It’s Friday, and the S&P 500 is at risk of becoming what economists call a bear market — when stock prices fall for a prolonged time. But how bad is that, actually? We’ve got some context. Plus, the Law School Admissions Test may become optional, and our hosts share their thoughts on the strong dollar and a pizza musical. We end with a round of Half Full/Half Empty.
Here’s everything we talked about today:
- “The S&P 500 narrowly averts a bear market. How long do they last once they arrive?” from MarketWatch
- “No LSAT Required? Law School Admissions Tests Could Be Optional Under New Proposal” from The Wall Street Journal
- “Archbishop: Pelosi will be denied communion over abortion” from AP News
- “Tesla’s Removal From S&P Index Sparks Debate About ESG Ratings” from Bloomberg
- “New York Now Has More Airbnb Listings Than Apartments for Rent” from Curbed
- “What does a strong dollar mean for the U.S. and world economies?” from Marketplace
- “In This Economy, Getting Fired Takes Hard Work” from The Wall Street Journal
- “Dolly Parton Joins the Star-Studded Cast of Taco Bell’s Tik Tok Musical, ‘Mexican Pizza’” from Taste of Country
Tell us what you think about today’s show. Email us at email@example.com or leave us a voice message at 508-827-6278, or 508-U-B-SMART.
Your donation powers the journalism you rely on. Give today to support “Make Me Smart.”
Make Me Smart May 20, 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.
Amy Scott Remember the guy with the chickens? You were hosting with me that day, right?
Kai Ryssdal: The guy with the, I don’t know the guy with the chickens. That’s a whole different podcast. I don’t even know.
Amy Scott: It was this podcast.
Kai Ryssdal: Oh, all right, was I there? Alright. Anyway, hey everybody, I’m Kai Ryssdal. Welcome back to Make Me Smart making today make sense is what we are doing.
Amy Scott: And I’m Amy Scott, thank you for joining us this Friday for economics on tap, whether you’re on a YouTube livestream with us or listening to the podcast.
Kai Ryssdal: Or on the Discord or what have you. We do it all on this pod. So we’re gonna do some news. We’re gonna do a little Half Full/ Half Empty. I am drinking. Let’s see. I’ve got the Santa Monica Brew Works. It’s a double IPA. It’s called “Head in the Clouds.” And I’ll just show it to you because it’s a lot easier than I sort of expected it would be. Not bad. Not bad, What about you? You’re in the D.C. Bureau, the Washington D.C. bureau.
Amy Scott: Yeah, so Kimberly. Sorry. I raided the fridge here. And I have a feeling this was left by one Kimberly Adams. It’s the Vida Loca Mockarita. So it’s a mock margarita. I have not not tasted it yet, but it’s what I need. Because I was actually at a happy hour real happy hour, a few hours ago. And I needed to move on to non alcoholic.
Kai Ryssdal: Yes. Yes, I was. So I was in the bureau last week. And I could tell you that it’s Kimberly’s. Yes, yes, yes.
Amy Scott Sorry, Kimberly. I’m also using your Slack account and your Google Doc. I swear I’m not trying to be creepy. It’s just you know, I usually work from my closet in Baltimore. Today’s a special day. I’m here in Washington in our official studios.
Amy Scott: Alright. You know, this isn’t bad. I’m just gonna say, mockarita. I’m here for it. Because I will not fall asleep on the train home.
Kai Ryssdal: Well, exactly. But I if I remember correctly, there’s a bunch of those in the fridge. There’s a bunch of those mocktails so you might as well just you know, clean Kimberly out if she’s not around.
Amy Scott: Take a couple home. Exactly. The weekend started. Thanks, Kimberly.
Kai Ryssdal: Oh, my goodness. All right, let’s do a little news. Before we get to the Mr. Jostad. What do you got?
Amy Scott: All right, I got something that you talked about just a few minutes ago in my headphones on the Marketplace, evening program. The S&P 500, as you know, got awfully near bear market territory today dipped briefly below the threshold of 3837, which is where it closed at its high most recent high January 3. And so as you know, technically a bear market is when an index is down 20% from its recent high. And we can talk about that distinction whether it really matters because you know, the way the market has been behaving recently is awfully bearish, whether it’s official or not. But I saw this piece on Marketwatch that I thought you would find interesting as a history buff yourself. It looked basically at the recent history of bear markets, looking at the S&P 500 since World War Two, there have been 17 of them. Bear or near bear markets. Generally the market falls further after reaching that 20% threshold before it starts to recover. And a recovery would be when it’s 20% above the recent low. So on average, they last about a year. And the peak to trough decline tends to be around 30%. So if we hit 20, history predicts which it doesn’t, but the average would be we could expect to see more. This is really interesting, the biggest bear market in that period, a decline of almost 57% was during the financial crisis 2007 to 2009.
