Chapter 1: Why are farmers struggling to plant their crops this year?
Oh, for a calmer time, huh? From American Public Media, this is Marketplace. In Los Angeles, I'm Kai Rizal. It is Friday today. This one is the 27th of March. Good as always to have you along, everybody. One does have a certain yearning, does one not, for the days and weeks when the news of this economy was not this?
These are obviously not, though, the days and weeks we are living in, so we are going to make sense of it as best we can. David Gurra is at Bloomberg. Courtney Brown is at Axios.
Chapter 2: How has the war impacted the economic landscape?
Hey, you two. Hey, Kai.
Hey, Kai.
Hey.
Courtney, let me begin with you, and I'll begin on Monday of this week on this program. I said, and I believe I'm quoting myself here, the markets are an idiot. They were falling for every head fake coming out of the White House and coming out of the president and his advisers about what was going to happen with this war and what the economic impacts were going to be.
And I wonder if five days later now, four days later on a Friday afternoon, given today's action, maybe they're wising up.
Which markets were you talking about? Were you excluding the bond market from this?
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Chapter 3: What does the latest consumer sentiment survey reveal?
Well, wait, wait, wait. Hang on. We're going to get to bonds in a minute. I want to talk like equities and oil and all that. Now I'm coming back to bonds. So go with the equities and oil.
I mean, I think that's right. I think we saw some equities under pressure today. I think the stock market is kind of like that very hyper college student that's not exactly focused on what's happening right in front of them. I think that...
Chapter 4: What challenges are farmers facing with rising input costs?
You know, there is a war going on, and every economist I talk to and have talked to this week, the big question is, how long is this conflict going to last? Is it going to widen? Is it going to escalate? What are going to be the implications for inflation?
I mean, there's concerns out there, and depending on which day you're looking at the stock market, you may or may not see those concerns reflected in equities, right?
Yeah.
Absolutely. So, David, let me just point out here, and this is not my observation, it's pretty much everybody's, lots of talk about an oil shock and what that's going to mean. It has to be said, this is not an oil shock, it is an everything shock, yes?
Yes, absolutely.
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Chapter 5: How do tariffs affect farmers' profitability?
And I was talking with Amos Hochstein, who is an advisor to President Biden on economic issues, energy issues, and he said, the market is pricing in risk at this moment, but they haven't priced in the kind of disruption that we're getting, that we really haven't seen something like this in an extremely... long period of time.
You know, I think about the move that we saw in the equity markets today. I think it probably stems from the fact that you've had a president who has felt that he has a lot of determinism over the course of this conflict. He thinks that he can set a deadline. He thinks that he can end this war when he wants to end this war. We even saw that pronouncement earlier this week.
He was going to extend a pause on attacking power plants. Lo, Israel went ahead and did that today. I think it's an indication that there are limits to what he's able to do in terms of shaping the trajectory of this conflict.
Chapter 6: What insights does the New York City artist share about the gig economy?
And while he's been somewhat successful, I think, kind of managing the equity markets over the course of the first few weeks of this conflict, there's a reaction function that he has been unable to manage, and that's oil prices and gas prices. And that's only gone in one direction since the start of this war. And so you're right. It's trickling across the economy.
There are, of course, the first-order effects. We see those at the gas pump, if you're pumping gas or diesel. But then there are all these other effects that I think everyone is now really having to reckon with, the fact that transportation costs are going to go up, capital costs for businesses are going to go up, fertilizer is going to be more expensive.
Consumer spending is bound to be impacted by all of this, and we're going to see kind of broader supply chain issues. So I think that there is, if not a reckoning at this point, a recognition of the fact that this duration variable is really something that's going to be squishier and squishier as all of this goes on, and that that's bound to have this adverse effect on markets and on all of us.
Yeah.
Chapter 7: What are the implications of rising inflation on consumer behavior?
And honestly, I forget whether it was Sun Tzu or Clausewitz, but one of them said, you know, the best strategy in the world never survives first contact with the enemy. And the Iranians get a vote here on all of these things that are going to happen. Courtney Brown, the bond market. I want you to explain to me why you think the bond market is a little different.
And you need to define a term premium, please.
Okay, why I think the bond market is different. I've always just respected the bond market more because I just think bond investors are smarter. I hope that's a satisfying answer. I think they... Everyone can sell the equity investors and send their letters to Courtney.
Yeah, that's right.
Chapter 8: How can we assess the long-term effects of the current economic situation?
Letters at marketplace.org.
Angry mail coming my way. No, I think there are considerations in the long term that I think play out in the bond market in a different way than in the stock market. I think this war is a perfect example of that. We are seeing that yields are going up and for two reasons, right?
There is kind of this uptick in inflation expectations, but there's also something called the term premium, which basically means that Bond investors are demanding more payment for, you know, the the the, you know, the the the opportunity to lend the government money. And so I think what's interesting this week is that there seems to be concerns about the government's fiscal situation.
I mean, there are always concerns, but now there seems to be more concerns about how much money the government is going to have to spend on this war. And we weren't in a great fiscal situation before. And is that fiscal situation going to get worse? And I think That's the big question on bond investors' mind these days.
Right. So, David, I'm going to play a piece of tape of the president here in just a second, and I will preface it by saying, in this very specific case, you do have to hand it to the president. Here's that tape.
I thought, frankly, I thought the oil prices would go up more, and I thought the stock market would go down more. The guy is right, right?
Yeah.
Yes, he is right. But I don't think that we've seen the end of this story. So maybe he thought that in the near term. But again, I think as people get a grasp of sort of what's happening here and the kind of displacement that's taking place, we're bound to see more of a reaction than maybe he is kind of cheerfully acknowledging there in those comments.
Look, I think we saw from a handful of policymakers over the course of this week all around the world, them reckoning with the fact that this is not a war that's going to be measured in weeks or despite what the Secretary of State said today when he was in Europe, it does feel like this is going to last a lot longer.
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