October 24, 2025 • 43 mins
Kyla Scanlon visits the studio armed with her three most pressing indicators of the state of the economy. What do we make of all those auto loan defaults? Is Jamie Dimon’s new $3 billion “fortress” a harbinger of fundamental changes in the labor market? And why does an economically anxious population keep on spending? Lots to discuss.
Max and Stacey also sit down with David Papadopoulos to talk about the forthcoming, high stakes election in Argentina and try to make sense of the Trump administration’s attempt to help the country out: a currency swap. Is it a bailout or does the US really need $20 billion worth of pesos?
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:12):
This is Everybody's Business from Bloomberg BusinessWeek.
Speaker 3 (00:14):
I'm Stacey Mannix Smith.
Speaker 4 (00:16):
And I'm Max Chefkin. Stacy. Yes this week.
Speaker 5 (00:19):
Yeah, we're going back to Argentina, the land of steak.
It's big news and inflation and bailouts.
Speaker 4 (00:26):
The bailout that we told you about a month ago.
It is happening. It has happened.
Speaker 5 (00:31):
The election that many people in the US were worried about,
it is happening.
Speaker 4 (00:35):
So we have David Papadoppolis back here to talk to.
Speaker 2 (00:38):
Me, and after that we'll be visited by a friend
of the show in studio. Very excited, Kyla Scanlin, economic
teacher extraordinaire, and she is going to help us navigate
this murky moment in our economy with some kind of
under the radar economic.
Speaker 3 (00:56):
Thing she has been watching.
Speaker 4 (00:57):
I'm ready for that, our underrated story. Now.
Speaker 5 (01:00):
You know, obviously the Democrats, as people know they are,
they're struggling to come up with a response to Trump,
and I think we've found it. I've got one word
for you, Stacy. Wait, it's more than one word. Forty
seven cheval bloc.
Speaker 2 (01:15):
Forty seven val blank is how the Democrats are going
to pull it together.
Speaker 4 (01:18):
Just wait for the story.
Speaker 3 (01:19):
Okay, I'm in so Max.
Speaker 2 (01:26):
The economy right now, the American economy is kind of
a scattershot a little bit. But one part that has
been very consistently not good is the housing market.
Speaker 5 (01:36):
Yeah, interest rates are up and because we haven't been
building enough houses, basically no one's moving.
Speaker 4 (01:41):
And so if you want to buy a house, you
are I think the well you're.
Speaker 3 (01:45):
Waiting for scientific term is funed.
Speaker 2 (01:48):
Well, you're waiting for lower interest rates, right because you're
just like, I'm not going to buy a house now.
Speaker 4 (01:52):
Well, and if you are sitting in your house, you're
not going to sell your house?
Speaker 2 (01:55):
So right, I mean you have you are a homeowner.
The chiefs are a home owner. Yea, right, I mean
would you sell.
Speaker 3 (02:01):
Your house right now?
Speaker 4 (02:03):
No? No, I would.
Speaker 6 (02:04):
Well.
Speaker 2 (02:04):
In fact, Max, you are indicative of a national trend.
The National Association of Retailers came out with these numbers
this week.
Speaker 3 (02:12):
Real Tours, Real Tours.
Speaker 4 (02:14):
They're very adamant about.
Speaker 3 (02:15):
The National Association of Real Tours.
Speaker 1 (02:18):
It's like a tour.
Speaker 2 (02:20):
As it turns out, home sales in the US this
year are the slowest they've been since nineteen ninety five.
Now that means slower than the housing crisis.
Speaker 1 (02:31):
Home sales.
Speaker 4 (02:32):
Yeah, it's it's really bad.
Speaker 5 (02:34):
And it's especially given that we went through this period
for a very long period where interest rates were very low,
where basically you could borrow money for next to nothing.
It's it's kind of shocking, honestly.
Speaker 2 (02:46):
And of course here in New York, everybody's obsessed with
housing and rent and how much everybody's paying for everything.
So I thought I would go out and ask people
how they were feeling about housing and home ownership right now.
Speaker 3 (02:57):
And here's what they said.
Speaker 7 (02:59):
If you're looking at the price of a house compared
to your salary, and then if you look at the
percentage of someone's salary that would go into housing fifty
sixty years ago, you're gonna see housings getting more expensive.
Speaker 3 (03:12):
It's just that real estate it's really expensive. So a
lot of us don't really get there.
Speaker 8 (03:19):
The cost of living going up compared to wages going
up is like something that worries me wanting to buy
a house, but also like wanting to be able to
spend time with my kids but also make enough money
to like support them.
Speaker 9 (03:29):
Well, we're still like in our early twenties, we eventually
think about long term like buying a house and stuff,
so we're focusing on like saving for that.
Speaker 4 (03:37):
My mom's a public school teacher.
Speaker 9 (03:39):
She didn't make enough money to like actually mortgage our house,
so it's mortgaged by my grandma. And that's like sort
of where like all the wealth is like humming from
in my family. So it's like if that's already happening
to my parents, like what am I gonna do?
Speaker 4 (03:53):
Oh? Man, I know that last one was pretty heavy.
Speaker 3 (03:56):
People are feeling.
Speaker 2 (03:56):
I mean, that's it's really interesting because it's this idea
that like that's the investment. If you can cobble together
the money to get a house, then you're kind of
on your way financially. And as a non homeowner, I
do have like FOMO about that.
Speaker 4 (04:10):
Yeah, Stacey, you're you're among the renters.
Speaker 2 (04:13):
My excuse is that I started reporting during the financial crisis.
So the very first interviews I did as a journalist
were two people who were underwater on their homes, and
it spooked me forever.
Speaker 5 (04:27):
I mean, renting is great if you've got a good situation.
That said, like the structure of our sort of regulatory
system makes it like basically almost impossible to like to
not want to own a home because there are these
great tax breaks. If you get a mortgage, your mortgage
payments are tax deductible. Like it's a huge subsidy that
renters don't get. And then because we don't, we're not
(04:49):
building enough houses. As you said, like there's almost this
sense that any no matter how much, it's going to
go up, and and it would be better if if
the world didn't work that way, I think, but it
is how the world.
Speaker 2 (05:00):
Works well historically speaking, it is an excellent investment. But
I have chosen to put my money in gold.
Speaker 4 (05:08):
I know you have.
Speaker 5 (05:09):
Gold fell this week, Stacey, was that week for you? Okay, Stacey?
It is as we're recording this October twenty second Wednesday now,
a month ago. I don't know if you remember, we
had a whole conversation about Argentina.
Speaker 4 (05:29):
Yes, of course, Javier.
Speaker 5 (05:31):
Mila, the cool chainsaw wielding sideburn having a president, had
run into some economic problems. The US was threatening to
bail the country out, and a bunch of stuff has
happened since we last talked that bailout.
Speaker 4 (05:46):
It has happened.
Speaker 5 (05:47):
Mela is facing an election I believe on Sunday. That's
the twenty sixth, So there's a lot going on. So
I thought we could bring back our friend David Popadopoulosho
we spoke to last month. Yes, he is an exactive
editor at Bloomberg. He's also the former host of Elon Inc.
Speaker 4 (06:04):
David, how are you? I'm good?
Speaker 5 (06:05):
All right, So David, can you just catch us up
and explain what is happening right now? So that bail
out that twenty billion dollar swap deal that we talked
about that the US was threatening to do, they have
now done it right.
Speaker 4 (06:19):
Well, I think that there's a lot of hocus pocus
going on around here.
Speaker 10 (06:23):
They don't like the optics of saying, yeah, we cut
Javier Malay a twenty billion dollar check, which is essentially
you know what they've done. So a swapline means the
US gives Melay access to twenty billion in Melay in
turn gives the Americans access to twenty billion dollars worth
of paysos if one is so inclined.
Speaker 2 (06:44):
So it's like, I'll trade you twenty billion dollars worth
of swap, except the paso.
Speaker 3 (06:49):
Is like really suffering from very very serious.
Speaker 10 (06:53):
The part of the swap that really matters is Melay
getting his twenty billion.
Speaker 4 (06:57):
I don't know. I mean, what are we going to do, Max,
If we get twenty billion dollars, we have BeOS, what
are we gonna we go do with them?
Speaker 10 (07:03):
So that on the one hand, they cut, they've done
that the swap line, which I don't believe has been
tapped yet. Separately, the US Treasury is is intervening in
the currency market in Buenos Aiere's. They are selling dollars
that the Treasury has in the Buenosiere's market and they're
buying up pesos to prop up the peso, and this increases.
Speaker 2 (07:26):
The value of the peso because a lot of the
value of a currency comes from demand. And so if
you are buying up pesos, if you're flooding the market
with dollars in buying up pesos, that creates a healthy
demand for the peso and that increases its value.
Speaker 10 (07:39):
Correct, they're creating demand from pesos, or the other way
to think about it, and I think perhaps a better way.
They are increasing the supply of dollars in the market
in Buenos Aires, so that when people somebody wants dollars,
there are now more dollars to be had because the
US Treasury is throwing dollars around there.
Speaker 4 (07:58):
Well.
Speaker 2 (07:58):
And also there's like a political element here. I mean
Max mentioned that there is this election on Sunday, and
is the subtext or maybe not even the subtext of
this that if Malay's party gets voted out, then this
help goes away.
Speaker 4 (08:16):
Well, I think Trump said sol, So it's not a subtext,
it's just text, which was kind of weird.
Speaker 10 (08:24):
I mean, like it's in general, it's not a great
gambit as you're trying to prop somebody up and trying
to pump them up to say, oh, but if this
thing doesn't go really well in the next few days,
we're totally out of here. Because now, if I'm an
Argentine investor, Ar'm someone who's skittish about holding paysos. I
hear that body language and that posturing from Trump. Now
(08:46):
I'm definitely getting out of the paeso right now. I'm
definitely want my dollars. But so to be clear on
the vote though, what this is a midterm election, Malay
is not up for reelection yet, his party, his broader
coalition right now has a very small percent of the
votes in Congress. They are trying to get up to
at least somewhere in the thirties high thirties. Preferably, the
(09:09):
party's not going to get voted out. The issue is
can they boost their presence in Congress enough to both
A allow me lay to properly stave off attempts by
the opposition to pass through spending increases, B to perhaps
impeach him when there are corruption scandals swirling around him
(09:29):
in his inner circle and he desperately needs to get
over a thirty three percent coalition to avoid that. And
then C, in an optimistic scenario, can they get close
enough to forty percent to then be in a position
to cut deals with other members of the opposition and
get some of his vast agenda through labor reform, pension reform,
(09:50):
tax reform.
Speaker 5 (09:51):
So the risk for the holders of this currency, for
the people who want me lay, to.
Speaker 4 (09:56):
The holders of the curtsy that you.
Speaker 5 (09:57):
And me, yeah, exactly, and evermore every day as we
continue to buy paesos, is what exactly that that Malaise
opponents will either gain seats or hold off Melaise gains
enough to make it hard for him to basically do anything.
Speaker 4 (10:13):
More, to like do more reforms or like what is
the actual.
Speaker 10 (10:18):
So I think that is the principal thing. So remember
last time I was on, I gave you a shark reference. Yeah,
and I give you another shark reference.
Speaker 1 (10:24):
Please.
Speaker 4 (10:25):
You know what happens, stacy, when a shark stops swimming.
Speaker 2 (10:27):
When it does because it can't move oxygen over it.
Speaker 10 (10:32):
Yes, So these stabilization plans, when you're coming out of
like crazy high inflation and an economy and crisis. You know,
it's great when you have some initial gains, but you
need to keep building off your momentum.