Kai Ryssdal: Oh I should have known.
Amy Scott: Well, I know I was like, oh, yeah, I was there.
Kai Ryssdal: Must have blocked it out.
Amy Scott: Right, the longest bear market was 1973 to 74, lasting nearly 21 months, in the shortest we should all remember, was in March of 2020, at the beginning of the pandemic. So, you know, past performance does not guarantee future results. But I thought it was kind of interesting context there, as we’re considering whether we are about to be in an official bear market.
Kai Ryssdal: Yeah, totally interesting to know. So those of you who pay attention to the stock market, will know that the NASDAQ the tech heavy NASDAQ has been in a bear market for a while now. Right? It’s down like 20% on the year. The reason the S&P being in a bear market matters, is because the S&P has a much broader reflect is a, is a much better reflection of the broader market, than the NASDAQ, the NASDAQ goes all the high flying tech companies, right. And they went way up and they have now crashed. The S&P 500, though, is the whole market basically. Right. And it’s widely representative. And that’s why that matters. For those who are wondering. Yeah.
Amy Scott: Yeah thank you for that context. What do you got?
Kai Ryssdal: Yeah. Oh, yeah. You know, I can’t it’s like, I wake up at two in the morning. And this is what I think about. Which isn’t even a life. Okay, so two things. One of which is an observation, actually, they’re both observations. So so the piece in The Wall Street Journal that, and to appreciate my take on this, you have to understand that when my wife and I were leaving the Foreign Service, she had decided she wanted to go to business school. And so she took the GMAT, it’s the general graduate management, something something test to get it.
Amy Scott: Graduate school test.
Kai Ryssdal: Right. And she’s the brains of the family. And she got into all the top notch business schools that she applied to, except for one, I not knowing what I wanted to do when I grow up. Decided I would revisit my undergraduate thought of maybe going to law school. So I took the LSAT in Beijing, which is a whole different story. But I am not the brains of the family. And I did not get into any of the law schools that I applied to, which is how I wound up on the radio. But again, that’s a whole different story.
Amy Scott: And we’re all thankful for that Kai.
Kai Ryssdal: As as am I. Literally changed my life, the best thing that ever happened to me was not getting into law school for real, it’s, it’s crazy. Anyway, I bring that up just as a way to say that. There’s a panel of the American Bar Association that accredits law schools that proposed today to make standardized tests, the LSAT, the law school admissions test, or whatever it is, proposed making that test optional, which would be huge, which would be huge for the same reason that optionality in undergraduate standardized tests has become such a big deal. Some of the same principles apply, right? It’s tough to get a broad representative sample of students if you test that way, there are exclusions based on race and income because they just can’t get the mentoring and the the prep courses and all that stuff. I just think that’s really interesting. I think that’s really interesting. Absolutely. That would really shake up the industry. Yeah. As the guy who did terribly on the LSAT. Yerribly. Okay. So that’s item number one. Item number two, I just I read this, and I went, Wow, this is kind of a big deal. So Congress voted last week, both the House and the Senate did on a reproductive rights bill in the wake of the leak of the Alito draft from two or three weeks ago, that seems to have the Supreme Court position to overturn Roe vs. Wade. So the House voted on its version, the Senate voted on its version, it does a bunch of each of them do different things and they go farther than Roe v. Wade did but Speaker of the House Nancy Pelosi voted for that reproductive rights bill. Speaker Pelosi is a devout and practicing Catholic. And today the Archbishop of San Francisco, which is to say the Archbishop of her home archdiocese, notified her and made the letter public which I just think is weird, frankly, that they are going to exclude her from taking communion. And I get that this is way outside the topic of the usual fare on this podcast. But I think it’s just fascinating. And wow. And huh. And wow, it’s just kind of wild. Yeah. So I’m just gonna read this to you because the language is stark. “I am hereby notifying you,” and this is her Archbishop. “You are” in bolded text, “not to present yourself for Holy Communion and should you do so you are not to be admitted to Holy Communion until such time as you publicly repudiate your advocacy for the legitimacy of abortion and confess and receive absolution of this grave sin in the Sacrament of Penance.” That’s wild, and it’s huge.
Amy Scott: The Speaker of the House Yeah, it is. I mean, she’s not alone among Catholics.
Kai Ryssdal: Oh, no. Hello Joe Biden.
Amy Scott: So what kind of conversation is happening within the church?
Kai Ryssdal: Yeah. Well, well, it’s worth pointing out here that Pope Francis has basically said, “You know what, we’re not going to deny people Holy Communion for this.” I guess the Archbishop of San Franciso feels differently.
