In no particular order, economists, they're just like us. How much your money is going to cost, and yes, you can get insurance for that. From American Public Media, this is Marketplace. In Los Angeles, I'm Kyle Rizdahl. It is Tuesday. Today, this one is the 28th of April. Good as always to have you along, everybody. If you get a bunch of economists and analysts in a room and you ask them to name the, I don't know, top three most important factors in this global economy of ours, I am going to bet that most, if not all of them, have somewhere in that top three, the cost of money, interest rates. So it is no small matter that this week is kind of a central bank of palooza, if you will. The Bank of Japan left its key rate unchanged this morning. We're going to hear from the Bank of England, the Bank of Canada and the Central Bank, too. And the Federal Reserve's Open Market Committee meets today and tomorrow. Almost certainly, by the way, Jay Powell's last get-together and press conference as Fed chair. Anyway, Marketplace's Justin Ho is going to get us going with what those central banks are up against and how that might square or not with what the Fed is dealing with back here. Central banks around the world are facing a similar dilemma. David Kelly at J.P. Morgan Asset Management says, on one hand, prices are rising. Because what they've seen, particularly since the start of the Iran war, is this big increase in energy prices. That's adding to inflation. And central banks deal with inflation by raising interest rates. But Kelly says, on the other hand, the Iran war and higher energy prices are also slowing down economic growth all over the world. And central banks deal with that by lowering interest rates. It's a fine balancing act, and they're really trying to set monetary policy to try to keep inflation in check without slowing down the economy. As a result, Kelly says most central banks are going to keep interest rates unchanged this week. But Dean Turner with UBS Global Wealth Management says inflation pressures are rising. There's going to be a lot of expectation that central banks are going to look to tighten policy in the coming months, which is essentially raising interest rates. Turner says that's different from what the Federal Reserve is expected to do, especially since Kevin Warsh, President Trump's nominee for Fed chair, backs interest rate cuts. The bias there would be that, especially with the new incoming chair, that, you know, the next move in interest rates will be down from the Federal Reserve. If the Federal Reserve starts diverging from the other central banks, investors will start to move money towards countries where rates are higher. Alex Grisino with Manulife Investment Management says that it'd mean less demand for U.S. assets and dollars. So you're probably seeing some downward pressure on the U.S. dollar if this directly happens. And a cheaper dollar makes imports more expensive. But Grisino says all of this could change depending on what happens with the war in Iran. You know, if you were to wave a magic wand and we got full flows through the Strait of Hormuz back up and running, a lot of the market posturing around what central banks will do probably dissipates pretty quickly. In other words, central banks around the world could start worrying less about inflation and more about economic growth. I'm Justin Ho for Marketplace. Wall Street today. Traders were maybe waiting to see what the Fed says tomorrow, although it's not like there is going to be a rate cut. Speaking of oil, by the way, as that last guy in Justin's spot was doing, the straight still closed, crude up another couple of 3% on both benchmarks. Brent North Sea, the global benchmark, just shy of $111 a barrel. Also, you might have heard the United Arab Emirates is going to leave OPEC after 60-something years in that cartel. There is a whole lot of petro-politics going on that I will spare you, but it is a very big deal. Elsewise in market capitalism, a fade by the three major indices. We will have the details when we do the numbers. The American consumer, as you know, and may well be experiencing personally, is not feeling great about this economy. And should you need data to validate those feelings, The conference board is only too happy to oblige. To be fair, the group's latest survey out today does show consumer confidence has ticked up this month. However, comma, it is still below the long-term baseline where it has been languishing for more than a year now. One perhaps not surprising culprit, high prices that just keep on rising. Daniel Ackerman made some calls. Gary Hoover is a professor of economics at Tulane University. And he's a normal guy. Likes a little treat sometimes. For lunch every day, for dessert, I like to have a small cake or a pie, a little individual cake or pie. He says those used to cost 84 cents a piece. Now they're up to 93. I have noticed that increase and I am upset about it. But for now, he's still enjoying those cakes. And consumers across the economy are still buying things. even the goods that are hardest hit by inflation, like gasoline. Hoover says in places like New Orleans, where he lives, there aren't many other ways to get around. Our mass transit system isn't one that would allow for easy substitution. Gas prices are also on the mind of Ted Rossman. He's principal analyst with Bankrate in New York City. I filled up yesterday and it was about $60 to fill up the family SUV. I mean, that's noticeably higher than it used to be. Rossman says he's been thinking about ways to save on gas, like combining errands, but he hasn't really implemented them yet. And this gets at what's been the paradox of the American consumer. People are not feeling great, but yet they're spending anyway. It's