Speaker 4 (10:48):
You need to keep moving forward.
Speaker 10 (10:50):
And if you're going to stall out and the whole
thing's going to die this quickly, right, and you lose
all momentum, you're like a shark, Like this thing is
just got to keep going for you. He's done some things. Yes,
he's broad inflation down. Yes, he's temporarily at least stabilized
the pace of.
Speaker 3 (11:06):
A lot of austerity.
Speaker 10 (11:07):
He's cut, Yes, he's certainly cut with his chainsaw a
lout of spending. But you need to deep in reforms
and really, you know, keep things going and so I think, yes,
there's a real concern that if this is all you're
able to do, have you e Mel, You're done. You're
not going to get through anything else in your agenda
to achieve your vision.
Speaker 4 (11:26):
No, we're out of here, all right.
Speaker 5 (11:28):
So I want to just give you just play a
little clip of Trump kind of trying to explain this
bailout on air Force one the other.
Speaker 4 (11:35):
It's not a bailouts. Let's listen right.
Speaker 6 (11:39):
With I assume you're talking about beef to get beef
prices down. The only price we have that's high is beef,
and we'll get that down. And one of the things
we're thinking about doing is beef from Argentina.
Speaker 1 (11:50):
But my question is, what do you have to say
to US farmers who feel that the deal is benefiting
Argentina more than it is THEMB as.
Speaker 6 (11:57):
They are, Argentina is fighting for its life, young lady,
you don't know anything about.
Speaker 2 (12:02):
It, Okay, love that as a reporter being called young
lady really great.
Speaker 5 (12:09):
Can we just put a pin in the question of
US farmers? And I just want to get at this
thing that he's saying, Argentina is fighting for his life,
young lady is that true. Is there any sense that
that true? It sounds like Argentina is preparing to vote
against the guy who's in charge of the country.
Speaker 10 (12:28):
I don't know about fighting for its life. I would
say that it is potentially in the precipice of another
full blown crisis. I mean, without Trump and Treasury Secretary
Scott Besson riding to the rescue, they probably would have
devalued the currency again if they are forced to value again.
Speaker 2 (12:45):
And broadly speaking, valuing the currency, do you mind just explaining, oh, sorry,
to value the currency.
Speaker 4 (12:50):
Means is they stop buying paesos with dollars.
Speaker 10 (12:54):
So right now the peso is is worth one thousand,
four hundred to the dollar. One dollar gets you one thousand,
four hundred paces. But if you're forcing the value and
stop defending the pace, so it probably goes from one
thy four hundred to I don't know, two thousand, two thousand,
five hundred. What that gets you is a whole nother
wave of inflation. So just when mi LA was able
(13:14):
to bring monthly inflation, I'm talking about annual inflation. I'm
talking about monthly inflation from around ten to eleven percent
down to two percent, and.
Speaker 4 (13:23):
For which is extraordinary, which is extradinary.
Speaker 10 (13:25):
For context, in the United States, inflation runs roughly two
percent a year. You would go from ten to two, Max,
you could go right back to ten or fifteen, and
you could be right back in the soup of like,
you know, an other crisis, so kind of fighting for
its life in the scent. Not really, but in the
sense that, yeah, it would mean a whole lot more
economic hardship. That's how you impoverish people by inflation soaring
(13:48):
out of control.
Speaker 4 (13:49):
But perhaps, yes, Max, it's a it's a slight overstatement.
Speaker 3 (13:53):
So is all this intervention working kind of?
Speaker 10 (13:58):
I mean, if the game bit is I'm gonna buy
me Lay enough time to get to the Sunday vote
October twenty seven vote without having to devalue, keeping the
paeso stable so it's not something that hurts him in
the polls on Sunday, and so that Argentines can support him,
(14:19):
hopefully rally around him, and not have the devaluation of
the paso weighing on their minds.
Speaker 4 (14:24):
I guess kind of.
Speaker 5 (14:25):
So the story you're telling makes me think, why would
anyone vote against Melay? You know, I listened to the
episode of Odd lots that came out last week. They
had a guy who wrote a book about the Argentina
default and it was basically like presenting Melay as the
only choice. And I'm kind of curious, like, what are
these voters reacting to. They know that the currency is
(14:47):
going to get devalued and they don't care.
Speaker 10 (14:50):
Yeah, I think they think this, and it's we have
this piece that's going out on Friday, and they spoke
with lots and lots of people. They're some fantastic reporting
and including a lot of people who voted for me
that in twenty twenty three, and they're now they're chain
sought out man, Like you know, they're a little bitter,
(15:13):
they're a little bit you know. One of the things
that I failed to properly perceive and I'm understanding better
now is Mile had always said I'm coming with the
chainsaw for.
Speaker 4 (15:23):
The casta La casta.
Speaker 10 (15:25):
The cast The cast kind of mean the establishment, the establishment,
And what Argentine's very much feel is maybe you went
for the costa, but I feel like you kind of
came for all of us. So like we have this
one guy talking about how his mother, his aunt all
had their pensions, not gutted, not cut, but capped. And
(15:47):
when your pension is capped, frozen at a certain amount,
and inflation is running ten percent a month, you're getting killed, right,
You're absolutely getting killed.
Speaker 5 (15:56):
Right.
Speaker 10 (15:56):
This has happened across the board, all sorts of cuts
like this. I just don't I think people didn't appreciate
how much it was going to hit them. And the
other thing is, you know, yes, there's been the stabilization,
inflation's come down, the peso's been stable, but like Max,
at some point, I think you were saying the other
day when we talked last time, where are the jobs,
where's the growth? Where's the freehand of the market?
Speaker 4 (16:17):
Where?
Speaker 10 (16:17):
And I don't they're not seeing or feeling any of that.
The corruption is weighing on their minds a bit. And
by the way, a very interesting thing, Melay twenty twenty
three in the campaign trail that chainsaw was everywhere with
him this.
Speaker 3 (16:29):
Time around, like parades with it.
Speaker 10 (16:31):
Yeah, this time around that chainsaw never never leaves his desk.
He does not campaign with it. Now he is essentially
hiding it all.
Speaker 5 (16:39):
Right, Can we just real quick talk about US politics here?
Because we heard Trump talk about the farmers Stacy. We've
talked about this. Yeah, this effort to defend the PAESO
has been bad for American soybean farmers. Argentina, as part
of their attempt to get a bunch of dollars, have
effectively lowered the prices of Argentine soybeans. China is buying those.
(16:59):
That's hurting American soybean farmers. Now we get this second
suggestion from the president for the president of the United
States that maybe will also buy some Argentine beef, which
is also bad for you know, a different subset of farmers,
a subset that is dear to your heart.
Speaker 4 (17:13):
Yeah.
Speaker 2 (17:14):
Yeah, My parents had a cattle farm when I was
growing up and whereabouts in Idaho, Nice in Ola, Idaho.
And I was really shocked to see that because that
would be kind of potentially devastating. Although beef prices have
been really high. I mean, that is an interesting other way,
I guess, to prop up the Argentine economy to buy
(17:35):
a bunch of their agricultural product.
Speaker 4 (17:37):
That's give one more dollars, right, gives it? Absolutely it does.
Speaker 10 (17:41):
And that's essentially what Trump was saying, Hey, to get
down beef prices here in the US.
Speaker 4 (17:44):
Will do this.
Speaker 10 (17:45):
Good for us, good for our consumers, good for the
Argentine ranchers. But so, yes, you could import beef here,
and apparently Trump might start doing so. You you know,
beef is sort of a niche product. Argentina does have
a very powerful egg sector, but it's an ag sector.
It's soybeans and it's wheat, and the soybeans all they
don't come here, they all go to indeed, to China. Yeah,
(18:07):
and so it's interesting because we believe that part of
what the use of trying to do is it's trying
to and the Journal's been on this story. They're trying
to drive a wedge between the Argentines and China, between
me lay and China.
Speaker 4 (18:21):
In coming in with this aid and all that, and
some of that you'll be able to do.
Speaker 10 (18:24):
But listen, at the end of the day, Argentina desperately
needs China to sell soybeans too.
Speaker 5 (18:30):
So we talked about like the terrible politics of you know,
cutting people's pensions. People generally don't like that, even if
there is a big crisis, even if there is the
threat of hyperinflation. I mean, the politics here on the
US side not good. You know, the government is shut down.
It's easy to forget, but in fact, government is shut down.
(18:50):
We're spending twenty billion dollars on this bailout more money
seems like hundreds of millions of dollars a day on this,
this buying pesos from the treasure. And then you have
the suggestion that we're gonna make beef cheaper, which means,
you know, effectively like less money for American cattle farmers.
Speaker 4 (19:08):
Yeah, I mean, for sure, and that is a key
part of his base.
Speaker 10 (19:14):
But I mean the spin that he's putting on it,
and I think it's a reasonable spin too, is but yeah,
but good for the American consumer. I mean, if b
prices are sky high, it's good for people at the
grocery store. The one other thing, by the way, that
I almost forgot about to mention is twenty billion dollar
swap line intervening in the currency market and really leaning
(19:34):
on the banks, the big Wall Street banks to come
up with another twenty.
Speaker 5 (19:37):
Billis Jamie Diamond in Argentina, I believe as we speak, as.
Speaker 2 (19:41):
We see why is this happening? Like why is this
a good idea for the US to do? I mean,
I understand like Argentina is I think very much at
a turning point and in crisis. But like, what is
why is I guess Trump jumping in, Why is Jamie
Diamond down in Argentina?
Speaker 3 (19:57):
What's going on?
Speaker 10 (19:58):
I believe Jamie Diamond is Argentina. Coincidentally, our reporting tells
us that Diamond just had planned to be down there
right around now for months. But now that he's there,
I think the sense is, Okay, Jamie, like, let's try
to put this thing together. But of course the banks
are gonna demand a little bit more than just pesos
as backing for their loans. They want stuff they want like, Okay,
(20:22):
what's our collateral a you're gonna give us, like the
lithium rights or like what other like what other mineral
rights are we gonna get out of this? Like I'm
not I'm not just taking Javier Milai's word for it.
So I think that one is kind of struggling in
terms of whether it gets done. I just think at
the end of the day, Donald Trump has one friend
in Latin America and his name is Javier Milay, and
(20:45):
Milay is his counterweight to the leftist in Brazil, to
the leftist in Chile, to the leftist in Columbia to
the Maduto regime in Venezuela, and he wants to stand
by his guy and say, hey, we're with you through
thick and thin go forth.
Speaker 5 (21:01):
All right, David, thank you for being here. We'll have
to come back and check in again once this election happens.
And also if we see whether our investment, our shared
investment in the Argentine, Hey, so how.
Speaker 4 (21:12):
It's doing.
Speaker 3 (21:21):
So Argentine's economy in very troubling shape, But our.
Speaker 2 (21:25):
Own economy isn't a strange place, I guess I would say.
Speaker 5 (21:28):
I mean it's a little You might say we're heading
in the in an Argentine direction.
Speaker 3 (21:33):
No, I love, that feels very extreme, but it is
like very back and forth.
Speaker 2 (21:37):
I mean, the job market is not looking great, but
the economy is growing. The markets keep setting records, but
then lower income Americans really struggling in a bunch of ways.
Speaker 3 (21:47):
The government is shut down, but prices are rising.
Speaker 2 (21:50):
If the economy at a mood ring, I would say
it has mixed feelings.
Speaker 5 (21:54):
Yeah, if you're an AI guy who posts a lot
on Twitter, you're getting paid like one hundred millions.
Speaker 3 (22:01):
Are your glory days?