Amy Scott: Yeah. One to watch. That’s really interesting.
Kai Ryssdal: Anyway, anyway. Yeah, that was that was a little far afield for us. But it just it really hit me. And so I wanted to just remark on it because we get to do that on this podcast.
Amy Scott: All right.
Kai Ryssdal: All right, Drew you’re up. All right, Half Full/Half Empty is the game, Drew Jostad is in charge. Amy and I are just along for the ride. Begin.
Drew Jostad: Okay, Tesla’s stock has been removed from the S&P 500 ESG Index. Are you half full or half empty?
Kai Ryssdal: Oh, wow.
Drew Jostad: Oh, yeah. He was really mad about that.
Kai Ryssdal: Oh, boy. Was he mad. I think he was probably about about some other things too. But, he was mad about that.
Amy Scott: Yeah.
Kai Ryssdal: Yeah. So I think you know what I mean, look, is is Tesla reshaping the world? Yes. Is Elon Musk a jerk? Yes. I suppose I’m half. I don’t actually I have no strong opinion on this. But my boss, Nancy Cassutt has told me I have to take a stand in the segment. So I’m gonna say half full on them being removed.
Amy Scott: She has really?
Kai Ryssdal: Oh, yeah, for sure. She actually Slacked me one afternoon and said, “I want to hear what you think!” I’m like, okay.
Amy Scott: Oh, okay. Yeah, but I don’t have to take a stand because I’m just a guet.
Kai Ryssdal: Yes. Okay. Good.
Amy Scott I don’t know. I don’t know. I mean, I think it’s good that we’re holding companies to some account for their environmental, social and governance. policies, procedures, impact, but I don’t really know what, what, how much difference that’s gonna make.
Kai Ryssdal: Exactly. There you go. Next.
Drew Jostad: Okay. New York City has more Airbnb listings than apartments for rent. Are you half full or half empty?
Kai Ryssdal: I saw that, what was it yesterday? And I kind of wondered how that could be. But I suppose it could. Look, Airbnb is challenging, right, because it provides a much needed service. Just for the traveling public. It lets landlords get some extra income, but it also can skew rental rates and housing availability. And especially in a place that’s as densely packed as Manhattan and New York City. I’m gonna say I’m half empty on that.
Amy Scott: Yeah, look, you’re putting me on the spot here as a housing reporter. You know, I can’t really take a stand on something like this. But I’m gonna say I’m half empty on the, the effect on the supply of housing just to live in. I mean, this is a crisis. It really is a crisis. And I agree with Kai, there’s lots of good things about rental income for for short term rentals and the availability of cool places to stay. But it’s a problem that communities really need to deal with. Because it is making it much harder for regular folks to afford a place to live.
Kai Ryssdal: Well-handled housing reporter Well-handled.
Amy Scott: Thank you.
Kai Ryssdal: Drew, continue.
Drew Jostad: Are you half full or half empty on a strong dollar?
Kai Ryssdal: Oh, so Sabri did this story for us. A couple of days ago, the dollar now is as strong as it’s been in 20 something years against the euro and the British pound, it’s really strong against the Japanese yen I’m think it’s a little bit of a double edged sword, right? Because the strong dollar attracts more people buying it right, because it’s rising in value. We could do the whole carry trade story if we wanted to. It also makes it easier for Americans to buy goods that we are importing, but it makes it trickier for American exports to be bought overseas, so I don’t I mean, I don’t. Alright, look, here’s the truth. I don’t care whether the dollar is weak or strong. I should care but I don’t. Because there’s so many other factors in this economy that determine things. I suppose I’m half full on the strong dollar better strong than weak. There we go. Okay, finally, I’m coming around to it. Thank you for this therapy session. I am half full on a strong dollar.
Amy Scott: Yeah, okay. I’m going to be half full too, because I really, really want to go to Europe and not feel like “oh my God!” every time I see the prices.
Kai Ryssdal: Well look so yes, exactly. So it’s basically at parity now. Right? It’s almost one to one with the euros, if you’re gonna go go now. Yes.
Amy Scott: Right. Unfortunately, I don’t think I can for other reasons, but I, that makes me kind of excited. But yeah, I’m not an exporter. So it’s easy for me to say that.
Kai Ryssdal: That’s right. All right do we have another one?
Drew Jostad: We have a survey reported in The Wall Street Journal that two thirds of managers say they’d be willing to rehire a middling former employee because of the tight labor market.
Amy Scott: That’s wild. Do they use the word middling? I hope no one ever says that about me. It’s just the most, you know, “meh” thing you could say about someone. I think that’s interesting. Weclome on board former middling employee. Well, I’m half empty on that. Yeah, exactly. I’m half empty on that, because it just shows how, how tight the labor market is. And, you know, the difficult situation employers are in trying to hire people. But hey, it’s good for the middling former employees.
