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Chapter 1: How does military conflict affect global cargo routes?
I'm just going to go ahead and say that risk is still macroeconomic worry number one. From American Public Media, this is Marketplace. In Los Angeles, I'm Kyle Rizzo. It is Tuesday. Today, this one is the 3rd of March. Good as always to have you along, everybody.
We are four days into things in the Middle East, and the only thing that is clear is that there are a whole lot of things that aren't clear. So we're going to talk about that and what that means economy-wise. Greg Ip is at The Wall Street Journal. He also joins us on the occasional Friday. Hey, Greg.
Hey, Kyle. How are you?
I'm all right, thanks. Test my premise, risk. What is your assessment of the risk tolerance, the risk atmosphere out there?
Well, you wake up to a new war in the Middle East and obviously people are worried and that adds to the risk in the whole geopolitical economic situation. And this comes at a time when people are already kind of on edge about like the AI bubble bursting or maybe everybody losing their jobs to AI, still some inflation pressure out there. So it kind of adds to an overall mix of anxiety out there.
Now, all that said, I would say that the reaction in the two days of trading we've had since the war began has been muted. On Monday, oil rose, but it didn't rise as much as a lot of analysts had expected. Stocks fell off, sold off, but at the end of the day, mostly unchanged. Tuesday, we wake up and it's almost like a delayed reaction. It's just, oh, wait a minute, there's a war going on.
Oil goes up some more and stocks fell. But even so, you know, I've been through a lot of these things over the years. Right now, it still feels like a muted reaction by the markets to what's going on in Iran.
Talk to me about the dollar and bonds, would you? Because the dollar has been rallying. Bond yields are going up, which means people are selling bonds. Explain all that.
Sure thing. So let's talk about the bonds part. That's a little bit easier to explain. So when people worry about inflation, for example, because oil prices are going up, they worry that the Federal Reserve will not be able to lower interest rates as much if interest rates aren't going to go down. That means bond yields are probably supposed to be higher than they already are.
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Chapter 2: What are the implications of air cargo demand in conflict zones?
How to phrase this. What do you imagine the president's pain point to be vis-a-vis the markets? Is he looking at stocks? Is he looking at bond yields? Do you think there's a thing that's going to make him go, you know what, let's get out of this in a hurry?
You know, I think all those things are going to like bear on that, Kai. I think the president goes into this war on the premise that within four to six weeks, he can achieve most of his aims, which is really basically the capitulation of the regime in Iran to his key demands, stopping nuclear enrichment, stopping ballistic missile development, stopping support for proxies.
And so I suppose I would assume that he steeled himself there. for some pain over that four to five weeks. I think the thing is, if the four or five weeks elapse and he's not getting closer to his goals and the pain continues to build, that presents him with some really tough choices. Because this is, as you say, a president that cares a lot about the stock market. He's been
urging the Federal Reserve to cut interest rates, claiming inflation is not a problem. So if the war does not quickly start delivering the goals that he has set out for himself in the next few weeks, it does start to really elevate his pain points.
30 seconds on this next answer, Greg, and then we've got to go. Four to six weeks sounds like a very long time as we sit here on day four.
It really does, and a lot can happen. Now, on the one hand, you might say, well, the Iranians, they have a lot of missiles. They have a lot of drones. They can hold out for a long time. This conflict has been going on at one level or another for 50 years. They can certainly hold out a little bit longer. Yeah. On the other hand, a lot of things are going against them.
Their population is angry at them. Their defenses have been shown to be very weak and so forth. I think the president is hoping that he maybe ends up in a Venezuela-like situation where the regime stays in place, but basically agrees to start behaving in a less confrontational way. Will that happen? I don't know. As you said, these are geopolitics. Nobody should be too confident.
Absolutely not. Greg Yip of The Wall Street Journal, occasionally with us on a Friday. Thanks, Greg.
Thanks for having me.
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Chapter 3: How do geopolitical tensions influence oil prices and market reactions?
So it's much easier. It's a lot shorter transit time. Granted, the cost is more significant.
Freed says shipping by air costs anywhere from five to ten times the amount of shipping by water. Still, companies have become increasingly willing to cough up the extra cash. Martin Dresner, a professor of supply chain management at the University of Maryland, says one reason has been fear about global conflicts.
You know, there's issues in transiting through the Suez Canal because of some hostilities, you know, with the rebel groups in Yemen. Previous to that, there's been pirates.
If conflict happens, it's much easier and less time intensive to reroute cargo in the air than it is to, say, force a ship the long way around Africa.
Plus, it's a safer option than ocean shipping.
But no method is perfect. Limited airspace means limited cargo capacity. And Brian Burke, chief commercial officer at Seco Logistics, says carriers are already dealing with messy routes.
You know, the war in Ukraine has effectively shut off Russian airspace. And so the same flights that now fly have to fly a longer route.
There is a limit to how many planes can occupy any given route each day. And carriers will demand higher rates.
because essentially it becomes like surge pricing.
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Chapter 4: What are the current trends in retail earnings and consumer behavior?
Finished 22,516. The S&P 500 dipped 64 points, 0.9%. 68 and 16. Believe me when I tell you It was way worse early in the going. Daniel Ackerman was just talking about retail sales. Target reported better than expected profit last quarter, jumped six and seven tenths of one percent. Best Buy missed quarterly profit expectations. Also a lackluster holiday season.
But the electronics retailer still beat earnings estimates for the past year. Best Buy climbed seven percent. America's second biggest retailer, second out of Amazon. Walmart rose 0.6%. Bonds down, yield on the 10-year T-note up 4.06%. You're listening to Marketplace. This is Marketplace. I'm Kai Risdahl. We're going to get the latest report on light vehicle sales.
