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Bonds, Boeing and Beyoncé
Apr 11, 2024
Episode 1137

Bonds, Boeing and Beyoncé

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Oh, and have you done your taxes yet?

Today, we’re discussing the bond market’s big reaction to the latest inflation news and why you shouldn’t worry about it. Plus, a new Boeing whistleblower comes forward, and Beyoncé calls out the home insurance industry.

Here’s everything we talked about today:

Join us tomorrow for Economics on Tap! The YouTube livestream starts at 3:30 p.m. Pacific time, 3:30 p.m. Eastern time. We’ll have news, drink, and play a round of Half Full/Half Empty.

Make Me Smart April 11, 2024 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.

Kai Ryssdal 

Ah, all right. I got 11:59:59. Juan Carlos, let’s hit it. 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. Thank you everyone for joining us on this Thursday, April the 11th. This month is zooming on by.

Kai Ryssdal 

I know right. Have you done your taxes yet? By the way.

Kimberly Adams 

No, I haven’t. I haven’t even started.

Kai Ryssdal

Oh no. Seriously?

Kimberly Adams

I have like a stack of unopened mail that is tax related. And I need to like, get another like 1099. It’s a weekend project. I know. I’m usually not a procrastinator. Usually, my taxes are done like, as soon as I get the document.

Kai Ryssdal

Yeah. Wow.

Kimberly Adams

It’s just been weird this year.

Kai Ryssdal

Alright, there you go.

Kimberly Adams

I hope I didn’t give anybody anxiety or like, you know, people who get like, secondary anxiety from people.

Kai Ryssdal 

Oh yeah. Totally. Alright, we’re going to do what we usually do on a Thursday. Listen back to some of the big stories of the week. We have some audio lined up, and here is the first one.

Tuan Nguyen

“If you look at the bond market today, clearly we see a big reaction, and in our opinion it’s a little bit of an overreaction.”

Kai Ryssdal 

Oh, that’s very interesting. Very interesting. And there’s your hint that I don’t listen to these clips beforehand by the way. Are you doing this one or am I?

Kimberly Adams

No, you do this.

Kai Ryssdal

Okay. So, that was an economist. I love the bond market, but not as much as Sabri Ben-Achour loves the bond market because that was an analyst, an economist rather at RSM named Tuan Ngygen. Tuan Ngygen rather, sorry, talking to Sabri yesterday for a spot he did on the show about how the bond market reacted to yesterday’s inflation news, which was for the third month in a row higher than anybody wanted. And the bond markets had a little bit of freakout. And rates went higher, they’re still higher today, about four and a half percent for the tenure, which is still historically low, quite high. You know, the bond market is a really good indicator of where the market is going, where the economy is going. It’s a sense of what’s on the horizon, whether it be inflation or more growth. The catch is that it’s not a perfect indicator. So, as with all things, one day does not a data set make, as I believe I said yesterday. You know, keep an eye on things, but let’s not freak out as Tuan Ngygen told Sabri yesterday, bit of an overreaction.

Kimberly Adams 

You know, it’s funny that this time we’re like, oh, this is inflation news that nobody wants. I mean, other than the, you know, pure politics of it. Republicans may love it for campaigning purposes. I feel like back in the day, we would talk about, you know, higher inflation and higher interest rates, as you know, good for savers. And that part of the narrative we don’t talk about much anymore, and is it because no one has savings anymore?

Kai Ryssdal 

That’s a really good question. I mean, look, we’ve burned through a lot of the pandemic savings, right? And all that extra income that we had from the payments and stuff. Those are all largely, analysts say, gone. So maybe that’s it. I don’t know. I mean, look, I think I said this yesterday. My mom’s having a grand old time with her CDs, right? There like, five something percent.

Kimberly Adams

Yeah, I’m sure.

Kai Ryssdal

So, you know, for people on fixed incomes, this is not terrible, except oh, by the way, for the inflation that’s coming along with it. So definitely a double-edged sword.

Kimberly Adams 

Yeah, yeah. Okay. So next up, we have another clip from another spot that was on the evening’s show.

