Chapter 1: What is the main topic discussed in this episode?
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Today's number, 4.5. That's how many gallons of alcohol the average Romanian male drinks each year. That's roughly 70% more than the average American, but it's 70% less than Kash Patel. Money market's bad. If money is evil, then that building is hell. The show goes on! Get back in there and watch the show! Show! Welcome to Profiteer Markets. I'm Ed Elson. It is April 21st.
Let's check in on yesterday's market vitals. The major indices fell as relations between Iran and the U.S. remained strained ahead of the ceasefire deadline. Oil prices rose but still remained below $100 a barrel. Shares of Fermi, the AI data center company that we predicted back in October would implode, plunged 20% after several top executives, including the CEO, resigned.
And finally, Apple stock dropped roughly 1% after hours on news that Tim Cook is stepping down in September. He will be replaced by Senior Vice President of Hardware Engineering, John Ternus. Okay, what's happening? The U.S.-Iran ceasefire expires tomorrow, and tensions are mounting. Both countries' delegations are headed to Pakistan to engage in talks ahead of the deadline.
President Trump said it's, quote, highly unlikely that the ceasefire would be extended if a deal was not reached before Wednesday. He also said the U.S. would continue to blockade the Strait of Hormuz until a deal is signed. And the meeting follows an active weekend of fighting. On Friday, Iran announced it would reopen the Strait of Hormuz after Israel and Hezbollah agreed to a ceasefire.
Stocks soared to record highs on that news. However, Tehran reversed course after the U.S. refused to lift its own blockade. Then on Sunday, the U.S. Navy fired on an Iranian cargo ship. and Iran threatened retaliation. Oil prices rose yesterday and stocks slipped.
So, here to give us the update on the war and what it means for us and for the economy, we're speaking with everyone's favorite, our favorite, Justin Wolfers, Professor of Economics and Public Policy at the University of Michigan. So, Justin, The ceasefire might end tomorrow. That's at least the deadline. I mean, there's a lot to get into, but I guess my first question is, does that even matter?
Because, you know, this weekend we heard from Trump that Iran violated the ceasefire. Iran said that we violated the ceasefire. We saw this news where we actually did fire Iran. at an Iranian cargo ship. So I just can't tell if this is even meaningful at all. What do you make of it? Does this change things for you?
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Chapter 2: What are the latest developments in the Iran war and their implications?
Many of us lose track of many Middle East stories. In fact, I have been trying very hard to keep track and not let anything go by, and still I'm confused because we have one extra layer that we don't normally have. which is we have no idea what the truth is. I'm not being funny. There was a time when someone said the following is a red line, you would understand it to be a red line.
There was a time when someone said these are the conditions, you understood it to be the conditions. There was a time when someone said we've reached an agreement, you would understand that they'd reached an agreement. So none of those things are true right now.
And we've seen in many cases that no one, including markets, knows whether to believe the American president or the Iranian leadership more. Um, that's actually not a joke. Okay. So that makes our lives hard, but no one cares about you and I, Ed. We're just two extraordinarily handsome blokes talking about the world. But I think what makes it harder is how do you resolve this?
Um, in some sense, let me describe something completely unrelated that happened to me this week. Yes. And hopefully we can draw the analogy. And I was talking to a young fella, um, about Mexico. He was talking about how Mexico should behave and what they should expect when NAFTA, which has been renamed several times, comes up for renegotiation. What should Mexico look for?
What should they be worried about? What's going to happen? And at face value, that seems like a very sensible and important question. But a different view is that the president has unilaterally torn up NAFTA now four or five times.
Which is another way of saying any time NAFTA yields outcomes that are not perceived to be in America's best interests, the president doesn't abide by it, whether it's in Mexico's best interests or not. Another way of saying that is we've lost the ability to contract over time. There is no NAFTA. There literally can't be a NAFTA. If I were to say, Ed, I'm going to marry you,
which would be beautiful. But I just didn't come home on Tuesday and then I came back a week later and then I didn't come home on Thursday and I didn't cook dinner for you on Friday. Are we married? So there's sort of two types of agreements you can do. There's a paper-scissors-rock agreement, which is I'll do something and you'll do something, and we'll both do it at the same time.
Not really paper-scissors-rock. And it's in both of our best interests, right? For instance, this interview, you said, Justin, I'll meet you at 4. It's not live, folks. Sorry. But Ed said, I'll meet you at 4 p.m. And I said, okay, I'll meet you at 4 p.m. And we're able to contract intra within time. At this time, I'll turn up and you'll turn up.
