Make Me Smart January 12, 2022 transcript

Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.

Marielle Segarra: Yeah, I went to the audiologist recently and she was like, “You have perfect ears.: Like she kept saying I had perfect ears. And I was like, you’re just like complimenting me now, like, please. Tell me more.

Kai Ryssdal: Yes, cause that’s what doctors need to do. …  Hey everybody. I’m calling Kai Ryssdal. Welcome back to Make Me Smart, making today make sense, while we brag about ourselves a little bit on this podcast is what we do. Good to have you here.

Marielle Segarra: Yeah, I’m Marielle Segarra. I have perfect hearing for anyone who wants to know. And I am also a super smeller. It is what do you want to know Wednesday. And that means it’s time for us to answer questions from listeners. Today, we’re kicking things off with a question from Greg in California. He writes, “For several months, the Dow and the NASDAQ have been moving in opposition to each other. If the Dow was up, the NASDAQ is down. I don’t recall a period like that before. Is it coincidence? Is it an indicator?”

Kai Ryssdal: Well, so look, first of all, it’s good question, right? Because it’s always good to know what’s going on in the markets, even if they are not the economy. And most of the time, the three major indices and also the Russell 2000. If you throw that in there as well, they move mostly in tandem, and I’m talking over you know, over time, but on any given day, they can go different directions. And here’s what’s going on, they’re completely different indices. First of all, the NASDAQ Composite has like 3000 something companies in it, a lot of tech heavy stuff, right? Google, those other big tech company that you know, and love and maybe hate. And it is a market cap weighted index, that is to say, how much each company is worth on the open market. And remember, market capitalization is outstanding shares times the share price. That depends on their influence in the market. Right. So companies that are worth more move that market more, the Dow is 30 lousy companies, right often called the blue chips to represent different sectors of  the economy, it’s historically based, it’s been around for 125, six something years. And it is a price weighted index that is to say, the companies with the higher share price, move that index more. Home Depot, McDonald’s, you know, some of them, they do different things. They are designed to different things. And so if they move differently on a day-to-day basis, that’s fine. Usually over time, you will find they move mostly together that in the S&P and the Russell as well. So there you go. That’s today’s market tutorial.

Marielle Segarra: So there’s no big like take home message or meaning behind the fact that they’re moving in opposite directions.

Kai Ryssdal: No, no, I would not be alarmed if over you know, even a week or a month or longer, they move differently day-to-day, but over time, the general trend in markets, they all they all mostly move together.

Marielle Segarra: Gotcha.

Kai Ryssdal: There you go. All right. Let’s see voice memo. Oh, about 5G from Bryon, in Arlington, Virginia.

Bryon: I have a question about the story that 5G cell service may interfere with airplanes landing. Is the interference real and how does it work? And does it impact all airplanes or only some of them? So anyway, I’m wondering if you can get into that a little bit. Thank you very much.

Marielle Segarra: Yeah, so to answer Bryon’s first question, yeah, the interference is real. And for those who may not have heard Verizon and AT&T had plans to roll out expanded 5G wireless service last week, and then that rollout was delayed because the FAA said, the band of radio spectrum that those carriers had bought was too close to the band that’s used by radio altimeters in thousands of planes used across the country. First of all, Kai, can you tell me am I saying radio altimeters correctly?

Kai Ryssdal: It’s alTIMeters.

Marielle Segarra: AlTIMeters!

Kai Ryssdal:  Right. And the thing you need to know about this is … in airplanes. Aircrafts have two kinds of altimeters in them. One measures barometric altitude, that is to say based on the pressure of where the airplane is right because the closer you are to the surface of the Earth, the higher the atmospheric pressure is. If you go to altitude, it is less right. So you have a barometric altimeter which measures pressure based on where you are in the air column, right, up and down. And that’s just absolute from mean sea level. So that will tell you how far above the mean sea level you are in that area. And barometric altimeter settings vary. I don’t want to get too far down in the weeds but you have to actually set that in the airplane based on where you are and what the weather is. The other instrumentation that aircraft have that is at issue here are what are called radio altimeter, sometimes radar altimeters, and the way they work is that they bounce radio waves down from the aircraft to the surface, and it will tell you how far you are physically above the nearest Earth. So if you look straight – If you’re on top of Mount Everest and you’re flying it 31,000 feet and you shoot a beam straight down and Mount Everest is 29,000 feet tall, it’s going to show you 2000 feet above terrain, right? And,  that instrument – and if you’re, you know, at LAX, and you’re at 2000 feet above terrain, you’re you know, 2000 feet above the dirt. That matters when you’re approaching and near land, which is to say, on takeoff and more importantly, landing. And that’s why the airlines and the FAA is concerned about the sale of the 5G spectrum, because those radar altimeter frequencies are close to the 5G frequencies. And that’s what matters. Sorry for all that information there.