been really one of the biggest puzzling factors in the economy the past few years, and we really haven't seen that change. One explanation is the labor market, says Dana M. Peterson, chief economist with the conference board. Even though there's not a ton of hiring, overall unemployment remains low. As long as people are working, they're getting income. And they are still spending. They just not happy about it I Daniel Ackerman for Marketplace There is a reality about the industry that accounts for almost one out of every five dollars spent in this economy that gets lost in all the high-level policy machinations. that happen. Healthcare is a business. There are bottom lines for all the sole practitioners and medical groups and hospitals out there. So the news that Idaho is cutting how much it pays doctors, dentists and therapists who treat Medicaid patients to close the state budget gap is a very live issue. Pediatric practices are failing at the most since about half the kids in this country are insured through that joint state and federal program. And as Alex Holgen reports other states are thinking about similar cuts. Medicaid meant everything to Carrie Warren when her kids were little. It covered vaccines, doctor's visits. It was ginormous in helping me be able to raise my children and be able to afford healthy things for them. Now Warren sees the other side of Medicaid. She runs the business operations for Coeur d'Alene Pediatrics in northern Idaho. Forty percent of the practice's patients have Medicaid. She says the payment is so low it doesn't even cover the costs to see a patient. That reality has practices like hers on thin margins. Then last year, Idaho cut how much it pays doctors across the state, sending her practice over the edge. There's been tears, sadness, anger, bitterness, frustration. After losing 13% of the revenue, the doctors made a tough call, sell their practice to a local community health center, which actually gets paid more to see these patients. It was just a move we had to make to protect our community. And that's our biggest focus is ensuring that the community has care. Idaho is a warning sign of what's to come. States are facing budget shortfalls driven by tax cuts and an anticipated $1 trillion reduction in federal spending on Medicaid over 10 years. In Colorado, for example, the state already pulled back a Medicaid rate increase. The governor said the 2025 tax bill forced the change. The new law shifts more Medicaid costs to states, forcing a choice, cut benefits or what they pay doctors. It's really difficult for states to be kind of generous on both of those at the same time. That's Diane Alexander, an economist at the Wharton School of Business at the University of Pennsylvania. She found back in 2013 when the Affordable Care Act temporarily raised Medicaid rates, it made a big difference. Increases as small as $10 per visit made it easier to get into a doctor. It doesn't sound like that much on paper, But on the other hand, that was like, I don't know, maybe like a 10 to 15 percent increase in the baseline rates. But a few years later, when the rates went back down, Alexander found access went with them. We saw kind of the reverse effect. So within a year, most of the gains had been lost when the payments went back down. Alexander worries that if states cut rates again, we could see similar effects, meaning people have insurance on paper, but they'll have trouble finding a doctor who will actually see them. Dr. Andrew Racine is the president of the American Academy of Pediatrics. He worries this will hit kids' care particularly hard. In pediatrics, we don't like to be catastrophists because our glasses always have full. This is the most significant threat to Medicaid in the history of the program. Which has been around since 1965. Racine warns reimbursement or coverage cuts could escalate the trend of hospitals closing or scaling back pediatric services. Since 2008, hospitals have closed a third of pediatric inpatient units, which includes things like pediatric ICUs or PICUs. It doesn't matter whether you're on Medicaid or not. If there's no PICU, there's no PICU. Elizabeth Parsons, a pediatrician at Pocatello Children's Clinic in southeastern Idaho, is worried about her practice's future. To cope with the cuts, she and her colleagues are taking a 25% pay cut and working longer hours. It's become more difficult for us to see Medicaid patients because the margins have become negative. I hope that we can survive. I don't know. Pediatricians worry that the cuts, combined with expected coverage losses, will leave kids in a lurch, unable to get basic care to keep them healthy. I'm Alex Olgin for Marketplace. Depending on how much time you spend online, you might have already noticed this, that there are courses out there that you can take on almost anything. How to start your own business, how to alter clothes, something called manifesting. The revenue estimate on the global digital education market come 2030 is $134 billion. That's from the consulting firm Grandview Research. Emily Stewart wrote about all of this the other day. She's a senior correspondent at Business Insiders. Emily, thanks for coming on the program. Thank you so much for having me. Tell me about these courses, would you? I guess, first of all, who is offering these things and about what subjects? I mean, basically anybody can offer an online course if you think about it. I wrote a story about this recently, and the way I kind of came into it is I was talking to people who flip stuff that they find a good will online. And they said, you know, actually the money for us isn't in selling stuff anymore. It's in offering courses. And so what we've seen, you know, over the years, especially online, people can offer