Wall Street Sinks on Greenland Risk

Summary

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.

Transcript

[Ed Elson]

Support for the show comes from Fundrise Investing in companies already in The S&P 500 can sometimes feel like you're being served someone else's leftovers. It's still a great meal, but it's hard not to imagine what the food tasted like when it was fresh out of the oven. But with Venture capital by fundrise, you can finally get in early and take a seat at the table alongside the biggest names in tech investing. Fundrise's mission is to give everyone the access required to invest in the best tech and AI companies. But before they go public, visit fundrise.com profg to check out Fundrise's venture portfolio and start investing in minutes. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. This is a paid advertisement.

[Sponsor Announcer 1]

Support for the show comes from public.com, you've got your core holdings, some high conviction picks, maybe even a few strategic options at play. So why not switch the investment platform built for those who take it seriously? Go to public.com and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com profg paid for by Public Investing. All investing involves the risk of loss, including loss of principal. Brokerage services for U.S. listed registered securities options and bonds in a self directed account are offered by Public Investing Inc. Member FINRA and SIPC. Complete disclosures available at public.com disclosures.

[Sponsor Announcer 2]

It'S true that some things change as we get older. But if you're a woman over 40 and you're dealing with insomnia, brain fog, moodiness and weight gain, you don't have to accept it as just another part of aging. And with MITI Health, you can get help and stop pushing through it alone. The experts at MIDI understand that all these symptoms can be connected to the hormonal changes that happen around menopause. And MIDI can help you feel more like yourself again. Many healthcare providers aren't trained to treat or even recognize menopause symptoms. MIDI clinicians are menopause experts. They're dedicated to providing safe, effective, FDA approved solutions for dozens of hormonal symptoms, not just hot flashes. Most importantly, they're covered by insurance. 91% of MITI patients get relief from symptoms within just two months. You deserve to feel great. Book your virtual Visit [e-mail] that's join M I D I.com today's number 25.

[Ed Elson]

That's how many years old Wikipedia turned last week. That means it can no longer date. Leo DiCaprio Money Market Matter if money.

[Justin Wolfers]

Is evil, then that building is hell. Show goes on the fighter now at once.

[Rohan Goswami]

And sell.

[Justin Wolfers]

Sell.

[Ed Elson]

Welcome to Profgue Markets. Hey guys, I'm Ed olson. It is January 21st. Let's check in on yesterday's market vitals. The major indices sold off in their worst session since October. Bitcoin dropped below $90,000, the dollar weakened and the yield on 10 year treasuries jumped to its highest level since August. Okay, what's happening? The S and P plunged 2% yesterday, erasing its gains for the year. As Wall street reckoned with President Trump's escalating threats to higher Greenland, volatility spiked with the vix. The market's so called fear gauge hitting its highest level since November and you guessed it, gold hit another record high as investors ran for cover. The drama is playing out in Davos right now as business and political leaders gather for the World Economic Forum. President Trump arrived yesterday and he agreed to meet with officials to discuss Greenland. But he says, quote, there can be no going back on his plan to seize the territory. Meanwhile, Greenland's Prime Minister is urging the island to prepare for an invasion which is still unlikely, but no longer unthinkable.

[Sponsor Announcer 1]

How far are you willing to go to acquired Greenland?

[Rohan Goswami]

You'll find out.

[Ed Elson]

Okay, joining us now to discuss everything that is happening here, we're speaking with Justin Wolfers, professor of Public Policy and Economics at the University of Michigan. Justin, welcome back to property markets.

[Justin Wolfers]

Would you believe me if I told you I was coming to you live from Greenland?

[Ed Elson]

I'm not sure I would. I'm not sure I would. It looks the same. Looks like you're, you're. You are in Ann Arbor right now. Is that right?

[Justin Wolfers]

It's as cold as Greenland, mate. And we have been taken over by federal authority as well.

[Ed Elson]

Right, right. It's, it's not, it's not too, not too dissimilar. Well, what's happened in the markets is quite astounding really. Stocks are plunging, yields are rising. All the safe haven assets like gold, are hitting record highs. I guess let's just start with your initial reactions. It's kind of remarkable what we're seeing here, at least to me. Do you feel the same way?

[Justin Wolfers]

Look, the thing that's more remarkable than what's happening in the markets is what's happening in the world.

