Today's number, 338.

That's how many dollars it costs to

apply to become bankrupt in the United

States. That makes America one of the

few places in the world where you have

to pay to be broke.

[music] Welcome to Propy Markets. I'm

Edson. It is January 28th. Let's check

in on yesterday's market vitals.

The S&P rose to a record high on

optimism for big tech earnings. That

gain came in spite of US consumer

confidence data, which actually fell to

its lowest level since 2014. Meanwhile,

United Health dragged the Dow into the

red. More on that in a moment. The yield

on 10ear Treasuries rose ahead of the

Fed's decision out this afternoon, and

the dollar continued its slide to a

4-year low as President Trump dismissed

concerns about the currency's decline.

and he said, quote, "I think it's

great." He also said, quote, "I could

have it go up or go down like a yo-yo."

Okay, what else is happening?

The EU and India have finalized a

historic free trade agreement. The deal,

which comes after two decades of talks,

will phase out tariffs on the vast

majority of goods. That move is expected

to double European exports to India

within the next 6 years. The timing of

the deal is also telling. It landed just

after President Trump's threats over

Greenland strained relations with

Europe. Meanwhile, India faces US

tariffs as high as 50% on key goods,

which raises an important question. Are

America's allies hedging their bets?

Here to help us answer that, we are

speaking with Liz Hoffman, business and

finance editor at Semaphore. Liz,

welcome back to Property Markets.

>> Hey, Ed. So, we want to get your

reactions to this new trade deal

confirmed between Europe and India. Uh,

it'll phase out most of the tariffs.

It's going to double the value of

European exports to India within the

next 6 years. Uh, people are calling it

historic, the mother of all deals. Any

initial reactions?

>> Yeah, I mean, unless you live in the EU

or India, which is in fact a lot of

people, I think the the numbers um will

either bear out or not. But to me sort

of directionally what this signals is

that a lot of uh countries around the

world particularly these middle powers

that are really big economies but um not

sort of hegeimon adjacent uh are

starting to realize that they can go

around Washington rather than than

simply being forced to kind of knuckle

under. And so you're starting to see

these new trade patterns emerge, new

trade alliances emerge. This deal has

been years in the making. Uh, and the

thing that got it over the finish line

was Donald Trump picking fights all over

the world.

>> My read on the situation is it's clear

that America is, I guess, sticking up

the finger to Europe and various other

allies in various ways. We saw what

happened in Daros and now just a few

days later there's this announcement of

this deal. It looks like this is very

much a reaction to what happened in

Daros. You were at Daros. Um, is that

the correct conclusion?

>> Yeah, look, the big story at at Davos

was Donald Trump, but the the um event

that really stuck with me was a speech

that uh the prime minister of Canada,

Mark Carney, gave. I mean, really just

like immediately a historic document,

kind of a speech for the ages is what um

Larry Frink, the CEO of BlackRock, uh

called it when I when I talked to him at

the end of the week. and and really he

was this was a call to arms to these

middle powers to say you know the the

there's been this rupture he called it

in in the world order and we can either

forge our own way um or or really recede

under that wave and um you know Carney

had I think either just been or was on

his I think he had just been in China

where he had signed a a huge trade deal

between Canada and China that taking a

step back is actually a remarkable

alliance you know it has It wasn't that

long ago, if you remember, there were

these huge geopolitical tensions between

Canada and China. Canada had had

arrested a a Chinese uh a Huawei

executive. I mean, there were this was

really fraught relations between the two

countries. And now you have this big

trade deal um that among other things

will bring Chinese EVs, these really

fantastically

um futuristic, the tech is great, they

are cheap, electric vehicles to Canada

right on America's doorstep. and it all

felt like a bit of a middle finger to

Donald Trump. Also, he he gave like the

first couple of minutes of the speech in

French which really felt like um

standing up for uh you know a kind of

multilateralism and globalism that

Donald Trump has has really tried uh to

dismantle. So you know that was kind of

a call to arms and then right on the

back end of it we see this this huge

trade deal between India and the EU and

these are goods that you know in a

different tariff regime would be headed

here. uh and you know will not be um

because of of the tariffs that uh the

white house has put on particularly

India.

>> I I recently saw Mark Carney spoke about

that speech um which as you say I mean

everyone considered it to be

groundbreaking. I've seen Canadians

saying it's the best speech that uh

prime minister of Canada has ever given.