Speaker 10 (22:02):
Yeah?
Speaker 4 (22:02):
Just to show up? And if you're just like a
regular person. There are no jobs available.
Speaker 3 (22:07):
That's right. Hiring is like very very low.
Speaker 2 (22:09):
But to help us kind of parse through this economy
and figure out what we should be looking at, we're
extremely lucky to have Kyla Scanlan, author of In This Economy,
the best selling book which you should buy in the.
Speaker 4 (22:20):
Studio with us.
Speaker 3 (22:21):
Hi, Kyla, Hey, yeah, happy to be here.
Speaker 2 (22:24):
If you aren't familiar with Kyla's work, Kyla does a
lot of basically like education, like economic education, I would say,
And you're always looking at different economic indicators from all
over the economy. So Max and I wanted to see
if you would talk about maybe three of the signs
in this economy that are less talked about and kind
of help us figure out what this economy looks like
(22:45):
before we get started, Like what do you think the
mood of the economy is?
Speaker 3 (22:50):
You are, after all, the inventor of the term vibe session.
Speaker 1 (22:54):
Yeah, yeah, I mean I think, like you know, all
that really matters right now is vibes because we don't
have a lot of data, and so that's something I'm
really paying attention to. Where it does seem like narrative
is moving markets much more than any fundamentals. And then
with the economy, like we obviously the government shut down,
so we don't have the data that we need to
understand it. So I'm a bit worried.
Speaker 2 (23:16):
Well, the first thing I wanted to ask about was
was feelings, because of the Vibe session consumer sentiment, a
lot of surveys coming out sort of show the consumer
sentiment is not doing great.
Speaker 1 (23:28):
Yeah, I mean you missed the University of Michigan. Who's
like one of the core measures of consumer sentiment.
Speaker 5 (23:34):
Oh yeah, Joanne schu at the University of Michigan. We
interviewed her like two months ago.
Speaker 3 (23:38):
Yes, yes, about about in fact, feelings.
Speaker 1 (23:41):
I mean the data that they have sentiment moved basically
sideways last month. We'll get a new print pretty soon.
But I mean sentiment has been going down and people
are really concerned, I think pretty much across the board.
So yeah, people are feeling great right now?
Speaker 3 (23:57):
Why does that matter?
Speaker 4 (24:00):
Do you know what I mean?
Speaker 2 (24:00):
I mean, feelings matter, not about feelings, but like, why
is that a big deal?
Speaker 1 (24:06):
I mean, like there's all sorts of reasons that people
have been talking about since the beginning of like the economy,
Like Caine said, animal spirits, the idea that like emotions
really move markets and sort of fundamental zon't use reflectory.
People are logical, right, very irrational, and so I think
like how people feel is ultimately a self fulfilling prophecy
(24:27):
for how they might spend. We saw a little bit
of disconnect with that over the past couple of years,
where people were like, I'm feeling really bad, but still
retail sales were up, so I think.
Speaker 3 (24:35):
Like it, like that's also like I've been there.
Speaker 5 (24:38):
Sure was Joanne's whole argument for like why the survey matters,
because like, if you're feeling bad, they don't spend as
much money, and that on a macro level adds up
to a recession.
Speaker 2 (24:48):
Basically people are spending more even though they're feeling bad.
Speaker 1 (24:52):
Well, that was the idea the vibesession, which was back
in twenty twenty two, so like fifty years ago at
this point, but like it was this disconnect between data
and sentim and so like the economic data during that time,
like GDP was booming, inflation was going down, the librim
market was strong, but people were feeling like still really terrible,
and so it didn't end up being that self fulfilling prophecy,
like we were not in a recession in twenty twenty two,
(25:14):
although Google search number for a recession actually spiked around
twenty twenty two.
Speaker 3 (25:18):
Everyone was googling recession.
Speaker 1 (25:20):
Yeah, So it's interesting, like I think, because the economy
has become so concentrated right now, especially in AI, it's
not always capturing I think how the everyday person is feeling.
People talk about this with regards to GDP all the time,
that it doesn't do a good job at capturing, uh,
you know, how the average person feels. And so I
think that's what we see more and more is that
the economic data might not be telling us the full story.
Speaker 2 (25:43):
So consumer sentiment red light, green light, yellow light in
terms of where it's that right now. Yeah, I think
we have the hard data to back up some of
the sentiment, at least we did before the shutdown. Like,
you know, the only jobs that were being added was
in healthcare and social services. Every other sector with shedding
jobs manufacturing, finance, technology and so like, it's pretty tough to.
Speaker 1 (26:05):
Feel good in an environment like that. And then inflation,
like grocery prices are you know, through the roof, And
so I think people are like ugh, yuck, gross, So
the data is enforcing the sentiment this time around. Yeah,
so red light, I think so all right.
Speaker 2 (26:20):
So the second thing is a little bit more numbers based,
a little more concrete, which is loan delinquencies.
Speaker 3 (26:28):
So car loan delinquencies are up.
Speaker 2 (26:30):
Car repossessions are apparently really spiking right now. This is
especially scary because a lot of times people see this
as a canary and a coal mine, because those are
some of the first loans people to fault on before
mortgage loans and things like that. And I think in
the first housing crisis, this was one of the real
red flags that things were going south.
Speaker 3 (26:50):
People were not making their car payments. So what do
you see here?
Speaker 1 (26:53):
I mean, I think we're seeing a lot of the
auto lenders begin to go under. So First Brands is
like one example of that, Tricolor, which JP Morgan lost
one hundred and seventy five million dollars on, and then
Primalan is also like oops. So I think that's really scary.
Speaker 5 (27:11):
Now, these these bankruptcies Tricolor and First Brands. I've seen
analysis that have suggested that it isn't like some kind
of economic indicator that it says something more about these
specific businesses, which I guess happens. It's possible that like
first Brand is just a bad company, or that Tricolor
was I think the story there is they were selling
(27:32):
to undocumented immigrants, and like that was.
Speaker 3 (27:35):
A that's probably crime loans anyway, right, but that like.
Speaker 5 (27:38):
In other words, it might not indicate some kind of
broader economic right, right, that seems like the question.
Speaker 1 (27:44):
Yeah, but now with prime Land, I think everyone's like, Okay,
this keeps happening. Like you know, once you have three dominoes,
it's like, Okay, the whole pile might be tipping over.
So I think because it keeps on happening, and then
some of the regional banks have made fraudulent loans, and
like people will come on and be like, I think
the whole read banking sector is fine, but with the
government shutdown, like they don't have as much float as
they normally would, and so I think like everything is
(28:07):
sort of compressing around the regional banks and around the
auto lenders, and people are having trouble making their payments,
maybe because they're out of work or because the payments are.
Speaker 4 (28:18):
Just through the roof.
Speaker 1 (28:19):
I mean, I used to sell cars, I used to
sell Hyundais back like in yeah, twenty seventeen, twenty nineteen,
that was before we had the big run up in
interest rates, and it was like crazy if we put
somebody on an eighty four month loan, and now this
much more commonplace for people to have eighty four month
(28:39):
lo you mean.
Speaker 4 (28:39):
A long loan because the interest rate on a long
loan is.
Speaker 1 (28:42):
Lower than right in four how long is eighty seven years?
Speaker 3 (28:45):
Okay?
Speaker 1 (28:46):
And the car depreciates like right when you get it.
Speaker 4 (28:49):
Off the law.
Speaker 5 (28:49):
Yeah, were you selling you would never say that when
you were selling a Hyundai, right, you would be like,
this is gonna this is going to last for ten years, well.
Speaker 1 (28:56):
Ten year, one hundred thousand mile warranty. Yeah, it's tricky.
It's it's really tricky because like I don't know, I
could we could do a separate podcast on my struggles
of selling cars. But yeah, people came in. You need
a car, Like the United States in most parts of
the country does not have public transit, so people have
to have a car to go to work. And so
I dealt with a lot of people who were coming
in and you know, needed to get to college or
(29:18):
they needed to get to their job and they were like,
what can I afford? And the way that you make
it more affordable for them is extending out the payments.
Speaker 3 (29:25):
What do you see as the significance of this for
the economy is this?
Speaker 4 (29:29):
Is this a big deal?
Speaker 3 (29:31):
Not a big deal.
Speaker 1 (29:32):
I mean, it's definitely a point of concern when people
can't make payments. And I think like it's something to
watch because it is sort of the first domino so
fall to use that metaphor again, and I think you
could see people starting to miss the mortgage payments like
sort of how we saw in two thousand and eight.
So it just means that people are struggling. And I
think people were already over extended with cars because the
(29:54):
US does have like a car culture gone on where
you got some We've definitely got a car. Yeah, you
got some tricked out US these that are like real
expensive and the pickup trucks like those things are crazy.
Speaker 2 (30:04):
And ida like pick up like people spend all their money. Yeah, yeah,
the establishing you buy when you come into a little money.
Speaker 1 (30:12):
Yeah, exactly.
Speaker 3 (30:14):
So green light, red light, yellow light for for loan delinquencies.
Speaker 1 (30:17):
I think it's a yellow light, Like I mean, I'm
really watching the sort of private credit situation. Like that's
a two trillion dollar industry. They're pretty exposed.
Speaker 3 (30:25):
To some of this stuff that's rolling off and credits
like private loans.
Speaker 1 (30:29):
Private credit is essentially like pre pe firms, other investment firms, Yes,
lending money to companies. So instead of this company, this.
Speaker 3 (30:40):
Is like on a macro scale as opposed to lending
to regular individuals.
Speaker 1 (30:44):
Yeah, so like if like you're a company and you're like, okay,
I don't necessarily want to borrow money from a bank,
you could go to a private credit firm.
Speaker 5 (30:51):
Well, and with both Tricolor and First Brands that that
was one of the elements. You had banks lending money
to these companies and private credit firms and they weren't
talking to each other. So in addition to the like
economic signal that a subprime model under sends, you have
this Kylo's bringing up the risk that like this spills
over into some kind of financial crisis.
Speaker 1 (31:11):
The cockroaches, as Jamie Dimond for the CEO of JP
Morgan said, and you know, they did lose one hundred
and seventy one million dollars on Tricolor, and so there
was actually like a little bit of drama between him
and one of the private credit CEOs Blue Out, because
Jamie Dimon said, he was like, I'm paraphrasing, but like
once one cockroach comes crawling out, like a bunch of
them are going to come crawling out, Like if you
ever met a family of cockroaches, that is what happens.
(31:33):
And so he was implying that, like, because these auto
companies are starting to go under, there's like more to follow.
And then the Blue Oul CEO is like, hey man,
you're you're complicit too.
Speaker 4 (31:45):
Yeah, you're a cockroach if that's what you're talking.
Speaker 5 (31:48):
Cock I'm glad you brought up Jamie Diamond and cockroaches
because that was our third Yes, third sign it is,
and I'm going to take it as a segue.
Speaker 4 (31:56):
So Jamie Diamond, I believe it was.
Speaker 5 (31:59):
It On Wednesday or tuesdays earlier this week as we're recording,
Jamie Diamond opened up the new headquarters of JP Morgan Chase.
It is spectacular. The word that's used in all of
these stories about it is fortress. It has like restaurants,
there's a club and club, there's.
Speaker 3 (32:16):
All sorts of things only for employees.
Speaker 4 (32:19):
Adar a beach club.
Speaker 3 (32:22):
I don't know, only for employees like you, just like
you and I can't go.
Speaker 4 (32:25):
I think it's a pub, right is it actually a club?
I don't know. But there's like.