[Ed Elson]

Right?

[Justin Wolfers]

The President woke up and decided the United States needed Greenland, which had never been part of the US or not, never in recent years hadn't been part of the US security planning at all. And he's saying he wants to buy it, take it something it, rename it, no one's quite sure what. And he's putting tariffs on countries who've sent vast forces of up to dozens of troops to defend Greenland from American hostile aggression. That is astonishing on its face. I know that your podcast is called Markets, mate. Sometimes we've got to pause on the world. The world's where the action is. So, yes, markets have responded to this.

[Ed Elson]

I guess the reason that the market's response seems relevant to me is we see a lot of crazy stuff from the President. We saw crazy stuff in the past few weeks. We saw the Powell investigation. We saw the invasion of Venezuela and the capture of Maduro. We saw what happened in Iran. And so I find that the markets help to give us a sense of what's maybe real and what isn't. And it seems that the markets are telling us right now this one's real. This one is different. This one is actually giving us pause. And it feels almost like we're back in April 2025. Everyone's deciding to sell. So I guess that's why it's kind of interesting to me, or seems important. I guess my question to you would be, why is this different? Or at least why do markets maybe believe that this is different?

[Justin Wolfers]

I'm not sure I'd give exactly the same explanation that you would add. Okay, so here's the problem, right? The bloke comes up with a harebrained idea every day. Nine out of ten times he tacos, Trump always chickens out, and the world moves on. And so if you're a trader, you want to discount these, because if you responded to each and every one of them, you'd sell off. And then the next day, the markets would rise as it became clear it wouldn't happen. And then you lost a lot of money.

[Ed Elson]

Yeah.

[Justin Wolfers]

So you got to scale your response to the likelihood that Trump will actually follow through. If Trump follows through in the short run, the obvious is he launches a trade war with the European Union, because, remember, he's talking about 25% tariffs by June. You can't just, as much as he's picked out Germany, that he wants to go after the United Kingdom. You don't just declare a trade war on particular members of the EU. The entire union response. The EU plus Norway plus the United Kingdom collectively is 22% of American exports. So that's a big economic threat right there. There are two other things you learn if you're serious. One is if he follows through with a trade war, there's actually a chance he follows through with a war war. That then is the end of NATO and the end of the post war world order. That in turn is the end of American military leadership. We move into some complicated world and you can get one of these guys who likes to point at the globe and tell you how complicated that gets. All I know is that Ed, in the brief time you and I have been alive, we haven't seen fighting on our shores. And that's not true for our grandparents. And so even if you don't like what we've had, it's been remarkably successful relative to the rest of you human history that we've grown up without wars on our shores. So there's some chance that that's the end of that for the United States. The world economic productive activity, it would be catastrophic. One war is a lot of wars. Walking closer to one war is a lot of problems. And then the other part is. So he's launched a trade war, a new trade war with you. You. The other part is you then learn tariff. McTare wants to tariff everyone at will. Deals don't mean anything. The idea that we'd get through 2025 and that was the end of tariffs because we would have done deals is clearly hopeless. And we just have trade wars and trade uncertainty for the next three years ahead of us as well. Those are really, really big generational shifts. I know. I wrote a study years ago looking at the stock market effect of the invasion of Iraq. We found that if the diff the stocks were valued 15% lower if the US invaded Iraq relative to if it didn't. So if you thought something like that, if you thought Greenland were Iraq, there's lots of reasons to think it's not right. You would expect stocks to fall on the order of 10 to 20%. Today they fell on the order of 1 to 2%. So my interpretation is they've built in a 1 in 10 chance the guy is serious in some sense. Markets are really useful here that are a wake up call. 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. If you remember Liberation Day, they screamed, they howled. We weren't quite used to the Trump two step of two steps forward and an immediate back down. If we're in a world in which you never followed through on anything, of course markets would react to nothing. The problem is that the president actually does sometimes do things. You could ask the Venezuelans about that. And the problem is we couldn't tell before the fact if he was serious about Venezuela. And then we learned after the fact he was. And I would like to think he's not serious about Greenland, but I don't want to wake up tomorrow and all of a sudden discover he was. So I think this is the markets putting in only a small chance, but it's a small chance of a big, big bad outcome.