Mike Schmidt

“TSMC as a company produces more than 90% of leading-edge logic chips globally. And now they’re bringing those advanced technologies to United States.”

Kimberly Adams 

So, that was from an interview I had with Mike Schmidt. He’s the director of the CHIPS program office at the Department of Commerce, and I was talking to him for a story about the latest round of CHIPS Act funding, which went to the Taiwan Semiconductor Manufacturing Company. It’s very similar in the shape of the deal to the one that Intel got a couple of weeks back. Many billions of dollars in this preliminary deal because obviously they have benchmarks they have to hit. TSMC would get up to $6.6 billion in grants along with like $5 billion in loans it’d be building, expanding some additional some factors they have in Arizona and potentially building a new one. Everybody I talked to you for the story was like the important part of this is the leading-edge chips, which is these really advanced chips that are used for AI. The CHIPS Act funding has been going out the door in smaller buckets for sort of shoring up preexisting chips factories that are the chips we need for like cars and computers and other day-to-day stuff. And I think Henry Epp did some stories about a chips factory in Vermont. And so, those are all important chips also in terms of rebuilding the industry in the United States, but it’s those leading-edge chips as they call them that are super important. And one thing I didn’t know until I talked to Mike for the story was apparently, in terms of what they called “greenfield investment,” which was a term I’d never heard before, investments that are like sort of new money coming into the country. This funding combined with some funding and investments that TSMC had already planned makes for the largest foreign direct investment in US history, which I thought was kind of interesting. And I’m sure it doesn’t hurt that it’s in a swing state and a lot of the CHIPS Act money, and a lot of the IRA money just so happens to be going to swing states and Arizona has become particularly interesting. Now, the caveat to that being like TSMC was already in Arizona, but you know, there it is.

Kai Ryssdal 

No, I’ll tell you that TSMC plant, they’re actually going to be three of them now in Arizona. They’re huge. I was there two, three weeks ago whatever. It was ginormous. Ginormous.

Kimberly Adams 

Did you have to wear like, the white outfits?

Kai Ryssdal 

Well, security threw us out. They wouldn’t let us in.

Kimberly Adams

Oh. Boo.

Kai Ryssdal

Yeah, totally. We didn’t even get past the parking lot. They literally came along, and they were like, “this is federal property. You can’t be here.” And I’m like, well, first of all, it’s not federal. Thank you very much, but we’re leaving. Don’t worry about it. Alright. Anyway, next clip. Juan Carlos, hit it.

Dennis Tajer

“The trust at Boeing from the operator side and the passenger side and the regulator is at an all-time low.”

Kai Ryssdal 

That may be the aviation news of the year understatement. That was Dennis Tajer. He’s an American Airlines pilot, also a spokesperson for the Pilots Union on CNBC talking about the latest whistleblower incident at Boeing, which the former Boeing engineer claims that changes in the way the 787 is built. A plane not without its problems, by the way, battery related mostly about eight or 10 years ago. Changes in the way it’s made, literally put together. I don’t want to exaggerate this. Put the aircraft at some risk of structural failure. Now, let’s be clear.

Kimberly Adams

Is he still alive?

Kai Ryssdal

This guy, yes. This guy, this whistleblower is still alive. Nudge, nudge. Wink, wink. Another insider Boeing has. Boeing says it stands completely behind this airplane. The FAA is looking at it. But look, this is not what Boeing needs right now. This is absolutely not what Boeing, a mainstay of the American industrial base needs at a time when it’s already had these problems. Yeah, I should look up the share price right now. But it’s, you know, these are not great times for BA ticker symbol BA.

Kimberly Adams 

You know, we talked to a couple of weeks ago about whether or not we’d feel comfortable flying on Boeing planes or this particular plane, and I was just like, yeah, no big deal, no big deal. And I was talking to a friend of mine the other day who was coming back from a trip, and they booked their flights to avoid certain Boeing planes, like they checked, and they avoided them. And I was just like, hmm, people are actually making decisions to avoid flying on Boeing planes. Wow. That was wild to me.

Kai Ryssdal 

Boeing shares 173 ish right now, three or four years ago, before the real big problems started, they were $40 a share. So, it’s been quite the tumble.