Speaker 5 (32:31):
And and Jamie Diamond in talking about this is talking
about it as this kind of like statement thing about
coming back to the office. What a what a believer
he is in return to office, and he's bought this thing,
and kind of like we're seeing this across the economy,
like all of these companies talking about you know, return
(32:53):
to office and the importance of it. And I'm kind
of curious, like to your mind, like what is actually
happening there, because it was only like a few years
ago when all the leading lights actually not Jmie Diamond,
who has been pretty steadfastly about putting butts in seats,
but yeah, most of the leading lights of businesses were
like all about you know, remote work.
Speaker 4 (33:14):
They're all these remote.
Speaker 3 (33:14):
First moment, they were all about remote work.
Speaker 4 (33:17):
And I'm just kind of wondering, like what has happened here?
Speaker 5 (33:19):
Is Is it that like conventional wisdom has gone one
hundred and eighty degrees, or is it a labor market
or is it some combination of those two things.
Speaker 1 (33:26):
I mean, I think companies just want to see what
people are up to.
Speaker 3 (33:30):
Yeah, it's just like a power move.
Speaker 1 (33:31):
Ah yeah, probably right, Like it's I think a lot
of people were concerned about the productivity of workers at home.
I think people were perfectly productive, but yeah, I think
there's like we want everybody here and then it's a
good workforce colling effect. So if people are like I'm
not going to come back to the office, it's like
you're quiet firing.
Speaker 3 (33:51):
This is the term, right, quiet firing. Is that the term?
Speaker 2 (33:54):
Yeah, that that's like a way of like, yeah, instead
of actually firing people, you just put a bunch of
beer years in place.
Speaker 3 (34:00):
Yeah, you put a bunch of things in place.
Speaker 2 (34:02):
And it's like, oh no, you're not fired. You just
have to It's just like Cinderella, like you can go
to the ball. You just have to like clean the
staircase and then oh you even get that all done.
I'm so sorry you can't go to the ball.
Speaker 4 (34:12):
It's like that's yeah.
Speaker 5 (34:14):
There's lots of this going on with like relocations, especially
people who moved to other cities during COVID.
Speaker 2 (34:21):
A bunch of yah, it's like, oh, yeah, you've got
to move here, move back to the big city.
Speaker 5 (34:26):
Yeah, I think this has absolutely nothing to do with productivity.
I think this is one hundred percent about the labor market.
It's just like they can do it, so they're doing it,
And if the labor market were better, tighter, then they
wouldn't be doing it. And I also think the fact
that Jamie Diamond invested a reported three billion dollars in
this headquarters is probably contributing to his desire to have
(34:47):
everyone like fill it up.
Speaker 4 (34:48):
It's like it's like once you.
Speaker 3 (34:50):
He doesn't want to be the only person in the club, once.
Speaker 4 (34:52):
You've paid for this, Like it looks pretty bad if
it's empty.
Speaker 1 (34:55):
Yeah, workers don't have a lot of power right now,
so I think companies are using that as a give
back to the office sort of thing.
Speaker 3 (35:02):
What do you see as the significance of that in
the economy.
Speaker 1 (35:05):
It's interesting, like, you know, we don't have a very
clear picture of the labor market right now because we
don't have the economic data from the government, but like
the Chicago Fed has some real time indicators that they released,
and like their indicators are like the labor market's mostly okay.
But then when you look at like private market data,
it's telling a little bit of a different story like ADP.
You know, there's a job losses there. So I think
(35:29):
like it's just a very confusing labor market and AI
is causing some problems. And then also it's not very
broad like going jobs or healthcare and social services.
Speaker 3 (35:40):
And hiring, Like I feel like that's like.
Speaker 1 (35:42):
The low firing, low hiring.
Speaker 2 (35:44):
Yeah right now at least it's just like still which
is weird except for I guess, all, well, if.
Speaker 1 (35:50):
You're a business and you're dealing with terroriffs, you're dealing
with fiscal policy uncertainty, you know, maybe even you're paying
attention to the FED recuts, like maybe you don't want
to hire people, right.
Speaker 5 (36:00):
You're a worker, like this is not a good time
to change jobs? No, I you know it's And it's
the exact same factor you're talking about with businesses, like
uncertainty makes us not want to move right totally.
Speaker 3 (36:13):
So Kyla green light, yellow light, red light.
Speaker 1 (36:16):
With the liver market, I'm so worried about the labor market. Yeah,
I just like so, Like I do videos and social
media and.
Speaker 3 (36:25):
Which are great. You should check them out. You do
one every day almost look at all different aspects of that. Yeah,
they're really great.
Speaker 1 (36:30):
I get a lot of messages from people and like
my audience is primary young people, and they're they're great,
But like a lot of people are like, Kyla, I
cannot find a job right now, and so I have
like anecdotal data that I think might be influencing me
a bit more. But yeah, I'm I'm like red light
on the labor market.
Speaker 3 (36:46):
Yeah yeah, so you're red light on the job market.
Sounds like, yeah, well, what about the overall economy?
Speaker 1 (36:53):
I don't know. I mean, I'm worried. I'm just worried,
and I hate it. I've been on the road for
the past year and a half. I'm in like six
states over the next four weeks, and I get to
talk to a lot of people from all over the country,
in all parts of the country, and like the one
thing I hear is just like I'm worried about the economy.
Speaker 9 (37:13):
You know.
Speaker 1 (37:13):
I absorb all that, and then I look at the
data that we have and I just see like this
point of concern and like, I'm really worried about the
divergence between the stock market and the economy too, Like
AI is driving so much of economic growth is driving
so much of the stock market, and I just feel
like it is disconnected from the material reality of the
average person.
Speaker 5 (37:33):
Kyla, this was great stick around. We've got one more
segment for you, so Kyla Stacy. This week in Business Week,
we published a cover story about Gavin Newsome.
Speaker 3 (37:49):
This is the like very Kyla lives in California, Yeah,
your governor.
Speaker 5 (37:53):
The point of the story is that there is this
fight which I actually hadn't been paying super close attention to,
over Proposition fifty. This is California's potential plan to add
a bunch of Democratic House seats to like.
Speaker 4 (38:06):
Complete with the Texas Redistrict king.
Speaker 5 (38:09):
And the larger point is basically, like Gavin Newsom, he
has not said he's running for president, but he's definitely
running for president, and I've been thinking about that, and
I've been thinking about that in light of a detail
in this story that I think is that is my
bid for underrated story, which is Gavin Newsom's favorite favorite drink,
which is a bottle of nineteen forty seven Chaval Blanc,
(38:30):
which is a very very very very very very expensive
bottle of wine. And I read this it's really funny
because Gavin Newsom is trying to rebrand himself as like
a regular guy.
Speaker 4 (38:43):
He's got a podcast, he like, hangs out with the brocast.
Speaker 3 (38:46):
Of Wine's not the way to repat himself.
Speaker 5 (38:49):
In the Business Week's story where where the authors Josh
Green and ELAIU Chemischer, they have a quote from one
of Gavin's friends who says, when people say who is Gavin,
I say, he's one of us.
Speaker 4 (39:02):
He's me. If you know Gav like I know him,
you know him with the hat on backwards.
Speaker 5 (39:06):
You know, I'm drinking a beer, hanging out watching ball,
talking sports, you know, talking shit about things.
Speaker 4 (39:11):
Okay, so that's.
Speaker 3 (39:12):
Gavin Newsom said that about himself.
Speaker 4 (39:13):
That's one of his friends.
Speaker 5 (39:14):
And then there's a little nice little parandemical that mentioned
that Gavin Newson's favorite bottle of wine is a forty
seven Chavall Blanc, which costs, like we say, fifteen thousand dollars.
In the story, I mean, I think there's so.
Speaker 3 (39:25):
Many rare wine implies that you've purchased this more than what.
Speaker 5 (39:28):
Okay, So now this is my question, do we think
this is bad in a political candidate or not, because
it seems like obviously very bad to be like, I'm
one of the bros. I just like to have an
EXPENSI bottle one. But I also thought, like, here's Gavin
Newsom last year. This is I think where the detail
comes from talking about his favorite bottle of wine.
Speaker 10 (39:47):
Is there one bottle of wine that you're saving for
a very special occasion?
Speaker 4 (39:52):
I need a year two.
Speaker 10 (39:56):
This is where your political consultants are not going to
like my answer.
Speaker 4 (40:00):
Give an honest answer, but let me not.
Speaker 1 (40:01):
I read that book on Applebee's after we lost.
Speaker 4 (40:04):
One of getting a politician to talk about Oh, of.
Speaker 10 (40:06):
Course Newsom said, you know at nineteen forty seven, which
was the answer to your question.
Speaker 4 (40:11):
Of course he would say that, Okay, so he's being real.
Speaker 3 (40:16):
Well, I'm not sure that that is the way to
appeal to the people. I don't know. I've never had
a twenty thousand dollars bottle of wine.
Speaker 4 (40:22):
I've never had.
Speaker 3 (40:24):
Two hundred dollars bottle of wine.
Speaker 1 (40:27):
I didn't you know wine was that expensive? Why why
is it so expensive?
Speaker 2 (40:33):
Is it just rare to you or scarc It's from
nineteen forty seven years old.
Speaker 4 (40:38):
I actually pulled up a like a article about.
Speaker 1 (40:42):
How many bottles do they have? Like from this year, very.
Speaker 5 (40:47):
Very few and according to Sotheby's, the Southby's website, which
has a write upon this, it's they're basically they say,
there are vanishingly few bottles left in the world, and
only sixteen the chateau itself.
Speaker 2 (41:01):
I just feel like, remember there was like that Jeff
Fox where they used to have that whole thing, where's like,
you know you're a redneck when you know he had
this whole thing. I feel like there is some equivalent
of like, you know you are not one of the
people when your favorite wine costs first of all, when
your favorite wine is described by Sotheby's, like when your
(41:21):
favorite drink whoa.
Speaker 5 (41:23):
And I guess this is like part of the political
moment we're in, like walk a line between between being
relatable and his authentic self.
Speaker 1 (41:34):
I don't know if we can like beat up on
him too much, like comparatively to what the president has earned,
you know, I think it's a billion dollars in crypto
or something like that.
Speaker 3 (41:45):
That's true, you know, and jet I just I think
we got to like.
Speaker 1 (41:49):
Look at the policies and decide from there. I don't
think it's great. I didn't even know whine could be
that expensive. But you know, maybe he sounds like he's
in business.
Speaker 5 (42:01):
I think that I actually like felt like this was
a very damaging detail until I watched that video and.
Speaker 4 (42:08):
Then I thought, no, he's just being who he is
and that and like actually.
Speaker 5 (42:12):
Maybe in our moment that is more valuable than the
like you know, old saw about He's just a regular guy,
you know you have a beer with. Although there's something
kind of clumsy about the backwards baseball.
Speaker 1 (42:25):
I mean that that's not a good depiction of like
what every day.
Speaker 4 (42:29):
When I relaxed, I turned the cap around.
Speaker 3 (42:32):
That's how you know, it's like after hours.
Speaker 1 (42:34):
Yeah, in his business, Oh my goodness, the APR friend
should do some work with that.
Speaker 2 (42:46):
Our show is produced by Stacy Wong. Magnus Henrickson is
our supervising producer, and.
Speaker 3 (42:50):
Amy Kean is our executive producer.
Speaker 2 (42:53):
Sam Rogich handle's engineering, and Dave Purcell fact checks, Sage
Bauman heads Bloomber podcast special thanks to Jeff Muscus, Julia.
Speaker 3 (43:01):
Rupin, and Mario Lank.
Speaker 2 (43:02):
If you have a minute, please rate and review the show.