[Ed Elson]

Just looking at what he's said recently, it does seem that he's somewhat serious from what he's been saying. That's a hard question to answer, but he's at least trying to present as serious. He also sent that text to the Prime Minister of Norway saying that he wouldn't be doing this if he had won the Nobel Peace Prize. This is maybe like a hyperbolic question, but I don't think it is. At what point do you think it's fair to say that he's actually lost his mind? I mean, that, like, very legitimately, not in the sense that, oh, he has dementia and he's just totally crazy, but, I mean, he's clearly operating on a different level of reality. He's decided that the world order as. As it is now is unacceptable. That that globalism, this is the end of it. And we're kind of going back to the 1800s. I mean, it appears that he might have gotten, I don't know, so drunk on power, so deluded by something that he might have actually, like, lost his mind. Here. Is that too far?

[Justin Wolfers]

I've had the same thought. And look, I like to speak to my Expertise. I'm a PhD economist. And so there are many questions where. And I've increasingly had to do this, say, I think you should talk to a psychiatrist, not an economist. And what's striking is that the most important economic question of the day is best answered by a psychiatrist. That's your point.

[Ed Elson]

Right?

[Justin Wolfers]

And it's a profoundly important point. There are actually ethical reasons why psychiatrists are not meant to. You're not meant to speak up about someone whom you've not examined.

[Ed Elson]

Yeah.

[Justin Wolfers]

I hope you don't mind. I might take your idea a little deeper because I've been thinking about this quite a lot. I certainly don't think if the president, as he currently is acting as rational, or at least we should put a high probability on that. And that worries me. And I'm like, oh, well, what happens if once every hundred years we have a leader, a world leader who is bonkers?

[Ed Elson]

Right.

[Justin Wolfers]

We've certainly had People who were bonkers. I think Adolf Hitler was bonkers.

[Ed Elson]

Yeah.

[Justin Wolfers]

I don't want to draw that comparison.

[Ed Elson]

But the point is, it's happened.

[Justin Wolfers]

Yeah. Then I got to thinking about it. Indulge me for a moment here. You would have. What sort of person would want to run for president of the United States who wakes up in the morning and thinks, I know I should run the free world? I, and I alone am uniquely qualified to run this country. And this country is the largest economy with the largest military in the world.

[Ed Elson]

Yeah.

[Justin Wolfers]

I think if you ran a survey of Americans, people with profound personality disorders would be much more likely to say yes than people without profound personality disorders. That's just a. It's an obvious statement.

[Ed Elson]

Yeah.

[Justin Wolfers]

You could say, justin, run for president tomorrow. And I'd be like, are you kidding? I gotta teach Econ 101 tomorrow, and I'm worried I've got too many students. I'm not qualified. I hope you'd say the same, Ed.

[Ed Elson]

I don't know. This pod's going pretty well.

[Rohan Goswami]

You give a bloke 30 under 30.

[Justin Wolfers]

And all of a sudden he thinks he can walk on water. But it's actually a really interesting point because if that point is correct, it says the amount of mental illness among world leaders is likely exorbitantly high.

[Ed Elson]

Right.

[Justin Wolfers]

That in turn changes how we ought to think about institutions. It says that we basically need to design our political institutions. So they're lunatic proof.

[Ed Elson]

Yeah.

[Justin Wolfers]

And in some sense, you go back and you read like, you know, the Federalist Papers, you get a sense of this. They would often talk about good versus evil instead, but I think actually just batshit versus not. And maybe, you know, after Nixon, we had a whole cleansing of, like, how do we. Corruption proof. The U.S. government. And I wonder whether people all around the world ought to be thinking about how do we. Mental health proof.

[Ed Elson]

Yeah.

[Justin Wolfers]

Our governments and, you know, we are meant to have checks and balances. And our biggest problem right now, of course, is Mike Johnson, which is we do have checks and balances. They just refuse to play. And they refuse to play because the guy with potentially the mental health problem is also the most charismatic figure in the country. And maybe that's what a mental health problem allows you to do. Anyway, that was more about politics. The markets. Let's come back to markets. I think the threat here is utterly dire. What I haven't had a chance to do today is if I wanted to make the case that it was, what I said, a small probability of a horrible outcome, rather than it being a moderately large probability of a moderately bad outcome, which I think is what you were suggesting. I think the way to tell the difference between our two stories would be to look at what was happening to Way out of the Money Options. I haven't had a chance to look. So maybe some bright spark who's in our audience has looked at Way out of the Money options and can tell us how they're behaving and drop a note in the comments.