Kai Ryssdal: Of which, you know, we’ve all been on I’ve been a middling employee before. Yeah, what Amy said, I’m half empty on that.
Amy Scott: There are days, maybe this week when I was a middling employee so.
Kai Ryssdal: Maybe even right now. Who knows? Sorry. Who knows?
Amy Scott Hopefully not. That’s a good one, Drew. I like that.
Kai Ryssdal: That was a good one.
Drew Jostad: Okay, last topic. I think I asked Amy about this fast food item last time she was here on a Friday.
Kai Ryssdal: Oh my god, what?
Drew Jostad: But apparently there is a Tik Tok musical in the works about the Taco Bell Mexican pizza. Starring Doja Cat and Dolly Parton. I’m just reading the what they give me Are you half full or half empty.
Kai Ryssdal: I think Bridget had a few before she put these questions in there.
Amy Scott: Wait whaaaat? Dolly Parton for real?
Drew Jostad: For real.
Amy Scott: Oh, I’m, I’m totally I’m totally full on this one. Like, overflowing. Yes.
Kai Ryssdal: Okay, what Amy said. I don’t know. Possibly, whatever. Who knows?
Amy Scott: Kai. I guess we don’t get to even talk about that one. There’s more to that story for another time.
Kai Ryssdal: No, go ahead. If you’ve got thoughts, please share them. Please share them right now.
Amy Scott: Well, it’s been said on this show in the in in the past when I think you were out that I am a Taco Bell fan. So I, it’s my go to like road, road food. And I don’t know about the Mexican pizza. I don’t know if it deserves its whole its own whole musical. But I’m here for it.
Kai Ryssdal: And other things you never knew about Amy Scott. I guess listeners did. Because you’ve talked about it before. I don’t know.
Amy Scott: Yeah. And I was sheepish about it. But now you know, I’m like I’m leaning fully into that. So.
Kai Ryssdal: You gotta own it. You gotta own it. I own it. Good stuff. Good stuff. All right. Super quick. On the way out here. Let me just remind everybody, it is still fundraising time. We are still trying to get get the money. We need to run this podcast and all of Marketplace. Super quick. Here’s the deal. If you give today, you can get the Kai-PA glass $7 a month, it goes back in the vault in a week. I have a secret stash. But that’s just me, because my name is on it. $7 a month, Kai-PA glass please help us out, marketplace.org/givesmart or click on the link that they are going to put in the show notes. And we appreciate anything at all that you can do. Truly we do.
Amy Scott: Back in the vault? That’s heavy!
Kai Ryssdal: I – that’s it, look, I don’t – they lock them up because it’s high demand. I don’t know. I don’t know. Although there is actually a warehouse in St. Paul, where they store them. Anyhow, that’s it for us.
Amy Scott: That’s what they mean by a vault.
Kai Ryssdal: Back next week. Tuesday, we’re doing a deep dive on something we touched on briefly this week. I think Kimberly did but we think merits a little bit more discussion, the Supreme Court ruling in FEC Federal Election Commission versus Ted Cruz for Senate which basically removes some of the limits around political fundraising. It could be a big deal come, oh, my gosh, the upcoming midterms and 2024 politics, money in politics is a big deal. Send us your questions on that actually, and your thoughts and anything else you want to share with us for the mailbag please.
Amy Scott: And you can do that by sending us a voice memo or an email to firstname.lastname@example.org you can leave us a voice message at 508-827-6278. That’s 508-U-B-SMART.
Kai Ryssdal: Can I just ask her what’s the difference between a voice message and a voice memo? Can we just – Bridget, I think we need to fix that. I’m just saying.
Amy Scott: Voicemail, Voice Memo app, you know.
Kai Ryssdal: I don’t know.
Amy Scott: The way you record it.
Kai Ryssdal: Make Me Smart is produced Marissa Cabrera. Heh, I don’t know. Our intern is Tiffany Bui. Today’s episode was engineered by of course Drew Jostad, senior producer, and arbiter of all questions and problems is Bridget Bodnar.
Amy Scott: The team behind our Friday game is Steven Byeon, Mel Rosenberg, Isabel Lyndon and Emily Macune with the music written by Drew Jostad. And the director of On Demand is Donna Tam.
Kai Ryssdal: So Bridget just Slacked me. Voicemail you call our number and talk and then hang up and move on. And I guess voice message is the thing you record. Yeah, you record your thing, listen to it, and then decide if you like it and then send it to us. All right, so they’re different, but still, we need to, okay, I’m gonna change that next time. It’s all I’m saying. Host privilege.
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