It means a lot to us, and if you have
a story that should be our business, email us at
everybody's at Bloomberg dot net. That is, everybody's with ans
at Bloomberg dot net.
Speaker 3 (43:16):
We would love to hear from you, and thank you
very much for listening. We will see you next week.
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:12):
This is Everybody's Business from Bloomberg BusinessWeek.
Speaker 3 (00:14):
I'm Stacey Mannix Smith.
Speaker 4 (00:16):
And I'm Max Chefkin. Stacy. Yes this week.
Speaker 5 (00:19):
Yeah, we're going back to Argentina, the land of steak.
It's big news and inflation and bailouts.
Speaker 4 (00:26):
The bailout that we told you about a month ago.
It is happening. It has happened.
Speaker 5 (00:31):
The election that many people in the US were worried about,
it is happening.
Speaker 4 (00:35):
So we have David Papadoppolis back here to talk to.
Speaker 2 (00:38):
Me, and after that we'll be visited by a friend
of the show in studio. Very excited, Kyla Scanlin, economic
teacher extraordinaire, and she is going to help us navigate
this murky moment in our economy with some kind of
under the radar economic.
Speaker 3 (00:56):
Thing she has been watching.
Speaker 4 (00:57):
I'm ready for that, our underrated story. Now.
Speaker 5 (01:00):
You know, obviously the Democrats, as people know they are,
they're struggling to come up with a response to Trump,
and I think we've found it. I've got one word
for you, Stacy. Wait, it's more than one word. Forty
seven cheval bloc.
Speaker 2 (01:15):
Forty seven val blank is how the Democrats are going
to pull it together.
Speaker 4 (01:18):
Just wait for the story.
Speaker 3 (01:19):
Okay, I'm in so Max.
Speaker 2 (01:26):
The economy right now, the American economy is kind of
a scattershot a little bit. But one part that has
been very consistently not good is the housing market.
Speaker 5 (01:36):
Yeah, interest rates are up and because we haven't been
building enough houses, basically no one's moving.
Speaker 4 (01:41):
And so if you want to buy a house, you
are I think the well you're.
Speaker 3 (01:45):
Waiting for scientific term is funed.
Speaker 2 (01:48):
Well, you're waiting for lower interest rates, right because you're
just like, I'm not going to buy a house now.
Speaker 4 (01:52):
Well, and if you are sitting in your house, you're
not going to sell your house?
Speaker 2 (01:55):
So right, I mean you have you are a homeowner.
The chiefs are a home owner. Yea, right, I mean
would you sell.
Speaker 3 (02:01):
Your house right now?
Speaker 4 (02:03):
No? No, I would.
Speaker 6 (02:04):
Well.
Speaker 2 (02:04):
In fact, Max, you are indicative of a national trend.
The National Association of Retailers came out with these numbers
this week.
Speaker 3 (02:12):
Real Tours, Real Tours.
Speaker 4 (02:14):
They're very adamant about.
Speaker 3 (02:15):
The National Association of Real Tours.
Speaker 1 (02:18):
It's like a tour.
Speaker 2 (02:20):
As it turns out, home sales in the US this
year are the slowest they've been since nineteen ninety five.
Now that means slower than the housing crisis.
Speaker 1 (02:31):
Home sales.
Speaker 4 (02:32):
Yeah, it's it's really bad.
Speaker 5 (02:34):
And it's especially given that we went through this period
for a very long period where interest rates were very low,
where basically you could borrow money for next to nothing.
It's it's kind of shocking, honestly.
Speaker 2 (02:46):
And of course here in New York, everybody's obsessed with
housing and rent and how much everybody's paying for everything.
So I thought I would go out and ask people
how they were feeling about housing and home ownership right now.
Speaker 3 (02:57):
And here's what they said.
Speaker 7 (02:59):
If you're looking at the price of a house compared
to your salary, and then if you look at the
percentage of someone's salary that would go into housing fifty
sixty years ago, you're gonna see housings getting more expensive.
Speaker 3 (03:12):
It's just that real estate it's really expensive. So a
lot of us don't really get there.
Speaker 8 (03:19):
The cost of living going up compared to wages going
up is like something that worries me wanting to buy
a house, but also like wanting to be able to
spend time with my kids but also make enough money
to like support them.
Speaker 9 (03:29):
Well, we're still like in our early twenties, we eventually
think about long term like buying a house and stuff,
so we're focusing on like saving for that.
Speaker 4 (03:37):
My mom's a public school teacher.
Speaker 9 (03:39):
She didn't make enough money to like actually mortgage our house,
so it's mortgaged by my grandma. And that's like sort
of where like all the wealth is like humming from
in my family. So it's like if that's already happening
to my parents, like what am I gonna do?
Speaker 4 (03:53):
Oh? Man, I know that last one was pretty heavy.
Speaker 3 (03:56):
People are feeling.
Speaker 2 (03:56):
I mean, that's it's really interesting because it's this idea
that like that's the investment. If you can cobble together
the money to get a house, then you're kind of
on your way financially. And as a non homeowner, I
do have like FOMO about that.
Speaker 4 (04:10):
Yeah, Stacey, you're you're among the renters.
Speaker 2 (04:13):
My excuse is that I started reporting during the financial crisis.
So the very first interviews I did as a journalist
were two people who were underwater on their homes, and
it spooked me forever.
Speaker 5 (04:27):
I mean, renting is great if you've got a good situation.
That said, like the structure of our sort of regulatory
system makes it like basically almost impossible to like to
not want to own a home because there are these
great tax breaks. If you get a mortgage, your mortgage
payments are tax deductible. Like it's a huge subsidy that
renters don't get. And then because we don't, we're not
(04:49):
building enough houses. As you said, like there's almost this
sense that any no matter how much, it's going to
go up, and and it would be better if if
the world didn't work that way, I think, but it
is how the world.
Speaker 2 (05:00):
Works well historically speaking, it is an excellent investment. But
I have chosen to put my money in gold.
Speaker 4 (05:08):
I know you have.
Speaker 5 (05:09):
Gold fell this week, Stacey, was that week for you? Okay, Stacey?
It is as we're recording this October twenty second Wednesday now,
a month ago. I don't know if you remember, we
had a whole conversation about Argentina.
Speaker 4 (05:29):
Yes, of course, Javier.
Speaker 5 (05:31):
Mila, the cool chainsaw wielding sideburn having a president, had
run into some economic problems. The US was threatening to
bail the country out, and a bunch of stuff has
happened since we last talked that bailout.
Speaker 4 (05:46):
It has happened.
Speaker 5 (05:47):
Mela is facing an election I believe on Sunday. That's
the twenty sixth, So there's a lot going on. So
I thought we could bring back our friend David Popadopoulosho
we spoke to last month. Yes, he is an exactive
editor at Bloomberg. He's also the former host of Elon Inc.
Speaker 4 (06:04):
David, how are you? I'm good?
Speaker 5 (06:05):
All right, So David, can you just catch us up
and explain what is happening right now? So that bail
out that twenty billion dollar swap deal that we talked
about that the US was threatening to do, they have
now done it right.
Speaker 4 (06:19):
Well, I think that there's a lot of hocus pocus
going on around here.
Speaker 10 (06:23):
They don't like the optics of saying, yeah, we cut
Javier Malay a twenty billion dollar check, which is essentially
you know what they've done. So a swapline means the
US gives Melay access to twenty billion in Melay in
turn gives the Americans access to twenty billion dollars worth
of paysos if one is so inclined.
Speaker 2 (06:44):
So it's like, I'll trade you twenty billion dollars worth
of swap, except the paso.
Speaker 3 (06:49):
Is like really suffering from very very serious.
Speaker 10 (06:53):
The part of the swap that really matters is Melay
getting his twenty billion.
Speaker 4 (06:57):
I don't know. I mean, what are we going to do, Max,
If we get twenty billion dollars, we have BeOS, what
are we gonna we go do with them?
Speaker 10 (07:03):
So that on the one hand, they cut, they've done
that the swap line, which I don't believe has been
tapped yet. Separately, the US Treasury is is intervening in
the currency market in Buenos Aiere's. They are selling dollars
that the Treasury has in the Buenosiere's market and they're
buying up pesos to prop up the peso, and this increases.
Speaker 2 (07:26):
The value of the peso because a lot of the
value of a currency comes from demand. And so if
you are buying up pesos, if you're flooding the market
with dollars in buying up pesos, that creates a healthy
demand for the peso and that increases its value.
Speaker 10 (07:39):
Correct, they're creating demand from pesos, or the other way
to think about it, and I think perhaps a better way.
They are increasing the supply of dollars in the market
in Buenos Aires, so that when people somebody wants dollars,
there are now more dollars to be had because the
US Treasury is throwing dollars around there.
Speaker 4 (07:58):
Well.
Speaker 2 (07:58):
And also there's like a political element here. I mean
Max mentioned that there is this election on Sunday, and
is the subtext or maybe not even the subtext of
this that if Malay's party gets voted out, then this
help goes away.
Speaker 4 (08:16):
Well, I think Trump said sol, So it's not a subtext,
it's just text, which was kind of weird.
Speaker 10 (08:24):
I mean, like it's in general, it's not a great
gambit as you're trying to prop somebody up and trying
to pump them up to say, oh, but if this
thing doesn't go really well in the next few days,
we're totally out of here. Because now, if I'm an
Argentine investor, Ar'm someone who's skittish about holding paysos. I
hear that body language and that posturing from Trump. Now
(08:46):
I'm definitely getting out of the paeso right now. I'm
definitely want my dollars. But so to be clear on
the vote though, what this is a midterm election, Malay
is not up for reelection yet, his party, his broader
coalition right now has a very small percent of the
votes in Congress. They are trying to get up to
at least somewhere in the thirties high thirties. Preferably, the
(09:09):
party's not going to get voted out. The issue is
can they boost their presence in Congress enough to both
A allow me lay to properly stave off attempts by
the opposition to pass through spending increases, B to perhaps
impeach him when there are corruption scandals swirling around him
(09:29):
in his inner circle and he desperately needs to get
over a thirty three percent coalition to avoid that. And
then C, in an optimistic scenario, can they get close
enough to forty percent to then be in a position
to cut deals with other members of the opposition and
get some of his vast agenda through labor reform, pension reform,
(09:50):
tax reform.
Speaker 5 (09:51):
So the risk for the holders of this currency, for
the people who want me lay, to.
Speaker 4 (09:56):
The holders of the curtsy that you.
Speaker 5 (09:57):
And me, yeah, exactly, and evermore every day as we
continue to buy paesos, is what exactly that that Malaise
opponents will either gain seats or hold off Melaise gains
enough to make it hard for him to basically do anything.
Speaker 4 (10:13):
More, to like do more reforms or like what is
the actual.
Speaker 10 (10:18):
So I think that is the principal thing. So remember
last time I was on, I gave you a shark reference. Yeah,
and I give you another shark reference.
Speaker 1 (10:24):
Please.
Speaker 4 (10:25):
You know what happens, stacy, when a shark stops swimming.
Speaker 2 (10:27):
When it does because it can't move oxygen over it.
Speaker 10 (10:32):
Yes, So these stabilization plans, when you're coming out of
like crazy high inflation and an economy and crisis. You know,
it's great when you have some initial gains, but you
need to keep building off your momentum.
Speaker 4 (10:48):
You need to keep moving forward.
Speaker 10 (10:50):
And if you're going to stall out and the whole
thing's going to die this quickly, right, and you lose
all momentum, you're like a shark, Like this thing is
just got to keep going for you. He's done some things. Yes,
he's broad inflation down. Yes, he's temporarily at least stabilized
the pace of.
