Make Me Smart June 6, 2024 Transcript

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Kimberly Adams 

Sorry, I was stretching to reach the volume knob.

Kai Ryssdal 

It’s all good. Hey everybody, I’m Kai Ryssdal. Welcome back to Make Me Smart, where we make today make sense.

Kimberly Adams 

And I’m Kimberly Adams. Thanks everybody for joining us on this Thursday, June the sixth.

Kai Ryssdal 

Big stories of the week is what we do on Thursdays. Some audio clips lined up, first one comes to us from the head of the European Central Bank, Christine Lagarde. Here you go.

Christine Lagarde

“The governing council today decided to lower the three key ECB interest rates by 25 basis points. Based on our updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission, it is now appropriate to moderate the degree of monetary policy restriction after nine months of holding rates steady.”

Kai Ryssdal 

Madame Lagarde, is that you, Kimberly?  Or am I doing this one?

Kimberly Adams 

No, you know monetary policy. That’s all you.

Kai Ryssdal 

So, Christine Lagarde there. The former head of the International Monetary Fund, now the head, also French finance minister at one point, years ago. Now head of the European Central Bank. They are cutting interest rates. They have beaten the Fed to it because the situation over there is just a little bit different. The first rate cut from the ECB in five years, almost. And it’s been steady, as you heard Lagarde say, for nine months. The interesting part is that in almost this many words, she said, look, this is a one off. We’re not talking about future rate cuts. We’re not talking about anything else. We’re just doing this. I should point out here, that Canada yesterday cut its key interest rate too. Fed meets on the 11th and 12th. Tuesday, Wednesday next, so we’ll see what Jay Powell and the gang have to say.

Kimberly Adams 

Can you say more about what’s different in Europe compared to our economy?

Kai Ryssdal 

Yeah, our economy is still by virtually every measure doing better than the European economy, right? The European economy has had a much tougher time coming back from first of all inflation. Second of all, just economic growth. We are, we the United States is growing leaps and bounds better than any developed economy in the world. And so, Powell and the gang are very leery of cutting rates for fear that that economic growth will expand, will take off again, and thus prices with it as well. Lagarde can sort of see that things are sluggish-ish in Europe, and she wants to sort of get ahead of that.

Kimberly Adams 

What do you think of this argument, and I can’t even remember where I read it, that one of the reasons the interest rate hikes are taking longer to have an impact in the US versus Europe is because of our 30-year mortgages. And so, we are less, many people are less reactive to those interest rate hikes in the way that other parts of Europe are.

Kai Ryssdal 

Yeah, so, the United States is the really the only country in the world that does this whole 30-year mortgage thing. Europeans do it completely differently, which is a whole story in and of itself. I don’t know the answer to the question. Look, I mean, you know, real estate is the most obviously, interest rate sensitive sector in any given economy. And the fact now that, I just thought today actually, that the 30 years at 6.99%. So, it’s under 7%. I don’t know. May well be. I don’t know enough about 7.

Kimberly Adams 

Okay, we should look into that. All right. Moving on. This next clip is related to a story we talked about yesterday: New York Governor Kathy Hochul’s last minute decision to delay New York City’s congestion pricing plan indefinitely. Let’s hear what one New York City resident had to say about it.

Austin Celestin

“She’s trying to cater to a group of people that would never vote for her, were never going to vote for her, regardless of whether or not she supported this. And she’s going to at the expense of people who would vote for her.”

Kimberly Adams 

That was New York City resident Austin Celestin. He was talking with a reporter for ABC7 New York about the political motives behind Hochul’s move to block congestion pricing after she previously, as we discussed yesterday, supported the plan. Now yesterday I said it would be interesting to see what kind of donations Hochul received in the months prior to making this decision. And it turns out, we do not have to wait. Shout out to Pete on Mastodon for flagging this for me. The Lever reported that Hochul received like $36,000 from lobbyists for state auto dealers, half of which came from a lobbying group that is directly opposed to congestion pricing. And The Lever was reporting that more money from that group is likely on the way.

Kai Ryssdal 

I saw a take on Twitter yesterday that the betting is going to be reversed after the November election. So, we’ll see. Who knows? Okay, next one. It’s the behemoth in artificial intelligence chipmaking. Here we go.

Gunjan Banerji

“We are seeing a true mania in Nvidia. I mean, take a look. The images that we’re seeing on social media. The CEO is signing shirts. My friends are texting me about the stock. My mom is texting me about the stock, and there’s a true mania out there.”