But, Ed, if you developed a reputation for never turning up on time, I wouldn't have turned up and vice versa. And so we've lost – let me bring all this from Mexico and from you and I back to the Middle East.
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Chapter 3: How does the U.S.-Iran ceasefire impact global relations?
If we never do what we say we're going to do, we can't form agreements over time. So you give something up today and I'll give something up tomorrow. It becomes impossible. Right.
And so therefore the range of plausible outcomes narrows and it takes off the table every outcome in which we ask the Iranians to do something good in stage one and we get something good in stage two because they know we will not deliver in stage two. And this is the deep sense in which this is the exact opposite of the art of the deal.
You think about all the possible futures that could occur, and the president has taken off the table a whole bunch of them. That worries me deeply.
Yeah, I mean, it seems as though We can't really trust anything that's being said. In addition, the deals that are being quote-unquote made don't really turn out to be deals.
They break the agreements of those deals and then they say that the deal is off, but then they continue to say that there's a deal and say that there's going to be a deadline for that deal and then talk about extending the deadline and... or renegotiating the deal, etc., etc. And so, we're supposed to kind of play this game of, oh, let's follow along with the story.
There's going to be a ceasefire, and then they're going to extend it. But ultimately, as we kind of began, like, none of it really means anything. So, the question becomes for us, how do we actually determine what is real and what isn't? And...
I mean, one thing that I do consider to be real, and I'd like to get your views on this, is the fact that the administration has proposed a $1.5 trillion defense budget for 2027, which makes me think, okay, this is all noise. This is all nonsense. Gas prices continue to be elevated. I think they're up more than 30% since the war began. It seems as though this is only going to continue.
At least that's my sense, but maybe I'm being pessimistic. What do you think is real? Like what are some real signals as to what will happen versus fake or meaningless?
Great. There's a lot of meat in the questions you just asked. So let me come back to what you said about deals. I have a proposal for you, Ed. Let's agree to never use the word deal again. And I mean that in the interest of honesty. What the president calls a deal is not I promise I will give up this and you will give up that. Promise means I'm going to follow through. Right.
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Chapter 4: What does the proposed $1.5 trillion defense budget signify for American households?
I think we're going to be all eyes on whether there's something strategic there. up Josh's sleeve as he starts out or whether it's sort of just continue on with the path that Disney's been on. All right.
Rich Greenfield, co-founder and TMT analyst at Lightshed Partners. Rich, appreciate your time. Thank you. Thanks for having me, Ed. Here's a question for you. Who in America is more excited about AI than fearful? Well, a recent poll suggests the answer is quite simple. Rich people.
Yes, it turns out when you ask Americans if they think AI will do more harm than good, and you categorize them by income, the only demographic group whose majority believes it will be a net positive for society are people who make more than $200,000 per year. Meanwhile, among people who make less than $100,000, only a third believe it will be a net positive.
And then among people who make less than $50,000, only a quarter believe it will be a net positive. In other words, how you feel about AI is almost directly proportional to how much money you make. If you make a lot of money, you feel good about it. And if you don't, you feel bad. And the question is, why?
Well, to us, the answer is quite obvious, and that is that AI stands to make rich people very rich and keep poor people probably poor. This isn't really conjecture. This is based on what we already know. Since ChapGPT was released in 2022, the top 1%, which owns half of the entire stock market, has added a collective $15 trillion to their net worth.
Meanwhile, the bottom 40% of Americans who don't own stocks haven't seen any of those gains, and their electric bills have risen 17%, in part because of the extraordinary energy consumption of data centers.
Now, we've talked a lot about the AI industry's popularity problem and how that might or might not have led to the violent attacks on Sam Altman last week, but I would argue that all of this isn't so much about Sam Altman or OpenAI or AI at all, When you get down to it, all of this is about wealth inequality. And the proof is clearly in the polling.
I talk more about this in my latest edition of my newsletter, Simply Put, which is out today. You can read it at simplyput.profgmedia.com. 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 video editor is Brad Williams.
Our research team is Dan Chalon, Isabella Kinsel, Chris Nodonohue, and Mia Silverio. And our social producer is Jake McPherson. Thanks for listening to Profiteer Markets from Profiteer Media. If you liked what you heard, give us a follow. I'm Ed Elson. I will see you tomorrow.
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