Speaker 3 (11:06):
A lot of austerity.
Speaker 10 (11:07):
He's cut, Yes, he's certainly cut with his chainsaw a
lout of spending. But you need to deep in reforms
and really, you know, keep things going and so I think, yes,
there's a real concern that if this is all you're
able to do, have you e Mel, You're done. You're
not going to get through anything else in your agenda
to achieve your vision.
Speaker 4 (11:26):
No, we're out of here, all right.
Speaker 5 (11:28):
So I want to just give you just play a
little clip of Trump kind of trying to explain this
bailout on air Force one the other.
Speaker 4 (11:35):
It's not a bailouts. Let's listen right.
Speaker 6 (11:39):
With I assume you're talking about beef to get beef
prices down. The only price we have that's high is beef,
and we'll get that down. And one of the things
we're thinking about doing is beef from Argentina.
Speaker 1 (11:50):
But my question is, what do you have to say
to US farmers who feel that the deal is benefiting
Argentina more than it is THEMB as.
Speaker 6 (11:57):
They are, Argentina is fighting for its life, young lady,
you don't know anything about.
Speaker 2 (12:02):
It, Okay, love that as a reporter being called young
lady really great.
Speaker 5 (12:09):
Can we just put a pin in the question of
US farmers? And I just want to get at this
thing that he's saying, Argentina is fighting for his life,
young lady is that true. Is there any sense that
that true? It sounds like Argentina is preparing to vote
against the guy who's in charge of the country.
Speaker 10 (12:28):
I don't know about fighting for its life. I would
say that it is potentially in the precipice of another
full blown crisis. I mean, without Trump and Treasury Secretary
Scott Besson riding to the rescue, they probably would have
devalued the currency again if they are forced to value again.
Speaker 2 (12:45):
And broadly speaking, valuing the currency, do you mind just explaining, oh, sorry,
to value the currency.
Speaker 4 (12:50):
Means is they stop buying paesos with dollars.
Speaker 10 (12:54):
So right now the peso is is worth one thousand,
four hundred to the dollar. One dollar gets you one thousand,
four hundred paces. But if you're forcing the value and
stop defending the pace, so it probably goes from one
thy four hundred to I don't know, two thousand, two thousand,
five hundred. What that gets you is a whole nother
wave of inflation. So just when mi LA was able
(13:14):
to bring monthly inflation, I'm talking about annual inflation. I'm
talking about monthly inflation from around ten to eleven percent
down to two percent, and.
Speaker 4 (13:23):
For which is extraordinary, which is extradinary.
Speaker 10 (13:25):
For context, in the United States, inflation runs roughly two
percent a year. You would go from ten to two, Max,
you could go right back to ten or fifteen, and
you could be right back in the soup of like,
you know, an other crisis, so kind of fighting for
its life in the scent. Not really, but in the
sense that, yeah, it would mean a whole lot more
economic hardship. That's how you impoverish people by inflation soaring
(13:48):
out of control.
Speaker 4 (13:49):
But perhaps, yes, Max, it's a it's a slight overstatement.
Speaker 3 (13:53):
So is all this intervention working kind of?
Speaker 10 (13:58):
I mean, if the game bit is I'm gonna buy
me Lay enough time to get to the Sunday vote
October twenty seven vote without having to devalue, keeping the
paeso stable so it's not something that hurts him in
the polls on Sunday, and so that Argentines can support him,
(14:19):
hopefully rally around him, and not have the devaluation of
the paso weighing on their minds.
Speaker 4 (14:24):
I guess kind of.
Speaker 5 (14:25):
So the story you're telling makes me think, why would
anyone vote against Melay? You know, I listened to the
episode of Odd lots that came out last week. They
had a guy who wrote a book about the Argentina
default and it was basically like presenting Melay as the
only choice. And I'm kind of curious, like, what are
these voters reacting to. They know that the currency is
(14:47):
going to get devalued and they don't care.
Speaker 10 (14:50):
Yeah, I think they think this, and it's we have
this piece that's going out on Friday, and they spoke
with lots and lots of people. They're some fantastic reporting
and including a lot of people who voted for me
that in twenty twenty three, and they're now they're chain
sought out man, Like you know, they're a little bitter,
(15:13):
they're a little bit you know. One of the things
that I failed to properly perceive and I'm understanding better
now is Mile had always said I'm coming with the
chainsaw for.
Speaker 4 (15:23):
The casta La casta.
Speaker 10 (15:25):
The cast The cast kind of mean the establishment, the establishment,
And what Argentine's very much feel is maybe you went
for the costa, but I feel like you kind of
came for all of us. So like we have this
one guy talking about how his mother, his aunt all
had their pensions, not gutted, not cut, but capped. And
(15:47):
when your pension is capped, frozen at a certain amount,
and inflation is running ten percent a month, you're getting killed, right,
You're absolutely getting killed.
Speaker 5 (15:56):
Right.
Speaker 10 (15:56):
This has happened across the board, all sorts of cuts
like this. I just don't I think people didn't appreciate
how much it was going to hit them. And the
other thing is, you know, yes, there's been the stabilization,
inflation's come down, the peso's been stable, but like Max,
at some point, I think you were saying the other
day when we talked last time, where are the jobs,
where's the growth? Where's the freehand of the market?
Speaker 4 (16:17):
Where?
Speaker 10 (16:17):
And I don't they're not seeing or feeling any of that.
The corruption is weighing on their minds a bit. And
by the way, a very interesting thing, Melay twenty twenty
three in the campaign trail that chainsaw was everywhere with
him this.
Speaker 3 (16:29):
Time around, like parades with it.
Speaker 10 (16:31):
Yeah, this time around that chainsaw never never leaves his desk.
He does not campaign with it. Now he is essentially
hiding it all.
Speaker 5 (16:39):
Right, Can we just real quick talk about US politics here?
Because we heard Trump talk about the farmers Stacy. We've
talked about this. Yeah, this effort to defend the PAESO
has been bad for American soybean farmers. Argentina, as part
of their attempt to get a bunch of dollars, have
effectively lowered the prices of Argentine soybeans. China is buying those.
(16:59):
That's hurting American soybean farmers. Now we get this second
suggestion from the president for the president of the United
States that maybe will also buy some Argentine beef, which
is also bad for you know, a different subset of farmers,
a subset that is dear to your heart.
Speaker 4 (17:13):
Yeah.
Speaker 2 (17:14):
Yeah, My parents had a cattle farm when I was
growing up and whereabouts in Idaho, Nice in Ola, Idaho.
And I was really shocked to see that because that
would be kind of potentially devastating. Although beef prices have
been really high. I mean, that is an interesting other way,
I guess, to prop up the Argentine economy to buy
(17:35):
a bunch of their agricultural product.
Speaker 4 (17:37):
That's give one more dollars, right, gives it? Absolutely it does.
Speaker 10 (17:41):
And that's essentially what Trump was saying, Hey, to get
down beef prices here in the US.
Speaker 4 (17:44):
Will do this.
Speaker 10 (17:45):
Good for us, good for our consumers, good for the
Argentine ranchers. But so, yes, you could import beef here,
and apparently Trump might start doing so. You you know,
beef is sort of a niche product. Argentina does have
a very powerful egg sector, but it's an ag sector.
It's soybeans and it's wheat, and the soybeans all they
don't come here, they all go to indeed, to China. Yeah,
(18:07):
and so it's interesting because we believe that part of
what the use of trying to do is it's trying
to and the Journal's been on this story. They're trying
to drive a wedge between the Argentines and China, between
me lay and China.
Speaker 4 (18:21):
In coming in with this aid and all that, and
some of that you'll be able to do.
Speaker 10 (18:24):
But listen, at the end of the day, Argentina desperately
needs China to sell soybeans too.
Speaker 5 (18:30):
So we talked about like the terrible politics of you know,
cutting people's pensions. People generally don't like that, even if
there is a big crisis, even if there is the
threat of hyperinflation. I mean, the politics here on the
US side not good. You know, the government is shut down.
It's easy to forget, but in fact, government is shut down.
(18:50):
We're spending twenty billion dollars on this bailout more money
seems like hundreds of millions of dollars a day on this,
this buying pesos from the treasure. And then you have
the suggestion that we're gonna make beef cheaper, which means,
you know, effectively like less money for American cattle farmers.
Speaker 4 (19:08):
Yeah, I mean, for sure, and that is a key
part of his base.
Speaker 10 (19:14):
But I mean the spin that he's putting on it,
and I think it's a reasonable spin too, is but yeah,
but good for the American consumer. I mean, if b
prices are sky high, it's good for people at the
grocery store. The one other thing, by the way, that
I almost forgot about to mention is twenty billion dollar
swap line intervening in the currency market and really leaning
(19:34):
on the banks, the big Wall Street banks to come
up with another twenty.
Speaker 5 (19:37):
Billis Jamie Diamond in Argentina, I believe as we speak, as.
Speaker 2 (19:41):
We see why is this happening? Like why is this
a good idea for the US to do? I mean,
I understand like Argentina is I think very much at
a turning point and in crisis. But like, what is
why is I guess Trump jumping in, Why is Jamie
Diamond down in Argentina?
Speaker 3 (19:57):
What's going on?
Speaker 10 (19:58):
I believe Jamie Diamond is Argentina. Coincidentally, our reporting tells
us that Diamond just had planned to be down there
right around now for months. But now that he's there,
I think the sense is, Okay, Jamie, like, let's try
to put this thing together. But of course the banks
are gonna demand a little bit more than just pesos
as backing for their loans. They want stuff they want like, Okay,
(20:22):
what's our collateral a you're gonna give us, like the
lithium rights or like what other like what other mineral
rights are we gonna get out of this? Like I'm
not I'm not just taking Javier Milai's word for it.
So I think that one is kind of struggling in
terms of whether it gets done. I just think at
the end of the day, Donald Trump has one friend
in Latin America and his name is Javier Milay, and
(20:45):
Milay is his counterweight to the leftist in Brazil, to
the leftist in Chile, to the leftist in Columbia to
the Maduto regime in Venezuela, and he wants to stand
by his guy and say, hey, we're with you through
thick and thin go forth.
Speaker 5 (21:01):
All right, David, thank you for being here. We'll have
to come back and check in again once this election happens.
And also if we see whether our investment, our shared
investment in the Argentine, Hey, so how.
Speaker 4 (21:12):
It's doing.
Speaker 3 (21:21):
So Argentine's economy in very troubling shape, But our.
Speaker 2 (21:25):
Own economy isn't a strange place, I guess I would say.
Speaker 5 (21:28):
I mean it's a little You might say we're heading
in the in an Argentine direction.
Speaker 3 (21:33):
No, I love, that feels very extreme, but it is
like very back and forth.
Speaker 2 (21:37):
I mean, the job market is not looking great, but
the economy is growing. The markets keep setting records, but
then lower income Americans really struggling in a bunch of ways.
Speaker 3 (21:47):
The government is shut down, but prices are rising.
Speaker 2 (21:50):
If the economy at a mood ring, I would say
it has mixed feelings.
Speaker 5 (21:54):
Yeah, if you're an AI guy who posts a lot
on Twitter, you're getting paid like one hundred millions.
Speaker 3 (22:01):
Are your glory days?
Speaker 10 (22:02):
Yeah?
Speaker 4 (22:02):
Just to show up? And if you're just like a
regular person. There are no jobs available.
Speaker 3 (22:07):
That's right. Hiring is like very very low.
