Prof G Markets — “Wall Street Sinks on Greenland Risk”
January 21, 2026
Vox Media Podcast Network

Episode Overview

In this episode, hosts Ed Elson and guest experts analyze volatile market reactions sparked by President Trump’s threats to take over Greenland, the global economic and geopolitical implications, and subsequent shocks to stocks, gold, and currencies. The episode also covers Netflix’s Q4 earnings, its bold Warner Brothers Discovery acquisition bid, and new “affordability” proposals from the White House. The discussion delves deep into the logic and psychology behind explosive policy announcements—and how markets parse noise from risk.

Key Discussion Points and Insights

1. Market Turmoil over Greenland Risk

[02:45–05:57]

• Backdrop:
  The S&P 500 suffered its worst day since October, down 2%, wiping out early-year gains. Bitcoin fell below $90,000, the dollar weakened, 10-year treasury yields surged, and gold hit record highs as investors sought safety.
• Trigger:
  Market volatility is being driven by President Trump’s escalating threats to “seize” Greenland, causing alarm at the World Economic Forum in Davos, and prompting defensive statements from Greenland’s Prime Minister.

Notable Quote:
"The President woke up and decided the United States needed Greenland... he's saying he wants to buy it, take it, something it, rename it, no one's quite sure what."
—Justin Wolfers [05:11]

2. Understanding How Markets React to Political Shocks

[05:57–11:11]

• Distinguishing Real Risk from Market Noise:
  • The hosts compare this risk to recent dramatic events (Powell investigation, Venezuela invasion, Iran), noting markets now seem to be pricing this Greenland scenario as more real and consequential.
• Wolfers’ Analysis:
  • Historically, markets discount most of Trump’s extreme threats, acting only when there’s likelihood of genuine follow-through.
  • If tariffs on the EU materialize, it could trigger a full-scale trade war (EU, Norway, UK = 22% of US exports)—a major economic risk.
  • The existential risk: escalation to actual military conflict, unraveling NATO, and the postwar world order ("...even if you don't like what we've had, it's been remarkably successful relative to the rest of human history that we've grown up without wars on our shores").
  • Markets seem to price about a 10% chance of a catastrophic outcome based on historical event studies (e.g., invasion of Iraq).

Notable Quote:
"It's not about the probability he follows through, it's about the consequences if he follows through, which is... They're screaming, 'This is terrible,' but they're not screaming screaming…"
—Justin Wolfers [09:58]

3. Presidential Psychology and Institutional Resilience

[11:11–16:30]

• Is Trump "Off the Rails"?
  Ed points out the apparent loss of touch with reality, asking if Trump is “operating on a different level of reality” and if it’s legitimate to question his mental state.
• Wolfers’ Reflection:
  • Economists are forced to defer to psychiatrists because the world’s biggest economic variables hinge on the president’s psychology.
  • The unique psychology of those who seek ultimate power ("profound personality disorders" over-represented among world leaders).
  • Institutional design must account for the possibility of “lunatic-proofing” leadership—modern checks and balances failing when Congress won’t act.

Notable Quote:
"The most important economic question of the day is best answered by a psychiatrist."
—Justin Wolfers [12:47]

Notable Quote:
"We basically need to design our political institutions so they're lunatic proof."
—Justin Wolfers [15:04]

4. Market Sentiment: Severity of the Threat

[16:30–17:09]

• The difference between a small chance of a catastrophic event and a moderate chance of a moderate one may show up in the pricing of far out-of-the-money options; audience is encouraged to investigate.

5. Corporate Focus: Netflix’s Earnings & Warner Bros. Discovery Bid

[19:59–30:41]

• Netflix Q4 Highlights:
  • Beat earnings (+31% YoY) and revenue (+18% YoY), reached 325M global subscribers.
  • Stock still fell 5% after hours due to conservative Q1 guidance and overhang from Warner Bros. Discovery takeover bid.
  • Netflix has shifted its bid for WBD to all cash, now at $83B.
• Skepticism from Investors:
  • Netflix is a talented builder but has never executed a takeover of this scale (“great builders, unproven buyers”).
  • Warner Bros. Discovery itself is the product of “two and a half decades of crappy M&A"—investors are wary of its “cursed” history.
  • The proxy filing detailed Warner’s spinoff valuations and background on negotiations.
  • Execution risk is high: most large entertainment mergers have historically destroyed value.
• Who Wants This Deal?
  • There appears to be little enthusiasm from shareholders of either company; Ted Sarandos (Netflix CEO) is the driving force.
  • Final dealmaking involved sharp negotiation tactics ("pencils down") from Netflix.
• Streaming Product Evolution:
  • Netflix doubled ad revenue in 2025 and is leaning harder into advertising.
  • Moving into podcasts and vertical video—competition with social media and YouTube is intensifying.
  • Rohan Goswami: “Everything is TV... podcasts were radio, now they're TV.”
  • Future direction: Investors look for more transparency and clear ROI on massive new content investments.