[Ed Elson]

Yeah, I think that would be good advice. Okay, we're gonna let you go here. I assume we're gonna be discussing this again. Probably. Maybe tomorrow. Who knows. Justin Wolfers, professor of Public Policy and Economics at the University of Michigan. Justin, really appreciate it. As always, great pleasure. After the break, a look at Netflix's earnings and for even more markets content. You can subscribe to my new weekly newsletter, simply [e-mail].

[Sponsor Announcer 1]

Support for the show comes from LinkedIn. It's a shame when the best B2B marketing gets wasted on the wrong audience. Like imagine running an ad for cataract surgery on Saturday morning cartoons. Or running a promo for this show on a video about Roblox or something. No offense to our Gen Alpha listeners, but that would be a waste of anyone's advertising budget. So when you want to reach the right professionals, you can use LinkedIn ads. LinkedIn has grown to a network of over 1 billion professionals and 130 million decision makers according to their data. That's where it stands apart from other ad buys. You can target buyers by job title, industry, company role, seniority, skills, company revenue. All so you can stop wasting budget on the wrong audience. That's why LinkedIn Ads boasts one of the highest B2B return on ad spend of of all online ad networks. Seriously, all of them. Spend $250 on your first campaign on LinkedIn ads and get a free $250 credit for the next one. Just go to LinkedIn.com Scott that's LinkedIn.com Scott Terms and conditions apply. Support for the show comes from Zbiotics. Having a good night out shouldn't come with a rough next morning. You can set yourself up for success with Zebiotics. Zebiotics Pre Alcohol Probiotic drink is the world's first genetically engineered probiotic. It was invented by PhD scientists to tackle rough mornings after drinking. And according to Zebiotics, here's how it works. When you drink, alcohol gets converted into a toxic byproduct in the gut. It's this byproduct not dehydration. That's to blame for your rough next day. Pre alcohol produces an enzyme to break this byproduct down. Just remember to make pre alcohol your first drink of the night. Drink responsibly and you'll feel your best tomorrow. I am trying as I get older to reduce my intake of alcohol. But when I do drink, I'm making my first drink of the night. That is Zbiotic. So I'm a I'm a consumer ready to try it? Go to zbiotics.com propgnow you'll get 15% off your first order when you use propg at checkout. Plus it's backed by 100% money back guarantee so there's no risk. Subscriptions are also available for for maximum consistency, remember to head to zbiotics.com profg and use the code profg at checkout for 15% off.

[Rohan Goswami]

This is a Monday.com ad, the samemonday.com helping people worldwide getting work done faster and better. The same Monday.com designed for every team and every industry. The same Monday.com with built in AI scaling your work from day one. The same Monday.com that your team will actually love using the same Monday.com with.

[Sponsor Announcer 2]

An easy and intuitive setup.

[Rohan Goswami]

Go to Monday.com and try it for free. Yes, the same Monday.com.

[Ed Elson]

We're back with profty markets. Netflix's stock fell as much as 5% after its forecast for the first quarter came in below expectations. That reaction overshadowed the an otherwise solid quarter. Revenue and earnings per share both beat estimates up 18% and 31% year over year and full year revenue came in at $45 billion, up 16% year over year. The company also hit a major milestone reaching 325 million paid global subscribers. Earlier in the day. Netflix also officially revised its bid for Warner Brothers Discovery, moving to an all cash offer of $83 billion instead of the previous mix of cash and stock. Here to discuss these earnings and also what this new bid actually means, we are speaking with Rohan Goswami, business reporter at Semaphore. Rohan, thanks for joining us on property markets.

[Rohan Goswami]

Ed, Happy to be here.

[Ed Elson]

So let's start with the earnings. Netflix just reported earnings. The stock sunk in after hours as much as 5%, which is kind of interesting because they beat on earnings, they beat on revenue. What do you make of the earnings and what do you make of Wall Street's reaction?