That's cars and SUVs and pickups. It's coming from the Bureau of Economic Analysis tomorrow. Best guesses are that February will have been a bit better than January was. Auto sales have been, in a word, volatile the past couple of years. COVID-induced shortages, which of course you remember, followed by surging demand.
And then tariffs stopped by people rushing to buy before EV tax incentives went away. So, Marketplace's Mitchell Hartman takes a look now at what's in store for motor vehicle sales in the 26-27 model year.
Auto sales flagged late last year and into January.
But, says Erin Keating at Cox Automotive, So far, February sales for manufacturers look pretty good.
Now, in the first week of March, consumers are seeing war in the headlines.
We've just had a big weekend of disruption. Consumer sentiment has continued to be volatile and sags quite a bit with phenomenon we're calling, and other people have called, uncertainty fatigue.
That might give consumers pause before buying a new car or pickup, the average price of which topped $50,000 late last year for the first time ever. Though so far, price alone hasn't dissuaded many buyers, says Carl Brouwer at iccars.com. I've been amazed at the level of new vehicle sales. Vehicles have gotten extremely expensive. and people keep buying them in spite of that.
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Chapter 5: How are vehicle sales impacted by economic uncertainty?
Sarah and Adam Hacktel are picking her up from Ouray Family Child Care, located in a little town down near Telluride. When did she start here?
Today.
Today's her first day? Yes. How did it go?
Great, yeah. It went wonderful, yeah.
Baby Daisy got a spot here for the winter. Adam remembers what things were like before they found this place, back when their older son was young.
A lot of driving.
With few full-time options close by, these parents would spend nearly three hours a day getting their son to and from daycare. And this is not unusual. Survey data shows that for four out of five parents here, child care falls short, especially for babies and toddlers.
It's unaffordable to live here, so you have to work full-time. Or we have to, at least. I don't want to speak for everybody, but without child care, that's not possible, and so we'd have to move somewhere else.
Last year, working families got some relief when this daycare and another opened just down the street from each other in a new affordable housing development. What makes this different from regular in-home daycare is that the houses were built specifically for it and pre-licensed. with the necessary fences, ramps, and square footage.
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Chapter 6: What is the conflict between Compass and Zillow about?
Can you say bye, friends?
Bye! McChristian shares some good news. We have a full-time spot open, so I wanted to offer it to you first. A full-time spot for baby Daisy, starting in the spring.
It took Daisy one day to win you over that much? Yeah.
Amazing news, they say. Bye, Melissa. See you tomorrow. So while this experiment hasn't completely solved the area's child care shortage, this family is driving home happy. In Yurei, I'm Leigh Patterson for Marketplace.
Our parting words on the program yesterday were about how everything that's going on right now is affecting the housing market. To wit, pushing the average 30-year fixed rate mortgage back above 6%. If you pull back a bit, though, there is even more that's complicating the world of home buying today.
We've gotten used to being able to find pretty much every home for sale we might be interested in with a quick Google search and then a bunch of brokerage websites, right? Last week, though, Compass, the biggest real estate brokerage in this country, said it's going to be now showing exclusive home listings only on Redfin.
This is the latest development in an ongoing battle over digital home listing, specifically between Compass and Redfin's competitor, Zillow. James Rodriguez wrote about it for Business Insider. Welcome to the program. Thanks so much for having me. So this thing, this Zillow ban and all these lawsuits, what in like 45 seconds is going on here?
So this is really a fight for control of real estate listings, and it could determine where you find your next home, whether it ever appears on Zillow at all. And you have on one side the country's largest brokerage, Compass, which has been essentially advertising homes in some places but not others.
It's been advertising homes on its own website or in private databases but not sharing them more widely, at least initially. And you have Zillow saying, hey, if a home is advertised somewhere online – It should be everywhere. And so they've instituted these rules that effectively could ban some listings if they're not advertised properly.
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Chapter 7: How do exclusive listings affect home buyers and sellers?
You might have to consider... You know, to what extent are they able to unlock the marketplace for me? So at the end of the day, it could be a more complicated home search.
One does imagine that this agglomeration of real estate brokerages and companies, right? I mean, Compass owns a bunch. Zillow is huge. It all just becomes power and wealth and market power concentrated in the hands of one, maybe two giant real estate companies.
I think that's the thing you have to look at here is that every company, they present these moral cases for homes should be listed everywhere or sellers should have the choice of where to list their homes. Every company involved in this fight has a huge financial stake in this. As one longtime real estate executive told me, listings are fuel.
And so this fight for listings is really at the heart of the real estate market and it could determine what kind of market do we have? Is it a place where you can go to any website and get a pretty good feel for what's out there?
Or are you really going to have to be a lot more careful about your search and think about who your agent is, what websites you're visiting, what other alternative methods you need to pursue to find your dream home? It could just be a lot more complicated.
Right. James Rodriguez at Business Insider. James, thanks so much. Appreciate your time.
Thank you.
All right, we've got to go. Too much news, not enough time. Jordan Mangy, Zoniel Maharaj, Janet Wynn, Olga Oxman, and Virginia K. Smith are the digital team around here, part of it. Anyway, I'm Kai Risdell. We will see you tomorrow. This is APM.
Hey, David Brancaccio here. I hope you're well and that your passport is up to date because I am hosting a trip to Italy this fall, and you, you are invited. Stay at a world-class Tuscan villa and step into the world of the Medici, the formidable family whose influence and power helped give rise to the Renaissance and the art we still celebrate today, and not to mention the banking system.
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