Um apparently he told the president I

meant what I said. That is that those

were his words. It seems like he is

doubling down on this. It appears that

perhaps Europe is also doubling down on

this position. We're going to find

allies elsewhere. Do you expect that we

will see more of these trade deals? I

mean, it seemed like maybe the ball was

starting to get rolling. I was wondering

whether it would stop in 2026, but it

appears to be accelerating. Would you

agree with that?

>> I would. The EU has, you know, opened in

and extended trade talks with some of

their other partners. The thing that

that really crystallized for Europe in

particular, but for a lot of other

countries when Donald Trump started this

trade war back in the spring of 2025

was they said, "Oh, we are really

reliant on the US, right? I mean, there

was and that's what gave the White House

so much of its power on the way in." Um,

and you know, they had some early

success striking some of these trade

deals. But the alternative if you're

Europe or India or Japan or or Canada is

to say oh we are too reliant on the US

and to go find partners elsewhere and

you know the world is a big place and it

is fragmenting. One word that was Davos

always coins these slightly ridiculous

phrases. Um and and one that I heard a

lot last week was miniateralism kind of

as a replacement for multilateralism and

that these big global trade webs that

largely flowed through the United States

um kind of as a as a global protector

and hegeimon and and kind of you know

good corporate citizen um are being

replaced by these more localized more

bilateral um agreements and arrangements

uh that increasingly are going to flow

outside of Washington and around

Washington. Um, probably at least, you

know, to some degree in the near term to

the detriment of American consumers.

>> Okay, Liz Hoffman, business and finance

editor at Seore. Liz, appreciate your

time.

>> Anytime, Ed. Always a pleasure.

>> We'll be right back. And if you're

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We're back with property markets.

Healthc care stocks cratered yesterday

on the Trump administration's plan to

keep Medicare rates flat next year. The

Center for Medicare and Medicaid

Services announced just a .009% payment

increase for Medicare Advantage plans.

That is far below the 4 to6% increase

that analysts were expecting. This

announcement coincided with United

Health's earnings miss, which also added

fuel to the sectorwide sell-off. CVS

Health closed down 14%. United Health

dropped nearly 20% and Humanana fell

21%. Here to help us break down this

plan and what it means for the future of

health insurance in America, we are

speaking with Michael Ha, senior

research analyst at Bed. Michael, thank

you for joining us on Profy Markets.

>> Thank you very much for having me. It's

a pleasure. So, this proposal, this

plan,

uh, it's a 0.09%

payment increase for Medicare Advantage

plans in 2027. Not really clear what

that even means, but I'm looking at CVS

Health, United Health, Humanana, all of

these stocks are cratering cratering

right now. [snorts] Uh, why is this

happening?

>> Great question, and let me take it at a

very high level and then I'll drill in.

And basically Medicare, I'll take it the

highest level. Medicare is health

insurance for seniors over the age of

65.

So think of it as health care, US

healthcare is about a4 to5 trillion

uh market. Medicare itself is about a

quarter of that, right? Call it a

trillion. So when you think about how

important of a role it plays in the

overall health care within the US, it's

significant. And your largest players

are your United Health, your Humanana,

your CVS, the names that you just called

out and they're all down close to 20%.

So the way to think about it is this is

run by the federal government and how

their pricing works is clearly volume

price, volumes of membership pricing is

determined by the federal government uh

under HHS via a department called CMS.

And every year in January, they provide

a proposed rate notice, call it the

advanced rate notice. And basically, if

there's a benchmark rate that every

health plan gets for a senior, that rate

should in theory every year go up to

track cost trend. And long story short

is a a flat rate increase 0.9% like you

mentioned it does not cut it because

right now the cost trend environment in

Medicare advantage world we're it's mids

single digit to high single digit so 1%

rate increase there's a huge delta it's

incredibly insufficient and what the

importance of this is this might

catalyze into 2027 because remember this

rate notice is for 27 seniors is getting

their benefits cut across the board and

it impacting membership next year in a

very significant way because remember if

the health insurers are going to hit on

rate and revenue, their levers are

benefits. That's the main main lever

right there.

>> I was going to ask you what what are the

implications for the consumer? Whenever

whenever I see something like this, my

sort of knee-jerk reaction is, oh, he's,

you know, pulling down profits

um for these healthcare companies. Maybe

that means more money in the consumer's

pockets, less money in the insurance

company's pocket. Maybe that's why the

stock's down. But it sounds like that's

actually not right. This could

negatively impact the consumer. Is that

right?

>> Exactly. Negatively will impact the

consumer and negatively impact the

health insurance companies themselves.

And when you think about it, benefits,

right? The [snorts] the ones that you

can really feel and that's most tangible

to you, right? It might be your dental

ve benefits, your vision, things of that

nature for seniors matter a lot and

there's a multitude of them. So it'll be

felt, it'll be very impactful to 2027.