Marielle Segarra: So is this dangerous? That’s what I was wondering, yeah.

Kai Ryssdal: Yeah. So look, if your radar altimeter gets jammed by frequencies that are in use for 5G, if you’re near LAX, or airports in the Northeast, where the radio spectrum is really crowded, that can be a really, really, really big deal. There are ways that you can technologically get around that, you can put filters on aircraft so that they will filter out those things. But the question is, what’s the safety factor? What’s the margin of error? How willing are you to – not put at risk – but to narrow the safety margin of aircraft in some of those crowded airspace and it’s a real deal. There’s a little tiny part of me that says, oh, man, you remember when you couldn’t use your, you know, cell phone to surf the web when the aircraft was taxiing. And you had to close it as soon as, you know, the aircraft doors closed. And that turned out to be nothing. I think this is more substantive. But there are technological ways around it. And that’s what they will wind up finding, I’m sure. I’m completely sure.

Marielle Segarra:  So I’m wondering like, you know, where they are right now, because they say the FAA  has said: Verizon and ATT need to pause this rollout. But they also announced these buffer zones, around 50 airports in the US, where the altimeter is may experienced interference, like LAX, LaGuardia, O’Hare. So is that already the case then, despite like, even though the rollout hasn’t happened, that if you’re flying into those places, like on your flights, there might be…

Kai Ryssdal: 5Gs not really out there yet, right. So it’s not really risk yet. The risk comes with the 5G rollout. And that’s, and that’s why, you know, there, there are these buffer zones around these really big and crowded and heavily instrumented airports, right? Because the reason you need it is when you’re flying on instruments, and you can’t actually – you know, you’re flying to LA most of the time, and you can see the ground and you’re fine. But sometimes there’s fog, and sometimes on the East Coast, there’s snow, or up in Chicago, right? And it can get really tricky. And that’s why you need your instruments, not the least instrument of which is the one that tells you where you are, as you approach the ground.

Marielle Segarra: It’s very helpful to have a pilot for this question.

Kai Ryssdal: I’m happy to be of service.

Marielle Segarra: Okay, well, this next question is also going to be kind of geared towards you.

Rachel: This is Rachel, calling from Boston, Massachusetts. I was really confused with this number had a Boston area code. But anyway, I was wondering about, you know what the deal is with bonds. I know I got one when I was a child, from my grandfather that was appreciated in like 10 years. And I cashed it out. And I was like, “Cool money!” because I was probably 13 years old. But that’s the end of my knowledge of bonds. So if you can get into that, that would be great. Thank you.

Kai Ryssdal: Wow. All right. So I’ll try to do it reasonably quickly. But first, is that 508 number, is 508 a Boston area code?

Marielle Segarra: So actually, I can answer this part because I asked Bridget Bodner. Like why is it a Boston area code? And it’s apparently just Google Voice thing.  Like you can pick a random number. And that’s the one. I mean, I chose the New York area code for my Google Voice number, but you can also just randomly have them generated.

Kai Ryssdal: Do people still use Google Voice?

Marielle Segarra: Oh, yeah.

Kai Ryssdal: I guess so.

Marielle Segarra: If you don’t want people knowing your actual like, cell phone number, you can have your Google Voice foward to it.

Kai Ryssdal: Huh.

Marielle Segarra: But then people know, you gave them the Google Voice number because like it when it answers, it’s like, “This is the Google Voice number for Marielle Segarra. You know, like, yeah.

