Slate Money – "Schrödinger’s Equities" (January 3, 2026)

Episode Overview

In this first episode of 2026, hosts Felix Salmon (Bloomberg), Elizabeth Spires (New York Times), and Emily Peck (Axios) deliver a comprehensive post-mortem on the financial year of 2025. They dissect surprising trends in the stock market, the global divergence in equities performance, anxieties over “AI stocks” and their outsized impact, the fortunes of Tesla, deal-making booms, the behavior of conglomerates like Berkshire Hathaway, and the geopolitical forces shaping trade and corporate strategy. As usual, the co-hosts mix sharp analysis, skepticism, and deadpan wit for a lively look back at a complicated financial year.

Main Discussion Points

1. The Paradoxical U.S. Stock Market Rally

• 2025’s S&P 500 Return: Despite a strong 19% gain, U.S. investors felt underwhelmed.
  • Felix: “In any normal world, a year where the S&P 500 went up by 19% … would be like, wow, that’s amazing. … And yet no one seems particularly happy about it.” (02:26)
• Two Main Reasons for Discontent:
  1. Relative Underperformance: Overseas markets—Europe, Asia, Brazil—outperformed.
  2. Falling Dollar: Gains in USD terms were eroded when converted to other currencies.
  • Felix: “If you’re not a dollar based investor, then most of those gains get wiped out by the decrease in the value of the dollar.” (03:40)
• Concentration of Market Gains: A handful of mega-cap tech (“Magnificent Seven”) carried much of the load; without them, the rest of the index appears lackluster.
  • Elizabeth: “The Magnificent Seven account for about a third of the growth this year … if you take them out ... the rest of the index ... would that be normal?” (05:45)

2. The "AI Bubble": Real, Perceived, or Both?

• Debate on AI’s Role:
  • Elizabeth: “People are a little nervous that the S&P's performance is so heavily dependent on AI.” (03:59)
  • Emily: “Everything I read is like, well, if not for AI, the economy would have been much worse … If you take the AI heavy companies out ... it doesn't look as impressive.” (04:05)
  • Felix (pushback): “To believe that story, you have to consider … Google and Apple to be AI stocks, which I just don't think that they are. … The number of actual AI stocks in the S&P 500 is basically one. It's basically Nvidia.” (04:23, 07:02)
• Schrödinger’s Equities Metaphor:
  • Elizabeth: “It sort of doesn't matter what the underlying revenues are. If people perceive [a company] as an AI company, that's what’s going to drive market valuation.” (07:51)
• AI as Corporate Rhetoric:
  • Nearly every S&P 500 company is loudly branding itself as “AI-focused,” whether or not it’s a core part of the business.

3. Sector Winners, Losers, and Bubbles

• Winners: S&P 500 mega-caps, gold and silver—viewed as safe havens.
• Losers: Consumer staples, retail, managed care—hit by weak labor market and spending pessimism. Crypto dropped, with Bitcoin down ~6.6% for the year.
  • Emily: “Crypto doing not well. You’d think it would be doing well because …” (11:59)
  • Felix: “If you just take a step back and say like bitcoin is worth $80,000, that's like completely insane and ridiculously high.” (13:17)
• Notable Quote:
  • Felix: “Are there some stocks that went down rather than up? Yes, ... But the sectors in general, they don't seem to be pricing in massive pessimism. They're just not pricing in as much optimism as they were a year ago.” (10:48)

4. U.S. vs. International Markets and the Dollar Decline

• Americans Feeling Left Behind:
  • 2025 was the first year since 2009 that U.S. stocks underperformed international peers.
    • Emily: “It's the first time that's happened since 2009, apparently.” (15:00)
• Europe’s Military Build-Out:
  • Felix: “The smart move was to basically say … The Europeans are going to massively increase their defense expenditure, and this is going to cause European stocks in general, but European defense stocks in particular to go through the roof. And that definitely happened.” (15:38)
• China and Mexico as Trade War Winners:
  • Elizabeth: "The two biggest targets of Trump's trade war ... have both come out winners ..." (15:16)
• Dead Cat Bounce in China?
  • Felix: “Chinese stocks are largely uninvestable. … I think of Chinese stocks … a little bit more like bitcoin … they just move around all over the place for a whole bunch of reasons.” (16:20)
• AI Rhetoric Internationally:
  • China following U.S. lead, touting “AI” as a magic wand for productivity.

