing's reaction function on that topic alone." (Timestamp: 11:07)
5. Scott Galloway’s Take on TikTok and Tariffs
After a brief interlude, Scott Galloway shares his perspectives:
- On TikTok: Galloway views TikTok’s new app as "the mother of all jazz hands," suggesting it’s a mere rebranding effort without genuine ownership changes. He believes the Chinese Communist Party (CCP) will retain control over TikTok's algorithms, undermining American bans. Galloway states, "The CCP will continue to control the algorithm." (Timestamp: 14:45)
- On Tariffs: He critiques Trump’s tariff strategy, asserting that it has stimulated more trade agreements among third parties, such as the EU and Mercosur, rather than benefiting the U.S. economy. Galloway remarks, "His hand is just getting weaker and weaker." (Timestamp: 16:03)
6. CoreWeave’s $9 Billion Acquisition of Core Scientific
Ed Elson introduces the significant acquisition news:
- CoreWeave, an AI-focused data center company that went public in March 2025, is acquiring Core Scientific, a Bitcoin mining firm, for $9 billion in an all-stock deal.
- This acquisition values Core Scientific at roughly $20 per share, representing a 66% premium over its previous closing price.
- CoreWeave had seen its stock soar by nearly 300% since its IPO, making it one of the year's hottest IPOs.
7. Detailed Analysis of the Acquisition
Gil Luria, head of technology research at D.A. Davidson, provides a nuanced perspective on the acquisition:
- The stock reactions indicate that Core Scientific investors believe CoreWeave’s shares will decline by the time the deal closes in Q4, making the acquisition less favorable. He explains, "The holders of Core Scientific believe that by the time this deal closes in Q4 of this year, Core Weave will be worth significantly less." (Timestamp: 27:14)
- Luria points out that the deal is primarily a form of financial engineering, with CoreWeave issuing new shares to finance the purchase, thereby diluting existing shareholders’ value.
- He highlights CoreWeave’s over-reliance on Nvidia’s GPUs and its heavy customer concentration in companies like Microsoft, coupled with substantial debt, questioning the sustainability of its business model.
8. Market Reactions and Future Implications
Ed Elson elaborates on the broader implications:
- The simultaneous decline in both CoreWeave and Core Scientific’s stocks post-announcement suggests skepticism about the deal’s value.
- Elson underscores concerns about CoreWeave’s fundamentals, including its dependency on Nvidia and a high debt load, which are not mitigated by the premium offered in the acquisition.
- He concurs with Luria’s assessment, noting, "Core Weave was the hottest IPO of the year... but when you look beneath the hood, what you discover is a business that is fundamentally quite weak." (Timestamp: 29:00)
9. Closing Thoughts
Ed Elson concludes the episode by reiterating the concerns surrounding CoreWeave’s overvaluation and the shaky foundations beneath its rapid growth. He emphasizes the importance of scrutinizing beyond surface-level market excitement to understand the true health and sustainability of such companies.
Notable Quotes
- Barry Appleton: "If money is evil, then that building is hell." (Timestamp: 02:03)
- Scott Galloway: "The CCP will continue to control the algorithm." (Timestamp: 14:45)
- Gil Luria: "Core Weave is not using cash. They're just issuing new shares, diluting their own shareholders." (Timestamp: 28:10)
Conclusion
This episode of Prof G Markets delves into significant economic and corporate developments, including President Trump’s implementation of new tariffs affecting major U.S. trading partners, TikTok’s strategic moves to align with U.S. regulatory demands, and CoreWeave’s controversial $9 billion acquisition of Core Scientific. Through expert analyses and insightful discussions, hosts Ed Elson and Scott Galloway provide listeners with a comprehensive understanding of how these events could shape financial markets and the broader economic landscape.
For more insights and detailed analyses, subscribe to Prof G Markets on your preferred podcast platform or visit markets@profgmedia.com with your questions and comments.
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