And actually this is what has been

happening transpiring over the past

couple of years because under Biden's

administration, rates were terrible.

They were abysmal. They were similar to

what we were seeing in 2027. So what we

have already seen over the past few

years, you can look at CVS's stock

chart, Humanana's stock chart, United's

now is that the rates have been

insufficient to match trends and it's

created it's wre havoc on health

insurance. And if you look at seniors

and membership, I mean for for

personally my father had a CVS health

plan and he was looking to reenroll but

they cut the plan. So that's what you're

seeing right now across health insurers.

They're cutting benefits. They're

cutting plans. They're sculpting their

geographic markets. They're doing what

they can to maintain margins in an

environment where rates are quite

frankly very insufficient.

>> How much of this has to do with Trump's

great health care plan that he announced

just the other week? I mean, when when

he proposed this, he put this proposal

out there, you know, we read through it.

We couldn't really see much detail at

all. And it appears that the markets

agreed. I mean, the consensus among the

markets was, you know, this doesn't

really mean anything

is isn't going to mean much change and

that's why there wasn't really a

reaction from the markets. But now we're

seeing, you know, a huge reaction. What

is the relationship between what we saw

today and the great health care plan

that was announced a couple weeks ago?

Is there a relationship?

>> A loose relationship. I would just when

we think about the great healthcare

plan, Trump, his focus is laser focused

on something called the ACA, the

exchange marketplace that was created

during the Affordable Care Act. It for

individuals where now there's over 20

million people enrolled. So, this is

different from Medicare Advantage,

right? There's three subsegments within

health insurance. There's Medicare

Advantage, which we're talking about.

There's Medicaid for low-income

individuals and then there's commercial

employer and individual. So when Trump

is making his remarks, the great health

care act plan, he's talking about

commercial and individual. So with

Medicare Advantage, it's it's different.

I I think for Trump he really has two

goals and one it's cutting premiums for

the individual marketplace and passing

money back to them perhaps via HSAs or

checks and for Medicare advantage in

everything Medicaid as well he wants to

eliminate fraud you know write reduce

waste and when you think about Medicare

advantage and how it relates to what

just happened last night this rate

notice the biggest surprise within this

rate notice is what they're doing on

risk model changes and I know this is

going to be very technical and granular

but it's important to understand because

what the government believes is that

there's a lot of fraud in risk coding in

risk adjustment there's been a lot of

articles from Wall Street Journal for

example about companies like United

Health Optimally

risk coding because and if you bear with

me for 15 seconds I'll explain why it

matters so we mentioned how every

Medicare advantage plan gets paid a

benchmark work rate for every senior.

And let's call it even number, $1,000

per member per month. So $12,000

annually. But it's it's unfair if, for

example, your member might have diabetes

and cancer and AIDS. You're incurring

much more cost. So as a health plan, you

should be getting paid more to match the

utilization, which is why the government

created something called a risk score.

And basically, it's a multiplier effect.

If you're healthy, you might be 1.0. 1.0

times 10,00. But if if you have a

multitude of coorbidities, that might be

2.0, that might be 10.0 times 1,000. And

this risk score is justified by health

insurers collecting codes to justify

your health status. And there are a lot

of players in the game, a lot of health

insurers who've been very aggressive

arbitrageing that risk code payment

mechanism because it's clearly so

impactful to revenue drops right to

bottom line. So to to basically circle

back this rate notice the most

surprising impact is what it's done to

risk adjustment and tightening it making

it less difficult to to be aggressive if

you will. So you're seeing the most

aggressive risk coders like United

Health seeing the biggest impact today

while conversely plans like Alignment

Health ticker ALHC my favorite plan the

best Medicare Advantage plan in the

country most conservative in risk code

they're seeing much less of an impact.

So, I think it's important to really

focus on that point.

>> It seems like, just if I were to, you

know, translate pretty simply, it seems

like that's maybe a good thing. No, if

if we're cracking down on on those

practices that's been reported on, is is

that not something to get behind?

>> It it is a good thing. I agree. I think

crackdown on all fraud across all of

health insurance is a positive, but the

the implication is if health plans get

hit on revenue and earnings, they're

going to look to find it somewhere. And

unfortunately, it'll be seniors

benefits. So, that'll be the first

toggle. And it will save the government

money. However, um it will impact

seniors. So, you know, positives and

negatives to this. Michael H, senior

research analyst at bed. Michael,

appreciate your time.

>> Thank you very much.