5. The Hyperscaler Debate & The Nature of "AI Stocks"

• What’s a Hyperscaler?
  • Large-scale data center operators (e.g., Amazon, Microsoft): "the pick and shovel stock of the AI boom." (18:07)
• Who Counts as a True AI Stock?
  • Felix: “There aren’t any trillion dollar hyperscalers.” (18:22)
  • Emily: “Is that like Oracle?” … Felix: “Oracle is the big exception … actually going out there and borrowing hundreds of billions of dollars … making big bets.” (18:36–19:20)
  • Leverage (debt-fueled investments) is rare among mega-cap tech, except Oracle.
  • Even so, for the market as a whole, “the stock market as a whole is [not] rising on the strength of AI stocks.” (20:17)

6. Tesla – Meme Stock or Still More?

• Tesla's Strange Resilience:

  • Car deliveries are falling, Elon Musk appears less invested, yet Tesla retains a massive valuation.
    • Felix: "It's pretty clear at this point that Elon is bored with cars ... and Tesla is an automaker. ... And yet, the company’s worth $1.7 trillion." (21:06)
  • Elizabeth: “My theory is that Tesla is partly a meme stock at this point. ... He's always been less competent than people perceive him to be.” (21:38)
  • Felix: “Meme stocks are worth like $100 million. They're not worth 1.6 trillion. … Big institutional investors are buying Tesla. ... I don't have like a better explanation.” (22:02–23:14)

• Money “Doesn’t Mean Anything”:

  • Emily references a Decoder Ring episode: “Stocks ... just keep going up now and people just keep putting money into the stock market and like, it doesn't even mean anything. … You're just making up narratives to fit whatever you want to throw the money at. It's like nothing means anything anymore.” (23:21–24:53)

• Ultra-Wealth & “Silly Money”:

  • Felix: “There’s a bunch of just silly money being thrown around in the world of the ultra rich ... like a $10 million watch … or a $30 million drinks cabinet in the shape of a rhinoceros.” (24:53)

7. Real Economy: Trade, Tariffs, and the North American Bloc

• Trump’s Tariff Bark Worse Than Bite:
  • Despite anti-trade rhetoric, most North American trade remains tariff-free due to USMCA (NAFTA successor), benefiting Mexico and Canada.
    • Felix: “He kind of didn’t ... All of these tariffs that he’s announced have been on the minority of trade ... In most things, most of the times. And this has been a big boom for Mexico...” (29:53–31:18)
  • Elizabeth: "Claudia Sheinbaum gets the award for the world leader who has best managed Trump...” (31:18)
  • Emily: “... Mexico has become the US’s number one trading partner ... cheaper ... [tariff rate is] 4% vs. 37% for China.” (31:42)
• Friendshoring Becomes Reality: North America forms a de facto trading bloc.
• Will Trump Pull Out of USMCA? Unlikely, say the hosts. (33:32)

8. Deal-Making Boom and the Strategic Role of Berkshire Hathaway

• 2025: Year of M&A:
  • $4.5T in global deals, half in the U.S., with $1T in divestments also setting records.
    • Felix: “...After many years in which the profit engine for investment banks was very much trading, it is now ... the M and A stuff is a much, much bigger deal than it has been in a long time.” (35:02–36:14)
• American vs. European Strategies:
  • U.S. firms see M&A as growth; in Europe, it’s often a last resort, but that’s changing.
• Berkshire Hathaway’s Massive War Chest:
  • Sitting on $380B cash, net seller of stocks for three consecutive years.
    • Felix: “They've been a net seller of stocks every year for past three years ... all goes into the pile of cash.” (38:46)
• Buffett’s Retirement; Greg Abel Takes Over:
  • “No one expects him to be a change agent ... just, you know, what would Warren do?” (41:34)
  • Key dilemma: Will Berkshire be forced to move out of its U.S. comfort zone and invest more internationally to deploy its cash? (44:59)