a course in anything. A lot of influencers do it. A lot of marketers do it. And it's pretty good money if you can actually get around to it because you basically film some videos, put them online, sell them, set them and forget it. All right. The flip side of this is who's buying them? Who's taking them? Who's paying the $50,000, $100,000 to take these courses? I mean, that's the question. And some of them, to be clear, are not, you know, they're not that expensive. I found some online for, you know, $44 where you can manifest money. But a lot of people do it. You think about, you know, in this day and age, a lot of people feel like their skill set isn't quite right for the labor market. They're worried about money. They're also maybe not so sure about traditional education. And so a lot of people go looking for these things. I mean, I hear masterclass ads all of the time. And not to say that these are like bad necessarily but the problem is there are so many that it can be really hard to figure out what is worth your money and what not Right So there definitely a caveat emptor thing about this But I do want to back up to something you said There is in the air now unease about this economy and college maybe for some is too expensive and not working out So they just looking for other ways to get stable. Yeah. I mean, if you think about it, right, if you are, you know, thinking about going back to school or you're thinking about going to college now, you might be sitting back and thinking, you know, this is $40,000, $50,000 a year. here's an online course that tells me maybe I can learn these skills in a set of weeks that will be much cheaper. Why not do that? And if you think for the people selling the courses, there are also bigger incentives. A lot of influencers, people feel like, well, I'm really subject to the algorithm. Today, the algorithm loves me. I get an audience. Tomorrow, I don't. And so one way to monetize their audiences is to sell them things directly. And sometimes that is a course. You say this in the piece, but there is a certain snake oilishness to this, right? You don't really know who's actually giving you useful stuff and who's just kind of, you know, scamming you. Yeah. I mean, some of this does feel like multi-level marketing a little bit where the idea isn't so much that you sell a product. It's that you sell other people on joining your network. You know, I found a lot of courses that are courses on how to make courses. And some of them say point blank. You don't have to have expertise. You can just make a course. And it's like, well, wait, wait, wait. Why would I make a course on nothing? You know, and I talked to a couple people for this who had had bad experiences, who had felt like they had coughed up, you know, $1,500, did not get what they thought they were paying for. And, you know, regardless of the people even offering the courses, people tend to drop off of these things. I mean, who among us has signed up for something and then given up? And so it is one where I think a lot of the time the expectation does not line up with reality. Not for nothing, but you could do a course on, I don't know, how to write for Business Insider. I don't know. I mean, that sounds nice, but I feel so bad if I didn't like it. No way. You and me both. That would be on the radio. I don't know. Emily Stewart, she's a senior correspondent at Business Insider. Emily, thanks a lot. Thank you. coming up people are having drinks buying snacks i mean what's not to like first though let's do the numbers down deltrio is basically flat down 25 points 49 141 the nasdaq off 223 that's points the percent is nine tenths of one closed to 24 663 the s&p 500 gave back 35 points about a half percent 71 and 38 dan ackerman was telling us earlier about consumer confidence ticking up in april despite rising prices no sign of that and how shares of some big retailers did today walmart flat. Target down 2%. Costco wholesale slipped four-tenths of 1%. A lot of big tech companies are reporting earnings tomorrow. More about that post-haste from Henry Epp. Amazon slipped about a half percent. Meta platforms declined one and a tenth percent. Alphabet, that's actually Google, ticked down two-tenths percent. YouTube as well, a bunch of other stuff. Bonds down yield on the tenure. Tino Rose, 4.34%. You're listening to Marketplace. 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Meta, Google, Microsoft, Amazon, Apple, they are together worth $16 trillion. Bloomberg did that math. That is a quarter of the value of all of the companies in the S&P 500. And the way those companies are getting and spending their money can tell us some things about the economy now and what it might look like in the future. Marketplace's Henry App has that one. There's a good reason we watch these results each quarter. Big tech makes up a large chunk of the American economy. Jacob Bourne is an analyst at eMarketer. In a span of 48 hours, you have just a handful of five companies that, you know, they can swing the market in either direction. But it's not just the stock market. Big tech can also tell us how consumers have been doing lately. Industry analyst Julie Osk says take Apple, which reports on Thursday. Apple gives us a view of consumer confidence in the markets and their ability to continue to spend. when we look at things like upgrade cycles of iPhones. Which can tell us how much discretionary spending consumers are doing. Meanwhile, Amazon's results will give us an even broader view of shopping habits. And then there's Meta and Google, which make a lot of their money selling ads, Osk says. There you also get a sense of the strength of the economy, just based on what folks are spending, to drive awareness and acquisition of consumers. But