[Rohan Goswami]

So look, they did beat on both those fronts and they guided to around their midpoint for the full year next year. And they also had A Decent subscriber number, 325 million. That's a milestone for them. But look, there's an overhang on this stock. And as you and I have talked about, Netflix is down I think 30 or 40% since rumors first circling about their interest in Warner Brothers for a simple reason. They are great builders. They are unproven buyers. They've never done a big deal like this before. And their investors who have counted on them for steady, reliable earnings growth are kind of in a wait and see mode. So the call is going on right now. Ted Sarandos and his co CEO are expected to sort of preview and give us a little bit more information on their thinking around this. But it also comes as they've made up, they've doubled down on their Warner Brothers bid.

[Ed Elson]

Right.

[Rohan Goswami]

You know, they've this morning announced what we've all known was coming. They flipped all cash. Warner's board has approved it. We got a lengthy 500 page proxy statement today which you know, I spent my entire lunch hour reading and it, and, and look there's, there is no doubt these guys right now are telling the world they are in it, they're in it to win it. And they could give a damn about the Ellisons.

[Ed Elson]

Yeah. What's new about this bid? I mean we know that it's, it's all cash. Now is that the only thing that's new? What have we lear about this new bid that was just announced on Tuesday?

[Rohan Goswami]

In terms of the actual bid? That's it. That's the only new thing. It lets us have a cleaner, although not perfect apples to apples comparison between Paramount and Netflix's bid. The interesting thing, there are some details that have come out in this proxy filing. And as you know, when companies are trying to combine, they make their case to shareholders through a formal document called a proxy statement.

[Justin Wolfers]

Right.

[Rohan Goswami]

That lays out all the financial analysis that their bankers have done, the potential legal risks and the most fun for reporters, a detailed, lengthy background to the solicitation. Which is a fancy way of basically saying the storyline of how these two companies came together. Thankfully, a lot of the reporting out there was confirmed by this background of the solicitation, which is always good news for reporters. The big thing that we finally as reporters, as investors got to look at was how Warner Brothers has decided to value their spin off business. Now remember we've talked about this. This is the business that they say is worth anywhere from three to five dol a share, which Paramount says is worth a buck generously and which Netflix has said we don't want anything to do with that. Don't give it to us. We don't want to touch it, spin it off.

[Justin Wolfers]

We don't care.

[Rohan Goswami]

So we finally got evaluation for that business, underpinned and justified by some financial analysis that Allen Co. And other bankers have done for Warner Brother. That was really the big thing out of this.

[Ed Elson]

Yeah, yeah. Just your point earlier that the, the stock, Netflix stock has slid like 30, 40% since the rumors started getting going. Talk a bit more about why that's happening. We've also seen obviously today, some selling activity. But what's so bad about buying another company like Warner Brothers? I mean, what are investors so worried about here?

[Rohan Goswami]

It's the uncertainty, right? This is what executives and bankers call execution risk, right? The ability for a company to actually do something with the assets they're picking up. And M and A is littered. Generally, most big M and A doesn't work. Keep in mind Warner Brothers discovery itself is a child of two and a half decades of crappy M and A going back to AOL Time Warner, which was the worst deal of all time by any account, right? So it's literally genetic with this company. There's never been a good deal for this company. Anyone who's bought this thing has almost immediately regretted it at and T picked it up and immediately dumped it, right? So it's not a good asset. It's kind of cursed and investors aren't superstitious, but it is kind of cursed. It's also a big bite at Apple for, as we were talking about earlier, just now, a company that has chosen to build, right, starting with House of Cards, but now, you know, a multinational multi language content business. Netflix has been really good at coming up with hits, executing on those hits, spending a lot on those hits, but executing on those hits. Now they're picking up a content library which has existed for decades from, you know, decades here. And while there's no question it's a valuable content library, investors are a little confused about why these guys who have steadfastly time and time again with even asked, would you buy this company? Would you buy that company? Why this time is different, right? Why Warner Brothers is so compelling to them. Now they've laid out the case. They think that the streaming business is going to be a four and a half billion dollar business, I think by 2030, which is meaningful for a company like Netflix, which did $50 billion of revenue or is expecting to do around $50 billion of revenue next year. But still, at the end of the day, it's a big bite. Shareholders have to pay for that. And if they don't see the results immediately, you know, these guys are skittish. These guys are skittish in the best of times, and it is not the best of times right now in the markets.