Speaker 2 (22:09):
But to help us kind of parse through this economy
and figure out what we should be looking at, we're
extremely lucky to have Kyla Scanlan, author of In This Economy,
the best selling book which you should buy in the.
Speaker 4 (22:20):
Studio with us.
Speaker 3 (22:21):
Hi, Kyla, Hey, yeah, happy to be here.
Speaker 2 (22:24):
If you aren't familiar with Kyla's work, Kyla does a
lot of basically like education, like economic education, I would say,
And you're always looking at different economic indicators from all
over the economy. So Max and I wanted to see
if you would talk about maybe three of the signs
in this economy that are less talked about and kind
of help us figure out what this economy looks like
(22:45):
before we get started, Like what do you think the
mood of the economy is?
Speaker 3 (22:50):
You are, after all, the inventor of the term vibe session.
Speaker 1 (22:54):
Yeah, yeah, I mean I think, like you know, all
that really matters right now is vibes because we don't
have a lot of data, and so that's something I'm
really paying attention to. Where it does seem like narrative
is moving markets much more than any fundamentals. And then
with the economy, like we obviously the government shut down,
so we don't have the data that we need to
understand it. So I'm a bit worried.
Speaker 2 (23:16):
Well, the first thing I wanted to ask about was
was feelings, because of the Vibe session consumer sentiment, a
lot of surveys coming out sort of show the consumer
sentiment is not doing great.
Speaker 1 (23:28):
Yeah, I mean you missed the University of Michigan. Who's
like one of the core measures of consumer sentiment.
Speaker 5 (23:34):
Oh yeah, Joanne schu at the University of Michigan. We
interviewed her like two months ago.
Speaker 3 (23:38):
Yes, yes, about about in fact, feelings.
Speaker 1 (23:41):
I mean the data that they have sentiment moved basically
sideways last month. We'll get a new print pretty soon.
But I mean sentiment has been going down and people
are really concerned, I think pretty much across the board.
So yeah, people are feeling great right now?
Speaker 3 (23:57):
Why does that matter?
Speaker 4 (24:00):
Do you know what I mean?
Speaker 2 (24:00):
I mean, feelings matter, not about feelings, but like, why
is that a big deal?
Speaker 1 (24:06):
I mean, like there's all sorts of reasons that people
have been talking about since the beginning of like the economy,
Like Caine said, animal spirits, the idea that like emotions
really move markets and sort of fundamental zon't use reflectory.
People are logical, right, very irrational, and so I think
like how people feel is ultimately a self fulfilling prophecy
(24:27):
for how they might spend. We saw a little bit
of disconnect with that over the past couple of years,
where people were like, I'm feeling really bad, but still
retail sales were up, so I think.
Speaker 3 (24:35):
Like it, like that's also like I've been there.
Speaker 5 (24:38):
Sure was Joanne's whole argument for like why the survey matters,
because like, if you're feeling bad, they don't spend as
much money, and that on a macro level adds up
to a recession.
Speaker 2 (24:48):
Basically people are spending more even though they're feeling bad.
Speaker 1 (24:52):
Well, that was the idea the vibesession, which was back
in twenty twenty two, so like fifty years ago at
this point, but like it was this disconnect between data
and sentim and so like the economic data during that time,
like GDP was booming, inflation was going down, the librim
market was strong, but people were feeling like still really terrible,
and so it didn't end up being that self fulfilling prophecy,
like we were not in a recession in twenty twenty two,
(25:14):
although Google search number for a recession actually spiked around
twenty twenty two.
Speaker 3 (25:18):
Everyone was googling recession.
Speaker 1 (25:20):
Yeah, So it's interesting, like I think, because the economy
has become so concentrated right now, especially in AI, it's
not always capturing I think how the everyday person is feeling.
People talk about this with regards to GDP all the time,
that it doesn't do a good job at capturing, uh,
you know, how the average person feels. And so I
think that's what we see more and more is that
the economic data might not be telling us the full story.
Speaker 2 (25:43):
So consumer sentiment red light, green light, yellow light in
terms of where it's that right now. Yeah, I think
we have the hard data to back up some of
the sentiment, at least we did before the shutdown. Like,
you know, the only jobs that were being added was
in healthcare and social services. Every other sector with shedding
jobs manufacturing, finance, technology and so like, it's pretty tough to.
Speaker 1 (26:05):
Feel good in an environment like that. And then inflation,
like grocery prices are you know, through the roof, And
so I think people are like ugh, yuck, gross, So
the data is enforcing the sentiment this time around. Yeah,
so red light, I think so all right.
Speaker 2 (26:20):
So the second thing is a little bit more numbers based,
a little more concrete, which is loan delinquencies.
Speaker 3 (26:28):
So car loan delinquencies are up.
Speaker 2 (26:30):
Car repossessions are apparently really spiking right now. This is
especially scary because a lot of times people see this
as a canary and a coal mine, because those are
some of the first loans people to fault on before
mortgage loans and things like that. And I think in
the first housing crisis, this was one of the real
red flags that things were going south.
Speaker 3 (26:50):
People were not making their car payments. So what do
you see here?
Speaker 1 (26:53):
I mean, I think we're seeing a lot of the
auto lenders begin to go under. So First Brands is
like one example of that, Tricolor, which JP Morgan lost
one hundred and seventy five million dollars on, and then
Primalan is also like oops. So I think that's really scary.
Speaker 5 (27:11):
Now, these these bankruptcies Tricolor and First Brands. I've seen
analysis that have suggested that it isn't like some kind
of economic indicator that it says something more about these
specific businesses, which I guess happens. It's possible that like
first Brand is just a bad company, or that Tricolor
was I think the story there is they were selling
(27:32):
to undocumented immigrants, and like that was.
Speaker 3 (27:35):
A that's probably crime loans anyway, right, but that like.
Speaker 5 (27:38):
In other words, it might not indicate some kind of
broader economic right, right, that seems like the question.
Speaker 1 (27:44):
Yeah, but now with prime Land, I think everyone's like, Okay,
this keeps happening. Like you know, once you have three dominoes,
it's like, Okay, the whole pile might be tipping over.
So I think because it keeps on happening, and then
some of the regional banks have made fraudulent loans, and
like people will come on and be like, I think
the whole read banking sector is fine, but with the
government shutdown, like they don't have as much float as
they normally would, and so I think like everything is
(28:07):
sort of compressing around the regional banks and around the
auto lenders, and people are having trouble making their payments,
maybe because they're out of work or because the payments are.
Speaker 4 (28:18):
Just through the roof.
Speaker 1 (28:19):
I mean, I used to sell cars, I used to
sell Hyundais back like in yeah, twenty seventeen, twenty nineteen,
that was before we had the big run up in
interest rates, and it was like crazy if we put
somebody on an eighty four month loan, and now this
much more commonplace for people to have eighty four month
(28:39):
lo you mean.
Speaker 4 (28:39):
A long loan because the interest rate on a long
loan is.
Speaker 1 (28:42):
Lower than right in four how long is eighty seven years?
Speaker 3 (28:45):
Okay?
Speaker 1 (28:46):
And the car depreciates like right when you get it.
Speaker 4 (28:49):
Off the law.
Speaker 5 (28:49):
Yeah, were you selling you would never say that when
you were selling a Hyundai, right, you would be like,
this is gonna this is going to last for ten years, well.
Speaker 1 (28:56):
Ten year, one hundred thousand mile warranty. Yeah, it's tricky.
It's it's really tricky because like I don't know, I
could we could do a separate podcast on my struggles
of selling cars. But yeah, people came in. You need
a car, Like the United States in most parts of
the country does not have public transit, so people have
to have a car to go to work. And so
I dealt with a lot of people who were coming
in and you know, needed to get to college or
(29:18):
they needed to get to their job and they were like,
what can I afford? And the way that you make
it more affordable for them is extending out the payments.
Speaker 3 (29:25):
What do you see as the significance of this for
the economy is this?
Speaker 4 (29:29):
Is this a big deal?
Speaker 3 (29:31):
Not a big deal.
Speaker 1 (29:32):
I mean, it's definitely a point of concern when people
can't make payments. And I think like it's something to
watch because it is sort of the first domino so
fall to use that metaphor again, and I think you
could see people starting to miss the mortgage payments like
sort of how we saw in two thousand and eight.
So it just means that people are struggling. And I
think people were already over extended with cars because the
(29:54):
US does have like a car culture gone on where
you got some We've definitely got a car. Yeah, you
got some tricked out US these that are like real
expensive and the pickup trucks like those things are crazy.
Speaker 2 (30:04):
And ida like pick up like people spend all their money. Yeah, yeah,
the establishing you buy when you come into a little money.
Speaker 1 (30:12):
Yeah, exactly.
Speaker 3 (30:14):
So green light, red light, yellow light for for loan delinquencies.
Speaker 1 (30:17):
I think it's a yellow light, Like I mean, I'm
really watching the sort of private credit situation. Like that's
a two trillion dollar industry. They're pretty exposed.
Speaker 3 (30:25):
To some of this stuff that's rolling off and credits
like private loans.
Speaker 1 (30:29):
Private credit is essentially like pre pe firms, other investment firms, Yes,
lending money to companies. So instead of this company, this.
Speaker 3 (30:40):
Is like on a macro scale as opposed to lending
to regular individuals.
Speaker 1 (30:44):
Yeah, so like if like you're a company and you're like, okay,
I don't necessarily want to borrow money from a bank,
you could go to a private credit firm.
Speaker 5 (30:51):
Well, and with both Tricolor and First Brands that that
was one of the elements. You had banks lending money
to these companies and private credit firms and they weren't
talking to each other. So in addition to the like
economic signal that a subprime model under sends, you have
this Kylo's bringing up the risk that like this spills
over into some kind of financial crisis.
Speaker 1 (31:11):
The cockroaches, as Jamie Dimond for the CEO of JP
Morgan said, and you know, they did lose one hundred
and seventy one million dollars on Tricolor, and so there
was actually like a little bit of drama between him
and one of the private credit CEOs Blue Out, because
Jamie Dimon said, he was like, I'm paraphrasing, but like
once one cockroach comes crawling out, like a bunch of
them are going to come crawling out, Like if you
ever met a family of cockroaches, that is what happens.
(31:33):
And so he was implying that, like, because these auto
companies are starting to go under, there's like more to follow.
And then the Blue Oul CEO is like, hey man,
you're you're complicit too.
Speaker 4 (31:45):
Yeah, you're a cockroach if that's what you're talking.
Speaker 5 (31:48):
Cock I'm glad you brought up Jamie Diamond and cockroaches
because that was our third Yes, third sign it is,
and I'm going to take it as a segue.
Speaker 4 (31:56):
So Jamie Diamond, I believe it was.
Speaker 5 (31:59):
It On Wednesday or tuesdays earlier this week as we're recording,
Jamie Diamond opened up the new headquarters of JP Morgan Chase.
It is spectacular. The word that's used in all of
these stories about it is fortress. It has like restaurants,
there's a club and club, there's.
Speaker 3 (32:16):
All sorts of things only for employees.
Speaker 4 (32:19):
Adar a beach club.
Speaker 3 (32:22):
I don't know, only for employees like you, just like
you and I can't go.
Speaker 4 (32:25):
I think it's a pub, right is it actually a club?
I don't know. But there's like.
Speaker 5 (32:31):
And and Jamie Diamond in talking about this is talking
about it as this kind of like statement thing about
coming back to the office. What a what a believer
he is in return to office, and he's bought this thing,
and kind of like we're seeing this across the economy,
like all of these companies talking about you know, return
(32:53):
to office and the importance of it. And I'm kind
of curious, like to your mind, like what is actually
happening there, because it was only like a few years
ago when all the leading lights actually not Jmie Diamond,
who has been pretty steadfastly about putting butts in seats,
but yeah, most of the leading lights of businesses were
like all about you know, remote work.