Notable Quotes:
"There's never been a good deal for this company. Anyone who's bought this thing has almost immediately regretted it... It's kind of cursed."
—Rohan Goswami [24:17]

"Ted Sarandos really wants this... In his lawyer's final message before the deal was signed, his lawyers basically said, 'Look, Warner Brothers, we're prepared to move on this right now. And if you don't get back to us by tonight, we're walking, we're done.'"
—Rohan Goswami [27:05]

6. 2026 Streaming Outlook

[27:37–30:41]

• Ad-supported models will grow as consumers grow more price-conscious.
• Major platforms will need to provide more metrics and transparency to investors, especially given the high stakes of recent M&A.

7. Trump’s Affordability Plans: Serious Policy or Political Performance?

[31:32–end]

• Summary:
  Newly announced proposals: 10% cap on credit card interest rates, banning institutional investors from buying homes, purchasing $200B in mortgage bonds, issuing tariff refunds, and a vague “Great Health Care Plan.”
• Host’s Assessment:
  • Markets shrug off these announcements as posturing—they don't see them as viable or likely to be enacted.
  • Tariffs remain the elephant in the room—lifting them would meaningfully lower living costs, but no action is expected.
• Analyst Quote Cited (from Vita Partners):
  "We think the plan is intended to demonstrate that the White House is doing something about affordability. But we believe the policies either stand little chance of being enacted or will have a minimal impact if enacted."[paraphrased at 32:43]

Notable Quote:
"Here we are pretending to care about affordability and at the same time actively making our lives less affordable. So until we get rid of the tariffs, I don't think there's any other reasonable response to these proposals than what Logan Roy said to his kids. And that is, 'You are not serious people.'"
—Ed Elson [33:50]

Notable Quotes & Memorable Moments with Timestamps

• “The President woke up and decided the United States needed Greenland... no one's quite sure what.” —Justin Wolfers [05:11]
• "It's not about the probability he follows through, it's about the consequences if he follows through..." —Justin Wolfers [09:58]
• "The most important economic question of the day is best answered by a psychiatrist." —Justin Wolfers [12:47]
• "We basically need to design our political institutions so they're lunatic proof." —Justin Wolfers [15:04]
• “There's never been a good deal for this company. Anyone who's bought this thing has almost immediately regretted it ... It’s kind of cursed.” —Rohan Goswami [24:17]
• "Everything is TV... podcasts were radio, now they're TV." —Rohan Goswami [28:41]
• "Here we are pretending to care about affordability and at the same time actively making our lives less affordable." —Ed Elson [33:50]

Important Timestamps

• [02:45] Market update: selloff triggered by “Greenland risk”
• [05:04] Wolfers’ initial reactions on geopolitical risk
• [09:00] Assessment: Market pricing in a small chance of a catastrophic outcome
• [12:30] Discussing Trump’s mental state as an economic risk
• [15:04] Need for “lunatic-proof” government institutions
• [19:59] Netflix earnings recap begins
• [22:36] Analysis of Warner Bros. Discovery bid
• [24:17] Problems with M&A in media sector
• [27:37] Netflix’s push into ad-supported and new formats
• [31:32] Breakdown of Trump’s affordability proposals

Tone & Language

The hosts maintain a brisk, irreverent, and candid tone—combining serious macro-financial insights with sharp humor and skepticism about political performance. Wolfers brings pragmatic, academic insight, while Rohan Goswami’s segment is delightfully blunt on the “cursed” nature of entertainment M&A. The analysis is rich, critical, and unvarnished: “no mercy, no malice.”

For Listeners

This episode will be invaluable if you want to understand:

• How markets try to gauge risk amid erratic geopolitical decisions
• The psychological, not just rational, dimensions of policy shocks
• Investor skepticism about big, uncertain M&A (Netflix/WBD)
• Why Wall Street often shrugs at grand policy announcements inside the Beltway

If you missed it, this detailed breakdown captures both the actionable takeaways and the inside jokes—so you’re up to speed on market risks, streaming wars, and the current American intersection of politics, economics, and performance art.