[Ed Elson]

So interesting. It's almost like the Netflix shareholders don't seem to want this deal. Warner Brothers shareholders don't seem to want this deal. Or at least they've been pushing for the Paramount deal instead. I'm kind of wondering who even wants this. Is it literally just Ted Sarandos and David Zaslav, like, who's decided that this is a good idea? Why is this even happening at this point?

[Rohan Goswami]

History is decided by the victors. So, you know, what? If two years from now, you and I are talking about this and they've done a wonderful job, we'll be saying, you know, they were so prescient. Who were we to doubt them? But it is kind of true to your point that nobody seems particularly thrilled about this process, with the exception. Yes. Of Warner Brothers board and of Netflix. The one interesting thing I should have mentioned earlier is we actually do have an explanation for why Warner Brothers went completely dark on Paramount. And it actually helps explain and answer your question of who really wants this. Ted Sarandos really wants this. We know this because 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. It's a move called, you know, you go pencils down, you basically walk out, you explode the deal. And Warner Brothers, just rather than risk losing, Netflix said, all right, all right, all right, fine, we'll go with you. They've got an executed merger agreement now, but it's clear that Ted Sarandos and you or I are both pretty smart people. We're not Ted Sarando's smart. Ted Sarandos thinks there's a lot of value for shareholders here. I don't know if he's actually going to get it in the end, but if history is any guide, patience with that guy usually is rewarded.

[Ed Elson]

Yeah. Just looking at the Netflix business, what they're doing here. So they. They doubled their ad revenue in 2025, which is interesting. It seems like they're going to be leaning more and more on advertising going forward. Another thing that we've been seeing recently, they're getting into podcasting. Just announced their first original video podcast with Davidson My question is what's the difference between a video podcast and a talk show? Maybe there isn't one. And then I guess this isn't relevant necessarily to Netflix, but Disney also announced recently they're going to get into vertical video on Disney. So a lot of interesting product announcements happening in the streaming world. It's kind of moving to an audio social media economy, it seems. What do you make of these moves? And just before we let you go, what do you think 2026 is going to look like in terms of streaming? Is it just going to be kind of, is it going to look like YouTube? I guess is my question.

[Rohan Goswami]

I mean, look, everything is tv, right? That's, that's what we're seeing. Podcasts for, radio now they're tv. Everything is tv. For Netflix specifically, it's not. They've been making this move for some time and the driver has been the consumer is a little weaker.

[Justin Wolfers]

Right.

[Rohan Goswami]

We're paying for a lot of things. We don't really have a clean bundle yet. No matter how hard the legacy cable companies are trying here, ad supported makes sense for them at this point because you've got a weak consumer, you've got an uncertain economy. Yes, the thinking is gone. People always spend money on content. How much money they'll spend and for what content is the bigger question. Which again ties into why they want to buy Warner Brothers, right? They've got some iconic franchises, they've got a lot of great content and that's what Netflix is, is paying for. They don't care about HBO Max necessarily. They don't care about the actual infrastructure of it all. Because Netflix is the pioneer in this space. For the space writ large, it's a harder question to answer, right? The content, the big, you know, buffaloes in the room, the apples, the Netflixes, the HBOs have shown in recent years, even before the economic slowdown, a sensitivity to the kind of blank check, Yellowstone style productions that cost hundreds of millions of dollars and have crazy perks for the talent. And the directors, they're a little more sensitive to that now. They've realized there actually needs to be measurable roi. So if there's one thing from a business perspective that I think will change for Netflix, whether it's because of this deal, because of antitrust, because investors just expect it, I expect, I hope, I should say for more clarity that they'll offer to the street on the actual underpinnings of their business. Remember, this is a company that has kind of steadfastly refused to divulge pretty elementary Information, viewing time, engagement, things that analysts and investors have expected from legacy streamers from cable companies for decades. So I would hope that this process, this big bite of the Apple, forces Netflix to talk to shareholders a bit more and say, look, here's what we're doing. Here's what we're seeing from consumers around the world. There's no question they've got a great product. The trick will be explaining why what they're doing is going to make this product better. And really, the only way to do that is going to have to be some more transparency.