>> We'll be right back. And if you're

enjoying the show so far, be sure to

like and subscribe to the Profod YouTube

channel at the link below.

We're back with Profy Markets.

Anthropic CEO Dario Amade just released

an essay that journalists are calling a

quote grave warning about AI. The piece

is called The Adolescence of Technology.

It was published on Monday. It's a

fascinating essay. However, there is a

catch and that is that the essay is also

38 pages and 20,000 words long. also

features no charts, no graphics. It is a

giant wall of text and therefore it is

highly unreadable. So we decided to do

the hard part and we read the whole

thing. That way you don't have to. So

here is our summary of Dario Amade's

essay. These are the cliffnotes. So the

first section is called I'm sorry Dave

and that is a reference to the famous

scene in 2001 [snorts] Space Odyssey

where Hal the AI system decides to

betray Dave the astronaut and he tries

to kill him and Ammed's point in this

section is that AI pulling a HAL or

betraying its creator betraying humanity

his point is that that is actually

possible in fact tests have shown that

Claude anthropics chatbot can in certain

situations engage in blackmail and

deception. They have seen this and that

is obviously very scary. And so a

explains how we should navigate this.

One suggestion is that AI companies

should be more transparent about their

models and how they work. And the other

suggestion, the more important

suggestion perhaps is that we need real

legislation to address this problem. And

this is a theme that continues

throughout the piece. The next section

is about AI and nuclear weapons, AI and

biological attacks, systems breaches,

all the sci-fi stuff that is again very

possible in a world of super

intelligence. Ammeday explains how

Anthropic is working to prevent this,

how they're investing more money to

build guard rails within their AI

systems. And he ends again with another

call for more regulation, more oversight

in America. Next, he discusses what

would happen if authoritarian

governments started to use AI. Talks

about the dangers of autonomous weapons,

mass surveillance, AI generated

propaganda. His solutions here are a

little bit vague, but ultimately the

point is something that I think most of

us can agree on, and that is

authoritarians plus AI is a pretty bad

combo. Now, the fourth risk is one we've

discussed before. specifically what will

AI do to jobs? What will it do to the

job market? And his view is very clear.

It will do a lot. He predicts AI could

displace roughly half of white collar

jobs in the next 5 years. He also

discusses how this could worsen

inequality and how the probability of a

quote economic concentration of power is

actually rising quite fast. Finally, the

last section discusses all the potential

downstream effects of AI. Maybe we start

to integrate AI into our biology. Maybe

we become functionally dependent on AI.

Maybe humans lose their sense of purpose

altogether, etc., etc. The biggest

message from the whole essay, however,

is quite simple. The message is that AI

needs more regulation. It needs more

oversight. It needs more guard rails. AI

needs policy that recognizes just how

dangerous it could really be. And what's

striking about this isn't necessarily

the message. I think a lot of people

know that. What is striking is from whom

that message is coming. It's not coming

from a regulator or a law maker or a

senator. It's coming from the CEO of one

of the largest AI companies in the

world. The guy who makes AI is literally

begging his own government to regulate

AI. And that's significant. That tells

you something about the state of our

government and its approach to AI. The

problem isn't even that America has a

bad AI strategy. The problem is that

America doesn't have an AI strategy. And

that is potentially even scarier. Now,

one last note before we go here. One of

AMD's complaints in the essay is that

this whole AI conversation has been

dominated by the wrong people. It's been

dominated by sensationalists and doomers

and these figures on social media who

aren't really asking the right

questions. He says, quote, "The least

sensible voices rose to the top." And

personally, I would probably agree with

him. But we should also recognize why

those voices rose to the top. And the

reason is because those voices are good

at social media. They're good at getting

a message across. And that is something

that Anthropic should also recognize. So

my unsolicited advice to Dario Amade, if

you're listening, I liked your comments.

We think your message is a good one. But

enough with the 38 page essays. Go fight

this battle where the battles are

actually being fought. Get on Tik Tok,

get on Instagram, get on YouTube, talk

to the camera, tighten your message, and

maybe throw in some shots, maybe throw

in some visuals. The problem isn't that

people aren't listening to you. The

problem is that people don't even hear

you. You're not even in the same room as

them. So, if you want to win this game

of attention, unfortunately, you have to

play by the rules. So, my advice, Dario

Amade, it's time to put away the pen.

[music] Enough with the blogging and

it's time to take out the camera. Thanks

for listening to Profy Markets from

Profy Media. If you liked what you

heard, subscribe to our YouTube channel

and tune in tomorrow for more. [music]

>> [music]