Kai Ryssdal 

It is amazeballs. That was Gunjan Banerji from the Wall Street Journal talking on CNBC yesterday about Nvidia. Market cap yesterday $3.012 trillion, puts it above Apple if you’re keeping score. Of course, market cap is just price per share times the number of outstanding shares. Interesting metric and means some things, but it’s not oh my god, you know. Anyway, $3 trillion dollars is a lot of money. And they’re going to keep on growing. It’s kind of remarkable. I think there is a share split coming like a 10-for-1 share split coming later this summer. So, that could be partially why people are piling in. Don’t know. Also, in other news, the Justice Department and the Federal Trade Commission have made a deal that’s going to let them move forward with antitrust investigations into Nvidia, Microsoft and OpenAI, all of which are giants in the world of artificial intelligence. So, I mean, this is the sector of this economy, and it’s kind of what’s driving the markets.

Kimberly Adams 

Yeah. It’s been astonishing watching that stock.

Kai Ryssdal

Oh, it’s amazing.

Kimberly Adams

I wonder how many members of Congress conveniently bought that early on. I was reading today about all these index funds, not index funds, but mutual funds that follow the publicly disclosed trades by members of Congress, they basically just mimic it. And all of these funds are like, drastically outperforming the market. Oh, okay. I’m very jaded today. I’m bringing a lot of negativity to this. I need to ease up. Anyway, last clip for today. This one’s about women’s basketball, let’s hear it.

Angel Reese

“People are talking about women’s basketball that you’d never would think would be talking about women’s basketball. People are pulling up to games. We got celebrities coming to games. Sold out arenas, like just because of one single game. And just looking at that, like, I’ll take that role. I’ll take the bad guy role. And I’ll continue to take that on and be that for my teammates. And if I want to be that, and I know I’ll go down in history. I’ll look back in 20 years and be like, yeah, the reason why we watching women’s basketball is not just because of one person. It’s because of me too, and I want y’all to realize that.”

Kimberly Adams 

That was Angel Reese, a player for the Chicago Sky, talking to reporters on Monday about fellow Sky player Chennedy Carter’s foul on Caitlin Clark that has sparked a lot of debate this week. And in case you missed it, the overview is that during a very heated game between the Chicago Sky and Indiana Fever over the weekend, Chennedy Carter shoulder-checked Caitlin Clark, knocked her to the ground, received a foul. That foul was later upgraded to a flagrant foul, and lots of people had big feelings about this. And the situation turned into controversy in the media because of the flagrant foul, first of all, but also the way that lots of people talked about it. There were many commentators suggesting that Clark is being unfairly targeted by other WNBA players out of jealousy for the attention that she’s received. And one of the points that Reese was trying to make in this clip is that there are other players in the league that have been putting in the time and putting in the work. And it’s not that, that Caitlin Clark is not the only player that matters in the league. And I saw a lot of really interesting commentary about this, but the one that jumped out to me the most was in the Washington Post written by Candace Buckner, who wrote, and the headline is: “The ugly discourse surrounding Caitlin Clark.” And one of the things she said was “Clark can’t simply be a rookie going through her Welcome to the WNBA phase, something that even the league itself leaned into with its tongue-in-cheek commercial aimed at newcomers, both the ones on the court and those in front of the television screen. Because Clark is the linchpin drawing sellout crowds and groundbreaking ratings — the marketable star with the agreeable skin color and sexuality — her plight carries a sympathetic bent with her most loyal audience.” And I think there is a lot to unpack in terms of why Clark in particular, in addition to her amazing skill, is the draw that is getting all of this new attention to the NBA, WNBA. Several commentators like women commentators on sports networks have been calling out some of these bigger hosts saying, you all could have been talking about the WNBA years ago. There was plenty to talk about. And you all chose this moment to sort of fixate on it. And Clark, of course, is an amazing player. And, you know, nobody should get roughed up like that in the game. But I do think there’s still a lot of discourse that needs to be had about what makes people pay attention to things.

Kai Ryssdal 

Yeah, look, this is loaded for a lot of the reasons you mentioned. It was a total BS foul just for the record. It was just BS foul. But the larger issues are absolutely relevant. Absolutely relevant. All right, we’re going. That’s it for today. News and drinks tomorrow on Economics on Tap. The YouTube live stream is at 3:30 pacific, 6:30 eastern. Do not miss it.

Kimberly Adams 

Make Me Smart is produced by Courtney Bergsieker. Audio engineering by Jay Siebold. Ellen Rolfes writes our newsletter. And Thalia Menchaca is our intern.

Kai Ryssdal 

Marissa Cabrera is our senior producer. Bridget Bodnar is the director of podcasts. Francesca Levy is the executive director of Digital. Neal Scarbrough, I don’t know what he does around here, but he only does it on Tuesdays.