[Ed Elson]

All right, Rohan Goswami, business reporter at Semaphore. I guess just before I let you go, Rohan, who's going to get wbd? I forget if I've already asked you this, but if you had to lock in a prediction, who wins?

[Rohan Goswami]

You asked me this, and I actually, the first time I said Netflix, then I said Paramount. Now I'm going to say Paramount with an asterisk. Okay? And here's why. Hear me out.

[Ed Elson]

Wow. I'm glad I asked you. Okay.

[Rohan Goswami]

They've got to bump their price. They've got to bump their price. It's getting ridiculous now. You know, if they want this thing so badly and they need this thing, they gotta pay more. They know that, too, but they just gotta pay more. It's that simple.

[Ed Elson]

Yeah.

[Rohan Goswami]

The money talks.

[Ed Elson]

Money talks. Okay. Thank you. Rohan Goswami, Semaphore business reporter. Appreciate your time. Thank you.

[Rohan Goswami]

Thanks, Ed.

[Ed Elson]

Well, with everything happening in Greenland, it's hard to remember that things are still happening in America. And one of those things is a slate of affordability plans that have been put forward by the President. One of them is to implement a 10% interest rate cap on credit cards. We touched on that last week. Another is to ban institutional investors from buying single family homes. Another is to buy up $200 billion worth of mortgage bonds. Another one is to issue a tariff refund. Another is a health care plan that Trump is calling the Great Health Care Plan. And the stated goal of all of these plans is to address affordability, to bring costs down. Now, when I read these plans, I see good news and I see bad news. The good news is Trump seems to now be recognizing that this affordability thing is a big deal, and if he wants to get votes, he needs to address it. The bad news is I don't think he's actually taking it seriously at all. And across each of these proposals, each of these plans, that is the main theme, they are unserious proposals. Take the credit card interest rate Cap, for example, as Saul Martinez told us last week, if this were actually implemented, it would decimate the business models of all the big banks and all the big credit card companies. Which is why it's strange that when he announced this plan, those stocks declined. Yes, but they didn't crater. And the reason they didn't crater is because Wall street recognizes this isn't a serious proposal. It's a little too ridiculous, a little too absurd. It isn't going to happen. Same thing is true of the great healthcare plan. Trump announces his plan to reinvent healthcare, although he doesn't really provide any details on how he'll actually do that. And once again, Wall street doesn't really have a reaction to it. Why? Because they don't think anything is actually going to happen. One healthcare analyst from Vita Partners said it best. He said, quote, 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. I could go on about all the other ideas, too. I could talk about the mortgage bond idea and the institutional home buying idea. I'll just cut to the chase. I don't think that those are serious proposals either. But even if they were, even if they did make sense, I would add that it would still be hard to take any. Any of it seriously when we're still living under a regime that has implemented one of the worst affordability plans in the history of America, and that is the tariffs. I would remind you that before the tariffs, inflation had come down to 2.3%. After the tariffs, they went up to 3%. And that makes perfect sense, because as we've discussed, it's Americans that pay the cost of the tariffs, not foreigners. The importer pays the tariff, and they pass that on to the consumer with price increases. In fact, a new report from the Kiel Institute has confirmed this. They found that Americans are absorbing 96% of the tariff costs. Foreigners, meanwhile, are only taking on 4%. Even Andy Jassy, the CEO of Amazon, made this point yesterday at Davos. He literally said that sellers are passing on the tariff costs costs to American consumers. So all of these affordability proposals, which are already unserious, they are especially unserious when you also consider the fact that we have tariffs. And if we're in the business of suggesting proposals, if the idea is to come up with a plan that will bring costs down, the idea is to come up with a plan that will address affordability. I have a really easy one that the administration could implement right now, and that is they could just get rid of the tariffs. It would be quick, it would be doable, it would be effective, and it would bring costs down by probably a percentage point. Of course, that won't happen because Trump has doubled down on this and he doesn't want to look foolish. But this is all just to highlight what a foolish situation we find ourselves in. 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. Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss, edited by Joel Patterson, and engineered by Benjamin Spencer. Our research team is Dan Shalon, Isabella Kinsel, Kristen o' Donoghue and Mia Silverio. Thank you for listening to Prof. G Markets from Prof. Gmedia. If you liked what you heard, give us a follow. I'm Ed Elson. I will see you tomorrow.