Speaker 4 (33:14):
They're all these remote.
Speaker 3 (33:14):
First moment, they were all about remote work.
Speaker 4 (33:17):
And I'm just kind of wondering, like what has happened here?
Speaker 5 (33:19):
Is Is it that like conventional wisdom has gone one
hundred and eighty degrees, or is it a labor market
or is it some combination of those two things.
Speaker 1 (33:26):
I mean, I think companies just want to see what
people are up to.
Speaker 3 (33:30):
Yeah, it's just like a power move.
Speaker 1 (33:31):
Ah yeah, probably right, Like it's I think a lot
of people were concerned about the productivity of workers at home.
I think people were perfectly productive, but yeah, I think
there's like we want everybody here and then it's a
good workforce colling effect. So if people are like I'm
not going to come back to the office, it's like
you're quiet firing.
Speaker 3 (33:51):
This is the term, right, quiet firing. Is that the term?
Speaker 2 (33:54):
Yeah, that that's like a way of like, yeah, instead
of actually firing people, you just put a bunch of
beer years in place.
Speaker 3 (34:00):
Yeah, you put a bunch of things in place.
Speaker 2 (34:02):
And it's like, oh no, you're not fired. You just
have to It's just like Cinderella, like you can go
to the ball. You just have to like clean the
staircase and then oh you even get that all done.
I'm so sorry you can't go to the ball.
Speaker 4 (34:12):
It's like that's yeah.
Speaker 5 (34:14):
There's lots of this going on with like relocations, especially
people who moved to other cities during COVID.
Speaker 2 (34:21):
A bunch of yah, it's like, oh, yeah, you've got
to move here, move back to the big city.
Speaker 5 (34:26):
Yeah, I think this has absolutely nothing to do with productivity.
I think this is one hundred percent about the labor market.
It's just like they can do it, so they're doing it,
And if the labor market were better, tighter, then they
wouldn't be doing it. And I also think the fact
that Jamie Diamond invested a reported three billion dollars in
this headquarters is probably contributing to his desire to have
(34:47):
everyone like fill it up.
Speaker 4 (34:48):
It's like it's like once you.
Speaker 3 (34:50):
He doesn't want to be the only person in the club, once.
Speaker 4 (34:52):
You've paid for this, Like it looks pretty bad if
it's empty.
Speaker 1 (34:55):
Yeah, workers don't have a lot of power right now,
so I think companies are using that as a give
back to the office sort of thing.
Speaker 3 (35:02):
What do you see as the significance of that in
the economy.
Speaker 1 (35:05):
It's interesting, like, you know, we don't have a very
clear picture of the labor market right now because we
don't have the economic data from the government, but like
the Chicago Fed has some real time indicators that they released,
and like their indicators are like the labor market's mostly okay.
But then when you look at like private market data,
it's telling a little bit of a different story like ADP.
You know, there's a job losses there. So I think
(35:29):
like it's just a very confusing labor market and AI
is causing some problems. And then also it's not very
broad like going jobs or healthcare and social services.
Speaker 3 (35:40):
And hiring, Like I feel like that's like.
Speaker 1 (35:42):
The low firing, low hiring.
Speaker 2 (35:44):
Yeah right now at least it's just like still which
is weird except for I guess, all, well, if.
Speaker 1 (35:50):
You're a business and you're dealing with terroriffs, you're dealing
with fiscal policy uncertainty, you know, maybe even you're paying
attention to the FED recuts, like maybe you don't want
to hire people, right.
Speaker 5 (36:00):
You're a worker, like this is not a good time
to change jobs? No, I you know it's And it's
the exact same factor you're talking about with businesses, like
uncertainty makes us not want to move right totally.
Speaker 3 (36:13):
So Kyla green light, yellow light, red light.
Speaker 1 (36:16):
With the liver market, I'm so worried about the labor market. Yeah,
I just like so, Like I do videos and social
media and.
Speaker 3 (36:25):
Which are great. You should check them out. You do
one every day almost look at all different aspects of that. Yeah,
they're really great.
Speaker 1 (36:30):
I get a lot of messages from people and like
my audience is primary young people, and they're they're great,
But like a lot of people are like, Kyla, I
cannot find a job right now, and so I have
like anecdotal data that I think might be influencing me
a bit more. But yeah, I'm I'm like red light
on the labor market.
Speaker 3 (36:46):
Yeah yeah, so you're red light on the job market.
Sounds like, yeah, well, what about the overall economy?
Speaker 1 (36:53):
I don't know. I mean, I'm worried. I'm just worried,
and I hate it. I've been on the road for
the past year and a half. I'm in like six
states over the next four weeks, and I get to
talk to a lot of people from all over the country,
in all parts of the country, and like the one
thing I hear is just like I'm worried about the economy.
Speaker 9 (37:13):
You know.
Speaker 1 (37:13):
I absorb all that, and then I look at the
data that we have and I just see like this
point of concern and like, I'm really worried about the
divergence between the stock market and the economy too, Like
AI is driving so much of economic growth is driving
so much of the stock market, and I just feel
like it is disconnected from the material reality of the
average person.
Speaker 5 (37:33):
Kyla, this was great stick around. We've got one more
segment for you, so Kyla Stacy. This week in Business Week,
we published a cover story about Gavin Newsome.
Speaker 3 (37:49):
This is the like very Kyla lives in California, Yeah,
your governor.
Speaker 5 (37:53):
The point of the story is that there is this
fight which I actually hadn't been paying super close attention to,
over Proposition fifty. This is California's potential plan to add
a bunch of Democratic House seats to like.
Speaker 4 (38:06):
Complete with the Texas Redistrict king.
Speaker 5 (38:09):
And the larger point is basically, like Gavin Newsom, he
has not said he's running for president, but he's definitely
running for president, and I've been thinking about that, and
I've been thinking about that in light of a detail
in this story that I think is that is my
bid for underrated story, which is Gavin Newsom's favorite favorite drink,
which is a bottle of nineteen forty seven Chaval Blanc,
(38:30):
which is a very very very very very very expensive
bottle of wine. And I read this it's really funny
because Gavin Newsom is trying to rebrand himself as like
a regular guy.
Speaker 4 (38:43):
He's got a podcast, he like, hangs out with the brocast.
Speaker 3 (38:46):
Of Wine's not the way to repat himself.
Speaker 5 (38:49):
In the Business Week's story where where the authors Josh
Green and ELAIU Chemischer, they have a quote from one
of Gavin's friends who says, when people say who is Gavin,
I say, he's one of us.
Speaker 4 (39:02):
He's me. If you know Gav like I know him,
you know him with the hat on backwards.
Speaker 5 (39:06):
You know, I'm drinking a beer, hanging out watching ball,
talking sports, you know, talking shit about things.
Speaker 4 (39:11):
Okay, so that's.
Speaker 3 (39:12):
Gavin Newsom said that about himself.
Speaker 4 (39:13):
That's one of his friends.
Speaker 5 (39:14):
And then there's a little nice little parandemical that mentioned
that Gavin Newson's favorite bottle of wine is a forty
seven Chavall Blanc, which costs, like we say, fifteen thousand dollars.
In the story, I mean, I think there's so.
Speaker 3 (39:25):
Many rare wine implies that you've purchased this more than what.
Speaker 5 (39:28):
Okay, So now this is my question, do we think
this is bad in a political candidate or not, because
it seems like obviously very bad to be like, I'm
one of the bros. I just like to have an
EXPENSI bottle one. But I also thought, like, here's Gavin
Newsom last year. This is I think where the detail
comes from talking about his favorite bottle of wine.
Speaker 10 (39:47):
Is there one bottle of wine that you're saving for
a very special occasion?
Speaker 4 (39:52):
I need a year two.
Speaker 10 (39:56):
This is where your political consultants are not going to
like my answer.
Speaker 4 (40:00):
Give an honest answer, but let me not.
Speaker 1 (40:01):
I read that book on Applebee's after we lost.
Speaker 4 (40:04):
One of getting a politician to talk about Oh, of.
Speaker 10 (40:06):
Course Newsom said, you know at nineteen forty seven, which
was the answer to your question.
Speaker 4 (40:11):
Of course he would say that, Okay, so he's being real.
Speaker 3 (40:16):
Well, I'm not sure that that is the way to
appeal to the people. I don't know. I've never had
a twenty thousand dollars bottle of wine.
Speaker 4 (40:22):
I've never had.
Speaker 3 (40:24):
Two hundred dollars bottle of wine.
Speaker 1 (40:27):
I didn't you know wine was that expensive? Why why
is it so expensive?
Speaker 2 (40:33):
Is it just rare to you or scarc It's from
nineteen forty seven years old.
Speaker 4 (40:38):
I actually pulled up a like a article about.
Speaker 1 (40:42):
How many bottles do they have? Like from this year, very.
Speaker 5 (40:47):
Very few and according to Sotheby's, the Southby's website, which
has a write upon this, it's they're basically they say,
there are vanishingly few bottles left in the world, and
only sixteen the chateau itself.
Speaker 2 (41:01):
I just feel like, remember there was like that Jeff
Fox where they used to have that whole thing, where's like,
you know you're a redneck when you know he had
this whole thing. I feel like there is some equivalent
of like, you know you are not one of the
people when your favorite wine costs first of all, when
your favorite wine is described by Sotheby's, like when your
(41:21):
favorite drink whoa.
Speaker 5 (41:23):
And I guess this is like part of the political
moment we're in, like walk a line between between being
relatable and his authentic self.
Speaker 1 (41:34):
I don't know if we can like beat up on
him too much, like comparatively to what the president has earned,
you know, I think it's a billion dollars in crypto
or something like that.
Speaker 3 (41:45):
That's true, you know, and jet I just I think
we got to like.
Speaker 1 (41:49):
Look at the policies and decide from there. I don't
think it's great. I didn't even know whine could be
that expensive. But you know, maybe he sounds like he's
in business.
Speaker 5 (42:01):
I think that I actually like felt like this was
a very damaging detail until I watched that video and.
Speaker 4 (42:08):
Then I thought, no, he's just being who he is
and that and like actually.
Speaker 5 (42:12):
Maybe in our moment that is more valuable than the
like you know, old saw about He's just a regular guy,
you know you have a beer with. Although there's something
kind of clumsy about the backwards baseball.
Speaker 1 (42:25):
I mean that that's not a good depiction of like
what every day.
Speaker 4 (42:29):
When I relaxed, I turned the cap around.
Speaker 3 (42:32):
That's how you know, it's like after hours.
Speaker 1 (42:34):
Yeah, in his business, Oh my goodness, the APR friend
should do some work with that.
Speaker 2 (42:46):
Our show is produced by Stacy Wong. Magnus Henrickson is
our supervising producer, and.
Speaker 3 (42:50):
Amy Kean is our executive producer.
Speaker 2 (42:53):
Sam Rogich handle's engineering, and Dave Purcell fact checks, Sage
Bauman heads Bloomber podcast special thanks to Jeff Muscus, Julia.
Speaker 3 (43:01):
Rupin, and Mario Lank.
Speaker 2 (43:02):
If you have a minute, please rate and review the show.
It means a lot to us, and if you have
a story that should be our business, email us at
everybody's at Bloomberg dot net. That is, everybody's with ans
at Bloomberg dot net.
Speaker 3 (43:16):
We would love to hear from you, and thank you
very much for listening. We will see you next week.
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