Kimberly Adams

That is a tumble.

Kai Ryssdal

Yeah.

Kimberly Adams 

All right. So, the next thing is a lot more fun. And it’s a two parter. So, first of all, here’s a clip of a song from Beyoncé’s new album, Cowboy Carter, and it’s called “YA YA.”

Beyoncé’s “YA YA”

“Wildfire burnt his house down / Insurance ain’t gon pay no Fannie Mae / So hold this holster pour mo’ liquor, please / Hard workin’ man ain’t got no money in the bank”

Kimberly Adams

You heard references there to Fannie Mae to fires to the bank. So, in that clip, Beyoncé is talking about a guy whose house burns down, and he can’t get insurance, and he doesn’t have money in the bank. And that brings me to this clip from a video that I saw on X, which is funny. I saw another clip online where someone said if Elon Musk can deadname their daughter, then we should be able to dead name Twitter.

Kai Ryssdal 

I don’t hate that. I don’t hate that. I mean, I hate that he deadnames his daughter.

Kimberly Adams 

But yeah, there it is. So, anyway. On Twitter, Daryl Fairweather, chief economist at Redfin was talking about these lyrics that you just heard in Cowboy Carter.

Daryl Fairweather

“What she’s saying is that the man’s insurance will not cover the damage from the wildfire. The insurance won’t pay off his mortgage, won’t be paying back Fannie Mae. So, how does Beyoncé know about Fannie Mae and its relationship to disasters like wildfires? Well, Beyoncé owns a $200 million home in Malibu. In Malibu, 99% of homes faced wildfire risk and that risk is increasing because of climate change.”

Kimberly Adams 

And I strongly encourage folks to go back and watch Darryl Fairweather’s video on this because she really unpacked sort of how this little snippet of lyrics really highlights an issue that’s big in California, which we were talking about just the other day. The inability to get insurance, how expensive insurance is, and how when someone who doesn’t have the millions and millions of dollars that Beyoncé does, this is a real catastrophe for your life. And, you know, with the caveat that Beyoncé owns many homes and would be fine, but you know, I thought it was interesting.

Kai Ryssdal 

Yeah, no, it totally is. It totally is. And I had not heard that song yet. Obviously, I hadn’t picked up on the lyrics. It’s totally interesting.

Kimberly Adams 

Do you find it where you are hard to find insurance?

Kai Ryssdal 

Not yet. Well, not yet me. Right? But that I think is just a function of the insurance company that I have. My sister-in-law and her husband had their policy canceled, and they live literally seven tenths of a mile from us. So, it’s coming, you know.

Kimberly Adams 

What are they? I mean, were they able to find another policy?

Kai Ryssdal 

They were able to get another quote from a different company, and there was also in the state of California, an insurer of last resort, which is of course more expensive, right? But look, they’re going to do it out here. And Florida is going to do the same with like Hurricane coverage and stuff right? We have the California Earthquake Authority, which provides earthquake insurance because no private insurers are going to do that. I’m sure the wildfire thing is going to have the same net result. You’re going to have California like environmental damage insurance or something. Yeah, no question.

Kimberly Adams 

Yeah.

Kai Ryssdal 

All right. And on that happy note, we’re out of here. Economics on Tap tomorrow. News, drinks, we’ll play a game. The YouTube livestream at 3:30 Pacific, 6:30 Eastern.

Kimberly Adams 

Make Me Smart is produced by Courtney Bergsieker. Audio engineering today by Juan Carlos Torrado. 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. She is apparently not on vacation. I got in trouble for saying that yesterday. She’s actually right across the glass from me. Let me know she’s very much here. Francesca Levy is the executive director of Digital and On- Demand. Out on the fade.

Kimberly Adams 

I’ve got to ask you. Are your taxes done?

Kai Ryssdal 

No, they’re not. But I did pick my accountant this morning. And he said, “I’ve got somebody working on it. Sorry. We’re really backed up.” And I’m like, “Hey, man, I got four days, but that’s why I’m paying you the big bucks, so that I don’t have to worry about it.”

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