Episode summary
Why This Morgan Stanley Exec Says Tariffs Will Be Struck Down | WSJ's Take On the Week
The Journal
· · Hosts: Telis Demos, Miriam Gottfried, Gunjan Banerji · Guests: Monica Guerra
Summary
Netflix’s upcoming earnings are framed as a key checkpoint on its Warner Bros. Discovery bidding war, with the hosts saying the company may be preparing an all-cash offer to strengthen its position. The discussion also notes that Netflix shares have lagged the S&P 500 and that investors may be uneasy about the size of the deal and the antitrust risk, especially with the Trump administration signaling interest in the review.
The other big market story is the surge in gold and silver. The hosts debate whether that move reflects a genuine return of the dollar-debasement trade or simply a broader pattern of investors hedging against Washington-driven uncertainty, including the investigation into Jerome Powell. They argue that the stock market has mostly looked through headline shocks, even when metals have reacted sharply.
Monica Guerra of Morgan Stanley Wealth Management says investors should focus on the policy calendar heading into a midterm year. She argues that gridlock is historically better for markets, expects tax refunds and corporate tax benefits to support the economy in 2026, and says her base case is that the Supreme Court will strike down Trump’s tariffs. She also says she is long defense, while seeing the strongest opportunities in drone and missile-defense technology.
Key takeaways
- Monica Guerra says her base case is that Trump’s tariffs will be ruled illegal, which could remove a major policy overhang for markets.
- Guerra expects tax refunds to be up about 44% year-over-year, with the biggest economic boost coming in 2026.
- Guerra says gridlock is the best scenario for markets and cites Republican-presidential, split-Congress periods as outperformers by 23% on average.
- The hosts say Netflix may move to an all-cash offer for Warner Bros. Discovery, but investors remain skeptical about the deal’s strategic logic and antitrust risk.
- Guerra says she is long defense, but thinks smaller companies in drone and missile-defense systems may benefit most from rising spending.
Notable quotes
“Our base case is that tariffs will be uh ruled uh illegal that they will be knocked down”
“I think gridlock is the best scenario”
“I am long defense”
“the market basically is trying to think like is this actually a time to sell my stocks because somehow stocks have kept charging higher despite all of the uncertainty”
How the episode opens
Our base case is that tariffs will be uh ruled uh illegal that they will be knocked down. Wow. — So that's that's our base case. — Hey everyone, I'm Telus Deeimos — And I'm Gjen Banerjee — And I'm Miriam Gotfrieded. On today's show, we have a big conversation about Washington.
But before we get to that, we've got a lot to talk about with what's going on in the markets this upcoming week. Miriam, tell us why you're focused on Netflix's upcoming earnings report this coming week.
Well, as everyone probably knows, Netflix is engaged in a deal to buy Warner Discovery, and I think we should expect to hear some kind of update on how that's going. Um, of course, Paramount also wants to buy Warner, and there's been kind of a back and forth bidding war between the two parties. I think Netflix is generally seen as the one to beat because Warner has signed a deal with them.
They want to move forward with them and because there's a huge breakup fee involved in that Netflix deal.
Meaning that if Netflix doesn't end up buying it, they're going to have to pay out to Warner Brothers. — Yes. They're going to h have to pay out $5.8 billion. That's big, right? That's a pretty big Okay. All right. and and Netflix stock has kind of underperformed over the past year, lagging behind the S&P 500 by around six, seven, eight percentage points, which is a pretty big margin for for a stock like Netflix.
Is that a sign that the market doesn't want Netflix to buy this? That there's some doubts about the true kind of synergies of like Netflix owning Paramount Studios and all that. — I think it could be a sign of two things.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- tariffs supreme court
- netflix paramount deal
- warner bros discovery bidding war
- gold silver rally
- fed investigation powell
Companies and tickers mentioned
- MS
- NFLX
- PARA
- Morgan Stanley
- Netflix
- Paramount Global
- Warner Bros. Discovery
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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