investors won't be looking as much at those consumer-facing aspects, says Brent Thill at Jeffries, because companies like Amazon, Meta, Microsoft, and Google. They are effectively fueling the AI investment boom of over billion invested this year in infrastructure and they are the foundation for AI Which is a bet on the future of this economy And as big tech spends to make that bet, it's boosting other sectors, Thill says. You're seeing energy, semis, hardware, infrastructure, all these stocks are absolutely ripping higher. Thill says he'll be watching whether big tech keeps spending on data centers and whether its suppliers can keep up. I'm Henry App for Marketplace. We've talked a lot the past couple of years about how in-person events just kind of keep getting more and more popular. They are what fans want. And honestly, live shows are where the money is for performers. An economic corollary to that is that the more people are paying up for concerts and sporting events and whatnot, the more risk that promoters and performers are looking at if something goes wrong. Enter then insurance policies, very specific kinds of insurance. Joe Words is a weather and climate reporter at Bloomberg. Joe, it's good to talk to you. Thanks for having me. Set the scene for me, would you? Bad Bunny has sold out a bunch of shows down in Columbia. Rain is in the forecast. Obviously, multi-million dollar investment. What happens? Yeah, that's right. 145,000 tickets sold. This is three days of concerts at the big stadium there. And really about $23.7 million on the line, not just in ticket sales, talking food, drink, merch, all sorts of stuff. And yeah, it's a tricky time of year in Colombia. We got some rain in the forecast and it's a notoriously tricky place to do forecast. Just it's got tropical climates and, you know, microclimates there. So his organizers think, you know, we need to ensure against a potential washout here. So with an eye on the forecast, they set up these weather stations like inside the stadium. and brokered the insurance that way. Tell me about how that went. Right. So what they set up was a parametric insurance policy. And this is a policy that will pay out a set amount and that needs a specific pre-agreed trigger. And the weather stations that they set up were to measure if that trigger happened. And in this case, a pre-agreed amount of rainfall. And this is an amount of rainfall that the organizers thought would lead to losses for the concert event. The thing is, weather is changing everywhere. Climate, more broadly, is changing everywhere. And I imagine this applies sort of more broadly than just Bad Bunny concerts in Medellin, yeah? Yeah, that's right. Look, you know, these parametric policies and these weather triggers are pretty common with more extreme events. We see them in like renewable energy, right? So a firm might buy them to cover an unexpected wind downturn or cloudier skies than imagine, and you want to cover some potential losses for your solar energy project or something like that. And in the entertainment industry, we're seeing events really be the predominant driver of a lot of profits in the entertainment industry space. And maybe the risk for your event is not just the event itself, but maybe it's a few hours before the event where people are having drinks, buying snacks, and a lot of your profits come from that. You can use these types of parametric policies to cover, you know, that risky period that really might eat into your margins. Yeah, you were using the word casually, but honestly, that's what's going on here, right? These companies, the event promoters, also the brokers, the insurance companies themselves. This is a new way or a reimagined way, I suppose, of pricing climate risk. That's right. It's a new way to price that risk. And they're getting better at pricing that risk, both using new tools to look at the data and look at the long-term trends for the bigger risk, but also their pricing exposure, right? How will they know if this triggering event happens? And now with technology making these sensors smaller and more portable, you can pack it up in a flight case, get on a plane, go to Columbia and set it up and make sure that you're confident that these triggering events have happened and that the payout terms are met. The kicker to this piece is that like three days after these concerts, there were, in fact, huge rainstorms in Columbia. Yeah, that's right. Yeah, huge, huge torrential rain just a few days later. So it looks like a smart policy. There you go. Joe Wirtz, Bloomberg. He's in London. Joe, thanks a lot. I appreciate your time. Thanks a lot. This final note on the way out today, it's a new working paper out from the Bureau of Economic Research about CEOs. Lots of interesting stuff in there, including this. The average age at which CEOs are being appointed has risen sharply since the beginning of the century, from 51 to 61. There is no single reason for that, the paper says, but quoting here, rising demand for generalist human capital leads firms to trade off peak ability for accumulated experience. Jordan Mangy, Zoniel Maharaj, Janet Wynn, Olga Oxman and Virginia K. Smith are the digital team. I'm Kyle Rizda. We will see you tomorrow, everybody. This is APM. The economy moves fast, and when headlines turn on a dime, it is essential that you feel informed rather than overwhelmed. Hey, I'm David Brancaccio, special correspondent for Marketplace and an avid reader of the Marketplace newsletter. Not that I'm partial. Every Friday, Marketplace curates must-read stories from the week and delivers explainers right to your inbox. So if you want the latest from me and our team of award-winning journalists, head over to marketplace.org slash newsletters and sign up today.