Kai Ryssdal: Yeah, yeah. Huh. Learn something new every day on this podcast, right? So bonds. Well, look, it’s a 15 minute podcast, of which we’ve got like five minutes left. But the very short version of bonds is this. Companies and governments, whether they be the United States government or the government of Japan, or the government of your local county or sometimes your school district, whatever, they need to borrow money to operate. And the way they do that, is they sell these things called bonds. The most popular one that we talked about on Marketplace all the time it’s the benchmark US Treasury bond, the 10 year treasury note, right. But you know, there are overnight bond, there are notes and all of these things that go out to 30 years from the government, and you can buy corporate bonds at whatever denomination, whatever, right? The basic functionality is this. They say, “we want to sell you a bond,” and you say, “Okay, here’s $100.” And they give you a piece of paper that says, “you have lent us $100.” And at the term of this bond at maturity, whether it’s 10 years or 30 years, or whenever, we will give you $100 plus X percent interest rate. Today, the interest on a 10 year treasury note is 1.74%. So if you buy that 10 year Treasury at 100 bucks, in 10 years, when that bond matures, you will get $100 plus 1.74% compounded over a bunch of time. That’s the basic functionality. Okay? Bonds do trade, you can buy bond mutual funds, you can buy bond – there are 1000 different ways to invest in bonds, they can be really tricky. They’re not for the average Mom and Pop investor, unless it’s grandpa buying you or you buying for yourself to hold over a period of time these securities because they’re incredibly safe, right? Government bonds specifically are incredibly safe. If you lend the government 100 bucks, you’re gonna get your money back plus all that interest. same cannot be said for all corporate debt. Let’s be clear, there are junk bonds, right, which pay higher interest the more risk you bear the longer time that you have that the government holds your money, the more interest they have to pay. But fundamentally, it’s an IOU. Here’s 100 bucks, we will owe you 100 bucks plus 1.74% over 10 years. That’s what it is. That’s it. That’s bonds in like 90 seconds. Yeah, that’s great. Super helpful. I feel like you should just bottle that, and play it on repeat.  That’s right. All right, one last one. Here we go. Max in Santa Cruz, go.

Max: I’ve just begun my first full time job search. And I’ve noticed an annoying trend. Some companies don’t list any kind of salary information in their job postings. How is this acceptable? It seems like just a sneaky tactic to underpay entry level workers. Please make me smart on this. Thanks.

Marielle Segarra: Yeah, it is sneaky, huh? Yeah, this is very true, it happens. Because basically, because employers can. Most are not required to post salary information in their job listings. That is changing in some places, like New York City Council just voted to pass a bill that would require employers with more than four workers to have in the job listings the salary range. And the mayor, the new mayor has until mid-Jan,  two days from now to veto that or approve it. And then some other states have laws like this, like in Nevada, in California. They’re all a little different. But yeah, I mean, there’s a thought that this could go a long way to close the pay gap, especially for women and people of color. And because studies have found that in states that outlaw pay secrecy, wage gaps are reduced. And specifically, there was one from 2015 that dealt with the wage gap for women. Yeah, cuz I mean, think about it, right? Like, if you don’t know what the salary range is, you’re gonna take a guess. And I don’t know, I guess studies have shown that like, men tend to ask for more. And also if you have –

Kai Ryssdal: Oh yeah, exactly, men – go ahead, sorry.

Marielle Segarra: No, if you have already been discriminated against in your salary, and so like, what you’re coming in with is lower than what a man might be coming in with, like, you’re just gonna not know to ask for that much. You’re gonna not know how much people are even getting.

Kai Ryssdal: Yeah, yeah.

Marielle Segarra: That’s happened to me.

Kai Ryssdal:  It’s all about asymmetric information, right? Because, yeah, I’m sure it’s happened to almost – well, I’m not gonna say almost all, but a whole lot of women out there, I’m sure have had this exact thing happen to them. And it’s asymmetrical information, right? The company has all kinds of salary information and data. And you as the job seeker, or the successful job seeker, have limited information. And so this is just an attempt to transparency and getting rid of some of those inequities in the workplace, which affect, you know, by gender and race and all those things. Yeah.

Marielle Segarra: And I think it actually saves people like a lot of time, because – if you post it. Because like, there have been jobs before that I thought looked interesting. And then you go through some of the interview process, they don’t want to tell you what they pay until the very end, and you’re like, that’s less than I make now. Like, what a waste of time, you know. So I think it’s helpful to have a range like, what are we talking about here?

Kai Ryssdal: Yeah, totally. No, that’s absolutely right. Pay transparencies is huge deal. Just, it’s a huge deal. Okay, so we’re done on Wednesday. Back tomorrow for Hollowed Out Shell Thursday. In the meanwhile, send us your questions. Let’s build that bank up after the holidays, shall we? makemesmart@marketplace.org or voicemail works, which I now know was a Boston area code 508-827-6278. 508-UB-SMART. Google Voice how about that. Today’s episode of this podcast Make Me Smart was produced by Marissa Cabrera and Marque Green. Charlton Thorp engineered, our intern is Tiffany Bui.

Marielle Segarra: Ben Tolliday and Daniel Ramirez, who I miss very much, composed our theme music and our senior producer is Bridget Bodnar. I want to be clear I miss both Ben Tolliday and Daniel Ramirez. Not just Daniel Ramirez.

Kai Ryssdal: One does wonder if they listen. I imagine we’d hear about it if they did.

Marielle Segarra: Oh, probably not. Sigh.

Kai Ryssdal:  Back tomorrow. Back tomorrow.