Notable Quotes & Moments

• On Perception Driving Markets:
  • Elizabeth: "If people perceive [a company] as an AI company, that's what’s going to drive market valuation." (07:51)
• On Tesla:
  • Felix: “Meme stocks are worth like $100 million. They're not worth 1.6 trillion." (22:02)
• The “Nothing Means Anything” Moment:
  • Emily: “... Something big is happening now with money and valuations and enthusiasm about the stock market... you’re just making up narratives to fit whatever you want to throw the money at. It’s like nothing means anything anymore.” (23:21–24:53)
• On the K-Shaped Economy:
  • Felix: “You have Tesla stock and Elon being the richest man in the world … [and] silly money being thrown around in the world of the ultra rich in a way that feels kind of money doesn’t mean anything.” (24:53)
• Berkshire’s Apple Exposure:
  • Felix: "Apple is like the biggest company they own. … There’s definitely been quarters where ... their entire fucking return has just been like, Apple stock goes up." (41:34–43:31)

Numbers Round (45:31 – 50:00)

• Emily: 480 — The number of colors in the board game Hues and Cues. "I recommend it for next year for all of you who will be at home." (45:34)
• Felix: 1 trillion — The interest (in USD) the U.S. will pay on its debt in 2026: "For the first time ever, we're going to have over $1 trillion in interest payments on treasury bonds…" (47:43)
• Elizabeth: Eight (hours) — How long an entrepreneur sat in boredom for mindfulness, a trend among the “super online” called “raw dogging boredom.” (48:47)

Key Timestamps

• 02:26: The U.S. stock market's 2025 performance paradox.
• 05:39–07:02: The AI stock debate—MAG7 vs. actual AI pure plays (Nvidia).
• 09:14: Google’s position as an AI company and the challenge of market narratives.
• 11:59–13:38: Discussion of sector performance, gold, crypto, and the Bitcoin story.
• 15:16–16:17: International market outperformance, Europe’s military spending, Chinese and Mexican stock performance post-trade war.
• 18:07–20:22: What is a hyperscaler? Who is a "real" AI stock? The leverage-warning.
• 21:06–24:53: The Tesla conundrum; meme stocks, and existential questions about money's meaning in this frothy climate.
• 29:53–34:48: Trade realities: USMCA, Mexico and Canada winning, tariffs less harmful than feared.
• 35:02–44:59: Deal-making boom; Berkshire Hathaway’s cash dilemma and the challenges ahead for Greg Abel.
• 45:31–50:00: Numbers round and the mindfulness trend.

Final Takeaways

• The mood among investors is paradoxical: 2025’s U.S. market gains didn’t translate into satisfaction, as investors fixate on international outperformance and question how "real" the AI-fueled rally is.
• Most companies now lay claim to AI, but the panel draws a stark line between firms fully exposed to AI (like Nvidia) and those “dressed up” with AI branding.
• Tesla, meme stocks, crypto, and the collectibles market all serve as symptoms and metaphors for a market environment awash in liquidity, where narrative and perception can overpower traditional fundamentals.
• While global deal-making is surging, the traditional fortress of value investing—Berkshire Hathaway—is struggling to find opportunities, posing fresh strategic questions in a changing world.
• And despite protectionist rhetoric, the North American trading bloc is stronger than ever.
• Throughout, the hosts return—knowingly—to the refrain that “nothing means anything anymore,” but dissect the trends with plenty of context, caveats, and a touch of weary optimism.

Tone & Language:
Lively, slightly sardonic, informed, occasionally exasperated, and jargon-aware but accessible.
Memorable moment: The recurring realization that, in this market, narrative-flexibility might be the most important financial asset of all.

For listeners seeking market insight, media skepticism, and a sense of how both global and U.S. business moved through 2025, this Slate Money episode is the essential wrapup.